KANZHUN LIMITED

Ladies and gentlemen, thank you for standing by and welcome to the Kanjin Limited First Quarter 2024 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'd 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 first quarter 2024 earnings conference call. Joining me today are our founder, chairman, and the 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 of achievements of the company to be materially different. The company caution you not to place undue 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 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.jping.com. With that, I will now turn the call to Jonathan, our founder, chairman, and CEO.

Hello everyone, welcome to our company's first quarter 2024 earnings conference call. On behalf of the company's employees, management team, and board of directors, I would like to thank our users and lecturers.

who have always believed in us and supported us.

先介绍一下业绩的情况。 一季度公司实现经计算现金收款20.5亿元, 同比增长24%, 环比增长15%, GAAP收入17.04亿元, 同比增长33%, 环比增长8%, 一季度实现2.4亿元的净利润, Let me first introduce our financial performance. In the first quarter, the company achieved a calculated cash billings of RMB 2.05 billion, up 24% year-on-year and 15% quarter-on-quarter.

Our gap revenue reached RMB 1.7 billion. up 33% year-on-year and 8% quarter-on-quarter. We achieved a net profit of RMB 240 million. Meanwhile, our adjusted net income, which excludes share-based compensation expenses, was RMB 530 million, up 117% year-on-year.

The average improvement of the first quarter BOSS-based APP is 46.62 million, which is 17% increase.

In the first quarter, the average verified MAU on the bus shipping app reached 46.62 million, representing a 17% year-on-year growth. The growth rate of enterprise users is faster this quarter compared with the same period last year.

In March, the number of verified MAU on the BossJapan app exceeded 50 million for the first time, reaching 55 million, up 24% year-on-year. At the same time, the ratio of DAU to MAU remained stable. As of the end of April, the cumulative number of verified users served by our platform exceeded 190 million, with the cumulative number of verified enterprises surpassing 40 million.

which means from January to April this year, the company attracted more than 17 million newly added verified users.

截止到2024年3月31号, 公司有大约570万个招聘者, 分布在超过350万个企业当中, 他们在Boss直聘付费开展招聘活动。

As of March 31, 2024, approximately 5.7 million enterprise customers across more than 3.5 million enterprises conducted paid recruitment activities on BossGP during the past 12 months.

So, in 12 months, the number of businesses paid by BossGP is more than 3.5 million companies. This seems to be very large in the global corporate service market, even more than the total population of many countries. However, in China's overall scale of more than 40 million, the proportion is less than 10%. Therefore, the annual cost of online recruitment services in China will still have a huge room for growth in the future.

In 12 months, there are more than 350 million companies paid for our service. This number seems very large in terms of the global enterprise service market. It even exceeding the total population of some countries. However, it only represents less than 10% of China's over 40 million enterprises. So which means there is enormous growth potential in the number of paying companies for China's online equipment service in the future.

And it's easy to see that not more than RMB 2,000 per year is paid to every company. With the expansion of value-added 2B services by Chinese companies, this situation will continue to change, and the number of shops will gradually increase.

Furthermore, it is obvious to calculate that the average annual payment per enterprise is currently less than RMB 2,000. As the vast pool of Chinese enterprises gradually becomes more willing to pay for valuable and must-have 2B services, the situation will continue to improve, which means our pool will continue to rise.

Therefore, for both Boss Zhiping and the entire online recruitment industry in China, we see significant growth potential in both the number of paying enterprises

and there are pool.

In our last earnings call, we shared some key characteristics of this year's spring recruitment season. Today, we would like to provide additional insights and updates on recent trends. First, still be blue-collar segment. The number of blue-collar users and this segment's revenue continue to grow rapidly.

Among new users in the first quarter, both the absolute amount and the growth rate of blue-collar users surpassed that of the white-collar users, with the blue-collar users' revenue contribution climbing up to over 35%. 值得一提的是,相比去年,今年的制造业和物流行业景气度明显提升,并且保持稳定上涨的趋势。

It's worth mentioning that compared with last year, the manufacturing and logistic industries have seen a good improvement in business sentiment this year, maintaining a steady upward trend.

From the post-spring festival to mid-May, the number of daily average newly added job positions in manufacturing and logistic industries increased by approximately 40% compared with the same period last year. At the same time, the white-collar sector has also shown some improvement trends.

The second trend relates to enterprise size. Driven by recovery in the white collar sector, the large companies recruitment demand has increased better year on year compared that of smaller enterprises.

showing the further recovery.

