Tencent-backed 58.com expects revenue to keep rising for Craigslist-like online classifieds business as bid to buy rivals pays off
Online marketing platform buoyed after seeing revenue double in latest quarter, projects Q4 revenue may hit US$245 million
Tencent Holdings-backed online marketing platform 58.com expects its classifieds business to improve over the next few quarters, after it recorded a nearly 200 per cent increase in total third-quarter revenue.
New York-listed 58.com runs mainland China’s biggest, Craigslist-like online classifieds site serving local merchants and consumers.
Michael Yao Jinbo, the founder and chief executive at 58.com, reported on Sunday in the US that the company’s forecast revenue this fourth quarter is expected to range from US$240 million to US$245 million, representing a year-on-year rise of 199 per cent to 205 per cent, following solid growth in the quarter to September.
“Our topline [revenue] grew faster than expected [last quarter],” Yao said.
“Our core classifieds business continued to grow rapidly as it acquired more traffic and merchants and increased in size and scale.”
Beijing-based 58.com posted a 196 per cent jump in total revenue last quarter to US$212.94 million, up from US$71.96 million in the same period last year.
That growth was primarily driven by healthy sales revenues from Ganji, a rival domestic classifieds site that it purchased in April, and Anjuke, a major online real estate listing platform that 58.com acquired in March.
Since 58.com remains in strategic investment mode, its losses widened to US$206 million last quarter from US$5.9 million a year ago.
The losses were primarily attributed to a 333 per cent leap in operating expenses to US$283.7 million, up from US$65.5 million a year earlier. The increase was a result of higher costs associated with the addition of Ganji and Anjuke.
The number of paying merchant members on the original 58.com platform in the third quarter reached 893,000, compared with 560,000 the previous year.
Ganji and Anjuke jointly had more than 700,000 paying merchant members last quarter.
In October, 58.com subsidiary 58 Home raised US$300 million from an equity funding round led by e-commerce giant Alibaba Group Holding, global investment firm KKR and Chinese insurer Ping An Group.
Tencent currently holds a 24.09 per cent stake in 58.com. It invested US$736 million in the company in the middle of last year.
Both business-to-business and consumer-to-consumer transactions are supported by 58.com. Its listings content - covering categories such as housing, jobs, cars, pets and tickets for shows - is highly compatible with Tencent’s mobile platforms.
Alicia Yap, the head of China internet research at Barclays, said in a report that Tencent’s significant stake would allow the Chinese internet giant “to better integrate resources with 58.com and participate more directly in its strategic direction and growth strategy”.