Kanzhun - Q2 2023
August 29, 2023
Transcript
Operator (participant)
Ladies and gentlemen, thank you for standing by, and welcome to the Kanzhun Limited Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a Q&A session. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Wenbei Wang, Head of Investor Relations. Please go ahead, ma'am.
Wenbei Wang (Head of Investor Relations)
Thank you, operator. Good evening and good morning, everyone. Welcome to our second quarter 2023 earnings conference call. Joining me today are our Founder, Chairman, and CEO, Mr. Jonathan Peng Zhao, and our Director and CFO, Mr. Yu Zhang. Before we start, we would like to remind you that today's discussion may contain forward-looking statements, which are based on management's current expectations and observations that involve known and unknown risks, uncertainties, and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different. The company 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 purposes only.
For definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results, please see the earnings review issued earlier today. In addition, a webcast replay of this conference call will be available on our website at ir.kanzhun.com. With that, I will now turn the call to Jonathan, our Founder, Chairman, and CEO.
Jonathan Peng Zhao (Founder, Chairman and CEO)
Hello, everyone. Welcome to our second quarter 2023 earnings conference call. On behalf of the company and our employees, I would like to express our sincere gratitude to our users, investors, and friends of our company, for whom have been upstanding with us during all these difficult times. Hello, everyone. Welcome to our second quarter 2023 earnings conference call. On behalf of the company and our employees, I would like to express our sincere gratitude to our users, investors, and friends of our company, for whom have been upstanding with us during all these difficult times.
Wenbei Wang (Head of Investor Relations)
First, I would like to share with you our performance for the second quarter of 2023. We recorded a GAAP revenue of RMB 1.49 billion for the quarter, up 34% year-on-year. Calculated Cash Billings was RMB 1.62 billion, up 65% year-on-year.
Jonathan Peng Zhao (Founder, Chairman and CEO)
本季度的净利润将近3.1亿元，扣除股权激励费用后，调整的净利润达到5.7亿元，同比增长135%，创造了本公司自成立以来单季度利润总额的新高。
Wenbei Wang (Head of Investor Relations)
Our net income for the quarter was approximately RMB 310 million, and our adjusted net income, which excludes share-based compensation expenses, increased by 135% year-on-year to around RMB 570 million. This represents a highest and quarterly record in the company's operational history.
Jonathan Peng Zhao (Founder, Chairman and CEO)
BOSS Zhipin的这个业务模式和我们花了10年时间打造的这个公司的组织，在这个季度在赚钱能力上又得到了一次验证。
Wenbei Wang (Head of Investor Relations)
The effectiveness of BOSS Zhipin's business model and our organization, which has been developed for over 10 years, has once again been tested on our strong profitability.
Jonathan Peng Zhao (Founder, Chairman and CEO)
二季度延续了一季度良好的用户增长模式，单季度新增完善用户达到1,400万人。APP的平均的完善MAU为4,360万，同比增长了65%。
Wenbei Wang (Head of Investor Relations)
In the second quarter, our strong user growth trend continued from the first quarter. The newly verified users for this quarter reached 14 million, and average monthly active users on the BOSS Zhipin app rose to 43.6 million, at 65% year-on-year.
Jonathan Peng Zhao (Founder, Chairman and CEO)
其中的蓝领跟二线以及以下的城市增长速度更快，这就延续了相当一个时期以来，我们持续向下沉市场和蓝领用户渗透的趋势。
Wenbei Wang (Head of Investor Relations)
Among all the users we serve, blue-collar users and users from second and lower-tier cities grew faster, benefiting from our continuous efforts in a quite long period to expand our penetration to lower-tier cities and blue-collar populations.
Jonathan Peng Zhao (Founder, Chairman and CEO)
从招聘者的需求来看，招聘者在过去一个季度的平均月活用户达到了历史最高值，主要是由蓝领、中小企业和低线级的城市的增长带动。
Wenbei Wang (Head of Investor Relations)
In terms of enterprise users, our average monthly active users hit a historical high in this quarter, primarily driven by increasing demand from blue-collar industries, SMEs, and lower-tier cities.
Jonathan Peng Zhao (Founder, Chairman and CEO)
其中以城市蓝领和供应链物流蓝领为主的餐饮、酒店、旅游、美容、保健、交通运输、仓储物流等招聘需求增势显著。
Wenbei Wang (Head of Investor Relations)
Breaking down by sectors, recruitment demand in catering, hotel, tourism, beauty and personal care, as well as transportation and logistics, warehousing, where more urban and supply chain logistics blue-collar workers work, have increased significantly.
Jonathan Peng Zhao (Founder, Chairman and CEO)
服务业的日均在线的职位，我们的定义是说当日的职位活跃，而且职位对应的这个招聘者也活跃。在这个严格口径下的在线职位数已经超过100万，成为平台上最大的一个职位类型。
Wenbei Wang (Head of Investor Relations)
Our average daily active positions in the urban service industry, which is defined as positions where both the job posting and these enterprise users are active in a single day, a relatively strict standard, exceeded 1 million for the first time, and has become the largest job offering on our platform.
Jonathan Peng Zhao (Founder, Chairman and CEO)
本季度蓝领的收入占比进一步提高到超过32%，二线以及以下城市的收入贡献也首次超过60%。
Wenbei Wang (Head of Investor Relations)
The revenue contribution from blue-collar users increased to more than 32% of our total revenues for this quarter, while the revenue contribution from second and lower tier cities exceeded 60% for the first time.