And the third one is by city tiers.

Second-tier and lower-tier cities have showed continued increase in both user growth and revenue contribution. However, the recruitment demand from first-tier cities has also recovered to some degree this year compared to the same period last year.

In production and manufacturing, supply chain logistics, Internet, AI technology, finance, reporting trade, etc., it is a relatively better segmented industry in recent years.

Manufacturing, supply chain logistics, internet AI technology, finance, and procurement trade subsectors have shown relatively better growth momentum recently. You may have noticed that we have recently acquired WD Technologies, the leading manufacturing talent delivery platform in China, or the Dagoon.

At the same time, the company has implemented the Hilo project for several years. The number of companies and release positions among them is also growing rapidly. In the first quarter, the Hilo U-select online position exceeded 260,000, covering more than 2,700,000 applicants.

At the same time, the Coach project, which we have been running for several years, has shown very fast-growing numbers of job postings and enterprises. In the first quarter, the Coach project's number of active job positions exceeded 260,000, covering more than 27 million job seekers.

That's why we believe that in the past 11 years of our network's exploration and successful experience, combined with the help of BOSS, we will be able to explore Lanling services and maximize our user size. We will be able to explore Lanling's manufacturing service model and revenue in a more mature and visible way.

So we believe that with Wode Da Gong Wang, more than 11 years of exploration and the industry experience combined with BossGP apps, user scale and our exploration in blue collar service, we should be able to continue to explore more service, more mature service in blue collar manufacturing industry and also in our revenue.

That concludes 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 you through the details of our financial results of the first quarter of 2024. We are happy to report a solid start to the year. characterized by continuous expansion in our user base and engagement and sustained revenue growth. In this quarter, our revenues hit a new high and reached RMB 1.7 billion in the quarter, representing a solid 33% year-over-year growth. Calculated cash billions reached RMB 2.1 billion, up 24% year-over-year, and 15% sequentially, showing a continued growth momentum. Our paid enterprise customers grew by 43% year-over-year to 5.7 million in the trailing 12 months ended March 31st. The faster growth rate of paid customers compared to that of total users indicates our increased paying ratio among enterprises and enterprise users. As Jonathan just mentioned, we noticed a recovery of recruitment demand from large companies. This trend is also demonstrated by the increased cash revenue contribution from key accounts in the quarter. which was up by 1.5 percentage points compared to the same period last year. While the downward trend of blended gap related output due to the change of revenue structure mix has also been mitigated. Moving to the cost side, Total operating costs and expenses increased by 17% year-over-year to RMB $1.6 billion in this quarter. Excluding share-based compensation expenses, adjusted operating costs and expenses increased by 14% to RMB $1.3 billion in this quarter. And our adjusted operating margin was 23%. doubled than that of 11% in the same quarter last year. Cost of revenues increased by 20% year over year to RMB 295 million in this quarter. This increase was primarily driven by increases in silver and bandwidth costs, payment processing costs, and employee related expenses. Gross margin went up by two percentage points compared to the same period last year, thanks to higher revenue growth. Our sales and marketing expenses decreased by 8% year over year to RMB 579 million in this quarter. This decrease was mainly due to decreased advertising and marketing expenses partially offset by increased sales compensation associated with the cash revenue growth. Notably, despite the disciplined marketing investment, we still achieved a record high MAU and enlarged the gap with our industry peers. Our R&D expenses increased by 40% year-over-year to RMB 468 million in this quarter. This increase has two reasons. One is the increased employee-related expenses, including year-end bonus and share-based compensation. The other even bigger reason is the result of our increased investment in generative AI development, which led to higher depreciation costs related to servers. Our G&A expenses increased by 64% year-over-year to RMB $270 million in this quarter, mainly due to increased employee-related expenses, including share-based compensation expenses. Our net income was RMB $292 million in this quarter, compared to RMB $33 million for the same quarter last year. Our adjusted net income reached RMB 531 million, up 117% year-over-year, and adjusted net margin for this quarter was 31%, up by 12 percentage points year-over-year. Net cash provided by operating activities grew by 66%. year-over-year to RMB $906 million for this quarter, mainly contributed by increased cash billions. As of March 31, 2024, our cash and cash equivalents, short-term time deposits, and short-term investments totaled RMB $11.9 billion, and our long-term investments in time deposits and wealth management products, or RMB, $3.4 billion. And now for our business outlook. For the second quarter of 2024, we expect our total revenues to be between RMB $1.91 billion and RMB $1.96 billion, a year-on-year increase of 28% to 32%. With that concludes our prepared remarks. And now we would like to answer questions. Operator, please go ahead with Q. 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. Our first question comes from the line of Robin Xu from Bernstein. Please go ahead. The line is open.

