KANZHUN LIMITED

Ladies and gentlemen, thank you for standing by. Welcome to the Kunshun Limited Fourth Quarter and Fiscal Year 2023 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 would like to turn the conference over to Ms. Wenbei Wang, Head of Investor Relations. Please go ahead, ma'am.

Thank you, operator. Good evening and good morning, everyone. Welcome to our fourth quarter and four-year 2023 earnings conference call. Joining me today are our founder, chairman, and CEO, Mr. Jonathan Peng Zhao, and our director and 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 on 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 measures for comparison purpose only. For a definition of non-GAAP financial measures, and the reconciliation of gap to non-gap 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.jping.com. With that, I will now turn the call to Jonathan, our founder, chairman, and CEO.

Hello, everyone. Welcome to our company's 2023 quarter and full-year release.

Hello everyone, welcome to our fourth quarter and full year 2023 earnings conference call. On behalf of the company and our employees, management team, and the board of directors, I would like to express our sincere gratitude to our partners and investors who trust and support us.

First, I would like to share our performance with you

In the fourth quarter, the company achieved a calculated cash billings of RMB 1.78 billion, up 61% year-on-year and 9% quarter-on-quarter. Our gap revenue reached RMB 1.58 billion, up 46% year-on-year and remained flattish with last quarter. Our adjusted net income, which includes share-based compensation expenses, was RMB 630 million.

In the fourth quarter, BOSS applied for an APT with an average of 41.2 million MAUs, which is 33% of the total growth. In the fourth quarter, we observed that the supply and demand ratio of recruiters and applicants was improving. We observed that medium-sized enterprises have maintained their performance of steady recovery over the past three quarters. This is due to our advance payment, GAAP income, and profit level in the fourth quarter.

In the fourth quarter, the average verified MAU on the BossGPIN app reached 41.2 million, representing a 33% year-on-year increase. In the fourth quarter, we noted an improving ratio between the demands from active enterprise users and the supplies from job seekers. We also noted continued steady recovery of medium and large-scale enterprises since the third quarter. all of which contributing to our cash billings, gap revenues, and profit levels in the fourth quarter to exceed our expectations. Let's take a look for the full year of 2023. The company achieved a calculated cash billing of RMB 6.69 billion, up by 45% year-on-year, and the gap revenue of RMB 5.95 billion, up by 32% year-on-year. Excluding share-based compensation expenses, the adjusted net income for the year reached RMB 2.16 billion. Furthermore, Excluding other income such as wealth management income, the adjusted operating income for 2023 was RMB 1.64 billion, reflecting a remarkable 191% year-on-year increase. This resulted in a 27.5% adjusted operating margin, underscoring the company's robust profitability capability. 2023

In 2023,

We attracted more than 49 million newly added Wi-Fi users, representing the largest annual growth in user base since the company's inception. This year, the number of users we serve has increased by nearly half of 100 million, and we are being able to help them with our products, which we are quite deeply proud of.

As of December 31st, 2023,

The company has served a total of over 178 million individual users and 13.3 million enterprises. The average verified MAU on the Boston app was 42.27 million in 2023, representing a year-on-year increase of 47%. Approximately 1.5 billion mutual achievements between job seekers and recruiters have been accomplished on our platform throughout the years.

In 2023, the number of paid enterprise customers increased by 44% year-on-year to 5.2 million.

Moreover, both the number of paid enterprise users and the paying ratio of active users continue to achieve record highs.

First, the number of new users in Lanling in 2023 is equivalent to that of Bailing users. The income contribution is more than 34%. Second, the income contribution of second-tier and second-tier cities is more than 60%, which is five points higher. Third, the income contribution of small and medium-sized enterprises with less than 100 people is also more than 5%.

