58.com Reports Fourth Quarter And Fiscal Year 2017 Unaudited Financial Results

Mar 7, 2018

BEIJING, March 7, 2018 /PRNewswire/ -- 58.com Inc. (NYSE: WUBA) ("58.com" or the "Company"), China's largest online market place for classifieds, today reported its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2017.

Fourth Quarter 2017 Financial Highlights

  • Total revenues were RMB2,764.7 million (US$423.1 million[1]), a 32.0% increase from the same quarter of 2016, exceeding the high end of the Company's guidance of RMB2,725 million.
  • Gross margin was 90.5% compared with 89.9% in the same quarter of 2016.
  • Income from operations was RMB613.7 million (US$93.9 million), compared with income from operations of RMB193.5 million in the same quarter of 2016.
  • Non-GAAP income from operations[2] was RMB762.5 million (US$116.7 million), compared with non-GAAP income from operations of RMB317.7 million in the same quarter of 2016.
  • Net income attributable to 58.com Inc. was RMB414.1 million (US$63.4 million), compared with net loss attributable to 58.com Inc. of RMB138.0 million in the same quarter of 2016.
  • Non-GAAP net income attributable to 58.com Inc.[3] was RMB549.0 million (US$84.0 million), compared with non-GAAP net loss attributable to 58.com Inc. of RMB22.7 million in the same quarter of 2016.
  • Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB2.82 (US$0.43) and RMB2.78 (US$0.43), respectively. One ADS represents two Class A ordinary shares.
  • Non-GAAP basic and diluted earnings per ADS[4] attributable to ordinary shareholders were RMB3.74 (US$0.57) and RMB3.69 (US$0.56), respectively.

Fiscal Year 2017 Financial Highlights

  • Total revenues were RMB10,068.8 million (US$1,540.9 million), a 32.6% increase from fiscal year 2016.
  • Gross margin was 90.8% compared with 90.7% in fiscal year 2016.
  • Income from operations was RMB1,796.5 million (US$274.9 million), compared with income from operations of RMB233.7 million in fiscal year 2016.
  • Non-GAAP income from operations was RMB2,359.2 million (US$361.1 million), compared with non-GAAP income from operations of RMB730.0 million in fiscal year 2016.
  • Net income attributable to 58.com Inc. was RMB1,285.1 million (US$196.7 million), compared with net loss attributable to 58.com Inc. of RMB783.8 million in fiscal year 2016.
  • Non-GAAP net income attributable to 58.com Inc. was RMB1,795.0 million (US$274.7 million), compared with non-GAAP net loss attributable to 58.com Inc. of RMB253.6 million in fiscal year 2016.
  • Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB8.82 (US$1.35) and RMB8.70 (US$1.33), respectively.
  • Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders were RMB12.32 (US$1.89) and RMB12.16 (US$1.86), respectively.

Management Comments

"We finished the year with another quarter of strong financial and operational results," commented Mr. Michael Yao, Chairman and Chief Executive Officer of 58.com. "Traffic on our mobile applications continued to grow strongly, largely as a result of our continued focus on product innovation and user experience improvement. Our core categories, such as jobs, secondary housing and rentals, used automobiles, and used goods all continue to create significant opportunities for us driven by their respective industries' rapid growth trajectory. The growth in traffic and revenues is particularly strong in lower tier cities and towns. We will continue to reinvest our increasing cash flow generated from our core businesses into these high-growth and low-penetration businesses and products to maximize the long-term value of our platform."  

Mr. Hao Zhou, Chief Financial Officer of 58.com added, "We continued to see strong growth in revenue, traffic and margins during the quarter. Our revenues exceeded guidance once again. Free cash flow for year 2017 was approximately US$400 million, up 63.3% from 2016. As revenues continue to grow and the margins of our core businesses expand further, we will invest more in technology and areas that will further strengthen our leadership position in our core categories."

Fourth Quarter 2017 Financial Results

Revenues

Total revenues were RMB2,764.7 million (US$423.1 million), representing an increase of 32.0% from RMB2,094.8 million in the same quarter of 2016.

