Tongdao Liepin Group

HKEX:6100

Earnings Call Transcript 2021-Q1

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Tongdao Liepin Group First Quarter 2021 Earnings Release Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, Sunday, 23rd of May 2021. I would now like to hand the conference over to your speakers for today, Rick Dai, Chairman and CEO; Tim Tian, CFO of the company; and Xueni Wang, Director of IR. Thank you. Ms. Wang, please go ahead.

[Xueni Wang, executive]

Thank you, operator. Hi, everyone. Thank you for joining us on this today's call to discuss our quarterly results for the 3 months ended March 31, 2021. I remind you that this call may contain forward-looking statements made under the safe harbor provisions. Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties and factors is included in the company's filings with the Hong Kong Stock Exchange. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under law. On today's call, Mr. Rick Dai, company's Chairman and CEO, will kick off with our business operational highlights. After that, Mr. Tim Tian, our CFO, will continue with detailed financial review. After the prepared remarks, we will be available to answer your questions. Now I will turn the call over to Rick.

[Kebin Dai, executive]

Okay. Thank you. Good evening, everyone. Thank you for joining our 2021 first quarter earnings call. We are very pleased to announce another solid result in the first quarter of 2021. Coming to the 2021, the talent service market has shown a very strong sense of recovery. The sentiment was supported by the feedback from our customers, operation data, like a member of job posting and reported numbers from the government.

Looking closer into the industrial performance with overall upward trend in markets, the industries that are most heavily suffered from the pandemic tend to experience the most remarkable reforms, including business in tourist, media and other off-line industries. At the same time, the sectors that are in favor of national policies and long-term development directions like new energy vehicles and intelligent manufacturing also showed high activities in the recruitment market. Following the strong recovery of Chinese economic and the reform of the recruitment sentiment, our revenue and gross profit came in at RMB 523 million and RMB 417 million, representing a strong growth of 52.6% and 47.9%, respectively. Our non-GAAP profit from operations increased to RMB 37 million, 42.1% year-on-year growth. Besides a solid financial performance, I would like to share some of experience -- exciting updates of our Liepin team during the first quarter. In January, we rolled out a series of branding campaigns. We introduced our new logo and a new celebrity [ Li Yipong ], to cater to the younger population performance. Our sponsorship in the international game league that software like LPL and the famous talk show also attract great attention from the younger generations. In the Chinese recruitment market, we can see the transformation of recruitment demand towards higher-end talents and the trend of the -- an increasing amount of younger populations in higher-end positions. Therefore, on top of our dominated position among the experienced talents in the mid- to high-end markets, we become increasingly welcomed and recognized by younger talents and recruiters. The enlargement of user base boosted our platform activities while also creating more business potentials for us. Together with our brand upgrade in targeting a wider range of populations, we further optimized our product superiority. Our mobile application launched a version 5.0 with various new functions and great features. For example, users can able -- users are able to interact on our platform freely through the upgraded instant messaging function. Recruiters enjoyed more customized interface to attract different candidates and job seekers. Profile updating process is greatly simplified. As we support unique demands from different segments of users, the overall user experience and stickiness were greatly improved. Meanwhile, we also attached great importance to data security and user protection. During the first quarter, we led the industrial transformation by introducing the virtual intermediary contact number between our users. By doing so, recruiters can only proactively contact candidates through our online platform or using a [ tight ] virtual number. As expected, we saw an increased number of user interactions on our platform. For example, the number of contacts with the registered individual users by various -- by verified headhunters were up by 38.8% this quarter compared to the same period last year. Those diversified behavior data can direct us to capture a deeper understanding of our user performance and further adapt to their needs. Overall, we believe that we are more than ready to adopt new contacting methods and play a significant role in driving the development of the industry. Besides the fast developing core recruitment business, our other HR service also made a great progress during the first quarter of this year. To begin with, our flexible staffing business maintained its strong growth momentum. The intellectual management platform, online business operating process and a digital internal supporting system of our flexible staffing business have created clear advantage versus the other players. Unlike most of the companies, we are able to bypass the limit of management and business expansion difficulty, and hence, deliver sustainable platforms. Secondly, our service remains a health growth given the higher base in 2020. We managed to convert a large amount of user traffic from the pandemic into frequent daily users for its efficiency and use -- ease of use. Our group is working with the business segment teams to explore more monetization possibilities, leveraging its product superiority and large user base. Last but not least, our training and assessment service serves as a valuable supplement to the overall business. This quarter, more customers cooperate exclusively with us on training and assessment for our [indiscernible] brand and excellent service offer. Moreover, on the 2C side, we provide closed-loop service from CV advisory into job application to certificate training and career coaching. Individual users are able to seek jobs, ask for advice and achieve self-improvement on our one-stop platform. In recent years, individual's willingness to improve themselves for the purpose of securing a better job continue to increase, which will eventually contribute to the rapid expansion of the online talent service market on the individual side. Overall, with the synergies of our talent service, we are continuously fulfilling more users' needs, and our value creation has been increasingly acknowledged by our users. As of March 31, 2021, the number of our verified business users increased from 725,000 by the end of last year to 811,000 in this quarter. The number of individual registered users increased from 63.2 million by the end of last year to 65.8 million as of this quarter of 2021. This year and going forward, we will continue to firmly execute our strategy in focusing on product superiority, technology advancement and penetrating on the users and the service front. Under the wave of Chinese economic recovery, we are confident in another strong year with our expanding user base, well-rounded product portfolio and rich opportunities lie within our business. Now let me turn it to Tim to walk you through our key financial highlights. Thank you. Tim?

