Revenue: RMB1.92 billion, up 13% year-on-year. Net Income: RMB510 million, reflecting a 112% year-on-year growth. Adjusted Operating Income: RMB690 million for the first quarter. Adjusted Operating Margin: 36%, up 13 percentage-points year-on-year. Share-Based Compensation Expenses: Decreased by 10% quarter-on-quarter. Average Verified Monthly Active Users: 57.56 million, up 24% year-on-year. Gross Margin: 83.8%, up 1.1 percentage-points year-on-year. Sales and Marketing Expenses: Decreased by 15% year-on-year to RMB491 million. R&D Expenses: Decreased by 9% year-on-year to RMB424 million. Net Cash Provided by Operating Activities: RMB1.0 billion, up 11% year-on-year. Cash Position: RMB14.8 billion as of March 31, 2025. Business Outlook for Q2 2025: Expected revenue between RMB2.05 billion and RMB2.08 billion, with a year-on-year increase of 7.0% to 8.5%.

Warning! GuruFocus has detected 3 Warning Signs with BZ.

Release Date: May 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Kanzhun Ltd (NASDAQ:BZ) achieved a GAAP revenue of RMB1.92 billion in Q1 2025, marking a 13% year-on-year increase. Net income for the first quarter reached RMB510 million, reflecting a significant 112% year-on-year growth. The company reported an adjusted operating margin of 36%, up 13 percentage points from the previous year. Kanzhun Ltd (NASDAQ:BZ) added over 15 million verified new users from January to April, with monthly active users reaching 57.56 million, a 24% year-on-year increase. The company has made solid progress in AI applications, enhancing user experience and operational efficiency, with AI-powered tools improving recruitment efficiency by 25%.

Negative Points

Despite revenue growth, the ongoing tariff war poses potential risks, although its impact has not intensified yet. Share-based compensation expenses, while decreasing, still represent a significant cost, impacting overall profitability. The company remains cautious about broadly expanding AI applications, which could limit immediate monetization opportunities. Revenue growth from Tier 3 and lower-tier cities, while increasing, still represents a smaller portion of overall revenue. The competitive landscape in the human resources industry remains stable, with no revolutionary changes from AI, potentially limiting disruptive growth opportunities.

Q & A Highlights

Q: How has the hiring demand evolved since the start of the tariff war, and have there been any signs of recovery in current demand? A: Wenbei Wang, Head of Investor Relations, explained that the tariff war's impact on the supply and demand relationship has been limited. The overall recruitment trend continues to improve, with a diversified industry and location distribution mitigating the impact. In April and May, new job postings and active job postings maintained a good growth rate, with some recovery observed in export-related industries after mid-May.

Story Continues

Q: How does the current recruitment demand trend in April and May compare with the same period last year, and what are the expectations for the graduation season in June and July? A: Wenbei Wang noted that the supply and demand ratio has improved this year compared to last year, especially after the Labor Day holiday and the spring festival. The blue-collar sector, particularly urban service blue-collar jobs, showed year-on-year growth from March to May. While it's difficult to predict precisely, the expectation for June and July is cautiously optimistic.

Q: What feedback has been received from the internal testing of AI features, and what are the plans for AI monetization? A: Wenbei Wang shared that the AI product testing has received positive feedback, with AI features gradually being rolled out to all users. The AI communication assistant has improved efficiency and user experience, with a 25% increase in recruiter achievement efficiency and a 15% increase in job seeker achievement rates. However, the company remains cautious about AI monetization, planning a gradual approach.

Q: How does the company view the RMB3 billion non-GAAP operating profit target for this year, and what are the plans for capital allocation? A: Yu Zhang, CFO, expressed confidence in achieving the RMB3 billion non-GAAP operating profit target, citing cost control and efficiency improvements. The company has over USD2 billion in cash and equivalents and considers shareholder returns important, with ongoing share repurchase programs and assessments for other measures to enhance shareholder returns.

Q: With the wider adoption of AI in the human resources industry, are there any expected changes in the competitive landscape, and how is the blue-collar recruiting business progressing? A: Wenbei Wang stated that the competitive landscape remains stable, with no revolutionary changes observed from current AI technologies. The company continues to invest in AI, confident in its potential to enhance business operations. The blue-collar sector is increasingly important, with significant contributions to user and revenue growth. The company is focused on improving service simplicity and reliability, particularly in blue-collar placement services.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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