Zhaopin Limited Reports First Quarter Fiscal Year 2015 Financial Results

BEIJING, Nov. 12, 2014 /PRNewswire/ -- Zhaopin Limited (NYSE: ZPIN) ("Zhaopin" or the "Company"), a leading career platform in China focused on connecting users with relevant job opportunities through their career lifecycle, today announced its unaudited financial results for the first quarter ended September 30, 2014.

Throughout the release, one ADS represents two Class A ordinary shares. Fiscal year refers to the 12 months ended June 30.

Financial Highlights

Percentage growth metrics refer to first quarter of fiscal year 2015 ("Q1 FY15") compared to first quarter of fiscal year 2014 ("Q1 FY14")

• Total revenues increased 22.6% to RMB293.5 million (US$47.8 million), exceeding the upper end of the Company's revenue guidance by RMB13.5 million (US$2.2 million)
• Online recruitment services revenues increased 23.2% to RMB252.8 million (US$41.2 million)
• Gross margin was 92.8% compared to 93.0% during Q1 FY14
• Net income increased 26.8% to RMB59.9 million (US$9.8 million)
• Non-GAAP net income increased 19.5% to RMB68.4 million (US$11.1 million)
• Basic and diluted net income per ADS were RMB1.18(US$0.20) and RMB1.06(US$0.18), respectively
• Non-GAAP basic and diluted net income per ADS were RMB1.34(US$0.22) and RMB1.22(US$0.20), respectively
• Total cash[1] was RMB1.5 billion (US$245.8 million or equivalent to cash per ADS of US$4.8) as of September 30, 2014

"I am pleased to report another solid quarter of growth with total revenue exceeding the upper end of our guidance range," commented Mr. Evan Guo, Chief Executive Officer and Director of Zhaopin. "We served 264,978 unique customers during Q1 FY15 which represents a 28.3% increase from Q1 FY14, as our business continued to gain momentum. Growth was driven primarily by our focus on the expansion of small-and medium sized enterprise ("SME") customers in both existing and new geographies. We recently opened a call center in Suzhou which should further increase customer growth momentum by providing us with a highly cost-effective way to penetrate into lower-tier cities and better serve SMEs. This directly complements and further strengthens our leadership position in southern China following the acquisition of CJOL[2] in Shenzhen in June 2014."

"Zhaopin is China's leading career platform in terms of jobseeker traffic. By executing our strategy, we are confident in our ability to strengthen our leadership position, extend our lead and ensure sustainable operational and financial growth. Our continued high profitability and strong balance sheet position provide the resources to re-invest in growing our business, including expanding our services and product offerings and entering into new geographies. Furthermore, Zhaopin's strong balance sheet position will enable us to seize merger and acquisition opportunities to accelerate growth and create synergies within our business. I am confident that we have the right strategy in place and the required management capabilities to continuously increase our market share of jobseekers and employers, and strengthen our position as China's leading career platform."

First Quarter Fiscal Year 2015 Unaudited Financial Results

Revenues

Total revenues were RMB293.5 million (US$47.8 million) in Q1 FY15, an increase of 22.6% from RMB239.3 million in Q1 FY14.

Online recruitment services revenues for Q1 FY15 were RMB252.8 million (US$41.2 million), a 23.2% increase from RMB205.2 million for Q1 FY14. The increase was primarily driven by growth in the number of unique customers using the Company's online recruitment services. The Company served 264,978 unique customers during Q1 FY15, representing a 28.3% increase compared with 206,579 unique customers served during Q1 FY14 driven by increased efforts to acquire and retain customers and growing usage of the internet as a recruitment channel by employers. As anticipated, average revenue per unique customer ("ARPU") decreased 3.9% during Q1 FY15 as compared to Q1 FY14 primarily due to the addition of new customers, who generally purchase introductory and lower-priced services at first. The growth in unique customers is a result of the Company's strategic focus on continued geographic expansion and acquisition of new customers, particularly across lower-tier cities.

Other services revenues for Q1 FY15 were RMB40.7 million (US$6.6 million), representing an increase of 19.3% from RMB34.1 million compared to Q1 FY14.

Other services revenues refer to revenues from various complementary services that cater to the different needs in a jobseeker's career life cycle, from college to graduation, first time job seeking through changing jobs. These services are highly strategic in establishing and deepening Zhaopin's relationship with jobseekers and employers. As demand outgrows talent supply in China, these services will become increasingly important to help our customers source the best talent available.

