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51job's CEO Discusses Q2 2012 Results - Earnings Call Transcript

During the second quarter, employers became more cautious about hiring amid increased economic uncertainty in China. Market demand for our recruitment services softened and this resulted in lower and slower top line growth with total revenues coming in at RMB360 million for the second quarter. Non-GAAP EPS of RMB2.1 was above our forecast range due to improved operating efficiency and cost management.

Taking a closer look at each revenue area, our online recruitment business increased 18% year over year. After completing a solid level of hiring during the post Chinese New Year period in February and March, we observed less activity in the second quarter as budget conscious employers faced stronger macro-headwinds. However despite these more challenging conditions, we transacted with an additional 15,000 enterprises compared to the year ago quarter, raising the number of unique employers using our online services to over 184,000 in the second quarter.

Reflecting the progressive declines in secular demand for print advertising services, as well as our decision to gradually discontinue these services, print revenues declined significantly in the second quarter. We expect to further reduce the number of cities where print is provided in the coming quarters. In the near term, this revenue loss from print will be a drag to our total revenue performance and cost comparisons to prior periods. However once this transition is completed, we believe the reallocation of resources to our faster growing business areas will position the company for strong future growth.

A continued bright spot in the second quarter was the steady development and rising contribution of our other HR services area. Revenues grew 28% year over year and employer demand for our business process outsourcing and training services has remained healthy. The recurring nature of our outsourcing services in particular has provided an offsetting effect to some of the hiring market volatility.

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