58.com Inc (WUBA) Q1 2019 Earnings Call Transcript

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58.com Inc (NYSE: WUBA)Q1 2019 Earnings CallMay 29, 2019, 8:00 a.m. ET

Contents:

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  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the 58.com First Quarter Financial Results Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note that this event is being recorded.

I would now like to turn the conference over to Mr. Rene Vanguestaine. Please go ahead sir.

Rene Vanguestaine -- Chairman and Chief Executive Officer

Thank you, Nancy. Hello, everyone and thank you for joining us today. The Company's results and an investor relations presentation were released earlier today and are available on the Company's IR website at ir.58.com. On the call today from 58 are Michael Yao, Chairman and Chief Executive Officer; Mr. Zhou Hao, Chief Financial Officer, Mr. Ye Wei (ph) , Deputy CFO and Mrs. Ally Wang, IR Director. Mr. Yao will give a brief overview of the Company's business operations and highlights, followed by Mr. Zhou who will go through the financials and guidance. They will both be available to answer your questions during the Q&A session that follows.

I remind you that this call may contain certain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expects, anticipates, future, intends, plans, believes, estimates, confident and similar statements. 58.com may also make written or oral forward-looking statements in its reports filed with or furnished to the US Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties.

Any statements that are not historical facts, including statements about 58.com's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: 58.com's goals and strategies; its future business development, financial condition and results of operations, its ability to retain and grow its user base and network of local merchants for its online marketplace, the growth of, and trends in, the markets for its services in China, the demand for and market acceptance of its brand and services, competition in its industry in China, its ability to maintain the network infrastructure necessary to operate its website and mobile applications, relevant government policies and regulations relating to the corporate structure, business and industry, and its ability to protect its users' information and adequately address privacy concerns.

Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the US Securities and Exchange Commission. All information provided on this goal is current as of today and 58.com does not undertake any obligation to update such information, except as required under applicable law. It is now my pleasure to introduce Mr. Yao. Michael, please go ahead.

Jinbo Yao -- Chairman and Chief Executive Officer

Thanks, Rene. Thanks everyone for joining on the call. Let me start off by saying that despite an increasing economic uncertainty, we still had a great first quarter 2019. Overall growth, 22.5% and that was slightly higher than our guidance. On non-GAAP basis, operating and net profit grew 13% and 42.6% respectively. Our app users grew 24% year-over-year. Our user engagement-related metrics are improving as well.

Our rolling 12 months app users have increased to 550 million, up 21% year-over-year. As you know, we have a huge space in the massive data across a wide range of content categories. As a result, we're often asked about macroeconomic trends (inaudible), but it's true that we see a slowdown in hiring, driven probably by increasing uncertainty in the business community about growth outlook. We can also feel that big ticket purchase such as homes and cars are slowing down probably due to a combination of weak consumer confidence and the continued government cooling measures in the real estate market. If confidence doesn't improve, we might see relatively low growth this year.

I often said that there is also a silver lining in the current situation. Government has been more vocal about (inaudible) domestic consumption and the private sector. So there will probably be more supportive policies and the incentives related for job creation and the tax cut. This would help our hiring and the local service business.

But what I want to emphasis most is that we still have tremendous growth opportunity in China regardless of the macroeconomic trends, mainly for the four following reasons. First, China is the big country and the user growth opportunity, especially in lower tier cities and the country is still massive in the range of hundreds of millions. Things such as traffic shifting from offline to online and the secondary home and the used cars eventually overtaken new home and the new cars continue the coverage of the macroeconomic environment. Second, technology advances, especially in mobile and big data and AI are creating tremendous opportunity for us to upgrade our platform to provide best user experience and grow our revenues and the profit.

So I want to take the opportunity to reiterate our three key focus. That is, platform scale, platform steps and operational efficiencies. First, from the platform scale point of view. 58 Town and Zhuan Zhuan has been a very innovative approach to expand our user bases into lower tier cities, town and countries. We believe we have attracted more than 100 million new users through 58 Town in 2019. We will continue to expand into more newer areas, improve content creation and the traffic optimization. Monetization is way below our average for 58 Town this year, but we believe the monetization potential for a lot what awaited the potential of 100 million users is very significant once we have -- we start to focus on it.

On a business user front, we now have 4.4 million (ph) unique paying users, which is still a small portion of the tens of millions of SMEs in China. We continue to send our field sales or dealer teams for more lower tier cities, expand -- expecting good feedback in terms of incremental revenue contribution.

