KANZHUN LIMITED

Ladies and gentlemen, thank you for standing by and welcome to Kanjun Limited fourth quarter and full year 2021 financial results conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. Today's conference is being recorded. At this time, I'd like to turn the call over to Ms. Wenbei Wang, Head of Capital Market and IR. Please go ahead, ma'am.

Thank you, operator. Good evening and good morning, everyone. Welcome to our first quarter and full year 2021 earnings conference call. Joining me today are our founder, chairman, and CEO, Mr. Jonathan Peng Zhao, and our director and CFO, Mr. Phil Yuzhang. Before we start, we would like to remind you that today's discussion may contain forward-looking statements which are based on management's current expectations and observations that involve known and unknown risk uncertainties and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different. The company calls on you not to place a new reliance on forward-looking statements and do not undertake any obligation to update this forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial matters for comparison purpose only. For definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our website at ir.gping.com. With that, I will now turn the call to Jonathan, our founder, chairman, and CEO. Hello, everyone.

Hello, everyone. Welcome to our fourth quarter and full year 2021 earnings conference call. On behalf of our entire company,

I would like to express our sincere thanks to our users and investors for your trust and support.

先看一下2021年四季度的情况。 四季度公司的GAAP收入为人民币10.9亿元, 实现了69%的同比增长, 超出公司的收入指引上限。 扣除股权基地费用的经调整后净利润, Let's review the performance for the fourth quarter first. The company recorded gap revenue of RMB 1.09 billion, achieving a year-on-year growth of 69% during the period.

exceeding the high end of our revenue guidance. Our adjusted net income, excluding share-based compensation expenses, reached RMB 350 million, and we maintained profitability over the last three consecutive quarters. While the fourth quarter is not a traditional peak season for China's recruitment market, we successfully maintained our stable performance data through our relentless drive to cultivate our abilities. 看一下2021年的概况。

This year, the company faces many challenges, but it has achieved good results. We have accumulated more than 100 million users who have completed the registration. In 2021, the total annual income of GAAP was 42.6 billion yuan, which increased by 119%. According to the calculation, the cash collection was 50.2 billion yuan, which increased by 98%. After the adjustment,

Despite the challenges the company has faced throughout 2021, we propelled our business forward with improvements to our key performance metrics. Our accumulated verified users rose to more than 100 million, and our gap revenue grew to RMB 4.6 billion in 2021, representing a year-on-year growth of 119%. Our calculated cash fillings reached RMB 5.0 billion, representing a year-on-year growth of 98%. Our adjusted net income, excluding share-based compensation expenses, reached RMB 850 million, which is the first time the company achieved a positive four-year non-debt profit since our initial establishment.

We have also made progress in many aspects of our business. First of all, it is the ability of the core business platform service of the company to be fully improved. Surrounding the experience of improved users, providing more efficient job recruitment services, we have done a lot of work. Over the past six months, we have worked hard at the product and technical level to improve the understanding ability of the user's deep needs. For example, We found that many users in the professional career will have new needs for cross-industry and cross-job work due to their own changes, or the needs of the family, or the changes in the market. Through the optimization of the recommended algorithm model, we combined our exploration and understanding of professional science to achieve progress. The more users see more rich and reasonable recommendation effects, thereby increasing the satisfaction of users. Simply put, users can have more revenue and less disturbance on the platform. One result is that in the second half of 2021, without new registered users, the activity and revenue of platform users are very stable. The prosperity of job hunting and recruitment We made excellent progress across many areas of our business. Let's start with the overall improvement of the company service capabilities of our core business platform.

which is to enhance user experience and provide more efficient job seeking and recruitment services. We have increased our ability to understand users' in-depth needs through our relentless efforts on the product and technical levels. For example, we found that many users generate new demands seeking for cross-industry or cross-professional job opportunities due to changes in their personal situation, family needs, or fluctuating market conditions. By optimizing our recommendation algorithm and strategy, combined with our exploration and understanding of career science, we have been able to present more users with more abundant and reasonable recommendation results and further improving user satisfaction level. Simply put, users are able to achieve more with less irrelevant interruptions. As a result, we are pleased to see that even with the suspension of new user registration since later half of last year, Our key indicators for user engagement and achievements on the platform still remain stable, and our ecosystem still remains robust. To give an example, the peak DAU following the 2022 Spring Festival exceeded the number in the same period of 2021, which is a record high and proof of our strong user sickness. 在之前的记报当中,我曾经向大家报告,在没有新用户注册的情况下,

We will be more focused on old users who care about the platform. In fact, the understanding ability to improve the deep needs of users just mentioned is a basic job for us to care for old users throughout the second half of 2021. As you can see, the result is good. As our platform serves more and more Chinese users, the value of caring for old users will increase.

