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Good day, and welcome to the Tongdao Liepin Group 2022 Fourth Quarter and Full Year Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Xueni Wang. Please go ahead, ma'am.
Hi, everyone. Thank you for joining us today to discuss our results for the fourth quarter and full year 2022. The company's financial and operating results were published and were posted on the company's IR website at ir.liepin.com. On today's call, Mr. Rick Dai, company's Chairman and CEO will kick off with our business operations and 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. All remarks and answers will be in Chinese followed by English translation. Before we continue, I would like to remind you that this call may contain forward-looking statements made under the safe harbor positions. 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 filing 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. Please note that certain financial measures that we use on this call are expressed on a non-GAAP basis. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. I will now turn the call over to our Chairman and CEO, Rick. Please go ahead, sir.
[Interpreted] Good evening, everyone. Welcome to the 2022 Annual Earnings Release Call of Tongdao Liepin Group. We would like to express our gratitude for your continuous attention and support of the company. 2022 has been a year filled with pressure and challenges for all industries, especially during the fourth quarter, when business was slow due to the pandemic outbreak. However, with the joint efforts of all employees of our group, we have ensured the overall stability of our business.
In 2022, we achieved a total revenue of RMB 2.64 billion, which remained relatively flat versus last year. The revenue generated from our business customers was RMB 2.35 billion with a slight year-on-year increase. With respect to profits, our non-GAAP operating profit was RMB 230 million, and our non-GAAP net profit attributable to shareholders was RMB 189 million. The result was mainly due to a massive one-off marketing expense brought by our partnership with CCTV for the top software game and industrial sponsorship in [indiscernible] during the World Cup in the fourth quarter of 2022. This is the largest single market investment we have pulled out in the past decade, and we believe that this marketing campaign will continue to reinforce our brand image for a long time. As restricted measures relating to the pandemic have been lifted, the recurrent market is recovering. As of the end of 2022, the number of registered individual users on our platform exceeded 83 million, a year-on-year increase of 12.9%. After the 2023 Chinese New Year, our individual user's registration and activity level have shown very impressive growth, with nearly 50% year-on-year increase in newly registered individual users in February and a more than 30% year-on-year increase in active users, reaching a historical high. The enthusiasm and confidence of professional scar employment have also been recovering.
Among them, the MAU of technical talent have shown rapid growth with a 45% year-on-year increase in February. Students maintain a high growth rate as well with DAU growing by more than 65% since Chinese New Year. Among them, the DAU of students from top universities grew by nearly 90% versus last year. This indicates that the platform's gathering effect of high-quality talents continues to deepen. On the other hand, the confidence of enterprises is also recovering self-asset. The recruitment plans and processes are more actively implemented compared to the fourth quarter of last year. The number of new job positions has recovered to a certain extent. For example, the energy industry, government-related jobs and the high-end manufacturing sector has maintained promising momentum. Meanwhile, we are also constantly practicing corporate social responsibility. We have jointly launched multiple employment activities with the Ministry of Human Resources and Social Security, the Minister of Education and all China federal industry and commerce and other departments, covering high-level talent in emerging industries, professionals in various industries and outstanding graduates. We are also partnering with the picking University School of Management to roll out the management trainee welfare activity for the second year to provide professional employment guidance for more graduates. In 2022, despite a challenging market environment, we remain committed to our platform class service strategy. We continuously upgraded our products, optimize our services and marketing strategies. Throughout the year, we have been stepping up our efforts to optimize user experience and supporting intelligent, talented job matching and recruitment process management. We have also helped our enterprise customers accelerate the digitalization of their recruitment processes.
On the market front, our demand taking and targeted expansion strategies provide us with more risk resilience. As a result, the number of verified business users reached 1.13 million on our platform, a 12.6% increase compared to last year. Although the number of business customers decreased slightly due to the dynamic and still remains about above 70,000. Furthermore, the annual ARPU for business customers had a new high, reaching RMB 33,000.
A high-quality customer base is the foundation and driving force for the company's continued growth in addition to constant iteration of some of our products, our differentiated professional service mechanism also plays a valid role in ensuring customer retention. Our platform operations team and dynamic data monitoring center will monitor user activities, while our service team can provide optimizing solutions through intelligent monitoring and manual intervention. This promotes more talented job matching and product usage, leading to an improved sales and service efficiency. Over the past year, we continue to advance the situation and upgrading of AI technology and algorithms, optimizing user search and recommendation experiences. By coming through multiple business lines and the underlying commonalities across different scenarios, we have decoupled business requirements and algorithm logic to modernize common organism modules. This optimizes the algorithm's migration ability across multiple scenarios and products, improved responsiveness to business needs in a local mode and in turn, empowers our business development.
