Kuaishou Technology Announces First Quarter 2023 Unaudited Financial Results
First Quarter 2023 Key Highlights
- Average DAUs on Kuaishou APP were 374.3 million, representing an increase of
8.3% from 345.5 million for the same period of 2022. - Average MAUs on Kuaishou APP were 654.4 million, representing an increase of
9.4% from 597.9 million for the same period of 2022. - Total e-commerce GMV(1) was
RMB224 .8 billion, representing an increase of28.4% fromRMB175 .1 billion for the same period of 2022. - Total revenue increased by
19.7% toRMB25 .2 billion fromRMB21 .1 billion for the same period of 2022. Online marketing services and live streaming contributed51.8% and37.0% , respectively, to the total revenue. The other11.2% came from other services. - Gross profit increased by
33.4% toRMB11 .7 billion fromRMB8 .8 billion for the same period of 2022. Gross profit margin in the first quarter of 2023 was46.4% , improving from41.7% for the same period of 2022. - Adjusted net profit(2) was
RMB42 million , compared to adjusted net loss(2) ofRMB3.7 billion for the same period of 2022. - Operating profit from the domestic segment(3) was
RMB963 million , compared to an operating loss(3) ofRMB1.5 billion for the same period of 2022.
Mr. Cheng Yixiao, Co-founder and Chief Executive Officer of Kuaishou said, "We delivered strong results in the first quarter of 2023 with positive adjusted net profit at the group level for the first time since our listing. Our significant breakthrough in profitability was achieved on the back of record level user metrics, revenue growth and operating efficiency improvement. Our total revenue reached
First Quarter 2023 Financial Review
Revenue from our online marketing services increased by
Revenue from our live streaming business increased by
Revenue from our other services increased by
Other Key Financial Information for the First Quarter of 2023
Operating loss was
Adjusted EBITDA(4) was
Total available funds(5) reached
Notes:
(1) Placed on or directed to our partners through our platform.
(2) We define "adjusted net profit/(loss)" as loss for the period adjusted by share-based compensation expenses and net fair value changes on investments.
(3) Unallocated items, which consist of share-based compensation expenses, other income, and other gains/(losses), net, are not included.
(4) We define "adjusted EBITDA" as adjusted net profit/(loss) for the period adjusted by income tax expenses, depreciation of property and equipment, depreciation of right-of-use assets, amortization of intangible assets, and finance (income)/expense, net.
(5) Total available funds included but not limited to cash and cash equivalents, time deposits, financial assets and restricted cash. Financial assets mainly included wealth management products and others.
Business Review
In the first quarter of 2023, we recorded group level adjusted net profit for the first time since our listing on the Stock Exchange in 2021, representing a significant breakthrough in our profitability. This milestone was achieved on the back of a strong first quarter performance driven by new records in user metrics, revenues growth and efforts in operating efficiency improvement.
In addition to healthy growth in our DAUs and MAUs, we continued to grow the number of content creators, advertisers and merchants on our platform while promoting a more integrated commercialization and traffic ecosystem. We also made substantial progress with our store-wide ROI strategy in driving end-to-end sales funnel conversion for both advertising and e-commerce businesses. As a result of these, combined with macro-economic tailwinds, our revenue growth accelerated across all three business segments (online marketing services, e-commerce and live streaming) in the first quarter of 2023 and outperformed their respective industries.
Our success in enhancing monetization and operating efficiency while maintaining our pace of business growth played a pivotal role in our profitability turnaround. Our domestic business delivered an operating profit for the fourth consecutive quarter, while the operating loss in our overseas segment also narrowed by
User and content ecosystem
In the first quarter of 2023, we set a new record for the scale of our user community by capitalizing on the growth opportunities from some seasonal festivals including the Chinese New Year. Average DAUs and MAUs on the Kuaishou App reached 374.3 million and 654.4 million, representing a year-over-year increase of
With a focus on both the efficiency and quality of user growth, we lowered our user acquisition and retention costs in the first quarter of 2023 on both a quarter-over-quarter and year-over-year basis. This was the result of the refined management and technological tools as well as optimized placement strategies for original, high-quality short video and live streaming content. Meanwhile, we further improved our ROI on user acquisition through growing the proportion of users with higher lifetime value.
