On August 25, Kuaishou Technology (1024.HK) released its second quarter and interim results for 2021. In the second quarter, Kuaishou’s revenue reached 19.14 billion yuan. Online marketing services are Kuaishou's largest source of revenue, a 156.2% increase from 3.9 billion yuan in the same period last year to 10 billion yuan, accounting for 52.1% of total revenue, and contributing more than half of total revenue for two consecutive quarters.
Su Hua, co-founder, chairman and CEO of Kuaishou, said: "In the ten years of development of Kuaishou, we have always adhered to the concept of equal emphasis on efficiency and fairness, and let everyone enjoy equally Kuaishou has always provided users with diversified content and services to enhance the vitality and trust of the community. ”
In the past ten years, Kuaishou has given full play to its advantages of inclusive traffic, and has continued to provide users with a variety of content and services. More than 20 million people earn income from Kuaishou in different ways, many of whom come from remote areas. Kuaishou has become a huge ecosystem that is prosperous and constantly innovating. Kuaishou said that it will continue to adhere to the concept of altruism and sharing and strive to create long-term value for every creator, merchant, institution and ordinary user.
Data shows that Kuaishou achieved unexpected growth in revenue and gross profit in the second quarter. According to consensus market expectations from Bloomberg, Kuaishou’s second-quarter revenue is expected to be 18.73 billion yuan, a year-on-year increase of 45.6%. Actual revenue reached 19.14 billion yuan, a year-on-year increase of 48.8%. Online marketing, live broadcast and other service revenues all exceeded expectations; in terms of gross profit , the market expected it to reach 8.321 billion yuan, a year-on-year increase of 87.6%. Kuaishou’s actual gross profit in the second quarter was 8.4 billion yuan, a year-on-year increase of 89%.
The average daily activity of Kuaishou apps in Q2 was 293.2 million, with year-on-year growth increasing month by month within the quarter.
In the second quarter of 2021, user participation and activity on Kuaishou further increased. Thanks to the upgrade of the platform's distribution algorithm and the continuous enrichment of the content ecology, the average daily active users of Kuaishou applications reached 293.2 million in the second quarter, a year-on-year increase of 11.9%, and the year-on-year growth rate increased month by month during the quarter. The average daily usage time per daily active user exceeded 100 minutes for the first time, an increase of 7.7% month-on-month.
As a key indicator to measure community activity and user stickiness, Kuaishou’s DAU/MAU ratio has reached 57.9%. This value maintains an increase compared with 53.0% in 2019, 55.1% in 2020 and 56.8% in the first quarter of this year. Kuaishou pointed out that the platform promotes full-cycle user management from user acquisition, user retention to monetization, as well as optimized content recommendations and personalized services, which have laid the foundation for increasing user activity.
In overseas markets, monthly active users in June exceeded 180 million, with South America, Southeast Asia and the Middle East being the focus of expansion. Kuaishou said, “This further strengthens our determination to seize major opportunities for future growth and development in overseas markets.” Kuaishou will continue to enrich the content ecosystem, encourage localized content creation, establish interactive content communities and social platforms, and encourage more people to Create value through creation, communication and interaction.
The number of high-quality content creators continues to grow, with approximately 1.9 million daily active anchors.
In the past ten years, Kuaishou started as a pure UGC short video platform and gradually developed into a huge content ecosystem, covering It contains dozens of contents and industry categories such as food, sports, knowledge, short plays, etc. Financial report data shows that as of June 30, 2021, there are more than 800 short series with a cumulative viewing volume of more than 100 million. As a benchmark for emerging content categories, with the introduction of copyrighted content such as the Olympics and CBA, Kuaishou Sports continues to create new interactive experiences through event broadcasts and secondary sports content creation that integrates short videos + live broadcasts.
In the second quarter, the participation of Kuaishou live broadcast users continued to increase. The average daily active user live broadcast penetration rate of Kuaishou applications has exceeded 70%, and the number of daily active anchors has remained at around 1.9 million. The Q2 revenue of the live broadcast segment was 7.2 billion, which was basically the same as the first quarter.
Cooperation with live streaming guilds is seen as an important measure to improve live streaming monetization capabilities.