[Ge Tian, executive]

Thank you, Rick, and thanks again, everyone, for joining our first quarter of 2021 results release call. During the first quarter, our revenue was RMB 523 million, a 52.6% increase from RMB 342.7 million in Q1 last year, which meaning credit to the upward market sentiment in the talent service industries and our maturing business teams. Our gross profit was RMB 417 million in Q1 2021, up by 47.9% year-over-year, and our gross margin remains at high level at 79.7%. Turning to operating expenses. Our sales and marketing expenses were RMB 285.1 million in the first quarter of this year, a 53% increase from RMB 186.3 million in the first quarter of last year. So the lift was mainly driven by additional marketing expenses related to the branding campaign as planned at the beginning of the year and the increase in the sales personnel in response to the surge in business demand. Our sales and marketing expenses as a percentage of revenue remained relatively flat at 54.5% in the first quarter this year compared with 54.4% in 1Q last year as we heavily invested in branding programs in the first quarter, as Rick just mentioned, a stable ratio illustrated to our improved sales efficiency year-over-year. Our G&A expenses were RMB 72.1 million in Q1 this year, a 13.0% increase from RMB 63.8 million in Q1, which was primarily due to the increase in management costs due to the expansion of our business. Our G&A expenses as a percentage of revenue in Q1 this year and Q1 last year were 13.8% and 18.6%, respectively, which decreased significantly this year due to the scale effect of our fast-growing top line. As part of our ongoing R&D activities, we continue to invest aggressively in our R&D expenses as part of the key growth strategies, which resulted in a 23% increase from RMB 56.8 million in Q1 last year to RMB 69.6 million in first quarter this year. Our R&D investment will continuously focus on product innovation, product upgrade, data security improvement and system integrations of our business segments. Our R&D expenses as a percentage of revenue in Q1 2021 and Q1 2020 were 13.3% and 16.6%, respectively, which decreased significantly this year due to the scale effect of our fast-growing top line as well. As a result, our profit from operations in the first quarter was RMB 9.6 million, up by 5.4x compared to RMB 1.5 million in Q1 last year. Our net profit for the period was RMB 3 million, turning positive from a net loss of RMB 2.2 million in Q1 last year. In the meantime, our non-GAAP operating profit, excluding share-based compensation and amortization of intangible assets, was RMB 37 million in the first quarter of this year, a 42.1% increase from RMB 0.6 million in the first quarter of 2020. As the company does firmly believe in value creation through business operations, we are also very pleased to see that the continuous strengthening of our business performance is increasingly recognized by the capital market. On February 26, Liepin was selected as a constituent stock of Hang Seng Composite Index and became eligible to trade under Shenzhen Hong Kong Connect on March 15. So overall, a significant increase was recorded across all our business segments during the first quarter of 2021. It is notable that our business layout, technology advancement and continuous effort from the management team provided us with a solid foundation to engine the future growth. We are also supported by the recovering economic activities and strong market demand from our customers. We will remain committed to deliver sustainable growth and create long-term value for our customers and shareholders. With that, operator, please open the line for questions.

