58.com, which describes itself as China’s “largest online marketplace serving local merchants and consumers” has reported an US$85 million operating loss despite soaring sales.
In the third quarter to September 30, NYSE-listed 58.com achieved total sales of $212.9 million, up a staggering 195.9 per cent from the same quarter last year.
Co-chairman and CEO Michael Yao said 58.com’s core classifieds business continued to grow rapidly as it acquired more traffic and merchants and increased in size and scale.
“Since our acquisition in March 2015, Anjuke’s traffic and topline growth accelerated, validating our vision and demonstrating our ability to efficiently integrate and grow other platforms within our ecosystem. 58 Home recently closed US$300 million fund raising from Alibaba, KKR and PingAn and is now in a better position to take advantage of the massive market opportunities that are emerging.
“Last week we announced the spin-off of our consumer-to-consumer used car platform Guazi, which is off to a great start with Mark Yang and his management team. Finally, we will continue to deepen the integration of Ganji as we work to provide our users with a superior experience,” said Yao.
Paper losses relating to the writedown in valuation of the company’s investment in Ganji, once its rival, and one-off non-cash transactions saw the company post a net loss of $206 million compared to a profit of $5.9 million in the same quarter last year.
However CFO Hao Zhou said total revenues exceeded the high end of the company’s guidance during the quarter as paying merchant members and online marketing services set new operational records.
“Most of our operating losses are related to new business initiatives such as 58 Home and Guazi. Our core classifieds businesses, which includes Anjuke, however, incurred very minor losses during the third quarter of 2015. The integration of Ganji is progressing well and we are optimistic that profitability for our core classifieds business will improve over the next few quarters,” he said.
Based on the 58.com’s current operations, total revenues for the fourth quarter of 2015 are expected to be between $240 million and $245 million, representing a year-over-year increase of 199 per cent to 205 per cent.