As of June 30 this year, the number of guilds that Kuaishou cooperates with has increased by nearly 400% year-on-year as of June 30, 2020. Driven by this, the average revenue of monthly live broadcast paid users of the Kuaishou application has increased by 16.9% month-on-month and 18.2% year-on-year.
Currently, more than 20 million people earn income from Kuaishou through different forms every year. Kuaishou pointed out that through more refined traffic algorithms, it provides users with other content forms besides short videos in the public domain, such as high-quality live broadcasts and e-commerce content, helping users find more interesting, meaningful and useful content. , to meet their new needs. These measures have also enhanced the platform's attractiveness and friendliness for content creators. In the second quarter, the number of high-quality content creators continued to grow healthily every month.
Significant brand effect, Q2 revenue grew strongly by 48.8% year-on-year
By better managing the rich traffic in private and public domains, Kuaishou’s monetization capabilities have been further enhanced. Kuaishou’s revenue in the second quarter was 19.14 billion yuan, a year-on-year increase of 48.8%. The previous market consensus was 45.6%. This value is also higher than the 36.6% year-on-year growth in the first quarter of this year. In terms of contribution to total revenue, online marketing services accounted for 52.1%, live broadcast business accounted for 37.6%, and other services accounted for 10.3%.
Online marketing services are Kuaishou’s largest source of revenue, a 156.2% increase from 3.9 billion yuan in the same period last year to 10 billion yuan, accounting for 52.1% of total revenue, contributing to total revenue for two consecutive quarters. More than half. Kuaishou's "brand effect" has further strengthened. Brand advertising revenue has exceeded the year-on-year growth of online marketing service revenue. The number of brand advertisers has also increased nearly four times compared with the same period last year, coming from industries such as beauty, daily chemicals, clothing, food and beverages, and automobiles. A large number of top customers use Kuaishou for brand promotion.
In the second quarter, Kuaishou further upgraded its e-commerce strategy, with revenue increasing 212.9% year-on-year to RMB 2 billion. The total amount of e-commerce transactions reached RMB 145.4 billion, an increase of 100% compared with the same period last year. Among them, the private sector contributed the vast majority of the total e-commerce transactions. Kuaishou said that by consolidating the competitive advantages of private domain trust e-commerce through merchants and anchors, it is expected to further increase the average repeat purchase rate and the conversion rate of e-commerce buyers. In addition, Kuaishou Store, as the closed-loop model of Kuaishou's e-commerce business, has continued to increase its contribution to total e-commerce transactions, from 66.4% in the same period of 2020 to 90.7% in the second quarter.
With the arrival of a large number of branded products and the development of self-broadcasting models by brand merchants, the brand value of Kuaishou e-commerce has further emerged. In terms of brand product supply, Kuaishou further strengthens the construction of the Haowu Alliance, lowers the e-commerce threshold for anchors, and provides more high-quality product choices. In the second quarter, Haowu Alliance’s e-commerce transaction volume increased by nearly 90% month-on-month.
With the expansion of online marketing and e-commerce business, Kuaishou’s gross profit in the second quarter reached 8.4 billion yuan, and its gross profit margin increased from 34.5% in the same period last year to 43.8%. Based on the three major sectors of online marketing, live broadcasting, and other services (including e-commerce), Kuaishou's revenue sources are more diversified and sustainable.
In the first quarter, the change in the fair value of Kuaishou’s convertible and redeemable preference shares amounted to negative 51.28 billion yuan. Affected by this, the book loss in the first half of the year totaled 64.79 billion yuan. Under non-GAAP, Kuaishou’s adjusted net loss in the first half of the year was 9.69 billion yuan, of which the adjusted net loss in the second quarter was 4.77 billion yuan, narrowing slightly from the first quarter. In terms of main expenses, sales and marketing expenses in Q2*** totaled 11.27 billion yuan, including expenses on overseas markets, product promotion and brand promotion activities. R&D expenses increased from RMB 1.3 billion in the same period last year to RMB 3.9 billion in the second quarter, mainly covering the increase in salary expenses related to R&D personnel.
In the second quarter, Kuaishou’s net cash outflow from operating activities was RMB 2.7 billion, maintaining a solid balance sheet structure. As of June 30, 2021, Kuaishou's cash and cash equivalents, time deposits, restricted cash and wealth management product balances totaled approximately RMB 57.2 billion.