Kanzhun Ltd - ADR Stock

Thank you for standing by, and welcome to Kanzhun Limited Second Quarter 2026 Financial Results Conference Call. [Operator Instructions]

Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. [ Laura Zhan ], Senior Manager of Investor Relations. Please go ahead, ma'am.

Thank you, operator. Good evening, and good morning, everyone. Welcome to our second quarter 2023 earnings conference call. Joining me today are our Founder, Chairman and CEO, Ms. Jonathan Peng Zhao; and our Deputy CFO, Ms. Wenbei Wang.

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 did not undertake any obligation to update the 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 reconciliation of GAAP to non-GAAP financial measures, please see earnings release issued earlier today. In addition, a podcast replay of this conference call will be available on our website at ir.kanzhun.com. With that, I will now turn the call to Jonathan, our Founder, Chairman and CEO.

[Foreign Language]

[Interpreted] Hello, everyone. Welcome to the company's second quarter 2026 earnings call. On behalf of all our employees, management and Board of Directors, I would like to express our sincere gratitude to our users and investors.

Today, I will mainly focus on three areas: second quarter results, changes in company's growth strategy, and shareholder returns. In second quarter, the company generated revenue of RMB 1.44 billion, up 14% year-on-year. In terms of profitability, adjusted income from operations, excluding share-based compensation expenses, was RMB 1.05 billion, up 19% year-on-year. Our adjusted operating margin was 43.8%, 1.9 percentage points year-on-year.

As of June 30th, the total paying enterprise customers in the past 12 months reached 7.2 million, up 11% year-on-year. Several key operating metrics reached record highs in this quarter. Average monthly active users, or MAU, are at exceeding 17 million in the second quarter. The average number of matches per job seekers increased both year-on-year and quarter-on-quarter. Once again, data has also proved that user outcomes also improved.

Next, I would like to expand how the company's growth strategy differs from higher tier and lower tier cities. The second quarter of this year marks the fifth anniversary of the company's IPO. Investors who are familiar with us will remember that throughout the past 5 years, we have constantly maintained that the core driver of the company's growth is user growth. This is determined by the size of the market.

China has nearly 500 million people in its urban workforce and more than 40 million active businesses. Based on this, BOSS Zhipin has cumulatively served approximately 300 million users and approximately 22 million employers. Even from where we stand today, there is still considerable room to grow. Second, this is determined by our model. BOSS Zhipin pioneered the mobile recommendation and direct chat model, and as a whole, this model substantially lowered the cost of communication between recruiters and job seekers.

This low-cost model enables tens of millions of companies to shift from traditional recruitment to mobile Internet recruitment, thereby digitalizing and mobilizing recruitment on a large scale. For the vast majority of our enterprise users, the first time they used our services was also the first time they used online recruitment. Third, this is determined by our strength and user needs.

Double-sided network effects give the company strong vitality. The larger the user base on both sides, the greater the variety of users, the more users express themselves, and the more users interact, the better we can serve them. The process of driving user growth is also the process of continuously producing digital oil for the recommendation engine.

Over the past several years, we have consistently seen that as monthly active users on both sides have increased, user outcomes created have also improved. With the engine supported by AI, we saw not only that AI improves the engine's efficiency, but also that the engine helps AI quickly establish its data flywheel.

Over the next five years, we will adopt different growth strategies for Tier 3, Tier 4, and Tier 5 cities and for Tier 1 and Tier 2 cities. In Tier 3, Tier 4, and Tier 5 cities, the core driver of growth will continue to be user growth, and our most important objective will remain user penetration. In Tier 1 and Tier 2 cities, while continuing to grow our user base, we will add reasonable price increases as a growth factor.

With regard to the pricing of our services, let me first take a look at the actual situation in the second quarter. Revenue in the second quarter was RMB 2.4 billion. That is a 10-billion number. It looks good, but here in Beijing, for many jobs, the price of a one-month job post is just the price of two cups of coffee. The value of many, many mutual matches that happen in every month combined is only enough to buy one bottle of mineral water. What do we mean by mutual match?

For those who are less familiar with us, let me explain again. A mutual match on our platform is equivalent to a job seeker submitting an application to a specific recruiter on another recruitment platform, and that recruiter also confirming the acceptance of the application. That is what we call a mutual match. It is a sad combination. In Beijing, in Shanghai, in Shenzhen, in Guangzhou, in Hangzhou, in Chengdu, in many cities, one such match is worth only one bottle of mineral water at 7-Eleven stores.

To make this easier to understand, let's start data from the leading recruitment platform in a mature market. According to publicly available information, one click on that platform costs approximately $0.25 to $1, while generating one application for a basic role costs approximately $5 to $10. I do not have data on how many applications for such a basic role result in one match.

If I assume, based on a high efficiency case, that a recruiter will accept one out of every five applications, that would translate into $25 to $50 per match. This, my friends, gives you an intuitive sense of two things. First, compared with developed countries, as importance placed on talent increases, the human resources services industry grows. There is considerable room for Chinese companies to increase what they pay for such services. Of course, this will take time.

Time is a powerful tool. One example is that today, the salary of a very good software engineer in China is roughly at the same salary as in Silicon Valley. Second, compared with one aspect of the enterprise expense in Beijing, I have seen that many enterprises have achieved a unit price, which is about 1/10 of a mineral water. The total monthly employment cost of junior human resources personnel could buy 1,000 unit of matches. Therefore, we can see that compared with Beijing, the service price in our field also has some potential to be improved.

Put differently, if we do not reform this, the human resources service industry is destined not to be valued by companies. It is destined not to receive high quality resources, and it might shrink. Therefore, at the beginning of the second 5 years, the company's growth strategy has changed, which is based on the first-tier market and some second-tier cities to improve the user experience while gradually increase the amount of customer payment in mature markets, including a reasonable increase in payment rates. This process has been sustained for a while.

The result growth that we have seen, part of the reason is that because of that. In fact, this also that in the last quarter, they would predict that growth and profit growth in second quarter will be better. That is part of the reason. This is the right time and right place to change the growth model. Everyone application has played a critical role, which is mainly reflected in three elements.

First, the large scale application of AI increased the platform efficiency. Secondly, some big customers in the white collar or blue collar factories agree very much that they believe that the AI powered interview, AI assisted resume screening, and other competitive solutions will also help to them. The combination of with our platform business is actually consistent with the pursuit of job seekers on the platform and within the recruiter. That is to achieve not the goal to do the recruitment, but to do a successful hire. This brings us to our closed-loop business.

The closer our services get to the actual hiring stage, and the closer we get to charging based on the successful hire, the more this model approaches a closed loop. The company will continue to invest in exploring this area. One point worth mentioning is that the revenue we received from our AI-enabled closed-loop business grew rapidly quarter over quarter in Q2. Let me discuss shareholder returns. The board today passed a resolution approving the distribution of annual dividends of $230 million.

Since the beginning of this year, the company has repurchased approximately $300 million worth of shares, representing more than 4.7% of its total share capital. In 2026, the company's total shareholder returns through share repurchase and dividends amounted to $530 million, exceeding 100% of last year's adjusted net income, and also exceeding the 50% we previously committed to. We share the benefits of the company's growth with shareholders. That concludes my remarks.

Next, our Deputy CFO Wenbei Wang will walk you through the financials in detail.

Thanks, Jonathan. Hello, everyone. Now let me walk through the details of financial results of the second quarter of 2026. We continue to deliver a high-quality set of financial results this quarter, marked by solid revenue growth and further improved profitability. Our revenue achieved accelerated trend, reaching RMB 2.4 billion, representing 14% year-on-year growth.

Recruitment demand in the second quarter remained broadly stable. We drove revenue and profit growth through user base expansion and improved monetization from higher-value services. The number of paid enterprise customers increased by 11% year-on-year to 7.2 million over the trailing 12 months ended June 30, 2026. Importantly, the paying ratio among active enterprise users improved for the fourth consecutive quarter, reflecting our sustained progress in monetization.

ARPPU for the quarter increased 7% year-on-year, driven by more efficient and valuable services, including an expanded suite of AI-powered features, which encouraged higher customer spending. Revenue growth was broadly balanced across different account sizes this quarter with both key accounts and small-sized accounts showing healthy momentum.

Moving to the cost side. Our total operating costs and expenses increased by 6% year-on-year to RMB 1.5 billion this quarter. Total share-based compensation expenses dropped by 19% year-on-year to RMB 186 million. As a percentage of revenue, share-based compensation expenses continued to continue this downward trend to 7.8% this quarter, down 3.1 percentage points year-on-year.

We expect share-based compensation expenses as a percentage of revenue to remain at a high single-digit level for the full year of 2026. In the second quarter, we sponsored the FIFA World Cup and increased our investment in AI-related cloud services. Meanwhile, our headcount grew sequentially, driven by stable growth in recruitment demand. Despite these investments, our profitability continued to improve.

Excluding share-based compensation expenses, our adjusted operating margin expanded by 1.9 percentage points year-on-year to a record high of 43.8%. This was primarily driven by our strong operating leverages, disciplined execution and ongoing efforts to enhance operating efficiencies through AI applications.

Looking into each segment, cost of revenues increased by 2% year-on-year to RMB 312 million this quarter. This increase was mainly due to higher server and bandwidth costs, partially offset by lower app store commission fees and improved operating efficiency as we widely leverage AI in our daily operations, verification and customer services. As a result, our gross margin went up by 1.6 percentage points year-on-year to 87%.

Sales and marketing expenses increased by 38% year-on-year to RMB 581 million this quarter, mainly due to the marketing campaign of 2026 FIFA World Cup as well as an increase in sales employee-related expenses related to higher cash revenues. Our R&D expenses were RMB 431 million this quarter, up 3% year-on-year. Excluding share-based compensation expenses, our adjusted R&D expenses increased by 7% year-on-year to RMB 361 million, mainly due to higher cloud service fees and server depreciation expenses related to AI infrastructure investment.

Our G&A expenses decreased by 30% year-on-year to RMB 219 million this quarter, mainly due to lower employee-related expenses. Interest and investment income reached RMB 1.6 billion this quarter compared to RMB 157 million for the same quarter last year. This increase was mainly driven by investment income of around RMB 1.5 billion arising from the fair value changes of one of our invested company, which went public in January 2026. Income tax expenses were RMB 550 million this quarter compared to RMB 97 million in the same quarter last year.