Jonathan Peng Zhao (Founder, Chairman and CEO)
我记得在过去两年的季度报告会上，我们向投资者汇报过几次，公司始终在投入力量，以算法和产品的力量加强不同人群、不同城市用户的理解，提高对他们的服务。那么今年面对蓝领和中小企业增长的机会，我们坚持几年的努力，取得了一些收获，我们将继续努力推进我们的技术创新。
Wenbei Wang (Head of Investor Relations)
As we have reported to our investors in our earnings call over the past two years, the company has been investing in algorithms and products to improve our targeted service capabilities across various user groups and cities, utilizing our enhanced understanding of their evolving demands. Our years of past efforts enable us to achieve good progress as we capture the opportunity arising from blue-collar workers and SMEs growth this year. Moving forward, we will remain committed to innovation and further improve in all this area.
Jonathan Peng Zhao (Founder, Chairman and CEO)
我们一直相信，一个逐步走向成熟的企业服务市场，企业是愿意为价值买单的，前提是你确实要提供价值。截止到2季度末，过去12个月的付费企业客户数再次回到一个快速增长的轨道上，并且达到了450万的历史新高，同比增加了18%，环比增加了13%。
Wenbei Wang (Head of Investor Relations)
We have long believed that in a mature market, in enterprise service, people are willing to pay for value as long as what you are offering is truly valuable. By the end of the second quarter, our paid enterprise customers for the trailing twelve months rebounded and resumed its fast growth momentum, hitting a record high of 4.5 million, up 18% year-on-year and 13% quarter-on-quarter.
Jonathan Peng Zhao (Founder, Chairman and CEO)
今年二季度的业务是比较艰苦的，不过从业务观察看，情况在近期有了一些积极的变化。我们看到，在经过七月份的毕业季之后，八月初到现在，平台整个招聘需求在迅速地恢复，并且至今都持续保持了上涨的趋势。
Wenbei Wang (Head of Investor Relations)
The second quarter this year was challenging. However, we have witnessed some positive updates lately from an operational perspective. Following the graduation season in July, we saw overall recruitment demand on our platform recover quickly and have retained a sustainable, promising upward trend since the beginning of August.
Jonathan Peng Zhao (Founder, Chairman and CEO)
以服务业为代表的蓝领仍然是表现最好的行业，白领各类职位也都开始企稳回升，包括人事、财务、行政、运营以及偏白领类型的生产制造岗位，这些都使得平台的招聘端活跃用户规模在近期达到了年内也达到了历史的新高。
Wenbei Wang (Head of Investor Relations)
The blue-collar urban service industry continued to outperform across all sectors, while various white-collar positions have stabilized and started to recover, especially white-collar positions across personnel, finance, administration, operations, and manufacturing. As a result, the number of our active enterprise users reached a new high for this year, as well as a record high in our corporate history.
Jonathan Peng Zhao (Founder, Chairman and CEO)
这个变化带来的一个影响就是招聘者跟求职者端的供求关系，也在持续变好。
Wenbei Wang (Head of Investor Relations)
Also, this trend leads to the supply to demand ratio on our platform, as well as the ratio of job seeker to enterprise users, is continuously improving.
Jonathan Peng Zhao (Founder, Chairman and CEO)
我借此机会还想再次感谢，始终能够理解我们，业务的优勢，并且，支持我们公司的。各位投资者，我的介绍就到这里。接下来请我们的CFO Phil为大家介绍公司的财务情况，谢谢。
Wenbei Wang (Head of Investor Relations)
I would like to take this chance to thank again for all those investors who have understood our advantages and continue to support us. That's all for my part of the call, and I will now turn it over to our CFO Phil for the review of our financials. Thank you.
Phil Yu Zhang (CFO)
Thanks, Jonathan. Hello, everyone. Now let me walk through the details of our financial results of the second quarter of 2023. In this quarter, we reached a record-breaking results across different sets of operational and financial figures, including MAU, revenues, total paid enterprise customers, profitability, metrics, and operating cash flows. Driven by our robust user growth and healthy user engagement, our revenues maintained rapid growth, momentum, and hit a new high at RMB 1.49 billion, representing a solid 16% quarter-on-quarter growth and a 34% year-on-year growth. Moreover, our calculated cash billings reached RMB 1.62 billion, up 65% year-on-year. Total paid enterprise customers in the 12 months.
Okay, so I'll start again. So in the second quarter, we reached record-breaking results across different set of operational and financial figures, including MAU, revenues, total paid enterprise customers, profitability metrics, and operating cash flows. Driven by our robust user growth and healthy user engagement, our revenues maintained a rapid growth momentum and hit a new high at RMB 1.49 billion, representing a solid 16% quarter-on-quarter growth and a 34% year-on-year growth. Moreover, our calculated cash billings reached RMB 1.62 billion, up 65% year-on-year. Total paid enterprise customers in the 12 months ended July 30, 2023, reached 4.5 billion, up 13% quarter-on-quarter, a record high and back to fast growing trend.
ARPPU for paid enterprise customers decreased slightly, both sequential and year-on-year, mainly due to faster revenue growth for small-sized accounts, as recruitment demand from SMEs recovered better compared to larger companies. Moving to the cost side, total operating cost and expenses for this quarter were RMB 1.31 billion, up 26% year-on-year. Hello? Excluding share-based compensations, our adjusted operating costs and expenses increased by 18% year-on-year to RMB 1.05 billion in this quarter. Adjusted operating margin is 29.2% for the quarter, up by 8.8 percentage points year-on-year. Cost of revenues was RMB 270 million, up 55% year-on-year, representing a gross margin of 81.8%, up by 1.1 percentage point compared to the last quarter.
