By XIAO Fang
Kuaishou’s revenue in Q3 grew 13 percent to 23.1 billion yuan (US$3.2 billion), beating market estimates of 22.6 billion. The short video app lost 2.7 billion yuan, significantly less than last quarter.
The overseas business brought in 189 million yuan, up 83 percent from Q2 and an eightfold increase from the same period last year. Although Kuaishou has been trying to expand outside China since 2017, it has failed to do what Bytedance has done with Tiktok. The overseas business contributed less than 1 percent of revenue but accounts for all the losses. Domestic business has reported profits for the two quarters since the company started disclosing domestic and foreign results separately.
Until last year, Kuaishou had three apps outside China – Kwai for Latin America and the Middle East, SnackVideo for Southeast Asia, and Zynn for North America. The three teams had total autonomy, but their strategies were similar, i.e. buying ads for users.
Since last February, Kuaishou shares have tumbled from close to HK0 (US, 370 yuan) to around HK. In the second half of 2021, the company began to cut costs and reduce losses. It shut down Zynn and exited North America and Japan, redirecting resources to regions still showing fast growth such as Brazil and Indonesia.
Marketing expenses fell from 11.3 billion yuan in Q2 2021 to 9.1 billion in the previous quarter. The proportion spent abroad shrank both in absolute value and percentage terms. Overseas losses narrowed to 1.7 billion yuan in Q3 from 2.9 billion a year ago.
CEO CHENG Yixiao said in the earnings call that Kuaishou will try to improve the efficiency of overseas business and gradually reduce its negative impact on the group's overall financial performance.
In a previous interview with Jiemian News, ZHENG Yanxiang, head of international commercialization, said Brazil and Indonesia were chosen as Kuaishou’s focus markets after taking into account market size, revenue per user and user experience. Currently, most advertisers in these two countries are still Chinese companies doing business there, but Kuaishou hopes to eventually generate at least 70 percent of ad revenue from local businesses.
Cheng Yixiao said in the earnings call that Kuaishou will try to find opportunities beyond ads, probably live streaming and e-commerce. He also stressed improving content and better collaboration with local businesses.
Kuaishou has its own business development teams in Brazil and Indonesia. Outside these two countries, it works with local operators either through licensing or direct ad buying.
