Ladies and gentlemen, thank you for standing by, and welcome to Kanzhun Limited Fourth Quarter and Fiscal Year 2024 Financial Results Conference Call. 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 fourth quarter and full year 2024 earnings conference call. Joining me today are our Founder, Chairman and CEO, Mr. Jonathan Peng Zhao; and our Director and CFO, Mr. Phil 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 does 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 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 will be available on our website. With that, I will now turn the call to Jonathan, our Founder, Chairman and CEO.

Hello, everyone. Thank you for joining our company's fourth quarter and full year 2024 earnings conference call. On behalf of the company’s employees, management team, and the Board of Directors, I would like to extend our sincere gratitude to our users, investors, and friends who have continuously believed in us and supported us. Let me first provide an overview of our financial performance. In the fourth quarter, the company achieved a GAAP revenue of RMB 1.82 billion, up 15% year-on-year. Our adjusted net income, which excludes share-based compensation expenses, reached RMB 720 million, reflecting a 15% year-on-year growth. In the fourth quarter, average verified monthly active users or MAU on the BOSS Zhipin app increased by 28% year-on-year to 52.7 million. For the full year of 2024, the company achieved a GAAP revenue of RMB 7.36 billion, up 24% year-on-year. Adjusted net income, which excludes share-based compensation expenses, reached RMB 2.71 billion, up 26% year-on-year. Furthermore, our adjusted operating income, excluding other income such as wealth management income, was RMB 2.32 billion for the full year 2024, rising by 41% year-on-year. And in 2024, we successfully delivered on our profit commitments. Share-based compensation expenses as a percentage of revenue in 2024 decreased by 2.3 percentage points compared to 2023 and are expected to further decline in both absolute value and the proportion of revenue in 2025. In 2024, we attracted nearly 49.5 million newly added verified users, setting a new record for end user growth. At the same time, we reduced marketing expenses compared to 2023, thanks to our growing brand recognition and enhanced bilateral network effects, which have significantly improved customer acquisition efficiency. As of December 31, 2024, the company has provided service to over 225 million users and 16.6 million enterprises. MAU on the BOSS Zhipin app for the full year reached 53 million, representing a year-on-year increase of 25.3%. In the year, we facilitated over 1.85 billion successful resume exchanges based on mutual consent between job seekers and employers, which is what we refer to as achievement in daily operation. Despite macroeconomic challenges in 2024, the company's user growth-driven revenue growth model remains effective, driving notable improvement in both revenue scale and profitability. Some may argue that we are more data-driven business. However, I would like to emphasize that our business model is so much more than that. To date, user expansion has remained our core growth driver. The structural revenue growth driven by sustained user penetration is clearly reflected in the following key metrics: first, increasing revenue contribution from blue-collar segments. Blue-collar user growth boosted their revenue contribution to overall revenue in 2024 to 38%. Notably, the manufacturing sector emerged as a bright spot for blue-collar growth, posting the fastest growth rate among all industries. Second, the revenue contribution from non-Tier 1 cities continues to grow. Third, the revenue contribution from micro and small enterprises continues to rise. Micro and small enterprises are defined as businesses with fewer than 20 employees. These revenue gains stem from structural shifts in user growth. At the core of this success is the company’s commitment to enhancing the user experience, which is underpinned by our continuous product and service optimization. It's not hard to imagine that within the online recruitment service industry, blue-collar workers, particularly those in the manufacturing sector, lower-tier cities, and micro-small enterprises are among the more challenging user groups to serve. Breakthroughs and growth in these areas would not only validate our user-first strategy but also highlight the significant potential for future user expansion and revenue growth. Additionally, we have observed that recruitment demand from white-collar and large enterprises has stabilized. Enterprises with over 10,000 employees demonstrated the fastest quarter-on-quarter revenue growth in the fourth quarter. I want to highlight one more aspect of our products and services. Many investors and friends have shown interest in the company’s exploration of closed-loop services initiatives, which we do have progress in. In 2024, the number of enterprises which we have provided placement-like services to was near 40,000. The total number of paid enterprise customers reached 6.1 million, representing a year-on-year increase of 17.3%. While the active user paying ratio remained stable, the average revenue per paying user or ARPPU achieved year-on-year growth, both for the full year and in the fourth quarter. Now let me introduce some AI implementation. We faced rollout in version 13.030 of the BOSS Zhipin app, which was released across major app stores around March 7. I'll start with our AI to seek or AI for job seekers site updates. First, on job seekers' interaction for job search, we have added an AI-powered question-based search function, something many of you are likely already familiar with, and also kept our traditional keyword search. The search engine is powered by both our proprietary model called Nanbeige and the deployment of DeepSeek-R1. The second thing on the job seeker side is we have released an AI bot to help job seekers with interview coaching. This feature primarily targets those who have graduated within the past 3 years. This AI bot has been trained on millions of real interviews, and its core skill is that it is very good at interviewing. As such, there are lots of things it can do. We will go step by step. Now let's take a look at AI's true business, which is the recruiter site. Our first application for enterprise users is an AI agent. Recruiters participating in the beta testing can communicate their needs to the agent, which can perform the following tasks: one, understand the recruiters' specific requirements; two, generate a curated list of candidates from our database; three, offer justification for its recommendations; four, deliver these results according to the recruiters' available schedule. For the second application, a better version has been launched to a selected group of blue-collar enterprise users. The process unfolds as follows: once the recruiter selects a candidate they deem suitable and explicitly express their willingness to proceed by saying, 'I’m willing to give this candidate a try,' the AI handles all subsequent communication on behalf of the recruiter. The communication process continues until the AI either obtains the job seeker's confirmation of interest through the exchange of contact information or the job seeker rejects the outreach of the recruiter who is represented by AI. On the operational front, AI has huge potential to improve management efficiency and reduce costs. For instance, leveraging AI for security review has improved our audit efficiency by 30%. Over the past 2 years, as our user base has expanded rapidly, the workload related to user security protection has increased accordingly. However, AI has enabled us to manage this without a proportional increase in staffing. Next, I will briefly update you on this year's spring recruitment season. Following the spring festival, the recruitment market continued its steady recovery trend that began towards the end of 2024. Post-Chinese New Year in February, the company's key metrics, including the number of active users, active job postings, and new job postings all reached historical highs. The average daily new job postings after Chinese New Year increased by more than 10% compared to the same period last year. Peak daily active users on the BOSS Zhipin app reached approximately 20 million, which are also historical highs. A very important highlight on the supply and demand side is that the job seeker to enterprise user ratio among new users improved compared to the same period last year, extending the positive momentum that began in November 2024. From an industry perspective, manufacturing, logistics, automotive, healthcare, education, and professional services have exhibited strong performance. In terms of job type, blue-collar positions have grown faster due to our user expansion, while white-collar roles have also demonstrated an improving year-on-year trend. Notably, since the spring festival, average daily posting of AI-related jobs have surged by over 60% year-on-year, signaling a revitalizing live ecosystem for emerging business. This growth in AI-related roles in turn has fueled good sequential momentum in demand for product and technical positions since the spring festival. Last but not least, we are very committed to shareholder returns. In 2024, the company repurchased approximately $229 million worth of shares, accounting for 3.7% of total outstanding shares. This underscores our confidence in the company's long-term growth. And that concludes my part of the call. I will now turn it over to our CFO, Phil, for the review of our financials. Thank you.