The gross margin started to bottom out from first quarter, and this trend is mainly due to sequential revenue growth in the second quarter. Our sales and marketing expenses were RMB 472 million, up 18% year-on-year. Adjusted sales and marketing expenses was RMB 408 million, up 12% year-on-year. This increase was primarily due to increased headcount in sales department. Notably, brand advertising and customer acquisition cost remained relatively stable with the same period of last year, while our trailing twelve months paid enterprise customers and MAU increased by 18% and 65% year-on-year, respectively, which strongly demonstrated our continuously improved marketing efficiency. Our R&D expenses increased by 19% year-on-year to RMB 366 million. Our adjusted R&D expenses kept stable with the same period last year.
Adjusted R&D expenses as a percentage of revenue reduced in the quarter, showing continuous improving trend sequentially. Our GNA expenses increased by 27% year-on-year to CNY 203 million. Adjusted GNA expenses increased by 14% to CNY 126 million, representing 8% of total revenues. Excluding certain one-off expenses, the percentage of adjusted GNA expenses to total revenue showed a downtrend, downward trend since 2022, benefiting from our improving operating efficiency. Net income was CNY 310 million, and adjusted net income reached CNY 568 million, more than doubled compared with the same period last year, and hitting a record high. Our adjusted net margin reached 38%, up 16 percentage points year-on-year, and six and 19 percentage points quarter-on-quarter.
Net cash provided by operating activities was RMB 764 million, up more than three times year-on-year, and hitting a record high. The significant increase, primarily due to from the 65% year-on-year growth of Calculated Cash Billings. As of June 30, 2023, our cash, cash equivalents, time deposit, and short-term investments were RMB 12.8 billion, and the long-term fixed income investments were RMB 2.0 billion, which totaled 14.7 billion. We are confident that our outstanding cash generation capability and ample cash reserve will support our commitment to further business expansion. And now for our business outlook. For the third quarter of 2023, we expect our total revenues to be between RMB 1.53 billion and RMB 1.56 billion, with a year-on-year increase of 30%-32%.
Given that there is still a whole month of September before the quarter ends, some level of uncertainties is still ahead. However, we are glad to witness an encouraging growth trend, leading by the improved recruitment demand since the beginning of August, especially in online standard loan purchase from SMEs. As the autumn recruitment season approaches, which is our high season, we are also expecting better recruitment demand from larger companies in the coming months. That concludes our prepared remarks, and now we would like to answer questions. Operator, please go ahead.
Operator (participant)
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Eddy Wang with Morgan Stanley. Your line is now open.
Eddy Wang (Executive Director)
Hey, Chairman Zhao, thank you for taking my question. First of all, congratulations on this quarter's earnings. It reached a new high. I have two questions. The first one is, Mr. Zhao, you mentioned in your opening remarks that the demand for white-collar workers is very strong, and the demand for blue-collar workers is recovering. I would like to ask, if the recovery of these positions for white-collar workers, are there any external conditions that can make it recover better? Can let us know your thoughts on this? And then, if we look at the trend, the demand for white-collar jobs in China, in the medium term or long term, will there be a structural imbalance between supply and demand? If this situation occurs, what kind of impact will it have on the online recruiting landscape? This is the first question.
The second question is, we mentioned in the first half of the year that the entire paying users, the corporate users, also reached a new high. Then I would like to ask, if we only look at the newly added annual customers online, are these new customers mainly from other platforms, who used other recruiting platforms in the past, and switched to us? Or they may not have used any online recruiting platform before, and were newly discovered by us? I will translate it myself. Thank you, management, for taking my question. I have two questions. The first is about the blue-collar recruitment. As Mr. Zhao has mentioned that although there are seeing improving demand for the white-collar in terms of job posting. But what, what do you think?
You know, as the macro improvements or the other factor will impact the demand of the white collar recruitment? And we all know that the blue collar demand actually is stronger than the white collar. So do you think this kind of dynamic in the recruitment in China will have the long term impact on the competitive landscape of the online recruitment platforms?
My second question is, in terms of the new addition of the annual subscription enterprise users, are they from the enterprise that have been already used the other online platform and be attracted by us, or they are never use any of the online platform, it's actually just go fresh new enterprise that go to our platform. Thank you.
Jonathan Peng Zhao (Founder, Chairman and CEO)
好，我回答你的问题，谢谢你的问题。我先回答你的第二个问题。实际上，这五六年以来，在中国的网络招聘行业的每一个player，他跟没有签过单的那个人签那个annual contract之前，都有一个人替他把这个没有签过合同的客户转化成一个能跟这个行业签合同的客户，是他自己或者是别人，但是总有一个零到一的过程。
Wenbei Wang (Head of Investor Relations)
Thank you for your question. I would like to answer the second question first. So in the past five to six years, among all those online recruitment players, for a new customer who began to sign a contract with any platform, there is always someone to help him to convert into help him start. There is a process from zero to one.
Jonathan Peng Zhao (Founder, Chairman and CEO)
我们扮演的角色呢，实际上是把很多从来没有用过付费的在线招聘服务的人，这样的客户带进了这个范畴里面去。
Wenbei Wang (Head of Investor Relations)
Our role is to let a lot of new users who have never used paid online recruitment services into the new area.
Jonathan Peng Zhao (Founder, Chairman and CEO)
我们亲自转化的线上招聘服务的付费客户中的变成一个 annual contract 的一个线下付费的年单客户的大部分，我相信是我们自己在转化的。
Wenbei Wang (Head of Investor Relations)
The majority of our annual contract customers, I believe, is converted from our own unique customers.
Jonathan Peng Zhao (Founder, Chairman and CEO)
一部分呢，也会跟我们的竞争对手去合作。
Wenbei Wang (Head of Investor Relations)
A small portion of that, we are sharing with our competitors.
