Kuaishou Financial Report: In Q3 2023, Kuaishou's revenue was 27.9 billion yuan, a year-on-year increase of 20.8%

Kuaishou handed in its "report card" for the third quarter of 2023. The financial report shows that Kuaishou's revenue in the third quarter was 27.9 billion yuan, a year-on-year increase of 20.8%; the profit during the period was 2.18 billion yuan, compared with a loss of 2.7 billion yuan in the same period last year; the adjusted net profit was 3.17 billion yuan, exceeding the market expectation of 2.66 billion yuan.

Kuaishou has achieved full-caliber profitability for two consecutive quarters. The improvement in profitability is the result of Kuaishou's cost reduction and efficiency improvement, as well as the steady development of its main businesses such as advertising, live streaming, and e-commerce.

This quarter, Kuaishou's advertising, live broadcasting, and other services (including e-commerce) revenues increased by 26.7%, 8.6%, and 36.6%, respectively. Among them, Kuaishou's e-commerce GMV increased by 30% year-on-year to 290.2 billion yuan, outperforming the industry's overall growth.

In the earnings call, Cheng Yixiao, founder and CEO of Kuaishou, said, "China's e-commerce industry has not yet reached the zero-sum game stage, and the ceiling will continue to rise. Kuaishou will play an important role in this."

E-commerce off-season is not slow, GMV growth exceeds 30%

This quarter, Kuaishou's total revenue increased by 20.8% year-on-year to 27.95 billion yuan. Among them, online marketing services (advertising) revenue was 14.69 billion yuan, a year-on-year increase of 26.7%; live broadcast revenue was 9.72 billion yuan, a year-on-year increase of 8.6%; other services (including e-commerce) revenue was 3.54 billion yuan, a year-on-year increase of 36.6%, contributing to the highest growth rate of Kuaishou's revenue.

The third quarter is traditionally an off-season for e-commerce, but Kuaishou's total e-commerce transaction volume (GMV) still grew by 30.4% year-on-year to 290.2 billion yuan, far exceeding the industry's growth. In the earnings call, Cheng Yixiao detailed the growth logic and future space of Kuaishou's e-commerce business.

Cheng Yixiao said that in the traditional e-commerce off-season, Kuaishou e-commerce still demonstrated unique resilience and advantages, mainly relying on abundant supply and refined operations.

In May this year, Kuaishou E-commerce clarified its "low-price good products" strategy and launched the "Chuanliu Plan" to connect the underlying ecology of influencers and merchants, and make full use of the private domain sedimentation of Kuaishou's semi-acquaintance community and the supplement of general shelf scenes, thereby forming an ecological closed loop of sustainable repurchase for consumers.

In terms of business operations, in the third quarter, through a refined business tiered operation system, Kuaishou's average monthly sales of businesses increased by about 50% year-on-year. The GMV share of branded goods, including Kuaishou brands, further increased year-on-year, among which well-known brands' self-broadcasting achieved outstanding results, with GMV increasing by more than 100% year-on-year, and the growth rate also increased quarter by quarter.

In terms of talent operations, Kuaishou pays more attention to the growth of mid-level and long-tail talents. Financial report data shows that in the third quarter, the proportion of mid-level and below talents in Kuaishou's overall talent GMV gradually increased from 20%+ at the beginning of 2021 to nearly 50% this quarter, and the health of the ecosystem has been further improved.

Regarding the progress of the pan-shelf market, which has attracted widespread attention from the outside world, Cheng Yixiao said that in the third quarter, Kuaishou's pan-shelf market accounted for nearly 20% of the overall GMV. At the same time, in the pan-shelf market, the search scale has continued to expand. This quarter, the peak number of daily search users with e-commerce intentions increased by 25% month-on-month to over 100 million, and the search GMV increased by about 70% year-on-year.

In addition, during this year's Double Eleven, Kuaishou opened the first-level traffic entrance of the mall. Cheng Yixiao revealed that during the event, the mall's GMV grew rapidly, accounting for about 10% of the overall GMV. In the future, the mall, as a supplementary venue for content e-commerce, will mainly target users with e-commerce shopping mentality to further increase the purchase frequency.

It is worth mentioning that, benefiting from the continuous expansion of the e-commerce business, Kuaishou's internal advertising revenue continued to maintain strong growth. Among them, after the whole-station business concept was accepted by more merchants, in the third quarter of this year, the marketing customer consumption of the whole-station promotion products also increased by nearly 5 times month-on-month.

