By | May 23, 2018

58.com Inc. (NYSE: WUBA) negotiated the trading capacity of 1112227 shares and observing the average volume of last three months the stock traded 962.31K shares. The stock has market cap of $12750.14M and relative volume of 1.16.

WUBA stock has a beta of 1.98 compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. The stock therefore has above average level of market risk. During the past week, the stock’s average weekly volatility was 3.02% and 2.81% volatility over the past 30 days.

Wall Street Analysts suggested rating of 2. This rating is on a scale of 1 to 5. A rating of a 1 or a 2 would signify a mean Buy view. A rating of 4 or 5 would specify a mean Sell opinion. A rating of 3 would show a mean Hold recommendation.  Captivating a peek at sell-side analyst insights, we can understand that the recent mean target price for the company is $85.83.

58.com Inc. (NYSE: WUBA), China’s largest online market place for classifieds, declared its unaudited financial results for the first quarter ended March 31, 2018.

Mr. Michael Yao, Chairman and Chief Executive Officer of 58.com commented “We delivered solid financial and operational results during the quarter”, “Our job category in particular continues to grow faster than other major categories in terms of revenues and number of paying customers which I believe is a clear indication of its market leading position. Our housing category remains resilient despite low overall transaction volumes in China’s housing market. Two of our newest early-stage businesses, Zhuan Zhuan, the C2C used goods transaction platform, and 58 Town, a version of 58 specifically designed for rural areas, both continue to grow rapidly. We continue to launch more features across our platform and are pushing further into lower tier cities to take advantage of growth opportunities there.”

Mr. Hao Zhou, Chief Financial Officer of 58.com added, “Revenues during the quarter increased a solid 24.3% year-over-year despite the impact from Chinese New Year falling later than usual. On a sequential basis, revenues decreased due to typical seasonality. Net and operating margin continued to improve significantly year-over-year. At the same time, our total number of employees at the end of this quarter decreased by approximately 7% year-over-year, which demonstrates our ability to leverage technology to increase operational efficiency and create more synergies between our various business segments.”

First Quarter 2018 Financial Results

Revenues

Total revenues were RMB2,471.2 million (US$393.0 million), representing an increase of 24.3% from RMB1,988.3 million in the same quarter of 2017.

Membership revenues were RMB928.9 million (US$147.7 million), an increase of 17.1% from RMB792.9 million in the same quarter of 2017. The increase in membership revenues was primarily driven by an increase in the number of subscription-based paying membership accounts. The total number of subscription-based paying membership accounts on the Company’s platforms, which include 58.com, Ganji.com and Anjuke.com, was approximately 2,665,000 during the first quarter of 2018, a 20.5% increase from approximately 2,212,000 in the same quarter of 2017. Subscription-based paying membership accounts refer to the users who have purchased the Company’s subscription-based membership services and whose membership subscriptions are active at any point during a given period. Some paying members purchase membership services from more than one platform from the Company, which contributes separately to the revenues of each platform.

Online marketing services revenues were RMB1,492.0 million (US$237.3 million), an increase of 31.2% from RMB1,137.0 million in the same quarter of 2017. The increase was primarily driven by the increasing adoption and effectiveness of the Company’s various online marketing services such as real time bidding, priority listing and various other online marketing services.

Cost of Revenues

Cost of revenues was RMB257.9 million (US$41.0 million), an increase of 29.2% from RMB199.6 million during the same quarter of 2017. The year-over-year increase was primarily driven by increases in the costs of used good sold, traffic acquisition costs (“TAC”) paid to 58.com’s advertising union partners, salaries and benefits, and short message service (“SMS”) costs.

Gross Profit and Gross Margin

Gross profit was RMB2,213.2 million (US$352.0 million), an increase of 23.7% from RMB1,788.7 million during the same quarter of 2017.

Gross margin was 89.6%, compared with 90.0% during the same quarter of 2017.

Operating Expenses

Operating expenses were RMB1,946.4 million (US$309.5 million), representing an increase of 13.8% from RMB1,710.8 million in the same quarter of 2017.

Sales and marketing expenses in the first quarter of 2018 were RMB1,439.2 million (US$228.9 million), an increase of 15.5% from RMB1,246.0 million in the same quarter of 2017.

Within sales and marketing expenses, advertising expenses accounted for RMB682.0 million (US$108.5 million) and RMB512.2 million during the first quarter of 2018 and 2017, respectively. The increase was primarily due to an increase in advertising expenses associated with the promotion of the 58.com and Zhuan Zhuan brands.

Non-advertising sales and marketing expenses in the first quarter of 2018 were RMB757.2 million (US$120.4 million), an increase of 3.2% from RMB733.8 million in the same quarter of 2017. Non-advertising sales and marketing expenses include salaries, benefits, commissions and share-based compensation for the Company’s sales, sales support, customer service, and marketing dealer management personnel, as well as online and offline promotional expenses, and other operating expenses that are associated with sales and marketing activities. The increase was primarily driven by increased commissions, salaries and benefits for the Company’s sales and customer service teams.