We reinforced the virtuous cycle of content supply and consumption by optimizing content supply through enhanced algorithm-based learning system targeting different user groups. We also continued to strengthen the social attributes and community vitality of our platform, key factors setting us apart from our competitors. By the end of the first quarter of 2023, pairs of mutual followers on the Kuaishou App reached a cumulative 29.6 billion, representing a
The Chinese New Year period has been an important window for user growth and brand promotion. This year, through a combination of "content + interaction," we provided users with dual venues to celebrate the new year on Kuaishou. In terms of content, we provided a diverse range of consumption choices including CCTV Spring Festival Gala, Kuaishou 1001 Nights Fans' Gala (快手一千零一夜老鉄聯歡晚會), online festival fairs, short plays and more. Among them, Kuaishou 1001 Nights Fans' Gala, Kuaishou's self-produced program, attracted more than 270 million viewers and received over 520 million likes in the first run. On the interaction side, we offered a variety of interesting interactive features and social games.
In addition to our engaging event-driven content, we also continued to enrich our content supply across various verticals. In terms of short plays, we further augmented the genres on offer while maintaining our industry-leading ability to produce blockbuster short plays. We launched a total of 55 short plays produced by Project Astral (星芒計劃) during the 2023 winter break period. Among them, Donglan Snow (東欄雪) accumulated 100 million views within a record-breaking 40 hours of its launch. Our high-quality short play content and growing brand awareness in this area have also been recognized by advertisers. In the first quarter of 2023, revenue from advertising sponsorship of Project Astral (星芒計劃) short plays increased by more than
We further refined the search function on our platform, which has led to stronger user habits on searching that facilitate content discovery. In the first quarter of 2023, Kuaishou search's average monthly users exceeded 420 million, and the number of daily searches on our platform peaked at more than 650 million. Meanwhile, we have also achieved continuous progress in commercialization of our search function, as evidenced by a doubling of increase in search-generated e-commerce GMV year-over-year, as well as a year-over-year growth in search advertising revenue of over
Online marketing services
Our revenue from online marketing services for the first quarter of 2023 grew by
Our advertising services provided to our native e-commerce merchants experienced robust growth momentum, propelled by the strong growth in the e-commerce GMV on our platform in the first quarter of 2023. In addition, we pioneered the use of store-wide ROI as a key performance indicator and completed pilot runs for certain advertisers during the Valentines' Day and March 8 Women's Day shopping festivals. Those trials proved the effectiveness of our new system in end-to-end sales funnel conversion from brand promotion to performance ads, and ultimately to transactions. In addition, we launched a project to grow our small and medium-sized e-commerce merchant client base to capitalize on their advertising needs and optimize our merchant ecosystem. In particular, we strengthened our client acquisition and marketing capabilities and upgraded our Magnetic Taurus (磁力金牛) platform for e-commerce marketing solutions on mobile devices.
In terms of our external performance-based advertising services, to facilitate our advertisers to capture this recovery trend and achieve their long-term goals, we are leveraging products and algorithms that are well integrated with industry attributes to promote the discovery, accumulation and user-brand matching of high-value user cohorts. This enables us to empower advertisers to achieve in-depth conversion of their target users. At the same time, we actively monitor the healthiness of external advertisements on our platform, ensuring their penetration of high-value users through our optimized traffic allocation mechanism. In addition, we have established review standards and system for native advertisement materials to improve the quality of creative materials and reduce their negative impact on user experience and our ecosystem. These efforts, together with our "organic + commercial" traffic allocation mechanism to enhance conversion efficiency and ROI for advertisers, have propelled the growth of our external advertising services. An encouraging recovery trend gradually began to take shape during the first quarter of 2023 in industries such as information services, medical care, finance and education.