In terms of external circulation advertising, Kuaishou follows a refined operation strategy, customizing different solutions for the needs of different industries such as finance, transportation, real estate, and games. Data shows that in the third quarter, Kuaishou's external circulation native promotion material consumption increased by more than 30% month-on-month.

"In the third quarter, although the recovery of the macro economy and advertisers' confidence still faced certain challenges, by deepening the industry's refined operations, Kuaishou's external circulation performance advertising maintained a recovery trend, and the year-on-year growth rate of revenue increased compared with the second quarter, especially in the media information, education and training, and medical industries. Good progress has been made." Cheng Yixiao said.

Short dramas performed well and the number of users reached a new high

In addition to continued profitability, the record-breaking user scale is another highlight of Kuaishou’s financial report this quarter.

The financial report shows that this quarter, Kuaishou's average daily active users (DAU) increased by 6.4% year-on-year to 386.6 million, and its average monthly active users (MAU) increased by 9.4% year-on-year to 684.7 million, both of which set new historical records. Among them, MAU increased by 11.7 million month-on-month. This means that Kuaishou still has new traffic under the accelerated competition from its old rival Douyin, Video Account, and Xiaohongshu.

In its financial report, Kuaishou stated that the record-breaking user scale was due to "efficient user growth strategies, rich supply of high-quality content and continuously optimized algorithms."

Specifically, Kuaishou further increased the channel delivery of high-quality original content, including short dramas, in Q3, achieving good user retention. At the same time, through high-quality content vertical operation activities such as the Summer Star Wish Party, it not only acquired new users but also increased the activity of existing users. In addition, it actively explored new customer acquisition channels, such as reaching young user groups through live broadcasts of public welfare courses in universities.

In terms of user usage time, in the third quarter, the average daily usage time of each daily active user of Kuaishou app was 129.9 minutes, compared with 129 minutes in the same period last year and 117 minutes in the previous quarter, both year-on-year and quarter-on-quarter increases. Judging from the results of DAU/MAU, user stickiness has increased quarter-on-quarter.

It is worth noting that summer short dramas and Asian Games content, while increasing user activity, also achieved a better combination of popular content and advertisers’ brand marketing demands. For example, the commercial customized short drama “Beauty Comes True” launched in the summer brought 1.09 billion exposures to the title sponsor Tmall International.

The financial report shows that in the third quarter of 2023, the Star Project short drama investment revenue increased by more than 10 times month-on-month, becoming a major "assist" to Kuaishou's revenue.

Launching a new AI strategy to explore the implementation of large-scale model scenarios

Since the beginning of this year, Kuaishou has been active in the field of AIGC. Just last month, Kuaishou officially launched the internal testing of the "AI Xiaokuai" account. It is reported that this is Kuaishou's first personalized application in the comment area.

Cheng Yixiao stated in the earnings call that Kuaishou launched a new AI strategy at the beginning of this year and specified clear strategic goals to ensure that it remains in the first echelon in China in possible technological breakthroughs, combines and empowers existing business scenarios, and strives to bring business leadership through independent disruptive technological innovation.

According to Cheng Yixiao, Kuaishou's current language big models - Kuaiyi's 13 billion and 66 billion big models have reached the leading level in the industry of the same scale. At the same time, it has also started the research and development of language big models with a scale of over 100 billion and multimodal big models.

In addition, Kuaishou has also launched a large-scale literary image model "KeTu", which can generate paintings with diverse styles, exquisite picture quality and full of creativity based on open text.

Talking about the scenario-based implementation of the big model, Cheng Yixiao pointed out that on the content consumption side, relying on the Ketu big model, Kuaishou launched the "AI Play Review" function in the short video comment area, where users can generate a large number of style pictures with one click by entering text, making it more convenient to have fun interactions in the comment area. Recently, Kuaishou began internal testing of the "AI Xiaokuai" account, providing users with interactive Q&A, picture generation, strategy retrieval, copywriting modification and other AIGC services based on short video application scenarios in the short video comment area.

Cheng Yixiao said that at present, various technical and business departments of Kuaishou are actively embracing the wave of big model technology, and the business development progress is in line with expectations. He believes that more big model applications will be presented to the outside world in the future.

From TechWeb