KANZHUN LIMITED

Ladies and gentlemen, thank you for standing by, and welcome to the Conjun Limited Third 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, Oprah. Good evening and good morning, everyone. Welcome to our third quarter 2024 earnings conference call. Joining me today are our founder, chairman, and the CEO, Mr. Jonathan Peng Zhao, and our director and the CFO, Mr. Phil Yu Zhang. Before we start, we would like to remind you that today's discussion may contain forward-looking statements, which are based on management's current expectations and observations that involve known and unknown risks uncertainties and other factors are not under company control, which may cause actual results, performance or achievements of the company to be materially different. The company caution you not to place on new reliance on forward-looking statements and do not undertake any obligation to update this forward-looking information except as required by law. During today's call, Management will also discuss certain non-GAAP financial measures for comparison purposes only. For a 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.jpim.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 third quarter 2024 earnings conference call.

On behalf of the company's employees, management team, and board of directors, I would like to extend our sincere gratitude to our users and investors who have continuously believed in us and supported us.

Let's talk about financial numbers for this quarter first. The company achieved a revenue of RMB 1.91 billion, up 19% year-on-year, and a net income of RMB 460 million.

Additionally, our adjusted operating income which includes share-based compensation expenses, reached RMB 610 million, reflecting a 10% year-on-year growth.

During the 30-degree period, there was the Olympic Games and the European Cup. The company increased the cost of promoting some brands, which led to a growth in market costs. But this is a one-off expense. We have maintained the goal of increasing profits throughout the year.

During the third quarter, which coincided with the Olympic Games and the EuroCup 2024, the company allocated additional resources to brand promotion, which led to an increase in marketing expenses. It was a one-off expenditure. Our annual profit growth target remains firmly on track.

It is worth mentioning that as a three-and-a-half-year-old Additionally, it is worth mentioning that as a company listed on Nasdaq for three and a half years and with a secondary primary listing on Hong Kong Exchange for two years,

Our share-based compensation expenses, which have historically accounted for a relatively high proportion of our revenue, have entered the anticipated phase of gradual reduction. In this quarter, these expenses demonstrated a decline both on a year-on-year and quarter-on-quarter basis. Reflecting on the third quarter, our efforts can be summarized into two sentences. While the overall recruitment market environment remains challenging, the company's unwavering focus on key growth drivers continues to yield positive results. Now let's take a look at a few notable highlights from the third quarter. First, our user growth continued to demonstrate strong growth momentum. As we all know, user growth has always been an important growth driver for us. In this quarter, the average monthly active users on our BossGPing app reached 58 million, representing a 30% year-on-year increase. From January to September 2024, newly added verified users exceeded 40 million.

Compared to the employer side, the growth of recruitment needs in the corporate side is slightly weak, but it still maintains the trend of growth. The number of newly released jobs in the third quarter increased by 18%. This is mainly due to the growth of users in our relatively efficient business model and the improvement of the market atmosphere.

Compared to the job seeker side, recruitment demand from enterprises showed a more moderate by steady upward trajectory. The number of newly posted job post positions in the third quarter increased by 18% year-on-year. This growth is mainly driven by the user growth and market share expansion fueled by our relatively efficient business model. The second thing in the third quarter, the growth of short-term paying ratio affected by supply and demand has been slowed down. Despite this, the retention of enterprise users remains solid, and the number of paid enterprise customers experienced a decent growth.

From July to September, the proportion of recruiters to recruiters continued to be higher than in the second quarter. The gap from the same period last year continued to grow. Relatively more recruiters caused the cycle of recruiters to be shortened. From July to September, the ratio of job seekers to enterprise users continued its upward trend since the second quarter.

with a gap compared to the same period last year continuing to widen. Relatively more job seekers have shortened the recruitment cycle for enterprises. That is, the time it takes for enterprises to fill a wide-time position is reduced. In the short term, this may affect the enterprise users' willingness to pay, leading to a slower growth of the company's paying ratio.

However, we have observed that the flow rate at the corporate end is still good. This must be good news in the long run. Investors and analysts who study corporate services are easy to understand. When the number of paid corporate customers reaches millions per year, the survival of corporate customers is decisive and the premise of all growth.