Secondly, platform service. What does it mean? (inaudible) has long been a place where users post in the browser information. Now with advanced technology and the product, in addition for just reading and the posting information of them, making a call, that is increasing and lot more that classified platform can do to help our users on to unwrap our platform. For instance, user can directly transact and arrange logistics service. In fact, on the C2C vendor site, our platform also produced directly transaction or service. In our yellow page category, (inaudible) relatively extend small chip size facilities, user can directly get a price quota and make a reservation. In some cases, we can also partner with someone who has better expertise in offline transaction or service instead of getting into transactional business ourself.

As we have announced earlier today, 58 will purchase convertible notes issued by Uxin for a principle amount of $100 million out of a total amount of $230 million from our all co-investors, including Warburg Pincus, the TPG. We believe our online traffic and the users' offline transaction, they were jointly created better user experience and accelerated with business growth. That said, let me -- let us be clear that transactional model, patent work for all the Company categories, especially those that are high value and are noticed then that image pull our service. We are also depending on our platform functions such as Switch, some of which are common in nature and work similarly across our common (inaudible).

Higher quality content video, virtual reality, live streaming, user reviews and the feedback, AI based recommendation essentially. Though users have access to more comprehensive and the better quality information and perhaps much more easier with service provider to facilitate decision making.

The third focus area is around increasing operation efficiency. This includes efficiency in user acquisition, new customer acquisition, existing customer retention, revenue per customer, the customer increase and also efficiency in how consumer interact with business on our platform. The solution is also very much technology-driven such as Big Data AI based chatbot, business user apps (inaudible). This initiative to us might take a while to improve margins, but we believe in the direction and the mid to longer term margin improvement opportunity is huge as we still have around 16,000 sales and customer service personnel.

So in summary, here is the main takeaway. There is the near-term macro slowdown, but China is a massive country. Our user base is still growing nicely and there is still a lot of ground for user expansion. Also, Grass Spiders (ph) is a great globally proven winner take all model with incurrent advantages, all are vertical models and yet our user experience still see a lot of programming opportunities is to collect knowledge and our proven ability to innovate. We have strong market share in core content categories such as housing, jobs and auto. And we believe we can further widen the market. Let me hand it to Hao for financials.

Hao Zhou -- Chief Financial Officer

Thanks, Michael. Thank you all again for joining our call. Let me walk you through the first quarter 2019 financials. Total revenues were RMB3 billion, up 22.5% year-over-year. Membership revenues were RMB1 billion, up 5.7% year-over-year. Online marketing services revenues were RMB1.9 billion, up 30.1% year-over-year.

Regarding paying users, we introduced a new metric starting from this quarter. Paying user -- paying business users, which refer to users who are identified as business users with unique identity information such as business license or personal ID information and who use the Company's subscription-based membership services or purchased at least one type of online marketing services in a given period. One paying business user can open up several paying user accounts on one or multiple online platforms.

Up until fourth quarter 2018, we have been disclosing the number of subscription-based paying membership accounts. We believe paying business user is a best metric, mainly for the following two reasons. First, over the last several years, our revenue mix have shifted toward OMS, online marketing services from membership services. In 2013, the membership services revenue was 59% of total revenues, but by 2018, it was down to 33%. So the membership paying user account is less than that indicative of the trend in our internal revenues. Paying business user covers users who purchase either membership services or OMS, so it is more comprehensive.

Secondly, as we have always noted in the past earnings and some paying -- paying merchant members purchased membership services from more than one of our several platforms and thus contribute separately to the revenues of each platform. Number of paying merchant -- paying membership accounts therefore include some duplication. Business paying user, however, represent a unique paying user, eliminates duplication and hence is more indicative of the true size of our business paying user base and market coverage.

The number and the percentage calculation doesn't include paying business users on Ganji, which the Company stopped selling stand-alone Ganji subscription-based membership services in 2018 or earlier in all of our content categories. The Ganji number was a very minor single-digit number in the first quarter 2019 number and included some membership packages with still under --were purchased before and due under monetization. This number was further decreased because no new Ganji membership services are being sold today. We believe that by excluding the Ganji portion, we provide a more relevant number to analyze our business with especially for forward-looking analysis.

