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Form 6-K 58.com Inc. For: Nov 15

November 15, 2018 6:56 AM EST

 

 

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 November 2018

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Commission File Number: 001-36140

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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: November 15, 2018

 

 

 

 

Exhibit Index

 

Exhibit 99.1 – Press Release

 

 

 

Exhibit 99.1

 

58.com Reports Third Quarter 2018 Unaudited Financial Results

 

BEIJING, November 14, 2018 -- 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 third quarter ended September 30, 2018.

 

Third Quarter 2018 Financial Highlights

 

·Total revenues were RMB3,626.8 million (US$527.2 million1), a 33.2% increase from RMB2,722.5 million in the same quarter of 2017, exceeding the high end of the Company’s guidance of RMB3,550 million.

 

·Gross margin was 89.5% compared with 91.6% in the same quarter of 2017.

 

·Income from operations was RMB670.6 million (US$97.5 million), a 28.4% increase from RMB522.4 million in the same quarter of 2017.

 

·Non-GAAP income from operations2 was RMB856.5 million (US$124.5 million), a 29.1% increase from RMB663.4 million in the same quarter of 2017.

 

·Net income attributable to 58.com Inc. was RMB726.2 million (US$105.6 million), a 105.6% increase from RMB353.3 million in the same quarter of 2017.

 

·Non-GAAP net income attributable to 58.com Inc.3 was RMB843.5 million (US$122.6 million), a 76.2% increase from RMB478.7 million in the same quarter of 2017.

 

·Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB4.92 (US$0.72) and RMB4.84 (US$0.70), respectively, representing 103.3% and 103.2% increases from RMB2.42 and RMB2.38, respectively, in the same quarter of 2017. One ADS represents two Class A ordinary shares.

 

·Non-GAAP basic and diluted earnings per ADS4 attributable to ordinary shareholders were RMB5.72 (US$0.83) and RMB 5.63 (US$0.82), respectively, representing 74.3% and 74.2% increases from RMB3.28 and RMB3.23, respectively, in the same quarter of 2017.

 

 

1 This press release contains translations of certain Renminbi amounts into U.S. dollars (US$) solely for the convenience of the readers. Unless otherwise specified, all translations of Renminbi (RMB) amounts into US$ amounts in this press release are made at RMB6.8792 to US$1.00, which was the U.S. dollars middle rate announced by the PRC State Administration of Foreign Exchange on September 28, 2018. The percentages stated in this press release are calculated based on the Renminbi amounts. On November 14, 2018, such exchange rate was RMB6.9402 to US$1.00.

 

2 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.

 

3 Non-GAAP net income attributable to 58.com Inc. is defined as net income attributable to 58.com Inc. 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.

 

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

 

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Management Comments

 

“We delivered solid financial and operational results for the third quarter with revenues exceeding the high end of our guidance,” commented Mr. Michael Yao, Chairman and Chief Executive Officer of 58.com. “We continued to see improvement in user growth and engagement on our mobile apps. Our two early-stage businesses, Zhuan Zhuan and 58 Town, continue to enjoy rapid user growth. Excluding Zhuan Zhuan and 58 Town, our core businesses maintained revenue, profit and profit margin growth momentum on a year-over-year basis. Despite an uncertain macro-economic environment, the China market remains massive and we continue to see enormous opportunities in lower-tier cities and towns where product innovation and technological advances are driving offline-to-online user conversion and substantially improving the services we can offer.”

 

Third Quarter 2018 Financial Results

 

Revenues

 

Total revenues were RMB3,626.8 million (US$527.2 million), representing an increase of 33.2% from RMB2,722.5 million in the same quarter of 2017.

 

Membership revenues were RMB1,181.1 million (US$171.7 million), an increase of 18.8% from RMB994.1 million in the same quarter of 2017. 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 2,968,000 during the third quarter of 2018, a 13.7% increase from approximately 2,611,000 in the same quarter of 2017. The Company defines subscription-based paying membership accounts as registered accounts through which users have purchased the Company’s subscription-based membership services and whose membership subscriptions are active at any point during a 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 RMB2,328.9 million (US$338.5 million), an increase of 40.3% from RMB1,660.5 million in the same quarter of 2017. 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 RMB380.6 million (US$55.3 million), an increase of 67.1% from RMB227.8 million in the same quarter of 2017. The year-over-year increase was primarily driven by increases in the costs of used goods and services sold on the Zhuan Zhuan platform, traffic acquisition costs (“TAC”) paid to 58.com’s advertising union partners, and salaries and benefits primarily for information quality control teams.