[Operator]

[Operator Instructions] And our first question comes from the line of Steven Tsai from Morgan Stanley.

[Steven Tsai, analyst]

I have 2 questions. My first question is related to your subscription business. Could you share with us the renewal progress in the first quarter and how it has trended in the second quarter to date? And if there is any metrics such as solid retention rates, that would be great. My second question is related to your sales and marketing spending. I noticed that in absolute dollar terms it expanded quarter-on-quarter, excluding SBC in the traditional low season. So just wondering how should we think about your sales and marketing spending into the second quarter as well as the full year 2021. Any color would be great.

[Ge Tian, executive]

Okay. I think in terms of the first quarter of the renewal, the subscription contracts, I think it will be a little bit tough to tell the situation just by 1 quarter situation because normally, we have a full year spend to work closely with our customers in order to understand their requirements, understand their needs so that we know what to sell to them. But based on what we know internally, I think all the data proved to be definitely more positive compared with what we saw last year since last year was pretty low -- a low quarter. Moving to your second question on the sales and marketing, right? I think, definitely, again, right, same as what we saw in the past couple of years, definitely, the first quarter was the heaviest quarter in terms of sales and marketing spending. So in terms of marketing costs, I think it will definitely go down in the second quarter and the rest of the year. But definitely, we will always assess the situation of the market and decide if we want to invest more or the level of investment depending on the movement of the situations in the full year.

[Operator]

And our next question comes from the line of Frank Tao from Huatai Securities.

[Ye Tao, analyst]

I have 2 questions here. The first one is on the new business. Can management share some color on the percentage of revenue contribution from the new business in the first quarter of 2021, for example, Wenjuanxing, Xunhou and Saiyou? And the second question is on gross margin. We have noticed that there is a year-over-year decline compared with the same period in both the 2020 and 2019. Can management share some color on the reason behind? And how should we think about the gross margin trend going forward?

[Ge Tian, executive]

Okay. Thanks, Frank. So regarding your first question on the revenue contribution from the new business, I think we already saw high growth of more than 50% in our top line in the first quarter. And actually, that's a growth rate of almost 70% compared with the same period in 2019. And the same growth -- and also the fast growth was mainly due to the strong recovery of the main recruitment business, and that's the core for the group. And then for sure, the new business also grew at a remarkable speed in 2021. Back to your question on the online survey business, I think we saw the business kind of had some sort of explosive growth that benefited from the pandemic in the first quarter of 2020. Actually, that also built up a high baseline for 2021. But we were actually glad to see that the products already in the online using habit has led to a very positive growth in the first quarter this year as well. Flexible staffing business last year nearly tripled, 3x, versus 2019. But we saw in the first quarter of 2021, we still observed a very continuous and high-growth momentum, which was driven by the strong market demand. And our supporting R&D and system and organizational structure also transform this traditional off-line management model into a lighter and more digital way so that it will help to engine the future growth of this business. And our revenue from 2C side increased significantly in 2021 in the first quarter. I think there are a couple of reasons, right? In addition to the steady growth of our original talent development business, the certificate training business also made an important contribution to the revenue growth. So the layout of this business actually helped us to provide more comprehensive closed-loop services to our individual users, as Rick just mentioned in the opening part. I think, overall, our new business is still showing very healthy high-speed growth trend. However, from the perspective of the total revenue of the core group, I think the size still compare to be smaller and still in a relatively early stage. And the core strategy will still be and always be the online recruitment business. That has been the biggest opportunity to explore. Regarding your second question on the GP margin trend, I think we can clearly see that the gross margin in first quarter this year was still high compared with last year. What you saw, more than 82%, the number was actually not ordinary. So basically affected by the pandemic in the first quarter of last year, the off-line business with low margin such as headhunter-related product and services and the campus recruitment is they were basically halted due to the physical restrictions. And the online business became a larger portion of our revenue last year, leading to an increase in the gross margin percentage last year. So with the gradual normalization of the pandemic and the promotion of the vaccines and all the activities from the society, so off-line activities have returned to basically standard level this year, and our business is showing a strong recovery as well. So the gross margin is lower than the level last year but still at a healthy level, 79%. So throughout the year, we believe our gross profit margin will still be in a relatively stable stage close to 78% to 80%, this range.