This increase was also mainly due to the RMB 367 million tax impact from the aforementioned investment income, withholding tax of RMB 20 million as well as RMB 10 million provision for the top-up tax under the OECD Pillar 2 rules and higher income from operations. Our net income reached RMB 1.9 billion this quarter, up 173% year-on-year. Excluding share-based compensation and net gains from the aforementioned investments, our adjusted net income increased by 9% to RMB 1.03 billion.

Net cash provided by operating activities was RMB 945 million this quarter, down 10% year-on-year. This decrease was mainly due to higher advertising and marketing expenditures and tax payment as well as lower interest and investment income received, partially offset by increased cash collection from customers.

As of June 30, 2026, our cash position, including cash, cash equivalents, short-term time deposits and short-term investments, excluding investment in securities stood at RMB 18.8 billion. Our strong cash position and cash-generating capability enable us to sustainably deliver our shareholder return commitments.

As Jonathan just mentioned, the Board declared an annual cash dividend of approximately USD 230 million, combined with over USD 300 million in share repurchase, we have completed year-to-date, which represents roughly 4.6% of our total outstanding shares. Our total shareholder return so far this year exceeds USD 530 million, representing an over 100% shareholder return ratio compared to the adjusted net income last year.

Cumulatively, we have now bought back over 10% of our total shares outstanding. And now for our business outlook. For the third quarter of 2026, we expect our total revenues to be between RMB 2.41 billion and RMB 2.5 billion, a year-on-year increase of 11.4% to 15.6%. That concludes our prepared remarks.

Now we would like to take questions. Operator, please go ahead.

[Operator Instructions] We will now proceed to our first question, and the question comes from the line of Timothy Zhao of Goldman Sachs.

[Foreign Language]

[Interpreted] My first question is regarding your AI monetization. Could management share more color on the latest progress of your AI products? For the closed-loop services that you just mentioned, could you share any color on the overall revenue scale? And how do you think about the overall AI impact on the matching efficiency? And if there's any quantity metric that you can share, that would be great.

Secondly is on your Nambe large language model. I recently -- I noticed that you recently launched Nbeigo4.23D model. Just wondering what is the improvement versus the last generation? And how do you compare the latest model versus the top large model in the market? And what is your different competitive position?

[Foreign Language]

[Interpreted] Okay. Thank you for your question. And about AI talent sourcing that we are trying to use, there is something slightly different. It is well known that when some of our customers started to use our recommendation system and we begin to know them, he used some of the search function to help himself.

But the search function, as we all know, the problem is the query is relatively short. And the large language model just gave us a possibility that you can use a very long query and also you can use multiple rounds of conversations to make it look like long. But actually, the system is just coming back to understanding what you really want. So that's the fundamental capability that large language model has.

So a very long text and multiple rounds of communication that which can come out to understanding of our customer demand and better to serve some clients who have high requirement, who have the requirement for high professionalism and which is better traditional recommendation search model cannot serve. So that just bring our search to our next level. So based on that that fundamental we just discussed about, it's quite easy to understand the new value AI sourcing has brought to us, which we have already served cumulatively more than 300 million users.

But our monthly active users last month is just 17 million. As we further penetrate to new users, the 17 million monthly active users versus 300 million total users might turn into like 100 million versus 400 million. This creates ability that we can expand our service to a lot of new users that not within the monthly active users scope. interesting part is who has the most needs to contact this kind of silent customers.

This kind of customers or this kind of job seekers actually is more senior, more professional, and more likely to be liked by the headhunters. This is more and more getting close to our pursuit of closed loop service. My understanding of the closed loop service is more like just one stage to another stage, the process interlocking. We are using AI to help our customers sourcing candidates.

We are using AI function to help them to screen resumes. Our AI interview functions are now working on more than 10,000 interviews every day. Stage by stage, we are getting more and more close to our onboarding, and AI is just helping us to accelerating this process and achieving our goal. For Nanbeige4.2-3B, it is quite a coincidence that early today, a very well-known testing institution.

A very well-known testing institution, Artificial Analysis, combined with Liquid AI to do a drawing testing on small sized model on both iPhone 17 Pro and Samsung Galaxy Nanbeige4.2-3B has achieved number one in five areas, including following the true transforming orders, scientific illusion, scientific interference and mathematics theoretical errors. Nanbeige has achieved number one in all those five areas. Actually, our previous model 4.1-3B also achieved quite nice results.

This model has been quite good in inference writing, fundamental advanced truth reasoning. On the contrary, 4.2-3B, this small size model, is better to handle more complicated agent truth and functions, including coding intelligence entity and maybe office working intelligence entity, et cetera. We believe on the road to pursue AGI, there is one way, mega size models, super consuming of electronic powers, investing a lot of money. That a lot of big companies are doing.

There is another way that maybe a smaller size model can help solving some specific problems and also create its own value. For example, the application in smartphones, on mobile vehicles, on intelligent robots, et cetera. In those areas, those smaller size model, we are in the leading position and have proven our value. That is our answers to the first two questions. Operator, let us proceed to the next one.

And our next question comes from the line of Eddy Wang of Morgan Stanley.

[Foreign Language] [Interpreted] My first question is related to the macro impact. What is your view on the macro impact on our company, especially for the second half of this year? As most internet company that has reported second quarter results have mentioned that the macro overhangs and the weak consumption. To what extent will BOSS be affected under such a macro backdrop? How much of this macro-driven pressure can be offset through our operation improvement?

The second question is related to the AI development, AI service and the product we have launched and probably will launch. Do you expect they will have different cost structure and will this affect our overall margin? In addition, do we have plan to materially ramp up the CapEx as we have seen with some of the other Internet companies?

So thank you for your question regarding the macro situation. I actually respect your professional observation and I will not talk too much about it. I have been starting our business for more than 12 years and we have experienced a lot, whether you have experience, or not experience, we have all gone through that. We have always maintained to be a very stable and maybe trustworthy business, and we will continue to maintain this very stable operation.

And have a big opportunity here with our potential market size. We have served over 300 million customers and more than 22 million enterprises. It is well known that the average life cycle, according to the People's Bank of China's enterprise, is less than three years. Within all those 22 million companies we have served, a lot of them are not active anymore.

They have turned into new elements and beginning new companies. For ease of observation, even we consider those 40 million enterprises as a fixed situation, we have more than double of our market to grow. On top of a lot of new companies are emerging every year. Our actual market size is even bigger. The second opportunity is in the paying ratio. Our actual annual served number of enterprises is more than 10 million, and over 50% of them are using our service for free. From that perspective, this is our second driver or second growth opportunities.

I will use one first-tier city as an example. We just reported that we intend to increase monetization for certain first-tier cities. In this particular city, including both paid and free service, the average cost per mutual match our customers can get for this city, for example, is like X RMB. If we turn those free customers into our lowest level of paying customers, then those costs will grow by at least 15%. rest assured both our investors, clients or public, that actually this is a very minimal changes.

I just explained that for a lot of our customers, the average cost to achieve a mutual matching is only the price of one mineral water at 7-Eleven. Either one bottle of mineral water or 1.15 bottle of mineral water is a very minimal cost to every enterprises. Eddy, just as we go through all these years, I am confident we are not only surviving, we should and we will be better and better. About the second question, thank you Eddy for asking me that.

Actually all those large companies who have invest a lot of CapEx for like arm race or things like that, I think they have their ambitions, they have their beliefs, but most importantly, they have that financial capabilities. For a company like us, we chose the path of following all the tail light strategy, and we prioritize AI applications in the smaller type companies. That is our approach, our strategy to facing this AI maybe disruption or AI impact what we can do.

Thank you for your trust, but I believe our investment in the AI will not impact our overall cost structure and impact our operation capability and financial markets. We will maintain current level of investment. As you know, we have good profitability, so we will maintain around like 20% to 25% of R&D expenses, and we will spend incremental money on the AI and to give more support. But I will not sacrifice our safety on our cash flow. I won't do that. Just don't worry. That's our answer to those two questions.

And the next question comes from Wei Xiong of UBS.

[Foreign Language]

[Interpreted] First, it is encouraging to see our margins have been maintaining at a very healthy level. Could we quantify the benefits from AI in our internal use to drive better efficiency and lower costs? How much room of further improvement do we see? Also, after the investment in FIFA World Cup, how should we think about the investment plans, the expenses, and the margin trends in the second half? Second, could we please get an update on your overseas business, including OfferToday? How should we think about if there is any plan to expand into other markets?

I will take the first question on margin. So actually we have been leveraging AI in all aspects of our daily operations, including security, notifications, sales and marketing and operating earning and everywhere. But to quantify it, maybe it may be more easier in the cost line. Since 2023, we have been witnessing that alongside with our user growth, our overall headcount of operating employees maintain stable.

As a result, the employee-related cost as a percentage of revenue continue to go down and help to contribute around 2 percentage points of our gross margin. You can see our gross margin now stayed at a very healthy high 80s level. We believe we at least maintain this very high gross margin level.

For our outlook for the second half, yes, we have sponsored the FIFA World Cup, but the cost will be evenly distributed or recognized within Q2 and Q3. Apart from that, we will maintain our current investment level of the cloud service rental cost for our AI model training. We are expecting maybe in Q3, the margin level should be similar to Q2, and for the full year as we expected at the beginning of this year, our overall adjusted operating margin can still slightly increase.

[Foreign Language]

[Interpreted] Thank you for your concern about OfferToday. Our current goal for OfferToday is in maybe five years from today, it can bring the company with $100 million to $115 million of revenue, that is around about the market size of Hong Kong. We call it maybe a middle dish, not too fast, but not too low. The lessons we learned from OfferToday is that it took around 2 to 3 years for our new business like OfferToday to enter into a market. Then next additional five years to grow to achieve $100 million to $115 million of revenue. We consider this kind of place or this kind of city worth investing.

Of course, those cities are in Asia and Europe. Of course, we need to avoid those high geopolitical risk areas. To sum up, 2 to 3 years of adaption and mature, five years of development, there are still a lot of cities of this size and worth investing. Also we have some markets we call it slow dish, maybe take a longer term around 10-15 years, which can also achieve a revenue like $100 million to $115 million.

The profile of this kind of market is maybe generally younger in the average age of the citizens and is a developing country, but it is developing quite orderly. Its total population is around slightly less than 100 million. Some place like Vietnam, Argentina or Brazil. In 10 to 15 years, we are hoping this kind of city can accept the new models like we have created and bring about nice profit or revenue to company by them. This topic is about OfferToday and what lessons it can give us to developing our overseas business. That is our answers to all the questions today. Thank you.