However, we have observed that the retention rate on the enterprise side remains solid. This is definitely a good news in the long term. Investors and analysts who focus on the enterprise service market should have recognized that when the number of annual paying enterprise customers reaches a scale of millions, the retention of enterprise customers becomes decisive, and it is a prerequisite for sustained growth.

The total number of paid enterprise customers for the 12 months ended September 30, 2024 reached around 6 million, up 22% year-on-year. The third thing, that is the average revenue per paid enterprise customers, namely ARPU, has remained stable.

First, in the blue-collar manufacturing sector, we are committed to purifying the market environment while striving to expand our front cycle and continue to achieve satisfactory growth.

On the platform, the data shows that the total number of companies that were selected for the third quarter increased by 45%, and the amount of contracts increased by more than 40%. As a result, this also helps us to increase the proportion of the total income in Lanling by more than 38%.

Our strategy focused on providing high-quality recruiting companies with greater opportunities to connect with candidates, leveraging a combination of innovative products, refined algorithms, and robust operational capabilities. In terms of data on our platform, in the third quarter, the accumulated number of enterprises joining Hilo, Coach Select Project grew by 45% quarter-on-quarter. and signed contract value increased by over 40% quarter-on-quarter. This also helped, as a result, this also helped the revenue contribution from overall blue-collar business in terms of total revenue further increase to more than 38%.

In the third quarter, the average monthly success rate was nearly 200 million times. The total number of recruiters and applicants, that is, each person on the platform, gained a communication opportunity based on mutual consent, and remained on the same level and continued to grow. Thanks.

the company continues to invest in technology to create greater value. In the third quarter, our platform facilitated an average of nearly 200 million monthly mutual achievements, demonstrating a continued rise in the number of successful interactions based on mutual consent between enterprise users and job seekers on a per capita basis.

As an entrepreneur, I and my friends all view this data as a testament to the value of our company brings to the world. And this has always been the goal that our company will long pursue. Finally, I would like to talk about the shareholder feedback that investors are concerned about. From last quarter's performance meeting to now, the company's total return on purchases is about $130 million. This year's total return on purchases is about $2.2 billion, corresponding to our total capital of about $3.4 billion. This reflects the company's confidence in long-term growth

在任何情况下都要持续关注并且落实股东回报的诚意。 Last, regarding shareholder returns, the company has repurchased around $113 million worth of shares since our last earnings call, bringing the total repurchase for this year to approximately $220 million. representing 3.4% of our total share. This underscores the company's confidence in our long-term growth prospects and our commitment and concern to delivering sustained returns to shareholders in any circumstances.