Jonathan Peng Zhao (Founder, Chairman and CEO)
然后说一下今年，今年的二季度呢，我觉得我们的线下的签单的客户，多数还是我们自己在转化我们的线上客户。
Wenbei Wang (Head of Investor Relations)
Yes, as of this year, for the second quarter, our offline annual contract customers, majority are from the conversion of our online paid customers.
Jonathan Peng Zhao (Founder, Chairman and CEO)
但是据我们的观察呢，确实有证据证明，从其他平台的线下签单合作客户又变成我们的合作客户，这个趋势在增强。
Wenbei Wang (Head of Investor Relations)
However, according to our observation, there is evidence that the trend, the customers from our other online recruitment platform converting to our customers, the trend is increasing.
Jonathan Peng Zhao (Founder, Chairman and CEO)
我在业务上看到的不大事，只跟A合作，变成了只跟B合作，更多的其实是他把他的预算进行了重新的分配，给每一家的呢更少的钱，但是呢，会跟更多的人合作。
Wenbei Wang (Head of Investor Relations)
From an operational perspective, it's not simply switching from A to B, but dividing their budget into more cooperating partners.
Jonathan Peng Zhao (Founder, Chairman and CEO)
然后回到您的问题上来。白领招聘需求的恢复需要最大的外部条件，我相信这个条件就是时间。
Wenbei Wang (Head of Investor Relations)
Back to your first question, the big external condition that required for the white-collar recruitment demand recover, I believe is time.
Jonathan Peng Zhao (Founder, Chairman and CEO)
这个时间在两种机制下作用于白领招聘需求的恢复。第一种机制就是首先恢复的行业，它会向其他行业扩散和影响，逐步带动其他行业的复苏。
Wenbei Wang (Head of Investor Relations)
This time, which will have effect on the recovery of white-collar recruitment on the two mechanisms. The first mechanism is that the industry that recover first will expand to other industries to help those industries recover.
Jonathan Peng Zhao (Founder, Chairman and CEO)
例如说明，在文化、体育、娱乐、传媒、新能源、汽车后市场等，其实是恢复比较快的，那么它会逐步带动它能够影响到产业中的白领招聘需求得到恢复。
Wenbei Wang (Head of Investor Relations)
For example, culture, sport, entertainment, media, new energy, automobile aftermarket. All these industries which are showing encouraging recruitment trends will impact other industry which can affected by them to become better.
Jonathan Peng Zhao (Founder, Chairman and CEO)
他的第二个机制呢，是随着时间的延续，会有更多的证据证明市场正在复苏，因此会给更多人带来信心去进行招募活动。
Wenbei Wang (Head of Investor Relations)
The second mechanism is that as time goes by, there were more concrete evidence which prove that the market is recovering, in order to enhance people's confidence to recruit, to increase their recruitment activities.
Jonathan Peng Zhao (Founder, Chairman and CEO)
举例如说，在一季度年初的时候，大企业的白领招聘是不如中小企业的。我理解大企业其实受信心和预测的影响会更大一些。
Wenbei Wang (Head of Investor Relations)
For example, at beginning, in the first quarter of this year, the large companies is recovered relatively worse compared to the SMEs, which I assume the larger companies, they might be affected by confidence and by confidence and the forecast.
Jonathan Peng Zhao (Founder, Chairman and CEO)
从二季度以来，我们看到10,000人以上的大企业，500-1,000人的中型企业，他们的新增职位的环比情况增长反而变成最快的。
Wenbei Wang (Head of Investor Relations)
However, since the second quarter, we have witnessed that the enterprises with more than 10,000 employees and the medium-sized enterprises between 500-1,000 employees, their recovery is much faster.
Jonathan Peng Zhao (Founder, Chairman and CEO)
然后就是关于您提到的，白领职位的供需结构性的关系失衡，我看到的，是在地产行业和互联网行业，招聘需求确确实实是在下降，但我觉得这也不足以构成整个一个结构性的一个供求关系的改变。
Wenbei Wang (Head of Investor Relations)
For your question about the supply and demand, whether there is a structural imbalance, we have saw that for industries like real estate and Internet, we do saw the declining recruitment demand, but I don't think it has been strong enough to concrete a structural imbalance.
Jonathan Peng Zhao (Founder, Chairman and CEO)
我就先回答这么多。
Wenbei Wang (Head of Investor Relations)
That's my answer for your question.
Jonathan Peng Zhao (Founder, Chairman and CEO)
Thank you, Zhao Zong. Thank you, Eddy.
Operator (participant)
Thank you. Our next question comes from the line of Timothy Zhao with Goldman Sachs. Your line is now open.
Timothy Z (Equity Research Analyst)
好的，赵总，以及文蓓，晚上好，感谢接受我的提问。那我有两条问题想要请教关于一层。那第一个是，我们知道在现有经济条件下面呢，可能还是找工作的人的供给是比较多的，那我不知道在这样的一个大环境下面，那公司有哪些策略可以去提高这个弊端的这个付费率以及ARPU。那我们除了现有的这个业务之外，那我们有没有一些其他的关于用户变现的一些考虑？那这是第一个问题。第二个问题是想请教一下，我们对于今年下半年整个付费用户以及ARPU的比率变化趋势的展望。那如果我们再详细地去拆这个中小企业，然后我们的线下签单以及蓝白领的构成，在今年下半年会有哪些特别的变化，那以及对于下半年的这个，利润率，我不知道公司有没有一些详细的展望。那我很快翻译一下我的几条问题。Thank you, management, for taking my question.
