Kuaishou Expertise (KUASF) CEO Cheng Yixiao on This autumn 2021 Outcomes – Earnings Name Transcript

Kuaishou Expertise (OTCPK:KUASF) This autumn 2021 Earnings Convention Name March 29, 2022 8:00 AM ET

Firm Individuals

Heather Diwu – Investor Relations

Cheng Yixiao – Chief Government Officer

Jin Bing – Chief Monetary Officer

Nicholas Chong – Senior Advisor

Convention Name Individuals

Kenneth Fong – Crédit Suisse

Alex Yao – JPMorgan

Alex Poon – Morgan Stanley

Thomas Chong – Jefferies

Felix Liu – UBS


Good day, girls and gents. Thanks for standing by. Welcome to the Kuaishou Expertise Fourth Quarter and Full Yr 2021 Monetary Outcomes Convention Name. Please observe that the English simultaneous interpretation can be supplied for administration’s ready remarks. This English line can be in listen-only mode.

I’ll now flip the decision over to Ms. Heather Diwu. Director of Investor Relations at Kuaishou Expertise.

Heather Diwu

All proper. Thanks, operator. Good night, and good morning to everybody. Welcome to our Fourth Quarter and Full Yr 2021 Monetary Outcomes Convention Name. Becoming a member of us at this time, we now have Mr. Cheng Yixiao, Co-Founder, Government Director and in addition CEO, Mr. Jin Bing, Chief Monetary Officer and Senior Adviser, Mr. Nicholas Chong.

Earlier than we begin, we wish to remind you that at this time’s dialogue might comprise forward-looking statements which contain plenty of dangers and uncertainties. Precise outcomes and outcomes might differ materially from these talked about in at this time’s announcement and dialogue. The corporate doesn’t undertake any obligation to replace any forward-looking data, besides as required by regulation.

Throughout at this time’s name, administration may even talk about such non-IFRS monetary measures for comparability functions solely. For the definition of non-IFRS monetary measures and reconciliation of IFRS to non-IFRS monetary outcomes, please confer with our outcomes announcement for the fourth quarter and full yr report ended December 31, 2021, issued earlier at this time.

For at this time’s name, administration will use Chinese language as the primary language, a third-party interpreter will present simultaneous interpretation primarily ready remarks part and consecutive interpretation in the course of the Q&A piece. Please observe that English interpretation is for comfort functions solely. In case of any discrepancy, administration assertion within the unique language will prevail.

I’ll now hand the decision over to Yixiao.

Cheng Yixiao

Good day, everybody. Welcome to Kuaishou Fourth Quarter and Full Yr 2021 Earnings Convention Name. Kuaishou has at all times been dedicated to creating happiness to our customers. Because the fourth quarter of 2021, we had 578 million MAUs and 323 million DAUs right here in China.

As our person base continues to increase, we’re extra conscious that as a extremely interactive and enormous quantity digital group with excessive person stickiness, Kuaishou will leverage its breadth and capabilities to offer applied sciences merchandise, providers, infrastructure and options for digitization of extra merchandise and industries, serving to customers decreasing transaction prices, enhance the effectivity of useful resource allocation and promote social productiveness and growth of the digital financial system.

Prior to now yr, billions of product orders have been despatched over the nation by way of Kuaishou’s platform, of which practically 560 million orders for agriculture merchandise, greater than 20 million customers earned earnings from Kuaishou of which greater than 60% come from low and mid-tier cities. And based on a third-party estimate by the tip of 2021, Kuaishou has created 34.64 million jobs for the society.

On the similar time, we now have been actively increasing new companies akin to native providers and recruitment. We purpose to satisfy buyer demand by way of our quick video and stay streaming capability, getting a excessive frequency and low barrier digital group and supply extra customers and industries with high-quality, environment friendly, handy digital platform.

Wanting again at 2021, in face of many challenges and uncertainties, we made a collection of well timed inside changes to strengthen our personal benefits, enhance organizational effectivity and make clear our strategic course, which final introduced passable and monetary outcomes.

First, I wish to share our work in regarding the site visitors development in financial and ecosystem cultivation. Within the fourth quarter of 2021, our DAUs and MAUs hit historic excessive. DAUs reached 323 million, reaching the best ever year-over-year development charge of 19.2% in 2021 and the corresponding quarter-over-quarter development additionally outperformed our typical seasonal patterns.

MAUs reached 578 million, reaching the highest-ever year-over-year development of 21.5%. Our MAU base grew by greater than 100 million evaluating with the fourth quarter of 2021, with extra customers becoming a member of Kuaishou, an inclusive and affluent digital group, our person combine grow to be extra various. Within the fourth quarter, common day by day time spent per DAU elevated by 32.3% year-over-year to 118.9 minutes and whole site visitors achieved fast development of 57.6% year-over-year.

