BOSS Zhipin: The small leader firmly sits in the 'Boss' position, but the cycle is just too tough.

$Kanzhun(BZ.US) The Q1 report is out, overall it still presents a business facing headwinds, requiring short-term reliance on its own efforts to maintain its small but beautiful nature.

Details:

1. To C brand mindshare remains solid: Platform users increased by 4.9 million QoQ to 57.6 million in Q1. At the same time, sales expenses excluding equity incentives fell 18% YoY, indicating that with solid brand mindshare, the platform's organic traffic remains considerable.

2. To B recruitment environment has not yet bottomed out: However, the pressure on the enterprise side is somewhat heavier. Q1 revenue grew 13%, slightly exceeding the downwardly revised market expectations from a month ago. But looking at the Q2 guidance (growth of 6.9%-8.5%), the trend shows increasing marginal pressure. Deferred revenue and cash flow metrics also confirm the bottoming pressure, with Q1 calculated cash flow growth at only 6.3% YoY, and the apparent recovery in growth compared to the previous quarter is mainly a base effect.

The only positive is that the number of paying enterprises did not decline, with a net increase of 300,000 QoQ. Judging by the average payment per enterprise, it’s still driven by the stability of large enterprises. Overall, whether it’s enterprise stickiness or C-end user stickiness, as long as it’s improving, it’s not bad—it’s just cyclical pressure due to the broader environment.

3. Continued cost control and efficiency improvement: Given the external pressure, the company can only accelerate internal efficiency. Besides the significant optimization space in sales expenses, Q1 R&D expenses also began to decline YoY. If we exclude incremental AI investments, traditional R&D costs contracted even more sharply. Administrative expenses (excluding SBC) continued to grow due to overseas expansion but remained largely in line with revenue growth, keeping the expense ratio stable.

Final core business operating profit (excluding other income) was 432 million, significantly exceeding market expectations of 329 million, with a profit margin of 22.5%. The steady improvement trend remains unchanged, further confirming BOSS's external competitiveness and internal operational efficiency.

4. Core performance metrics vs. market consensus expectations

Dolphin Research's View

BOSS Zhipin is a company of good quality, but having passed the high-growth stage, it’s increasingly difficult to escape its inherent strong beta attributes. In an era of rapid AI transformation, the market has also begun to worry whether BOSS Zhipin’s long-standing recommendation algorithm advantage will be caught up, as well as the impact of AI on job demand.

Dolphin Research believes that AI’s replacement of job demand is a longer-term issue, and the process of change is still unclear. Since the impact has not yet materialized, the market is unlikely to persistently trade on this point in the short term. As for the second point—AI narrowing the gap between BOSS Zhipin’s algorithm and its peers—while this may happen, BOSS Zhipin’s comprehensive competitive advantage lies not only in its algorithm but also in its dual-sided B and C traffic loop, which other platforms lack. Moreover, the platform’s operational logic is still about selling data rather than monetizing active traffic. Of course, if there are concerns, subsequent changes in traffic share can be tracked.

Therefore, Dolphin Research still believes that BOSS Zhipin is a stock worth picking up without hesitation during valuation pullbacks. However, given that domestic demand policies take time to materialize and the external environment is highly volatile, short-term swing trading may offer a better experience.

So how to trade within the range? Let’s do a simple calculation:

If the macro environment continues to show little improvement, revenue growth may hover around a "mediocre" 10%. However, BOSS Zhipin’s excellent business model means there’s still room for efficiency improvement (the core business requires little additional investment, with ongoing economies of scale).

Last year, the company guided for long-term Non-GAAP operating profit margin to reach 40%, leaving nearly 4 percentage points of optimization from current levels. Assuming a 10% revenue CAGR over 3-5 years, achieving the long-term profit target would imply a 15%-20% profit CAGR. Therefore, during the short-term macro bottoming phase, with difficulty in retelling the growth story (blue-collar expansion), and without additional sentiment boosts, a 15x-20x EV/EBIT is a reasonable valuation range (based on 2025 EBIT slightly above guidance of 3.2 billion yuan, equivalent to $6.7~8.8 billion).

In reality, the previous bottom valuation during tariff-related trading corresponded to less than 15x 2025 Non-GAAP EBIT. Considering that the broader environment will likely remain in a bottoming phase in Q2 and Q3, trading should revolve around this valuation range before more service consumption stimulus in H2. Currently, the $8.3 billion market cap is near the upper limit of the reasonable valuation range at 20x, and the guidance hints at increasing environmental pressure, leaving very little upside.

Detailed Analysis Below

1. To C brand mindshare remains solid

During the Q1 spring recruitment season, job seekers’ activity increased QoQ, with BOSS Zhipin reaching 57.6 million MAUs, a net increase of 4.9 million users, exceeding market consensus. Combined with the continued significant YoY decline in sales expenses, this indicates that current user growth relies more on organic traffic, and BOSS Zhipin’s brand mindshare among users—especially job seekers—is very solid.

Management has always placed high importance on user scale in its strategic goals. This is because more active C-end users attract more B-end enterprises to join and engage. The biggest difference between BOSS Zhipin and traditional recruitment platforms is that it primarily monetizes through algorithm-driven traffic rather than enterprise-initiated search traffic. Thus, BOSS Zhipin naturally requires more active traffic.

Referencing QM data, when comparing BOSS Zhipin to the industry, its traffic share remains stably leading. BOSS Zhipin, 51Job, and Zhaopin basically dominate the C-end traffic of online recruitment platforms.

