Close

Form 6-K 58.com Inc. For: Aug 22

August 22, 2019 6:20 AM EDT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2019

--------------

 

Commission File Number: 001-36140

--------------

 

58.com Inc.

 

Building 105, 10 Jiuxianqiao North Road Jia

Chaoyang District, Beijing 100015

The People’s Republic of China

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x Form 40-F ¨

 

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  58.com Inc.
   
       
  By       : /s/ Hao Zhou
  Name  : Hao Zhou
  Title : Chief Financial Officer

 

Date: August 22, 2019

 

 

 

 

Exhibit Index

 

Exhibit 99.1 – Press Release

 

 

 

Exhibit 99.1

 

58.com Reports Second Quarter 2019 Unaudited Financial Results

 

BEIJING, August 21, 2019 /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 second quarter ended June 30, 2019.

 

Second Quarter 2019 Highlights

 

·Total revenues were RMB4,134.7 million (US$601.4 million1), a 20.5% increase from RMB3,430.5 million in the same quarter of 2018, exceeding the high end of the Company’s guidance of RMB4,100 million.

 

·Total number of paying business users2 was approximately 3.6 million in the second quarter of 2019, a 2.2% increase from the same quarter of 2018.

 

·Gross margin was 89.5% compared with 90.0% in the same quarter of 2018.

 

·Income from operations was RMB967.8 million (US$140.8 million), a 30.3% increase from RMB742.9 million in the same quarter of 2018.

 

·Non-GAAP income from operations3 was RMB1,145.6 million (US$166.6 million), a 28.9% increase from RMB888.7 million in the same quarter of 2018.

 

·The Company sold a portion of its equity interest in Che Hao Duo group (“Che Hao Duo”, formerly known as Guazi) and recorded RMB642.2 million in realized gains and RMB3.4 billion in unrealized gains on the change in fair value of the remainder of its stake.

 

·Net income attributable to 58.com Inc. ordinary shareholders was RMB4,178.7 million (US$607.8 million), a 509.7% increase from RMB685.3 million in the same quarter of 2018.

 

·Non-GAAP net income attributable to 58.com Inc. ordinary shareholders4 was RMB1,646.4 million (US$239.5 million), a 101.4% increase from RMB817.5 million in the same quarter of 2018.

 

·Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB28.12 (US$4.09) and RMB27.77 (US$4.04), respectively, representing 504.7% and 507.5% increases from RMB4.65 and RMB4.57, respectively, in the same quarter of 2018. One ADS represents two Class A ordinary shares.

 

·Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders5 were RMB11.08 (US$1.61) and RMB10.94 (US$1.59), respectively, representing 99.7% and 100.6% increases from RMB5.55 and RMB5.45, respectively, in the same quarter of 2018.

 

 

1 This press release contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) solely for the convenience of the readers. Unless otherwise specified, all translations of Renminbi amounts into US$ amounts in this press release are made at RMB6.8747 to US$1.00, which was the U.S. dollars middle rate announced by the PRC State Administration of Foreign Exchange on June 28, 2019. The percentages stated in this press release are calculated based on the Renminbi amounts. On August 21, 2019, such exchange rate was RMB7.0433 to US$1.00.

 

2 Paying business users refer to users who are identified as business users with unique identity information such as business licenses or personal identification information and who used the Company’s subscription-based membership services or purchased at least one type of online marketing services in a given period. One paying business user can open up several paying user accounts on one or multiple online platforms. The number and the percentage calculation does not include paying business users on Ganji as the Company stopped selling stand-alone Ganji subscription-based membership services in 2018 or earlier in all of its content categories.

 

3 Non-GAAP income from operations is defined as income 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.

 

4 Non-GAAP net income attributable to 58.com Inc. ordinary shareholders is defined as net income attributable to 58.com Inc. ordinary shareholders excluding share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, change in fair value of long-term investments, share-based compensation expenses included in share of results of equity investees, 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.

 

5 Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders is defined as non-GAAP net income attributable to 58.com Inc. ordinary shareholders divided by weighted average number of basic and diluted ADSs.

 

-1-

 

 

First Half 2019 Financial Highlights

 

·Total revenues were RMB7,163.0 million (US$1,041.9 million), a 21.4% increase from RMB5,901.7 million in the same period of last year.

 

·Gross margin was 89.8% in the first half of 2019 and 2018.

