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58.com Inc (NYSE:WUBA)
Q2 2019 Earnings Call
Aug 22, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, and welcome to the 58.com Second Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Christian Arnell. Please go ahead.

Christian Arnell -- Investor Relations

Thank you. Hello, everyone, and thank you for joining us today. The Company's results and its Investor Relations presentation were released earlier today and are available on the Company's IR website at 58.investorroom.com. On the call today -- from 58 is Mr. Michael Yao, Chairman and Chief Executive Officer; Mr. Zhou Hao, Chief Financial Officer; and Mr. Ye Wei, Deputy CFO; and Ms. Ally Wang, IR Director.

Mr. Yao will give a brief overview of the Company's business operations and highlights followed by Mr. Zhou who will go through the financials and guidance. They will all be available to take your questions during the Q&A session that follows.

I would like to remind you that this call may contain forward-looking statements made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expect, anticipate, future, intend, plans, believes, estimates, confident, and similar statements. Any statements that are not historical facts, including statements about 58.com's beliefs and expectations are forward-looking statements that involve risks -- that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the US Securities and Exchange Commission. All information provided on the call is current as of today. 58.com does not undertake any obligation to update such information, except as required under applicable law.

I'd now like to pass the call over to Mr. Yao. Michael, please go ahead.

Michael Yao -- Chairman and Chief Executive Officer

Thank you, Christian. Thanks everyone for joining our call again. We are very pleased with our second quarter results and the improvement we are seeing across various areas of our company. The second quarter, our revenue grew 21% while non-GAAP operating profit increased 29% year-over-year. Operating expense grew at a slower rate than revenue. Our headcount was about 22,000 during the quarter, a steady drop from a year ago. Employee mix continue to shift more toward product and the tech which grew 8% while sales and the marketing personnel decreased by 3%. Traffic, particularly on our mobile apps, continue to grow very rapidly.

The macroeconomic environment remains uncertain and challenging. While the Chinese government has taken measures to support the economy, recruitment in various industries has slowed. In housing, growth in sales transaction volume is mostly coming from lower-tier cities where the rental market remains stable. The government continued to monitor and control housing price very tightly, which has created a relatively stable market.

The macroeconomic environment has impacted our recruitment in the housing business and the cost revenue growth was slow somewhat. We remain confident in our ability to maintain our market-leading position and the medium to longer term growth potential of our platform. In China, so it is undoubtedly the largest horizon gratified platform.

As a combined group, we have acquired other vertical platforms over the market several years such as Anjuke for housing and incorporated others such as Guazi [Indecipherable]. We also incorporated in the spun of certain platforms such as in the cars vertical with Che Hao Duo group, and the home and freight vertical with [Indecipherable] which we don't consolidated into our financials, but provide support [Indecipherable]. Put together, we are the clear leader in terms of online recruitment, housing, used car, and the yellow page local service.

Our scaled online presence and diversified [Indecipherable] from various content categories make ourselves the biggest and the most profitable platform with diversified risk profile when compared with other -- with our vertical peers. This is very important, especially in this macroeconomic environment. Even if we take specifically metric is for most of our content categories and compare them with other publicly available data for pure play verticals, we comfortably lead in terms of traffic, video and the customer numbers. So despite again say impact our revenue from the macroeconomic slowdown, we remain very confident about our market leadership position. We are also confident in the fact that our user experience and engagement is improving as our products and the technology play an increasingly significant role.

We continue to integrate the Big Data just in the messenger video, voice, we are in the payment technology into our platform. This allows users to access more and higher quality information and easily communicate with business or other consumers. Higher quality user improves customer satisfaction with effectively of our online marketing services, as I have commented on the previous call, our product and the tech focus continue to be on the very competitive content linkage data [Indecipherable] and we are happy to see progress being made in this area. We are also making progress in developing collaborate relationships with third parties for totally strong ecosystem with every benefit from. One example is the JV we formed with [Indecipherable] primary home broker in China to jointly improve our primary home transaction business.

Primary brokers typically help developers on project, concept, design and the launch of offline services. This has the biggest housing user base and can mobilize more than 1 million secondary real estate agents to sell new homes. Our collaboration will enable us for further streamline and improve the full value chain from the users searching online for housing, to viewing the house in person and completing the final transaction.

