51job, Inc. Reports Second Quarter 2019 Financial Results

SHANGHAI,Aug. 6,2019 -- 51job,Inc. (Nasdaq: JOBS)("51job" or the "Company"),a leading provider of integrated human resource services in China,announced today its unaudited financial results for thesecondquarterof 2019 ended June 30,2019.

Second Quarter 2019 Financial Highlights:

Net revenues increased 7.6% over Q2 2018 to RMB963.6 million (US$140.4 million)

Online recruitment services revenues increased 3.8%

Other human resource related revenues increased 14.8%

Gross margin was 70.1% compared with 71.6% in Q2 2018

Income from operations increased 23.9% over Q2 2018 to RMB270.2 million (US$39.4 million)

Operating margin was 28.0% compared with 24.4% in Q2 2018

Fully diluted earnings per share was RMB1.00 (US$0.15)

Excluding share-based compensation expense,gain from foreign currency translation and change in fair value of convertible senior notes,as well as the related tax effect of these items,non-GAAP adjusted fully diluted earnings per share were RMB5.90 (US$0.86)

Commenting on the results,Rick Yan,President and Chief Executive Officer of 51job,said,"We continue to face tough market conditions in 2019 as economic uncertainty has weighed on companies in China. With employers being cautious on spending and highly selective in adding headcount during this business cycle,we have seen a slowdown in recruitment activity which has affected the growth of our online business. In the other HR services area,there has been some resiliency as our HR outsourcing business is making progress after operational adjustments stemming from the implementation of new tax and social insurance regulations earlier this year. Despite soft demand,we are executing our strategic plan with efficiency and cost effectiveness,which enabled us to maintain solid margins and profitability in the second quarter. With proven focus,discipline and experience,we are managing through current market challenges while continuing to invest,innovate and incubate new HR products and services that will drive 51job's growth and development over the long term."

Second Quarter 2019 Unaudited Financial Results

Net revenues for the second quarter ended June 30,2019 were RM963.6 million (US$140.4 million),an increase of 7.6% from RMB895.5 million for the same quarter in 2018.

Online recruitment services revenues for the second quarter of 2019 were RMB611.0 million (US$89.0 million),representing a 3.8% increase from RMB588.4 million for the same quarter of the prior year. The growth was driven by higher revenue per unique employer,which was partially offset by a decrease in the number of unique employers utilizing the Company's online services. Average revenue per unique employer increased 20.0% in the second quarter of 2019 as compared with the same quarter in 2018,due to up-selling efforts that resulted in the purchase of multiple and/or higher value online products and services as well as the Company's continued reallocation of sales resources away from smaller sized customer accounts. In line with the Company's strategic priority to focus more attention on higher potential employers and moderate new user additions,the estimated number of unique employers decreased 13.5% to 326,996 in the second quarter of 2019 compared with 377,831 for the same quarter of the prior year. The estimated number of unique employers in the second quarter of 2019 reflects those employers currently assigned a unique identification number in the Company's management information systems and does not include employers utilizing Lagou.com.

Other human resource related revenues for the second quarter of 2019 increased 14.8% to RMB352.6 million (US$51.4 million) from RMB307.1 million for the same quarter in 2018. The increase was primarily due to greater usage and growth of business process outsourcing,training and assessment services.

Gross profit for the second quarter of 2018 increased 5.4% to RMB675.9 million (US$98.5 million) from RMB641.0 million for the same quarter of the prior year. Gross margin,which is gross profit as a percentage of net revenues,was 70.1% in the second quarter of 2019 compared with 71.6% for the samequarterin 2018 due to higher employee compensation expenses.

Operating expenses for the second quarter of 2019 decreased 4.1% to RMB405.6 million (US$59.1 million) from RMB422.9 million for the same quarter in 2018. Sales and marketing expenses for the second quarter of 2019 decreased 6.1% to RMB313.7 million (US$45.7 million) from RMB334.2 million for the same quarter of the prior year primarily due to lower advertising expenditures,performance-based bonuses and selling expenses,which was partially offset by higher employee salaries and social insurance payments. General and administrative expenses for the second quarter of 2019 increased 3.7% to RMB92.0 million (US$13.4 million) from RMB88.7 million for the same quarter of the prior year primarily due to higher employee compensation expenses,which was partially offset by lower office expenses.

