Financial Performance - Revenue for the first half of 2023 reached RMB 2,765.2 million, representing a 22.9% increase compared to RMB 2,250.2 million in the same period of 2022[6] - Net profit for the first half of 2023 was RMB 342.3 million, a significant increase of 326.1% from RMB 80.3 million in the first half of 2022[6] - Adjusted net profit (non-GAAP) for the first half of 2023 was RMB 813.5 million, up 123.9% from RMB 363.4 million in the same period of 2022[6] - The company reported a pre-tax profit of RMB 383.7 million for the first half of 2023, a remarkable increase of 306.3% from RMB 94.4 million in the same period of 2022[6] - Total revenue increased by 22.9% from RMB 2,250.2 million in the first half of 2022 to RMB 2,765.2 million in the first half of 2023[19] - Revenue from online recruitment services for enterprise clients rose by 22.6% to RMB 2,730.9 million in the first half of 2023, compared to RMB 2,227.2 million in the same period of 2022[22] - Other services revenue, primarily from paid value-added services for job seekers, increased by 49.1% to RMB 34.3 million in the first half of 2023 from RMB 23.0 million in the first half of 2022[22] - Operating profit grew by 33.8% from RMB 73.0 million in the first half of 2022 to RMB 97.7 million in the first half of 2023[27] User Engagement - Average monthly active users reached 41.7 million in the first half of 2023, a 61.0% increase from 25.9 million in the first half of 2022[9] - The average daily active users to monthly active users ratio was 26.8% in the first half of 2023, consistent with the previous year[9] - The company reported a significant increase in daily active users, with a total of 1.5 million users logging in at least once per day on the BOSS recruitment mobile application[118] - The company reported a total of 55 million monthly active users as of June 30, 2023, indicating a significant user engagement[119] Operational Efficiency - The company aims to enhance operational efficiency to achieve sustainable high-quality growth in the future[10] - The company continues to focus on technology innovation and user experience optimization to strengthen its leadership in the online recruitment market in China[9] - The company is committed to continuous improvement in its operational efficiency and cost management strategies to enhance profitability[118] Expenses and Costs - Operating costs rose by 47.2% to RMB 517.5 million in the first half of 2023, up from RMB 351.6 million in the first half of 2022[23] - Marketing expenses increased by 19.4% to RMB 1,100.4 million in the first half of 2023, compared to RMB 921.9 million in the first half of 2022[24] - R&D expenses grew by 16.8% to RMB 699.0 million in the first half of 2023 from RMB 598.4 million in the first half of 2022[25] - General and administrative expenses increased by 16.3% to RMB 367.6 million in the first half of 2023, up from RMB 316.0 million in the first half of 2022[26] Cash Flow and Financial Position - As of June 30, 2023, total cash and cash equivalents, time deposits, and short-term investments amounted to RMB 12.8 billion, with a net cash flow from operating activities of RMB 1.3 billion for the first half of 2023[29] - The group had no interest-bearing bank or other borrowings as of June 30, 2023, resulting in a debt-to-equity ratio of zero[30][32] - Cash and cash equivalents decreased to RMB 2,740,769 thousand as of June 30, 2023, from RMB 9,751,824 thousand as of December 31, 2022, a decline of 71.9%[66] - Total assets increased to RMB 16,382,801 thousand as of June 30, 2023, from RMB 14,826,867 thousand as of December 31, 2022, representing a growth of 10.5%[66] - Total liabilities rose to RMB 3,550,793 thousand as of June 30, 2023, compared to RMB 3,186,104 thousand as of December 31, 2022, an increase of 11.5%[66] Corporate Governance - The company has complied with all provisions of the corporate governance code, except for the separation of roles between the Chairman and CEO, which is held by Mr. Zhao[38] - The company has established a corporate governance committee to ensure compliance with regulations and protect shareholder interests[43] - The corporate governance committee consists of three independent non-executive directors, with Zhao Peng serving as the chairman[43] Share Structure and Incentives - The company has a dual-class share structure, with Class A shares granting one vote and Class B shares granting ten votes, allowing significant voting control to Mr. Zhao, who holds approximately 16.2% of the issued shares[36] - The company has a total of 19,355,262 Class A shares reserved for future grants under the share incentive plan, which will affect voting rights if exercised[36] - The board of directors has approved a share incentive plan to motivate key employees, which is expected to drive productivity and innovation[120] Future Outlook - The company has outlined future performance guidance, aiming for a revenue growth rate of 20% year-over-year for the next fiscal year[118] - The company plans to expand its market presence in Southeast Asia, targeting a 15% increase in user acquisition by the end of 2024[120] - New product launches are expected to contribute an additional RMB 300 million in revenue for the second half of 2023[120] - A strategic acquisition is in progress, which is projected to enhance the company's market share by 10%[120]

Financial Data and Key Metrics Changes - The company reported a GAAP revenue of RMB1.49 billion for Q2 2023, representing a 34% year-over-year increase and a 16% quarter-on-quarter growth [5][11] - Calculated cash billings reached RMB1.62 billion, up 65% year-on-year [5][12] - Net income for the quarter was approximately RMB310 million, with adjusted net income increasing by 135% year-on-year to around RMB570 million, marking the highest quarterly record in the company's operational history [5][15] - Adjusted operating margin improved to 29.2%, up by 8.8 percentage points year-on-year [13][15] - Cash, cash equivalents, and short-term investments totaled RMB12.8 billion as of June 30, 2023 [16] Business Line Data and Key Metrics Changes - Average monthly active users (MAU) on the BOSS Zhipin app rose to 43.6 million, up 65% year-on-year [5][11] - The revenue contribution from blue-collar users increased to over 32% of total revenues for the quarter [7] - Total paid enterprise customers reached a record-high of 4.5 million, up 18% year-on-year and 13% quarter-on-quarter [8][12] Market Data and Key Metrics Changes - Recruitment demand in sectors such as catering, hotel, tourism, beauty, personal care, and logistics has significantly increased [6] - The number of active enterprise users reached a new high, indicating a recovery in recruitment demand since the beginning of August [9] Company Strategy and Development Direction - The company continues to invest in algorithms and products to enhance service capabilities, particularly targeting blue-collar workers and SMEs [8] - The strategy focuses on increasing market share and improving technology investments to adapt to changing market conditions [35] - The company aims to capture growth opportunities in lower-tier cities and blue-collar populations [8][35] Management's Comments on Operating Environment and Future Outlook - Management noted a quick recovery in recruitment demand following the graduation season in July, with a promising upward trend observed since early August [9] - The company expects total revenues for Q3 2023 to be between RMB1.53 billion and RMB1.56 billion, reflecting a year-on-year increase of 30% to 32% [17] Other Important Information - The company has initiated a share buyback program with a total size of RMB150 million, reflecting its strong cash position and commitment to shareholder returns [40] Q&A Session Summary Question: What factors will impact white-collar recruitment demand? - Management indicated that the recovery of white-collar recruitment is influenced by macroeconomic improvements and industry recovery trends [20][22] Question: Are new annual subscription enterprise users from existing platforms or new customers? - Most new annual contract customers are converted from existing users, with an increasing trend of customers switching from competitors [20][21] Question: What strategies are in place to improve ARPU and paying ratio of enterprise users? - The company is cautious about monetizing job seekers and focuses on converting more users into paid customers [26][27] Question: What is the outlook for operating margin in the second half? - Management expects operating margins to maintain a healthy level with potential for improvement, subject to seasonality [30] Question: How does the company view its competitive advantages in the blue-collar recruitment space? - The company highlighted its strong double-sided network effect and continuous investment in technology as key competitive advantages [43][44]

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 2,765,161 thousand, representing a 22.9% increase from RMB 2,250,224 thousand in the same period of 2022[2] - Operating profit increased by 33.8% to RMB 97,732 thousand for the six months ended June 30, 2023, compared to RMB 73,029 thousand in the prior year[2] - Net profit surged by 326.1% to RMB 342,260 thousand for the six months ended June 30, 2023, up from RMB 80,321 thousand in the same period of 2022[2] - Adjusted net profit (non-GAAP) reached RMB 813,453 thousand, a 123.9% increase from RMB 363,367 thousand in the same period of 2022[2] - Total revenue increased by 22.9% from RMB 2,250.2 million in the first half of 2022 to RMB 2,765.2 million in the first half of 2023[16] - Revenue from online recruitment services for corporate clients rose by 22.6% to RMB 2,730.9 million in the first half of 2023, compared to RMB 2,227.2 million in the same period of 2022[15] - The company achieved a net profit of RMB 309.6 million and an adjusted net profit of RMB 568.5 million in Q2 2023, both representing historical highs for the company[6] - The company reported a pre-tax profit of RMB 383,740 thousand for the six months ended June 30, 2023, up from RMB 94,444 thousand in the same period of 2022, indicating a growth of approximately 305.5%[40] User Engagement - Average monthly active users (MAUs) increased by 61.0% to 41.7 million for the six months ended June 30, 2023, compared to 25.9 million in the same period of 2022[5] - The average daily active users (DAUs) as a percentage of MAUs remained stable at 26.8% for the first half of 2023[5] Expenses and Investments - Marketing expenses rose by 19.4% to RMB 1,100.4 million in the first half of 2023, compared to RMB 921.9 million in the