Zhaopin Limited Reports Second Quarter Fiscal Year 2015 Financial Results

BEIJING, Feb. 16, 2015 /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 second quarter ended December 31, 2014.

Throughout the release, one American Depositary Share ("ADS") represents two Class A ordinary shares. Fiscal year refers to the 12 months ended June 30.

Second Quarter Fiscal Year 2015 Financial Highlights

Percentage growth metrics refer to second quarter fiscal year 2015 ("Q2 FY15") compared to second quarter fiscal year 2014 ("Q2 FY14")

• Total revenues increased 18.7% to RMB341.8 million (US$55.1 million), exceeding the upper end of the Company's revenue guidance by RMB 6.8 million (US$ 1.1 million).
• Online recruitment services revenues increased 20.5% to RMB264.0 million (US$42.6 million)
• Gross margin was 89.0% compared to 88.4% during Q2 FY14
• Net income increased 51.7% to RMB61.5 million (US$9.9 million)
• Excluding share-based compensation expense, non-GAAP net income increased 54.0% to RMB68.0 million (US$11.0 million)
• Basic and diluted net income per ADS attributable to ordinary shareholders were RMB1.20 (US$0.20) and RMB1.10 (US$0.18), respectively, compared to basic and diluted net income per ADS attributable to ordinary shareholders of RMB0.98 and RMB0.88, respectively, for the same period of last fiscal year.
• Non-GAAP basic and diluted net income per ADS were RMB1.32  (US$0.22) and RMB1.22  (US$0.20), respectively, compared to non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders of RMB1.06 and RMB0.94, respectively, for the same period of last fiscal year.
• Total cash[1] was RMB1.7 billion (US$267.9 million or equivalent to cash per ADS of approximately US$5.2) as of December 31, 2014.

"I am pleased to report another strong quarter of both financial and operational growth in which we again exceeded the upper end of our revenue guidance," commented Mr. Evan Guo, Chief Executive Officer and Director of Zhaopin. "Our focus on expanding market share amongst small-and-medium sized enterprises in both existing and new geographies was a key driver of growth during a quarter in which we served 272,281 unique customers[2], a 29.5% increase from the same period last year."

"As China's leading career platform in terms of jobseeker traffic[3], we have always distinguished ourselves by focusing on engaging the largest number of jobseekers on our platform at various stages of their career lifecycle. We are pleased with the progress we have made this year in expanding the scale of our platform, enhancing our brand recognition and broadening our service offerings with products such as www.highpin.cn, Zhaopin's high-end online recruitment platform. We believe that we are better meeting the needs of our customers and when combined with Zhaopin's leadership in jobseeker metrics, this is leading to strong growth in the number of unique customers served and improvements in customer retention. When combined with our growing profits, Zhaopin's strong balance sheet position and increasing operating efficiency allow us to carefully assess merger and acquisition opportunities as we re-invest in expanding our business eco-system. I am confident in our ability to further penetrate into lower-tier cities, improve the user experience and leverage the opportunities that emerge from our mobile strategy as we work to strengthen our leadership position and generate sustainable returns for our shareholders.

Second Quarter Fiscal Year 2015 Unaudited Financial Results

Revenues

Total revenues were RMB341.8 million (US$55.1 million) in Q2 FY15, an increase of 18.7% from RMB288.0 million in Q2 FY14.

Online recruitment services revenues for Q2 FY15 were RMB264.0 million (US$42.6 million), a 20.5% increase from RMB219.1 million for Q2 FY14. The increase was primarily driven by growth in the number of unique customers using the Company's online recruitment services. The Company served 272,281 unique customers during Q2 FY15, representing a 29.5% increase compared with 210,178 unique customers served during Q2 FY14. The increase in unique customers was primarily driven by the Company's increased efforts to acquire and retain customers and the growing usage of the internet as a recruitment channel by employers. As anticipated and in-line with the Company's focus on growing market share among new customers, average revenue per unique customer ("ARPU") decreased 7.0% during Q2 FY15 compared to Q2 FY14. The decrease was mainly 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.