Membership revenues were RMB1,038.8 million (US$159.0 million), an increase of 27.9% from RMB812.0 million in the same quarter of 2016. The increase in membership revenues was primarily driven by an increase in the number of subscription-based paying membership accounts. The total number of subscription-based paying membership accounts on the Company's platforms, which include 58.com, Ganji.com and Anjuke.com, was approximately 2,654,000 during the fourth quarter of 2017, a 28.2% increase from approximately 2,070,000 in the same quarter of 2016. The Company defines subscription-based paying membership accounts as the registered accounts through which users have purchased the Company's membership subscriptions. The number of subscription-based paying membership accounts in a given period represents the paying merchant members whose membership subscriptions are in their service period at any point during the given period. Some paying merchant members purchase membership services from more than one Company platform which contributes separately to the revenues of each platform.

Online marketing services revenues were RMB1,644.5 million (US$251.7 million), an increase of 38.3% from RMB1,189.4 million in the same quarter of 2016. The increase was primarily driven by the increasing adoption and effectiveness of the Company's various online marketing services such as real-time bidding, priority listing and various other online marketing services.

Cost of Revenues

Cost of revenues was RMB262.9 million (US$40.2 million), an increase of 23.8% from RMB212.2 million in the same quarter of 2016. The year-over-year increase in the 58.com's cost of revenues was primarily driven by increases in salaries and benefits for customer service staff and costs of used goods sold.

Gross Profit and Gross Margin

Gross profit was RMB2,501.8 million (US$382.9 million), an increase of 32.9% from RMB1,882.5 million during the same quarter of 2016.

Gross margin was 90.5%, compared with 89.9% during the same quarter of 2016.

Operating Expenses

Operating expenses were RMB1,888.1 million (US$289.0 million), an increase of 11.8% from RMB1,689.0 million in the same quarter of 2016.          

Sales and marketing expenses in the fourth quarter of 2017 were RMB1,338.6 million (US$204.9 million), an increase of 9.3% from RMB1,224.7 million in the same quarter in 2016.

Within sales and marketing expenses, advertising expenses accounted for RMB511.9 million (US$78.3 million) and RMB454.4 million in the fourth quarter of 2017 and 2016, respectively. The increase was primarily due to an increase in advertising expenses associated with the promotion of the 58.com and Zhuan Zhuan brands.

Other sales and marketing expenses in the fourth quarter of 2017 were RMB826.7 million (US$126.6 million), an increase of 7.3% from RMB770.3 million in the same quarter in 2016. Other sales and marketing expenses primarily include salaries, benefits and sales commissions, as well as office overhead expenses associated with sales, customer service and marketing teams. The increase was primarily driven by increased commissions for the Company's sales, customer service and marketing teams.

Research and development expenses in the fourth quarter of 2017 were RMB357.9 million (US$54.8 million), an increase of 14.2% from RMB313.4 million in the same quarter of 2016.  The increase was primarily due to increased salaries and benefits as well as share-based compensation expenses for the research and development of new features and services.

General and administrative expenses in the fourth quarter of 2017 were RMB191.6 million (US$29.3 million), an increase of 27.0% from RMB150.9 million in the same quarter of 2016. The increase was primarily driven by an increase in salaries, share-based compensation expenses and other administrative related expenses.

Income from Operations

Income from operations was RMB613.7 million (US$93.9 million) in the fourth quarter of 2017, compared with income from operations of RMB193.5 million in the same quarter of 2016. Operating margin, defined as income from operations divided by total revenues, was 22.2% in the fourth quarter of 2017, compared with 9.2% in the same quarter of 2016.

Non-GAAP income from operations was RMB762.5 million (US$116.7 million) in the fourth quarter of 2017, compared with non-GAAP income from operations of RMB317.7 million in the same quarter of 2016. Non-GAAP operating margin, defined as non-GAAP income from operations divided by total revenues, was 27.6% in the fourth quarter of 2017, compared with 15.1% in the same quarter of 2016.

Other Expenses

Other expenses in the fourth quarter of 2017 were RMB123.8 million (US$19.0 million), compared with other expenses of RMB365.5 million in the same quarter of 2016. Other expenses in the fourth quarter of 2017 mainly included a RMB198.3 million share of results of equity investees, which primarily consisted of a RMB186.4 million share of the net loss attributable to 58 Home's ordinary shareholders calculated based on the Company's ordinary shareholding in 58 Home, which was partially offset by investment income of RMB27.5 million and government subsidies of RMB25.7 million.

Net Income/(Loss) Attributable to 58.com Inc.