first half of 2022[18] - Research and development expenses increased by 16.8% to RMB 699.0 million in the first half of 2023, up from RMB 598.4 million in the same period of 2022[19] - The company invested RMB 100.0 million in August 2023 to acquire approximately 1.38% equity in a technology company[59] Cash and Assets - Cash and cash equivalents, along with short-term investments, totaled RMB 12.8 billion as of June 30, 2023[24] - Cash and cash equivalents decreased to RMB 2,740,769 thousand as of June 30, 2023, down from RMB 9,751,824 thousand as of December 31, 2022, a decline of approximately 71.9%[41] - Total assets increased to RMB 16,382,801 thousand as of June 30, 2023, from RMB 14,826,867 thousand as of December 31, 2022, representing a growth of approximately 10.5%[41] - The total amount of fixed deposits and short-term investments grew from RMB 3,458.1 million as of December 31, 2022, to RMB 10,050.1 million as of June 30, 2023, an increase of about 190.5%[53] Corporate Governance and Shareholder Communication - The audit committee, consisting of three independent non-executive directors, reviewed the unaudited consolidated financial statements for the six months ended June 30, 2023[37] - The company complied with all corporate governance codes during the reporting period, except for the separation of roles between the chairman and CEO[35] - The announcement reflects the company's commitment to corporate governance[60] - The board is actively involved in overseeing the company's operations and performance[60] - The company is focused on transparency and timely communication with stakeholders[60] - The interim report will include key financial metrics and operational highlights[60] Future Outlook and Strategy - The company continues to focus on technology innovation and user experience optimization to strengthen its leadership in the online recruitment market in China[5] - The company is confident in further improving operational efficiency to achieve sustainable high-quality growth in the future[6] - The company plans to enhance its technology infrastructure and optimize data analytics and deep learning capabilities to improve user experience[14] - The company aims to expand its user base across various industries and regions in the second half of 2023[14] Share Repurchase and Debt - The company approved a share repurchase plan allowing for the buyback of up to $150 million worth of shares over the next 12 months[13] - The company repurchased a total of 721,426 American Depositary Shares (equivalent to 1,442,852 Class A ordinary shares) for a total consideration of $9,999,822.98 during the reporting period[38] - The highest price paid per share during the buyback was $7.185, while the lowest was $6.585[38] - The company's debt ratio was zero as of June 30, 2023, with no borrowings reported[29] Tax and Liabilities - Total income tax expense surged from RMB 14.1 million in 2022 to RMB 41.5 million in 2023, marking an increase of approximately 194.5%[50] - The deferred income tax expense for 2023 was RMB 14.4 million, indicating the company’s strategic tax planning efforts[50] - The total liabilities for other payables and accrued liabilities decreased from RMB 633.5 million as of December 31, 2022, to RMB 520.0 million as of June 30, 2023, a reduction of about 17.8%[58] Employee Statistics - The company had a total of 5,434 employees as of June 30, 2023, with 49.7% in sales and marketing, 24.8% in R&D, and 20.4% in operations[32] Legal and Regulatory Matters - The company has not been involved in any significant litigation or arbitration during the reporting period[39] - There were no major events after the reporting period that could impact the company[39]

Financial Performance - For Q2 2023, the revenue was RMB 1,487.6 million (USD 205.2 million), an increase of 33.7% compared to RMB 1,112.3 million in Q2 2022[4] - The calculated cash receipts for Q2 2023 were RMB 1,619.5 million (USD 223.3 million), up 65.4% from RMB 979.2 million in the same period last year[4] - The net profit for Q2 2023 was RMB 309.6 million (USD 42.7 million), a significant increase of 234.7% from RMB 92.5 million in Q2 2022[4] - The adjusted net profit for Q2 2023 was RMB 568.5 million (USD 78.4 million), up 134.6% from RMB 242.3 million in the same quarter last year[4] - Operating profit for Q2 2023 was RMB 175.0 million (USD 24.1 million), an increase of 129.4% compared to RMB 76.3 million in Q2 2022[8] - Total revenue for the three months ended June 30, 2023, was RMB 1,487,615 thousand, representing a 33.7% increase from RMB 1,112,344 thousand in the same period of 2022[18] - Net profit attributable to ordinary shareholders for the three months ended June 30, 2023, was RMB 309,597 thousand, a significant increase of 234.5% compared to RMB 92,493 thousand in the same period of 2022[18] - Total revenue for the six months ended June 30, 2023, was RMB 2,765,161,000, representing a year-over-year increase from RMB 2,250,224,000[22] - Net profit for the three months ended June 30, 2023, was RMB 309,597,000, compared to RMB 92,493,000 for the same period in 2022, reflecting a significant increase[22] - Adjusted net profit for the six months ended June 30, 2023, was RMB 813,453,000, compared to RMB 363,367,000 for the same period in 2022[22] User and Customer Growth - The average monthly active users reached 43.6 million, a 64.5% increase from 26.5 million in Q2 2022[4] - The total number of paying enterprise customers was 4.5 million, an 18.4% increase from 3.8 million as of June 30, 2022[4] Expenses and Costs - Operating costs and expenses totaled RMB 1,310.8 million (USD 180.8 million), a 25.8% increase from RMB 1,041.8 million in Q2 2022[6] - Marketing expenses for Q2 2023 were RMB 471.6 million (USD 65.0 million), an 18.0% increase from RMB 399.5 million in Q2 2022[7] - R&D expenses for Q2 2023 were RMB 365.9 million (USD 50.5 million), an 18.9% increase from RMB 307.7 million in Q2 2022[7] - The company reported a total operating cost of RMB 1,310,808 thousand for the three months ended June 30, 2023, which is a 25.8% increase from RMB 1,041,790 thousand in the same period of 2022[18] - Research and development expenses for the six months ended June 30, 2023, totaled RMB 698,975 thousand, an increase of 16.8% from RMB 598,425 thousand in the same period of 2022[18] Cash Flow and Investments - Net cash flow from operating activities for Q2 2023 was RMB 763.7 million (USD 105.3 million), representing a 308.6% increase from RMB 186.9 million in Q2 2022[10] - Cash flow from operating activities for the six months ended June 30, 2023, was RMB 1,307,618,000, up from RMB 480,948,000 in the same period of 2022[21] - The company reported a net cash outflow from investing activities of RMB (8,390,368,000) for the six months ended June 30, 2023, compared to RMB (97,909,000) for the same period in 2022[21] Future Outlook - The company expects total revenue for Q3 2023 to be between RMB 1.53 billion and RMB 1.56 billion, reflecting a year-over-year increase of 29.8% to 32.3%[12] - The company aims to enhance operational efficiency for sustainable high-quality growth in the future[5] Shareholder Information - Basic and diluted earnings per American Depositary Share for Q2 2023 were RMB 0.71 (USD 0.10) and RMB 0.69 (USD 0.09), respectively, compared to RMB 0.21 and RMB 0.20 in Q2 2022[9] - Adjusted earnings per American Depositary Share for Q2 2023 were RMB 1.31 (USD 0.18) and RMB 1.26 (USD 0.17), up from RMB 0.56 and RMB 0.53 in the same period last year[9] - The board approved a share repurchase plan in March 2023, allowing the company to repurchase up to USD 150 million worth of shares over the next 12 months[11] Financial Position - As of June 30, 2023, cash and cash equivalents, along with short-term investments, totaled RMB 12,790.8 million (USD 1,763.9 million)[11] - Total assets increased from RMB 14,826,867,000 as of December 31, 2022, to RMB 16,382,801,000 as of June 30, 2023[20] - Cash and cash equivalents decreased from RMB 9,751,824,000 at the end of 2022 to RMB 2,740,769,000 by June 30, 2023[21] - Deferred revenue increased from RMB 2,060,892,000 as of December 31, 2022, to RMB 2,564,777,000 as of June 30, 2023[20] - The total liabilities rose from RMB 3,186,104,000 at the end of 2022 to RMB 3,550,793,000 by June 30, 2023[20] - The company’s total equity increased from RMB 11,640,763,000 as of December 31, 2022, to RMB 12,832,008,000 as of June 30, 2023[20] Non-GAAP Metrics - The company emphasizes the importance of non-GAAP financial metrics to assess operational performance and trends[15]

Interim Results Announcement Overview This section provides a high-level overview of KANZHUN LIMITED's financial performance and key non-GAAP measures for the reporting period [Financial Performance Highlights](index=1&type=section&id=Financial%20Performance%20Highlights) The company achieved substantial year-on-year growth in revenues, operating income, and net income for the first half of 2023 Financial Performance Summary | Metric | Six Months Ended June 30, 2022 (RMB thousands) | Six Months Ended June 30, 2023 (RMB thousands) | Change (%) | |:-----------------------------|:--------------------------------------------------|:--------------------------------------------------|:-----------| | Revenues | 2,250,224 | 2,765,161 | 22.9% | | Income from operations | 73,029 | 97,732 | 33.8% | | Income before income tax | 94,444 | 383,740 | 306.3% | | Net income | 80,321 | 342,260 | 326.1% | | Adjusted net income (non-GAAP) | 363,367 | 813,453 | 123.9% | [Non-GAAP Financial Measure Reconciliation](index=2&type=section&id=Non-GAAP%20Financial%20Measure%20Reconciliation) The company uses adjusted net income, a non-GAAP measure, to evaluate operating performance by excluding non-cash share-based compensation expenses - Adjusted net income (non-GAAP) is defined as net income excluding share-based compensation expenses, which are non-cash and do not result in cash outflow. This measure is used by management to evaluate operating performance and facilitate period-to-period comparisons[4](index=4&type=chunk) Adjusted Net Income Reconciliation | Metric | Six Months Ended June 30, 2022 (RMB thousands) | Six Months Ended June 30, 2023 (RMB thousands) | |:-----------------------------------------|:--------------------------------------------------|:--------------------------------------------------| | Net income | 80,321 | 342,260 | | Add: Share-based compensation expenses | 283,046 | 471,193 | | Adjusted net income (non-GAAP financial measure) | 363,367 | 813,453 | Business Review and Outlook This section reviews the company's business performance, strategic