Thanks, Jonathan. Hello, everyone. Now let me walk through the details of our financial results for the fourth quarter and full year of 2024. We delivered solid financial results for the fourth quarter and the full year of 2024. The recruitment market environment in 2024 was challenging, but we are pleased to see that recruitment demand gradually stabilized towards the end of the year. Under such conditions, our revenues grew by 15% year-on-year to RMB 1.8 billion during this quarter, slightly beating our expectations, and grew by 24% to RMB 7.4 billion for the full year. Our number of paid enterprise customers for 2024 expanded to 6.1 million marking a 17% year-on-year growth. ARPPU for the quarter was up by 6.8% year-on-year and 3.9% quarter-on-quarter, marking a fourth consecutive quarterly growth. ARPPU for the full year reached RMB 1,200, up by more than 5% year-on-year. It's a result of our efforts to explore customer needs and provide more valuable services. Moving to the cost and expenses side. Our total operating costs and expenses increased by 7% year-on-year to RMB 1.5 billion during the fourth quarter and by 15% to RMB 6.2 billion for the full year. Total share-based compensation expenses decreased by 6% year-on-year in the quarter. As a percentage of revenue, share-based compensation went down by 4 and 2 percentage points, respectively, for the quarter and the full year. Excluding share-based compensation expenses, our adjusted income from operations grew by 27% to RMB 659 million and 41% to RMB 2.3 billion, respectively, for the quarter and the full year. The adjusted operating margin for the fourth quarter reached a quarterly historical high of 36.1%, while the annual adjusted operating margin improved by 4 percentage points to 31.5% in 2024, continuing to demonstrate our strong operating leverage and beating our target. Cost of revenues increased by 14% year-on-year to RMB 314 million during the fourth quarter and by 17% to RMB 1.2 billion for the full year. This increase was primarily due to increases in payment processing costs, server and bandwidth costs, and other business-related costs alongside with the growth of revenue and user base. It's worth mentioning that operational employee-related costs as a percentage of revenue decreased by 0.9 percentage points year-on-year, providing evidence of AI application to improve operating efficiency. As a result, our gross margin went up by 0.9% to 83.1% in 2024. Sales and marketing expenses decreased by 2% year-on-year to RMB 426 million during this quarter and increased by 4% to RMB 2.1 billion for the full year. Our marketing expenses, including Olympic campaign sponsorship, decreased by 10% year-on-year despite a higher new user growth versus the prior year. We believe this improving trend of user acquisition efficiency will continue in 2025 and will lead to a further decrease in our marketing expenses on both the absolute amount and as a percentage of revenue. R&D expenses increased by 2% year-on-year to RMB 440 million this quarter and by 18% to RMB 1.8 billion for the full year. This increase was primarily driven by our further investments in AI infrastructure, which incurred AI-related server depreciation costs and cloud services fees. G&A expenses increased by 23% year-on-year to RMB 276 million during this quarter and by 35% to RMB 1.1 billion for the full year. This increase was mainly due to increased employee-related expenses and investment in new business initiatives. Our net income reached RMB 444 million in the quarter and RMB 1.6 billion in 2024. Our adjusted net income increased by 15% year-on-year to RMB 722 million in the fourth quarter and 26% year-on-year to RMB 2.7 billion for the full year. Adjusted net margin continued to expand in the full year and reached a historical high of 36.9%. Net cash provided by operating activities amounted to RMB 956 million during the fourth quarter and increased by 16% year-on-year to RMB 3.5 billion for the full year. Our cash position stood at RMB 14.7 billion as of December 31, 2024, despite share buyback spending. The robust cash reserves, coupled with strong operating cash flows, strategically position us well to support future growth initiatives and shareholder returns. During this quarter, we repurchased 6.7 million ADS for a total consideration of USD 93 million. This led to a 1.1% decrease in our total outstanding shares as compared to September 30, 2024, even after counting in shares issued for our share-based awards. Combined with shares repurchased in the preceding quarters, we have spent a total of USD 229 million for the share repurchases in 2024, representing substantial progress in our share repurchase programs. Now for our business outlook for the first quarter of 2025, as we witnessed recruitment spending bottoming out from last quarter and showing an upswing trajectory post the Chinese New Year, we expect our total revenues to be between RMB 1.9 billion and RMB 1.92 billion, a year-on-year increase of 11.5% to 12.7%. With that, that concludes our prepared remarks. Now we would like to answer questions.