Due to time constraints, that concludes today's question-and-answer session. At this time, I'll turn the conference back to Laura for any additional or closing remarks.

Thank you once again for joining us today. If you have any further questions, please contact our IR team directly. Thank you.

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

Ladies and gentlemen, thank you for standing by, and welcome to Kanzhun Limited First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Today's conference is being recorded. At this time, I'd like to turn the conference over to [ Ms. Laura Zhan ], Senior Manager of Investor Relations. Please go ahead, ma'am.

Thank you, operator. Good evening, and good morning, everyone. Welcome to our first quarter 2026 earnings conference call. Joining me today are our Founder, Chairman and CEO, Mr. Jonathan Peng Zhao; and our Deputy CFO, Ms. Wenbei Wang. 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 shipments 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 these forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison for [indiscernible]. 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 at ir.zhipin..com.

[Interpreted] Hello, everyone. Welcome to our first quarter 2026 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 and our investors for their continued support.

[Interpreted] Today's presentation will cover 4 main parts. First, our growth in the first quarter second, key trends among job seekers and enterprise users on our platform. Third, the company's perspective on AI and strategic approach; and finally, the shareholder return.

Let me start with our first quarter growth. As a double-sided platform, we continue to see strong growth from both job seekers and enterprise user sites. Looking back to January to April this year, we acquired over 15 million newly verified users. Looking ahead, we believe that achieving over 14 million early verified users for the full year should be achievable. .

Looking at paid enterprise customers' condition, number of paid enterprise customers reached 7.1 million for the 12 months ended March 31, up 10.9% year-on-year and 4.4% quarter-on-quarter.

In the first quarter, the average monthly active users or MAU on the [indiscernible] app reached 16.9 million up 5.7% year-on-year. In March, MAU exceeded 72 million, up 4.6% year-on-year. The raise in our MAU in March was more than 10 million higher than the first quarter average is that the Chinese New Year occurred later this year, resulting in a later peak improvement season.

The 2026 Chinese New Year fell on February 17, while the 2025 New Year was on January 29. Hence, this year, the peak recruitment season only fell within March, whereas the peak recruitment season fell within both February and March in 2025.

Let me discuss our revenues. In the first quarter, the company achieved revenue of RMB 2.07 billion, up 7.6% year-on-year. Please kindly note that this figure also reflects the comparison between 1 month of peak season in 2026 versus 2 months of peak season in 2025. Looking ahead, we are confident that our revenue growth in the second quarter and for the full year will be stronger than what we delivered in the first quarter.

On the profit perspective, in the first quarter, the adjusted operating income, excluding share-based compensation expenses, which is over RMB 810 million, up 17.8% year-on-year. The adjusted operating margin was 39.4%, up 3.4 percentage points year-on-year. .

Second, key trends among enterprise users and job seekers on our platform. As discussed multiple times earlier, our platform is different for -- in different tier cities and different types of industries.

Overall, our continued rapid user growth has driven sustained rapid growth among all coworkers lower-tier cities and small and medium size enterprises on our platform. At the same time, equipment demand from white collar workers and large enterprises have continued to improve.

From the user growth perspective, as of April 13 among the newly acquired users in this year, excluding flash graduates, nearly Q3 were white collar workers. From a revenue perspective, in the first quarter, all color revenue exceeded 40% of our total revenue for the first half.

White collar recruitment demand has also accelerated at Chinese New Year compared to the same period last year. Looking into the specific subsectors, active job postings for software engineers increased by 10.9% from January to April compared to 2025. This is consistent with the recent observations from our U.S. peers. Referring to the public data, their active software development job postings in the United States grew by 9.1% year-on-year from January to April 2026, we are 2 percentage points higher than their numbers.

On our platform, we have not seen the kind of alarming large-scale reduction in program positions that some have feared. At the same time, revenue from AI-related roles on our platform has grown by over 100%. Simply put, development of AI has brought us more revenue or we have not yet seen a large decline in job portals.

Among other industries, manufacturing, electronics, telecommunications, semiconductors, transportation and logistics, urban services and various professional services led in year-on-year growth on our platform.

For large enterprises, their recruitment demand, we saw a notably recovering trend during this year's spring recruitment season. In the first quarter, companies with 1,000 to less than 10,000 employees recorded the fastest growing year-on-year revenue growth, followed by those with 500 to less than 1,000 employees. This average number of job postings users also increased modestly. If we compare it to the last quarter, back then, we shared that the strongest growth in hiring demand was coming from small micro enterprises. This quarter, however, if we compare it to last quarter, Back then, we shared that the strongest growth in hiring demand was coming from small and micro enterprises. In this quarter, however, large enterprises are delivering our sites revenue growth year-on-year.

That concludes the recent trend on enterprise users and job seekers on our platform. And this, we will discuss 2 views and 4 strategic pillars on AI that we all are concerned.

Since the ChatGPT 4.0 launched in March 2023, this AI paradigm has given us 38 transformative monthers. Meanwhile, recent government disclosure of unidentified aerial phenomenon have put our generation in unprecedented territory. Our perspectives are broadening. Our convictions are being reshaped. Civilization is facing new challenges, which is unavoidable. Many things that once were familiar are now becoming invest, including how we think about our companies and how you think about the investment and competition. .

As one of the leaders in the worldwide and Chinese recruitment industry and as an entrepreneur myself, I have spent the past 3 years navigating between 2 main sites, honing that new technologies could solve major problems while at the same time, worrying about technology potential disruptive impact. As informed, yet hopeful in continuously exploring all within the fall of my responsibilities.

Our shareholders and employees have also gone through ups and downs concerned at all times excited as others, sometimes they have been with us on sometimes together, we have all been on quite a roller coaster ride.

Looking back on the past 3 years, we believe it is time for the company to provide a progress report to our shareholders, the public and our employees. This will be organized around 2 key observations and 4 main strategies. Our first observation is that to date for the company's business model and industry position, the opportunities brought by AI technology have outweighed.

First, based on reliable public data, credible data released by listed companies and our own channel data would have concluded that over the past 3 years, the company's market-leading position has been further strengthened. [indiscernible] have continued to increase, and we have maintained steady growth strong by a challenging environment.

Second, as we know, lower token costs have accelerated the proliferation of AI application in both our internal operations and user services. In the past quarter, stability for our platform -- the ability for over 10 million of users on our platform to be able to access to AI services has been made possible by this reduction in cost.

Third, extensive exploration in large model pretraining and application has accelerated growth of our young employees, including their sense of pride and standing with the company. the more widely AI technology are used, the more convincingly they solve real problems the faster young talent will rise and smoother the process of rejuvenation of our leadership team will become. In the long term, this helps slow down the corporate entropy.

The growth of leaders within our organization is a core, a result of individual aspirations and progress aligning with the company's shared vision. As young talent essentially meet young people can more quickly gain recognition from the organization's shared systems and standards. This also explains why in every wave of technological and cognitive revolution, young people tend to emerge as leaders. .

Add to that, those technological oriented companies were enjoying the rise of young people and the reduce of corporate entropes. Our second observation is that to date, either enterprise type or job seekers stand-alone agents have been capable of challenging the company's business current model. On the contrary, once agents are embedded with our double-sided network ecosystem, the company's accumulated user base and data to play a positive and constructive role. Recruitment and job seeking is always a multiple people to multiple people game.

Weather a labor or contractor should be signed or not or whether every day the [indiscernible] ultimately comes down to a management game between 2 large groups of people. The double-sided network that has been built for over the past 12 years and our understanding on users for the past 12 years, has always been designed to reflect the real dynamics of job seeking and recruitment in [indiscernible]. In essence, [indiscernible] agent, AI agents into our double-sided network serves as a driving force that enhanced information collection, processing and dissemination.

Looking at our first quarter data. First, the application of AI agents has improved the time and efficiency from an initial that successful mutual consent conversion rate by 50%. Second, the large-scale application of AI may enable the user retention, which is its highest level since the pandemic in 2020. Third, the average per enterprise user achievement increased by a double-digit percentage.

Overall study in data and series told us that AI is our friend instead of the enemy.

Now let me walk you through our 4 strategic considerations of AI. First, investing in AI to advance the cross business model. We firmly believe that in the recruitment industry, the important thing is that we could deliver the onboarding and replacement of -- placement of candidates for enterprise users. No matter we do survey or not to do the survey, every enterprise user is willing to pay for the delivering of candidates instead of the traffic exploration or the click on candidates. We firmly believe that within the sort of the AI technology and result oriented business model is achievable on our platform.

It is a very important part of our company, and we will continue to allocate resources to this effort. And while we're protecting the experience of the high-end job seekers, we are also open to leverage new technologies and new operating systems to collaborate with the external companies that specialize in the closed loop recruiters.

I will share 3 data view. First, within the company's in-house accounting team for consultants who recently used AI, 20% of the candidate recommendations they deliver already come from AI-drive operations. Second, our another post-pilot project, the combined productivity of human plus agents increased by 4 times in the first quarter, already exceeding the average productivity level of accountants in the industry.

Third, for the [indiscernible] agent campus recruitment service, the company offers externally revenue grew by more than 50% year-on-year in the first quarter. Therefore, the AI-powered closed loop service is one of our core strategy. Second, we are also maintaining a proportion of our resources in AI science, currently focused primarily on the training and development of small models. There are 5 reasons for this.

First, small models are less expensive for us to use internally. Second, continuous in-house R&D helps us enhance the business accountability and enable the development of long-term technical capabilities tailored to vertical recruitment narrows. Third, small models are increasingly gaining attention across the industry. which helps ensure a sense of pride and recognition for our science team. Fourth, our in-house model has also been actively applied to our search and recommendation functions demonstrating advantages in both efficiency and [indiscernible] compared to large models. Last. under the paradigm, the large models are too costly for us to see.

Our third strategy on AI stack, we will continue to invest heavily in AI applications. Our primary evaluation criteria is that how AI helps our double-sided job seeking and the recruitment network ecosystem.

According to the investigation for the past 12 months, we have formed some -- we have formed some logical and common sense for these. And we believe that we will treat AI technology as value-added tool for identifying and solving problems.

Regarding the reward and bonus -- regarding the rewarding bonus on the related areas, we -- the teams that use AI to discover and resolve issues will be generally rewarded by us. So far, we believe that our exploration and investigation -- investments in AI will be based on our double-sided ecosystem, theoretical framework. .

