Zhaopin Limited Reports First Quarter of Fiscal Year 2017 Financial Results
BEIJING, Nov 24, 2016 /PRNewswire/ -- Zhaopin Limited (NYSE: ZPIN) ("Zhaopin" or the "Company"), a leading career platformin China focused on connecting users with relevant job opportunities through their career lifecycle, today announced its unaudited financial results for the first quarter of fiscal year 2017 ended September 30, 2016.
Throughout the release, oneAmerican depositary share ("ADS")represents two Class A ordinary shares. Fiscal year refers to the 12 monthsendedJune 30.
FirstQuarter of Fiscal Year 2017Financial Highlights
Percentage growth metrics refer to the firstquarter of fiscal year 2017("Q1 FY17") compared to the firstquarter of fiscal year 2016("Q1 FY16")
"I am pleased to announce that Zhaopin delivered another strong quarter of growth in its financial and operating results. These results are ongoing validation of Zhaopin's strategy and operational capabilities. Key highlights include total revenue increasing by 21.9% year over year ("yoy") as online recruitment services revenue increased by 21.6%, number of unique customersgrew by 21.8% yoy, to 391,782 unique customers. Online revenue growth was due to a strong performance by our sales force and our strategic focus on lower-tier cities and small and medium-sized enterprises ("SME") employers. Non-GAAP net income wasRMB83.3 million, an increase of 10.1% from the previous year as we continued to re-invest in product innovation, and geographic and market segment expansion." commented Mr.Evan Guo, Chief Executive Officer and Director of Zhaopin.
"Zhaopin has exciting and large growth prospects across a jobseeker's career lifecycle. Sustained re-investment is critical to our ability to deliver more value to candidates and employers which will lead to further differentiation versus our competitors. We have been pleased with Zhaopin's results from its current re-investment phase. I expect that Zhaopin will continue to prudently re-invest to strengthen sales and marketing and product innovation to expand geographically and further improve our recruiting results. As the largest and leading career development platform inChina, we will also leverage our scalable platform to penetrate deeper into the human resources value chain to grasp new business opportunities," concluded Mr.Evan Guo.
Zhaopin's website is the most popular career platform in China as measured by average daily unique visitors in each of the 12 months ended September 30, 2016, the number of registered users as of September 30, 2016 and the number of unique customers for the three months ended September 30, 2016.
Non-GAAP results exclude share-based compensation. Explanation of the Company's non-GAAP financial measures and related reconciliations to GAAP financial measures are included in the accompanying "Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results".
A "unique customer" refers to a customer that purchases the Company's online recruitment services during a specified period. Zhaopin makes adjustments for multiple purchases by the same customer to avoid double counting. Each customer is assigned a unique identification number in the Company's information management system. Affiliates and branches of a given customer may, under certain circumstances, be counted as separate unique customers.
FirstQuarter ofFiscal Year2017Unaudited Financial Results
Total revenuewasRMB426.2 million(US$63.9 million) in Q1 FY17, representing an increase of 21.9% fromRMB349.5 millionin Q1 FY16.
Online recruitment services revenuefor Q1 FY17 wasRMB380.3 million(US$57.0 million), representing a 21.6% increase fromRMB312.7 millionfor Q1 FY16. The increase was primarily driven by the growth in the number of unique customers using the Company's online recruitment services. The Company served 391,782 unique customers during Q1 FY17, representing a 21.8% increase compared with 321,654 unique customers served during Q1 FY16. We believe our strategic focus on continued geographic expansion and improvement in customer services contributed to the growth in the number of unique customers. Average revenue per unique customer ("ARPU") decreased slightly by 0.1% during Q1 FY17 compared with Q1 FY16. The slight decrease in ARPU was primarily due to the addition of new customers, who generally purchased introductory and lower-priced services initially. The decline in ARPU from new customers was, however, largely offset by the introduction of new products, and cross-selling and up-selling of value-added services to existing customers. Zhaopin's ARPU may vary quarter to quarter depending on new customer acquisition and new products and services launched.
Other services revenuefor Q1 FY17 wasRMB45.8 million(US$6.9 million), representing an increase of 24.6% fromRMB36.8 millionduring Q1 FY16. The increase was primarily due to campus recruitment services, assessment services and other human resource related services which delivered strong growth despite strong competition.
Other services revenue refers to revenue from campus recruitment services, assessment services, and other human resource related services. These services complement the Company's core online employment services by catering to the different needs in a job seeker's career life cycle, from college to graduation, first- time job seeking and through changing jobs. Strategically, these services play an important role in establishing and deepening Zhaopin's relationship with job seekers and employers.
Gross Profit and Gross Margin
Gross profitfor Q1 FY17 wasRMB384.9 million(US$57.7 million), representing an increase of 19.4% fromRMB322.3 millionfor Q1 FY16.
