51job, Inc. Reports Third Quarter 2020 Financial Results

SHANGHAI,Nov. 20,2020 --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 thethird quarterof 2020 ended September 30,2020.

Third Quarter 2020 Financial Highlights:

Net revenues decreased 8.4% from Q3 2019 to RMB906.1 million (US$133.5 million)

Online recruitment services revenues decreased 13.9%

Other human resource related revenues increased 1.4%

Income from operations was RMB175.0 million (US$25.8 million)

Fully diluted earnings per share was RMB2.55 (US$0.37)

Excluding share-based compensation expense,loss from foreign currency translation,and changes in fair value of listed equity securities and long-term investments,as well as the related tax effect of these items,non-GAAP adjusted fully diluted earnings per share was RMB3.57 (US$0.53)

Third Quarter 2020 Unaudited Financial Results

Net revenues for the third quarter ended September 30,2020 were RMB906.1 million (US$133.5 million),a decrease of 8.4% from RMB989.0 million for the same quarter in 2019.

Online recruitment services revenues for the third quarter of 2020 were RMB545.5 million (US$80.3 million),representing a 13.9% decrease from RMB633.4 million for the same quarter in 2019.The year-over-year decline was due to the ongoing impact of the COVID-19 pandemic and global economic uncertainty on the business operations of companies in China,which has negatively affected their recruitment demand and spending on the Company's online recruitment platforms in 2020. However,when compared to the second quarter of 2020,third quarter online recruitment services revenues grew 8.4% sequentially as recruitment activity improved and the Company's contract signings with employers increased.

Other human resource related revenues for the third quarter of 2020 increased 1.4% to RMB360.6 million (US$53.1 million) from RMB355.6 million for the same quarter in 2019. When compared to the second quarter of 2020,other human resource related revenues increased 10.8% sequentially due to a strong rebound in the Company's training business. More clients authorized or resumed in-person learning and interaction,and a greater number of training events,including some rescheduled from the first half of the year,were conducted in the third quarter of 2020.

Gross profit for the third quarter of 2020 was RMB584.4 million (US$86.1 million) compared with RMB682.3 million for the same quarter of the prior year. The decline was primarily due to the lower level of revenues and the increase in cost of services as the Company stepped up investment in new technology and product development in the third quarter of 2020.Sequentially,the Company also added seasonal staff in preparation for the upcoming campus recruitment peak period in the fall,which resulted in higher employee compensation expenses in the third quarter. Gross margin,which is gross profit as a percentage of net revenues,was 64.5% in the third quarter of 2020 compared with 69.0% for the samequarterin 2019.

Operating expenses for the third quarter of 2020 decreased 3.8% to RMB409.3 million (US$60.3 million) from RMB425.5 million for the same quarter in 2019.Sales and marketing expenses for the third quarter of 2020 decreased 3.9% to RMB313.2 million (US$46.1 million) from RMB325.8 million for the same quarter of the prior year primarily due to a reduction in contributions to social welfare funds and a decrease in performance-based bonuses,which was partially offset by greater spending on advertising and promotion activities.General and administrative expenses for the third quarter of 2020 decreased 3.6% to RMB96.2 million (US$14.2 million) from RMB99.7 million for the same quarter of the prior year primarily due to a reduction in contributions to social welfare funds and a smaller provision for doubtful accounts.

Income from operations for the third quarter of 2020 was RMB175.0 million (US$25.8 million) compared with RMB256.7 million for the third quarter of 2019.Operating margin,which is income from operations as a percentage of net revenues,was 19.3% in the third quarter of 2020 compared with 26.0% for the same quarter in 2019.Excluding share-based compensation expense,operating margin would have been 23.0% in the third quarter of 2020 compared with 29.5% for the same quarter in 2019.

The Company recognized a loss from foreign currency translationof RMB29.2 million (US$4.3 million) in the third quarter of 2020 compared with a gain of RMB31.4 million in the third quarter of 2019 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.

