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51job, Inc. (NASDAQ:JOBS)

Q4 2013 Earnings Conference Call

February 20, 2013 8:00 p.m. ET

Executives

Linda Chien – VP and Head of IR

Rick Yan – President and CEO

Kathleen Chien – COO and Acting CFO

Analysts

Tim McHugh – William Blair

Philip Wan – Morgan Stanley

Wendy Huang – Standard Chartered Bank

George Meng – Macquarie

William Huang – Barclays Capital

Operator

Good day, ladies and gentlemen. Thank you for holding.

Welcome to the 51job, Inc. Fourth Quarter and Fiscal Year 2013 Conference Call.

(Operator Instructions).

I will now hand the conference over to Ms. Linda Chien, Vice President and Head of Investor Relations. Thank you, madam. Please go ahead.

Linda Chien

Thank you, [Ruby]. And thank you all for attending this teleconference to discuss unaudited financial results for the fourth quarter and fiscal year ended December 31, 2013.

With me for today’s call are Rick Yan, President and Chief Executive Officer, and Kathleen Chien, Chief Operating Officer and Acting Chief Financial Officer.

A press release containing fourth quarter and full year 2013 results was issued earlier today and a copy may be obtained through our website at ir.51job.com.

Before we begin, I would like to remind you that during this call, statements regarding targets for the first quarter of 2014, future business and operating results constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon management’s current expectation and actual results could differ materially.

Among the factors that could cause actual results to differ are the number of recruitment advertisements placed, sales orders received and customer contracts executed during the remaining weeks of the first quarter of 2014; any accounting adjustments that may occur during the quarterly close; fluctuations in the value of the renminbi against the U.S. dollar and other currencies; behavioral and operational changes of customers in meeting their human resource needs as they respond to evolving social, economic, regulatory and political changes in China as well as stock market volatilities; introduction by competitors of new or enhanced products or services; price competition in the market for the various human resource services that the company provides in China; acceptance of new products and services developed or introduced by the company outside of the human resources industry; and fluctuations in general economic conditions.

For additional information on these and other factors that may affect the company’s financial results, please refer to the Risk Factors section of the company’s filings with the Securities and Exchange Commission. 51job undertakes no obligation to update targets prior to announcing final results for the first quarter of 2014 or as a result of new information, future events or otherwise.

Also I would like to remind you that during the course of this call we may discuss non-GAAP measures. Reconciliation to their most directly comparable GAAP financial measures are provided in the tables appended to the press release. This conference call is being broadcast on the internet and is available through our website at ir.51job.com.

Now I’ll turn the call over to Rick.

Rick Yan

Thank you, Linda. And welcome to today's call. I will begin with highlights for the fourth quarter and the full year 2013, followed by Kathleen with a detailed presentation of our financial results. Then I will discuss current market and operating conditions, as well as provide our guidance for the first quarter. Finally we'll open the call to your questions.

We are proud to end the year on a high note, with record results in the fourth quarter. Revenues reached RMB472 million and non-GAAP EPS was RMB2.89, both ahead of guidance. For the full year 2013, our total revenues were RMB1.6 billion and net income topped RMB500 million, marking our sixth consecutive year of top and bottom line growth. Despite market volatility, regulatory uncertainty and our ongoing transition away from print operations, we have continued to achieve profitable growth while balancing important investments with improved efficiency.

Although the yearend is usually a slow period for recruitment, the performance of our online business stayed on an upward trend in the fourth quarter. Revenues increased by 22% and the customer base expanded by 29% to about 236,000 companies. In each consecutive quarter of 2013, we have accelerated the pace of growth through diligent strategy execution. We are already benefiting from our increased investments in sales force ambitions and marketing activities begun earlier last year. And this gives us condition that even greater return lie ahead.

Our progress is also evident on the competitive front. Publicly available information indicates that our online revenue growth was around three times of that of our main rival in 2013, while at the same time we maintain our status as the industry's profitability leader with higher margins. Going forward we remain focused on new customer acquisition and now have over 2,900 direct sales and account management staff serving employers and solving the HR problems across China.

On the job seeker front, we added nearly 10 million users in 2013, closing the year with 73 million registered user accounts and 64 million resumes. As the online business strengthened, our other HR services area maintained its consistent performance with revenue increased by 21% in the fourth quarter. Our HR outsourcing services continued its solid customer adoption and usage, despite the regulatory uncertainty.

