Kanzhun Ltd

NASDAQ:BZ

Earnings Call Analysis

Robust Growth and Diverse Revenue in 2023

In Q4 2023, Kanzhun Limited achieved strong financial performance with cash billings rising to RMB 1.78 billion and GAAP revenue hitting RMB 1.58 billion, both marking significant year-on-year growth. The adjusted net income reached RMB 630 million. For the full year, cash billings were up 45% and GAAP revenue increased by 32%, with an impressive adjusted net income of RMB 2.16 billion. Operating income saw a notable year-on-year surge of 191%, resulting in a 27.5% adjusted operating margin. User engagement on the BOSS Zhipin app showed remarkable growth, evident from both historical highs in various user metrics post-Spring Festival and a 47% year-on-year increase in average verified MAUs. The platform also made significant strides in attracting blue-collar users and those from lower-tier cities, as well as small enterprises, all contributing to a diverse revenue stream.

Robust Growth in Q4 and FY 2023

Kanzhun Limited reported impressive results for the fourth quarter with cash billings up 61% year-on-year, and GAAP revenues increasing 46% compared to the same period last year, suggesting a strong finish to 2023. This performance was backed by a stable adjusted net income, reflecting the company's capacity to translate higher billings into profits effectively.

Surging User Engagement

The company saw an increase of 33% in its average verified monthly active users (MAU) on the BOSS Zhipin app during the fourth quarter. This boost in user engagement indicates a growing demand from active enterprise users, and a healthy supply of jobseekers. The continued recovery of medium and large-scale enterprises adds to the positive trajectory, contributing to exceeding expectations.

Yearly Performance Highlights

For the full year of 2023, Kanzhun Limited's cash billings rose by 45%, with GAAP revenue climbing 32% year-on-year. The company managed to secure an adjusted net income of RMB 2.16 billion. These figures reflect a solid year, with profitability growing significantly, as seen in the 191% jump in adjusted operating income, marking a strong adjusted operating margin of 27.5%.

Massive Increase in Verified Users

2023 saw the largest annual growth in the user base since the inception of Kanzhun Limited, with more than 49 million newly added verified users. This swell contributed to the company serving over 178 million individual users and 13.3 million enterprises in total. With an average verified MAU reaching 42.27 million, representing a 47% increase, the company reinforced its role in facilitating 1.5 billion interactions between jobseekers and recruiters throughout the year.

Expansion in Paid Enterprise Customers

The number of paid enterprise customers grew by 44% in 2023, rising to 5.2 million. Kanzhun Limited continued to hit record highs regarding both the volume and the paying ratio of active enterprise users. Such growth signifies a strong monetization capability and reflects the increasing value that enterprises find in the company's services.

Diversifying Revenue Streams

Revenue contributions diversified significantly in 2023. Blue-collar users started to match the scale of white-collar users, with their revenue contribution exceeding 34%. Additionally, revenue from second and lower-tier cities crossed 60%, up by 5 percentage points year-on-year. Contributions from small enterprises with less than 100 employees also saw an uplift of over 5 percentage points from the previous year, indicating broadening demographic and geographic appeal.

Technological Advancements and AI Initiatives

Kanzhun Limited has made strides in technology with the introduction of the Nanbeige big large language model, designed specifically for the recruitment industry. The model has shown industry-leading results in benchmarks and is being applied in recruiting and job-seeking scenarios, reflecting the company's commitment to innovation without overextending on investment.

Outlook for Spring and Beyond

Post-Spring Festival metrics are setting new records, with peak daily active users on the BOSS Zhipin app nearing 17 million. These figures offer insights into a potentially different user behavior trend compared to the same period in the previous year, hinting at ongoing momentum into the upcoming season.

Earnings Call Transcript 2023-Q4

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Kanzhun Limited Fourth Quarter and Fiscal Year 2023 Financial Results Conference Call. [Operator Instructions] Today's conference is being recorded.At this time, I would like to turn the conference over to Ms. Wang -- Wenbei Wang, Head of Investor Relations. Please go ahead, ma'am.