• Campus recruitment services revenues for Q1 FY15 were RMB14.7 million (US$2.4 million), a 21.0% increase from RMB12.1 million for Q1 FY14. The increase was driven primarily by the increase in number of campus recruiting events the Company organized and completed for its customers as companies compete to attract talent.
• Assessment services revenues for Q1 FY15 were RMB13.7 million (US$2.2 million), a 39.4% increase from RMB9.9 million for Q1 FY14. The increase in assessment services revenues was driven primarily by increased market demand and the Company's focus on key industries to promote its assessment services. These services are becoming increasingly popular for employers to evaluate the disposition and skills of potential candidates. Assessment services revenues accounted for 4.7% of total revenues during Q1 FY15, an increase from 4.1% in Q1 FY14.
• Other human resource related revenues for Q1 FY15 were RMB12.3 million (US$2.0 million), a 1.2% increase from RMB12.2 million for Q1 FY14. The increase was primarily due to increased revenues from new service lines including training and overseas recruitment services, which was partially offset by a decline in print revenues as we continue to strategically wind down this product offering.

Gross Profit and Gross Margin

Gross profit for Q1 FY15 was RMB268.3 million (US$43.7 million), an increase of 23.8% from RMB216.7 million for Q1 FY14.

Gross margin for Q1 FY15, as measured by gross profit as a percentage of net revenue, was 92.8%, compared with 93.0% in Q1 FY14.

Operating Expenses

Operating expenses for Q1 FY15 were RMB200.0 million (US$32.6 million), representing an increase of 21.0% from RMB165.2 million for Q1 FY14.

• Sales and marketing expenses for Q1 FY15 were RMB133.4 million (US$21.7 million), representing an increase of 22.3% from RMB109.1 million for Q1 FY14 primarily due to increase in sales headcount, higher sales team compensation and business development expenses, and higher rental costs. As a percentage of net revenues, sales and marketing expenses decreased slightly from 46.8% for Q1 FY14 to 46.2% for Q1 FY15 primarily because (i) the Company's growth in revenues outpaced the increase in expenditures on sales team compensation and sales force expansion; and (ii) the Company reduced its spending on offline advertising activities to optimize returns on marketing investments. Sales and marketing expenses for Q1 FY15 included share-based compensation expenses of RMB0.1 million (US$0.02 million), compared to RMB0.2 million in Q1 FY14.
• General and administrative expenses for Q1 FY15 were RMB66.6 million (US$10.8 million), representing an 18.7% increase from RMB56.1 million for Q1 FY14. The increase was primarily driven by an increase in employee compensation costs, professional services fees and depreciation expenses. The increase in professional fees was primarily due to costs associated with being a public company. The Company relocated its Beijing headquarters in July 2014 and expanded rented office space in several cities to support business growth. General and administrative expenses for Q1 FY15 included share-based compensation expenses of RMB8.4 (US$1.4 million) million as compared to RMB9.8 million for Q1 FY14.

Income from Operations

Income from operations for Q1 FY15 was RMB68.4 million (US$11.1 million), representing a 32.7% increase from RMB51.5 million for Q1 FY14.Operating margin, as measured by income from operations as a percentage of net revenues, was 23.7% in Q1 FY15, compared with 22.1% in Q1 FY14. In Q1 FY15, the Company recognized total share-based compensation expenses of RMB8.5 million (US$1.4 million) compared with RMB10.0 million in Q1 FY14. Excluding share-based compensation expenses, non-GAAP income from operations for Q1 FY15 was RMB76.9 million (US$12.5 million), as compared to RMB61.6 million during Q1 FY14. Excluding share-based compensation expenses, operating margin would be 26.6% in Q1 FY15, compared with 26.4% in Q1 FY14.

Other Income, net

Net other income for Q1 FY15 was RMB0.2 million (US$0.03 million), representing a 91.5% decrease from RMB2.0 million for Q1 FY14. Other income included local government financial subsidies of RMB5.1 million (US$0.8 million) in Q1 FY15, compared with RMB3.3 million in Q1 FY14. Other income for Q1 FY15 was offset by a one-time tax expense of RMB4.8 million (US$0.8 million) arising from the change of shareholders of a consolidated affiliated entity.

