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spk06: Ladies and gentlemen, thank you for standing by and welcome to the Kanjun Limited First Quarter 2023 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a Q&A session. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms Wenbei Wang, Head of Investor Relations. Please go ahead, ma'am. Thank
spk04: you, operator. Good evening and good morning, everyone. Welcome to our First Quarter 2023 earnings conference call. Joining me today are our founder, chairman, and CEO, Mr. Jonathan Pengzhao, and our director and the CFO, Mr. Phil Yu Zhang. Before we start, we would like to remind you that today's discussion may contain forward-looking statements, which are based on management's current expectations and observations that involve known and unknown risks, uncertainties, and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different. The company caution you not to place your reliance on forward-looking statements and do not undertake any obligation to update this forward-looking information, in fact, as required by law. During today's call, management will also discuss certain non-debt financial measures for comparison purpose only. For a definition of non-debt financial measures and a reconciliation of debt to non-debt 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 .tripping.com. With that, I will now turn the call to Jonathan, our founder, chairman, and CEO.
spk03: Hello, everyone.
spk04: Welcome to our first quarter 2023 earnings conference call. On behalf of the company and our employees, I would like to express our sincere gratitude to our users and investors and our employees. In general, this is the season when our business began to return to its healthy development trajectory as we stepped into the post-economic era.
spk03: In
spk04: the first quarter, we recorded revenue of RMB 1.28 billion representing an increase of 12% and 18% -on-year and sequentially. Our calculated cash billings reached RMB 1.65 billion representing an increase of 28% and 49% -on-year and quote-unquote respectively. Along with the recovery of our revenue, we demonstrated our healthy profitability and achieved a net profit of RMB 32.7 million compared to a net loss in the same period of last year. Our adjusted net income, which excludes share-based compensation expenses, was RMB 245 million, increasing by 102% -on-year.
spk03: The average daily usage increased by 54% and the daily usage increased by nearly 15 million. Among them, the average daily usage and the average daily usage from low-level cities increased faster. Among the new users of the first quarter, the average daily usage contributed more than 40%. The average daily usage accumulated a total of 31%
spk04: increase. The average monthly active users on both JPN app were approximately 14 million, up 58% -on-year. The average daily active users increased by 54% -on-year on this quarter, with PICGAU reaching nearly 15 million. Notably, blue collar and lower tier city users were the fastest growing cohort across our user base. In this quarter, blue collar users contributed to more than 40% of the newly verified user growth, with accumulated verified blue collar users accounting for 31% of our total users by end of this quarter.
spk03: Number 6, we've invested in parameterization that means that the number ofasi topop up is seamlessly increasing. Consequently, demand reduction is currently being seen as a prime event, with consumptioncarbon escaping enemy 장aptos, which also shows that our software and services can support different industries and different types of users.
spk04: In terms of recruitment demand from enterprise users, which many of you care about, since the first quarter T&R, our monthly active enterprise user sales continuously reached record highs in comparative periods, while maintaining a consistently high level since the spring festival. Among all the industries we served, the urban service industries were the most prominent performers, while the SMEs recovered faster than large enterprises. This is also a demonstration of our software and modeling ability to serve different users from different industries, regions and enterprise scales.
spk03: In the past 12 months, the number of paid users has been rapidly recovering. The demand for service has been expected to continue to grow over time. The service industry has become the second largest industry to contribute to the company's revenue growth, and this has resulted in a total of more than 30% of the total revenue in the blue-collar. In terms of business scale and regional distribution, the number of companies below 100 and cities below 2 has also improved.
spk04: Commercial-wise, thanks to the general recovery of recruitment demand from our enterprise users, the number of our paid enterprise customers in the 12-month period ended March 31st, recovered rapidly, and this growth trend is expected to continue in the following quarters. Strong user growth has driven the urban service industry to become our second largest revenue contributor, leading to the result that revenue contribution from blue-collar users accounted for over 30% of our total revenue in this quarter. In terms of enterprise scale and regional distribution, the revenue contribution of enterprises with less than 100 employees, and those from second and lower tier cities also increased year on year.