Income from operations for the second quarter of 2019 increased 23.9% to RMB270.2 million (US$39.4 million) from RMB218.1 million for the second quarter of 2018. Operating margin,which is income from operations as a percentage of net revenues,was 28.0% in the second quarter of 2019 compared with 24.4% for the same quarter in 2018. Excluding share-based compensation expense,operating margin would have been 30.9% in the second quarter of 2019 compared with 27.2% for the same quarter in 2018.

The Company recognized a gain from foreign currency translationof RMB28.6 million (US$4.2 million) in the second quarter of 2019 compared with a loss of RMB80.8 million in the second quarter of 2018 primarily due to the impact of the change in exchange rate between the Renminbi and the U.S. dollar on the Company's U.S. dollar cash deposits and U.S. dollar-denominated convertible senior notes.

In the second quarter of 2019,the Company recognized a mark-to-market,non-cash loss of RMB333.3 million (US$48.5 million) associated with a change in fair value of convertible senior notes compared with RMB309.3 million in the second quarter of 2018. On April 15,2019,the convertible senior notes matured and the principal amount of US$172.5 million was converted into 4,035,664 shares.

Other income in the second quarter of 2019 included local government financial subsidies of RMB123.1 million (US$17.9 million) compared with RMB154.0 million in the second quarter of 2018.

Net income attributable to 51job for the second quarter of 2019 was RMB67.4 million (US$9.8 million) compared with net loss of RMB(56.6) million for the same quarter in 2018. Fully diluted earnings per share for the second quarter of 2019 were RMB1.00 (US$0.15) compared with loss per share of RMB(0.92) for the same quarter in 2018.

In the second quarter of 2019,total share-based compensation expense was RMB28.0 million (US$4.1 million) compared with RMB25.1 million in the second quarter of 2018.

Excluding share-based compensation expense,gain/loss from foreign currency translation and change in fair value of convertible senior notes,non-GAAP adjusted net income attributable to 51job for the second quarter of 2019 increased 11.5% to RMB400.1 million (US$58.3 million) compared with RMB358.7 million for the second quarter of 2018. Non-GAAP adjusted fully diluted earnings per share were RMB5.90 (US$0.86) in the second quarter of 2019 compared with RMB5.43 in the second quarter of 2018.

As of June 30,cash and short-term investments totaled RMB9,756.7 million (US$1,421.2 million) compared with RMB8,834.2 million as of December 31,2018.

Business Outlook

Based on current market and operating conditions,the Company's net revenues target for the third quarter of 2019 is in the estimated range of RMB915 million to RMB955 million (US$133.3 million to US$139.1 million). Guidance for earnings per share is provided on a non-GAAP basis due to the inherent difficulty in forecasting the future impact of certain items,such as gain/loss from foreign currency translation. The Company is not able to provide a reconciliation of these non-GAAP items to expected reported GAAP earnings per share,without unreasonable efforts,due to the unknown effect and potential significance of such future impact. Excluding share-based compensation expense and any gain or loss from foreign currency translation,the Company's non-GAAP fully diluted earnings target for the third quarter of 2019 is in the estimated range of RMB4.00 to RMB4.30 (US$0.58 to US$0.63) per share. The Company expects total share-based compensation expense in the third quarter of 2019 to be in the estimated range of RMB32 million to RMB33 million (US$4.7 million to US$4.8 million).

Presentation and Reclassification of Government Surcharges

Beginning January 1,the Company's presentation of government surcharges has changed,and government surcharges have been included in cost of services. The prior year's amount of government surcharges has been reclassified to conform with the current year's presentation. This reclassification had no effect on the reported results in the consolidated statements of operations and comprehensive income.

