Kanzhun Q2 FY26 earnings call BZ

Kanzhun is leveraging AI across all aspects of its operations, including security, verification, sales, marketing, and R&D. The company's large language model, Nanbeige4.2-3B, achieved top rankings in 5 areas in a joint testing by Artificial Analysis and Liquid AI for small-sized models on mobile devices. This demonstrates its capability in handling complex agent functions like coding and office work, enhancing search capabilities by allowing longer queries and multi-round conversations to better understand customer demand, especially for high-professionalism roles. AI interview functions are currently processing over 10,000 interviews daily, expanding service to new users beyond the current monthly active user base.

The Board approved an annual cash dividend of approximately $230 million. Combined with over $300 million in share repurchases year-to-date, the total shareholder returns exceeded $530 million. This represents over 100% of last year's adjusted net income, fulfilling a prior commitment. Cumulatively, the company has repurchased over 10% of its total shares outstanding, demonstrating a strong commitment to returning value to shareholders.

Despite acknowledging macro headwinds^🌐, Kanzhun identifies significant growth opportunities within its market. The company has served over 300 million cumulative users and 22 million enterprises in China, with a substantial portion of these enterprises being new or inactive, indicating a large untapped market. A key growth driver is the opportunity to increase the paying ratio among its 10 million annual enterprise users, over 50% of whom currently utilize free services. Monetization efforts in first-tier cities are expected to drive revenue growth with minimal cost impact to customers, as the average cost for a mutual match remains very low.

Kanzhun's overseas business, OfferToday, is targeted to generate $100 million to $115 million in revenue within five years. The company plans to expand into other markets in Asia and Europe, focusing on cities that can achieve this revenue target within a 2-3 year adoption period and an additional 5 years of growth. They also identify 'slow dish' markets, such as Vietnam, Argentina, or Brazil, which could potentially reach $100 million in revenue over a 10-15 year horizon, indicating a long-term strategic approach to international growth.

Kanzhun maintains a disciplined investment approach, particularly regarding AI development. The company prioritizes AI applications and smaller models over mega-sized models that require substantial capital expenditure. Management explicitly stated that AI investment would not materially impact the overall cost structure or financial markets, and they would not sacrifice safety or cash flow. R&D expenses are expected to be maintained at around 20% to 25% of revenue, with incremental spending on AI to support innovation without compromising financial stability.

AI applications have significantly contributed to improved operating efficiency. Employee-related costs as a percentage of revenue decreased by approximately 2 percentage points, helping to maintain a high gross margin of 87%. The adjusted operating margin expanded to a record 43.8%, driven by strong operating leverage and disciplined execution. This improvement occurred despite increased sales and marketing expenses, primarily due to the FIFA World Cup marketing campaign, and higher AI-related cloud service fees.