- Total Revenue: CNY1.02 billion, a year-on-year decrease of 7.2%.
- Gross Profit Margin: 78.8%, an increase of 2.8 percentage points year-on-year.
- Non-GAAP Operating Profit (H1 2024): CNY93.95 million, a year-on-year increase of 100%.
- Non-GAAP Net Profit Attributable to Equity Shareholders (H1 2024): CNY66.61 million, a year-on-year increase of 58.8%.
- Revenue (Q2 2024): CNY540 million.
- Non-GAAP Operating Profit (Q2 2024): CNY95.43 million, a year-on-year increase of 52%.
- Revenue from Talent Development Services (H1 2024): CNY160 million, a year-on-year increase of 41%.
- Registered Business Users: 1.37 million, a 12.4% increase year-on-year.
- Paying Business Customers: 63,000, a 5.1% increase year-on-year.
- Registered Individual Users: Over 100 million, an 11% increase year-on-year.
- Average MAU Growth (Q2 2024): 10.3% year-on-year.
- Revenue (Q2 2024): CNY544 million, a 7.8% decrease year-on-year.
- Revenue from Talent Acquisition and HR Services (Q2 2024): CNY452 million, a 14.1% decrease year-on-year.
- Revenue from Talent Development Services (Q2 2024): CNY91.3 million, a 44.5% increase year-on-year.
- Gross Margin (Q2 2024): 78.5%, a 4 percentage point increase year-on-year.
- Gross Profit (Q2 2024): CNY427 million, a 2.9% decrease year-on-year.
- Operational Expenses (Q2 2024): CNY372 million, a 14.8% decrease year-on-year.
- Sales and Marketing Expenses (Q2 2024): CNY230 million, a 17.6% decrease year-on-year.
- G&A Expenses (Q2 2024): CNY62.25 million, an 18.1% decrease year-on-year.
- R&D Expenses (Q2 2024): CNY79.21 million, a 2.1% decrease year-on-year.
- Operating Profit (Q2 2024): CNY85.55 million, a 73.3% increase year-on-year.
- Net Profit (Q2 2024): CNY79.23 million, a 29.6% increase year-on-year.
- Net Profit Attributable to Equity Shareholders (Q2 2024): CNY65.43 million, a 9.4% increase year-on-year.
- Non-GAAP Operating Profit (Q2 2024): CNY95.43 million.
- Net Cash Outflow from Operating Activities (H1 2024): CNY120 million.
Release Date: September 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross profit margin increased to 78.8%, a 2.8 percentage point rise year-on-year.
- Non-GAAP operating profit doubled to CNY93.95 million, a 100% increase year-on-year.
- Revenue from talent development services grew by 41% year-on-year, maintaining growth for three consecutive quarters.
- Number of registered business users increased by 12.4% year-on-year, reaching 1.37 million.
- Average Monthly Active Users (MAU) grew by 10.3% year-on-year in the second quarter.
Negative Points
- Total revenue decreased by 7.2% year-on-year, amounting to CNY1.02 billion.
- Revenue from talent acquisition and other HR services for business customers fell by 14.1% year-on-year.
- Mid to high-end recruitment market remains under pressure, affecting overall demand.
- Cash billings continued to decline in the second quarter.
- Net cash outflow from operating activities was around CNY120 million in the first half of the year.
Q & A Highlights
Q: Seeing a significant rebound of the company's profit margin in the second quarter, could you provide an outlook for the two-year profit trend? How long can this optimization last?
A: (Kebin Dai, CEO) The recovery of mid to high recruitment demand has been slow. We are committed to cost reduction and efficiency enhancement, reflected in a year-on-year decrease of 11.2% in total operating expenses in the first half of the year. This trend is expected to continue with a 10% to 15% optimization of total operating expenses. The largest expected annual decrease is in G&A expenses due to streamlining the organizational structure. Sales and marketing expenses will also see significant control. R&D expenses are expected to remain stable or slightly decrease. Revenue for the full year is expected to decline by about 10%, with gross margin improvement consistent with the first half of the year. The non-GAAP OP margin is expected to improve compared to last year, but the extent is still uncertain.
Q: Could you provide an overview of the GMV and revenue contribution of RCN in this quarter and your outlook on the future development of this business?
