58.com Inc. (58同城, NYSE: WUBA), a large classifieds company in China, continues to leave last year’s concerns over profitability in the mirror. After consolidating a series of high-profile acquisitions in 2015, the Beijing-based company reported net income from operations of 522.4 million RMB ($78.6 million U.S.) in Q3 of FY2017, up from 143 million RMB in Q3 of FY2016 (full release).

Along with 58.com, the company also wholly owns second-ranked classifieds marketplace Ganji.com, as well as real estate listings site Anjuke.com and jobs site ChinaHR.com.

Michael Yao, CEO of China’s classifieds giant 58.com

Total revenue in Q3 was 2.7 billion RMB which exceeded the company’s guidance. The total number of subscription-based, paying membership accounts across 58.com, Ganji.com and Anjuke.com stood at 2.6 million at end-Q3, up 26 percent y-on-y.

Fourth quarter revenue guidance was set at between 2.63 billion and 2.73 billion RMB.

Discussing developments in Q3, 58.com CEO Michael Yao noted that offline verification has become a priority across jobs, autos and housing. Government pressures are driving this in housing and jobs. In real estate, the push for increased consumer trust in the rental market is being effected at both a public and private level, whereas in the jobs market new regulations are threatening serious repercussions for platforms failing to properly vet all job postings.

In the past few days, it has come to light that LinkedIn China had removed its individual job postings after running afoul of verification procedures.

Yao also discussed the company’s rural push, as the company looks to expand beyond cities and into the village communities of China, where internet coverage is on the rise.

It is becoming clear that a rift is emerging in used-auto classifieds in China, a sector in which 58.com dominates. While the rest of the sector is embracing financing – see for instance Bitauto (NYSE: BITA) and its Yixin Group (易鑫集团) subsidiary, Souche.com (大搜车) and its Ant Financial-backed Tangeche.com (弹个车) platform and Autohome (汽车之家, NYSE: ATHM) which has elevated financing to one of its “four pillars” – 58.com is swimming against the tide by holding off.

On the topic of financing, Yao noted, “it is true that some other peer companies are developing very aggressively their financial services arm related to used goods, or even the used-car sector or new-car financing etcetera; but we do very little, we are very cautious in not taking on excessive risk related to financial business […] I think our view is, unless we have confidence our team that can handle the risk related to the financial services, we’re going to be very cautious about those, that part.” (This is very good to hear; one can only hope the financial regulators are wide awake when it comes to online credit extension in the classifieds sector by blue-eyed, twenty-something, IT workers and their algorithms; the financial crisis of 2008 is still fresh in our minds – editor.)

58.com CFO Hao Zhou said housing market transactions are expected to continue stagnating in the near future, although the company was pushing into lower-tier cities where that is less of a problem. He also said the stagnating property market is being offset by an otherwise strong macroeconomic environment, which is supporting the jobs and used-autos markets.

In 58.com-related news from the last quarter, the company:

announced a “super-ecosystem” or data sharing between itself and its affiliate, c-to-c, used-auto platform Guazi.com (瓜子);

+ Airbnb equivalent Tujia (途家网), in which 58.com owns a considerable stake was valued at $1.5 billion U.S. after a series E financing round; and

+ 58.com’s app for temp work saw mobile active users (MAU) climb 638 percent from September 2016 to September 2017.

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