Via steady growth of quick movies and stay streams in content material and use case eventualities, person engagement and stickiness in Kuaishou ecosystem continues to develop. Person base and time spend accelerated the expansion within the second half of 2021. It was attributable to the strengthening of our social benefits, in-depth operation and have content material and excessive environment friendly iteration of our organizational construction.

First, we proceed to construct our social attributes and strengthen Kuaishou’s traits thus forming an in depth connection between customers, create an interactive networking ambiance and enhancing person stickiness and exercise. Now we have elevated our funding in attracting new prospects by way of constructing social mindsets early within the person life-style and in addition algorithms and merchandise are repeatedly optimized to actively facilitate the conversion to a extra mutual relationships.

By the tip of 2021, pairs of future followers on our platform exceeded 19 — 16.3 billion pairs on a group foundation, up by 68% year-over-year with greater than 200 mutual comply with relations that on per MAUs on common. On the similar time, the standard of personal area content material has improved repeatedly by way of ongoing confidence. Within the fourth quarter of 2021, absolutely the worth of personal area site visitors of the platform continues to develop and the standard expertise of mutual comply with relations additionally has been improved.

Lively and fixed content material creation ecosystem important for us, we now have at all times adopted by the precept of inclusiveness, offering larger assist to creators throughout numerous features akin to site visitors, in fourth quarter comes up from mid-tier and long-tail creates contributed greater than 80% of the platform’s video views consumption, and this share continues to rise.

Excessive-quality content material creators will be seen and found on Kuaishou in order that they’ll accumulate invaluable non-public area site visitors and generate on some outcomes. Within the fourth quarter, the variety of high-quality content material creators on our platform continues to extend quarter-over-quarter. And we now have been creating new refined and distinctive content material classes, concentrating on completely different person group and enhancing our content material operational suggestion talents.

This has developed the differentiated content material minds and reaching constructive outcomes by way of person acquisition and time spent. The brand new content material verticals have been created akin to quick performs, sport and data sharing quickly grew in 2021.

Take Kuaishou Playlet, for instance. We’re aiming to construct an in depth and refined content material provide ecosystem supporting UGC creators whereas launching Undertaking Astral, which results in the follow of high quality quick play creation on this sector. By the tip 2021, Undertaking Astral launched 240 unique personalized quick play, of which greater than 100 acquired greater than 100 million views.

With greater than 10,000 quick performs on our platform at current, we now have grow to be a house to many blockbuster quick performs and lead {industry}. Brief performs have additionally introduced us the person development with extra feminine customers in excessive tier. In 2021, greater than 1 billion customers have been quick performs on Kuaishou. The proportion of video view of quick play has rapidly elevated the extent of prime content material verticals, demonstrating our goal of making featured content material customers shared of thoughts and coronary heart.

By way of group effectivity because the adjustment of our organizational construction of the expansion division in June we now have strengthening of infrastructure, building of development system and knowledge integration. This measure laid a extra strong technical basis for our effectivity enchancment. On the similar time, with a steady evolution of {industry} and person mindset, we expanded differentiated channels and formulate dynamic administration options for person acquisitions and reactivating concentrating on customers at completely different teams and in addition phases of their life-style cycle.

Now we have additionally helped us to search out greatest resolution to maximizing the returns and enhancing buyer acquisition and retention effectivity. On the premise of fast site visitors development, our whole income reached CNY 81.1 billion in 2021, up by 37.9% year-over-year. Income from on-line advertising and marketing providers enterprise was CNY 42.67 billion, reaching a fast development of 95.2%. And income contribution to whole income elevated to 52.6% in 2021 from 37.2% in 2020.

The macro setting has been a steady engine because the second half of 2021, however we nonetheless absolutely unlock our development potential, preserve a extra resilient development efficiency in on-line advertising and marketing service enterprise and additional improve our market share.

First, Kuaishou supplied advertisers with the fast-growing and large site visitors development. On Kuaishou the breadth of our public area and the stickiness of our non-public area and closed-loop system for our enterprise ecosystem, collectively, they supply a novel site visitors mixture and driving the ecosystem that continues to draw new advertisers.

Steady optimization of promoting content material supplies has additionally earned us an area to additional enhance and cargo. And second, though our on-line advertising and marketing providers enterprise began comparatively late by way of steady iteration of our promoting system and merchandise and enhancing our working and repair capabilities. Our advertisers expertise and charge of return was additional optimized, resulting in enhanced industrial competitiveness.

In 2021, we consolidated Xiaodiantong and fan headlines to Magnetic Taurus in order that our advertisers would have the ability to conduct extra refined funding and finances allocation in each private and non-private area and thus enhance decision-making effectivity and charge of return. By way of maturity of the algorithm mannequin and worth mechanism, we now have performed manufacturing analysis and in addition optimized the algorithm to spice up effectivity.

