KANZHUN LIMITED

Ladies and gentlemen, thank you for standing by, and welcome to the Kanjin Limited Second 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 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 second quarter 2024 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 unknown and unknown known and unknown risks, uncertainties, and other factors not under a 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 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-gap 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, thank you for joining our company's second quarter 2024 earnings conference call. GAP revenue of 19.2 billion yuan increased by 29%. The second quarter achieved a net profit of 4.2 billion yuan. At the same time, the net profit of 7.2 billion yuan increased by 26%. The second quarter, the average MAU hit 54.6 million. I will start with our financial numbers.

In the second quarter, the company achieved calculated cash billings of RMB 1.95 billion, up 20% year-on-year. Our gas revenue reached RMB 1.92 billion, up 29% year-on-year. We recorded a net profit of RMB 420 million. Meanwhile, our adjusted net income, which excludes share-based compensation expenses, lost to RMB 720 million. up 26% year-on-year. In the second quarter, the average verified MAU on the bus shipping app grew by 25% year-on-year to 54.6 million. From January to June this year, the company attracted around 28 million newly added verified users. The total paid enterprise customers in the 12 months ended June 30, 2024, reached 5.9 million. representing 31% year-on-year growth.

Our cash feelings in the second quarter still have a decent year-on-year growth, however, weaker on a quarter-on-quarter basis and a little bit lower than our expectations.

This was mainly due to weaker demand from the recruitment side in the later half of the second quarter. There were relatively fewer enterprise users and more job seekers in the market, which is what we refer to as a high CP ratio. In this case, most enterprise users found it easier to hire. For example, a project team that took three months to fill all the positions in the past now only takes two months. reducing enterprise users' desire to spend more money on recruitment.

However, we still find that the growth trend of recruiters is still good. There are two evidences. First, the number of new recruiters has exceeded the same period last year. Second, the number of recruiters who are more active than before has increased by 17%. We noticed that the growth trend of enterprise users is still good. There are two proofs.

In the second quarter, the number of newly added enterprise users was higher than that of the same period last year. Second, the average monthly active user of enterprise users increased by 17% year-on-year. Investors who have long been following us know that user growth is the core growth driver for our revenue growth. We still have a good growth of enterprise users in the second quarter. This is good news for the company.

We believe that the performance of the second wave is a short-term situation. There is still a chance of structural growth in the long term. Our confidence comes from three aspects. First, the Chinese market is a huge economy with the largest number of companies with the highest SME activity. Second, there is a lack of labor force, especially youth labor force. This trend is not easy to change.

We believe the second quarter performance is a temporary situation. Long-term structural growth opportunities remain strong. Our confidence is grounded in three factors. First, the Chinese market is a huge economy with the highest small and medium-sized enterprise activities and the largest number of enterprises. Second, there is a persistent shortage of labor supply, particularly among younger generations, which is unlikely to change in the near future. Third, our efficient service model is best suited to address the challenges presented by the first two factors. Under current situation, the company's management team believe we should do what is best suited for the moment. Today, I will talk about three things.

The first thing is to ensure the four-year profit target. During challenging times, confidence is crucial for everyone, no matter it's co-investors, co-employees,

for potential investors and the prospective talent. In tough times, confidence is more valuable than gold. Ensuring profitability for the year will help to sustain confidence in the company, which can be achieved through further refinement of our management.

The second thing is to invest a lot of resources in new growth points. For example, in the manufacturing industry in Nanning, there are some new dollars that can be found.

The second thing is to invest more resources on new growth drivers. For example, in the blue-collar manufacturing industry, there may be some new dollars. To briefly review the blue collar manufacturing industry we have talked before. The background is the complex relationship between factories, workers, platforms and agents. In addition to many historical issues have made it challenging for online platforms to serve the blue collar manufacturing industry.

The history is, three years ago, we started by purifying the job seeking and recruitment environment.

through what we call the coach project. The intention of this initiative has two. First is to protect the overall job seeking process of the job seeker. Second was to help blue collar agents and organizations make money decently.

This is the current situation. After a lot of struggle, the middle-class organizations in this field have started to make changes on the Internet platform. This has already happened. A group of people have promised to be honest with their users. The current situation is after a tough game, the long-standing issue of bad or low-quality agents driving out good ones across online recruitment platforms is beginning to improve.

This positive shift has already happened. Good guys who commit to treating job seekers with integrity, posting authentic job details and salary information, are now receiving better results. We have named these trustworthy agents as Platform Certified Count Select.

The latest data is our post-select project generated over RMB 40 million in revenue in the second quarter, which is much higher than that in the first quarter.

These good signs make me feel that our strategy and the persistence in the past few years are correct.

Many large-scale enterprises with good layout around the world can effectively use this hellish cycle to benefit from sustainable development, especially with the current model created by BOSS. This model is very likely to provide value in different regional markets through localization and evolution, and gain a space for survival and development. The third thing is our overseas business.

As we all know, economies are cyclical, and these economy cycles are often out of sync across different countries and regions. Large companies with a strong global presence can effectively utilize this regional big shift to support sustainable growth. In particular, bus shipping has pioneered our current model globally. This model is very likely to provide value and gain space for survival and development in various regional markets through localization, hybridization, and evolution. While we are seeing promising progress in Europe and Asia, it's still too early to report on the results.

Lastly, I would like to talk about confidence.

In order to strengthen our core investors' confidence in the company, we need to strengthen our trust in our shareholders and their return. For example, we have been actively repurchasing in Canada. In the past four months, we have repurchased $88 million.

Last but not least, it's important to address confidence again, particularly in terms of strengthening the returns for our shareholders who have constantly supported us since our IPO. For example, we will continue to increase our share buyback efforts. We have bought over US$88 million repurchased in the past four months, This all will help to reinforce the valuable confidence of our shareholders and management.

That concludes my part of the call. I will now turn it over to our CFO Phil for the overview of our financials.

Thank you.

