Kanzhun (BZ) Reported 173% GAAP Profit Growth but Adjusted Net Income Rose 9.4%. What Drove the Gap?

Kanzhun Limited (NASDAQ:BZ) reported a 173% surge in GAAP net income for the second quarter, but the majority of the growth came from an investment gain rather than operational performance. Revenue expanded 14.1% year-over-year to RMB2.40 billion, while GAAP income from operations increased 32.6% to RMB863.2 million. Nonetheless, GAAP net income jumped 173.1% to RMB1.94 billion, a stark contrast to the 9.4% growth in non-GAAP adjusted net income, which reached RMB1.03 billion.

This discrepancy stemmed from a significant RMB1.47 billion investment income gain from the fair-value changes of an investee that went public in January 2026, contributing a substantial portion to the reported profit growth. This gain was not generated by Kanzhun's online recruitment platform and was excluded from adjusted net income, along with a RMB366.5 million tax impact.

After accounting for the tax effect, the gain translated to approximately RMB1.10 billion, explaining a large part of the difference in profit growth figures. Despite this, Kanzhun still showcased robust growth in its core business, with a 10.8% increase in trailing-12-month paid enterprise customers to 7.2 million and a 10.4% rise in average monthly active users to 70.2 million.

Revenue growth outpaced both customer and revenue metrics, indicating that both customer acquisition and monetization played a role in the overall performance. The company also exhibited operating leverage, with a GAAP operating margin of roughly 36.0%, up from 31.0% a year earlier, and an adjusted operating margin that expanded to 43.8%.

However, the investment-driven profit surge should not be mistaken for future earnings momentum, as the 173.1% GAAP net-income growth is a misleading measure of underlying earnings. Adjusted net income only grew by 9.4%, which trailed both revenue growth and the 19.2% increase in adjusted operating income. The larger income-tax burden further contributed to the weaker conversion of reported earnings to adjusted earnings.

Cash flow also diverged from the reported earnings, with Kanzhun generating RMB944.8 million in operating cash flow, a decline of 10.2% from RMB1.05 billion. The decline was attributed to higher advertising and marketing expenditures, increased tax payments, and lower cash receipts from interest and investment income, partially offset by higher customer billings.