The middle and high-end job search market is under pressure, and both revenue and profit declined in 2023. In 2023, the company achieved revenue of 2,282 billion yuan/ -13.5%; achieved adjusted operating profit of 139 million yuan/ -60.4%; achieved net profit adjusted to mother of 106 million yuan/ -44.1%. The decline in revenue and profit was due to the relatively slow recovery of the middle and high-end recruitment market. As of the end of 2023, the company's contract liabilities were $796 million, -4.0% YoY and -0.3% YoY. 2023Q4's operations improved month-on-month, achieving revenue of 630 million/ +0.9% in a single quarter; adjusted net profit loss of 13.88 million yuan and loss of 160 million yuan for the same period in 2022, narrowing sharply.
By business, the company's 2B business achieved revenue of 2.02 billion yuan in 2023, -14% year-on-year; accounting for 88%, which is basically the same as the previous year. The 2C business achieved revenue of 260 million yuan, -11% year-on-year; accounting for 11%, a slight increase.
The number of paying corporate customers was positive year over year in the second half of the year, and ARPU declined throughout the year. In terms of enterprise users, the year-on-year decline in the number of paying enterprise customers in the first half of 2023 was reversed in the second half of the year. As of the end of 2023, the number of paying enterprise customers reached 72,000 yuan, +1.9%; the ARPU of enterprise users was about 281,000 yuan, -15.4% year over year, mainly lower unit price for lightweight basic package customers; in terms of individual users, the cumulative number of registered individual users reached 95 million by the end of 2023, +12.6% year on year; headhunting, as of At the end of 2023, the number of verified headhunters reached 211,000, -0.3% year-on-year; the number of registered individual users reached 1,086 million times, or -5.3% year-on-year.
Profitability has declined marginally, and sales rates have been optimized. In 2023, the company's gross profit margin was 74.3%, -3.3 pct; adjusted net profit margin was 4.6% /-3 pct; sales/management/R&D rates were 47.4%/16.7%/15.8%, respectively, -2/+4/+1pct. The net interest rate for 2023Q4 was -6.3%, or -33.9% for the same period last year; the sales/management/R&D rates were 44.2%/21.9%/16.1%, respectively, compared to -29/+5/-3 pct. The reduction in sales rates was mainly due to large advertising expenses for the 2022/Q4 World Cup.
Multi-hunting RCN empowers the headhunting industry. In September 2023, the company launched Multi-Hunting RCN, which is committed to empowering small and medium-sized headhunters, and has established in-depth cooperation with nearly 60 hunting companies. 2024Q1 has launched AI intelligent interview products, and will continue to launch new AI recruitment products in the future to improve user recruitment efficiency and job matching.
Risk warning: User growth falls short of expectations, increased industry competition, information security & regulatory risks, etc.: In 2024, recruitment demand in the high-end recruitment market is still slowly recovering, and corporate recruitment budgets are still relatively cautious, but the company introduced lightweight products to hedge against the downturn in the business. The 2023Q4 revenue side growth rate has been corrected, which is expected to increase market share in the SME market and drive a slight increase in revenue side growth. We expect net profit growth to pick up in 2024-2026. 100 million yuan (the original forecast for 2024-2025 was 175/248 million yuan), corresponding to the PE valuation of about 12/8/7x, maintaining the company's “increase in wealth” rating.