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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, thank you for standing by, and welcome to the Tongdao Liepin Group Third Quarter 2020 Earnings Release.
[Operator Instructions]
I will now hand the conference over to your first speaker, Ms. [indiscernible]. Ma'am, please go ahead.
Thank you, operator. Hi, everyone. Thank you for joining us on today's conference call to discuss our third quarter results for the 9 months ended September 30, 2020. 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 these 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 pick up with our business operations and highlights. After that, Mr. Ge Tian, Company's 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.
Okay. Thank you, everyone. Good morning, everyone. Thank you for joining our 2020 third quarter earnings call. As a one-stop talent service platform provider, we generated robust growth during the third quarter of 2020. For the third quarter of 2020, our revenue and our gross profit came in at RMB 453.9 million and RMB 356.1 million, representing a year-on-year growth of 16.6% and 17.1%, respectively. Our profit from operations increased by 41.6% year-on-year to RMB 71.5 million from RMB 50.1 million. And our non-GAAP operation profit was RMB 93.2 million in the third quarter of 2020, a 31.9 -- 41.9% growth year-on-year.
As a [indiscernible] of our human resource service market, our vision is to build a high-tech human resource service ecosystem to connect individual users, business users and headhunters and other ecosystem partners. Throughout the year, we have provided online staff service across the HR value chain to our business customers, for example, training and assessment and survey service. Moreover, our big data team also launched many projects to improve algorithm to increase matching efficiency between jobs and talent. Especially, we successfully report traffic of job tickets and recommended jobs, which are more suitable to them.
This technological improvement has successfully expanded our business growth during the third quarter, and I expect it to be the driver of our long-term growth. For business users, we offer diverse service, including talent acquisition, service and HR-related users. Through our talent platform, liepin.com, we provide a wide range of talent solutions as well as customized subscription packages. We also provide 106 closed-loop talent acquisition service, namely Interview Express and Onboarding Express to help business users conduct more edition hiring online. The number of our verified business users increased from 518,000 to 682,000 in the third quarter of 2020 year-on-year.
For individual users with diverse product line, we now provide a full range of talent service for different groups of talents. The number of bases individual users increased from 52.8 million as of September 30, 2019 to 61.4 million as of December 13, 2020. We expect that the level of engagement in our individual users will continue to grow in the near future as we are working on the improvement of our recommendation and mass efficiency.
The number of our verified headhunters increased from 157,000 to 167,000 in the third quarter of 2020 year-on-year we have observed an increase in level of activity and engagement among our petrified hunters, significantly activating our individual users on our platform. Following our long-term strategy, we provide other HR-related service as value-added service to our business customers, including video-based talent platform, training and assessment flexible staffing and survey service. This business initiatives help us need diversity from our -- our business customers and contribute to our business growth during the third quarter. During the third quarter, our video-based talent platform and its online video function has worked as a handy tool to improve and improve the hiring efficiency. For example, interview reports, which are generated based on the interviewers' feedback and AI analytics that have provided recruiters with all-round and an object analysis, this has greatly saved recruiters' time and energy during the process of after-interview decision-making.
Our survey business also achieved strong performance during the third quarter, as a leading service platform in China during the time of COVID-19 outbreak. Wenjuanxing has become an important tool for our companies, schools -- for companies, schools, healthcare institutions, government and communities to collect health information and the travel history in China. The increase in the traffic and survey collection continued to drive up the business growth in the third quarter of 2020, and we will lead to the long-term development with the increase of data accuracy accumulation.
Throughout the past months, we have been working for investment targets that operate in health business conditions and can bring the sustainable synergy to the whole group. During the third quarter, we acquired a 51.6% equity interest in Beijing Saiyou Education Technology with a total cash consideration of RMB 165.5 million. Saiyou provides online professional certification education. By entering into this strategic investment, we will be able to expand our business coverage to provide a professional certification training to our individual users. Moreover, this helps us provide a close-looped professional service starting from training to job seeking to the individual users. This will attract more individual users to our platform, and as a result, increase our user traffic.
