Tencent-backed app Kuaishou looks for more ways to monetise millions of users, trim losses after Hong Kong IPO gets go-head
- Company says its profitability remained uncertain as it struggled to monetise its huge user base
- Kuaishou’s losses amounted to 9.4 billion yuan in the first 11 months of 2020, down from 68 billion yuan in the first half, according to a stock exchange filing
The Beijing-based company, which is the world’s second-largest such app, said in a filing with the Hong Kong stock exchange late on Friday that its profitability remained uncertain as it continued to struggle to find ways to make money from its huge user base, reach and engagement. It said it had 262 million daily active users as of September last year.
Kuaishou’s statement underscores the struggle that internet companies face in China – they might attract large number of users, but monetising and making a profit from this remains largely elusive. The country’s population at 1.4 billion and mobile internet use, at 873 million as of 2019, respectively, are the world’s largest. But internet access and content in China is among the most regulated in the world, which potentially restricts the gains web-based platforms can make.
“The time it will take for us to achieve profitability hinges on our ability to effectively monetise our product and service offerings, and continuously growing revenues in a cost-effective way, which we may not successfully achieve,” the company said. “While our future revenue growth will depend on the realisation of our monetisation strategies, our ability to grow cost-effectively will primarily depend on improvements in our operational efficiency.”
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It said its operational efficiency would also depend on factors such as its ability to retain and attract users, and to further enhance its services. Profits will also be determined by the continued popularity of the short-video format, and the popularity of content formats in China and the development of other social platforms. These external factors “are beyond” the company’s control, Kuaishou added.
The bulk of its business was its e-commerce live streaming, which recorded total sales worth 332.7 billion yuan in the January to November period last year, about eight times bigger than the 42.3 billion yuan it reported in the same period in 2019. In November, however, China’s National Radio and Television Authority issued a circular that seeks to further regulate platforms selling products through live streams, potentially affecting Kuaishou’s business.
“We generated a majority of our revenues from our live-streaming business. We are still in the process of obtaining further guidance from regulatory authorities and evaluating the applicability and effect of the various requirements … on our business,” it said.
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Kuaishou’s IPO will surpass the US$3.9 billion raised by JD.com’s secondary listing last June, and will be second only to the US$13 billion secondary listing in November 2019 by Alibaba Group Holding, which owns the South China Morning Post.