Thank you, Ms. Guan. I have two questions. I'll ask the Chinese first, and then I'll translate. First, Ms. Guan, please share some of the trends and overall status of domestic recruitment needs in the first quarter, last year's same period, or when you communicated with investors last quarter, have there been any changes? Secondly, I would like to ask the company to share some of the development of the company's own business, as well as the situation of various companies' growth drivers. Are there any characteristics of the overall business expected for the second quarter, and is there a new expectation for the growth of the whole year? My question is, could management share your observations on the state of recruitment demand in China by white collar, blue collar, KAs versus SMEs, et cetera, by industry compared to a year ago and the company's expectations last quarter? And can you also share some thoughts on both Japan's own business trends in the more recent months. Looking forward to the rest of Q2. Thoughts on growth rates in the rest of the year and whether high comps in the service industry will have an impact on growth rates in the coming months. Thank you.

The increase in the number of employees in the company this year is better than last year. We can see that, for example, the number of recruits in Japan and the number of employees in the company are constantly reaching new historical heights.

Thank you for your question.

If we look at the new job postings and their growth of their recruitment demand, we saw that this year it's overall better compared to the last year.

So every day we continue to see the new historical high of daily active bosses and daily active enterprises. On an overall accumulated basis, we saw that for the existing bosses, their activity is also better compared to last year.

In the first quarter, as we have just said, blue collar definitely grew better compared to other sectors. And we have just talked about numbers.

And the highlight this year is still manufacturing and logistics.

urban surveys compared to a high base is not as fast as the other two sectors.

From a business scale, last year we made some predictions based on historical experience, that is, small and medium-sized enterprises will recover faster than large enterprises, but when Once the big companies start to recover, they will have a different performance. This is what we predicted last year. Now it seems that the current big companies are recovering. Their sustainability will be better. For example, there is a data to say that in April, such as medium-sized and medium-sized enterprises like 500 people, its Japanese army's new command number compared to March, there is a 10% increase.

In terms of the different company size, based on our historical experience and the estimate, we talked about our view on the recovery of different size companies. So we saw that the smaller companies, it has a faster recovery speed, and the larger companies, it takes more time. But once they started to recover, it will show a different performance pattern compared to smaller companies. And currently, we saw that, yes, the larger companies' easy recovery can last better and longer. I will share with one number that in April, for the enterprises with more than 500 persons, the daily newly added job postings compared to March grew by 10% month over month. So we just saw that

The activity of new companies and storage companies, especially in manufacturing and supply. We also looked at medium-sized enterprises. These drivers are in line with the rules of our industry and the actual data we observed this year. Another one that is also in line with it is low-end cities. They have become the drivers of our growth. We just talked about our newly added bosses.

We talked about the activities of our existing bosses, about the highlight of manufacturing and logistics sector, about medium and larger size companies. and those drivers have in line with our observation and expectations and also there is another driver which is lower tier cities which is also have been successfully demonstrated by many other companies where they started with the first tier cities and then further penetrate into lower tier cities

So overall, this year's recruitment market in terms of both size industries and regions, we saw it as more stable and more balanced and more normal situation. Normal is more consistent with what we have been observing recently.

The second question is related to the year-end and the second quarter guidance. In order to be able to explain it clearly, I will use Chinese first.

I will translate it again. Overall, the situation of Q2 is related to Q1. The situation of Q1 in all aspects is obviously better than last year. Q1, the time we gave out is a bit late. The time of guidance is a bit late. Due to the strong numbers at the end of March, Q1 is obviously better than the increase of 12% compared to when we gave out guidance. The final result is 15% increase compared to. This time, the performance time is a little early, and then it hasn't ended in May, and it hasn't started in June. So on the basis of Q1's high-end technology, we currently expect that Q2 will continue to grow, corresponding to the same increase of 28% to 32%, which is accelerated by 24% of Q1, and the rate of increase is probably at a low unit number. The expectation of the year-end revenue increase is unchanged. Let me translate it. Q1 was a strong quarter, performed much better than the same period of 2023. Q1 CCB guidance was announced in the middle of March within our last earnings call. The final results of quarter over quarter 15 percentage points growth turned out to be clearly better backed by the momentum around the end of March. Around this moment, about 10 days before the end of May, second quarter's CCP guidance is still a bit early to tell. We now estimate that on top of Q1's high base, Q2 will continue to see sequential growth. Magnitude will be likely in low single-digit percentage points, quarter over quarter. Its year-on-year growth rate will be in the range of 28% to 32%, faster than that of Q1. And our full year's outlook of CCP growth is unchanged. So this is our answers to the second quarter and full year outlook.