Currency Convenience Translation

For the convenience of readers,certain Renminbiamounts have been translatedinto U.S. dollar amounts at the rate of RMB6.8650to US$1.00,the noon buying rate on June 28,2019 in New York for cable transfers of Renminbias set forth in the H.10 weekly statistical release of theFederal Reserve Board.

Conference Call Information

The Company's management will hold a conference call at 9:00 p.m. Eastern Time on August 5,2019 (9:00 a.m. Beijing / Hong Kong time zone on August 6,2019) to discuss its second quarter 2019 financial results,operating performance and business outlook. To dial in to the call,please use the following telephone numbers:

US:

+1-888-346-8982

International:

+1-412-902-4272

Hong Kong:

+852-3018-4992

Conference

ID: 51job

The call will also be available live and on replay through 51job's investor relations website,http://ir.51job.com.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"),51job uses non-GAAP financial measures of income before income tax expense,income tax expense,adjusted net income,adjusted net income attributable to 51job and adjusted earnings per share,which are adjusted from results based on GAAP to exclude share-based compensation expense,as well as the related tax effect of these items. The Company believes excluding share-based compensation expense and its related tax effect from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expense is not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company believes excluding gain/loss from foreign currency translation and change in fair value of convertible senior notes,as well as the related tax effect,from its non-GAAP financial measures is useful for its management and investors as such translation or mark-to-market loss is not indicative of the Company's core business operations and will not result in cash settlement nor impact the Company's cash earnings. 51job also believes these non-GAAP financial measures excluding share-based compensation expense,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 non-GAAP measures have been reconciled to GAAP measures in the attached financial statements.

About 51job

Founded in 1998,51job is a leading provider of integrated human resource services in China. With a comprehensive suite of HR solutions,51job meets the needs of enterprises and job seekers through the entire talent management cycle,from initial recruitment to employee retention and career development. The Company's main online recruitment platforms (http://www.51job.com,http://www.yingjiesheng.com,http://www.51jingying.com,http://www.lagou.com,and http://www.51mdd.com),as well as mobile applications,connect millions of people withemployment opportunities every day. 51job also provides a number of other value-added HR services,including business process outsourcing,training,professional assessment,campus recruitment,executive search and compensation analysis. 51job has a call center in Wuhan and a nationwide network of sales and service locations spanning 37 cities across China.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "targets,"confident" and similar statements. Among other things,statements that are not historical facts,including statements about 51job's beliefs and expectations,the business outlook and quotations from management in this announcement,as well as 51job's strategic and operational plans,are or contain forward-looking statements. 51job may also make written or oral forward-looking statements in its periodic reports to theU.S. Securities and Exchange Commission,in its annual report to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. All forward-looking statements are based upon management's expectations at the time of the statements and involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement,including but not limited to the following: execution of 51job's strategies and business plans; behavioral and operational changes of enterprises in meeting their human resource needs as they respond to evolving social,political,regulatoryand financial conditions in China; introduction by competitors of new or enhanced products or services; price competition in the market for the various human resource services that 51job provides in China; acceptance of new products and services developed or introduced by 51job outside of the human resources industry;risks related to acquisitions or investments 51job has made or will make in the future; accounting adjustments that may occur during the quarterly or annual close or auditing process; fluctuations in the value of the Renminbi against the U.S. dollar and other currencies; and fluctuations in general economic and business conditions in China. Further information regarding these and other risks are included in 51job's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release and based on assumptions that 51job believes to be reasonable as of this date,and 51job undertakes no obligation to update any forward-looking statement,except as required under applicable law.

Contact:

Linda Chien

Investor Relations

51job,Inc.

+86-21-6879-6250

ir@51job.com

51job,Inc.