initiatives, platform services, and future outlook [Business Review for the Reporting Period](index=3&type=section&id=Business%20Review%20for%20the%20Reporting%20Period) In the first half of 2023, KANZHUN LIMITED continued its strategy of technology innovation, enhancing user experience and strengthening its leadership in China's online recruitment market, evidenced by significant user growth and robust engagement - The company continued to execute its strategy centered on technology innovation, enhancing user experience and strengthening its leadership in the online recruitment market in China[8](index=8&type=chunk) User Metrics | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Change (%) | |:-------------------------------------|:-------------------------------|:-------------------------------|:-----------| | Average Monthly Active Users (MAU) | **25.9 million** | **41.7 million** | **61.0%** | | Average DAU/MAU (First Half of 2023) | Consistent with 2022 | **26.8%** | - | [Management Commentary](index=3&type=section&id=Management%20Commentary) Management expressed satisfaction with strong Q2 2023 results, highlighting robust MAU growth, expansion into blue-collar and lower-tier cities, and the effectiveness of their flexible monetization model in capturing recovery opportunities, leading to record-high net income and adjusted net income - Founder, Chairman, and CEO, Mr. Jonathan Peng Zhao, highlighted robust MAU growth to a historical high, with expansion among blue-collar users and in second-tier and lower-tier cities, attributing it to product and algorithm iteration[9](index=9&type=chunk) - CFO, Mr. Phil Yu Zhang, noted a **33.7% YoY revenue increase** for Q2 2023, and record-high net income of **RMB309.6 million** and adjusted net income of **RMB568.5 million** for the quarter, affirming the business model's effectiveness and resilience[9](index=9&type=chunk) [Platform and Services](index=4&type=section&id=Platform%20and%20Services) The BOSS Zhipin mobile app employs a 'direct recruitment model' to efficiently connect job seekers and enterprises through two-way communication and recommendations - The BOSS Zhipin mobile app employs a 'direct recruitment model' that integrates two-way communication and two-sided recommendations for efficient online recruitment[12](index=12&type=chunk) - Services for enterprise users include job posting, personalized candidate recommendations, direct communication, and value-added tools to enhance recruitment efficiency[13](index=13&type=chunk) - Services for job seekers include job recommendations, direct chats with employers, resume delivery, and value-added tools for job hunt preparation[13](index=13&type=chunk) [Monetization Model](index=5&type=section&id=Monetization%20Model) The primary revenue source is paid services offered to enterprise users, based on a connection-oriented strategy, supplemented by value-added tools - Most revenue is generated from paid direct recruitment services and value-added tools offered to enterprise users, based on a connection-oriented monetization strategy[14](index=14&type=chunk) - Job seekers receive free core job seeking services, with paid value-added tools available to assist their job hunt[14](index=14&type=chunk) [Sales and Marketing](index=5&type=section&id=Sales%20and%20Marketing) The company leverages a proprietary CRM system to empower its sales team, acquires user traffic through online channels and organic growth, and invests in brand promotion - Sales team is empowered by a proprietary CRM system to identify and engage with employers for bulk purchases or tailored services, utilizing data-driven insights[15](index=15&type=chunk) - User traffic is acquired from online third-party channels (app stores, search engines, info feeds, social networking platforms) and organic growth (word-of-mouth, brand recognition)[15](index=15&type=chunk) - Brand image is promoted through various marketing initiatives, including outdoor, TV, video advertising, and campaigns at major events[15](index=15&type=chunk) [Recent Developments](index=5&type=section&id=Recent%20Developments) The company held its Annual General Meeting on June 26, 2023, and authorized a new share repurchase program of up to US$150 million - The Annual General Meeting was held on June 26, 2023, with all proposed resolutions adopted[16](index=16&type=chunk) - A new share repurchase program of up to **US$150 million** was authorized in March 2023. During the reporting period, over **1.4 million Class A ordinary shares** were repurchased for approximately **US$10.0 million**[17](index=17&type=chunk) [Business Outlook](index=6&type=section&id=Business%20Outlook) For the second half of 2023, the company plans to expand its user base, optimize sales and marketing, and continue investing in technology development - Plans to expand user base across job seekers, enterprise users, and various industries/areas in the second half of 2023[18](index=18&type=chunk) - Will optimize sales and marketing strategy while continuing investment in this area[18](index=18&type=chunk) - Commitment to ongoing technology developments to enhance the user-friendly ecosystem, reinforce technology infrastructure, and refine recommendation algorithms[18](index=18&type=chunk) Management Discussion and Analysis This section offers a detailed analysis of the company's financial performance, including revenues, costs, and income [Overview of Financial Performance (Table)](index=6&type=section&id=Overview%20of%20Financial%20Performance%20(Table)) The table provides a detailed breakdown of revenues, operating costs and expenses, and other income/expenses, culminating in net income for the six months ended June 30, 2022 and 2023 Consolidated Financial Performance | Metric | Six Months Ended June 30, 2022 (RMB thousands) | Six Months Ended June 30, 2023 (RMB thousands) | |:----------------------------------------------|:--------------------------------------------------|:--------------------------------------------------| | Revenues | | | | Online recruitment services to enterprise customers | 2,227,184 | 2,730,879 | | Others | 23,040 | 34,282 | | **Total revenues** | **2,250,224** | **2,765,161** | | Operating cost and expenses | | | | Cost of revenues | (351,578) | (517,486) | | Sales and marketing expenses | (921,900) | (1,100,431) | | Research and development expenses | (598,425) | (698,975) | | General and administrative expenses | (316,035) | (367,572) | | **Total operating cost and expenses** | **(2,187,938)** | **(2,684,464)** | | Other operating income, net | 10,743 | 17,035 | | **Income from operations** | **73,029** | **97,732** | | Investment income | 17,075 | 147,084 | | Financial income, net | 24,185 | 131,587 | | Foreign exchange gain | 4,694 | 2,808 | | Other (expenses)/income, net | (24,539) | 4,529 | | **Income before income tax expenses** | **94,444** | **383,740** | | Income tax expenses | (14,123) | (41,480) | | **Net income** | **80,321** | **342,260** | Share-based Compensation Expenses Allocation | Category | Six Months Ended June 30, 2022 (RMB thousands) | Six Months Ended June 30, 2023 (RMB thousands) | |:----------------------------------|:--------------------------------------------------|:--------------------------------------------------| | Cost of revenues | 16,113 | 22,962 | | Sales and marketing expenses | 63,817 | 124,530 | | Research and development expenses | 115,117 | 196,430 | | General and administrative expenses | 87,999 | 127,271 | | **Total** | **283,046** | **471,193** | [Revenues Analysis](index=7&type=section&id=Revenues%20Analysis) Total revenues increased by **22.9%** to **RMB2.8 billion**, primarily driven by user growth and engagement - Total revenues increased by **22.9%** to **RMB2.8 billion** for the six months ended June 30, 2023, primarily due to user growth and increased user engagement[22](index=22&type=chunk) - Revenues from online recruitment services to enterprise customers increased by **22.6%** to **RMB2.7 billion**[22](index=22&type=chunk) - Revenues from other services (mainly paid value-added services for job seekers) increased by **49.1%** to **RMB34.3 million**, benefiting from an expanded user base[22](index=22&type=chunk) [Cost of Revenues Analysis](index=7&type=section&id=Cost%20of%20Revenues%20Analysis) Cost of revenues rose by **47.2%** to **RMB517.5 million**, mainly due to increased server and bandwidth costs and payment processing costs, in line with business growth - Cost of revenues increased by **47.2%** to **RMB517.5 million**, primarily driven by higher server and bandwidth costs and payment processing costs, reflecting business growth[23](index=23&type=chunk) [Sales and Marketing Expenses Analysis](index=7&type=section&id=Sales%20and%20Marketing%20Expenses%20Analysis) Sales and marketing expenses increased by **19.4%** to **RMB1.1 billion**, primarily due to higher employee-related expenses, brand advertising, and customer acquisition costs - Sales and marketing expenses increased by **19.4%** to **RMB1,100.4 million**, mainly due to increases in employee-related expenses, brand advertising expenses, and customer acquisition costs[24](index=24&type=chunk) [Research and Development Expenses Analysis](index=7&type=section&id=Research%20and%20Development%20Expenses%20Analysis) Research and development expenses grew by **16.8%** to **RMB699.0 million**, primarily attributable to increased share-based compensation expenses - Research and development expenses increased by **16.8%** to **RMB699.0 million**, primarily due to increased share-based compensation expenses[25](index=25&type=chunk) [General and Administrative Expenses Analysis](index=7&type=section&id=General%20and%20Administrative%20Expenses%20Analysis) General and administrative expenses increased by **16.3%** to **RMB367.6 million**, mainly driven by higher share-based compensation expenses - General and administrative expenses increased by **16.3%** to **RMB367.6 million**, mainly due to increased share-based compensation expenses[26](index=26&type=chunk) [Income from Operations Analysis](index=7&type=section&id=Income%20from%20Operations%20Analysis) Income from operations increased by **33.8%** to **RMB97.7 million**, reflecting the overall business growth and expense management - Income from operations increased by **33.8%** to **RMB97.7 million** for the six months ended June 30, 2023[27](index=27&type=chunk) [Income Tax Expenses Analysis](index=7&type=section&id=Income%20Tax%20Expenses%20Analysis) Income tax expenses increased significantly to **RMB41.5 million** for the first half of 2023, up from **RMB14.1 million** in the prior year - Income tax expenses increased to **RMB41.5 