Gross marginfor Q1 FY17, as measured by gross profit as a percentage of net revenue, was 91.2%, compared to 93.5% for Q1 FY16. The slight decrease in gross margin was mainly due to lower gross margin of other services.
Operating expensesfor Q1 FY17 wasRMB300.4 million(US$45.1 million), representing an increase of 22.2% fromRMB245.8 millionfor Q1 FY16.
Income from Operations
Income from operationsfor Q1 FY17 wasRMB84.5 million(US$12.7 million), representing a 10.4% increase fromRMB76.5 millionfor Q1 FY16. Operating margin, as measured by income from operations as a percentage of net revenue, was 20.0% in Q1 FY17, compared with 22.2% in Q1 FY16. In Q1 FY17, the Company recognized total share-based compensation expenses ofRMB2.2 million(US$0.3 million), compared withRMB5.0 millionin Q1 FY16. Excluding share-based compensation expenses, non-GAAP income from operations for Q1 FY17 wasRMB86.7 million(US$13.0 million), as compared withRMB81.5 millionduring Q1 FY16. Excluding share-based compensation expenses, operating margin would be 20.5% in Q1 FY17, compared with 23.6% in Q1 FY16.
Investment and Interest Income, net
Net investment and interest income for Q1 FY17 wasRMB9.4 million(US$1.4 million), representing a 34.7% increase fromRMB7.0 millionfor Q1 FY16. The growth in net investment and interest income resulted from increased interest and investment income from larger bank deposits generated from business operations and investments in time deposits and principal-protected wealth management products as well as lower interest expenses due to the repayment of bank loans.
Other Income, net
Net other income for Q1 FY17 wasRMB4.3 million(US$0.6 million), representing a 22.4% increase compared withRMB3.5 millionfor Q1 FY16. Other income for Q1 FY17 included aRMB4.5 million(US$0.7 million) government subsidy, compared withRMB3.5 millionfor Q1 FY16.
Net incomefor Q1 FY17 wasRMB81.1 million(US$12.2 million), representing a 14.7% increase compared withRMB70.7 millionfor Q1 FY16. The Company's effective tax rate decreased from 18.7% for Q1 FY16 to 17.4% for Q1 FY17, primarily due to the increase in tax deductions relating to research and development expenditures.
Non-GAAPnet incomefor Q1 FY17 wasRMB83.3 million(US$12.5 million), representing an increase of 10.1% fromRMB75.7 millionin Q1 FY16.
Basic and DilutedNet Incomeper ADS
Basic and dilutednet incomeper ADSfor Q1 FY17 wereRMB1.46(US$0.22)andRMB1.42(US$0.22), respectively, compared with basic and diluted net income per ADS ofRMB1.30andRMB1.24, respectively, for Q1 FY16.
Non-GAAP basic and dilutednet incomeper ADSfor Q1 FY17 wereRMB1.50(US$0.22)andRMB1.46(US$0.22), respectively, compared with non-GAAP basic and diluted net income per ADS ofRMB1.40andRMB1.32, respectively, for Q1 FY16.
CashandCash Equivalents,Restricted Cash andTimeDeposits
As ofSeptember 30, 2016, the Company had cash and cash equivalents, restricted cash and time deposits ofRMB2,348.7 million(US$352.2 million), representing a 2.6% increase fromRMB2,289.2 millionas ofJune 30, 2016. The increase in the Company's cash and cash equivalents, restricted cash and time deposits was mainly attributable to strong net cash flows generated from operating activities and issuance of ordinary shares upon exercise of employees' stock options.
Net cash flow generated from operating activities in Q1 FY17 amounted toRMB61.8 million(US$9.3 million), representing an increase of 35.8% fromRMB45.5 millionin Q1 FY16. Operating cash flow increased primarily due to increased cash collection driven by revenue growth.
Status of Preliminary Non-Binding Proposal
OnJanuary 19, 2016, the Company announced that its board of directors (the "Board") had received a preliminary non-binding proposal letter, datedJanuary 19, 2016, from CDH V Management Company Limited and Shanghai Goliath Investment Management L.P. , proposing to acquire all outstanding ordinary shares in Zhaopin not owned by Zhaopin's controlling shareholder, SEEK International Investments Pty Ltd, forUS$17.50in cash per ADS, orUS$8.75per ordinary share of the Company, in a going-private transaction.
OnFebruary 1, 2016, the Board formed a special committee (the "Special Committee") consisting of two independent and disinterested directors, Mr. Alex Chit Ho and Mr.Peter Andrew Schloss, to consider theJanuary 19going-private proposal.
OnMarch 2, 2016, the Company announced that the Special Committee had retained Duff & Phelps, LLC as its independent financial advisor and Fenwick & West LLP as its U.S. legal counsel to assist it in this process.