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 through the details of our financial results of the third quarter of 2024. We delivered a solid set of financial results in this quarter, despite the industry headwind. with revenue grew by 19% year on year to RMB 1.9 billion. This growth was mainly driven by the continued expansion of our enterprise user base as we further penetrated into blue collar industries, lower tier cities, as well as small sized companies market. Even facing a generally soft recruitment market, Number of paid enterprise customers was 6 million in the trailing 12 months ended September 30, 2024, up by 22% year-on-year and 2% quarter-on-quarter. Our pool in this quarter remained stable sequentially. Our overall operating cost and expenses were flattish, quarter on quarter, even including several one-off or non-structured expense items in this period. As one of our key focuses being sustainable cost control, we are confident that our effective business model can continue to generate strong operating leverage in the future. Looking at the detailed financial metrics, excluding share-based compensation expenses, adjusted operating cost and expenses increased by 23% year-on-year to RMB 1.3 billion, flat-ish quarter-on-quarter. Adjusted operating profit reached RMB 605 million, up by 10% year-on-year, with an adjusted operating margin of 32%. Cost of revenues increased by 17% year-on-year to RMB 314 million in this quarter, mainly driven by higher server and bandwidth costs, payment processing costs, as well as employee-related expenses. Gross margin capped at the same level of 84% as last quarter. Sales and marketing expenses increased by 14% year on year to RMB 522 million in this quarter, primarily driven by the marketing campaigns launched during the Paris 2024 Olympic Games and the Euro Cup of 2024. Excluding the sponsorship expenses, we witnessed the improved efficiency and business leverage in both our selling and marketing expenses due to our strong brand recognition and a powerful network effect inherent in our business. We are confident that the enhanced marketing efficiency Trends will continue to improve along with our top-line growth. R&D expenses increased by 12% year-on-year to RMB $464 million in this quarter, excluding share-based compensation expenses. Adjusted R&D expenses increased by 18% year-on-year to RMB $361 million. depreciation cost associated with our earlier investments in ai infrastructure has largely stabilized and is not expected to increase in the near future our dna expenses increased by 31% year-on-year to RMB $286 million in this quarter, mainly due to higher employee related expenses and some one-off expenditures that will not occur in the coming year. Our net income was RMB $464 million in this quarter, up 9% year-on-year, and our adjusted net income in this quarter reached RMB $739 million and increased by 4% year-on-year, which was affected by the decrease in the interest and the investment income. Total share-based compensation expenses amounted to RMB $275 million in this quarter, down by 9% quarter-on-quarter and 5% year-on-year. As Jonathan just mentioned, we are expecting total share-based compensation expenses to continue the downward trend in 2025. Net cash provided by operating activities in this quarter was RMB $812 million, relatively stable with that of the same period of last year. As of September 30, Our cash and cash equivalents, short-term time deposits, and short-term investments totaled RMB $14.6 billion. We launched an additional share repurchase program in August of 2024, running concurrently with the March program. which allows us to buy back up to U.S. dollar 350 million of shares. Since the announcement of the August program, as Joseph just mentioned, we have repurchased a total consideration of approximately U.S. dollar 130 million, making the total buyback amount reach the U.S. dollar 220 billion. this year, demonstrating our commitment in shareholders' return and long-term confidence of our business. And now for our business outlook for the fourth quarter of 2024, we expect the total revenues to be between RMB $1.795 billion and RMB $1.81 billion, a year-on-year increase of 13.6% to 14.5%. That concludes our prepared remarks, and now 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. Our first question comes from Eddie Wong with Morgan Stanley. Your line is open.

Thank you, Dr. Wang. Yu Ge, Wen Bei, thank you for accepting my question. I have two questions. The first one is, we have seen that since September, the government has launched a series of knowledge-based public policy. Does this help our recruitment market to recover? Do we also see some improvement in operating data that corresponds to this knowledge-based policy? This is the first question. The second one is that Thank you management for taking my question. I have two questions. The first one is that The government has launched some supportive policy since September end. Have you witnessed any signs of this policy has helped to boost the recruitment market and have you witnessed any operating metrics improvement as well? The second question is, given the uncertainty of the macro economy, which could sustain into 2025, how should we think we could maintain the revenue growth in 2025? Thank you.

Thank you for the question. Let me answer it. Regarding the policy of this series at the end of September, we see that the number of new business unit users will be the same as before in October. Please note that every year in November and December, it is actually a common recruitment period. Thank you for your question.

About the first one regarding the supporting policy since the end of September, I have several observations to share with you. Firstly, we noticed that the newly added enterprise users every day has been improving on a year-on-year basis since the end of October. And please note that November and December are traditionally a relatively low season for recruitment. However, the newly added enterprise users improving on a year-on-year basis since October. My understanding is that this is good news. And this trend has continued into November and December.

And then there is a... Actually, everyone is very concerned about this CBB. This CBB, Job Seekers Be Recruiters. This ratio is still falling back. We mentioned in the press release that the same ratio in July and September is higher than last year. The current situation is still falling back. The current ratio is better than last year's same period, lower than last year's same period. It has reached a lower level this year. I personally understand that this shows that in the field of employment,

And the second thing about the job seeker to recruiter ratio, which I believe many of you are concerned, have been continuing to fall back. I have just been discussing in my prepared remark that during July to September, that number is high compared to the same period last year, and now it is lower than the same period last year. and reached a relatively low level within this year, which means the supply and demand unbalance issue is improving.

Although so, I still think that after all, from policy to actual economic data expression,

Even though despite of this good news, good signs, my understanding is that this supporting policy need take some time to transfer into actual improvement of economy and actual improvement of enterprise recruitment demand. So this should take some time, and we should stay patient and calm.