Another example is our first quarter 2019 investment in Uxin, where 58 online traffic [Indecipherable] offline got regional transaction capability will contribute to a more streamlined and integrated online and offline free on the car transaction and the delivery process. Of course, we continue to [Indecipherable] which applies a different strategy and the business model for the pre-owned car, which is also doing very well. This example shows that our model is constantly evolving from a pure online advertising model to a platform with a more comprehensive set of series powered by data and the technology.

As an Internet company, we not only work on book to better understand our users, we also work closely with our customers and other ecosystem partners to better serve our customers and the increase our industry efficiency, and the user satisfaction. Our customers such as real estate developers, secondary home agents, autos, and the big employers, we feel that our value-added is becoming increasingly appreciating and the opportunity to create more value-added service became bigger. Housing and auto are [Indecipherable] markets, while recruitment is indispensable and also a huge market. We feel excited about the enormous market opportunity and our potential.

While we continue to monitor macroeconomic growth trends, I also want to emphasize again the channels are massive with enormous regions that have yet to be penetrated. The best example of our penetrating whether it's [Indecipherable] initially, which continued to gain opportunity [Indecipherable] popularity. Well, 58.com is only four years old, demand from lower-tier cities, for localized and easily accessible [Indecipherable]. The monetization potential for us for next recruitment housing and auto advertisers toward [Indecipherable] is huge. In 2019, our focus remained on -- remains on user and engagement growth category toward our mobile app.

We really increased our investment in [Indecipherable] gradually monetization it going forward. Last but not least, let me also mention about Zhuan Zhuan, our online used goods trading platform, it's also doing great. It's less growth when compared with last year if you -- order volumes and they generally continue to grow rapidly. Our Zhuan Zhuan team is focused on driving user engagement and the convention monetization which only we can forecast during the second half of 2018 is making encouraging progress. We began charging commissions from online C2B and the B2C transactions in the used cellphone category and have slowly introducing across other categories. We are happy to see that its user base in the [Indecipherable] was largely not impacted as we slowly increased monetization.

I'm pleased with our overall progress this quarter aside from driving growth in the innovation products technology and the business model. We have also been embracing operational efficiency through traffic acquisition and the sales and the service. As you can see, both advertising and the long advertisement sales and the marketing income are growing, but at a slower rate than revenue. Operating profit margin over the last several years has improved a lot and the way it was an all-time high during the quarter. Let's say that both our core [Indecipherable] platform models, I believe that the margin for our core kind of ad classified business will improve as we continue to streamline sales in the serious progress. Increased [Indecipherable] gradually become profitable in the coming years. By then, our total growth margins will also be much higher.

In summary, while the macroeconomy slowdown is clearly impact our dividends in the short term, the enormous opportunity to drive growth remains in the mid to longer term. Online cost for the model is a proven model in the involving with technology. There is no shortage of money for test various unproven business model in China. Our market leadership position remains solid. We believe our strategy is clear and then consistent. Our team is capable and motivated and our partners and the investee companies are getting stronger and increasing number. We have many exciting productivity in the pipeline and everyday we are making tangible progress. We are building the business for longer term and all investor can see short-term cycles.

With that, let me pass it to Hao to go through the financials.

Hao Zhou -- Chief Financial Officer

Thanks, Michael. Thank you again for joining our call. I'll now walk you through our second quarter 2019 financials. Total revenues were RMB4.1 billion, up 20.5% year-over-year. Membership revenues were RMB1.2 billion, up 1.5% year-over-year. Online marketing services revenues were RMB2.7 billion, up 23.8% year-over-year. In the second quarter of 2019, the total number of paying business users was approximately 3.6 million, a 2% increase from the same quarter of 2018. Traffic continued its healthy growth and was driven by our expanding user base and increased user engagement. We have been widening and improving the various types of online marketing services we offer across different content categories. As a result, we believe that our customers' ROI on our platform remained healthy.

Gross margin was 89.5% compared with 90% during the same quarter of 2018, due to minor changes in our product mix. Operating expenses were RMB2.7 billion, up 16.5% year-over-year.

