51job, Inc. (JOBS) Q2 2012 Earnings Call August 9, 2012 9:00 p.m. ET Executives Linda Chien – Head of IR Rick Yan – President and CEO Kathleen Chien – COO and Acting CFO Analysts Philip Wan – Morgan Stanley Wendy Huang - CIMB Securities Stephen Sheldon - William Blair & Company Alicia Yap – Barclays Capital Alex Leung – SAC Capital Wallace Cheung – Credit Suisse Presentation Operator
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Among the factors that could cause actual results to differ are the number of recruitment advertisements placed; sales orders received and customer contracts executed during the remaining weeks of the third quarter of 2012; any accounting adjustments that may occur during the quarterly close; fluctuations in the value of the renminbi against the US dollar and other currencies; behavioral and operational changes of customers in meeting their human resource needs as they respond to evolving social, economic and political changes in China as well as stock market volatilities; introduction by competitors of new or enhanced products or services; price competition in the market for the various human resource services that the company provides in China; acceptance of new products and services developed or introduced by the company outside of the human resources industry; and fluctuations in general economic conditions.For additional information on these and other factors that may affect the company’s financial results, please refer to the Risk Factors section of the company’s filings with the Securities and Exchange Commission. 51job undertakes no obligation to update targets prior to announcing final results for the third quarter of 2012 or as a result of new information, future events or otherwise. Also I would like to remind you that during the course of this call we may discuss non-GAAP measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the tables appended to the press release. This conference call is being broadcast on the internet and is available through our website at 51job.com. Now I’ll turn the call over to Rick. Rick Yan Thank you, Linda and welcome to today’s call. I will begin with a review of the second quarter, followed by Kathleen with a detailed presentation of our financial results. Then I will discuss current market conditions and our guidance. Finally, we’ll open the call to your questions.
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.
In addition, our integrated one-stop shop approach to sales and customer service enables us to leverage our existing assets across all business lines. We believe this will greatly benefit our total operating efficiency and productivity as other HR services area grows over time.Read the rest of this transcript for free on seekingalpha.com