As I have mentioned in the previous earnings call, in the absence of new user registrations, we deepened our focus on better serving our existing users. What I just said about developing a deep understanding of users' true needs is a fundamental aspect in taking good care of existing users. As you can see, our strategy has been proved effective. Along with the continuous growth of our platform's user base, serving our existing users will create increasing values in the long run. Therefore, it will be very important that we are and will continue to do so.

broadening the platform's source of job opportunities, providing them with more job opportunities and more powerful and perfect job tools. It is worth mentioning that the number of high-income people on the platform continues to increase in terms of active users. On the one hand, this is because of the refined operation, which has caused the activity of high-income users to increase. On the other hand, due to the increase in the number of people

On an operational level, we continue to cultivate and refine our services for different user groups. To better serve the white and golden-collar users, we have broadened the source channels for the job openings on our platform via campus recruitment, cooperation with headhunting consultants, and etc. so as to provide them with more job opportunities, as well as the powerful and sophisticated job-seeking tools. Moreover, the proportion of high-income users among total active users on our platform continue to increase. This is because, on the one hand, driven by our refined operations, high-income users' engagement on the platform has increased. And on the other hand, the salaries of many returning existing users have increased. Folding them into the high-income user bracket, we are sincerely happy for them.

and feelings, the four sides, the workers, the factories, the platform and the intermediaries, try to turn the game into a two-sided game. That is to say, the platform has to stand with the occupants, and then stand with the user units, so as to coordinate the behavior of the intermediaries. After hard work, Many top midfielders have already recognized the rules of the game that we have set under the premise of protecting the defenders. Today, I am very happy to reveal the name of this internal plan, which is called the Hailuo Plan. The word Hailuo is used to express my respect to Mr. Zuo Hui's shell. Because of the management of the midfield market, trying to make the midfielders earn money with dignity, Mr. Zuo Hui is the first person in the whole game. We have used technical means and combined the means of artificial education to cover the accounts of more than 80,000 intermediary agents. We have initially established new industry service rules and a more feasible and safer product model. At the same time, for the positions provided by our offline security team and other excellent intermediaries, we have listed them as

We also made progress in the blue-collar sector. In previous quarters, some investors have asked for our views on the phenomenon of irregularities and dishonesty in the intermediary agencies in blue-collar recruitment for manufacturing industry. I'd love to share our thoughts. The solution is to protect the interest and feelings of the job seekers. to reduce the number of involving parties from four, alias workers, manufacturers, platforms, and agencies, into two, whereby platforms stand in solidly with the workers and then the manufacturers to jointly restrain the negative behaviors of agencies and thus change the rules of the game. After our efforts, many top agencies have acknowledged our rules, which is established under the premises of protecting job seekers. And today, we will announce the name for this internal project, which we call the High Law Project. The word high law, which means count in English, is a salute to Mr. Zuo Hui's because Mr. Zuo is believed to be the first person to have effectively regulated the intermediate market to allow the agencies to earn money with dignity. By leveraging our technologies combined with manual verification, we have established a network covering more than 80,000 agencies, leading to the establishment of a new industry service rule and a more transparent and secured product model. At the same time, we have listed high-quality companies and positions provided by good agencies that have been verified and screened by our offline screen team as highly selected.

In the middle-tier organizations of the manufacturing industry, Throughout

Throughout all these years, we have witnessed the irregularities and dishonesty among blue-collar agencies in the manufacturing industry and the harm they have caused to job seekers, employers, and recruitment platforms. We firmly believe this phenomenon can be changed. We will continue to work on helping enact industry reform, what I just introduced as some achievements so far. 说一下平台的安全能力建设,我们认为

To abide by the law is the bottom line of an enterprise. And the ability to protect users is the ceiling of an enterprise. How do we understand it? We think that the growth of an enterprise, its ability to make money, its pursuit of making money, should be inferior to, to obey, to be inferior to the construction of the ability to protect users. In other words, must be developed under the protection of users, and not above the protection of users. This is our understanding of the two things of a company making money and protecting users. It is a philosophical understanding that is familiar to everyone. It can also be understood that this is our understanding of user safety and business growth.