 

·Income from operations was RMB1,249.1 million (US$181.7 million), a 23.7% increase from RMB1,009.7 million during the same period of last year.

 

·Non-GAAP income from operations was RMB1,610.8 million (US$234.3 million), a 23.9% increase from RMB1,300.2 million during the same period of last year.

 

·Net income attributable to 58.com Inc. ordinary shareholders was RMB4,876.9 million (US$709.4 million), a 467.1% increase from RMB859.9 million during the same period of last year.

 

·Non-GAAP net income attributable to 58.com Inc. ordinary shareholders was RMB2,082.3 million (US$302.9 million), an 85.4% increase from RMB1,123.3 million during the same period of last year.

 

·Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB32.84 (US$4.78) and RMB32.43 (US$4.72), respectively, representing 461.9% and 463.7% increases from RMB5.85 and RMB5.75, respectively, in the same period of 2018.

 

·Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders were RMB14.02 (US$2.04) and RMB13.85 (US$2.01), respectively, representing 83.7% and 84.3% increases from RMB7.64 and RMB7.51, respectively, in the same period of 2018.

 

Management Comments

 

“I’m pleased to report a second quarter of solid financial and operational results for 2019, in which total revenues increased 20.5% year-over-year and exceeded the high-end of our guidance,” commented Mr. Michael Yao, Chairman and Chief Executive Officer of 58.com. “On a non-GAAP basis, operating income and net income attributable to 58.com Inc. ordinary shareholders grew 28.9% and 101.4% year-over-year, respectively.”

 

-2-

 

 

Mr. Yao continued, “While a softening economy and uncertain macro-economic environment impacted some of our content categories such as jobs, we remain optimistic about the enormous market opportunity and the future growth potential for our platform. The rapid growth of traffic and revenues from lower-tier cities and towns speaks to the size of the market, and the improvement in user engagement across all content categories reflects the strength of our technology and ability to innovate. Our online platforms for housing and jobs continue to lead the market as we invest further in areas that will strengthen our leadership position and generate long-term value for our shareholders.”

 

Second Quarter 2019 Financial Results

 

Revenues

 

Total revenues were RMB4,134.7 million (US$601.4 million), representing an increase of 20.5% from RMB3,430.5 million in the same quarter of 2018.

 

Membership revenues were RMB1,183.8 million (US$172.2 million), an increase of 1.5% from RMB1,166.9 million in the same quarter of 2018.

 

Online marketing services revenues were RMB2,706.3 million (US$393.7 million), an increase of 23.8% from RMB2,186.7 million in the same quarter of 2018.

 

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 listings and various other online marketing services.

 

Cost of Revenues

 

Cost of revenues was RMB434.5 million (US$63.2 million), an increase of 27.2% from RMB341.5 million in the same quarter of 2018. The year-over-year increase was primarily driven by increases in the costs of goods sold on Zhuan Zhuan, services provided on other platforms, expenses associated with the operations of all the Company’s platforms, and salaries and benefits relating to web operation and information quality control teams.

 

Gross Profit and Gross Margin

 

Gross profit was RMB3,700.3 million (US$538.2 million), an increase of 19.8% from RMB3,089.0 million during the same quarter of 2018.

 

Gross margin was 89.5%, compared with 90.0% during the same quarter of 2018.

 

Operating Expenses

 

Operating expenses were RMB2,732.5 million (US$397.5 million), an increase of 16.5% from RMB2,346.1 million in the same quarter of 2018.

 

Sales and marketing expenses in the second quarter of 2019 were RMB2,056.1 million (US$299.1 million), an increase of 15.3% from RMB1,782.6 million in the same quarter in 2018.

 

-3-

 

 

Within sales and marketing expenses, advertising expenses in the second quarter of 2019 were RMB979.0 million (US$142.4 million), an increase of 14.8% from RMB852.8 million in the same quarter of 2018.

 

The increase was primarily due to an increase in mobile traffic acquisition expenses, particularly for mobile applications such as 58.com and Anjuke, which are part of the Company’s core business.

 

Non-advertising sales and marketing expenses in the second quarter of 2019 were RMB1,077.1 million (US$156.7 million), an increase of 15.8% from RMB929.8 million in the same quarter in 2018.

 

Non-advertising sales and marketing expenses include salaries and benefits, commissions and share-based compensation expenses for the Company’s sales, sales support, customer service, marketing dealer management personnel, online and offline promotional expenses, and other operating expenses that are associated with sales and marketing activities.

