Why Shares of 58.com Are Soaring Today

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What happened

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Shares of 58.com (NYSE: WUBA), a leading online marketplace operator in China, jumped on Monday following a strong second-quarter report. Surging revenue and soaring profits easily beat analyst expectations, and the company's guidance called for continued double-digit growth during the third quarter. At 11:15 a.m. EDT, the stock was up about 11.5%.

So what

58.com reported second-quarter revenue of 2,593 million renminbi, or $382.8 million, up 33.3% year over year and $45.6 million higher than the average analyst estimate. Membership revenue totaled RMB963.7 million, or $142.3 million, up 28.2% year over year. The company now has 2.46 million members across its platforms, up 24.8% year over year.

Online marketing revenue was RMB1,536.5 million, or $226.8 million, up 36.6% year over year. 58.com pointed to increasing adoption and effectiveness of its marketing services as the main drivers of the growth.

Non-GAAP diluted earnings per ADS came in at $0.66, well above the $0.20 expected by analysts. Higher revenue was main reason for the earnings surge. CEO Michael Yao discussed some of the highlights of the quarter:

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Among all our categories, jobs continued to deliver the fastest year-over-year growth and increasingly accounts for a larger proportion of total revenues. While the housing market in tier one and two cities remains relatively soft, revenues from our housing category continue to show resilience by performing better than expected. We are making solid progress in developing new and innovative products across various categories. Our mobile app traffic continues to grow rapidly and is accounting for a larger portion of our total traffic.

Now what

In addition to beating analyst estimates for revenue and earnings, 58.com's third-quarter guidance came in above analyst expectations. The company expects revenue to grow by 24.8% to 29.7% year over year, to a range of $382 million to $397 million. Analysts were expecting revenue guidance of $351 million.

With strong growth in the second quarter and a better-than-expected outlook, investors have every reason to bid up the stock.

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Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.