Now let's talk about the improvements we have made to our security capabilities on our platform. We believe that compliance with the law is the very base law of our business, while the willingness and ability to protect users represents its ceilings. Let me put it in another way. If the growth of an enterprise, its capabilities to make money should be lower than, subject to, and lag behind its ability to protect the users it serves. We must grow our business based on our capabilities to protect users instead of putting protection beneath profitability. This is our philosophic understanding of the chicken and egg problem between profitability and user protection. It can also be seen as our understanding of the relationship between enterprise growth and user security, which also represents our spending priorities in our daily work.

to establish a perfect personal information protection mechanism, and strive to become a relative leader in the human resources service industry in China. The second is the security and protection of platform users. Focusing on protecting the interests and feelings of platform users, we established the industry's first offline audit team. Combining the online AI screening and audit strategy, In China, 50 major cities are conducting offline checks on corporate users. 30 data security capabilities have been improved, and investment in technology and manpower has continued to increase. In 2021, the company's related safety team increased by 750 people. The total number has exceeded 1,000 people and will continue to expand.

We have greatly improved the security capabilities of our platforms from three aspects, laying a solid foundation for our long-term and sustainable business development. The first is personal information protection. We have established a comprehensive personal information protection mechanism, both in compliance with the requirement of relevant laws and regulations, and further enhanced by the business attributes of our own platform. which we hope will become a benchmark among human resources service enterprises in China. The second measure is platform user safety protection, which focuses on protecting the user's interests and feelings. Here we have established the industry's first online security team. Combined with online AI screening and security process, we can verify enterprise addresses recruit enterprise relationships, and identify high-risk positions and businesses in 50 cities offline. The third is the comprehensive improvement of our data security capabilities, leading to the increased investment in technology and talents. In 2021, we increased the security-related headcount by over 750, and currently, our safety-related teams have more than 1,000 people and will continue to expand.

We are committed to the social responsibility of an enterprise, and we are committed to the responsibility of a public company. In 2021, the company has taken active action to assist college students, to assist disabled people, and to donate to major disaster events, as well as to participate in the construction of an ecological environment. For example, the company has obtained the funding from 2021 Chinese Enterprise Anti-Red Donation 500 Walls Obtained 2021 Chinese Enterprise Charity Work 500 Walls Honorary Name The company and I, because of our active support for college students' employment, have made outstanding contributions. Obtained the Chinese Ministry of Education's thank-you certificate, and became the top partner of Chinese Ministry of Education's 2021 High School Graduates' Employment Work. 我们也非常荣幸地成为北京2022冬奥会和东残奥会官方人力资源服务独家供应商。 这表达了一家北京的企业和我们企业几千个北京的居民的诚意和喜悦。 We have practiced concerted social responsibility and integrated it throughout the company.

both as a responsible corporation and as a highly visible public company. In 2021, the company has taken an active part to assist college students and the disabled in job seeking endeavors, provided donations to assist the victims of major natural disasters, and we participated in green construction projects. We have been recognized for our contributions. We were also named in the Fighting Donation 2021 Top 500 Chinese Enterprises and the Philosophy 2021 Top 500 Chinese Enterprises issued by the China Enterprise Charity Forum. Both the company and I were awarded a certificate of appreciation from the Ministry of Education of China and were named the 2021 Excellent Partner in the Employment of College Students for our active support and outstanding contributions to the employment of college students. We were also honored to be the exclusive provider of official human resources services for the Beijing 2022 Winter Olympics and the Winter Paralympics, which was a moment of great pride and joy for us as a company headquartered in Beijing with thousands of Beijing residents as our employees.

Whether it's the past year of 2021 or the eight years since we started our business, we are very grateful to the users and investors for their trust and support. We will also stick to our vision, mission and values, and stick to and improve the way we do business. Some time ago, we announced a $1.5 billion stock repurchase plan. This also expresses the company management's confidence in long-term business development and the idea that we want to deliver long-term value to investors and users. That's all for my introduction. Next, CFO Phil will introduce our financial situation. Thank you. Regardless of 2021,

eight years since our establishment. In 2022, we will remain true to our mission and values as we cooperate with cybersecurity scrutiny and prepare for future growth. We sincerely thanks the support from our investors and we will continue to improve the measures how it works. The US dollar 150 million share repurchase plan we announced early this month is a testament of our management team's confidence and faith in the future development of our business and the belief in our ability to deliver long-term value to our investors and users. With that, I will turn to our CFO Phil for the review of our financials. Thank you.