Thanks, Jonathan. Hello, everyone. Now let me walk you through the details of our financial results of the second quarter of 2024. In this quarter, we delivered a healthy and sustainable top line and bottom line growth. Calculated cash billions and the revenues grew by 20% and the 29% year on year, respectively, mainly driven by the growth of our enterprise users. Average monthly active enterprise users in the quarter grew by 17% year-on-year. We continued to penetrate into different categories of users, especially in blue-collar sectors, small-medium-sized enterprises, and users from lower tier cities. As a result, revenue contributions from those sectors continued to increase. Paid enterprise customers in the 12 months ended June 30, 2024, increased by 31% year on year to 5.9 million. The paying ratio was higher than last year, but sequentially kept stable. We are happy to see that AR PPU average paying per paying user of paid users increased around 3% year-on-year and 3% sequentially, reaching the highest level in the past four quarters. Part of the reason was that revenue from key accounts outgrew small and middle-sized accounts. But more importantly was our effort to increase client usage by offering high-quality and targeted products and services. Moving to the cost and expenses side, excluding share-based compensations, adjusted operating cost and expenses increased by 20% year-on-year to RMB $1.3 billion, and that led to an adjusted operating profit of RMB $660 million in the quarter, up 52% year-on-year. Adjusted operating margin reached 34.4%, up by 5.3 percentage points compared to the same quarter last year and hit an all-time high. Cost of revenues increased by 17% year-on-year to RMB $317 million. 317 million in this quarter, representing a gross margin of 83.5% continued its upward trend. Sales and marketing expenses increased by 16% year on year to RMB 545 million in this quarter. This increase was mainly driven by our enhanced investment in customer acquisition as well as higher sales conditions. R&D expenses increased by 21% year-on-year to RMB $444 million in this quarter. Excluding share-based compensation expenses, adjusted R&D expenses increased by 28% year-on-year to RMB $334 million This increase was primarily driven by our earlier investments in AI infrastructure, which generated a higher depreciation cost. Our G&A expenses increased by 29% year on year to RMB 261 million in this quarter. Adjusted G&A expenses increased by 21% year on year to RMB 153 million, mainly due to increased employee-related expenses. Our net income was RMB 417 million in this quarter, up 35% year-on-year. And our adjusted net income in this quarter reached RMB 719 million. and increased by 26% year-on-year. We expect that our share-based compensation expenses reached the peak level in this quarter and will gradually decline in the coming quarters. We are now reviewing stock compensation scheme and studying some schemes which might even accelerate the process. Net cash provided by the operating activities grew by 14% year-on-year to RMB $869 million for this quarter. As of June 30, 2024, our cash and cash equivalents short-term time deposits and short-term investments totaled as RMB 14.3 billion. Notably, in the past four months, we have repurchased a total consideration of US dollar 88 million, which demonstrated our commitment in shareholders' return and long-term confidence of our business. And now for our business outlook, for the third quarter of 2024, we expect our total revenues to be between RMB 1.9 billion and 1.92 billion RMB, a year-on-year increase of 18.2% to 19.5%. That concludes our prepared remarks, and we would like to answer questions. Operator, please go ahead with the queue.

Thank you. If you'd like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again. One moment for questions.

Our first question comes from Timothy Zhao with Goldman Sachs.

Your line is open.

Thank you for accepting my question. I have two questions. The first one is about our user growth. We saw in the company's Preparation Markets that our user growth is still very good. I would like to ask the management team what they think about the current market competitive pattern. Under the pressure of the whole red light, how do we consider to increase our market share? This is the first question. Thank you, Benjamin, for taking my questions. I have two questions here. The first is regarding your user growth and market share. How does Benjamin's team view the market share currently and in the adverse microenvironment currently are we considering to further accelerate the market share again? And second, as we mentioned, to ensure the full-year profit this year, could management share what is your detailed measure and what is your OPEX, including the SBC trend for the rest of this year? Thank you.

Okay, let me talk about it. The company's current growth pattern in the domestic market is relatively stable. uh okay thank you for your question uh for the first one regarding uh competition the current competitive landscape is relatively stable or we'd rather say we have a

relatively good competitive advantages and there are many third-party data and our own data can prove that.

For example, we just talked about the MAU data on the platform. The DAU data is also a new high-level data. In terms of activity, you can actually see the ratio between the brand's DAU and MAU. This has always maintained a relatively good relationship. The same goes for the users' use of the market. So, in the end, as a domestic leading Internet recruitment platform, in terms of various dimensions, it has maintained stability and continued

For example, we just mentioned our MAU and DAU all achieved a historical high in the second quarter. The user activities, for example, the DAU and MAU ratio still remain at a very high level. The same case for the user usage time. So all of those data has proved that as a leading online recruitment platform, our every perspective, our competitive landscape is stable and continued in a good trend.

From this year, I think the core staff management of the company Today, we have a goal that we have to achieve. This goal is part of our confidence. That is to say, this company is solid. So from a big strategy point of view, I think we can simply look at it this way. First of all, in such a situation, we have a growth target of 45 million users all year round. In fact, in the first to sixth month of this year, we have already achieved A large part of it. 28 million yuan. So this year, we still have 1,200 to 1,700 million yuan left. This gives us a lot of room to control our market spending. On the one hand, we can still ensure the achievement of our goal of the whole year. On the other hand, in the current situation, the company has properly implemented The profit is low, but the loss rate is high. In the short term, there are some consumable goals that should be put back appropriately. It's not about not doing it, but it depends on the timing. In addition, in terms of the urgency of the work, we can also put some of the work that has been reduced to the forefront. In general, we can use the internal management method to achieve our goal And in terms of guarantee the full-year profit target, so we believe it's very critical for our core employees, for our management to have this target.

This is part of our confidence and is a testing file whether this firm is very stable and strong. So on a strategic perspective, the first way is our full year user growth target is 40 to 45 million. And in the first six months, the first half of this year, we have already achieved 28 million. So there are only 12 to 17 million left for us to grow. It should be relatively easy to achieve, so we can control our overall spending on marketing to appropriately achieve our profit target. Second, under current circumstances, we want to better use our resources and to move the priority of those project initiatives with lower success rate and higher target to postpone its resource usage and prioritize the importance of reducing the overall cost. And this can be achieved through internal management and with, we believe, with very high level of certainty. In terms of detailed data, I think Phil can give you some more color.