Sales and marketing expenses in the second quarter of 2019 were RMB2.1 billion, up 15.3% year-over-year. Within sales and marketing expenses, advertising expenses in the second quarter of 2019 were RMB1 billion, up 14.8% year-over-year. Non-advertising sales and marketing expenses in the second quarter of 2019 were approximately RMB1.1 billion, up 15.8% year-over-year. Research and development expenses in the second quarter of 2019 were approximately RMB0.5 billion, up 22.3% year-over-year. The increase was mostly headcount related.

General and administrative expenses in the second quarter of 2019 were approximately RMB194 million, up 14.7% year-over-year. As you can see, if we exclude R&D expenses, all our other operating expenses are growing at a slower rate than revenues. We are strategically expanding our teams to develop products and technologies for our platform, while at the same time, carefully controlling expenses and making significant progress in improving operational efficiency. The total number of employees at the end of second quarter 2019 remained below 22,000, largely stable when compared to last year and last quarter.

Non-GAAP income from operations was approximately RMB1.1 billion in the second quarter of 2019, up 28.9% year-over-year. Non-GAAP operating margin was 27.7% in the second quarter of 2019, compared with 26%, excuse me, in the same quarter of 2018. Other income in the second quarter of 2019 was RMB3.7 billion, compared with RMB94.1 [Phonetic] million in the same quarter of 2018, largely due to a RMB3.4 billion non-cash unrealized fair value gain in our investment in Che Hao Duo group, formerly known as Guazi, as well as an RMB642 million realized gain as a result of the cash received from a sale of certain equity interest in Che Hao Duo. Let me clarify that according to the latest US GAAP accounting principles, we account for our investments in Che Hao Duo using the measurement alternative method. The sale of the certain equity stake is seen as an observable price change event. So we have to revalue the remainder of our shares in Che Hao Duo. As you can see, Che Hao Duo has done very well over the last several years and many investors have participated in various financing runs as increasing valuations, which has increased the value of our holdings.

Other items in investment gains and losses include an RMB493 million fair value losses in our investment in 5i5j due to a decrease in the share price on the Asian market in China during the second quarter of 2019, alongside with other minor immaterial gains and losses.

Non-GAAP net income attributable to 58.com Inc, ordinary shareholders was approximately RMB1.4 billion in the second quarter of 2019, up a 101.4% year-over-year. Non-GAAP net margin was 39.8% in the second quarter of 2019, compared with 23.9% in the same quarter of 2018.

Now on to the guidance. Based on the Company's current operations, total revenues for the third quarter of 2019 are expected to be between RMB4.1 billion and RMB4.2 billion. This represents a year-over-year increase of 13% to 16% in RMB amounts. These estimates reflect the Company's current and preliminary view, which is subject to change.

With that, we'd like to open the Q&A session. Operator, please begin the Q&A.

Questions and Answers:

Operator

[Operator instructions] The first question comes from Hillman Chan of Citigroup. Please go ahead.

Hillman Chan -- Citigroup Inc -- Analyst

Hi, Yao [Foreign Language] [Technical Issues]

Operator

Yeah, Mr. Chan are you still there, sir?

Hillman Chan -- Citigroup Inc -- Analyst

[Foreign Language] Hello, can you hear me?

Michael Yao -- Chairman and Chief Executive Officer

Yes. Continue. Go ahead.

Operator

Okay, his line is disconnected, I've got a feeling he was in a bad sound area, so we'll go to the next questioner, who is Thomas Chong of Jefferies. Please go ahead.

Thomas Chong -- Jefferies -- Analyst

Thanks management for taking my questions. I would like to ask about our strategy for Zhuan Zhuan, as we see our revenue starts to ramp up in the second quarter, any comments about competition and when should we expect that to achieve profitability and how should we think about its long-term margin profile? Thank you.

[Foreign Language]

Hao Zhou -- Chief Financial Officer

Yeah, hi, Thomas, this is Hao, I would first address some of the financial related part, and Michael may chime in on the strategy part. Yes, as you can see that Zhuan Zhuan revenue is ramping up, because we go through the other revenue line, which is a reflection of pretty encouraging trends that we have seen in the last two or three quarters in Zhuan Zhuan, because we really became a focus of monetization -- of the focus of the business things pretty late last year. And currently, we started to sort of distinguish users between consumers and business, we're starting to take commission from business who buys and sell used stuff on our platform, we started mainly in the used cellphone categories, but we are also testing other potential categories as well.

