TikTok Rival Kuaishou’s Business in China Turns Profitable in 2022
Kuaishou, a Chinese short video platform, reported a 16.2% increase in total revenue last year to reach 94.2 billion yuan ($13 billion), up from 81.1 billion yuan in 2021. The company also significantly reduced its adjusted net loss from 18.9 billion yuan in 2021 to just 5.8 billion yuan last year.
Furthermore, the company’s operating profit from its domestic segment reached 192.1 million yuan last year, compared to an operating loss of 8.7 billion yuan in 2021.
Kuaishou has implemented cost-cutting measures since last year to enhance internal efficiency. Despite revenue growth, the company has significantly reduced costs, leading to profitability in its domestic business. According to the financial report, Kuaishou’s sales and marketing expenses in Q4 decreased by 4.8% YoY to 9.7 billion yuan, accounting for 34.4% of total revenue, compared with 41.9% in the same period of 2021. This is the first time that this ratio has fallen below 35% since going public.
During a conference call, Kuaishou CFO Jin Bing stated that the company’s advertising business is its biggest source of income. He also mentioned that Kuaishou is currently in the process of signing and completing its 2023 advertising framework cooperation agreements one by one. It is expected that there will be a noticeable increase in the online advertising market during the second half of 2023.
Jin acknowledged the intense competition from Meituan and Douyin in the local life sector. He believed that short videos can effectively showcase goods and services, making them a popular choice for merchants seeking to expand their customer base. However, he also emphasized the need to enhance online consumption through diverse content.
In 2022, Kuaishou’s e-commerce business experienced a 32.5% year-on-year increase in gross merchandise volume (GMV), reaching 901.2 billion yuan for the entire year. Despite supply chain and logistics disruptions, the GMV achieved a record high of 312.4 billion yuan in the fourth quarter alone, with a growth rate of 30% compared to the previous year.
Since the start of this year, major e-commerce platforms in China have been engaged in fierce competition, with attractive subsidies becoming a key focus. In light of this, Kuaishou CEO Cheng Yixiao has pointed out that there is a significant difference between live-streaming e-commerce and shelf-based e-commerce models. The purchasing behavior of Kuaishou users is driven not only by price but also by trust in both the live-streamers and the platform itself.
SEE ALSO: Former Kuaishou AI Tech Researcher to Develop Large Model
Speaking of the currently popular GPT, Cheng stated that relying on the artificial intelligence team, Kuaishou has accumulated years of technology experience in generative AI, especially in large-scale language models (LLM), multimodal pre-training large models, and intelligent creation tools. In the direction of LLM, Kuaishou started to put strength in LLM training, automatic copywriting, dialogue system development and cross-modal content generation at the end of last year.