Almost about providers, we supplied the goal resolution to our prospects from numerous industries in order to trigger the marketed requirement extra exactly. In 2021 variety of advertisers elevated by greater than 60% in contrast in ’20. Promoting of our closed-loop ecosystem can also be one of many development engines of Kuaishou promoting enterprise. For the expansion of GMV and energetic margins and optimized our merchandise in 2021, income from promoting enterprise achieved three-digit development. Sooner or later, we may even proceed to enhance the return on retailers’ funding by strengthening the worth of our closed-loop enterprise and product effectivity.

And likewise as well as, model commercial additionally achieved a breakthrough efficiency with income up greater than 150% in 2021. Kuaishou’s service provider various person base and long-term non-public area worth market is unparalleled and a assets for excellent advertisers. So coupled with our funding in and in addition operational high-quality contents as on the spot video games and Tremendous Reside present. Now we have been in a position to efficiently entice extra high-quality branded websites on our platform.

The advertising and marketing resolution that integrates the product effectivity additionally absolutely realized business closed-loop worth in 2021, the variety of model advertisers greater than doubled. Reside streaming e-commerce as a attribute of high-efficiency, robust interplay and is content material oriented. On a foundation, Kuaishou has shaped a particular reliable e-commerce mannequin with a excessive repeat buy charge. That superior expertise and nice trade in e-commerce purchasing mindset for extra customers. In 2021 our e-commerce GMV reached CNY 680.0 billion, representing file development of 78.4%.

Particularly, the proportion of Kuaishou our self e-commerce continues to extend. In December 2021, Kuaishou accounted for 98.8% of e-commerce GMV. Belief is undoubtedly the muse of Kuaishou’s e-commerce enterprise, within the fourth quarter of 2021 the month-to-month e-commerce repeated buy charge at of our platform elevated by 5 share factors in contrast with the identical interval final yr. That is as a result of persistent efforts made by the platform and growth to offer customers with extra assure and cost-effective store expertise.

In 2021, we launched the Kuaishou Belief Card transaction safety mechanism to offer customers with safety rights and worry-free purchasing expertise. Now we have seen the service provider who activated the Belief Card noticed their GMV elevated by 20% inside 30 days, this not solely protects prospects’ rights and pursuits and reduces the price of person order decision-making, but additionally enhance the conversion charge of each our transaction and stay streamings per room. The platform has additionally improved the timelessness after the gross sales.

And likewise this measure has elevated the willingness of repeat buy for the brand new customers. Within the second half of 2021, the repeat buy charge of recent customers elevated by greater than 10 share factors in contrast with the primary half of the yr. And presently, we now have built-in dozens of belief indicators right into a system and a belief index of retailers will decide the site visitors distribution.

Along with strengthening belief, we additionally proceed to optimize the provision of merchandise and enhance merchandise high quality. In 2021, we upgraded Kuaishou’s choice to Kuaishou distribution which lowered the brink for retailers and types joined distribute, permitting extra high-quality retailers to affix the Kuaishou distribution system. On the similar time, the merchandise are set to refine layers and high-quality merchandise recognized by way of algorithms the place we matched with extra rights and pursuits for a extra correct and clever biomechanism administration platform.

Within the fourth quarter of 2021, greater than 30% of e-commerce GMV got here from the Kuaishou distribution system for model retailers, we established a KA staff to offer a tailored providers. In 2021, the e-commerce enterprise of name teams have developed quickly. The e-commerce GMV from self-operated stay streaming and effectively model was greater than 9x of the primary half of 2021 with important driving the conversion of recent energetic consumers. We’re delighted to see that in 2021, the consumption frequency of annual energetic consumers and ARPPU additional elevated.

Folks and content material are important for stay streaming of e-commerce, the platform energetic e-commerce streamers proceed to develop in 2021. The additional optimization of high quality of stay streaming content material, coupled with the continual enrichment of merchandise provide primarily based on the muse for steady improve of e-commerce penetration within the fourth quarter of 2021. The penetration charge of the platform stay streaming e-commerce additional improve. Our technical staff continues to optimize the mechanism, particularly in distribution of e-commerce content material in public area. In 2021, our order conversion charge elevated considerably.

Within the second half of 2021, we started to construct a service supplier system and empower extra retailers and streamers to depend shops effectivity. By the tip of 2021 greater than 500 service suppliers has been attracted by Kuaishou platform. The month-to-month GMV charge of the retailers exceed that of the overall GMV by 20 share factors.

For our stay streaming enterprise up to now yr, we proceed to optimize content material high quality, enhance operational effectivity and discover eventualities growth to present core participant the worth of the underwriting infrastructure and promote the rise in person engagement and stickiness.