Finally, we also expect cross-sell opportunities of providing professional certification training service to the employees of our existing business customers in the future. For the fourth quarter of 2020, we will continue to follow the strategy of providing one-stop talent service for our users using our online platform. Therefore, investments on R&D will continue in order to drive further upgrade and the business integration. We believe that with the expansion of our service offering and improvement in products, our experience will be further enhanced and long-term organic growth will be generated.
So now let me turn it to Tian to walk you through our key financial highlights. Thank you.
Thank you, Rick, and thanks again, everyone, for joining our third quarter 2020 results release call. I'll walk you through our financial performance for the 9 months ended September 30, 2020.
So our total revenue was RMB 1.26 billion, 14.5% increase from RMB 1.1 billion in 2019, which was mainly driven by the growth of number of paying guest users and average revenue per user. This is because we have been able to diversify HR-related products to our key customers. Our gross profit was RMB 1.0 billion, up by 14.6% year-over-year. And our gross margin was 79.4% for the 9 months.
Turning to the operating expenses. Our sales and marketing expenses increased by 8.7% year-on-year to RMB 565.6 million. Our sales and marketing expenses as a percentage of revenue, however, decreased to 44.8%, which was resulting from the continuous improvement in the sales efficiency after we separated the sales team into new customer acquisition and existing customer revenue team early this year. Our general and administrative expenses were RMB 202.3 million, a 12.4% increase from RMB 180 million in 2019. Our general and administrative expenses as a percentage of revenue decreased to 16.0% from 16.3% in 2019 as a result of the improvement in the operational leverage.
As Rick just mentioned, we continuously invest in our R&D as part of our long-term growth strategy, which resulted in a 24.4% increase from RMB 139.5 million in 2019 to RMB 173.6 million for our R&D expenses. As a percentage of revenue, our R&D expense was 13.8%, which was primarily spent on product innovation, existing product upgrade and further integration of the diverse system for the acquired subsidiaries.
As a result, our profit from operations was RMB 128.5 million compared to RMB 106.0 million for the 9 months ended September 30, 2019, up by 21.2% year-over-year. Meanwhile, our non-GAAP operation profit, excluding share-based compensation and amortization of intangible assets resulting from the acquisition was RMB 207.6 million in 2020, 42.4% year-on-year increase from RMB 145.8 million last year.
So if we look at the third quarter of 2020 standalone, our revenue for the quarter came in at RMB 453.9 million, representing a year-on-year growth of 15.6%. With the revenue growth and operating leverage improvements, our non-GAAP operating profit for the quarter increased by 41.9% year-on-year to RMB 93.2 million in the third quarter of 2020.
And now -- and our non-GAAP operating margin also reached 20.5% in the third quarter of 2020, which is 3.7% up compared with last year. So over the past 3 quarters, with further recovery in the overall hiring sentiment and demand in the China job market, our revenue collected from the providing talent services to business customers, achieved accelerated growth. Moreover, with a strategic investment in Saiyou, as Rick just mentioned, we now are able to provide more comprehensive services to new video users, which can help us have more individual user traffic and diversify and increase our [indiscernible] monetization. We believe with all the product and sales strategy, we have formed and implemented in 2020, we are quite positive about our outlook for the long-term growth of the company, including both 2B and 2C business. For the rest of the year, we will continue to improve our operational leverage, while we continue to invest on R&D for technology innovations and investment branding for new user acquisitions.
And now I will turn the call back over to the operator to begin the Q&A.
[Operator Instructions] Your first question on queue comes from the line of Binbin Ding from JPMorgan.
Congrats on the very strong third quarter results. My first question is on your recruitment services. So can you talk about the recovery trend of the key accounts versus SME customers into the third quarter? And which are the key industries that we have seen the most recovery and which sectors are still relatively laggard? And my second question is on the strategic investment in Saiyou Education. So can you talk about the rationale behind the investment? If possible, could management share some color in terms of the financial performance of Saiyou Education, such as revenue size, profitability, et cetera? And what kind of synergies shall we expect from the investments? And when will we started to consolidate Saiyou?