I have a, I think two questions. I think first in the current market environment, where we see a bigger number of the job seekers than the recruitment demand, what is our strategies in improving the ARPU as well as the paying ratio of the enterprise users? And do we have other motivation, consideration, on our massive user base? And what is our guidance or outlook on the paying number of customers as well as ARPU trend into the second half of this year? And if we break it down into SMEs, offline billings, and white collar versus blue collar, what will be the breakdown change over time in the second half? And secondly, it's on the OP margin in the second half. I'm just wondering if management have any guidance, that would be very helpful.
Thank you。
Jonathan Peng Zhao (Founder, Chairman and CEO)
好的，谢谢你的问题。然后在今年的Q1和Q2这个过程中，确实看到很多岗位的求职者很多，对于招聘者来说，比较容易招到人。我们在这个过程中，对于是不是可以启动一个，像C端也就是面临困难更大的一侧，某种的这个收费的机制，我们采取极度谨慎的态度，并且没有在这一方面有行动。那么对于B端来讲，其实，我们看一个数字，这个数字就是在过去12个月付费给我们的B端客户，从客户数看是400多万，从公司数看是200多万的情况。实际上在整个中国5000万以上的企业存量中的占比是非常低的。我们也通过今年关于在蓝领和下沉城市的成功的实践，知道我们的适应性是很强的，所以我们觉得还是应该在更多的客户，付钱给我们的这个上做努力。
Wenbei Wang (Head of Investor Relations)
Thank you for your question. So in the first and second quarter of this year, we do have witnessed that a lot of job seekers will find it more difficult to find a job, and much easier for the enterprise to do the recruitment. But we have been quite very cautious on whether we should initiate some kind of monetization for the job seekers who are much more difficult under these circumstances, and we took no action. And for the enterprise users, I just talk about number, which is our last twelve month paid enterprise customers number is 4.5 million, and which is approximately over 2 million paid enterprises. That is a very small portion, compared to more than 50 million enterprises in China.
So we have learned that from our successful practice in blue collars and lower-tier cities this year, we saw that our business model is very adaptive, so we continue to bring more customers from platform and converting them into paid customers. For your question on whether there are new initiatives for monetization products, in terms of our monetization strategy, we believe that if you can provide higher value, if you can provide obvious value in a massive scale, you should certainly can do something, do more things in your monetization product, in your commercial products. That is actually part of the things what we are doing, and hopefully we can be patient enough to see that.
Jonathan Peng Zhao (Founder, Chairman and CEO)
Phil Yu 来回答.
Wenbei Wang (Head of Investor Relations)
Regarding your, your question about the trend in our pool, our CFO will take that question.
Phil Yu Zhang (CFO)
Thanks, Timothy's questions. So regarding the paid enterprise customers number in the quarter, we did record a very healthy rebound for the paid enterprise customers number. So that metrics was back to 4.5 million for the trailing twelve months paid enterprise customers. And in recent months, we, you know, we witnessed a very quick increase for the small medium-sized enterprise users pay to use our service. So this is the main driver behind that increased number. So their purchase of our service is more through online self-serve purchases. So basically, because of their contribution to the online, you know, their contribution to our total revenue is increasing, so that drags a little bit of the overall output.
In terms of the large enterprises, their ARPU, this year's ARPU, compared with prior years, is a little bit lower, but sequentially, we are witnessing that their ARPU is recovering. So from the beginning of this year, we're continuously seeing that their ARPU are, you know, are increasing. So in terms of the sector, blue collar, particularly urban services from lower tier cities, contribute higher for the paid customers. And the quick rebound of paid enterprise customers, this fact also reflects, I think, firstly, this is a, you know, a sign of a recovery of the many aspects of the economy. Secondly, our, you know, recruiting services can bring good value propositions to those businesses. So that's the reasons behind.
In terms of the company's margin in this quarter, so basically in first quarter and second quarter, we continuously saw faster revenue growth. So given the future revenue streams will continue to rise, while major costs and expenses items are kept at mild growth pace, we think that our operating margin will maintain at healthy level and with upside potentials. This comment is more like a mid-to-long-term comment. We expect the operating margin to steadily improve along with good top line growth. But in short term, it will subjected to seasonality and other one-off events.
Wenbei Wang (Head of Investor Relations)
Thank you, that's all of our, all our answer to your question, and operators please proceed to the next.
Operator (participant)
Thank you. Our next question is from the line of Yu Bai with Haitong International. Your line is now open.
Yu Bai (Assistant)
好的，谢谢赵总，Wenbei Wang，谢谢接受我的提问。那我这边也是有两个小问题，第一个是关于赵总刚刚也提到近期我们的一个恢复的趋势，那比如说在八月份招聘用户的活跃规模创下了年内还有历史的新高。那我想请教一下管理层，这个趋势是否符合一般的一个季节性规律？并且这个里面其实KA账户的一些恢复趋势是怎么样的，比如说有没有任何一些数字，包括像活跃度、付费率、ARPU等情况能跟我们分享，这是第一个问题。然后我第二个问题是呢，在当前这样的一个宏观环境的背景下，想请教一下管理层，公司目前对于整体的一个战略排序是怎么看的，比如说什么事情在我们的一个最高优先级上，然后什么事可能这个时候我们会觉得要稍微滞后地去对待。这是第二个问题，那我也自己翻译一下这两个问题。
Thank you, management, for taking my questions. I actually have two for today. The first one is regarding our recent recovery trend, like President Zhao has just mentioned, we've witnessed some encouraging trend from enterprise users in August, so I would like to further understand does that comply to our normal seasonality?
Or is it something that's quite unusual for this year? And then within that, what is the recovery momentum out there for our KA accounts? If management could share any operating metrics like engagement ratio, paying ratio, and ARPU and etc, that would be much appreciated. So that was my first question, and then my second question is a little bit broader. We all acknowledge that this year since that macro environment has been a little bit weaker than we thought it would be. So, I'm just wondering under such a condition, what is our top strategic priority for now?
