Author | Mia
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After the Hong Kong stock market on March 20, Kuaishou Technology (1024. HK) announced its fourth quarter and full year 2023 results. In the fourth quarter of 2023, Kuaishou's revenue was 32.6 billion yuan, up 15.1% year-on-year, and its adjusted net profit was 4.4 billion yuan, compared to a loss of 45 million yuan in the same period last year. For the full year of 2023, Kuaishou's total revenue was RMB113.47 billion, up 20.5% year-on-year, and its adjusted net profit was RMB10.27 billion, compared to a loss of RMB5.8 billion in the same period last year.
In terms of user growth, in Q4 2023, the average daily active users of Kuaishou APP will be 382.5 million, a year-on-year increase of 4.5%, and the average monthly active users will be 700.4 million, a year-on-year increase of 9.4%. In addition, the average daily usage time per daily active user of Kuaishou APP Q4 reached 124.5 minutes. For the full year of 2023, the average daily active users of the Kuaishou app will be 379.9 million, up 6.8% year-on-year, and the average monthly active users will be 678.2 million, up 10.7% year-on-year.
This financial report has set a number of "firsts": revenue exceeded 100 billion yuan for the first time, e-commerce GMV exceeded 1.18 trillion for the first time, becoming the fifth platform with GMV exceeding 1 trillion yuan after Taotian, JD.com, Pinduoduo and Douyin, and monthly activity exceeded 700 million yuan for the first time......
The company made a profit at the end of the three years of listing, but the capital market did not respond enthusiastically. The day after the earnings report was released, as of the close of trading on March 21, Kuaishou's share price fell to HK$51.25 per share. Obviously, the era of barbaric growth of "throwing money for the market" has passed, and the keywords of many Internet platforms have become "reducing costs and increasing efficiency", focusing on the core business in an all-round way, eliminating non-profitable businesses, and collectively entering the era of profitability. Douyin and other strong enemies are around, and Kuaishou still faces many challenges.
Advertising live e-commerce is responsible for making money, and short dramas are responsible for traffic
The troika of advertising, live broadcasting, e-commerce, and Kuaishou to support a family.
Last year, Kuaishou's online marketing service (advertising) revenue reached 60.3 billion yuan, with a year-on-year increase of 23% under the refined operation and intelligent delivery strategy, making it the largest source of income. Revenue from live streaming business reached RMB39.1 billion, an increase of 10.4% from RMB35.4 billion in 2022, making it the second largest source of revenue. In terms of data performance, the average daily live broadcast time of Kuaishou anchors increased by nearly 30% year-on-year, the number of high-quality anchors increased by more than 100 times, and there were more than 425 live broadcast categories. Compared with Kuaishou in 2019~2020, the proportion of live broadcast revenue is up to more than eighty percent, and it is not difficult to see that its revenue structure has undergone a great change.
In the fourth quarter of 2023, the GMV of Kuaishou's e-commerce business maintained a rapid year-on-year growth of 29.3%, reaching a scale of 403.9 billion yuan, and the average monthly number of e-commerce buyers in the fourth quarter reached a new high of 130 million, driving the GMV of the whole year of 2023 to exceed 1.18 trillion yuan. For the whole year, the average monthly number of moving merchants increased by more than 90% year-on-year, and the revenue from other services, including e-commerce, increased by 44.7% from 9.8 billion yuan to 14.1 billion yuan, mainly due to the growth of e-commerce business and the increase in the total transaction volume of e-commerce goods. Founder and CEO Cheng Yixiao once said: "The e-commerce business is one of the important engines of Kuaishou's future growth, and it is also the center of our entire commercialization ecosystem. ”
At the 2023 Kuaishou E-commerce Gravity Conference, Cheng Yixiao proposed three business vanes of low-cost and good goods, high-quality content, and intimate service, and said that he would tilt resources to high-quality operators. At the same time, the "Chuanliu Plan", which encourages merchants and influencers to cooperate and win-win, has been increased, and the annual traffic has increased from 30 billion to at least 60 billion.
