Q1 2025 Kanzhun Ltd Earnings Call
Operator: Ladies and gentlemen, thank you for standing by and welcome to Kanzhun Limited first quarter 2025 financial results conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. Today's conference is being recorded.
Okay.
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to country and limited first quarter 'twenty 25 financial results Conference call. At this time all participants are in a listen only mode. After the Speakers' presentation. There would be a question and answer session. Today's conference is being recorded.
Wenbei Wang: At this time, I'd like to turn the conference over to Miss Wenbei Wang, Head of Investor Relations. Please go ahead, ma'am. Thank you, Peter. Good evening and good morning, everyone.
Speaker Change: At this time I'd like to turn the conference over to MS. When they want head of Investor Relations. Please go ahead ma'am.
Speaker Change: Thank you operator.
Wenbei Wang: Welcome to our first quarter 2025 earnings conference call. Joining me today are our founder, chairman, and CEO, Mr. Jonathan Peng Zhao, and our director and CFO, Mr. Philip Zhang.
MS: Good morning, everyone welcome to our first quarter at Tinder, you can define earnings conference call. Joining me today, our founder Chairman and CEO, Mr. Jonathan Ho.
MS: And now what they're trying to stand for what's your feeling Joe.
Wenbei Wang: Before we start, we would like we would like to remind you that today's discussion may contain forward-looking statements, which are based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different. The company caution you not to place undue reliance on forward-looking statements and do not undertake any obligation to update this forward-looking information, except as required by law.
MS: We start we would like 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 all.
MS: The 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.
MS: 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.
MS: As required by law.
Wenbei Wang: During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnest release issued earlier today.
MS: During today's call management will also discuss certain non-GAAP financial measures for comparison purposes only.
MS: But that Michelle of non-GAAP financial measures and the Reconsolidation of GAAP to non-GAAP financial results. Please see the earnings release issued earlier today.
Wenbei Wang: In addition, a webcast replay of this conference call will be available on our website at ir.jpin.com Now I will turn the call to Jonathan, our founder, chairman, and CEO.
MS: In addition, a webcast replay of this conference call will be available on our website.
MS: I R J P and dotcom.
Donaldson: Now I will turn the call to Donaldson, our founder chairman and the fees.
Peng Zhao: 大家好 Hello everyone Welcome to our company's first quarter sales conference in 2025 On behalf of all the employees, management and board of directors I would like to extend our sincere thanks to our long-time users Thank you for your continued support of our investors. Hello everyone, thank you for joining our company's first quarter 2025 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, investors, and friends who have continuously believed in and supported us. Regarding the concerns of investors, I will mainly report on several aspects.
Speaker Change: Uh huh.
Donaldson: Plain vanilla a concern of ours.
Donaldson: Publicly.
Donaldson: Also check your ankle.
Donaldson: John.
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Donaldson: Sushi tissue on the Tulsa G 200 Ashish.
Speaker Change: Hello, everyone. Thank you for joining our company's first contract and day to day five earnings conference call.
Speaker Change: Half of the company's employees management team and board of directors.
Speaker Change: Like to extend our sincere gratitude to our users and that's true in France.
Speaker Change: They'd be supporting that.
Speaker Change: We Oh, there's a question just to walk through a phone call to comment on.
Peng Zhao: First, we focus on guaranteeing profit. The results are good. as well as the tariff war that everyone is concerned about and the impact it has on our business. 我的观察是,影响还没有扩大。 My observation is that the impact has not expanded. Thirdly, AI is making progress.
Speaker Change: Sure Andrew does that bother me very sharp well what's wrong.
Doug: Sure Doug.
Speaker Change: Once we got to one yeah.
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Speaker Change: With a bunch of harsher usual I mean I'll put up.
Sanjay: Sanjay Yeah, they're shooting touch.
Peng Zhao: In response to key investor concerns, I would like to report on a few main topics. First, we have remained focused on driving profitability with encouraging results. Second, regarding the ongoing tariff war, which is a concern for many, my observation is that its impact on our business has not been intensive. Third, we have continued to make solid progress on the AI front. First of all, I would like to report the main performance figures The first quarter, the company's net income was 19.2 billion yuan, which was 13% higher than the previous year. net profit of 5.1 billion yuan increased by 112% Let me start with an overview of our financial performance.
Speaker Change: Yeah.
Speaker Change: In response to key Investor concerns I would like to report on a few main topics.
Speaker Change: First we have remained focused on driving profitability with encouraging results.
Speaker Change: Second regarding the ongoing tariff war, which he is a concern for many my observation. He said he's been impact on our business nothing to be fine.
Speaker Change: Third we have continued to make solid progress on the AI front.
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Speaker Change: Excuse me round he told me if I'm wrong.
Speaker Change: Sure.
Speaker Change: Let me start with an overview of our financial performance.
Peng Zhao: In the first quarter, the company achieved a gap revenue of RMB1.92 billion, up 13% year-on-year. Our net income reached RMB510 million, reflecting a 112% year-on-year growth.
Speaker Change: In the first quarter, the kind of thing that she's a GAAP revenue of RMB 192 billion up 13% year on year.
Speaker Change: Net income reached RMB 510 media without paying a 112% year on year.
Peng Zhao: The uncertainty of the past few years has prompted the company to develop a strategy. This is why companies should focus on the right things for a small number of people. 从而增加经营的确立性。 Based on this, the company made a clear proposal to keep profits at the end of last year. The various uncertainties of recent years have promoted the company to formulate a strategy, which is to focus intensely on very few high-impact priorities to enhance operational certainty. Based on this, at the end of last year, we clearly proposed to guarantee profit. Without taking into account other income such as finance, Yi Jilu adjusted his business profit to 6.9 billion yuan The profit margin is 36% 去年一季度是23% The profit margin has increased by 13.9% Overall, this result reflects the company's executive power to implement strategic goals and the excellent operating leverage effect.
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Speaker Change: Does that with a certain piece of recent years have small to the company to formulate a strategy.
Speaker Change: We choose to focus intensity and very few of high impact Crown Royal Peach.
Speaker Change: Operational efficiency.
Speaker Change: Based on this at the end of last year, we clearly propelled to guarantee profits.
Speaker Change: Okay.
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Sean: Thank you Sean.
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Peng Zhao: Excluding other income such as wealth management income, our adjusted operating income was RMB690 million for the first quarter. Adjusted operating margin was 36%, up 13 percentage points year-on-year, compared to 23% in the same period last year. Overall, this achievement demonstrated the company's capability to implement strategic goals and exceptional operational leverage. Gao Hao Li Run is about controlling costs and increasing income There are two things worth mentioning about the cost. Increasing profitability involves both cost control and revenue growth.
Speaker Change: Excluding other income such as wealth management income.
Speaker Change: Operating income was RMB 619 million for the first quarter.
Sean: Adjusted operating margin were 50, 646% up 14 percentage points year on year compared to 23% the same period of last year.
Sean: Oh boy well this achievement demonstrates the company's clubbing teach to implement strategic goals and exceptional accretion averages.
Collier: Collier said it all cuda jumbo.
Sanjay: Sure Sanjay.
Sanjay: Great.
Sean: Okay.
Sean: Got you.
Sean: Yeah.
Sean: Increasing profitability involves both cost control and revenue growth.
Peng Zhao: With respect to cost, there are two things worth mentioning. First, the SBC fell. This quarter's stock exchange base fee is absolutely worth 10% lower than the previous year. The proportion of net income has shrunk by nearly 4%. Previously, we predicted that as the company's IPO goes on for longer and as the company continues to grow, the SBC will have a downward trend in absolute value and profit. This trend will continue. First is the decrease of the SBC expenses. Our share-based compensation expenses this quarter were down by 10%, quarter on quarter. As a proportion of revenue, this represents a narrowing of nearly four percentage points in the year.
Sean: With respect to cost there are two things worth mentioning.
Sean: The issue of SPC.
Sean: Thank you.
Sean: Thank you Joe.
Sean: I didn't hear Columbia shutdown pattern this year, China, Charlotte can be obese surcharges in Slovakia.
Sean: So most of that IPO Joel <unk>.
Scott: Sure. This is Scott.
Michele J.: SBC related Michele J.
Michele J.: Do you track those shutdown, which you should go to the tissue issue.
Michele J.: First is a decrease of SBC expenses.
Michele J.: Our share based compensation expenses this quarter, it worked down by 10% quarter on quarter.
Sean: That's our proposal this represent a narrowing of nearly four percentage points.
