On November 20, Kuaishou released its third-quarter financial report for 2024, showing overall performance in line with market expectations but also revealing issues that need urgent attention. The report indicates that Kuaishou achieved good results in user growth and advertising revenue but faced significant challenges in its e-commerce business. Meanwhile, Kuaishou's layout in the AI field is gradually showing results, becoming a new growth point.

First, from a user data perspective, Kuaishou's third-quarter performance was a highlight. The average daily active users (DAU) reached 408 million, and the average monthly active users (MAU) reached 714 million, with year-on-year growth rates of 5.4% and 4.3%, respectively, and a month-on-month increase of approximately 3.3%. This growth is mainly attributed to Kuaishou's continuous optimization of its content ecosystem and the improvement of user engagement.

In the third quarter, the average daily usage time per user on Kuaishou reached 132 minutes, with a net increase of 10 minutes, indicating users' high recognition of the platform's content. Additionally, as an authorized broadcaster of the 2024 Paris Olympics, Kuaishou achieved 316 billion impressions of Olympic-related content, attracting 640 million viewers and generating 15.9 billion interactions. This event not only boosted user activity but also brought significant brand exposure and user growth to Kuaishou.

In terms of the e-commerce business, Kuaishou's performance was relatively flat. The year-on-year growth rate of e-commerce GMV in the third quarter was 15.1%, flat with the previous quarter, but the overall slowing trend is irreversible. The reasons behind this phenomenon are multifaceted.

Firstly, the weak macroeconomic environment and fierce competition in the e-commerce industry have put considerable pressure on Kuaishou. The third quarter coincides with the e-commerce off-season, when consumer willingness is low, and traditional e-commerce platforms further squeezed Kuaishou's KOL live streaming e-commerce market share through subsidies and promotions.

Secondly, Kuaishou's progress in transforming to a broader shelf model has been slow. Although the proportion of broad-shelf GMV has increased to 27%, it has not effectively addressed competition from traditional e-commerce. The slow transformation reflects Kuaishou's shortcomings in supply chain and product management and exposes deficiencies in user shopping experiences.

In terms of advertising revenue, Kuaishou's third-quarter advertising revenue met expectations, with a year-on-year increase of 20% to RMB 17.6 billion. Notably, outbound advertising performed exceptionally well, with a year-on-year growth rate exceeding 25%, primarily benefiting from high-demand advertisers in short dramas, competitive e-commerce, and local life services.

In the third quarter, Kuaishou's paid short drama marketing consumption increased by over 300% year-on-year, accounting for a double-digit proportion of outbound consumption and peaking at over RMB 40 million in a single month. This growth not only showcases Kuaishou's advantage in content ecosystems but also brings considerable advertising revenue to the platform.

However, inbound advertising growth was relatively modest, with a year-on-year increase of 15%, mainly tracking GMV changes. In the current macroeconomic environment, Kuaishou has strived to boost advertisers' willingness to invest by introducing a series of ad delivery tools and subsidy policies, but the short-term effects have been limited.

In live streaming, Kuaishou's third-quarter live streaming reward revenue was RMB 9.3 billion, down 3.9% year-on-year but continuing to slow. This change is mainly due to Kuaishou's active introduction of high-quality live streams and guilds, with the number of agencies signing contracts increasing by 40% year-on-year and the number of contracted anchors increasing by over 60% year-on-year.

By enriching live stream content and optimizing user experiences, Kuaishou has gradually restored vitality to its live streaming business. Additionally, Kuaishou has achieved certain success in expanding live streaming scenarios, such as a 100% year-on-year increase in daily resume submissions on KuaiPin and a fourfold increase in daily search volume for Ideal Home services. The exploration of these new businesses provides Kuaishou with diversified revenue sources, helping to alleviate pressure on a single business.

In terms of profitability, Kuaishou achieved a net profit of RMB 3.27 billion under GAAP in the third quarter, continuing to decline month-on-month. Core operating profit was RMB 2.65 billion, with a profit margin of 8.5%, down 2.7 percentage points month-on-month. The decline in profit margins is attributed to multiple factors.

On the one hand, the costs of Olympic content and increased revenue sharing from the recovery of live streaming negatively impacted gross margins. On the other hand, Kuaishou's increasing investments in new business expansion and AI research and development, particularly promotional expenses and user subsidies in local life, short dramas, gaming, and server costs for AI businesses, have put pressure on profits in the short term but will enhance Kuaishou's competitiveness and market position in the long run.

In the AI field, Kuaishou's layout is gradually yielding results. It has launched products such as the large language model "Kuaiyi," the text-to-image large model "Ketu," and the text-to-video large model "Keling," with Keling AI's commercialization progressing as expected, generating over RMB 10 million in monthly revenue.

Kuaishou specifically emphasized in its financial report that the daily average consumption of AIGC marketing materials from marketing clients exceeds RMB 20 million. The launch of these AI products not only improves Kuaishou's content production efficiency but also provides advertisers with more innovative marketing tools, enhancing advertising effectiveness. However, the development costs of large AI models are substantial, and the monetization cycle is long. Kuaishou needs to find a balance between investment and return to ensure the sustainable development of its AI business.