Thanks, Jonathan. Hello, everyone. Thank you for joining our earnings call today. Before I begin, please note that All amounts are in RMB and all comparisons are on a year-on-year basis unless otherwise stated. We are pleased to close 2021 with solid financial results. In this quarter, our total revenues increased by 69% to RMB $1.09 billion, beating the high end of our guidance range. And our total revenues for the full year of 2021 achieved 119% growth to RMB 4.26 billion, with online recruitment and services revenue accounting for about 99% of our total revenues. Our calculated cash billions increased by 24% to RMB 1.17 billion in the quarter and was up by 98% to RMB 5.02 billion in 2021. Now I would like to further elaborate of the top line, which represents a sustainable and quality growth. Despite we were suspended for new user registrations in early July, we recorded strong user growth in the first half of 2021. There were 20.7 million newly verified users from January to June, among which 3.4 million are enterprise users. Our total accumulated verified enterprises users reached 14.9 million by first half, a 79% year-on-year growth. Meanwhile, to guarantee user experience and better serve our existing users, we continued to provide innovative commercial products, but controlled the pace of our monetization. Benefiting from our resilient model and high user retention, we see that both customer demand and willingness to pay are well maintained, which resulted to a 4.0 million paid enterprise users in 2021 with 82% year-over-year growth, a key contributor to our total revenue growth. Moving on to the cost side. Let's look at the fourth quarter numbers first. Excluding share-based compensation, total operating costs and expenses grew by 25% to RMB $726 million, translating to an adjusted operating margin of 34%. Our cost of revenue increased by 89% to RMB $150 million in the quarter with our gross margin remained stable at 86.3%, primarily driven by increased headcount, especially in security and operation personnel, a testimony of our efforts to improve platform security and user safety. Sales and marketing expenses increased by 16% to RMB $374 million, representing 34% of our total revenue, down by 15.5 percentage points year over year. Continued our trend of improving marketing efficiency since last quarter as a result of reduced marketing activities during the user registration suspension. Research and development expenses increased by 31% to RMB 199 million, primarily due to enhanced investments in hiring R&D talent. General and administrative expenses decreased by 81% to RMB 119 million in this quarter, which was mainly due to RMB 533 million share-based compensation expenses recognized related to the issuance of Class B ordinary shares to TechWolf limited in the same quarter of 2020. Excluding share-based compensation expenses, our adjusted G&A expenses increased by 74%, primarily as a result of the increase of headcount. Our net income reached RMB $233 million compared to the net loss of RMB $529 million same quarter last year. Excluding share-based compensation, our adjusted net income was RMB $349 million in this quarter, translating to an adjusted net margin of 32%. demonstrating the healthy and robust modern profile of our core business. For 2021, our total operating costs and expenses, including service compensation, grew by 51% to RMB $3.4 billion, representing an adjusted operating margin of 21%. an increase of 36 percentage points compared to 2020, resulting from improving operating efficiency. Among which, our gross margin remains robust at 87%, with cost of revenue increased by 131%. Sales and marketing expenses increased by 44% to RMB 1.9 billion and R&D expenses increased by 60% to RMB 822 million. G&A expenses were RMB 1.99 billion for the year, primarily due to the one-off share-based compensation expenses of RMB 1.5 billion relating to the issuance of Class B shares to Type I limited, including share-based compensation our general and administrative expenses increased by 60% to RMB 310 million. Our net loss for the year was RMB 1.07 billion. Excluding share-based compensation, we achieved a non-GAAP net profit of RMB 853 million for the whole year. Our net cash generated from operating activities was RMB $535 million for the fourth quarter and RMB $1.6 billion for the whole year. And as of December 31, 2021, end of the year, our cash, cash equivalents, and short-term investment totaled as RMB $12.2 billion. Our cash reserve and growth robust operating cash flows would set a solid foundation for long-term sustainable growth. And now for our business outlook. For the first quarter of 2022, we expect our total revenues to be between RMB 1.1 billion and RMB 1.12 billion, representing a year-over-year growth rate of approximately 40% to 42%, a further testament of our effective business and monetization model. With our user engagement data remains robust, we are confident of a full recovery and expedited growth when time is ready. That concludes our prepared remarks, and now we would like to answer questions. Operator, please go ahead.

Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to withdraw your request, please press the pound or hash key. Please stand by while we compile the question and answer roster. So once again, to ask a question, please press star 1 on your telephone. Our first question comes from the line of Eddie Wang from Morgan Stanley. Please ask your question.

is actually very good, and there is still growth in return. I will start with this guide. Li Xiaojian may want to hear Mr. Gao's interpretation of three questions. The first is, if you look at the first quarter, how is the mood of the entire recruitment market? Has it been affected by the pandemic and the epidemic? If so, I don't know if the impact is reflected in the first quarter. Or is it that this impact may have some sequelae and will reflect in the following few seasons? Does this reflect in our guidance? This is the first question. The second question is, in fact, I have seen a lot of news recently saying, for example, that the TNT industry has a wide resource. I don't know how much this affects us, especially as Mr. Zhao mentioned earlier, the proportion of our high-income people is actually getting higher and higher. This is a comparison of the situation of a large factory. How does this affect us? More importantly, I would like to ask those small and medium-sized enterprises that we can't see, how are they doing in the recent recruitment? Thirdly, I would like to go back to the guidance. Compared to the increase in income, This is in terms of our operations, in addition to what Mr. Zhao mentioned earlier, including the blue order. I don't know if there is any commercialization in the first quarter. In other words, in addition to these aspects, we actually have to do some other things in our operations, so that our income may be in the past three, in the past two quarters, including the first quarter of this year, while this cannot be registered as a new user, it can still maintain a very stable situation. Yes, I may translate it simply. My question is regarding the first quarter guidance. We noticed that the guidance has been very resilient, and we still expect our Q-on-Q growth. So just want to hear your thoughts on three questions. First is that, what's the hiring sentiment in the first quarter? Your hiring sentiments have been affected by the macro weakness, as well as the COVID-related lockdown. Second question is about we have heard that there's a haircut in the TMT industry recently. I just want to know if there's any impact, you know, from this TMT, you know, the sector. And on top of that, what's the higher sentiment of the SMEs in China in the first quarter? And the third question is about our operation. Have we, you know, what have been incremental, you know, the operation, you know, efficiency or the effort we have been, you know, did in the first quarter to secure this very solid, you know, the first quarter revenue guidance? Thank you.

好,謝謝你的問題。 關於我們EP會有一個環比增長的一個預期, I think first of all, we have to pay attention to one of the characteristics of the Chinese recruitment market, which is that it is always a forgetful place. So after the New Year and the Lunar New Year, many people get the annual award. So it's a time to find a job. And their departure will lead to a lot of vacancies. These vacancies will also come out to recruit people. This is why there is a saying that the principle of spring is forgetfulness. I just said in my report that the fourth quarter is not a forgetfulness of the Chinese photo market. The first quarter is a very forgetful forgetfulness, so this factor is very large.

Okay, I will answer your first question regarding our guidance for the first quarter of 2022. I would like to emphasize that the first quarter of every year is a big season for recruiting because after the Chinese New Year Festival... Okay, I will continue. So after the Chinese New Year Festival, A lot of employees, they received their year-end cash rewards, and they were looking for a job change, job switch. So I just said the fourth quarter is not a peak season, but the first quarter is a peak season. It's a very robust season for recruiting markets. 然后关于宏观的影响,您刚才提到的一个是比方互联网巨头裁员,

For example, the impact of some industries. First of all, you mentioned the Internet. First of all, we see that some very large Internet companies are not very active in recruiting. But from the entire Internet industry, many small and medium-sized Internet companies are very active in recruiting. 所以如果讲整个互联网行业的话,我们没有看到说整个互联网行业的招聘变得不积极这样一个事儿。 您刚才提到这个行业。 And regarding your second question on the macro impact, you just mentioned that we have seen lots of internet giants using income out for their heavy lay of their employees.

We have noticed that within the Internet sector, the big companies, the Internet giants, they are not very active in recruiting. But for the whole industry-wise, we observed that the middle and small-sized enterprises are still very active. They are still hiring a lot of people. So from the overall Internet industry perspective, we did notice very significant changes.

And then let's talk about the impact of the epidemic that you just mentioned. It's been more than two years, and we've been paying attention to this issue. So the epidemic actually has two aspects of influence. The first aspect is that whether it's a volunteer or a volunteer, there are more people who are willing to use online methods or direct chat methods to improve the efficiency of recruitment interviews. This is something that we should have seen earlier. On the other hand, there are some industries that will be affected by the pandemic if we keep a distance. We mainly see blue-collar services in some cities. If there is no way to open a business, the recruitment behavior will decrease. But in general, we think that last year's business did not have a serious impact on the job market. And from this year's first quarter to the current one, it has not had a serious impact on the whole industry. It only has an impact on the open positions of recruiters in some industries.

