Q3 2015 Company Presentation
Safe Harbor Statement and Disclosure Statements in this presentation regarding 51job s future business, operating results and financial condition constitute "forwardlooking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon management s current views and expectations and actual results could differ materially. Among the factors that could cause the Company s actual results to differ are, but not limited to, market acceptance of its services; its ability to expand into other recruitment and human resource services; its ability to control operating costs and expenses; its potential need for additional capital and the availability of such capital; changes in its management team and other key personnel; behavioral and operational changes of customers in meeting their human resource needs as they respond to evolving social, economic, regulatory and political changes in China as well as stock market volatilities; introduction by its 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; fluctuations in the value of the Renminbi against the U.S. dollar and other currencies; acceptance of new products and services developed or introduced by the Company outside of the human resources industry; any risks related to acquisitions or investments the Company has made or will make in the future; and fluctuations in general economic conditions. For additional information on these and other potential factors that could affect the Company s financial results, please refer to the Company s filings with the Securities and Exchange Commission. 51job undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. To supplement the consolidated financial statements presented in accordance with US GAAP, the Company uses non-gaap financial measures to exclude share-based compensation expense, gain/loss from foreign currency translation, convertible senior notes issuance costs, change in fair value of convertible notes and change in fair value of zero-strike call options, as well as the related tax effect of these items. The Company believes excluding these items from its non-gaap financial measures is useful for its management and investors to assess and analyze the Company s core operating results as these expenses are not directly attributable to the underlying performance of the Company s business operations and may not impact its cash earnings. The Company also believes that excluding these 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 facts and statistics used in this presentation relating to the human resource services industry and economy in China are derived from various government and institute research publications. While 51job has taken reasonable care to ensure that these facts and statistics presented are accurately reproduced from such sources, 51job has not independently verified them. These facts and statistics may not be comparable to similar facts and statistics collected for the industry or economy in the United States and other countries. 1
Leading HR Services Provider in China One-Stop Shop for Employers Human Resource Needs Leader in Online and HR Services Segments Large National Footprint Diversified Customer Base in a Focused Vertical 2
Comprehensive Product Offering Business Lines 2014 Revenue Mix Products Description Online Recruitment Services 66% Core offerings: 51job.com (age 20s-30s) ehire (employer platform) Additions: 51jingying.com (experienced workers) Yingjiesheng.com (college) Leading technology platforms for entire white collar hiring range from college graduates to experienced professionals Employers can post ads and search/ download resumes for a fee Job seekers can maintain an account and apply to jobs for free Other Human Resource Related Services 33% Business process outsourcing Training & assessment Campus recruitment Executive search HR conferences Compensation analysis Large portfolio of one-stop solutions to meet wide range of HR needs Integrated online/offline strategy to deliver high quality services Shared salesforce and resources to drive combined scale efficiency Print Advertising 1% 51job Weekly Recruitment publication printed in one remaining city (Xian) Managing pro-active business transition away from print since 2010 3
Unique Integrated Services Model Employment Lifecycle Products & Services Tangible Results Identifying Vast Candidate Pool High Quality Resumes Attracting Retaining Developing Online Mobile Superior Customer Service End-to-End Solutions 4
Key Investment Highlights Economic Growth and Secular Trends Underpinning HR Market Development Premier Human Resource Brand and Online Leader Large Sales Force with Nationwide Footprint Scalable Operating Platform with Margin Improvement Opportunity Highly Experienced Management Team with a Proven Track Record 5
China s Economic Growth and Development Economic Growth Comparison Registered Businesses in China Recent Selected Economic and Demographic Data U.S. China GDP (US$B) 17,421 10,266 (in millions) 43.0 47.2 51.4 56.9 65.3 GDP Growth 2.4% 7.4% 52% 2004-2014 Avg Growth 1.7% 9.3% Population (MM) 320 1,368 Urban 81% 55% 2010 2011 2012 2013 2014 Individual businesses Private enterprises Increasing Contribution of Services Sector (as % of total China GDP) (in millions) College Graduates in China 33% 40% 41% 43% 48% 6.3 6.6 6.8 7.0 7.3 1995 2000 2005 2010 2014 2010 2011 2012 2013 2014 Source: United States U.S. Census, BEA China National Bureau of Statistics, PRC State Administration for Industry and Commerce, PRC Ministry of Education 6