 

The increase in non-advertising sales and marketing expenses was mainly related to an increase in commissions and salaries of field sales teams and customer service personnel and marketing and promotional expenses for 58.com and newer platforms such as 58 Town and Zhuan Zhuan.

 

Research and development expenses in the second quarter of 2019 were RMB482.0 million (US$70.1 million), an increase of 22.3% from RMB394.0 million in the same quarter of 2018. The increase was primarily due to increases in salaries and benefits and share-based compensation expenses for the Company’s research and development personnel for the development of new features and services.

 

General and administrative expenses in the second quarter of 2019 were RMB194.4 million (US$28.3 million), an increase of 14.7% from RMB169.4 million in the same quarter of 2018. The increase was primarily driven by increases in salaries and benefits and share-based compensation expenses for administrative personnel.

 

Income from Operations

 

Income from operations was RMB967.8 million (US$140.8 million) in the second quarter of 2019, an increase of 30.3% from RMB742.9 million in the same quarter of 2018.

 

Operating margin, defined as income from operations divided by total revenues, was 23.4% in the second quarter of 2019, compared with 21.7% in the same quarter of 2018.

 

Non-GAAP income from operations was RMB1,145.6 million (US$166.6 million) in the second quarter of 2019, an increase of 28.9% from RMB888.7 million in the same quarter of 2018.

 

Non-GAAP operating margin, defined as non-GAAP income from operations divided by total revenues, was 27.7% in the second quarter of 2019, compared with 26.0% in the same quarter of 2018.

 

-4-

 

 

Other Income/(Expenses)

 

Net other income in the second quarter of 2019 was RMB3.7 billion (US$538.9 million), compared with net other income of RMB94.1 million in the same quarter of 2018.

 

Net other income in the second quarter of 2019 mainly consisted of RMB3.7 billion in net investment income. Within net investment income was RMB3.4 billion in unrealized gains on the change in fair value of long-term investments in Che Hao Duo, which is accounted for using measurement alternative method, as a result of the occurrence of an observable price change event related to the Company’s sale of a certain equity stake in Che Hao Duo, RMB642.2 million in realized gains generated from the sale of a certain equity stake in Che Hao Duo, RMB56.5 million in income from short-term commercial bank investment products the Company purchased with its surplus cash, and a fair value gain of RMB41.3 million due to the revaluation of certain convertible notes the Company invested in the second quarter of 2019, which were partially offset by a fair value loss of RMB492.9 million primarily as a result of a decline in the share price of 5I5J Holding Group Co., Ltd., a publicly traded company in which the Company invested in the third quarter of 2018 and holds a minority stake.

 

Net Income Attributable to 58.com Inc. Ordinary Shareholders

 

Net income attributable to 58.com Inc. ordinary shareholders was RMB4,178.7 million (US$607.8 million) in the second quarter of 2019, an increase of 509.7% from RMB685.3 million in the same quarter of 2018.

 

Net margin, defined as net income attributable to 58.com Inc. ordinary shareholders divided by total revenues, was 101.1% in the second quarter of 2019, compared with 20.0% in the same quarter of 2018.

 

Non-GAAP net income attributable to 58.com Inc. ordinary shareholders was RMB1,646.4 million (US$239.5 million) in the second quarter of 2019, an increase of 101.4% from RMB817.5 million in the same quarter of 2018.

 

Non-GAAP net margin, defined as non-GAAP net income attributable to 58.com Inc. ordinary shareholders divided by total revenues, was 39.8% in the second quarter of 2019, compared with 23.9% in the same quarter of 2018.

 

Basic and Diluted Earnings per ADS

 

Basic and diluted earnings per ADS attributable to ordinary shareholders in the second quarter of 2019 were RMB28.12 (US$4.09) and RMB27.77 (US$4.04), respectively, representing 504.7% and 507.5% increases from RMB4.65 and RMB4.57, respectively, in the same quarter of 2018.

 

Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders in the second quarter of 2019 were RMB11.08 (US$1.61) and RMB10.94 (US$1.59), respectively, representing 99.7% and 100.6% increases from RMB5.55 and RMB5.45, respectively, in the same quarter of 2018.