So yes, it looks good within a pretty short period and we will add around potentially, as we said, we can expand to other categories, and so it did speak to the value we created in the first three years of Zhuan Zhuan because even though we started monetization very recently, but in the last three years, we have accumulated a huge amount of users. And we did some branding last year, the team worked very hard in kind of making sure that the process all run smoothly and we also are pretty innovative in choosing some of the value-add services that we believe can further reduce the friction of used good transactions on our platforms, for instance, inspection of the cellphones, among others. So we're doing a lot of things, not only to create an online platform but really just to remove the friction of online used goods transactions. And so in the first two years and half, we basically focused on user experience, right? So we didn't really try to monetize too early and but now when we start to ramp up monetization, it was -- it's based on a pretty, a very vibrant and a platform already. So the ramp-up was seem pretty fast, which I think is the result of the value we created all along.

And you asked about the long-term profit ratio, I think it's -- obviously it's too in the loss-making stage today, because we have a team that really focused on user experiences and we started to monetize that recently. But we believe if you think about the model itself, right, it's very platform-based model as Michael mentioned in his prepared remarks. It's online transaction, it's the cost base is a bit of -- there will be R&D cost, there will be some customer service costs, handling some customer queries, but it's going to be a fairly small compared to the overall GMV that we're seeing that going through the platform. And you think about that almost anyone in China can buy and sell used goods, so potentially this is a very big platform with various type of used goods.

And we believe that we have seen e-commerce grow very well in China, right, for the last say 10, 15 years, but the transactions for used goods in terms of awareness is significantly lagging. But at the same time, we see that the infrastructure, the online payment infrastructure including logistics et cetera is very good already in China. So it is especially in most recent years, right? So in theory if it works for new goods, largely it works for used goods as well, in terms of buying and selling online. So I think it's underserved, but it has massive market, so I think the major focus for the business still even though we start to ramp up revenue, major focus is still growing platform, making sure it's a superior user experience. And ultimately when we have QGMVs growing through the platform, we have commission rate, we've even marketing percentage, and which should be more than enough to cover R&D and customer service cost that the platform needs on an ongoing basis. So I believe it's a pretty nice model. But we'll see -- and I'll probably leave Michael to mention about strategy and the competition part of your question.

Michael Yao -- Chairman and Chief Executive Officer

[Foreign Language]

Hao Zhou -- Chief Financial Officer

Yeah, in terms of strategy and differentiation with our peers, for one, I think because of investment from Tencent, right? On top of being the investor on the corporate level, they invest additional $200 million in 2017. And so therefore we have a closer relationship versus our competitor from that has no resources that they can leverage from WeChat ecosystem. So users can access Zhuan Zhuan not only from the app, but also from mini programs and because of the transactional [Indecipherable] so it works equally well almost. So that's one thing and second thing is, we focus on service. As I mentioned a little bit before, but on the inspection on cellphones when you -- and it's a challenge as well as opportunity at the same time for used goods, right? Because it's, it does have a character of not being the very steady dice like the new goods. But if you go through category by category, there are areas where when you introduce certain services you significantly reduce the friction whether it's a -- some services related to pre-owned speakers or books whether cleaning or packaging or anything. So maybe different services or different categories, but we try to do the smart things and find these pain points and introduce services that will unlock the demand for online transaction of used goods. So on that I think different companies have different viewpoints and may be a lot of different areas people can focus on. So it's -- so it cause natural differentiation among the players. So it's not -- it's not like all the used goods trading platforms are exactly the same. So it naturally takes on different characters. So that's the second thing to differentiate. And I think --

Thomas Chong -- Jefferies -- Analyst

Thank you.

Hao Zhou -- Chief Financial Officer

Yeah, it's a promising category, potentially it's a massive platform for users and GMV. Thank you, Thomas.

Operator

And we have a question from Hillman Chan of Citigroup. Please go ahead, Mr. Chan.