Or maybe for the remaining couple of months this year and for next year as well. So at the same time, what are the things that we might just want to lay back a little bit to wait for better opportunities in the future? So that was the second question. Thank you, management.
Jonathan Peng Zhao (Founder, Chairman and CEO)
好的，谢谢你的问题。然后你的第一个问题，关于一个季节性的因素，在我们这个招聘的市场当中，确实有两个词跟季节有关，一个叫金三银四，一个叫金九银十，就是来用金跟银形容，生意还比较好做。那么实际上金九银十通常也是从八月份开始的。
Wenbei Wang (Head of Investor Relations)
Thank you for your question. For your first question, whether the August is a trend is money, for the online recruitment market, there are two keywords. First one is the golden March and silver April, next, second one is golden September and silver October, which both means a better market condition. The second one for golden September and silver October, which is definitely starting from August.
Jonathan Peng Zhao (Founder, Chairman and CEO)
这跟大企业的关系就会更大一些，因为实际上2024年七月份很多好学校要毕业的学生，在2023年的九到十一月份，很多企业就已经开始抢夺这些好的学生，这就是所谓的秋招。
Wenbei Wang (Head of Investor Relations)
This has more relations to the larger companies for all those good for all those graduates from top universities who will graduate in July 2024. Many larger companies were starting to do the recruiting for those top talents during September to November this year.
Jonathan Peng Zhao (Founder, Chairman and CEO)
在这个季节因素的影响之外，我相信呢，还有一个整个中国经济在招聘者端逐步恢复的一个因素，这两个因素叠加在一起，就可以使得出现数据上的如下的表现。
Wenbei Wang (Head of Investor Relations)
On top of the seasonality, another factor is that I believe the recruitment demand is gradually recovering alongside with the economy, and which will be shown in the data as follows.
Jonathan Peng Zhao (Founder, Chairman and CEO)
八月份我们看到招聘者的日活规模达到了历史的新高。
Wenbei Wang (Head of Investor Relations)
In August, the daily active enterprise users number has reached a historical high.
Jonathan Peng Zhao (Founder, Chairman and CEO)
不论大中小的各个规模的公司，在招聘上都呈现出了快速增长的趋势。
Wenbei Wang (Head of Investor Relations)
Enterprises in all kind of sizes, large companies, medium size and small size, all size of companies has showed a very fast recovery trend in recruitment.
Jonathan Peng Zhao (Founder, Chairman and CEO)
实事求是 to be very honest, 我现在分不清多少比例是因为旺季的到来，多少比例是因为逐步在恢复，所以我还需要更长的时间去观察。但是目前我看到的招聘者的趋势是不错的。
Wenbei Wang (Head of Investor Relations)
To be honest, I cannot clearly distinguish, which part is from seasonality and which part is from the recovery economy, but I still need take some time to observe. But at least the current trend is quite encouraging.
Jonathan Peng Zhao (Founder, Chairman and CEO)
其中关于K客户的问题，那答案比较简单，就是我们看到500人以上的员工规模的企业，他在新增职位数上，最近的环比增速要高于小于500人的企业。
Wenbei Wang (Head of Investor Relations)
For the recovery of key customers, the answer is quite simple, that we have saw that, in enterprises with more than 500 employees, is newly posted, number of newly posted jobs. The growth rate and the sequential growth rate is faster compared to the enterprises with less than 500 employees.
Jonathan Peng Zhao (Founder, Chairman and CEO)
然后，在战略上的话，我跟你们汇报一下，我有这么几个想法。第一个想法就是我们这么多年来坚持的就是，我们以NPS为基础，不断提高我们服务的市场占有率。
Wenbei Wang (Head of Investor Relations)
In terms of the company strategy, I would like to share with you several things we have been holding true in all these years. The first one is, based on the NPS, we continue to increase our market share.
Jonathan Peng Zhao (Founder, Chairman and CEO)
鉴于我们刚才说过的，我们过去 12 个月付钱给我们的企业数，仅占就是 200 万除以 5,000 万企业这样的一个比例，所以我觉得我们还有很长的路要走。
Wenbei Wang (Head of Investor Relations)
As we said, we have 12, 12 and 12 months paid enterprises nearly over 2 million, which is a small portion compared to 15 million enterprises in China. We still have a very long way to go.
Jonathan Peng Zhao (Founder, Chairman and CEO)
所以我的第二个战略上的想法就是我们也是坚持了多年的，持续地在技术，乃至于，不光是应用类的技术，也包括在职业科学领域的基礎研究上，不断做投入。
Wenbei Wang (Head of Investor Relations)
Our second strategy, which is also something we have been doing for quite a long time, which is to continue to input, invest in technology, not only for application technology, but also career science fundamental studies.
Jonathan Peng Zhao (Founder, Chairman and CEO)
实际上，在今年二季度比较艰苦的条件下，我们看到蓝领的服务和下沉城市的服务增长很快，我就理解为是多年的技术投入，使得我们可以在环境出现机会的时候，我们可以接得住这样的机会。
Wenbei Wang (Head of Investor Relations)
Actually, for the second quarter, which is a relatively tough time, we can capture the growth in the blue collar and lower tier cities. I believe, which is the result of all these years of continuous investment in technology, which help us to can capture the opportunity when the environment allows.
