The company’s unaudited consolidated results reflect a significant surge in revenues, operating profit, and user engagement metrics, underscoring its dominant position in the digital economy.

A robust start to 2024

In Q1 2024, Kuaishou reported revenues of RMB 29.4 billion, marking a 16.6% increase compared to the same period in 2023.

This growth was accompanied by a notable rise in gross profit, which reached RMB 16.1 billion, up from RMB 11.7 billion in Q1 2023, reflecting a gross profit margin of 54.8%.

The company’s operating profit soared to RMB 3.99 billion, reversing the operating loss of RMB 698 million from the previous year.

Strategic initiatives driving growth

Kuaishou’s strategic initiatives have been pivotal in driving its growth. The company’s innovative traffic recommendation mechanism, enhanced monetization strategies, and robust e-commerce operations have all contributed to its strong financial performance.

In Q1 2024, Kuaishou rolled out a new traffic recommendation mechanism, aligning user experience improvements with increased monetization efficiency.

This strategy has attracted higher buyer budgets and boosted the company’s e-commerce business, which grew by 28.2% year-over-year to RMB 288.1 billion in GMV.

Financial highlights

Kuaishou’s financial metrics paint a picture of robust growth and strategic success. The company achieved an adjusted net profit of RMB 4.39 billion, a staggering increase from RMB 42 million in Q1 2023.

The adjusted EBITDA also saw a significant rise, reaching RMB 5.98 billion, up from RMB 1.99 billion in the same period last year. These metrics highlight Kuaishou’s effective cost management and revenue generation strategies.

User engagement and platform growth

Kuaishou’s user engagement metrics have shown impressive growth, with average DAUs reaching 393.8 million, up from 374.3 million in Q1 2023.

Average MAUs also increased to 697.4 million, reflecting the company’s successful user acquisition and retention strategies.

The average daily time spent per DAU on the Kuaishou app was 129.5 minutes, further emphasizing the platform’s ability to engage users effectively.

Kuaishou’s adjusted net profit of RMB 4.39 billion and adjusted EBITDA of RMB 5.98 billion are indicators of strong financial health. The substantial increase in these metrics from the previous year highlights the company’s effective cost management and revenue generation capabilities. Additionally, the significant reduction in administrative expenses by 49.7% year-over-year is a positive sign of operational discipline.

The growth in Kuaishou’s overseas business, with revenues reaching RMB 991 million, up 193.2% year-over-year, and the narrowing of operating losses in these markets, indicates successful international expansion. The company’s localized strategies and investments in content generation and platform optimization are paying off, contributing to overall revenue growth and improved operating efficiency.

For the fourth quarter, Bilibili reported total net revenues of RMB 6.3 billion ($894.3 million), a modest increase of 3% year-over-year.

This growth reflects the platform’s diversified revenue streams, with significant contributions from advertising and value-added services (VAS). Advertising revenues soared by 28% year-over-year to RMB 1.9 billion ($271.7 million), while VAS revenues increased by 22% to RMB 2.9 billion ($402.4 million).

However, mobile game revenues dipped by 12% year-over-year to RMB 1.0 billion ($141.8 million), primarily due to a high comparison base from the previous year.

The fiscal year 2023 painted a similar picture of resilience and growth, with total net revenues reaching RMB 22.5 billion ($3.2 billion), up by 3% from the previous year.

The growth in advertising and VAS revenues stood out, increasing by 27% and 14% respectively, highlighting Bilibili’s ability to monetize its content effectively. Despite challenges in the mobile gaming sector, which saw a 20% decline in revenues to RMB 4.0 billion ($566.4 million), the company’s broad portfolio of revenue sources helped offset impacts from specific segments.

Bilibili’s focus on cost management and operational efficiency became evident in its gross profit, which surged by 41% year-over-year to RMB 5.4 billion ($766.5 million), reflecting an improved gross profit margin of 24.2% for the fiscal year 2023, up from 17.6% in 2022.

The company also made strides toward profitability, with net loss narrowing by 36% to RMB 4.8 billion ($677.7 million) for the year, and adjusted net loss decreasing by 49% to RMB 3.4 billion ($480.9 million).

A key highlight of Bilibili’s performance is its robust user engagement, with average daily active users (DAUs) reaching 100.1 million in the fourth quarter, an 8% increase from the same period in 2022.

This user growth, coupled with an average daily time spent of over 95 minutes, underscores the platform’s strong appeal and user retention capabilities.