From annual data, BOSS Zhipin’s new traffic mainly comes from blue-collar workers. The blue-collar industry has developed rapidly in recent years, with high job mobility, meaning both job seekers and employers have relatively higher demand for intermediary platforms to facilitate recruitment. Additionally, the online recruitment penetration rate in the blue-collar sector is low, so marginal changes in user expansion are more noticeable.

2. To B recruitment environment pressure fluctuates

Q1 total revenue was 1.92 billion yuan, up 12.7% YoY. Compared to the downwardly revised expectations from some leading institutions a month ago, this growth is slightly better than expected. Of this, ToB online recruitment service revenue was 1.9 billion yuan, up 12.9% YoY. Other revenue was 22 million yuan, having passed the high-growth 红利期。

Management’s Q2 total revenue guidance is in the range of 2.05~2.08 billion yuan, with YoY growth of 7%~8.5%, indicating further slowdown.

(1) From BOSS Zhipin’s perspective: Large enterprises remain more stable

Q1 paying enterprise accounts totaled 6.4 million, implying an average payment per enterprise up 5.6% YoY. Regular price increases are only a minor factor; the main driver is structural changes in paying enterprises—larger enterprises with higher payments show higher "strategic resilience" in turbulent environments, or due to complex organizational structures, respond more slowly to market changes.

The above characteristics of different enterprises’ coping strategies have been very evident during the recent economic downturn. In 2024, the revenue contribution from large enterprises (Key Accounts) increased significantly, up 3 percentage points compared to 2023.

As of the end of 2024, BOSS Zhipin has penetrated 27% of enterprises in the industry. At this scale, the platform’s ecosystem is quite 稳固。

Q1 calculated cash flow growth was 6%, with the apparent recovery compared to the previous quarter mainly due to base effects. Sequentially, the pressure trend resembles Q1 last year, i.e., weaker than historical performance. Referencing Sensor Tower’s cash flow data, performance since the beginning of this year is similar to last year, with significant cash flow growth pressure.

(2) From the industry perspective: Driven by specific segments, overall slightly warmer YoY

Q1 was influenced by earlier spring recruitment, and the environment was not as bad as initially expected, so urban employment 人口 increased 1.7% YoY. Sequentially, the seasonal improvement was slightly better than last year.

Unemployment metrics showed little change. In terms of total 招聘数量， driven by specific industries like steel, electronics, transportation, and automotive, the recruitment index improved slightly YoY. For BOSS Zhipin, which is more 互联网-centric, this appears somewhat 落后。

3. Self-driven cost control and efficiency improvement

Q1 BOSS Zhipin’s gross margin remained stable at 83.8%. Generally, aside from seasonal fluctuations, it stays stable. Core business operating profit (revenue - cost - sales expenses - R&D expenses - administrative expenses) reached 430 million, exceeding expectations, with a profit margin of 22.5%, up 17 percentage points YoY from 5.3%.

Traditionally, Q1 is when BOSS Zhipin aggressively acquires customers, but this time it stuck to its 年初 cost-cutting strategy, reducing sales expenses by 15% (18% YoY excluding SBC).

Besides the significant optimization space in sales expenses, Q1 R&D expenses also began to decline YoY. Excluding incremental AI investments, traditional R&D costs contracted even more sharply. Administrative expenses (excluding SBC) continued to grow due to overseas expansion but remained largely in line with revenue growth, keeping the expense ratio stable.

For equity incentive expenses, the company expects 单季度 figures below 1 billion this year, with a long-term contraction target—SBC as a percentage of revenue 持续下降，预计三年后达到中个位数，按 5% 计算，相较 Q1 还有 8 个点的下降空间。

Final Non-GAAP operating profit excluding equity incentives was 684 million, with a 35.6% margin. For long-term guidance, last quarter maintained the 2025 Non-GAAP operating profit target of 3 billion yuan, implying a margin of about 37%. Dolphin Research believes that based on Q1 performance, despite revenue pressure, it may still slightly exceed guidance.

The company’s long-term profit margin target is Non-GAAP OPM of 40%. Excluding SBC’s 5%, GAAP operating margin could reach 35%, which is only moderately high in the platform economy. But given BOSS Zhipin’s business model, sales expenses could see more optimization than expected, raising the long-term margin target. Management’s adjustments to this guidance during the earnings call are worth watching.

Dolphin Research articles on "BOSS Zhipin":

Earnings Season

March 11, 2025 call transcript《BOSS Zhipin (Minutes): Signs of recovery after Spring Festival》

March 11, 2025 earnings review《BOSS Zhipin: Strong headwinds don’t obscure its "small but beautiful" nature》

December 11, 2024 call transcript《BOSS Zhipin: Prudent spending to meet targets (3Q24 call minutes)》

December 11, 2024 earnings review《BOSS Zhipin: Not slacking off, just facing strong headwinds》

August 28, 2024 call transcript《BOSS Zhipin: No price war, focusing resources on strengths》

August 28, 2024 earnings review《BOSS Zhipin: Finally, even the "small but beautiful" can’t withstand beta’s "hammer"》

May 21, 2024 call transcript《BOSS Zhipin: Further recovery in large enterprise recruitment (1Q24 call minutes)》

May 21, 2024 earnings review《BOSS Zhipin: Niche small but beautiful, easily 跨越周期》

March 13, 2024 call transcript《BOSS Zhipin: Enterprise user online activity hits new high (4Q23 call minutes)》

March 12, 2024 earnings review《Big difference in perception? BOSS Zhipin "confirms"招聘回暖》