As the company continues to expand our user coverage, both the user and revenue structure undergoes constant evolution, highlighted by the following key points. First, in 2023, the scale of newly added blue-collar users matched that of the white-collar users, with revenue contribution of the whole year from blue-collar users exceeding 34%. Revenue contribution from second and lower tier cities exceeded 60%, a 5% point increase year-on-year. Third, revenue contribution from enterprises with less than 100 employees also increased by more than 5% points year-on-year. All these changes further demonstrated that we are confident that our product can serve different users and also our service can cover different kind of users. 这主要还是基于我们一直在相互研究不同用户的 This is mainly based on the down-to-earth research on actual detailed needs from different kind of users and our continuous efforts in technology investments. 今年1月公司自主研发的首个招聘行业的

In January this year, our company's proprietary big model, which we named it Nanbei Ge Big Large Language Model,

which is believed to be the first large language model designed specifically for the recruitment industry, has successfully completed its online registration for generative artificial intelligence. The effect of this model has reached the industry leading level on some public benchmarks and has gradually been applied in some recruiting and job seeking scenarios. For example, for those young entrepreneurs who are still starting up their companies, we provide them with rapid job posting function. And for those young people or fresh graduates, job seekers, we provide them with resume polishing functions, et cetera. The company's investment in AIGC mainly focuses on two principles. First, we keep track of the cutting-edge technology to avoid generational gaps in knowledge. Second, focus on industrial implementation and not make big investments blindly. 接下来我们简单更新一下今年春天的情况。

Next, we will briefly update the situation for this spring.

Following the Spring Festival, the company's various user metrics continue to hit historical highs, with the peak DAU on the BossJPG app approaching 17 million, for example. From those data, we also identified several characteristics which are notably different from the same period last year, including the following keywords.

The first keyword is the number of recruits. After the Spring Festival, the number of new recruits for the Japanese army

First, recruiters. Since the Spring Festival, the daily average number of newly posted job positions and active job positions have both reached historical highs compared with the same period in the previous years. The daily average number of active job positions increased by 20% year-on-year.

The second keyword is large enterprises. Since Spring Festival, the average daily active position from enterprises with more than 10,000 employees increased by 24% compared with the same period of 2023. The third keyword is industry. The daily average number of newly added job positions and active job positions across all industries

has shown positive growth since this year's Spring Festival, compared with the same period of 2023, among which the blue-collar industry has once again reached a new record high, driven by the continuous expansion of urban service sectors. Additionally, the manufacturing and supply chain logistics sector have shown accelerated year-on-year growth rate,

In the white-collar industry, sectors such as consumer goods, medical equipment, automotive, and advertising media are leading the growth.

The fourth key word is business. From the type of position, it is different from last year.

The fourth keyword is business. There has been a noticeable shift in the types of job positions compared with last year.

The positions focusing on the development and growth of the enterprise business, such as sales guides, human resource services, finance, and related positions have experienced a clear rebound in growth rate.

So we anticipate

Our quarter-on-quarter increase in both cash billing and debt revenue for the fourth quarter.

I'm pleased to announce the company's board of directors approved a new share repurchase plan today, up-sizing to repurchase up to US dollar 200 million of the company's shares over the next 12 months.

This marks our third share repurchase plan, alongside the US$18 million special cash dividend issued in last November, demonstrating the management's commitment and sincerity towards long-term shareholder returns.

This is my part of the presentation. Next, CFO Phil will introduce our financial situation.

That concluded my part of the call. I will now turn it over to our CFO Phil for the review of our financials. Thank you.

