Kuaishou Technology turned profitable at home after revenue beat estimates, defying China’s worsening economic malaise and competition against TikTok-owner ByteDance Ltd.
(Bloomberg) — Kuaishou Technology turned profitable at home after revenue beat estimates, defying China’s worsening economic malaise and competition against TikTok-owner ByteDance Ltd.
Revenue rose to 21.7 billion yuan ($3.2 billion) for the three months ended June, compared with an average projection for 20.7 billion yuan.
Its global net loss came in at 3.18 billion yuan, versus a 5.1 billion yuan estimated loss.
China’s second-largest short-video company has joined its peers in embracing a new era of cautious expansion in the country’s giant internet sector.
The industry’s Big Two, Tencent Holdings Ltd. and Alibaba Group Holding Ltd., logged their first-ever quarterly revenue falls this month, after grappling with a deepening downturn in the world’s No.
2 economy, the product of a property slump and ad-hoc Covid lockdowns.
Kuaishou’s domestic business delivered an operating profit of 93.6 million yuan in the second quarter, ahead of management’s timeline for moving into the black.
Its overseas division now represents less than 1% of total sales, but more than half of total operating losses.
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The company has shifted its focus to profitability over market-share by ramping up monetization while cutting cost — especially in global markets.
Executives had said that Kuaishou’s domestic business should be in the black sometime in 2022 on an adjusted net income basis, which excludes one-off items like investment gains or losses.
In the wake of stricter rules on content and spending, Kuaishou is moving away from live-stream tipping to more lucrative businesses like e-commerce.
It has teamed up with food-delivery giant Meituan to let Kuaishou users access local services through download-free lite apps inside the short-video platform. But such efforts to expand its reach across China’s digital economy was countered last week by a similar tie-up between ByteDance and Alibaba.
In the longer run, Kuaishou is locked in a prolonged duel with ByteDance, whose viral hit Douyin continues to lure away users and advertisers from the broader Chinese social media sphere.
Tencent’s ubiquitous app WeChat is also closing the gap between the two front-runners in short videos, by serving more ads and content in its TikTok-style feed.
In August, Kuaishou announced changes to its top leadership by installing a 12-person management committee, including co-founder and chief executive officer Cheng Yixiao, chief financial officer Jin Bing, tech chief Chen Dingjia and other divisional leaders.
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