Looking ahead, Bilibili’s management expressed optimism about the company’s strategic direction, emphasizing continued investment in content and creator ecosystems to drive community growth and further monetization.

With a commitment to improving financials and achieving profitability, Bilibili is poised to navigate the evolving digital entertainment landscape with agility and strategic focus.

Top traffic driver compared: TikTok/Douyin vs. Kuaishou vs. Bilibili vs. RED

A recent unveiling at the “2024 WeChat Open Class PRO” has shone a light on its video account e-commerce business, demonstrating a nearly threefold increase in Gross Merchandise Value (GMV) in 2023. This growth is complemented by a more than 244% rise in order volume and an approximately 300% increase in product offerings.

Industry insiders estimate that live commerce via WeChat’s video accounts generated a GMV between 40 to 50 billion yuan in 2022. Following the reported threefold growth, the 2023 figures are projected to hit between 120 and 150 billion yuan.

Li Chengdong, an e-commerce analyst and founder of Dolphin Think Tank, acknowledges the impressive growth rates of video account e-commerce in 2023. However, he notes the sector’s scale remains modest compared to giants like Alibaba, JD.com, and Pinduoduo, whose GMVs have breached the trillion yuan mark, alongside emerging live commerce platforms like Douyin and Kuaishou.

A significant development is Tencent’s integration of video account e-commerce with its WeChat advertising system, allowing for video account livestreams to be promoted within Moments. This new feature opens up fresh avenues for traffic acquisition, potentially boosting conversion rates by shortening the consumer journey from ad click to purchase.

The integration extends beyond advertising, as various e-commerce formats within the WeChat ecosystem, such as social commerce and mini-program commerce, are linking up with video account e-commerce. This strategic move positions video accounts as a foundational infrastructure within WeChat e-commerce, facilitating a seamless flow of both public and private domain traffic within the social network.

WeChat’s new social e-commerce platform integrates Shopping Accounts

Launched in 2020 as a counter to Douyin and Kuaishou, WeChat’s video accounts rapidly developed a comprehensive suite of short video functionalities. By integrating with other WeChat services like Official Accounts, Search, and Mini Programs, video accounts have become a crucial part of the ecosystem.

The platform’s commercial exploration, especially in live commerce, started in earnest around the first half of 2021. According to Yu Haijun, founder and general manager of Guangzhou Zhi Ling Network Science and Technology Co., Ltd., early adopters included notable brands drawn by the platform’s promise of a refined operational framework focusing on user experience.

Tencent’s Q3 2023 earnings report highlighted a more than 50% year-on-year increase in total video account views, with WeChat’s video account content ecosystem and creator base continuing to expand. Partnering platforms like Weimob reported a 47.6% increase in video account merchants and a 50.5% increase in their GMV in the first half of 2023, further underscoring the growing importance of video accounts in the e-commerce landscape.

Despite these advances, some insiders express dissatisfaction with the growth rate, pointing to a relatively low ad load rate in video content compared to other platforms. This limitation suggests a need for increased user engagement and refined recommendation algorithms to boost traffic and conversion rates.

The integration of WeChat Moments ads with video account commerce represents a deepening of video accounts’ role within Tencent’s ecosystem, offering merchants enhanced promotional opportunities and streamlined customer purchase pathways. However, achieving a significant uplift in conversion rates through this integration will require meticulous data alignment and robust cross-departmental collaboration.

As Tencent doubles down on its investment in video account and live commerce, the future of WeChat e-commerce hinges on the harmonious fusion of advertising and transactional capabilities, underscoring the platform’s commitment to enriching its commercial ecosystem.

WeChat expanding e-commerce reach with mini program integration on JD, Xiaohongshu

Kuaishou started to lead the short video market by reaching over 200 million MAU in November 2017.

Tik Top, part of Toutiao, saw astonishing growth in MAU from September 2017. In February 2018, Kuaishou continued to dominate this market with DAU of exceeding 100 million, followed by Tik Tok.

Read our online entertainment market briefing to understand the latest about short video segment, Douyin, and Kuaishou.

Top traffic driver compared: TikTok/Douyin vs. Kuaishou vs. Bilibili vs. RED

The majority of China’s short-video users (over 70%) is between 18 and 35 years-old and more are located in tier-3 and tier-4 cities than the top tier cities.

The DAU/MAU ratio of Kuaishou and Tik Tok both reached 0.45, which means each user equally launch Kuaishou/Tik Tok app almost every other day.