OK. Thank you for your question. And let's move on to the next question.

Thank you. Please stand by. Our next question comes from the line of Eddie Wang from Morgan Stanley. Please go ahead. The line is open.

The first question is, we also noticed that the number of paid users in this quarter has also maintained a very rapid growth. In fact, I would like to ask if you can give a specific introduction to the situation of our company's pay rate now, and if you look at the trend, what has changed in the past quarter? Also, in terms of the growth of our CCB, can you help us figure out the growth of the entire pool, the growth of the users, and the contribution of companies of different sizes, including KAA, middle-sized, small-sized, and so on? This is the first question. Thank you for taking my question. I have two questions. The first one is about the paying ratio. We have noticed that the company has very rapid growth of the paying enterprise users. Could you please share with us the paying ratio trend in the past couple of quarters? And on top of that, if you can share us the breakdown of the R pool, user growth, as well as different sized enterprise contribution on the billions. My second question is about the upcoming graduation We remember that if you look at last year, the surge of the graduates during the summer actually has hit on the supply-demand dynamic in the recruitment market. Just want to hear your view on the upcoming season, and do you see this will happen again? Thank you.

Let me first talk about a basic strategy for our income growth. I think that until March 31st of this year, the number of companies paid in the past 12 months is at 3.5 million, which is less than 10% of the total number of enterprises in China. And we have initially verified our services I think my main strategy for growth in the future is to allow more companies that have not yet paid for recruitment to recruit and pay on the platform. This is my basic strategy.

And thank you for your question.

First, I will talk about our basic growth strategy for our revenue. Till the end of March 31st, there are more than 350 million paid enterprise customers using our service, which is less than 10% of China's total number of enterprises. And also we have initially verified, demonstrated that our business model, our service model can adapt to a variety and vast range of different type of customers. So for me, for us, our future growth strategy is that we will continue to attract more and more enterprises to pay for our service for their recruitment. That's my basic growth strategy.

Based on this strategy of increasing dollar market share, especially our current market share is very low, so we are actually aiming at a company that has not paid for online recruitment at all. We should be very cautious in taking the payment strategy. In other words, I will not pursue the improvement of ARPU.

And based on these premises, we will focus on to improve the number of paid enterprises. But that will be our key target since our dollar market share is quite low. So based on that, we intend to be very cautious in dealing with companies who have not paid for recruitment service or online recruitment service before, which means the priority of output increase is not that high.

In this case, if a large enterprise, a certain KA, has more recruiters, and publishes more positions on the platform to recruit people, it will buy more recruitment accounts. So... And based on those situations,

For larger companies, key accounts, when there is a recruiter using our service, he will then add to buy more accounts with us. And the same case is for the smaller companies and SMEs. When there are one recruiter using us, then there will be one more buying more accounts. So that leads to the result in the first quarter, we saw that in a cash revenue perspective, both large accounts meet on small size companies. There are poor increase. And that which means on an average basis in every company, more users are using our service and also demonstrates the battery recovery trend of larger companies.

What does the payback rate actually have to do with? In an industry, uh, uh, And the factors which related to our paying ratio, which is within one industry for a particular role, the number of recruiters and compared to that the supply of job seekers.

If the supply and demand continue to grow, then we will gradually start to charge for that type of growth to maintain a balanced supply and demand. For example, for real estate agents, where a lot of people are recruiting, a lot of companies are recruiting real estate agents, but very little job seekers want to do that job. So for real estate agents, our paying ratio is actually 100%.

So the principle for the pay ratio is that with more recruiters, then in one industry and particular role, there will be a higher pay ratio and then related to the increased output. Due to the mess of the situation, I still insist on improving the market share of our paid users. As long as I insist on this, other things will happen.

Since we have been doing this type of monetization for quite a while and have been relatively successful with this model, so we will continue to go down this way. So we were sticking to increase our penetration of paid enterprise customers. And if that happened, everything else will naturally follow.

