It's not easy. In the difficult second quarter, Kuaishou Technology actually exceeded expectations.

After BABA$BABA-W (09988.HK)$、 Tencent$TENCENT (00700.HK)$After the release of the latest first-quarter results, the baton was passed to Kuaishou Technology. So how does it perform as the "first share of China short Video" this time?

Today, through Kuaishou Technology's financial report, let's see if Kuaishou Technology, who is slowing down, is "faster" this time:

01. Overall data

Kuaishou Technology science and technology$KUAISHOU-W (01024.HK)$In the second quarter of 2022, total revenue rose 13.4% year-on-year to 21.7 billion yuan, higher than Bloomberg's consensus forecast of 20.7 billion yuan.

The net loss is 3.18 billion yuan, with an estimated loss of 5.14 billion yuan; after adjustment, the net loss is 1.31 billion yuan, and the estimated loss is 2.91 billion yuan.

Conclusion: the former big factory Ali, Tencent performance under pressure, Kuaishou Technology performance is unexpected, the net loss shrank sharply, it seems that not far from the loss.

02. The domestic business is profitable.

In the second quarter, Kuaishou Technology's domestic business achieved a single-quarter profit, with an operating profit of more than 93 million yuan, completing the target of becoming a regular employee at the level of domestic operating profits two quarters ahead of schedule. In addition, the overall EBITDA of the company reached 410 million yuan in the second quarter, becoming a regular employee for the first time since the fourth quarter of 2020.

Conclusion: it is not easy. Under the general trend of overall weakness in the industry, Kuaishou Technology's domestic business has unexpectedly made a profit, which is definitely an important milestone for Kuaishou Technology.

03. The ecological environment of users has decreased.

In the second quarter of Kuaishou Technology, the number of daily active users increased by 18.5% compared with the same period last year to 347 million, the number of monthly active users increased to 15.9% to 587 million, and the average monthly paid users of App LVB increased by 21.8% to 54.2 million. The average number of daily active users per day is 125.2 minutes, an increase of 17.1% over the same period last year.

Summary: according to Kuaishou Technology, both daily active users and monthly active users reached a new high, but after turning over the Q1 financial report, it was found that the number of daily active users was 345.5 million, the number of monthly active users was 597.9 million, and the average monthly paid users of App LVB was 56.5 million, with each daily active user using an average of 128.1 minutes per day.

In other words, in addition to the slight increase in the number of daily active users, the number of monthly active users and the average monthly paid users of App LVB are both declining. Is it fair to say?

04. E-commerce performed well

Total revenue of platform Q2 increased 13.4% to 21.7 billion yuan compared with the same period last year. Among them, online marketing services (that is, advertising), live streaming and other services (including e-commerce) accounted for 50.7%, 39.5% and 9.8% of the revenue, respectively. Kuaishou Technology's advertising revenue in the second quarter was 11 billion yuan, an increase of 10.5 percent over the same period last year.

Kuaishou Technology's GMV (total value of e-commerce transactions) rose 31.5% year-on-year to 191.2 billion yuan, exceeding the consensus estimate of 180.9 billion yuan in the Bloomberg market. Key indicators such as the number of monthly active users of e-commerce, such as paying users and repurchase rate, continued to grow in the second quarter.

Conclusion: there are obvious signs of weakness in traditional Internet advertising, while short video advertising goes against the trend, which once again shows that short video advertising is more and more favored by businesses.

It seems that although Kuaishou Technology's users are not as good as Douyin's, Kuaishou Technology's e-commerce business still keeps growing because of its strong user stickiness and a repurchase rate of more than 70%.

05. The research and development of chips is one step ahead of people.

Research and development expenditure decreased by 16.1% from 3.9 billion yuan in the same period in 2021 to 3.3 billion yuan in the second quarter of 2022. According to the financial report, the decrease in leading actors is due to a decrease in employee benefit expenses (including related share-based compensation expenses).

Conclusion: after Internet companies have increased their R & D investment in the field of hard science and technology, Kuaishou Technology is not slow. According to the data of Kuaishou Technology White Paper on Innovation and intellectual property released by Kuaishou Technology in April, Kuaishou Technology's investment in R & D has increased from 2.9 billion yuan in 2019 and 6.5 billion yuan in 2020 to 15 billion yuan in 2021.

Although at this glance, Kuaishou Technology's R & D investment is reduced, but under the general trend of reducing costs and increasing efficiency on the Internet as a whole, money should be spent on the knife edge.

Up to now, Kuaishou Technology has accumulated more than 7000 domestic and foreign patents, covering video recommendation system, infrastructure, audio and video processing, multimedia understanding, computer vision and graphics.

What is more worth mentioning is that the core has just been announced in the byte, and Kuaishou Technology's chips have been successfully produced. At the Kuaishou Technology StreamLake brand conference a few days ago, Kuaishou Technology announced that the cloud intelligent video processing chip SoC has been successfully taped out and is being tested online. Who says Kuaishou Technology does everything one step slower than Douyin, the other person's chip is fast.

06. Overseas market disclosure for the first time

Kuaishou Technology showed the domestic and overseas operations separately in his performance report for the first time.

Kuaishou Technology's domestic business achieved its quarterly profit target two quarters ahead of schedule, with Q2 operating profits exceeding 93 million yuan.

The cost of sales and marketing dropped from 11.3 billion yuan in the same period last year to 8.8 billion yuan this year, and the proportion of income also dropped from 58.9% to 40.4%. The company's overall adjusted net loss narrowed sharply, with Q2 recording 1.31 billion, a decrease of 2.41 billion compared with the previous quarter, with an adjusted net loss rate of 6%, an improvement of 20.2% year-on-year and 11.7% month-on-month improvement.

By the end of June, the average daily use time of a single user of Kuaishou Technology in overseas markets reached a record high, with an average usage time of more than 60 minutes, and the retention rate and user participation of overseas users further increased.

In the second quarter, Kuaishou Technology's total overseas revenue was 103 million yuan, more than double that of the previous month. The operating loss narrowed sharply to 1.606 billion yuan from 4.368 billion yuan in the same period in 2021, a reduction of 63.2%.

Conclusion: to tell you the truth, Kuaishou Technology's performance in going to sea is not bad. But its competitors are so strong that I wonder if Suhua will regret what he said five years ago, "We have done it for 56 ethnic groups. Why is it difficult for us to go to sea to be dozens of countries?"

Generally speaking, Kuaishou Technology's performance this time is not bad. But Kuaishou Technology can not be taken lightly, the pattern of South Douyin and North Kuaishou Technology may change. According to the signal released by Tencent's Q2 financial report, video number will become the focus of its future incubation and cultivation. At present, it has been online information flow advertising and video number stores, which also indicates that Tencent's pace of commercialization is getting faster and faster. The short video industry is bound to have a big war.

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