58.com Reports Third Quarter 2019 Unaudited Financial Results

Author: 58.com Inc / 2023-07-23 21:21 / Source: 58.com Inc

58.com Reports Third Quarter 2019 Unaudited Financial Results

BEIJING,Nov. 19,2019 -- 58.com Inc.(NYSE: WUBA) ("58.com" or the "Company"),China's largest online market place for classifieds,today reported its unaudited financial results for the third quarter ended September 30,2019.

Third Quarter 2019 Highlights

Total revenues were RMB4,258.0 million (US$602.0 million[1]),a 17.4% increase from RMB3,626.8 million in the same quarter of 2018,exceeding the high end of the Company's guidance of RMB4,200 million.

Total number of paying business users[2] was approximately 3.6 million in the third quarter of 2019,a 3.0% increase from the same quarter of 2018.

Gross margin was 88.2% compared with 89.5% in the same quarter of 2018.

Income from operations was RMB862.2 million (US$121.9 million),a 28.6% increase from RMB670.6 million in the same quarter of 2018.

Non-GAAP income from operations[3] was RMB1,039.2 million (US$146.9 million),a 21.3% increase from RMB856.5 million in the same quarter of 2018.

Net income attributable to 58.com Inc. ordinary shareholders was RMB791.6 million (US$111.9 million),a 9.0% increase from RMB726.2 million in the same quarter of 2018.

Non-GAAP net income attributable to 58.com Inc. ordinary shareholders[4] was RMB1,018.0 million (US$143.9 million),a 20.7% increase from RMB843.5 million in the same quarter of 2018.

Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB5.31 (US$0.75) and RMB5.26 (US$0.74),respectively,representing 7.9% and 8.6% increases from RMB4.92 and RMB4.84,in the same quarter of 2018. One ADS represents two Class A ordinary shares.

Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders[5] were RMB6.83 (US$0.97) and RMB6.76 (US$0.96),representing 19.4% and 20.2% increases from RMB5.72 and RMB5.63,in the same quarter of 2018.

[1]This press release contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) solely for the convenience of the readers. Unless otherwise specified,all translations of Renminbi amounts into US$ amounts in this press release are made at RMB7.0729 to US$1.00,which was the U.S. dollars middle rate announced by the PRC State Administration of Foreign Exchange on September 30,2019. The percentages stated in this press release are calculated based on the Renminbi amounts. OnNovember 18,2019,such exchange rate was RMB7.0037 to US$1.00.

[2]Paying business users refer to users who are identified as business users with unique identity information such as business licenses or personal identification information and who used the Company's subscription-based membership services or purchased at least one type of online marketing services in a given period. One paying business user can open up several paying user accounts on one or multiple online platforms. The number and the percentage calculation does not include paying business users on Ganji as the Company stopped selling stand-alone Ganji subscription-based membership services in 2018 or earlier in all of its content categories.

[3]Non-GAAP income from operations is defined as income from operations excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisitions. See "Reconciliation of GAAP and Non-GAAP Results" at the end of this press release.

[4]Non-GAAP net income attributable to 58.com Inc. ordinary shareholders is defined as net income attributable to 58.com Inc. ordinary shareholders excluding share-based compensation expenses,amortization of intangible assets resulting from business acquisitions,change in fair value of long-term investments,share-based compensation expenses included in share of results of equity investees,and income tax effects of GAAP to non-GAAP reconciling items. See "Reconciliation of GAAP and Non-GAAP Results" at the end of this press release.

[5]Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders is defined as non-GAAP net income attributable to 58.com Inc. ordinary shareholders divided by weighted average number of basic and diluted ADSs.

Management Comments

"I am pleased to report solid financial and operational results once again,with revenue totaling RMB4.26 billion and exceeding the high end of our previous guidance despite challenging market conditions," commented Mr. Michael Yao,Chairman and Chief Executive Officer of 58.com. "On a non-GAAP basis,operating income and net income grew 21.3% and 20.7% year over year,respectively. We continue to solidify and expand our leading market position in all our core categories,especially for primary housing and other local services. Secondary housing and jobs continue to show substantial resilience despite challenging market conditions. We are confident in our horizontal platform and the diversified product and services it offers. We are also optimistic about the massive market opportunity and tremendous growth potential that China offers and will continue to invest in innovation and user engagement to further enhance our leading market position."

