Boss Zhipin (Minutes): Signs of Recovery After the Spring Festival
The following is the $Kanzhun(BZ.US)$BOSS ZHIPIN-W(02076.HK) fourth quarter earnings conference call minutes. For financial report interpretation, please refer to《 BOSS Zhipin: Facing Headwinds, Still Maintaining the "Small but Beautiful" Essence 》
1. Review of Key Financial Information
1. Fourth Quarter Financial Performance
In the fourth quarter of 2024, the company's GAAP revenue reached RMB 1.82 billion, a year-on-year increase of 15%; adjusted net income (excluding stock-based compensation expenses) reached RMB 720 million, a year-on-year increase of 15%.
The number of paid enterprise clients increased to 6.1 million in 2024, a year-on-year increase of 17%. This quarter's revenue slightly exceeded expectations, with the client pool growing by 6.8% year-on-year and 3.9% quarter-on-quarter, achieving growth for four consecutive quarters.
2. Annual Financial Performance
In 2024, the company's GAAP revenue reached RMB 7.36 billion, a year-on-year increase of 24%; adjusted net income reached RMB 2.71 billion, a year-on-year increase of 26%; adjusted operating income reached RMB 2.32 billion, a year-on-year increase of 41%.
The adjusted operating profit margin increased to 31.5%, and the adjusted net profit margin reached a historical high of 36.9%.
3. Cost and Expense Situation
In the fourth quarter, total operating costs and expenses increased by 7% year-on-year to RMB 1.5 billion, and for the entire year, it increased by 15% to RMB 6.2 billion.
The proportion of stock-based compensation expenses to revenue decreased by 4 and 2 percentage points for the quarter and the year, respectively.
Sales and marketing expenses decreased by 2% year-on-year to RMB 426 million this quarter, while for the entire year, it increased by 4% to RMB 2.1 billion, with marketing expenses (including Olympic event sponsorship) decreasing by 10% year-on-year.
Research and development expenses increased by 2% year-on-year to RMB 440 million this quarter, and for the entire year, it increased by 18% to RMB 1.8 billion, mainly due to further investment in AI infrastructure.
General and administrative expenses increased by 23% year-on-year to RMB 276 million this quarter, and for the entire year, it increased by 35% to RMB 1.1 billion, mainly due to increased employee-related expenses and investments in new business initiatives 4. Cash Flow and Share Buybacks
Net cash provided by operating activities in the fourth quarter was RMB 956 million, an annual increase of 16% to RMB 3.5 billion.
As of December 31, 2024, cash reserves reached RMB 14.7 billion. In 2024, the company repurchased approximately USD 229 million of its shares, accounting for 3.7% of the total outstanding shares, with 6.7 million American Depositary Shares (ADS) repurchased in this quarter for USD 93 million, reducing the total outstanding shares by 1.1% compared to September 30, 2024.
II. Detailed Content of the Earnings Call
2.1 Key Information from Executives
1. User Data
User Growth Situation: In 2024, nearly 49.5 million new verified users were attracted, setting a new annual user growth record. The average monthly active users (MAU) of the BOSS Zhipin APP reached 53 million for the year, a year-on-year increase of 25.3%; in the fourth quarter, MAU grew by 28% year-on-year to 52.7 million. As of December 31, 2024, the company has served over 225 million users and 16.6 million enterprises.
User Behavior Data: In 2024, over 1.85 billion successful resume exchanges based on mutual agreement between job seekers and employers were facilitated. The recruitment market continued to recover after the Spring Festival, with key indicators such as active user numbers, active job postings, and new job postings reaching historical highs in February. The average daily new job postings after the Spring Festival increased by over 10% compared to the same period last year, with peak daily active users of the BOSS Check-in APP reaching approximately 20 million, and the ratio of job seekers to enterprise users among new users improved compared to the same period last year.
2. Business Structure and Market Trends
Changes in Business Structure: The revenue growth model driven by user growth is effective, leading to significant improvements in revenue scale and profitability. The growth of blue-collar users contributed to 38% of overall revenue in 2024, with manufacturing being the highlight of blue-collar growth, showing the fastest growth rate; revenue contributions from non-first-tier cities continued to increase; revenue contributions from micro and small enterprises (fewer than 20 employees) continued to rise. Meanwhile, recruitment demand from white-collar and large enterprises (more than 10,000 employees) has stabilized, with the fastest quarter-on-quarter revenue growth in the fourth quarter.
Emerging Business Trends: Since the Spring Festival, the average daily posting volume of AI-related positions has surged by over 60% year-on-year, driving good growth momentum in product and technology job demand. From an industry perspective, manufacturing, logistics, automotive, healthcare, education, and professional services performed strongly; from a job type perspective, blue-collar positions grew faster due to user expansion, while white-collar positions also showed an improving trend year-on-year.
3. Product and Service Innovation
Application of AI on the Job-Seeking Side: A new version of the BOSS Zhipin APP was released around March 7 in major app stores, adding an AI-driven question-based search function for job seekers while retaining traditional keyword search, with the search engine supported by the self-developed model "NanBeiGe" and DeepSeek R1 It also launched an AI robot to provide interview coaching for job seekers who graduated in the past three years, which has been trained on millions of real interviews.
Application of AI in recruitment: For enterprise users, an AI agent has been launched, allowing recruiters participating in the test to communicate their needs to it. The AI agent can understand specific requirements, generate a list of candidates from the database, provide reasons for recommendations, and deliver results according to the recruiter's schedule. A beta application has also been launched for some blue-collar enterprise users. When recruiters select suitable candidates and express a willingness to try, the AI will communicate on their behalf until it receives confirmation of the job seeker's interest or a rejection. Additionally, using AI for security audits has improved audit efficiency by 30%.