spk03: In this quarter, we have a key point in our work. In the current employment situation, we have to work to ease the imbalance between supply and demand, ensuring that single users, especially those who are looking for a job, can have better income, and the experience of using it is not affected. Through deepening the understanding and exploration of user needs and working hard on the recommendation of algorithms, we have achieved certain results. After the Spring Festival, in February and March, the number of users we reach is 1.6 billion pairs of monthly monthly sales. This is 65% higher than last year. In the case of monthly users, the revenue is increased by 68%, while the total revenue is increased by 65%. Whether it is in terms of the number of people or in terms of the total number, we have achieved a historic growth.
spk04: On the business operations side, one of our priorities in the quarter was to alleviate the imbalance between supply and demand under current employment market conditions. Specifically, we worked to ensure individuals, especially job seekers, could access more and better employment opportunities on our platform with a continued high-quality user experience. Through deeper understanding and exploration of user demand, combined with continuous efforts to optimize our algorithms, we made some progress in this area. In February and March following the Spring Festival, the number of successful constant reach, which means the successful resume exchange between job seekers and enterprise users, achieved on average 116 million pairs. This is an increase of 65% -on-year. To remind you that our monthly active users increased by 58% -on-year, which means we have achieved record highs in terms of total number of resume exchanges and the number of resume exchanges per person. So I would like to take this opportunity to give special thanks to our engineers and the product managers who have made their special efforts. For those critical users such as college students, we continue to leverage our resources, trying our best to help them access to more suitable opportunities on our platform. This is an important work for our company this quarter and also the corporate culture that more than 55,000 employees of our company are working on.
spk03: Many investors and our company's friends are concerned about the challenges and opportunities that AI technology has brought to our company. Today we can only say two things. First, the company values this very much. Second, the company will invest in a reasonable way and do some things. In terms of the number of active users, the number of positions is always high in the case of March. This is a good phenomenon. In terms of industry, the service industry and tourism industry continue to perform well. The stock exchange and logistics have been growing recently, and the demand for the manufacturing industry is also gradually improving.
spk04: In general, since the beginning of the second quarter, our platform has continued to see solid growth trends in our user base and user engagement, both on the job seeker side and enterprise side. It's worth mentioning that the number of active enterprise users and active positions posted have both shown an ongoing and steady increase, succeeding the levels we saw at the end of March. This is actually a quite good scenario. In terms of what we are seeing within different industries, the urban service industry and the travel and tourism industry have continued to perform well. The growth rates for sectors such as warehousing and logistics is a highlight recently, while recruitment demand in manufacturing industries have also demonstrated promising recovery trends.
spk03: That's all for today. Next, we will have our CFO Phil to introduce our financial situation.
spk04: With that, I will turn the call over to our CFO Phil for a review of our financials.
spk01: Thanks, Jonathan. Hello everyone. Now let me walk through the details of our financial results for the first quarter of 2023. We are pleased to deliver a solid quarter results with strong revenue growth as well as healthy profitability and strong operating cash flow. Driven by the robust user growth and rebound of recruitment demand post the Spring Festival, we have witnessed a re-acceleration of both revenue and calculated cash filling growths. Our revenues reached R&D 1.28 billion, up 12% year over year, and our calculated cash fillings reached R&D 1.65 billion, representing a year over year increase of 28%. Quarterly number of paid enterprise customers alone reached to historical high level, mainly due to increase in number of active enterprise customers and improved paying ratio. As a result, our number of paid enterprise customers in the past 12 months also recovered and expects to continue to increase in the coming quarters. Revenue contribution from small size accounts increased as recruitment demand from SME grew better. Moving to the cost side, total operating costs and expenses in this quarter were R&D 1.37 billion, up 20% year over year, excluding share-based compensation. Our adjusted operating costs and expenses in this quarter increased by 15% to R&D 1.16 billion. Considering other operating income, our adjusted operating margin for this quarter is 10.6%. Cost of revenues in this quarter was R&D 247 billion, up 39% year over year, mainly driven by increases in server and bandwidth costs, due to higher