In terms of R&D, we will continue to focus on technology development, including upgrading IT infrastructure, innovating functionalities and products and providing technical support to our sub businesses. Additionally, we will continue to explore new business models that are mutually beneficial to us and headhunters. At the end of 2022, we have gathered over 210,000 registered headhunters on our platform. Also, we would like to share with you our achievements in cybersecurity. Our information recommendation algorithm and information search algorithm, test the Internet information service algorithm reports that were published by the Cyberspace Administration of China in the first batch in August and the second batch in October in 2022, respectively. This further ensures that our products can operate in unauthorized, healthy and stable environment while fully respecting and protecting our users. Recently, generative AI models represented by ChatGPT [indiscernible]. We believe that in the recruitment industry, generated AI models will have performed significance for improving recruitment efficiency for talents and recruiters including enterprises and headhunters in the long term. Currently, we have been conducting small scale experience on pre-training language models internally, mainly exploring the content generation of resumes and job description. This pre-trained model can generate corresponding job responsibilities and qualifications based on given skilled keywords.
However, overall, it is still limited to internal small-scale experiments and require further refinement and optimization. In the future, we will continue to pay attention to related technologies such as ChatGPT, explore content accuracy, model minimization and application in specific sales and maintain an open attitude to interact with more advanced models in the market, constantly exploring the application of large-scale crane training models internally.
The mid- to high-end segment occupies the largest market share in the recruitment industry and online recruitment in this segment also has high industry thresholds. First of all, talents at this level are of air quality and are relatively more passive. Therefore, they also have higher value in the recruitment process. The platform means to build longer brand awareness and have more standardized and strict operating standards for attracting and retaining high-quality talents and positions. Therefore, we still enjoy notable advantages in gathering passive job seekers. Secondly, unlike traditional bilateral model, the mid- to high-end segment is a multiparty ecosystem and our platform needs to have a deep understanding of the behavioral patterns and the needs of all parties.
At the same time, the requirements for data authenticity and accuracy are also higher. This means that we need to establish higher standards in various assets such as qualification review and train the system to improve its understanding and interactive ability of complex and even implicit needs of mid- to high-end recruitment in order to facilitate more effective achievements. You can see that this market is not only a traffic platform but also requires a precise AI matching model recognized from the perspective of professional recruiters.
This business needs to provide more than just a platform but a platform service model involving a whole set of process mechanism built by all parties in the BHC model and our internal service team. With our focus on the mid- to high-end online recruitment market for more than 10 years, we have been able to maintain our pace and continue to deepen even in the face of different market conditions and competitive environments. Since 2023, there have been uncertainties in the domestic and internal macro environment. However, as our countries enter into a new stage of development, employment remains the cornerstone of people's livelihood and economic development. We believe that with the steady recovery of the overall economy, the recruitment market will also continuously strengthen quarter-by-quarter throughout the year. We will actively seize the opportunities of the market recovery, fortify our core recruitment business, serve more high-quality enterprises and individual users and expand and deepen our original coverage with a focus on sales efficiency. We will also see opportunities in emerging industries supported by the market recovery and favorable policies, so I still caught a bit longer term advantages. We will expand our business with state-owned enterprises and government agencies. At the same time, we will continue to focus on improving operational efficiency and controlling costs. Finally, it is worth mentioning that our Board has approved a share repurchase plan for the first time since our listing, which will allow us to buy back up to HKD 300 million over the next 12 months. Based on our current market value, it represents approximately 6% of our total shares. This share repurchase plan is also a good demonstration of our confidence in the long-term business development and corporate value. In 2023, we have many new shareholders and investors who are interested in our company. We will continue to consolidate our business, explore development opportunities and share long term value with more investors. Once again, we thank you for your long-term attention and support. Now I'll forward to Tim, our CFO, to introduce our 2022 full year annual results.
[Interpreted] Thank you, Rick, and thanks again, everyone, for joining us Fourth Quarter and Full Year 2022 Earnings Release Conference Call. Our business model continues to demonstrate its effectiveness amidst very challenging market conditions in 2022, resulting in a stable and healthy financial performance. Unless otherwise stated, all data presented below are in RMB. Total revenue for the year 2022 amounted to RMB 2,638 million, a 0.5% decrease compared to 2021. Specifically, revenue generated from talent acquisition and other HR services from our business customers was RMB 2,346 million, a 1.6% year-on-year increase. In 2022, certain recruitment demands were postponed due to the pandemic resurgence, especially the pandemic outbreak during the fourth quarter. Nevertheless, our high-quality customer base, rich product metrics and effective business development strategies still provided us with still stable business performance.
