Ladies and gentlemen, thank you for standing by and welcome to the Kanzhun Limited First Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a Q&A session. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Wenbei Wang, Head of Investor Relations. Please go ahead, ma'am.

Thank you, operator. Good evening, and good morning, everyone. Welcome to our first quarter 2024 earnings conference call. Joining me today are our Founder, Chairman and CEO, Mr. Jonathan Peng Zhao; and our Director and CFO, Mr. Phil Yu Zhang. Before we start, we would like to remind you that today's discussion may contain forward-looking statements, which are 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. The company cautions you not to place undue reliance on forward-looking statements and do not undertake any obligation to update this forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our website at ir.zhipin.com. With that, I will now turn the call to Jonathan, our Founder, Chairman and CEO.

[Foreign Language] Hello, everyone. Welcome to our company's first quarter 2024 earnings conference call. On behalf of the company's employees, management team and Board of Directors, I'd like to thank all our users and investors who have always believed in us and supported us. Let me first introduce our financial performance. In the first quarter, the company achieved calculated cash billings of RMB2.05 billion, up 24% year-on-year and 16% quarter-on-quarter. Our GAAP revenue reach RMB1.7 billion, up 33% year-on-year and 8% quarter-on-quarter. We achieved a net profit of RMB240 million. Meanwhile, our adjusted net income, which excludes share-based compensation expenses was RMB530 million, up 117% year-on-year. In the first quarter, the average verified MAU on the BOSS Zhipin app reached 46.62 million, representing a 17% year-on-year growth. The growth rate of enterprise users is faster this quarter compared with the same period last year. In March, the number of verified MAU on the BOSS Zhipin app exceeded 50 million for the first time, reaching 55 million, up 24% year-on-year. At the same time, the ratio of DAU to MAU remained stable. As of the end of April, the cumulative number of verified users served by our platforms exceeded [190 million] with a cumulative number of verified enterprise surpassing 40 million, which means from January to April this year, the company attracted more than 70 million newly added verified users. As of, 31 March 2024, approximately 5.7 million enterprise customers across more than 3.5 million enterprises conducted paid recruitment activities on BOSS Zhipin during the past trailing-12 months. In 12 months, there are more than 350 million companies paid for our service. This number seems very large in terms of the global enterprise service market with it even exceeding the total population of some countries. However, it only represents less than…

Thanks, Jonathan. Hello, everyone. Now let me walk you through the details of our financial results of the first quarter of 2024. We are happy to report a solid start to the year, characterized by continuous expansion in our user base and engagement and sustained revenue growth. In this quarter, our revenues hit a new high and reached RMB1.7 billion in the quarter, representing a solid 33% year-over-year growth. Calculated cash billings reached RMB2.1 billion, up 24% year-over-year and 15% sequentially, showing a continued growth momentum. Our paid enterprise customers grew by 43% year-over-year to 5.7 million in the trailing 12 months ended March 31st. The faster growth rate of paid customers compared to that of total users indicates our increased paying ratio among enterprises and enterprise users. As Jonathan just mentioned, we noticed a recovery of recruitment demand from large companies. This trend is also demonstrated by the increased cash revenue contribution from key accounts in the quarter, which was up by 1.5 percentage points compared to the same period last year, while the downward trend of blended cash related ARPU due to the change of revenue structure mix has also been mitigated. Moving to the cost side, total operating cost and expenses increased by 17% year-over-year to RMB1.6 billion in this quarter. Excluding share-based compensation expenses, adjusted operating costs and expenses increased by 14% to RMB1.3 billion in this quarter and our adjusted operating margin was 23%, double than that of 11% in the same quarter last year. Cost of revenues increased by 20% year-over-year to RMB295 million in this quarter. This increase was primarily driven by increases in server and bandwidth costs, payment processing costs and employee-related expenses. Gross margin went up by 2 percentage points compared to the same period last year, thanks to higher revenue…

[Operator Instructions] Our first question comes from the line of Robin Zhu from Bernstein. Please go ahead. Your line is open.

[Foreign Language] So my questions. Could management share your observations on the state of recruitment demand in China by white-collar, blue-collar, KAs versus SMEs et cetera by industry compared to a year ago and the company's expectations last quarter? And can you also share some thoughts on BOSS Zhipin's own business trends in the more recent months, looking forward to the rest of Q2, thoughts on growth rates and in the rest of the year, and whether high comps in the service industry will have an impact on growth rates in the coming months. Thank you.