OnMay 5, 2016, the Company announced that the Board had received a preliminary non-binding proposal letter, datedMay 5, 2016, from Mr.Evan Sheng Guo, director and chief executive officer of the Company, Mr.Ge Wang, vice president of the Company, Mr.Weigang Wang, vice president of the Company, Mr.Luyang Tang, vice president of the Company, Mr. Tianruo Pu, chief financial officer of the Company, and Sequoia China Investment Management LLP (together, the "Management Buyer Group"), proposing to acquire all outstanding ordinary shares in Zhaopin not owned by the Management Buyer Group forUS$17.75in cash per ADS, orUS$8.875per ordinary share of the Company, in a going-private transaction. The Special Committee will also consider this going-private proposal in due course.
Due to the potential pending transaction, Zhaopin will not be providing an outlook statement.
This announcement contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the exchange rate of RMB6.6685 toUS$1.00, as set forth in the H.10 statistical release of the Federal Reserve Board onSeptember 30, 2016.
Use of Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (GAAP), Zhaopin uses non-GAAP measures of adjusted income from operations, adjusted net income, adjusted net income per share and adjusted net income per ADS, which are adjusted from results based on GAAP to exclude share-based compensation expenses. The Company believes that excluding share-based compensation expenses from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expenses are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. Zhaopin also believes these non-GAAP measures excluding share-based compensation expenses, are important in helping investors to understand the Company's current financial performance and future prospects and to compare business trends among different reporting periods on a consistent basis. The presentation of these additional measures should not be considered a substitute for or superior to GAAP results or as being comparable to results reported or forecasted by other companies. The non-GAAP measures have been reconciled to GAAP measures in the attached financial statements.
Zhaopin's management will host an earnings conference call onWednesday, Nov 23, 2016at8:00 p.m.U.S. Eastern Time (9:00 a.m.Beijing/ Hong Kong Time onNov 24, 2016).
Dial-in details for the earnings conference call are as follows:
U.S. Toll Free:
Hong Kong Toll Free:
Mainland China Toll Free:
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 through8:00 p.m.U.S. Eastern Time,Nov 30, 2016. The dial-in details for the replay are as follows:
U.S. Toll Free:
Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of Zhaopin's website athttp://www.zhaopin.com.
About Zhaopin Limited
Zhaopin is a leading career platform inChina, focusing on connecting users with relevant job opportunities throughout their career lifecycle. The Company's zhaopin.com website is the most popular career platform inChinaas measured by average daily unique visitors in each of the 12 months endedSeptember 30, 2016, number of registered users as ofSeptember 30, 2016and number of unique customers for the three months endedSeptember 30, 2016. The Company's over 125.2 million registered users include diverse and educated job seekers who are at various stages of their careers and are in demand by employers as a result of the general shortage of skilled and educated workers inChina. In the fiscal year endedJune 30, 2016, approximately 36.9 million job postingswere placed on Zhaopin's platform by 509,813 unique customers including multinational corporations, small and medium-sized enterprises and state-owned entities. The quality and quantity of Zhaopin's users and the resumes in the Company's database attract an increasing number of customers. This in turn leads to more users turning to Zhaopin as their primary recruitment and career- related services provider, creating strong network effects and significant entry barriers for potential competitors. For more information, please visithttp://www.zhaopin.com.
Zhaopin calculates the number of job postings by counting the number of newly placed job postings during each respective period. Job postings that were placed prior to a specified period - even if available during such period - are not counted as job postings for such period. Any particular job posting placed on the Company's website may include more than one job opening or position.
Safe Harbor Statements
This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and 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. Zhaopin 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 Zhaopin'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: Zhaopin's goals and strategies; its future business development, financial condition and results of operations; its ability to retain and grow its user and customer base for its online career platform; the growth of, and trends in, the markets for its services inChina; the demand for and market acceptance of its brand and services; competition in its industry inChina; 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 Zhaopin does not undertake any obligation to update such information, except as required under applicable law.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands, except for number of shares and ADS and per
share and per ADS data)
For the Three Months Ended
September 30, 2015
September 30, 2016
September 30, 2016
Online recruitment services
Other services revenue
Less: Business tax and surcharges
Cost of services
Sales and marketing expenses
General and administrative expenses
Total operating expenses
Income from operations
Foreign currency exchange gain
Investment and interest income, net
Other income, net
Income before income tax expenses
Income tax expenses
Less: Net (income)/ loss attributable to the non-controlling interest
Net income attributable to Zhaopin Limited's shareholders
Net income per share:
Net income per ADS:
Weighted average number of shares used in computing net income per
Foreign currency translation adjustment, net of tax
Total comprehensive income
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except for number of shares)
As of June 30
As of September 30
Cash and cash equivalents
Time deposits and restricted time deposits
Accounts receivable, net
Amounts due from a related party
Prepayments and other current assets
Deferred tax assets
Total current assets
Restricted time deposits
Property and equipment, net
Intangible assets, net
Other non-current assets
Total non-current assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term bank loans
Salaries and welfare payable
Accrued expenses and other current liabilities
Total current liabilities