So regarding our Bottom line and the major cause and expenses item, I'll quickly mention our thoughts. As Jonathan just mentioned, we would like to try our best to secure our operating profit. Our target for a full year of non-GAAP operating profit is set as $2.3 billion. which is roughly up 40% year over year on top of last year's adjusted, non-GAAP adjusted operating profit. So in terms of our gross margin, our gross margin will, in third quarter or following quarters, will stay flat or slightly improve due to higher economy of scale. And our marketing expenses, as Jonathan mentioned, will be controlled and at a relatively low level. Our selling expenses and the G&A expenses, those expenses items will all be moderate and in a reasonable situation. And in terms of the R&D expenses, because of the way probably will shift our priority from some like AI related infrastructure investments into other things so from third quarter or from second half this part the expenses will decrease so altogether our operating margin will increase second half and the versus the full year operating margins versus last year will also be better thank you

Our investors will also be concerned about one thing. Because of the market share we just mentioned, many of our investors are also concerned about whether we will be more aggressive The balance between the two sides of the supply and demand relationship is a challenge for the service platform. So, in this sense, if we want to maintain the ecological balance between the recruiters and the demanders, we are not going to spend more money. To be honest, I don't think I'm going to do that myself. Maybe this is the right time. Maybe this is the right time for me to use a certain price strategy to grab more market share and achieve a market cap. I don't think I'm going to do that now. I don't think it's meaningful for our industry to do that. We should just do our own thing. That's my opinion.

And for the market share, which a lot of investors are concerned and have asked a lot about, we actually, after experiencing the years past, we noticed that on the current situation, every dollar we spend there will be more job seekers and less enterprise users. So the CB ratio currently is a challenge for the platforms who is based on the supply and demand balance of both sides. So from this perspective, to keep a balanced CB ratio, actually we don't need to spend money too aggressively. And that's my view to share. In addition, To increase the market share on the enterprise user side, currently the overall paying desire of the enterprise are not that strong. So the best and most effective way to enlarge our enterprise market share is to start a price war. And currently, it is tough. It is time to do that. But I'm not planning to take even more shares by lowering our price. I don't think this is a meaningful thing to do at current situation. And that's my view to share. And thank you, Preta. Let's move on to the next question.

Thank you. Our next question comes from Eddie Wong with Morgan Stanley. Your line is open.

Thank you, Mr. Zhao, Yu Ge, Wenbei. Thank you for my question. I also have two questions. The first one is, can you please help us sort out what the situation is like in the second quarter until now, in July and August, and what is the effect of the demand for recruitment? Is the recruitment demand in August going to improve in June and July? And then what about the performance of different industries and companies of different sizes? This is the first question. The second question is that maybe everyone is worried now. That is to say, Hongguan is relatively weak. It may last for a while. This pressure is also transmitted to various companies, including us. Mr. Zhao also mentioned that from our internal Thank you management for taking my question. We understand that the macro situation since the second quarter has been relatively weak. I just want to hear your view. Have you witnessed any improvement in the recruitment demand in August versus June and July? How is the performance of different industries and the enterprise of different scales? And the second question is, if the micro continues to be relatively weak, will we have any change in the business strategy to offset the, you know, the micro impact? Thank you.

First of all, yes, we can't say, I can't say that we are in a situation where we are in a situation where we are in a situation where we are in a situation

First, we cannot talk about the macro, but we can share with our own situation, which we observed from our website and app. First way is in the second quarter, the overall willingness to pay from recruiters are lowering. And secondly, the blue collar growth is still better than white collar. That's why it's still there.

Speaking of Lanling, there are a few observations that I can share with you. One observation is that Lanling's whole situation is relatively fast in terms of Q2 return speed after a high in our traditional Zhaoming.

And let's further look into blue-collar. There are several observations we can share with you. The first observation is that the overall blue-collar recruitment demand reached peak historical high in the spring festival recruitment season, but just a fallback relatively faster in the second quarter.

Even so, the situation of Lanling is still growing well compared to last year's second quarter. Another point of view is that we have just introduced the whole bright spot of this year. The whole bright spot of the second quarter of this year's Lanling is in the production and manufacturing industry, and the logistics industry.

Even relatively faster fallback in second quarter, we still see a very good year-on-year growth in terms of the blue-collar revenue in the second quarter. And among the detailed subsectors, there is one highlight, which is the manufacturing industry continue to outperform all other industries. And after that is the logistics sector.

There are two other things worth mentioning about the second wave. First, the city's limit. Compared to the first wave, compared to the second, third, and fourth wave, the growth of the invaders will be faster. And there are also other two observations worth sharing.

Compared to the first-tier cities, the recruiter enterprise user growth is better and faster in the second, third, and fourth-tier cities. And the second one is there is a continued trend, which we have already discussed in the last quarter's results, that the larger size of the enterprise grows better. For example, a big enterprise with over 10,000 employees at the companies with the fastest or the faster growth rate.

We have seen the situation in August. Let's continue with the Lanling topic. In August, Lanling's supply and demand ratio is better than the whole Q2 situation. The improvement of the BC ratio is invisible.

And about our recent situation in August, we'll continue to talk about the blue collar. So blue collar, the overall supply and demand situation in August is better than the second quarter. and the enterprise to job seeker ratio continue to see improvement and we observed the daily active enterprise user number continue to go up week by week and the manufacturing industries are still the best among all others

There are some measures to counteract this impact. What we are actually doing is to concentrate more resources. Originally, it may take a longer time. In the case of our original resource allocation, the resources obtained are relatively limited. For example, if we talk about the blue-collar manufacturing industry, from the blue-collar planning to the blue-collar selection to the process of generating income, we are currently

And the second question about what kind of monetization strategy we can use against the macro headwinds. The things we are currently doing first is to concentrate our resources. to the business and department, which we, because it's a faster outlook, a lot longer outlook, we give limited resources to. For example, on the blue collar manufacturing industry, we, from high low count project to count select and to generate revenues, we are currently enhancing our investment and the input on this area.

I'm not sure if we'll be able to make a lot of money in the future in collaboration with HALO Ocean. But I believe this is the first opportunity for an Internet company to make some real money in the game of HALO Ocean. I think it starts from here.