[Foreign Language] Zhu, thank you for your question. If we look at the job -- new job postings and their growth of their recruitment demand, we saw that this year it's overall better compared to the last year. So the -- every day, we saw -- we continue to see the new historical high of active -- daily active BOSS's and daily active enterprises. On an overall accumulated basis, we saw that for the existing BOSS's, their active is also better compared to last year. In the first quarter, as we have just said, blue-collar definitely grew better compared to other sectors and we have just talked about numbers. And the highlight this year is still manufacturing and logistics. Urban service compared to a high base is not as fast as the other two sectors. In terms of the different company size, based on our historical experience and estimate, we talked about our view on different -- on the recovery of different sized companies. So we saw that the smaller companies, it has a faster recovery speed and larger companies, it take more time. But once they started to recover, it will show a different performance pattern compared to smaller companies. And currently, we saw that, yes, the larger companies recovery can last better and longer. I will share with one number that in April, for the enterprises with more than 500 persons, these daily newly added job postings compared to March grew by 10% month over month. We just talked about our newly added BOSS's. We talked about the activities of our existing BOSS's, about the highlight of manufacturing and logistics sector, about medium and larger-sized companies and those drivers have -- in line with our observation and expectations. And also there is another driver, which is lower-tier cities, which also have been successfully demonstrated by many other companies where they started with the first-tier cities and then further penetrated into lower-tier cities. So overall, this year's recruitment market in terms of both size, industries and regions, we saw it as more stable and more balanced and more normal situation. Normal is more consistent with what we have been obtained recently.

[Foreign Language] Q1 was a strong quarter, performing much better than the same period of 2023. Q1 CCB guidance was announced in the middle of March within our last earnings call, the final results of quarter-over-quarter 15 percentage points growth turned out to be clearly better factored by the momentum around the end of March. Around this moment, about 10 days before the end of May, second quarter's CCB guidance is still a bit early to tell. We now estimate that on top of Q1's high base, Q2 will continue to see sequential growth. Magnitude will be likely in low single-digit percentage points quarter-over-quarter. Its year-on-year growth rate will be in the range of 28% to 32%, faster than that of Q1. And our full year's outlook of CCB growth is unchanged. So this is our answers to the second quarter and full year outlook.

Okay, thank you for your question and let's move on to the next question, please.

Thank you. Please standby. Our next question comes from the line of Eddy Wang from Morgan Stanley. Please go-ahead. Your line is open.

[Foreign Language] Thank you for taking my question. I have two questions. The first one is about the paying ratio. We have noticed that the company has very rapid growth of the paying enterprise users. Could you please share with us the paying ratio trend in the past couple of quarters? And on top of that, if you can share us the breakdown of the ARPU user growth as well as different sized the enterprise contribution on the billings? And my second question is about the upcoming graduation season. So we remember that if you look at last year, the search of the graduates during the summer actually has hit on the supply demand dynamic in the recruitment market. I just want to hear your view on the upcoming, the season and do you see this will happen again? Thank you.

[Foreign Language] And thank you for your question. First, I will talk about our basic growth strategy for our revenue. Until the end of March 31st, there are more than 350 million paid enterprise customers using our service, which is less than 10% of China's total number of enterprises. And also we have initially verified, demonstrated that our business model, our service model can adapt to a variety of vast range of different type of customers. So for me, for us, our future growth strategy is that we will continue to attract more and more enterprises to pay for our service for their recruitment. That's my basic growth strategy. Based on this premises, we will focus on to improve our -- improve the number of paid enterprises. But since we -- that will be our key target since our dollar market share is quite low. So based on that, we intend to be very cautious in dealing with companies who have not paid for recruitment service or online recruitment service before, which means the priority of ARPU increase is not that high. And based on those situations for larger companies, key accounts, when there is a recruiter using our service, he will then add to buy more accounts with us. And the same case is for the smaller companies and SMEs, when there are a wide recruiter using us, then there will be more and more buying more accounts. So that is to the result in the first quarter, we saw that in a cash revenue perspective, both large accounts, middle and small-sized companies, their ARPU increased and that -- which means I think every -- on an average basis in every company, more users are using our service and also demonstrate the better recovery trend of larger companies. And…

And operator, let's move on to the next one.

Thank you. Please standby. Our next question comes from the line of Timothy Zhao from Goldman Sachs. Please go ahead. Your line is open.

[Foreign Language] Thank you management for taking my questions. I have two questions. The first question is regarding the blue-collar sector, especially after the company acquired the WD Technology. Could management share your thoughts on how to develop the blue-collar business going forward. The user contribution from the lower-tier cities is becoming bigger and bigger going forward? Or what are --what is your thoughts on how to serve this kind of users going forward? And secondly, I think as we see the user growth so far this year is pretty good, just wondering what is your sales and marketing strategies for the rest of this year, especially given the Paris Olympics is a few months away? Could you share your marketing campaign thoughts around the Olympics? Thank you.

