Form 6-K 58.com Inc. For: Mar 08

March 8, 2018 6:59 AM

 

 

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 March 2018

 

 

 

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: March 8, 2018

 

 

 

 

Exhibit Index

 

Exhibit 99.1 – Press Release

 

 

 

Exhibit 99.1

 

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

 

BEIJING, March 7, 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 fourth quarter and fiscal year ended December 31, 2017.

 

Fourth Quarter 2017 Financial Highlights

 

·Total revenues were RMB2,764.7 million (US$423.1 million1), a 32.0% increase from the same quarter of 2016, exceeding the high end of the Company’s guidance of RMB2,725 million.

 

·Gross margin was 90.5% compared with 89.9% in the same quarter of 2016.

 

·Income from operations was RMB613.7 million (US$93.9 million), compared with income from operations of RMB193.5 million in the same quarter of 2016.

 

·Non-GAAP income from operations2 was RMB762.5 million (US$116.7 million), compared with non-GAAP income from operations of RMB317.7 million in the same quarter of 2016.

 

·Net income attributable to 58.com Inc. was RMB414.1 million (US$63.4 million), compared with net loss attributable to 58.com Inc. of RMB138.0 million in the same quarter of 2016.

 

·Non-GAAP net income attributable to 58.com Inc.3 was RMB549.0 million (US$84.0 million), compared with non-GAAP net loss attributable to 58.com Inc. of RMB22.7 million in the same quarter of 2016.

 

·Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB2.82 (US$0.43) and RMB2.78 (US$0.43), respectively. One ADS represents two Class A ordinary shares.

 

·Non-GAAP basic and diluted earnings per ADS4 attributable to ordinary shareholders were RMB3.74 (US$0.57) and RMB3.69 (US$0.56), respectively.

 

 

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

 

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

 

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

 

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

 

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Fiscal Year 2017 Financial Highlights

 

·Total revenues were RMB10,068.8 million (US$1,540.9 million), a 32.6% increase from fiscal year 2016.

 

·Gross margin was 90.8% compared with 90.7% in fiscal year 2016.

 

·Income from operations was RMB1,796.5 million (US$274.9 million), compared with income from operations of RMB233.7 million in fiscal year 2016.

 

·Non-GAAP income from operations was RMB2,359.2 million (US$361.1 million), compared with non-GAAP income from operations of RMB730.0 million in fiscal year 2016.

 

·Net income attributable to 58.com Inc. was RMB1,285.1 million (US$196.7 million), compared with net loss attributable to 58.com Inc. of RMB783.8 million in fiscal year 2016.

 

·Non-GAAP net income attributable to 58.com Inc. was RMB1,795.0 million (US$274.7 million), compared with non-GAAP net loss attributable to 58.com Inc. of RMB253.6 million in fiscal year 2016.

 

·Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB8.82 (US$1.35) and RMB8.70 (US$1.33), respectively.

 

·Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders were RMB12.32 (US$1.89) and RMB12.16 (US$1.86), respectively.

 

Management Comments

 

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

 

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

 

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Fourth Quarter 2017 Financial Results

 

Revenues

 

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

 

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

 

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

 

Cost of Revenues

 

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

 

Gross Profit and Gross Margin

 

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

 

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

 

Operating Expenses

 

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

 

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

 

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

 

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

 

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

 

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

 

Income from Operations

 

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

 

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

 

Other Expenses

 

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

 

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

 

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

 

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

 

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Basic and Diluted Earnings per ADS

 

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

 

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

 

Cash Flow

 

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

 

Fiscal Year 2017 Financial Results

 

Revenues

 

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

 

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

 

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

 

Cost of Revenues

 

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

 

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Gross Profit and Gross Margin

 

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

 

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

 

Operating Expenses

 

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

 

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

 

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

 

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

 

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

 

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

 

Income from Operations

 

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

 

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

 

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Other Expenses

 

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

 

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

 

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

 

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

 

Basic and Diluted Earnings/(Loss) per ADS

 

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

 

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

 

Cash Flow

 

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

 

Cash and Cash Equivalents and Short-term Investments

 

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

 

Shares Outstanding

 

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

 

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Business Outlook

 

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

 

Non-GAAP Financial Measures

 

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

 

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Conference Call

 

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

 

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

 

International: +1-412-317-5225    
U.S. Toll Free: +1-866-235-9918    
Hong Kong: 800-905945    
China: 4001-201203    
Passcode: WUBA    
     

 

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

 

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

 

International: +1-412-317-0088  
U.S. Toll Free: +1-877-344-7529  
Passcode: 10117724  
       

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

 

About 58.com Inc.