We will now take our first question from the line of Eddy Wang from Morgan Stanley.

I have two questions. The first one is that could you please share your thoughts on how the AI boom driven by the DeepSeek might impact the online recruitment industry? And this includes the transformations in the industry technology and products as well as its influence on the market recruitment demand, for example, the hiring surge in the tech industry. What are our competitive advantages in this context? The second question is we actually have made a quite big significant investment in AI already. So with the emergence of DeepSeek, will this promote any adjustments to our AI R&D investment strategy? And what is our future roadmap for AI product development?

Thank you for your question. Let me first talk about the implication DeepSeek has on the online recruitment industry. First, especially for the demand side, in short term, we do see some changes. For example, on the recruiter side, as I just mentioned, the average daily newly added AI-related jobs surged by more than 64%, which is quite rare. The existing jobs became more active too. So the average daily online active job number of AI-related jobs increased by more than 24%, which is also quite a big number. On the job seeker side, of course, everyone is trying to look for opportunities in this AI trend. So on the numbers, we find that the active search results and active search keywords with AI increased by more than 34% year-on-year. I believe these changes will deeply affect the future of the recruitment industry. I will talk about one positive side and maybe one slightly negative side. On the positive side, this trend of AI has very strong understanding of human natural language and generates human natural language. This can deeply affect the way people find a job and the way a recruiter writes a job description. In terms of description and expression of resumes and job descriptions, this wording format in front of AI is very simple and easy to understand. However, I have a concern as well. We have over 200 million of AI-generated resumes and 40 million of AI-generated job descriptions. In this situation, the meaning behind all those resumes and job descriptions and what our machines are matching becomes questionable. There's a concern about the quality of content generated by AI as more people begin using it. Now this mass pollution of resumes or job descriptions has not fully started yet, so we need to be alert and prepared for that. Regarding our advantages, I believe we do have some. We have been continuously investing in AI science for the past 2 years. We also have our own pretrained model Nanbeige, which is quite effective. We have many AI application scenarios and accumulated unique user behavior and vertical-related data. As for further investment in AI development, I have been considering this recently. In early 2023, the AI trend seemed to spur out of nowhere, so we have made significant investments into GPUs. Currently, we have stored enough computing power. We have bought many GPUs before the restriction order on GPU purchasing. However, given the increased demand for GPUs and the reality of technological investment, our investment strategy may change. The emergence of DeepSeek has given us confidence in our investment strategy moving forward. As changes promote progress, we will continue to focus more on AI application and AI agents and explore further developments in AI science. Regarding our product roadmap, we will continue our exploration of AI application agents, and you will see upcoming launches of new services. On the revenue side, we have one product which has been available for more than a year and is highly desired because it can help recruiters increase efficiency. That’s my answer to your questions. Operator, let’s move on to the next question.

