Kanzhun: The environment remains volatile, but the essence of being small and exquisite remains unchanged.

$Kanzhun(BZ.US) The second quarter report has been released. Although the performance is not perfect, the flaws do not overshadow the strengths. Once again, it proves that in a headwind environment, a reliable and small yet beautiful team will increasingly highlight its competitive advantages.

Specifically:

1. User share continues to rise: In the second quarter, the platform's users increased by 3 million quarter-on-quarter, reaching 60.6 million. Meanwhile, sales expenses for promotion increased by 10% year-on-year, returning to normal levels. However, due to significant optimization of sales personnel, overall marketing expenses still fell by 23% year-on-year.

Compared to absolute values, Dolphin Research focuses more on market share. According to Questmobile data, BOSS 's user share continues to rise.

Since May, Yupao Zhipin, characterized by direct phone chats and targeting the blue-collar market, has increased its advertising in first- and second-tier markets, striving to penetrate the white-collar market. Dolphin Research believes there is no need to worry too much for now, as Yupao poses little competitive threat to BOSS Zhipin in terms of recommendation algorithms, the completeness and matching of the white-collar industry ecosystem.

2. Revenue will emerge from the bottom: On the enterprise side, the overall environment remains challenging, and recruitment budgets are still shrinking. However, while beta is not performing, alpha is stepping up—thanks to online penetration and BOSS Zhipin's own competitive advantages, BOSS Zhipin has already emerged from the bottom of the revenue cycle.

In Q2, the number of paying enterprises increased by 100,000 quarter-on-quarter, with total revenue just under 2.1 billion, a year-on-year growth of only 5.7%, which is below expectations and seems to contradict the company's guidance of "bottoming out in Q4 last year and warming up quarter by quarter." Dolphin Research believes that the time difference in the Spring Festival leading to a misalignment in spring recruitment (earlier in 2025 than in 2024) may be one factor, and the impact of tariffs in April may also have had a delayed effect (in May, the company believed tariffs had no impact on foreign trade enterprise recruitment).

However, from the third quarter revenue guidance (growth rate of 11%-13%) and Sensor Tower data, Q3 revenue is accelerating quarter-on-quarter. In the conference call, the company also mentioned that revenue continued to warm up in July and August, and as of now, the third quarter revenue growth is expected to be around 15%, in line with market expectations.

3. Operational efficiency continues to improve: A reliable management team often maintains high operational efficiency, especially during the mature development phase when growth slows. In the second quarter, BOSS Zhipin continued to improve efficiency against the trend. In addition to the aforementioned sales expenses, R&D expenses also continued to decline in the second quarter. Management expenses increased by 19% year-on-year, mainly due to investment in overseas business expansion.

Ultimately, the operating profit of the core business (excluding other income) was 650 million, with a profit margin of 22.5%, an increase of 8 percentage points quarter-on-quarter, significantly higher than market consensus, confirming BOSS's external competitiveness and internal operational efficiency.

4. New dividends and buybacks: The advantage of the business model is reflected in the increasing cash on the books, and a generous and reliable management team will share the profits with shareholders.

As of the end of Q2, it reached 2.2 billion USD (including short-term deposits and investments), and this time, an annual dividend plan was initiated, with 80 million USD (0.168 USD/ADS) to be distributed in October. Meanwhile, last year's approved buyback was extended by one year to August 2026, during which up to 250 million USD will be repurchased. In total, the shareholder return rate reaches 3%.

5. Comparison of core performance indicators with market consensus

Dolphin Research's View

Overall, Q2 performance has its pros and cons, but the strengths outweigh the flaws, still demonstrating BOSS Zhipin's strong alpha in adversity.

Since the announcement of the Hong Kong stock issuance at the end of June, BOSS Zhipin's overall liquidity has significantly improved, thereby driving active stock prices and early valuation recovery. However, this round of increase is also supported by fundamentals—despite environmental pressures, BOSS Zhipin's market share is increasing on both the user and enterprise sides, driving a recovery in revenue (mobile iOS).

Last quarter, Dolphin Research estimated that this year's Non-GAAP operating profit could reach 3.2 billion (exceeding the company's guidance of 3 billion), and based on the latest second-quarter performance, Dolphin Research believes the certainty of achieving this has increased, and under positive expectations, it can be raised to 3.5 billion. Switching to next year's valuation, if growth continues at a rate of 15-20% (implying revenue growth of 10-15% and profit margin improvement), then at an 18x EV/EBIT valuation, it would be around 9.3 to 10.6 billion, and the current valuation is within this reasonable range.