Hillman Chan -- Citigroup Inc -- Analyst

Hello. [Foreign Language] Thank you very much for taking my question. So actually could management share volume of the future on our recruiters and property agents and how we should think about the growth outlook in the fourth quarter in 2020, and also as macro is not so good, although we do a strategically to broaden our monetization and cut back on spending. And lastly, how should we think about macro impact on competition, especially on the property side? Thank you very much.

Michael Yao -- Chairman and Chief Executive Officer

[Foreign Language]

Hao Zhou -- Chief Financial Officer

Yeah, so first of all on the sector growth rate on the housing and jobs, even though I mean there is clearly macro impact particularly on jobs, because as you can imagine recruitment is a directly reflection of the confidence level of the business community and which in today's environment is not particularly high and which is no secret. So we're clearly seeing a drop in the demand for hiring, which directly hits. And we see that across the board, we see that other recruitment platforms in China as well et cetera, but we still have very good market share in terms of the -- especially in the blue collar side, but it's not as good as a kind of the overall market hiring demand-wise, like a couple of years ago.

However, we do notice that in the supply demand equation by sector and/or by industry is different. So I think what we are doing is we're trying to be selective or be more focused in areas, industries where there is still relatively strong demand and trying to continue to meet our customers' requests there and along with some other product future innovations, is that we're doing on jobs.

On housing, yes, it is true that we have good years in housing in '15 and '16 starting from, I think, late part of '16 inflow, lot of the restrictive measures have been put into place by the government. And so the volume took a hit and it has been pretty low, but quite stable given the continuity of these policies. So it's not like, if we -- it is pretty low level but stable. So it's a new norm almost as well as volume and price.

So it's a fairly stable market, but it's a big market, so we're talking about potentially 6 trillion to 7 trillion secondary GMV every year, we're talking about 15 trillion new homes GMV, so this is a huge market, but just stable, not very heated as previous year. So there are still a lot of things we can do, we're going to focus on different sub-segments. We used to be very big on -- well, we started with rental and we moved into secondary. We're now more focused on -- also starting to focus more on commercial real estate, some primary homes and on the short-term rental platforms, apartment rental platforms et cetera, and also from a platform point of view, we are evolving as Michael alluded to in his speech earlier that we -- our model is evolving from pure traffic direction model, right? To a more of a traffic obviously continuing to extend to continue to defend the leadership position but also introducing more services, we are trying to go deeper into helping our customers with our technology, so that they become more efficient regardless whether it's secondary or rental or primary. One example is we start to form a JV with primary brokers, so that we jointly serve developers better with a more streamlined end to end process of buying new homes. We provide secondary agents for instance chance to sell new homes as well. And so we are trying to utilize all these resources that we have as well as our partners have and trying to increase the efficiency of the industry. I think on the online side if you download the Anjuke app on 58, you will see changes that are happening very quickly in terms of user experience, in terms of data, in terms of video, in terms of -- in short and services, in terms of all the user experience improvement that we have been introducing. So I think ultimately if it's a stable market, it's fine, but it's huge, the industry is -- there's a lot of inefficiency in it, we have got good market share. We've got leadership market share in traffic in businesses, but we can serve our consumers and business a lot better, I think we'll monetize these one way or another but as long as we add value we will be able to grow our revenues. Yes.

Michael Yao -- Chairman and Chief Executive Officer

[Foreign Language]

Hao Zhou -- Chief Financial Officer

Yeah. And then your question about extending the revenue sources, right. One example would be 58 Town, it's really a geography expansion. But if you think about our product roadmap or business model roadmap, it's very similar to what we have gone through in big cities with 58.com, so we're replicating our success story or capability in different locations or distributed a smaller locations individually right, but the countryside or rural area add up to huge amount of users, we're talking about 400 million, 500 million people, so almost equivalent to our current users that we have accumulated in the last 14 years in 58.com.

So while we replicate our success in smaller lower tier places, we believe that over time you will contribute significant revenue. So hopefully RMB1 billion in the next year or those future years to come. And at the same time, there is lot of 58, it's not only about housing and jobs, right, it has a huge big list of different content categories. So as we continue to deepen our services in our core category, housing and jobs or used cars that we can -- we will looking to other categories as well. We are trying to understand better the differences, frankly, Yellow Pages, it's a combination of a lot of different niche categories as we dig deeper and we hope to create better user experiences and create new revenue streams as we kind of improve our business model differently in different categories. So that provides another angle as well.