On the other hand, our revenue from talent development services to individual users was RMB 290 million in 2022, a 15% decrease from RMB 341 million in 2021, primarily due to talents lower wellness to pay and the postponement of examination date of certain certifications as a result of the resurgence of the pandemic starting from the second quarter of 2022. Our gross profit was RMB 2,047 million in 2022, down by 1% versus last year. Our gross margin was 77.6%, slightly lower than last year due to the changes in product mix. Turning to operating expenses. Our sales and marketing expenses were RMB 1,306 million in 2022, a 6.7% increase from RMB 1,225 million in 2021. The sales and marketing expense margin went up from 46.2% in 2021 to 49.5% in 2022. The increase was mainly due to the surge in marketing expenses from the massive one-time marketing campaign we launched during the FIFA World Cup in the fourth quarter of 2022. For our sales expenses per se, excluding one-off expenses, our sales personnel efficiency continued to improve due to optimized team structure, enhanced digital sales capabilities [indiscernible] relations. Sales in pace margin was, therefore, optimized. In terms of R&D expenses, we continue to strengthen our various in process matching but committing to R&D investment. In 2022, we focused on establishing our IT infrastructure, optimizing our matching algorithm, launching innovative functions and incubating new initiatives. As a result, our R&D expenses were up by 18.8% from 2021. Our R&D expense as a percentage of revenue increased from 12.7% in 2021 to 15.2% in 2022. Our G&A expenses were RMB 345 million in 2022, a 2.8% decrease from RMB 355 million in 2021. The G&A expense margin decreased to 13.1%, down by 0.3 percentage points, resulting from our strengthened corporate governance and more stringent internal control. Due to the [indiscernible] profit from operations in 2022 was RMB 85.3 million, down by 63% year-on-year. Excluding share-based compensation expenses and amortization of intangible assets resulting from acquisitions, our non-GAAP profit from operations was RMB 230 million. On top of that, adding back one-off expenses relating to the FIFA World Cup, our adjusted non-GAAP profit from operations was approximately RMB 400 million, an interest of nearly 8% compared to last year. Adding back one-off expenses, our adjusted non-GAAP operating profit margin was around 15.4%, which is around 1 percentage point higher than last year, representing our efficient cost control strategies and healthy business growth. Our net profit for the year was RMB [ 85.59 ] million, down by 53.2% versus last year. Excluding share-based compensation expenses and amortization of intangible assets resulting from acquisitions. Our non-GAAP net profit attributable to equity owners was RMB 189 million. Adding by the one-off expenses relating to the marketing campaign mentioned above, our adjusted non-GAAP net profit attributable to asset owners was around RMB [ 350 ] million, an increase of 31% compared to 2021. Our marketing campaign during the World Cup in the fourth quarter of 2022 had a significant impact on our sales and marketing expenses and led to a relatively low reported profit. However, excluding such expenses, our financial performance continued to show a healthy growth and our cost reduction and efficiency improvement strategies. As for 2023, we expect our sales and marketing fees will return to standard levels while we continue to pay close attention to strengthening our internal management. We will also be fully prepared for further business development. In the mid- to long-term, along with the market recovery, we believe that our sales and marketing expense margin as well as our G&A expense margin, we'll still have considerable room for optimization. In addition, in order to enhance the efficiency of our cash utilization and strengthen our shareholder return math system, the Board approved for the first time a share repurchase plan of up to HKD 300 million over the next 12 months, representing approximately 6% of our total shares. This demonstrates our confidence in our future development, and we look forward to creating more value for our customers, employees and investors.
And this concludes our prepared remarks. Operator, please open the line for questions. Thank you.
[Operator Instructions] And caller from Citic.
[Interpreted] I have 2 questions for you. The first is that how should we think about the risk and opportunities that AI brings to the industry and companies. And the second is, how should we think about the pace of the recruitment recovery in 2023 and which industry have seen better rebound and which ones are lower than our expected -- expectation? And how should we look forward to the growth of cash billing in 2023? That's all.
[Interpreted] So thank you for your question. We've spent a lot of time in evaluating this new technology. Before the understanding of AI was limited to its ability to replace repetitive [ tap ] I've seen a fill like manufacturing and logistics. However, the current wave of technological innovation in AIGC is focused more on creative tasks like automated content generation. This presents a challenge for knowledge and creative workers such as copywriters, designers and lawyers, causing anxiety in the workforce about the possibility of white-collar positions for being replaced.
Our team has conducted research and technological studies, and we would like to share some of the insights of the impact of AIGC on the workforce with you. Firstly, in the short term, AIGC will greatly improve the efficiency of production tools, thereby increasing productivity. For example, authoring tools like AI-empowered PPT generators and picture-generated pools like mid journeys and reduced the time needed for work from several hours or even days to just a few minutes. By embracing these tools, white-collar employees can significantly improve their productivity.