You asked about the second question, which is how we can guarantee the growth of next year's revenue. I actually have a few opinions on this. First of all, our revenue growth actually has some stable and clear drivers. The first is user growth. I think next year, we expect at least 15% of the overall user growth. Therefore, even if the growth rate at the B end may slow down, I still think it's a growth trend. If the status quo is stable, I hope the growth at the B end will be better.

About the second question, facing the uncertainty of macro, how we can guarantee our continued revenue growth trend. We have several key structural growth drivers for our revenue, which is still unchanged. The first thing is the user growth. Even though of all these uncertainties, we expect that we can still have at least 15% of overall user growth. The enterprise side might be slower, but still it can grow. And if the macro can stable at some level, then we expect the enterprise side have better performance. So our user growth as the most important driver is still quite solid.

And then my driver, a more stable driver, is actually the rate of return. Now, there are a few concepts to talk about. The first concept is that my entire rate of return has been slowly developing from 5%, 10%, 20%, 30%, and 40% over the years. So my overall trend is that the growth trend of my rate of return is obvious.

And the second important driver is our paying ratio can still maintain a stable level. If you're looking back, our paying ratio started at even zero or 5% and improved along these years, now reaching at like 20 to 30% level. And so the upward trend is unchanged.

And another opinion is that

the increase of paying ratio has some connection with the supply and demand balance. And as the sign of the supply and demand balance improving, we expect that if the economy can be stable, then our paying ratio can return to our growth trend.

If the global economy continues to develop well,

If the macro can actually go back to growth, then our pain ratio will experience a significant improvement. And the third driver is our pool.

As far as we have got the first and second driver, which is enough, we are not in a hurry to aggressively increase our pool. So it will keep at a stable and slightly improvement trend.

I have a question about Lanling's driver.

Actually, everyone has noticed that I saw Lanling's revenue this year. to a level of 38%. For me, this is very important. Because a few years ago, we had an ideal that we would try our best to solve, especially in the middle-range field of manufacturing, The higher the salary, the more job seekers you can get. The entire market is in chaos. So we implemented the HALO project. And we hope that one day, more intermediaries will agree with us and we can all play this game together. Okay. Now I see the money. I think it's the connection between dreams and reality.

And I have an additional revenue growth driver, which is our Blue Collar business. Our Blue Collar contributed more than 38% in the third quarter of our total revenue. This is quite an important breakthrough. Several years ago, I had an ideal thoughts that I want to resolve the problem in the blue-collar manufacturing recruitment industry, which is bad money driven out of good money, and people with decent background cannot get good jobs. So we launched the Conch High Law Project in the hope of someday, one day, the top good college agents can agree with us to agree with our rules to do equipment business on our platform. And now we have saw some real money coming back from this, which is our dreams coming into the reality. That's my answer to your question.

Operator, let's move on to the next question.

Thank you. Our next question comes from Timothy Zhao with GS. Your line is open.

Thank you for accepting my question. I have two questions. The first question is related to whether we can introduce the situation of different customers in the third quarter if we look at the blue and white zeros as well as the different sectors. We mentioned in the previous call that the overall ERP of the third quarter is relatively stable. What is the difference between SMEs and big clients' income and ARP? This is the first question. The second question is about our users. As we mentioned, the total number of new users in the first three seasons has exceeded 40 million. In this way, the number of individual users should be close to or up to 200 million. Thank you for taking my questions. My first question is regarding the more detailed breakdown into the third quarter, including the the customer performance between the blue-collar and white-collar sectors, as well as different sectors, sub-sectors as well. And as Benjamin mentioned, that our pool overall is relatively stable in the third quarter. Could Benjamin provide more color in terms of our pool and revenue trend between SMEs and key accounts? And second question is regarding the user growth. I think as Benjamin mentioned, that I think in the first nine months of this year, they were already 40 million newly added verified users. And in my calculation, the individual users should already reach or get close to 200 million. Could you imagine share about the photo room for the individual users to grow? And as we are aiming for 15% or more than that growth into next year, how should we think about the sales marketing expenses or the marketing expenses into next year? Thank you.