And you talk about the impacts of COVID-19, and we observed that there are two impacts of this situation. The first one is this impact has been observed for a long time, that is lots of more and more people coming online for their job seeking and recruiting activities. They want to use the direct chat function to increase their hiring efficiency. And the second thing is that some industries where the COVID-19 has a more severe impact and some cities where the people need to keep their social distance and stay at home, we saw that they have some impact because especially in the urban service sector of the blue collar, there are lots of restaurants that need to shut down temporarily so the hiring activities naturally goes down. Overall, last year, we were not impacted very seriously. And this year, from the first quarter of the year to date, we saw some impact in several cities and several industries, but no material impact to us.

然后刚才您提到了这个中小微企业, SME 的情况, 这个还是挺有意思的一个情况。 我们服务的 80% of the customers are SMEs. And they have a characteristic, which is relatively strict. We found that this small and medium-sized enterprises have a characteristic in recruiting. They always try to survive. And if they have a need today, or if a person has resigned, they will decide relatively simply that I have a need, so I want to recruit a person. Or if a person has resigned, I want to hire a person. Therefore, at a very low level, these smaller companies are not like big companies. Because, for example, after a year or six months, there is a kind of confidence problem. So it directly affects today's shopping behavior. They don't do that. I think I should say more about this. Not only to the shopping market, but also, I believe, to the Chinese economy. And the third question you mentioned about SMEs, small and medium-sized enterprises. This is quite an interesting topic.

On our platform, more than 80% are SMEs, and they have a characteristic of very stubborn. They always try to survive. So when people left the company, they need to hire another person immediately to live on. So from a micro level, not unlike many big enterprises, they might raise their headcount or even lay off people because they lose confidence in maybe six months or one year from now, and they just hire people as their business grows. And this point is very important not only to the recruitment market, but to the overall China's economy, which provides more resilience to the overall economy. Because a lot of these individual positions accumulated after a very big number of job openings and hiring needs. And this will bring the hope to overall market. And that's my answer. And I will pass to Phil.

I can offer you with some additional information. So first of all, first quarter guidance, that number does include the consideration of macro impact. During the first quarter, I mean the last quarter of last year, we did notice some like weakness in certain industries. For example, like in real estate area and in online education area. So those areas we did see declining with their revenue contribution. Also, we noticed that for some new retail type of online commerce and live show type of internet service, also there was some decline. After Spring Festival, we noticed that some retailing industry, retailing sector, there was a little bit of weakness. But we didn't notice some growing sector, for example, like advanced manufacturing. So overall, I think the macro economy does have impact to the online recruitment service area. But because we have a broad-based customer experience, customer base. We have a broad customer base with our service. And as Johnson just mentioned, we have a huge number of small, medium-sized enterprises. And we catch the very resilient demand from high-quality industries and high-quality companies. So overall, we think that the macro impact to our business is limited, is, you know, controllable. And so within our overall revenue contribution, like IT and the tech technology and the internet is still one of the major areas. And their growth in last quarter of 2021 is still healthy. And in the first two months of this year, they also recorded a nice growth, although their growth is slightly lower than overall growth. And the top internet or top technology companies, their contribution to our overall revenue is very, very small. Top 100 companies, their total revenue contribution in our numbers is around mid-single digits. So we have a diversified revenue contribution from all of the industries and all of the companies. So that's received a macro impact. And in terms of your last question regarding what we did during the last quarter, lesson probably like third quarter and fourth quarter how we achieved our growth one of the reason is that the key account all those you know higher quality companies and you know their enhance their spending with the platform because of as we previously communicated we have a three layers of funnel to do our business. So basically, we have a lot of users use our service for free, and we have a large number of small, medium-sized employers. They use our service with a small amount of purchase, and we have, you know, offline contract signing purchase. So basically, our high-quality service and our good user experience effectively help us continuously convert those free users into small-amount purchasers and into those offline contract buyers. And during the past third quarter and fourth quarter, we continued with this development. So that contributes a healthy revenue contribution to our business. And overall, our paying ratio with all of the business users on our platform remains stable. So that's basically the full picture.

Right. Thank you. Next question comes from Timothy Zhao from Goldman Sachs. Please ask your question.