Net income attributable to 58.com Inc. was RMB414.1 million (US$63.4 million) in the fourth quarter of 2017, compared with net loss attributable to 58.com Inc. of RMB138.0 million in the same quarter of 2016. Net margin, defined as net income /(loss) attributable to 58.com Inc. divided by total revenues, was 15.0% in the fourth quarter of 2017, compared with negative 6.6% in the same quarter of 2016.

Non-GAAP net income attributable to 58.com Inc. was RMB549.0 million (US$84.0 million) in the fourth quarter of 2017, compared with non-GAAP net loss attributable to 58.com Inc. of RMB22.7 million in the same quarter of 2016. Non-GAAP net margin, defined as non-GAAP net income /(loss) attributable to 58.com Inc. divided by total revenues, was 19.9% in the fourth quarter of 2017, compared with negative 1.1% in the same quarter of 2016.

Basic and Diluted Earnings per ADS

Basic and diluted earnings per ADS attributable to ordinary shareholders in the fourth quarter of 2017 were RMB2.82 (US$0.43) and RMB2.78 (US$0.43), compared with basic and diluted losses per ADS attributable to ordinary shareholders of RMB0.95, in the same quarter of 2016.

Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders in the fourth quarter of 2017 were RMB3.74 (US$0.57) and RMB3.69 (US$0.56), respectively, compared with non-GAAP basic and diluted losses per ADS attributable to ordinary shareholders of RMB0.16 in the same quarter of 2016.

Cash Flow

Net cash provided by operating activities was RMB875.8 million (US$134.0 million) in the fourth quarter of 2017, compared with net cash provided by operating activities of RMB842.2 million in the same quarter of 2016.

Fiscal Year 2017 Financial Results

Revenues

Total revenues were RMB10,068.8 million (US$1,540.9 million), representing an increase of 32.6% from RMB7,592.1 million during fiscal year 2016.

Membership revenues were RMB3,789.5 million (US$580.0 million), an increase of 28.4% from RMB2,951.1 million during fiscal year 2016. The increase in membership revenues was primarily driven by an increase in the number of subscription-based paying membership accounts. The number of quarterly average paying membership accounts on the Company's platforms, which include 58.com, Ganji.com and Anjuke.com, was approximately 2,485,000 during fiscal year 2017.

Online marketing services revenues were RMB5,978.5 million (US$915.0 million), an increase of 37.0% from RMB4,363.8 million during fiscal year 2016. The increase was primarily driven by the increasing adoption and effectiveness of the Company's various online marketing services such as real-time bidding, priority listing and various other online marketing services.

Cost of Revenues

Cost of revenues was RMB925.5 million (US$141.6 million), an increase of 30.9% from RMB707.2 million during fiscal year 2016. The year-over-year increase was primarily driven by increases in salaries and benefits for customer service staff, costs of used goods sold, and other types of website maintenance-related costs such as depreciation expenses.

Gross Profit and Gross Margin

Gross profit was RMB9,143.3 million (US$1,399.3 million), an increase of 32.8% from RMB6,884.9 million during fiscal year 2016.

Gross margin was 90.8%, compared with 90.7% during fiscal year 2016.

Operating Expenses

Operating expenses were RMB7,346.8 million (US$1,124.4 million), representing an increase of 10.5% from RMB6,651.2 million during fiscal year 2016.

Sales and marketing expenses in fiscal year 2017 were RMB5,212.4 million (US$797.7 million), an increase of 5.5% from RMB4,941.4 million during fiscal year 2016.

Within sales and marketing expenses, advertising expenses accounted for RMB2,087.1 million (US$319.4 million) and RMB2,040.0 million during fiscal year 2017 and 2016, respectively. The increase was primarily due to an increase in advertising expenses associated with the promotion of the 58.com and Zhuan Zhuan brands.

Other sales and marketing expenses in fiscal year 2017 were RMB3,125.3 million (US$478.3 million), an increase of 7.7% from RMB2,901.4 million during fiscal year 2016. Other sales and marketing expenses primarily include salaries, benefits and sales commissions as well as office overhead expenses associated with sales, customer service and marketing teams. The increase was primarily driven by increased commissions and share-based compensation expenses for the Company's sales, customer service and marketing teams.