Peng Zhao: We have previously predicted that the longer time passes since the IPO, as well as the growth of our revenue, the impact of SBC's expenses on profits will decline in both absolute value and percentage. This trend will continue.
Sean: We have previously predicted that the longer time passes since the IPO as well as the girls. So power revenue the impact of SBC expenses and profits, while a decline in both absolute and percentage.
Sean: This trend will continue.
Peng Zhao: The second is the increase in the efficiency of market placement. From January to April this year, the company has accumulated and added more than 15 million users. In the first quarter, the average perfect MAU of BOSchP is 57,560,000, which is a 24% increase. In March, after the Spring Festival, the number of users for the APP was close to 65 million. And the number of single users is increasing at the same rate as Junbao Secondly, the improvement of marketing efficiency. From January to April this year, the company added over 15 million verified users. In the first quarter, the average verified and monthly active users on the BOSchipping app reached 57.56 million, up 24% year-on-year.
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Sean: Yes.
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Sean: Yeah.
Sean: I'm sure they'll come.
Sean: Jim Bob Chicago.
Sean: Okay.
Sean: Secondly, the improvement of marketing efficiency.
Sean: From January to April this year, the company added over 15 million barrel finding.
Sean: In the first quarter.
Sean: Rich verified and the monthly active users on the bus Chipping App reached 57.26 million up 24% year on year.
Peng Zhao: Post-Chinese New Year, monthly active users in March approached 65 million. The average number of achievements per user continuing to increase both quarter on quarter and year on year. Under the premise of reducing market costs, we have maintained a strong user growth, benefiting from the dual-sided network effect of our model, and we continue to focus on increasing user satisfaction. We maintained robust user growth despite the decrease in marketing expenses, benefiting from the two-sided network effects of our model and our continued focus on improving user satisfaction. Our income growth and core driving factor are still driven by increasing user growth and penetration rate.
Sean: Post Chinese new year monthly active users in March approached 65 medium.
Sean: The average number of about two minutes per user continuing to increase both quarter on quarter and year on year.
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Sean: We maintained robust user growth despite the decrease in marketing expenses and <unk> from the two sided network effects of our model and our continued focus on improving user satisfaction.
Speaker Change: Well, there's always some job postings.
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Peng Zhao: Therefore, Income growth and user growth show high-level structural changes Our core revenue growth drivers are still the growth of users and the increase in penetration rate. Therefore, revenue growth and user growth showed a highly correlated structural change. First of all, among the new users, the blue-lead group accounted for more than 45%, which led to an increase in blue-lead income to more than 39% in the first quarter. First, blue-collar new users accounted for over 45% of our total new users in the first quarter, driving their shares of revenue up to more than 39%. Second, with the expansion of new users in cities below Level 3, we see that the income contribution of cities below Level 3 has increased by 3% to more than 23%.
Sean: Yes.
Sean: Sure.
Sean: Transchannel called with Shanghai.
Sean: Yes.
Sean: Yeah.
Sean: Our core revenue growth drivers are still in the growth of users and the increase in penetration rate.
Sean: Therefore revenue growth and user growth showed a highly correlated structural change.
Sean: Okay.
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Joel: Thank you Joel.
Joel: Okay.
Joel: First blue collar, new users accounted for over 45% of our total in the first quarter.
Sean: Sure some revenue up to more than 69%.
Sean: Yeah. So Josh is only on a whole bunch of T cells for sure.
Sean: Ill put out one cannot Sundance charterers showrooms yet.
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Peng Zhao: Second, alongside with the higher growth rate of new users among tier three and lower tier cities, the revenue contribution from tier three and below goes up by 3 percentage points to over 23%. Third, small and medium-sized enterprises, which we can define as companies under the 100-year-old-debt circumstance, are increasing day by day on the platform, which leads to... The income ratio contributed by small and medium-sized enterprises is at a new high when they were founded at the same time. revenue from enterprises with fewer than 100 employees hit a record high contribution for the period due to the higher growth rate of the smaller size.
Sean: Okay.
Sean: Second alongside of Wheatstone higher growth story. He told me he knew that among <unk> and OFC lower tier cities the revenue contribution from yesterday.
Sean: Both.
Sean: Three percentage points to over 23%.
Sean: Shall we see it will not create any issue.
Chad: Hey, Chad it's yet.
Sean: Hi.
Sean: You're going to pin down.
Sean: Roger.
Sean: So this year. So we have shown over time that can sheet Felicia shingle.
Sean: Third.
Sean: Revenue from enterprises with fewer than 100 employees hit a record high contribution for the period.
Sean: Due to the higher growth rate of that smaller size company.
Peng Zhao: Many people are concerned about the impact of the tariff war. We also attach great importance to it. So far, our overall conclusion is that the tariff war this decision did not affect their careers or official relationships Many people are concerned about the impact of the Tariff War, we also take it seriously. So far, our overall conclusion is, with regard to the job-seeking and recruitment supply and demand relationship, no severe impact of the war has been observed. Overall, we observed that since the Spring Festival, the recruitment demand of platform-side enterprises has maintained the state of recovery.
Sean: A lot of questions.
Sean: Question regarding Michelle.
Sean: Sure.
Sean: Sure Richard.
Sean: Tom.
Sean: Joseph I hate that they will maintain tight.
Sean: Shortly we're talking.
Sean: Sure go ahead.
Sean: Definitely.
Sean: Okay.
Sean: I mean people are concerned about the impact of the tariff War, we also take seriously.
Sean: So far although overall conclusions with regard to the job seeking income in supply and demand relationship most severe impact of the war has been observed so far.
Sean: So all these homes, but how long could you Eli.
Sean: The company's future.
Joe: Sure Joe waves with Apache.
Peng Zhao: From 1st to 4th of April, the average number of new releases increased by 17% 活跃用户的付费率环比有改善 This led the company to increase the number of customers from 12% to 6.38 million in the 12 months before March 31 In general, we observed that hiring demand from enterprises has continued to show recovery trend since Chinese New Year. From January to April, average new job postings grew 19.17% year-on-year, while the paying ratio improved sequentially. Posting total paid enterprise customers in the If we look from the perspective of the industry, we see that the almost sequential increase of service industry roundtrip hiring demand from minority representatives in catering and consumes has continued since April.
Joe: You don't see a pendulum swings of our commercial on the balance sheet.
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Andrew: No matter the constant Tien Tsin, I'll say, it's Andrew.
Doug: Yes, Doug turbocharged here.
Doug: On the commercial.
Doug: Now, let Richard Dahl Youll be excited about that.
Doug: In general we are.
Doug: That hiring demand from enterprises has continued to show recovery trend since Chinese new year.
Doug: From January to April average, new job postings grew 19, 17% year on year, while the paying ratio improved sequentially.
Doug: Total paid enterprise customers in the 12 months ended March 31st two six points of the $8 million up can you kind of 12% year on year.
Doug: So higher though.
Doug: Is.
Doug: So is that on a full year topping feature.
Doug: Thank you last one beach.
Peng Zhao: The demand for manufacturing jobs has shown its resilience under the influence of tariffs. The number of new jobs increased by 10% in April. From industry perspective, recruitment demand for blue-collar workers represented by urban service sectors, such as catering and retail, has been continuously and steadily rebounding since April. Manufacturing recruitment has demonstrated resilience despite the impact of tariffs, with a number of new job postings maintaining young-year growth in April. During this period, the demand for white-collar recruits also showed an upward trend. In the advertising industry, the professional service industry, the Internet, finance, car industry, etc. The demand for white-collar recruits is increasing at the same rate.
Doug: Sure.
Doug: Welcome to Shaw quickly, though.
Doug: Sure sure.
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Doug: From industry perspective, the common demand for blue collar workers represented by other service sectors, such as catering and retail has been continuously instead in a rebounding since April.
Doug: I'm not sure of recruitment has demonstrated resilience despite the impact of Paris with a number of new job postings, maintaining young girls in April.
Doug: Okay.
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Peng Zhao: Meanwhile, recruitment demand for white-collar has also stabilized and begun to recover, with industries such as advertising, professional services, internet, finance, and automotive leading in year-on-year growth rate.
Doug: Meanwhile, recruitment demand for White collar has also stabilized and began to power with industries, such as advertising professional services Internet finance and automotive you're beating your close rate.
Doug: Okay.