Other services revenues[4] for Q2 FY15 were RMB77.8 million (US$12.5 million), representing an increase of 12.9% from RMB68.9 million during Q2 FY14. The increase in other services revenues was primarily due to growth from assessment and campus recruitment services. Growth in assessment services was mainly driven by increased market demand and the Company's focus on key industries while growth in campus recruitment services was driven primarily by the increase in number of campus recruiting events the Company organized.

Other services revenues refer to revenues from campus recruitment services, assessment services, and other human resource related services, which are 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. Strategically, these services play an important role in establishing and deepening Zhaopin's relationship with jobseekers and employers. The continued strong financial results in other services revenues are validation of our ability and effectiveness of our services to meet the evolving needs of job seekers and employers.

Gross Profit and Gross Margin

Gross profit for Q2 FY15 was RMB299.9 million (US$48.3 million), an increase of 20.2% from RMB249.5 million for Q2 FY14.

Gross margin for Q2 FY15, as measured by gross profit as a percentage of net revenues, was 89.0%, compared with 88.4% in Q2 FY14.

Operating Expenses

Operating expenses for Q2 FY15 were RMB228.1 million (US$36.8 million), representing an increase of 17.6% from RMB194.0 million for Q2 FY14.

• Sales and marketing expenses for Q2 FY15 were RMB165.4 million (US$26.7 million), representing an increase of 19.7% from RMB138.2 million for Q2 FY14 primarily due to increases in sales team headcount and compensation, business development expenses, advertising expenses, higher rental costs associated with the expansion of the Company's business and the opening of the second call center in Suzhou. The increase in sales and marketing expenses is consistent with Zhaopin's strategy of re-investing to grow its market share in China's fast growing online recruitment market. As a percentage of net revenues, sales and marketing expenses remained stable at 49.1% for Q2 FY15 compared to 49.0% for Q2 FY14. Sales and marketing expenses for Q2 FY15 included share-based compensation expenses of RMB0.1 million (US$0.01 million), compared to RMB0.2 million in Q2 FY14.
• General and administrative expenses for Q2 FY15 were RMB62.7 million (US$10.1 million), representing a 12.5% increase from RMB55.7 million for Q2 FY14. The increase was primarily driven by an increase in employee compensation costs, share-based compensation, depreciation, and rental expenses associated with the relocation or expansion of Zhaopin offices to support growth in several cities, which was partially offset by a decline in professional services fees. General and administrative expenses for Q2 FY15 included share-based compensation expenses of RMB6.4 million (US$1.0 million) as compared to RMB3.4 million for Q2 FY14.

Income from Operations

Income from operations for Q2 FY15 was RMB71.8 million (US$11.6 million), representing a 29.3% increase from RMB55.5 million for Q2 FY14. Operating margin, as measured by income from operations as a percentage of net revenues, expanded to 21.3% in Q2 FY15 compared with 19.7% in Q2 FY14. In Q2 FY15, the Company recognized total share-based compensation expenses of RMB6.5 million (US$1.0 million) compared with RMB3.6 million in Q2 FY14. Excluding share-based compensation expenses, non-GAAP income from operations for Q2 FY15 was RMB78.3 million (US$12.6 million), as compared to RMB59.1 million during Q2 FY14. Excluding share-based compensation expenses, operating margin would be 23.2% in Q2 FY15, compared with 21.0% in Q2 FY14.

Investment and Interest Income, net

Net investment and interest income for Q2 FY15 was RMB5.3 million (US$0.9 million), representing a 257.4% increase from RMB1.5 million for Q2 FY14. The significant increase in net investment and interest income was primarily due to (i) interest and investment income from bank deposits and other high interest bearing products; and (ii) the repayment of a portion of the Company's bank loans resulting in a decrease in interest expense and related bank charges.

Other Expense, net

Net other expense for Q2 FY15 was RMB2.2 million (US$0.4 million), representing a 127.1% increase from RMB1.0 million for Q2 FY14. Other expense included an office restoration expense and the forfeiture of a Shanghai branch office's rental deposit due to early termination of the rental contract. 