Sure. Thanks, Binbin, for the question. I will answer the question first and Rick will ask some color later, maybe. So regarding your question over the KA and SME recovery and things, right? So basically, our recruitment activities were indeed impacted by COVID-19 and overall macro in the first quarter. And many business customers during that time made the choice to delay their hiring activities. So with cases getting under control from March till April, I think maybe June for Beijing, so we started to see the increase of recruitment activity systems.
So for instance, starting from the second quarter, there is a positive year-on-year growth in our number of new job postings and so on. So the churn actually continued for the third quarter as well. This is what we can observe from the business operations and our financial results actually reflect on that. So in general, KA clients, especially the industry-leading players, are more resilient than the SME clients and so the recovery is much faster. So their hiring sentiment is more positive, and higher demand is much stronger versus the SMEs. So take the TMT industry as an example, clients like Huawei or Alibaba, right? Their purchase from us is not really impacted by the pandemic. So some of them, even better than last year. So the further recovery in the overall hiring sentiment and in mind, in the China job market also explains why our third quarter revenue growth. And our revenue in the third quarter, standalone achieved 16.6% year-over-year growth from last year. I think this is my view on the KA versus SME.
And for your second question on the acquisition of the Saiyou, right? So basically, if we think about the business model, so Beijing Saiyou, this company, it operates as one of the leading online education platforms for professional certification and skilled training prices is what Rick just mentioned in the beginning. So this company actually provides online training courses to individual users ranging from teaching certifications, counseling certifications and so on. So basically every course includes live lectures, recording lectures and online questions banks, so which are assets from the online platform.
So regarding the thoughts behind the synergies, we can think about that 3 perspectives. So we think the first one is we can actually expand our services offerings to individual users because our corporate readiness to help every talent to achieve greater career success. So therefore, we have been actively speaking for targets to help expand our business conversion, provide like one-stop talent services for individual users. So by entering this strategic investment, we are able to provide closed-loop professional certificates from professional certification, education, all the way to job seeking to the individual users on our service platform.
So the second one that I would think about is it's also beneficial to increase the individual user traffic. So, Saiyou have a proven track record in terms of training for teaching, counseling and other professional certifications. So therefore, it has accumulated a lot of talent base on its own. The individual user of Saiyou are potential job seekers up on the completion of the certifying plans. So this is based on what we can see, right, this investment and the partnership is expected to help promote our talent service platform and raise our brand awareness among these users.
I think the third one is really by doing this strategic alignment actually helps to diversify the value-added service to business customers as part of our training assessment business units. So based on our experience with our business customers, we actually observed a certain demand of employee online or on-job training. So with this strategic investment, we're actually able to diversify our training services and other professional certification trainings for corporate employees. This is what we are really excited about. And this is actually beneficial for us to increase our value creation and also strengthen the business relationship with our business customers. I think the last part of the financials, my view is, since this acquisition was actually completed in September this year. I will say the financial impact on the third quarter and fourth quarter in this year wouldn't be material.
Overall, if we look at the business itself, it is fast-growing, and we still need to continue the marketing to acquire more market share and also the R&D to upgrade the platform to improve their user experience. And this is really what Liepin is good at. So therefore, for the moment, we -- we would expect -- I think for the moment, we expect essentially a breakeven business. And it's for a short period over time. So given the growth rate that we foresee for the moment, I think the top line contribution will be close to like 10% of the group next year. And I think there will be a very good supplement to our monetization. So this is my view on 2 of your questions, maybe Rick, you can add some color.
Okay. I think in terms of the first question about what would be the trend of improvement itself. I think for KA and SME, actually, it grew pretty well in the third quarter. As we mentioned before, Liepin's customer actually quite high-quality to get to the other platforms. So we -- our customers -- the business are much more resilient than others. So we see that in the third quarter, no matter KA or SME, they are going and coming back. And we also observed another trend that more and more customers, they actually would like to drive online product rather than off-line because of the behaviors that generated in the pandemic.