4. Business Outlook
First-quarter revenue expectations: Given that recruitment spending rebounded from a low point last quarter and has shown an upward trend after the Spring Festival, total revenue in the first quarter of 2025 is expected to be between RMB 1.9 billion and RMB 1.92 billion, representing a year-on-year growth of 11.5% to 12.7%.
2.2 Analyst Q&A
Q: How will the AI boom driven by DeepSeek affect the online recruitment industry, including changes in industry technology and products, as well as the impact on market recruitment demand (e.g., high demand in the tech industry)? In this context, what is the company's competitive advantage?
The company has previously made significant investments; will the emergence of DeepSeek prompt the company to adjust its AI R&D investment strategy, and what is the future roadmap for the company's AI product development?
What impact does DeepSeek have on the online recruitment industry?
A: In the short term, there are some changes from the demand side.
On the recruitment side, the average daily increase in AI-related positions has surged over 64%, and existing positions are also more active, with the average daily number of online active AI-related positions increasing by over 24%. On the job seeker side, the number of proactive search keywords containing AI has increased by over 34% year-on-year. These changes will profoundly impact the future of the recruitment industry, with both positive and negative aspects.
On the positive side, AI can understand and generate natural language well, making the format of resumes and job descriptions simple, transparent, and easy to understand in front of AI. On the negative side, there are over 200 million AI-generated resumes and 14 million AI-generated job descriptions on the platform, raising concerns about the issues brought by a large amount of AI-generated content:
For example, in our country, more and more people are using artificial intelligence to search for results and write articles, and there will be an increasing number of fabrications by artificial intelligence, which is a historical fact that did not exist before. And with over 1,000 repetitions, this will become a fact. So many things are included, and large-scale revenue monetization has not yet begun.
Q: What advantages does the company have in responding to AI challenges?
A: The company has continuously invested in AI science over the past two years, has its good pre-trained models, many application scenarios, and has accumulated a large amount of unique user behavior and vertically relevant data.
Q: What are the company's future investment plans for AI development? A: At the beginning of 2023, the company spent over $1 billion to purchase GPUs, and currently has sufficient computing power in reserve. Many GPUs were purchased before the GPU purchase restrictions were implemented. Last year, due to the overall environment, more GPUs and greater computing power were needed, which somewhat limited technological investments, and no more purchases will be made in the future. DeepSeek has provided significant insights into the company's investment strategy, and in the future, the company and many others will focus more on AI applications and AI agents, while continuing to explore the field of AI science.
Q: What are the company's current products and services, and plans, and what should be noted in terms of revenue?
A: The company currently has an AI product aimed at recruiters that has been launched for over a year. This product can improve the efficiency of both parties by 60% and save over 40% of time, which is expected to be well-received by recruiters. In the future, the company will continue to explore AI application agents and will soon launch new services.
Q: Can you share detailed information about the recruitment needs of different enterprise sizes and industries, and how do you view the sustainability of this demand?
A: Compared to last year, the spring recruitment season this year shows a strong month-on-month trend. The month-on-month growth of online active job postings before and after the Spring Festival exceeded 173%, while last year it was 141%. The white-collar industry is steadily recovering, and AI-related jobs are driving growth in some sub-industries of the internet. Compared to the previous quarter, overall cash flow shows an accelerating growth trend.
Q: What is the trend of the platform's payment rate and average revenue per user (ARPU) this year, and how do you plan to improve the platform's monetization rate?
A: There is no strong motivation to aggressively increase ARPU. As different industries and types of companies recover, there will be room for mutual improvement. Last year, ARPU saw good growth, and the payment rate has stabilized. There are no aggressive monetization plans, but rather waiting for the environment to improve collectively. The focus is more on whether services can be provided to different types of users, especially enterprises. In the past two years since the pandemic restrictions were lifted, over 6 million new enterprises have been served, and the number of annual paying enterprise customers has increased by 1.5 million, reflecting the growth potential of the business.
Q: What is the current customer acquisition cost for the company, and how does it compare to a few years ago? Are there significant marketing or promotional plans for 2025? Considering the continuous expansion of profit margins in recent years, how do you view the company's long-term sustainable profit margin level?
A: There are no large marketing activities planned for 2025. The company is still in a rapid user growth phase, with a user growth target set at over 35 million for 2025. Currently, the cost of acquiring traffic per user is much lower compared to previous years, mainly due to increased brand awareness.
Overall, the percentage of sales and marketing expenses relative to total revenue continues to decline. Other major cost and expense items, such as sales costs and R&D expenses, have been well controlled. Looking ahead, the annual gross margin and operating profit margin are expected to further increase. The full-year non-GAAP operating profit target for 2025 is set at 3 billion RMB, a 30% increase from 2.3 billion RMB in 2024. Additionally, stock-based compensation expenses will decrease quarter by quarter, which will lead to higher growth in GAAP-based net profit.
Q: Can the management share the revenue contribution and customer feedback of the Aito plan? What are the strategic priorities and plans for the blue-collar business this year, and how do you view the changes in the revenue structure of the blue-collar business?
A: The Aito plan is a project aimed at agents with a high demand for recruitment. Last year, the total contract amount exceeded 200 million yuan, and a new business revenue contribution of over 2% is a good and valuable investment. In the fourth quarter, the number of signed agents increased by 21% quarter-on-quarter, covering over 140 million job seekers. With the development of artificial intelligence, there may be some changes starting from March. In the past, well-trained personnel through agencies had advantages, while inexperienced newcomers did not, but now, in employment, artificial intelligence may level the playing field. The company will continue to update progress and invest in exploring cost services and placement-related services.
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