In 2021, the income from stay streaming enterprise continued to enhance reaching CNY 31 billion, of which the stay streaming income within the fourth quarter reached CNY 8.8 billion, a rise of 14.3% quarter-over-quarter and 11.7% year-over-year, reaching the primary constructive year-over-year development within the yr.

Reside streaming is a vital content material provide for the platform. The expertise company enterprise is an effective place to begin of the platform to achieve content material provide. It’s also an essential a part of our platform by way of constructing wholesome and open stay streaming e-commerce. And likewise in the midst of 2021, we launched the Blue Ocean plan to strengthen cooperation with expertise businesses and assist and entice assets, we hope to find high-quality and promise and expertise businesses and breakthrough bottlenecks of the prevailing {industry} acquiring new development alternatives benefiting from the platform coverage and our openness of ecosystem expertise businesses deliver diversified streamers platform.

On the finish of 2021, a cumulative variety of streamers signed by expertise businesses has greater than doubled early year-over-year on platform. Extra higher-quality content material provide has been acknowledged by customers and person willingness to pay has been elevated. Within the fourth quarter of 2021, the typical month-to-month ARPPU of stay streaming enterprise reached CNY 60.7, an rising of 17.2% year-over-year and eight.2% improve quarter-over-quarter.

On the similar time, high-quality content material simulate to extend within the stay streaming penetration charge and development of paying customers. Within the fourth quarter of 2021, the energetic person penetration charge of stay streaming enterprise elevated by 15 share factors over the identical interval of final yr.

The typical MPUs of the stay streaming enterprise elevated by 5.2% quarter-over-quarter to 48.5 million. We consider that there’s room for additional growth in brief video and stay streaming eventualities. New digital wants of customers are always evolving and a group like Kuaishou with extremely energetic person engagement has extra contact factors with customers enabling it to seize person wants sooner and for brand new transaction base for our customers bilateral networks in large group.

Now we have regularly begun to discover different eventualities akin to on-line recruitment and native providers to empower extra industries and folks with quick movies and stay streaming. As for the abroad market, we personal — are the important thing markets in 2021. We achieved profitable person acquisition within the first half of the yr, gaining an affordable market share. Because the center of final yr, we’re targeted extra on the strengthening of our differentiation and enhancing high quality of makes use of and optimizing the development of infrastructure to key organizational market and elevated funding in characteristic content material and concentrating on core person group extra exactly.

On the similar time, we now have higher the course — deliberate course and tempo of funding in abroad assets within the second half of 2021 with extra distinctive funding and is deliberate funding, DAU, person time spend and person retention charge this market proceed to extend quarter-over-quarter.

In comparatively mature market, we now have been exploring monetization alternatives on the promoting, stay premium and e-commerce. Sooner or later, we hope to develop the more energizing merchandise and person mindset in abroad market and proceed to attain top quality and growth and higher return on funding.

My sharing find yourself right here. Subsequent, I wish to ask Jin Bing to share the corporate’s monetary efficiency.

Jin Bing

Thanks, Yixiao, and hi there, everybody. I am happy to have grow to be a part of Kuaishou household and meet with all of you within the first earnings name in Kuaishou. We ended the yr of 2021 with a robust quarter of economic efficiency as we proceed to take initiatives in price management and monetary effectivity enchancment by way of environment friendly capital allocation and a disciplined funding method.

We purpose at delivering values for our customers, content material creators and companions driving high-quality development and enhancing our monetization and upgrading our effectivity on the similar time. Within the fourth quarter, we continued to optimize our income and price construction and launch working leverages, main a big quarter-over-quarter lower in each our working loss and adjusted internet loss.

For the complete yr 2021, our whole income reached CNY 81.1 billion, up 37.9% year-over-year. Importing our robust development momentum was sustained into the fourth quarter regardless of a difficult macro setting. Our revenues for the fourth quarter elevated 35% year-over-year and 19.2% quarter-over-quarter to CNY 24.4 billion. A rise was primarily pushed by the web advertising and marketing providers and different providers development, particularly, the e-commerce enterprise development.

Our on-line advertising and marketing service maintained a fast development and additional gained market share. Within the fourth quarter of 2021 its income reached CNY 13.2 billion, representing a rise of 55.5% year-over-year and 21.3% quarter-over-quarter. Income of on-line advertising and marketing providers of the complete yr of 2021 was CNY 42.7 billion, rising by 95.2% year-over-year. This was primarily pushed by a vigorous development of whole site visitors and repeatedly enhance digitalized promoting merchandise and working capabilities.

All of those contributed to additional optimized promoting expertise and internet efficiency right into a rising variety of advertisers utilizing our platform in addition to elevated promoting finances on our platform. Our providers embrace e-commerce can also be striving with income of CNY 2.4 billion within the fourth quarter of representing a rise of 40.2% year-over-year and 27.3% quarter-over-quarter.