In the first quarter of 2019, our total number of paying business users was approximately 3.4 million, a 7.5% increase from the same quarter of 2018, compared with the 22.5% increase in total revenues. You can see that revenue per customer has increased at double digit year-over-year. We have been quite successful, especially in innovating and optimizing in our various online marketing services revenue models. And in the meantime, our traffic has had very healthy growth as Michael talked about earlier and we have been widening and improving other services such as SaaS tools, screening data, et cetera for our business users. As a result, we believe that our customers on a platform continue to be real positive.

Gross margin was 90.2%, compared with 89.6% during the same quarter of 2018. Operating expenses were RMB2.45 billion, up 25.9% year-over-year. Sales and marketing spend in the fourth -- in the first quarter of 2019 was RMB1.8 billion, up 24.6% year-over-year. Within sales and marketing expenses, advertising expenses in the first quarter of 2019 was approximately RMB887 million, up 30% year-over-year. Non-advertising sales and marketing expenses in the first quarter of 2019 were approximately RMB107 million, up 19.7% year-over-year. Research and R&D (ph) expenses in the first quarter of 2019 were approximately RMB495 million, up to 42.9% year-over-year. The increase was mostly headcount related.

General and administrative expenses in the first quarter of 2019 were approximately RMB162 million, generally stable year-over-year. As you can see, advertising and R&D expenses were growing faster than revenues. So we believe that user growth and product and technology investments will bring us bigger mid to longer term benefits. So non-advertising sales and marketing expenses and G&A expenses were quite well controlled and both grew at a slower rate than revenues, which speak to our progress in improving operation efficiency.

The total number of employees at the end of first quarter 2019 was still around 22,000, largely stable year-over-year or sequentially. Non-GAAP income from operations was approximately RMB465 million in the first quarter of 2019, up 13% year-over-year. Non-GAAP operating margin was 15.4% in the first quarter of 2019, compared with 16.6% in the same quarter of 2018.

Other income in the first quarter of 2019 was RMB554 million, compared with other income of RMB9 million in the same quarter of 2018, largely due to a non-cash fair value gain as a result of the increase in the share price of 5i5j, a public traded company we invested in -- during the third quarter of 2018 and still hold a minority stake.

Non-GAAP net income attributable to 58.com Inc. ordinary shareholders was approximately RMB436 million in the first quarter of 2019, up 42.6% year-over-year. Non-GAAP net margin was 14.4% in the first quarter of 2019, compared with 12.4% in the same quarter of 2018.

Now, on to the guidance. Based on the Company's current operations, total revenues for the second quarter of 2019 are expected to be between RMB4 billion and RMB4.1 billion. This represents a year-over-year increase of about 17% to 20% in RMB amount. These estimates reflect the Company's current and preliminary view, which is subject to change.

With that, we'd like to open the Q&A session. Nancy, please begin.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Hillman Chan from Citigroup. Please go ahead.

Hillman Chan -- Citigroup -- Analyst

(foreign language) Thank you very much for taking my question. My first question is on investment on Uxin. Could management share more about the rationale behind and how we should think about the cooperation in the used auto business in the future in particular the timeline of the cooperation and the monetization strategy and how we should think about the further cooperation with third-party platforms, including Guazi in the future? And regarding -- my second question is on the competition. Could management share more on our view as well as the impacts on Beike and Tencent reach cooperation? And how we should think about marketing spend on our core real estate business, including Country 10 (ph) WUBA this year versus last year? Thank you very much.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Hao Zhou -- Chief Financial Officer

Yes. Well, under Uxin case, the rationale is the following: first of all, used car has always been one of the key content categories on our platform and we enjoy a pretty big user base on our used car category and covering a huge number of cities and regions, including lower tiers. Now, before the lower tier cities particularly, our traffic is not that easy to monetize, because for those cities, they inherently have fewer cars.

So, even if users wanted to buy a car, he has had only very limited option. And those -- dealers in those cities are also less developed. Whereas in Uxin, recently in the last 12 months, they have started a business called the cross-regional sales, where they really digitize the COGM entries from various dealers that it work with and really created the nationwide inventory of cars and that's visible for everyone that access on the Internet. So this -- they also have very deep experience offline in terms of inspecting the cars and helping with logistic title transfers, so on so forth. They also have the big thousands of people who work on these projects offline. So they have got experience, they've got a team and they actually have been able to show that they have been having pretty good momentum on this cross-regional sales in the last 12 months and they have good ambitions in this year as well.