For the players who want to see the classification, we can see that the average of the blue team is obviously higher than the average of the white team. From the perspective of income, the average of the blue team has increased to 38%. However, compared to the same period last year, Thank you for your question. First one regarding different

blue-white collar and industries. Of course, the overall growth rate of blue collar is still faster than white collar. As I just mentioned, the revenue contribution has further increased to over 38%. However, compared to the same period last year, we have seen the blue collar revenue growth rate have been significantly slowing down, which was mainly affected by the weak urban service industry performance. Compared to blue-collar, white-collar is relatively stable.

In terms of the industry, the service industry has been weak since the 20th century. We have recently seen some signs of recovery, which is the service industry. It is worth mentioning. Another bright industry is manufacturing and storage. In terms of sub-sectors, as I just said, the urban service industry has been relatively weak since the second quarter. However, we've recovered a little bit in recent weeks. For the

Better performed industries, we have several highlights. Manufacturing industries, logistics and warehouse, automobile are the three best performed industries in the third quarter and the recent weeks. For example, the manufacturing industry has year-on-year revenue growth more than 45% in the third quarter.

In terms of the scale of this enterprise, Sanjidoo is two-headed. One is a very large enterprise with more than 10,000 employees. These enterprises perform best in terms of growth.

The second-highest is a small enterprise with less than 100 employees.

And about the different size of enterprises, we notice these are on the true end.

of the market. First one is the hyper-scale enterprise with more than 10,000 employees performed the best in the third quarter. And the second one is the small and micro-sized enterprises with employees less than 100 people. My understanding that this is actually quite good news because majority of China's enterprises are small-sized companies, which is also the main contribution of our new users, new enterprise users.

I would like to add one point in regards to our three accounts breakdown. Key accounts recorded the highest revenue growth, which is up more than 30% year-over-year. The overall are up 5% year-over-year, flat quarter-over-quarter. Among all three segments, Key Accounts are improved the most.

About the space for user growth, this question is very good. My first set of data I want to talk about is

And about your second question of our user growth potential, it's actually a quite good question.

We have actually started through several different channels of methodology that come to a conclusion that China's marketable employees, the number of China's marketable employees are more than 400 million, which means we have a double space to grow.

According to the official data, the number of enterprises in China is between 40 million and 50 million. There is also a pipeline of more than 50 million. In any case, from the point of view of our service, we are actually trying to serve small and medium-sized enterprises and all kinds of enterprises. So our B-end

And on the enterprise side, the room of space is even bigger. The official number is that China has 40 to 50 million enterprises. Some channels have even more than 50 million. No matter what, we have very strong advantages in terms of enterprise-sized services because our models are very suitable for small or even micro-sized companies and across different industries, which can support our very strong and large room for our enterprise users.

Next year, I don't plan to spend a lot of market costs to get users. There are two reasons.

The first reason is that the current better double-edged net effect

And we are not planning to spending a lot of money on marketing or user acquisition. There are two reasons. First, due to a very strong double sided network effect. the natural traffic has accounted for a very significant portion of our new users. 第二个原因就是从具体的技术上来讲,战略上来讲, 目前预测2025年没有非常值得花很多钱去参与的大型的campaign, 所以的话我觉得我们会保持一个较少的费用, And technically speaking, there is no big events or marketing campaign which we need to spend more money on. So as a result, we will keep our marketing spends at a relatively low level. And that's my answer to your question. Thank you, Timothy. And operator, let's move on to the next question.

Thank you. Our next question comes from . With GBS, your line is open.

I have two questions to ask. First, I have a follow-up question about Lanling. I want to ask about the next development strategy of our Lanling business, including the plan for other Lanling business besides the manufacturing industry. Do we have any plans to set up more offline services in Lanling? By the way, can you ask the management to update the competitive pattern of the Lanling industry? Have you seen any changes? My second question is about the profit next year. Thank you, management, for taking my question. My first question is on blue collar recruitment. Could management maybe share your future growth strategy for the blue-collar business around manufacturing and other verticals? Do we plan to build our offline service capabilities for the blue-collar recruitment? And also, have we observed any change in the competitive landscape here? And second, just on the profitability outlook for next year, understanding management has shown a very strong commitment to protecting profitability in light of the macro uncertainties. So if we just look at our profit goal, for the next year? What do we see as the major drivers for profitability improvement? And is there any potential new investments that we should consider? Thank you.