Peng Zhao: Since last quarter, more people have started to pay attention to AI. We have been paying a lot of attention to AI in our business for the past two years. In the first quarter, in terms of products and services, we will continue to develop and apply AI technology. and expand the test scale and search rate of AI users. 这件事情稍微展开说一下 AI2C to Job Seekers, AI2B to Recruiters, and AI2M to Management. Since last quarter, market has been very concerned about AI. We also attach great importance to AI in our own daily operations in the recent two years. In this quarter, in terms of products and services, we continue to deepen application of AI technology and expand the scale and the penetration rate of AI testing users.
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Doug: Central understand Laconia, Yes, we'll see.
Doug: To job seekers, yes, it will be.
Doug: Yeah true management some of them yet.
Doug: It seems last quarter market has been very concerned about AI. We also attach great importance to our own daily operations.
Doug: Yes.
Doug: This quarter in terms of products and services, we continue to deepen applications of AI technology and expand its scale and the penetration rate of AI techy.
Peng Zhao: Now allow me to expand on our AI development. We'll break it down into three key aspects, AI2C to job seekers, AI2B to recruiters, and AI2M to management.
Doug: Now allow me to spend all of our AI development.
Doug: Well break it down into three key aspect.
Doug: A two seat to job seekers.
Doug: To be sure recruiters and AI to mandate.
Peng Zhao: See you guys, we'll see you. The first thing is that in the last meeting, we talked about a gray area experiment. After the user searches, we not only give a search result, but also give some explanations about this result. This explanation is generated by AI. Why do we have this result? The results of the experiment are positive, so this function is open to everyone to use. First, AI2C. The first item is the grayscale testing, also known as phased rollout, we mentioned in our last earnest call, which is after a user contacts a search, we do not only need to give the result, but also provide an explanation by AI why the result is what it is.
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Doug: First AI tools.
Doug: The first item is the gray scale testing also long must face general out.
Doug: We mentioned in our last earnings call, which is that's why I use a context, we do not only need to redeem the results, but also provide them spend nisha explanation by AI why the result is what it is.
Peng Zhao: Initial outcomes showed promise results and we have now rolled out to all users. The second thing about AI2C is that we have an AI interviewer who trains the user on how to face the interview. The experiment shows that this increases the user's understanding of the recommendation system, which is very helpful. This help is visible. 因此呢,现在我们已经把这个机器人开放给了所有的学生以及所有工作三年以内经验的年轻人 The second thing of AI2C, which we also mentioned during our last call, is our AI-powered interview robot designed to help users practice interview skills. Our experiments have shown that it can meaningfully enhance the recommendation system's understanding of individual user behaviors and the outcome is quite significant.
Doug: Initial outcome showed promising results and we have now rolled out to all users.
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Jason: Hello, This is Jason used oil.
Jason: Yes.
Doug: Okay.
Doug: The second thing of ITC, which we also mentioned during our last call is our AI powered interview robot designed to help users practice interview skills.
Doug: Our expansions have shown that it can meaningfully enhance your recommendation systems understanding of individual user behaviors and the outcome is quite significant.
Peng Zhao: Now we have officially launched it for all students and young people with up to three years of work experience.
Doug: No we have officially launched eat well all students and young people with up to three years of work experience.
Peng Zhao: Second, let's talk about AI2B. to recruiters. You guys should. The application of AI technology has helped the company in the interoperability business to a certain extent. As a result, the number of companies that have provided delivery services has increased by about 30%. We have seen some money here for the first time. Moving on to AI2 recruiters. One is the application of AI technology, which has, to some extent, supported our exploration in closed-loop services. The result is, in the first quarter, the number of enterprises we provide placement-like services grew by about 30% quarter-over-quarter. We are now starting to see some cashing.
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Speaker Change: Moving on to AI to recruiters why.
Speaker Change: Why is the application of AI technology, which has to some extent supported our exploration in closed loop service.
Speaker Change: The result is in the first quarter. The number of enterprises, we provide placement of light services grew by about 30% quarter over quarter.
Speaker Change: We are now starting to see some compression.
Peng Zhao: Another one is that we tested an agent. This agent can communicate with the user to understand some of their personalization needs. After that, I started to search on the whole platform for candidates suitable for the recruiter. This agent is still evolving. So far, we can see that it can improve the accuracy of the match. Here is a data. The number of patients who use this agent has increased by 25% compared to the expected efficiency achieved by the player. The other one is an agent which can interact with the users. The agent can guide enterprise users to convey their personalized recruitment demand and proactively search for suitable candidates across the platform.
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Speaker Change: I'm not sure if the agent attrition that you have done.
Speaker Change: So far I cannot possibly kick off PPA that you care to give us more detail.
Speaker Change: So you won't see the agent talking job, sorry, Sean Dodge Firmed up.
Speaker Change: Oh gosh.
Speaker Change: The other one is the is our agent which can interact with the users.
Speaker Change: That agent Count guide enterprise users to convey their personal lines recruitment demand and productivity search for suitable candidates across the platform.
Peng Zhao: The agent is still evolving, but we have witnessed that this agent can effectively improve the matching accuracy. Enterprise users who have used the agent are seeing a 25% increase in achieving their recruitment results. Although this is the case, although this is the case, we...
Speaker Change: The agent is still evolving, but we have witnessed that this agent can effectively improved the matching accuracy.
Speaker Change: Enterprise users who have used the agent.
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Peng Zhao: To help all the recruiters, we need to be extremely cautious. Our strategy is divided into two parts. First, we don't set limits on the ability of recruiting robots. Second, we will continue to be extremely cautious when and under what conditions we promote the robot. That said, we remain extremely cautious about broadly expanding the robust role of allowing it to somehow, even somehow, partially replace human culture. Our current strategy is as follows. First, we place no limits on building the recruitment boss capabilities. Second, we are extremely prudent about when and how widely we will deploy the robot.
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Speaker Change: That said, we remain extremely cautious about botany spending all boss snow, allowing you to somehow even somehow partially replace human nutrition.
Speaker Change: Our current strategy is as follows first we place no limits on building their coumaphos capabilities second well extremely prudent about when and how widely we ought to clear them.
Peng Zhao: Thirdly, I'd like to talk about AI2Management in two ways. The first thing is the reform of the weekly newspaper. Now, after a person has written a weekly newspaper, we have a... The self-taught AI will help you write it down, summarize it, and then you can modify it. In this way, you can have two upgrades for your watch at the same time. One is through AI Summarize and you modified it. The other is the one you wrote in the original. So far, what we have seen is that in the last episode, people usually look at the short one first, and then look at the long one.
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Peng Zhao: Authorities, AI2Mindment First thing, there are two things to talk about. First thing, the reformation of weekly report. Now after one finished their weekly report, we have our proprietary AI system to help create a concise summary version, which can still be revised by you. That way, you have two reports sent to your higher-up. One is a summative AI plus modified, the other one is your original version. Until now, the supervisor's behavior is trying to check the concept first, then move on to the longer one. The topic I just mentioned is a foundation. The real direction of value realization is probably like this.
Speaker Change: Saturday I two main demand.
Speaker Change: First thing two things to talk about firstly, the formation, which we report.
Speaker Change: Now onto one finished there which are important we have our proprietary AI systems to help create a coupla some are emerging which can still be in the lifestyle.
Speaker Change: That way you have to report century O'hara.
Speaker Change: One is the summative AI past modified the other one is to our original budget.
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Speaker Change: Now the supervisors behaviors tend to check the context, where the first to move on to the longer one.
John Laguna: Go ahead, John Laguna, usually that's useful.
Speaker Change:
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Peng Zhao: Now, our AI will study the weekly newspaper written by a person many times in history and connect them together to read. At the same time, it will collect the data of the relevant upper and lower parts. 一个人比较多的项目闭环 The content is always empty, and there are a lot of big words and big phrases. Then AI will remind you of this. I understand that this thing is actually a bit valuable. So that's just some basic applications today. The value, how to realize the value is, the AI will study your historical weekly reports and also read across the weekly reports from related departments.
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Speaker Change: Thanks, John for that.
Speaker Change: Okay.
Speaker Change: So that's just some basic application.
Speaker Change: The value.
Speaker Change: How to realize that the AI will start AUR historical mix reports and also read up close on weekly reports from related departments.
Peng Zhao: If there are too many projects that have not closed the loop, or the content is empty, or there are too many big words, the AI will remind you. This is a supplement to human capability.
Speaker Change: There are too many projects that are not close to do well.
Speaker Change: Clinton is empty well there are too many big words, but I will remind you. This is a supplement to human capabilities.