So we believe that 58 Used Car's traffic problem versus -- and together with Uxin's offline transaction experience, especially in the cross-regional sales is very complementary. And we can help Uxin to lower the user acquisition costs and they will help us to have more verified listing on our platform and enable 58 Used Car users to have an access to these services that to buy cars in different locations as well.

And so we believe it's a good synergy. And that we have been working with -- we've been monitoring their -- the new cross-region sales force some time and they've been discussing with an index for the last several months. And so we've been very careful obviously with this investment, which is of 100 million out of the 2030 (ph) together with Warburg Pincus, TPGs, et cetera.

So, we are today working on interfaces already. So, it should be pretty soon, hopefully within the months, where we can have online collaborations between us and Uxin. So hopefully our intuitive services can really build a multi-win situation, where Uxin will become more -- a higher efficiency company and where our users on 58 will have more selections and we may have little incremental revenue and it's multi-win outcome.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Hao Zhou -- Chief Financial Officer

Yes, with respect to Guazi, obviously, many of you know that it was initially incubated by us and spun off and they have done very well and last -- early in the first quarter, we announced a deal to exit partially our stake in Guazi for more than $700 million and even post the deal has not been 100% completed but post deal we'll also continue to have a stake, a minority stake, about 8% (ph) in Guazi. So, we continue to have business collaboration with Guazi. We are a happy shareholder. They've done well. But it's important to emphasize that 58 Used Car platform and Guazi are very different in nature. We are a platform approach based on information. We have a huge amount of users. We don't have that many people. We don't get into actual transactions. We don't get into a finance businesses, whereas Guazi has become a quite different model in the used car space and they've done well.

And it's also worth noting that Guazi and Uxin are having different models as well. So -- as from a 58 point of view, we're happy to work with all dealers or agents, big or small, including Guazi and Uxin. So we're going to continue that way in future.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Hao Zhou -- Chief Financial Officer

Yes, with respect to Beike, which is also part of holding all together, they were our customers before on our housing platform and they were an offline brokerage and chain brokerage company in China. But recently, they have started to put more investments quite aggressively on the online platform called Beike and inviting third-party agents to join. And recently also, they've got on WeChat Wallet access.

But we believe that the mini program traffic that 58 has and together with Anjuke, et cetera is actually than -- a bigger than Beike's mini program traffic according to some sources we obtained. But the overall traffic of the Beike platform link is lot less our traffic -- than our traffic on 58 Housing and Anjuke. We believe it's also we're several times bigger than them on the entire total traffic especially on app. That's on the traffic side.

On the business side, on the real estate agent side, in our 3.4 million paying business users in Q1 '19, real estate has about 1.2 million. So this is a huge number. And according to numbers that we have gathered from Beike, they allege that they have about 200,000. And if you take out the original employee or the direct employees, will probably have only less than 100,000. So, it's 10 times difference. So both from traffic, consumer and business point of view, I think Beike's platform is a very small fraction of what we have today.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Hao Zhou -- Chief Financial Officer

Yes, and also right on year-end, Chinese year-end or after that, based on data we can gather that actually the traffic growth of our platform, 58 Housing as well as Anjuke is actually better than Beike and Homelink. Not only we're bigger in size, but also we're better on closed rates in that period with -- probably with a lot less advertising spending there. So that really entice very different traffic acquisition efficiency there. And not only on the overall traffic, but also the user engagement metrics, time spent and repeated visits, et cetera, we are doing very well compared to what we can gather that they're doing. So, I think we've done pretty -- very good competitively against Beike and Homelink.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Hao Zhou -- Chief Financial Officer

Yes. And it is true that we have increased somewhat our budget on advertising in response to the very aggressive spending from Beike's point of view as a new challenger. But as far as we know, clearly, they're losing pretty significant amount of money on this and for housing platform, which is very low frequency, it is very questionable that if you can continue to be loss making at a pretty big amount, how sustainable that model is. And today -- especially in today's financing investment you see or the capital marketing environment and I think if you continue to lose huge amount of money and continue BC&T Financials for a not proven model, we think it's very questionable.

Hillman Chan -- Citigroup -- Analyst

(foreign language)

Hao Zhou -- Chief Financial Officer

Thank you.

Operator

Our next question comes from Wendy Huang from Macquarie. Please go ahead.