Research and development expenses in fiscal year 2017 were RMB1,368.4 million (US$209.4 million), an increase of 23.5% from RMB1,107.9 million during fiscal year 2016. The increase was primarily due to increased salaries and benefits as well as share-based compensation expenses associated with the hiring of additional employees for research and development of new features and services.

General and administrative expenses in fiscal year 2017 were RMB766.0 million (US$117.2 million), an increase of 27.3% from RMB601.9 million during fiscal year 2016. The increase was primarily driven by an increase in salaries, share-based compensation expenses and other administrative related expenses.

Income from Operations

Income from operations was RMB1,796.5 million (US$274.9 million) in fiscal year 2017, compared with income from operations of RMB233.7 million during fiscal year 2016. Operating margin was 17.8% in fiscal year of 2017, compared with 3.1% during fiscal year 2016.

Non-GAAP income from operations was RMB2,359.2 million (US$361.1 million) in fiscal year 2017, compared with non-GAAP income from operations of RMB730.0 million during fiscal year 2016. Non-GAAP operating margin was 23.4% during fiscal year 2017, compared with 9.6% during fiscal year 2016.

Other Expenses

Other expenses in fiscal year 2017 were RMB260.5 million (US$39.9 million), compared with other expenses of RMB1,057.7 million during fiscal year 2016. Other expenses in fiscal year 2017 mainly included a RMB687.4 million share of results of equity investees, which primarily consisted of a RMB663.2 million share of the net loss attributable to 58 Home's ordinary shareholders calculated based on the Company's ordinary shareholding in 58 Home, which was partially offset by investment income of RMB342.2 million and government subsidies of RMB81.4 million.

Net Income/(Loss) Attributable to 58.com Inc.

Net income attributable to 58.com Inc. was RMB1,285.1 million (US$196.7 million) in fiscal year 2017, compared with net loss attributable to 58.com Inc. of RMB783.8 million during fiscal year 2016. Net margin was positive 12.8% in fiscal year of 2017, compared with negative 10.3% during fiscal year 2016.

Non-GAAP net income attributable to 58.com Inc. was RMB1,795.0 million (US$274.7 million) in fiscal year 2017, compared with non-GAAP net loss attributable to 58.com Inc. of RMB253.6 million during fiscal year 2016. Non-GAAP net margin was positive 17.9% in fiscal year 2017, compared with negative 3.4% during fiscal year 2016.

Basic and Diluted Earnings/(Loss) per ADS

Basic and diluted earnings per ADS attributable to ordinary shareholders in fiscal year 2017 were RMB8.82 (US$1.35) and RMB8.70 (US$1.33), compared with basic and diluted losses per ADS attributable to ordinary shareholders of RMB5.46, during fiscal year 2016.

Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders in fiscal year 2017 were RMB12.32 (US$1.89) and RMB12.16 (US$1.86), respectively, compared with non-GAAP basic and diluted losses per ADS attributable to ordinary shareholders of RMB1.77 during fiscal year 2016.

Cash Flow

Net cash provided by operating activities was RMB2,697.3 million (US$412.8 million) in fiscal year 2017, compared with net cash provided by operating activities of RMB1,887.8 million during fiscal year 2016.

Cash and Cash Equivalents and Short-term Investments

As of December 31, 2017, the Company had cash and cash equivalents and short-term investments of RMB4,962.7 million (US$759.5 million).

Shares Outstanding

As of December 31, 2017, the Company had a total of 293,965,131 ordinary shares (including           245,924,871 Class A and 48,040,260 Class B ordinary shares) issued and outstanding. One ADS represents two Class A ordinary shares.

Business Outlook

Based on the Company's current operations, total revenues for the first quarter of 2018 are expected to be between RMB2,290 million and RMB2,390 million. This represents a year-over-year increase of 15.2% to 20.2% in Renminbi amounts. These estimates reflect the Company's current and preliminary view, which is subject to change.