Peng Zhao: The second thing about AI2Management is that we use AI in the work of human resources. Now we are doing some evaluation. In fact, if we completely rely on people to evaluate each other, even if it is a so-called 360-degree evaluation, it may also be affected by two kinds of noise. The second thing on AI tool management is the use case for talent evaluation. When we merely rely on humans for performance appraisal, even so-called 360 degrees, there might be interference from true noise sources. First of all, people are forgetful. For example, a person's previous work and contribution will gradually fade.
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John: Only merely rely on humans for performance appraisal.
John: So call it 360 degrees.
Speaker Change: Might be interference from two noisy sources.
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Peng Zhao: The closer the performance is, the deeper the impression on the manager. This is a very human thing. Therefore, as a long-term evaluation, this is not appropriate. The first thing is forgetfulness. For example, a person's previous contributions will be downplayed, and recent performance will be more important. It's quite human natural, but this might not be appropriate as a long-term evaluation. Secondly, we have the ability to make people see what we want them to see. This is also very humane. At the same time, a superior, who is conscious, or will also visualize and alter the information they have in their summer.
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Speaker Change: Dr. Alan I, just do not clear yet.
Josh: Thanks, Josh.
Michelle: Hi, Michelle.
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Peng Zhao: And then present it to the public. The second thing is also quite according to human nature. So a homo sapiens will see what others want you to see. One's superior may consciously or unconsciously filter and change their subordinate's information before presenting it upward. However, AI is objective, and under the premise of protecting an employee's privacy and dignity, AI can see longer and more objectively. they won't avoid it because they don't like a person with a competitive relationship. So in this sense, AI is a more equal opportunity in the application of human resource management. However, AI is objective.
Josh: Oh shut shops.
Josh: The second thing is also quite too.
Josh: According to human nature.
Josh: Homosapiens, we'll see what others wanted to proceed.
Josh: Superior on many calls.
Josh: Consciously or unconsciously future and 10 years.
Josh: Putting this information before presenting it upward.
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Josh: However, AI is objecting.
Peng Zhao: Under the premises of protecting our employees' privacy and dignity, AI can see the objective changes in past performance data. AI will not like an employee because it likes his character or will not evaluate him badly because it dislikes the employee. So AI is neutral and impartial in terms of human resource application.
Josh: On the premises of protecting our employees privacy and dignity.
Josh: You can see the objective tended in past performance data.
Josh: I will not like a employee because it lacks chief Patrick Holden.
Josh: Well not not humana.
Josh: Additive because it dislikes equally so AI, it's neutral and impartial in terms of human resource applications.
Peng Zhao: Zongshang's experience and exploration of AI in 2C, 2B, and 2MG are equally important to me. The first quarter of 2025 was good, and this year's overall forecast is also good. To sum up, for the AI to job seekers, to enterprise users, and to management, these three aspects, our exploration and research are equally important.
Josh: Tom.
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Josh: To sum up in Florida.
Josh: For the AI to two docks CCAR is trying to price users and tremendous history aspects all REIT formation.
Josh: And.
Josh: And our research are equally important.
Peng Zhao: To sum up, the first quarter of 2025 was solid. On the whole, we are positive for the year ahead, and we will continue to work hard.
Josh: To sum up the first quarter of <unk> were solid on that.
Josh: So we are positive for the year ahead, and we will continue to work hard.
Julien: Well the whole thing just yes, Hello Julien.
Speaker Change: Sample field.
Julien: All of that just yet.
Peng Zhao: That concludes my part of the call.
Philip Zhang: I will now turn it over to our CFO, Phil, for the review of our financials. Thank you. Thanks Jonathan.
Julien: That concludes my part of the call I will now turn it over to our CFO Phil for the interim.
Phil: The review of our financials. Thank you.
Philip Zhang: Hello everyone. Now let me walk through the details of our financial results of the first quarter of 2025. We are delighted to report a solid start to the year, characterized by continuous expansion in our user base and engagement and sustainable revenue growth. In this quarter, our revenues reached RMB 1.9 billion, representing a 13% year-on-year growth. We experienced a decent spring recruitment season with continuous improvement in enterprise hiring demand, evidenced by the growth of our cash collections, which has bottomed out from the last quarter. Revenues from key accounts and small-sized accounts both contributed higher growth rates in the quarter.
Phil: Thanks, Joe Hello, everyone now, let me walk through the details of our financial results of the first quarter of 2025.
Phil: We are delighted to report a solid start to the year.
Phil: Characterized by continuous expansion of our user base and engagement and the sustainable revenue growth in this quarter. Our revenues reached RMB, one 9 billion, representing 13% year on year growth, we experienced a decent screen recruitment season.
Phil: With continuous improvement.
Phil: Enterprise hiring demand.
Phil: Evidenced by the.
Phil: Growth of our cash collections, which has bottomed.
Phil: From the last quarter.
Phil: Revenues from key accounts on the small side comps both contributed a higher growth rates in the quarter.
Philip Zhang: Our paid enterprise customers grew by 12% year on year to 6.4 million in the trading 12 months ended March 31st, primarily driven by the growth of enterprise users. Paying ratio among active enterprise users increased on a sequential basis. as the supply-to-demand situation of the labor market improved from the previous quarter. AR-PPU increased by 5% year-on-year, mainly due to the expansion of paying amounts from key accounts. Moving to the cost of fire Total operating costs and expenses decreased by 8% year-on-year to RMB1.5 billion in the first quarter. share-based compensation expenses dropped by 13% year-on-year and 10% quarter-over-quarter to RMB 252 million, shrinking for the third consecutive quarter.
Phil: Our paid enterprise customers grew by 12% year on year to $6 4 million in the trailing 12 months ended March 31st primarily driven by the growth of enterprise users.
Phil: <unk> ratio among active enterprise users increased on a sequential basis.
Phil: The supply demand situation of the labor market improve.
Speaker Change: Previous quarter.
Phil: <unk> increased by 5% year on year, mainly due to the expansion of hitting our marks from key accounts.
Phil: Moving to the cost side.
Phil: Total operating costs and expenses decreased by 8% year on year to RMB, one 5 billion in the first quarter.
Phil: Share based compensation expenses.
Phil: The pie.
Phil: 13% year on year.
Phil: 10% quarter over quarter to RMB 230.
Phil: <unk> $52 million shrinking for the third consecutive quarters.
Philip Zhang: Excluding share-based compensation expenses, adjusted operating costs and expenses decreased by 6% year-on-year to RMB1.2 billion, and our adjusted operating margin reached 36%, up by 13 percentage points year-on-year. a showcase of our disciplined cost control and a high operating leverage despite Q1 normally having the lowest margin within the full year due to seasonality. Cost of revenues increased by 5% year-on-year to RMB311 million this quarter. Gross margin went up by 1.1%. to 83.8% compared to the same period of last year. as a testimony of our AI application to improve our operating efficiency. Sales and marketing expenses decreased by 15% year-on-year to RMB 491 million during this quarter, primarily due to decreases in advertising and marketing expenses and employee-related expenses.
Phil: Excluding share based compensation expenses, while adjusted operating costs and expenses decreased by six.
Phil: <unk> year on year to RMB, one 2 billion.
Phil: Our adjusted operating margin reached 36% up by 13 percentage points year on year.
Phil: A showcase of our disciplined cost control and a higher operating leverage despite Q1 normally having the lowest margins within the full year due to seasonality.
Phil: Cost of revenues increased by 5% year on year to RMB 311 million. This quarter gross margin went up by 1.1.
Phil: Vintage points to 83, 8% compared to the same period of last year.
Phil: As a testimony of our application to improve our operating efficiency.
Phil: Sales and marketing expenses decreased by 15% year on year to RMB $491 million. During this quarter, primarily due to decreases in advertising and marketing expenses and employee related expenses.
Philip Zhang: However, our strong brand recognition enhances the marketing efficiency and superior user engagement guarantee that we can still maintain robust user growth momentum. Our RMB expenses decreased by 9% year-on-year to RMB424 million in this quarter and was relatively stable sequentially. This decrease was primarily driven by lower employee-related expenses and reduced public cloud expenses related to AI. Our GNA expenses for RMB 266 million in this quarter remaining relatively stable both year-on-year and quarter-over-quarter. Our net income reached RMB512 million in this quarter. up 112% year-on-year, while adjusted net income increased by 44% to RMB 764 million. Net margin improved to 26.6%, up 12 percentage points year-on-year, while our adjusted net margin increased to 39.7%, up 8.6% points year-on-year Net cash provided by operating activities reached RMB1.5 billion.
Phil: However, our strong brand recognition as the marketing efficiency understood Purion user engagement of the guarantee to that weaker steel maintained robust user growth momentum.