According to data released by Kuaishou, in the fourth quarter of 2023, the GMV of pan-shelf scenarios has achieved more growth than that of the broader market, accounting for more than 20% of the total GMV of e-commerce. In the New Year's Festival at the beginning of 2024, the GMV of pan-shelf increased by 383% compared with the previous year's Festival. Although the current proportion of revenue is not the highest, e-commerce has a lot of room for growth, and its rapid development has also activated the growth of other business performance. CICC Research Report pointed out that the growth rate of its internal circulation advertising is higher than the growth rate of GMV, precisely due to the improvement of the e-commerce ecology.
When its GMV enters the trillion era, it also means that emerging content e-commerce such as Kuaishou e-commerce and Douyin e-commerce will have to face up to e-commerce platforms such as Taotian, JD.com, and Pinduoduo. For comparison, Xinmaobang data shows that in 2023, Alibaba's GMV will be 7,185.4 billion yuan, Pinduoduo's GMV will be 4,045.1 billion yuan, and JD.com's GMV will be 3,539.4 billion yuan.
Of course, as a short video platform, the above three businesses are all based on its own traffic pool of 700 million old iron, so in the final analysis, it still depends on the role of content to attract new users and attract solid fans. Vertical content such as sports, agriculture, agriculture, and short dramas has effectively enhanced user stickiness, enriched the content ecology, and contributed revenue.
Last year, the short drama that reached the market size of 10 billion yuan has become the most eye-catching existence in the financial report. Kuaishou's "Donglan Snow" and "The Reason Why I Returned to Seventeen" are all popular representatives. At the end of last year, the platform launched an independent short drama APP Xifan. According to the financial report, by the end of 2023, the total number of Kuaishou Xingmang short dramas will be nearly 1,000, of which more than 300 popular short dramas will be broadcast over 100 million yuan. In addition, Kuaishou has also introduced tens of thousands of third-party paid short dramas.
Kuaishou said that today, 270 million users watch short drama content on Kuaishou every day. In the fourth quarter of 2023, the number of users who watched more than 10 episodes of heavy short dramas per day reached 94 million, a year-on-year increase of more than 50%;
It's worth noting that while monthly active users hit a new high, both user time and DAU declined. According to the financial report data, Kuaishou's average daily traffic in Q4 2023 will be 47.62 billion, down 5.2% month-on-month and 2.9% year-on-year, and the main reason for the decline is that the average daily usage time of users in this quarter was 124.5 minutes, a decrease of 5.4 minutes from the previous quarter. It may be related to a shift in its growth strategy.
With one hand grasping "increasing income" and the other hand grasping "reducing costs", the dual efforts to jointly create an increase in revenue and profit. Its administrative expenses and R&D expenses decreased by 10.4% and 10.5%, respectively, mainly due to changes in employee benefit expenses. Its sales and marketing expenses decreased by nearly 1.7% year-on-year to RMB36.5 billion, and the percentage of total revenue decreased from 39.4% in 2022 to 32.2% in 2023.
CICC issued a research report saying that it maintained the "outperform" rating of Kuaishou-W (01024.HK), predicting that the core business is expected to maintain growth resilience, and profits may exceed expectations again.
Overseas layout of key markets, domestic competition for local life "cake"
According to the financial report, in 2023, Kuaishou's revenue from overseas will be 2.28 billion yuan, a year-on-year increase of nearly 3 times, and its liquidity will be further improved, with an operating loss of 2.79 billion yuan, compared with a loss of 6.6 billion yuan in the same period in 2022, and the operating loss has been significantly narrowed. The overall operating loss of overseas business in the fourth quarter decreased by 63.2% year-on-year.
Through two products, such as Snack Video and Kwai, its overseas business is no longer "blooming globally", but is focusing on key markets such as Brazil and Indonesia, and by deepening its localization strategy, it has increased its daily active users and user spending time. According to the financial report, the online marketing revenue of Kuaishou's overseas business in Q4 2023 increased by more than 300% year-on-year, the number of customers increased by 87%, and the total consumption increased by more than 400%.