Our fourth strategy is that we believe that AI driven revenue growth is a natural process and the natural results. As AI technology improves platform efficiency, it will lead to a higher user achievement better satisfaction and stronger brand reputation among users. This in turn will drive sustained revenue growth. We see this as a smoother, lower risk and more sustainable cost.

Investors who are familiar with us understand that we are very original self-developed model, which we don't sell advertisement. We don't sell click. Our business model is based on production of our double-sided network ecosystem. So we believe that essentially to undergoing this current AI model is already fully verified this model and very functional [indiscernible]. So whether to grow by 50% for this year or 15% for the next 5 years, we chose the latter, and we believe the combination of our technology and our organization [indiscernible].

So after 3 years of exploration, those 2 points and 4 strategies we just talked about it actually has been fully verified. It's not that our product as we have been doing that for a long time. So for the investors who care about us, for the [indiscernible] to us and our internal employees, I want to say that the strategies we just discussed is based on our real exploration and our employees who work on the front line of our AI development and all the team leaders of our core AI teams have all contributed to the points I just discussed.

Finally, on shareholder returns, we have remained fully committed to delivering on our shareholder return promises. Since the start of this year, we have repurchased over $200 million in shares or around 3% of our total outstanding shares. In aggregate, since 2022, we have bought about close to 10% of our total shares.

As a reminder, last quarter, we announced that a shareholder return plan committing that over the next 3 years, the annual amount we allocate to buybacks and dividends will be no less than 50% of the prior year's adjusted net income, and we are holding through on that commitment as we all see. .

With that, I will now turn to our Deputy CFO, Wenbei Wang to review our financials. Thank you.

Thanks, Jonathan. Now let me conclude through the details of our financial results for the first quarter. So we are delighted to report a solid start to this year characterized by continued expansion in our user base and engagement alongside sustained revenue growth. Despite a later Chinese New Year, which meant a shorter window of the peak recruitment season within this quarter, our revenue reached RMB 2.1 billion, up 8% year-on-year. We are witnessing accelerated revenue as well as cash traction growth post Chinese New Year supported by robust [indiscernible].

Our paid enterprise customers grew by 11% year-on-year to RMB 7.1 million in the trailing 12 months ended March 31, 2026, primarily driven by the growth of enterprise users paying ratio among active enterprises increased on a sequential basis. Growth from key accounts and large size continues showed better trends compared to the same period last year, a more balanced structure. As a result, ARPU in the first quarter increased 2% year-on-year.

Moving to the cost side. Our total operating cost and expenses decreased by 3% year-on-year to RMB 1.4 billion this quarter. Total share-based compensation expenses dropped by 24% year-on-year and 11% quarter-on-quarter to RMB 181 million. As percentage of revenue-wise, share-based compensation accounted for 9.2% of total revenue for this quarter went down by 3.9 percentage points year-on-year and 1.1 percentage points usually.

We expect SC expenses as a percentage of revenue to stay around 9% in. Excluding share-based compensation expenses, our adjusted operating costs and expenses were RMB 1.3 billion, remaining relatively stable year-on-year. Our adjusted operating income increased RMB 815 million, up 18% year-on-year, representing an adjusted operating margin of 39.4%. up by 3.4 percentage points year-on-year. Despite first quarter normally having the lowest margin in the full year in seasonality. We believe there remains substantial room for further margin improvement in our core business segment. due to the robust operating leverage of our business model. But considering our continued investment in AI, remarkable spending for long-term brand commissions and investment in new businesses along with the corresponding margin dilution for those new businesses, we can still expect a modest margin expansion for the coming years.

Looking into each segment, cost of revenue decreased by 4% to RMB 298 million this quarter. This decrease was primarily due to lower employee-related expenses resulting from enhanced operating efficiency and partially offset by higher [indiscernible] bandwidth cost. As a result, our gross margin went up by 1.8 percentage points to 85.6 percentage. Additionally, the induction of store commission fees starting in March also contributed to gross margin improvement.

Sales and marketing expenses increased by 2% year-on-year to RMB 502 million this quarter. primarily due to increase in advertising and marketing expenses, which partially offset by decrease in sales employee-related compensations as a result of our continued endeavor to improve sales efficiency. R&D expenses were RMB 424 million this quarter, remaining relatively stable year-on-year. Excluding SBC expenses, our adjusted R&D expenses increased by 5% year-on-year to RMB 351 million, primarily due to higher cost service fees and seller depreciation expenses relating to AI infrastructure.

Our G&A expenses decreased by 15% year-on-year to RMB 282 million this quarter, primarily driven by lower share-based compensation expenses. Our interest and investment income was RMB 781 million in the quarter, up 422% year-on-year. This increase was primarily driven by investment income of RMB 640 million arising from fair value changes of one of our invested companies, which went public in January 2026.

Income tax expenses were RMB 299 million this quarter, up 293% year-on-year. This increase was also primarily due to the tax impact from the aforementioned investment income of RMB 154 million as well as the provision of RMB 60 million top-up tax under the Pillar 2 tax release and the recording tax of RMB 8 million as well as higher income from operations.

Our net income reached RMB 1.1 billion this quarter. Excluding share-based compensations, net gains from the aforementioned investment, our adjusted net income increased by 12% to RMB 856 million. Net margin improved to 54.4%, while adjusted net margin increased to 41.4%, up 1.7 percentage points year-on-year. Net cash provided by operating activities reached RMB 1.2 billion this quarter, up 19% year-on-year. Our cash position, including cash, cash equivalent, short-term term deposits and short-term investment by excluding investment in securities, stood at RMB 19.8 billion as of March 31, 2026. Our strong cash position and cash generating capability will support us to continue to deliver our commitment in shareholder returns. As Jonathan just mentioned, we have purchased a total of over USD 200 million worth of shares, representing approximately 3% of our total outstanding shares. We will continue to maintain substantial shareholder efforts. including share buyback and dividends based on specific market and operating conditions.

And now for our business outlook. For the second quarter of 2026, we expect our total revenues to be between RMB 2.38 billion and RMB 2.42 billion, a year-on-year increase of 13.2% to 15.1%.

That concludes our prepared remarks, and now we would like to take the questions. Operator, please go ahead.

[Operator Instructions] We will now proceed to take our first question. And the question comes from the line of Wei Xiong of UBS.

[Interpreted] I have 2 questions. So first, you mentioned about the business impact from a delayed Chinese New Year this year. May I ask if we only consider the days in the first quarter post CNY as well as the second quarter based on our expectation, do we see an improvement in the year growth rate and which industries or job posting have seen more notable improvement.

And second, regarding the AI disruption, have we seen any impact on the job posting on our platform considering we already have a very mature white collar business, but the AI disruption to blue collar is theoretically smaller, will we accelerate blue-collar business going forward.

And also regarding the AI-powered closed-loop services could management give an update on the latest progress as well as the feedback from industry participants such as agencies and [indiscernible]?

Second question first about the closed loop service. Actually, we talked a lot about opinions and will give you several numbers. The first number is among all of our different business in the first quarter, actually, the AI-supported closed loop service is the fastest among different experimental groups. Some have been -- have a growth rate over 100%, some have 50%. But yes, the overall revenue scale is relatively small. So for the first quarter, our AI facilitated closed loop service have total revenue line of around RMB 50 million.

And about your first question regarding the poor recruitment season. also can support this data. So our average month actives for the first quarter is around 60 million. However, the MAU for March is over 70 million and MAU for April also close to the number of March. So I think that's a very representative number that the overall industry have been rapidly robust after premium season. And on promise is that the ratio between supply and demand, which is enterprise users and recruiters is healthy. So it's quite easy to understand is a very good recruitment season. The overall newly added reporting number increased by 10% year-on-year.

And even to be more practical. So for the first half and overall this year, I think the growth rate of our cash correction will be accelerating compared to last year. So for the full year, we are looking at, at least a double-digit number of year-on-year growth.

And about another question -- or most people have been quite concerned about, which is what kind of jobs will be impacted by the AI or even replaced by AI, so to be honest, our dear investors and shareholders, I have been doing improved serious resources into this matter and want to make our own conclusion a very serious and scientific conclusion. And once we have our report, we will open to the public. But till today, our observation is that the software development engineer hasn't experienced any decline to positive on the contrary the active number of job postings increased by 10.9%. So I will continue to welcome this topic and our team want to publish some papers but I want to take more time. So just [indiscernible], 2 quarters of time, and I'll maybe give you a more clear answer to this question. .

That's some of our views.

We would now take our next question from the line of Eddy Wang of Morgan Stanley.

[Interpreted] My question is also related to AI. We have noticed that recruit our offering peer company mentioned in its latest earnings that AI has greatly contributed to the increase of the revenue, especially the average revenue per job. Can [indiscernible] enhance the revenue for job listing with the help of AI as well? And how much can be enhanced and how can this be achieved? And a follow-up question is that in the Chinese recruitment market, could there be recruitment platform with lower matching efficiency than ours that might benefit more from AI. How this company [indiscernible] change in the future industry competition patterns.

[Interpreted] And thank you for your question. We also noticed that our predecessor who established in 1962 have been making some statements like you said, and we are quite happy for the progress that they have got. From our perspective, so the Chinese domestic market is on current main focus area and how it can help us to achieve higher revenue growth, I think I will divide it by throughput. So in the order of considering this, I think the first thing, we receive still to first provide better value and then we higher price so that the first part.

And second is, in China domestic market, there are over 40 million enterprises, which more than half of them have never used online services before. So I think there is a process that from a rural area, enrollment to a fully cultivated markets. So the third thing is that I have actually talked a lot in our industry that are very basic contradictory or controversies that whether you are selling exposure to the culture or onboarding. So from the exposure to onboarding, they are very, very long term, and there are many, many different steps. So we are all experiencing from selling 1 drug exposure to selling 1 [indiscernible]. And even after the testing period is becoming a very good employees or even get promotions.

So what are we providing to our customers. I think everybody is going through the exploration process. So in model 3 points I just discussed, with all help where currently are we standing. I think without a doubt, that let us to help with all those people who haven't used the online common service in China to use their digitalized and network data to better help us to serve our clients, and that's the first thing we need to do. And now we are using to support our cost services. So from the earliest online recruitment service in 1997 from selling advertisement exposure to some in the future with help of technology, we can tell you I can help you to deliver ongoing and you can pay me based on that. That's what we have been insisting.

