Ladies and gentlemen, thank you for standing by and welcome to the Kanzhun Limited Second 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 second 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, webcast replay 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. Thank you for joining our company's second quarter 2024 earnings conference call. [Foreign Language]. I will start with our financial numbers. In the second quarter, the company achieved calculated cash billings of RMB1.95 billion, up 20% year on year. Our GAAP revenue reached RMB1.92 billion, up 29% year on year. We recorded a net profit of RMB420 million. Meanwhile, our adjusted net income, which excludes share based compensation expenses, rose to RMB720 million, up 26% year on year. In the second quarter, the average verified MAU on the BOSS Zhipin app grew by 25% year on year to 54.6 million. From January to June this year, the company attracted around 28 million newly added verified users. The total paid enterprise customers in the 12 months ended June 30, 2024, reached 5.9 million, representing 31% year-on-year growth. [Foreign language]. Our cash bookings in the second quarter still have a decent year-on-year growth. However, weaker on a quarter on quarter basis and, and a little bit lower than our expectation. This was mainly due to weaker demand from the recruitment side in the later half of the second quarter. There were relatively fewer enterprise users and more job seekers in the market, which is what we refer to as a high CB ratio. In this case, most enterprise users found it easier to hire for example, a project team that took three months to fill all the positions in the past now only takes two months reducing enterprise users desire to spend more money on recruitment. [Foreign language]. We noticed that the growth trend of enterprise users is still good. There are two proofs. First, in the second quarter, the number of newly added enterprise users was higher than that of the same period last year. Second, the…

Thanks, Jonathan. Hello, everyone. Now let me walk you through the details of our financial results of the second quarter of 2024. In this quarter, we delivered healthy and a sustainable top-line and bottom-line growth. Calculated cash billings and the revenues grew by 20% and the 29% year on year respectively, mainly driven by the growth of our enterprise users average monthly active enterprise users in the quarter grew by 17% year on year. We continued to penetrate into different categories of users, especially in blue-collar sectors, small, medium-sized enterprises, and users from lower-tier cities. As a result, revenue contributions from those sectors continue to increase. Paid enterprise customers in the 12-month ended June 30, 2024 increased by 31% year on year to 5.9 million. The paying ratio was higher than last year, but sequentially kept stable. We are happy to see that ARPPU average paying per paying user of paid users increased around 3% year on year and 3% sequentially reaching the highest level in the past four quarters. Part of the reason was that revenue from key accounts out grew small and middle-sized accounts, but more importantly, was our effort to increase client usage by offering high quality and targeted products and services. Moving to the cost and expensive side, excluding share-based compensations, adjusted operating cost and expenses increased by 20% year on year to RMB1.3 billion, and that led to an adjusted operating profit of RMB660 million in the quarter, up 52% year on year. Adjusted operating margin reached a 34.4%, up by 5.3 percentage points compared to the same quarter of last year, and a hit an all-time high. Cost of revenues increased by 17%, year on year to RMB317 million, in this quarter representing a gross margin of 83.5% continued its upward trend. Sales and…

[Operator Instructions]. Our first question comes from Timothy Zhao with Goldman Sachs. Your line is open.

[Foreign Language]. Thank you for taking my question. I have two questions here. The first is regarding your user growth and market share. How does management team view the market share currently and in the adverse market environment currently? Are we considering to further accelerate the market share gain? And second, as we mentioned to ensure the full year profit this year, could management share what is your detailed measure and what is your OpEx, including the SPC trend for the rest of this year? Thank you.

[Foreign Language]. Thank you for your question. For the first one regarding competition, the current competitive landscape is relatively stable, or we rather say, we have relatively good competitive advantages, and there are many third-party data and our own data have to prove that. [Foreign Language]. For example, we just mentioned, our MAU and DAU all achieved a historical high in the second quarter. The user activities, for example, the DAU and MAU ratio still remain at a very high level. So, in the same case for the user usage time, so all of those data prove that as a leading online recruitment platform every perspective, our competitive landscape is really stable and continued in a good trend. [Foreign Language]. And in terms of guaranteed a full year profit target. So, we believe is very critical for our core employees, for our management to have this target. This is part of our competence and is a testify further this firm is very stable and strong. So, on a strategic perspective, the first way is our full-year user growth target is RMB40 million to RMB45 million. And in the first six months, the first half of this year, we have already achieved RMB28 million. So, there are, only RMB12 million to RMB17 million left for us to grow. It should be relatively easy to achieve so we can control our overall spending on marketing to properly achieve our profit target. Second, under current circumstances, we want to better use our resources and to move the priority of those project initiatives with lower success rate and higher target, to postpone it resource usage and prioritize the importance of reducing the overall cost. And this can be achieved through internal management and with we believe this very high level of certainty in terms of detailed data I think Phil can give you some more color.

Regarding our bottom line and major cause and the expenses item, I’ll quickly mention our thoughts. As Johnson just mentioned, we would like to try our best to secure our operating profit, the target, our target for full year of non-GAAP operating profit is set as RMB2.3 billion, which is roughly up 40% year over year, on top of the last year's adjusted non-GAAP adjusted operating profit. So, in terms of our gross margin, our gross margin will in third quarter or following quarters, we'll stay flat or slightly improve due to higher economy of scale. And our marketing expenses, as Johnson mentioned will be controlled, and at relatively low level. Our selling expenses and G&A expenses, those items all be moderate and in a reasonable situation. And in terms of the R&D expenses, because of, we probably will shift our priority from some like AI-related infrastructure investments into other things. So, from third quarter or from second half this part, the expenses will decrease. So altogether our operating margin will increase second half and versus the full year operating margin versus last year will also be better. Thank you.

