Kanzhun Ltd (BZ) 2025 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Kanzhun Limited Third Quarter 2025 Financial Results Conference Call. At this time, all participants are in 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 third quarter 2025 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 purpose only. For a definition of non-GAAP financial measures, and a 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 may be available on our website at ir.zhipin.com.

With that, I will now turn the call to Jonathan, our Founder, Chairman and CEO.

Hello, everyone. Thank you for joining our Company's third quarter 2025 earnings conference call. On behalf of the Company's employees, management team and board of directors, I would like to extend our sincere gratitude to our users, investors and friends who have continuously believed in and supported us.

I will briefly walk through our key operational results and business progress this quarter, focusing on three areas: First, the recovery in demand drove accelerated growth in our third quarter performance; Second, the evolving characteristics for equipment demands across different dimensions; Third, progress in integrity into our products, technology, and overall business operations.

Let's start with the financial performance. In the third quarter, we generated a total revenue of RMB2.16 billion, up 13.2% year-on-year, with growth accelerating from the previous quarter. Excluding share-based compensation expenses and other incomes, such as investing gains, our adjusted operating profit reached RMB900 million, up 49.3% year-over-year.

Our GAAP net profit was only RMB780 million, up 67.2% year-on-year, with a net profit margin of 35.8%. Part of this improvement was attributable to a decrease in share-based compensation expenses, which was RMB220 million this quarter, marking the third consecutive quarter of sequential decline and a year-on-year drop of 21%.

The growth in the third quarter was driven by two key factors. The first and most important driver was continued user growth, supported by our increasing penetration and expanding market share. From January to October, we acquired over 40 million newly verified users. In the third quarter, the average verified monthly active users, which is (MAU) on the BOSS Zhipin App reached 63.82 million.

While the user scale is growing, user activity is also strong. According to third-party data, the DAU to MAU ratio has maintained a high industry-leading level.

The second driver was the rebound in enterprise-side demand, which boosted monetization level. In the third quarter, the newly posted job positions increased 25% year-on-year, while both the number of recruiters posting new jobs and the average number of post per recruiters grew steadily compared to the previous quarter and the same period last year.

From July to September, the average number of daily active enterprise users grew at a faster pace sequentially and job seekers, marking the first time this has happened in three years.

The supply-demand balance on our platform, meaning the ratio of enterprise users to job seekers, continued to improve. The paying ratio among quarterly active users increased both year-on-year and quarter-on-quarter. By September 30, the number of paid enterprise customers in the 12-month grew 13.3% year-on-year to 6.8 million.

The second agenda item focuses on observing enterprise hiring demand in this quarter from multiple perspectives.

From an industry perspective, blue-collar revenue growth continued to lead, with its revenue contribution reaching a record high in the third quarter. Manufacturing remains the most robust sector, topping the industries in revenue growth for five consecutive quarters.

Taking this opportunity, I would like to do a brief review. Three years ago, the Company's strategy for serving manufacturing job seekers and recruiters was divided into three stages in terms of priority. First, improve the online job search environment for blue-collar workers; Second, develop the user scale of the platform; Third, pursue commercial benefits. In 2022, we launched the Conch Project to purify the job search environment for blue collar workers, pursuing the authenticity of recruiters, job positions, and compensation, combating false information, and enhancing user trust. Over the past three years, the process has been extremely challenging, and the results have gradually emerged.

Meanwhile, transportation, logistics and warehousing, and the service industries also delivered solid overall performance. Among the white-collar sectors, industries such as artificial intelligence, Internet services, lifestyle services, new retail and gaming are experiencing leading growths.

The white-collar segment experienced a notable increase in participation from small and medium-sized enterprises, with paying user numbers growing quickly while the average spending remains stable, an opposite trend to previous patterns, reflecting a revival of the white-collar entrepreneurial ecosystem.

From the perspective of city tiers and company size, demand in Tier-1 cities is rebounding, Tier-2 cities remained stable, and the revenue contribution from Tier-3 and lower-tier cities continued to rise. Among enterprises of different sizes, mid-to-large enterprise, which is between 500 to 9,999 employees, are growing the fastest, followed by small and micro enterprises, and then very large enterprises.

The third agenda item reviews the progress we made since AI was interpreted into the Company's business from products and technology perspectives.

On the job seeker service side, there are two things worth mentioning.

First, after a period of continuous iteration, an AI job search assistant has been fully launched for all job seekers. Currently, it can recommend positions for users, answer questions, and also provide suggestions on how to optimize their revenues. In the third quarter, not only was the full of this product rollout achieved, but the number of interactions per user with the AI job search assistant also showed a significant quarter-on-quarter increase.