million** for the six months ended June 30, 2023, compared to **RMB14.1 million** in the corresponding period of 2022[28](index=28&type=chunk) [Net Income Analysis](index=7&type=section&id=Net%20Income%20Analysis) Net income surged by **326.1%** to **RMB342.3 million**, primarily due to increased investment and financial income from treasury management - Net income increased by **326.1%** to **RMB342.3 million**, primarily due to increased investment income and financial income from the company's treasury management strategy, including investments in time deposits and principal-guaranteed fixed rate notes[29](index=29&type=chunk) Other Financial Information This section details the company's liquidity, capital resources, investments, and other key financial aspects [Liquidity and Capital Resources](index=8&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company maintained strong liquidity with **RMB12.8 billion** in cash, cash equivalents, time deposits, and short-term investments - Cash and cash equivalents, time deposits, and short-term investments totaled **RMB12.8 billion** as of June 30, 2023[30](index=30&type=chunk) - Net cash generated from operating activities for the first half of 2023 was **RMB1.3 billion**[30](index=30&type=chunk) [Interest-bearing Bank and Other Borrowings](index=8&type=section&id=Interest-bearing%20Bank%20and%20Other%20Borrowings) The Group did not have any interest-bearing bank or other borrowings as of June 30, 2023 - The Group did not have any interest-bearing bank and other borrowings as of June 30, 2023[30](index=30&type=chunk) [Significant Investments](index=8&type=section&id=Significant%20Investments) The Group made significant investments in principal-guaranteed fixed rate notes with UBS AG and Goldman Sachs, totaling **US$320 million** Fixed Rate Notes Investments | Issue Date | Parties to the fixed rate notes | Interest Rate (per annum) | Maturity Date | Principal amount of subscription (US$) | |:-----------|:--------------------------------|:--------------------------|:--------------|:---------------------------------| | May 30, 2023 | The Company, UBS AG | 5.30% | May 30, 2025 | 150,000,000 | | June 14, 2023 | The Company, Goldman Sachs | 5.33% | June 14, 2024 | 100,000,000 | | June 14, 2023 | The Company, Goldman Sachs | 5.23% | June 14, 2025 | 70,000,000 | - The fixed rate notes are principal-guaranteed with fixed returns, akin to bank deposits, and were determined to be fair and reasonable after arm's length negotiation[33](index=33&type=chunk) [Material Acquisitions and Disposals](index=9&type=section&id=Material%20Acquisitions%20and%20Disposals) The Group did not have any material acquisitions or disposals of subsidiaries, consolidated affiliated entities, or associated companies during the Reporting Period - The Group did not have any material acquisitions or disposals of subsidiaries, consolidated affiliated entities, or associated companies during the Reporting Period[34](index=34&type=chunk) [Pledge of Assets](index=9&type=section&id=Pledge%20of%20Assets) As of June 30, 2023, the Group did not have any pledge of assets - As of June 30, 2023, the Group did not have any pledge of assets[34](index=34&type=chunk) [Future Plans for Material Investments and Capital Assets](index=9&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) As of June 30, 2023, the Group did not have any detailed future plans for material investments or capital assets - As of June 30, 2023, the Group did not have any detailed future plans for material investments or capital assets[34](index=34&type=chunk) [Gearing Ratio](index=9&type=section&id=Gearing%20Ratio) The Group's gearing ratio was nil as of June 30, 2023, consistent with December 31, 2022, due to having no borrowings - The Group's gearing ratio was nil as of June 30, 2023, as it had no borrowings[34](index=34&type=chunk) [Foreign Exchange Exposure](index=9&type=section&id=Foreign%20Exchange%20Exposure) The majority of the Group's revenues and expenses are in RMB, while most cash and cash equivalents are in U.S. dollars - Substantially all revenues and the majority of expenses are denominated in Renminbi (RMB)[35](index=35&type=chunk) - The majority of cash and cash equivalents are denominated in U.S. dollars[35](index=35&type=chunk) - The company monitors currency risk but has not used derivative financial instruments to hedge exposure[35](index=35&type=chunk) [Contingent Liabilities](index=10&type=section&id=Contingent%20Liabilities) The Company had no material contingent liabilities as of June 30, 2023 - The Company had no material contingent liabilities as of June 30, 2023[37](index=37&type=chunk) [Capital Expenditure Commitment](index=10&type=section&id=Capital%20Expenditure%20Commitment) The Company had no material capital expenditure commitment as of June 30, 2023 - The Company had no material capital expenditure commitment as of June 30, 2023[38](index=38&type=chunk) [Employees and Remuneration Policies](index=10&type=section&id=Employees%20and%20Remuneration%20Policies) As of June 30, 2023, the Group had **5,434 employees**, with sales and marketing comprising the largest function - As of June 30, 2023, the Group had a total of **5,434 employees**[39](index=39&type=chunk) Employee Distribution by Function | Function | Number of employees | % of total | |:-----------------------------|:--------------------|:-----------| | Sales and marketing | 2,702 | 49.7% | | Research and development | 1,346 | 24.8% | | Operations | 1,111 | 20.4% | | General administration | 275 | 5.1% | | **Total** | **5,434** | **100.0%** | - Remuneration policies include competitive salaries, incentive share grants, and participation in government statutory employee benefit plans (social insurance, housing funds), supplemented by employer's liability and commercial health insurance[40](index=40&type=chunk) Corporate Governance This section outlines the company's adherence to corporate governance standards, including board structure and securities transaction policies [Compliance with Corporate Governance Code](index=11&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The company generally complied with the Corporate Governance Code, with a noted deviation where Mr. Peng Zhao holds both Chairman and CEO roles - The Company complied with all code provisions of the Corporate Governance Code, except for provision C.2.1, where Mr. Peng Zhao holds both the Chairman and Chief Executive Officer roles[42](index=42&type=chunk)[44](index=44&type=chunk) - The Board believes this dual role ensures consistent leadership, effective strategic planning, and prompt decision-making, with major decisions made in consultation with Board members and independent non-executive Directors[44](index=44&type=chunk) [Compliance with Model Code for Securities Transactions by Directors](index=11&type=section&id=Compliance%20with%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The company adopted a Management Trading of Securities Policy, with terms no less exacting than the Model Code, and all Directors and relevant employees confirmed compliance - The Company adopted a Management Trading of Securities Policy, with terms no less exacting than the Model Code, and all Directors and relevant employees confirmed compliance during the Reporting Period[45](index=45&type=chunk) [Audit Committee](index=11&type=section&id=Audit%20Committee) The Audit Committee, composed of three independent non-executive Directors, monitors financial statement integrity, compliance, and internal controls - The Audit Committee comprises three independent non-executive Directors: Mr. Charles Zhaoxuan Yang (Chairman), Mr. Yonggang Sun, and Mr. Yusheng Wang[46](index=46&type=chunk) - Primary duties include monitoring financial statement integrity, compliance with legal/regulatory requirements, reviewing internal control over financial reporting, and approving related party transactions[46](index=46&type=chunk) - The Committee reviewed the unaudited condensed consolidated financial statements for the six months ended June 30, 2023, and discussed accounting policies and internal controls with senior management[47](index=47&type=chunk) Other Information This section covers additional disclosures including share repurchases, litigation, dividends, and significant post-period events [Purchase, Sale or Redemption of the Company's Listed Securities](index=12&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) During the Reporting Period, the Company repurchased **721,426 ADSs** (representing **1,442,852 Class A ordinary shares**) for approximately **US$10.0 million** on Nasdaq - The Company repurchased **721,426 ADSs** (**1,442,852 Class A ordinary shares**) for an aggregate consideration of approximately **US$10.0 million** on Nasdaq during the Reporting Period[49](index=49&type=chunk) Share Repurchase Details | Trading Month | Number of Class A ordinary shares repurchased | Highest price paid (US$) | Lowest price paid (US$) | Aggregate consideration paid (US$) | |:--------------|:----------------------------------------------|:-------------------------|:------------------------|:-----------------------------------| | May 2023 | 1,442,852 | 7.185 | 6.585 | 9,999,822.98 | - The repurchased shares were cancelled in July 2023, and Mr. Zhao, the WVR beneficiary, proportionately reduced his WVR by converting Class B ordinary shares to Class A ordinary shares[50](index=50&type=chunk) [Material Litigation](index=12&type=section&id=Material%20Litigation) The Company was not involved in any material litigation or arbitration, nor was it aware of any pending or threatened material litigation or claims against the Group during the six months ended June 30, 2023 - The Company was not involved in any material litigation or arbitration, and no material litigation or claims were pending or threatened against the Group during the Reporting Period[52](index=52&type=chunk) [Interim Dividend](index=12&type=section&id=Interim%20Dividend) The Board did not recommend any interim dividend for the six months ended June 30, 2023 - The Board did not recommend any interim dividend for the six months ended June 30, 2023[53](index=53&type=chunk) [Significant Events after the Reporting Period](index=12&type=section&id=Significant%20Events%20after%20the%20Reporting%20Period) No significant events that might affect the Company after the Reporting Period were disclosed in this announcement, apart from the investment mentioned in the notes - Save as disclosed in this announcement (referring to the subsequent event in Note 11), there were no significant events that might affect the Company after the Reporting