 

-2-

 

 

Gross Profit and Gross Margin

 

Gross profit was RMB3,246.2 million (US$471.9 million), an increase of 30.1% from RMB2,494.8 million during the same quarter of 2017.

 

Gross margin was 89.5%, compared with 91.6% during the same quarter of 2017.

 

Operating Expenses

 

Operating expenses were RMB2,575.6 million (US$374.4 million), an increase of 30.6% from RMB1,972.3 million in the same quarter of 2017.

 

Sales and marketing expenses in the third quarter of 2018 were RMB1,920.1 million (US$279.1 million), an increase of 42.6% from RMB1,346.2 million in the same quarter in 2017.

 

Within sales and marketing expenses, advertising expenses in the third quarter of 2018 were RMB978.2 million (US$142.2 million), an increase of 80.7% from RMB541.2 million in the third quarter of 2017. The increase was primarily due to promotional campaigns launched during the quarter for the Company’s apps. Advertising expenses associated with the Company’s core businesses including 58.com and Anjuke accounted for the majority of the increase, while advertising expenses for Zhuan Zhuan grew at a faster rate from a smaller base in 2017.

 

Non-advertising sales and marketing expenses in the third quarter of 2018 were RMB941.9 million (US$136.9 million), an increase of 17.0% from RMB805.0 million in the same quarter in 2017. Non-advertising sales and marketing expenses include salaries, benefits, commissions and share-based compensation 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 Company’s sales and marketing headcount as of September 30, 2018 was approximately 16,000, a 2.0% decrease from September 30, 2017. The increase in non-advertising sales and marketing expenses was mainly related to marketing and promotional expenses for the Company’s core businesses as well as the expansion of Zhuan Zhuan and 58 Town.

 

Research and development expenses in the third quarter of 2018 were RMB468.8 million (US$68.1 million), an increase of 25.7% from RMB372.9 million in the same quarter of 2017. 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 third quarter of 2018 were RMB186.7 million (US$27.1 million), a decrease of 26.3% from RMB253.3 million in the same quarter of 2017. The decrease in general and administrative expenses was due to the decreases in professional expenses, depreciation and amortization expenses and other administrative expenses, which were partially offset by the increase in salaries, benefits and share-based compensation expenses related to administrative personnel.

 

-3-

 

 

Income from Operations

 

Income from operations was RMB670.6 million (US$97.5 million) in the third quarter of 2018, an increase of 28.4% from RMB522.4 million in the same quarter of 2017.

 

Operating margin, defined as income from operations divided by total revenues, was 18.5% in the third quarter of 2018, compared with 19.2% in the same quarter of 2017.

 

Non-GAAP income from operations was RMB856.5 million (US$124.5 million) in the third quarter of 2018, an increase of 29.1% from RMB663.4 million in the same quarter of 2017.

 

Non-GAAP operating margin, defined as non-GAAP income from operations divided by total revenues, was 23.6% in the third quarter of 2018, compared with 24.3% in the same quarter of 2017.

 

Other Income/(Expenses), net

 

Other income in the third quarter of 2018 was RMB103.7 million (US$15.1 million), compared with other expenses of RMB81.4 million in the same quarter of 2017. Other income in the third quarter of 2018 mainly included RMB51.1 million investment income associated with the purchase of short-term investments, RMB67.5 million in change in fair value of long-term investments, and RMB6.0 million in tax refunds and other government subsidies, which were offset by RMB22.1 million share of net loss of equity investees. The year-over-year improvement was largely due to less equity pick-up from 58 Home, 58.com’s non-consolidated affiliate.

 

Net Income Attributable to 58.com Inc.

 

Net income attributable to 58.com Inc. was RMB726.2 million (US$105.6 million) in the third quarter of 2018, an increase of 105.6% from RMB353.3 million in the same quarter of 2017.

 

Net margin, defined as net income attributable to 58.com Inc. divided by total revenues, was 20.0% in the third quarter of 2018, compared with 13.0% in the same quarter of 2017.

 

Non-GAAP net income attributable to 58.com Inc. was RMB843.5 million (US$122.6 million) in the third quarter of 2018, an increase of 76.2% from RMB478.7 million in the same quarter of 2017.

 

Non-GAAP net margin, defined as non-GAAP net income attributable to 58.com Inc. divided by total revenues, was 23.3% in the third quarter of 2018, compared with 17.5% in the same quarter of 2017.

 

Basic and Diluted Earnings per ADS

 

Basic and diluted earnings per ADS attributable to ordinary shareholders in the third quarter of 2018 were RMB4.92 (US$0.72) and RMB4.84 (US$0.70), respectively, representing 103.3% and 103.2% increases from RMB2.42 and RMB2.38, respectively, in the same quarter of 2017.