In 2021, income of different providers reached CNY 7.4 billion, rising by 99.9% year-over-year and as we additional enrich the merchandising provide, enhance service capabilities and optimize distribution algorithms our whole GMV of e-commerce reached CNY 680 billion in 2021, representing a rise of 78.4% year-over-year. On the monetization facet, we prioritize supporting retailers to develop by providing competitiveness internet fee charges.

And income from our stay streaming enterprise was CNY 8.8 billion for the fourth quarter of final yr, up 11.7% year-over-year and 14.3% quarter-over-quarter, marking the very first time of year-over-year development for stay streaming in 2021. The rise primarily resulted from in-house stay streaming content material and extra environment friendly streaming operations, which then drove paying person development and restoration of the willingness to proceed and client. Common MPUs for stay streaming grew 5.3% quarter-over-quarter to 48.5 million month-to-month ARPPU.

For stay streaming on our Kuaishou has expanded 17.2% year-over-year and eight.6% quarter-over-quarter to CNY 60.7.

Gross revenue for the yr of 2021 reached CNY 34 billion rising 42.9% year-over-year. Gross revenue margin in 2021 was 42%, enhancing from 40.5% in 2020. Our enhanced development margin on account of optimized income combine and improved administration of working prices.

Promoting and advertising and marketing bills have been CNY 10.2 billion for the fourth quarter representing 41.9% of whole revenues with a 7.1% quarter-over-quarter lower. The lower have been primarily because of our extra environment friendly and disciplined spending on our person acquisition and upkeep as required by buyer optimization in addition to refined operations administration and took initiatives to pursue high-quality person development.

Promoting and advertising and marketing bills as a share of whole revenues decreased all year long from 68.5% within the first quarter of 2021 to 41.9% within the fourth quarter. On the similar time, we strengthened the optimization of organizational personnel effectivity within the fourth quarter in 2021 analysis and growth bills have been CNY 4.0 billion. This was a lower of 4.8% quarter-on-quarter, representing 16.4% of whole revenues within the quarter down from 20.6% in third quarter, and it bills for the fourth quarter of 2021 elevated barely by 0.7% quarter-over-quarter to CNY 920 million, representing 3.8% of whole revenues versus 4.5% in third quarter.

On adjusted internet loss for the fourth of 2021 was CNY 3.6 million. Our adjusted internet margin improved 7.9 share factors quarter-over-quarter. We proceed to take care of a robust stability sheet place with money and money equivalents, time deposits, restricted money and wealth administration merchandise to CNY 49.6 billion on the finish of 2021. We generated a constructive working internet money stream within the fourth quarter of 2021 as we improved monetization effectivity and higher handle our working capital.

Wanting ahead, the sustainable and wholesome growth of our core enterprise will result in an additional assets deployment and planning. On the similar time, continued implementation to cut back prices and enhance working effectivity to gasoline our enterprise growth and create long-term worth for our shareholders.

A lot for my sharing. Please, now we will have the Q&A.

Query-and-Reply Session


Crédit Suisse, Kenneth Fong.

Kenneth Fong

Congrats on the very robust set of outcomes. We noticed fourth quarter person and site visitors has been very robust and each are reaching historic highs. Are you able to please share with us the drivers behind? Within the first quarter, spring occasion can also be very effectively acquired. Are you able to share with us among the person development outlook for this yr?

Yixiao Cheng

To begin with, by way of common development, quick video and stay streaming are richer and extra engaging and simply disseminated content material format, which has grow to be more and more prevalent iterating conventional media format by way of capability growth to assist extra content material than broader person case eventualities.

Moreover, quick video has regularly grow to be a mainstream format as it may be more practical in content material filtering and extra environment friendly in content material show. So we consider that China’s quick video DAUs can doubtlessly attain 1.1 billion. Towards this backdrop, we proceed to attain thrilling outcomes on the expansion facet in a decade after our firm’s founding. So within the second half of 2021, our DAUs and whole site visitors elevated by 18.5% and 58.3% year-over-year, respectively.

Specifically, the fourth quarter, our DAUs reached a historic excessive of 323 million, which has additional enhanced our confidence in reaching our mid- to long-term DAU goal, which is 400 million.

And our work on the expansion facet is principally 2, as follows, first, strengthening our differentiated benefits and in addition enhancing our organizational effectivity. In order the quick video {industry} is shifting from a pure development stage to a stage the place contributors compete with current customers, it’s requiring us to create extra differentiated worth for customers and grow to be a extra distinctive presence in customers’ thoughts.

So our forecast differentiation or foremost differentiation in opposition to different quick video platforms is our positioning as a social platform. That is troublesome to copy since that is predicted that on our underlying values and in addition cap distribution logic. So by the tip of 2021, we now have greater than 16.3 billion payers of mutual followers accumulatively, a rise of 68.2% in contrast with the tip of 2020. This locations us as an industrial chief by way of the mutual relationship penetration charge.