Period[54](index=54&type=chunk) Unaudited Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including statements of comprehensive income, balance sheets, and cash flows, along with detailed notes [Statements of Comprehensive Income](index=13&type=section&id=Statements%20of%20Comprehensive%20Income) The unaudited condensed consolidated statements of comprehensive income show a significant increase in net income and total comprehensive income for the six months ended June 30, 2023 Condensed Consolidated Statements of Comprehensive Income | Metric | Six Months Ended June 30, 2022 (RMB thousands) | Six Months Ended June 30, 2023 (RMB thousands) | |:----------------------------------------------|:--------------------------------------------------|:--------------------------------------------------| | Total revenues | 2,250,224 | 2,765,161 | | Total operating cost and expenses | (2,187,938) | (2,684,464) | | Income from operations | 73,029 | 97,732 | | Investment income | 17,075 | 147,084 | | Financial income, net | 24,185 | 131,587 | | Income before income tax expenses | 94,444 | 383,740 | | Income tax expenses | (14,123) | (41,480) | | **Net income** | **80,321** | **342,260** | | Other comprehensive income (Foreign currency translation adjustments) | 539,012 | 403,775 | | **Total comprehensive income** | **619,333** | **746,035** | | Basic Net income per share (RMB) | 0.09 | 0.39 | | Diluted Net income per share (RMB) | 0.09 | 0.38 | [Balance Sheets](index=14&type=section&id=Balance%20Sheets) The unaudited condensed consolidated balance sheets show an increase in total assets, primarily driven by a shift from cash to time deposits and short-term investments Condensed Consolidated Balance Sheets | Asset/Liability/Equity | As of December 31, 2022 (RMB thousands) | As of June 30, 2023 (RMB thousands) | |:----------------------------------------|:-------------------------------------------|:---------------------------------------| | **ASSETS** | | | | Cash and cash equivalents | 9,751,824 | 2,740,769 | | Time deposits and short-term investments | 3,458,089 | 10,050,063 | | **Total current assets** | **13,826,262** | **13,252,498** | | Long-term investments | – | 1,952,215 | | **Total non-current assets** | **1,000,605** | **3,130,303** | | **Total assets** | **14,826,867** | **16,382,801** | | **LIABILITIES** | | | | Deferred revenue | 2,060,892 | 2,564,777 | | **Total current liabilities** | **3,031,109** | **3,407,198** | | **Total liabilities** | **3,186,104** | **3,550,793** | | **SHAREHOLDERS' EQUITY** | | | | **Total shareholders' equity** | **11,640,763** | **12,832,008** | [Statements of Cash Flows](index=15&type=section&id=Statements%20of%20Cash%20Flows) The unaudited condensed consolidated statements of cash flows show increased operating cash flow but substantial investing outflows, leading to a net decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows | Cash Flow Category | Six Months Ended June 30, 2022 (RMB thousands) | Six Months Ended June 30, 2023 (RMB thousands) | |:-------------------------------------------------|:--------------------------------------------------|:--------------------------------------------------| | Net cash provided by operating activities | 480,948 | 1,307,618 | | Net cash used in investing activities | (97,909) | (8,390,368) | | Net cash (used in)/provided by financing activities | (87,816) | 68,955 | | Effect of exchange rate changes on cash and cash equivalents | 537,116 | 2,740 | | **Net increase/(decrease) in cash and cash equivalents** | **832,339** | **(7,011,055)** | | Cash and cash equivalents at beginning of the period | 11,341,758 | 9,751,824 | | **Cash and cash equivalents at end of the period** | **12,174,097** | **2,740,769** | [Notes to Financial Statements](index=16&type=section&id=Notes%20to%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated financial statements, clarifying accounting policies and specific financial items [General Information](index=16&type=section&id=General%20Information) KANZHUN LIMITED, incorporated in the Cayman Islands, primarily provides online recruitment services through its 'BOSS Zhipin' platform in the PRC - KANZHUN LIMITED, incorporated in the Cayman Islands, primarily provides online recruitment services through its 'BOSS Zhipin' platform in the People's Republic of China[62](index=62&type=chunk) [Basis of Presentation](index=16&type=section&id=Basis%20of%20Presentation) The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and Hong Kong Listing Rules for interim information - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and Hong Kong Listing Rules for interim financial information[63](index=63&type=chunk) - They are prepared on the same basis as the audited consolidated financial statements of the preceding fiscal year and include all adjustments necessary for fair statement[63](index=63&type=chunk) [Revenues (Detailed by account type)](index=16&type=section&id=Revenues%20(Detailed%20by%20account%20type)) Revenues from online recruitment services to enterprise customers increased across all account sizes, with small-sized accounts showing the highest growth Revenues by Source and Account Type | Revenue Source | Six Months Ended June 30, 2022 (RMB thousands) | Six Months Ended June 30, 2023 (RMB thousands) | |:----------------------------------------------|:--------------------------------------------------|:--------------------------------------------------| | Online recruitment services to enterprise customers | 2,227,184 | 2,730,879 | | – Key accounts (RMB50,000+ annually) | 517,925 | 551,984 | | – Mid-sized accounts (RMB5,000-RMB50,000 annually) | 910,848 | 995,592 | | – Small-sized accounts (RMB5,000 or less annually) | 798,411 | 1,183,303 | | Others | 23,040 | 34,282 | | **Total** | **2,250,224** | **2,765,161** | - For online recruitment services, **RMB1,988.3 million** was recognized over time and **RMB742.6 million** at a point in time for the first half of 2023[65](index=65&type=chunk) [Income Tax](index=17&type=section&id=Income%20Tax) The company is exempt from income tax in the Cayman Islands, subject to **16.5%** profit tax in Hong Kong, and its PRC VIE enjoys a preferential **15%** tax rate as a 'High and New Technology Enterprise' - Cayman Islands: Not subject to income or capital gain tax[67](index=67&type=chunk) - Hong Kong: Subsidiary subject to **16.5%** Hong Kong profit tax[68](index=68&type=chunk) - China: Consolidated VIE, Beijing Huapin Borui Network Technology Co., Ltd., qualifies as a 'High and New Technology Enterprise' (HNTE) and enjoys a preferential income tax rate of **15%**[69](index=69&type=chunk) - China: Enterprises engaging in R&D activities are entitled to claim a **200%** super deduction for qualified R&D expenses from January 1, 2023, onwards[70](index=70&type=chunk) Income Tax Expenses | Income Tax Component | Six Months Ended June 30, 2022 (RMB thousands) | Six Months Ended June 30, 2023 (RMB thousands) | |:---------------------------|:--------------------------------------------------|:--------------------------------------------------| | Current income tax expenses | 14,123 | 27,069 | | Deferred income tax expenses | – | 14,411 | | **Total** | **14,123** | **41,480** | [Net Income Per Share](index=18&type=section&id=Net%20Income%20Per%20Share) Basic net income per share increased significantly to **RMB0.39** for the six months ended June 30, 2023, from **RMB0.09** in the prior year Net Income Per Share Calculation | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | |:----------------------------------------------|:-------------------------------|:-------------------------------| | Net income attributable to ordinary shareholders (RMB thousands) | 80,321 | 342,260 | | Weighted average number of ordinary shares (Basic) | 869,427,036 | 867,314,841 | | Weighted average number of ordinary shares (Diluted) | 917,484,059 | 903,757,988 | | Basic Net income per share (RMB) | **0.09** | **0.39** | | Diluted Net income per share (RMB) | **0.09** | **0.38** | [Time Deposits and Short-term Investments](index=18&type=section&id=Time%20Deposits%20and%20Short-term%20Investments) The company significantly increased its time deposits and short-term investments to **RMB10.05 billion** as of June 30, 2023, from **RMB3.46 billion** at the end of 2022 Time Deposits and Short-term Investments Breakdown | Investment Type | As of December 31, 2022 (RMB thousands) | As of June 30, 2023 (RMB thousands) | |:----------------------------------------------|:-------------------------------------------|:---------------------------------------| | Time deposits | 793,042 | 7,087,902 | | Principal-guaranteed fixed rate notes | 2,665,047 | 1,879,280 | | Structured deposits | – | 724,399 | | Wealth management products | – | 351,164 | | Others | – | 7,318 | | **Total time deposits and short-term investments** | **3,458,089** | **10,050,063** | [Accounts Receivable, Net](index=19&type=section&id=Accounts%20Receivable%2C%20Net) Accounts receivable, net, increased to **RMB15,196 thousand** as of June 30, 2023, with a notable increase in receivables between 3 and 6 months Accounts Receivable Aging Analysis | Aging Analysis | As of December 31, 2022 (RMB thousands) | As of June 30, 2023 (RMB thousands) | |:--------------------------------|:-------------------------------------------|:---------------------------------------| | Within 3 months | 8,903 | 10,067 | | Between 3 months and 6 months | 415 | 4,479 | | Between 6 months and 1 year | 92 | 513 | | More than 1 year | 452 | 137 | | **Total** | **9,862** | **15,196** | [Prepayments and Other Current Assets](index=19&type=section&id=Prepayments%20and%20Other%20Current%20Assets) Prepayments and other current assets decreased to **RMB436,934 thousand**, primarily due to a reduction in prepaid advertising expenses and receivables related to share-based awards Prepayments and Other Current Assets Breakdown | Item | As of December 31, 2022 (RMB thousands) | As of June 30, 2023 (RMB thousands) | |:---------------------------------------------|:-------------------------------------------|:---------------------------------------| | Prepaid advertising expenses and service fee | 211,604 | 125,409 | | Receivables from third-party on-line payment platforms | 30,317 | 102,856 | | Deposits | 68,390 | 60,948 | | Receivables related to the exercise of share-based awards | 172,452 | 52,691 | | Staff loans and advances | 33,672 | 29,818 | | Others | 84,338 | 65,212 | | **Total** | **600,773** | **436,934** | [Accounts Payable](index=19&type=section&id=Accounts%20Payable) Accounts payable decreased to **RMB173,483 thousand**, mainly driven by a reduction in payables for property, equipment, and software, and