 

-5-

 

 

Cash Flow

 

Net cash provided by operating activities was RMB1,549.9 million (US$225.4 million) in the second quarter of 2019, an increase of 23.0% from RMB1,260.0 million in the same quarter of 2018.

 

First Half 2019 Financial Results

 

Revenues

 

Total revenues were RMB7,163.0 million (US$1,041.9 million) in the first half of 2019, representing an increase of 21.4% from RMB5,901.7 million during the same period of 2018.

 

Membership revenues were RMB2,165.9 million (US$315.0 million) in the first half of 2019, an increase of 3.3% from RMB2,095.7 million during the same period of 2018.

 

Online marketing services revenues were RMB4,647.2 million (US$676.0 million) in the first half of 2019, an increase of 26.3% from RMB3,678.6 million during the same period of 2018.

 

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 listings and various other online marketing services.

 

Cost of Revenues

 

Cost of revenues was RMB731.3 million (US$106.4 million) in the first half of 2019, an increase of 22.0% from RMB599.5 million during the same period of 2018. The year-over-year increase was primarily driven by increases in the costs of goods sold on Zhuan Zhuan, services provided on other platforms, expenses associated with the operations of all the Company’s platforms, and salaries and benefits relating to web operation and information quality control teams.

 

Gross Profit and Gross Margin

 

Gross profit was RMB6,431.7 million (US$935.6 million) in the first half of 2019, an increase of 21.3% from RMB5,302.2 million during the same period of 2018.

 

Gross margin was 89.8% in the first half of 2019 and 2018.

 

Operating Expenses

 

Operating expenses were RMB5,182.6 million (US$753.9 million), representing an increase of 20.7% from RMB4,292.5 million during the same period of 2018.

 

Sales and marketing expenses in the first half of 2019 were RMB3,849.0 million (US$559.9 million), an increase of 19.5% from RMB3,221.8 million during the same period in 2018.

 

Within sales and marketing expenses, advertising expenses in the first half of 2019 were RMB1,865.4 million (US$271.3 million), an increase of 21.5% from RMB1,534.8 million during the same period in 2018.

 

-6-

 

 

The increase was primarily due to an increase in mobile traffic acquisition expenses, particularly for mobile applications such as 58.com and Anjuke, which are part of the Company’s core business.

 

Non-advertising sales and marketing expenses in the first half of 2019 were RMB1,983.6 million (US$288.5 million), an increase of 17.6% from RMB1,687.0 million during the same period in 2018.

 

Non-advertising sales and marketing expenses include salaries and benefits, commissions and share-based compensation expenses for the Company’s sales, sales support, customer service, and marketing dealer management personnel, online and offline promotional expenses, and other operating expenses that are associated with sales and marketing activities.

 

The increase in non-advertising sales and marketing expenses was mainly related to an increase in commissions and salaries of field sales teams and customer service personnel and marketing and promotional expenses for 58.com and newer platforms such as 58 Town and Zhuan Zhuan.

 

Research and development expenses in the first half of 2019 were RMB977.0 million (US$142.1 million), an increase of 31.9% from RMB740.4 million during the same period of 2018. The increase was primarily due to increases in salaries and benefits and share-based compensation expenses for the Company’s research and development personnel for the development of new features and services.

 

General and administrative expenses in the first half of 2019 were RMB356.5 million (US$51.9 million), an increase of 8.0% from RMB330.2 million during the same period of 2018. The increase was primarily driven by increases in share-based compensation expenses and salaries and benefits of administrative personnel.

 

Income from Operations

 

Income from operations was RMB1,249.1 million (US$181.7 million) in the first half of 2019, an increase of 23.7% from RMB1,009.7 million during the same period of 2018.

 

Operating margin was 17.4% in the first half of 2019, compared with 17.1% during the same period of 2018.

 

Non-GAAP income from operations was RMB1,610.8 million (US$234.3 million) in the first half of 2019, an increase of 23.9% from RMB1,300.2 million during the same period of 2018.

 

Non-GAAP operating margin was 22.5% in the first half of 2019, compared with 22.0% during the same period of 2018.

 

Other Income/(Expenses)

 

Net other income in the first half of 2019 were RMB4.3 billion (US$619.5 million), compared with net other income of RMB102.9 million during the same period of 2018.