[Wenbei Wang, executive]

Thank you, operator. Good evening, and good morning, everyone. Welcome to our fourth quarter and full year 2023 earnings conference call. Joining me today are our Founder, Chairman and CEO, Mr. Jonathan Peng Zhao; and our Director and CFO, Mr. Phil Yu Zhang.Before we start, we would like to remind you that today's discussion may contain forward-looking statements, which are based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different. The company cautions you not to place undue reliance on forward-looking statements and do not undertake any obligation to update this forward-looking information, except as required by law.During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our website at ir.zhipin.com.With that, I will now turn the call to Jonathan, our Founder, Chairman and CEO.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Hello, everyone. Welcome to our fourth quarter and full year 2023 earnings conference call. On behalf of the company and our employees, management team and the Board of Directors, I would like to express our sincere gratitude to our [indiscernible] and investors who trust and support us.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] First, I would like to share our performance with you. In the first -- in the fourth quarter, the company achieved a calculated cash billings of RMB 1.78 billion, up 61% year-on-year and 9% quarter-on-quarter. Our GAAP revenue reached RMB 1.58 billion, up 46% year-on-year and remained flattish with last quarter. Our adjusted net income, which excludes share-based compensation expenses, was RMB 630 million.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] In the fourth quarter, the average verified MAU on the BOSS Zhipin app reached 41.2 million, representing a 33% year-on-year increase. In the fourth quarter, we noted an improving ratio between the demands from active enterprise users and the supplies from jobseekers. We also noted continued steady recovery of medium and large-scale enterprises since the third quarter, all of which contributing to our cash billings, GAAP revenues and profit levels in the fourth quarter to exceed our expectations.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Let's take a look for the full year of 2023. The company achieved a calculated cash billings of RMB 6.69 billion, up by 45% year-on-year and a GAAP revenue of RMB 5.95 billion, up by 32% year-on-year. Excluding share-based compensation expenses, the adjusted net income for the year reached RMB 2.16 billion.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Furthermore, excluding other income, such as wealth management income, the adjusted operating income for 2023 was RMB 1.64 billion, reflecting a remarkable 191% year-on-year increase. This resulted in a 27.5% adjusted operating margin, underscoring the company's robust profitability capability.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] In 2023, we attracted more than 49 million newly added verified users, representing the largest annual growth in user base since the company's inception. This year, the number of users we served has increased by nearly half of 100 million, and we have been able to help them with our products, which we are quite deeply proud of.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] As of December 31, 2023, the company has served a total of over 178 million individual users and 13.3 million enterprises. The average verified MAU on the BOSS Zhipin app was 42.27 million in 2023, representing a year-on-year increase of 47%. Approximately 1.5 billion mutual achievements between jobseekers and recruiters have been accomplished on our platform throughout the year.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] In 2023, the number of paid enterprise customers increased by 44% year-on-year to 5.2 million. Moreover, both the number of paid enterprise users and the paying ratio of active users continued to achieve record highs.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] As the company continues to expand our user coverage, both the user and revenue structure undergoes constant evolution highlighted by the following key points. First, in 2023, the scale of newly added blue collar users matches that of the white collar users with revenue contribution of the whole year from blue collar users exceeding 34%. Second, revenue contribution from second and lower-tier cities exceeded 60%, a 5 percentage point increase year-on-year. Third, revenue contribution from enterprises with less than 100 employees also increased by more than 5 percentage points year-over-year.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] All these changes further demonstrated that we are confident that our product can serve different users and also our service can cover different kind of users.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] This is mainly based on the down-to-earth research on actual detailed needs from different kind of users and our continuous efforts in technology investments.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] In January this year, our company's proprietary big model, which we named it Nanbeige big large language model, which is believed to be the first large language model designed specifically for the recruitment industry has successfully completed its online registration for generative artificial intelligence. Effect of this model has reached the industry-leading level on some public benchmarks and has gradually been applied in some recruiting and job seeking scenarios.For example, for those young entrepreneurs who are starting up their companies, we provide them with rapid job posting function. And for those young people or fresh graduates, jobseekers, we provide them with resume polishing functions, et cetera.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] The company's investment in AIGC mainly focus on 2 principles. First, we keep track of the cutting-edge technology to avoid the generational gap in knowledge. Second, focus on industrial implementation and not to make big investments blindly.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Next, we will briefly update the situation for this spring. Following the Spring Festival, the company's various user metrics continue to hit historical highs with the peak DAU on the BOSS Zhipin app approaching [ 17 million ], for example. From those data, we also identified several characteristics, which are notably different from the same period last year, including the following keywords.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] First, recruiters since the Spring Festival, the daily average number of newly posted job positions and active job positions have both reached historical highs compared with the same period in the previous years. The daily average number of active job positions increased by 20% year-on-year.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] The second keyword is large enterprises. Since Spring Festival, the average daily active position from enterprises with more than 10,000 employees increased by 24% compared with the same period of 2023.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] The third keyword is industry. The daily average number of newly added job positions and active job positions across all industries has shown positive growth since this year's Spring Festival compared with the same period of 2023, among which the blue collar industry has once again reached a new record high, driven by the continuous expansion of urban service sector.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Additionally, the manufacturing and supply chain logistics sector have shown accelerated year-on-year growth rate.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Within the white collar industry, sectors such as consumer goods, medical equipment, automotive, and advertising and media are leading the growth.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] The fourth keyword is business. There has been a noticeable shift in the types of job position compared with last year. The position is focusing on the development and growth of the enterprise business, such as sales guys, human resource services, finance and related positions have experienced a clear rebound in growth rate.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] So we anticipate our quarter-on-quarter increase in both cash billing and GAAP revenue for the first quarter.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] I'm pleased to announce the company's Board of Directors approved a new share repurchase plan today, upsizing to repurchase up to USD 200 million of the company's shares over the next 12 months. This marks our third share repurchase plan alongside the USD 80 million special cash dividend issued in last November, demonstrating the management's commitment and the sincerity towards long-term shareholder returns.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] That concluded my part of the call. I will now turn it over to our CFO, Phil, for the review of our financials. Thank you.