 

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

 

Safe Harbor Statements

 

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

 

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For more information, please contact:

 

58.com Inc.

 

ir@58.com

 

Christensen

 

In China

 

Mr. Christian Arnell

 

Phone: +86-10-5900-1548

 

E-mail: carnell@christensenir.com

 

In US

 

Ms. Linda Bergkamp

 

Phone: +1-480-614-3004

 

Email: lbergkamp@ChristensenIR.com

 

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58.com Inc.

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

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

 

    As of  
   

December 31,

2016

   

December 31,

2017

   

December 31,

2017

 
    RMB     RMB     US$  
ASSETS                  
Current assets:                        
Cash and cash equivalents     1,200,457       1,524,982       233,385  
Restricted cash-current     1,151,940       93,350       14,286  
Term deposits     26,361              
Short-term investments     833,480       3,437,707       526,110  
Accounts receivable, net     424,892       667,750       102,193  
Prepayments and other current assets     426,056       657,272       100,590  
Total current assets     4,063,186       6,381,061       976,564  
Non-current assets:                        
Restricted cash-non-current           792,000       121,208  
Property and equipment, net     1,480,921       1,351,681       206,863  
Intangible assets, net     1,532,228       1,309,566       200,417  
Land use rights, net     3,766       3,688       564  
Goodwill     15,903,677       15,864,655       2,427,941  
Long-term investments     2,118,461       1,808,601       276,790  
Long-term prepayments and other non-current assets     223,767       755,260       115,586  
Total non-current assets     21,262,820       21,885,451       3,349,369  
Total assets     25,326,006       28,266,512       4,325,933  
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY                        
Current liabilities:                        
Short-term loans     1,842,720       75,000       11,478  
Accounts payable     611,947       624,300       95,543  
Deferred revenues     1,845,846       2,123,755       325,021  
Customer advances     1,236,076       1,365,437       208,968  
Taxes payable     62,084       186,491       28,541  
Salary and welfare payable     553,506       536,831       82,157  
Accrued expenses and other current liabilities     727,904       689,134       105,466  
Total current liabilities     6,880,083       5,600,948       857,174  
Non-current liabilities:                        
Long-term loans     150,000       777,427       118,978  
Deferred tax liabilities     373,810       319,219       48,854  
Other non-current liabilities     69,937       17,376       2,659  
Total non-current liabilities     593,747       1,114,022       170,491  
Total liabilities     7,473,830       6,714,970       1,027,665  
Mezzanine equity:                        
Mezzanine classified noncontrolling interests     86,457       1,736,405       265,741  
Total mezzanine equity     86,457       1,736,405       265,741  
Shareholders’ equity:                        
58.com Inc. shareholders’ equity:                        
Ordinary shares (US$0.00001 par value, 4,800,000,000 Class A and 200,000,000 Class B shares authorized, 240,930,737 Class A and 48,740,260 Class B shares issued and outstanding as of December 31, 2016 and 245,924,871 Class A and 48,040,260 Class B shares issued and outstanding as of December 31, 2017, respectively)     18       18       3  
Additional paid-in capital     20,907,599       21,488,376       3,288,600  
Accumulated deficit     (3,070,735 )     (1,689,683 )     (258,590 )
Accumulated other comprehensive loss     (138,597 )     (55,671 )     (8,520 )
Total 58.com Inc. shareholders’ equity     17,698,285       19,743,040       3,021,493  
Noncontrolling interests     67,434       72,097       11,034  
Total shareholders’ equity     17,765,719       19,815,137       3,032,527  
Total liabilities, mezzanine equity and shareholders’ equity     25,326,006       28,266,512       4,325,933  

 

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58.com Inc.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

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

 

    For the Three Months Ended     For the Fiscal Year Ended  
   

December 31,

2016

   

December 31,

2017

   

December 31,

2017

   

December 31,

2016

   

December 31,

2017

   

