(Bloomberg) — Kuaishou Technology’s revenue increased 33%, defying China’s tech crackdown and intensifying competition with ByteDance Ltd.
Sales rose to 20.5 billion yuan ($3.2 billion) for the three months ended September, versus the 20.1 billion yuan average forecast. Net loss was 7.1 billion yuan, compared with the 8.6 billion yuan loss projected, as marketing expenses climbed at a slower pace.
Kuaishou, the operator of China’s largest short-video platform after ByteDance’s Douyin, is going on a spending spree to compete with the TikTok owner in both domestic and global markets. It’s also grappling with an influx of social-media rivals including Tencent Holdings Ltd.’s WeChat. Beijing’s broad regulatory scrutiny over industries from education to insurance and real estate is weakening prospects for its burgeoning online advertising business.
In a surprise move announced last month, Su Hua stepped down as the company’s chief executive officer, handing over the leadership role to co-founder Cheng Yixiao to focus on long-term strategy as chairman. The move coincided with a flurry of management shuffles at China’s largest internet firms including ByteDance and e-commerce operator JD.com Inc., as the tech crackdown cows the country’s billionaires into submission.
Kuaishou is aggressively pursuing new content in areas spanning from sports to music and variety shows. It has nabbed the rights to broadcast the 2022 Winter Olympics and produce short-video content for NBA China. And just like Douyin and TikTok, the video-sharing community is morphing into an online bazaar where influencers peddle lipsticks and smartphones to their followers — the division that includes e-commerce now contributes roughly 10% of total sales.
Livestreaming revenue shrank at a slower pace, falling roughly 3% after a 14% decline in the June quarter, while online marketing services climbed a better-than-expected 76.5%, driven by traffic growth and an increasing number of advertisers. Growth in other services — the business line that includes e-commerce — cooled to 53% in the September quarter, after more than tripling in the previous three months.
Kuaishou on Tuesday reported monthly users rebounded to nearly 573 million on its main app, though it didn’t disclose the latest figures for its overseas users. The company in August shut down its Zynn video app, ending a year-long attempt to challenge TikTok in the U.S. In June, its global products including Kwai and Snack Video chalked up 180 million monthly users outside China, up from 150 million in April.
One of the worst performers among large listings in 2021, Kuaishou has shed roughly $170 billion in market value since hitting a peak in February, less than two weeks after its $5.4 billion initial public offering in Hong Kong. The stock climbed 1.2% in Tuesday trading before the results.
(Adds details from filing)
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