With respect to brand advertising, we focused on strengthening our product capabilities. We established a rich advertising product portfolio, which included splash ads and sponsorships for our self-produced IPs as well as KOLs' home pages and searches, further expanding our brand advertising scenarios and resources. Furthermore, we designed and customized solutions for brand advertisers at various stages across different industries. We systematically established user assets for brand advertisers and created an end-to-end conversion path integrating brand promotion, performance ads and transaction, leading to increased recognition of our platform's value from a growing number of brand advertisers. Driven by these initiatives to unlock our ecosystem's potential for brand advertisers and benefitting from key promotion events such as the Chinese New Year and March 8 Women's Day in the first quarter of 2023, our revenue from brand advertising maintained its growth momentum with a year-over-year increase of over
E-commerce
In the first quarter of 2023, we continued to strengthen our trust-based e-commerce ecosystem and execute our omni-domain operating strategy. We further satisfied our users' needs by enriching our merchandise, improving matching accuracy between buyers and sellers and harnessing high-quality streamer resources and e-commerce content, which in turn drove a year-over-year increase in GMV of
On the merchandise side, we continued to reinforce our merchandising capabilities, amplifying the exposure of more high-quality products for recommendation through product evaluations and ratings based on a broader array of metrics. At the same time, we guided merchants to continue enhancing product information quality and quantity as well as elevating their service abilities.
On the merchant side, we further upgraded the cooperative mechanism between merchants and KOLs. We delved into users' needs and established connections between users and merchants leveraging high-quality recommendation content produced by KOLs. We also facilitated more accurate product matching for KOLs engaged in product distributions through a more refined, tiered operation strategy, leading to an over
Onboarding and development of merchants are also critical in driving the success of this segment. We established cooperation with more brand merchants across a growing range of industries, catering to our users' increasing needs and consumption of branded merchandise. Leveraging our deep insights into users' consumption behaviors, we carried out targeted on-boarding program of merchants, leading to a year-over-year increase of approximately
Additionally, we worked with service providers to attract merchants in industry zones and improve our merchant empowerment system. In the first quarter of 2023, we launched the Gold Rush Initiative (斗金計劃) with exclusive policy and traffic support to help small and medium merchants grow. In March 2023, the number of both monthly onboarded business merchants and monthly active business merchants increased by over
On the user front, we continued to refine our tiered operations for e-commerce paying users. We cultivated user mindsets through recommendations and reinforced the conversions of new paying users and potential customers via smart subsidies, promotions and traffic allocation adjustments. In the first quarter of 2023, new e-commerce paying users' monthly purchase frequency increased continuously year-over-year and quarter-over-quarter, with retention rates improving every month. With respect to paying users who are relatively less active, we strengthened the identification and reactivation of users with subpar experience. As for e-commerce active paying users, we launched our early warning and targeted anti-churn strategies in the first quarter of 2023 to provide better services to high-value users. In the first quarter of 2023, the number of monthly active e-commerce paying users and average order price continued to increase year-over-year, with monthly ordering frequency rising year-over-year. Algorithm-wise, we mitigated the impact of e-commerce content on user time spent by modeling the relationship between e-commerce related user interactions and consumption time spent. This optimized users' e-commerce consumption experience, leading to more effective recommendations and conversion.
Shelf-based e-commerce is another major realm in Kuaishou's omni-domain e-commerce business strategy. In the first quarter of 2023, we started to test the new shopping mall entry button on the landing page of Kwai shop to better meet the intent-driven shopping needs of highly active paying users. Meanwhile, as we further optimized our search function to better identify user intentions, we improved the product relevance of search results, leading to a doubling of GMV generated from searches year-over-year in the first quarter of 2023.