Research and development expenses during the first quarter of 2018 were RMB346.4 million (US$55.1 million), an increase of 10.1% from RMB314.5 million in the same quarter of 2017. The increase was primarily due to increases in salaries and benefits and share-based compensation expenses for the Company’s research and development personnel for the development of new features and services.

General and administrative expenses in the first quarter of 2018 were RMB160.8 million (US$25.6 million), a 7.0% increase from RMB150.3 million in the same quarter of 2017. The increase was primarily driven by increases in salaries and benefits, and share-based compensation expenses.

Income from Operations

Income from operations was RMB266.8 million (US$42.4 million) in the first quarter of 2018, compared with RMB77.9 million in the same quarter of 2017. Operating margin, defined as income from operations divided by total revenues, was 10.8% in the first quarter of 2018, compared with 3.9% in the same quarter of 2017.

Non-GAAP income from operations was RMB411.6 million (US$65.4 million) in the first quarter of 2018, compared with RMB217.2 million in the same quarter of 2017. Non-GAAP operating margin, defined as non-GAAP income from operations divided by total revenues, was 16.6% in the first quarter of 2018, compared with 10.9% in the same quarter of 2017.

Other Income/(Expenses), net

Other income in the first quarter of 2018 was RMB8.8 million (US$1.4 million), compared with other expenses of RMB96.8 million in the same quarter of 2017. Other income in the first quarter of 2018 mainly included a RMB41.1 million investment income resulting from the purchase of short-term investments, which was offset by a RMB33.8 million share of the net loss attributable to 58 Home’s ordinary shareholders calculated based on the Company’s ordinary and preferred shareholding in 58 Home.

Net Income/(Loss) Attributable to 58.com Inc.

Net income attributable to 58.com Inc. was RMB174.6 million (US$27.8 million) in the first quarter of 2018, compared with net loss attributable to 58.com Inc. of RMB21.5 million in the same quarter of 2017. Net margin, defined as net income/(loss) attributable to 58.com Inc. divided by total revenues, was positive 7.1% in the first quarter of 2018, compared with negative 1.1% in the same quarter of 2017.

Non-GAAP net income attributable to 58.com Inc. was RMB305.8 million (US$48.6 million) in the first quarter of 2018, compared with RMB105.7 million in the same quarter of 2017. Non-GAAP net margin, defined as non-GAAP net income attributable to 58.com Inc. divided by total revenues, was 12.4% in the first quarter of 2018, compared with 5.3% in the same quarter of 2017.

Basic and Diluted Earnings/(Loss) per ADS

Basic and diluted earnings per ADS attributable to ordinary shareholders in the first quarter of 2018 were RMB1.19 (US$0.19) and RMB1.17 (US$0.19), respectively, compared with basic and diluted loss per ADS attributable to ordinary shareholders of RMB0.15 in the same quarter of 2017.

Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders in the first quarter of 2018 were RMB2.08 (US$0.33) and RMB2.05 (US$0.33), respectively, compared with RMB0.73 and RMB0.72, respectively, in the same quarter of 2017.

Cash Flow

Net cash provided by operating activities was RMB710.0 million (US$112.9 million) in the first quarter of 2018, compared with net cash provided by operating activities of RMB428.6 million in the same quarter of 2017.

Cash and Cash Equivalents, Restricted Cash and Short-term Investments

As of March 31, 2018, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB6,500.0 million (US$1,033.7 million).

Shares Outstanding

As of March 31, 2018, the Company had a total of 294,743,133 ordinary shares (including 246,702,873 Class A and 48,040,260 Class B ordinary shares) issued and outstanding. One ADS represents two Class A ordinary shares.

Business Outlook

Based on the Company’s current operations, total revenues for the second quarter of 2018 are expected to be between RMB3,100 million and RMB3,200 million. This represents a year-over-year increase of 19.6% to 23.4% in Renminbi amounts. These estimates reflect the Company’s current and preliminary view, which is subject to change.

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Irwin Rhodes

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Irwin Rhodes as a blogger and press writer, has worked on topics like earnings reports, hot stocks and market news. He is an experienced professional with 10+ years in research, analysis and reporting. He enjoys taking complex ideas and translating them into content aimed at the general public. Irwin has personal interests in health, fitness, animal care, gardening, travel, world politics, and current social issues, but always willing to learn something new. Irwin has a Masters in Applied Finance and Investment. He specializes in income trading using options, is very conservative in his style and believes patience in waiting for the best setups is the key to successful trading. He covers articles for Technology category. Email Contact: Irwin@newsregistrar.com

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