[Operator]

Our next question comes from the line of Melody Chan from Jefferies.

[Melody Chan, analyst]

I have 2 questions. The first one is about the 2021 outlook. So now the market sentiment is recovering very well, and can management share the view on the 2021 outlook? And how should we expect the trend in the coming quarters? And how are we going to capture the opportunity of the recovery? And my second question is more on the Saiyou performance. Can management share on the update from their performance and the contribution? And what should we expect from Saiyou going forward?

[Ge Tian, executive]

Thanks, Melody. I think in terms of the market and the view on full year outlook, I think, obviously, the market has recovered strongly as we expected. And our annual outlook for this year may turn at the same level as we put it at the beginning of the year. But definitely 1Q already showed a strong growth. So if you look at the first quarter, right, really, it only accounts for a minor portion of the total annual performance, and the pandemic had somehow impacted our performance in the first quarter last year. So you can see a significant jump of more than 50% in our top line and even higher growth in the cash collection. But going to next quarter, our top line will follow the momentum while the market is still [ heated ]. And our refinement in our sales team structure and technology development will also support our growth. And as a group, right, the full spectrum of our talent services, including recruitment business and other HR services, will also be a solid foundation to execute our business growth for the full year. Regarding capturing the opportunity of the market recovery, we've taken many measures to capture the growing market on top of our organic growth during the recovery like our branding campaign, product upgrade, process marketing and user segmentation, which already brought a lot of amount of frequent users to our platform based on our observations in the first quarter. This is all about converting the users to our paying customers. And at the same time, right, we're also putting a lot of effort in technology development and system integration of our multiple business to drive the long-term growth while capturing the opportunities from the market recovery. I think -- in summary, I think the organic growth this year would be good enough to expect. Regarding the comments on Saiyou performance and the contribution, I think this has been doing well and within our expectations. And you can see from our announcement that our revenue from the 2C customers increased by more than 300% in first quarter. Actually, it was mainly driven by the stable organic growth of our original 2C business, plus our investment in the certificate training business during the third quarter of last year. But definitely, Saiyou played a very important role in this great growth. And our synergy with Saiyou in multiple dimensions, this is -- Liepin leverage our technology capabilities in terms of supporting Saiyou, and this is what Liepin has always been good at. Ultimately, it will help Saiyou to achieve a more sophisticated platform and better user experience. As the number of graduates increase year-over-year, the employment situation will definitely become more challenging for them. Also, this is going to be a situation the government has to tackle for the coming -- upcoming years. That's why our country really puts greater importance to the development of the professional education industry. And the government actually already provided some sort of special fund support, carry on new application training, strengthen professional skills. And at the same time, I think in March or early this year, right, the newly implemented law related to the promotion of privately run growth also clearly pointed out to encourage the company to invest in professional education. This is what we observed in the market. So we really hope that we can help to improve the individual competitiveness by providing high-quality talent service product to help them. But it is still in a fast-growing stage. It has expanded from its domain in teaching certificate and consulting certificate training all the way to MBA trainings and others this year. As part of our business integration, our group and the Saiyou are also able to share the middle office like IT, HR and finance expertise while acquiring new users through the promotion channels. At the same time, the business also provides more well-rounded solutions to our individual users, which further kind of fulfill our mission of helping every talent achieve greater success. I'm not sure, Rick, if you want to add anything for these 2 questions.