In the third quarter of 2020,the Company recognized a mark-to-market,non-cash loss of RMB46.5 million (US$6.9 million) associated with a change in fair value of listed equity securities investment in Huali University Group Limited,which is traded on the Hong Kong Stock Exchange.The Company also recognized a non-cash gain of RMB39.6 million (US$5.8 million) related to a change in fair value of long-term investment in a human resource consulting and executive search services company in China in the third quarter of 2020.

Other income in the third quarter of 2020 included local government financial subsidies of RMB5.6 million (US$0.8 million) compared with RMB9.3 million in the third quarter of 2019.

Net income attributable to 51job for the third quarter of 2020 was RMB173.3 million (US$25.5 million) compared with RMB300.2 million for the same quarter in 2019. Fully diluted earnings per share for the third quarter of 2020 was RMB2.55 (US$0.37) compared with RMB4.44 for the same quarter in 2019.

In the third quarter of 2020,total share-based compensation expense was RMB33.5 million (US$4.9 million) compared with RMB34.8 million in the third quarter of 2019.

Excluding share-based compensation expense,gain/loss from foreign currency translation,non-GAAP adjusted net income attributable to 51job for the third quarter of 2020 was RMB243.0 million (US$35.8 million) compared with RMB303.7 million for the third quarter of 2019.Non-GAAP adjusted fully diluted earnings per share was RMB3.57 (US$0.53) in the third quarter of 2020 compared with RMB4.49 in the third quarter of 2019.

As of September 30,2020,cash and short-term investments totaled RMB10,137.6 million (US$1,493.1 million) compared with RMB9,940.6 million as of December 31,2019.

Currency Convenience Translation

For the convenience of readers,certain Renminbiamounts have been translatedinto U.S. dollar amounts at the rate of RMB6.7896to US$1.00,the noon buying rate on September 30,2020 in New York for cable transfers of Renminbias set forth in the H.10 weekly statistical release of theFederal Reserve Board.

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,and changes in fair value of listed equity securities investment,long-term investment and convertible senior notes,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,as well as the related tax effect,from its non-GAAP financial measures is useful for its management and investors as such translation,mark-to-market gain or 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 more than 30 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,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; growth and trends of the human resource services industry in China; market acceptance of 51job's products and services; competition in the industry; 51job's ability to control costs and expenses; 51job's ability to retain key personnel and attract new talent; relevant government policies and regulations relating to 51job's industry,corporate structure and business operations; seasonality in the business;fluctuations in the value of the Renminbi against the U.S. dollar and other currencies; 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; and fluctuations in general economic and business conditions in China and globally,including the impact of the coronavirus or other pandemic. 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 releaseand 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

Investor Relations,51job,Inc.

Tel: +86-21-6879-6250

Email: ir@51job.com51job,Inc.Consolidated Statements of Operations and Comprehensive Income

For the Three Months Ended

September 30,

2019

September 30,

2020

September 30,

2020(In thousands,except share and per share data)(unaudited)

(unaudited)

(unaudited)

RMB

RMB

US$ (Note 1)Revenues:

Online recruitment services633,393

545,501

80,344Other human resource related revenues355,560

360,604

53,111Net revenues988,953

906,105

133,455Cost of services (Note 2)(306,690)

(321,748)

(47,388)Gross profit682,263

584,357

86,067Operating expenses:

Sales and marketing (Note 3)(325,779)

(313,170)

(46,125)General and administrative (Note 4)(99,738)

(96,165)

(14,164)Total operating expenses(425,517)

(409,335)

(60,289)Income from operations256,746

175,022

25,778Gain (Loss) from foreign currency translation31,366

(29,215)

(4,303)Interest and investment income,net48,390

58,284

8,584Change in fair value of listed equity securities investment-

(46,533)

(6,854)Change in fair value of long-term investment-

39,614

5,835Other income,net12,729

6,692

986Income before income tax expense349,231

203,864

30,026Income tax expense(50,784)

(39,330)

(5,793)Net income298,447

164,534

24,233Net loss attributable to non-controlling interests1,714

8,788

1,294Net income attributable to 51job,Inc.300,161

173,322

25,527

Net income298,233Other comprehensive income (loss)386

(597)