Jonathan Peng Zhao (Founder, Chairman and CEO)
对于持续不断地加大技术基础科学研究投入，我就理解为很多我们尊重的公司，先进的公司的身上体现出来的杰出的阿尔法，很多时候我觉得也是来源于它建立了自己的能力，从而能够适应在客观环境中的机遇。
Wenbei Wang (Head of Investor Relations)
In the, my understanding for our continuous to increase investment in technology and fundamental science, which is also what we saw for all those, larger companies, advanced companies we respect, is that their outstanding alpha coming from their own capabilities, allow them to adapt to new, opportunities once they come.
Jonathan Peng Zhao (Founder, Chairman and CEO)
我就回答这么多，谢谢你。
Wenbei Wang (Head of Investor Relations)
That's my answer for your question. Thank you.
Wei Xiong (Equity Research Analyst)
谢谢赵总。
Operator (participant)
Thank you. Our next question comes from the line of Zhong Wei Zhong with UBS. Your line is open.
Wei Xiong (Equity Research Analyst)
赵总，宇哥、文呗，大家晚上好。感谢接受我的提问，也恭喜咱们这个季度非常强劲的利润。那我想先追问一下，就是关于企业招聘意愿恢复的这个节奏问题。因为企业在过去一段时间，这个宏观的不确定性之后，可能更加趋向于降本增效。那么就想问一下，就是如果当宏观开始企稳转暖之后，那企业是不是也需要更长的时间才会重启这个人 员扩张跟招聘预算的增加？那另外一个问题呢，就是基于咱们现在非常健康的这个现金状况跟利润率，那想请教一下最近这个关于回购的进展，还有其他的，咱们有没有考虑其他关于这个股东回报的计划？那我也自己翻译一下。Thank you, management, for taking my questions. First, just want to follow up on the recovery pace of the enterprise hiring demand. Given that, you know, we're experiencing a long period of uncertainties in the macro, and the enterprises seems to lean forward or focus more on cost controls, and does that, will that last a little bit longer, which means that after the macro environment stabilizes and started to warm up, enterprises might still need a little bit while to restart, you know, account expansion. And second, just given our very resilient cash position and profitability, just want to get an update on the progress of our share buyback program, as well as management's other thoughts regarding our shareholder returns. Thank you.
Jonathan Peng Zhao (Founder, Chairman and CEO)
好，那个，我先说一些小微企业，我们遇到的小微企业，就是说举例说有个人招了10个人，有2个人走了，那么对他来说，他今天确实需要10个人，我觉得他不会想那么多，他就要求这2个人回来。所以小微企业我觉得在任何时候，他的行为都是类似的，有需求他就会招募。
Wenbei Wang (Head of Investor Relations)
Thank you for your question. I will start with small and medium or even micro enterprises. For example, for small enterprises, when you have 10 employees, when two of them leave the job, they simply need to recruit two more in order to keep on with their business. I think that those activities are the same for small and medium-sized enterprises. Anytime they need to do the recruitment, whenever they have demand.
Jonathan Peng Zhao (Founder, Chairman and CEO)
然后，大企业的行为，我觉得，正如我们所有人都了解的，大企业的行为会更加谨慎和缓慢一些。那我愿意说两个现象，一个现象就是说，我们看到最近大企业在 lay off 这件事情上，其实是没有之前更早的时间那么普遍了，这是我们看到的。
Wenbei Wang (Head of Investor Relations)
For large companies, as we have all known that larger companies are more cautious in the slow, slow, in terms of, increasing their headcount budget. And I can, I can give you two examples of phenomenon. The first one is the large companies have been less active in laying off foreign people, and so that situation is becoming less and less.
Jonathan Peng Zhao (Founder, Chairman and CEO)
另外一件事，我觉得也是我们其实每个人都清楚的，就是我们看到很多大企业左手在裁员，右手在招聘。那么本质上讲，很多大企业借着一个特定的机会去裁掉一些比较贵的，可能不太好用的人，去招一些比较便宜的，然后可能比较好用的人。我觉得这个是在经历经济周期当中，非常多的大企业受过训练的管理者一定会采取的措施，那这个是一直在持续的一个过程。
Wenbei Wang (Head of Investor Relations)
And another thing is that we have all witnessed a lot of large companies. They do the lay off on one hand and do the recruitment on the other hand simultaneously, which is actually this is a very good opportunity for them to fire those people who are expensive and low quality, and hire some people with high quality, but less, much more cheaper. So this is the opportunity which all of those well-trained administrators will take.
Jonathan Peng Zhao (Founder, Chairman and CEO)
至于说如何能够看到整个不管大小各个行业企业都开始热烈地招人的这个局面，我现在暂时回答不了这个问题，我对此没有明确的预测。
Wenbei Wang (Head of Investor Relations)
In terms of when we can expecting enterprises across all industry and those different sizes starting to do a very aggressive recruiting. I don't have a clear view at this moment.
Jonathan Peng Zhao (Founder, Chairman and CEO)
您问到我们，回购，这些领域的事情，要请CEO来回答你的问题。
Wenbei Wang (Head of Investor Relations)
For share repurchase and capital allocation, CEO will take your question.
Phil Yu Zhang (CFO)
So last year we had our first tranche of share buyback program. The size was $150 million, and we used up the money at the end. This year we have announced a new round of share repurchase program in Q1. The total size is also $150 million. We just executed a little bit and we will continue to execute it, you know, going forward. Regarding, you know, our situation, we have a high cash positions and good profitability, plus a positive free cash flow. We do appreciate shareholder, you know, continuous support and we definitely will think about how to, you know, improve shareholders return. Company is doing some research and try to find appropriate ways to increase shareholders value. So, please, you know, give us some time.
Wenbei Wang (Head of Investor Relations)
Oh, thank you. That's all for our answers. And operator, please proceed to the next question.
Operator (participant)
Thank you. Our next question comes from the line of Yang Bai with CICC. Your line is now open.