advertising expenses Accounts Payable Breakdown | Item | As of December 31, 2022 (RMB thousands) | As of June 30, 2023 (RMB thousands) | |:------------------------------------------|:-------------------------------------------|:---------------------------------------| | Payables for purchase of property, equipment and software | 142,142 | 121,919 | | Payables for advertising expenses | 32,277 | 23,249 | | Others | 10,878 | 28,315 | | **Total** | **185,297** | **173,483** | Accounts Payable Aging Analysis | Aging Analysis | As of December 31, 2022 (RMB thousands) | As of June 30, 2023 (RMB thousands) | |:--------------------------------|:-------------------------------------------|:---------------------------------------| | Within 3 months | 163,146 | 154,736 | | Between 3 months and 6 months | 9,152 | 2,902 | | Between 6 months and 1 year | 7,667 | 4,247 | | More than 1 year | 5,332 | 11,598 | | **Total** | **185,297** | **173,483** | [Other Payables and Accrued Liabilities](index=20&type=section&id=Other%20Payables%20and%20Accrued%20Liabilities) Other payables and accrued liabilities decreased to **RMB520,012 thousand**, primarily due to reductions in salary, welfare, and bonus payable, and tax payable Other Payables and Accrued Liabilities Breakdown | Item | As of December 31, 2022 (RMB thousands) | As of June 30, 2023 (RMB thousands) | |:-----------------------------------|:-------------------------------------------|:---------------------------------------| | Salary, welfare and bonus payable | 366,454 | 321,008 | | Consideration payable for share repurchase | – | 72,361 | | Advance from customers | 58,630 | 64,669 | | Tax payable | 152,598 | 48,221 | | Others | 55,800 | 13,753 | | **Total** | **633,482** | **520,012** | [Subsequent Event](index=20&type=section&id=Subsequent%20Event) In August 2023, the Group invested **RMB100.0 million** for approximately **1.38%** equity interest in a technology company - In August 2023, the Group invested **RMB100.0 million** for approximately **1.38%** equity interest in a technology company[84](index=84&type=chunk) [Dividend](index=20&type=section&id=Dividend) No dividend was declared for the six-month periods ended June 30, 2022 and 2023 - No dividend was declared for the six-month period ended June 30, 2022 and 2023[85](index=85&type=chunk) Administrative Details This section provides administrative information regarding the publication of interim results and the composition of the Board of Directors [Publication of Interim Results Announcement and Interim Report](index=21&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) This interim results announcement is published on the Hong Kong Stock Exchange and the Company's investor relations websites - Interim results announcement published on Hong Kong Stock Exchange (http://www.hkexnews.hk) and Company (https://ir.zhipin.com/) websites[87](index=87&type=chunk) - The interim report for the six months ended June 30, 2023, will be despatched to Shareholders and made available on the aforementioned websites[87](index=87&type=chunk) [Board of Directors Composition](index=21&type=section&id=Board%20of%20Directors%20Composition) As of August 29, 2023, the Board of Directors comprises five executive Directors, one non-executive Director, and three independent non-executive Directors - Executive Directors: Mr. Peng Zhao (Founder, Chairman and Chief Executive Officer), Mr. Yu Zhang, Mr. Xu Chen, Mr. Tao Zhang, Ms. Xiehua Wang[87](index=87&type=chunk) - Non-executive Director: Mr. Haiyang Yu[87](index=87&type=chunk) - Independent Non-executive Directors: Mr. Charles Zhaoxuan Yang, Mr. Yonggang Sun, Mr. Yusheng Wang[87](index=87&type=chunk)

Kanzhun Limited (NASDAQ:BZ) Q1 2023 Earnings Conference Call May 24, 2023 8:00 AM ET Company Participants Wen Bei Wang - Head of Investor Relations Jonathan Peng Zhao - Founder, Chairman and Chief Executive Officer Phil Yu Zhang - Chief Financial Officer Conference Call Participants Eddy Wang - Morgan Stanley Wei Xiong - UBS Timothy Zhao - Goldman Sachs Operator Ladies and gentlemen, thank you for standing by, and welcome to the Kanzhun Limited First Quarter 2023 Financial Results Conference Call. At this t ...

Financial Performance - For Q1 2023, the revenue was RMB 1,277.5 million (USD 186.0 million), an increase of 12.3% compared to RMB 1,137.9 million in Q1 2022[4] - The calculated cash receipts for Q1 2023 were RMB 1,649.6 million (USD 240.2 million), up 27.7% from RMB 1,291.5 million in Q1 2022[4] - The net profit for Q1 2023 was RMB 32.7 million (USD 4.8 million), compared to a net loss of RMB 12.2 million in Q1 2022[4] - Adjusted net profit for Q1 2023 was RMB 245.0 million (USD 35.7 million), a 102.3% increase from RMB 121.1 million in Q1 2022[4] - Operating cash flow for Q1 2023 was RMB 543.9 million (USD 79.2 million), up 85.0% from RMB 294.0 million in Q1 2022[9] - Total revenue for the three months ended March 31, 2023, was RMB 1,277,546 thousand, representing a 12.3% increase from RMB 1,137,880 thousand in the same period of 2022[15] - The net profit for the three months ended March 31, 2023, was RMB 32,663 thousand, a turnaround from a net loss of RMB 12,172 thousand in the same period of the previous year[19] - Adjusted net profit for the three months ended March 31, 2023, was RMB 244,954 thousand, compared to RMB 121,054 thousand for the same period in 2022, reflecting a significant increase of approximately 102.5%[19] User Metrics - The average monthly active users in Q1 2023 reached 39.7 million, a 57.5% increase from 25.2 million in Q1 2022[4] - The total number of paid enterprise customers remained stable at 4.0 million as of March 31, 2023, compared to the same period in 2022[4] Expenses - Operating costs and expenses totaled RMB 1,373.7 million (USD 200.0 million) in Q1 2023, a 19.9% increase from RMB 1,146.1 million in Q1 2022[6] - Marketing expenses in Q1 2023 were RMB 628.8 million (USD 91.6 million), up 20.4% from RMB 522.4 million in Q1 2022[6] - Research and development expenses for Q1 2023 were RMB 333.1 million (USD 48.5 million), an increase of 14.6% from RMB 290.7 million in Q1 2022[6] - The company reported a significant increase in equity incentive expenses, which rose to RMB 212,291 thousand for the three months ended March 31, 2023, from RMB 133,226 thousand in the same period of 2022, an increase of approximately 59.4%[19] Shareholder Information - The adjusted earnings per American Depositary Share (ADS) for Q1 2023 were RMB 0.57 (USD 0.08), compared to RMB 0.28 in Q1 2022, reflecting strong growth[8] - The basic and diluted net profit per ADS for Q1 2023 were RMB 0.08 (USD 0.01) and RMB 0.07 (USD 0.01), respectively, compared to a loss of RMB 0.03 in the same period of 2022[8] - The company approved a new share repurchase plan in March 2023, allowing for the repurchase of up to USD 150 million worth of shares over the next 12 months[9] Future Outlook - The company expects total revenue for Q2 2023 to be between RMB 1.43 billion and RMB 1.46 billion, representing a year-over-year increase of 28.6% to 31.3%[9] - The company continues to focus on market expansion and new product development as part of its strategic initiatives moving forward[19] Cash and Assets - As of March 31, 2023, cash and cash equivalents, along with short-term investments, totaled RMB 13,456.1 million (USD 1,959.4 million)[9] - Cash and cash equivalents decreased to RMB 6,254,572 thousand as of March 31, 2023, down from RMB 9,751,824 thousand as of December 31, 2022[17] - Total assets as of March 31, 2023, were RMB 15,004,876 thousand, an increase from RMB 14,826,867 thousand as of December 31, 2022[17] Other Financial Metrics - The company emphasizes the importance of non-GAAP financial metrics for assessing business performance, which should not be solely relied upon[12] - The company reported a foreign exchange loss of RMB 1,099 thousand for the three months ended March 31, 2023, compared to a loss of RMB 442 thousand in the same period of 2022[15] - Deferred revenue increased to RMB 372,011 thousand for the three months ended March 31, 2023, from RMB 153,640 thousand in the same period of 2022, representing a growth of approximately 142.5%[19]

[DEFINITIONS](index=3&type=section&id=DEFINITIONS) This section defines key legal and company-specific terminology used throughout the circular - This section provides definitions for key terms used throughout the circular, ensuring clarity and consistent understanding of legal and company-specific terminology[7](index=7&type=chunk)[8](index=8&type=chunk)[9](index=9&type=chunk)[10](index=10&type=chunk) [LETTER FROM THE BOARD](index=7&type=section&id=LETTER%20FROM%20THE%20BOARD) This letter outlines the agenda for the Annual General Meeting, including key proposals and board recommendations [1. Introduction](index=7&type=section&id=1.%20Introduction) The Board invites shareholders to the June 26, 2023 AGM to vote on key proposals for the company's governance - The Annual General Meeting (AGM) is scheduled for **Monday, June 26, 2023**, at 3 p.m. Beijing time[13](index=13&type=chunk)[28](index=28&type=chunk) - Key proposals include the **re-election of directors**, grant of mandates for **share issuance and repurchase**, and **re-appointment of the auditor**[14](index=14&type=chunk) [2. Proposed Re-election of the Retiring Directors](index=8&type=section&id=2.%20Proposed%20Re-election%20of%20the%20Retiring%20Directors) The Board recommends the re-election of retiring directors Mr. Yu Zhang, Mr. Xu Chen, and Mr. Haiyang Yu - The following directors are proposed for re-election: **Mr. Yu Zhang**, **Mr. Xu Chen**, and **Mr. Haiyang Yu**[15](index=15&type=chunk) - The Nomination Committee and the Board recommend their re-election based on their **valuable contributions and experience**[16](index=16&type=chunk) [3. Proposed Grant of General Mandate to Issue Shares](index=8&type=section&id=3.%20Proposed%20Grant%20of%20General%20Mandate%20to%20Issue%20Shares) Shareholders are asked to approve a mandate for issuing new Class A Ordinary Shares up to 20% of total issued shares - The proposed Issuance Mandate allows Directors to allot, issue, and deal with additional Class A Ordinary Shares up to **20% of the total issued Shares**[20](index=20&type=chunk) Share Issuance Mandate Details | Metric | Value | | :--- | :--- | | Issued Class A Ordinary Shares (Latest Practicable Date) | 728,110,243 | | Issued Class B Ordinary Shares (Latest Practicable Date) | 140,830,401 | | Total Issued Shares (Assumed at AGM Date) | 868,940,644 | | Maximum Class A Ordinary Shares to be Issued (20% of total) | 173,788,128 | | Exclusions from Mandate | Rights Issue, Share Option Schemes, Vesting of Restricted Shares, Scrip Dividend, Specific Authority | | Mandate Expiration | Conclusion of next AGM, expiration of period for next AGM, or revocation by shareholders | [4. Proposed Grant of General Mandate to Repurchase Shares](index=9&type=section&id=4.