Thanks, Jonathan. Hello, everyone. Now let me walk through the details of our financial results of the fourth quarter and full year of 2023. We are pleased to deliver a strong set of results for the fourth quarter and the full year of 2023. For the fourth quarter, our calculated cash billings reached a historical high of RMB 1.8 billion, grew by 61% year-over-year, and notably 9% quarter-on-quarter, beating our expectations. Revenues increased by 46% to RMB 1.6 billion compared to the same period last year, and stayed relatively stable sequentially due to the lower seasonality, confirmed our observation of a gradual recovery, especially at medium and large-sized companies. Revenue contribution from key accounts and their R pool also recovered sequentially in this quarter. For the full year of 2023, our calculated cash billions and revenues increased by 45% and 32% respectively. Number of paid enterprise customers reached 5.2 million in 2023, up by 44% year over year, marking another new high level of paying ratio among active enterprise users and demonstrated our ample space and flexibility in monetization. Moving to the cost side, Total operating costs and expenses decreased by 4% year-over-year to RMB $1.4 billion in the fourth quarter and increased by 16% year-on-year to RMB $5.4 billion in 2023. This year, we managed to achieve a robust user growth while still seeing margin expansion. The annual adjusted operating margin improved from 12.5% in 2022 to a record level of 27.5% in 2023, up by 15 percentage points. Cost of revenues increased by 36% year-over-year to RMB 275 million in the fourth quarter and 40% year-over-year to RMB 1.1 billion in 2023. This increase was primarily driven by increased server and bandwidth costs and payment processing costs in line with the growth of user engagement and transactional volume. Our sales and marketing expenses decreased by 36% year-over-year to RMB 433 million in the fourth quarter, as we didn't have similar marketing campaigns like 2022's FIFA World Cup sponsorship in the year, and remained stable with last year at RMB 2.0 billion for the full year of 2023. Even excluding the World Cup sponsored fees, adjusted sales and marketing expenses as percentage of revenue went down by seven percentage points this year compared to 2022. When at that time we could only have the user growth of half of the year. This proves the effectiveness of our marketing strategy, which emphasizes more towards branding campaigns. Our R&D expenses increased by 46% year-over-year to RMB $430 million in the fourth quarter and 31% year-over-year to RMB $1.5 billion in 2023. Excluding share-based compensation expenses, Adjusted R&D expenses increased by 62% year-over-year to RMB 316 million in the fourth quarter and 25% year-over-year to RMB 1.1 billion in 2023. This increase was mainly driven by our further investments in talent and AI technology developments which incurred AI-related server and cloud service fees. Our G&A expenses decreased by 9% year-over-year to RMB 225 million in the first quarter and increased by 13% year-over-year to RMB 812 million in 2023. Excluding share-based compensation expenses, adjusted G&A expenses decreased by 32% year-over-year to RMB $122 million in the first quarter and 8% year-over-year to RMB $482 million in 2023, mainly due to decreased professional service fees. Our net income was RMB $331 million in the fourth quarter, and RMB $1.1 billion in 2023 full year. Adjusted net income increased from RMB $59 million in the first quarter of 2022 to RMB $629 million and increased from RMB $799 million in 2022 full year to RMB $2.2 billion for full year 2023, representing a significant year-over-year increase. Adjusting net margin for the full year of 2023 reached a record high of 36.2%, up by 18.5 percentage points. Net cash provided by operating activities was RMB 927 million for the fourth quarter and RMB 3.1 billion for the full year of 2023. As of December 31st, 2023, our cash and cash equivalents, time deposits, and short-term investments totaled RMB 12.9 billion. and long-term investments in fixed-rate notes and wealth management products, or RMB 2.3 billion. With our commitment to share our success with shareholders and supported by our robust cash reserve, we paid a cash dividend of RMB 563 million in December 2023. Additionally, our board has repurchase program over the next 12 months and upsized the program to U.S. dollar 200 million, demonstrating our strong commitment to shareholder returns. And now, for our business outlook, we have seen encouraging trend of recovered equipment demand post-Chinese New Year, and we are confident to deliver better than expected results for the current quarter. In the first quarter of 2024, we expect our calculated cash billions to increase sequentially by at least 12%, one, two. And revenues to be between RMB 1.64 billion and RMB 1.67 billion, with a year-over-year increase of 28.3% to 30.7%. With that, that concludes our prepared remarks, and now we would like to answer questions. Operator, please go ahead with questions.

Thank you. We will now begin the question and answer session. To ask a question, please press star 1-1 on your telephone and wait for a name to be announced. If you would like to cancel your request, please press star 1-1 again. Our first question comes from the line of Eddie Wang from Morgan Stanley. Please go ahead.

Hello, Mr. Zhao, Yu Ge, Wenbei. Good evening. First of all, congratulations on the very strong performance. I have two questions. The first one may have been a little involved before, but I would like to ask specifically about the situation of the entire employment market after the Spring Festival, including the recruitment of different enterprises in the Western sector, including the supply and demand situation. Compared with the second half of last year, has it become better? Then, based on this, I want to hear Mr. Zhao's opinion. Do you think that companies are more confident in the recovery of the economy at this time? This is the first question. Then the second question is that I want to ask Thank you for taking my question. My first question is about the recruitment demand. situation after Chinese New Year. Can you give us more details in terms of the different industries by different enterprise sizes on this supply-demand situation compared with last year? And my second question is, what's your forecast or expectation for the revenue growth of the company for this year? Thank you.