Consolidated Statements of Operations and Comprehensive Income

For the Three Months Ended

June 30,2018

June 30,2019

June 30,2019

(In thousands,except share and per share data)

(unaudited)

(unaudited)

(unaudited)

RMB

RMB

US$ (Note 1)

Revenues:

Online recruitment services

588,379

611,025

89,006

Other human resource related revenues

307,147

352,567

51,357

Net revenues (Note 2)

895,526

963,592

140,363

Cost of services (Note 3)

(254,512)

(287,733)

(41,913)

Gross profit

641,014

675,859

98,450

Operating expenses:

Sales and marketing (Note 4)

(334,217)

(313,687)

(45,694)

General and administrative (Note 5)

(88,655)

(91,956)

(13,395)

Total operating expenses

(422,872)

(405,643)

(59,089)

Income from operations

218,142

270,216

39,361

Gain (Loss) from foreign currency translation

(80,775)

28,571

4,162

Interest and investment income,net

26,420

45,424

6,617

Change in fair value of convertible senior notes

(309,313)

(333,287)

(48,549)

Other income,net

153,869

123,059

17,926

Income before income tax expense

8,343

133,983

19,517

Income tax expense

(65,662)

(67,420)

(9,821)

Net income (loss)

(57,319)

66,563

9,696

Net loss attributable to non-controlling interests

691

861

125

Net income (loss) attributable to 51job,Inc.

(56,628)

67,424

9,821

Net income (loss)

(57,696

Other comprehensive income

856

378

55

Total comprehensive income (loss)

(56,463)

66,941

9,751

Earnings (Loss) per share:

Basic

(0.92)

1.03

0.15

Diluted (Note 6)

(0.92)

1.00

0.15

Weighted average number of common shares outstanding:

Basic

61,350,009

65,618,355

65,355

Diluted

61,009

67,754,553

67,553

Notes:

(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.8650

to US$1.00 on June 28,2019 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical

release of the Federal Reserve Board.

(2) Beginning January 1,government surcharges have been included in cost of services. The prior year's amount

amount of government surcharges has been reclassified to conform with the current year's presentation. This reclassification

reclassification had no effect on the reported results in the consolidated statements of operations and comprehensive

income.

(3) Includes share-based compensation expense of RMB3,384 and RMB4,459 (US$650) for the three months ended

June 30,2018 and 2019,respectively.

(4) Includes share-based compensation expense of RMB2,909 and RMB3,833 (US$558) for the three months ended

June 30,respectively.

(5) Includes share-based compensation expense of RMB18,798 and RMB19,684 (US$2,867) for the three months ended

June 30,respectively.

(6) Diluted loss per share for the three months ended June 30,2018 was calculated in accordance with the "if

converted" method. The potential conversion of the convertible senior notes and the impact of share options were

excluded in the computation of diluted loss per share for the three months ended June 30,2018 because their effect

would be anti-dilutive. On April 15,the convertible senior notes matured,and the note holders requested the

conversion of the senior notes into 4,664 shares.

51job,Inc.

Consolidated Statements of Operations and Comprehensive Income

For the Six Months Ended

June 30,except share and per share data)

(unaudited)

(unaudited)

(unaudited)

RMB

RMB

US$ (Note 1)

Revenues:

Online recruitment services

1,136,671

1,224,401

178,354

Other human resource related revenues

570,128

651,052

94,836

Net revenues (Note 2)

1,706,799

1,875,453

273,190

Cost of services (Note 3)

(469,407)

(537,097)

(78,237)

Gross profit

1,237,392

1,338,356

194,953

Operating expenses:

Sales and marketing (Note 4)

(609,030)

(602,415)

(87,752)

General and administrative (Note 5)

(174,185)

(182,199)

(26,540)

Total operating expenses

(783,215)

(784,614)

(114,292)

Income from operations

454,177

553,742

80,661

Gain (Loss) from foreign currency translation

(44,488)

42,351

6,169

Interest and investment income,net

49,434

77,980

11,359

Change in fair value of convertible senior notes

(898,415)

(752,073)

(109,552)

Other income,net

154,184

185,387

27,005

Income (Loss) before income tax expense

(285,108)

107,387

15,642

Income tax expense

(109,837)

(127,476)

(18,569)

Net loss

(394,945)

(20,089)

(2,927)

Net loss attributable to non-controlling interests

5,505

2,697

393

Net loss attributable to 51job,Inc.