user traffic and payment processing costs, which is related to the higher growth of cash collections from our online self-serve facilities. Excluding share-based compensation expenses, our adjusted sales and marketing expenses were R&D 568 million, up 15% year over year. This increase was primarily due to higher marketing expenses compared to last year, as we have strong user and traffic growth this quarter. However, we have observed that overall customer acquisition efficiency has improved compared to the same period of 2021 due to our enhanced branding recognition. This encouraging trend will help us continue to achieve some profitability while maintaining good user growth momentum. Sales employees related expenses also increased as a result of higher cash revenue growth. Our R&D expenses in this quarter increased by 15% year over year to R&D 333 million, and the GNA expenses in this quarter increased by 6% year over year to R&D 165 million. Notably, benefiting from our strategy and efforts to improve operating efficiency, our adjusted R&D expenses and adjusted GNA expenses kept relatively stable with the same period of 2022. Net income in this quarter was R&D 33 million as compared to our net loss of R&D 12 million in the same quarter 2022. Our adjusted net income for this quarter increased by 102% year over year to R&D 245 million, representing an adjusted net margin of 19%. Net cash provided by operating activities was R&D 544 million for this quarter. As of March 31, 2023, our cash equivalents and short-term investments increased to R&D 13.5 billion. The robot's operating cash flows and cash reserves enable us to be more flexible on capital allocation and future development strategies. And now, for our business outlook, for the second quarter of 2023, we expect our total revenues to be between R&D 1.43 billion and R&D 1.46 billion, with an year over year increase of .6% to 31.3%. That concludes our prepared remarks. Now we would like to answer questions. Operator, please go ahead.
spk06: Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A queue. Our first question comes from the line of Eddie Wang from Morgan Stanley. Please go ahead. Your line is open.
spk02: Hello, Mr. Zhao and Mr. Yu. Thank you for answering my question. I have two questions. First, although the overall unemployment rate in April has stabilized, the youth unemployment rate has reached a new high. In the second quarter, the third quarter, there will be new graduates. Do you think this will become a long-term structural problem? The unemployment rate in the youth is at a higher level. What impact will this have on our business? The next question is the unemployment rate in April and May, and the unemployment rate for active business users will be higher than in March. If the economic recovery is a little slower than expected, can the recruitment demand be returned to the second half of this year? I will go through the questions myself. The second question is that you mentioned in April and May, we do witness that the job posting and active enterprise users' level has been higher than we witnessed in March. However, if we consider the overall economic recovery is slightly lower than we expected, and at the same time we do see the youth employment rate as being high, do you think this recruitment demand recovery is sustainable into the second half of this year? Thank you.
spk03: There are many job seekers this year, and the number of job offers is relatively low. One of the limitations is that the youth employment rate for -year-olds is relatively high. Do you think this will become a long-term structural problem? I don't think so. I think this is a problem that is being resolved. From our observations, I would like to share two interesting observations with you. One is that the ratio of people who are in charge and those who are willing to provide jobs is relatively severe. However, from January 21, the Spring Festival, to 17-18 weeks, this situation is gradually being resolved.
spk04: Regarding the current situation with more job seekers compared to relatively less recruitment demand, which leads to a high unemployment rate of the younger people aged between 16-24, will that turn into a long-term structural question? My answer is no. I believe the situation has been improving. There are two interesting observations I would like to share with you. The first one is that in February, March, April, and May, on a -on-year and historical view, the ratio between job seekers and recruiters is relatively at a very unpleasant level. But after January 21, after the Spring Festival, about 17-18 weeks, we have seen that the situation has been improving on a weekly basis.
spk03: Another interesting number is that this year, hard-working graduates have actively applied for a job in a small company. Compared to last year, this data has risen by more than 10%. This is something that has never been seen in history. This makes me feel that people always try to adapt to the environment and find their own chance to survive and develop.
spk04: Another interesting thing is that the graduates this year, their active reach out to the small and medium-sized enterprises. The F ratio has risen by over 10% compared to last year. This is a scenario I have never seen historically. My personal feeling is that people have tried their best to adjust to the environment and to strive for their development opportunities.