Our non-public area site visitors additionally continued to develop, demonstrating a high-quality and the robust thoughts share of Kuaishou non-public area. With respect to content material, we constantly serve the personalised want of our customers, exploring distinctive and in addition new classes that may be supported by quick movies and stay stream, aiming to encourage a extra differentiated person mindset to content material.

Along with the Kuaishou Playlet we talked about, content material verticals akin to sports activities and data sharing have each contributed positively to our person acquisition and person time spent in addition to promoted content material creation on our platform. Our feedback over stay ratio are industry-leading, reflecting customers robust willingness to work together primarily based on content material and trusting reference to one another that expands past contents consumption.

Now we have additionally repeatedly enriched the choices of services for our customers and began to increase the person case of quick video and stay streaming to the areas akin to native service recruitment, catering to the necessity for the customers.

Our efforts to enhance organizational effectivity additionally boosted person development. Because the third quarter of final yr, we now have been repeatedly optimizing customers acquisition effectivity and retention charge. The primary quarter is the height season for the Web {industry} to realize customers and develop site visitors. And this yr, leveraging our previous expertise and efforts on effectivity enchancment, our Chinese language New Yr and Winter Olympics joint occasions achieved higher ends in attracting new customers in contrast with final yr.

So our person retention charge additionally elevated year-over-year after Chinese language New Yr. Complete funding on customers in addition to Chinese language New Yr occasions within the first quarter have been additional optimized in contrast with the identical interval of final yr, demonstrating our important enchancment in effectivity. We stay assured with our whole site visitors development this yr and are steadily shifting in direction of our mid- to long-term goal of 400 million DAUs.


JPMorgan, Alex C. Yao.

Alex Yao

We’re glad to see our e-commerce enterprise persevering with to develop robustly on this quarter regardless of of the macro weak point. So a few questions on e-commerce stay streaming. Primary, how do you guys see the long-term development potential for e-commerce stay streaming?

Quantity two, in comparison with different related platforms, what’s the aggressive benefit of economic e-commerce stay streaming. Lastly, we have been seeing rising regulatory necessities in e-commerce and stay streaming, are you involved that these incremental insurance policies for necessities will negatively have an effect on the e-commerce stay streaming near-term outlook?

Yixiao Cheng

Thanks for the query. It has at all times been the power that stay streaming as a brand new tender format and gross sales channels provides larger benefits to each customers and suppliers. First, it’s a extra environment friendly content material format in contrast with data displayed within the types of graphics and texts for conventional shelf-based e-commerce, stay streaming shows merchandise extra vividly.

This, coupled with the intensive interactions between streamers and customers, prices customers supplies wealthy data to customers for decision-making, resulting in a greater purchasing expertise and better gross sales conversion charge. Secondly, stay streaming e-commerce is a gross sales channel that may higher fulfill customers’ wants for purchasing with the continual enchancment in Chinese language folks’s dwelling requirements and extremely diversified merchandising motion customers usually have clear finances and intention to buy with out particular goal in thoughts, in such circumstances, customers would buy groceries and devour content material uncover and decide their targets.

The enjoyable content material consumption expertise supplied by stay streaming can higher meet customers’ wants for purchasing and the energetic vibe of the stay streaming session additional stimulates customers’ intention to purchase and facilitate conversion. So in the long run, we consider the overall GMV of stay streaming e-commerce might attain CNY 6 trillion.

And second query is about Kuaishou aggressive benefits. Our years of dedication to merchandise site visitors and long-term worth has supplied us with high-quality non-public area site visitors and a extremely engaged enterprise base with robust belief. Belief-based non-public area e-commerce is taking form in Kuaishou, which can also be a novel un-referable characteristic of us derived from a invaluable expertise. Our assist to the non-public area motivated our retailers and streamers to give attention to long-term person relationships and operations.

Additional optimizing client expertise contributing to our main industrial and main month-to-month repeat buy charge. As well as, in contrast with different platforms, Kuaishou has extra benefits within the lower-tier markets. We additionally seen that buyers in these markets skilled higher-than-average earnings development, which brings necessities of consumption improve.

Primarily, consumption is upgraded together with the customers’ larger willingness to pay for differentiated merchandise, which is on the core model. As such, consumption improve often comes with elevated buy of branded merchandise.

So we found that in addition to the normal well-known model, it’s simpler for some rising fairly model basing their operations on Kuaishou to face out. These manufacturers often originated from the manufacturing head stream and have more cost effective provide sources than a well known model making them a greater match for the consumption ranges and mindsets of customers within the lower-tier markets.

On the similar time, with wonderful content material operation functionality, these manufacturers can leverage stay streaming extra successfully to draw customers and facilitate conversion. And lastly, these manufacturers have a robust design to spend money on promotion and commercialization due to their intention to extend publicity, construct model picture and accumulate model fairness.

