Chinese short video app operator Kuaishou tops revenue forecast amid tough quarter for tech giants
- Kuaishou’s revenue rose 24 per cent, beating analyst estimates amid a tough first quarter for China’s tech sector
- The ByteDance rival has fared better than other Big Tech firms grappling with the effects of 18 months of crackdowns that authorities suggest will end
The Hong Kong-listed company, which has lost over 80 per cent of its market value from its peak in February 2021, said revenue increased to 21.1 billion yuan (US$3.2 billion) in the first three months this year, topping consensus forecast of 20.6 billion yuan.
Net losses fell to 6.25 billion yuan from 57.75 billion yuan a year ago, the company added, better than the 6.4 billion yuan loss estimated by 11 analysts tracked by Bloomberg.
Cheng Yixiao, co-founder and CEO of Kuaishou, said the company achieved “satisfactory results” across its business operations “amid a challenging environment”.
Speaking in a conference call after the results were released, Cheng noted that the recent Covid outbreak in China had dragged on growth at the company’s e-commerce and advertising business.
“We estimate that more than half of Kuaishou’s merchants are located in pandemic control areas,” said Cheng. “Affected by control measures, users cannot order [services] on demand and receive deliveries on time. Purchase frequency has decreased year-over-year. The live-streaming activity of merchants has been impacted in these areas.”
“The year-over-year growth rate of our ad revenue has moderated since mid-March without a notable recovery,” said Cheng, adding that the advertising industry had also been affected by slowing macroeconomic growth and other factors.
Kuaishou saw its total gross merchandise value for e-commerce transactions on its platforms increase 47.7 per cent year-over-year, compared with a growth rate of 219.8 per cent in the same period last year.
NetEase, however, fared relatively well for the quarter. China’s second largest video gaming firm on Tuesday reported revenue of 23.6 billion yuan, up 14.8 per cent from the first quarter of 2021. Net income remained flat at 4.4 billion yuan, roughly the same as last year.
Net revenue for the multimedia giant’s online game services rose 15.3 per cent to 17.3 billion yuan, while revenue from cloud music jumped 38.6 per cent to 2.1 billion yuan.
Kuaishou’s chairman and co-founder Su Hua also became the subject of rumours this week. Yesterday, the Beijing-based company denied that Su was taken away by police at the end of April in relation to an investigation. The initial report, from “self-media” WeChat account Xinwaner, said Su had not been seen in the office in the past month, only showing up via video for a public event yesterday.
“We’ve officially reported [the case] to the police station and started the related legal procedure to protect the interests of our company and Mr Su,” Kuaishou said in a statement on Monday.