So this is the churn of [indiscernible] and compared to KA and SME, I would say, KA are much more strong and resilient than SMEs. And SME customers, we see the middle-sized customers going very well in some like TMT and some high-tech manufacturing like cars, especially for the new energy car. In that segment, we see the very strong growth. And so for the recruitment, we think about that today, all the customers actually have much higher competence level than before to invest in the recruitment. So we believe that in the future, in the fourth quarter and for next year, we are much more optimistic than before.
For the second question, let me talk about the Saiyou education. I think Tian just now already mentioned, and I think the answer is quite complete for different angles to talk about this. We actually started talking I think 2 years ago, when we -- when we lease the company publicly. We talk about this, we think about that, if our mission is to let every professional achieve their career goal, then we have to provide good opportunities. So we provide a lot of jobs and match jobs, but we also need to help them to improve their skills. So we're actually searching different kind of target to see what kind of company should be -- should be the right partners for us to further improve the individual skills and their certificates.
And we observed there are several trends in the personal skills. First trend, because of the pandemic, we see the online education, that kind of the industry going very fast. No matter K-12 or the adult's education. So we think that in future, the future would be the very, very high demand. So we see that Saiyou Education, they are much more focused on the teacher certificate, education. And also, on the other side, we see that more and more white-collar, actually, they're seeking for the psychological help. So the psychological consultant should be another segment that we need to enter. And Saiyou also provides a psychological education certificate. And also we see the white-collar, they would like to further improve themselves, so they would apply for the MBA course. And Saiyou also provide MBA course -- education -- sorry, MBA exam education. So for the skills that the Saiyou provides, actually, we think that it's really a big good match to Liepin's mission and also the individual users' needs.
So that's the reason behind why we will invest in Saiyou Education. And in the future, we will continue to look what kind of the education that the overall industry needs and the white-collar skills need so then we will further invest. And also, we would naturally expand our individual service in the near future. So this is our logic behind.
Your next question in queue comes from the line of Wei Xiong from UBS.
Yes. Sure. Congratulations on a solid quarter. First, I want to ask about the next year's outlook. As you guys highlighted that the hiring sentiment in the market has been gradually normalized. As we are approaching the end of the year, shall we be more positive for next year's outlook? Or is there any risks apart from the ongoing COVID-19 that we should be more mindful of?
And second, I noticed from the results disclosure that management expects to invest more aggressively in branding and user acquisition in the fourth quarter. Could you please maybe elaborate a bit more about what channels are we investing in? And how much it will impact margins in the fourth quarter and maybe next year?
Sure. Okay. Thanks, Wei. So I think regarding your question on the outlook for the next year and the rest of the year, I think my view is really -- so yes, definitely more positive than at the beginning of the year. So definitely, I think the growth rate will be back to normal. I would say, for us, it will be around 20% to 30%-ish for the overall growth next year. By the way, we are actually in the middle of designing a plan for next year to forecast our different business lines and kind of add a resource in order to achieve growth rate for the next year. But definitely, I would say the biggest challenge would be the COVID-19, right? I hope it wouldn't become COVID-20.
So without an impact on the pandemic, I think business operation, the demand from the market will definitely go back to normal. And you know the GDP growth for [indiscernible] also indicated a very positive growth rate for China next year. I mean that would be a good time for us as well. So secondly, regarding your question on the marketing cost and teams, right? So think in order to engine the future growth, so definitely, this is past due for us to invest not only on marketing but on R&D. So basically, we plan to use both off-line and online channels to do the branding and user acquisition. So take the online channel, as an example, we know almost exactly, which channel would bring in what type of new users based on analysis from our big data team.
As I mentioned before, if we are trying to acquire more young talents, we will definitely consider using channels and forums that can appeal to these certain types of people. So not only for the new user acquisition, but also for branding purpose. Another example is that we actually embedded advertisement in things like career-related variety shows, targeting graduates. Like the attractive offer season tube, which has many audiences and stream this month already. So I would say off-line channels will be things like advertising in the metro stations, airports, where we can see the business traffic in the mega screen.
