Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue grew by 11.6% year over year to RMB31 billion.
- Gross margin reached a quarterly record of over 55%.
- Adjusted net profit hit RMB4.7 billion with a margin of 15.1%, both at new highs.
- AI-driven advancements, including the launch of Kling AI and Kolors, have shown significant user engagement and commercial potential.
- E-commerce GMV grew by 15% year over year to RMB305.3 billion, with monthly active paying users increasing by 14.1%.
Negative Points
- Live streaming revenue decreased by 6.7% year over year to RMB9.3 billion.
- Ongoing economic pressures and softer consumer sentiment impacted overall market conditions.
- Increased selling and marketing expenses by 16.3% year over year to RMB10 billion.
- Research and development expenses decreased by 11.11% year over year, potentially impacting future innovation.
- Despite improvements, the company still faces significant competition in the domestic e-commerce market.
Q & A Highlights
Q: Can you elaborate on Kuaishou's AI strategy and recent advancements?
A: (Unidentified Company Representative) We have made significant progress in AI, particularly in large visual generation models. Our Kling AI model has been widely accepted both domestically and globally. We also launched a membership program for exclusive features and open-sourced our text-to-image model, Kolors. Our AI matrix supports various business scenarios, including content creation and e-commerce. We plan to continue enhancing these models and exploring B2B monetization paths.
Q: How is Kuaishou supporting new merchants in its e-commerce platform?
A: (Unidentified Company Representative) We have initiatives like Set Sail and Uplift to support new merchants with traffic resources and operational guidance. In Q2 2024, the number of monthly active merchants grew by over 50% year-over-year. We also offer rebates and traffic support to ensure new merchants can scale effectively.
Q: What are Kuaishou's strategies for the second half of the year in e-commerce?
A: (Unidentified Company Representative) We will focus on content-driven and social e-commerce, leveraging live streaming and short videos to attract and engage users. We aim to enhance user purchasing frequency and develop a broader e-commerce environment. We will also strengthen our KOL ecosystem and improve shelf-based e-commerce by upgrading search and match efficiency.
Q: How is Kuaishou enhancing its online marketing services?
A: (Unidentified Company Representative) We provided intelligent marketing solutions and deeper sales funnel conversion paths, resulting in a 25% year-over-year increase in online marketing services revenue in the first half of the year. We will continue to optimize our intelligent marketing products and algorithms to empower diverse industry clients and leverage major marketing events for further growth.
Q: Can you provide an update on Kuaishou's local services business?
A: (Unidentified Company Representative) We renewed our strategic partnership with McDonald's, extending our cooperation to cover 10,000 stores in 100 cities. We aim to provide precise local services recommendations and cost-effective marketing solutions for merchants. In Q2, the number of active merchants and daily active merchandise grew significantly, driving platform GMV growth.
Q: What is Kuaishou's profitability outlook?
A: (Unidentified Company Representative) We achieved a record adjusted net profit of RMB4.7 billion in Q2, with an adjusted net margin of 15.1%. We aim to reach a 20% adjusted net margin in the mid-term by optimizing our revenue mix, controlling costs, and improving operational efficiency. Our investments in AI and other initiatives will drive long-term sustainable growth.
Q: How is Kuaishou leveraging AI in its business operations?
A: (Unidentified Company Representative) We use AI to enhance content creation, understanding, and recommendation. Our large models support various business scenarios, including e-commerce and online marketing. In Q2, nearly 20,000 merchants utilized our AI capabilities, and average daily spending on AIGC marketing materials reached RMB20 million, showcasing the commercial potential of our AI models.
Q: What are Kuaishou's plans for its overseas business?
A: (Unidentified Company Representative) We are deepening our presence in key overseas markets like Brazil and Indonesia through targeted content offerings and ROI-driven growth strategies. Our overseas revenue increased by 141.4% year-over-year in Q2. We aim to further improve monetization efficiency and reduce operating losses in our overseas business.
Q: How is Kuaishou addressing the challenges in the live streaming business?
A: (Unidentified Company Representative) We are iterating our refined operating approach to bolster a healthy live streaming ecosystem. We have established regional teams to recruit high-quality talent agencies and supported leading talent agencies through policies and project guidance. We also promote emerging streaming features to attract more talent agencies and streamers.
Q: What are Kuaishou's key business developments in Q2 2024?
A: (Yixiao Cheng, CEO) In Q2, our total revenue grew by 11.6% year-over-year to RMB31 billion. We achieved a quarterly record gross margin of 55% and an adjusted net profit of RMB4.7 billion. Our AI-driven technology, vibrant user ecosystem, and efficient organizational synergy contributed to these strong results. We also made significant strides in large visual generation models and expanded our e-commerce and online marketing services.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