[Kebin Dai, executive]

I think -- okay, let me add just a few words about it. I think the first question is how can we capture the opportunity of the market recovery. Actually, just last time, what we mentioned that there's a huge recovery from the industry like TMT and also like AI-related manufacturing and also the new energy vehicles. Actually, we are greatly capture those new opportunities. So we actually gained a lot of share from this kind of the new company and opportunities. On the other hand, we actually try to expand our market coverage by expanding more customers. So we want to cover more customers. Actually, just like what we mentioned before, we divide our sales team into 2. One is the new -- what we call is new customer team, and the other one is the renewal team. So for the new customer team, actually, we cover more customers from the online products. We get the leads for the online products. So that's the new things we have -- we've never done before, and then we see the advantage in the Q1. So we see from more marketing expense to promoting to the market, and then we get more sales leads from the market, and then we transform them for the online sales team to our long-term customers. That shows a more efficient way than before. So this is the first thing I would like to add. And secondly, about the Saiyou performance and contribution, I think on the -- for the career training, it's a really good fit to our platform, because it's really helped our individual users to get more career skills and certificate to show their capability in their jobs. So this is a good way to synergy. What we have already done, it's -- we call it the middle platform to help the IT, HR and finance to corporate each other so that they can greatly and fastly to get the capability of our organization. And then we see the efficiency of Saiyou is really high now, and then they are trying to expand the organization to get more customers. And in overall, I would say that Saiyou will continue to help us to help the individual users of Liepin and also to help us to reach our users' profile online so that they can show their certificates and show their skills on the CV. That will help us to improve the CV quality so that we can provide a higher-quality resume to our customers. So this is a good fit. And also, we see that as the demand of the user -- individual users for the career skills training is really high and people would like to pay. And then we see the revenue growth, and then we expect a higher coverage and higher growth on this business as well. Yes.

[Operator]

And our next question comes from the line of Binbin Ding from JPMorgan.

[Binbin Ding, analyst]

I have 2 questions here. First is about the key recruiting industries. You mentioned in the press release that the top 3 recruiting industry in the first quarter are electric vehicles, tourism and media, which seem a little different from our top industries, i.e., financial services and TMT. So what's that such a difference just to us? And can you talk about the kind of opportunities as well as challenges behind such a change? My second question is about investments. We noted that over the first quarter earnings results, a lot of Internet companies have decided to step up investments in multiple areas this year, for example, in user acquisition, in R&D personnel, in [indiscernible], et cetera. So what is your preliminary plan in terms of investments of this year? And what kind of financial implications shall we expect?

[Ge Tian, executive]