Non-GAAP Financial Measures           

To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this press release presents non-GAAP income/(loss) from operations, non-GAAP operating margin, non-GAAP net income/(loss) attributable to 58.com Inc., non-GAAP net margin and non-GAAP basic and diluted earnings/(loss) per share and per ADS by excluding share-based compensation expenses of the Company (net of the amount allocated to noncontrolling interests), amortization of intangible assets resulting from business acquisitions, share-based compensation expenses included in share of results of equity investees, loss on conversion of Guazi Convertible Note, gain on deconsolidation and disposal of business and income tax effects of GAAP to non-GAAP reconciling items. The Company believes these non-GAAP financial measures are important to help investors understand the Company's operating and financial performance, compare business trends among different reporting periods on a consistent basis and assess the Company's core operating results, as they exclude certain expenses that are not expected to result in cash payments.  The use of the above non-GAAP financial measures has certain limitations. Share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, non-cash gain or loss and income tax effects resulting from GAAP to non-GAAP reconciling items have been and will continue to be incurred in the future and are not reflected in the presentation of the non-GAAP financial measures, but should be considered in the overall evaluation of the Company's results. The Company compensates for these limitations by providing the relevant disclosure of its share-based compensation expenses of the Company (net of the amount allocated to noncontrolling interests), amortization of intangible assets resulting from business acquisitions, share-based compensation expenses included in share of results of equity investees, loss on conversion of Guazi Convertible Note, gain on deconsolidation and disposal of business and income tax effects of GAAP to non-GAAP reconciling items, all of which should be considered when evaluating the Company's performance. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure is set forth at the end of this release.

Conference Call

58.com's management will host an earnings conference call on Thursday, March 8, 2018 at 8:00 a.m. U.S. Eastern Time (9:00 p.m. Beijing / Hong Kong time on the same day).

Dial-in details for the earnings conference call are as follows:

International:

 +1-412-317-5225

U.S. Toll Free:

 +1-866-235-9918

Hong Kong:

 800-905945

Mainland China:

 4001-201203

Passcode:

 WUBA

Please dial in 15 minutes before the call is scheduled to begin and provide the passcode to join the call.

A telephone replay of the call will be available after the conclusion of the conference call through 8:00 a.m. U.S. Eastern Time, March 15, 2018. The dial-in details for the replay are as follows:

International:

+1-412-317-0088

U.S. Toll Free:

+1-877-344-7529

Passcode:

10117724

Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of 58.com's website at http://ir.58.com.  

About 58.com Inc.

58.com Inc. (NYSE: WUBA) operates China's largest online marketplace for classifieds, as measured by monthly unique visitors on both its www.58.com website and mobile applications. The Company's online marketplace enables local merchants and consumers to connect, share information and conduct business. 58.com's broad, in-depth and high quality local information, combined with its easy-to-use website and mobile applications, has made it a trusted marketplace for consumers. 58.com's strong brand recognition, large and growing user base, merchant network and massive database of local information create a powerful network effect. 

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995.  These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. 58.com may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about 58.com's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: 58.com's goals and strategies; its future business development, financial condition and results of operations; its ability to retain and grow its user base and network of local merchants for its online marketplace; the growth of, and trends in, the markets for its services in China; the demand for and market acceptance of its brand and services; competition in its industry in China; its ability to maintain the network infrastructure necessary to operate its website and mobile applications; relevant government policies and regulations relating to the corporate structure, business and industry; and its ability to protect its users' information and adequately address privacy concerns. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and 58.com does not undertake any obligation to update such information, except as required under applicable law.

For more information, please contact:

58.com Inc.
ir@58.com

Christensen

In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com

 

58.com Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data, unless otherwise noted)



As of


December 31,

2016


December 31,

2017


December 31,

2017


RMB


RMB


US$

ASSETS






Current assets:






Cash and cash equivalents

1,200,457


1,524,982


233,385

Restricted cash-current

1,151,940


93,350


14,286

Term deposits

26,361


_


_

Short-term investments

833,480


3,437,707


526,110

Accounts receivable, net

424,892


667,750


102,193

Prepayments and other current assets

426,056


657,272


100,590

Total current assets

4,063,186


6,381,061


976,564

Non-current assets:






Restricted cash-non-current

_


792,000


121,208

Property and equipment, net

1,480,921


1,351,681


206,863

Intangible assets, net

1,532,228


1,309,566


200,417

Land use rights, net

3,766


3,688


564

Goodwill

15,903,677


15,864,655


2,427,941

Long-term investments

2,118,461


1,808,601


276,790

Long-term prepayments and other non-current assets

223,767


755,260


115,586

Total non-current assets

21,262,820


21,885,451


3,349,369

Total assets

25,326,006


28,266,512


4,325,933

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY






Current liabilities:






Short-term loans

1,842,720


75,000


11,478

Accounts payable

611,947


624,300


95,543

Deferred revenues

1,845,846


2,123,755


325,021

Customer advances

1,236,076


1,365,437


208,968

Taxes payable

62,084


186,491


28,541

Salary and welfare payable

553,506


536,831


82,157

Accrued expenses and other current liabilities

727,904


689,134


105,466

Total current liabilities

6,880,083


5,600,948


857,174

Non-current liabilities:






Long-term loans

150,000


777,427


118,978

Deferred tax liabilities

373,810


319,219


48,854

Other non-current liabilities

69,937


17,376


2,659

Total non-current liabilities

593,747


1,114,022


170,491

Total liabilities

7,473,830


6,714,970


1,027,665

Mezzanine equity:






Mezzanine classified noncontrolling interests

86,457


1,736,405


265,741

Total mezzanine equity

86,457


1,736,405


265,741

Shareholders' equity:






58.com Inc. shareholders' equity:






Ordinary shares (US$0.00001 par value, 4,800,000,000 Class A and 200,000,000 Class B shares authorized, 240,930,737 Class A and 48,740,260 Class B shares issued and outstanding as of December 31, 2016 and 245,924,871 Class A and 48,040,260 Class B shares issued and outstanding as of December 31, 2017, respectively)

18


 

 

 

18


 

 

 

3

Additional paid-in capital

20,907,599


21,488,376


3,288,600

Accumulated deficit

(3,070,735)


(1,689,683)


(258,590)

Accumulated other comprehensive loss

(138,597)


(55,671)


(8,520)

Total 58.com Inc. shareholders' equity

17,698,285


19,743,040


3,021,493

Noncontrolling interests

67,434


72,097


11,034

Total shareholders' equity

17,765,719


19,815,137


3,032,527

Total liabilities, mezzanine equity and shareholders' equity

25,326,006


28,266,512


4,325,933


 

 

 

58.com Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share, per share and per ADS data, unless otherwise noted)



For the Three Months Ended


For the Fiscal Year Ended


December 31,


December 31,


December 31,


December 31,


December 31,


December 31,


2016


2017


2017

2016


2017


2017



RMB


RMB


US$


RMB


RMB


US$

Revenues:













Membership

812,021


1,038,812


158,981


2,951,135


3,789,524


579,952


Online marketing services

1,189,380


1,644,486


251,674


4,363,777


5,978,491


914,954


E-commerce services

44,520


17,450


2,671


166,753


73,941


11,316


Other services

48,852


63,934


9,785


110,462


226,824


34,713

Total revenues

2,094,773


2,764,682


423,111


7,592,127


10,068,780


1,540,935

Cost of revenues(1)

(212,238)


(262,853)


(40,227)


(707,237)


(925,497)


(141,639)

Gross profit

1,882,535


2,501,829


382,884


6,884,890


9,143,283


1,399,296

Operating expenses(1):













Sales and marketing expenses

(1,224,702)


(1,338,587)


(204,859)


(4,941,380)


(5,212,360)


(797,704)


Research and development expenses

(313,389)


(357,898)


(54,773)


(1,107,897)


(1,368,441)


(209,427)


General and administrative expenses

(150,915)


(191,631)


(29,327)


(601,906)


(766,017)


(117,232)

Total operating expenses

(1,689,006)


(1,888,116)


(288,959)


(6,651,183)


(7,346,818)


(1,124,363)

Income from operations

193,529


613,713


93,925


233,707


1,796,465


274,933

Other income/(expenses):













Interest income/(expenses), net

(9,401)


7,515


1,150


(48,640)


(1,623)


(248)


Investment income/(loss), net

(131,994)


27,538


4,214


(145,411)


342,241


52,377


Share of results of equity investees

(225,178)


(198,333)


(30,353)


(926,740)


(687,400)


(105,200)


Gain on deconsolidation and disposal of businesses

_


_


_


79,581


_


_


Foreign currency exchange gain/(loss), net

229


296


45


(3,727)


793


121


Others, net

849


39,157


5,993


(12,713)


85,455


13,078

Income/(loss) before tax

(171,966)


489,886


74,974


(823,943)


1,535,931


235,061


Income tax benefits/(expenses)

37,639


(42,144)


(6,450)


50,980


(146,689)


(22,449)

Net income/(loss)

(134,327)


447,742


68,524


(772,963)


1,389,242


212,612


Add: Net loss/(income) attributable to noncontrolling interests

958


(763)


(117)


4,916


(4,667)


(714)


 Less: Deemed dividend to mezzanine classified noncontrolling interests

(4,604)


(32,922)


(5,038)


(15,717)


(99,507)


(15,228)

Net income/(loss) attributable to 58.com Inc.

