BOSS ZHIPIN(BZ) - 2024 Q2 - Quarterly Report

Executive Summary & Company Overview Second Quarter 2024 Highlights KANZHUN LIMITED achieved significant financial and operational growth in Q2 2024, with revenue up 28.8% and strong user base expansion Key Performance Highlights for Q2 2024 | Metric | Q2 2024 (RMB) | Q2 2023 (RMB) | YoY Growth | | :--- | :--- | :--- | :--- | | Revenue | 1,916.7 Million | 1,487.6 Million | 28.8% | | Calculated Cash Billings | 1,950.7 Million | 1,619.5 Million | 20.5% | | Average Monthly Active Users (MAU) | 54.6 Million | 43.6 Million | 25.2% | | Paying Enterprise Customers (LTM) | 5.9 Million | 4.5 Million | 31.1% | | Net Income | 417.3 Million | 309.6 Million | 34.8% | | Adjusted Net Income | 718.7 Million | 568.5 Million | 26.4% | Management Commentary Management emphasizes user growth as a core driver for revenue and profit, expressing confidence in long-term development and shareholder returns - CEO Mr. Peng Zhao noted that the company's average monthly active users increased by 25.2% year-over-year to 54.6 million, solidifying its leading position as China's largest online recruitment platform. Despite macroeconomic headwinds, enterprise user growth is the core driver for stable revenue and profit growth. The company prioritizes shareholder returns and has initiated and will continue to increase share repurchases, demonstrating confidence in its long-term development[4] - CFO Mr. Yu Zhang stated that the company achieved healthy and sustainable revenue and profit growth this quarter. Adjusted operating income increased by 52.1% year-over-year, and the adjusted operating profit margin reached a record high, increasing by 5 percentage points from the same period last year, attributed to the company's excellent business model and effective cost control. The company continues to invest in technology R&D, with R&D expenses accounting for 23.2% of revenue, maintaining an industry-leading level[4] About KANZHUN LIMITED KANZHUN LIMITED operates BOSS Zhipin, a leading online recruitment platform in China, leveraging interactive mobile applications and network effects - KANZHUN LIMITED operates BOSS Zhipin, China's leading online recruitment platform, efficiently connecting job seekers and enterprise users through highly interactive mobile applications that facilitate two-way communication, smart recommendations, and innovative online recruitment scenarios[21] - BOSS Zhipin benefits from its large and diverse user base, which creates strong network effects, enhancing recruitment efficiency and driving rapid expansion[21] Second Quarter 2024 Financial Performance Revenues Total revenue for Q2 2024 reached RMB 1.917 billion, a 28.8% increase, primarily driven by online recruitment services for enterprise clients Q2 2024 Revenue Overview | Revenue Source | Q2 2024 (RMB) | Q2 2023 (RMB) | YoY Growth | | :--- | :--- | :--- | :--- | | Online Recruitment Services (Enterprise Customers) | 1,892.7 Million | 1,470.8 Million | 28.7% | | Other Services (Value-added services for job seekers) | 24.0 Million | 16.8 Million | 42.9% | | Total Revenue | 1,916.7 Million | 1,487.6 Million | 28.8% | - The growth in online recruitment service revenue from enterprise customers was primarily driven by an increase in the number of enterprise users[5] - The growth in other services revenue primarily benefited from an expanding user base[5] Operating Costs and Expenses Total operating costs and expenses increased by 19.5% to RMB 1.567 billion in Q2 2024, driven by higher R&D and administrative expenses Q2 2024 Operating Costs and Expenses | Expense Category | Q2 2024 (RMB) | Q2 2023 (RMB) | YoY Growth | | :--- | :--- | :--- | :--- | | Total Operating Costs and Expenses | 1,566.6 Million | 1,310.8 Million | 19.5% | | Share-based Compensation Expenses | 301.4 Million | 258.9 Million | 16.4% | | Cost of Revenues | 316.5 Million | 270.3 Million | 17.1% | | Sales and Marketing Expenses | 545.2 Million | 471.6 Million | 15.6% | | Research and Development Expenses | 443.7 Million | 365.9 Million | 21.3% | | General and Administrative Expenses | 261.2 Million | 203.0 Million | 28.7% | - The increase in cost of revenues was primarily due to higher server and bandwidth costs, payment processing fees, and employee-related expenses[6] - The