51job's CEO Discusses Q2 2011 Results - Earnings Call Transcript

As expected our print advertising revenue decreased in the second quarter due to the discontinuation of operations in certain cities over the past year and the resulting decline in page volumes. Going forward we believe that print revenue contribution will progressively decrease as more employers choose our online services for their recruitment advertising needs.

While favorable market conditions have played an important role in growth, our margin improvement has been driven by the significant economy of scale and operating efficiency we have built into our service model. Gross margin hit a record high of 71.8% and excluding share based compensation, which increased meaningfully in the second quarter, operating margin reached 37.6%. As we grow and more deeply penetrate the market, we believe there is further room for margin expansion to exploit synergies between our businesses and to increase our share of overall our HR budgets.

We are on pace for an exceptional year of revenue growth and profitability. With our proven track record for execution, established industry leadership position and powerful brand we possess distinct competitive advantages and move forward confidently to position 51job for sustainable, profitable growth over the long term. I will now turn the call over to Kathleen for a more detailed financial review.

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