Boss Zhipin Earnings: Revenue Beats Slightly; Execution Risks Persist as Scale Remains Small

We maintain our fair value estimate for Boss Zhipin at USD 20 per ADR (HKD 78.20 per share) after the company reported first-quarter 2024 revenue of CNY 1.7 billion, which was 2% better than our estimate. Operating margin improved to 5% from negative 8% a year ago but saw a 900 basis point decline sequentially, which is a slight concern. Sales and marketing expenses increased to 34% of sales, and the company expects similar levels for the rest of 2024, which is 600-700 basis points higher than the second half of 2023. However, the elevated sales and marketing expenses are likely to be offset by a higher gross margin as the platform scales up, with more enterprises beginning to pay for its recruiting services. For the second quarter of 2024, the company guided revenue to the midpoint of CNY 1.935 billion, representing an increase of 30% year on year. This is also in line with our second-quarter 2024 forecast.