A new labor contract law amendment went into effect last July, which affected the HR outsourcing business. Our training business wrapped up a better year due to improved product cross-selling assets. And reflecting the healthy hiring market demand we saw throughout 2013, we had a robust campus recruitment season in the fourth quarter as employers look to raise their brand awareness and build a talent pipeline. We continue to believe that one of our strongest and differentiated competitive advantages is to tightly integrate a sales and customer service approach for our full suite of end-to-end HR solutions.

As the rollout of the online continues rapidly to new enterprises, we are concurrently deepening relationships with employers and delving further into customer budget to create new revenue opportunities through these value-added HR services.

Finally, after four years of transition, our strategic wind-down of print operations near completion. Our local management team did a tremendous job in driving this process and absorbing the financial impact without disruption to overall business operations. As the HR services market grows more [ph] we will need to combine great ideas with great on-the-ground execution. And this experience validates our beliefs that we have the best talent in the industry to drive our future success.

We are very pleased with progress we make in our core operations this past year. We carry solid momentum into 2014 as we focus on efforts to further expand our market leadership in the HR services industry, and strengthen our value proposition to employers in China.

I'll now turn the call over to Kathleen for a detailed financial discussion.

Kathleen Chien

Thank you, Rick. In my following presentation, please be aware that all financial numbers are in our reporting of the Chinese renminbi, unless otherwise stated.

Our total revenues for the fourth quarter of 2013 were RMB472 million, exceeding our forecast and representing a 19% increase over the same quarter in 2012. Our online revenues for the fourth quarter grew 22% year over year to RMB289 million, driven by an increase in the volume of employers, which was partially offset by the lower ARPU.

Due to our solid strategy execution led by our direct sales team, combined with increased marketing effort, the number of unique employers increased by over 52,000 year over year to nearly 236,000 companies in the fourth quarter of 2013. However, and as expected, the impact of this substantial influx of employers drove a shift in customer mix toward more purchases of introductory or lower-priced packages, which resulted in a 5% decrease in the online ARPU compared to the year-ago quarter.

Our other HR services area performed well in the fourth quarter as the revenues increased 21% year over year to RMB177 million. The growth was primarily driven by the greater usage of our outsourcing and training services as well as a strong demand for our seasonal campus recruitment services. In the fourth quarter, other HR services accounted for over 37% of total revenues, which is a new high for the company.

Turning to the print business which is drawing to a close, our print advertising revenues declined 54% from the year-ago quarter to RMB6 million. The number of print advertising pages in the fourth quarter of 2013 decreased 35% to less than 250 pages. We also terminated publications in the cities of Chengdu and Harbin this past December, which leaves us with just two remaining cities where 51job Weekly is produced.

As the first question is traditionally a strong seasonal period for print, we expect to absorb one more quarter of material year-over-year decline in print revenues in the range of a 70% to 75% decrease. Following this, we believe the impact of the print transition will be minimal on our overall financial results and enable comparisons to prior periods to more accurately reflect a core and continuing operation.

Our gross profit grew 20% to RMB323 million and gross margin was 71.3%. Included in cost of services in the fourth quarter was higher share-based compensation expense in the amount of approximately RMB3 million.

Our sales and marketing expenses increased 31% year over year to about RMB128 million in the fourth quarter, primarily due to sales headcount additions, higher employee compensation expenses, and also greater expenditures for advertising and promotional activity. Included in sales and marketing expenses was share-based compensation expense of RMB2.5 million in the fourth quarter.

For the first quarter of 2014, we are continuing to be aggressive with regard to our customer acquisition efforts and expect sales and marketing expenses as a percentage of revenues to be at the high end of our historical 25% to 30% spending range.

G&A expenses for the fourth quarter was about RMB62 million, an increase of nearly 20% from the year-ago quarter due to higher employee compensation, office expenses, professional services fee, and also depreciation.

Share-based compensation expense included in G&A increased to nearly RMB13 million in the fourth quarter of 2013, compared with RMB10 million in the same quarter of the prior year. For the first quarter of 2014, on top of an expected rise in share-based compensation expenses, we expect to also incur additional costs related to preparation, renovation and decoration of several office products.