So going forward, I would say, investment on marketing and branding is also taking into considerations when we are making budget for the next year. We can foresee the competition in the industry, it's there. A lot of other market players are more aggressive in terms of marketing. So we remain to balance the competition in the market. However, on the other hand, we will need to drive up our operational efficiency from other items like sales expenses so to make sure the sales and marketing expenses as a percentage of revenue continue to drop, so that we can drive the profitability while we invest in marketing. So Rick, do you have any...
Yes. In terms of marketing, I think the -- if you look at the trend, you will see more and more young talent become more important in some young companies like TMT particularly. So young talent, actually, their user behavior on the Internet are much different versus people who are like aged 35 above, that will be dramatically different versus the young talent. So they would like -- they are more used to video, that kind of short video, that kind of advertising and content. So we will highly invest on that video communication, that kind of the marketing tools.
So that kind of channel would be different versus previously when we do the SEM or just the search engine. And also that would be different versus the traditional off-line branding, advertising, that will be different. We would like to completely invest on this channel so that we can catch the trend especially for the young talents.
I think that we would not -- it wouldn't be that big impact to our P&L. I don't think there would be a big impact, but we would like to balance our budget into -- within our marketing budget, I mean. So this is the trend we were going to leverage.
And for the next year outlook, I think of course, if there is no -- another pandemic happen in early next year, that will be much more optimistic than before. But if there's only some risks that cannot control then that will be also -- I think will be the impact to the business. But the point is that with this year's experience, we are much more competitive. Even if there's a -- similar situation happened, we -- our team and our business resilience, I think there will be no doubt that we have full confidence. So for next year, I would be more optimistic than this year.
Your next question in queue comes from the line of Melody Chan from Jefferies.
Congratulation on the solid result. I have 2 questions. First, I would like to ask about our R&D funding. You mentioned in the call that we will continue to invest in our R&D capability. So how should we see the R&D trending going forward in 2021. And second, I would like to ask more about the recruitment activities. Are we seeing more replacement and talent reserve in Q4 as usual? And since the COVID situation's contained and things are back to normal, how should we expect the 2021 activity levels?
Okay. Thanks, Melody. So to comment on your first question, on the R&D. The answer is, yes, we definitely will continuously invest on R&D to engine the sustainable and long-term growth. And the R&D expenses as a percentage of revenue was up around 12% in 2019. And for the 9 months ended in 3Q, the percentage was already about 13.8%. So I think we can see the upward trend.
We will try to maintain the R&D expenses at a relatively flat level as a percentage of revenues for next year. And the thing that this year, 2020, next year, we will continue to invest on product upgrade, product innovation and system integration of the acquired businesses. I think there are a couple of reasons behind this R&D spending arrangement. First of all, we value the matching more than any other players in the market, and we will continue to invest to improve the matching algorithm. So during the past few couple of months, right, so we have been working on improving matching algorithm by cleaning and labeling our database. Because in the mid- to high-end market, to deliver the results of the hiring process is very important. Meaning whether the recruiters can find the right talent, whether the job seekers can find the right job they desire. So this is quite important to us.
Secondly, product innovation is also very important. For example, we have introduced the data analytics to our video-based recruitment platform. And this actually helped to improve the efficiency of things like online interviews, which was very well received by our business customers. And in the future, we also wanted to make efforts to create things like this and disrupt the market. And the last but not the least, right? So we're actually in the middle of building up a BI team, which are able to analyze the data generated from our platform so that we can have a much better or greater visibility of our business and also the industries, not only for the industry we are in, but also for the industries of our clients we are interacting with.
So the output of the analysis will be a great product, not only for our internal operations, but also for potential data users who want to deep dive into different types of industries. So this is my view on the R&D spending and the reasons behind it.
So regarding the Q4 recruitment comments, so I would say, normally for -- in the fourth quarter, right, companies tend to make organizational upgrade and prepare for the business for the next year. So this is also what we observed in the past years in the fourth quarter. So I would expect there will be more demand for replacement hiring as well as expansion hiring in the fourth quarter. Also, we have observed a continuous recovery in the hiring sentiment demand from the second quarter. So we think the overall trend is definitely going up in the fourth quarter.