spk03: If the situation is not handled well, the NPS of the job seekers will drop. This is something that we have been trying to deal with. I think that from the perspective of the growth of job seekers and recruiters every month, I think that this is something that we can handle.
spk04: In terms of the impact to the company, this year today, the pressure I have feeling the most is that the situation of more job seekers compared to less job demand, job supply, which has placed great pressure to our recommendation system and our customer service system. If we cannot deal with it correctly, that will impact our NPS, especially on the job seekers side. We have been working quite hard on this. If you look at it from the perspective of the average, average achievements or average job revenue changes, each month per person we have done pretty well up to now.
spk03: Your second question is about the demand for April and May. If we compare April and May, we see that the new job that the recruiters give out every week, in fact, it is about 7% higher than the previous one. At the same time, there is a job where the recruiters go to look for people, and the job is active. If we compare April and May to February and March, the activity of the recruiters is also 6% higher. So I am happy to see this data. So you are asking if there is a continuous improvement. We see that the answer is a definite answer. It is a continuous improvement.
spk04: And about your second question of the recent demand recovery in April and May, we have observed that compared to February and March, weekly newly posted jobs have been increased by 7% on a week basis. And another number is that for each job opening, the enterprise users, the recruiters behind that, the situation of the recruiters actively looking for people compared to February and March in April and May, that situation also increased by 6%. This is an encouraging number, and I am glad to look at that. Whether this is sustainable, my answer is pretty sure the situation is improving and quite sustainable.
spk02: Thank you, Mr. Zhao. I am Yu Beowenbei. Thank
spk03: you. Thank you.
spk06: Thank you. We will now move on to our next question. Our next question comes from the line of Wei Zhong from UBS. Please go ahead. Your line is open.
spk05: Hello, Mr. Zhao, Yu Beowenbei. Good evening, everyone. Thank you for answering my question. I also have two questions to ask. The first question is about our enterprise users. If we look at the big and small enterprises separately, can you please introduce the recent recovery of the two sides? For example, the activity of the enterprise users, the pay rate, the recruitment period, what has changed in the past few months compared to the previous two years? Is there any change worth noting? The second question is about the recruitment in Lanling. I would like to ask if we have more colors to share about the recent progress of the Lanling recruitment business, including a strategic focus this year. We have actually made very good progress in the service industry. If there is a greater breakthrough in the manufacturing industry in the future, what measures will the company take? I will also translate it for myself. Thank you, management, for taking my question. Firstly, regarding the enterprise users, could management comment on the recovery trends for your KA users and SME users separately, for example, in terms of the user engagement, paying ratio, recruiting cycle, etc.? What has been trending in the past few months? Are there any noticeable changes compared to a few years ago? Secondly, I just want to follow up on the blue collar recruiting business. Could management share more progress in that regard, as well as your strategic focus for the year? Given we have made very good progress in the services sector, if we want to see a bigger breakthrough in the manufacturing sector, what actions do we plan to take this year? Thank you.
spk03: The recovery of large and small enterprises this year is quite interesting. In the first and second months, the recovery speed of small enterprises is very fast. The big enterprises are relatively slower. In the fourth and fifth months, the recovery rate is different. In the fourth and fifth months, we see a small enterprise with a net profit of less than 99 people. Its daily rate is 1% higher than the fourth and fifth, and the second and third. But the companies with more than 10,000 employees are at a 7% increase in their daily rate in the fourth and fifth months. So the big enterprises are faster in the fourth and fifth months. This is a point to consider. There is another point I want to make. Please translate.
spk04: For the comparison between large companies and SMEs, one interesting point is that we have seen different situations. In January and February, we have observed that SMEs have recovered very rapidly, while large companies are more slowly. But in April and May, the situation is different. One data to look at is that for enterprises with less than 100 people, the daily active job protein increased by 1% in April and May compared to January and February. However, for enterprises with people with more than 10,000, the daily active jobs increased by 7% in April and May, which they showed a trend with faster recovery. Another data which we often look at internally, which is in April and May, among the different job categories within an enterprise, the jobs related to marketing and procurement, have increased faster, which means people, these jobs are related to the company's development, to help them either spending more or earning more money, which means they have better confidence at this stage. Generally speaking, there are millions of enterprises and tens of millions of job seekers on our platform every month. That means they have no problems in their largely or frequently represented job market. Our witness said they have been working very hard to try to solve their own problems. And we are also trying our best to help them with that. So the general solution is that April and May is better than February and March for other companies and companies.