Sure. Thanks, Binbin. I think regarding the industries and the observations on them on the first quarter, basically, I think we were very pleased to see the mass recovery of many industries this year. Among the overall rebound, as you just mentioned, right, I think the most active industries in terms of the recruitment is mainly driven by the demand recovery from the relaxation of the physical restrictions due to the ease of the pandemic on one hand and the favorable government policies on the other hand. As we are a talent service provider covering all major industries in China, our broad user coverage has provided us with a strong resilience during the downturn, meaning that we are actually merely affected by the industrial fluctuations in terms of the mix or the speed. The reason why TMT, finance and real estate turned out to be our main sectors traditionally, it's because there are a great amount of the mid-to high-end recruitment demand coming from these 3 sectors due to their fast development in the past decade. Even though the top 3 industries I just mentioned only accounts for 30, 40-ish of our total revenue, so when the demand shifted to other segments, we could also capture the market rapidly because for one, we already cover all the industries and persist with all the necessary knowhow, and secondly, within our group, we do have a big data team to support our sales direction, allowing us to spot the trend right away by leveraging all kinds of data analytics. Binbin, the number of our registered business users has increased around 20 -- sorry, around 12% versus last quarter and approximately 40% year-over-year. Therefore, you can see that we are not really limited to any particular industries, and our business has always proved to be resilient even during the downturn like last year given our unique market position, also products -- we already have diversified product mix. Regarding the investment, I think it was really helpful for you to give us your observations on the industry and what -- how the others doing. I think the pandemic of last year has really promoted the online trend of most industries and gradually penetrating to traditional sectors with the development and solidification of the online consumption habits and also work habits. We have seen the many TMT or Internet companies are seizing this opportunity to increase the investment in order to gain more market share, mostly due to the competition. However, I think the digitalization of the human resource industry is still at a very early stage and the online penetration is still very low. We can see that there's still a lot of room to grow in the future. That's why for our investment, there is nothing to do with the competition. I think at the beginning of the year, I think we talked about many times, we upgraded our brand, we changed our logo, introduced a new ambassador in order to be closer to our younger generations, right? I think by doing so, we also moved our traffic interest to ensure a broader user base in the longer term to attract the younger generations. So in addition to the larger-scale marketing investment, we also pay more attention to improve the overall marketing efficiency. For example, we narrowed down the marketing activities into key areas and cities supported by our BI analytics for more targeted users. At the same time, we strengthened the logic of targeting specific regions, plus job functions and paid more attention to the matching of the B and C in a specific area. I think one example could be we are more active in trying new marketing channels to be more cost effective, and this will actually help us to obtain growth in the mid- to longer term. I think, more importantly, on the R&D side, we can see the R&D investment in the first quarter of this year has already increased by 22% compared with last year, as I just talked about, right? I think the R&D will definitely be very important to be mainly used for continuous investment in big data and AI, including product upgrading, data workout, construction and over -- at the end, matching improvement. I think in addition, right, we will further introduce the top talent to support optimization of the whole R&D organization structure. And that means that talent is one of the things we value a lot. And at the same time, our group continues to carry out the R&D and technology empowerment for our new businesses, which we also support integration of the multiple businesses for longer-term growth, and this is something we also care about. I think regarding potential M&A as part of the investment team, we've always expanded to other business streams in the past 2 or 3 years, and they are almost well integrated with our group. But at present, our group will focus more on the developing of the main recruitment business and other new businesses. And we have always been actively looking for -- prudently deciding on any particular new investments. And we will continue to focus on good investment opportunities in market. I think this is what we are doing all the time and this -- and we won't stop doing it. But I think, overall, I think in terms of the feasible or more visible marketing and R&D investment, I think it was very active in the first quarter of 2021, but these are also within the -- our annual budget, and it was 100% within the plan. At the present, from the financial point of view, they are also in line with the decision made at the beginning of the year. But for sure, if we find a greater or better direction that we can invest to improve our efficiency, improve our competitiveness, we will not rule out the ability of further investment into marketing or R&D. But in the near term, we certainly hope to actively achieve further business growth and acquire higher market share. This is my comment on your question. Rick, do you have any...

[Kebin Dai, executive]