Phil: Our R&D expenses decreased by 9% year on year to RMB $424 million in this quarter and it was relatively stable sequentially.
Phil: This decrease was primarily driven by lower employee related expenses and a reduced public cloud expenses related to AI.
Phil: Our G&A expenses were RMB 266 million in this quarter.
Phil: Gaining relative stable both year on year on a quarter over quarter.
Phil: Our next call.
Phil: Reached to RMB $512 million in this quarter.
Phil: 112% year on year.
Phil: Adjusted net income increased by 44% to RMB $764 million net.
Phil: Net margin improved to 26, 6%.
Phil: 12 percentage points year on year.
Phil: Our adjusted net margin increased to $39 seven.
Phil: Seven.
Phil: Eight six percentage points year on year.
Phil: Net cash provided by operating activities reached RMB one point.
Philip Zhang: zero billing in this quarter. up 11% year-on-year. Our cash position totaled RMB 14.8 billion as of March 31st. 2025. Our strong cash generation and robust cash position provide financial flexibility to execute growth initiatives and enhance shareholder returns.
Phil: Zero billion in this quarter.
Phil: 11% year on year, our cash position totaled RMB.
Phil: $14 8 billion as of March 31.
Phil: 2025.
Phil: Our strong cash generation on a robust cash position.
Phil: The financial flexibility to execute our growth initiatives.
Phil: Hence shareholder returns.
Philip Zhang: And now for our business outlook. For the second quarter of 2025, we expect our total revenues to be between RMB 2.05 billion and RMB 2.08 billion. with a year-on-year increase of 7.0% to 8.5%. Please note this growth rate will also bottom out this quarter, driven by continued improvement of cash selection growth in the year.
Phil: And now for our business outlook for the second quarter of 2025, we expect our total revenues to be between RMB 2.05 billion and RMB 2.08.
Phil: With a year on year increase of 7.0% to eight 5%.
Phil: Please note this growth rate will also Baltimore this quarter driven by continued improvements of cash collection.
Operator: That concludes our prepared remarks and now we would like to answer questions.
Phil: In the year.
Phil: That concludes our prepared remarks, and now we would like to answer your questions. Operator. Please go ahead.
Operator: Operator, please go ahead. Thank you. We will now begin the question and answer session.
Phil: Thank you.
Phil: We will now begin the question and answer session 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 again.
Operator: To ask a question, please press star 11 on your telephone and wait for your name to be announced.
Eddy Wang: We will now take our first question from the line of Eddy Wang from Morgan Stanley. Please ask your question, Eddy. Thank you, Mr. Zhao and Mr. Wenbei, for accepting my question. I have two questions. The first one is, can you please share with us the changes in the past month since the tariff war began to ease? From a micro-level point of view, have we seen any changes in corporate recruitment demand and how has this change evolved? In addition, have we seen a stronger recovery in corporate recruitment demand recently?
Speaker Change: We will now take our first question from the line of Eddy Wang from Morgan Stanley. Please ask your question Eddy.
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Eddy Wang: This is the first question. The second question is, if I remember correctly, after last May, the macroeconomic situation became weaker, and the tariff relationship for the graduation season increased, and then it also began to weaken. Compared to the same period last year, what is the current trend in April and May this year? What are the changes between different industries and different companies? Will this trend continue until the graduation season in June and July this year? Thank you for taking my questions.
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Eddy Wang: I have two questions. The first one is that, would you please give us a debrief of how the hiring demand evolved over the past, you know, past month from the start of the tariff war to the end of the year? And have we seen any signs of the recovery in high-demand retail? And the second question is that, if I remember correctly, after May last year, macro weakness coincided with a graduation season has led to a deterioration of recruitment demand. How does the current recruitment demand trend in April and May compare with the same period last year?
Speaker Change: Taking my questions I have two questions.
Speaker Change: The first one your thoughts would you please give the forgive us debrief of how the hiring demand evolved over the past.
Speaker Change: Pass them off.
Speaker Change: After careful work to it.
Speaker Change: And have we see any signs of the recovery inherent demand recently.
Speaker Change: And the second question, yes, that's if I remember correctly after may last year.
Speaker Change: Call weakness coincide with a.
Speaker Change: Graduation season has led to.
Speaker Change: Exploration of recruitment demand how does.
Speaker Change: <unk> recruitment demand trend in April and May compared with the same period last year, and how we see different trends among different industries and different size of the enterprises.
Eddy Wang: And have we seen different trends among different industries and different size of the enterprises? Will such trend continue into the graduate season in June and July? Thank you.
Speaker Change: Sure to continue to continue.
Speaker Change: Continuing to the.
Speaker Change: Gradually season in June and July.
Speaker Change: Sure.
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Peng Zhao: We are all concerned about the Guanxu Station, I will answer your first question. 我们主要还是看招聘者 We mainly look at applicants Relationship between the Health Office and the Law student Zhao Hongzuo is a relationship that has greatest impact on our platform. First of all, since this year, there has been a trend of continuous improvement in the relationship between China and the United States. Thank you for your question. About the first one, which is tariff for everybody is concerning. We are still looking from the supply and demand perspective of job seekers posting job expectations and recruiters posting job postings.
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Speaker Change: Okay.
Speaker Change: Thank you for your question about the first one which is tariff war everybody is complaining.
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Speaker Change: We are still looking from the supply and demand perspective job seeker posting double the patients.
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Peng Zhao: So this is the most important, has the most high importance to our platform. In general speaking, the improvement, the recovery of recruitment trend, continued recruitment trend is still the case. That is undoubtful. In the report, I mentioned a general point of view, which is also a very serious point of view. The conclusion I observed is that the impact of the whole tariff war on my platform's supply-demand relationship has not yet been expanded. The view we talked during our prepared remarks, which is quite serious, that in general speaking, the tariff war impact on our overall supply and demand relationship is still quite limited.
Speaker Change: Job postings. So this is the most important most for the system.
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Speaker Change: Our rail coming trend continuing recruitment trend is Jill.
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Speaker Change: We will go into the June quarter.
Speaker Change: Okay.
Speaker Change: The.
Speaker Change: Bill we talked about during our prepared remarks, which is quite serious.
Speaker Change: In general speaking the tariff.
Speaker Change: What impact on our overall supply and demand relationship.
Speaker Change: Still quite limited.
Peng Zhao: Objectively speaking, the industry and the region on our platform are very wide and scattered. The number of jobs and income of the relevant industries and regions in foreign trade exports is relatively low on our platform so far. Objectively speaking, we have a quite diversified industry and location distribution, so the export-related industries, both in terms of revenue and the job numbers of job posting contribution, are quite low. Let's look at the trend in data, the number of new jobs in April and May, and... The number of active positions in the county has maintained a good growth.
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Speaker Change: Generally speaking we have a quite diversified.
Speaker Change: Industry and.
Speaker Change: So patient distributions so the export related industries, both in terms of revenue and the number of job postings for Patricia are quite long.
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Peng Zhao: There is no obvious decline compared to March. If we look at the detailed numbers, for example, in April and May, the total number of new job postings and active job postings have kept a good growth rate. We haven't seen any significant fallback compared to March. For industries affected by tariffs, such as foreign trade, the growth of this position saw a slowdown at the beginning of April, but after mid-May, the trend of growth has returned. For industries which affected bigger by the tariffs, such as export-related jobs, so we saw some slowering in terms of growth rate in the beginning of April, but it has recovered after mid-May.
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Speaker Change: If we look at the detail numbers for example in April and May the total number of new job postings and.
Speaker Change: Our politics have kept a good close rates, we haven't seen any significant pullback compared to March.
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Speaker Change: Julia that some jobs that we have to kind of issue.
Speaker Change: No.
Speaker Change: The attrition.
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Speaker Change: For industries, which affected our bigger by the tariff Paris, such as export related jobs. So we saw some.
Speaker Change: Slower in terms of growth rate in the beginning of April but.
Speaker Change: Has recovered after midnight.
Peng Zhao: Your second question Let's move on to the second question. The big picture we established is very plausible regarding this year's inter-goal to volleyball. You asked a more specific question. The ratio of the changes between May and the Spring Festival compared to May this year and May last year, this year's trend is better than last year's. The second question regarding the overall recruitment market, so the overall supply and demand relationship has continued to improve in this year. Let's take a detailed look at the days after May compared to the same days after the Spring Festival. So this year we saw better growth trend compared to last year between after May, especially after Labor Day holiday and after Spring Festival.
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Speaker Change: The second question regarding the overall recruitment market.
Speaker Change: The overall supply and demand has continued to improve in this year.