Okay, then we... We may not be suitable to evaluate the situation of the employment market because we can only see our own data. We are just players in this field. But we are also willing to share what we see. First of all, we see the growth of the day-to-day life of the entire B-end. In the case of the same ratio, the increase is higher than the case of the C-end. A change that exists at the same time is that the proportion of applicants and recruiters on the entire platform is gradually improving. Because I have been in this industry for a long time, I see that in any distributed area or area, there is a relatively balanced ratio between B and C. Thank you for your question. Regarding the first question, we are not suitable to comment on the entire drone market.

But we, as a platform, we have our own data, and as one of the players, we would like to share with you our observations. First, it's about the enterprise side, which we have witnessed a year-on-year growth from the enterprise side higher compared to the job seeker side, which result in the ratio between job seekers and enterprise users continue to improve. I have been within this industry for quite a long time, And within any detailed industries, the ratio between enterprise users and job seekers, its relative balance have been quite significant to me. Since the Spring Festival this year, my observation is that the ratio between enterprise users and job seekers, it has been rebalancing towards a relatively normal situation.

Regarding whether the enterprises have restored the confidence for the

market and for the future. The data we just mentioned is that both newly posted jobs and online active jobs have reached a record new high and very significant year-on-year growth. And to share with you some detailed trend on particular sectors. For example, for manufacturing workers, logistics, urban service related new color sectors have recovered quite well after the spring festival.

Another angle is that for those cities along the sea, which is more external-related economics,

shows better user growth after the Spring Festival, so which implies the manufacturing related to export have been performing quite well recently.

There is an observation that I shared with you last spring, that is, small and medium-sized enterprises start to recruit people relatively quickly, while large and medium-sized enterprises Now, for example, companies with more than 10,000 employees, their current position growth rate is actually faster than some of the middle and upper-middle-class companies. This situation started in August, and then gradually continued backwards. The whole thing reflects the recovery of the white-collar sector in recruitment.

Another observation we discussed about last spring is that the small and micro companies recovered much better after the spring festival last year. However, this year, the larger companies, they have postponed a recovery trend. However, this year, as we just said, enterprises with more than 10,000 employees grow much better compared to those medium-sized enterprises. And this situation has been started since August last year and continued after the Spring Festival, which shows the continuity of the white-collar recovery.

The second question you asked is about the year-round expectation. Let me review it first. From last year's Q1 to now, Regarding your second question for our outlook for this year, I would start with reviewing for the performance for last year. So since the beginning of 2023, what we witnessed that we have seen improvement.

sequentially from Q1 to Q4 and until Q1 this year for the consecutive five quarters.

This feeling can be verified from the data from the previous four seasons, including this year's first season, quarter by quarter. Speaking of this year's Q1, Phil just talked about this prediction. We are more confident

And that observation has been proved by our quarter-on-quarter sequential growth data. And we hope that the trend can continue within this year. And for the first quarter this year, as Phil just discussed, we are expecting our calculated cash billions have at least a 12% of quarter-over-quarter growth compared to the fourth quarter last year.

And given my experience and observations for the operation, I'm pretty sure that in the second quarter, we will continue to have sequential growth.

Thank you. And that concludes my answer to your question. Thank you.

Thank you for the question. Thank you for the question. Next question comes from Timothy Chao from Goldman Sachs.

Please go ahead. Hello, Mr. Chao. Thank you for accepting my question. First of all, I would like to congratulate the very strong performance of Group C and Group E. I have two questions I would like to ask. The first one is about this year's Spring Festival. We observed that some of our friends have increased their market investment. Could you please share with us the strategy of our user growth and market investment this year? If we look at the competition in the market, what are the incremental changes? The second one is that I would like to ask you about the changes in the cost-benefit ratio of all of us this year and the level of the profit-loss ratio this year. I will quickly translate it. Thank you, Benjamin, for taking my questions, and congrats on the very strong results. I have two questions here. First, we noticed that some of our competitors have increased marketing spending post-Twice New Year. Could Benjamin share your strategy for this year's user growth and marketing campaigns? Have you observed any incremental change in the competitive landscape? And second question is your outlook regarding this year's operating expenses as well as profitability margin. Thank you.