Third Quarter 2019 Financial Results

Revenues

Total revenues were RMB4,258.0 million (US$602.0 million),representing an increase of 17.4% fromRMB3,626.8 millionin the same quarter of 2018.

Membership revenues were RMB1,192.7 million (US$168.6 million),an increase of 1.0% from RMB1,181.1 million in the same quarter of 2018.

Online marketing servicesrevenues were RMB2,797.5 million (US$395.5 million),an increase of 20.1% from RMB2,328.9 million in the same quarter of 2018.

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 listings and various other online marketing services.

Cost of Revenues

Cost of revenues was RMB501.1 million (US$70.8 million),an increase of 31.7% from RMB380.6 million in the same quarter of 2018. The year-over-year increase was primarily driven by increases in the costs of services provided on other platforms,expenses associated with the operations of all the Company's platforms,and salaries and benefits relating to web operation and information quality control teams.

Gross Profit and Gross Margin

Gross profit wasRMB3,756.9 million (US$531.2 million),an increase of 15.7% from RMB3,246.2 million during the same quarter of 2018.

Gross margin was 88.2%,compared with 89.5% during the same quarter of 2018.

Operating Expenses

Operating expenses were RMB2,894.6 million (US$409.3 million),an increase of 12.4% from RMB2,575.6 million in the same quarter of 2018.

Sales and marketing expenses in the third quarter of 2019 were RMB2,177.1 million (US$307.8 million),an increase of 13.4% from RMB1,920.1 million in the same quarter in 2018.

Within sales and marketing expenses,advertising expenses in the third quarter of 2019 were RMB986.9 million (US$139.5 million),which were generally stable compared with RMB978.2 million in the same quarter of 2018.

Non-advertising sales and marketing expenses in the third quarter of 2019 were RMB1,190.2 million (US$168.3 million),an increase of 26.4% from RMB941.9 million in the same quarter in 2018.

Non-advertising sales and marketing expenses include salaries and benefits,commissions and share-based compensation expenses for the Company's sales,sales support,customer service,marketing dealer management personnel,online and offline promotional expenses,and other operating expenses that are associated with sales and marketing activities.

The increase in non-advertising sales and marketing expenses was mainly due to an increase in marketing and promotional expenses for 58.com and newer platforms such as 58 Town and Zhuan Zhuan.

Research and development expenses in the third quarter of 2019 were RMB520.9 million (US$73.7 million),an increase of 11.1% from RMB468.8 million in the same quarter of 2018. The increase was primarily due to increases in salaries and benefits for the Company's research and development personnel for the development of new features and services.

General and administrative expenses in the third quarter of 2019 were RMB196.6 million (US$27.8 million),an increase of 5.3% from RMB186.7 million in the same quarter of 2018. The increase was primarily driven by increases in salaries and benefits and share-based compensation expenses for administrative personnel.

Income from Operations

Income from operations was RMB862.2 million (US$121.9 million) in the third quarter of 2019,an increase of 28.6% from RMB670.6 million in the same quarter of 2018.

Operating margin,defined as income from operations divided by total revenues,was 20.2%in the third quarter of 2019,compared with 18.5% in the same quarter of 2018.

Non-GAAP income from operations was RMB1,039.2 million (US$146.9 million) in the third quarter of 2019,an increase of 21.3% from RMB856.5 million in the same quarter of 2018.

Non-GAAP operating margin,defined as non-GAAP income from operations divided by total revenues,was 24.4% in the third quarter of 2019,compared with 23.6% in the same quarter of 2018.

Other Income/(Expenses)

Net other income in the third quarter of 2019 was RMB80.2 million (US$11.3 million),compared with net other income of RMB103.7 million in the same quarter of 2018.

Net other income in the third quarter of 2019 was mainly attributable to RMB60.7 million income from short-term commercial bank investment products the Company purchased with its surplus cash,RMB53.8 million in tax refunds and other government subsidies,RMB24.7 million dividend income,and a fair value gain of RMB14.2 million due to the revaluation of certain convertible notes the Company invested in the second quarter of 2019,which were partially offset by a fair value loss of RMB83.9 million primarily as a result of a decline in the share price of 5I5J Holding Group Co.,Ltd.,a publicly traded company in which the Company invested in the third quarter of 2018 and holds a minority stake.

