(Bloomberg) — Kuaishou Technology’s revenue rose a better-than-expected 49% after advertising sales more than doubled, 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, beating the 18.7 billion yuan average forecast after online marketing revenue surged 156%. But monthly and daily active users slid from the previous quarter and its net loss of 7 billion yuan exceeded the 6.25 billion yuan projected.
Revenue from live streaming shrank 14%, a steeper decline than in the previous three months. Kuaishou, the operator of China’s most popular short-video platform after ByteDance’s Douyin, is grappling with an influx of rivals from Bilibili Inc. to Tencent Holdings Ltd.’s WeChat.
It’s going on a spending spree to try and maintain loyalty among the country’s youth, deploying a generous marketing budget into newer areas like e-commerce and gaming. Its selling and marketing expenses more than doubled to 11.3 billion yuan in the second quarter.
Away from the business, 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.
Read more: Kuaishou Loss Deepens After Media Call for a Video Clampdown
The company has recently turned abroad and toward 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. In June, the company chalked up 180 million monthly users in overseas markets, up from 150 million in April.
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(Updates with details on users from the second paragraph)
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