58.com Inc. (WUBA)

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58.com Inc. (WUBA)

Q2 2014 Results Earnings Conference Call

August 21, 2014 8:00 AM ET

Executives

Christian Arnell - Christensen IR

Michael Yao - Chairman and CEO

Hao Zhou - Chief Financial Officer

Analysts

Dick Wei - Credit Suisse

Phillip Wan - Morgan Stanley

Wendy Huang - Standard Chartered

Alicia Yap - Barclays

Cheng Cheng - Pacific Crest Securities

Eddie Leung - Merrill Lynch

Jiong Shao - Macquarie

Tian Hou - TH Capital

Antony Tong - 86Research

Presentation

Christian Arnell

Thank you. Hello, everyone. And thank you for joining us today for 58.com’s Second Quarter 2014 Earnings Conference Call. The company’s results were released early today and are available on the company’s IR website at www.58.com, as well as PR Newswire services.

On the call today from 58.com are Mr. Michael Yao, Chairman and Chief Executive Officer; and Mr. Hao Zhou, Chief Financial Officer. Mr. Yao, will discuss 58.com’s business operations and company highlights, followed by Mr. Zhou, who will go through the financials and guidance. They will all be available to answer your questions during the Q&A session that follows.

I’ll remind you that this call may contain forward-looking statements made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management’s current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company’s control, which may cause the company’s actual results, performance or achievements to differ materially from those in the forward-looking statements.

Further information regarding these and another risks, uncertainties and factors is including in the company’s filings with U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement, as a result of new information, future events or otherwise except as required under law.

It is now my pleasure to introduce Mr. Michael Yao. Mr. Yao, please go ahead?

Michael Yao

Thanks, Christian. Thank you all for joining our conference call. Today I would like to talk about three things, firstly, an update of our business during the quarter, second, the strategic partnership with Tencent, and lastly, my observation and assessment of the local service sector in China.

First of all, we have a great second quarter as our strong growth momentum continued. Almost every operating metric reached at record high. Activity on our platform rebounded (indiscernible) from our seasonal low during Chinese New Year.

According to our internal safety statistic, monthly unique visit to our platform continued to be above 200 million. PC traffic is growing both in terms unique visit and the page views year-over-year. This is quite a remarkable since total PC usage in China has remained relatively flat for quiet some times. This shows that when compared to other big websites, there is still plenty of room for grows on the PCs side.

Mobile traffic on the other hand continued to grow at a much faster rate than PC. Mobile page views particularly to our listing and [19] (ph) pages as a percentage of total page views increased to 54% in the second quarter from 51% last quarter and the 39% a year ago. This means we’re attracting new mobile-only users because our mobile service provides a far better user experience than PC.

Our products and the technical teams really have worked very hard and I thank them for their effort. We are happy to see our merchants-related metric improved across the Board. In the second quarter we have more than 7 million merchants on our platforms, up from 5 million last quarter.

Quarterly subscription-based paying merchant members reached about 1,210,000 compared to 441,000 last quarter and the 298,000 a year ago. If we add another 200,000 non-subscription-based paying users, we will probably surpass 1 million paying users in the near future.

We have also made good progress in up-selling on our marketing service to our paying merchant members. Of the 1,210,000 subscription-based paying merchant members 26 of them purchased extra on their marketing service, such as bidding and (indiscernible) listing. This is up from 21% last quarter and 18% a year ago. This means that our merchants are increasingly willing to pay for performance as online marketing service are short-term flexible solution.

We are also creating an easy payment interface for our mobile apps also our WeChat service account. The adoption of more sales service based on our marketing service helped us to become more efficient overtime. The across the Board improvement in our operating metrics result in revenue growth reaching record high level, something Hao will discuss in more detail later.

We also reorganized our field sales team during the quarter. Our four solid strong field sales team is a competitive advantage for allowing us to establish and effective paying merchant bid rate. Where our nearest classified competitor only has a direct sales in four cities. With better management tool such as (indiscernible) at their disposal. The team’s efficiency almost doubled from last year. We are taking this team to the next level by strengthening the management of each individual reach across all regions.

We have more industry experience during our management team probably bring an in-depth understanding of the vertical and they will help to train our sales team. While our teams are become more professional, we are extended the size and the reach of our service. I want to thank all our field sales team for their motivation. They are clearly a real team and will accomplish a lot more in future.

Then let me allow talking about Tencent, a company that we are expecting a lot. We all began to use which are as a perfect partner in several areas, Tencent has a number of great mobile and the social platform which can integrate our local service information.

These will surely the beneficial to both Tencent and 58 users. The social elements of our offline categories will help us tackle the job issue in China in a better way. Communication between users and merchants is a lot easier with WeChat and Mobile QQ.

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