Our operating income for the fourth quarter of 2013 increased 12% year over year to RMB133 million. Our operating margin was 29.4% compared with 31.4% in the same quarter of last year. Excluding share-based compensation expense, our operating margin would be 33.5% compared with 35% in the year-ago quarter.

Other income in the fourth quarter included RMB30 million in local government financial subsidy. The effective tax rate was 15% in the fourth quarter, lower than prior quarters due to adjustment to income tax expense for the full year 2013 to reflect the actual income tax due.

Our net income for the fourth quarter increased 27% to RMB155 million compared with RMB122 million in the same quarter of 2012. Our fully diluted earnings were RMB2.57 per common share, which is equivalent to US$0.85 per ADS.

Excluding share-based compensation expense, loss from foreign currency translation and their related tax impact, our non-GAAP adjusted net income was RMB175 million in the fourth quarter. Non-GAAP adjusted fully diluted earnings per common share were RMB2.89, which is equivalent to US$0.95 per ADS.

For the full year of 2013, our total revenues increased 11% to RMB1.68 billion. Online revenues increased 15% to RMB1.08 billion, comprising 65% of our total revenues. We expanded our online customer base meaningfully, increasing the annual total of unique customers for the 2013 year to 23% -- by 23% to nearly 334,000 companies.

In 2013 our other HR services area grew 17% to RMB541 million and increased its contribution to 32% of our total revenue. Lastly, the ongoing transition away from the print business resulted in a decrease of revenues in that area to RMB51 million, which represented just 3% of our total revenues.

Gross margin in 2013 increased 50 basis points to 72.5%, driven primarily by the economy of scales and our continued focus on efficiency. Our income from operation was slightly higher to RMB489 million and net income increased more than 6% to over RMB500 million in 2013.

Excluding share-based compensation expense, the loss from foreign currency translation and their related tax impact, our non-GAAP adjusted net income was RMB572 million in 2013. Our non-GAAP adjusted earnings per common share for 2013 was RMB9.52 or US$3.15 per ADS.

And turning to our balance sheet, we maintained a very strong cash flow generation and ended 2013 with cash and short-term investments totaling over RMB3.1 billion, which is equivalent to approximately US$520 million.

In the fourth quarter we completed the acquisition of office space in Beijing for a total purchase price of approximately RMB165 million. The transaction was fully funded from our existing cash resources. And in January, our local Beijing staff and operations completed the move and now are occupying those premises.

I'll now turn the call back over to Rick.

Rick Yan

Thank you, Kath.

As many of you know, the post-Chinese New Year period is peak season for recruitment. And based on what we've seen so far, we feel that 2014 is off to a solid start. Our initial read of the activity levels indicates that employers are stepping up their hiring efforts, which mirrors the positive responses we collected from participants to our quarterly survey at the end of last year.

Competition amongst companies for talent also appears high and salary expectations look robust. For 2014, our analysis projects that employers are expecting to adjust wages upwards of 8% on average for white collar workers. We believe all of these data points signal a favorable recruitment environment. We are optimistic about a solid market demand year and we will need to monitor trends over the next six to eight weeks to see if they further validate this assessment.

In late January, the PRC Ministry of Human Resource and Social Services issued regulations on the labor dispatch model in China, a mechanism that we utilized to deliver some of our HR outsourcing services. The regulation titled Interim Provisions on Labor Dispatch is related to the labor contract law amendment that went into effect last July, and finally provides some formal implementation guidelines. The new regulation will go into effect on March 1st and includes, among other things, definitions for temporary auxiliary and substitute positions, as well as new compulsory terms to be specified in labor dispatch contracts. In addition, a 10% quota of labor dispatch employees to total workforce was instituted, but enterprises will have a two-year transitional period to rectify any non-compliance.

In our opinion, this regulation was not surprising and was largely in line with the spirit of last year's amendment. We have begun working with our outsourcing customers to interpret how they will be affected by these guidelines and undertake any required adjustments to the delivery of our services to them. We do not believe these recent regulatory changes will be disruptive to the long-term growth or prospects of the HR outsourcing market in China. In fact, we feel that they exemplify the government's focus on protecting worker rights, improving work conditions, and creating a strong social safety net, all of which are supportive to the development of a health labor market.

Approaching our 10th year anniversary as a listed company, we are as equally excited and confident today as we were in IPO about our future. With China transitioning to a more service oriented and customer driven economy, we feel that the importance of human capital, especially the need for white collar talent, is rising. We believe our knowledge of this space is unmatched and our track record over the past decade has clearly demonstrated the monetization of the HR vertical is achievable and sustainable.