I cannot be so very certain to say that the current SLAC project will have very big revenue from our cooperation with blue collar manufacturing industry in the the third and fourth quarter of this year. But we believe this is the first real chance, actual chance for the online recruitment platform to go into the blue collar manufacturing industry and make some real money.

And that's my answer to your question. Thank you.

Thank you. Our next question comes from Robin Zhu with Bernstein. Your line is open.

Thank you, Ms. Zhao. I have two questions. One is, can you please tell us in detail about the development of overseas business and AI after the acquisition of my workstation? I have two questions. One, would management elaborate on recent developments in the company with regards to the WD acquisition? if management could give us more color on overseas and investments in AI. And second, given the weakness in the company's shares in recent times, could management share some thoughts on go-forward buybacks and whether the company will consider instituting a regular dividend? Thank you.

Sorry, we just muted ourselves. My working network has become a part of our company.

We have acquired most of its shares. This was mentioned several times on our conference call. Thank you for your question.

The first one, WD technology, I have mentioned that in our conference call before. And because Jason, the CEO, is a very respectful peer of ours, and since their establishment in 2015 until now, they have been able to become the number one in their own areas. So to purchase the majority of the shareholder stake of WD Technology is out of the recognition and the respect of Jason, a CEO, and his team's work in this area. And it's not just our further expansion into the area. It's more likely to add ourselves with some capabilities. which is difficult for we to develop by ourselves.

So Jason, the CEO and his team, in the field of manufacturing, the service model created by knowledge is fully recognized in the entire industry. So in the current stage, I can report to you that it is actually three things. Jason and his team, we fully recognize his knowledge and the industry actually has fully recognized their knowledge and know-how

and model in the manufacturing industry. And currently, he's working with us for three things. First of all, they are fully independently to lead the development of WTE technology.

The second thing is to help the company to push forward the overall environment improvement

under the count project, and the monetization, the commercial project, commercial plan, under the count select project.

The third thing is actually not to be disclosed publicly. What I can say is that Jason is led by the operating team of my working network. and a part of the product development team of BOSS, trying to combine the work in the field of service that is most advantageous to us and the traffic and recommendation work that is most advantageous to BOSS. We are still looking forward to a service, but now I think we should...

And the third one which not suitable to discuss more details publicly at this moment is that Jason is currently leading the operational team of WD technology and part of our R&D team to together combine the advantages of our traffic and their experience and know-how in the industry to combine together to publish a new product or service which we can't we would rather looking forward to that but maybe in the next quarter

We are a bit nervous. We initially launched a service in Hong Kong that we consider to be a MVP service to see how users in Hong Kong would view it. I think this will take two to three months. Then we may have to decide whether to speed things up in Hong Kong. If you can see a good income in Hong Kong, I think there is a real contribution to revenue. I think it's too early to talk about it today. Now I see it as a three-year plan. In the developed countries in Asia and Europe, we conducted a long-term exploration of overseas business. What I can report is that I am satisfied with the local team that I have recruited. I am also confident

And for our overseas business, first for our Hong Kong initiatives, we have made some progress and have initially published an MEP service to serve the recruiters in Hong Kong and see how the users might react or behave on our platform. This might take two to three months, and then we will decide whether we can accelerate the development of this business. And in terms of the revenue, which is a decent revenue from Hong Kong business, I think it's a little bit early, maybe take more than the next two to three years. And in the Asia and Europe area, and some developed countries, we have taken quite a long time to work. And at the current stage, what I can say is that I'm satisfied with the local team we have recruited, and we have confidence.

What you just mentioned about our thoughts in the AI field, we have also made some reports to the shareholders on Compute Call. What I want to say today is that Uh,

And the third one regarding the generative AI, I have shared some of our thoughts before and maybe add some more here. So there are two points. First, in a scientific perspective, we are executing a tail light project, which is for our research guys, our tech guys to understand, to know what the most developed technology in this area is and what they are doing. But we are not planning to invest more resources. Actually, we're not affordable to do that, to actually do that. We just know what they are doing and kept up with the most advanced technology.

Another thing is that we insist on our previous strategy at the application level, that is, we will prioritize things that can't be done before the appearance of Synthesit AI. Under this strategy, we now have some things in the company that are already being applied in the industry.

On the application level, so our strategy is still R. If something are not happening before the emerge of generative AI technology, then we give priority to that. So under that strategy, we have some good application in the industry level. So we are using it internally now.

So we are using it internally now. In the short term, the core shareholders and core employees of the current company have a problem with their confidence. This confidence is not something that is necessary or subjective. It is something that is very real. So I think it is necessary for the current company to do a better job of returning shareholders. This is my basic point of view. From this point of view, we actually have a return plan of US$200 million. In the past four months, we have made 8,800 million. In terms of our scale of the company, I think this is a real action, and it is a very decisive action. We are not talking about it, we are taking money to do it. We will continue this return plan.

And about the shareholder returns, we have long been insist on providing a shareholder return to our shareholders, which is a basic ethic for the company. And we always attach great importance to that. So because it's a very true problem, very true, very crucial point for the core shareholders and the employees to maintain our strong confidence. So it's very essential and important to do a good shareholder return project. So we have a 200 million US dollar share buyback program. And in the last four months, we have already bought 88 million. This is a real number and a real act we have done for a company of our size, and we will continue to do that.

For Phoenix, I can say that a possible Phoenix project is still under study. That is my answer to your question.

And about dividend, I can say that for a potential dividend payer plan, we are still under research. And that's my answer to your question. And given the time constraint, I think that's the last question for our core operator.

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 closing remarks.

Thank you once again for joining us today. If you have any further questions, please contact our IR Team Directorate or TPG Natural Relations. Thank you.

Thank you. You may now disconnect. Good day. you Thank you. Thank you. Thank you. music music you you Ladies and gentlemen, thank you for standing by, and welcome to the Kanjin Limited Second 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 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 second quarter 2024 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 unknown and unknown known and unknown risks, uncertainties, and other factors not under a company's control, which may cause actual results, performance, or achievements of the company to be materially different. The company cautions 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, thank you for joining our company's second quarter 2024 earnings conference call.