 

Net other income in the first half of 2019 mainly consisted of RMB4.2 billion in net investment income. Within net investment income was RMB3.4 billion in unrealized gains on the change in fair value of long-term investments in Che Hao Duo, which is accounted for using measurement alternative method, as a result of the occurrence of an observable price change event related to the Company’s sale of a certain equity stake in Che Hao Duo, RMB642.2 million in realized gains generated from the sale of a certain equity stake in Che Hao Duo, RMB92.1 million in income from short-term commercial bank investment products the Company purchased with its surplus cash, a fair value gain of RMB41.3 million due to the revaluation of certain convertible notes the Company invested in the second quarter of 2019, and a fair value gain of RMB21.5 million as a result of the increase in the share price of 5I5J Holding Group Co., Ltd., a publicly traded company in which the Company invested in the third quarter of 2018 and holds a minority stake.

 

-7-

 

 

Net Income Attributable to 58.com Inc. Ordinary Shareholders

 

Net income attributable to 58.com Inc. ordinary shareholders was RMB4,876.9 million (US$709.4 million) in the first half of 2019, an increase of 467.1% from RMB859.9 million in the same period of 2018. Net margin was 68.1% in the first half of 2019, compared with 14.6% during the same period of 2018.

 

Non-GAAP net income attributable to 58.com Inc. ordinary shareholders was RMB2,082.3 million (US$302.9 million) in the first half of 2019, an increase of 85.4% from RMB1,123.3 million during the same period of 2018. Non-GAAP net margin was 29.1% in the first half of 2019, compared with 19.0% during the same period of 2018.

 

Basic and Diluted Earnings per ADS

 

Basic and diluted earnings per ADS attributable to ordinary shareholders in the first half of 2019 were RMB32.84 (US$4.78) and RMB32.43 (US$4.72), representing increases of 461.9% and 463.7% from basic and diluted earnings per ADS attributable to ordinary shareholders of RMB5.85 and RMB5.75, respectively, during the same period of 2018.

 

Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders in the first half of 2019 were RMB14.02 (US$2.04) and RMB13.85 (US$2.01), respectively, representing increases of 83.7% and 84.3% from non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders of RMB7.64 and RMB7.51, respectively, during the same period of 2018.

 

Cash Flow

 

Net cash provided by operating activities was RMB2,114.8 million (US$307.6 million) in the first half of 2019, an increase of 7.3% from net cash provided by operating activities of RMB1,970.0 million during the same period of 2018.

 

Cash and Cash Equivalents, Term deposits, Restricted Cash and Short-term Investments

 

As of June 30, 2019, the Company had cash and cash equivalents, term deposits, restricted cash and short-term investments of RMB8,217.4 million (US$1,195.3 million).

 

-8-

 

 

Shares Outstanding

 

As of June 30, 2019, the Company had a total of 297,350,925 ordinary shares (including 252,118,805 Class A and 45,232,120 Class B ordinary shares) issued and outstanding.

 

Business Outlook

 

Based on the Company’s current operations, total revenues for the third quarter of 2019 are expected to be between RMB4.1 billion and RMB4.2 billion. This represents a year-over-year increase of 13% to 16% in Renminbi amounts. These estimates reflect the Company’s current and preliminary view, which is subject to change.

 

-9-

 

 

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 from operations, non-GAAP operating margin, non-GAAP net income attributable to 58.com Inc. ordinary shareholders, non-GAAP net margin and non-GAAP basic and diluted earnings per share and per ADS attributable to ordinary shareholders by excluding share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, change in fair value of long-term investments, share-based compensation expenses included in share of results of equity investees, income tax effects of above 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, amortization of intangible assets resulting from business acquisitions, change in fair value of long-term investments, share-based compensation expenses included in share of results of equity investees, income tax effects of above 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 August 22, 2019 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing / Hong Kong time on the same day).

 

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

 

International: +1-412-317-6061
   
U.S. Toll Free: +1-888-317-6003
   
Hong Kong Toll Free: 800-963976
   
Hong Kong 852-58081995
   
China Toll Free: 4001-206115
   
Passcode: 4637049

 

-10-

 

 

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, August 29, 2019. The dial-in details for the replay are as follows:

 

International: +1-412-317-0088
   
U.S. Toll Free: +1-877-344-7529
   
Passcode: 10134419

 

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 market place 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 business users and consumer users 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. For more information on 58.com, please visit http://www.58.com.

 

-11-

 

 

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.