And I also want to remind you with a number that our paid enterprise -- number of paid enterprise customers is over 7.1 million by end of this quarter. So grew by 10.9% year-on-year and 4.4% quarter-on-quarter. Why I want to talk about this number is because this 10% increase not only representing a progress of our commercialization but also means for us we are helping more and more users in China who have not used online services for to go step by step to a more civilized way for hiring and job seeking.

So now we are talking about price hike because for all the 7.1 million people, how many they are paying us by each user. Our revenue is around RMB 8 billion per year. So on average, every paying customer is paying us around [indiscernible]. So I think everybody can see the huge potential in here for hire price. But between more paying customers, for example, we have 7.1 million today. In the future, we can have 9.1 -- or 19 million paying customers. So I choose to grow our number of paying customers first. And by that time, I think we still have huge potential to further increase our price.

And my idea about growing paying users or the price might change for one day, and I will communicate with people for concerned as timely about changes. And then about whether there are potential for the AI [indiscernible] our peers who have maybe weaker technology than us to maybe exceeding us. I think their ability exactly indexed. But based on my experience, when I have experiencing from maybe a little bit concerned about AI and more curious and less concerned, and now we have our own views and strategies and we are actually more practical people and solving questions kind. So today, I'm not worried that in -- our peers in China's recruitment industry who have really weaker matching efficiency maybe one day to exceeding us or disrupt as I'm more than worried and it won't be quite said.

And that's our answer to the question. Operator, please proceed to our last question.

Our final question today comes from Timothy Zhao of Goldman Sachs.

My first question is regarding your operating expense interest regarding the work on marketing expenses and R&D expenses [indiscernible] AI. Just wondering if you can share some more detailed color on what is your outlook for this year's overall profit margin. And also, I note that you have been increasing your buyback from the public market. Just wondering if there's any updates on your shareholder return plans for this year and in the midterm? .

And secondly is regarding your overseas expansion. We note that after there has been growing very rapidly in the Hong Kong market. Just wondering if you can share us some color on the latest user base and monetization update in Hong Kong and any investments that you have made in Hong Kong in the first quarter? And do you have any other plan to further expand into new overseas markets?

[Interpreted] Thank you for your question. So the World Cup is always a very good thing which we can communicate with a lot of viewers during very short time, whether how much we will [indiscernible]. So the advantage for this year is that there are more games and a longer period of the World Cup events but the disadvantage is also quite clear because the time difference. So we are still under communication and looking at the final RI, I will communicate once we have our results.

Secondly, about the AI, we will continue to met. But this year, the one major change you have all witnessed that for some comps and some very critical jobs the companies can offer very high selling for top tenants. So we should pay and find appropriate person to maintain our AI-related development capabilities. And another one is on the computing power, including rental service and referring cost. So we are also investing on that maybe further expanding our expenses.

So for our margin perspective, I will call this is not quite high at 50%, but considering all those investments and broadcast sponsorship and the new business. So I think it's just a similar expectation for us from the beginning of this year, we are expecting a smaller increase in our adjusted operating margin.

And about shareholder returns and buyback, I want to reemphasize that year-to-date, we have spent more than USD 200 million to bought over 3% of the total shares. If you're looking at the quarterly payout ratio is already exceeding what we spent in the first. And there are 2 reasons we are doing this. First is actually our valuation is quite good. So it's very efficient to spend money. And also, we want to provide more confidence. We have confidence in our company, and we want to spread that -- share that view with all those employees and investors who have been starting with us, and we will continue to do that.

Thank you for asking about offer today. And actually, we did develop quite well in Hong Kong. Looking at the model side, which we have more advantages. So we have -- now currently, our daily active numbers is approximately 60,000 daily active users. So you can't understand that this way. So for the 3 million Hong Kong workers the 1 out of 50 are using it every day. So actually, we are providing our enterprise customers a large amount of active effective suppliers who can communicate today. So that's why the recruiters are using very efficient and new model to communicate with job seekers. So where people can get over today. So that's our kind of situation.

And there are 2 reasons we are developing our Hong Kong business First is the -- whether our business model based on double-side ecosystems can get verified in the market quite clear close to the mainline and another more reason, when we are developing internationally, we want to cultivate a very important core team for us to go further. So that's -- our priority revenue is not our current priority, and we are investing in a reasonable amount. I have been communicating with our employees and our investors that before and we still have done today. And we have confidence that we can turn over today to Hong Kong local most satisfied job seeking recruitment platform for both job seekers and recruiters that however has not changed for May, and we will continue to invest and continue to make more efforts and hope you can keep following on us.

And that's all of our answers to the questions today.

Due to time constraints, that concludes today's question and answer session. At this time, I'll turn the conference back to Laura for any additional or closing remarks.

Thank you once again for joining us today. If you have any further questions, please contact our IR team. Thank you.

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

Ladies and gentlemen, thank you for standing by, and welcome to Kanzhun Limited Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions]. Today's conference is being recorded.

At this time, I would like to turn the conference over to [ Ms. Laura Chen ], Senior Manager of Investor Relations. Please go ahead, ma'am.

Thank you, operator. Good evening, and good morning, everyone. Welcome to our Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. Joining me today are our Founder, Chairman and CEO, Mr. Jonathan Peng Zhao; and our Deputy CFO, Ms. Wenbei Wang.

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 measures, please see the earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our website at ir.zhipin.com.

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

[Interpreted] Hello, everyone. Thank you for joining our company's fourth quarter and Full Year 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 and investors who have continuously believed in and supported us.

Today's presentation will cover 4 main parts. First, our financial results for fourth quarter and full year of 2025. Second, the robust growth momentum we are seeing in both supply and demand during the spring recruitment season this year; third, an update on our AI progress; and fourth, further strengthen our commitment to shareholder returns.

First, let me briefly review the company's performance for the fourth quarter and full year of 2025. In fourth quarter, we generated a total revenue of RMB 2.08 billion, up 14% year-on-year. Excluding share-based compensation expenses, our adjusted operating profit reached RMB 900 million, up 37% year-on-year.

The fourth quarter is traditionally a low season for recruitment in China. However, after adjusting for seasonality, the higher demand for our enterprises continued the steady recovery trend since the beginning of this year. The supply and demand ratio also remained within a healthy range.

By sector, manufacturing, electronics, communications and semiconductor industries stood out. Urban service, automotive and consumer retail industries saw faster growth. The Internet technology industry achieved a fast year-on-year growth rate in the fourth quarter compared to the third quarter.

In full year 2025, the company generated a total revenue of RMB 8.27 billion, up 12.4% year-on-year. Net income reached RMB 2.7 billion. Excluding other income such as investment gains and share-based compensation expenses, our adjusted operating profit reached RMB 3.38 billion, up 45.7% year-on-year. Our adjusted operating profit margin reached 40.8%.

The upward growth momentum in user continues. In 2025, the company acquired nearly 46 million newly verified users. As of the end of 2025, the platform had cumulatively served over 250 million job seekers and 36 million enterprise users with the total number of enterprises served exceeding 20 million.

In 2025, the average monthly active users, the MAU of the BOSS Zhipin app reached over 60.7 million, representing a year-on-year increase of 14.5%. In 2025, the platform facilitated over 2.27 billion instances of mutually consented exchanges of resume or contact information, what we commonly refer to as mutual consent, representing a year-on-year growth of 22.4%. The average number of mutual consent per job seeker also rose by 7% year-on-year. This demonstrates our strong double-sided network effect on our platform.

In 2025, the company continued its momentum in penetrating the blue-collar sector, lower-tier cities and small and medium-sized enterprises. The growth rate of blue collar users led overall user base with their contribution to revenue further increasing. Meanwhile, white-collar recruitment demand also recovered steadily with factors such as Internet technology and communications, semiconductors achieved higher growth rates compared to 2024, reflecting a structural improvement.

From a city tier perspective, revenue contribution from third-tier and low-tier cities approached 25% in the fourth quarter, doubling compared to 4 years ago. This clearly demonstrates that our user penetration strategy in lower-tier markets is steadily gaining traction, while our brand awareness has continued to expand. In 2025, revenue contributed by enterprises was fewer than 100 employees exceeded 50% for the first time. The substantial contribution from SMEs become a key driver of the platform's continuous growth.

On the monetization front, in the 12 months ended December 31, 2025, which is full year 2025, the number of paid enterprise customers reached 6.83 million, up 11.6% year-on-year and 1.3% quarter-on-quarter. The payment among active users continue to see modest growth due to the increased revenue contribution from SMEs, the average revenue per paying user, which is the ARPPU, remained broadly stable. Second, we are seeing robust momentum in both supply and demand side during the spring recruitment season this year.

As we know, the peak season for recruitment in China is after spring festival every year. Adjusted for the Chinese New Year holiday, the average daily newly verified users, including both job seekers and enterprise users exceeded the same period last year and active users after spring festival reached at a record high.

The average daily job postings in the 15 days after the spring festival grew by a double-digit percentage year-on-year. In terms of supply and demand dynamics, the ratio of job seekers to enterprise users, which is the [ C2B ] ratio, our platform remained within a healthy and reasonable range.

By industry sector, active job postings in areas such as manufacturing, electronics and communications, semiconductors, automotive, advertising and media and urban services grew at a faster pace compared to other industries. Given that the spring festival fell later this year compared to last year, and it has been only a few weeks since the holiday period ended, white-collar and large enterprises typically resume operations slightly later than blue-collar and SME sectors. However, based on our current data, both newly added and active job postings in fields such as Internet, AI and technology already showing signs of accelerated year-on-year growth compared to the same period last year.

Third, our AI progress. First, with the empowerment of AI, the company now has significantly greater opportunities to deliver closed-loop services. For enterprise users, the goal is to bring the right people on board. For job seekers, it's about securing a stable position. In this sense, the value that online equipment has provided since its inception represents only a small part of the big picture so far.

In the past, online recruitment advertising platforms primarily offered value through information dissemination between supply and demand side. Now platforms like BOSS Zhipin focus on increasing the profitability and opportunity of establishing labor contracts between enterprise users and job seekers. Moving forward, the online recruitment industry has the opportunity to evolve towards a closed-loop model. AI can assist companies in completing the last mile of work.

By 2025, with the support of AI capabilities, the revenue from closed-loop services has already reached the scale of hundreds of millions RMB. To date, this segment has been growing faster than other businesses on our platform. In fact, many have recognized that AI can improve the matching efficiency for any roles in the economy. In simple terms, AI enables large-scale closed-loop services by better digitalizing both sides of demand, enhancing the efficiency of frontline workers and reducing the maintenance costs of large teams.