Speaker Change: Take a detailed look.
Speaker Change: After two days after may compared to the same date the spring festival. So this year, we saw better.
Speaker Change: Girls trend compared to last year.
Speaker Change: After may after may, especially after labor day holiday and spring.
Speaker Change: Yeah.
Peng Zhao: I would like to make a few remarks on the rankings. A few of them are not exactly in the points of April. and the number of recruiters in the last 20 months. These two things are better than last year. Let's look at some detailed numbers. So, in April till today, since April till today, the newly number of newly posted jobs and number of recruiters who posted jobs number, the sequential trend are better compared to last year. Among them, Lanling in March to May... at the same time. among which the blue-collar sector especially urban service blue-collar sector the young year growth rates continue to enlarge from March to May.
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Speaker Change: Let's look at some detail numbers.
Speaker Change: So in April to date since April till today, the newly number of newly policy jobs and.
Speaker Change: Number of liquid high school policy jobs.
Speaker Change: Sequential trend or better compared to last year.
Speaker Change: I mean, the central government.
Speaker Change: Can be thoughtful careers documentation for yet.
Speaker Change: Among.
Speaker Change: The blue collar sector, especially other surveys blue collar sector.
Speaker Change: Year on year growth rates continue to enlarge from March to May.
Peng Zhao: You asked me about my graduation plan for June to July. I can only say that it's hard for me to predict. But I... I have a good feeling that June and July will be a good year. And about our prediction for June, July the graduation season, it's hard to say we can we can predict precisely, but according to my personal feelings it could be okay since it's coming.
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Speaker Change: No.
Speaker Change: About our predictions for June and July with graduation season. So it's hard to say we can we can.
Speaker Change: Predict precisely, but according to my personal feeling it too it could be okay.
Operator: And that's my answer to your question, Eddy, and operator let's move on to the next one. Thank you.
Speaker Change: Yeah sure.
Speaker Change: And that's my answer to your question Eddy and operator, let's move onto the next one.
Timothy Zhao: Our next question comes from the line of Timothy Zhao from Goldman Sachs. Please go ahead, Timothy. Okay, thank you Guan Yiceng for accepting my question. I have two questions to ask. The first one is about the progress of our AI. We know that BOSS is testing some AI features for B and C internally. I would like to ask about the feedback on the current test. When do we expect to officially launch some monetary tools for our AI? And how do we measure its impact on our income? Secondly, I'd like to ask you about our profit, especially considering the impact of the latest macro and some changes in user growth and currency exchange rate.
Speaker Change: Our next question comes from the line of Timothy Zhao from Goldman Sachs. Please go ahead Timothy.
Andrew: Hello, Thank you Helane, it's Andrew so now.
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Timothy Zhao: Has the expectation of a non-gap operating profit of 3.5 billion yuan changed? In the second half of the year, there will be some uncertainties. What measures will we take to ensure the realization of this profit? If we look further, What are your thoughts on this? Also, can you share with us your thoughts on capital allocation? Now I'll quickly translate. Secondly, is considering the latest macro environment as well as the monetization rate as well as user growth, just wondering how does management see the 3 billion RMB non-gap opt-in profit target for this year? And into the second half, what are our leverage to make sure this 3 billion target is achievable?
Speaker Change: Jenkins essentially <unk> non-GAAP operating profit today.
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Speaker Change: You alluded you would see.
Speaker Change: And that was my colleague my a couple of weeks at some cost.
Speaker Change: So women that type of capital allocation into July.
Speaker Change: Telecom player. Thank you Sir.
Speaker Change: Thank you mentioned for <unk> for taking my questions two questions here from my side.
Speaker Change: We understand that the company has been internally testing the AI features for both enterprises and the job seekers.
Speaker Change: <unk> this year what is the feedback so far and what is the plan for the comp due to launch the AD monetization features.
Speaker Change: Secondly is considering.
Speaker Change: The latest macro environment as far as somewhat of a different rate thats why its user growth just wondering how it.
Speaker Change: What does management see the 3 billion RMB non-GAAP op profit target for this year and into the second half.
Speaker Change: What are our leverage to make sure it is.
Timothy Zhao: And what is the longer term market expansion? Rong for the company.
Speaker Change: 3 billion target is achievable and what is the longer term margin expansion.
Peng Zhao: And additionally, I'd like to share about our plan for capital. Okay, I'll answer your first question about AI. Also, about our profit... I would like to ask our CFO to answer the related questions. Let me start with the first one. In fact, when I was reporting just now, I talked about a lot of AI issues. We can conclude that the overall feedback on the anti-poisoning experiment is positive. This also depends on how ahead we are with the We have always been cautious when it comes to AI. Our investors and analysts should know this. So, what you're saying is...
Speaker Change: <unk> grown for the company and Additionally, add quit metric this year about our plan for capital allocation. Thank you.
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Philip Zhang: Thank you for your question. I will take the first one regarding AI and our CFO will answer the second question regarding the margin. So about AI, it is good to summarize that our series of phased out AI product testing has quite positive feedbacks. We have definition and this is based on that we have been continued to be very cautious in terms of using AI. And I think analysts and the investors who are familiar with us knows our view. As I mentioned earlier, some of the tests we do are already being used by specific users. This is also a gradual process.
Speaker Change: Yes.
Speaker Change: Thank you for your question I'll take the first one regarding the I and all of our stakeholders.
Speaker Change: Question regarding the margin.
Speaker Change: About AI.
Speaker Change: It did to summarize that our series of phased out.
Speaker Change: Yeah.
Speaker Change: Testing.
Speaker Change: Quite positive feedbacks, we have destination and this is based on that we have been.
Speaker Change: To be very cautious in terms of using AI and ml.
Speaker Change: Our squad.
Speaker Change: No.
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Speaker Change: The elements of legal associated to the China <unk>.
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Speaker Change: Industrial market.
Speaker Change: Ashish any of your questions.
Peng Zhao: And we just mentioned that some of our testing products have already opened to all of our users. It's a gradual process. You asked me this question because it has something to do with money. You don't know when I'm going to talk about currency. I can actually say a little bit. It's not money, but there's a smell of money in it. You can smell the money. I want to give you some data. And regarding the monetization, I would like to share two data The first one is that the recruiters who use our AI recruitment function in Huizhou still have to do some work in the same workload.
Speaker Change: And we just mentioned that some will follow.
Speaker Change: Testing products has already opened to all of our units.
Speaker Change: It is a gradual gradually.
Speaker Change: Oh, well Randhawa deidre good scale.
Speaker Change: So colby.
Speaker Change: What you said should be sweeter publisher Ginnie Mae whichever touch.
John: Listen John Absolutely David.
John: And regarding the monetization I would like to share two data.
Speaker Change: The dealer business for Toledo Shlomo.
Speaker Change: So if you are talking to us.
Speaker Change: No that's too much.
Peng Zhao: We are not completely looking forward to it. Its efficiency is actually improved. For the recruiters who have grayscaled used our AI equipment function, his efficiency of achievement increased by 25% under the same amount of compensation. In addition, our A.I. communication assistant has accumulated more than 9 million conversations on the big screen. In fact, with his help, the number of applicants has reached 15%. The AI communication assistant has accumulated over 9 million conversations during our massive grayscale test. So the job seekers who have been responded by the AI communication assistant, his achievement rate increased by 15%.
Speaker Change: As you put it all on the <unk> guidance.
Speaker Change: How does the potential issues that you called out.
Speaker Change: Jason.
Speaker Change: For the <unk> will have great scale, they used our AI incremental.
Speaker Change: Akshay.
Speaker Change: Efficiency.
Speaker Change: Shipments increased by 25%.
Speaker Change: The same amount of compensation.
Speaker Change: Yes.
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Speaker Change: Chile, Peru, Taco Chunghwa Youll know Adam.
Speaker Change: No.
Speaker Change: So how the vulnerable to shocks.
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Speaker Change: The AI communication assistant have accumulate to be subbed over 90 million conversations Julien our massive grayscale test. So the job seekers will have been responding by the aggregate Keisha assistant T cell tumor rate increased by 15%.
Peng Zhao: I think, in principle, we have improved efficiency, improved feelings, and saved time and labor. You can smell the money in it. But I would still say that... When it comes to making money in AI, we are more cautious. I see it as a kind of money, but it could be some real money. So in principle, the AI products can improve the efficiency, increase your user experience, and save you some time. But in reality, we are still quite cautious. So my view is we might be relatively gradually and slowly on the AI adoption of monetization. But it must be some real money.