Some fairly manufacturers have already reached a substantial scale with annual gross sales of some hundred million and even a number of billion renminbi. So why are these rising manufacturers in a position to develop up on Kuaishou. On one hand, as a content material platform with a site visitors benefit, Kuaishou supplied these manufacturers with a house base to construct their model narrative and area of interest.

However, Kuaishou’s key strengths in non-public area attracts customers to repeatedly go to and buy, serving to domesticate model thoughts share and obtain a long-term wholesome operations, benefiting from the industry-leading repeat buy charge. In the meantime, these aggressive fairly manufacturers have grow to be a novel providing of Kuaishou, which not solely meet the wants of our current customers but additionally assist us to amass new consumers.

And lastly, the current regulatory modifications certainly raised the necessities for our governance as stay streaming e-commerce is a brand new {industry}, it must be standardized and related legal guidelines and laws have to be improved always throughout its growth and growth.

Main platforms ought to led by instance, and have the benign interplay with the regulatory authorities to enhance techniques and guidelines to make sure the economic orderly, healthily and sustainable growth. Now we have at all times been dedicated to strengthening e-commerce infrastructure and platform governance to boost the customers’ consumption expertise and their belief within the platform.

We launched the Kuaishou Belief Card, a transaction safeguard mechanism to offer customers with rights akin to refund with out return. In the meantime, we rolled out the strict punishment and countermeasures for streamers and retailers promoting faux and merchandise or engaged, publish publicity and click on farming.

Sooner or later, we hope to proceed rising with the {industry} and alter extra customers consumption expertise and service provider sale expertise to contribute to the event of the digital financial system.


Morgan Stanley, Alex Poon.

Alex Poon

I will translate my query. To begin with, congrats on very robust outcomes. And my query is said to our effectivity enchancment and may administration share with us how will we management our prices and to attain China phase breakeven this yr.

Yixiao Cheng

Thanks, Alex. We’re very assured that our home enterprise will ship a quarterly adjusted internet revenue inside 2022, and a path is kind of clear. Most significantly, we count on steady development margin growth this yr.

First, with the event of high-margin enterprise just like the promoting and e-commerce, the income combine will additional improve, driving total gross margin growth. Second, for every enterprise line, we’re additionally finishing up price management measures aimed toward higher managing income sharing prices amongst others.

Third, as a part of our initiatives to cut back prices and improve effectivity we’re managing our working prices akin to bandwidth, service, depreciation and amortization and labor prices to launch extra working leverage and enhance asset utilization effectivity. Within the fourth quarter of 2021 our whole site visitors elevated by 57.6% year-over-year. In distinction, our traffic-related working prices solely elevated by 10.8% year-over-year, resulting in a 3.1 share level discount as a share of income.

Fourth, whereas we barely elevated the price of content material within the different price merchandise, we consider that content material can enhance the person acquisition, person retention and engagement, which is critical person worth and enterprise worth as effectively.

We are going to preserve self-discipline within the ROI-based method with our content material funding. Our gross margin reached 42% in 2021 rising 1.5 share factors evaluating with 2020, and this may proceed to increase this yr.

And secondly, we try to proceed delivering outcomes and expense management this yr. With respect to promoting and advertising and marketing costs, due to our organizational restructuring, optimized effectivity, amongst different means, acquisition price per person and retention price per DAU have each been trending down because the third quarter of 2021, whereas we guarantee person development and optimize retention, this yr, we’ll proceed to refine our operations in an effort to maintain absolutely the greenback of promoting and advertising and marketing bills to be no larger than final yr and considerably cut back charges as a share of income particularly in mild of the easing of exterior competitors.

By way of personnel-related bills, we presently have a comparatively enough expertise pool and we’re always optimizing the administration of our personnel productiveness and unit spending effectivity. So we’re concentrating on additional optimizations to our R&D and administrative bills as a share of income.


Jefferies, Thomas Chong.

Thomas Chong

My query is about our internet marketing providers. On condition that we now have seen a really robust development momentum within the fourth quarter. Nevertheless, what we’re seeing proper now’s that macro shouldn’t be very sure. So how would that have an effect on our 2022 promoting KPIs? And the way will we truly preserve or improve the promoting market share for this yr?

Yixiao Cheng

The challenges from the macro setting do exist and in addition proceed to have an effect on all the promoting {industry}, together with us. Regardless of this our annual promoting income reached CNY 42.7 billion, rising present scale and the fast and above {industry} charge of 95%, serving to us proceed to realize market share within the internet marketing sector.

So there are a number of causes behind it. To begin with, advertisers proceed to have finances biases for giant video-based platforms with scale rising site visitors. Within the fourth quarter of 2021. Our whole site visitors elevated at a quick tempo of practically 58% year-over-year. And secondly, Kuaishou supplies a mixture of complete promoting merchandise and a closed-loop transaction which can be uncommon available in the market.