Wendy Huang -- Macquarie -- Analyst

(foreign language) I would just briefly trans my question. So when the company went public, you guys were talking about WUBA's light action model and Tussle (ph) model. So, 40% to 50% operating margin in the long term is achievable. And now, even before we achieve that long-term target, we are still in the middle way of coming up to that long-term target, given the recent macro uncertainties, we are having a setback on the margins. At the same time, we're seeing the companies are moving more toward heavy asset model directly, indirectly. For example, recently -- maybe to -- I don't know, maybe to -- for the safety, you're strengthening your ecosystem, you are making this investment (inaudible) as well. So this is actually indirectly also lowering the return on your capital that indirectly affecting your margin in the long term. I'm not sure is my understanding is correct or not.

And related to this, regarding the backlog, you're also actually having lots of team managers on the ground, which actually you need to subsidize in. Although these are not counted as your full-time employees, but in some sense, they are similar to the ground sale -- of ground sales force you actually used to have for your (inaudible) product in the past. So given all of these changes we had on the business front and investment front, how should we actually think about the robust long-term business profile and also the margin profile? Thank you.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Hao Zhou -- Chief Financial Officer

Yes, Wendy, thanks for the question. Actually as we speak, as you know our business is made up of a profitable core business in some categories and then some loss-making businesses like Zhuan Zhuan, 58 Town, where they're much earlier stage business and in a sort of a user expansion phase first and has not focused on one mission at this stage. So it's a combination of things that we have.

If you strip out the earlier stage to loss-making businesses, some of the core busineses actually are very close to say 40% margins. And even in those businesses, we are still spending for future growth in terms of product track and user acquisition, et cetera. So in theory, if we further cut back those future investment rate expenses, our core business can even go beyond 40% in this quarter if we wanted to do that. But we had a question that is it a right thing to do? Because we -- in China, we're so glad in China where there are so many opportunities beyond what we currently already have. If you look at lower tier opportunity that 58 Town is potentially addressing, if you look at used car, our collaboration with Uxin or Zhuan Zhuan upgrade of almost the e-commerce model, right? And these are -- these actually are new opportunities where we launched something and have actually getting very good momentum.

And then you further rewind, you can see that our investment in 58 Home and Guazi has yielded a very good returns, more financial returns today over time. So we had similar choices before, we made our bests and in hindsight, I think it's a good return. So I think on one hand, we do have a high margin classifieds business already today in housing and jobs. On the other hand, we continue to see great opportunity. And it is our choice to continue to go after more opportunities and eventually create bigger platforms.

And ultimately, I think the investors if you believe in us, you'll get bigger returns, big profits and revenues down the road. And -- but it's also true that in China, it's a big country, not only we see opportunities, many others see the opportunity as well. So there are a lot of entrepreneurs in China challenge our position from time-to-time and we see them plead for the money in those companies, but then I remind you to look at our track record, right. So if you look at housing, if you look at jobs and some other sectors, so by and large I think we have been winning the competition.

So, not only we have ambition to create bigger platform and address new opportunities but also we have a pretty good track record in really beating the competitors and therefore, cementing our position or continue to be leaders in more areas. So that's the reality in China. But I think we feel excited about the opportunity to create much bigger and more profitable business longer term at the expense of delaying some of the margin improvement opportunity today.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Hao Zhou -- Chief Financial Officer

Yes. So just to add on to that, China is a big country, right? It has 1.4 billion people and so therefore competition is pretty much a norm. But we welcome that because competition sometimes makes current on the little pressure but it's really also educating the market. It is accelerating the user education. It's really just help the eventual winner to get to the end go faster. And the other thing it does is it prevents more potential competitors if it's already become more competitive and it's actually kind of -- it's not bad.

And the other thing that you looked at it, sometimes you choose to do business our own, sometimes we used to invest, right? I mean, for instance, the Uxin is a good example to show that even though it's an extension of what we want to do on 58, but we do it through collaboration, we do through collaboration. So it has actually made us less heavy versus we're doing it ourselves.

And if you look at our investment in Uxin, 5i5j or acquired 58 Home, today on paper, they are probably already (technical difficulty) and we're already getting some of that back in cash from Guazi, for instance. And we believe that over time, these investment positions will prove its value in a more concrete matter.

Wendy Huang -- Macquarie -- Analyst

Thanks, Michael and Yao. Thank you.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language), Wendy.

Hao Zhou -- Chief Financial Officer

Thanks, Wendy.

Operator

Our next question comes from Tian Hou of T.H. Capital. Please go ahead.