December 31,

2017

 
    RMB     RMB     US$     RMB     RMB     US$  
Revenues:                                    
Membership     812,021       1,038,812       158,981       2,951,135       3,789,524       579,952  
Online marketing services     1,189,380       1,644,486       251,674       4,363,777       5,978,491       914,954  
E-commerce services     44,520       17,450       2,671       166,753       73,941       11,316  
Other services     48,852       63,934       9,785       110,462       226,824       34,713  
Total revenues     2,094,773       2,764,682       423,111       7,592,127       10,068,780       1,540,935  
Cost of revenues(1)     (212,238 )     (262,853 )     (40,227 )     (707,237 )     (925,497 )     (141,639 )
Gross profit     1,882,535       2,501,829       382,884       6,884,890       9,143,283       1,399,296  
Operating expenses(1):                                                
Sales and marketing expenses     (1,224,702 )     (1,338,587 )     (204,859 )     (4,941,380 )     (5,212,360 )     (797,704 )
Research and development expenses     (313,389 )     (357,898 )     (54,773 )     (1,107,897 )     (1,368,441 )     (209,427 )
General and administrative expenses     (150,915 )     (191,631 )     (29,327 )     (601,906 )     (766,017 )     (117,232 )
Total operating expenses     (1,689,006 )     (1,888,116 )     (288,959 )     (6,651,183 )     (7,346,818 )     (1,124,363 )
Income from operations     193,529       613,713       93,925       233,707       1,796,465       274,933  
Other income/(expenses):                                                
Interest income/(expenses), net     (9,401 )     7,515       1,150       (48,640 )     (1,623 )     (248 )
Investment income/(loss), net     (131,994 )     27,538       4,214       (145,411 )     342,241       52,377  
Share of results of equity investees     (225,178 )     (198,333 )     (30,353 )     (926,740 )     (687,400 )     (105,200 )
Gain on deconsolidation and disposal of businesses                       79,581              
Foreign currency exchange gain/(loss), net     229       296       45       (3,727 )     793       121  
Others, net     849       39,157       5,993       (12,713 )     85,455       13,078  
Income/(loss) before tax     (171,966 )     489,886       74,974       (823,943 )     1,535,931       235,061  
Income tax benefits/(expenses)     37,639       (42,144 )     (6,450 )     50,980       (146,689 )     (22,449 )
Net income/(loss)     (134,327 )     447,742       68,524       (772,963 )     1,389,242       212,612  
Add: Net loss/(income) attributable to noncontrolling interests     958       (763 )     (117 )     4,916       (4,667 )     (714 )
Less: Deemed dividend to mezzanine classified noncontrolling interests     (4,604 )     (32,922 )     (5,038 )     (15,717 )     (99,507 )     (15,228 )
Net income/(loss) attributable to 58.com Inc.     (137,973 )     414,057       63,369       (783,764 )     1,285,068       196,670  
Net earnings/(loss) per ordinary share attributable to ordinary shareholders - basic     (0.48 )     1.41       0.22       (2.73 )     4.41       0.67  
Net earnings/(loss) per ordinary share attributable to ordinary shareholders - diluted     (0.48 )     1.39       0.21       (2.73 )     4.35       0.67  
Net earnings/(loss) per ADS attributable to ordinary shareholders – basic (1 ADS represents 2 Class A ordinary shares)     (0.95 )     2.82       0.43       (5.46 )     8.82       1.35  
Net earnings/(loss) per ADS attributable to ordinary shareholders – diluted (1 ADS represents 2 Class A ordinary shares)     (0.95 )     2.78       0.43       (5.46 )     8.70       1.33  
Weighted average number of ordinary shares used in computing basic earnings/(loss) per share     289,523,186       293,323,477       293,323,477       286,975,068       291,475,725       291,475,725  
Weighted average number of ordinary shares used in computing diluted earnings/(loss) per share     289,523,186       297,680,844       297,680,844       286,975,068       295,304,995       295,304,995  

 

 

Note:

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

 

Cost of revenues    387    1,139    174    490    3,278    502 
Sales and marketing expenses    17,773    17,940    2,746    59,017    69,926    10,702 
Research and development expenses    29,439    34,856    5,334    98,515    126,116    19,301 
General and administrative expenses    19,152    44,808    6,857    108,553    151,249    23,147 

 

- 12 -

 

 

58.com Inc.