Yang Bai (Research Analyst)
Ah, OK, I will translate by myself. The first one is that the service industry and warehousing, logistics blue-collar workers have been a stable growth point for us this year. We want to know if our performance stands out compared to other competitors in the same field, and what our main competitive advantages are? How do we currently view the sustainability of this business?
Second one is, as for the platform B C ratio, what are the recent trends since the beginning of the year? How has the renewal rates of long term customers and the speed of income recognition changed compared to before? Thank you.
Jonathan Peng Zhao (Founder, Chairman and CEO)
好，我们现在的蓝领用户到7月底的时候，超过了平台用户的31%，这是一个很大的数了。此外来说呢，就是看我们的职位数的话，在日均的服务业的岗位，活跃岗位的话是超过100万的。这，这两个数据放在一起去看呢，实际上就体现了一个优势，这个优势就是比较强的双边网络效应。刚才其实跟大家介绍过，关于我们在二线以下下沉城市的发展的过程，这个过程是相对匀速的，也是这样的一个网络效应的不断的延伸的过程。
Wenbei Wang (Head of Investor Relations)
Thank you for your question. Our, our blue collar users accounted for more than 40% of our total users. And as I just said, the job posting at daily, at average active job posting for the service urban service industry has exceeded more than 1 million every day, which these two numbers combined together showcase a very strong advantage with, with double sided network effect. And that also demonstrated by our, a very smooth growth in further extending into the lower tier cities.
Jonathan Peng Zhao (Founder, Chairman and CEO)
强劲的双边网络效应曾经带给我们在一线城市白领领域的，竞争优势，那么现在它正在带给我们二线及下沉城市和所有蓝领领域的竞争优势。
Wenbei Wang (Head of Investor Relations)
A very strong double-sided network effect have helped us to gain our strong advantages in the white-collar and first-tier cities area, and this will also help us to further expand into lower-tier, lower-tier cities and blue-collar users.
Jonathan Peng Zhao (Founder, Chairman and CEO)
在蓝领领域当中能够取得的这个成绩，还跟我们之前汇报过的一项工作有关，就是我们的海螺计划。
Wenbei Wang (Head of Investor Relations)
The achievements we have for blue-collar users has a very high relationship with a project we call it for, that is the Hai Luo Project, country project.
Jonathan Peng Zhao (Founder, Chairman and CEO)
曾经在互联网的蓝领招聘的过程中，有这样一个现象，假如所有招聘者只能开5000块钱一个月给这个蓝领的话，那么愿意说8000的夸张的人就更容易收到简历。
Wenbei Wang (Head of Investor Relations)
There is a situation in the online recruitment for blue collar users, for a job, which is the actual salary is 5,000 RMB per month. Those people who post a job with more than 8,000 RMB per month are much easier to receive a resume.
Jonathan Peng Zhao (Founder, Chairman and CEO)
那么从平台的视角，要通过技术的力量，还要坚持一个，保护求职者的一个policy的话，你要做的事情就是那个说实话的人能得到更多的曝光，那个不说实话的人其实会吃亏。你一直坚持这么做，更多的蓝领就愿意在你的平台上找工作了。
Wenbei Wang (Head of Investor Relations)
From a platform perspective, alongside with our continuous investment in technology, and if you stick to your policy of protecting the job seekers, and help those users who can tell the truth, who are more authenticated, have more exposure, and those who are not be punished, then you can attract more and more blue collar users coming to your platform.
Jonathan Peng Zhao (Founder, Chairman and CEO)
所以基于这样policy跟技术能力，坚持了一段时间的海螺计划，开始在蓝领的ecosystem当中发挥了生产力的作用。
Wenbei Wang (Head of Investor Relations)
Based on that policy and on the power of technology, the current project we have been doing for quite a while has shown very strong capability for the blue collar ecosystem.
Jonathan Peng Zhao (Founder, Chairman and CEO)
关于我们的，平台的，长单客户续约的情况，赚钱的这个事情，Phil来说一下。
Phil Yu Zhang (CFO)
Okay, so, so remaining a couple of questions, I'll answer one by one. So first of all, your question is, you know, the C2B ratio for the platform. So we witness the platform, C2B ratio as a key indicator of, platform demand and supply. So basically, this demand and supply ratio continue to improve starting from year begin. We think this is a very clear evidence that shows overall economy is through a real recovery.
In terms of what I just mentioned is the platform, you know, active user demand and supply ratio, and in terms of the daily newly acquired users, so this C2B ratio, in short term, partially due to seasonality and partially due to macro recovery, we believe, in August, we are seeing much improved C2B ratio, and that ratio is, you know, best year to date. You know, we consider this is a very encouraging sign. And in terms of second question, annual contract, you know, retention and, in terms of their, like, NDRR, net dollar retention rate, what we are seeing both metrics are, you know, sequentially bottom out from the beginning of the year.
The trend will likely to go on in the following quarters. And last question regarding the revenue recognition thing in short term, because of a higher percentage of contribution from SME clients and less a little bit less annual contracts, you know, our online purchase normally will be consumed by you know, those customers in short term, short period of time. So revenue recognition in short term will slightly you know, faster than before. However, this is just a temporary situation and mainly related to faster SME growth in the near term. So that's my question. That's my answer to your question.
Timothy Z (Equity Research Analyst)
谢谢。
Operator (participant)
Thank you. Due to time constraints, that concludes today's questioning answer session. At this time, I will turn the conference back to Wenbei for any additional or closing remarks.
Wenbei Wang (Head of Investor Relations)
Thank you once again for joining us today. If you have any further questions, please contact our team directly. Thank you.
Operator (participant)
This concludes today's conference call. Thank you for your participation. You may now disconnect.