So to give you more color on this, according to our internal study, basically, about 80% of the companies in Eastern and Southern part of China, they tend to return the same level of hiring budget. And even some of them decide to increase the budget. So I would say, we're quite optimistic about the rest of the year in terms of the hiring demand. And if we look at the hiring demand for next year, I think the demand for the talent will increase as well because the recruitment activities are relatively related to the macro economy. And since the GDP growth will be there, I think if the COVID-19 pandemic will not recur, we will still be very positive about the outlook for the higher demand for the next year. So Rick, do you have any comments?
Yes. I would like to add some points about your first question, about the R&D spending. First of all, I would like to highlight that we will further continue to invest on the R&D. I think ever since the first day we launched the product, we know that technology will be the key to drive the difference. And also, we truly believe technology can change the game role in this segment because it's a long segment -- it's a long history segment in China, online recruitment. So this is the first point.
The second point, actually, I would like to take you through what kind of R&D and what kind of products that we are going to invest. I think, firstly, Tian just mentioned about the matching metrics. I would like to highlight that actually for Liepin platform, matching, it's very important and also we -- our difficulties level is very high because we actually compete with the headhunters. Traditionally, the matching between the job seekers and the job is actually done by the headhunters. So we have to make sure that our matching algorithm actually is more efficient than headhunters. So this will ask us to invest more on the tech -- I mean, the tech -- technology and also the algorithm, how to make sure that the people can really find their right job. So first of all, the matching.
The second one, actually, we are we are now actually have already invested over like 1.5 years of our video. We talked about this before. But in the third quarter, actually, we see a very high potential of video asset acceptance from the customer. Actually, the customer use the video interview pretty well. And also, they would like to use the video interview to assess the talents, especially for the campus recruitment, we see the huge demand for this one. And also, we see there's a huge demand from the government to say they use the video to recruit the talents. So this is the video. And based on the video, we also invest on the robot. Traditionally, people would like to use people -- we need to train our interviewer to interview the candidates. Especially, when you see this campus regimen or there's a high amount of interviews, then you see the interview will be very tight because they have a lot of interviews.
And also they ask the same questions again, and again. So we invest in the robots. So then let robots to ask the questions and let the robots to assess the people. This kind of technology, actually, we are the very advanced in this industry. Quite interesting, we see there are some players actually follow us in the past one year. But we see that they only copy that very surface. They don't copy the deep inside, and then they don't copy the technology. So we truly believe that the highly investment on technology themselves can drive our competition -- competence -- confidence.
The third one actually is talk about how can we invest on the talent assessment so we further invest talent assessment that kind of technology can help us to improve the interview, but also improve the training. Traditionally, we see the training actually, or especially for the corporate training, they only conduct training based on the topics, right? Because, for example, I would like to train the leadership, I would like to train the communication skills. I would like to train some very basic skills that come out of training. But they don't know actually for each individual, what kind of the skill that they really need. So we will highly invest on the technology about how to assess the talent, what kind of skills you really need, and then we provide the training cost. That will be a huge difference between us and the competition.
And then the last one, actually, we invest on the NLP to -- I mean the natural language process, the kind of a technology to help the team that the product can really understand what kind of survey that we are conducting in China. And in each industry so that we can generate more insight from each industry.
So that kind of investment that we are making to the R&D, so you see above the [ 4 10 ] code for experts actually, we invest on the R&D. And this kind of investment can help us to differentiate our products versus the other ones. And we truly believe that from the third quarter results, that no matter video or matching or the training or the survey that we are going to lead in the market products. So this is the highlight, I would like to ask about our R&D spending.
And your last question in queue comes from the line of [indiscernible] from Huatai Securities.
I have a question regarding your new initiatives. So could management share more color on the revenue contribution from your new business? This business should have high margin, right? So it seems that this has not been shown in this year. So how should we think about the margin trend going forward?
Sure. Thanks for the question. So I would say -- so just to start with the landscape of our revenue split. Right? So definitely, as we know, the revenue contributed by our new business initiatives, including flexible staffing, training assessment and survey business together that account for powering up 15% of our total revenue. So you are definitely right about the higher gross profit margin for these new initiatives. Because all of this business, as I just named, actually provide products and services through online cloud platform. So as a result, the margin is quite high. So even for flexible staffing, we booked the service charge instead of the [ JV ] already.