Especially in Lanling, we have made some progress. I would like to sum it up. In essence, our idea is becoming reality. What is the idea? The idea is that factories, intermediaries, workers, and platforms, the four of us, can coexist. Because we coexist, because of the rules of the game, everyone can coexist.

Okay, thank you for your question.

We just talk about the improvement to the achievement we have in the blue corner, especially manufacturing factory. So the essence of that is actually is idea or concept becomes reality, which is the factories, intermediaries, workers, and the platform. Those four parties can coexist under one code-recognized game rules, which can allow everyone to be more efficient and earn money with dignity. And now that idea has come into reality.

This process is very difficult because So this is actually a very hard process. And I will talk again about essence, which is

Every player, the factories, agents, workers, and platforms, they are all battling against the short-term interest and long-term interest.

Let me give you an example. A certain worker is very clear that his position is about 6,000 yuan per month. But when he sees that someone says that this position is 15,000 yuan, For example, one manufacturing worker who is

quite clearly aware that his working salary should be in the 6,000 RMB per month range. However, if someone posts a job of 450,000 RMB per month, he is quite hard to resist attempt to submit a resume. So it's a fight for a potential for job and secured working opportunity.

So what I just talked about is the current salary of a certain position. So in a very good order season, this position can also reach 8,000 yuan. So I control the salary of this position. You can't release more than 8,000 yuan here.

And the example I just said is actually unreal.

worker facing on the current market condition, in a good season, that his salary can raise to around $88,000 per month. So I control the related similar kind of jobs salary range with no more than $8,000. If we have that, that can have, I have permission to answer your two questions.

Okay, your first question is related to the competition pattern. I can say that in the short term, I can control the position of the intermediary organization. The position cannot exceed $8,000. Then I may not be able to beat the person who can make $15,000. They can make $15,000. I can't do it in the short term. But in the long term, I think I have hope. Because I restored the truth. This is the competitive pattern you talked about. And then you talked about us working hard to do offline interaction. I actually want to say that what I am doing now is very expensive. And once it's done, I also hope to do it. Its advantages are also very obvious. But I need to stick to it. And the question about the competitive landscape.

So if I continue to control the workers' salary range, which our job posting can be no higher than 8,000 per month, in short term, I may not be able to compete with a platform that allows people to post jobs with over 150,000 RMB per month. But in the long term, I have a strong advantage because I actually return the truth of this job position. And the second about how committed I will invest to do the offline placement, because the things I'm currently we are doing is quite difficult and need a lot of input from every level. So I hope I can continue to do that, which we have already established very clear advantages. So in the short term, I won't invest heavily in the placement while continuing our current game with those four participants. And hopefully we can have good results.

And then about the profit, I actually think I can put it simply. That was very complicated. I'll say more. As for the profit, I can put it simply. In this situation, a lot of And the second question, I will give a short but clear answer.

So facing all these difficulties, we need to find out which thing is the definitely right to do. And we believe to guarantee our profit or profitability is the definitely correct thing. So we need to do and we will guarantee our profit.

When I was managing the profit target next year, What everyone is talking about is that I have enough confidence. I can manage a profit target for the next year. I won't talk about the detailed management in the middle. I just want to say one thing. What I see in our company is a regular thing. The bar of my business is relatively obvious. My margin is relatively clear.

And in terms of managing our next year profit target, I have very strong confidence. I won't talk too much about our management details, but one thing I can say is that we have very strong operating averages. So as long as we can

which will majority turn into our profit. This trend is quite clear.

Regarding our company's margin outlook in 2025, I can offer some of our thoughts. Regarding the gross margin, we expect our gross margin will be flat or improve slightly next year. Sales efficiency improvement will leave additional leverage to selling expenses. Absolute amount of marketing spending will be capped at 2024's level or even decrease. R&D headcount likely will not increase. There's no near-term actual investment to AI hardware. So our, and one more thing is our new business. We expect our new business spending will be with disciplined approach. So all in all, our operating margin will further improve, as Jonathan said, will further improve along with our top line growth. So this is our view towards the margin profit.