Another progress, I will describe it between the enterprise user side and job seeker side. The AI quick hiring tool developed for high-end users with demanding recruitment requirements and strong willingness to pay has achieved positive results and is now being scaled up for broader trials. The core function of the tool is to better remember and understand the specific needs and preferences of targeted client, automatically conduct searches within a database of 250 million job seekers and the continuous interaction with users to improve hit rate. The feature demonstrates high reusability, and we believe that it holds strong commercial potential.

From the job seeker side, our AI-assisted interview feature experiment has been fully rolled out to users within BOSS Zhipin's interview rooms. This has significantly increased both the usage and reusability of the company's proprietary interview rooms, while also enabling the platform to collect a greater volume of high-value interview data.

The third progress is that the company has adopted a proactive approach in applying AI agent to assist the specific enterprise users by leverage AI hosting and screening capabilities. [ Protected delivery ] efficiency has significantly improved in a situation like hiring scenarios such as for manufacturing workers and live streamers. This progress makes a business model based on successful hires or interviews viable on a large scale. We consistently inform job seekers that they are interacting with AI agents. And we believe that the job seekers response is quite positive and enterprise user satisfaction rate is high.

The last approach in terms of scientific research, the scientists at our company's [indiscernible] lab have made some industry-leading exploration into the intelligence and capability filling of small models. Among this, the recently opened source, [indiscernible] [ 4.1/3B ] model with only 3 billion parameters, surpassed models from the [indiscernible] series ranging from 4 billion to 52 billion parameters on multiple evaluation tasks. We are not intended to compare with others on this scale. In late February, it ranked first in HuggingFace's trending list for the text generation models.

Fourth, our plan for shareholder returns. Today, the Board passed a resolution approving a plan to allocate no less than 50% of the prior year's adjusted net income for dividend and share repurchase over the 3-year period starting from 2026. Meanwhile, the company will increase the share repurchase program upper limit from $250 million to $400 million initially approved in August 2025. We will scale up repurchase as appropriate in response to changing market conditions, and we believe that it fully demonstrates our confidence in the company's long-term growth as well as our long-run commitment to delivering value to our shareholders and friends who supported and believed in us.

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

Thanks, Jonathan. Hello, everyone. Now let me walk through the details of our financial results of the fourth quarter and full year of 2025. We are pleased to deliver a quality set of financial results for the fourth quarter and full year, with revenue growth continued its accelerating momentum and enlarged profitability. In the fourth quarter, the recruitment market sustained a steady recovery trend throughout the year. Under such conditions, our revenues reached RMB 2.1 billion during this quarter with growth rate accelerating to 14% year-on-year and grew by 12.4% to RMB 8.3 billion for the full year.

Our number of paid enterprise customers for 2025 expanded to 6.8 million, marking a 12% year-on-year growth and 1.3% increase compared to the trailing 12 months ended September 30. We witnessed a more balanced growth this year with faster revenue growth from both key accounts and small size accounts. In the fourth quarter, in particular, revenue from small-size accounts grew 21% year-on-year, outpacing mid-size accounts and key accounts. As a result of this structural impact, overall, ARPPU remained stable, but ARPPU for each segment all showed increasing trend.

Moving to the cost and expenses side. Our total operating cost and expenses decreased by 7% year-on-year to RMB 1.4 billion during the fourth quarter and by 7% to RMB 5.8 billion for the full year. Total share-based compensation expenses decreased by 23% and 20% year-on-year, respectively, in this quarter and the full year. As a percentage of revenue-wise, SBC went down by 5 percentage points year-on-year, both for the quarter and the full year, and we also expect this trend to continue. Excluding share-based compensation expenses, our adjusted income from operations grew by 37% to RMB 900 million and 46% to RMB 3.5 billion, respectively, for the quarter and the full year.

The adjusted operating margin for the fourth quarter reached a quarterly historical high of 43.3%, while the annual adjusted operating margin improved by 9 percentage points to 40.8% in 2025, continuing to demonstrate our strong operating leverage and unwavering commitment to financial discipline. Cost of revenues decreased by 1% year-on-year to RMB 309 million during the fourth quarter and decreased by 0.4% to RMB 1.2 billion for the full year. This decrease was primarily due to a decrease in employee-related expenses and rental expenses partially offset by an increase in payment processing cost.

As a result, our gross margin went up by 2 percentage points to 85.1% in 2025, marking the second year of increasing. Sales and marketing expenses decreased by 9% year-on-year to RMB 389 million during this quarter and decreased by 18% to RMB 1.7 billion for the full year. The decrease for the quarter was primarily due to improved sales efficiency, which led to a decreased employee-related expenses. No major marketing campaign in this year also further decreased sales and marketing expenses for the full year. R&D expenses decreased by 8% year-on-year to RMB 406 million this quarter and decreased by 9% to RMB 1.7 billion for the full year.

Excluding share-based compensation expenses, our adjusted R&D expenses decreased by 4% year-on-year to RMB 1.3 billion for the full year and stayed relatively flat year-on-year and sequentially for this quarter. G&A expenses decreased by 7% year-on-year to RMB 256 million during this quarter, which was mainly due to decreased employee-related expenses. G&A expenses increased by 10% to RMB 1.2 billion for the full year primarily due to a one-off impairment of intangible assets booked in the third quarter. Income tax expenses were RMB 165 million this quarter, up 81% year-on-year. This was primarily driven by higher income before income tax expenses as well as the provision of a top-up tax of RMB 38 million related to the OECD Pillar Two global minimum tax rules.

Our net income reached RMB 682 million in the quarter and RMB 2.7 billion in 2025. Our adjusted net income increased by 25% year-on-year to RMB 906 million in the fourth quarter and 33% year-on-year to RMB 3.6 billion for the full year. Adjusted net margin continued to expand in 2025 and reached historical high of 43.6%. Net cash provided by operating activities amounted to RMB 1.3 billion during the fourth quarter and increased by 29% year-on-year to RMB 4.6 billion for the full year. And our cash position stood at RMB 19.9 billion as of December 31, 2025.

We will leverage our strong cash position and profitability to invest in future growth initiatives as well as shareholder returns. In 2025, we declared a dividend of USD 80 million. And as of year-to-date in 2026, we have already repurchased a total of USD 50 million worth of shares. Furthermore, as Jonathan just announced, the Board has approved a new shareholder return policy that for each year in next 3 years starting from 2026, we will allocate no less than 50% of the company's adjusted net income of the preceding fiscal year for dividend distribution and share repurchases and upsize our share repurchase program to a total of USD 400 million through August 28, 2027.

And now for our business outlook, for the first quarter of 2026, we expect our total revenues to be between RMB 2.050 billion and RMB 2.085 billion, a year-on-year increase of 6.6% to 8.4%. This Q1 figure reflects a different seasonality in this year as the later Chinese New Year meant a shorter window of the peak recruitment season fell within this quarter. This timing difference aside, our underlying momentum remains strong with the strong demand we are seeing throughout the spring season. We expect a clear acceleration in revenues over the coming quarters.

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

[Operator Instructions] Our first question comes from Eddy Wang from Morgan Stanley.

[Interpreted] I have -- recently, we have seen a very extensive debate around the narratives of AI disruption and substitution. I think the market and investors have 2 key concerns regarding the impact of AI on the industry and on our company. So I would appreciate your insights on two questions. First is that will the adoption of AI agents significantly reduce the future demand of the white-collar hiring and the jobs and affecting the long-term growth potential of the recruitment market in China.

And the second question is does the development of AI technology pose a very big challenge to BOSS Zhipin's competitive advantage and the business mode in the future?

[Interpreted] Thank you for your question. I also made certain observations and consideration that I noticed in America, both domestically some discussions about AI capability to replace human labor force, especially for white collar. And you know OpenClaw is quite important. Recently everybody is talking about OpenClaw. So that might take some opportunities for human work, I notice that.

But my own thinking is that more based on the market we are facing, my first opinion is that the development of AI, the improvement AI can have to the human labor efficiency, I think it's a very good supplement to the overall labor force in the coming 2 to 20 years.

So we have made some quite reasonable and practical calculation that if we consider age between 16 and 59, a broader age for labor force, that number in 2026 is about 180 million. And according to the current situation, we refer that in 2036, that number will go down by around 9%. And until 2046, the number will further go down by 20% to 690 million. So this is a result based on our calculation and some factor data. So in fact, this 9% to 20% in the coming 20 years, that decrease in the number, I think, is quite challenging, quite severe challenge. And what we can see can help with this situation is actually the application of AI in this daily work.

And another thing different about this AI discussion, replacing discussions in the U.S. that 2 different points between U.S. and China. First, is the ratio between blue-collar and white-collar is different. So they are around like 150 million or 160 million labor force in the U.S. and the white-collar has around 100 million. So it's like a 2:1 ratio. From China's perspective, this is other way around, which is we have more blue-collar population.

So another different point between U.S. and China is the situation of the enterprises, which is employers. So this is a commonly agreed that in China, the number of active operational enterprises is around like 40 million. So according to the public data we can get, 98% of which are small or even micro-sized enterprises. So from SMB's perspective, maybe you can record a lot of very successful SaaS companies are not that easy to achieve same kind of success in China because where in China, 98% of companies are SMBs. When they are hiring people, for example, they're hiring 8% compared to 9%. The difference is not huge and it's not that difficult.

So it's the same situation here, around 40 million enterprises in China hired around 420 million urban employees. So on average, one company hired around 10%. Because the development of AI, the company might hire 9% instead of the 10%. I think that can explain why a lot of software or SaaS company [indiscernible] China that is actually determined by the size of the company and the different stage of the development of the company.

Of course, the discussion before was based on the assumption that AI was largely taking jobs from the human beings. And now I will share another real data I have observed recently that this AI development has brought about a very good [ enthusiasm ] about the entrepreneurs of technology companies and also a surge in demand from AI-related talents. So this year, after the spring festival from the demand of the enterprise customers, the AI-related, artificial intelligence-related newly posted jobs grew by 172% year-on-year and active online jobs increased by 80%. That's a very huge improvement.

Now about direct -- beyond direct AI-related jobs, we have another concept about AI path, if you can record the concept of Internet path. So more and more companies, not only in the first-tier cities, but also more and more like second-tier cities in the center of the province, the companies are recruiting talents or background related to AI and increasing -- creating new roles. Now we can call that AI path for now, actually, those jobs are more commonly adopted and more and more further going into low-tier cities and more and more common or lower in the salary range.