In terms of expense controls, maybe let me comment on if you look at our expense profile, right, and it's very high gross margin model, so it's really the operating expense is advertising, which is mainly user acquisition or people or people largely salespeople is a big chunk of our employee base, which is really ultimately they are trying to acquire paying users and/or acquiring retaining paying users. So in terms of traffic acquisition, we're doing [Indecipherable] we've seen pretty good ROIs. And so I think that's an investment that we need for the mid to longer-term value of the platform, because that would affect platform, the bigger we get and the more leverage we have on your expenses. So we believe the longer term as we become bigger and stronger versus other smaller peers, you will -- naturally be a small percentage of the revenue. And we will compare the ROIs, we will track the data rigorously, we will compare the ROIs of traffic acquisition and we can -- we do have control of where we cut back on certain channels and such depending our assessment of the overall balance between growth and short-term profitability. And on the people side, as you can see, Michael mentioned also, is we have actually been reducing our total employee size largely from the sales and marketing teams, because the self-serve initiative, the online payment, the infrastructure, as well as our internal teams, our tools are getting better. So even though we serve 3.6 million SMEs, but we are being able -- we are serving them with few amount of people with, by introducing better tools to them, so that they can be more self-served and we had -- all these initiatives are going on and we believe that there is huge potential for us to be much more efficient in the years to come. Thanks Hillman.

Hillman Chan -- Citigroup Inc -- Analyst

Thanks Hao. Thanks Michael.

Operator

Next question comes from Natalie Wu of CICC. Please go ahead.

Natalie Wu -- CICC -- Analyst

(Foreign Language) I will translate myself. We see a significant slowdown in the job sector. Just curious, one, if any typical recruiter verticals performed actually quite resilient and let this weakness. And two, what's management take on the current online penetration of blue-collar job recruitment, and how big [Indecipherable] well in the future? Because according to our observation is the online penetration is still at a low level and has a great potential to develop and an overall weakness across the offline industry normally will not have such an impact on the -- according online business. So just want to hear from management opinions on that and what do you see as the largest issues that seen this but the online penetration growth of blue collar recruitment sector at current stage? Thank you.

Michael Yao -- Chairman and Chief Executive Officer

Thank you, Natalie. [Foreign Language]

Hao Zhou -- Chief Financial Officer

Yeah, so in terms of industries, yes, we do see differences in different verticals, for instance, manufacturing used to be a larger portion, but has continued to be shrunk over last couple of years at least. It's now it's really single digit of our revenue contribution according to our estimate, and financial services, the micro loans P2Ps used to be a pretty active industry but -- more because of regulations, that has reduced a lot in terms of hiring demand for instance. But on the other hand, industries like education seems to be do quite positive looking, or pretty strong demand or local services, restaurants, and these areas don't seem to get impacted that significantly from the macro, at least for now. So there are differences. So that's why we think we can also [Indecipherable] our resources differently to get growth as high as possible.

Now in terms of hiring online penetration, yes, we do agree that it's not a high penetration at all, there is still lot of consumers jobseekers as well as businesses that have not really embraced online hiring as much as they have been embracing maybe some other online applications. So there is still for room for us to grow. I mean we think currently out of the slowdown in our jobs, revenue is largely macro related, because we've seen that across all of the hiring platform different companies and it's not a secret, right. So it's quite understandable that the confidence level given the macro situation that we're seeing globally and domestically has very naturally caused the business owners to be very cautious of not to expand I mean for you guys to say the least and some cases cutting back on the current employee size.

So you can imagine how much or how much money they wanted to spend on hiring if they are reducing their team size. So this is what we are facing externally, but as I said, as we said before, there is lot more we can do in terms of our ability to grow and to improve user experience, improve matching and improve data and we believe that economic cycles come and go. So once maybe the government is talking about more stimulus, right. So if those things kick in and at some point the confidence level is back up again, I think the hiring activities will be back again as on our leadership position in the online hiring is there we'll get the majority of the benefit when the time comes. So we'll continue to improve our product and maintain our market share.