[Yu Zhang, executive]

Thanks, Jonathan. Hello, everyone. Now let me walk through the details of our financial results of the fourth quarter and full year of 2023.We are pleased to deliver a strong set of results for the fourth quarter and the full year 2023. For the fourth quarter, our calculated cash billings reached a historical high of RMB 1.8 billion, grew by 61% year-over-year and notably 9% quarter-on-quarter, beating our expectations.Revenues increased by 46% to RMB 1.6 billion compared to the same period last year and stayed relatively stable sequentially due to the lower seasonality, confirmed our observation of a gradual recovery, especially at medium and large-sized companies. Revenue contribution from key accounts and their ARPU also recovered sequentially in this quarter.For the full year of 2023, our calculated cash billings and revenues increased by 45% and 32%, respectively. Number of paid enterprise customers reached 5.2 million in 2023, up by 44% year-over-year, marking another new high level of paying ratio among active enterprise users and demonstrated our ample space and the flexibility in monetization.Moving to the cost side. Total operating costs and expenses decreased by 4% year-over-year to RMB 1.4 billion in the fourth quarter, and increased by 16% year-on-year to RMB 5.4 billion in 2023. This year, we managed to achieve a robust user growth while still seeing margin expansion. The annual adjusted operating margin improved from 12.5% in 2022 to a record level of 27.5% in 2023, up by 15 percentage points.Cost of revenues increased by 36% year-over-year to RMB 275 million in the fourth quarter and 40% year-over-year to RMB 1.1 billion in 2023. This increase was primarily driven by increased server and bandwidth cost and payment processing costs in line with the growth of user engagement and transactional volume.Our sales and marketing expenses decreased by 36% year-over-year to RMB 433 million in the fourth quarter as we didn't have a similar marketing campaigns like 2022 FIFA World Cup sponsorship in the year and remained stable with last year at RMB 2.0 billion for the full year of 2023. Even excluding the World Cup sponsor fees, adjusted sales and marketing expenses as a percentage of revenue went down by 7 percentage points this year compared to 2022, when at that time, we could only have user growth of half of the year. This proves the effectiveness of our marketing strategy, which emphasizes more towards branding campaigns.Our R&D expenses increased by 46% year-over-year to RMB 430 million in the fourth quarter and 31% year-over-year to RMB 1.5 billion in 2023. Excluding share-based compensation expenses, adjusted R&D expenses increased by 62% year-over-year to RMB 316 million in the fourth quarter and 25% year-over-year to RMB 1.1 billion in 2023. This increase was mainly driven by our further investments in talent and AI technology developments, which incur AI-related server and cloud service fees.Our G&A expenses decreased by 9% year-over-year to RMB 225 million in the first quarter and increased by 13% year-over-year to RMB 812 million in 2023. Excluding share-based compensation expenses, adjusted G&A expenses decreased by 32% year-over-year to RMB 122 million in the fourth quarter and 8% year-over-year to RMB 482 million in 2023, mainly due to decreased professional service fees.Our net income was RMB 331 million in the fourth quarter and RMB 1.1 billion in 2023, the full year. Adjusted net income increased from RMB 59 million in the fourth quarter of 2022 to RMB 629 million and increased from RMB 799 million in 2022 full year to RMB 2.2 billion for full year 2023, representing a significant year-over-year increase. Adjusted net margin for the full year of 2023 reached a record high of 36.2%, up by 18.5 percentage points.Net cash provided by operating activities was RMB 927 million for the fourth quarter and RMB 3.0 billion for the full year of 2023. As of December 31, 2023, our cash and cash equivalents, time deposits and short-term investments totaled RMB 12.9 billion, and long-term investments in fixed rate notes and wealth management products were RMB 2.3 billion.With our commitment to share our success with shareholders and supported by our robust cash reserve, we paid a cash dividend of RMB 563 million in December 2023. Additionally, our Board has[Audio Gap]Repurchase program over the next 12 months and upsized the program to USD 200 million, demonstrating our strong commitment to shareholder returns.And now for our business outlook. We have seen encouraging trends of recovered recruitment demand post the Chinese New Year, and we are confident to deliver better-than-expected results for the current quarter. In the first quarter of 2024, we expect our calculated cash billings to increase sequentially by at least 12% and revenues to be between RMB 1.64 billion and RMB 1.67 billion, with a year-over-year increase of 28.3% to 30.7%.With that -- that concludes our prepared remarks. And now we would like to answer questions. Operator, please go ahead with questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Eddy Wang from Morgan Stanley.