As a result, our flexible staffing starting business is able to achieve more than 90% gross margin together with survey and training and assessment businesses. So one reason why for now, the GPM was not largely improved by this new initiative is that these businesses are still in the early stage and not large enough to make a material change or impact compared with our core business, which account for 80% of the revenues. And another reason is that with the off-line activities come back to the normal level, our -- what we observed in the third quarter is for the [ 850 ] closed-loop services, which has a comparatively lower margin, also increased in the third quarter. Therefore, this could offset some of the margin upside growth by the new initiatives.
However, we believe once these new initiatives become scalable in the coming years, their positive impact from the GPM will start to take effect. And in the longer term, my view on the GPM is expected to be at a level above 80%. So this is my perspective.
Okay. I just want to highlight one thing. In our organization structure, actually, we build -- I mean, within our organization, actually, we build a platform. The platform that is, I think, in different angles. First platform actually we build the R&D platform. So then we highly invest in our R&D, but our R&D will fully support different business. For example, our core business, recruitment and our new business, like just mentioned, individual education and survey and also the training assessment and also the video, the kind of the new initiative. So R&D investment is our platform, okay? So when we invest, we invest in our group R&D. R&D is kind of the whole group of organization rather than we divide our R&D in different small group.
So if you look at the P&L, you will see that our R&D, we book into our group rather than talking to the different initiatives. So this is the first one, like I said.
And secondly, actually, our data team, also the same organization as the R&D and -- as well as the sales team and the HR and finance team. So to us, we will see that more new initiatives coming in, into our platform. That is just like new brands to our group but still, they will share the cost of our R&D and share the cost of our data team and the sales team and also the function team. So this is the organization that we decide in our group, rather than we just set up a new kind of company. And then within a small company, we build different kind of organization. That will be waste of money. So we built up what we call is -- I don't know how to translate in English, but we call it [Foreign Language]...
Centralized.
Centralized -- okay, it's a centralized platform. But that will be the -- it's kind of a share -- it's kind of the shared service center kind of concept. So there you see we drive cost efficiency to support different new initiatives. So this is the point I would like to highlight because I don't want the people think about that, okay, we launched a new initiative, then we launched a new -- the whole new team that we will highly invest and different team in the small initiative group, that's not true.
Even we invest on the new initiatives, for example, Saiyou or the other Wenjuanxing, or the other -- for me, they're kind of a new initiative we launched, we leverage this kind of organization so that we can drive the cost efficiency. So you can see we actually put lots of cost in our group rather than different groups. That's -- I think the consideration is coming from the cost efficiency and also the communication efficiency. So we have a central team in Beijing, so that can help us do a lot of new initiatives within the IT team, data team. So this is the characterization part of our highlights.
There are no further questions in queue. Presenters, please continue.
Okay. Thank you, everyone, for joining the conference call. And if you have any follow-ups, or you want to do a one-on-one, just feel free to reach out to us and we are very happy to talk to you.
Yes. I just want to highlight 2 points. On the first one, I think for the third quarter business results, we are much more high confidence than before that the overall -- our core business is still keep going and going pretty healthy. And then we can -- we're looking forward that for the business side, and we see for our platform whether 2C or 2B, we see there's a true growth engine in our coming future. Especially after we invest in Saiyou, we can fully leverage our traffic and also further grow the individual business user -- business individual.
And the second point, I still want to highlight that we will further continue to invest in our R&D to drive our product superiority. I think this is the key investment we are going to take a long time, we are going to invest. So I would like that people understand that Liepin is a technology platform. So this is the 2 key points I would like to make. Thank you all. Thank you for your listening, and thank you for your time.
Thank you so much, presenters. Ladies and gentlemen -- please go ahead, sir.
No. Thank you.
Thank you so much presenters. Ladies and gentlemen, this concludes our conference for today. Thank you all for participating. Stay safe, everyone. You may now disconnect.