 

[email protected]

 

Christensen

 

In China

 

Mr. Christian Arnell

 

Phone: +86-10-5900-1548

 

E-mail: [email protected]

 

In US

 

Ms. Linda Bergkamp

 

Phone: +1-480-614-3004

 

Email: [email protected]

 

-12-

 

 

58.com Inc.

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

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

 

   As of 
  

December 31,

2018

  

June 30,

2019

  

June 30,

2019

 
   RMB   RMB   US$ 
ASSETS               
Current assets:               
Cash and cash equivalents    2,387,478    1,659,434    241,383 
Restricted cash-current    812,000    45,632    6,638 
Term deposits    -    20,000    2,909 
Short-term investments    4,587,610    6,492,331    944,380 
Accounts receivable, net    917,443    1,099,248    159,898 
Prepayments and other current assets    813,403    997,606    145,113 
Total current assets    9,517,934    10,314,251    1,500,321 
Non-current assets:               
Property and equipment, net    1,329,752    1,297,396    188,721 
Intangible assets, net    1,099,945    1,001,742    145,715 
Right-of-use assets, net    -    258,474    37,598 
Land use rights, net    3,610    3,571    519 
Goodwill    15,874,220    15,897,711    2,312,495 
Long-term investments    3,365,906    7,463,539    1,085,653 
Investment in convertible note    -    728,718    106,000 
Long-term prepayments and other non-current assets    639,478    557,030    81,026 
Total non-current assets    22,312,911    27,208,181    3,957,727 
Total assets    31,830,845    37,522,432    5,458,048 
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY               
Current liabilities:               
Short-term loans    812,794    38,000    5,528 
Accounts payable    887,558    1,076,499    156,589 
Deferred revenues    2,348,333    2,420,520    352,091 
Customer advances    1,465,169    1,805,532    262,634 
Taxes payable    250,231    341,601    49,690 
Salary and welfare payable    642,445    571,179    83,084 
Operating lease liabilities, current    -    113,412    16,497 
Accrued expenses and other current liabilities    878,368    930,818    135,398 
Total current liabilities    7,284,898    7,297,561    1,061,511 
Non-current liabilities:               
Deferred tax liabilities    283,112    598,641    87,079 
Operating lease liabilities, non-current    -    144,044    20,953 
Other non-current liabilities    1,675    -    - 
Total non-current liabilities    284,787    742,685    108,032 
Total liabilities    7,569,685    8,040,246    1,169,543 
Mezzanine equity:               
Mezzanine classified noncontrolling interests    1,944,397    2,016,349    293,300 
Total mezzanine equity    1,944,397    2,016,349    293,300 
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, 250,858,415 Class A and 45,586,164 Class B shares issued and outstanding as of December 31, 2018 and 252,118,805 Class A and 45,232,120 Class B shares issued and outstanding as of June 30, 2019, respectively)   19    19    3 
Additional paid-in capital    21,621,665    21,788,998    3,169,447 
Retained earnings    439,514    5,384,138    783,182 
Accumulated other comprehensive loss    (40,622)   (20,463)   (2,977)
Total 58.com Inc. shareholders’ equity    22,020,576    27,152,692    3,949,655 
Noncontrolling interests    296,187    313,145    45,550 
Total shareholders’ equity    22,316,763    27,465,837    3,995,205 
Total liabilities, mezzanine equity and shareholders’ equity    31,830,845    37,522,432    5,458,048 

 

-13-

 

 

58.com Inc.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATION

 

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

 

   For the Three Months Ended   For the Six Months Ended 
  

June 30,

2018

  

June 30,

2019

  

June 30,

2019

  

June 30,

2018

  

June 30,

2019

  