先说一下二季度业绩的一些数字。 二季度公司实现经计算现金收款19.5亿元,同比增长20%, GAG收入19.2亿元,同比增长29%,

The second quarter achieved a net profit of 4.2 billion yuan. At the same time, the net profit of 7.2 billion yuan has increased by 26% after deducting the stock market memory cost. The second quarter, the average improvement of MAU has reached 54.6 million, which has increased by 25%. In June this year, the company added about 28 million users to the improvement. I will start with our financial numbers. In the second quarter, the company achieved calculated cash billings of RMB 1.95 billion, up 20% year-on-year. Our gas revenue reached RMB 1.92 billion.

up 29% year-on-year. We recorded a net profit of RMB 420 million. Meanwhile, our adjusted net income, which excludes share-based compensation expenses, rose to RMB 720 million, up 26% year-on-year. In the second quarter, the average verified MAU on the bus shipping app grew by 25% year-on-year to 54.6 million. From January to June this year, the company attracted around 28 million newly added verified users. The total paid enterprise customers in the 12 months ended June 30, 2024, reached 5.9 million, representing 31% year-on-year growth.

This is mainly due to the lack of recruiters in the second half of the second quarter. The number of recruiters is relatively small, and the number of applicants is relatively large. In other words, the CP ratio is higher. In this case, it will be easier for most companies to recruit people. For example, it used to take three months to recruit a project team. Now it only takes two months. The desire of the company to recruit people will drop.

Our cash feelings in the second quarter still have a decent year-on-year growth, however, weaker on a quarter-on-quarter basis and a little bit lower than our expectation. This was mainly due to weaker demand from the recruitment side in the later half of the second quarter. There were relatively fewer enterprise users and more job seekers in the market, which is what we refer to as a high CB ratio. In this case, most enterprise users found it easier to hire. For example, a project team that took three months to fill all the positions in the past now only takes two months, reducing enterprise users' desire to spend more money on recruitment.

But we still find that the growth trend of recruiters is still good. There are two evidences. First, the number of new recruiters in Artico is more than the same as last year. We noticed that the growth trend of enterprise users is still good. There are two proofs.

First, in the second quarter, the number of newly added enterprise users was higher than that of the same period last year. Second, the average monthly active user of enterprise users increased by 17% year-on-year. Investors who have long been following us know that user growth is the core growth driver for our revenue growth. We still have a good growth of enterprise users in the second quarter. This is a good news for the company.

We believe that the performance of 2G is a short-term situation. There is still a chance of structural growth. Our confidence comes from three aspects. First, the Chinese market is a huge economy with the highest SME activity and the largest number of enterprises. Second, there is a lack of labor force, especially youth labor force. This trend is not easy to change.

We believe the second quarter performance is a temporary situation. Long-term structural growth opportunities remain strong. Our confidence is grounded in three factors. First, the Chinese market is a huge economy with the highest small and medium-sized enterprise activities and the largest number of enterprises. Second, there is a persistent shortage of labor supply, particularly among younger generation, which is unlikely to change in the near future. Third, our efficient service model is best suited to address the challenges presented by the first two factors.

In the current situation, the management of the company believes that we should do what we should do at this time. Today, I will mainly talk about three things.

Under current situation, the company's management team believe we should do what is best suited for the moment. Today, I will talk about three things.

The first thing is to ensure the four-year profit target. During challenging times, confidence is crucial for everyone, no matter it's co-inventors, co-employees,

for potential investors and the prospective talent. In tough times, confidence is more valuable than gold. Ensuring profitability for the year will help to sustain confidence in the company, which can be achieved through further refinement of our management.

The second thing is to invest more resources in new growth points. For example, in the manufacturing industry in Nanning, there are some new dollars that can be found.

The second thing is to invest more resources on new growth drivers. For example, in the blue-collar manufacturing industry, there may be some new dollars. To briefly review the blue collar manufacturing industry we have talked before. The background is the complex relationship between factories, workers, platforms, and agents, in addition to many historical issues, have made it challenging for online platforms to serve the blue collar manufacturing industry.

The history is three years ago, we started by purifying the job seeking and recruitment environment.

through what we call the Coach Project. The original intention of this initiative has two. First, is to protect the overall job seeking process of the job seeker. Second, was to help blue collar agents and organizations make money decently.

The current situation is as follows. After the interruption of the government, the intermediary organizations in this field have begun to make changes in the long-term situation on the Internet platform. At present, such a thing has already been realized. A group of people have promised to be sincere in treating the needy. The current situation is, after a tough game, the longstanding issue of bad or low-quality agents driving out good ones across online recruitment platforms is beginning to improve.

This positive shift has already happened. Good guys who commit to treating job seekers with integrity, posting authentic job details and salary information, are now receiving better results. We have named these trustworthy agents as platform certified count select.

The latest data is our punch select project generated over RMB 40 million in revenue in the second quarter, which is much higher than that in the first quarter.

These good signs make me feel that our strategy and the persistence in the past few years are correct.

Many large-scale enterprises with good layout around the world can effectively use this hellish cycle to benefit from sustainable development, especially with the current model created by BOSS. This model is very likely to provide value in different regional markets through localization and evolution, and gain a space for survival and development. The third thing is our overseas business.

As we all know, economies are cyclical, and these economy cycles are often out of sync across different countries and regions. Large companies with a strong global presence can effectively utilize this regional big shift to support sustainable growth. In particular, BossGPing has pioneered our current model globally. This model is very likely to provide value and gain space for survival and development in various regional markets through localization, hybridization, and evolution. While we are seeing promising progress in Europe and Asia, it's still too early to report on the results.

Lastly, I would like to talk about information.

In order to strengthen our core investors' confidence in the company, we need to strengthen our trust in our shareholders and their return. For example, when we actively repurchased in Canada, we had a total of $88 million in repurchases in the past four months.

Last but not least, it's important to address confidence again, particularly in terms of strengthening the returns for our shareholders who have constantly supported us since our IPO. For example, we will continue to increase our share buyback efforts. We have bought over US$88 million repurchased in the past four months, This all will help to reinforce the valuable confidence of our shareholders and management.

That concludes my part of the call. I will now turn it over to our CFO, Phil, for the overview of our financials.