Yes. Let me add a little bit more points about this. Regarding to your first question, I think this is really a good opportunity for us because we see there's some change in the market. I observed 3 important changes. Firstly, we see this new vehicle, like new energy vehicle, that kind of the industry really forming lots of players going to the market, right? So you will see that competition is really compete. It really hits competition. But we also see that the new energy vehicles not only attracting the traditional talents, but also they are attracting the Internet engineering also because they want to do lots of interaction features to the app, to the device in the car. So -- and on the other hand, we see the new energy vehicles company, they also need to hire a lot of in-store sales. So that means there's a lot of different industry talents they will go across from the traditional Internet, traditional sales to new energy vehicles area. So this is the first observation. And then secondly, we see there's a -- traditional internet company, they also are attracting the traditional talents like you see the -- lots of Internet companies, they are attracting their consumer growth talents, logistic talents. So this is another area that we observe. And then the third observation is that we observe there's lot of new consumer goods company established in the last 6 months. So they require lots of live show and short video, that kind of content, to attract the consumers to buy their products. So that means that there's a huge demand for the content-generating skills for the talents. And then we see there's opportunity for training, but it is also opportunity for the talent recruitment across the different industry, both like a new industry and also the traditional industry. So the talent kind of float in different layer. So this is the question -- this is the first answer to your first question that this change can also actually give us a lot of opportunity because traditionally, Liepin also covered a lot of like Internet talents and also the traditional talents in the Internet area and also the consumer [indiscernible] and manufacturing and also the traditional real estate. So this is a good opportunity for us. And regarding your second question about the investment. I think, for us, I would like to add 2 points. One, definitely, we will further invest in the talents. There's no more words to say that. But secondly, I would like to say how are we going to invest in R&D. There are 3 dimensions. One is about the AI matching. This is very tough, but it's a really important area for us to further invest because for recruitment itself, the matching is the key. But today, I think in the market, there are still a lot of difficulties, especially for the mid- to high-end talents because they are so unique and so personality that's focused on that. And second, we would like to invest for the -- like a video interview, that kind of the AI-driven video interview. And then we're going to launch a new product. We see there's huge opportunity for the mass recruitment. There's lots of interview that's conducted by the human. And by the interview, it's really tough. But now we can introduce a new AI video interview. So this is also driven by our R&D team. And the third is that we would like to further invest on the team to further invest the capability to build a digital organization. Today, we already have different group of people to focus on the different businesses like Liepin mid- to high-end recruiting business, but also we are expanding the new business. But we'd like to make sure that our organization is really highly efficient. So we would like to invest the capability to build a digitalization organization. And in the first quarter, actually, we see there's a very good synergy by the IT system established and also the cooperation between the different group of people. So this is a really good investment for us. And we see that in the future, because of the organization efficiencies further improved, we can expect the new business continues to grow further. And this is, in fact, a very effective way. Thank you.

[Operator]

The next question comes from the line of Wei Xiong from UBS.

[Wei Xiong, analyst]

Congratulations on the solid quarter. First, I just want to follow up on your previous comment about the opportunities you observe in talent services market and about capturing the growth in other emerging sectors. So I wonder, could management elaborate your customer acquisition strategy? How do you plan to further diversify and deepen your customer penetration across different industry verticals? And second, I have a quick question regarding regulations. It looks like there is an increasing regulatory focus regarding the protection of user data in the Internet space. And a few online recruitment platforms actually got recently caught out by regulators. So I wonder if management could share your thoughts on the future regulatory trends in the online recruiting space. And are there any implications to our operations?

[Ge Tian, executive]

