Research Analyst
Megan Tao (+852 2277 6515)
megantao@phillip.com.hk

Financial summary

Kuaishou is a leading content community and social platform in China and globally. As a technology company powered by and built upon artificial intelligence, Kuaishou is dedicated to continuously enriching its services and application scenarios through ongoing technological innovation and product upgrades, thereby creating value for its customers. On Kuaishou, users record and share their lives through short videos and live streaming, discover what they need, and showcase their talents. By closely collaborating with content creators and businesses, Kuaishou provides technologies, products, and services that meet users' diverse needs, including entertainment, online marketing services, e-commerce, local lifestyle services, gaming, and more.

Financial performance

In the first quarter of 2025, the company achieved total revenue of RMB 32.6 billion (Chinese yuan, same below), representing a year-over-year increase of 10.9%. In terms of profitability, operating profit reached RMB 4.3 billion, up 6.6% YoY, while adjusted net profit was RMB 4.6 billion, a 4.4% YoY increase. By segment, 1Q25 online marketing services revenue grew 8.0% YoY to RMB 18.0 billion, primarily driven by increased ad spending from marketing clients due to the adoption of AI-powered ad placement solutions. Live streaming revenue rose 14.4% YoY to RMB 9.8 billion, attributed to refined operations and diversified content. Other services revenue increased 15.2% YoY to RMB 4.8 billion, mainly fueled by e-commerce business growth.

In terms of expenses, the company’s sales and marketing expenses as a percentage of total revenue decreased to 30.4% in Q1 2025 from 31.9% in the same period last year, primarily due to improved operational efficiency.

In Q1 2025, Kuaishou’s average daily active users (DAUs) and monthly active users (MAUs) reached 408 million and 712 million, respectively, up 3.6% and 2.1% YoY. The app’s DAUs hit a record high and surpassed 400 million for the third consecutive quarter. Through refined user growth strategies, the average customer acquisition cost (CAC) for new users decreased. Meanwhile, enhanced content consumption experiences—driven by high-quality content, iterative traffic distribution mechanisms, and diverse community engagement features—further improved new user retention rates.

Online Marketing Services: External-loop business as the core growth engine, AI-driven end-to-end efficiency improvement

In the first quarter of 2025, external-loop marketing services served as the primary growth driver, with AI technology deeply enhancing end-to-end operational efficiency. Within the content consumption sector, marketing expenditure for short dramas achieved rapid year-over-year growth. Marketing clients leveraged native pathways to elevate content value and strengthen user engagement, deepening the platform’s understanding of user preferences. In the local lifestyle sector, solutions such as native direct messaging and lead form collection boosted conversion rates, driving marketing expenditure growth of over 50.0% YoY.

Meanwhile, AI technology empowered the entire workflow of online marketing service solutions, delivering efficient brand marketing and performance-driven conversions. According to management, Q2 online marketing service revenue is expected to return to double-digit YoY growth, with accelerated ad expenditure growth in the generalized shelf-based advertising space.

E-commerce: Tripartite Operating Model Drives Continuous Optimization Across Multiple Domains

The company continued to enhance consumers' shopping experience. In Q1 2025, e-commerce GMV grew by 15.4% YoY to RMB 332.3 billion, while the monthly active buyer count reached 135 million, up 7.1% YoY. By continuously developing growth resources and widely applying large-scale models, the company provided merchants with a full suite of AI-powered livestreaming tools, leading to a YoY increase of over 30.0% in new merchants joining Kuaishou during Q1 2025. Through the establishment of a tripartite operating model integrating "livestreaming + mall + short videos," the company drove continuous optimization across multiple domains. In Q1 2025, generalized shelf-based e-commerce contributed approximately 30.0% of total GMV, with the number of daily active merchants growing over 40.0% YoY, while short video-based e-commerce GMV surged by over 40.0% YoY.

Livestreaming: YoY Growth Returns to Positive Territory

The company further refined its operations in key categories such as multi-host livestreaming and group livestreaming. By the end of Q1 2025, the number of signed agencies increased by over 25.0% YoY, while the number of signed streamers grew by over 40.0% YoY.

Company valuation

In April 2025, the company launched Keling AI 2.0, introducing the innovative concept of multimodal vision-language and rolling out multimodal editing features, which have now been widely adopted across various industries including advertising marketing, short dramas, and smart devices. Leveraging AI technology, the company has empowered the entire process of online marketing service solutions, encompassing AIGC marketing material production, intelligent marketing placement agents, and large-scale marketing acompañrecommendation models, thereby enhancing clients' marketing conversion efficiency. In Q1 2025, the daily average ad spending on AIGC marketing materials reached approximately RMB 30 million.

Overall, we are optimistic about the company's medium-to-long-term growth prospects and believe its fair valuation should be 17 times the projected 2025 PE, corresponding to a target price of HK$73 per share. We forecast the company's 2025-2027 operating revenues at RMB 142.4/156.2/170.7 billion, with net profits of RMB 16.8/21.3/26.3 billion, translating to EPS of RMB 3.91/4.94/6.11. The current share price implies PE multiples of 15/12/10x for 2025-2027. In conclusion, we initiate coverage with an "Accumulate" rating.

Risk factors

1) Slower-than-exhibitspected progress in AI applications;
2) User growth slowdown;
3) Regulatory risks in the internet industry.

Financials

Current Price as of: Jul 14 2025
Exchange rate: HKD/RMB = 0.91
Source: PSHK Est.

Download PDF version...