[Foreign Language]. For the market share, which a lot of investors are concerned and asked a lot about. We actually after experiencing the years past, we notice that on the current situation, every dollar we spend there will be more job seekers and less enterprise users. The CPU [ph] ratio is currently is a challenge for the platforms who is based on the supply and demand balance of both sides. So, from this perspective, to keep the balanced civil ratio, we actually, we don't need to spend money too aggressively and that's my view to share. In addition to increase the dollar market share on the enterprise user side, currently, the overall paying desire of the enterprise are not that strong. The best and most effective way to enlarge our enterprise market share is to start a price wall. And currently it is a tough, it's a time to do that, but I'm not planning to take even more shares by lowering our price. I don't think this is a meaningful thing to do at current situation. And that's my view to share. Thank you, operator. Let's move on to the next question.

Thank you. Our next question comes from Eddy Wang with Morgan Stanley. Your line is open.

[Foreign Language]. Thank you, management, for taking my question. We understand that the macro situation seems second quarter has been relatively weak, so just want to hear your view that have you witnessed any improvement in the recruitment demand in August versus June and July? And how's the performance of different industries and different the enterprise of different skills? And the second question is, if the micro continues to be relatively weak will we have any change in the business strategy to offset the macro impact?

[Foreign Language]. First, we cannot talk about the macro, but we can share with our own situation, which we observed from our website and app. First one is, in the second quarter, the overall willingness to pay from recruit recruiters are lowering. And secondly, the blue-collar growth is still white collar that why it’s still fits. [Foreign Language]. And let's further look into blue-collar. There are several observations we can share with you. The first observation is that the overall blue-collar recruitment demand reached peak historically high in the spring festival recruitment season, but just fall back relatively faster in the second quarter. [Foreign Language]. Even relatively factor pullback in second quarter, we still see a very good year-over-year growth in terms of the blue-collar revenue in the second quarter. And among the detailed sub-sectors, there is one highlight, which is, uh, the factory industry continues to outperform all other industries. And after that is logistics sector. [Foreign language]. And there are also other two observations worth sharing. First, compared to the first-tier cities, the recruiter’s enterprise user growth is better and faster in the second, third, fourth-tier cities. And the second one is, there is a continued trend, which we have already discussed in the last quarter results that to the larger size of the enterprise grow better. For example, big enterprise with over 10,000 employees, at the companies with the fastest or the faster growth rate. [Foreign language]. And about recent situation in August, we'll continue to talk about blue-collar. So blue-collar the overall supply and demand situation in August is better than the second quarter. And the enterprise-to-job seeker ratio continued to see improvement. And we observed the daily active enterprise user number continue to go up week by week. And the manufacturing industries are still the best among all others. [Foreign Language]. And the second question about what kind of monetization strategy we can use to against the macro headwinds, the things we are currently doing first is to concentrate our resources to the business and department, which we -- because faster outlook -- longer outlook, we give limiter to. For example, on the blue-collar manufacturing industry, we from [Indiscernible] project to contract and to generate revenues, we are currently enhancing our investment and input on this area. [Foreign Language]. I cannot be so very certain to say that the [Indiscernible] project will have very big revenue from our corporation with blue collar manufacturing industry in the third and fourth quarter of this year. But we believe this is the first real chance actual change for the online recruitment platform to go into the blue-collar manufacturing industry and make some real money. And that's my answer to your question.

Our next question comes from Robin Zhu with Bernstein. Your line is open.

[Foreign Language]. So, I have two questions. One, would management elaborate on recent developments in the company with regards to the WD acquisition. If management could give us more color on over the seas and investments in AI. And second, given the weakness in the company's shares in recent times, could management share some thoughts on go-forward buybacks. And whether the company will consider instituting a regular dividend. Thank you.

[Foreign Language]. Thank you for your question. The first question was the over WD technology, I have mentioned that conference call before and because the Jason the CEO is a very respectful peers of ours and the reception in 2015 until now. And they be able to become the number one in their own areas. So, to purchase the majority of the shareholder stake of WD technology is out of the recognition and the respect of Jason and his team work in this area. And it's not just us for expansion into the area is more likely to add ourselves with some capabilities, which is difficult for we to develop ourselves. [Foreign Language]. Jason and his team we fully recognize his knowledge and the industry actually has fully recognized their knowledge knowhow and model in the manufacturing industry. And currently, he's working with us for three things. First of all, they are fully independently to lead the development of capabilities. [Foreign Language]. And the second thing is to help the company to push forward the overall environment improvement under the couch project and the monetization, the commercial project -- commercial plan under the com select [ph] project. [Foreign Language]. And the third one, which is not simple to discuss more details publicly at this moment is that Jason is currently leading the operational team of WD technology and part of our R&D team together combine the advantages of our traffic and their experience and the know-how in industry to combine together to publish new product or service, which we were rather looking forward to that, but maybe in the next quarter. [Foreign Language]. And for our overseas business, first for our Hong Kong initiatives, we have made some progress and have initially achieved -- published MEP service to serve quarter…

Thank you. Due 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 IR team directly or zhipin [ph] Net Relations. Thank you.

Thank you. You may now disconnect. Good day.