(389,440)

(17,392)

(2,534)

Net loss

(394,927)

Other comprehensive income

156

60

9

Total comprehensive loss

(394,789)

(20,029)

(2,918)

Loss per share:

Basic

(6.37)

(0.27)

(0.04)

Diluted (Note 6)

(6.37)

(0.27)

(0.04)

Weighted average number of common shares outstanding:

Basic

61,143,380

63,642,818

63,818

Diluted

61,818

Notes:

(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.8650

to US$1.00 on June 28,government surcharges have been included in cost of services. The prior year's amount

amount of government surcharges has been reclassified to conform with the current year's presentation. This reclassification

reclassification had no effect on the reported results in the consolidated statements of operations and comprehensive

income.

(3) Includes share-based compensation expense of RMB6,953 and RMB9,120 (US$1,328) for the six months ended

June 30,respectively.

(4) Includes share-based compensation expense of RMB5,977 and RMB7,840 (US$1,142) for the six months ended

June 30,respectively.

(5) Includes share-based compensation expense of RMB34,963 and RMB40,302 (US$5,871) for the six months ended

June 30,respectively.

(6) Diluted loss per share for the six months ended June 30,2018 was calculated in accordance with the "if converted"

method. The potential conversion of the convertible senior notes and the impact of share options were excluded in the

computation of diluted loss per share for the six months ended June 30,2018 because their effect would be

anti-dilutive. On April 15,and the note holders requested the conversion

of the senior notes into 4,664 shares. The impact of share options was excluded in the computation of diluted

loss per share for the six months ended June 30,2019 because the effect would be anti-dilutive.

51job,Inc.

Reconciliation of GAAP and Non-GAAP Results

For the Three Months Ended

June 30,except share and per share data)

(unaudited)

(unaudited)

(unaudited)

RMB

RMB

US$ (Note 1)

GAAP income before income tax expense

8,517

Add back: Share-based compensation

25,091

27,976

4,075

Add back: (Gain) Loss from foreign currency translation

80,775

(28,571)

(4,162)

Add back: Change in fair value of convertible senior notes

309,313

333,287

48,549

Non-GAAP income before income tax expense

423,522

466,675

67,979

GAAP income tax expense

(65,821)

Tax effect of non-GAAP line items

132

(64)

(9)

Non-GAAP income tax expense

(65,530)

(67,484)

(9,830)

Non-GAAP adjusted net income

357,992

399,191

58,149

Non-GAAP adjusted net income attributable to 51job,Inc.

358,683

400,052

58,274

Non-GAAP adjusted earnings per share:

Basic

5.85

6.10

0.89

Diluted (Notes 2,3)

5.43

5.90

0.86

Weighted average number of common shares outstanding:

Basic

61,355

Diluted

67,708,774

67,553

For the Six Months Ended

June 30,except share and per share data)

(unaudited)

(unaudited)

(unaudited)

RMB

RMB

US$ (Note 1)

GAAP income (loss) before income tax expense

(285,642

Add back: Share-based compensation

47,893

57,262

8,341

Add back: (Gain) Loss from foreign currency translation

44,488

(42,351)

(6,169)

Add back: Change in fair value of convertible senior notes

898,415

752,073

109,552

Non-GAAP income before income tax expense

705,688

874,371

127,366

GAAP income tax expense

(109,569)

Tax effect of non-GAAP line items

51

(56)

(8)

Non-GAAP income tax expense

(109,786)

(127,532)

(18,577)

Non-GAAP adjusted net income

595,902

746,839

108,789

Non-GAAP adjusted net income attributable to 51job,Inc.