(88)Total comprehensive income298,833

163,937

24,145Earnings per share:

Basic4.52

2.58

0.38Diluted4.44

2.55

0.37Weighted average number of common shares outstanding:

Basic66,369,912

67,185,235

67,235Diluted67,622,677

68,089,693

68,693

Notes:

(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.7896to US$1.00 on September 30,2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statisticalrelease of the Federal Reserve Board.(2) Includes share-based compensation expense of RMB5,558 and RMB5,345 (US$787) for the three months endedSeptember 30,2019 and 2020,respectively.(3) Includes share-based compensation expense of RMB4,778 and RMB4,595 (US$677) for the three months endedSeptember 30,respectively.(4) Includes share-based compensation expense of RMB24,498 and RMB23,603 (US$3,476) for the three months endedSeptember 30,respectively.51job,Inc.Consolidated Statements of Operations and Comprehensive Income

For the Nine Months Ended

September 30,except share and per share data)(unaudited)

(unaudited)

(unaudited)

RMB

RMB

US$ (Note 1)Revenues:

Online recruitment services1,857,794

1,595,772

235,032Other human resource related revenues1,006,612

930,072

136,985Net revenues2,864,406

2,525,844

372,017Cost of services (Note 2)(843,787)

(847,227)

(124,783)Gross profit2,020,619

1,678,617

247,234Operating expenses:

Sales and marketing (Note 3)(928,194)

(882,094)

(129,918)General and administrative (Note 4)(281,937)

(285,999)

(42,123)Total operating expenses(1,210,131)

(1,168,093)

(172,041)Income from operations810,488

510,524

75,193Gain (Loss) from foreign currency translation73,717

(19,591)

(2,885)Interest and investment income,net126,370

169,018

24,894Change in fair value of listed equity securities investment-

20,164

2,969Change in fair value of long-term investment-

39,835Change in fair value of convertible senior notes (Note 5)(752,073)

-

-Other income,net198,116

155,617

22,920Income before income tax expense456,618

875,346

128,926Income tax expense(178,260)

(135,722)

(19,990)Net income278,358

739,624

108,936Net loss attributable to non-controlling interests4,411

15,604

2,298Net income attributable to 51job,Inc.282,769

755,228

111,234

Net income278,936Other comprehensive income (loss)446

(294)

(43)Total comprehensive income278,804

739,330

108,893Earnings per share:

Basic4.38

11.27

1.66Diluted4.27

11.11

1.64Weighted average number of common shares outstanding:

Basic64,561,839

67,000,172

67,172Diluted66,245,961

67,992,639

67,639

Notes:

(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.7896to US$1.00 on September 30,2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statisticalstatistical release of the Federal Reserve Board.(2) Includes share-based compensation expense of RMB14,678 and RMB17,341 (US$2,554) for the nine months endedSeptember 30,respectively.(3) Includes share-based compensation expense of RMB12,618 and RMB14,907 (U$2,196) for the nine months endedSeptember 30,respectively.(4) Includes share-based compensation expense of RMB64,800 and RMB76,549 (US$11,274) for the nine months endedSeptember 30,respectively.(5) On April 15,2019,the convertible senior notes matured,and the note holders requested the conversion of the seniornotes into 4,035,664 shares.51job,Inc.Reconciliation of GAAP and Non-GAAP Results

For the Three Months Ended

September 30,except share and per share data)(unaudited)

(unaudited)

(unaudited)

RMB

RMB

US$ (Note 1)GAAP income before income tax expense349,026Add: Share-based compensation34,834

33,543

4,940Add (Less): (Gain) Loss from foreign currency translation(31,366)

29,215

4,303Add: Change in fair value of listed equity securities investment-

46,533

6,854Less: Change in fair value of long-term investment-

(39,614)

(5,835)Non-GAAP income before income tax expense352,699

273,541

40,288GAAP income tax expense(50,793)Tax effect of non-GAAP line items76

(32)

(5)Non-GAAP income tax expense(50,708)

(39,362)

