51job, Inc. (NASDAQ: JOBS) stock rose over 12.1% on March 17th, 2020 (as of 11:43 am GMT-4; Source: Google finance) after the company in the fourth quarter of FY 19 has reported the 1.3% rise in the net revenues to CNY1.136 billion, which is above the guidance range the company provided back in November of last year. As expected, due to the weak macro conditions that affected hiring demand, the online revenues declined 5% to CNY613 million in the fourth quarter. The revenues for other HR services grew 10% to CNY522 million in the fourth quarter, on the back of the seasonal campus recruitment projects as well as greater usage of BPO, training and assessment services. The seasonal campus recruitment activity saw a good activity despite the soft tone for general hiring as employers remain focused on planning for the future with regards to key talent pipeline and development. Growth of the BPO business, training and assessment services reflected continued cross-selling efforts by the company’s sales team.
Moreover, the gross margin fell to 66.7% in the fourth quarter of 2019 compared with 69.5% in 2018. The increase in cost of services was mainly due to higher employee compensation expenses, seasonal headcount additions as well as logistics cost, such as venue rental and event decoration, which were related to providing the campus recruitment services. Included in cost of services in the fourth quarter million in the fourth quarter of 2019, which declined by about 7% from a record level in 2018 but up 54% sequentially from the preceding quarter. The operating margin was 34.8%, and excluding share-based compensation expense, it would have been 37.8%.
Meanwhile, in the fourth quarter, the company had completed an investment in Huali University Group Limited, which successfully listed on the Hong Kong Stock Exchange in November of 2019. In the fourth quarter, the company had recorded an impairment of CNY98 million related to a minority equity investment in a provider of on-demand work opportunities. Due to the weak macro conditions that affected hiring demand, the online revenues fell 5% to CNY613 million in the fourth quarter. However, the company continues to make progress in the main strategic objective in deepening the engagement with high-quality accounts, and this has resulted in a further uplift in ARPU of 9%.
For the first quarter of 2020, net revenues target is in the projected to be in the range of CNY725 million to CNY775 million, which is a year-over-year decline of 15% to 20%. For the non-GAAP fully diluted EPS target, the estimated range is to be between CNY1.70 and CNY2.20 per share.