Growth may be slowing at 51job (NASDAQ:JOBS), but the Shanghai-headquartered provider of internet-based recruitment services throughout China is still taking big steps in the right direction. Shares of 51job soared 6% on Friday following a well-received quarterly report.
51job clocked in with second-quarter revenue of $84.2 million. That is 10.2% ahead of where it landed a year earlier. It's 51job's weakest top-line growth since the first quarter of last year, but it's just enough to stretch the company's streak of double-digit-percentage growth to five quarters. The results landed 51job near the low end of its earlier guidance, calling for $83.7 million to $86.8 million in revenue.
There was healthy growth across both of its major businesses. Online recruitment services -- accounting for roughly two-thirds of the revenue mix -- saw its top-line results grow 11.2%, to $56.1 million. Other human-resource-related revenue checked in at $28.1 million, a 9.1% year-over-year advance. That category was held back as a result of the new value-added-tax policy change in China that went into effect in May.
51job's original print-publishing business is no longer a factor or a third business category that the dot-com speedster breaks out. It nixed the publication of 51job Weekly -- the weekly local job listings that it partnered with more than two dozen regional newspapers to push out at its peak -- late last year.
The bottom line
Margins contracted since the prior year's showing, but 51job's adjusted profit of $0.48 a share was enough to get the market excited. That's well ahead of the outlook it issued three months ago, when it was targeting earnings between $0.36 and $0.39 a share on that basis.
There are now 322,236 unique employers that rely on 51job's online platform to fill open positions. That is 7% more accounts than the company was servicing a year earlier, and this is the fifth straight quarter that average revenue per unique employer has grown.
51job's guidance for the new quarter is calling for an adjusted profit between $0.37 and $0.40 a share. The forecast is also eyeing $86.5 million to $89.5 million in revenue for the third quarter. The company beat its top-line outlook during the first quarter, and it was the bottom line that got obliterated in the second quarter. If the stock is moving higher after blowing its own targets away on just one end of the income statement, it would be interesting to see what will happen if it crushes it when it comes to revenue and profitability.
It's still comforting to see growth continuing beyond the VAT policy change in May. There was a fear that the reform would cool hiring trends. But as long as Chinese businesses keep hiring and 51job remains a major player in generating leads for employers, growth should continue to be on the menu.