Live streaming
In the first quarter of 2023, live streaming revenue grew by
On the supply side, we focused on promoting the development of live streaming as a profession and continuously advanced our diverse cooperation with top talent agencies and streamers. In the first quarter of 2023, the number of active streamers from talent agencies increased by over
Our innovative "live streaming +" services made steady progress in the first quarter of 2023, with average daily resume submissions on Kwai Hire (快聘) growing by over
Overseas
In the first quarter of 2023, we further deepened our key country focus strategy to optimize resource allocation and improve our monetization capabilities. As a result, revenue from our overseas business grew at an accelerated pace to reach
With respect to live streaming, we optimized our content supply by adding a vast array of talent agencies to our partner roster and energizing our existing talent agency partners to produce more and better live streaming content. Meanwhile, we ramped up our exploration in live streaming revenue products and rolled out new iterations of operational process, leading to steady improvements in live streaming paying ratio and ARPPU. In addition, we successfully enhanced the gross profit margin of our live streaming business through a series of measures to improve talent agencies' efficiency. On the advertising front, we achieved better-than-expected revenue growth, thanks to our efforts to strengthen local operation capabilities, expand advertiser coverage to more industries, and optimize our product portfolio and service capabilities. In addition, we launched our e-commerce services in
Corporate social responsibilities
Given the accelerated digitalization of
About Kuaishou
Kuaishou is a leading content community and social platform with its mission to be the most customer-obsessed company in the world. Kuaishou has relentlessly been focusing on serving its customers and creating value for them through the continual innovation and optimization of its products and services. At Kuaishou, any user can chronicle and share their life experiences through short videos and live streams and showcase their talents. Working closely with content creators and businesses together, Kuaishou provides product and service offerings that address various user needs that arise naturally, including entertainment, online marketing services, e-commerce, online games, online knowledge-sharing, and more.
Forward-Looking Statements
Certain statements included in this press release, other than statements of historical fact, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "might", "can", "could", "will", "would", "anticipate", "believe", "continue", "estimate", "expect", "forecast", "intend", "plan", "seek", or "timetable". These forward-looking statements, which are subject to risks, uncertainties, and assumptions, may include our business outlook, estimates of financial performance, forecast business plans, growth strategies and projections of anticipated trends in our industry. These forward-looking statements are based on information currently available to the Group and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, many of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realized in the future. Underlying these forward-looking statements are a large number of risks and uncertainties. In light of the risks and uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as representations by the Board or the Company that the plans and objectives will be achieved, and investors should not place undue reliance on such statements. Except as required by law, we are not obligated, and we undertake no obligation, to release publicly any revisions to these forward-looking statements that might reflect events or circumstance occurring after the date of this press release or those that might reflect the occurrence of unanticipated events.
For investor and media inquiries, please contact
Kuaishou Technology
Investor Relations
Email: ir@kuaishou.com
CONDENSED CONSOLIDATED INCOME STATEMENT | ||||||
Unaudited | ||||||
Three Months Ended March 31 | ||||||
March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||
RMB'Million | RMB'Million | RMB'Million | ||||
Revenues | 25,217 | 28,293 | 21,067 | |||
Cost of revenues | (13,505) | (15,417) | (12,285) | |||
Gross profit | 11,712 | 12,876 | 8,782 | |||
Selling and marketing expenses | (8,723) | (9,740) | (9,488) | |||
Administrative expenses | (919) | (1,034) | (871) | |||
Research and development expenses | (2,920) | (3,446) | (3,523) | |||
Other income | 52 | 450 | 263 | |||
Other gains/(losses), net | 100 | (349) | (806) | |||