Net Income Attributable to 58.com Inc. Ordinary Shareholders

Net income attributable to 58.com Inc.ordinary shareholders wasRMB791.6 million (US$111.9 million) in the third quarter of 2019,an increase of 9.0% fromRMB726.2 million in the same quarter of 2018.

Net margin,defined as net income attributable to 58.com Inc. ordinary shareholders divided by total revenues,was 18.6% in the third quarter of 2019,compared with 20.0% in the same quarter of 2018.

Non-GAAP net income attributable to 58.com Inc. ordinary shareholders was RMB1,018.0 million (US$143.9 million) in the third quarter of 2019,an increase of 20.7% from RMB843.5 million in the same quarter of 2018.

Non-GAAP net margin,defined as non-GAAP net income attributable to 58.com Inc. ordinary shareholders divided by total revenues,was 23.9% in the third quarter of 2019,compared with 23.3% in the same quarter of 2018.

Basic and Diluted Earnings per ADS

Basic and diluted earnings per ADS attributable to ordinary shareholders in the third quarter of 2019 were RMB5.31 (US$0.75) and RMB5.26 (US$0.74),in the same quarter of 2018.

Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders in the third quarter of 2019 were RMB6.83 (US$0.97) and RMB6.76 (US$0.96),in the same quarter of 2018.

Cash Flow

Net cash provided by operating activities was RMB1,059.4 million (US$149.8million) in the third quarter of 2019,an increase of 22.7% from RMB863.4 million in the same quarter of 2018.

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

As of September 30,the Company had cash and cash equivalents,term deposits,restricted cash and short-term investments of RMB9,488.9 million (US$1,341.6 million).

As of the date of this earnings release,the Company has received cash consideration in accordance with the transaction agreements relating to the Company's sale of certain equity stake in Che Hao Duo group as previously announced.

Shares Outstanding

As of September 30,the Company had a total of 299,057,321 ordinary shares (including 253,825,201 Class A and 45,232,120 Class B ordinary shares) issued and outstanding.

Business Outlook

Based on the Company's current operations,total revenues for the fourth quarter of 2019 are expected to be between RMB4.05 billion and RMB4.15 billion. This represents a year-over-year increase of 12% to 15% in Renminbi. These estimates reflect the Company's current and preliminary view,which is subject to change.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States,or GAAP,this press release presents non-GAAPincome from operations,non-GAAPoperating margin,non-GAAP net incomeattributable to 58.com Inc. ordinary shareholders,non-GAAP net marginand non-GAAP basic and diluted earnings per share and per ADSattributable to ordinary shareholders by excluding share-based compensation expenses,income tax effects of above GAAP to non-GAAP reconciling items. The Company believes these non-GAAP financial measures are important to help investors understand the Company's operating and financial performance,compare business trends among different reporting periods on a consistent basis and assess the Company's core operating results,as they exclude certain expenses that are not expected to result in cash payments. The use of the above non-GAAP financial measures has certain limitations. Share-based compensation expenses,non-cash gain or loss and income tax effects resulting from GAAP to non-GAAP reconciling items have been and will continue to be incurred in the future and are not reflected in the presentation of the non-GAAP financial measures,but should be considered in the overall evaluation of the Company's results. TheCompany compensates for these limitations by providing the relevant disclosure of its share-based compensation expenses,income tax effects of above GAAP to non-GAAP reconciling items,all of which should be considered when evaluating the Company's performance. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP,but should not be considered a substitute for,or superior to,financial measures prepared in accordance with GAAP. Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure isset forth at the end of this release.

Conference Call

58.com's management will host an earnings conference call onNovember 19,2019at8:00 a.m.U.S. Eastern Time (9:00 p.m. Beijing/Hong Kong time onthe same day).

Dial-in details for the earnings conference call are as follows:

International:

+1-412-317-6061

U.S. Toll Free:

+1-888-317-6003

Hong Kong Toll Free:

800-963976

Hong Kong

852-58081995

Mainland China Toll Free:

4001-206115

Passcode:

8284139

Please dial in 15 minutes before the call is scheduled to begin and provide the passcode to join the call.

A telephone replay of the call will be available after the conclusion of the conference call through8:00 a.m.U.S. Eastern Time,November 26,2019. The dial-in details for the replay are as follows:

International:

+1-412-317-0088

U.S. Toll Free:

+1-877-344-7529

Passcode:

10136855

Additionally,a live and archived webcast of the conference call will be available on the Investor Relations section of 58.com's website athttp://ir.58.com.