Net Income

Net income for Q1 FY15 was RMB59.9million (US$9.8million), representing a 26.8% increase from RMB47.2 million for Q1 FY14.

Non-GAAP net income for Q1 FY15 was RMB68.4 million (US$11.1 million), a 19.5% increase from RMB57.3 million for Q1 FY14.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS for Q1 FY15 were RMB1.18 (US$0.20) and RMB1.06 (US$0.18) respectively, compared with basic and diluted net income per ADS of RMB1.20 and RMB1.04, respectively for Q1 FY14.

Non-GAAP basic and diluted net income per ADS for Q1 FY15 were RMB1.34 (US$0.22) and RMB1.22 (US$0.20) respectively, compared with non-GAAP basic and diluted net income per ADS of RMB1.46 and RMB1.26, respectively for Q1 FY14.

Cash and Cash Equivalents, Restricted Cash and Time Deposits

As of September 30, 2014, the Company had cash and cash equivalents, restricted cash and time deposits of RMB1,508.6 million (US$245.8 million), a 1.8% decrease from RMB1,536.7 million as of June 30, 2014. The decrease was mainly due to the repayment of a bank loan of RMB128.9 million (US$21.0 million) in Q1 FY15.

Business Outlook

Based on current market conditions and the Company's current operations, total estimated revenues for the second quarter of fiscal year 2015 are expected to be in the range of RMB325 million (US$53.0 million) to RMB335 million (US$54.6 million). This represents management's current, preliminary view, which is subject to change.

Exchange Rate

This announcement contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the exchange rate of RMB6.1380 to US$1.00, as set forth in the H.10 statistical release of the Federal Reserve Board on September 30, 2014.

Recent Developments

On October 20, 2014, the Company announced the opening of its second call center in Suzhou, Jiangsu Province. The Suzhou call center is expected to facilitate the acquisition of new customers in lower-tier cities, expand Zhaopin's market share in southern China, and enable the Company to better serve SMEs in a more cost-effective manner.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (GAAP), Zhaopin uses non-GAAP measures of adjusted income from operations, adjusted net income, adjusted net income per share and adjusted net income per ADS, which are adjusted from results based on GAAP to exclude share-based compensation expenses. The Company believes that excluding share-based compensation expenses from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expenses are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. Zhaopin also believes these non-GAAP measures excluding share-based compensation expenses, are important in helping investors to understand the Company's current financial performance and future prospects and to compare business trends among different reporting periods on a consistent basis. The presentation of these additional measures should not be considered a substitute for or superior to GAAP results or as being comparable to results reported or forecasted by other companies. The non-GAAP measures have been reconciled to GAAP measures in the attached financial statements.

About Zhaopin Limited

Zhaopin is a leading career platform in China, focusing on connecting users with relevant job opportunities throughout their career lifecycle. The Company's zhaopin.com website is the most popular career-focused website in China as measured by average daily unique visitors in each month of 2013 and up to and including September2014. Zhaopin is the second largest online recruitment services provider as measured by revenues in 2013 and up to and including September 2014. The Company's over 92.4 million registered users include diverse and educated job seekers who are at various stages of their careers and are in demand by employers as a result of the general shortage of skilled and educated workers in China. In the fiscal year ended June 30, 2014, approximately 18.1 million job postings[3] were placed on Zhaopin's platform by 335,168 unique customers including multinational corporations, small and medium-sized enterprises and state-owned entities. The quality and quantity of Zhaopin's users and the resumes in the Company's database attract an increasing number of customers. This in turn leads to more users turning to Zhaopin as their primary recruitment and career- related services provider, creating strong network effects and significant entry barriers for potential competitors. For more information, please visit http://www.zhaopin.com.

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Zhaopin may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about Zhaopin's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: Zhaopin's goals and strategies; its future business development, financial condition and results of operations; its ability to retain and grow its user and customer base for its online career platform; the growth of, and trends in, the markets for its services 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 Zhaopin does not undertake any obligation to update such information, except as required under applicable law.

For more information, please contact:

Zhaopin Limited
Ms. Jessica Ye
Executive Vice President
[email protected]

Christensen

In China
Mr. Christian Arnell
Phone: +86-10- 5900-1548
E-mail: [email protected]

In U.S.
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: [email protected] 

SOURCE Zhaopin Limited

Related Links

http://www.zhaopin.com