June 30,

2019

 
   RMB   RMB   US$   RMB   RMB   US$ 
Revenues:                              
Membership    1,166,859    1,183,838    172,202    2,095,745    2,165,866    315,049 
Online marketing services    2,186,660    2,706,282    393,658    3,678,638    4,647,182    675,983 
E-commerce services    23,120    73,665    10,715    31,015    101,688    14,792 
Other services    53,891    170,954    24,867    96,305    248,256    36,112 
Total revenues    3,430,530    4,134,739    601,442    5,901,703    7,162,992    1,041,936 
Cost of revenues(1)    (341,535)   (434,463)   (63,197)   (599,481)   (731,314)   (106,378)
Gross profit    3,088,995    3,700,276    538,245    5,302,222    6,431,678    935,558 
Operating expenses(1):                              
Sales and marketing expenses(2)    (1,782,590)   (2,056,090)   (299,081)   (3,221,812)   (3,849,040)   (559,885)
Research and development expenses    (394,046)   (482,021)   (70,115)   (740,442)   (976,998)   (142,115)
General and administrative expenses    (169,430)   (194,354)   (28,271)   (330,234)   (356,522)   (51,860)
Total operating expenses    (2,346,066)   (2,732,465)   (397,467)   (4,292,488)   (5,182,560)   (753,860)
Income from operations    742,929    967,811    140,778    1,009,734    1,249,118    181,698 
Other income/(expenses):                              
Interest income, net    2,070    8,411    1,223    3,244    16,873    2,454 
Investment income, net    69,763    3,665,280    533,155    110,848    4,209,850    612,369 
Share of results of equity investees    (16,251)   636    93    (53,586)   (9,935)   (1,445)
Foreign currency exchange loss, net    (1,796)   (20,967)   (3,050)   (894)   (18,018)   (2,621)
Others, net    40,291    51,084    7,431    43,288    60,012    8,729 
Income before tax    837,006    4,672,255    679,630    1,112,634    5,507,900    801,184 
Income tax expenses    (119,360)   (461,328)   (67,105)   (189,468)   (567,437)   (82,540)
Net income    717,646    4,210,927    612,525    923,166    4,940,463    718,644 
Net loss/(income) attributable to noncontrolling interests    (400)   1,847    269    421    4,161    605 
Net income attributable to 58.com Inc.    717,246    4,212,774    612,794    923,587    4,944,624    719,249 
Deemed dividend to mezzanine classified noncontrolling interests   (31,926)   (34,056)   (4,954)   (63,692)   (67,756)   (9,856)
Net income attributable to 58.com Inc. ordinary shareholders    685,320    4,178,718    607,840    859,895    4,876,868    709,393 
Net earnings per ordinary share attributable to ordinary shareholders - basic    2.32    14.06    2.04    2.92    16.42    2.39 
Net earnings per ordinary share attributable to ordinary shareholders - diluted    2.29    13.88    2.02    2.88    16.21    2.36 
Net earnings per ADS attributable to ordinary shareholders – basic
(1 ADS represents 2 Class A ordinary shares)
   4.65    28.12    4.09    5.85    32.84    4.78 
Net earnings per ADS attributable to ordinary shareholders – diluted
(1 ADS represents 2 Class A ordinary shares)
   4.57    27.77    4.04    5.75    32.43    4.72 
Weighted average number of ordinary shares used in computing basic earnings per share    294,800,587    297,245,471    297,245,471    294,222,506    296,969,544    296,969,544 
Weighted average number of ordinary shares used in computing diluted earnings per share    299,860,203    300,988,565    300,988,565    298,962,360    300,768,910    300,768,910 

 

Note:

 

(1)Share-based compensation expenses were allocated in cost of revenues and operating expenses as follows:

 

Cost of revenues    1,012    1,146    167    2,115    2,979    433 
Sales and marketing expenses    16,199    25,556    3,717    33,334    54,076    7,866 
Research and development expenses    35,119    47,303    6,881    70,716    98,523    14,331 
General and administrative expenses    42,539    52,129    7,583    83,288    103,861    15,108 

 

Amortization of intangible assets resulting from business acquisitions were allocated in operating expenses as follows:

 

Sales and marketing expenses    43,637    43,487    6,326    87,286    86,441    12,574 
Research and development expenses    11,677    12,021    1,748    23,354    24,018    3,493 

 

(2)Breakdown of sales and marketing expenses was as follows:

 

Advertising expenses    852,817    978,960    142,400    1,534,836    1,865,430    271,347 
Non-advertising sales and marketing expenses    929,773    1,077,130    156,681    1,686,976    1,983,610    288,538 

 

-14-

 

 

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 Six Months Ended  
   

June 30,

2018

   

June 30,

2019

   

June 30,

2019

   

June 30,

2018

   

June 30,

2019

   

