Kanzhun Limited Q2 FY2025 earnings call

• Financial performance: Total revenue grew 9.7% y-o-y to RMB 2.1 billion, net income grew 70.4% y-o-y to RMB 710 million, adjusted operating profit grew 33% y-o-y to RMB 880 million. Share-based compensation expenses decreased for two consecutive quarters. - Platform supply-demand dynamics: During the second quarter and graduation season, job-hire demand dynamics improved. On the job seeker side, incremental job seeking demand from graduates moderated, while on the employer side, recruitment demand for fresh graduates increased. In July, newly posted jobs increased by approx. 20% y-o-y. - AI progress: AI to job seekers: AI-interviewed training robot makes progress in recommendations, AI-assisted user search iterates. AI to enterprises: Provides AI-assist in job posting optimization, helps select value-added services. AI to management: R&D uses AI in coding, with 30%-70% of code generated by AI, and AI plays role in customer service. - Hong Kong share offering and shareholder return arrangements: Completed Hong Kong secondary share offer of HKD 2.2 billion. Board approved annual dividend policy (USD 80 million for current fiscal year) and new share repurchase program (up to $250 million over next 12 months starting August 29).

In the second quarter, the company achieved total revenue of RMB 2.1 billion, up 9.7% year-on-year. Net income reached RMB 710 million, with a year-on-year growth of 70.4%, and the net profit margin exceeded 33%. Excluding share-based compensation expenses and other income, adjusted operating profit was RMB 880 million, up 33% year-on-year. Share-based compensation expenses for the quarter decreased by nearly 10% quarter-on-quarter for the second consecutive quarter. From January to July, the company cumulatively added over 30 million verified new users. In the second quarter, the average verified active users on the BOSS Zhipin app reached 63.56 million, up 16.5% year-on-year. Revenue contributions from blue-collar, lower-tier cities and small and medium-sized enterprises further increased compared to last year. During the 12 months ended June 30, the total number of paid enterprise customers reached RMB 6.5 million, up 10% year-on-year.

The company expects total revenues for the third quarter of 2025 to be between RMB 2.13 billion and RMB 2.16 billion, a year-on-year increase of 11.4% to 13%.

Today's discussion may contain forward-looking statements based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different.

Q: The recruitment demand recovery on BOSS platform in the second quarter and July. Any different driver versus before? Is the recovery sustainable and outlook for third quarter? Also, view on AI's impact on white-collar recruitment, especially programmers' hiring demand.

A: Compared to before, small future is Internet sector job postings recovering to new high since 2021, big future is smaller size or micro size enterprises recovering faster. Impact of food delivery battle is minor. Recovery is sustainable, business growth rate in third quarter expected to further accelerate. Regarding AI's impact on white-collar recruitment, entry-level programmer recruitment cost increases as focusing on more potential people, impact on hiring of white collar is very limited.

Q: Margins continue to expand, how to think about margin trend in next year and beyond? Important investment areas? Impact of start-up companies ramping up advertising investment on marketing and user acquisition cost?

A: Margin improvement is due to business model's scale effect and effective cost control, direction of gradual improvement is clear. Investment priorities focus on R&D innovation and new business initiatives. Impact of start-up companies' advertising investment on us is quite limited due to strong double-sided network effect, high user acquisition efficiency and retention, and still investing large amount in marketing while user acquisition cost is low.

Q: Details about AI application on enterprise side and commercial products with more commercial potential? Thought on capital markets going forward, plans to improve Hong Kong market liquidity and dividend plan?

A: Developed recruitment agent HAMR used by approx. 500 recruiters daily, and a system for large state-owned enterprises with features like customization of digital human advertises, etc. Regarding capital markets, fundraising in July aimed to improve Hong Kong line liquidity. Have healthy cash balance, annual dividend policy with USD 80 million for current fiscal year and renewed share repurchase program show commitment to shareholder returns.