15 seconds short video is Tik Tok’s main product, which meets users’ need for fragmentation of the network transmission. Tik Tok users have a longer duration of the engagement. Around 30 million users opened Tik Tok at 9:00 and don’t turn it off until 23:00 at late night. It seems that only after they fell asleep did they stopped watching short videos.

In particular, after a meal and before sleep are peak periods for browsing Kuaishou and Tik Tok.

In February 2018, Tik Tok users aged 24-35 accounted for 46.71% of the total users on Tik Tok. Compared with users aged under 24 who were the majority in July 2017, they have higher income and consumption power. Moreover, users live in super tier 1 and tier 1 cities accounted for 63.87% of the total. Hence, it becomes easier for Tik Tok to achieve traffic monetization.

Female young users aged under 24 represent the majority of Kuaishou/Tik Tok users. Kuaishou had higher penetration rate than Tik Tok in fourth-tier cities or below while Tik Tok performed better in first and second tier cities than Kuaishou.

The number of users with a bachelor degree or above of Tik Tok was 10% more than that of Kuaishou. However, the income levels of the two short-video mobile apps were almost the same.

The most attractive elements of Kuaishou lie in its interesting and down-to-earth, versus fun, cool, and young elements of Tik Tok.

57% users of both apps follow interesting ordinary people; and, 53.3% users follow the talented. Currently, both Kuaishou and Tik Tok tend to offer more support and exposure to the interesting ordinary people.

After seeing other users’ interesting videos, 77.8% of Tik Tok users would try to imitate the video by themselves compared with 50.9% Kuaishou users. The motivation of recording life on short video drives 59% Tik Tok users and 49.1% Kuaishou users to post a video.

For users who had used both Kuaishou and Tik Tok, 15% of them uninstalled both of them. For users who have used both apps but eventually keep at least one of them, 4.4% of them choose Kuaishou while 31.5% of them choose Tik Tok.

Both Kuaishou and Tik Tok saw higher user churn rate in female users than male ones, higher in the second- and fourth-tier cities or below than the first- and third-tier cities. Kuaishou loses most users in the second-tier cities compared with Tik Tok in fourth-tier cities or below.

Compared with Tik Tok, users are more likely to leave Kuaishou for boring content or application design not hitting the spot.

Users spend more time on Tik Tok.

Chinese influencer platforms: Weibo, Douyin, Kuaishou, Xiaohongshu

The average mobile MAUs of short video app Likee increased by 86.2% to 150.3 million from 80.7 million in the corresponding period of 2019.

The average mobile MAUs of global live streaming services increased by 20.4% to 102.3 million from 85.0 million in Q2 2019, among that:

• 41.2 million were from YY, which increased by 6.0% year over year;
• 61.1 million were from outside of China
  • 29.4 million from Bigo Live, which increased by 41.3% year over year
  • 31.7 million from HAGO, which increased by 25.3% year over year.

The average mobile MAUs of video communication service was 204.4 million. The total number of paying users of YY decreased by 2.2% to 4.1 million from 4.2 million in the corresponding period of 2019, primarily due to the impact of COVID-19.

During the quarter, Bigo Live’s mobile MAUs and paying users achieved very impressive growth, and live streaming revenues of Bigo segment contributed more than half of Joyy’s total live streaming revenues for the first time ever.

On the short-form video front, Joyy also focused on cultivating Likee’s global ecosystem by diversifying its content offerings, refining its product features, and tailoring its expansion initiatives to different regions.

Likee’s total MAUs increased by 86.2% year over year to 150.3 million in Q2 2020.

Financial Highlights

Net revenues increased by 36.3% to RMB5,840.1 million (US$826.6 million) from RMB4,284.8 million in the corresponding period of 2019.

Net income from continuing operations attributable to controlling interest of JOYY Inc.2 was RMB619.4 million (US$87.7 million), compared to net loss RMB6.1 million in the corresponding period of 2019, primarily due to the impact of income from fair value change in investment.

Non-GAAP net income from continuing operations attributable to controlling interest and common shareholders of JOYY Inc increased by 38.3% to RMB493.6 million (US$69.9 million) from RMB357.0 million in the corresponding period of 2019, primarily due to the decrease in the operating loss of Bigo Inc (“Bigo”).

Kuaishou (Kwai) Technology and Jingdong (JD) Retail Group signed a strategic cooperation agreement on 27 May 2020 that enables users to buy JD products on Kuaishou platform directly.