And now for the overall number of jobs for the white collar, I actually mentioned in my report earlier that this year, the overall number of white-collar jobs increased especially like Internet, like information, communication, semiconductors and [ automobile ]. They actually are outgrowing the overall platform. And if you compare to the other side in the U.S. from indeed their data also show that the number of white-collar jobs increased this year.

And I quite appreciate your concern about our own challenge arrived by the AI itself. We have been paying a lot of attention to this since beginning of 2023 with ChatGPT 3.5 moment.

First, one thing has not changed, the AI also cannot change, BOSS Zhipin is actually a platform for the game of people for a [ common-based ] human beings, both sides are [ naive ] people who are looking for a job to provide for his family. So the person needs somebody to help him to do the job and both sides need to be [indiscernible] from the supply side and demand side. So that's a marketplace for [ real person ] of majority of the population.

Another point is that the analysts and investors who have known us quite well, know that one point, which was a prediction in the past, but a reality now that we have a very strong bilateral network effect, which caused that in addition of our users continue to grow, the individual achievement a user can get also increases. So until now, we haven't [ failed ] any challenge arrived -- posted to ourselves. On the contrary, due to our unique data, I think AI can help us to better solidify these advantages.

And another point is, as I mentioned in my prepared remarks that we now can clearly see that with the informative AI, we can move forward very aggressively into this placement market with multi-hundred billions of market size, which is actually since the beginning of online recruitment industry in 1997. And now the first time for the online recruitment platform to have opportunity to achieve like a business model based on results. And AI is actually helping us with that.

So Eddy, you can see I don't have any like unique point to predict or I'm not well positioned to predict what kind of influence or even [ disaster ] the AI can bring about to the real world. I just provide you some observations based on current data based on our daily work. So that's my answer to your question.

Our next question comes from Timothy Zhao of Goldman Sachs.

[Interpreted] The first question is a more follow-up question on the AI and AI progress. Could management share what is your plan for the AI product in terms of testing, in terms of new product launch? And regarding the AI product monetization, what kind of expectations we should have for this year? And we also note that for your Nanbeige large language model, just wondering what is the rationale behind your consistent investments. And what is your expectations in terms of the Nanbeige large language model application this year?

Secondly is regarding the recruitment demand or recruitment trend after Chinese New Year. Just wondering if you can elaborate more details and especially compared to the previous years, what are the special points about the recruitment demand for this year after the Chinese New Year?

[Interpreted] So about AI commercialization, so the first thing is about the closed-loop placement service, which last year, we have already made like million level -- RMB 100 million level of revenue and this year, we expect that number to double or triple or even have multiple growth that's quite sure. Another thing is not like a native AI product, but I would rather say AI is empowering overall aspect of our operation and the technology and the product to help us to provide better solutions and better experience to our customers.

So actually, Kanzhun has made a very significant investment in like AI applications, including resources, product managers and the technology team. In the meanwhile, we also kept a relatively smaller science team to develop our [ large language ] model. So the thing about keeping our own proprietary pretraining models, the reason is that I feel that we are necessary to keep our so-called taillight strategy during a world that AI is developing very, very fast. So we must have a team who can clearly follow the most advanced leading company to see what they're doing. So that's the reason why the [indiscernible] exist.

We cannot only become the company to download open-source platform. And then sometimes, someone trying to tell us if we can only download other [ purpose stack ], then we might not understand what is happening and download something we cannot properly use that. That's why we kept this taillight strategy. So we don't want to succeed, we just don't want to [ lose ].

Okay. Another point is that it's quite easy to understand why we are doing this smaller scale model because it has a relatively very low cost for training and revenue. And it means more smart or intelligent ideas, which is quite useful to our daily work. And apparently, we are doing this smaller-sized model to further help our industrial applications that are up on that. Another thing is our scientists, which number is relatively smaller, but they are very, very, very young and talented.

I would like to take this opportunity to tell you something they are sharing with that they say that one day, there is one day, it's not that compared to who can consume more electricity, who can consume more computing power, who have more data, who can give a higher salary. Compared to all those 4 things, actually is the obstacle that current paradigm is facing for the current model.

So actually, the science is not belonging to the mind, it belongs to the people who have very strong spirits. So actually, when our scientists are talking about making developing a smaller model, I didn't tell them to do it by tomorrow for industrial application. I want to say that we are not a very wealthy company, we are not. But in this progress of human technology revolution, we are -- we once have taken the #1 of the HuggingFace text ranking. It means that a smaller size company can express their own voice during this huge technology revolution.

Yes. About the spring recruitment -- spring festival recruitment season this year, as Jonathan just mentioned, this year, we actually saw a very strong recruitment demand with both new and active enterprise data showing significant year-on-year growth and the situation remains stable. So -- but I would like to point out, there is one difference this year that the later Chinese New Year actually will result in weaker year-on-year data for the fourth quarter especially on a GAAP basis because they are actually -- if you count, there are 20 fewer days for revenue [indiscernible] after the holiday compared to last year in the first quarter.

So that might have bigger impact on the GAAP numbers for the quarter. But on the full year, if you're looking at the Lunar calendar environment, our cash collection growth is positive, and we are expecting to accelerate further throughout the year compared to 2025.

And yes, that's our answer to the question. And given the time constraint, I think we can take the last question.

The last question comes from Wei Xiong of UBS.

[Interpreted] Firstly, could management update our user growth target for 2026 and considering the additional investment in sales, marketing and AI this year. How should we think about the margin trend as well as the future room for margin expansion?

And secondly, regarding our overseas business, could management please give an update there as well. We noticed very rapid user growth of OfferToday in Hong Kong. So what's our plan for the next stage of development?

Thank you for your question. I will answer the first one regarding margin, and then Jonathan will take the OfferToday question.

So for 2026, we are still looking at a very robust user growth. So at least -- we want to add at least 40 million of newly verified users this year. And in terms of investment, as you said, we might further invest in AI like computing power, buying servers and maybe renting some computing power. And about the [ World Cup ], we have not decided yet. But even considering those, we expect that given our strong leverage of our operations, we expect overall adjusted operating profit margin can slightly increase compared to last year, even taking consideration of the [ World Cup ] and AI investment. From the long term, we still have a quite huge upside potential for our [ main ] recruitment domestic business, and we will maintain a steady growth year-on-year going forward. However, as Jonathan just mentioned, we have -- if we have opportunities in new initiatives like closed-loop placement, AI overseas, we will not hesitate to invest, and we will communicate with the market [indiscernible] timely. But at least until now, we are expecting our margin to improve some in the coming years.

[Interpreted]. Thank you for not missing OfferToday. So this time we're coming to Hong Kong to do earnings. I have a slightly different feeling, especially now OfferToday has now ranked #1 in Hong Kong in terms of daily active users on the mobile app. If you compare different platforms, like mobile and PC, so among the 3 million workforce in Hong Kong, I can say every 50 Hong Kong workers, one of them is using OfferToday daily looking for opportunities. Some of them have already secured new work opportunities through OfferToday. But now when we are working on the road, I'm looking at all the potential users for me. I felt quite happy.

OfferToday is not a simple replica of BOSS Zhipin China Mainland, but the core is actually the same. So in somehow, the BOSS Zhipin as a native app has received a certain recognition in the Hong Kong market. But our sole job is to further push forward the localization, including two parts. First is the localization of own product. And second is the localization of our team, especially we are expecting more and more native Hong Kong young talents to join us becoming the lead manager of our [ office ] product.

And moving beyond OfferToday about our other international approaches, I can say that we will be more active to looking for opportunities to cooperate with local institutions for offers like that. Actually, we are making some progress, but still not turning yet to make the report.

I just want to clarify, Hong Kong is part of China, so beyond the overseas market. So that's all the answers for the question.

Due to time constraint, that concludes today's question-and-answer session. At this time, I will turn the conference back to Laura for any additional or closing remarks.

Thank you once again for joining us today. If you have any further questions, please feel free to contact us. Thank you.

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you for standing by, and welcome to Kanzhun Limited Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] Today's conference is being recorded.

At this time, I'd 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.

Now I will turn the call to Jonathan, our Founder, Chairman and CEO.

[Interpreted] 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'd like to stand over sincere gratitude to our users, investors and friends who have continuously believed and supported us.

I will briefly walk through our key operational results and business progress this quarter, focusing on 3 areas: first, recovery in demand driven [indiscernible] growth in our third quarter performance; second, the evolving characteristics for equipment demand across different dementias; third, progress in integrity into our product, technology and overall business [indiscernible].

Let's start with the financial performance. In the third quarter, we generated a total revenue of RMB 2.16 billion, up 13.3% year-on-year with growth at high rate from the previous quarter. [indiscernible] compensation expenses and other income, such as investing base of adjusted operating profit, which [indiscernible] up 49.3% year-over-year.

Our GAAP net profit was only [ RMB 780 million ], up 67.2% year-on-year, with a net profit margin of 35.8%. [indiscernible] this improvement was attributable to a decrease in share-based compensation expenses, which was RMB 220 million this quarter, marking the third productive quarter of sequential decline and a year-on-year drop of 21%.

The growth in the third quarter was driven by 2 key factors. The first and most important driver was continued EBIT growth supported by our increase in penetration and expanding market share. From January to October, we acquired almost 4 million new [indiscernible]. In the third quarter, the average verified mostly active users, which is [indiscernible] reached 53.82 million.

While the user sales grow, user activity is also strong according to [indiscernible] our DAU to MAU ratio has retained a high industry-leading level.

The second driver was relieved on the enterprise side demand, which also helped the number of improvement of data in the monetization side. In the third quarter, the newly [indiscernible] increased 25% year-on-year, will boost the number of contracts posting new jobs and average number of post-perpetual grew steadily compared to the previous quarter and the same period in 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 3 years.

The supply-demand balance on our platform means the ratio of enterprise users to job seekers continue to improve. By September 30, the number of [ time ] enterprise customers in the 12 months grew 13.3% year-on-year to 6.8 million. Over the entire quarter, the payment ratio among quarterly active users increased both year-on-year and quarter-on-quarter.

The second agenda item focuses on service enterprise current demand in this quarter from multiple perspectives. From an industry perspective, [indiscernible] revenue growth continued to lead with its revenue contribution reaching a record high in the third quarter. Manufacturing industries remains the most robust sector [indiscernible] industry's revenue growth in 5 consecutive centers.