Natalie Wu -- CICC -- Analyst

Got it. Quickly can I rate it as, we actually have a good chance of growth recovery of the job segment next year?

Hao Zhou -- Chief Financial Officer

And I think it's probably too early to the point to one way or another in terms of how the market will go, because we are in pretty unusual times, as you know, and so to comment on next year will probably need at least in the quarter to be more confident on giving you more color on that.

Natalie Wu -- CICC -- Analyst

Got it. Thank you.

Hao Zhou -- Chief Financial Officer

Thanks, Natalie.

Operator

And the last question today due to time constraints will be from Jamie Chen [Phonetic] of Bank of China International. Please go ahead.

Jamie Chen -- Bank of China International -- Analyst

[Foreign Language] I'll quickly translate myself. So I think Yao also just talk about the RMB1 billion revenue target for 58.com next year. Can you talk about the key contributing factors to start with? Is this similar to the current revenue mix at 58.com? And also in terms of business expansion, do you expect to expand sales force or like leverage the current village manager to in-charge of the recruiting efforts? Thank you very much.

Michael Yao -- Chairman and Chief Executive Officer

[Foreign Language]

Hao Zhou -- Chief Financial Officer

[Foreign Language] Yeah, so for 58 Town, Jamie, we do see very fast user ramp up. So Michael said if he is very similar to how he would started -- how he started 58.com in the very first initial years and it has a good word of mouth, he also himself kind of tracks his home town's 58 Town product development and then has seen users giving very positive feedback as well as from the government -- local government point of view and we really viewed as a very positive force in digitizing locally in terms of centralizing the information that's useful for local people.

And yes, he did mention 1 billion up, but we didn't commit to to deliver that next year maybe next year and the year after what he meant is really, he can reach -- can reach to a pretty significant revenue scale, so we'll see how that ramps up. And you mentioned about the go-to-market strategy, right, the monetization strategy, it has some aspects, which are similar to 58. But maybe not exactly and maybe exactly the same, for instance, in some cases, the revenue will be generated with our current customers, for instance, of home developers, right, that its existing customer of our team, but if they wanted to build a project in a remote area and we can help them to mobilize people in the smaller towns maybe in the neighboring smaller towns series. It's more time in the area to come to the project to potentially customers for our housing customer.

And similarly for auto manufacturers, right. So if there is a certain model that's more tailor made for small lower tier users, and we have 58 Town, it will be a very suitable channel for us to advertise on their behalf, we'll probably be one of the best channels and because we're talking about very distributed network people. So, and you mentioned about the Town partners, yes, Town partners are the local guys who can act and as the agent to help to monetize more of the local businesses where they can meet the person in person, then we'll provide the tools and training to them so that they can help us to monitor. So it will be a combination of methods that we'll experiment in terms of monetization. But the commercial potential for 58 Town is very obvious. We are linking the hundreds of millions of people with -- I'm sure you will be very interested. It will be very interesting assets for a lot of customers, including some existing customers of ours and maybe some other new customers. So we're -- very excited and positive about the business. Even though, today, it's very early. We're losing -- we'll make some losses because the initial statement, but it's a great business and it's doing very well.

Operator

Was there any follow-up, Ms. Chen?

Jamie Chen -- Bank of China International -- Analyst

That's very helpful, And looking forward to more. Hi. Yeah. Thank you, Hao. Thank you, Michael. Looking forward to hear more updates from you in the future.

Operator

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Christian Arnell for any closing remarks.

Christian Arnell -- Investor Relations

Thank you everyone for joining our call today. If you have any further questions or comments, please don't hesitate to reach out to any of us. This concludes the call tonight. Have a good night.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Duration: 61 minutes

Call participants:

Christian Arnell -- Investor Relations

Michael Yao -- Chairman and Chief Executive Officer

Hao Zhou -- Chief Financial Officer

Hillman Chan -- Citigroup Inc -- Analyst

Thomas Chong -- Jefferies -- Analyst

Natalie Wu -- CICC -- Analyst

Jamie Chen -- Bank of China International -- Analyst

More WUBA analysis

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