Thank you.

Thanks, Jonathan. Hello, everyone. Now let me walk you through the details of our financial results of the second quarter of 2024. In this quarter, we delivered healthy and sustainable top line and bottom line growth. Calculated cash billions and the revenues grew by 20% and 29% year on year, respectively, mainly driven by the growth of our enterprise users. Average monthly active enterprise users in the quarter grew by 17% year-on-year. We continued to penetrate into different categories of users, especially in blue-collar sectors, small-medium-sized enterprises, and users from lower tier cities. As a result, revenue contributions from those sectors continued to increase. Paid enterprise customers in the 12 months ended June 30, 2024, increased by 31% year on year to 5.9 million. The paying ratio was higher than last year, but sequentially kept stable. We are happy to see that AR PPU average paying per paying user of paid users increased around 3% year-on-year and 3% sequentially, reaching the highest level in the past four quarters. Part of the reason was that revenue from key accounts outgrew small and middle-sized accounts. But more importantly was our effort to increase client usage by offering high-quality and targeted products and services. Moving to the cost and expenses side, excluding share-based compensations, adjusted operating cost and expenses increased by 20% year-on-year to RMB $1.3 billion, and that led to an adjusted operating profit of RMB $660 million in the quarter, up 52% year-on-year. Adjusted operating margin reached 34.4%, up by 5.3 percentage points compared to the same quarter last year and hit an all-time high. Cost of revenues increased by 17% year-on-year to RMB $317 million. 317 million in this quarter, representing a gross margin of 83.5%. Continued is upward trend. Sales and marketing expenses increased by 16% year on year to RMB 545 million in this quarter. This increase was mainly driven by our enhanced investment in customer acquisition as well as higher sales conditions. R&D expenses increased by 21% year-on-year to RMB 444 million in this quarter. Excluding share-based compensation expenses, adjusted R&D expenses increased by 28% year-on-year to RMB 334 million. This increase was primarily driven by our earlier investments in AI infrastructure, which generated a higher depreciation cost. Our G&A expenses increased by 29% year on year to RMB $261 million in this quarter. Adjusted G&A expenses increased by 21% year on year to RMB 153 million, mainly due to increased employee-related expenses. Our net income was RMB 417 million in this quarter, up 35% year-on-year. And our adjusted net income in this quarter reached RMB 719 million, and increased by 26% year-on-year. We expect that our share-based compensation expenses reached the peak level in this quarter and will gradually decline in the coming quarters. We are now reviewing stock compensation scheme and studying some schemes which might even accelerate the process. Net cash provided by the operating activities grew by 14% year-on-year to RMB $869 million for this quarter. As of June 30, 2024, our cash and cash equivalents short-term time deposits and short-term investments totaled as RMB 14.3 billion. Notably, in the past four months, we have repurchased a total consideration of US dollar 88 million, which demonstrated our commitment in shareholders' return and long-term confidence of our business. And now for our business outlook. For the third quarter of 2024, we expect our total revenues to be between RMB 1.9 billion and 1.92 billion RMB, a year-on-year increase of 18.2% to 19.5%. That concludes our prepared remarks, and we would like to answer questions. Operator, please go ahead with the Q&A.

Thank you. If you'd like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again. One moment for questions. Our first question comes from Timothy Zhao with Goldman Sachs. Your line is open.

Thank you for accepting my question. I have two questions. The first one is about our user growth. We saw in the company's Prefabric Marksman that our user growth is still very good. I would like to ask the management level what they think about the current market competitive pattern. Under the pressure of the whole red light, how will we consider to increase our market share? This is the first question. Thank you, Benjamin, for taking my questions. I have two questions here. The first is regarding your user growth and market share. How does Benjamin's team view the market share currently and in the adverse microenvironment currently, are we considering to further accelerate the market share again? And second, as we mentioned, to ensure the full-year profit this year, could measurement share, what is your detailed measure, and what is your OPEX, including the SBC trend for the rest of this year? Thank you.

Okay, let me talk about it. The company's current growth pattern in the domestic market is relatively stable. Okay, thank you for your question. For the first one regarding competition, the current competitive landscape is relatively stable, or we'd rather say we have

relatively good competitive advantages, and there are many third-party data that our own data has to prove that.

For example, we just talked about the MAU data on the platform. The DAU data is also a historical high level. In terms of activity, you can actually see the ratio between the platform's DAU and MAU. This has always maintained a relatively good relationship. The same goes for the users' use of the market. So, in the end, as a domestic leading Internet recruitment platform, in terms of various dimensions, it has maintained stability and continued

For example, we just mentioned our MAU and DAU all achieved a historical high in the second quarter. The user activities, for example, the DAU and MAU ratio still remain at a very high level. The same case for the user usage time. So all of those data has proved that as a leading online recruitment platform, our every perspective, our competitive landscape is stable and continued in a good trend.

From this year, I think the core staff management of the company Today, we have a goal that we have to achieve. This goal is part of our confidence. That is to say, this company is solid. So from a big strategy point of view, I think we can simply look at it this way. First of all, in such a situation, we have a growth target of 4,000 to 4,500 million users all year round. In fact, in the first to sixth month of this year, we have already achieved A large part of it. 28 million yuan. So this year, we still have 1,200 to 1,700 million yuan left. This gives us a lot of room to control our market spending. On the one hand, we can still ensure the achievement of our goal of the whole year. On the other hand, in the current situation, the company has to allocate The profit is low, but the loss rate is high. In the short term, there are some consumable targets. We need to put it back properly. Not stop doing it, but look at the timing. In addition, in terms of the urgency of the work, we can also put some of the work that has been reduced to the forefront. In general, we can use the internal management method to make it possible for us And in terms of guarantee the full year profit target, so we believe it's very critical for our core employees, for our management to have this target.

This is part of our confidence and is a testifier of whether this firm is very stable and strong. So on a strategic perspective, the first way is our full year user growth target is 40 to 45 million. And in the first six months, the first half of this year, we have already achieved 28 million. So there are only 12 to 17 million left for us to grow. It should be relatively easy to achieve so we can control our overall spending on marketing to appropriately achieve our profit target. Second, under current circumstances, we want to better use our resources and to move the priority of those project initiatives with lower success rate and higher target to postpone its resource usage and prioritize the importance of reducing the overall cost. And this can be achieved through internal management and with, we believe, with very high level of certainty. In terms of detailed data, I think Phil can give you some more color.