(137,973)


414,057


63,369


(783,764)


1,285,068


196,670

Net earnings/(loss) per ordinary share attributable to ordinary shareholders ‑ basic

(0.48)


1.41


0.22


(2.73)


4.41


0.67

Net earnings/(loss) per ordinary share attributable to ordinary shareholders ‑ diluted

(0.48)


1.39


0.21


(2.73)


4.35


0.67

Net earnings/(loss) per ADS attributable to ordinary shareholders – basic (1 ADS represents 2 Class A ordinary shares)

(0.95)


2.82


0.43


(5.46)


8.82


1.35

Net earnings/(loss) per ADS attributable to ordinary shareholders – diluted (1 ADS represents 2 Class A ordinary shares)

(0.95)


2.78


0.43


(5.46)


8.70


1.33

Weighted average number of ordinary shares used in computing basic earnings/(loss) per share

289,523,186


293,323,477


293,323,477


286,975,068


291,475,725


291,475,725

Weighted average number of ordinary shares used in computing diluted earnings/(loss) per share

289,523,186


297,680,844


297,680,844


286,975,068


295,304,995


295,304,995













Note:

























Share‑based compensation expenses were allocated in cost of revenues and operating expenses as follows:














Cost of revenues

387


1,139


174


490


3,278


502

Sales and marketing expenses

17,773


17,940


2,746


59,017


69,926


10,702

Research and development expenses

29,439


34,856


5,334


98,515


126,116


19,301

General and administrative expenses

19,152


44,808


6,857


108,553


151,249


23,147

 

 

58.com Inc.

Reconciliation of GAAP and Non-GAAP Results

(in thousands, except share, ADS, per share and per ADS data, unless otherwise noted)



For the Three Months Ended


For the Fiscal Year Ended


December 31,


December 31,


December 31,


December 31,


December 31,


December 31,


2016


2017


2017


2016


2017


2017


RMB


RMB


US$


RMB


RMB


US$

GAAP income from operations

193,529


613,713


93,925


233,707


1,796,465


274,933


Share-based compensation expenses[5]

66,751


93,463


14,303


266,575


339,837


52,010


Amortization of intangible assets resulting from business acquisitions

57,432


55,348


8,471


229,728


222,865


34,107

Non-GAAP income from operations

317,712


762,524


116,699


730,010


2,359,167


361,050













GAAP net income/(loss) attributable to 58.com Inc. 

(137,973)


414,057


63,369


(783,764)


1,285,068


196,670


Share-based compensation expenses

66,751


93,463


14,303


266,575


339,837


52,010


Share-based compensation attributable to noncontrolling interests

_


_


_


(151)


_


_


Amortization of intangible assets resulting from business acquisitions

57,432


55,348


8,471


229,728


222,865


34,107


Share-based compensation expenses included in share of results of equity investees

5,455


(292)


(45)


78,826


2,094


320


Loss on conversion of Guazi Convertible Note

_


_


_


84,177


_


_


Gain on deconsolidation and disposal of business

_


_


_


(79,581)


_


_


Income tax effects of GAAP to non-GAAP reconciling items[6]

(14,358)


(13,555)


(2,074)


(49,444)


(54,872)


(8,398)

Non-GAAP net income/(loss) attributable to 58.com Inc.

(22,693)


549,021


84,024


(253,634)


1,794,992


274,709













GAAP operating margin

9.2%


22.2%


22.2%


3.1%


17.8%


17.8%


Share-based compensation expenses

3.2%


3.4%


3.4%


3.5%


3.4%


3.4%


Amortization of intangible assets resulting from business acquisitions

2.7%


2.0%


2.0%


3.0%


2.2%


2.2%

Non-GAAP operating margin

15.1%


27.6%


27.6%


9.6%


23.4%


23.4%













GAAP net margin

(6.6)%


15.0%


15.0%


(10.3)%


12.8%


12.8%


Share-based compensation expenses

3.2%


3.4%


3.4%


3.5%


3.4%


3.4%


Share-based compensation attributable to noncontrolling interests

_


_


_


0.0%


_


_


Amortization of intangible assets resulting from business acquisitions

2.7%


2.0%


2.0%


3.0%


2.2%


2.2%


Share-based compensation expenses included in share of results of equity investees