June 30,

2019

 
    RMB     RMB     US$     RMB     RMB     US$  
GAAP income from operations     742,929       967,811       140,778       1,009,734       1,249,118       181,698  
Share-based compensation expenses6     90,454       122,315       17,792       179,875       251,190       36,538  
Amortization of intangible assets resulting from business acquisitions     55,314       55,508       8,074       110,640       110,459       16,067  
Non-GAAP income from operations     888,697       1,145,634       166,644       1,300,249       1,610,767       234,303  
                                                 
GAAP net income attributable to 58.com Inc. ordinary shareholders     685,320       4,178,718       607,840       859,895       4,876,868       709,393  
Share-based compensation expenses     90,454       122,315       17,792       179,875       251,190       36,538  
Amortization of intangible assets resulting from business acquisitions     55,314       55,508       8,074       110,640       110,459       16,067  
Change in fair value of long-term investments     -       (2,965,114 )     (431,308 )     -       (3,474,064 )     (505,340 )
Share-based compensation expenses included in share of results of equity investees     8       -       -       (8 )     9       1  
Income tax effects of GAAP to non-GAAP reconciling items7     (13,556 )     254,940       37,084       (27,112 )     317,818       46,231  
Non-GAAP net income attributable to 58.com Inc. ordinary shareholders     817,540       1,646,367       239,482       1,123,290       2,082,280       302,890  
                                                 
GAAP operating margin     21.7 %     23.4 %     23.4 %     17.1 %     17.4 %     17.4 %
Share-based compensation expenses     2.7 %     3.0 %     3.0 %     3.0 %     3.5 %     3.5 %
Amortization of intangible assets resulting from business acquisitions     1.6 %     1.3 %     1.3 %     1.9 %     1.6 %     1.6 %
Non-GAAP operating margin     26.0 %     27.7 %     27.7 %     22.0 %     22.5 %     22.5 %
                                                 
GAAP net margin     20.0 %     101.1 %     101.1 %     14.6 %     68.1 %     68.1 %
Share-based compensation expenses     2.7 %     3.0 %     3.0 %     3.0 %     3.5 %     3.5 %
Amortization of intangible assets resulting from business acquisitions     1.6 %     1.3 %     1.3 %     1.9 %     1.6 %     1.6 %
Change in fair value of long-term investments     -       (71.7 )%     (71.7 )%     -       (48.5 )%     (48.5 )%
Share-based compensation expenses included in share of results of equity investees     0.0 %     -       -       (0.0 )%     0.0 %     0.0 %
Income tax effects of GAAP to non-GAAP reconciling items     (0.4 )%     6.1 %     6.1 %     (0.5 )%     4.4 %     4.4 %
Non-GAAP net margin     23.9 %     39.8 %     39.8 %     19.0 %     29.1 %     29.1 %
                                                 
Weighted average number of ordinary shares used in computing non-GAAP basic earnings per share     294,800,587       297,245,471       297,245,471       294,222,506       296,969,544       296,969,544  
Weighted average number of ordinary shares used in computing non-GAAP diluted earnings per share     299,860,203       300,988,565       300,988,565       298,962,360       300,768,910       300,768,910  
Weighted average number of ADS used in computing non-GAAP basic earnings per ADS     147,400,293       148,622,736       148,622,736       147,111,253       148,484,772       148,484,772  
Weighted average number of ADS used in computing non-GAAP diluted earnings per ADS     149,930,101       150,494,283       150,494,283       149,481,180       150,384,455       150,384,455  
                                                 
Non-GAAP net earnings per ordinary share attributable to ordinary shareholders - basic     2.77       5.54       0.81       3.82       7.01       1.02  
Non-GAAP net earnings per ordinary share attributable to ordinary shareholders - diluted     2.73       5.47       0.80       3.76       6.92       1.01  
Non-GAAP net earnings per ADS attributable to ordinary shareholders - basic     5.55       11.08       1.61       7.64       14.02       2.04  
Non-GAAP net earnings per ADS attributable to ordinary shareholders - diluted     5.45       10.94       1.59       7.51       13.85       2.01  

 

 

6 Since the third quarter of 2017, certain share-based awards with redemption features granted to the Company’s 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 RMB4.4 million and RMB9.6 million for the three months and six months ended June 30, 2018 , respectively, and RMB3.8 million and RMB8.2 million for the three months and six months ended June 30, 2019 , respectively, which were excluded from the GAAP to non-GAAP reconciliation accordingly.

 

7 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 change in fair value of long-term investments. Other GAAP to non-GAAP reconciling items have no income tax effect.

 

-15-



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings