Kuaishou, China’s second-largest short video operator behind Douyin, reported a narrower-than-expected loss and double-digit growth in revenue for the first quarter of 2022, as the company managed to get through a yearlong challenge for China’s tech sector.
The Hong Kong-listed company, whose major backer include Tencent Holdings, managed to narrow its quarterly loss to 6.25 billion yuan, from a loss of 57.7billion yuan a year earlier.
The total revenue came in at 21.1 billion yuan for the quarter ended March, representing year-over-year growth of 24 percent.
These numbers indicate Kuaishou is on the right track to expand its scale and diversify its monetization model beyond virtual gifting.
However, Kuaishou hasn't monetized its users as much as its peers yet. Some advertisers said that the return on investment from marketing on Kuaishou is lower than on Bytedance's Douyin. Because the former has a less competitive algorithm and a relatively narrow user-base focused on lower-tier cities.
Kuaishou blamed the losses on a significant increase in research and development (R&D), brand marketing, and product promotion.
Kuaishou saw its daily active users grew 17 percent year-over-year to 346 million.
Cheng Yixiao, co-founder and CEO of Kuaishou, said the recent Covid outbreak in China had affected the company’s e-commerce and advertising business.
The company’s advertising unit still increased 32.6 percent to 11.4 billion yuan in revenue for the quarter despite all the uncertainties and challenges facing the country’s advertising sector.
“The year-over-year growth rate of our ad revenue has slowed since mid-March without a notable recovery,” Cheng said.
The new growth engine of the Kuaishou business was its e-commerce live streaming, which booked total revenue of 1.87 billion yuan in the quarter. Its e-commerce still has a long way to go given the fact that it only accounted for 8.9 percent of total revenue in the first quarter.
China’s livestreaming sector has been dealing with a tighter regulatory landscape since last year as the country’s regulators vowed to clean up irregular activities and chaos in the sector. Although the government recently signaled that the tech scrutiny will ease, Covid-19-related lockdowns have continued to hurt the whole economy.
The company, which has lost over 80 per cent of its market value from its peak in February 2021, has named Jin Bing, former Joyy’s chief financial officer (CFO) as its new CFO in January, the appointment came three months after it announced the surprise departure of its chairman Su Hua.
Su stepped down as CEO in October 2021, joining other high-profile executives who relinquished their roles last year.