Operating loss | (698) | (1,243) | (5,643) | |||
Finance income/(expense), net | 111 | 107 | (11) | |||
Share of losses of investments accounted | (14) | (27) | (37) | |||
Loss before income tax | (601) | (1,163) | (5,691) | |||
Income tax expenses | (275) | (384) | (563) | |||
Loss for the period | (876) | (1,547) | (6,254) | |||
Attributable to: | ||||||
— Equity holders of the Company | (873) | (1,547) | (6,254) | |||
— Non-controlling interests | (3) | - | - | |||
(876) | (1,547) | (6,254) | ||||
CONDENSED CONSOLIDATED BALANCE SHEET | ||||
Unaudited | Audited | |||
As of March 31, 2023 | As of December 31, 2022 | |||
RMB'Million | RMB'Million | |||
ASSETS | ||||
Non-current assets | ||||
Property and equipment | 12,407 | 13,215 | ||
Right-of-use assets | 10,130 | 10,806 | ||
Intangible assets | 1,145 | 1,123 | ||
Investments accounted for using the equity method | 264 | 268 | ||
Financial assets at fair value through profit or loss | 4,094 | 3,626 | ||
Other financial assets at amortized cost | 697 | 670 | ||
Deferred tax assets | 5,223 | 5,095 | ||
Long-term time deposits | 7,776 | 7,870 | ||
Other non-current assets | 415 | 776 | ||
42,151 | 43,449 | |||
Current assets | ||||
Trade receivables | 5,117 | 6,288 | ||
Prepayments, other receivables and other current assets | 3,071 | 4,106 | ||
Financial assets at fair value through profit or loss | 10,885 | 13,087 | ||
Other financial assets at amortized cost | 556 | 726 | ||
Short-term time deposits | 11,031 | 8,318 | ||
Restricted cash | 319 | 59 | ||
Cash and cash equivalents | 12,473 | 13,274 | ||
43,452 | 45,858 | |||
Total assets | 85,603 | 89,307 | ||
CONDENSED CONSOLIDATED BALANCE SHEET | ||||
Unaudited | Audited | |||
As of March 31, 2023 | As of December 31, 2022 | |||
RMB'Million | RMB'Million | |||
EQUITY AND LIABILITIES | ||||
Equity attributable to equity holders of the Company | ||||
Share capital | - | - | ||
Share premium | 274,521 | 274,473 | ||
Other reserves | 29,965 | 29,239 | ||
Accumulated losses | (264,755) | (263,882) | ||
39,731 | 39,830 | |||
Non-controlling interests | 5 | 8 | ||
Total equity | 39,736 | 39,838 | ||
LIABILITIES | ||||
Non-current liabilities | ||||
Lease liabilities | 8,155 | 8,721 | ||
Deferred tax liabilities | 22 | 23 | ||
Other non-current liabilities | 5 | 16 | ||
8,182 | 8,760 | |||
Current liabilities | ||||
Accounts payables | 18,951 | 22,868 | ||
Other payables and accruals | 10,735 | 10,190 | ||
Advances from customers | 3,281 | 3,240 | ||
Income tax liabilities | 1,233 | 936 | ||
Lease liabilities | 3,485 | 3,475 | ||
37,685 | 40,709 | |||
Total liabilities | 45,867 | 49,469 | ||
Total equity and liabilities | 85,603 | 89,307 | ||
Financial Information by Segment | ||||||||||||
Unaudited Three Months Ended | ||||||||||||
March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||
Domestic | Overseas | Unallocated | Total | Domestic | Overseas | Unallocated | Total | Domestic | Overseas | Unallocated | Total | |
RMB'Million | RMB'Million | RMB'Million | ||||||||||
Revenues | 24,879 | 338 | - | 25,217 | 28,008 | 285 | - | 28,293 | 21,019 | 48 | - | 21,067 |
Operating profit/(loss) | 963 | (823) | (838) | (698) | 1,267 | (1,499) | (1,011) | (1,243) | (1,543) | (1,846) | (2,254) | (5,643) |
Reconciliation of Non-IFRS Measures to the Nearest IFRS Measures | |||||
Unaudited | |||||
Three Months Ended | |||||
March 31, | December 31, | March 31, | |||
2023 | 2022 | 2022 | |||
RMB'Million | RMB'Million | RMB'Million | |||
Loss for the period | (876) | (1,547) | (6,254) | ||
Add: | |||||
Share-based compensation expenses | 990 | 1,112 | 1,711 | ||
Net fair value changes on investments(1) | (72) | 390 | 821 | ||
Adjusted net profit/(loss) | 42 | (45) | (3,722) | ||
Adjusted net profit/(loss) | 42 | (45) | (3,722) | ||
Add: | |||||
Income tax expenses | 275 | 384 | 563 | ||
Depreciation of property and equipment | 964 | 891 | 733 | ||
Depreciation of right-of-use assets | 788 | 776 | 828 | ||
Amortization of intangible assets | 38 | 37 | 35 | ||
Finance (income)/expense, net | (111) | (107) | 11 | ||
Adjusted EBITDA | 1,996 | 1,936 | (1,552) | ||
Note:
(1) Net fair value changes on investments represents net fair value (gains)/losses on financial assets at fair value through profit or loss of our investments in listed and unlisted entities, net (gains)/losses on deemed disposals of investments and impairment provision for investments, which is unrelated to our core business and operating performance and subject to market fluctuations, and exclusion of which provides investors with more relevant and useful information to evaluate our performance.
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