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Earnings Highlights and Summary

For the first quarter of the fiscal year 2018, 58.com's total revenues were RMB2.47 billion (US$393.0 million), representing an increase of 24.3% from RMB1.99 billion in Q1 2017. The Company's revenue numbers beat analysts' estimates by $22.26 million.

During Q1 2018, 58.com's cost of revenues was RMB257.9 million (US$41.0 million), up 29.2% from RMB199.6 million in Q1 2017, primarily driven by increases in the costs of used good sold, traffic acquisition costs (TAC) paid to 58.com's advertising union partners, salaries and benefits, and short message service (SMS) costs.

58.com's gross profit was RMB2.21 billion (US$352.0 million) in Q1 2018, reflecting an increase of 23.7% from RMB1.79 billion in Q1 2017. The Company's gross margin was 89.6% in the reported quarter compared to 90.0% in the year earlier same quarter.

For Q1 2018, 58.com's operating expenses were RMB1.95 billion (US$309.5 million), representing an increase of 13.8% from RMB1.71 billion in Q1 2017. The Company's sales and marketing (S&M) expenses were RMB1.44 billion (US$228.9 million) in the reported quarter, up 15.5% from RMB1.25 billion in the year earlier comparable quarter.

During Q1 2018, 58.com's research and development (R&D) expenses totaled RMB346.4 million (US$55.1 million), up 10.1% from RMB314.5 million in Q1 2017, primarily due to increases in salaries and benefits and share-based compensation expenses for the Company's R&D personnel for the development of new features and services.

58.com's income from operations was RMB266.8 million (US$42.4 million) in Q1 2018 compared to RMB77.9 million in Q1 2017. The Company's operating margin was 10.8% in the reported quarter compared to 3.9% in the prior year's corresponding quarter. 58.com's non-GAAP income from operations was RMB411.6 million (US$65.4 million) in Q1 2018 compared to RMB217.2 million in Q1 2017. The Company's non-GAAP operating margin came in at 16.6% in the reported quarter compared to 10.9% in Q1 2017.

58.com's net income attributable to common shareholders was RMB174.6 million (US$27.8 million), or RMB1.17 (US$0.19) diluted earnings per ADS, in Q1 2018 compared to a net loss of RMB21.5 million, or RMB0.15 diluted loss per ADS, in Q1 2017.

58.com's non-GAAP net income attributable to common shareholders was RMB305.8 million (US$48.6 million), or RMB2.05 (US$0.33) diluted earnings per ADS, in Q1 2018 compared to RMB105.7 million, or RMB0.72 per diluted ADS, in Q1 2017. The Company's earnings beat Wall Street's estimates of US$0.23 per share.

Operating Results

During Q1 2018, 58.com's membership revenues jumped 17.1% to RMB928.9 million (US$147.7 million) compared to RMB792.9 million in Q1 2017, primarily driven by an increase in the number of subscription-based paying membership accounts. The total number of subscription-based paying membership accounts on the Company's platforms, which include 58.com, Ganji.com, and Anjuke.com, was approximately 2,665,000 during Q1 2018, reflecting an increase of 20.5% from approximately 2,212,000 in Q1 2017.

For Q1 2018, 58.com's online marketing services revenues surged 31.2% to RMB1.49 billion (US$237.3 million) compared to RMB1.14 billion in Q1 2017, primarily driven by the increasing adoption and effectiveness of the Company's various online marketing services, such as real time bidding, priority listing, and various other online marketing services.

Cash Matters

During Q1 2018, 58.com's net cash provided by operating activities was RMB710.0 million (US$112.9 million) compared to RMB428.6 million in Q1 2017.

As of March 31, 2018, 58.com had cash and cash equivalents, restricted cash, and short-term investments of RMB6.50 billion (US$1.03 billion).

Business Outlook

Based on 58.com's current operations, the Company is forecasting total revenues to be in the range of RMB3.10 billion to RMB3.20 billion for the second quarter of the fiscal year 2018, representing a y-o-y growth of 19.6% to 23.4% in Renminbi amounts.

Stock Performance Snapshot

June 20, 2018 - At Wednesday's closing bell, 58.com's stock was marginally up 0.62%, ending the trading session at $79.35.

Volume traded for the day: 610.75 thousand shares.

Stock performance in the previous six-month period - up 10.68%; past twelve-month period - up 88.48%; and year-to-date - up 10.87%

After yesterday's close, 58.com's market cap was at $12.14 billion.

Price to Earnings (P/E) ratio was at 50.67.

The stock is part of the Technology sector, categorized under the Internet Information Providers industry. This sector was up 0.2% at the end of the session.

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