Leadership in Online Segment Growth of Internet Usage in China 2010 2011 2012 2013 2014 Internet Users (MM) 457 513 564 618 649 % of Total Population 34% 38% 42% 46% 48% Mobile Internet Users (MM) 303 356 420 500 557 % of Internet Users 66% 69% 74% 81% 86% Source: CNNIC Registered User Accounts at 51job.com Job Seeker Resumes at 51job.com (in millions, year end as of Dec 31 and 3Q as of September 30) (in millions, year end as of Dec 31 and 3Q as of September 30) 45 54 64 73 84 94 36 44 54 64 75 87 2010 2011 2012 2013 2014 3Q15 2010 2011 2012 2013 2014 3Q15 7
National Coverage with Large Direct Sales Force 3,600+ Direct Sales Force Covering 104 Cities 25 Sales Offices Sales Coverage for Online Services Wuhan Call Center 8
Scalable Operating Platform for Margin Expansion (RMB MM, Margin Calculated as % of Net Revenues) Gross Profit and Margin Performance 1,336 929 1,042 1,166 686 72% 72% 73% 73% 468 67% 232 51% 293 52% 366 450 438 55% 56% 54% 61% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 9
Highly Experienced Management Team Rick Yan, Chief Executive Officer & Co-Founder Tenure: 15 years Director and Head of China Practice, Bain & Company (11 years) 2 HBR articles on China, speaker at many business conferences MBA Distinction, INSEAD, B.Sc and M.Phil, Hong Kong University Kathleen Chien COO & Acting CFO, Co-Founder Tenure: 16 years David Jin Senior VP Tenure: 15 years Tao Wang Vice President Tenure: 15 years 10
World Class Board of Directors David Chao Chairman of the Board Li-Lan Cheng Independent Director Co-founder and General Partner of DCM (venture capital firm) in the Silicon Valley Previously worked at McKinsey & Company, Apple and Recruit Director of Renren Inc. COO of E-House (China) Holdings Limited Director of Country Style Cooking Restaurant Chain Co., Ltd. and Le Gaga Holdings Limited Eric He Independent Director CFO, YY Inc. Kazumasa Watanabe Non-executive director Corporate executive officer of Recruit Holdings Co., Ltd. (largest HR services company in Japan) Head of research and development for Asia sales promotion business Rick Yan Director and CEO Prior experience: Director and the Head of China Practice at Bain & Company for 11 years 11
Financial Highlights
Historical Revenue Performance and Contribution Total Revenue Growth Trend Despite Periods of Economic Uncertainty and Print Transition (RMB MM) 480 596 698 844 860 817 1,090 1,370 1,512 1,677 1,897 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Growing Contribution from High Potential Online and Other HR Services Businesses (Calculated as % of Total Revenues) 80% 60% 40% 20% 0% Online Other HR Print 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 12
Capturing Attractive Online Opportunity (in thousands) Unique Employers Using Online Services (1) 39 57 75 94 103 143 214 244 272 334 388 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Online Recruitment Services Revenues (2) (RMB MM) 803 943 1,084 1,248 112 159 220 283 312 333 543 13 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (1) An employer who purchases online services multiple times or in multiple quarters is only counted as ONE unique employer for the annual figure. (2) Government policy of 6% value-added tax on online revenues starting June 1, 2014 affects growth rate and margin comparability to prior periods.
Balancing Returns and Investments for Long-Term Growth Sales and Marketing Expenses (1) Operating Income (1) (RMB MM, Margin Calculated as % of Net Revenues) 552 451 363 324 274 211 211 30% 26% 27% 28% 27% 25% 25% 2008 2009 2010 2011 2012 2013 2014 (RMB MM, Margin Calculated as % of Net Revenues) 536 554 479 605 296 37% 37% 124 147 29% 34% 33% 15% 19% 2008 2009 2010 2011 2012 2013 2014 Quarterly Unique Employers (2) Quarterly Online ARPU (3) (in thousands) 238 236 259 280 284 279 288 301 296 (RMB) 1,169 1,226 1,163 1,114 1,112 1,144 1,077 1,116 1,157 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 14 (1) Excludes share-based compensation expense. Government policy of 6% value-added tax on online revenues starting June 1, 2014 affects growth rate and margin comparability to prior periods. (2) An employer who purchases online services multiple times or in multiple quarters is only counted as ONE unique employer for the annual figure. (3) Reflects the adoption of a 6% value added tax starting on June 1, 2014, which reduced the amount of online revenues recognized.
Consistent Profitability and Strong Cash Flow Generation Track Record of Profitability (1) Non-GAAP Net Income (RMB MM) 449 520 572 638 68 87 137 151 122 140 265 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Cash Flow From Operations Strong Cash Position for M&A (2) (RMB MM) (RMB MM) 747 756 4,495 4,714 344 497 575 1,600 2,054 2,531 3,148 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 3Q15 15 (1) Excludes share-based compensation expense, gain/loss from foreign currency translation, convertible notes issuance costs in 2014 and mark-tomarket changes in fair value of convertible notes and call options. (2) Includes cash and short-term investments, which consist of certificates of deposit with original maturities of three months to one year.
Growth Initiatives
Key Growth Initiatives Increase customer wallet share through up-selling and cross-selling New product development to widen service scope Selectively pursue strategic investments and acquisitions Expand salesforce to drive new customer acquisition 16