Unidentified Participant

I'm (inaudible). (foreign language) Okay. English. So last earnings call, we did exchange ideas about how bad can TenStar (ph) news feed business. So Michael, your answered you're going to get started. So recently, after Chinese New Year, we did see such action. It's great, execution really great. So culture will backtrack. So my understanding is this is forgotten group of people. When people want to sell in things to them, want their time, they will think of them. However, there isn't any group want to help them to find a job, to resolve their issues here in the city in a strange place and we brought now offering such features is really helping them and been able to help you. So, I think it's a great.

So Michael, I really like to know what's your strategy going forward to continue step up and make this a bigger deal for your next growth engine? That's my question. Thank you.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Unidentified Participant

(foreign language)

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Unidentified Participant

(foreign language)

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Hao Zhou -- Chief Financial Officer

Yes, so (foreign language). We'll probably give it a name, say it's 58 Community. It's really a place for those who haven't used it. We encourage to try it out and Kin (ph) definitely thanks for trying -- thanks for looking into that and give us the feedback, which is very encouraging. So, 58 Community is really a place in the 58 app, where users come and not only -- instead of just typically going to 58 and look for housing, jobs and very purposeful information, they come to this community forum really to just share their learnings in their daily life and find people with similar interest or similar viewpoints or anything that they want to talk about. It's really a place where they discuss things quite freely and find a sense of community online.

So this is a new product, but it's been growing very fast and that's actually attracted to users on our platform than any other single content category in a very short period of time. So it's very popular and we like it very much because we think it's a very, very unique position and we really kind of feel the void of what city inhabitants today in terms of what they do. Sometimes they are under pressure. They don't have a outlet for kind of some of the steam or just a place to find people have a similar feedback or the place to find comfort. So we think it's not -- it's a very unique product and it's a product that bring our users a sense of community and a sense of comfort, which is very nice. And so we'll continue to invest in that. We will try to have our users to have a sense of belonging or family even. For instance, we allow people with similar professions to talk about their experiences of doing similar jobs in online, which is really unique place versus -- instead of other places that we couldn't find out of alternative places to kind of have that online interaction. So we feel like it's very useful. And the team internally that is responsible for this project is also very motivated and encouraged by the feedback that we got from our users, because they clearly liked it, they visited and they give us good reviews as well.

The 58 Town is also a good product. It's actually -- it's just a very similar product in the different location. So it typically caters to small towns. So, Michael was asking Kin where she's from but really if you're from a small place and right now work in big cities, you kind of wonder what is happening in your hometown. And you would not know unless you have a product similar to 58 Town. So Michael himself also looked back to -- he is from the countryside place and he also used to take time to look back to the original hometown to see what's happening. So it is something that for -- China is very common where people move around different places. They are from a small place, they go into big cities for a better living. But I think 58 Town also provides a place for those people who are in other places to check out what's happening. So it's -- we believe those products are very well. We'll continue to invest and it's currently growing very nicely.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Hao Zhou -- Chief Financial Officer

Yes. So, for people who are in the same town obviously they also benefit from a product like 58 Town, because it is really digitizing the information for that particular area, which is tend -- which is pretty small, so was not well served by Internet industry before, but now that with mobile Internet, it becomes conveniently possible. So we kind of enabled that. So it's both for people who live in the same town or also people from that town to -- in another places to live.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Hao Zhou -- Chief Financial Officer

So actually, it's a same team who incubated 58 Town and 58 Community. So that team has a very strong sense of mission today and is very motivated too by the initial success on both products. So, we believe products like these will bring a different flavor to 58 on top of what we have already built.

Unidentified Participant

It's a great product and congratulations, Michael and Hao.

Jinbo Yao -- Chairman and Chief Executive Officer

(foreign language)

Hao Zhou -- Chief Financial Officer

Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Rene Vanguestaine for any closing remarks.

Rene Vanguestaine -- Chairman and Chief Executive Officer

Thank you, Nancy. Thank you all for joining us today and for your continued interest in 58. Don't hesitate to contact us if you have any questions. Good night.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect and have a great day.

Duration: 63 minutes

Call participants:

Rene Vanguestaine -- Chairman and Chief Executive Officer

Jinbo Yao -- Chairman and Chief Executive Officer

Hao Zhou -- Chief Financial Officer

Hillman Chan -- Citigroup -- Analyst

Wendy Huang -- Macquarie -- Analyst

Unidentified Participant

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