While this has no doubt attracted interest to our industry and resulted in waves of intense competition, we have consistently emerged on top. While others have come and gone, we have continued to set ourselves apart with an HR customer-centric sales approach, new product innovation, and our proven execution capability. Whether there's a need for online listings, campus interviewing, leadership training, LFS processing or any other HR service, we have an answer for employers. Whether it's through offline, online or mobile, we can help them reach the widest audience or target just that one perfect candidate.

Since inception we have stayed true to our vision to create the foremost one-stop shop for HR services in China. We are confident that we are taking the right steps and making the right investments as we work towards this goal.

Turning now to our guidance, based on current market conditions and also factoring in a decrease in print advertising revenues, our total revenue target for the first quarter of 2014 is in the estimated range of RMB435 million to RMB450 million. For the non-GAAP fully diluted EPS target, our estimated range is between RMB1.95 to RMB2.15 per common share. Please note that this non-GAAP EPS range does not include share-based compensation expense, gain or loss from foreign currency translation, nor their related tax impact.

Total share-based compensation expense is expected to be between RMB19 million and RMB20 million for the first quarter. This guidance reflects our current forecast which is subject to change.

That concludes our presentation, we'll be happy to take your question at this time. Operator?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions]

And our first question comes from the line of Tim McHugh with William Blair. Please go ahead.

Tim McHugh – William Blair

Yes. Thank you. First, I guess, Rick, you comment about the regulations were helpful, and I understand you don't think it changed the long-term growth opportunity. But if we pick across 2014 and I guess more of a medium-term outlook, will we see a noticeable impact on the growth rate of that business? I mean in other words, will it take some time to work through with the clients [ph] before we can see that pick back up?

Kathleen Chien

I think our assessment right now, Tim, is that we don't expect that there will be a meaningful impact because I think, A, is that there has actually been a two-year grace period that's been given for everybody to assess what their situation and to then, let's say, regain compliance if they do not meet those requirements at this point. So I think now there is some sort of more specific guideline that people can work toward, I don't think that that should be something that would put people off.

I think a little bit of certainty now has been introduced in the equation. So I think the tougher part was actually -- I would say the second half of last year when people weren't sure what was coming down the line. So we actually think that having the guidelines filled out and clarified a little bit more is actually helpful. And we are not expecting at this point in time that there will be a meaningful impact even in the short term. I think there will be some transition that we'll be having to make and maybe adapt as we assess the full impact of this as we work with customers and regulators. But I think at this point our feeling is that we don't expect that there will be a meaningful impact.

Tim McHugh – William Blair

Okay. And then you alluded to this a little bit I think, but, you know, LinkedIn's been public about being more aggressive now going forward and trying to -- and you've been asked about them as a competitor I think in the past, but I guess any news of them trying to be more aggressive? Does that -- do you think, is there anything about your strategy that would change? Would you accelerate any spending on products or do you -- I guess any reaction to that news I guess just in terms of your outlook?

Kathleen Chien

I think LinkedIn's announcement, if you -- I don't think it's something that we were surprised by, if you will. I think that one of the things we've always believed in is that at this point they're sitting in a different segment than where we're in, firstly. And secondly, I think that, China is a big market, everyone is always very interested in it, so there's no lack of trying or lack of effort by anybody.

So I think we welcome the fact that people will continue to validate the potential of the Chinese market and I think that we will be focused as ever on our own product development, on our evolution over time, to make sure that we have the full suite of product that meets the different needs of the different types of candidates that the HR is looking for. So I don't think that really changes our outlook and our planning, but I do think that, you know, certainly we'll continue to be very focused looking at our own product development, innovation, will be going forward.

Tim McHugh – William Blair

Okay. Thank you. And then just one numbers question, Kathleen, I guess. Tax rate, it was lower than expected for this quarter, but what type of rate would you think for this year?

Kathleen Chien

Our overall rate for the year 2013 was about 17%. And I think for the year 2014, we're budgeting for similar levels.

Tim McHugh – William Blair

Okay. Thank you.

Operator

Thank you. The next question comes from the line of Philip Wan with Morgan Stanley. Please go ahead.