[Eddy Wang, analyst]

[Foreign Language] My first question is about the recruitment demand situation after Chinese New Year. Can you give us more details in terms of the different subindustries by different enterprise sizes, this supply-demand situation compared with last year? And my second question is, what's your forecast or expectation for the revenue growth of the company for this year?

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Thank you for your question. Regarding the first question, we are not suitable to comment on the entire job market. But we -- as a platform, we have our own data and as one of the players, we would like to share with you our observations. First is about the enterprise side, which we have witnessed a year-on-year growth from the enterprise side higher compared to the jobseeker side, which result in the ratio between jobseekers and enterprise users continue to improve.I have been within this industry for quite a long time. And any -- within any detailed industries, the ratio between enterprise users and jobseekers, the -- its relative balance have been quite significant to me. Since the Spring Festival this year, my observation is that the ratio between enterprise users and jobseekers, it has been balancing -- rebalancing towards a relatively normal situation.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Regarding whether the enterprises have restored confidence for the market and for the future, the data we just mentioned is that both newly posted jobs and online active jobs have reached record new high and very significant year-on-year growth.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] And to share with you some detailed trend on particular sectors. For example, for manufacturing workers, logistics, urban service-related blue collar sectors have recovered quite well after the Spring Festival.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Another angle is that for those cities along the sea, which is more external related economics shows better user growth after the Spring Festival, so which implies the manufacturing related to export have been performing quite well recently.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Another observation we shared -- we discussed about last spring is that the small and micro companies recovered much better after the Spring Festival last year. However, this year, the larger companies, they have postponed a recovery trend. However, this year, as we just said, enterprises with more than 10,000 company employees grows much better compared to those medium-sized enterprises. And this situation has been started since August last year and continued after the Spring Festival, which shows the continuity of the white collar recovery.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Regarding your second question for our outlook for this year, I would -- starting with reviewing for the performance for last year. So since the beginning of 2023, what we witnessed that we have seen improvement sequentially from Q1 to Q4 and until Q1 this year for the consecutive 5 quarters.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] And that observation has been proved by our quarter-on-quarter sequential growth data. And we hope that trend can continue within this year. And for the first quarter this year, as Phil just discussed, we are expecting our calculated cash billings have at least 12% of quarter-over-quarter growth compared to the fourth quarter last year.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] And given my experience and observations for the operation, I'm pretty sure that in the second quarter, we will continue to have sequential growth.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] And that concludes my answer to your questions. Thank you.

[Operator]

Our next question comes from Timothy Zhao from Goldman Sachs.