 

Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders in the third quarter of 2018 were RMB5.72 (US$0.83) and RMB5.63 (US$0.82), respectively, representing 74.3% and 74.2% increases from RMB3.28 and RMB3.23, respectively, in the same quarter of 2017.

 

-4-

 

 

Cash Flow

 

Net cash provided by operating activities was RMB863.4 million (US$125.5 million) in the third quarter of 2018, an increase of 22.8% from RMB702.9 million in the same quarter of 2017.

 

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

 

As of September 30, 2018, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB7,162.5 million (US$1,041.2 million).

 

Shares Outstanding

 

As of September 30, 2018, the Company had a total of 296,277,533 ordinary shares (including 250,691,369 Class A and 45,586,164 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 fourth quarter of 2018 are expected to be between RMB3.5 billion and RMB3.6 billion. This represents a year-over-year increase of 26.6% to 30.2% 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, 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.

 

-5-

 

 

Conference Call

 

58.com’s management will host an earnings conference call on November 15, 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: +1-412-317-6061
   
U.S. Toll Free: +1-888-317-6003
   
Hong Kong Toll Free: 800-963976
   
Hong Kong 852-58081995
   
China Toll Free: 4001-206115
   
Passcode: 0603639

 

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, November 22, 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: 10126317

 

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.

 

-6-

 

 

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.

 

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]

 

-7-

 

 

58.com Inc.

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

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

 

    As of  
   

December 31,

2017

   

September 30,

2018

   

September 30,

2018

 
    RMB     RMB     US$  
ASSETS                  
Current assets:                        
Cash and cash equivalents     1,524,982       1,428,996       207,727  
Restricted cash-current     93,350       812,047       118,044  
Short-term investments     3,437,707       4,921,441       715,409  
Accounts receivable, net     667,750       906,403       131,760  
Prepayments and other current assets     657,272       981,581       142,688  
Total current assets     6,381,061       9,050,468       1,315,628  
Non-current assets:                        
Restricted cash-non-current     792,000       -       -  
Property and equipment, net     1,351,681       1,324,142       192,485  
Intangible assets, net     1,309,566       1,155,521       167,973  
Land use rights, net     3,688       3,630       528  
Goodwill     15,864,655       15,864,655       2,306,177  
Long-term investments     1,808,601       3,298,113       479,433  
Long-term prepayments and other non-current assets     755,260       545,536       79,302  
Total non-current assets     21,885,451       22,191,597       3,225,898  
Total assets     28,266,512       31,242,065       4,541,526  

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY

                       
Current liabilities:                        
Short-term loans     75,000       814,514       118,402  
Accounts payable     624,300       990,496       143,984  
Deferred revenues     2,123,755       2,419,859       351,765  
Customer advances     1,365,437       1,505,259       218,813  
Taxes payable     186,491       263,762       38,342  
Salary and welfare payable     536,831       574,234       83,474  
Accrued expenses and other current liabilities     689,134       735,241       106,879  
Total current liabilities     5,600,948       7,303,365       1,061,659  
Non-current liabilities:                        
Long-term loans     777,427       37,500       5,451  
Deferred tax liabilities     319,219       294,087       42,750  
Other non-current liabilities     17,376       1,675       243  
Total non-current liabilities     1,114,022       333,262       48,444  
Total liabilities     6,714,970       7,636,627       1,110,103  
Mezzanine equity:                        
Mezzanine classified noncontrolling interests     1,736,405       1,914,560       278,311  
Total mezzanine equity     1,736,405       1,914,560       278,311  
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, 245,924,871 Class A and 48,040,260 Class B shares issued and outstanding as of December 31, 2017 and 250,691,369 Class A and 45,586,164 Class B shares issued and outstanding as of September 30, 2018, respectively)     18       19       3  
Additional paid-in capital     21,338,787       21,526,285       3,129,184  
Accumulated deficit     (1,689,683 )     (5,971 )     (867 )
Accumulated other comprehensive loss     (55,671 )     (43,798 )     (6,366 )
Total 58.com Inc. shareholders’ equity     19,593,451       21,476,535       3,121,954  
Noncontrolling interests     221,686       214,343       31,158  
Total shareholders’ equity     19,815,137       21,690,878       3,153,112  
Total liabilities, mezzanine equity and shareholders’ equity     28,266,512       31,242,065       4,541,526  

  

-8-

 

 

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 Nine Months Ended  
   

September 30,

2017

   

September 30,

2018

   

September 30,

2018

   

September 30,

2017

   

September 30,

2018

   