Philip Wan – Morgan Stanley

Good morning, Rick, Kathleen and Linda. Thanks for taking my questions. And congrats on a solid quarter.

So my first question is on your online recruiting business, given that you see some strong momentum going into 2014, I wonder, do you have any plan to adjust your pricing this year?

Kathleen Chien

I think, to answer that question, I think we always say that, for pricing issues, we don't visit that until the second quarter anyway. So I think we're holding off on that as usual. So I think, firstly, we are still always going to be focused much more on customer growth and acquisition. So that will be priority as usual. We'll revisit that pricing equation I think in the second quarter after we go through the peak season.

Philip Wan – Morgan Stanley

Okay. Thank you. And then my second question is, could you share with us your investment plan for the rest of this year? And how should we look at your margin trend over the next couple of quarters? Thank you.

Kathleen Chien

I think what we've been actually doing in the last few quarters, if you go back in time, is that I think we've been very clear that we've been actually stepping up our sales and marketing efforts throughout the last few quarters. I think we believe that those investments are driving stronger customer acquisition and higher growth. And I think those are the priorities we want to focus on. So I believe that, you know, in my earlier comments as well, I think we expect to be spending at the high end of our sales and marketing historical range, and we also expect that, given there is so much interest in how I think the recruiting space will continue to evolve, whether or not it goes higher end or the lower end or white collar end, the blue collar end, if you will, all that, I think our R&D or product development area will be something that we'll be spending more on, as well as the shares.

So I think overall we expect that we should be stepping up investments. And we hope that that will bring us the customer growth and the positive trajectory that we feel that we've been on for the last few quarters already. So that will be the focus for now. So we're not taking the foot off the pedal in that sense. We want to invest more at this point in time.

Philip Wan – Morgan Stanley

Right, thank you. Lastly, given that we have an earlier Chinese New Year in 2014, so I wonder if you could sort of quantify the impact of the seasonality shift between Q1 and Q2. Thank you.

Kathleen Chien

I think what we will expect is that, given the Chinese New Year pattern, this year's pattern should be more similar to what it was in 2012 where Chinese New Year also fell earlier. So you would see that overall -- the difference in terms of the first to second quarter revenue bump will actually be a little bit more moderate in the online space. That's what we were looking at, at this point in time. So if you look at 2013, that pattern is a little bit different.

Philip Wan – Morgan Stanley

Okay, that's very helpful.

Kathleen Chien

Yes.

Philip Wan – Morgan Stanley

Thank you.

Operator

Thank you. The next question comes from the line of Wendy Huang with Standard Chartered Bank. Please go ahead.

Wendy Huang – Standard Chartered Bank

Thanks. My first question is about your other HR services, especially the HR outsourcing. So when we actually look at your different business segment, you always actually encourage us to look at year-over-year growth. However, I do notice that every year, in particular in the past few years, in the first quarter the year-over-year growth for the HR business tends to be very flattish. And also looking back to 2013, the full year growth for the segment was only 17%. That seems kind of weaker than what I expected. So I wonder, what should we look at, the medium-term trend or the next-year growth for the HR -- other HR business. Thank you.

Kathleen Chien

I think there's two points that we will make to that question, Wendy. One is that, as we've talked about a little bit, there has been the regulatory issue that there was a little bit of overhang last year, and I think we talked about how that was something that made people a little bit more cautious given that there is uncertainty. So I think now that there is a new regulation that's been kind of issue as a supplement to the previous guideline, and that's something that go into effect starting next month, I do think that's a positive thing at least, that people have more certainty as to, you know, what are the boundaries that they're working with, so that I think that's actually more helpful.

So I think that's, you know, part of the reason why I think last year things were not as robust as it was in prior years, if you will.

And in terms of just going back to the specific point on the first quarter, first quarter there tends to be a lot of influx into how people budget and start the New Year, if you will. And with that particular business as well, people don't do their hiring until after New Year's. And if you decide to hire after New Year's, then the ramp-up is also going to be pushed back. And last year also we talked about the fact that with a late Chinese New Year, it was very difficult for people to come out, kick-start their program anyways given the limited time that they had after Chinese New Year.

So I would imagine from a seasonality perspective pattern, that the other HR services may not have the strongest growth always in the first quarter, but that's just because of the calendar, if you will. But I think that, you know, we still feel that, at least having a new guideline that's been issued as a supplement to the information in the last year, that's going to be helpful for us rather than a drawback. So I do think that that's what we're looking at.