About 58.com Inc.

58.com Inc. (NYSE: WUBA) operates China's largest online marketplace for classifieds,as measured by monthly unique visitors on both its www.58.com website and mobile applications. The Company's online marketplace enables local business users and consumer users to connect,share information and conduct business. 58.com's broad,in-depth and high-quality local information,combined with its easy-to-use website and mobile applications,has made it a trusted marketplace for consumers. 58.com's strong brand recognition,large and growing user base,merchant network and massive database of local information create a powerful network effect. For more information on 58.com,please visit http://www.58.com.

Safe Harbor Statements

This press release contains forward-looking statements 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," "confident" and similar statements. 58.com may also make written or oral forward-looking statements in its reports filed with or furnished to the U.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. Any statements that are not historical facts,including statements about 58.com's beliefs and expectations,are forward-looking statements that involve factors,risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include,but not limited to the following: 58.com's goals and strategies; its future business development,financial condition and results of operations; its ability to retain and grow its user base and network of local merchants for its online marketplace; the growth of,and trends in,the markets for its services in China; the demand for and market acceptance of its brand and services; competition in its industry in China; its ability to maintain the network infrastructure necessary to operate its website and mobile applications; relevant government policies and regulations relating to the corporate structure,business and industry; and its ability to protect its users' information and adequately address privacy concerns. Further information regarding these and other risks,uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release,and 58.com does not undertake any obligation to update such information,except as required under applicable law.

For more information,please contact:

58.com Inc.

ir@58.com

Christensen

In China

Mr. Christian Arnell

Phone: +86-10-5900-1548

E-mail: carnell@christensenir.com

In US

Ms. Linda Bergkamp

Phone: +1-480-614-3004

Email: lbergkamp@ChristensenIR.com

58.comInc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands,except share and per share data,unless otherwise noted)

As of

December 31,

2018

September 30,

2019

September 30,

2019

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

2,387,478

1,700,175

240,379

Restricted cash-current

812,000

66,567

9,412

Term deposits

20,000

2,828

Short-term investments

4,587,610

7,702,198

1,088,973

Accounts receivable,net

917,443

1,233,226

174,359

Prepayments and other current assets

813,403

1,738,229

245,759

Total current assets

9,517,934

12,460,395

1,761,710

Non-current assets:

Property and equipment,net

1,329,752

1,300,836

183,918

Intangible assets,099,945

945,993

133,749

Right-of-use assets,net

269,508

38,104

Land use rights,net

3,610

3,551

502

Goodwill

15,874,220

15,897,711

2,247,693

Long-term investments

3,365,906

8,144,539

1,151,513

Investment in convertible note

763,873

108,000

Long-term prepayments and other non-current assets

639,478

820,956

116,070

Total non-current assets

22,312,911

28,146,967

3,979,549

Total assets

31,830,845

40,607,362

5,741,259

LIABILITIES,MEZZANINE EQUITY AND

SHAREHOLDERS' EQUITY

Current liabilities:

Short-term loans

812,794

118

Accounts payable

887,558

1,171,578

165,643

Deferred revenues

2,348,333

2,468,961

349,073

Customer advances

1,465,169

1,810,747

256,012

Taxes payable

250,231

412,739

58,355

Salary and welfare payable

642,445

655,354

92,657

Operating lease liabilities,current

110,103

15,567

Accrued expenses and other current liabilities

878,368

1,076,696

152,228

Total current liabilities

7,284,898

7,706,296

1,089,552

Non-current liabilities:

Deferred tax liabilities

283,112

594,912

84,111

Operating lease liabilities,non-current

158,073

22,349

Other non-current liabilities

1,675

Total non-current liabilities

284,787

752,985

106,460

Total liabilities

7,569,685

8,459,281

1,196,012

Mezzanine equity:

Mezzanine classified noncontrolling interests

1,944,397

3,581,053

506,306

Total mezzanine equity

1,306

Shareholders' equity:

58.com Inc. shareholders' equity:

Ordinary shares (US$0.00001 par value,4,800,000,000 Class A and

200,000 Class B shares authorized,250,858,415 Class A and

45,586,164 Class B shares issued and outstanding as of December 31,

2018 and 253,120 Class B shares issued and

outstanding as of September 30,respectively)

Additional paid-in capital

21,621,665

21,864,532

3,091,310

Retained earnings

439,514

6,217,579

879,071

Accumulated other comprehensive income/(loss)