September 30,

2018

 
    RMB     RMB     US$     RMB     RMB     US$  
Revenues:                                    
Membership     994,107       1,181,105       171,692       2,750,712       3,276,850       476,342  
Online marketing services     1,660,502       2,328,921       338,545       4,334,005       6,007,559       873,293  
E-commerce services     14,664       15,627       2,272       56,491       46,642       6,780  
Other services     53,247       101,148       14,703       162,890       197,453       28,703  
Total revenues     2,722,520       3,626,801       527,212       7,304,098       9,528,504       1,385,118  
Cost of revenues(1)     (227,761 )     (380,623 )     (55,330 )     (662,644 )     (980,104 )     (142,474 )
Gross profit     2,494,759       3,246,178       471,882       6,641,454       8,548,400       1,242,644  
Operating expenses(1):                                                
Sales and marketing expenses(2)     (1,346,202 )     (1,920,131 )     (279,121 )     (3,873,773 )     (5,141,943 )     (747,462 )
Research and development expenses     (372,873 )     (468,782 )     (68,145 )     (1,010,543 )     (1,209,224 )     (175,780 )
General and administrative expenses     (253,255 )     (186,713 )     (27,142 )     (574,386 )     (516,947 )     (75,146 )
Total operating expenses     (1,972,330 )     (2,575,626 )     (374,408 )     (5,458,702 )     (6,868,114 )     (998,388 )
Income from operations     522,429       670,552       97,474       1,182,752       1,680,286       244,256  
Other income/(expenses):                                                
Interest income, net     1,664       390       56       (9,138 )     3,634       528  
Investment income, net     55,956       115,378       16,772       314,703       226,226       32,886  
Share of results of equity investees     (182,087 )     (22,109 )     (3,214 )     (489,067 )     (75,695 )     (11,003 )
Foreign currency exchange gain/(loss), net     313       790       115       497       (104 )     (15 )
Others, net     42,726       9,271       1,348       46,298       52,559       7,640  
Income before tax     441,001       774,272       112,551       1,046,045       1,886,906       274,292  
Income tax expenses     (51,150 )     (16,798 )     (2,442 )     (104,545 )     (206,266 )     (29,984 )
Net income     389,851       757,474       110,109       941,500       1,680,640       244,308  
Net loss/(income) attributable to noncontrolling interests     (1,785 )     2,649       385       (3,904 )     3,070       446  
Deemed dividend to mezzanine classified noncontrolling
interests
    (34,809 )     (33,959 )     (4,936 )     (66,585 )     (97,651 )     (14,195 )
Net income attributable to 58.com Inc.     353,257       726,164       105,558       871,011       1,586,059       230,559  

 

-9-

 

 

   

For the Three Months Ended

   

For the Nine Months Ended

 
   

September 30,

2017

   

September 30,

2018

   

September 30,

2018

   

September 30,

2017

   

September 30,

2018

   

September 30,

2018

 
    RMB     RMB     US$     RMB     RMB     US$  
Net earnings per ordinary share attributable to ordinary shareholders - basic     1.21       2.46       0.36       2.99       5.38       0.78  
Net earnings per ordinary share attributable to ordinary shareholders - diluted     1.19       2.42       0.35       2.96       5.29       0.77  
Net earnings per ADS attributable to ordinary shareholders – basic (1 ADS represents 2 Class A ordinary shares)     2.42       4.92       0.72       5.99       10.76       1.56  
Net earnings per ADS attributable to ordinary shareholders – diluted (1 ADS represents 2 Class A ordinary shares)     2.38       4.84       0.70       5.92       10.59       1.54  
Weighted average number of ordinary shares used in computing basic earnings per share     291,777,760       295,068,924       295,068,924       290,853,040       294,681,288       294,681,288  
Weighted average number of ordinary shares used in computing diluted earnings per share     296,419,017       299,839,409       299,839,409       294,437,994       299,630,643       299,630,643  

 

Note:

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

 

Cost of revenues    1,141    2,198    320    2,139    4,313    627 
Sales and marketing expenses    19,383    30,427    4,423    51,986    63,761    9,269 
Research and development expenses    30,050    55,785    8,109    91,260    126,501    18,389 
General and administrative expenses    40,459    47,208    6,862    106,441    130,496    18,970 

 

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

 

Sales and marketing expenses    43,671    43,637    6,343    132,486    130,923    19,032 
Research and development expenses    11,677    11,677    1,698    35,031    35,031    5,092 

 

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

 

Advertising expenses    541,209    978,219    142,200    1,575,135    2,513,055    365,312 
Non-advertising sales and marketing expenses    804,993    941,912    136,921    2,298,638    2,628,888    382,150 

 

-10-

 

 