increase in sales and marketing expenses was mainly attributable to higher customer acquisition costs and employee-related expenses for sales personnel[6] - The increase in research and development expenses was primarily due to increased technology investments[7] - The increase in general and administrative expenses was primarily due to higher employee-related expenses[7] Profitability The company's profitability significantly improved in Q2 2024, with operating income surging by 104.9% and net income growing by 34.8% Q2 2024 Profitability Metrics | Metric | Q2 2024 (RMB) | Q2 2023 (RMB) | YoY Growth | | :--- | :--- | :--- | :--- | | Operating Income | 358.6 Million | 175.0 Million | 104.9% | | Net Income | 417.3 Million | 309.6 Million | 34.8% | | Adjusted Net Income | 718.7 Million | 568.5 Million | 26.4% | Earnings Per Share (EPS) In Q2 2024, basic and diluted net earnings per ADS were RMB 0.95 and RMB 0.91, with adjusted figures at RMB 1.63 and RMB 1.57 Q2 2024 Earnings Per ADS | Metric | Q2 2024 (RMB) | Q2 2023 (RMB) | | :--- | :--- | :--- | | Basic Net Earnings (per ADS) | 0.95 | 0.71 | | Diluted Net Earnings (per ADS) | 0.91 | 0.69 | | Adjusted Basic Net Earnings (per ADS) | 1.63 | 1.31 | | Adjusted Diluted Net Earnings (per ADS) | 1.57 | 1.26 | Cash Flow from Operating Activities Net cash generated from operating activities in Q2 2024 was RMB 869 million, increasing by 13.7% year-over-year Q2 2024 Cash Flow from Operating Activities | Metric | Q2 2024 (RMB) | Q2 2023 (RMB) | YoY Growth | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | 868.6 Million | 763.7 Million | 13.7% | Financial Position, Capital Allocation & Outlook Cash Position As of June 30, 2024, the company maintained ample liquidity with cash, short-term deposits, and investments totaling RMB 14.282 billion Cash Position as of June 30, 2024 | Metric | Amount (RMB) | | :--- | :--- | | Total Cash and Cash Equivalents, Short-term Time Deposits, and Short-term Investments | 14,281.9 Million | Share Repurchase Program The board authorized a new 12-month share repurchase program in March 2024, allowing for up to $200 million in repurchases - The company's board of directors authorized a new share repurchase program in March 2024, effective from March 20, 2024, for a period of 12 months[12] - Under this program, the company may repurchase up to $200 million of its shares, including in the form of ADSs[12] Business Outlook (Q3 2024 Guidance) The company forecasts Q3 2024 total revenue between RMB 1.90 billion and RMB 1.92 billion, projecting 18.2% to 19.5% year-over-year growth Q3 2024 Revenue Outlook | Metric | Forecast Range (RMB) | YoY Growth | | :--- | :--- | :--- | | Total Revenue | 1.90 Billion - 1.92 Billion | 18.2% - 19.5% | - This forecast reflects the company's current view on the Chinese market and operating conditions, which are subject to change and cannot be reasonably predicted with accuracy as of the date of this release[13] Additional Information Conference Call Information The company will host a conference call on August 28, 2024, to discuss financial results, with pre-registration and webcast details available - The company will hold a conference call to discuss its financial results on August 28, 2024, at 8:00 AM U.S. Eastern Time (8:00 PM Beijing/Hong Kong Time on August 28, 2024)[14] - Participants are required to pre-register via a designated link, and a live and archived webcast of the conference call will be available on the company's investor relations website[14] Exchange Rate RMB amounts in this announcement are converted to USD using the Federal Reserve Board's H.10 rate of 7.2672 as of June 28, 2024 - For the convenience of readers, certain RMB amounts in this announcement have been translated into U.S. dollars at an exchange rate of RMB 7.2672 to US$1.00, the exchange rate as of June 28, 2024, as set forth in the H.10 statistical release of the Federal Reserve Board[16] Non-GAAP Financial Measures The company uses non-GAAP measures like calculated cash billings and adjusted net income to assess operating performance and provide business insights - The company uses non-GAAP financial measures such as calculated cash billings and adjusted net income as supplemental measures to review and assess operating performance[17] - Calculated