Overall I think the long term is that this is an under-penetrated market. This is a market that's still in development, and I don't think we're at a point where there's lack of customers and lack of opportunities. It's just that there's a little bit of bumps in the road that we need to kind of weather. That's what happens.

Wendy Huang – Standard Chartered Bank

Okay. And also one small question about days sales outstanding that you mentioned in your presentation. So you mentioned that DSO was 12 or less than 12 for the past 23 quarters. Could you maybe tell me how actually did you come up with this number? And what's kind of the implication we should draw from that data?

Kathleen Chien

Sorry, which number you're talking about? I didn't hear you, Wendy --

Wendy Huang – Standard Chartered Bank

DSO. DSO.

Kathleen Chien

DSO number is about 13 days. I don't think that's meaningfully changed.

Wendy Huang – Standard Chartered Bank

Okay. So how did you come up with that number?

Kathleen Chien

I take the accounts receivables divided by revenues for the year. So you will count to that number in terms of days.

Wendy Huang – Standard Chartered Bank

Okay. Okay, thank you.

Kathleen Chien

Sure, no problem.

Operator

Thank you. The next question comes from the line of George Meng with Macquarie. Please go ahead.

George Meng – Macquarie

Hi, good morning everyone. Thank you very much for taking my question. Congratulations on a great quarter. So I have a couple of questions. The first question is on your 4Q revenue, also first quarter guidance. So is there any specific reason that you actually beat your previous guidance on the revenue quite a bit, given you already have -- hit a birdie [ph] when you guided the fourth quarter. Is there anything in particular that we should know?

And also for the first quarter, if I'm not -- if I didn't get it right, I think the EPS guidance actually implies that the margins will be down a bit. So is there anything special about that? Thanks.

Kathleen Chien

Sure. I think with guidance, we try to give the best available information at the time that we give. But last -- every year I always say, in the fourth quarter, that usually falls in the sort of first week, second week of November, is when we actually announce results and give guidance. There's still sort of more than half of the quarter go through. So I am certainly not going to penalize a team for doing better than they thought. So I'm very happy to see that we were able to even beat our estimates at the time. So I think that we did solid execution, the hard work of the team, and I think the continuous sales and marketing efforts that we had started to put in during the first half of last year really kind of helped this continued drive forward. So I think that is what it is.

I think in terms of then the first quarter and everything else, I mean I don't think that there's anything that's extraordinary I guess. That's kind of, you know, I don't know specifically what you're -- I guess the question is maybe you could actually rephrase the question so I can understand that better, the second part.

George Meng – Macquarie

No problem, I got you. So my second question is regarding your sales force. So basically you're saying now you have more than --

Kathleen Chien

Right, yes. So I mean, yes -- no. I think the early -- I guess the early answer I had, given also to the question by Wendy, is also just, you know, we expect that sales and marketing expenses to continue to go up, and we want to invest more. And also point with what Tim had also raised earlier, is that I think product development innovation, these are things that will be very important to us as the market continues to evolve and change. So I think that the market is pretty busy right now I think in China. I think we're pretty pleased to see that I think we're actually outgrowing our main competitors, and I think we're on pretty good growth trajectory. So I think this is the right time to continue to make the push ahead. And I think all of the efforts that we made last year is helping us forward and we don't feel that this is a time to worry too much about maybe a couple of points in margin sacrifice, if needed.

George Meng – Macquarie

Got it. Okay. And so my second question is related to your sales force, because I think you previously -- you said that you're going to increase your sales force aggressively until like Chinese New Year time. So does that actually imply that we should expect some kind of dial-back in terms of the new addition to your sales force post Chinese New Year? And also because last year you added about 20% in your sales force while your top line didn't really grow that much, so can see an increased percentage of sales and marketing expenses. Can we actually expect these to stabilize or you expect that the addition to your sales force [ph] will outpace your top line growth in the next -- in 2014 basically? Thanks.

Kathleen Chien

Well, when you add sales force, there's always a ramp-up period. So if you see a growth rate over the last few quarters, it's actually been increasing. So that's actually moving in line, if you will. And we don't expect that the sales force addition day one to be productive. So I think that's why we think that last year's investments have actually been helping us in the second half and continue pushing into this year the momentum.