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 Nine Months Ended  
   

September 30,

2017

   

September 30,

2018

   

September 30,

2018

   

September 30,

2017

   

September 30,

2018

   

September 30,

2018

 
    RMB     RMB     US$     RMB     RMB     US$  
GAAP income from operations     522,429       670,552       97,474       1,182,752       1,680,286       244,256  
Share-based compensation expenses5     85,581       130,660       18,993       246,374       310,535       45,142  
Amortization of intangible assets resulting from business acquisitions     55,348       55,314       8,041       167,517       165,954       24,124  
Non-GAAP income from operations     663,358       856,526       124,508       1,596,643       2,156,775       313,522  
                                                 
GAAP net income attributable to 58.com Inc.     353,257       726,164       105,558       871,011       1,586,059       230,559  
Share-based compensation expenses     85,581       130,660       18,993       246,374       310,535       45,142  
Amortization of intangible assets resulting from business acquisitions     55,348       55,314       8,041       167,517       165,954       24,124  
Change in fair value of long-term investments     -       (67,450 )     (9,805 )     -       (67,450 )     (9,805 )
Share-based compensation expenses included in share of results of equity investees     (1,972 )     8       1       2,386       1       0  
Income tax effects of GAAP to non-GAAP reconciling items6     (13,556 )     (1,218 )     (177 )     (41,317 )     (28,330 )     (4,118 )
Non-GAAP net income attributable to 58.com Inc.     478,658       843,478       122,611       1,245,971       1,966,769       285,902  

 

 

5 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 RMB5.0 million and RMB14.5 million for the three months and nine months ended September 30, 2018, respectively, and 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 resulting from change in fair value of long-term investments . Other GAAP to non-GAAP reconciling items have no income tax effect.

 

-11-

 

 

  

For the Three Months Ended

  

For the Nine Months Ended

 
  

September 30,

2017

  

September 30,

2018

  

September 30,

2018

  

September 30,

2017

  

September 30,

2018

  

September 30,

2018

 
   RMB   RMB   US$   RMB   RMB   US$ 
GAAP operating margin   19.2%   18.5%   18.5%   16.2%   17.6%   17.6%
Share-based compensation expenses   3.1%   3.6%   3.6%   3.3%   3.3%   3.3%
Amortization of intangible assets resulting from business acquisitions   2.0%   1.5%   1.5%   2.3%   1.7%   1.7%
Non-GAAP operating margin   24.3%   23.6%   23.6%   21.8%   22.6%   22.6%
                               
GAAP net margin   13.0%   20.0%   20.0%   11.9%   16.6%   16.6%
Share-based compensation expenses   3.1%   3.6%   3.6%   3.3%   3.3%   3.3%
Amortization of intangible assets resulting from business acquisitions   2.0%   1.5%   1.5%   2.3%   1.7%   1.7%
Change in fair value of long-term investments   -    (1.8)%   (1.8)%   -    (0.7)%   (0.7)%
Share-based compensation expenses included in share of results of equity investees   (0.1)%   0.0%   0.0%   0.0%   0.0%   0.0%
Income tax effects of GAAP to non-GAAP reconciling items   (0.5)%   (0.0)%   (0.0)%   (0.6)%   (0.3)%   (0.3)%
Non-GAAP net margin   17.5%   23.3%   23.3%   16.9%   20.6%   20.6%
                               
Weighted average number of ordinary shares used in computing non-GAAP basic earnings per share   291,777,760    295,068,924    295,068,924    290,853,040    294,681,288    294,681,288 
Weighted average number of ordinary shares used in computing non-GAAP diluted earnings per share   296,419,017    299,839,409    299,839,409    294,437,994    299,630,643    299,630,643 
Weighted average number of ADS used in computing non-GAAP basic earnings per ADS   145,888,880    147,534,462    147,534,462    145,426,520    147,340,644    147,340,644 
Weighted average number of ADS used in computing non-GAAP diluted earnings per ADS   148,209,508    149,919,704    149,919,704    147,218,997    149,815,321    149,815,321 
                               
Non-GAAP net earnings per ordinary share attributable to ordinary shareholders - basic   1.64    2.86    0.42    4.28    6.67    0.97 
Non-GAAP net earnings per ordinary share attributable to ordinary shareholders - diluted   1.61    2.81    0.41    4.23    6.56    0.95 
Non-GAAP net earnings per ADS attributable to ordinary shareholders - basic   3.28    5.72    0.83    8.57    13.35    1.94 
Non-GAAP net earnings per ADS attributable to ordinary shareholders - diluted   3.23    5.63    0.82    8.46    13.13    1.91 

 

-12-



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