Okay, thank you very much for accepting my question, and I also thank the company for its very strong 4G performance. I may have two questions here. The first question is about the competition pattern, because we see that in the online photography industry, we also have peers or friends who have a lot of new actions in recent months, including the market in Lanling and college students. So, I would like to ask Mr. Guan, how should we look at the current financial situation and how the financial situation will develop in 2022? The second question is about our R&D expenditure, because we have seen that R&D expenditure has been a relatively mild trend in the past two seasons. And if it is the ratio of income, there is also a relatively obvious decline. So, I would like to ask Mr. Guan, how do we look at the R&D expenditure in 2022? And what are the main aspects? 那我们会不会可以有一些对于一些新的产品或者是新的功能推出的期待? 那我很快去翻译一下。 Thank you, Benjamin, for taking that question and congrats on the strong results. My first question will be about the competitive landscape in the online equipment industry. As we see, some of our peers have launched some new initiatives, including in the blue-collar segment as well as college graduates. Could you imagine share your view on the latest competitive landscape and how it will evolve in 2022? And my second question is about the R&D expenses as the absolute amount has been in a mild growth over the past two quarters and the percentage of revenue will also decline very significantly. Can you imagine share how we should look at the R&D expenses in this year? and what kind of area that we are going to invest in, and shall we expect any new product or new features? Thank you.

So I can answer your second question first. So regarding the R&D expenses, so basically we maintain the, you know, steady growth with our R&D engineer headcounts. during the past couple of quarters. So our total number of R&D engineers by first half of last year, that number was 980. And now that number, by third quarter, that number was 1,070. And by the end of last year, that number was 1,140. So from that, you can see So during the third quarter, during the last quarter of last year, although we were still in the cybersecurity review and our revenue got some limitation, but we still steadily increase our R&D people. So we think that we will further invest in this area. So continue this pace.

I would like to add something on the second question about our R&D census.

which is how we will spend our money. We will continue to hire more people, more expensive engineers and product managers to improve our capabilities. As I mentioned in my speech just now, we hope switching to more refined operations to our existing users to understand their in-depth needs. and reaching order to make them have a greater achievement and less interruptions on our platform to increase the user's overall experience. This is very difficult and very costly. We will continue to do that.

And then about the change in the competition pattern, I have a few things to say. First of all, as you have noticed, in the past half year, In our industry, other companies have some actions in the blue and white service. We pay great attention to these actions. What I want to say next is that according to incomplete statistics, there are many large and small institutions in China that do Internet recruitment services. This is a fully competitive market. We also think that there will be people who want something in front of us. This is also a normal thing. This is about other companies making new mistakes in the work of blue and white. We noticed it. We respect it. This is a reality. Next, I want to say that in terms of competition, in detail, although everyone knows that we have registered new users for more than half a year, The third-party data that we saw recently, I think you will also see the data of Quest Mobile. We still have a large lead in the number of users in the monthly level. At the same time, in terms of user activity, user usage market, etc., we also have a stable lead. The reason for this is actually mentioned in the report. We have spent a lot of energy on protecting our old users. Now, I would like to talk about a point. We have 100 million users. China has more than 600 million non-agricultural workers. Actually, 100 million users is equivalent to a large proportion of all American workers. If I remember correctly, the number of Americans is more than 100 million. To answer your first question about competitive life-based,

I would like to make some – I have several points to make. The first one is we have noticed that during the past half year, there are other enterprises within our industry, they have taken some actions in either blue-collar or white-collar services. We have noticed that and we fully respect them. According to our very incomplete statistics, There are lots of enterprises and institutions within this industry. It's a fully competition industry. So it's natural that there will be something or some ideas some people are thinking ahead of us and doing that. It's very normal. We have noticed and we respect them. The second point is that, until now, we haven't been able to do our users over seven or even eight months. According to the third-party data, which I believe you all can see, our user number, our MAU and DAU, still ahead of our peers by a large amount, and our user activities our user time spending and the user frequency, we are ahead of them very steadily. And the reason is that we have paid a lot of attention and focus on protecting our existing users. There is a view that we have already accumulated over 100 million users, and there are 600 million non-spam employees in China. But in the United States, There are about 130 million workforce, and we have already achieved that number. So we have enough users to do something for them, to better serve them. So we fully respect our competitors or our peers for their innovation and their actions. but we have confidence we can better serve our existing users and to maintain our market position.