(5,798)Non-GAAP adjusted net income301,991

234,179

34,490Non-GAAP adjusted net income attributable to 51job,Inc.303,705

242,967

35,784Non-GAAP adjusted earnings per share:

Basic4.58

3.62

0.53Diluted4.49

3.57

0.53Weighted average number of common shares outstanding:

Basic66,693

For the Nine Months Ended

September 30,except share and per share data)(unaudited)

(unaudited)

(unaudited)

RMB

RMB

US$ (Note 1)GAAP income before income tax expense456,926Add: Share-based compensation92,096

108,797

16,024Add (Less): (Gain) Loss from foreign currency translation(73,717)

19,591

2,885Less: Change in fair value of listed equity securities investment-

(20,164)

(2,969)Less: Change in fair value of long-term investment-

(39,835)Add: Change in fair value of convertible senior notes (Note 2)752,073

-

-Non-GAAP income before income tax expense1,227,070

943,956

139,031GAAP income tax expense(178,990)Tax effect of non-GAAP line items20

(71)

(10)Non-GAAP income tax expense(178,240)

(135,793)

(20,000)Non-GAAP adjusted net income1,048,830

808,163

119,031Non-GAAP adjusted net income attributable to 51job,Inc.1,053,241

823,767

121,329Non-GAAP adjusted earnings per share:

Basic16.31

12.29

1.81Diluted15.90

12.12

1.78Weighted average number of common shares outstanding:

Basic64,2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statisticalrelease of the Federal Reserve Board.(2) On April 15,Inc.Consolidated Balance Sheets

As of

December 31,except share and per share data)(unaudited)

(unaudited)

(unaudited)

RMB

RMB

US$ (Note 1)ASSETS

Current assets:

Cash2,294,904

1,962,219

289,004

Restricted cash66,169

24,732

3,643

Short-term investments7,645,686

8,175,367

1,204,101

Accounts receivable (net of allowance of RMB21,952 and

RMB18,956 as of December 31,2019 and September 30,

respectively)266,437

250,702

36,924

Prepayments and other current assets669,208

578,798

85,248Total current assets10,942,404

10,991,818

1,618,920Non-current assets:

Long-term investments1,482,544

1,541,153

226,987

Time deposits—

712,570

104,950

Property and equipment,net271,932

268,103

39,487

Goodwill1,036,124

1,124

152,605

Intangible assets,net203,162

173,206

25,510

Right-of-use assets320,809

310,284

45,700

Other long-term assets10,420

13,819

2,035

Deferred tax assets22,147

33,312

4,906Total non-current assets3,347,138

4,088,571

602,180Total assets14,289,542

15,080,389

2,221,100

LIABILITIES,MEZZANINE EQUITY AND EQUITY

Current liabilities:

Accounts payable48,114

66,038

9,726

Salary and employee related accrual162,775

215,186

31,693

Taxes payable267,596

166,164

24,473

Advance from customers1,108,518

1,081,332

159,263

Lease liabilities,current34,817

36,046

5,309

Other payables and accruals1,211,642

1,050,562

154,731Total current liabilities2,833,462

2,615,328

385,195Non-current liabilities:

Lease liabilities,non-current50,763

45,168

6,653

Deferred tax liabilities214,307

222,546

32,777Total non-current liabilities265,070

267,714

39,430Total liabilities3,098,532

2,883,042

424,625

Mezzanine equity:

Redeemable non-controlling interests216,974

200,565

29,540

Shareholders' equity:

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

authorized,66,784,688 and 67,400,537 shares issued and

outstanding as of December 31,

respectively)53

54

8

Additional paid-in capital4,901,466

5,169,509

761,386

Statutory reserves17,930

17,930

2,641

Accumulated other comprehensive income254,524

254,230

37,444

Retained earnings5,774,358

6,529,586

961,704Total 51job,Inc. shareholders' equity10,948,331

11,971,309

1,763,183Non-controlling interests25,705

25,473

3,752Total equity10,974,036

11,996,782

1,766,935Total liabilities,mezzanine equity and equity14,100

Note (1): The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.7896 to US$1.00on September 30,2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the FederalReserve Board.

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