spk03: We are more confident in the field of urban service. We are more confident that we have created good value. We have also worked hard for several years. This year, when urban service was quickly restored after the epidemic, we have some evidence of our efforts. For example, we just mentioned that the income of the entire BlueLand industry has increased quite a bit. The user's income has also increased quite a bit. This is what I want to say.
spk04: We have also seen the value after years of efforts. And after the COVID, with the fast recovery for the urban service industry, all of our proven efforts have some concrete evidence on numbers. So we just discussed that either users and revenue contributions from the urban service industry and the blue collar have increased rapidly.
spk03: And the manufacturing industry, construction industry, logistics, and the delivery industry. In fact, I think we are working hard to create greater value for these industries. I dare not say that we have created greater value when we are confident in the urban service industry. So I think we are still on the road. This is my other view on this issue.
spk04: We are not as confident as the urban service sector, but we are on our way and we are on the right direction. That's my view on
spk03: this. I think we will continue to explore this issue and create greater value for our businesses. This is my answer to your second question.
spk04: We have been actively and progressively exploring solutions to these industries to try to provide more value to them while achieving our own business development.
spk05: Thank you, management.
spk03: Thank you.
spk06: Thank you. Thank you. Once again, to ask a question you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by. Our next question comes from Timothy Zhao from Goldman Sachs. Please go ahead, your line is open.
spk00: Thank you. Thank you, management, for taking my question. I have two questions here. One is regarding the enterprise paying ratio and our pro trend. Could the management share any new products or new strategies in improving the overall enterprise paying ratio, especially related to the small size and medium size customers as well as the new customers the company has acquired? Secondly, regarding sales marketing, we understand the first quarter is typically the peak quarter in terms of sales marketing spending. I was wondering if the management could provide some updates on the company's sales marketing plan for the rest of this quarter, for the rest of this year and what is our margin forecast for this year. Thank you.
spk01: Okay, Timothy, I would like to answer those two questions. Regarding our paying ratio for the quarter, generally speaking our paying ratio improved a little bit in the quarter compared with last year. In terms of APU, APU kept stable in the quarter. I think the overall paying ratio improvement is mainly because of healthy growth of job seekers and business customers in urban services and a few other logistic and tourism sectors. So the competition is between the business customers that are, you know, that the platform naturally, you know, increase a little bit about our paying ratio. Rest of other sectors maintain a quite stable paying ratio in the quarter. In terms of the new business customers and business customers from lower tier cities, they are the key contributor to this growth. So this is the first question. The second question regarding our selling marketing expenses and our overall expenses. You're right that the first quarter in terms of the seasonality, normally it's a high quarter because of there's a very usually industry wide branding campaign. Happened after Spring Festival. So in our situation, we need a little bit of brand advertisement in the quarter. But looking ahead, there's no other big marketing event in the rest of the year. So this is a branding advertisement. In terms of our traffic acquisition costs, which is related to our user growth, supported by our well established brand recommendation. I think this area is shown with a very high efficiency in the first quarter. And we believe that this high efficiency will further continue in the following quarter. So that means in terms of the branding and in terms of the traffic acquisition marketing. So the overall selling marketing will be, you know, will be packed in a disciplined situation. So our overall marketing spending will hope to generate further leverage in the year. And after cause items like R&D, like G&A will follow the suit in a similar trend. So our overall opening margin for 2020-3 compared with last year will be up in our thoughts. So that's pretty much our directional thoughts regarding our opening margin. So that's my answer to the second question.
spk00: Thank you.
spk06: Thank you. Due to time constraint, that concludes today's question and answer session. At this time, I will turn the conference back to Wenbei for any additional or closing remarks.
spk04: Thank you once again for joining us today. If you have any further questions, please contact or reach out directly. Thank you.
spk06: This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand
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