Speaker Change: Well, so listen to any song Sigala Charlie.
Speaker Change: So not material us ethanol pretty mental where we're not sure sure adequate short time.
Speaker Change: Yeah sure transparent how quickly does it yet.
Speaker Change: Conversely, the milestones are.
Speaker Change: We had some real money.
Speaker Change: So in principle, the AD products and improve efficiency increase you are using to PRN lucentis Amy sometime but.
Speaker Change: But yeah any team we were still quite cautious so my release.
Speaker Change: We might be that should be gradually and slowly over there yeah.
Speaker Change: Adoption monetization.
Speaker Change: It must be some walnuts.
Philip Zhang: Yes, that's what I know.
Speaker Change: Yes sure.
Philip Zhang: And then Li Wen... So I'd like to answer the profitability and margin question. So as Jonathan mentioned in the prepared remarks earlier, even under current market conditions with many external uncertainties, the company's overarching goal for this year is to secure a solid bottom line growth first, then try our best to grow faster with our business. In first quarter, we had a good start and we managed to reduce cost to improve overall efficiency for most of the cost and the expenses items. Our marketing fees dropped an absolute amount versus last year, but we still achieved satisfactory new user growth.
Speaker Change: Zero.
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Speaker Change: So I'd like to also.
Speaker Change: Ooh profitability a margin question.
Speaker Change: So.
Speaker Change: As Joseph mentioned.
Speaker Change: In the prepared.
Speaker Change: Remarks earlier.
Speaker Change: Even under current.
Speaker Change: Conditions with many.
Speaker Change: External uncertainties.
Speaker Change: The company is the overarching goal for this year is to secure a solid.
Speaker Change: Bottomline growth first then try our best to.
Speaker Change: Grow faster with our business.
Speaker Change: In first quarter, we had a.
Speaker Change: We had a good start.
Speaker Change: And we managed to reduce costs or to improve overall efficiency for them also most of the costs and expenses items.
Speaker Change: Our marketing is marketing fees dropped to in absolute amount.
Speaker Change: Versus last year, but we still achieved.
Speaker Change: Satisfactory new user growth.
Philip Zhang: We had higher revenue, but our sales guide, the number of our sales dropped. Headcounts for R&D, administrative costs, and operation functions kept stable. Our internal AI tools kept in for the platform's operation and verification jobs, which leads to improvement of our boss margin. You should know that our margin in the first quarter is the lowest due to the seasonality. With all the measures mentioned above, there's still room to improve in the second half of the year. So we are confident with our 3 billion RMB non-gap operating profit target for the full year.
Speaker Change: We had a have a higher revenue, but our sales number of our sales dropped.
Speaker Change: Headcount for R&D.
Speaker Change: Dominion to achieve cost and operation functions kept stable.
Speaker Change: Our internal AI towards keep.
Speaker Change: <unk> for the platform's operation under verification drops which leads to <unk>.
Speaker Change: Improvement of our gross margin.
Speaker Change: You should know that.
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Speaker Change: Our margin in the first quarter is the lowest.
Speaker Change: Due to the seasonality.
Speaker Change: With all the measures mentioned above there.
Speaker Change: There's still room to improve in the second quarter.
Speaker Change: Second half of the year.
Speaker Change: So we are confident with our.
Speaker Change: Three building RMB non-GAAP operating profit.
Philip Zhang: This is a comment for the profitability and margin. And regarding the shareholder return topic, the company currently has more than two billion U.S. dollar cash and equivalents on hand. We consider shareholder returns a very important topic and we like to do whatever fits us. Currently, our share repurchase program is still ongoing and we definitely will continue. At the same time, we are studying and doing some assessments for other means, other measures to increase our shareholder return. So please stay tuned. We would like to, you know, do it. step by step.
Speaker Change: For the full year this is.
Speaker Change: Comment.
Speaker Change: Profitability and margins and regarding the shareholder return topic.
Speaker Change: The company currently has more than $2 billion U S dollar cash and equivalents.
Speaker Change: We consider shareholder return so very potent.
Speaker Change: Our topic and we like to do whatever feedback.
Speaker Change: Nearly all of our share repurchase program is still ongoing.
Speaker Change: We definitely will continue.
Speaker Change: At the same time, we are studying.
Speaker Change: Doing some assessment for other means other measures to increase our shareholder return. So please stay tuned.
Speaker Change: We're glad to.
Speaker Change: Do it.
Speaker Change: Step by step.
Philip Zhang: OK, that's our answer to those two questions.
Speaker Change: Okay, that's our answer to that to those two questions and I'll put you on that.
Wei Xiong: And operator, let's move on to the next. Thank you. Next question comes from Wei Xiong from UBS. Please ask your question, Wei. Good evening, Mr. Zhao, Yu Zhang, and Wenbei. Thank you for accepting my question. I also have two questions to ask.
Speaker Change: Excellent.
Speaker Change: Thank you next question comes from weight Shang from UBS. Please ask your question.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Jonathan.
Speaker Change: Thank you Glenn is foundational in Norway, or not and when he comes from Joe <unk>.
Wei Xiong: First of all, I want to ask about AI. Because we have observed that the human resources industry has also started to widely apply AI. Have we seen any changes in the competitive pattern or potential changes? Can we use AI to further expand our service content?
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Speaker Change: So Andrew AIP Buda or towards one.
Wei Xiong: The second question is, we have also introduced the progress in the blue-chip market. I would like to ask the management team to update us on the current situation in the blue-chip market. What are the main KPIs this year? And how are we delivering the progress of these new businesses? I will also translate it myself. Thank you, management, for taking my question.
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Speaker Change: Thank you management for taking my question.
Wei Xiong: First, with the wider adoption of AI in human resources industry, are we seeing any changes or expecting any potential changes in the competitive landscape? And can we leverage AI to actually further expand our service offerings?
Speaker Change: With the wider adoption of AI in human resources industry.
Speaker Change: Are we seeing any changes or expecting any potential changes in the competitive landscape.
Speaker Change: Can we can leverage AI to actually further expand our service offerings.
Peng Zhao: And secondly, could management share more updates regarding our blue-collar recruiting business? What are the key KPIs for this year? And how is our progress in the new businesses, such as placement services? Thank you. Uh, about... Has KuanYueYang changed the competitive pattern of our industry? 我的看法会偏保守 My opinion will be conservative I have an idea. This generation of AI is the mainstream big data model we see now. and the apps that are available on the market so far. and Lanfang Dai. I don't think there are any opportunities to make a fundamental change in the competitive situation of our industry.
Speaker Change: And secondly could management share more updates regarding our blue collar recruiting business.
Speaker Change: What are the key kpis for this year and how is our progress in the new business such as our placement services. Thank you.
Speaker Change: Got it.
Speaker Change: I ask the proceeding should.
Speaker Change: On the high end that Julian good you got it.
Speaker Change: While the costs were 10 volatile.
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Speaker Change: From a high opinion that you're factoring some of that.
Peng Zhao: Overall, it's relatively stable. And about your first question of how AI will impact the competitive landscape, my view is relatively conservative. So my assessment is for this generation of AI technology and all the AI applications we can observe from the market, we haven't seen any revolutionary or disruptive changes. So the competitive landscape is relatively stable. But I also have a premonition that if there is a new generation of products in the global human resources recruitment industry, I believe that the biggest driving force behind it must be the new technical ability. And it is possible that this generation's 1.5 generation or 2 generations of AI technology, I think this possibility will be relatively high.
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Speaker Change: About your first question of how AI will impact the competitive landscape my own really spread to the concept. So.
Speaker Change: So my my assessment piece for this generation of AI.
Speaker Change: And all of the applications, we can observe from the market, we haven't seen any revolutionary disruptive changes so the competitive landscape is relatively stable.
Speaker Change: Thanks.
Speaker Change: That tissue, Google Chinchilla in ECM Tommy.
Speaker Change: Please yoshida is that a new generation of products to what actual whatsapp airports in Colombia.
Speaker Change: It ended up eating to assume the chief.
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Peng Zhao: But I also have some predictions that if globally, among the human resource industries, there is a new generation of AI products can change the overall landscape, then there must be pushed by the new generation of AI technology, which might be like the 1.5 or 2.0 generation. Therefore, although we haven't seen a substantial change in the industry's spiritual pattern, we will still put a lot of resources into AI. For example, since last year, we have bought more than 100 billion chips so that we can build some resources and small-scale... 测试性的推理服务 Even though we haven't observed any revolutionary changes of the industry, we still place very high importance of AI and AI-related investment.