[Timothy Zhao, analyst]

[Foreign Language] Congrats on the very strong results. I have 2 questions here. First, we noticed that some of the competitors have increased marketing spending post the Chinese New Year. Could management share your strategy for this year's user growth and marketing campaigns? Have you observed any incremental change in the competitive landscape?And second question is your outlook regarding this year's operating expenses as well as profitability margin.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Thank you for your question. Regarding the competitive landscape, yes, we have noticed the newly published the third-party data, and we are quite aware of our own data, which we -- the conclusion is that we don't notice any fundamental changes regarding the competitive landscape.And for some of our peers who increased their investment in marketing after Spring Festival this year, because some of them are not public companies, we cannot have their data, but I have been within this industry for long term. So I know that because there are some signs of improvement from the revenue side, then people are willing or more willing to invest in the marketing to spend more, which I believe is a reasonable explanation and also concur -- echoed by our own data. So this is actually a positive sign for me because not only us, but the whole industry are recovering or moving up. So we are the -- we are not [ owning deck ] within a warning water.And for our user growth target, we are still targeting for at least 40 million newly verified users this year, because, as you said, our peers have increased their investment on marketing, so I will not discuss too much on the details. But I can guarantee you that we will still spend money reasonably.I don't have the feeling to increase a lot of our marketing expenses, it's not actually necessary. So we will spend reasonably -- in a reasonable range. But at the same time, we will maintain our strong competitive edge in terms of user penetration, in terms of market share and the whole leading position. And that's the answer to your first question.

[Yu Zhang, executive]

So regarding the user acquisition. So definitely, there will be expenses. So simply speaking, we would like to keep our user growth at still at a quick or fast pace. But meanwhile, we would like to keep selling marketing as a percentage of revenue at the most flat or in a better scenario would be slightly lower than 2023. So this selling marketing percentage of revenue.So regarding the gross margin trend, in the short term, due to seasonality, Q4 is a low quarter. So gross margin was affected slightly. So Q1, the gross margin to be flat. And this is mainly because of the high online revenue contribution, which involves higher payment processing fees in short term. But for the full year of 2024, we would like to see gross margin improvement, mainly due to the leverage from personnel costs backed by quick revenue growth. So basically, simply speaking, gross margin to be further improving in 2024.As I just mentioned, selling and marketing expenses, so rest of other items, like R&D and G&A, we won't expect to increase these expenses aggressively. So, operating margin on the bottom line to continue seeing uptrends. So basically, we would like to keep our -- most of the cost or expenses lines in a self-disciplined manner. So therefore, we can leverage driven by our faster business or revenue growth for the full year.

[Operator]

Our next question comes from the line of Yang Bai from CICC.

[Yang Bai, analyst]

[Foreign Language] My first question is, what's the company's strategy of commercialization this year and what are the expected trends in the payment ratio and ARPU? And my second question is, what's the progress of the company's blue collar business? And what are the future planning direction for the blue collar sectors?

[Yu Zhang, executive]

Okay. So I'll answer the first question regarding the monetization or commercialization for our business. So we just reported that for the latest quarter, there was 5.2 million trailing 12 months paid enterprise customers. So this is -- this was a historical high. And regarding our commercialization, there was -- there were 2 components. One is paying ratio and other is ARPU. So we expect that the paid -- in terms of the paid enterprise customers in 2024, so we would like to continue to see the growth of the paid enterprise customers sequentially.And in terms of the -- their ARPU, the blended ARPU in the last quarter looked -- dropped a little bit. This is mainly because of the contribution from small and medium-sized enterprises. Their revenue contribution is bigger because of the fast growth from SME companies. And the blended effect makes blended ARPU drop a little bit. But when -- but if you look at the small, medium-sized accounts and the key accounts separately, you would like to see both of them, their ARPU increased in the last quarter. So their ARPU are all increased, respectively.And in terms of the paying ratio, compared with 2022 -- 2023, the overall paying ratio increased by 3 percentage points. At this moment, the paying ratio for the platform is still at a low level. So we believe there would be still a good room to grow. So it will take several years to gradually increase the paying ratio for us.And in short term, the paid enterprise customers growth mainly comes from the user growth and, as we just mentioned, our marketing strategy. So basically, in this year, we will still continue to acquire users and at a very quick or faster pace. So basically, that will contribute us with new users, new business users, new paid enterprise customers. And for the longer term, we expect the paying ratio to continue to grow, and the recovery from large enterprises, as Jonathan just mentioned, we definitely will increase their ARPU. So paying ratio increase and ARPU increase, those 2 parts have good potentials will support our long-term growth with our commercialization.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] I will firstly talk about the blue collar business. So our blue collar business has -- experiencing continued healthy growth. So a data point to support that, which is our revenue grew by 32% year-on-year. However, the revenue contribution from blue collars goes up by 6 percentage points from 28% to 34%, which is a very powerful demonstration of the good performance of our blue collar business.And there are 4 detailed sectors within blue collars, which are urban service, manufacturing, construction, and warehousing and logistics. Every subsector, the numbers of users have is less than white collars. However, combined together, they are quite a considerable amount. So we need to better serve them.Within the urban service sector, we have been doing well. We have a good recommendation and reputation. So we also made some money from there. Within manufacturing, we are still under very hard exploration, which actually this has been going for a while. We talked about there are 4 players within manufacturing recruitment business, which had factories, which is employee -- employers, the workers, the agents, the offline agents, which -- who have been playing there for a long time and the last one is the platform.So the game is that in a considerable long term -- longer term, within those 4 parties, among 2 or 3 of them, there have been contradictory situations. So actually, it's a zero-sum game. But we have been the hard [indiscernible] for quite a long term, and we made some progress. And also the industry situation for manufacturing in the past 2 or 3 years have been quite different from previous period. So we will continue to work on that area.So that's my update on our progress on blue collar business. And that does concludes our question for CICC.