Regarding our Bottom line and the major cause and the expenses item, I'll quickly mention our thoughts. As Jonathan just mentioned, we would like to try our best to secure our operating profit. Our target for a full year of non-GAAP operating profit is set as $2.3 billion. which is roughly up 40% year over year on top of last year's adjusted, non-GAAP adjusted operating profit. So in terms of our gross margin, our gross margin will, in third quarter or following quarters, will stay flat or slightly improve. due to higher economy of scale. And our marketing expenses, as Johnson mentioned, will be controlled and at a relatively low level. Our selling expenses and the G&A expenses, those expenses items will all be moderate and in a reasonable situation. And in terms of the R&D expenses, because of the way probably will shift our priority from some like AI related infrastructure investments into other things so from third quarter or from second half this part the expenses will decrease so altogether our operating margin will increase second half and the versus the full year operating margins versus last year will also be better thank you

Our investors will also be concerned about one thing. Because we just mentioned the market share. Many of our investors are also concerned about this situation. Will we... to increase the market share. In fact, over the past few years, we have experienced so much. In terms of the company's model, if we spend a dollar, it will definitely bring more sales and fewer coins. And currently, the B-C ratio is actually In terms of balance between the two sides, this service platform is facing a challenge. So, in this sense, if we want to maintain the ecological balance of recruiters and applicants, we should not spend more money. This is actually a point I would like to share with you. In addition, if we want to increase our share in the B section, it is relatively low in terms of the number of applicants. In this case, the effective way to expand the share in the B section should be to fight the war. To be honest, I don't think I'm going to do that myself. Maybe this is the right time. Maybe this is the right time. I'm going to use a certain price strategy to grab more market share and achieve a market share. I don't think I'm going to do that now. I don't think it's meaningful for our industry to do that. We should just do our own thing. That's what I think.

And for the market share, which a lot of investors are concerned and have asked a lot about, we actually, after experiencing the years past, we noticed that on the current situation, every dollar we spend there will be more job seekers and less enterprise users. So the CB ratio currently is a challenge for the platforms who is based on the supply and demand balance of both sides. So from this perspective, to keep a balanced CB ratio, actually we don't need to spend money too aggressively. And that's my view to share. In addition, To increase the market share on the enterprise user side, currently the overall paying desire of the enterprise are not that strong. So the best and most effective way to enlarge our enterprise market share is to start a price war. And currently, it is time to do that. But I'm not planning to take even more shares by lowering our price. I don't think this is a meaningful thing to do at current situation. And that's my view to share. And thank you, Preta. Let's move on to the next question.

Thank you. Our next question comes from Eddie Wong with Morgan Stanley. Your line is open.

Thank you, Mr. Zhao, Yu Ge, Wenbei. Thank you for my question. I also have two questions. The first one is, can you please help us sort out what the situation is like in the second quarter of July and August, and what is the effect of the demand for recruitment? Is the recruitment demand in August going to improve in June and July? And what about the performance of different industries and companies of different sizes? This is the first question. The second question is that maybe everyone is also worried now. That is to say, Hongguan is relatively weak. It may last for a while. This pressure is also transmitted to various companies, including us. As Mr. Zhao said before, from our inside, Thank you management for taking my question. We understand that the macro situation since the second quarter has been relatively weak. I just want to hear your view. Have you witnessed any improvement in the recruitment demand in August versus June and July? How is the performance of different industries and the enterprise of different scales? And the second question is, if the micro continues to be relatively weak, will we have any change in the business strategy to offset the, you know, the micro impact?

Thank you.

First of all, yes, we can't say, I can't say that we are in a situation where we are in a situation where we are in a situation where we are in a situation

First, we cannot talk about the macro, but we can share with our own situation, which we observed from our website and app. First way is in the second quarter, the overall willingness to pay from recruiters are lowering. And secondly, the blue collar growth is still better than white collar. That's why it still stands.

Speaking of Lanling, there are a few observations that I can share with you. One observation is that Lanling's whole situation is relatively fast in terms of QoR return speed after a rush of traditional Zhaoming. This is one observation.

And let's further look into blue-collar. There are several observations we can share with you. The first observation is that the overall blue-collar recruitment demand reached peak historical high in the spring festival recruitment season, but just a fallback relatively faster in the second quarter.

Despite this, the situation in the second quarter is still growing well compared to the second quarter of last year. Another point of view is that we have just introduced the whole bright spot of this year. The whole bright spot of the second quarter of this year is in the production and manufacturing industry and the logistics industry.

Even relatively faster fallback in second quarter, we still see a very good year-on-year growth in terms of the blue-collar revenue in the second quarter. And among the detailed subsectors, there is one highlight, which is the manufacturing industry continue to outperform all other industries. And after that is the logistics sector.

There are two other things worth mentioning about the second wave. First of all, compared to the first-tier cities, the growth of the invaders will be faster compared to the second, third and fourth-tier cities. And there are also other two observations worth sharing. First,

Compared to the first-tier cities, the recruiter enterprise user growth is better and faster in the second, third, and fourth-tier cities. And the second one is there is a continued trend, which we have already discussed in the last quarter's results, that the larger size of the enterprise grows better. For example, a big enterprise with over 10,000 employees at the companies with the fastest or the faster growth rate.

We have seen the situation in August. Let's talk about Lanling first. In August, Lanling's supply and demand ratio is better than the whole Q2 situation. The improvement of the BC ratio is too visible.

And about recent situation in August, we'll continue to talk about the blue collar. So blue collar, the overall supply and demand situation in August is better than the second quarter. and the enterprise to job seeker ratio continue to see improvement and we observed the daily active enterprise user number continue to go up week by week and the manufacturing industries are still the best among all others

some measures to counteract this impact, what we are actually doing is to focus more resources on the relatively limited resources that we have gained over a longer period of time in terms of our original resource allocation. For example, if we talk about the blue-collar manufacturing industry, from the Hilo project to the Hilo selection to the process of generating income, we are currently

And the second question about what kind of monetization strategy we can use against the macro headwinds. The things we are currently doing first is to concentrate our resources. to the business and department, which we, because it's a faster, longer outlook, we give limited resources too. For example, on the blue collar manufacturing industry, we, from high low count project to count select and to generate revenues, we are currently enhancing our investment and the input on this area.

