Kanzhun Limited (BZ) Earnings

Management highlights

- Core Growth Strategy Update - Historically, user growth has been the core driver of Qantuan's growth, supported by large untapped market potential: China has ~500 million active working population and over 40 million active enterprises, while Qantuan has served ~300 million total job seekers and 22 million enterprises, leaving significant room for expansion. - The company's mobile-first AI-powered matching model drastically reduces communication costs between recruiters and job seekers, enabling large-scale adoption of online recruitment for millions of first-time users. Strong double-sided network effects create a data flywheel that improves service quality as user base and interaction volume grow. - Updated multi-tier growth strategy: In Tier 3/4/5 cities, user growth and penetration remain the top priority. In mature Tier 1 and select Tier 2 cities, Qantuan will gradually increase monetization (through higher payment rates and unit prices) while continuing user growth, as current matching prices are extremely low compared to global peers and enterprise employment costs, leaving significant upside. - The updated strategy has already contributed to better-than-expected revenue and profit growth in Q2 2026. - AI and Operational Progress - Widespread AI adoption has improved platform efficiency and enabled new high-value AI-powered services (including resume screening, AI interviewing, and AI talent sourcing), driving increased customer spending. AI-related services achieved rapid growth in Q2. - Qantuan's small-sized large language model Nanbei Ge 4.23B ranked first in five testing categories across general and technical domains, cementing the company's leading position in small-domain specialized models, which are suited for industry-specific use cases and edge device deployment. - AI has also improved internal operating efficiency: since 2023, operating headcount has remained stable despite user growth, reducing employee costs as a share of revenue and contributing ~2 percentage points of gross margin improvement. - Shareholder Returns - The board approved a $230 million annual cash dividend. Combined with $300 million in year-to-date share repurchases, 2026 total shareholder returns exceed $530 million, representing over 100% of last year's adjusted net income, exceeding the company's 50% commitment. Cumulatively, Qantuan has returned over 10% of total outstanding shares to investors.

Guidance

- For Q3 2026, management expects total revenue to be between RMB 2.41 billion and RMB 2.5 billion, representing 11.4% to 15.6% year-on-year growth. - Share-based compensation as a percentage of revenue is expected to remain at a high single-digit level for full-year 2026. - The FIFA World Cup sponsorship cost will be evenly recognized across Q2 and Q3 2026, and Q3 adjusted operating margin is expected to be similar to Q2 2026's record 43.8%. Full-year 2026 adjusted operating margin is still expected to see a slight increase from 2025. - R&D investment will remain stable at 20% to 25% of total revenue, with incremental spending allocated to AI development, with no material impact on margins or cash flow safety.

Segment performance

Qantuan Limited operates a single core recruitment service segment in Q2 2026: Total revenue reached RMB 2.4 billion, representing 14% year-on-year growth. Adjusted operating income (excluding share-based compensation) was RMB 1.05 billion, up 19% year-on-year, with adjusted operating margin of 43.8% (up 1.9 percentage points year-on-year). Total operating costs and expenses increased 6% year-on-year to RMB 1.5 billion. Cost of revenue increased 2% year-on-year to RMB 312 million, driving gross margin up 1.6 percentage points year-on-year to 87%. Sales and marketing expenses increased 38% year-on-year to RMB 581 million, primarily due to 2026 FIFA World Cup marketing campaigns. R&D expenses were RMB 431 million (up 3% year-on-year); adjusted R&D expenses (excluding share-based compensation) increased 7% year-on-year to RMB 361 million, driven by AI infrastructure investments. General and administrative expenses decreased 30% year-on-year to RMB 219 million. Net income was RMB 1.9 billion, up 173% year-on-year; adjusted net income (excluding one-time investment gains and share-based compensation) increased 9% to RMB 1.03 billion. Operating cash flow was RMB 945 million, down 10% year-on-year. As of June 30, 2026, total cash and liquid assets stood at RMB 18.8 billion. Paid enterprise customers (12-month trailing) reached 7.2 million, up 11% year-on-year, with the active enterprise paying ratio improving for 4 consecutive quarters. Average revenue per paid user increased 7% year-on-year.

Risks & headwinds

- Weak macroeconomic conditions and soft consumption could potentially impact recruitment demand and enterprise spending on recruitment services. However, management notes significant untapped market size and low current monetization levels, and minimal planned price increases (a 15% average increase for converting free users to low-tier paid plans) are not expected to meaningfully impact customer demand, allowing the company to offset macro pressure through organic expansion and monetization improvements. - Large-scale AI development by big tech companies requires massive capital expenditure and power consumption, but Qantuan's strategy of prioritizing small specialized models aligned with its recruitment use case avoids this high cost burden. - Geopolitical risk is an active consideration for international expansion, and the company will prioritize markets with lower geopolitical risk for overseas expansion.

Analyst Q&A

• Q: What is the latest progress of AI products, what is the revenue scale of closed-loop hiring services, how does AI improve matching efficiency, and what improvements does the new Nanbei Ge 4.23B large model bring, and how does it differ from mainstream large models? /

  A: Large language models enable long queries and multi-round conversations, which let the platform better understand recruiter demand for specialized, high-requirement roles that traditional short-query search and recommendations could not serve well. AI also enables outreach to 300 million+ accumulated non-active users, especially senior professional candidates that headhunters target, expanding the platform's addressable user pool. The company is progressively building out closed-loop hiring services, with AI already powering over 10,000 AI interviews daily, moving closer to end-to-end onboarding. Nanbei Ge 4.23B is a small specialized model that ranked first in five independent testing categories. Unlike the massive, high-cost general models pursued by large tech companies, Qantuan focuses on small models that deliver value for specific industry use cases, where it holds a leading position. (748 characters)

• Q: How will weak macro conditions impact Qantuan's performance in H2 2026, how much downside can be offset by operational improvements, and will AI change cost structures or require major new CAPEX? /

  A: Management has over 12 years of operating experience and will maintain stable operations through market cycles. Qantuan still has significant untapped market: even with 40 million total Chinese enterprises, Qantuan has penetrated less than half, and 50% of current active users are still free, creating ample organic growth and monetization upside. Planned price increases in mature markets are extremely modest (only a 15% rise to convert free users to low-tier paid plans, equal to less than half the price of a cup of coffee) so they will not meaningfully impact demand. The company follows a "tail light strategy" for AI, prioritizing application of small specialized models rather than massive investments in general large models. R&D spending will hold at 20-25% of revenue, so AI investment will not hurt margins or cash flow. (712 characters)

• Q: How much has AI improved internal efficiency and margins, what are margin trends for H2, and what is the update on overseas expansion strategy? /

  A: AI has stabilized operating headcount despite user growth since 2023, cutting employee costs as a share of revenue and adding ~2 percentage points to gross margin, which remains in the high 80% with further room for improvement. FIFA World Cup costs are split between Q2 and Q3, so Q3 margins will be similar to Q2, and full-year adjusted operating margin will still see a slight increase. Qantuan's first overseas offering, OfferToday in Hong Kong, targets 100-150 million USD in annual revenue within five years. The company plans incremental expansion to other developed large Asian and European cities with low geopolitical risk, following a 2-3 year market adoption period and 5-year growth phase per market. Longer-term, the company is evaluating larger emerging markets like Vietnam, Argentina, and Brazil for entry over a 10-15 year horizon. (701 characters)