So we now have 5 complete promoting merchandise, together with closed-loop e-commerce advert, exterior efficiency advertisements, model advertisements and Kuaishou Union and Star Magnet to satisfy customers’ total advertising and marketing and gross sales wants. In order Kuaishou’s closed-loop e-commerce platform helps advertisers to enhance gross sales conversion whereas optimizing person expertise and promoting effectiveness our native e-commerce advertisements has grown sooner than our total promoting enterprise in a triple-digit development charge year-over-year.

And third, though our promoting enterprise began comparatively late, it additionally means extra alternatives and upside for future development. By way of advertiser protection, as we strengthen our model enterprise and repair functionality, the variety of advertisers grew by greater than 50% in 2021, and there may be room for additional enchancment.

In the meantime, our steady funding in algorithm and product iterations have additional optimized our promoting system and merchandise contributing to a double-digit improve in common month-to-month spending by advertisers. Whereas our exterior efficiency as has been affected by macroeconomic elements and regulatory insurance policies, its plan has proven a stronger resilience relative to the {industry}.

Fourth, the development of promoting, high quality and algorithm optimization in addition to product innovation has additionally given us additional upside in advert load and conversion charges. Our extra native promoting content material mixed with industrial-leading algorithm capabilities and steady product iterations have performed a strong basis for us to offer a greater person expertise in advert consumption. In 2021, our advert masses elevated by a small diploma as deliberate and nonetheless has room to develop.

And lastly, our model advert enterprise, Kuaishou Union and Star Magnet are all of their early stage, possessing larger development potential relative to mature corporations. These drivers will proceed to propel our enterprise development this yr and improve our promoting market share.

In the meantime, we stay cautious and proceed to watch the restoration traits in a common setting and can be extra specializing in our model enterprise, our personal enterprise of growth.


UBS, Felix Liu.

Felix Liu

Let me translate myself. Congratulations on the robust fourth quarter. My query is in your new enterprise initiatives. I seen you launched a web-based hiring service targeted on blue collar hiring in addition to established a strategic collaboration primarily based on native providers. So I am simply curious, can administration share some insights in your ideas on the brand new enterprise, their long-term development potential in addition to your subsequent strategic execution plan?

Yixiao Cheng

Thanks for the query. We consider quick video and stay streaming as a infrastructure have the power and potential to alter many industries, advance the event of digital financial system and increase enterprise effectivity in recent times. Financial growth has modified the provision and demand relationships of many industries leading to demand that can not be absolutely met by way of conventional modeling and fashions.

Blue collar recruitment is one in all them. Ache factors akin to data asymmetry between blue collar staff and enterprises, mismatch between expertise and jobs and labor shortages have lengthy existed, impeding enhancements in employment effectivity and financial growth. In response to the accessible statistics inside China’s present working inhabitants, over 400 million persons are blue-collar staff, greater than twice the scale of white collar staff and characterize the general employment state of affairs of the Chinese language inhabitants.

So the penetration of on-line recruitment is simply somewhat over 10% within the blue-collar job market in contrast with greater than 50% of the white-collar job market. That is to say that blue collar jobs have essentially the most potential in on-line recruitment by way of market measurement and development velocity.

Now we have been exploring the industrialization of the stay streaming ecosystem and blue-collar recruitment is a really appropriate place to begin for Kuaishou. We have already got the large blue collar person base that includes robust person belief and frequent actual interactions amongst customers and between customers and our platform.

Through quick video and stay streaming candidates can perceive the job place, working setting and different related data within the shortest time potential and in essentially the most simple method, which is able to enhance decision-making effectivity and facilitate a extra dependable job search expertise. On the similar time, enterprises can leverage Kuaishou’s site visitors and algorithm know-how to search out appropriate candidates most successfully.

As blue collar staff change jobs comparatively extra incessantly, enterprises are extra delicate to recruitment prices and return, making them an pressing want of a large-scale on-line product that’s more practical and well timed. We hope to regularly enhance the video-based recruitment system to create a greater job conversion for blue collar market.

Sooner or later, we stay up for tapping into our personal capabilities and benefits extra deeply to facilitate the interplay of digital financial system and the actual financial system and their long-term wholesome growth.


Thanks as soon as once more for becoming a member of us at this time. In case you have any additional questions, please contact our Capital Market and Investor Relations staff at any time. Thanks.

Next Post

What Is Gross sales Pressure Automation?

Whenever you hear “gross sales pressure,” the very first thing it’s possible you’ll consider is Salesforce the corporate. Whereas Salesforce is a high buyer relationship administration (CRM) software program platform that can be utilized for gross sales pressure automation, on this article we cowl gross sales pressure automation as an […]
What Is Gross sales Pressure Automation?