%20Proposed%20Grant%20of%20General%20Mandate%20to%20Repurchase%20Shares) Shareholders are asked to approve a mandate for repurchasing up to 10% of the Company's total issued shares - The proposed Repurchase Mandate allows Directors to repurchase Shares up to **10% of the total issued Shares**[23](index=23&type=chunk) Share Repurchase Mandate Details | Metric | Value | | :--- | :--- | | Issued Class A Ordinary Shares (Latest Practicable Date) | 728,110,243 | | Issued Class B Ordinary Shares (Latest Practicable Date) | 140,830,401 | | Total Issued Shares (Assumed at AGM Date) | 868,940,644 | | Maximum Class A Ordinary Shares to be Repurchased (10% of total) | 86,894,064 | | Mandate Expiration | Conclusion of next AGM, expiration of period for next AGM, or revocation by shareholders | [5. Proposed Re-appointment of Auditor](index=10&type=section&id=5.%20Proposed%20Re-appointment%20of%20Auditor) The Board proposes re-appointing PricewaterhouseCoopers as the independent auditor for the 2023 fiscal year - **PricewaterhouseCoopers** is proposed for re-appointment as the independent auditor for the year ending December 31, 2023[27](index=27&type=chunk) - The Board also seeks authorization to **fix the auditor's remuneration** for the ensuing year[27](index=27&type=chunk) [6. The AGM and Proxy Arrangement](index=10&type=section&id=6.%20The%20AGM%20and%20Proxy%20Arrangement) This section details the AGM voting procedures, including weighted voting rights for different share classes - All resolutions proposed at the AGM will be **voted by way of poll**[31](index=31&type=chunk) - Voting rights are weighted: Class A shares have one vote, while Class B shares have **ten votes per share** for most resolutions[32](index=32&type=chunk) - Shareholders of record on **May 25, 2023**, are invited to attend or submit proxy/voting instructions[30](index=30&type=chunk) [7. Recommendations](index=11&type=section&id=7.%20Recommendations) The Board unanimously recommends that shareholders vote in favor of all proposed resolutions at the AGM - The Board recommends shareholders **vote in favor of all proposed resolutions**, including director re-election and share mandates[33](index=33&type=chunk) [8. Further Information](index=12&type=section&id=8.%20Further%20Information) Shareholders are directed to the appendices for additional detailed information on the proposed resolutions - Shareholders are advised to refer to the appendices for **further detailed information**[35](index=35&type=chunk) [9. Responsibility Statement](index=12&type=section&id=9.%20Responsibility%20Statement) The Directors collectively and individually affirm full responsibility for the accuracy of this circular - The Directors collectively and individually accept **full responsibility for the accuracy** of the information in this circular[36](index=36&type=chunk) [APPENDIX I – DETAILS OF THE RETIRING DIRECTORS PROPOSED TO BE RE-ELECTED AT THE AGM](index=13&type=section&id=APPENDIX%20I%20%E2%80%93%20DETAILS%20OF%20THE%20RETIRING%20DIRECTORS%20PROPOSED%20TO%20BE%20RE-ELECTED%20AT%20THE%20AGM) This appendix provides detailed biographical and professional information for the directors proposed for re-election [(1) ZHANG Yu](index=13&type=section&id=%281%29%20ZHANG%20Yu) This section details the background, experience, and shareholdings of executive director and CFO Mr. Yu Zhang - **Mr. Yu Zhang** (aged 46) is an executive director and Chief Financial Officer with over 17 years of TMT experience[38](index=38&type=chunk) - Mr. Zhang's term is for an initial three years from the Listing Date, subject to **re-election**[40](index=40&type=chunk) Mr. Yu Zhang's Share Interests and Emoluments | Metric | Value | | :--- | :--- | | Class A Ordinary Shares | 9,432,750 | | Director's Emoluments | None (in capacity as executive Director) | [(2) CHEN Xu](index=14&type=section&id=%282%29%20CHEN%20Xu) This section details the background, experience, and shareholdings of executive director and CMO Mr. Xu Chen - **Mr. Xu Chen** (aged 47) is an executive director and Chief Marketing Officer with over 20 years of marketing experience[46](index=46&type=chunk) - Mr. Chen's term is for an initial three years from the Listing Date, subject to **re-election**[47](index=47&type=chunk) Mr. Xu Chen's Share Interests and Emoluments | Metric | Value | | :--- | :--- | | Class A Ordinary Shares | 3,625,804 | | Director's Emoluments | None (in capacity as executive Director) | [(3) YU Haiyang](index=15&type=section&id=%283%29%20YU%20Haiyang) This section details the background and affiliations of non-executive director Mr. Haiyang Yu - **Mr. Haiyang Yu** (aged 40) is a non-executive director and also holds positions at a Tencent group company[53](index=53&type=chunk) - Mr. Yu's term is for an initial three years from the Listing Date, subject to **re-election**[56](index=56&type=chunk) Mr. Haiyang Yu's Share Interests and Emoluments | Metric | Value | | :--- | :--- | | Shares or Underlying Shares | None | | Director's Emoluments | None (in capacity as non-executive Director) | [APPENDIX II – EXPLANATORY STATEMENT ON THE REPURCHASE MANDATE](index=17&type=section&id=APPENDIX%20II%20%E2%80%93%20EXPLANATORY%20STATEMENT%20ON%20THE%20REPURCHASE%20MANDATE) This appendix explains the rationale, funding, and potential impacts of the proposed share repurchase mandate [1. Reasons for Repurchase of Shares](index=17&type=section&id=1.%20Reasons%20for%20Repurchase%20of%20Shares) The repurchase mandate provides flexibility to enhance shareholder value, though there are no immediate plans for its use - The Repurchase Mandate offers flexibility to **enhance net asset value and/or earnings per Share**[62](index=62&type=chunk) - The Directors have **no present intention to repurchase shares** but would exercise the power if it benefits the Company[62](index=62&type=chunk) [2. Share Capital](index=17&type=section&id=2.%20Share%20Capital) The mandate would authorize the repurchase of up to 86,894,064 shares, representing 10% of total issued shares Current Share Capital and Maximum Repurchase | Metric | Value | | :--- | :--- | | Issued Class A Ordinary Shares (Latest Practicable Date) | 728,110,243 | | Issued Class B Ordinary Shares (Latest Practicable Date) | 140,830,401 | | Total Issued Shares (Assumed at AGM Date) | 868,940,644 | | Maximum Shares Authorized for Repurchase (10%) | 86,894,064 | [3. Funding of Repurchases](index=17&type=section&id=3.%20Funding%20of%20Repurchases) Share repurchases will be financed using the Company's internal resources in compliance with all regulations - Share repurchases will be funded from the **Company's internal resources**, in accordance with applicable laws and regulations[64](index=64&type=chunk) [4. Impact of Repurchases](index=18&type=section&id=4.%20Impact%20of%20Repurchases) Full exercise of the repurchase mandate is not expected to materially impact the Company's financial position - **No material adverse impact** on the Company's working capital or gearing position is expected from the exercise of the Repurchase Mandate[66](index=66&type=chunk) - The Directors will not exercise the mandate to an extent that would **materially adversely affect** the Company's working capital or gearing levels[66](index=66&type=chunk) [5. Takeovers Code](index=18&type=section&id=5.%20Takeovers%20Code) Safeguards are in place to prevent the repurchase mandate from triggering a mandatory offer under the Takeovers Code - An increase in a shareholder's proportionate voting interest due to repurchases could **trigger the Takeovers Code**[67](index=67&type=chunk) - Mr. Zhao, the WVR Beneficiary, controls approximately 65.9% of voting rights and must reduce his weighted voting rights if his proportion increases, thus **no mandatory offer is expected**[68](index=68&type=chunk) - The Directors will not repurchase shares to an extent that would result in less than the **prescribed minimum public float**[69](index=69&type=chunk) [6. General](index=19&type=section&id=6.%20General) Directors and connected persons have no current intention to sell shares to the Company under the proposed mandate - None of the Directors or their close associates have any **present intention to sell shares** to the Company if the Repurchase Mandate is approved[71](index=71&type=chunk) - No core connected persons have notified the Company of an **intention to sell shares** or undertaken not to sell shares to the Company[71](index=71&type=chunk) - The Directors have undertaken to the Stock Exchange to exercise the repurchase power in accordance with **Listing Rules and applicable Cayman Islands laws**[71](index=71&type=chunk) [7. Market Prices of Shares](index=19&type=section&id=7.%20Market%20Prices%20of%20Shares) This section provides the historical high and low trading prices for the Company's shares since its listing Market Prices of Class A Ordinary Shares (HK$) | Month | Highest HK$ | Lowest HK$ | | :--- | :--- | :--- | | **2022** | | | | December (since Listing Date) | 78.75 | 76.00 | | **2023** | | | | January | 98.95 | 77.50 | | February | 97.85 | 78.50 | | March | 83.85 | 67.00 | | April | 74.50 | 74.50 | | May (up to Latest Practicable Date) | 74.50 | 69.90 | [8. Repurchases of Shares Made by the Company](index=19&type=section&id=8.%20Repurchases%20of%20Shares%20Made%20by%20the%20Company) The Company has not repurchased any of its Class A Ordinary Shares since its listing date - The Company has **not repurchased any Class A Ordinary Shares** on the Stock Exchange from its Listing Date up to the Latest Practicable Date[74](index=74&type=chunk) [NOTICE OF THE ANNUAL GENERAL MEETING](index=20&type=section&id=NOTICE%20OF%20THE%20ANNUAL%20GENERAL%20MEETING) This notice formally announces the AGM and lists the ordinary resolutions to be considered and voted upon [Ordinary Resolutions](index=20&type=section&id=Ordinary%20Resolutions) The AGM will consider nine ordinary resolutions, including financial adoption, director elections, and share mandates - The AGM will consider nine ordinary resolutions, including **adopting financial statements**, **re-electing directors**, granting **share issuance and repurchase mandates**, and **re-appointing the auditor**[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) [SHARES RECORD DATE AND ADS RECORD DATE](index=24&type=section&id=SHARES%20RECORD%20DATE%20AND%20ADS%20RECORD%20DATE) The record date for voting eligibility for both ordinary shares and American Depositary Shares is May 25, 2023 Record Dates for AGM Voting Eligibility | Record Date Type | Date | Time Zone | | :--- | :--- | :--- | | Share Record Date | May 25, 2023 | Hong Kong time | | ADS Record Date | May 25, 2023 | New York Time | [ATTENDING THE AGM](index=24&type=section&id=ATTENDING%20THE%20AGM) Only shareholders of record as of the Share Record Date are entitled to attend and vote at the AGM - Only holders of record of Shares as of the Share Record Date are **entitled to attend and vote** at the AGM[88](index=88&type=chunk) - The Company reserves the right to **refuse entry** or instruct persons to leave the AGM venue to comply with applicable laws and regulations[88](index=88&type=chunk) [PROXY FORMS AND ADS VOTING CARDS](index=24&type=section&id=PROXY%20FORMS%20AND%20ADS%20VOTING%20CARDS) This section outlines the deadlines and procedures for submitting proxy forms and ADS voting instructions - Shareholders can appoint a proxy, and ADS holders must submit **voting instructions to Citibank, N.A.**[89](index=89&type=chunk) Proxy/Voting Instruction Deadlines | Document Type | Recipient | Deadline | Time Zone | | :--- | :--- | :--- | :--- | | Proxy Form (for Shares) | Computershare Hong Kong Investor Services Limited | June 24, 2023, 3 p.m. | Hong Kong Time | | Voting Instructions (for ADSs) | Citibank, N.A. | June 14, 2023, 10 a.m. | New York Time |