(40,622)

70,023

9,900

Total 58.com Inc. shareholders' equity

22,020,576

28,152,153

3,980,284

Noncontrolling interests

296,187

414,875

58,657

Total shareholders' equity

22,316,763

28,567,028

4,038,941

Total liabilities,mezzanine equity and shareholders' equity

31,259

58.comInc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATION

(in thousands,except share,per share and per ADS data,unless otherwise noted)

For the Three Months Ended

For the Nine Months Ended

September 30,

2019

September 30,

2019

RMB

US$

RMB

US$

Revenues:

Membership

1,181,105

1,192,688

168,628

3,276,850

3,358,554

474,848

Online marketing services

2,328,921

2,797,453

395,517

6,007,559

7,444,635

1,052,558

E-commerce services

15,627

111,438

15,756

46,642

213,126

30,133

Other revenues

101,148

156,418

22,115

197,453

404,674

57,215

Total revenues

3,626,801

4,257,997

602,016

9,528,504

11,420,989

1,614,754

Cost of revenues(1)

(380,623)

(501,108)

(70,849)

(980,104)

(1,422)

(174,246)

Gross profit

3,246,178

3,756,889

531,167

8,548,400

10,188,567

1,440,508

Operating expenses(1):

Sales and marketing expenses(2)

(1,920,131)

(2,177,120)

(307,812)

(5,141,943)

(6,026,160)

(852,007)

Research and development expenses

(468,782)

(520,919)

(73,650)

(1,209,224)

(1,497,917)

(211,783)

General and administrative expenses

(186,713)

(196,608)

(27,797)

(516,947)

(553,130)

(78,204)

Total operating expenses

(2,575,626)

(2,894,647)

(409,259)

(6,868,114)

(8,077,207)

(1,994)

Income from operations

670,552

862,242

121,908

1,680,286

2,111,360

298,514

Other income/(expenses):

Interest income,net

390

11,223

1,587

3,634

28,096

3,973

Investment income,net

115,378

4,697

664

226,226

4,214,547

595,873

Share of results of equity investees

(22,109)

(9,294)

(1,314)

(75,695)

(19,229)

(2,719)

Foreign currency exchange gain/(loss),net

790

9,027

1,276

(104)

(8,991)

(1,271)

Others,net

9,271

64,524

9,123

52,559

124,536

17,607

Income before tax

774,272

942,419

133,244

1,886,906

6,450,319

911,977

Income tax expenses

(16,798)

(108,775)

(15,379)

(206,266)

(676,212)

(95,606)

Net income

757,474

833,644

117,865

1,640

5,774,107

816,371

Net loss/(income) attributable to noncontrolling interests

2,649

(203)

(29)

3,070

3,958

560

Net income attributable to 58.com Inc.

760,123

833,441

117,836

1,683,710

5,778,065

816,931

Deemed dividend to mezzanine classified noncontrolling interests

(33,959)

(41,861)

(5,919)

(97,651)

(109,617)

(15,498)

Net income attributable to 58.com Inc. ordinary shareholders

726,164

791,580

111,917

1,059

5,668,448

801,433

Net earnings per ordinary share attributable to ordinary

shareholders‑ basic

2.46

2.65

0.38

5.38

19.06

2.69

Net earnings per ordinary share attributable to ordinary

shareholders‑ diluted

2.42

2.63

0.37

5.29

18.85

2.66

Net earnings per ADS attributable to ordinary shareholders – basic

(1 ADS represents 2 Class A ordinary shares)

4.92

5.31

0.75

10.76

38.12

5.39

Net earnings per ADS attributable to ordinary shareholders – diluted

(1 ADS represents 2 Class A ordinary shares)

4.84

5.26

0.74

10.59

37.69

5.33

Weighted average number of ordinary shares used in computing basic

earnings per share

295,068,924

298,222,350

298,350

294,681,288

297,391,735

297,735

Weighted average number of ordinary shares used in computing diluted

earnings per share

299,839,409

300,997,714

300,714

299,630,643

300,760,561

300,561

Note:

(1) Share‑based compensation expenses were allocated in cost of revenues and operating expenses asfollows:

Cost of revenues

2,869

264

4,313

4,848

685

Sales and marketing expenses

30,427

23,323

3,298

63,761

77,399

10,943

Research and development expenses

55,785

47,230

6,678

126,501

145,753

20,607

General and administrative expenses

47,208

53,879

7,618

130,496

157,740

22,302

Amortization of intangible assets resulting from business acquisitions were allocated in operating expenses asfollows:

Sales and marketing expenses

43,637

43,354

6,130

130,923

129,795

18,351

Research and development expenses

11,677

12,015

1,698

35,031

36,033

5,095

(2)Breakdown of sales and marketing expenses was as follows:

Advertising expenses

978,219

986,931

139,537

2,513,055

2,852,361

403,280

Non-advertising sales and marketing expenses

941,912

1,190,189

168,275

2,628,888

3,173,799

448,727

58.comInc.