Also, as I mentioned earlier, in China, there are more than 600 million non-agricultural workers, and we only serve about 100 million people. So we still need to work harder to better serve our users, to better understand their needs and knowledge of the industry. This is a long way to go. 那么再补充一个关于竞争的观点就是,其实我们好好服务我们的用户,使得我们的用户和市场是满意的,那这是我们该做的事情。 And for your last question about what new products we have been doing and can tell the market, we have done a lot of research and initiatives on many aspects, but nothing we...

nothing we think worth discussing today. We might release in the future when it's mature. As I just said, there are 600 million non-farm working population in China, and we only served over 100 million of them. So we will continue to refine our service and products to understand the in-depth needs of the users to accumulate more industry knowledge. And there's still a very long way to go. And to supplement another competitive view, which is we believe what we should do today is just to continue to provide the best service to our users.

So given this opportunity, I'd like to update the number like we provided in third quarter last year. So due to the cybersecurity review process, because we are not allowed to grow users. During the third quarter results, we mentioned the number of failed user registrations around that time. So by the end of March 15, we recorded the accumulated number of failed user registrations as 34 million users. So that's a huge number, and we believe you know, there's still very strong market demand. And because of we have a very, you know, strong, you know, user service capabilities, and we deliver best user experiences. So once we were allowed to grow, we definitely can grow our users.

And that concludes our answers for this session.

Thank you. Our last question comes from the line of Wei Xiong from UBS. Please ask your question.

I have two quick questions. One is, as we mentioned earlier, once the supervision is over, we still hope to increase the number of users as soon as possible. And during this period, we have seen from the internal data that there are still a lot of users who want to register for our platform. I would like to hear about the specific strategy for increasing the number of users afterwards. How can we restore the trend of increasing the number of users before a shorter period of time? The second question is, I would like to ask Mr. Lin, Thank you management for taking my questions. First question I want to ask, as we're still under the impact of the cybersecurity review. Just wondering if the company has any plan to quickly restore the user growth momentum once the cybersecurity review is behind us. And second, just on the margin trend, we've seen that 4Q margin is again very solid. And how should we think about the margin trend in the first quarter and also 2022? Thank you.

Thank you for your question. I'll answer it. That's the first thing, which is spending money. First of all, thank you for your good wishes and wishes. After we restore users, we will increase our marketing costs. This is an important job for us at the moment, which is to increase the scale of our service users. However, this recruiter has a characteristic, which is that he When they need to find a job, they will pay attention to a marketing platform. Of course, after they came to our platform, you have already found their stability is very strong. But first, they need to pay attention. So, we will also comply with this rule, that is, smartly spend money, and not forcefully spend money. This still needs to follow the market rules. It's probably such a plan.

I will answer your first question about our growth strategy after using our user registration. Firstly, thank you for your good wishes. And once we were allowed to grow users, the first thing we will do is to increase our marketing expenses because it's very important to increase the user base we are serving. And there are characteristics of job seekers. When they looking for jobs, when they start looking for jobs, they need to notice a platform. And history has proved that when people come to our platform, their technique is very high. But they need to first notice that. So we will spend our money very cautious and smartly. And that's my answer.

So I can offer a little bit more. First of all, as Jonathan just mentioned, once we are allowed to grow, we definitely will increase our marketing activities because of what we consider that user growth as the call driver and the right thing to do during our current stage. But having said that, we definitely will spend money wisely and we will try our best to balance the you know, the top-line growth, user growth, and with the profitability. So that's what we think about. And during the, you know, first quarter, the last quarter of 2021, that number, you know, our profit number already, you know, showed to investors that we have, you know, nice margin. And so basically that's our, you know, core margin profile. And during the 2022 full year, we think that we would like to try to at least maintain, you know, the full year like a margin situation. But having said that, we need to, you know, consider our growth strategy once we were allowed to grow. And for the first quarter, first quarter normally is, you know, seasonality high span quarter from the you know 2021 first you know number one number two number three number four from that you can see the first quarter of the 2021 is a loss only last quarter in last year because of normally we would like to you know spend more with our marketing activities in the first quarter and in this year we have the the Olympic Games marketing campaign. So that means we will continue the seasonality pattern. So first quarter of 2022, the margin would be low. But after that, starting from second quarter, the margin will recover, will recover to the normal situation. So that's pretty much the situation. That's mainly because of the seasonality issues.

All right, thank you. So due to time constraint, that concludes today's question and answer session. At this time, I'll turn the conference back to Wenbei for any additional or closing remarks.

Thank you once again for joining us today, and I sincerely apologize for this signal interruption during this call. And if you have any further questions, please contact our IR team directly or TPD Investor Relations. Thank you.

Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.