Kanzhun's Profit Surges in Q1 on Cost Cuts

Kanzhun (BZ) reported strong Q1 2025 results, with revenue up 13% to 1.92 billion yuan and GAAP net income more than doubling to 512 million yuan, driven by disciplined cost management and a 13 percentage point expansion in adjusted operating margin to 36%. Growth was supported by increased penetration in blue-collar and lower-tier city markets, while exposure to export-oriented industries remains low, mitigating tariff risks; Q2 revenue is projected to grow 7.0% to 8.5% year-over-year, and the full-year non-GAAP operating profit target of 3 billion yuan was reaffirmed.

Analysis

Kanzhun (NASDAQ:BZ) reported a robust first quarter for 2025, with revenue increasing 13% year-over-year to 1.92 billion yuan and GAAP net income surging 112% to 512 million yuan. A key driver of this performance was exceptional margin expansion, with the adjusted operating margin reaching 36%, a significant 13 percentage point increase from 23% in the prior year's quarter. This margin improvement was attributed to disciplined cost management, evidenced by an 8% year-over-year reduction in total operating costs, a 15% cut in sales and marketing expenditure, and a third consecutive quarterly decline in share-based compensation expenses. The company also demonstrated user base growth, with paid enterprise customers climbing 12% over the trailing twelve months to 6.38 million. Strategically, Kanzhun has diversified its user base, with the blue-collar segment now contributing over 39% to revenue and tier 3-and-below cities accounting for more than 23% of revenue, which mitigates risks associated with macroeconomic uncertainties and specific industry sensitivities. Notably, management highlighted that export-oriented enterprises represent a small portion of job postings and revenue, thereby limiting direct exposure to global tariff disputes. Kanzhun's investment in AI, exceeding 1 billion yuan since 2023, has led to AI-driven recruitment tools handling over 9 million candidate conversations in beta tests, enhancing internal productivity and user engagement without yet causing, in management's view, disruptive changes to the competitive landscape. Looking ahead, Kanzhun projects Q2 revenue growth between 7.0% and 8.5% year-over-year, to a range of 2.05 billion to 2.08 billion yuan, and reaffirmed its full-year non-GAAP operating profit target of 3 billion yuan, supported by a robust cash position exceeding $2 billion and an active share repurchase program.

Key Decisions for Investors

• Investors should consider Kanzhun's demonstrated ability to significantly expand operating margins through cost rationalization and operational leverage alongside consistent revenue growth.
• The company's strategic focus on diversifying its user base towards blue-collar workers and lower-tier cities, coupled with minimal exposure to export-sensitive industries, offers a degree of insulation from specific macroeconomic headwinds and trade tensions.
• Monitor the continued execution of Kanzhun's AI strategy for potential long-term competitive advantages, while acknowledging management's current assessment that near-term industry disruption from AI is limited.
• The reaffirmed full-year profit guidance, active share repurchase program, and substantial cash reserves may provide a supportive backdrop for the stock, warranting attention to capital return developments.