The two companies will cooperate in the supply chain capability building, brand marketing, and data capabilities building of the Kuaishou Store, and jointly create a new ecosystem of short video live streaming.

Sales from Alibaba live streaming platform grew by 150% for 3 consecutive years.

JD Retail provides superior products to Kuaishou Stores and Kuaishou anchors will select and sell the products. Users can buy JD.com products directly on Kuaishou Shop and enjoy the delivery and post-sales services provided by JD.

This partnership is happening soon during China’s 618 Shopping Festival and will kick off during JD’s 17th Anniversary Grand Promotion (“618”) and Kuaishou’s June 16th Shopping Festival. From June 16th to 18th, products from JD’s first-party business will be available for to a portion of Kuaishou’s live streaming KOLs.

At the same time, JD Retail and Kuaishou will collaborate to strengthen brand marketing capabilities. Kuaishou’s anchors will do live streaming and short video marketing, and JD will provide joint marketing capabilities and fulfillment services, to enhance the core competitiveness of both brands.

The two parties will also explore targeted marketing based on JD’s insights on customer shopping behavior and Kuaishou’s understanding of short video and e-commerce live streaming.

“The retail industry is facing the opportunities and challenges of more and more diversified consumer demand and consumption scenarios. JD Retail has China’s leading retail supply chain, and is trusted by hundreds of millions of customers because of its quality product offerings and services. It is committed to driving the transformation of the retail industry through opening up its own capabilities. Kuaishou is a short video social platform loved by hundreds of millions of users. The partnership between JD Retail and Kuaishou will provide Chinese consumers with a high-quality experience in richer shopping scenarios,

said Lei Xu, CEO of JD Retail.

Since the beginning of this year, short video live streaming in e-commerce has been developing rapidly. Check out Taobao Live’s Stunning Growth in 2020.

As a short video live broadcast platform with more than 300 million daily active users, Kuaishou is the earliest explorer in the e-commerce live streaming industry with leading advantages in the number of users and the creation of new scenarios.

As early as June 2019, Kuaishou announced that users can view JD products in the Kuaishou app and be redirected to the JD app to make a purchase.

The latest cooperation is an upgrade and will supplement and advance Kuaishou in terms of product offering, and is also in line with Kuaishou’s goal to expand its boundaries to brands and high-quality goods.

JD will gain in terms of being able to reach new users and push into new scenarios in the emerging e-commerce live streaming market.

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WiMi priced its IPO of 4,750,000 American depositary shares (ADSs) at US$5.5 per ADS for a total of US$26.1 million dollars.

WiMi offers AR-based holographic services and products to cater to the customers’ needs. Currently, its offerings consist primarily of holographic AR advertising services (80.3% of total revenues in Q1 2020; 80.5% in 2018; and, 69.3% in 2017) and holographic AR entertainment products.

WiMi is the largest holographic AR application platform in China, in terms of the total revenue in 2018, according to Frost & Sullivan. It has built the most comprehensive and diversified holographic AR content library among all holographic AR solution providers in China.

It has developed the professional media player in China specifically designed for holographic AR contents. It has built in a comprehensive set of setting parameters and editing tools used for holographic AR content playback and allows end-users to playback complex high-fidelity simulations quickly and cost-effectively. End-users are able to adjust the contrast, saturation and vibrancy of the displayed holographic AR content and create their own custom visual effect.

Holographic AR Advertising Services

Currently, advertisement is the biggest vertical of AR. According to Frost & Sullivan, the market size was estimated at RMB1.5 billion in 2016, and is expected to be at RMB7.8 billion by 2020, with a compound annual growth rate (CAGR) of 71.6%, much higher than the growth of total online advertising market, which has a CAGR of 32.4% from 2014 to 2018.

In 2025, the market will be valued at RMB143.9 billion with a CAGR of 79.1%, indicating a larger market share in total online advertising market in the next five years.

WiMi’s holographic AR advertising software enables users to insert into video footages real or animated 3D objects that integrate seamlessly within the scene of such footages. Their online holographic AR advertising solution embeds holographic AR ads into films and shows that are hosted by leading online streaming platforms in China.

During Q1 2019, holographic AR ads produced using WiMi’s software generated a total of approximately 2.3 billion views, as compared to approximately 1.2 billion views during Q1 2018, representing an increase of 91.7%.

During Q1 2019, it had 65 customers, as compared to 49 customers during Q1 2018. The average revenue per customer was approximately RMB 1.0 million during Q1 2019, as compared to RMB 0.7 million during Q1 2018.