601,407

749,536

109,182

Non-GAAP adjusted earnings per share:

Basic

9.84

11.78

1.72

Diluted (Notes 2,3)

9.20

11.44

1.67

Weighted average number of common shares outstanding:

Basic

61,818

Diluted

67,332,502

65,542,618

65,618

Notes:

(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.8650

to US$1.00 on June 28,2019 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical

release of the Federal Reserve Board.

(2) Diluted earnings per share for the three and six months ended June 30,2018 were calculated in accordance with

the "if converted" method. This includes the add-back of interest expense of RMB9,050 and RMB17,903 related to the

convertible senior notes to the numerator of non-GAAP adjusted net income attributable to 51job for the three and six

months ended June 30,2018,respectively. The maximum number of 4,672 potentially converted shares related

to the convertible senior notes was added to the denominator of diluted common shares for the three and six months

ended June 30,2018.

(3) On April 15,and the note holders requested the conversion of the

senior notes into 4,Inc.

Consolidated Balance Sheets

As of

December 31,

2018

June 30,

2019

June 30,

2019

(In thousands,except share and per share data)

(audited)

(unaudited)

(unaudited)

RMB

RMB

US$ (Note 1)

ASSETS

Current assets:

Cash

1,968,351

2,016,791

293,779

Restricted cash

5,770

15,816

2,304

Short-term investments

6,865,886

7,739,937

1,127,449

Accounts receivable (net of allowance of RMB11,014 and

RMB10,976 as of December 31,2018 and June 30,

respectively)

230,065

207,940

30,290

Prepayments and other current assets

606,918

653,197

95,149

Total current assets

9,676,990

10,633,681

1,548,971

Non-current assets:

Long-term investments

729,095

807,095

117,567

Property and equipment,net

527,020

281,575

41,016

Goodwill

1,036,124

1,124

150,928

Intangible assets,net

244,446

223,285

32,525

Right-of-use assets (Note 2)

—

340,155

49,549

Other long-term assets

9,736

10,440

1,521

Deferred tax assets

15,005

17,310

2,521

Total non-current assets

2,561,426

2,715,984

395,627

Total assets

12,238,416

13,349,665

1,944,598

LIABILITIES,MEZZANINE EQUITY AND EQUITY

Current liabilities:

Accounts payable

49,881

55,801

8,128

Salary and employee related accrual

164,134

141,775

20,652

Taxes payable

191,793

123,581

18,002

Advance from customers

1,126,300

1,193,425

173,842

Convertible senior notes

1,725,182

—

—

Lease liabilities,current (Note 2)

—

38,719

5,640

Other payables and accruals

952,178

1,042,327

151,832

Total current liabilities

4,209,468

2,595,628

378,096

Non-current liabilities:

Lease liabilities,non-current (Note 2)

—

62,690

9,132

Deferred tax liabilities

210,752

231,237

33,683

Total non-current liabilities

210,752

293,927

42,815

Total liabilities

4,420,220

2,889,555

420,911

Mezzanine equity:

Redeemable non-controlling interests

225,645

221,155

32,215

Shareholders' equity:

Common shares (US$0.0001 par value: 500,000,000 shares

authorized,61,874,716 and 66,363,563 shares issued and

outstanding as of December 31,

respectively)

50

53

8

Additional paid-in capital

2,055,036

4,717,095

687,122

Statutory reserves

17,279

17,279

2,517

Accumulated other comprehensive income

254,185

254,245

37,035

Retained earnings

5,242,691

5,225,299

761,151

Total 51job,Inc. shareholders' equity

7,569,241

10,213,971

1,487,833

Non-controlling interests

23,310

24,984

3,639

Total equity

7,592,551

10,955

1,491,472

Total liabilities,mezzanine equity and equity

12,598

Notes:

(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.8650 to US$1.00 on

June 28,2019 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve

Board.

(2) The Company has adopted ASU No. 2016-02,"Leases," beginning January 1,2019. Under the new provisions,the Company has

recognized right-of-use assets and lease liabilities for all operating leases related to office buildings with terms more than 12 months.

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