BZ — Q2 2026 Financial Report Analysis

KANZHUN, which runs the BOSS Zhipin job-matching app in China, grew second-quarter 2026 revenue 14.1% to RMB2,398.6 million, up from 7.6% growth in the first quarter, and widened its operating margin by 5 percentage points even while spending heavily on a 2026 FIFA World Cup sponsorship. The headline net income figure (+173.1% to RMB1,942.3 million) is mostly a paper gain on a stake in another company that went public in January; on the company's own adjusted basis, profit grew a more modest 9.4%.

At a glance

• Revenue +14.1% to RMB2,398.6 million (about US$353.5 million) — growth nearly doubled from Q1's 7.6%, driven by more employers paying for recruitment services (7.2 million paying enterprise customers over the past 12 months, +10.8%).
• Operating margin 36.0%, up from 31.0% — revenue grew faster than costs; a 29.7% cut in general and administrative spending more than paid for a 38.3% jump in marketing.
• Net income RMB1,942.3 million, but RMB1,099.6 million of it is an after-tax investment gain — strip that and stock-based pay out and adjusted net income was RMB1,029.2 million, up 9.4%.

The quarter in numbers

All figures in millions of RMB (Chinese yuan) unless stated; per-share figures are per American Depositary Share (ADS), the unit traded on Nasdaq, which represents two ordinary shares. The company's convenience rate is RMB6.7851 per US dollar.

"Non-GAAP" or "adjusted" figures are the company's own versions that leave out certain costs or gains; here they exclude share-based compensation (pay given to staff in stock rather than cash) and, this year, the investment gain described below.

Where the growth came from

Almost all revenue (99%) comes from employers paying to post jobs and reach candidates. That line grew 14.7%, which the company attributes "mainly" to growth in paying enterprise customers. Paying customers grew 10.8%, so the remaining few points of growth suggest each paying employer spent somewhat more on average — though the customer count is a 12-month figure while revenue is one quarter, so that is a rough read, not a measured number.

The small "other" line, mostly paid add-ons sold to job seekers, fell to RMB14.6 million from RMB24.8 million. The company says it deliberately simplified those features from the third quarter of 2025 to keep job seekers engaged rather than charge them — a revenue trade-off, but a tiny one.

Monthly active users passed 70 million for the first time (70.2 million, +10.4%). On a platform that matches two sides of a market, more active job seekers make the app more valuable to employers, which is what supports the pricing.

Why the margin widened

Operating margin — the share of revenue left after running the business, before interest income and tax — rose to 36.0% from 31.0%. Line by line:

• Cost of revenues rose only 1.6% (server and bandwidth costs up, payment processing costs and stock pay down), lifting gross margin to 87.0% from 85.4%.
• Sales and marketing jumped 38.3% to RMB580.9 million, mainly advertising for the 2026 FIFA World Cup sponsorship plus higher sales staff costs. It ate 24.2% of revenue versus 20.0% a year ago.
• Research and development rose 3.5% to RMB430.5 million, driven by cloud service fees, despite management's stated push into AI models.
• General and administrative fell 29.7% to RMB218.6 million on lower employee-related costs. This is not only lower stock pay: excluding stock-based compensation, G&A still fell about 25% (RMB164.4 million vs RMB218.6 million).
• Share-based compensation overall fell 18.9% to RMB186.4 million.

Excluding stock pay, total operating costs grew 10.7% against revenue growth of 14.1%. That gap — operating leverage, where revenue grows faster than the cost base — is the real source of the margin gain, and it held up even through a quarter with an unusually large one-off marketing push.

What the headline numbers hide

Most of the net income jump is a paper gain. "Interest and investment income" was RMB1,632.5 million versus RMB157.0 million a year ago. Of that, RMB1,466.1 million (pre-tax) is a fair-value gain — an increase in the market value of KANZHUN's stake in an investee company that listed in January 2026, booked as profit even though nothing was sold. After the RMB366.5 million of tax booked against it, the gain added RMB1,099.6 million to net income. Underlying interest and investment income was about RMB166 million, close to last year's RMB157 million. The company does not name the investee in the release; the stake now sits in long-term investments, which rose to RMB3,671.6 million from RMB1,898.2 million at year-end. Because this gain moves with someone else's share price, it can reverse in a later quarter.