And secondly, companies will prioritize recruiting high-quality talent of our entry-level employees for leadership, strategic management and execution since entry-level candidates can be easily replaced by AI. This is because AI can only be used as a tool by individuals who are proficient in utilizing this technology and to empower their work. And this precisely matches with the mid- to high-end talent recruitment business that we specialize in and create opportunities for us. And also, this wave of AIGC innovation will attract more capital and talent to innovative start-ups. As more tech companies in this field and niche markets emerge, there will be an increased demand for a variety of high-level tech personnel, which we have a strong advantage in presenting an excellent opportunity for our business growth. So the remarks I just shared with you is our thought for the short-term impact. So at this point of time, I'm not able to share with you our thoughts on the long-term impact of this technology. Thank you. We do believe that the recovery of the macroeconomic environment is a long-term process, especially after the effect of the pandemic. Currently, we've observed a gradual improvement in business confidence, particularly after the tuition. According to our platform's operational data, there has been an increase in the number of new job postings as well as in the recruitment activity levels of those enterprises and headhunters. In terms of enterprise types, some industries have rebounded due to the reopening of certain places. SMEs, in particular, have shown faster recovery than large enterprises whose decision-making process are relatively slower. However, if we look at the entire year or even longer, the recruitment budget of medium and large sized enterprises will be much larger than that of the SMEs, providing greater business potential. Our business customers mainly consist of medium and large enterprises.
According to our recent survey, there has been an increase in our customers' confidence level regarding business development. As for the industry outlook, certain industries such as high-end manufacturing, energy and chemical are experiencing faster demand growth. The finance and real estate industries are showing marginal recovery to a certain extent, while the general manufacturing sector is still relatively soft due to the weak export.
[Interpreted] So considering the second part of your question, it is very clear to us that despite the effect of macroeconomics and the pandemic, our contract liabilities have shown quarter-to-quarter growth. In the first quarter this year, our cash billings were close to the same period last year, which is a historical high because last year, we didn't really suffer any impact because the economics mainly started from the end of March. Overall, we expect to see gradual improvement in our business performance throughout the year, meaning that the second quarter will be better than the first quarter, and the second half of the year will be better than the first half of the year.
Thank you. We can open for another question.
[indiscernible]
[Interpreted] First question is about our strategy in terms of competition and growth for the year of 2023 in the mid- to high-end recruiting segment? And have we seen any changes in the competitive landscape so far in the segment? And second is regarding the newly announced share buyback program. Just wondering can management share a little bit more details of the plan, for example, the rationale behind? And what's our plan to fund the share buyback and the plan to execute the share buyback program. And in the future, do we have any other plans to further increase our shareholder returns?
[Interpreted] The addressable market of the metro high recommend is huge, yet online penetration is still relatively low, making it an attractive segment. However, there are certain entry barriers for the mid- to high-end recruitment market, process matching capability, algorithm, iteration speed and high data accuracy are required to serve this market. Long-term brand recognition and accumulated experience in the headcount and ecosystem are also essential. These assets require sufficient focus, innovation and craftmanship of our team. We will continue to solidify our advantages through focuses on hopefully talent, process matching and professional service. With regard to our business customers, we aim to seize the opportunities for our by national industry transformation and acquire more emerging industry customers through cooperation with local government will enhance the professionalism of our products, provide more in-depth tailored services and increase customer stickiness by offering more digital products and services that meet their needs will also improve the efficiency of the transformation from users to customers.
Furthermore, leveraging the customer health model, we will further classify our customers, improve their satisfaction and explore their diverse demand. More importantly, we will continue to prioritize technology upgrades. Sees opportunities to improve platform efficiency through new technologies such as AIGC and actively explore innovative cooperation models with headhunters to uncover market space in the mid- to high-end online recruitment market.
[Interpreted] Thank you for your question. Last Friday, we announced our first share repurchase plan since our listing. We plan to buy back up to HKD 300 million over the next 12 months. Historically, liquidity has been the main concern for conducting share buyback. However, with the recent improvement in our shareholder structure and liquidity, the Board believes that our market conditions are not durable. This repurchase plan reflects the confidence of our management team and major shareholders in our future growth and long-term value. It is also in line with the interest of both the companies and our shareholders.
And about the founding, totally, our domestic and overseas capital reserves are quite sufficient and can be used in a flexible manner to support this repurchase plan. Therefore, founding users is very convenient for us. And regarding the pace of the share buyback, we will proceed flexibly based on the market conditions over the next 12 months. Finally, we will also continue to explore and consider more ways to utilize funds, further strengthen the shareholder return mechanism and share the company's development dividends with more investors.
Thank you. We can now open for another question.
And there are no more questions in the queue.
Okay. So given the time limit then, we [indiscernible] conclude our conference call. If you have further questions or inquiries, you can always contact us through our IR e-mail ir.liepin.com. And thank you once again for joining us today. Look forward to seeing you next time. Have a great day.
Thank you. Bye.
This concludes today's call. Thank you for your participation. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]