Okay, okay. Let's talk about the whole competition pattern. From the basic aspect of the competition pattern, we also noticed the data of the third party. The data of the third party. We are also clear about our own data. So we don't think there is much change in this basic aspect. This is just a basic judgment. In addition, In addition, I am also thinking about the increase in investment. What I actually see is, I think everyone should, because some companies are not listed companies, so we can't see their numbers. But I guess, based on what I have done in the industry for so many years, I think everyone should feel some good news in terms of income. So it will be more generous in terms of spending. I think this is a reasonable deduction. And this deduction itself is also confirmed in my own data. So I think the whole industry has this feeling of the spring river, the water is hard, and the duck is the first. Of course, we are not the only duck in the spring river. So I think this is still a judgment. So from the user's growth goal, I think we should talk about We are planning to have more than 40 million new users. As for the specific strategy, as you said, I thought about this strategy. As you said, everyone is working hard this year. So, it's not convenient for me to talk about the detailed strategy. But we will still maintain a reasonable investment. We will not suddenly start spending a lot of money. I don't see this as a necessity today. We can still maintain our market share in a very reasonable amount of money. And we can still maintain it at a relatively high level. I am quite confident about this. That's all for my reference.

Thank you for your question. Regarding the competitive landscape, yes, we have noticed the newly published third-party data. And we are quite aware of our own data, which the conclusion is that we don't notice any fundamental changes regarding the competitive landscape. And for some of our peers who increased their investment in marketing after Spring Festival this year, Because some of them are not public companies, we cannot have their data. But I have been within this industry for a long time, so I know that because there are some signs of improvement from the revenue side, then people are willing to move willing to invest in the marketing to spend more, which I believe is a reasonable explanation and also conquered, echoed by our own data. So this is actually a positive sign for me because not only us, but the whole industry are recovering or moving up. So we are not only back within a warming water. And for our user growth target, we are still targeting for at least 40 million newly verified users this year. Because, as you said, our peers have increased their investment on marketing, so I will not discuss too much on the details. But I can guarantee you that we will still spend money reasonably. I don't have the feeling to... increase a lot of our marketing expenses. It's not actually necessary, so we will spend a reasonable amount in our consumer range. But at the same time, we will maintain our strong competitive edge in terms of user penetration, in terms of market share, and the whole leading position. And that's the answer to your first question.

So regarding the user So definitely there will be expenses. So simply speaking, we would like to keep our user growth still at a quick or fast pace. But meanwhile, we would like to keep selling marketing as a percentage of the revenue at the most flat or in better scenario would be slightly lower than 2023. So this is selling marketing percentage of the revenue. So regarding the gross margin trend, in short term, due to seasonality, Q4 is low quarter. So gross margin was affected slightly. So Q1, the gross margin to be flat And this is mainly because of the high online revenue contribution, which involves higher payment processing fees in short term. But for the full year of 2024, we would like to see gross margin improvement, mainly due to the leverage from personnel costs backed by quick revenue growth. so basically simply speaking gross margin to be further improving in 2024 as I just mentioned selling and marketing expenses so rest of other items like R&D and G&A we won't expect to increase these expenses aggressively so operating margin on bottom line to continue seeing uptrends. So basically, we would like to keep most of the cost or expenses lines in a self-disciplined manner. So therefore, we can leverage driven by our faster business or revenue growth for the full year.

And that concludes our answer to the question. Operator, let's proceed to the next question.

Thank you. One moment for the next question. Our next question is from CICC. Please go ahead.

Thank you, Mr. Guan. I have two questions. The first question is about our business strategy this year. My first question is what's the company's strategy of commercialization this year? and what are the expected trends in the payment ratio at Apple? And my second question is, what's the progress of the company's blue collar business and what are the future planning direction for the blue collar sector? Thank you.