Seeking this opportunity, I would like to do a brief review. 3 years ago, the company's strategy performing manufacturing job seekers recruiter was divided into 3 states in terms of priorities. The first stage is to improve the online job search environment for blue collar workers. Between the passage of [indiscernible] and profitable second, we chose the second path. The second stage is to develop a user scale [indiscernible] platform and the third day to pursue commercial benefits in our renewable scale.

In 2022, we launched the [indiscernible] for blue collar workers pursuing authenticity of culture, job positions and compensation combined with information and increasing [indiscernible] track. Over the past 3 years, the process has been extremely challenging, and the results have gravely emerged.

Meanwhile, transportation, logistics and warehousing and the solar industry also delivered solid overall performance. Among the white collar factors, industries, such as artificial intelligence, Internet service, lifestyle service, new retail and [indiscernible] leading growth.

One thing worth mentioning among the white collar segment, which is -- we have noticed a notable increase in participation from small and medium-sized enterprises in the white collar industry. With paying user numbers growing quickly through the [indiscernible] remains stable, which is also the trend to prove patents. This in certain levels reflecting on revival of the white collar entrepreneur ecosystem.

From the perspective [indiscernible], demand in Tier 1 cities is rebounding. [indiscernible] remain stable, and the revenue contribution from Tier 3 and Tier 3 cities continue to rise. Among enterprises [indiscernible] different sizes, mutual life enterprise, which is between [ 500 to 9,999 ] are growing the fastest, followed by small macro enterprising and low enterprises.

The third agenda item, we used the progress we made since I was interpreting the company's business from product and technology perspective. On the [indiscernible] conserve plan, there are 2 things worth mentioning. First, after series of continuous iteration, the [indiscernible] job search systems have been fully launched for all job seekers.

Currently, it can recommend position for users on the questions and also provide suggestions on how to optimize their revenues. In the third quarter, not only was the full rollout of this product has been achieved, but the number of interactions per user with this job search assistant also showed a significant quarter-on-quarter increase.

And then we have also been continuously optimizing the AI interview culture feature. In the third quarter, a number of job seekers who completed the more interviewed shows further improvement and also their activity level and conversion rates continue to improve compared to the first quarter.

On the recruiter service side, multiple AI products have been gradually launched to provide services. They are full [indiscernible] metric. First, the AI communication 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 first rollout. Experiment shows that this product would only help the platform better understand recruiters [ intentions ], but also allows for comparison among all job seekers on the platform. They are improving matching purity. Currently, [indiscernible] recruiter participated in the [indiscernible] increases.

Third, we have extended AI interim features to a number of well-known customers from the [indiscernible] recruitment side. For example, the AI interview can support multiple [indiscernible] and customize into newer profile. This client has very strong appeal to [indiscernible] leading to a high-volume application in the short term, which increasingly significantly pressured for recruiters during the campus recruiting activities. The development of the developing AI [indiscernible] this pressure.

Fourth, we are potently exploring AI wholesale recruitment service and AI-powered box placement solutions in diverse recruitment scenarios such as high-end white collar and gold collar [indiscernible] and manufacturing industries. These initiatives are gradually generating benefits.

Among all those enterprise [indiscernible] services, we have been quite cautiously which we allow the job seekers to know [indiscernible] narrow they are communicating with an AI profits, and they have an option to close the service they have the button and sometimes someone might choose to close and someone choose to continue the communication, and we are continuously acting related examples.

We [indiscernible] provides the option for jobseekers, whether we can communicate with AI to guarantee their interest, but also, we are continuously to observe with the intervention of AI, what kind of impact will affect the neutral [indiscernible], but also from a stable double-side situation and what kind of impact of the -- of this will have to our ecosystem from job seeking and recruitment perspective. We are continuing to growing and acting 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 [indiscernible]. Looking ahead, we will continue to focus on strengthening our core business capability, will 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 RMB 2.2 billion this quarter, with growth accelerating to 13% year-on-year. The faster revenue growth this quarter was primarily driven by higher enterprise user growth as well as improve the monetization level due to the recovering hiring demand.

Our commercialization strategy grounded in technological balance enabled 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 middle sized -- 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 RMB 1.5 billion in this quarter. Share-based compensation expenses dropped by 21% year-on-year and 6% quarter-on-quarter to RMB 216 million, shrinking for the third consecutive quarters on both absolute amount and the percentage of revenue. Excluding share-based compensation expenses, adjusted income from operations grew by 49% to RMB 904 million, and our adjusted operating margin reached 41.8%, up by 10.1 percentage points year-on-year and a relatively flat quarter-on-quarter.

Cost of revenues decreased by 2% year-on-year to RMB 308 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 operations. 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 RMB 394 million during this quarter. As we don't have sports events, marketing campaigns this year, even if we exclude 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 confirmed our sustainable increase of marketing efficiencies due to our strong brand recognition and network [indiscernible]. Our R&D expenses decreased by 12% year-on-year to RMB 408 million in this quarter. Excluding share-based compensation expenses, our adjusted R&D expenses decreased by 8% year-on-year to RMB 331 million in this quarter and it stays relatively flat sequentially. Our G&A expenses increased by 28% to RMB 367 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 RMB 228 million in this year, primarily due to a partial disposal of every investment and increased interest from [ HKD 2.2 billion ] shares offering this proceeds in early July. Our net income increased by 67% to RMB 775 million in this quarter, with adjusted net income increased by 34% to RMB 992 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 6 consecutive quarters. Net cash provided by operating activities reached RMB 1.2 billion in this quarter, up 45% year-on-year. As of September 30, 2025, we continue to maintain a strong cash position of RMB 19.2 billion.

And now for our business outlook. For the fourth quarter of 2025, we expect our total revenue to continue the growth momentum and reached between RMB 2.05 billion and RMB 2.07 billion with a year-on-year increase of 12.4% to 13.5%.

With that concludes our prepared remarks. And now we would like to answer questions. Operator, please go ahead with the call.

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

[Interpreted] I have 2 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 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?

[Interpreted] From our data persperctive, the recruitment activities from enterprises mainly recovered in the third quarter. The growth rate of monthly active users [indiscernible] is faster compared to the job seeker. The pressure from the job seeker platform has been [indiscernible]. If we can report that back in 2021 and 2022, it was a real very difficult for the fresh graduates to find a job, and in the stream and the opening [indiscernible] was affecting or not happening as receptive. So people -- young -- especially young people, it's really difficult to finda a job.

This year, take July, for example, the fresh graduates, the expression for job seeking demand compared to the same period last year has declined by [indiscernible]. Meanwhile, from the enterprise side, the company will 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 for example, that we quite clearly felt the pressure, which have been accumulated for several years, which released a lot in the third quarter. In the third quarter, the companies have ratio between job seekers and recruiter among active users improved compared to last year. The newly added [indiscernible] also recruited and also the third quarter is better than the second quarter, which gives [indiscernible] continued confidence.

So it's quite needed to understand that based on the change, improving change of supply and demand, we increase 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 low base. So from an quarter perspective, we also compare to 2023 in the same period. 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 compared to the [indiscernible].

So based on all the observations and comparisons, I had the confidence to conclude in my prepared remarks that improved hiring demand drove our [indiscernible] demand growth and that's where my confidence come from.

And now Phil will give you [indiscernible] regarding the retention and change [indiscernible].

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 improving contract renewal rate improving continuously, particularly in third quarter. In the past, actually, for the first time in the past 2 years, a company level net dollar retention rate starting to bottom out. This signals potential turning point from previous onward trajectory. And we believe this is driven primarily by improved the company retention rate and their higher renewal spending. And we observed this situation, not only at the key account customers, but also at a small, medium-sized enterprises.

So simply speaking, that the company's renewal and new 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.

Our next question comes from Wei Xiong from UBS.

[Interpreted] 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?

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

By mentioning this, I would like to clarify on [indiscernible]. Firstly, majority of our main [indiscernible] customers are developed on their own rather than gaining shares from our shares.

So the second concept is that the public data that China is over 40 million [indiscernible] and our higher enterprise number of paid enterprise customers still a small close percentage of that. That's why even on the [indiscernible] macro situation, we still have ample room to grow our market share.

And the logical conclusion is that when the market can cover when the demand improved, we can enjoy a revenue engine growth rate. But on a competitive land perspective, we need to [indiscernible] that for the customer, both we and our peers are [indiscernible], especially under economic pressure situation and the clients normally will tend to service provide who has better ROI and higher service mobility. And we do have some montages over that.

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

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

Our procedure is better serve users in higher revenue growth actually has 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 understanding what is the profitability [indiscernible].

And for your reference, [indiscernible].

Our next question comes from Timothy Zhao from Goldman Sachs.

[Interpreted] 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 amortization 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 Mercer also has been evolving experience model. Could management share your view on the competitive landscape between the traditional recruitment platforms as well as -- and the general AI companies in the recruitment industry?

[Interpreted] So when we are trying to combine AI and the human activities, we had some very interesting findings under our [indiscernible] experiments. For example, both customers who quite angry and cannot contain his temper, he is placing customers service [indiscernible] people they could be quite aggressive. But when the customer knows that the [indiscernible] party is AI, [indiscernible] from very harsh words. So the biggest comparison from the customer [indiscernible].

And the second example is for our AI interact products. So a lot of job seekers who have used this service to repeatedly to try and introduce deals once or once again. But we found out that when the job seeker is [indiscernible] is below the first one, then they will start this repeat. So you can see some very interesting findings, I can show in our daily recruitment. So when people can control -- well control his temper when they are speaking with AI and also people who are [indiscernible] real human coach very frequently, but you can do that through AI.

All these results is telling us that when we apply the technology through a very, very interested people and the job matching the superior and subordinated action for this other scenario, we need to be very cautious when looking the [indiscernible]. So now all more than 2 years, this really exciting [indiscernible] been able to generate a killer level applications in our industry. Actually, we are not in a hurry and actually give us more time to firm away to how [indiscernible] with all these developments and the new technologies.

So I just mentioned that on the certain placement is narrow, both in blue collar and white collar recruitment such as full cycle holding recruitment service or semicycle hosting recruitment service, we have been very actively choose -- try out to use less, but also quite cautiously. So, 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 all industry questions, part we can generate revolution level industry change.

Just like the lower network and recommendation technology combined with the condition of improvement and demand that have generated faster [indiscernible] 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. [indiscernible] professionals to do the tagging actually show the value of the high-quality data. If the high-quality data is very critical, it's very important then with the -- team, other peers within our industry actually have some certain level of advantages.

Just to -- your question, I want to express some observations we noticed from our daily approaches. And that all our answer to questions, 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. Thank you.

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

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]