A: (Kebin Dai, CEO) The headhunting market is under pressure, but Duolie RCN has provided employment opportunities for headhunting firms on our platform. Since last September, the number of headhunters and headhunting firms joining Duolie RCN Network has continued to increase with more than 65,000 positions in operation. We are confident in achieving the annual GMV target. In the second half of the year, we will explore the application of AI technology in the headhunting industry, which will have a profound impact on the traditional headhunting industry. We are also working on commercialization and exploring more opportunities, especially in the application and monetization of AI technology.
Q: What are the main reasons for the significant increase in gross margin year on year this quarter? How should we think about the future trend of gross margin?
A: (Ge Tian, CFO) The improvement in gross margin was mainly due to two factors: the increase in the proportion of high-margin online products and the control of the gross margin of project-based products. We expect the gross margin for the full year to show a certain increase compared to last year. Factors affecting the gross margin include the macro environment and product structure. When the macro environment is stable, the gross margin of project-based products will improve. Promoting high-margin online products and controlling the gross margin of project-based products will also contribute to increasing the overall gross profit margin. Internal efficiency improvements, especially using AI, will further ensure the stability of our gross margin.
Q: How has the company managed to maintain user engagement despite reducing marketing expenses?
A: (Kebin Dai, CEO) Despite significantly reducing marketing expenses, user engagement has maintained good growth with an average MAU growing by 10.3% year on year in the second quarter. This is mainly due to improved efficiency in acquiring new users through refined management of our marketing channels. Product and recall strategy innovation has reactivated and stimulated a large number of talents, leading to more efficient job matching on the platforms and optimizing user experience.
Q: What are the company's plans for expanding into non-first-tier cities and non-white-collar positions?
A: (Kebin Dai, CEO) We will continue to expand into more non-first-tier cities and non-white-collar positions, penetrating fields like the urban service industry, blue-collar manufacturing industry, and medical service industry. This targeted sales and product strategy has helped us gain more business customers since the beginning of the year. By the end of the first half of the year, the number of registered business users on our platform reached 1.37 million, a 12.4% increase compared to the same period last year.
Q: How has the company's talent development services performed in the first half of the year?
A: (Kebin Dai, CEO) Our talent development services achieved a total revenue of CNY160 million, a year-on-year increase of 41%, maintaining growth for three consecutive quarters. This growth is mainly attributed to the continued improvement of our online professional training business. With the approach of the intensive examination period and continuous improvement of operational efficiency, we expect this business to maintain high growth throughout the year.
Q: What measures has the company taken to improve internal efficiency and reduce costs?
A: (Ge Tian, CFO) We have significantly reduced marketing expenditures and restructured our business lines to achieve more refined team management. Our R&D and other support teams are continuously improving efficiency to build a more streamlined organizational structure. We have also made flexible adjustments in the sales staff, streamlining the organizational structure and optimizing personnel. The reduction in G&A expenses in the second quarter was significant, mainly due to further optimization of our offline business management system.
Q: What is the company's outlook on the mid to high-end recruitment market?
A: (Kebin Dai, CEO) The mid to high-end recruitment market will continue to experience certain pressures in the short term. However, this challenge presents an opportunity to enhance our internal strength and market shift to cope with structural changes in corporate recruitment needs. We will continue to employ diversified sales strategies, optimize organizational structures, and fortify services to focus on the in-depth development of key account customers and extensive coverage of SME businesses. We will also renew recruitment products to strengthen our professional service advantages in the mid- to high-end online recruitment market.
Q: How is the company leveraging AI technology in its operations?
A: (Kebin Dai, CEO) We are actively promoting AI products like the intelligent interviewer Doris to explore the diverse needs of medium to large enterprises. Doris is expected to take on more interview demands in the second half of the year. We have also been honored with the Smart Technology Application Practice Case award for these applications. We will continue to explore AI technology with a focus on continuous testing in practical industry applications, believing that AI has a profound impact on human resource services.
Q: What are the company's plans for the second half of the year regarding cost control and efficiency improvements?
A: (Ge Tian, CFO) We will continue to focus on cost control and efficiency improvements. We expect further reduction in G&A expenses in the second half of the year. We will also optimize the allocation and focus of our R&D expenses, achieving deeper cost reduction and efficiency enhancement. We will continue to explore modular upgrades and internal use of AI tools to improve efficiency. Overall, we will look for opportunities to reduce costs and improve efficiency in combination with business development next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