[Operator]

The next question comes from the line of Robin Zhu of Bernstein.

[Robin Zhu, analyst]

[Foreign Language] So 2 questions, please. One, it's good to see management raise the buyback for the coming year. So I think that you could share some thoughts on capital return policy going forward and the monthly pace of buybacks. Given there's almost $2 billion of cash on the balance sheet, will the company commit to a systematic capital return program going forward as revenue and cash flows grow?Second, I'm keen to hear management talk about future product development and specific ways the company can leverage AI to capture more value and profit in the recruiting process. Also, would love an update on overseas expansion if management has any new thoughts or concrete plans.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] Thank you for your question. So regarding cash allocation, so it's actually to make the fast arrangement, optimize the allocation of company's capital and continues to increase shareholder return is a duty for any pubic company, any management of a private company and CEO of any public company is our [persevere ] and our duty.And we have roughly, as I said, 15 billion cash on hand. So for me, the priority to use this cash, there are priorities. The top priority will always be -- we will use our money for future development, for user growth, to expand our advanced model to more user groups to more industries, areas and the country to initiate our business.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] In the second priority to provide shareholder return, we are currently exploring possibility following our initial special cash dividend last year to pay cash dividend continuously in the future.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] And the last one is from share repurchase perspective. So we just approved this USD 200 million new repurchase program. So we -- so that's what we have been doing, and we will continue to do. So we want to utilize this share buyback program to guarantee our shareholders their shareholding percentage. And we will -- in the future, we will coordinate between all these several methods or several ways to provide the best return to our shareholders.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] And from the AI investment, our policy, like we just discussed, first is to keep up with the latest leading technology and teams to avoid any knowledge gap, generational gap compared with the first tier teams. And secondly, we will continue to pursue the industrial implementation and not to blindly investment to compete with chips, compete with spending of electricity power, which is not worthwhile, we will spend our money cleverly.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] And regarding the opportunity that AI has brought about for our company and for our industry, I would like to share with you one of my understandings, which is if something -- if development cannot go -- proceed without artificial intelligence, without AI, then we need to invest that. So if something can function quite well even without AI, then we should be very cautious on the investment. That's distinguish between whether we should spending more from an industrial perspective.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] And about the overseas business, which many of the investors may concern, our policies are also quite clear. First is, we will go overseas to make money. Second, so we want to make money from wealthy people. Third, the recruitment and job seeking business is quite serious is regarding the power and protection of jobseekers, so which have a quite high requirement for the local labor law.And fourth -- and so based on those requirements and considerations, we will invest in the top like 5 or 6 GDP countries or areas where the [ legal ] environment are quite clear and mature and the enterprises are used to pay for services and all those traditional business model can make good money. So that's quite clear, we don't go to mature market, [ ancient ] payers, good laws and wealthy people. So that's our strategy for overseas business.

[Peng Zhao, executive]

[Foreign Language]

[Wenbei Wang, executive]

[Interpreted] And for your reference, and that wraps us -- wrap up our answers for those questions. And due to the time constraint, that will be the last question. So, operator?

[Operator]

Thank you. At this time, I will turn the conference back to Wenbei for any additional or closing remarks.

[Wenbei Wang, executive]

Okay. Thank you once again for joining us today. If you have any further questions, please contact our team directly. And thank you.

[Operator]

That does conclude today's conference call. Thank you for participating. You may now disconnect your lines.

[Wenbei Wang, executive]

Thank you. Bye-bye.[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]