Kuaishou revenue rises 33 per cent in third quarter amid Beijing’s tech crackdown, competition with ByteDance

Kuaishou revenue reached US$3.2 billion, beating estimates as the company contends with tightened regulations and stiff competition
The short video platform became one of the worst-performing tech stocks this year amid Beijing’s crackdowns on Big Tech companies and internet content

Kuaishou

Tracy Quin Shanghai

Published: 5:12pm, 23 Nov, 2021

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Kuaishou Technology, operator of China’s second-largest short video platform, announced a 33.4 per cent year-on-year rise in revenue for the third quarter, beating expectations as it grapples with Beijing’s crackdown on internet content this year.

Revenue for the Hong Kong-listed company, backed by China’s gaming and social media giant Tencent Holdings, reached 20.5 billion yuan (US$3.2 billion) for the quarter ended September, surpassing the expected 20.1 billion yuan, based on a composite estimate from 11 analysts compiled by Bloomberg.

Net losses shrank 76 per cent to 7.1 billion yuan, coming in even lower than the 8.6 billion yuan in losses estimated by analysts. Losses were in line with the 7 billion yuan the company lost in the second quarter.

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“We are determined to reduce costs and enhance efficiency, and we started to take actions in the third quarter,” Kuaishou chief executive Cheng Yixiao said during an earnings call with analysts.

The Beijing-based company reported an average of 320.4 million daily active users (DAU) on its main platform, 18 per cent more than the 271.7 million users it had a year ago.

Cheng said that Kuaishou is expecting “to lower the maintenance cost per DAU by enhancing advertising efficiency, improving retention rates, as well as refining operational management”.

“Our sales and marketing expenses as a percentage of total revenues is also expected to decrease as our revenue per DAU increases. This is one of our key goals in next year’s business plan,” he said.

The company said it has no plans to significantly increase headcount next year.

As Beijing regulators have taken a tougher stance this year on internet content, especially for platforms like Kuaishou that offer live streaming, it has become harder and more costly for tech companies to grow revenues and acquire new users. Kuaishou is also operating in a highly competitive market that is dominated by ByteDance, the owner of TikTok and its Chinese version Douyin, which together had more downloads than any other non-game app last month.

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Kuaishou’s stock price has also been a casualty of Beijing’s broad crackdown on the tech sector this year. Since its successful IPO in February, which saw its share price rise by as much as 200 per cent on the first day of trading, Kuaishou stock has become one of the worst-performing among tech companies. Shares were up 1 per cent on Tuesday, closing at HK$94.8 (US$12.17).

The live-streaming industry has been subject to greater scrutiny and new regulations this year. Seven regulatory agencies introduced a new set of guidelines for the industry in April that requires companies to create lists of unlawful products and hire content moderators. Then in August, the Ministry of Commerce released a draft regulation that will limit the types of products that can be sold through live-streaming e-commerce, banning sex toys, spy devices, foreign newspapers and medicine.

Meanwhile the Personal Information Protection Law, which came into effect this month, makes it significantly harder and more expensive for tech firms in China to access and use consumer information.

While Kuaishou is still evaluating the impact of the new law, the company “attaches great importance to data security and personal information protection”, said chairman Su Hua.

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