The second question you asked is about the SPEAKER 1

About your second question of the coming graduation season, last year, the situation is relatively difficult because post-COVID, we have seen two or even three years of graduation coming out, surging to looking for jobs in a short period window, the summer graduation season. So we see the competing heavily with each other.

At the same time, last year's college students were not willing to come out to work, which is also more serious than this year. We mainly observed two reasons. The first reason is that they stayed at home for a long time. They stayed for a long time and were not willing to come out. The second reason is that there are absolutely fewer job opportunities. Therefore, the number of job opportunities they look up to is also less, which also reduces their willingness to come out to work.

Last year, also graduates who doesn't want to come out looking for jobs, that portion is larger compared to this year. There are two reasons for that. First, three years of the COVID, they spend a lot of time at home and they just reluctant to come out. And secondly, the job opportunities is relatively less. And the job opportunities they find interesting is also much less. So they don't want to come out a lot to looking for jobs actually.

We expect this year the situation should be better compared to last year.

First of all, we have introduced the number of jobs for the entire platform many times.

First reason is that the active opening job postings on our platform, as we just discussed, have reached historical highs this year.

obviously improved compared to last year. And secondly, the large companies, white collars, larger first-tier cities, their recovery should be largely helped with graduates to find a job.

I noticed a number.

So after the spring festival till the middle of May, we saw that the full-time jobs, the bosses who post their full-time jobs actively talking with those graduates. The daily active job posting number grew by more than 30% year-on-year.

As a matter of fact, Boss Shi Ping has tried our best to help those newly graduated children. We will continue to do that and wish them all the best.

That's my answer to all your questions. Operator, let's move on to the next one.

Thank you. Please stand by. Our next question comes from the line of Timothy Xiao from Goldman Sachs. Please go ahead. Your line is open.

Thank you for accepting my question. I also have two questions to ask. The first question is about the market in Lanling. Especially after we acquired Woda Group, I would like to ask you about the development of the entire BOSS business in Lanling. What is it like now? Especially, you just mentioned the proportion of people in Lanling, including the size of the existing market. How does the company think about the future service of users? This is the first question. Thank you, Benjamin, for taking my questions. I have two questions. The first question is regarding the blue-collar sector. The company acquired the WD technology. Could imagine share your thoughts on how to develop the blue-collar business going forward. User contribution from the lower tier cities is becoming bigger and bigger going forward. What is your thoughts on how to serve this kind of users going forward? And secondly, I think as we see the user growth so far this year is pretty good. I'm just wondering what is your sales marketing strategy for the rest of this year, especially given the Paris Olympics is a few months away. Could you share your marketing campaign thoughts around the Olympics? Thank you.

Well, for me, when I was playing in the East, in the WD, when I was playing in the East, Some places are a bit similar. We all started our business in 2013. We first started as a service provider. We started as a service provider for an Internet technology company. As for my online business, I started as a service provider for a factory. So I've known this company for a long time. In that sense, I define him as a survivor and a lucky guy.

So, thank you for your question. 我的打工网, which we will short for WD, actually somehow similar with Boss 13. So, we both founded in 2013 and have been with this industry for more than 11 years. So, Boss, we started as white-collar platform focusing on internet technology companies, and WD, they focused and started with manufacturing factory workers. And so I have known WD for quite a long time. So my definition for them is actually they are survivors, lucky guys.

For example, it was the first to create the entire experience process around the user, using the user as the core. It was the first to do that, and it has persisted to this day. This is the reason why it is able to be the leader among so many middle-class institutions in the manufacturing industry. The leader of the region, I think.

So WD, they are the pioneer in inventing some capability which is suitable for digital life, which combined with manufacturing related recruitment. So, for example, they are one of the first to concentrate or prioritize the user experience of the job seekers and for the users, helping improve their user experience. So that's why today they can be the leading platforms for certain regions.

So the first time Bounce announced the Bingo project, I would like to say that what we are most concerned about in Bingo is that through Bingo, So this is the first time both have to discuss about our acquisition.

So I will also want to share that our acquisition strategy is we want to acquire some core abilities respectfully, which cannot be accumulated by our own. And that will help us to cut the chase and work together to achieve better results.

So this is my introduction to some of the considerations I made in cooperation with my big company, for your reference.

assess our consideration for our collaboration with WD Water.com for your reference.