Reconciliation of GAAP and Non-GAAP Results

(in thousands,ADS,

2019

RMB

US$

RMB

US$

GAAP income from operations

670,514

Share-based compensation expenses[6]

130,660

121,560

17,188

310,535

372,750

52,700

Amortization of intangible assets resulting from business acquisitions

55,314

55,369

7,828

165,954

165,828

23,446

Non-GAAP income from operations

856,526

1,039,171

146,924

2,156,775

2,649,938

374,660

GAAP net income attributable to 58.com Inc. ordinary shareholders

726,433

Share-based compensation expenses

130,446

Change in fair value of long-term investments

(67,450)

75,676

10,699

(67,450)

(3,398,388)

(480,480)

Share-based compensation expenses included in share of results of equity investees

Income tax effects of GAAP to non-GAAP reconciling items[7]

(1,218)

(26,147)

(3,696)

(28,330)

291,671

41,237

Non-GAAP net income attributable to 58.com Inc. ordinary shareholders

843,018,038

143,936

1,966,769

3,100,318

438,337

GAAP operating margin

18.5%

20.2%

17.6%

18.5%

Share-based compensation expenses

3.6%

2.9%

3.3%

Amortization of intangible assets resulting from business acquisitions

1.5%

1.3%

1.7%

1.4%

Non-GAAP operating margin

23.6%

24.4%

22.6%

23.2%

GAAP net margin

20.0%

18.6%

16.6%

49.6%

Share-based compensation expenses

3.6%

2.9%

3.3%

Amortization of intangible assets resulting from business acquisitions

1.5%

1.3%

1.7%

1.4%

Change in fair value of long-term investments

(1.8)%

1.8%

(0.7)%

(29.8)%

Share-based compensation expenses included in share of results of equity investees

0.0%

Income tax effects of GAAP to non-GAAP reconciling items

(0.0)%

(0.7)%

(0.3)%

2.6%

Non-GAAP net margin

23.3%

23.9%

20.6%

27.1%

Weighted average number of ordinary shares used in computing non-GAAP basic

earnings per share

295,735

Weighted average number of ordinary shares used in computing non-GAAP diluted

earnings per share

299,561

Weighted average number of ADS used in computing non-GAAP basic earnings per

ADS

147,534,462

149,175

147,340,644

148,695,868

148,868

Weighted average number of ADS used in computing non-GAAP diluted earnings per

ADS

149,919,704

150,498,857

150,857

149,815,321

150,380,281

150,281

Non-GAAP net earnings per ordinary share attributable to ordinary

shareholders ‑ basic

2.86

3.41

0.48

6.67

10.43

1.47

Non-GAAP net earnings per ordinary share attributable to ordinary

shareholders ‑ diluted

2.81

3.38

0.48

6.56

10.31

1.46

Non-GAAP net earnings per ADS attributable to ordinary shareholders ‑ basic

5.72

6.83

0.97

13.35

20.85

2.95

Non-GAAP net earnings per ADSattributable to ordinary shareholders ‑ diluted

5.63

6.76

0.96

13.13

20.62

2.91

[6]Since the third quarter of 2017,certain share-based awards with redemption features granted to the Company's employees were expected to be settled in cash and were classified as liabilities. The share-based compensation expenses recognized for this type of awards amounted to RMB5.0 million and RMB14.5 million for the three months and nine months ended September 30,2018,and RMB4.7 million and RMB13.0 million for the three months and nine months ended September 30,were excluded from the GAAP to non-GAAP reconciliation accordingly.

[7]This is to exclude the income tax effects related to amortization of intangible assets resulting from business acquisitions calculated at PRC statutory income tax rate of 25% and change in fair value of long-term investments. Other GAAP to non-GAAP reconciling items have no income tax effect.