Kuaishou Doubled Profit in Second Quarter on Robust Advertising

By Sherry Qin

Kuaishou Technology's net profit more than doubled in the second quarter as it continued to boost its key advertising revenue with resilient user numbers and greater exposure to users in lower-tier cities while improving operational efficiency.

The Beijing-based short-video app operator said Tuesday that net profit rose to 3.98 billion yuan, equivalent to $557.7 million, from 1.48 billion yuan a year earlier. The result topped expectations of 3.59 billion yuan in a FactSet poll of analysts.

Adjusting for share-based compensation expenses and net fair-value changes on investments, net profit jumped 74% to 4.68 billion yuan.

Kuaishou, which competes with TikTok parent ByteDance, said quarterly revenue rose 12% to 30.975 billion yuan, helped by its marketing and e-commerce businesses. That was roughly in line with the FactSet estimate of 30.40 billion yuan.

Short-video apps have been more resilient to China's macro softness and proven to be one of the platforms that users are willing to spend time on, Citi analysts said in a recent research note.

Kuaishou's advertising business, which made up more than half of sales, rose 22%. The number of average daily active users on Kuaishou's app increased 5.1% to 395.3 million in the second quarter. The robust performance benefited from Kuaishou's unique position of having more exposure to users in lower-tier cities with grassroots content, a more balanced traffic distribution and an interactive community.

Its gross profit margin improved to 55.3% from 50.2% in the year-earlier period as it continued to shift its revenue mix to the higher-margin advertising and e-commerce businesses.

Shortly after its multibillion-dollar initial public offering in early 2021, Kuaishou's stock fell sharply as Chinese regulators cracked down on the tech industry. Its shares have drifted lower in recent months, taking losses this year to 16%.

To shore up its share price, Kuaishou in May said it planned to buy back the equivalent of $2 billion in shares over three years, citing confidence in its business outlook and prospects.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

August 20, 2024 05:23 ET (09:23 GMT)

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