In 2018, WiMi had 121 customers, as compared to 97 customers in 2017. The average revenue per customer was approximately RMB 1.5 million in 2018, as compared to approximately RMB 1.4 million in 2017.

Through its proprietary image and video recognition technologies, its software enables users to analyze the underlying video footage at a pixel level to identify ad spaces that can be augmented by 3D objects.

Advertisers and their agencies purchase these ad spaces through application programming interface, or APIs, integrated with our systems, specifying their target audience and budgets and typically providing the 3D models to be embedded in the videos.

When the ad space is detected and 3D objects are generated, the 3D objects are embedded into the underlying streaming videos automatically on a batch-processing basis as determined by its software.

Holographic AR Entertainment Products

Entertainment, including gaming and video, takes a huge share of AR sector as well, and it is expected to have a higher growth rate. In 2016 the market size was estimated at RMB0.6 billion and is expected to be at RMB6.8 billion by 2020, with a CAGR of 83.5%.

WiMi holographic AR entertainment products consist primarily of payment middleware software, game distribution platform, and holographic mixed reality (“MR”) software.

Payment middleware is a software solution that connects mobile apps to payment channels, giving mobile app users convenient access to a wide range of online payment options. WiMi has cooperated with more than 55 app developers and its payment middleware has been embedded to over 1,100 marketed mobile apps of over 300 customers in 2018, most of which were featured by AR functions.

Its mobile payment middleware facilitates app developers to build an in-app payment infrastructure that allows micropayments to be made or received through an efficient, secure system, without any interface redirection.

Such mobile payment middleware enables app developers to store users’ payment credentials in a trusted and safe environment and eases user’s burden of repeatedly entering and authenticating payment information for each transaction.

Its payment middleware can be fully integrated with various types of mobile apps, especially those employing AR technologies, such as live streaming, gaming, selfie, photo editing, and video-sharing apps. Currently, the payment middleware supports substantially all of the major online payment channels in China, and is compatible with the mainstream mobile operating systems.

Content Production

WiMi has built a comprehensive holographic AR content library. The formats of its holographic AR contents range from 3D models to holographic short videos.

As of December 31, 2018, it owned 4,654 ready-to-use AR holographic contents that were available to be adapted to its holographic AR products and solutions covering a wide category, including animals, cartoon characters, vehicles, and foods.

2,961 proprietary and licensed intellectual properties (“IP”) were for education scenarios, 851 for tourism, 739 for arts and entertainment and 103 for popular science.

The average mobile MAUs of Likee (formerly known as Like) increased by 208.3% to 115.3 million in Q4 2019 from 37.4 million in Q4 2018.

The average mobile MAUs of JOYY’s global live streaming services increased by 21.5% to 158.9 million from 130.8 million in Q4 2018, 102.8 million of which were from China, including 41.2 million from YY, which increased by 3.8% year over year, and 61.6 million from Huya, which increased by 21.5% year over year.

56.1 million live streaming MAUs were from outside of China, including 23.1 million from BIGO LIVE, which increased by 18.6% year over year, and 33.0 million from HAGO (casual-game-oriented social media platform), which increased by 57.9% year over year.

Average mobile MAUs of imo was 211.0 million.

The total number of paying users of YY increased by 9.8% to 4.5 million from 4.1 million in Q4 2018. Total number of paying users of Huya increased by 5.9% to 5.1 million from 4.8 million in Q4 2018. See Huya’s competitor Douyu here.

YY’s financial highlights in Q4 2019:

• YY’s net revenues increased by 64.2% to RMB7,618.2 million (US$1,094.3 million) from RMB4,640.9 million in Q4 2018.
• Net income attributable to controlling interest of JOYY Inc.1 was RMB172.8 million (US$24.8 million), compared to RMB694.7 million in Q4 2018.
• Non-GAAP net income attributable to controlling interest of JOYY was RMB600.8 million (US$86.3 million), compared to RMB846.9 million in Q4 2018, primarily due to the impact of the consolidation of Bigo Inc (“Bigo”)

YY’s net revenues increased by 62.2% to RMB25,576.2 million (US$3,673.8 million) from RMB15,763.6 million in 2018. Net income attributable to controlling interest of JOYY Inc. was RMB3,445.2 million (US$494.9 million), compared to RMB2,209.0 million in 2018.

Non-GAAP net income attributable to controlling interest of JOYY was RMB2,252.6 million (US$323.6 million), compared to RMB3,274.1 million in 2018.

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