[Foreign Language] So thank you for your question. My [indiscernible] which we will short for WD, actually somehow similar with BOSS Zhipin, so we both founded in 2013 and have been with this industry for more than 11 years. So first, we started as white-collar platform focusing on Internet technology companies, and WD, they focused -- started with manufacturing factory workers. And so I have known WD for quite a long time. So my definition for them actually they are a survivor for long-time. So WD, they are the pioneer in inventing some capability which is suitable for digitalize, which combined with manufacturing-related recruitment. So for example, they are one of the first to concentrate or prioritize the user experience of the job secrets and for the users helping improve their user experience. So that's why today they can be the leading platforms for certain reasons. So this is the first time BOSS have to discuss about our acquisition. So I will also want to share that our acquisition strategy is we want to acquire some core abilities respectfully, which cannot be accumulated by our own and that will help us to cut the chase and work together to achieve better results. That's our consideration for our collaboration with WD, for your reference.

Well, I can comment Timothy's second question regarding to the user growth and marketing strategy. So basically, we will keep marketing expenses at a reasonable level and maintain a disciplined user growth approach. This is what we mentioned many, many times. So definitely, we will like to leverage Paris Olympic Games to enhance our brand, but we would have to spend appropriately. Within current marketing environment, leading platform like us [indiscernible] with lead invoices higher economy of scale and have a better marketing efficiency, which means at a not heightened spending, our user growth is still satisfactory. Our new user growth totally recorded as 17 billion in the first four months this year, close to half of our annual target of 30 million to 40 million new users. So with this situation, we don't need to be extra aggressive at this front. So hope my comment answers your question.

Okay. That's our -- all of our answers. And operator, let's move on to next question.

Thank you. Please standby. Our next question comes from the line of Yang Bai from CICC. Please go ahead. Your line is open.

[Foreign Language] I will translate for myself. The first one is, have we seen any change in the competitive landscape after the spring recruitment? And the second one is, we have mentioned the sales and marketing strategies for this year before. We also noticed that Internet companies are increasing their AI CapEx, including our AI-related expenses. Have we adjusted our outlook on profit margin this year? Thank you.

[Foreign Language] Thank you for your question. So for the first one regarding competition, this year we have noticed this spring many of our peers, they or majority of them are spending more aggressively this year during the spring fest recruitment season. So we noticed that and we were also doing the same marketing investment. So the competition is more fierce. And so the overall spending has increased. A last -- during the last earnings call, I have also analyzed why because this year people feel that there are various opportunities in the market and that they would like to spend more to increase their revenue. And after the competition of marketing in the first quarter, so I think that you have all already noticed that the third party data in April, our -- the overall competitive landscape is very stable. And some data -- some operating metrics in the past, we are still maybe a little bit below our peers. And in April, we have surpassed all of our competitors in all the operating metrics. And so to conclude of the first quarter's competitive situation that we very value, highly respect our peers' active marketing events. But we firmly believe that to continue to improve our service for both job seekers and recruiters is still the effective or maybe the only effective way in terms of "marketing strategies". And our numbers, so both MAU, DAU active and the user time spent and all the operating metrics, we continue to maintain good momentum and advantages. And that's my answer for the competitor question.

And regarding your second question related to our margin profile for the full year. So I could quickly run through the major cost and the expenses item and mention our thoughts. Regarding the gross margin, so basically the line below the COGS, our gross margin, we think that will slightly improve due to higher economy of scale starting from second quarter. And -- so mainly marketing expenses, we think will maintain at the current level, absolute amount will increase a little bit. Percentage wise will be flat or decline. In terms of selling expense, which is mainly in compensation of sales guys, its percentage to revenue will be flat or decline. So combined the selling and the marketing expenses, the total selling and marketing expense, its total percentage points to revenue will further improve in 2024. And then is R&D expenses, which is related to -- you just mentioned AI spending. You are right that we increased our investment-related to the AI and -- but that part could be offset by the revenue in the full year. So the full year percentage-wise, R&D expense would be flat, similar percentage points compared to last year. And then is G&A. So G&A percentage to revenue for full year will be improved compared with last year. In first quarter, temporarily it increased, but we expect the second quarter will drop. So the full year, percentage-wise, will be a bit better compared with last year. So the trend I just mentioned fees percentage rise both for our GAAP numbers and our adjusted non-GAAP numbers. So all in all, our operating margin in 2024 would actually improve along with our continued revenue growth. So that's my comment to the most cost items and the overall margin for the company.

And that's all of our answers to the question. Operator, please go ahead.

Due to time constraints, that concludes today's question-and-answer session. At this time, I will turn the conference back to Wenbei for any additional or closing remarks.

Thank you once again for joining us today. If you have any further questions, please contact our team directly. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.