Okay, thank you. In light of the time constraint, I think, Peter, we can take one last question.

Thank you. Our last question comes from Yangyang Xiao with CICC. Your line is open.

Thank you. To answer my question, I have two questions. The first question is about the progress of our overseas business. How do we balance our current goal of profit control and investment in future overseas businesses? The second question is that we have noticed that there seems to be a trend in the market for products such as AI interviews. How do we view the application scene of AI technology in the recruitment field and the potential new income or a space for down payment? uh thanks management for taking my question and i have two questions my first question is how is our overseas business progressing and how can we balance our profit control goals with overseas business investment And my second question is, we've noticed that an industry-wide trend towards AI products like AI interviews. So how do you view the current application scenarios of AI in the recruitment field? And what potential new revenue or cost reduction opportunities might there be? Thank you.

Regarding the relationship between the development of our international business and our target audience, I can see very clearly that next year, we won't have much to invest in the development of our international business. This is related to the logic of our business development. Our logic is basically that we don't see a rabbit, we don't hear a sound. Thank you for your question. About your first question of our overseas business and the relation with investment and relation with our profit topic.

So one thing is clear that is next year we won't have a very big investment in our overseas business. This has a relation to our business developer methodology, which is we want to release the eagle until we see the rabbit, which means we won't increase investment heavily before we have some certainty. So we have to do some very small experiment with limited cost.

根据这个逻辑的话 根据我们的运营经验 明年这一年的时间 在我们的国际化业务的尝试当中 是没有那么清楚的 能够看到那个rabbit 所以的话 我们明年不会 有很多钱的投入 因此就势必不会影响到 我的利润目标

So in our plan, we won't expect we can clearly see that rabbit next year. So that won't affect our profit target next year.

Regarding the application of AI, I still think that the entire industry, not just our industry, but all industries in AI, In terms of AI application, actually now within the industry, or actually all the industries, the reality is

the high prospect of the technology cannot correlate with the real actually application scenario. So there's a very loud lightning, but very small rain. So that's an industry fact.

But I want to further explain our opinion during our industrial practice.

The first one is we will insist on the equality between job seekers and recruiters. We will not allow any side to use advantage of AI to have advantages over the other side.

The second policy we insist on is that users need to know each other. Simply put, when a user is in contact with the other side, if the other side is an AI representative, then And the second principle we insist is the right to know. So whenever a user are facing the potential counterparty of AI, then we should let that user know. Then there is no need to use LLM to cover it up again. I think this is a waste.

And the third policy will insist that the current application scenario which can be perfectly done without large language model, there is no necessity to use LLM to do it again, which is actually kind of waste.

So after talking about a set of theories, let's talk about one of them. Apart from all those theories, we have several real applications. So in terms of protecting the safety of our users, our AI technology has been quite useful. We previously revealed that last year, our user security team had more than 900 people. In fact, since this year, the number of users has increased by tens of millions. In this situation, the number of users in our user security team has not increased. One of the reasons is that

We discussed in the past that we have over 900 people of our security team, and this year we increased more than tens of millions of users, but we didn't increase the total number of our security team. One important reason is that we used our AI technology to assist with the verification, which largely increased our overall review efficiency.

招聘平台跟企图在招聘平台上作恶, 伤害求职者的人打仗, 这件事情的本质, the first principle, 其实是一个成本之争。 如果坏人不划算,那他就肯定不来了。 So in the history of the black people fighting with the platform, the first principle is actually the fighting of the caste.

Whenever the evil guys feel it hurts to do things, to do bad things on the platform, then he will not continue to do that. With the help of AI, we can actually increase our advantages over that so it can create real value for our operation. And that's my answer for your question.

And I think that's all the questions for tonight. 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 Wenbi for any closing remarks.

Thank you once again for joining us today. If you have any further questions, please contact our IR team directly or TPG in that relation. Thank you.

Thank you for your participation. This does conclude the program. You may now disconnect. Good day.