51job (JOBS) is partying like it's 2011. The Shanghai-based provider of online recruitment services posted better-than-expected results for its fiscal fourth quarter after Thursday's market close, delivering its headiest top-line growth in more than six years. This is also the sixth consecutive period of accelerating revenue growth.
The top line clocked in at a record $134 million for the quarter, up 25.6% since the prior year's showing. 51job was only targeting $124 million to $127 million in revenue when it initiated guidance for the period three months ago. It may not be a speedster by the standards of China's other dot-com darlings, but you have to go all the way back to the third quarter of 2011 to find the last time that 51job was growing faster than it did during the final three months of 2017.
Business keeps picking up the pace at 51job. We've seen the year-over-year revenue gains go from 10.2% during the second quarter of 2016 to 13.3%, 13.6%, 16%, 20.3%, 22.4%, and now 25.6% in subsequent periods. Guidance suggests that things will slow in the near term, but it's hard to argue with overall success.
Image source: 51job.
Getting the job done
Online recruitment services -- 51job's largest business, accounting for 60% of its revenue -- rose 22.6% during the period. Total revenue growth was lifted higher by a 30.4% uptick in its other human resource category.
It's not a surprise to see 51job growing faster than it has in recent financial updates. Top-line gains were held back since the second quarter of 2016 when a value-added tax (VAT) policy change kicked in for 51job. It wasn't until the third quarter of 2017 that we finally started to see accurate year-over-year comparisons. Even with that side note, 51job checking in with its healthiest quarterly -- and annual -- growth since 2011 is encouraging.
The good news doesn't end at the top line. Gross margin continues to expand, helping lead the way to a 51% surge in operating income. 51job's adjusted earnings are clocking in at $0.77 a share, well ahead of the per-share profit of $0.59 to $0.62 that it was modeling in its earlier guidance.
51job's balance sheet is in good shape, closing out 2017 with nearly $1.1 billion in cash and short-term investments. It closed on its $118.9 million purchase of a majority stake in Lagou -- a recruitment website geared to technology and engineering talent in China -- in December, so its cash balance reflects the transaction.
51job's outlook for the new quarter is mixed. It sees an adjusted profit of $0.43 to $0.48 a share on $116 million to $120.7 million in revenue. These goalposts may seem well short of the fourth-quarter's performance, but there's seasonality in this business and the late Lunar New Year holiday in 2018 is only going to make the new period even more challenging. The top-line guidance suggests revenue growth will be north of 30%, 51job's seventh straight period of accelerating revenue growth. Unfortunately for investors the bottom-line outlook falls short of the $0.50 a share it posted in adjusted earnings a year earlier. 51job has historically been conservative in its guidance, but we'll have to see how this all plays out three months from now.