Thanks, Wei. I think these are good questions. I think I'll talk about the customer acquisition first. So basically, we -- as you know, right, we always pay great attention to growing our user base and fulfilling their diverse needs. Therefore, you can see that our business user and individual user continue to grow at a rapid speed. And the number of our registered business users increased to more than 800,000 by the end of this quarter, right, and we've already attracted around 66 million individual users to our platform as well. Like I just mentioned just now, we further segmented our users to track and analyze the job positions by job functions in specific cities. I think this is something we started to do in the second half of last year. So basically, we built a sophisticated data visualization center to mirror the product development, marketing and sales strategy for target groups and target regions. And the improved efficiency and effectiveness of the online marketing and sales strategy could be the key to continuously attract more users onto our platforms, no matter, B or individual users. With a large number of incoming new users, so the improvement of our product has -- almost converting them to frequent users. We continue to execute our product-driven strategy. So basically, with the product upgrade in the first quarter of this year, the recruiters can experience more technology-supported functions like instant messaging, improved candidates ranking system and some other functions as well. So I believe their hiring efficiency and the result could be further improved and more users will gradually develop platform stickiness. This is something we care more and more. Therefore, the number of paying customers also increased as a result. We continue to promote the optimization of the sales teams, restructured by dividing them into existing customer renewal team and new customer acquisition team, as Rick just mentioned. So for the new customer acquisition team, they just focus on the number of new customer conversions, meaning converting the existing users to the paying business customers. Meanwhile, by separating the job functions from the existing customer renewal team, they can better focus on customer retention, improve the renewal rates and upsell or cross-sell, which further broadening and deepening our user customer coverage. I think this is my view in terms of the customer acquisition on top of the user acquisition. I think your second question, mentioning about the regulation from the government, definitely, this is a hot topic in the first quarter for us as well. To start with, right, I think we strongly believe that the employment issue will -- is the direction of the government's long-term concern, and this is why we are in the industry, right? So the online recruitment industry has improved the efficiency of the whole recruitment market and created significant value for the individuals, enterprises and the whole society. So in the future, the industry will definitely be further standardized in terms of user information protection, data security and the fair competition, which always what we care about. But again, right, the employment issue will -- definitely more important than all the issues coming from the regulation. So we are quite pleased to see the standardization of our industry under the government support, all the things that happened recently, right? We always do our best to ensure using information protection and data security. For example, we do a lot of verifications during the new user registration, and we insist on renewing the account information using technical and manual methods for all the registration. The account will also be banned once we detect any misconduct on the platform. Together, we are able to help the government in developing a more regulated industry to reduce as many illegal activities as possible. And this is also within our interest as well. And in the first quarter this year, we enabled the virtual content information among the recruiters, headhunters and our candidates, as Rick just mentioned in the opening speech. We've continuously worked on technology capability, in data security for many years. And this time, supported by the government policies, we are actually quite happy to lead the industrial transformation and put what we've been thinking in the past couple of years into practice in the first quarter, and we were very happy about that. As a market-leading player in the mid- to high-end talent acquisition with complete sets of user protection mechanisms, we are actually very looking forward to a more regulated industry and will actively contribute to the industrial development or transformation. Yes. Rick, you want to add anything especially on the second topic?

[Kebin Dai, executive]

Yes. I think in China today, we see that recruitment is a good market due to several reasons, like, firstly, we see here in the new economic environment with [ CD ] enterprise, they would like to upgrade their talent structure. They would like to hire more talented people. And then secondly, we see this population structure issues, so they would greatly impact the employment. You will see the population will need to hire more young people and has lots of discussion about this population issues. So the employment would be a very important issue for the enterprise. And thirdly, I think during the last year, the pandemic -- actually, they -- the pandemic will cause new behavior of the recruitment. For example, they are much more behavior online and even like interview online, so I think all these factors can give us a great market expectation. So we will see the online recruitment market will grow faster and faster in the coming years. The market size will grow as well. And also, just now Tim mentioned about how we see the regulation, that kind of the direction from the government side. I think this is really a good thing to do, and this is the right thing for the whole industry. We really want to and should be protect the personal security and privacy. And today, we see actually our product have lots of improvement, including how we carefully collect the personal information. But this is really the good way to help us to further improve our products. For example, just now I mentioned that we use a new way to help the recruiters contact the candidates. There are lots of good ways to help us to drive all the recruitment activities back online rather than they just connect with the candidates and then drive the other activities off-line. So in future, we can expect that more interaction will happen online, for example, communication online and then the interview will online, even more, text will happen online. So all those regulations can actually not only protect the people's privacy but also can help us to drive a new way to develop our new products and make sure that we can drive higher product [ mix ]. So this is -- I think, overall, I really think that those regulations is really help us to improve our products to provide better value to our users. Yes. Thank you very much. Thank you very much for your questions.

[Ge Tian, executive]

Yes. I think we've already run out of time, but thanks for everyone joining our meeting. If you guys have any follow-ups or you want to set up a separate discussion, just feel free to reach out to our IR team at [e-mail]. We'll be happy to discuss more with you guys. Thanks again. Have a good evening.

[Kebin Dai, executive]

Thank you. Thank you, everyone.

[Operator]

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.