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United States securities and exchange commission logo
April 15, 2021
Peng Zhao
Chief Executive Officer
Kanzhun Ltd.
18/F, GrandyVic Building Taiyanggong Middle Road
Chaoyang Distict, Beijing 100020
People s Republic of China
Re: Kanzhun Ltd.
Draft Registration
Statement on Form F-1
Submitted March 19,
2021
CIK No. 0001842827
Dear Mr. Zhao:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-1
Summary, page 1
1. Please explain why you
combine both job seekers users and those that use the platform to
hire employees, i.e.
enterprise users, in your statistics for MAUs and DAUs. We note that
you generate almost all
of your revenue from paid enterprise customers. Discuss how
combining the two user
groups into one metric provides insight as to user engagement,
customer billings or
revenue generation. We further note that you provide comparative
industry information
based on the Top 5 online job search companies in China based on
MAU. Please clarify if
these competitors also combine job seekers with hiring entity
users.
Peng Zhao
FirstName LastNamePeng Zhao
Kanzhun Ltd.
Comapany
April NameKanzhun Ltd.
15, 2021
April 215, 2021 Page 2
Page
FirstName LastName
2. Please clarify that the term enterprise user covers Bosses and
recruiting professional
users of all sized companies, rather than that of only large
businesses.
3. Please clarify that your revenue model is primarily based on a
freemium or similar model
where you offer your services on your platform primarily for free to
both job seekers and
enterprise users, but you generate nearly all of your revenue through
employers and
recruiting professionals through subscription, job placement ads and
value-added
services. Clarify that of your 11.4 million enterprise users, only 2.3
million of them were
paid enterprise customers that generated revenue in 2020. Further,
please advise us
whether the conversion rate from free enterprise user to paid
enterprise customer is a key
performance indicator used by management to evaluate your business.
Summary Consolidated Financial Data, page 15
4. Please include a supporting calculation for your pro forma net loss
per share, including a
reconciliation of net loss attributable to ordinary shares to pro
forma net loss attributable
to ordinary shares and a reconciliation of weighted average ordinary
shares outstanding to
pro forma weighted average ordinary shares outstanding.
Risk Factors
Our post-offering memorandum and articles of association and the deposit
agreement provide...,
page 64
5. Please expand your risk factor to address that Section 22 of the
Securities Act provides
concurrent jurisdiction for Securities Act claims to both state and
federal courts. Since
your exclusive forum provision provides for federal courts to have
exclusive jurisdiction
over Securities Act claims, please briefly discuss the uncertainty as
to whether this
provision is enforceable and that investors cannot waive compliance
with the federal
securities laws and the rules and regulations thereunder.
Business, page 118
6. We note that you provide a business measures relating to percentage of
DAUs to MAUs,
revenues by type of job seeker, verified job seekers, verified
enterprise users, etc., for
2020 only. Please provide similar amounts for 2019 or explain why you
do not believe it
is material.
7. On pages 91 and 121 you indicate that you have a substantial number of
free enterprise
users that do not generate revenue and your ability to monetize these
enterprise users is a
part of your growth plans. Please provide a description of the key
functions of your
platform that free enterprise users may use without any paid
subscriptions or paid
services. For example, please clarify if a Boss or recruiter could
review and search job
seeker profiles, contact and interview them via streaming video in
your app, and then hire
the job seeker for free if they do not post a job ad or otherwise use
any of the value-added
services.
Peng Zhao
FirstName LastNamePeng Zhao
Kanzhun Ltd.
Comapany
April NameKanzhun Ltd.
15, 2021
April 315, 2021 Page 3
Page
FirstName LastName
8. You state that your sales and marketing expenses represented 91.8% and
69.3% of your
revenues in 2019 and 2020. Please provide more details of your
advertising expenditures.
In this regard, discuss whether you have material arrangements, such
on online traffic
acquisition arrangements and branding advertising.
Regulation, page 137
9. On pages 25 and 141, you indicate that you have not obtained the
Audio-Visual License
for providing internet audio-visual program services and content
through your online
recruitment platform in China. You further indicate that you may be
subject to fines and
suspension of audio-visual activities through your platform without a
license and such a
license may not be available to you since you are not a state-owned or
controlled entity.
Please clarify whether you believe you are required to receive the
Audio-Visual License to
operate your current platform and discuss your efforts to obtain such
a license. Your
discussion should include the name of the government entity that would
issue the Audio-
Visual License and whether you have applied for such a license.
10. You briefly mention on page 25 that the Audio-Visual License may cover
short
educational videos available for purchase by users and short
recruitment videos uploaded
by users. Please provide a more detailed description of the video
features of your
platform that may fall under the scope of the Audio-Visual License. In
particular, please
clarify if the in-app streaming interviewing feature would be included
and, if so, the
impact on the company's operations.
