Stock of 58.com Jumps 3% on Better-than-expected Revenue
China's online marketplace for classifieds, 58.com Inc. (NYSE: WUBA), reported strong first-quarter revenue, sending its stock up 3 percent to $56.40 per American depositary share Wednesday.
The company said its revenue in the three months through March reached $449.7 million, up 23 percent from the corresponding period of 2018 in a statement after markets closed Tuesday. Its income surged 300 percent from a year ago, totaling $103.7 million, or 69 cents per ADS, according to the report.
That was thanks to increased user traffic and user engagement on the company's apps, according to Michael Yao, the chief executive officer of 58.com.
"Our core housing and jobs businesses lead the market, while newer businesses like Zhuan Zhuan and 58 Town are growing rapidly, " Yao said. "We are confident in our online classifieds marketplace business model and will continue to invest in innovation and marketing to further strengthen our leadership position."
Online marketing services revenue of 58.com grew 30 percent year-over-year to $288.2 million, outperforming other segments. The company said its marketing strategies included real-time bidding and priority listing, among others.
58.com reported costs of revenue rose 15 percent to $44.1 million from the corresponding period of 2018, which was primarily driven by increases in the cost of services on Anjuke Inc. and ChinaHR, a real estate information-based platform and a recruitment business. Other costs included traffic acquisition expenses paid to 58.com's advertising union partners, as well as salaries and benefits distributed to information quality control teams, the company said.
Additionally, 58.com announced its partnership with Uxin Ltd. (Nasdaq: UXIN), a Beijing-based used car seller. Uxin said in a statement Tuesday evening that it has arranged a convertible note purchase agreement with investors among which were certain affiliates of 58.com, Warburg Pincus, and TPG. According to the agreement, 58.com will cooperate with Uxin in traffic and inventory acquisition, used car inspections, big data analysis, and SaaS.
Yao said he saw "enormous" potential in China's used car market. "58 Used Car, a leading online used car platform for consumers and businesses that is part of our multi-content category classifieds platform, will benefit from Uxin's tremendous offline transaction-related expertise," Yao also stated.
Regarding its business outlook, 58.com said it expects second-quarter revenue of between 4 billion yuan and 4.1 billion yuan, or $574 million and $593 million.
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