Our next question comes from the line of Timothy Zhao from Goldman Sachs.

I have two questions here. First, as you have shared a lot about the recruitment trend year-to-date, especially after Chinese New Year, could management share more detailed color about the recruitment demand between different enterprise sizes and also different industries? And more specifically, how should we think about the sustainability of the demand outlook? The second question is regarding the paying ratio and ARPPU trend on the platform. For this year, how we are going to plan to increase the monetization rate or ARPPU on this platform?

So this year's spring recruitment season compared to last year, we find that the sequential trend has been quite strong. One number is that the online active job postings before and after the spring festival saw a sequential growth of more than 173%, while last year's was 141%. White-collar industry is stably recovering. The highlight is that AI-related jobs have been helping with some subsectors of the Internet to start regrowing. One key point is that compared to last quarter, this quarter, our overall cash inflow has shown an accelerating growth trend. On the ARPPU side, I don’t have a very strong motive to increase ARPPU aggressively. I am witnessing recovery across different industries and company sizes, so I will give them space to improve together. So last year, we saw some good growth on the ARPPU side, but I don’t have very big aggressive plans to accelerate monetization; I want to wait for things to improve together. I would rather say we are able to provide service to different kinds of users, especially enterprises. Since the COVID reopening, we have served over 6 million new enterprises, and the annual number of paid enterprise customers increased by 1.5 million. I hope this data can illustrate our view on growth potential. That’s my answer to your question. Operator, let’s move on to the next question.

Our next question comes from the line of Wei Xiong from UBS.

Firstly, I want to ask what's our current customer acquisition cost? And how does it compare to a few years ago? If we look at 2025, are there any major marketing or promotion plans that we should be aware of? Given the continued margin expansion over the past few years, how should we think about the long-term sustainable margin level for the company? Secondly, on the blue-collar business, I am wondering if management could share the revenue contribution and client feedback from our current program. What's our strategic focus and planning for our blue-collar business among other new initiatives for this year? How should we think about the change in revenue mix from the blue-collar segment?

I'll answer the first question. Simply speaking, there's no big marketing campaign ahead in 2025. We are still at a fast user growth stage. Our user growth target for this year is set at over 35 million for 2025. In terms of the selling and marketing to our business, this is still with business leverage. Traffic acquisition per user today compared with prior years is much lower mainly due to our improved brand awareness. As such, the overall selling and marketing as a percentage of total revenue, we continue to see this percentage going down. Other major cost and expense items like COGS, sales expenses relative to revenue, and also R&D expenses are all well under control. Looking ahead, the gross and operating margins are all expected to further improve for the full year. We hope to secure high-quality bottom line growth first and then actively look for additional upsides. We've set our non-GAAP operating profit target at RMB 3 billion for 2025, which is 30% higher than RMB 2.3 billion non-GAAP operating profit for 2024. Lastly, our share-based compensation expenses, as I just mentioned in the prepared remarks, will decline sequentially, which makes our GAAP-based bottom line net profit with even higher growth. That’s my comment on margins and our financial focuses for 2025.

Thank you for remembering the Hailuo project, which we have been discussing for several years. The Conch select Hailuo project is aimed at those agents with massive hiring demand. Last year, we saw the contract amount for Hailuo exceed RMB 200 million. Any new business that contributes more than 2% of our revenue and is growing is valuable input. In the fourth quarter, the accumulated agencies who have joined Hailuo improved by 21% sequentially and have served more than 40 million job seekers. With the development of AI, I believe things might change. In the past, well-trained agents always had advantages, but the new entrants with AI may have a more equal footing now. When we initiated Hailuo, we didn’t foresee this. As AI technology evolves, we will keep you updated on progress and continue to invest in and explore closed-loop services and placement-related services. That’s my answer to your question.

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 our team directly or Investor Relations. Thank you.

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