Tongdao Liepin Group (FRA:6WT) (H1 2026) Earnings Call Highlights: AI-Driven Growth Powers ...

• Overall recruitment market recovery remains uneven, with entry-level white-collar positions facing significant pressure.

• Sales and marketing expenses increased 9.8% year-on-year due to higher online sales costs from subsidiary channel strategy changes.

• Other income declined due to lower interest income from shareholder return outflows and foreign exchange losses from USD depreciation.

• R&D expenses decreased 13.3% year-on-year, potentially limiting long-term innovation capacity despite efficiency gains.

• Full-year cash billings growth is expected to be only mid-single-digit, indicating a cautious outlook for the second half.

Q & A Highlights

Q: How is AI changing recruitment demand, and what is the outlook for the industry? Also, what is the company's outlook for the second half of 2026? A: CEO Kebin Dai stated that China's recruitment market is presenting structural opportunities, with strategic emerging industries like the AI value chain and advanced manufacturing expanding. Employers are placing significantly greater emphasis on AI skills, which are rapidly transitioning from a value-added skill to a fundamental capability. This has intensified recruitment challenges, as companies raise standards for talent identification and assessment, and talent profiles become less defined. CFO Ge Tian added that cash billings have grown for four consecutive quarters, and the company expects full-year 2026 cash billings to maintain mid-single-digit growth. He projected that full-year non-GAAP profit attributable to owners will grow by more than 20% year-on-year, with the second half showing significant improvement over the first half.

Q: How should we think about the monetization potential of the company's AI progress? A: CEO Kebin Dai explained that the difficulty of identifying and assessing scarce talent is rising, creating growth opportunities for mid- to high-end platforms like Liepin. The company's AI recruitment products, such as the AI Pro account and Intended Candidate Search, have effectively helped recruiters improve hiring quality and efficiency. He highlighted the launch of "Lilly," an AI agent targeting business users, which extends service boundaries across the value chain, including organizational development and talent assessment. Lilly is currently embedded within the AI Pro account to enhance appeal and client stickiness, with plans to eventually offer it as a stand-alone product to expand the client base and extend the service chain.

Q: What are the expectations for operating expenses, particularly regarding AI spending, marketing, and user acquisition costs? A: CFO Ge Tian stated that total operating expenses in 2026 are expected to see a modest increase, but the overall operating expense ratio is expected to decline as revenue grows. The sales expense ratio is expected to edge up slightly due to changes in market channels for a subsidiary, but for the main Liepin platform, the ratio is expected to decline year-on-year. R&D expenses are expected to continue their downward trend due to efficiency gains from AI tool enablement. The company continues to attract users through brand positioning rather than conventional marketing spend, which has proven effective as registered individual users grew 9.6% year-on-year and MAU reached a record high.

Q: Can you provide more details on the company's financial performance in the first half of 2026? A: CFO Ge Tian reported that the company generated revenue of RMB 989 million, a 5.6% year-on-year increase. Gross margin improved by 1.4 percentage points to 79%, the highest level in recent years. Non-GAAP operating profit was RMB 136 million, up 8.8% year-on-year, while non-GAAP profit attributable to owners was approximately RMB 110 million, up 30.5%. Excluding other income, non-GAAP operating profit increased significantly by 42.6% year-on-year. The company had total cash reserves of more than RMB 2.4 billion as of June 30, 2026.

Q: What is the company's strategy regarding shareholder returns? A: CEO Kebin Dai reiterated the company's commitment to distribute dividends equivalent to no less than 50% of non-GAAP profit attributable to owners over the next three years. The company completed the payment of the 2025 dividend with an actual payout ratio of approximately 63%, exceeding the commitment. Management expressed confidence in the company's profitability and determination to enhance shareholder returns, exploring diversified shareholder return initiatives to give back to investors.

Q: How is the company's BHC ecosystem performing? A: CEO Kebin Dai reported healthy growth across the BHC ecosystem. As of June 30, cumulative registered individual users exceeded 122 million, up 9.6% year-on-year. Registered business users reached 1.51 million, up 5.4%, including around 63,000 paid customers. Verified headhunters reached approximately 231,000, up 6% year-on-year, and the number of times headhunters reached out to individual users increased by 10.6% year-on-year.

Q: What is the performance of the company's AI products? A: CEO Kebin Dai stated that AI products have become the company's most important growth driver. Customer coverage of AI accounts has increased to nearly 100%. Within six months of launching the AI Pro account, around 40% of AI account customers upgraded, and more than 70% of new customers chose the AI Pro account. The Intended Candidate Search product can now deliver the first interested candidate within two hours for nearly 60% of job orders. Cash billings from AI products exceeded RMB 100 million for the full year last year, and in the first half of this year, they increased by nearly 100% year-on-year.

Q: What are the key trends in the recruitment market that the company is observing? A: CEO Kebin Dai highlighted two major trends: structural recovery and the deepening impact of AI. The pace of market recovery is differentiated across industries, with robust recruitment demand in advanced manufacturing, telecommunications, semiconductors, IT, and the Internet. The number of newly posted positions increased by approximately 14% year-on-year, with segments like smart hardware, artificial intelligence, aerospace equipment, and vehicle manufacturing each increasing by more than 35%. AI skills are rapidly becoming a fundamental requirement, with positions requiring AI tool proficiency increasing by nearly 100% year-on-year in the first quarter.

Q: How is the company leveraging its large language model and AI technology? A: CEO Kebin Dai explained that the company's large language model, Tongdao Hui Cai, leverages extensive industry expertise and domain-specific data to enhance matching accuracy and efficiency. The company has built a closed-loop reinforcement learning system based on behavioral feedback to continuously improve user interaction. On the C side, Career Partner AI provides one-stop end-to-end services covering career planning, job matching, and resume submission. A new memory function module was launched in the first half to extend user interaction journeys and strengthen engagement.

Q: What is the company's future development strategy? A: CEO Kebin Dai stated that amid the AI wave reshaping job structures, entry-level white-collar positions face significant pressure, while professional and leadership roles remain stable. The company will continue to iterate products and deepen services around recruitment needs in the AI era, while also focusing on blue-collar

For the complete transcript of the earnings call, please refer to the full earnings call transcript .