Then, we have also been continuously optimizing the AI interview coaching feature. In the third quarter, job seekers who completed mock interviews showed further improvements in both activity level and conversion rates compared to the previous quarter.

On the recruiter service side, multiple AI products have been gradually launched to provide services. They are full four aspects to mention.

First, the AI communication assistant feature is being gradually integrated into existing commercial related products. As a result, the average mutual achievement conversion ratio from these products have increased by 7%.

Second, a product called AI Quick Hiring, after continuous optimization, is currently under phased roll-out. Experiments show that this product not only helps the platform better understand recruiters’ intentions but also allows for comparisons among all job seekers on the platform, thereby improving matching accuracy. Currently, the re-use rate among recruiters participating in the phased roll-out testing is steadily increasing.

Third, we have extended AI interim features to a number of well-known customers from the campus recruitment side. For example, the AI interview can support multiple rounds of follow-up questions and customized interviewer profiles. These clients have very strong appeal to students, leading to a high-volume applications in a short term, which creates significant pressure for recruiters during the campus recruitment activities. The developed AI service has alleviated this pressure.

Fourth, we are cautiously exploring AI-hosted recruitment services and AI-powered bulk placement solutions in diverse recruitment scenarios, such as high-end white-collar and gold-collar positions, blue-collar roles in the catering, and manufacturing industries. These initiatives are gradually generating benefits.

Among all those enterprise-side AI services, we have been quite cautiously which we allow the job seekers to know whenever they are communicating with an AI service. They have an option to close the service. They have the button. Sometimes, someone might choose to close and someone choose to continue the communication, and we are continuously collecting related samples.

We not only simply provide the option for jobseekers, whether they can communicate with AI or not to guarantee their interest, but also, we are continuously to observe with the intervention of AI, what kind of impact will affect the mutual matching not only on the individual and recruiter’s prospectives, but also from a scalable double-side situation. And what kind of impact of this will have to our ecosystem from job seeking and recruitment perspectives, we are continuing to observe and collect data.

In summary, the third quarter, we delivered high-quality growth with solid progress across middle growth, commercialization, and AI analogy implementation. In October, the Company completed an annual dividend payment of approximately $80 million. Looking ahead, we will continue to focus on strengthening our core business capabilities, while actually fulfill our commitment to shareholders.

That concludes my part of the call, I will turn it over to our CFO, Phil for a review of our financials. Thank you.

Thanks, Jonathan. Hello, everyone. Now let me walk through the details of our financial results for the third quarter of 2025. In this quarter, we delivered high quality and sustainable top-line and bottom-line growth. Our revenue reached RMB2.2 billion this quarter, with growth accelerating to 13% year-on-year. The solid accelerated revenue growth this quarter was primarily driven by higher enterprise user growth, as well as improve monetization level due to the recovering hiring demand.

Our commercialization strategy grounded in ecological balance, enables us to effectively and sustainably improve user payment ratio within a relatively better hiring environment. The growth in paid enterprise customers, which grew by 13% to 6.8 million for the 12 months ended September 30, demonstrates our capability and potential to enhance monetization level.

Revenue from small-sized accounts showed continued growth momentum, with revenue contribution in this quarter, up by 2.2 percentage points, while key accounts growth remained stable. As a result of the structural mix shifting, the overall ARPPU maintained stable.

Moving to the cost side. Total operating costs and expenses decreased by 7% year-on-year to RMB1.5 billion in this quarter. Share-based compensation expenses dropped by 21% year-on-year and 6% quarter-on-quarter to RMB216 million, shrinking for the third consecutive quarters on both absolute amount and percentage of revenue. Excluding share-based compensation expenses, adjusted income from operations grew by 49% to RMB904 million, and our adjusted operating margin reached 41.8%, up by 10.1 percentage points year-on-year and relatively flat quarter-on-quarter.

Cost of revenues decreased by 2% year-on-year to RMB308 million in this quarter. Mainly due to the decrease in operational employee-related expenses as a result of improved operational efficiency as we continue to engage AI in our daily operation. Gross margin went up by 2.2 percentage points year-on-year and 0.4 percentage points quarter-on-quarter to 85.8%. Sales and marketing expenses decreased by 25% year-on-year to RMB394 million during this quarter, as we don't have sports events, marketing campaigns this year. Even excluding the sports sponsorship costs, our adjusted sales and marketing expenses in this quarter decreased 15% year-on-year, while we still maintain a robust user growth. Double confirming the sustainable increase of marketing efficiency due to our strong brand recognition and network effect.

Our R&D expenses decreased by 12% year-on-year to RMB408 million in this quarter. Excluding share-based compensation expenses, our adjusted R&D expenses decreased by 8% year-on-year to RMB331 million in this quarter and stayed relatively flat sequentially.

