How's Kuaishou 2024Q4 Performance?

$KUAISHOU-W(01024)$ 2024Q4 results validate the effectiveness of "technology-driven + ecological synergy" strategy:

AI-enabled advertising and e-commerce efficiency, narrowing losses in overseas business signifies that the model is running through, and the commercialization of AI can open the second growth curve.

The current valuation reflects the market's expectation of its long-term growth, but we need to be vigilant about the risks of slowing user growth and intensifying competition in the industry.Investors are advised to focus on tracking the conversion efficiency of AI technology, the repurchase rate of e-commerce users and the profitability of overseas markets.

Performance

Core Data Highlights

• Q4 revenue of RMB35.4bn (+8.7% yoy), slightly exceeding market expectation of RMB34.8bn;

• Adjusted net profit of 4.7 billion yuan (+7.8% yoy), full-year adjusted net profit of 17.7 billion yuan (+72.5% yoy);

• Daily active users 401 million (+4.8% yoy), monthly active users 734 million (+5.0% yoy);

• Online marketing revenue of RMB20.6 billion (+13.3% yoy) and e-commerce GMV of RMB462.1 billion (+14.4% yoy);

• Overseas revenue grew 52.9% and operating loss narrowed 57.2%.

Share price and investor sentiment After the release of the earnings report, after trading hours, and its market capitalization exceeded HK$460 billion.The market gave positive comments on its dual-round drive of advertising and e-commerce, narrowing of overseas losses and progress of AI commercialization, but was concerned about the slight decline in user growth YoY (Q4 daily activity decreased by 0.07bn YoY compared to Q3).

Key investment points

1. AI technology drives advertising efficiency leap, and commercialized short drama becomes an incremental engine

• Online marketing revenue accounted for 57.1% of the annual 72.4 billion yuan (+20.1% yoy), the main reason:

  • Average daily consumption of AIGC material exceeded RMB 30 million, improving advertising conversion efficiency;

  • Commercialized short drama ecosystem contributed new incremental revenue, with single-user ad revenue reaching RMB51.4 (+7.9% yoy).

• Analysts' Focus: Can the growth rate of advertising revenue be sustained?The company responded that the AI big model optimizes the recommendation algorithm, the number of customers increased by 18% year-on-year, and the proportion of small and medium-sized merchants increased to 65%.

2. E-commerce GMV exceeded 1.39 trillion, user stickiness and supply upgrading resonance

• Q4 e-commerce GMV increased by 14.4% year-on-year to 1.39 trillion (+17.3% yoy) for the whole year, the core driving force:

  • Monthly active buyers 143 million (+10.0% yoy), penetration rate 19.5%;

  • Short-video e-commerce GMV grew by more than 50% year-on-year, and local life business GMV doubled.

• Strategic Initiatives: More than 7 million new users were added in the Double Eleven promotion, the repurchase rate was boosted through the coupon supplement strategy, and the number of merchants with average monthly sales increased by 25%.

3. Overseas business entered a benign growth path, narrowing loss to verify model optimization

• Q4 revenue grew 52.9%, with 83.5% growth in online marketing revenue, mainly due to increased user stickiness in Southeast Asian markets (e.g. Indonesia, Vietnam).

• Cost control was effective: through localized operation (e.g. reducing celebrity endorsement), operating loss narrowed by 57.2% year-on-year, and single-user acquisition cost dropped by 32%.

4. A key step in AI commercialization, Keyline AI revenue exceeded 100 million yuan.

• The cumulative revenue of Keling AI exceeded 100 million yuan, the user scale of independent App exceeded 5 million, and AIGC technology empowers virtual live broadcasting, e-commerce customer service and other scenarios.

• Management guideline: in 2025, we will increase the investment in AI technology, aim to increase the proportion of AI-related revenue to 15%, and explore the B-side enterprise service market.

5. Straight broadcasting business stabilized at the bottom, content ecosystem structural optimization

• Q4 live broadcast revenue amounted to RMB9.8 billion (-2.0% yoy), a decrease of 5.6 percentage points compared with Q3, mainly benefiting from the application of virtual anchor technology (accounting for more than 30%).

• Adjustment of content strategy: Increased investment in short dramas, knowledge payment and other vertical content, total user time increased by 5.8% year-on-year, and advertisement loading rate increased by 1.2 percentage points.

6. Risk Reminder and Response

• User growth bottleneck: Q4 daily activity declined sequentially, attention should be paid to the competition in the sinking market and the attractiveness of AI content;

• Industry regulatory risks: short drama content compliance and e-commerce platform governance costs may affect profitability.