cash billings are derived by adding the change in deferred revenue to revenue, used to measure and monitor sales growth, as the company typically bills paying enterprise customers at the time of sale, but related revenue may be recognized proportionally over time[17] - Adjusted net income is derived by excluding share-based compensation expenses (non-cash expenses), which helps identify underlying business trends that may be impacted by certain expenses and facilitates investor evaluation of the company's operating performance[17] - Non-GAAP financial measures are not defined under U.S. GAAP and should not be considered in isolation or as a substitute for the most directly comparable GAAP financial measures[18] Safe Harbor Statement This press release contains forward-looking statements under the 1995 U.S. Private Securities Litigation Reform Act, subject to inherent risks - This press release contains "forward-looking" statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995[19] - Forward-looking statements involve inherent risks and uncertainties, and the company undertakes no obligation to update any forward-looking statements, except as required under applicable law[19] Unaudited Condensed Consolidated Financial Statements Unaudited Condensed Consolidated Statements of Operations This section presents KANZHUN LIMITED's unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2024 Unaudited Condensed Consolidated Statements of Operations (Summary) | Metric | Q2 2024 (RMB) | Q2 2023 (RMB) | H1 2024 (RMB) | H1 2023 (RMB) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | 1,916,743 | 1,487,615 | 3,620,496 | 2,765,161 | | Total Operating Costs and Expenses | (1,566,640) | (1,310,808) | (3,179,390) | (2,684,464) | | Operating Income | 358,609 | 175,031 | 462,202 | 97,732 | | Net Income | 417,250 | 309,597 | 658,974 | 342,260 | | Basic Net Earnings per ADS | 0.95 | 0.71 | 1.51 | 0.79 | | Diluted Net Earnings per ADS | 0.91 | 0.69 | 1.46 | 0.76 | Unaudited Condensed Consolidated Balance Sheets This section presents KANZHUN LIMITED's unaudited condensed consolidated balance sheets as of June 30, 2024, and December 31, 2023 Unaudited Condensed Consolidated Balance Sheets (Summary) | Metric | As of June 30, 2024 (RMB) | As of December 31, 2023 (RMB) | | :--- | :--- | :--- | | Total Assets | 19,164,849 | 17,940,048 | | Total Liabilities | 4,383,498 | 4,510,855 | | Total Shareholders' Equity | 14,781,351 | 13,429,193 | | Cash and Cash Equivalents | 3,472,390 | 2,472,959 | | Short-term Time Deposits | 5,267,014 | 6,922,803 | | Short-term Investments | 5,542,508 | 3,513,885 | | Deferred Revenue | 3,175,000 | 2,794,075 | Unaudited Condensed Consolidated Statements of Cash Flows This section presents KANZHUN LIMITED's unaudited condensed consolidated statements of cash flows for the three and six months ended June 30, 2024 Unaudited Condensed Consolidated Statements of Cash Flows (Summary) | Metric | Q2 2024 (RMB) | Q2 2023 (RMB) | H1 2024 (RMB) | H1 2023 (RMB) | | :--- | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | 868,556 | 763,708 | 1,774,097 | 1,307,618 | | Net Cash from Investing Activities | (72,309) | (4,427,593) | (595,771) | (8,390,368) | | Net Cash from Financing Activities | (81,847) | 23,166 | (186,425) | 68,955 | | Cash and Cash Equivalents, End of Period | 3,472,390 | 2,740,769 | 3,472,390 | 2,740,769 | Unaudited Reconciliation of GAAP and Non-GAAP Results This section provides KANZHUN LIMITED's unaudited reconciliation of GAAP and non-GAAP results for the three and six months ended June 30, 2024 Unaudited Reconciliation of GAAP and Non-GAAP Results (Summary) | Metric | Q2 2024 (RMB) | Q2 2023 (RMB) | H1 2024 (RMB) | H1 2023 (RMB) | | :--- | :--- | :--- | :--- | :--- | | Revenues | 1,916,743 | 1,487,615 | 3,620,496 | 2,765,161 | | Add: Change in Deferred Revenue | 33,997 | 131,874 | 380,925 | 503,885 | | Calculated Cash Billings | 1,950,740 | 1,619,489 | 4,001,421 | 3,269,046 | | Net Income | 417,250 | 309,597 | 658,974 | 342,260 | | Add: Share-based Compensation Expenses | 301,443 | 258,902 | 590,420 | 471,193 | | Adjusted Net Income | 718,693 | 568,499 | 1,249,394 | 813,453 | | Adjusted Basic Net Earnings per ADS | 1.63 | 1.31 | 2.84 | 1.88 | | Adjusted Diluted Net Earnings per ADS | 1.57 | 1.26 | 2.75 | 1.80 |