OK, so I'll answer the first question regarding the monetization or commercialization for our business. So we just reported that for the first for the latest quarter, there was 5.2 million, 12 months paid enterprise customers. So this was a historical high. Regarding our commercialization, there were two components. One is paying ratio, another is ARPU. So we expect that the paying, in terms of the paid enterprise customers, in 2024, so we would like to continue to see the growth of the paid enterprise customers sequentially. And in terms of their R pool, the blended R pool in the last quarter dropped a little bit. This is mainly because of the contribution from small, medium-sized enterprises, their round contribution you know, is bigger because of the fast growth from SME companies. And the blended effect makes blended R pool drop a little bit. But if you look at a small, medium-sized accounts and the key accounts separately, you would like to see both of them, their R pool increased in the last quarter. So they are all increased, respectively. And in terms of the paying ratio, compared with 2022, 2023, the overall paying ratio increased by 3 percentage points. At this moment, the paying ratio for the platform is still at a low level, so we believe there would be still a good room to grow. So it will take several years to gradually increase the paying ratio for us. And in short term, the paid enterprise customers' growth mainly comes from the user growth. And as we just mentioned, our marketing strategy, so basically in this year, we will still continue to acquire users at a very quick or faster pace. So basically that will contribute to us with new users, new business users, new enterprise, paid enterprise customers. And for the longer term, we expect the paying ratio to continue to grow and the recovery from large enterprises, as Jonathan just mentioned, with that definitely will increase their output. So paying ratio increase and output increase Those two parts have good potentials, will support our long-term growth with our commercialization.

Let me talk about the business aspect of Lanling. This year, as we just mentioned, the Lanling business is in a sustainable and healthy development. In terms of revenue, our revenue was originally a... In terms of growth, in terms of revenue, our revenue was originally a... In terms of growth, our revenue was originally a... In terms of growth, our revenue was originally a... In terms of growth, our revenue was originally a... In terms of growth, our revenue was originally a... In terms of growth, our revenue was originally a... In terms of growth, our revenue was originally a... In terms of growth, our revenue was originally a... There is also a blue line for the construction industry. There is also a blue line for the logistics delivery in the warehouse on the road. It is relatively small for each group of people. It is really objective to add them together. We should serve them well. Currently, in the field of services, our service recognition is relatively high. We also make some money. In the field of production and manufacturing, to be honest, we are still in the process of hard exploration. This has been said for a long time. In the end, there are four people. One is the factory as the employer. One is the worker. One is the intermediary organization that has existed for a long time. One is the platform. The game between these four people In a fairly long time, 2-2-3-3 is contradictory. It may be a sort of integrated game. If there is a way to turn it into a multiplayer game, then this thing can be played better, and everyone will benefit from it. I think this thing is still under continuous exploration, especially in the past two years. I will briefly talk about the blue collar business.

So our blue collar business have experienced continued healthy growth. So data point to the product, which is our revenue grew by 32% year on year. However, the revenue contribution from blue collars goes up by six percentage points from 28% to 34%, which is a very powerful demonstration of the good performance of our blue collar business. And there are four detailed sectors within blue collars which are urban service, manufacturing, construction, and warehousing and logistics. Every sub-sector, the numbers of users have been less than white-collar. However, combined together, they are quite a considerable amount. So we need to better serve them. Within urban service sector, we have been doing well. We have a good recommendation and reputation. So we also make some money from there. Within manufacturing, we are still under very hard exploration, which actually has been going for a while. We talked about there are four players within manufacturing recruitment to business, which are the factories, which is employers, the workers. the agents, the offline agents who have been playing there for a long time. And the last one is the platform. So the game is that in a considerable longer time, within those four parties, among two or three of them, there have been contradictory situations. So actually, it's a zero-sum game. But we have been hard-sorting, exploring for quite a long time, and we made some progress. And also the industry situation for manufacturing in the past two or three years have been quite different from previous period. So we will continue to work on that area. So that's my update on our progress of blue-collar business. And that concludes our question for CSEC. And operator, let's move to the next question.

Certainly. The next question comes from the line of Robin Chu of Brinstein. Please go ahead.

Thank you, Mr. Wang. I have two questions I would like to ask. The first one is, I am very happy to see that the company has increased its return rate this time. How should we think about the overall cash allocation of the company? And is the repurchase going to be more stable every month? The company now accounts for more than 1.3 billion in cash. I don't know if the company will consider a more systematic way to increase shareholder returns as the company's revenue and cash flow increases. The second is, I would like to ask about the company's future product development path. How can we provide more services in the recruitment process? How can we expand the application through AI model development and how can we help the company achieve income and profit? And do we have any new ideas and actual plans overseas and overseas? So two questions, please. One, it's good to see management raise the buyback for the coming year. So I think that you could share some thoughts on capital return policy going forward and the monthly pace of buybacks. Given there's almost $2 billion of cash on the balance sheet, will the company commit to a systematic capital return program going forward as revenue and cash flows grow? Second, I'm keen to hear management talk about future product development and specific ways the company could leverage AI to capture more value and profit in the recruiting process. Also, we'll have an update on overseas expansion if management has any new thoughts or concrete plans. Thank you.