Both Douyin and Kuaishou focused on "snatching the Meituan cake", that is, the local life business, last year.
In the earnings call, the senior management said: "Local life can not only contribute to GMV, but also improve user stickiness, which is one of the new businesses that Kuaishou values very much." 2023 is the first year of Kuaishou's local life, with many from 0 to 1, rapid growth in GMV, and continuous enrichment of supply. At the Kuaishou Local Life Cohesion Ecological Conference the next day, Kuaishou said that the local life transaction volume (GMV) increased by 25 times year-on-year in the fourth quarter of last year, and this year it plans to invest in billion-level platform subsidies and 100 billion traffic in the group purchase business to support 1,000 million-GMV brands.
Entering 2023, the scale of Kuaishou local life's pilot cities will be further expanded, starting from Harbin, Qingdao and other places, with 16 key operating cities, including nearly 50 cities with agent services. In October, Kuaishou Local Life launched the second phase of the "Flying Bird Plan" to support store explorers through traffic and cash incentives. It is understood that the first phase of the "Flying Bird Project" has helped more than 2,000 creators.
The market value has fallen by eighty percent compared with the peak, and it has not yet returned to the high point, as the "second", Kuaishou's pressure from Douyin is not small: whether it is the e-commerce business, or the number of content hits, and even TIK TOK's overseas business and local life business.
Just a few days ago, Douyin's parent company, ByteDance, was also rumored to have generated $120 billion (about 863.5 billion yuan) in revenue in 2023, a year-on-year increase of about 40%. According to the data, the GMV of Douyin e-commerce will exceed 2.2 trillion yuan in 2023, which is almost twice the volume of Kuaishou e-commerce, and in terms of growth rate, Douyin e-commerce GMV will increase by 80% year-on-year in 2023.
The same is true for content competition, according to data released by Douyin and Kuaishou at the end of last year, there are 12 and 4 super-head hits with more than 1 billion views on the site.
In terms of GMV of local life, Douyin soared from 11 billion yuan in 2021 to 310 billion yuan in 2023.
In the absence of first-mover advantage and traffic advantage, what Kuaishou has to do may be to compete in the sinking market. In many counties and towns, the penetration rate of online catering industry is not high. According to Questmobile data, in May 2023, Kuaishou accounted for 58.8% of users in "new-tier cities" (i.e., below the third tier), and 41% of users aged 24 and below and 25-30 years old. According to the "Kuaishou Local Life User Insight Report" launched by Feigua Data, its users have the characteristics of "three more", that is, there are many female users, many young users under the age of 30, and many users in new cities. In 2023Q4, Kuaishou's local female users accounted for 60.6%, and the GMV accounted for 57.9%.
Kuaishou has more advantages than Douyin and Meituan in the sinking market, and in the context of the outbreak of "she economy" and "county economy", there is a lot of room for imagination to seize this blue ocean market.
In addition to the above keywords, what is Kuaishou's new story?
Cheng Yixiao focused on the popular AIGC in the earnings call, "In terms of self-developed large models, following Kuaiyi's 13 billion and 66 billion parameter models, 4Q23 focused on training 175 billion parameter language large models, and achieved satisfactory results, and the current performance greatly exceeds GPT 3.5, approaching GPT 4.0 in terms of understanding, detailing and readability, and the company is confident that it will reach the level of GPT 4.0 in the next six months." The performance of the multi-modal model and the "graphable" model of the large model of Wensheng Graph exceeds the level of Midjourney V5. In the field of video generation, at the end of last year, we actively promoted the patent research and development of related technologies. In addition, he also mentioned Kuaishou's self-developed game business in incubation.
When it comes to deep waters, investors need to see not only an excellent report card, but also long-term value in the future. How to find the best business balance between users, creators, and merchants is a test for Kuaishou's old iron.