Although Dolphin Research has always said that BOSS Zhipin is a company of good quality, especially in terms of business model and management team reliability, given the repeated pressure of the macro environment (according to the Cheung Kong Graduate School of Business Enterprise Index, June faced continued deterioration expectations), it is still more suitable to buy on dips unless there is a sustained positive trend in macro data, especially in enterprise investment-related indicators, leaving a certain safety margin.

Detailed Interpretation Below

1. User-side share continues to rise

In the second quarter, a recruitment off-season, BOSS Zhipin's monthly active users still increased by 3 million, reaching 60.6 million. Although below market expectations, Dolphin Research believes changes in market share are more important. According to Questmobile data, BOSS Zhipin has always maintained a user scale advantage among leading platforms, reflected in a continuous increase in share proportion.

2. The environment still has pressure, but BOSS Zhipin has bottomed out and warmed up

Total revenue in the second quarter was 2.1 billion, a year-on-year increase of 9.7%, basically in line with expectations. Among them, ToB network recruitment service revenue was 2.08 billion, a year-on-year increase of 9.8%. Other income was 2.48 billion, a year-on-year increase of 3%.

Management's guidance for total revenue in the next quarter is in the range of 2.13 to 2.16 billion, with a year-on-year growth rate of 11% to 13%, reflecting a recovery in growth as the base slows down.

(1) From BOSS Zhipin's perspective: Short-term tariffs have a minor impact

In the second quarter, the number of paid enterprise accounts was 6.5 million, an increase of 100,000 quarter-on-quarter, with the implied average payment amount per enterprise increasing by 3.4% year-on-year. Apart from regular price increases for specific industries, it still reflects that large enterprises have a more "stable" recruitment pace compared to small and medium-sized enterprises during periods of environmental turbulence.

The calculated revenue growth rate in the second quarter was only 5.7%, not only below expectations but also seemingly contrary to the company's guidance of "bottoming out in Q4 last year and warming up quarter by quarter." Dolphin Research believes that the time difference in the Spring Festival leading to a misalignment in spring recruitment (earlier in 2025 than in 2024) and the impact of April tariffs on foreign trade and manufacturing blue-collar industries may be factors.

However, since June, Sensor Tower data shows that BOSS Zhipin's revenue has resumed growth, and the company has stated that as of August, Q3 overall revenue growth is 15%, in line with the original market expectations. Therefore, the miss in the second quarter can be temporarily ignored, and there is no need to adjust Q3 and full-year expectations accordingly.

(2) From an industry perspective: Cautiously optimistic

However, from macro indicators (employment indicators, enterprise forward-looking indicators, PMI, and other economic indicators), Dolphin Research is not optimistic about the second half of the year after the graduation season, except for a few industries (such as the highly prosperous AI industry, policy-stimulated catering and other blue-collar industries), most are expected to continue to fluctuate for a while, and policy releases should continue to be monitored.

3. Always maintain efficient operations

In the second quarter, BOSS Zhipin's gross margin remained stable at 85.4%, significantly improved compared to previous years. The operating profit of the core business (revenue-cost-sales expenses-R&D expenses-administrative expenses) was 650 million, exceeding expectations, with a profit margin of 31%, a significant improvement of 13 percentage points compared to last year's 18%.

The optimization points in expenses mainly lie in sales expenses and R&D expenses, mainly reflected in personnel reduction, as can be seen from the overall decline of 30% in SBC expenses. Expenses other than personnel salaries basically resumed growth in the second quarter.

Ultimately, the Non-GAAP operating profit after excluding stock-based compensation was 750 million, with a profit margin of 35.6%, consistent with the previous quarter. In terms of long-term guidance, the target set at the beginning of the year for this year's Non-GAAP operating profit is 3 billion, implying a profit margin of about 37%, Dolphin Research believes that based on the situation reflected in Q2, the possibility of beating the guidance has greatly increased.

The company's long-term profit margin target is Non-GAAP OPM 40%, if the 5% SBC is deducted, the GAAP operating profit margin can reach 35%, which is only considered medium to high in the platform economy, but for BOSS Zhipin's business model, sales expenses are expected to have more optimization than expected, thereby raising the long-term profit margin target. It is worth paying attention to whether the management will have new adjustments to this guidance in the conference call.

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