Well, I can comment on Timothy's second question regarding to the user growth and marketing strategy. So basically, we will keep marketing expenses at a reasonable level and maintain a disciplined user growth approach. This is the way mentioned many, many times. So definitely we will like to leverage Paris Olympic Games to enhance our brand, but we will have to spend appropriately. Within current marketing environments, leading platforms like us, we believe in voice. higher economy of scale and have a better marketing efficiency, which means at a not heightened spending, our user growth is still satisfactory. Our new user growth totally recorded at 17 billion in the first four months this year, close to half of our annual target of 30 to 40 million new users. So with this situation, we don't need to be extra aggressive at this front. So my comment answers your question.

OK. That's all of our answers. And operator, let's move on to the next question.

Thank you. Please stand by. Our next question comes from the line of Yang Bai from CICC. Please go ahead. Your line is open.

Thank you, Mr. Wang. I have two questions. The first question is, after the Spring Festival, have we seen any changes in the competition pattern? The second question is, you mentioned the strategy of the market this year. We also noticed that in the Internet industry, many companies this year have increased their AI-related cutbacks, including our company's own AI-related costs. I will translate for myself. The first one is, have we seen any change in the competitive landscape after the spring recruitment? And the second one is, we have mentioned the sales and marketing strategies for this year before. We also noticed that internet companies are increasing their AI CapEx including our AI-related expenses. Have we adjusted our outlook on profit margin this year? Thank you.

This year, we noticed that most of our colleagues invested in the market and spent a lot of money. We noticed that When we were buying positions, the competition was quite intense. So when we saw this, when we were spending money, everyone's excitement increased. When we had a meeting last quarter, I actually analyzed why. Because, to be honest, I think everyone should see that there are opportunities for income this year.

Thank you for your question. So for the first one regarding competition, this year we have noticed that this spring, many of our peers, the majority of them have spending more aggressively this year during the Springfest recruitment season. So we noticed that when we were also doing the same mapping investment so the competition is more fierce and so the overall spending has increased. During the last earnings call I have also analyzed why because this year people feel that there is opportunity in the market and they would like to spend more to increase their revenue. 接下来就是说经过了一季度的

in terms of marketing. Since then, we have seen the data of the third wave in April. It reflects the data that you are all using. Our competition is still stable, and some of the data has not surpassed some of the peers in some aspects. In April, we should be able to

And after the competition of marketing in the first quarter, so I think you have all already noticed that the third party data in April, so the overall competitive landscape is very stable. And some data, some operating metrics in the past we are still maybe a little bit below our peers. And in April, we have surpassed all of our competitors in all the operating metrics.

So to sum up the competition pattern of the first quarter, I feel that we still pay great attention to the positive behavior of competitors in the industry. At the same time, we firmly believe that the users of the C-end and B-end And so to conclude of the first quarter's competitive situation, that we very highly respect our peers' active marketing events.

But we firmly believe that to continue to improve our service for both job seekers and recruiters is still the effective or maybe the only effective way in terms of quote-unquote marketing strategies. And our numbers of both MAU, DAU activities and the user time spent and all the operating metrics, we continue to maintain good momentum and advantages. And that's my answer for the competitive question.

And regarding your second question related to our margin profile for the full year, so I could quickly run through the major cost and the expenses item and mention our thoughts. Regarding the gross margin, so basically the line below the COGS, gross margin we think that will slightly improve due to a higher economy of scale starting from second quarter. So mainly, marketing expenses we think will maintain at a current level. Absolute amount will increase a little bit. Percentage-wise will be flat or decline. In terms of selling expense, which is mainly compensation of sales guys, its percentage to revenue will be flat or decline. So combined, the selling and the marketing expenses The total selling and marketing expense is total percentage points to revenue will further improve in 2024. And then is R&D expenses, which is related to you just mentioned AI spending. You're right that we increase our investment related to the AI, but that part could be offset by the revenue in the full year. So the full year, percentage-wise, R&D expense would deflect similar percentage points compared to last year. And then is G&A. So G&A percentage to revenue for full year will be improved compared with last year. In first quarter, temporarily It's increased, but we expect the second quarter will drop. So the full year percentage rise will be better compared with last year. So the trend I just mentioned feeds both for our gap numbers and our adjusted non-gap numbers. So all in all, our operating margin in 2024, we'd like to improve along with our continued revenue growth. So that's my comment to the most cost items and the overall margin for the company.

And that's all of our answer to the question.

Operator, please go ahead. Due to time constraints, 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.

Thank you once again for joining us today. If you have any further questions, please contact our lead director. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.