 

Reconciliation of GAAP and Non-GAAP Results

 

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

 

    For the Three Months Ended     For the Fiscal Year Ended  
   

December 31,

2016

   

December 31,

2017

   

December 31,

2017

   

December 31,

2016

   

December 31,

2017

   

December 31,

2017

 
    RMB     RMB     US$     RMB     RMB     US$  
GAAP income from operations     193,529       613,713       93,925       233,707       1,796,465       274,933  
Share-based compensation expenses5     66,751       93,463       14,303       266,575       339,837       52,010  
Amortization of intangible assets resulting from business acquisitions     57,432       55,348       8,471       229,728       222,865       34,107  
Non-GAAP income from operations     317,712       762,524       116,699       730,010       2,359,167       361,050  
                                                 
GAAP net income/(loss) attributable to 58.com Inc.     (137,973 )     414,057       63,369       (783,764 )     1,285,068       196,670  
Share-based compensation expenses     66,751       93,463       14,303       266,575       339,837       52,010  
Share-based compensation attributable to noncontrolling interests                       (151 )            
Amortization of intangible assets resulting from business acquisitions     57,432       55,348       8,471       229,728       222,865       34,107  
Share-based compensation expenses included in share of results of equity investees     5,455       (292 )     (45 )     78,826       2,094       320  
Loss on conversion of Guazi Convertible Note                       84,177              
Gain on deconsolidation and disposal of business                       (79,581 )            
Income tax effects of GAAP to non-GAAP reconciling items6     (14,358 )     (13,555 )     (2,074 )     (49,444 )     (54,872 )     (8,398 )
Non-GAAP net income/(loss) attributable to 58.com Inc.     (22,693 )     549,021       84,024       (253,634 )     1,794,992       274,709  
                                                 
GAAP operating margin     9.2 %     22.2 %     22.2 %     3.1 %     17.8 %     17.8 %
Share-based compensation expenses     3.2 %     3.4 %     3.4 %     3.5 %     3.4 %     3.4 %
Amortization of intangible assets resulting from business acquisitions     2.7 %     2.0 %     2.0 %     3.0 %     2.2 %     2.2 %
Non-GAAP operating margin     15.1 %     27.6 %     27.6 %     9.6 %     23.4 %     23.4 %
                                                 
GAAP net margin     (6.6 )%     15.0 %     15.0 %     (10.3 )%     12.8 %     12.8 %
Share-based compensation expenses     3.2 %     3.4 %     3.4 %     3.5 %     3.4 %     3.4 %
Share-based compensation attributable to noncontrolling interests                       0.0 %            
Amortization of intangible assets resulting from business acquisitions     2.7 %     2.0 %     2.0 %     3.0 %     2.2 %     2.2 %
Share-based compensation expenses included in share of results of equity investees     0.3 %     0.0 %     0.0 %     1.0 %     0.0 %     0.0 %
Loss on conversion of Guazi Convertible Note                       1.1 %            
Gain on deconsolidation and disposal of business                       (1.0 )%            
Income tax effects of GAAP to non-GAAP reconciling items     (0.7 )%     (0.5 )%     (0.5 )%     (0.7 )%     (0.5 )%     (0.5 )%
Non-GAAP net margin     (1.1 )%     19.9 %     19.9 %     (3.4 )%     17.9 %     17.9 %
                                                 
Weighted average number of ordinary shares used in computing non-GAAP basic earnings/(loss) per share     289,523,186       293,323,477       293,323,477       286,975,068       291,475,725       291,475,725  
Weighted average number of ordinary shares used in computing non-GAAP diluted earnings/(loss) per share     289,523,186       297,680,844       297,680,844       286,975,068       295,304,995       295,304,995  
Weighted average number of ADS used in computing non-GAAP basic earnings/(loss) per ADS     144,761,593       146,661,739       146,661,739       143,487,534       145,737,863       145,737,863  
Weighted average number of ADS used in computing non-GAAP diluted earnings/(loss) per ADS     144,761,593       148,840,422       148,840,422       143,487,534       147,652,498       147,652,498  
                                                 
Non-GAAP net earnings/(loss) per ordinary share attributable to ordinary shareholders - basic     (0.08 )     1.87       0.29       (0.88 )     6.16       0.94  
Non-GAAP net earnings /(loss) per ordinary share attributable to ordinary shareholders - diluted     (0.08 )     1.84       0.28       (0.88 )     6.08       0.93  
Non-GAAP net earnings /(loss) per ADS attributable to ordinary shareholders - basic     (0.16 )     3.74       0.57       (1.77 )     12.32       1.89  
Non-GAAP net earnings /(loss) per ADS attributable to ordinary shareholders - diluted     (0.16 )     3.69       0.56       (1.77 )     12.16       1.86  

 

 

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

 

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

 

- 13 -

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