I'm not sure if we'll be able to make a lot of money by collaborating with HALO Ocean in the Q3 and Q4. But I believe this is the first opportunity for an Internet company to make some real money by using HALO Ocean in the game. I think it starts from here.

I cannot be so very certain to say that the COUNT-SLAG project will have very big revenue from our cooperation with blue collar manufacturing industry in the the third and fourth quarter of this year. But we believe this is the first real chance, actual chance for the online recruitment platform to go into the blue collar manufacturing industry and make some real money.

And that's my answer to your question.

Thank you. Our next question comes from Robin Zhu with Bernstein. Your line is open.

Thank you, Ms. Zhao. I have two questions. One is, can you please tell us in detail about the development of overseas business and AI after the acquisition of my big company? I have two questions. One, would management elaborate on recent developments in the company with regards to the WD acquisition? if management could give us more color on overseas and investments in AI. And second, given the weakness in the company's shares in recent times, could management share some thoughts on go-forwards by banks and whether the company will consider instituting a regular dividend? Thank you.

Sorry, we just mutated ourselves a little bit.

Actually, I would like to emphasize that what we are doing now is not entirely based on the concept of a set-up. We actually want to add Thank you for your question. The first one on WD technology, I have mentioned that in our conference call before.

And because Jason, the CEO, is a very respectful peer of ours, and since their establishment in 2015 until now, they have been able to become the number one in their own area. So to purchase the majority of the shareholder stake of W-Technology is out of the recognition and the respect of Jason, the CEO and his team's work in this area. And it's not just our further expansion into the area. It's more likely to add ourselves with some capabilities, which is difficult for we to develop by ourselves.

Jason, the CEO, and his team have been fully recognized in the entire industry in terms of the service model created by the knowledge learned in the field of manufacturing. In the current stage, I can report to you that these are the three things. Jason and his team, we fully recognize his knowledge and the industry actually has fully recognized their knowledge and know-how

and model in the manufacturing industry. And currently, he's working with us for three things. First of all, they are fully independently to lead the development of WTE technology.

The second thing is to help the company to push forward the overall environment improvement

under the count project and the monetization, the commercial project, commercial plan under the count select project.

and a part of the product development team of BOSS, trying to combine the work in the service field that is advantageous to us and the traffic and recommendation work that is advantageous to BOSS. We are currently... We are currently launching a service that we are looking forward to. But now, I think we should...

And the third one which not suitable to discuss more details publicly at this moment is that Jason is currently leading the operational team of WD technology and part of our R&D team to together combine the advantages of our traffic and their experience and know-how in the industry to combine together to publish a new product or service which we can't we would rather looking forward to that but maybe in the next quarter

We are a bit nervous. We initially launched a service in Hong Kong that we consider to be a MVP service to see how users in Hong Kong would view it. I think this will take two to three months. Then we may have to decide whether to speed up the speed of business development in Hong Kong. If it can be seen as a good income in Hong Kong, I think there is a real contribution to revenue. I think it's too early to talk about it today. Now I see it as a three-year plan. In the eight countries and regions of Asia and Europe, we conducted a long-term overseas business exploration. What I can report is that I am satisfied with the local team that I have recruited. I am also confident

And for our business, first for our Hong Kong initiatives, we have made some progress and have initially to publish the MEP service to serve the recruiters in Hong Kong and see how the users might react or behave on our platform. This might take two to three months, and then we will decide whether we can accelerate the development of this business. And in terms of the revenue, which is a decent revenue from Hong Kong business, I think it's a little bit early. Maybe take more than the next two to three years. And in the Asia and Europe area, and some developed countries, we have taken quite a long time to work. And at the current stage, what I can say is that I'm satisfied with the local team we have recruited and we have confidence.

What you just mentioned about our thoughts in the AI field, we have also made some reports to the shareholders on the conference call. What I want to say today is that Uh,

And the third one regarding the generative AI, I have shared some of our thoughts before and maybe add some more here. So there are two points. First, in a scientific perspective, we are executing tail light project, which is for our research guys, our tech guys to understand, to know what the most developed technology in this area is and what they are doing. But we are not planning to invest more resources. Actually, we're not affordable to do that, to actually do that. We just know what they are doing and kept up with the most advanced technology.

Another thing is that we insist on our previous strategy at the application level, that is, we will prioritize things that can't be done before the appearance of Synthesis AI. Under this strategy, we now have some things in the company that are being applied in the industry.

On the application level, so our strategy is still R. If something is not happening before the emerge of generative AI technology, then we give priority to that. So under that strategy, we have some good application in the industry level. So we are using it internally now.

So we are using it internally now. In the short term, the core shareholders and core employees of the current company have a problem with their confidence. This confidence is not something that is necessary or subjective. It is something that is very real. So I think it is necessary for the current company to do a better job of returning shares. This is my basic opinion. With this in mind, we actually have a return plan of US$200 million. In the past four months, we have made $8,800 million. In terms of a company of our size, I think this is a real-life action, and it is a very significant action. We are not talking, we are making money. We will continue this return plan.

and about the shareholder returns we have a long been insist on providing a shareholder return to our shareholders which it is a basic ethic for the company and we always attach great importance to that so which because the is at is a very true very true, very crucial point for the core shareholders and employees to maintain our strong confidence. So it's very essential and important to do a good shareholder return project. So we have a $200 million share buyback program. And in the last four months, we have already bought 882. 88 million, this is a real number and a real act we have done for a company of our size and we will continue to do that. And about dividend, I can say that for a potential dividend payer plan, we are still under research. And that's my answer to your question. And given the time constraint, I think that's the last question for our core operator.

Thank you.

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 closing remarks.

Thank you once again for joining us today. If you have any further questions, please contact our IR Team Directorate or TPD National Relations. Thank you.

Thank you. You may now disconnect. Good day.