We also believe that this year continuously we will be making more investments because again we feel that the investments we're making are pushing us in the right direction. If you look at actually our growth rate for the fourth quarter, we're looking at 19%, that's actually approximate to the sales headcount addition for the year if you want to think about it from that perspective. So I don't think we're actually not realizing the yields from our investments.

So I think at this point in time we still believe that the market seems to be quite solid. I don’t think there has been a trajectory in the sentiment in the marketplace. So I believe that this year we'll continue to make additional investments and so therefore we'll be spending at the high end of the historical range and that we're committed to continuing to push forward on this front, to make sure that we continue to capture market share and gain more distance from competitors.

George Meng – Macquarie

Got it. So the sales force new additions will continue to be at the similar pace as the second half of last year, is that correct?

Kathleen Chien

We will continue to make additional investment, yes.

George Meng – Macquarie

Okay, cool. And my last question is related to your CVs and accounts. So you mentioned that now you have like 64 million CVs at the end of 2013. I recall that you have about 54 million at the end of 2012. So I just want to get a sense that, out of this old or existing 54 million CVs at the end of 2012, how many of that was actually updated during last year?

Kathleen Chien

I don't have the number off the top of my head, but usually I think our percentage is nearly 40% to 50% will be updated within the I think 18-month period or something like that.

George Meng – Macquarie

Okay. So likewise for the accounts or the number of users, because this is also like -- so you have like 63 million accounts at the end of 2012. So how many of that actually remained active last year? Is it similar, like half of that or --

Kathleen Chien

We expect a similar rate. We'll expect a similar rate.

George Meng – Macquarie

Okay, got it. That's very helpful. Thank you very much.

Kathleen Chien

Thank you.

Operator

Thank you. [Operator Instructions]

Our next question comes from the line of William Huang with Barclays Capital. Please go ahead.

William Huang – Barclays Capital

Hi, good morning. Thank you for taking my call. I have several questions. My first question is, can you update us the hiring demand for major sector? What sectors you saw the highest demand and also your expectation on wage inflation this year? Thank you.

Kathleen Chien

I'll take the wage inflation question first. I think what we -- based on our surveys, we expect that for the white collar it's about 8% on average.

In terms of industries or sectors, I think we really actually talk about this too much because I think sometimes it's just timing too when people kind of begin their campaign to start up and sometimes not a very -- a significant issue. I mean basically overall we're looking at, right now, overall job growth rate versus similar period last year, is about, for the first week after Chinese New Year, we got it as about close to 30%. And I think almost all of the sectors are obviously up, so.

William Huang – Barclays Capital

Okay, thanks. Well, second question is, given some like classified side, they monetize well on the low end, the blue collar market. So do we have any plan on incentive to penetrate that -- to that new arena or if we have some -- can you just update us on the strategy? Anything will be great. Thanks.

Kathleen Chien

I think -- earlier we were talking a little bit of that, a little bit similar to how we look at LinkedIn, if you will. I think women are the blue collar or kind of a high end, in terms of right [ph] campus kind of an area. These are just different candidate pools that people will be recruiting them. Our historical kind of strength has been in the white collar segment. And that is actually mirrored a little bit more in terms of the type of corporates that we tend to work with. But I think that this is something that obviously there are still opportunities out there and there's opportunity for us to expand our market. And that's something we'll look at.

I will be not as specific in maybe the comments in terms of what we're looking at specifically just because for competitive and for confidentiality reasons, but I think there's obviously different pockets of areas that we can look at in terms of targeting different jobseeker groups. And we are actively looking at those. Blue collar just being one of many that we're looking at.

William Huang – Barclays Capital

Okay. But that won't happen in -- over the near term, right? It's just like over monitor [ph] but we have no near-term strategy, right?

Kathleen Chien

I would not necessarily say we don't have near-term strategy, but we're going to keep things under wraps a little bit. But obviously if we launch something we'll share it with you.

William Huang – Barclays Capital

Thank you.

Operator

Thank you. [Operator Instructions]

And Mr. Yan, there are no further questions at this time. Please continue with any final comments.

Rick Yan

Thank you for joining us today. We look forward to speaking with you again next quarter and we value your continued support of 51job. Thank you. Bye-bye.

Operator

Thank you. Ladies and gentlemen, this concludes the 51job fourth quarter and fiscal year 2013 conference call. Thank you for your participation. You may now disconnect.

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