0.3%


0.0%


0.0%


1.0%


0.0%


0.0%


Loss on conversion of Guazi Convertible Note

_


_


_


1.1%


_


_


Gain on deconsolidation and disposal of business

_


_


_


(1.0)%


_


_


Income tax effects of GAAP to non-GAAP reconciling items

(0.7)%


(0.5)%


(0.5)%


(0.7)%


(0.5)%


(0.5)%

Non-GAAP net margin

(1.1)%


19.9%


19.9%


(3.4)%


17.9%


17.9%















Weighted average number of ordinary shares used in computing non-GAAP basic earnings/(loss) per share.. 

289,523,186


293,323,477


293,323,477


286,975,068


291,475,725


291,475,725


Weighted average number of ordinary shares used in computing non-GAAP diluted earnings/(loss) per share

289,523,186


297,680,844


297,680,844


286,975,068


295,304,995


295,304,995


Weighted average number of ADS used in computing non-GAAP basic earnings/(loss) per ADS

144,761,593


146,661,739


146,661,739


143,487,534


145,737,863


145,737,863


Weighted average number of ADS used in computing non-GAAP diluted earnings/(loss) per ADS

144,761,593


148,840,422


148,840,422


143,487,534


147,652,498


147,652,498















Non-GAAP net earnings/(loss) per ordinary share attributable to ordinary shareholders ‑ basic

(0.08)


1.87


0.29


(0.88)


6.16


0.94


Non-GAAP net earnings /(loss) per ordinary share attributable to ordinary shareholders ‑ diluted

(0.08)


1.84


0.28


(0.88)


6.08


0.93


Non-GAAP net earnings /(loss) per ADS attributable to ordinary shareholders ‑ basic

(0.16)


3.74


0.57


(1.77)


12.32


1.89


Non-GAAP net earnings /(loss) per ADS attributable to ordinary shareholders ‑ diluted

(0.16)


3.69


0.56


(1.77)


12.16


1.86

 

 



[1] This press release contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) solely for the convenience of the reader. Unless otherwise specified, all translations of Renminbi amounts into U.S. dollars amounts in this press release are made at RMB6.5342 to US$1.00, which was the U.S. dollars middle rate announced by the State Administration of Foreign Exchange of the People's Republic of China (PRC) on December 29, 2017. On March 6, 2018, such exchange rate was RMB6.3386 to US$1.00. The percentages stated in this press release are calculated based on the Renminbi amounts.

[2] Non-GAAP income/(loss) from operations is defined as income/(loss) from operations excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisitions. See "Reconciliation of GAAP and Non-GAAP Results" at the end of this press release.

[3] Non-GAAP net income/(loss) attributable to 58.com Inc. is defined as net income/(loss) attributable to 58.com Inc. excluding share-based compensation expenses of the Company (net of the amount allocated to noncontrolling interests), amortization of intangible assets resulting from business acquisitions, share-based compensation expenses included in share of results of equity investees,  loss on conversion of Guazi Convertible Note, gain on deconsolidation and disposal of business and income tax effects of GAAP to non-GAAP reconciling items. See "Reconciliation of GAAP and Non-GAAP Results" at the end of this press release.

[4] Non-GAAP basic and diluted earnings/(loss) per ADS is defined as non-GAAP net income/(loss) attributable to 58.com Inc. divided by weighted average number of basic and diluted ADS.

[5] In 2017, certain share-based awards with redemption features granted to our employees were expected to be settled in cash and were classified as liabilities. The share-based compensation expenses recognized for this type of awards amounted to RMB5.3 million in the fourth quarter of 2017 and RMB10.7 million in fiscal year 2017 were excluded from the GAAP to non-GAAP reconciliation accordingly.

[6] This is to exclude the income tax benefits related to amortization of intangible assets resulting from business acquisitions calculated at PRC statutory income tax rate of 25% and income tax expense related to dispose of business. Other GAAP to non-GAAP reconciling items have no income tax effect.

SOURCE 58.com


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