(Bloomberg) — Kuaishou Technology’s revenue beat estimates, defying China’s stricter content control and intensifying competition with ByteDance Ltd.
Sales rose to 19.1 billion yuan ($3 billion) for the three months ended June, versus the 18.7 billion yuan average forecast. Net loss was 7.04 billion yuan, compared with the 6.25 billion yuan loss projected.Kuaishou, the operator of China’s most popular short-video platform after ByteDance’s Douyin, is going on a spending spree to try and maintain loyalty among the country’s youth. It’s grappling with an influx of rivals from Bilibili Inc. to Tencent Holdings Ltd.’s WeChat, as the firm deploys a generous marketing budget into newer areas like e-commerce and gaming.Kuaishou has shed roughly $180 billion in valuation since notching a record shortly after its February debut. Beijing’s campaign to rein in big tech has ignited a trillion-dollar selloff in Chinese equities and up-ended industries from education and e-commerce to ride-sharing. Kuaishou is now trading below its listing price, after state media urged tighter regulation of internet video content and share lockups expired for some investors.
The company has recently turned to advertising in its search for new revenue. Online ads have surpassed virtual gifts to become Kuaishou’s biggest cash cow, with founder Su Hua projecting a 60% revenue contribution by the year-end. But China’s for-profit tutoring ban and a resurgence of Covid-19 cases globally will likely deal a blow to advertising revenue from the edtech and travel sectors.While Kuaishou’s overseas revenue is still negligible compared to ByteDance’s TikTok, Su’s company intends to close the user gap with its bigger foe in countries like Brazil and Indonesia. That’s despite it shutting down the Zynn video app this month, ending a year-long attempt to challenge TikTok in the U.S.
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