Net Income

Net income for Q2 FY15 was RMB61.5 million (US$9.9 million), representing a 51.7% increase from RMB40.5 million for Q2 FY14.

Non-GAAP net income for Q2 FY15 was RMB68.0 million (US$11.0 million), a 54.0% increase from RMB44.2 million for Q2 FY14.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS for Q2 FY15 were RMB1.20 (US$0.20) and RMB1.10 (US$0.18) respectively, compared with basic and diluted net income per ADS of RMB0.98 and RMB0.88, respectively for Q2 FY14.

Non-GAAP basic and diluted net income per ADS for Q2 FY15 were RMB1.32 (US$0.22) and RMB1.22 (US$0.20) respectively, compared with non-GAAP basic and diluted net income per ADS of RMB1.06 and RMB0.94, respectively for Q2 FY14.

Cash and Cash Equivalents, Restricted Cash and Time Deposits

As of December 31, 2014, the Company had cash and cash equivalents, restricted cash and time deposits of RMB1,662.1 million (US$267.9 million), a 8.2% increase from RMB1,536.7 million as of June 30, 2014. 

Net cash flow generating from operating activities in Q2 FY15 amounted to RMB164.3 million (US$26.5 million), representing an increase of 59.9% from RMB102.7 million in the same period of last fiscal year.

Six Months Ended December 31, 2014 Unaudited Financial Results

Total revenues for the six months ended December 31, 2014 were RMB635.4 million (US$102.4 million), an increase of 20.5% from RMB527.4 million for the same period in 2013.

Online recruitment services revenues for the six months ended December 31, 2014 were RMB516.9 million (US$83.3 million), a 21.8% increase from RMB424.4 million for Q2 FY14.

Gross profit for the six months ended December 31, 2014 was RMB568.2 million (US$91.6 million), an increase of 21.9% from RMB466.2 million for the same period in 2013.

Income from operations for the six months ended December 31, 2014 increased 30.9% to RMB140.1 million (US$22.6 million) from RMB107.1 million for the same period in 2013.

Net income for the six months ended December 31, 2014 was RMB121.4 million (US$19.6 million), representing a 38.3% increase from RMB87.8 million for the same period in 2013.

Non-GAAP net income for the six months ended December 31, 2014 was RMB136.4 million (US$22.0 million), a 34.5% increase from RMB101.4 million for the same period in 2013.

Basic and diluted net income per ADS for the six months ended December 31, 2014 were RMB2.36 (US$0.38) and RMB2.16 (US$0.34) respectively, compared with basic and diluted net income per ADS of RMB2.16 and RMB1.88, respectively for the same period in 2013.

Non-GAAP basic and diluted net income per ADS for the six months ended December 31, 2014 were RMB2.66 (US$0.44) and RMB2.44 (US$0.40) respectively, compared with non-GAAP basic and diluted net income per ADS of RMB2.50 and RMB2.16, respectively for the same period in 2013.

Business Outlook

Based on current market conditions and the Company's current operations, total revenues for the third quarter of fiscal year 2015 are expected to be in the range of RMB305 million (US$49.2 million) to RMB315 million (US$50.8 million), representing a 13.5%-17.0% increase from the same period last year. 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 RMB6.2046 to US$1.00, as set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2014.

Recent Developments

From August to September 2014, the Company jointly conducted a survey with Peking University's Corporate Social Responsibility and Employer Brand Communication Research Center to identify the "Best Employers in China for 2014." The results of the survey are intended to provide job seekers with a useful tool to evaluate potential employers throughout their career lifecycle and provide employers with objective insight into job seekers' needs.

On November 26, 2014, the Company announced the launch of its bi-annual 'Graduate with a Future' employment campaign to help connect China's millions of new university graduates with relevant job opportunities.

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 2014. Zhaopin is the second largest online recruitment services provider as measured by revenues in 2014. The Company's over 93.8 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[5] 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