Financial Performance - Total revenue for 2022 was RMB 4,511,062 thousand, representing a 5.9% increase from RMB 4,259,128 thousand in 2021[6]. - The adjusted net profit for 2022 was RMB 799,449 thousand, a decrease of 6.2% from RMB 852,572 thousand in 2021[6]. - Operating loss for 2022 was RMB (129,519) thousand, a significant improvement from RMB (1,036,320) thousand in 2021, reflecting an 87.5% reduction[6]. - Net profit for 2022 was RMB 107.2 million, a significant turnaround from a net loss of RMB 1 billion in 2021[26]. - Total revenue increased by 5.9% from RMB 43 billion in 2021 to RMB 45 billion in 2022, driven by continuous investment in service capabilities[20]. - Revenue from online recruitment services for corporate clients was RMB 4,461.3 million in 2022, up 5.7% from RMB 4,219.0 million in 2021[20]. - Other services revenue, primarily paid value-added services for job seekers, rose by 24.2% to RMB 49.8 million in 2022 from RMB 40.1 million in 2021[20]. - Operating costs increased by 36.1% from RMB 554.6 million in 2021 to RMB 754.9 million in 2022, mainly due to higher employee-related expenses and server costs[21]. - Marketing expenses rose by 3.0% to RMB 2 billion in 2022, influenced by increased brand advertising costs during the 2022 FIFA World Cup[22]. - R&D expenses surged by 43.9% to RMB 1.2 billion in 2022, attributed to higher employee-related costs[23]. - General and administrative expenses decreased by 63.9% to RMB 719.7 million in 2022, following a one-time equity incentive expense of RMB 1.5 billion in 2021[24]. User Engagement - The number of monthly active users for 2022 reached 28.7 million, up 5.9% from 27.1 million in 2021[9]. - The average daily active users as a percentage of monthly active users remained stable at 27.2% in 2022, consistent with 2021[9]. - The CEO highlighted strong user growth and engagement since early 2023, indicating a recovery in recruitment demand[10]. - The CFO noted robust financial performance despite external challenges, maintaining efficient marketing activities while scaling user growth[10]. - The company continues to focus on technology innovation and enhancing user experience to strengthen its leadership in the online recruitment market[9]. - The platform connects job seekers and employers through a highly interactive mobile application, emphasizing a seamless user experience[11]. Cash and Assets - Cash and cash equivalents increased by 8.0% to RMB 132 billion as of December 31, 2022, from RMB 122 billion at the end of 2021[26]. - As of December 31, 2022, the company had no interest-bearing bank loans or other borrowings, resulting in a debt-to-equity ratio of zero[27][28]. - The total number of employees as of December 31, 2022, was 5,602, with 46.8% in sales and marketing, 25.8% in R&D, 22.4% in operations, and 5.0% in general administration[31]. - The company reported an operating loss of RMB 129.5 million in 2022, compared to an operating loss of RMB 1 billion in 2021[25]. - The company reported a significant increase in investment income, which rose to RMB 65,150 in 2022 from RMB 24,744 in 2021, an increase of 163.5%[161]. - Total assets increased to RMB 14,826,867 in 2022, up from RMB 13,641,623 in 2021, reflecting a growth of 8.7%[160]. Regulatory and Compliance Risks - The company faces risks related to currency fluctuations, as most revenues and expenses are denominated in RMB while cash and cash equivalents are primarily in USD[29]. - The company must comply with complex and evolving laws and regulations in mainland China, which could impact its operations and growth[37]. - The company is exposed to competition in the online recruitment market in China, which may impact its market share and financial performance[36]. - The company has significant risks associated with variable interest entity structures, which may be impacted by changes in Chinese laws and regulations[175]. - The company’s ability to execute contracts related to variable interest entities may be limited due to uncertainties in the Chinese legal system[175]. Corporate Governance - The board consists of nine members, including five executive directors, one non-executive director, and three independent non-executive directors[80]. - The company has adhered to all corporate governance code provisions as per the listing rules, except for the separation of roles between the Chairman and CEO[77]. - The company emphasizes a healthy corporate culture as essential for long-term success and sustainable development[78]. - The board will periodically reassess the separation of roles between the Chairman and CEO to ensure effective decision-making[77]. - The company is committed to high standards of corporate governance to protect shareholder interests and enhance accountability[78]. - The company has established a remuneration committee to review and recommend the remuneration of directors and senior management, consisting of two independent non-executive directors and one executive director[89]. Shareholder Relations - The company emphasizes effective communication with shareholders to enhance investor relations and understanding of business performance and strategies[114]. - The company is committed to timely and accurate disclosure of information to shareholders and the public[114]. - The company has established a shareholder communication policy to ensure ongoing dialogue with shareholders, particularly during annual general meetings[114]. - Major shareholders include Image Architecture Investment (Hong Kong) Limited and Tencent Holdings Limited, each holding 72,309,691 Class A ordinary shares, representing 9.98% of the total[120]. Equity Incentive Plans - The company has implemented a stock incentive plan for management and eligible employees, with expenses recognized based on the fair value of the awards granted[197]. - The maximum number of new shares that can be issued under the 2020 Share Incentive Plan is 145,696,410 shares, with an annual increase of 1.5% based on the total issued and outstanding shares[125]. - The 2020 Share Incentive Plan aims to attract and retain top talent by providing selected employees, directors, and consultants with additional rewards and opportunities to acquire shares[123]. - The company has not granted any options or awards under the 2020 Share Incentive Plan or the post-IPO share plan during the reporting period[122]. Audit and Financial Reporting - The independent auditor's report confirms that the consolidated financial statements reflect the group's financial position as of December 31, 2022, in accordance with US GAAP[149]. - The auditor's remuneration for audit and audit-related services for the years ended December 31, 2021, and 2022 was RMB 13,910 thousand and RMB 18,983 thousand, respectively, showing an increase in audit fees[196]. - The company has adopted ASC 842 for operating leases, recognizing right-of-use assets and lease liabilities based on the present value of lease payments[197]. - The company has not recognized any significant uncertain tax positions as of December 31, 2022, indicating a stable tax compliance status[198].

Financial Position - As of December 31, 2022, the company had RMB2,631.3 million in RMB-denominated cash and cash equivalents and short-term investments, and US$1,518.9 million in U.S. dollar-denominated cash and cash equivalents and short-term investments[797] - If RMB2,631.3 million were converted to U.S. dollars at the end of 2022 exchange rate of RMB6.8972 for US$1.00, the U.S. dollar cash balance would have been US$1,900.4 million[797] - A 10% depreciation of RMB against the U.S. dollar would result in a U.S. dollar cash balance of US$1,862.3 million[797] Currency and Interest Rate Risk - The company has not used any derivative financial instruments to hedge foreign exchange risk but monitors currency risk exposure[794] - The company has not been exposed to material risks due to changes in market interest rates, and has not used derivative financial instruments to manage interest rate risk exposure[798] - The company will consider hedging significant foreign currency exposure should the need arise[794] - The conversion of U.S. dollars into RMB for operations may be adversely affected by appreciation of the RMB against the U.S. dollar[796] - The company’s future interest income may fall short of expectations due to changes in market interest rates[798] Initial Public Offering - The company raised RMB 6.4 billion in net proceeds from its initial public offering after deducting underwriting commissions and expenses, selling 55,200,000 ADSs at an initial price of US$19.00 per ADS[822] - Total expenses incurred for the company's initial public offering amounted to RMB 26.8 million, with no payments made to directors or officers[823] - The company intends to use the proceeds from the initial public offering as disclosed in its registration statements on Form F-1, with no material changes in the use of proceeds[823] Other Financial Information - In 2022, the company received a reimbursement of US$7.1 million from the depositary after deduction of applicable U.S. taxes[803] - The company intends to submit any annual report provided to security holders in electronic format as an exhibit to a current report on Form 6-K[794]