Speaker Change: Yeah.
Speaker Change: But I also have some predictions that.
Speaker Change: Globally.
Speaker Change: The amount of the human resource metrics.
Speaker Change: Our new generation and product content overall landscape then.
Speaker Change: There must be pushed by the new generation.
Speaker Change: Maybe like the one five or.
Speaker Change: Two points there.
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Speaker Change: Oh, Yeah, no we haven't observed any evolutionary changes.
Speaker Change: The industry and we still a pace very high Thomson Reuters.
Peng Zhao: For example, last year, actually since 2023, we have bought more than 1 billion RMB of chips, which is enough for us to conduct self-developed research and small-scale inference. In AI science, we still support a small-scale laboratory to maintain our own pre-training capabilities, especially for the application of open-source advanced models. In terms of AI science, we still maintain a small-scale lab for us to be able to conduct pre-training of our own model and replicate all those open-source models. In fact, we also have confidence in AI applications and AI agents. I can't say it's an advantage, but it's suitable for AI.
Speaker Change: Thank you.
Speaker Change: For example last year.
Speaker Change: It's actually says Canadian history, we have bought more than one word.
Speaker Change: Chasing that flat to come back so sell through Apple research and small scale insights.
Speaker Change: So they are assigned to follow.
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Speaker Change: Sean I'm on SCS.
Speaker Change: Sure.
Speaker Change: Thank you Shannon.
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Speaker Change: Hi, Cynthia Blushing.
Speaker Change: Okay.
Speaker Change: In terms of AI finally, we still maintained.
Speaker Change: Small scale that for us to be able to pull that 225 of our model and.
Speaker Change: All of those co pay so much stock model.
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Speaker Change: Xiaomi enrollments usage from the audience.
Speaker Change: Okay.
Speaker Change: But also you asked about those are assumed for sure.
Speaker Change: Right.
Peng Zhao: to play the role of reality. In fact, we are actually quite confident that in terms of using AI science for AI application, our business scenario is actually quite suitable to applicate the power of AI to have some effects on our business. In this process, we are more sure than when we first saw ChatGPT At that time, we were more panic and curious Today, we are more sure This generation of large-scale models has been able to bring help to the work in our hands. So I think this kind of work has become more realistic. Compared to the first emergence of Chad GPT, when we felt a little bit panic or curious at that time, now we have more certainty on the AI technology can actually help with our business and with more real feelings.
Speaker Change: Probably shed Statoil.
Speaker Change: In fact, we are actually quite confident that in terms of using first four applications or over business scenario actually quite third Q to Q and it takes the power.
Speaker Change: Two full AI to have some effects on our business.
Speaker Change: Now, let's add to the purchase of course, a number of women.
Speaker Change: The download kind of our <unk> digital.
Speaker Change: And that once you see the name of the shareholder.
Speaker Change: Longer haul sheet, starting here, which is contributing as you look at all.
Speaker Change: Keith I'm wishing iijima Colgate actually the contour bottle.
Speaker Change: So to go from a little bit in the schedule.
Speaker Change: Compared to the first team earnings tend to be cheap when we go to.
Speaker Change: They panic or curious at that time now we have more certainty.
Speaker Change: The AI technology can actually help with our business is more on this more.
Speaker Change: Felix.
Speaker Change:
Peng Zhao: I can also add that a lot of online entertainment companies want to work under a closed circuit, the process. So this thing actually with the help of AI, we will see some results. I think we will... we will have more certainty to prove that this can be realized on a large scale or to prove that this cannot be realized on a large scale. I think it's more realistic.
Speaker Change: So go ahead, Keith all the Eagle project.
Speaker Change: Actually you Joseph Tung globally on Doug and cheer Alicia.
Speaker Change: Okay sure.
Speaker Change: Quarter, how much of the industry change issues that they had a boundary shot shabu.
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Speaker Change: Yes, that's all conjecture.
Peng Zhao: And a more top view to share that a lot of online recruitment platforms have long been pursuing the closed loop or placement service. Now, with the help of AI technology, we have more certainty to confirm that whether we can achieve closed loop service in a big scale or not. 佔到我們新增用戶的45% Lanling's income has exceeded 39% of our income. We really value this job more and more. At the same time, the income of programs below the three lines is also increasing. This is really our... should pay more attention to. And with blue-collar sector, new user contribution more than 45 percent, revenue contribution more than 39 percent, and increase the revenue contribution from third tier and below cities.
Speaker Change: And then on a more.
Speaker Change: We want to share that a lot of online recruitment of platform.
Speaker Change: <unk> been pursuing the.
Speaker Change: Also our placement service now or at least help US guide technology, we have more certainty.
Speaker Change: Confirm that whether we can.
Speaker Change: A cheap cost of service in a big scale or not.
Speaker Change: Okay.
Speaker Change: Montana Commvault table motion.
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Speaker Change: Oh sure, So hey, Josh Im sure that totally get that.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: You guys have talked to the Sunshine.
Speaker Change: And Oh.
Speaker Change: Blue collar sector or use our new user contribution more than 45%.
Speaker Change: Integration within such a 9% and increased the revenue contribution from low tier cities.
Peng Zhao: So this aspect actually are becoming more and more important of our daily operations.
Speaker Change: So this aspect actually.
Speaker Change: Becoming more and more important to help our Danny appreciate it.
Peng Zhao: I would like to use a word to describe the feeling when we are in the blue-collar and low-level services. This word is that things will be more simplified. No matter if it's Bluebell or Whitebell in low-tier cities, they hope that the use of our software will be simpler, more concise, and have a simplified service process and content. This is also our effort. And if we want one word to summarize our future efforts to serve the blue-collar and low-intensity users, is our service and products will be more simple. As a result, they docs carried a huge amount of work.
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Speaker Change: Good question Danny.
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Speaker Change: Dennis.
Speaker Change: How much do you want but you cannot get that.
Speaker Change: Good luck is conducting.
Speaker Change: Conducting a lot of audio needle so yes sure.
Speaker Change: And if we want one word to summarize our.
Speaker Change: Our future in EMEA, our future efforts to serve the blue collar and the low end gesture user space. Our survey some products will be most important.
Peng Zhao: Once we got to my ears at Lang Lang's connections… what happened, what lies behind this, It's another matter where the talks were intensive Auf der Seite gibt es die Verschärfung, was kommt kriegt man auf den Planeetabschiff? Wo brennt das flavor? and of course, time. But, I think that the core value of LanLing's approach, can actually be… efficiency, and the reliability of the results. If this is the case, the directions of the AIM will be clearer I am willing to say that the help AI brings to us is also because of this reason. I am willing to do so, and we are still continuing to work together.
Speaker Change: And then you kind of I think Thats also judicious in tissue.
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Speaker Change: You just had a philosophy that partially in agency <unk>.
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Speaker Change: Yeah, and pharma molecule Bianchi Sheila.
Speaker Change: So when we say that kind of jumped out of the bundle we can achieve it.
Speaker Change: Hey, Vince Yeah, I wouldn't say that that's the total.
Speaker Change: Yeah.
Peng Zhao: And in terms of placement business, especially on the blue-collar placement, we have been spending a lot of resources and time. The key point is to guarantee the efficiency and the reliability of your results. So if AI application can really help with those two aspects, then we do feel some confidence in this perspective, and that's why we want to further invest in this area. That's my answer to your question.
Speaker Change: And.
Speaker Change: In terms of placement business.
Speaker Change: Essentially all of them.
Speaker Change: We have been spending a lot of resources.
Speaker Change: The.
Speaker Change: Key point is to guarantee the efficiency and reliability of our results. So add applications really help with those two aspects that we believe we do feel some confidence in this perspective, that's why we want to friendly mosquitoes.
Speaker Change: Essentially we will have great options.
Speaker Change: And that's my answer to your question I think that's the last one due to a chemical change.
Operator: Operator, I think that's the last one due to the time constraint. Thank you. Yes, due to time constraint, that concludes today's question and answer session.
Speaker Change: Thank you, yes due to time constraint that concludes today's question and answer session. So at this time I'll turn the conference back to Wednesday for any additional or closing remarks.
Wenbei Wang: So at this time, I'll turn the conference back to Wenbei for any additional or closing remarks. Thank you all for your time. Thank you, everyone, for joining our call today. And if you have any further questions, please contact our ARRA team directly or TPG. Congratulations. Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.
Speaker Change: Thank you operator, and thank you everyone for joining our call today and if you have any further questions. Please contact our IR team directly or TPG Metro.
Speaker Change: <unk>.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect your lines.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].