Our G&A expenses increased by 28% to RMB367 million in this quarter, primarily due to a one-off impairment of intangible assets, partially offset by a decrease in employee-related expenses. Excluding the impairment, our G&A expenses decreased both year-on-year and sequentially.

Our interest and investment income in the quarter increased by 43% year-on-year to RMB228 million, primarily due to a partial disposal of an equity investment and the increased interests from HKD2.2 billion HK shares offering proceeds in early July.

Our net income increased by 67% to RMB775 million in this quarter, with adjusted net income increased by 34% to RMB992 million. Net margin improved by 11.6 percentage points year-on-year to 35.8%, while adjusted net margin reached 45.8%, up 7.2 percentage points year-on-year. Both of them have maintained sustainable improvements over the past six consecutive quarters.

Net cash provided by operating activities reached RMB1.2 billion in this quarter, up 45% year-on-year. As of September 30, 2025, we continue to maintain a strong cash position of RMB19.2 billion.

And now, for our business outlook. For the fourth quarter of 2025, we expect our total revenue to continue the growth momentum and reach between RMB2.05 billion and RMB2.07 billion, with a year-on-year increase of 12.4% to 13.5%.

That concludes our prepared remarks. And now, we would like to answer questions. Operator, please go ahead.

(Operator Instructions) Eddy Wang, Morgan Stanley.

I have two questions. First is what's the overall recruitment demand recently. We noticed that the unemployment rate in September and October is improving. Do you think this is mainly due to the seasonal factors or the improving trend is a leading indicator of macro recovery? What are the driving factors behind BOSS’s accelerating growth in the third quarter?

My second question is that as we are approaching the end of the year, what's your perception of the renew willingness right now? Are there any noticeable trends in customer review rates or the renewed amount? Thank you.

From our data perspective, the recruitment activities from enterprises indeed recovered in the third quarter. The growth rate of monthly active users on enterprise-side is faster compared to the job seeker. The pressure from the job seeker to our platform has been eliminated. If we can recall that back in 2021 and 2022, it was a real very difficult for the fresh graduates to find a job, and in 2023 and the re-opening which everybody was expecting was not happening as expected. So people, especially young people, it's really difficult to find a job. This year, take July for example, the fresh graduates, their expression for job seeking demand compared to the same period last year has declined by double digit

Meanwhile, from the enterprise side, the company, which have posted job opening to fresh graduates increased by double digits. So from the situation from both job seeker and recruiter side, especially from the fresh graduate as an example, that we clearly felt that the pressure, which have been accumulated for several years, released a lot in the third quarter. In the third quarter, not only the ratio between job seekers and recruiter among active users improved compared to last year, the newly added user ratio also improved and also the third quarter is better than the second quarter, which give us continued confidence. So it's quite needed to understand that based on the improving changes of supply and demand, we witnessed the recovery of the enterprise side and improvement of the paying ratio and it also helped with our overall business operations.

So the third quarter last year was a relatively a low base. So from an quarter perspective, we also compare to the same period of 2023. It was worth mentioning that the recovery of the white-collar, for example, the newly added number of job posting for the white-collar position in the third quarter increased significantly when compared to the second quarter, 2023. So based on all the observations and comparisons, I had the confidence to do the conclusion in my prepared remarks that improved hiring demand drove our accelerated revenue growth and that's where my confidence come from.

And now Phil will give you answers regarding the retention and the changes.

So Eddy, companies renews their any contract individually at different point of time, not only at the year-end. Starting from the year, we have witnessed the contract renewal rate improving continuously, particularly in third quarter. In the past -- actually, for the first time in the past two years, a company level net dollar retention rate starting to bottom out. This signals potential turning point from previous downward trajectory. And we believe this is driven primarily by improved Company retention rate and their higher renewal spending.

And we observed that this situation, not only at the key account customers, but also at a small-, medium-sized enterprises. So simply speaking, that the Company's annual contract renewal situation improved sequentially and annually. So this, once again, proved that the hiring demand in the economy has been recovering healthily.

And that's our answer to your question, Eddy.

Wei Xiong, UBS.

Firstly, we observed that our company has continued outgrowing peers for the past few years. So if we look at the enterprise recruiting budget allocation, how much more share can we continue to gain over peers? And how do we sustain that above peers' growth going forward? And looking at next year, if the macro situation improves, will we continue to solidify our leadership? Or is it possible to see higher competition pressure because the peers may step up investments?

And secondly, on margin side, given the high base this year, how do we think about the trend for our margin next year? What are the major investment areas, for example, in terms of sales and marketing? How do we think about the spending plan there? And previously, given the macro uncertainty, we said we want to prioritize profitability. So looking at next year, are we going to continue prioritizing that profitability or lean towards investing a little bit for growth? Thank you for taking my questions.