Adjusted profit grew slower than adjusted operating profit (9.4% vs 19.2%) because of tax. Total tax was RMB550.3 million versus RMB97.1 million. Removing the investment gain and its tax, the effective rate on the remaining pre-tax income works out to roughly 18% versus about 12% a year ago (our calculation from the release's figures). The company points to withholding tax of RMB19.7 million and a RMB10.3 million "Pillar Two" top-up tax — the global 15% minimum tax on large multinationals — on top of higher operating profit.

Per-share growth lagged profit growth despite buybacks. Adjusted diluted EPS per ADS rose only 6.7% versus 9.4% for adjusted net income, because the diluted share count was about 2% higher than a year ago (925.6 million vs 906.9 million). Buybacks are now shrinking it quarter to quarter — the first-half average was 936.9 million, so Q2 was well below Q1 — but year on year they have not yet reduced it.

Cash conversion dipped in the quarter, not over the half. Operating cash flow fell 10.2% to RMB944.8 million, about 92% of adjusted net income, which the company attributes to higher advertising spending and tax payments and lower interest received, partly offset by higher customer billings. For the first half, operating cash flow of RMB2,134.9 million was 113% of adjusted net income. Compared with GAAP net income it looks much weaker (70% for the half), but that is because the investment gain produced no cash. Deferred revenue — money customers have prepaid for services not yet delivered — rose to RMB3,548.3 million from RMB3,236.0 million at year-end, despite a RMB41.6 million reduction from a new Chinese VAT law, a sign that customer prepayments are still growing.

Guidance: Q2 revenue of RMB2,398.6 million landed inside the RMB2.38–2.42 billion range given in May, slightly below its midpoint.

Cash and shareholder returns

Cash, short-term deposits and short-term investments totalled RMB18,807.2 million (US$2,771.8 million) at June 30; the balance sheet shows no bank borrowings. Net financing outflows were RMB1,749.3 million in the first half, in line with the buyback program (the release does not itemize them). The board declared an annual dividend of US$0.51 per ADS (about US$230 million in total), and management says that with over US$300 million of buybacks so far this year, total returns already exceed 100% of last year's adjusted net income — above the floor of at least 50% it committed to in March for each of 2026–2028. The buyback authorization was raised to US$400 million through August 2027.

Takeaway: Strip out the investment gain and this is still a genuinely better quarter: revenue growth accelerated to 14.1% and the operating margin rose 5 points while marketing spend jumped 38%, showing the cost base is growing more slowly than sales. The catch for shareholders is that higher tax and a share count that hasn't fallen year on year turned 19% growth in adjusted operating profit into under 7% growth in adjusted earnings per ADS.

Outlook

Management guides third-quarter 2026 revenue of RMB2.41–2.50 billion, up 11.4% to 15.6% year on year. The midpoint (about 13.5%) implies growth holding near Q2's pace rather than accelerating further. Things to watch when Q3 results arrive:

• Whether marketing spend falls back after the World Cup. If sales and marketing returns closer to 20% of revenue, Q3 margins could improve further; if it stays elevated, the Q2 margin gain was mostly the G&A cut.
• Investment income swings. The listed investee stake is now marked at market value each quarter, so GAAP net income can rise or fall sharply for reasons unrelated to the recruitment business. The adjusted figures are the better guide to the core.
• Tax rate. Whether the higher rate on core profit (with Pillar Two now applying) persists will decide whether adjusted net income keeps lagging operating profit.
• AI monetization. Management says early commercialization of AI-assisted chat and AI interviews "point[s] to substantial market potential", but the release gives no revenue figure for it yet; until it does, growth still rests on paying-employer count.

This is the first BOSS Zhipin report on this site, so there is no earlier outlook to check against. The figures come from the earnings release furnished to the SEC on Form 6-K (KANZHUN is a foreign private issuer and does not file 10-Qs); it contains no segment breakdown or full management discussion beyond what is summarized above.