Management, page 155
11. According to your description of your Shareholders Agreement on page
177, you disclose
that its corporate governance provisions will expire upon the close of
the IPO. Please
clarify whether your current board were subject to any board
appointment or nomination
rights made pursuant to your Shareholders Agreement. If so, please
specify which
directors were appointed or nominated by shareholders pursuant to such
rights.
12. Please briefly discuss the board observer rights for your principal
shareholder Global
Private Opportunities Partners, an affiliate of your underwriter
Goldman Sachs. Further,
we note that your related party disclosures cross-reference the
description of your
Shareholders Agreement on page 177, but does not mention the related
party nature of this
board observer right and indicates that the corporate governance
provisions of the
agreement would expire upon the close of the IPO. Please clarify that
the board observer
rights will survive the close of your IPO and revise your description
of your Shareholders
Agreement accordingly.
13. Your description of the capital share capital indicates that your
articles do not require an
annual general meeting on page 167. Please clarify on page 159 if you
are not required to
hold annual elections for directors. If so, please also clarify
whether you intend to hold
annual meetings and/or annual elections of directors. If not, please
address this issue in a
risk factor as appropriate.
Peng Zhao
Kanzhun Ltd.
April 15, 2021
Page 4
Consolidated Financial Statements
Notes to Consolidated Financial Statements
1. Principal Activities and Organization
(d) Risks Related to the VIE Structure, page F-14
14. Your disclosure on page F-15 states that the Company considers that
there is no asset of
the VIE that can be used to settle obligations of the VIE except for
registered capital of the
VIE amounting to RMB 8,992 as of December 31, 2019 and 2020,
respectively. Please
clarify if you mean that there are no assets of the VIE that can only
be used to settle
obligations of the VIE. Otherwise, please clarify how obligations of
the VIE are settled.
2. Principal Accounting Activities
2.13 Revenue Recognition
Item Based Model, page F-22
15. Your disclosure states that under the item based model you deliver
service in the form of
other various virtual tools. Please further clarify the nature of
these services and over
what period they are delivered or made available to customers. Tell us
how you
considered the criteria in ASC 606-10-25-23 through 25-30 in
determining when the
performance obligation has been satisfied.
Arrangements with Multiple Performance Obligations, page F-23
16. Your disclosure indicates that your contracts with enterprise
customers may include bulk
sales of various value added features and subscription packages.
Please further clarify the
nature of the value added features and how you determined that they
are distinct form
your subscription services. Refer to ASC 606-10-25-19 through 25-21.
2.14 Cost of Revenues
2.15 Sales and Marketing Expenses, page F-23
17. Your disclosure on page 32 indicates that in exchange for facilitating
the purchase of your
online recruitment services through your mobile applications you pay
certain app store
operators a certain share of the revenue you receive from these
transactions. Clarify if
these costs are included in your online traffic acquisition costs. If
so, tell us your basis for
including in sales and marketing expense rather than cost of revenues.
In this regard,
FirstName LastNamePeng Zhao
considering that these fees are based on a share of revenue, they appear
to be direct costs
Comapany NameKanzhun
of providing Ltd. Please also tell us the dollar amount of these
costs for each
the service.
period
April 15, 2021presented.
Page 4
FirstName LastName
Peng Zhao
FirstName LastNamePeng Zhao
Kanzhun Ltd.
Comapany
April NameKanzhun Ltd.
15, 2021
April 515, 2021 Page 5
Page
FirstName LastName
9. Operating Lease, page F-33
18. Your disclosure on page F-25 states that lease expense for lease
payments is recognized
on a straight-line basis over the lease term. However, we note your
lease expense includes
interest on lease liabilities. Please clarify your accounting for
operating leases and how it
complies with ASC 842.
16. Share Based Compensation, page F-48
19. When your preliminary IPO price is known, please reconcile and explain
the differences
between the fair values of the underlying equity interest determined
on each grant date
including the difference between the most recent grant date fair value
and the midpoint of
your offering range. Describe the objective evidence that supports
your determination of
the fair value of the underlying equity interest at each grant or
issue date. Please provide
this analysis for the most recent six months. In addition, your
disclosure should fully
describe the assumptions utilized at the IPO valuation date that are
significantly different
than those used in the most recent valuation.
General
20. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
You may contact Laura Veator, Senior Staff Accountant, at (202) 551-3716
or Stephen
Krikorian, Accounting Branch Chief, at (202) 551-3488 if you have questions
regarding
comments on the financial statements and related matters. Please contact Edwin
Kim, Staff
Attorney, at (202) 551-3297 or Jan Woo, Legal Branch Chief, at (202) 551-3453
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: Z. Julie Gao