I would like to start with our number of paid enterprise customers, which grew by 13.3% to 6.8 million by the trailing 12 months. In a matter of fact, the majority, over 80%, of paid enterprise customers are more on the micro enterprises, which we use our own business model and go-to-market strategy developed over the years.

By mentioning this, I would like to clarify on two concepts. Firstly, majority of our main paid enterprise customers are developed by our own rather than gaining shares from our peers. So the second concept is that, it is public data that China has over 40 million small and medium sized enterprise, and our number of paid enterprise customers is still a small percentage of that. That's why even on the relatively tight macro situation, we still have ample room to grow our market share.

And the logical conclusion is that when the market recover, when the demand improved, we can enjoy revenue and business growth. But on a competitive landscape, we need to admit that, for customers both we and our peers are serving, especially under economic pressure situation, then the clients normally will tend to service provider who has better ROI and higher service capability. And we do have some advantages over that.

And about the profitability, which you concerned a lot, the current profit margin you observed, which is actually a strategic selection from our company-level. Last year, we decided that facing all the uncertainties, we want to make sure the only strategy, which is to guarantee the profit. And this year, you have seen our very strong implementation capability and the realized profit number.

Essentially, this very strong margin profile actually reflects our effective double side natural effect, our further penetration into user mindset and very efficient and smooth internal management and operation. And all those result in this high-margin profile. As a result, I can predict that the profit margin for next year will continue to improve. But we will not sacrifice our revenue growth to achieve this profitability. So for the next year, we still want to guarantee at least 35 million newly verified users.

Our pursuit in better serve users and in higher revenue growth actually have higher priority compared to our pursuit of profitability. That's our strategic level view on our profitability. And we hope you and our investors can better understand what the profitability means to us. This is for your reference. Let’s move to the next question.

Timothy Zhao, Goldman Sachs.

Congrats on the solid results. Two questions from my side. first, as Jonathan just mentioned, that we are going to explore more in the different verticals within the recruitment industry. Could the management share more progress and updates on this? And what are the potential impacts to our services and monetization into longer term?

Secondly, is on the AI-related question. We noticed that OpenAI recently announced to enter the recruitment industry and some other AI start-ups like Merker also has been evolving experience model. Could management share your view on the competitive landscape between the traditional recruitment platforms as well as Kanzhun, and the general AI companies in the recruitment industry? Thank you.

So when we are trying to combine AI and the human activities, we had some very interesting findings under our strategic experiments. For example, when a customer who is quite angry and cannot contain his temper, when he is facing customers service people, normally they could be quite aggressive. But when the customer knows that the counterparty is AI, nobody will use very harsh words. So the biggest complaint from the customer to AI is: you are a very stupid AI.

And the second example is for our AI interview coaching products. So a lot of job seekers who have used this service to repeatedly train their interview skills once or once again. But we found out that when the job seeker’s second score is below the first one, then they will stop this repeat. So you can see some very interesting findings, I can show in our daily recruitment. So people can well control his temper when they are speaking with AI and also people who do not want to bother a real human coach very frequently, but you can do that to an AI.

All these results is telling us that when we apply the technology to a very old, very ancient people and job matching, superior and subordinated matching scenario, we need to be very cautious when using the new technologies. So now over more than two years, this really exciting large language model technology haven’t been able to generate a killer level applications in our industry. Actually, we are not in a hurry and it actually give us more time to find a way to coexist with all these developments and the new technologies.

So I just mentioned that on the certain placement scenario, both in blue collar and white collar recruitment such as full cycle hosting recruitment service or semi-cycle hosting recruitment service, we have been very actively to try out new technologies, but also quite cautiously. So far, we have some achievements, but still not in a stage to massively roll out these new features.

We also noticed that some leading technology companies who have been empowered by AI, who has expressed their interest in entering into recruitment industry. So the new technology combined with old industry questions, possibly can generate revolution level industry change. Just like the mobile network and recommendation technology combined with the traditional recruitment demand that have generated Boss Zhipin App, this new generation of online recruitment model.

Up to today, my thinking of that the combination of AI and recruitment service, the key bottleneck is actually not competing power. Merker who has gathered lots of professionals to do the tagging actually show the value of the high-quality data. If the high-quality data is very critical and very important, then Boss Zhipin and other peers within our industry actually have certain level of advantages. Just to leverage on your question, I want to express some observations we noticed from our daily operations. And that's all of our answer to your question, Timothy.

Due to time constraint, that concludes today's question-and-answer session. At this time, I'll 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 us directly. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.