Thank you. From the perspective of a company, the cash in hand is to make the best arrangements for corporate capital. In the course of the company's development, we are constantly improving the returns of shareholders. I think this is the duty of any listed company, any management level of a listed company, and any CEO of a listed company. So as you said, our short-term money is more than 130 billion. Our long-term investment is more than 150 billion. How will this thing work? I actually have a priority in my heart. First of all, When I have a chance to develop, I will first of all be able to develop, to be able to expand, to be able to increase the growth of the entire company, to be able to expand the model of the company that has been created in more people, more industries, more regions and countries.

Thank you for your question. So regarding the cash allocation, so it is actually to make the best arrangement to optimize the allocation of company's capital and continues to increase shareholder return is a duty for any public company, any management of public company and the CEO of any public company is our pursuer and our duty. And we have roughly, as you said, 15 billion cash on hand. So for me, the priority to use this cash, there are priorities. The top priority will always be we will use our money for future development, for user growth, to expand our advanced model to more user groups, to more industries, areas, and countries to initiate our business.

And the second priority is to provide shareholder return.

We are currently exploring a possibility of following our initial special cash dividend last year to pay cash dividend continuously in the future.

And the last one is from share with purchase perspective.

So we just approved this US dollar 200 million new repurchase program. So that's what we have been doing and we will continue to do. So we want to utilize this share-by-buy program to guarantee our shareholders their shareholding percentage. And in the future, we will coordinate between all these several methods or several ways to provide the best return to our shareholders.

You also mentioned the perspective of AI. We will make some investments. We have a clear policy. First, we will pursue advanced technology and advanced teams. We don't want to see any cognitive differences in the development of AIGC in this round. Secondly, we hope to land on the industry. and from the AI investment our policy like we just discussed first is to keep up with the latest leading technology and teams to avoid any

knowledge gap, generational gap, compared with the first-tier teams. And secondly, we will continue to pursue the industrial implementation and not to blindly invest to compete with chips, compete with spending of electricity powers, which is not worthwhile. We will spend our money cleverly.

Of course, I think our investors, our shareholders will be concerned. This whole wave of large model development applications, for our company and for the entire industry, I think everyone is very concerned. I will say something that I have been aware of in the industry so far. I hope to share this knowledge with everyone. This is how we see it. If this thing can't be done without AI, And regarding the

opportunity that the AI have brought about for our company and for our industry, I would like to share with you one of my understanding, which is, if something is development cannot go proceed without artificial intelligence without AI, then we need to invest that. So if something can functioning quite well, even without AI, then we should be very cautious on the investment. That's the distinguish between whether we should spend more from an industrial perspective.

Thirdly, because our business involves the right to employment, labor law, and so on, the legal requirements are relatively high. In the end, I think we should invest in places like the top five or top six in the global GDP. At the same time, it is also a place where the entire legal environment is relatively clear and transparent. At the same time, it is also a place

And about the overseas business, which many of the investors may concern, our policies are also quite clear. First is we will go overseas to make money. Second, so we want to make money from wealthy people. Third, the recruitment and job seeking business is quite serious. It's regarding the power and protection of job seekers. So we have a quite high requirement for the local labor law. And fourth, based on those requirements and considerations, we will invest in the top five or six GDP countries or areas where the legal environment are quite clear and mature and the enterprises are used to pay for services. And all those traditional business models can make good money. So that's quite clear. We don't go to mature market, ancient pairs, good laws and wealthy people. So that's our strategies for overseas business. And for your reference. And that wraps up our answers for those questions. And due to the time constraint, that will be the last question for operator.

Thank you. At this time, I will turn the conference back to Wenbei for any additional or closing remarks.

Okay. Thank you once again for joining us today. If you have any further questions, please contact our team directly, and thank you.

That does conclude today's conference call. Thank you for participating. You may now disconnect your line.