[Performance Highlights](index=1&type=section&id=Performance%20Highlights) [Financial Summary](index=1&type=section&id=Financial%20Summary) In Q1 2022, the company's total revenue increased by 23.8% to RMB 21.1 billion, with gross profit up 25.7%, while operating loss narrowed by 22.6% to RMB 5.6 billion and adjusted net loss significantly narrowed by 34.1% to RMB 3.7 billion Q1 2022 Financial Summary (YoY) | Metric | Q1 2022 (RMB thousand) | Q1 2021 (RMB thousand) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 21,066,677 | 17,019,450 | 23.8% | | Gross Profit | 8,781,824 | 6,987,795 | 25.7% | | Operating Loss | (5,643,369) | (7,292,142) | (22.6%) | | Loss for the Period | (6,253,896) | (57,751,051) | (89.2%) | | Adjusted Net Loss | (3,722,265) | (5,650,687) | (34.1%) | | Adjusted EBITDA | (1,551,708) | (4,929,270) | (68.5%) | [Operating Metrics](index=2&type=section&id=Operating%20Metrics) In Q1 2022, Kuaishou app's core operating data reached new highs, with average daily active users growing 17.0% to 345.5 million, daily average time spent per DAU increasing 29.0% to 128.1 minutes, and e-commerce GMV achieving robust 47.7% YoY growth Q1 2022 Core Operating Data | Metric | Q1 2022 | Q1 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Average DAU (million) | 345.5 | 295.3 | +17.0% | | Average MAU (million) | 597.9 | 519.8 | +15.0% | | Daily Avg Time Spent per DAU (minutes) | 128.1 | 99.3 | +29.0% | | E-commerce GMV (RMB million) | 175,075.6 | 118,559.4 | +47.7% | [Business Review and Outlook](index=2&type=section&id=Business%20Review%20and%20Outlook) [Ecosystem](index=3&type=section&id=Ecosystem) In Q1 2022, Kuaishou achieved record user scale and stickiness through differentiated growth strategies and technical optimization, with platform social attributes strengthening as mutual-follow user pairs grew 68.9%, and significant progress in vertical content like short dramas and sports boosted user engagement - Kuaishou app DAU increased by **17.0%** to **345.5 million**, and MAU increased by **15.0%** to **597.9 million**[5](index=5&type=chunk) - User stickiness strengthened, with daily average time spent per DAU increasing by **29.0%** to **128.1 minutes**[5](index=5&type=chunk) - Platform social attributes strengthened, with cumulative mutual-follow user pairs reaching **18.8 billion**, a **68.9%** year-over-year increase[5](index=5&type=chunk) - Significant progress was made in content verticals such as short dramas and sports, including the launch of **18 Kuaishou Star-Shine short dramas** each with over **100 million views**[6](index=6&type=chunk) [Online Marketing Services](index=4&type=section&id=Online%20Marketing%20Services) Despite macroeconomic challenges and industry seasonality, online marketing services achieved **32.6%** YoY growth in Q1 2022, reaching RMB **11.4 billion** in revenue, driven by platform traffic growth, over **60%** increase in advertisers, and internal advertising demand from e-commerce Online Marketing Services Performance | Metric | Q1 2022 | YoY Growth | | :--- | :--- | :--- | | Revenue | RMB 11.4 billion | 32.6% | | Number of Advertisers | - | Over 60% | - Online marketing service revenue contributed by platform e-commerce merchants maintained healthy growth, enhancing business resilience[7](index=7&type=chunk) - For brand advertising, operational activities such as the Winter Olympics and Chinese New Year successfully attracted dozens of world-renowned brands to the platform[8](index=8&type=chunk) [Live Streaming](index=4&type=section&id=Live%20Streaming) In Q1 2022, live streaming revenue grew **8.2%** to RMB **7.8 billion**, driven by a strengthened live streaming ecosystem and a **7.8%** increase in monthly paying users to **56.5 million**, with new content forms like 'Kuaizhaogong' expanding users and traffic Live Streaming Business Performance | Metric | Q1 2022 | YoY Growth | | :--- | :--- | :--- | | Revenue | RMB 7.8 billion | 8.2% | | Average Monthly Paying Users | 56.5 million people | 7.8% | | Average Revenue per Monthly Live Streaming Paying User | RMB 46.3 | +0.4% | [Other Services (Including E-commerce)](index=5&type=section&id=Other%20Services%20%28Including%20E-commerce%29) Other services, primarily e-commerce, showed strong performance in Q1 2022, with revenue growing **54.6%** to RMB **1.9 billion** and e-commerce GMV increasing **47.7%** to RMB **175.1 billion**, driven by strengthening 'trust e-commerce', developing 'Kuaibrands', and improving the service provider system Other Services and E-commerce Business Performance | Metric | Q1 2022 | YoY Growth | | :--- | :--- | :--- | | Other Services Revenue | RMB 1.9 billion | 54.6% | | E-commerce GMV | RMB 175.1 billion | 47.7% | - Over **99%** of GMV originated from the closed-loop e-commerce platform 'Kuaishou Store'[11](index=11&type=chunk) - The 'Trust Purchase' guarantee system was launched, increasing repeat purchase rates[11](index=11&type=chunk) - Key supported 'Kuaibrand' merchants achieved average monthly GMV exceeding **RMB 25 million**[11](index=11&type=chunk) [Overseas Business](index=6&type=section&id=Overseas%20Business) Overseas business showed steady growth in Q1 2022, with the company implementing strict cost control and focusing on core markets, leading to continuous improvements in average daily active users, user retention, and time spent, alongside steady progress in commercialization - In the Brazilian market, daily average time spent per DAU in Q1 2022 was close to **60 minutes**, demonstrating high user stickiness[13](index=13&type=chunk) - The company continues to enhance localized operational capabilities and commercialization infrastructure to explore more monetization opportunities[13](index=13&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=Management%20Discussion%20and%20Analysis) [Q1 2022 vs. Q1 2021 (YoY Comparison)](index=7&type=section&id=Q1%202022%20vs.%20Q1%202021%20%28YoY%20Comparison%29) In Q1 2022, total revenue grew **23.8%** to RMB **21.1 billion**, with gross margin slightly increasing to **41.7%** and operating loss margin significantly narrowing from **-42.8%** to **-26.8%**, primarily due to more effective cost control, especially an **18.6%** YoY decrease in sales and marketing expenses [Revenue](index=8&type=section&id=Revenue_yoy) Total revenue increased by **23.8%** YoY, primarily driven by online marketing services, e-commerce, and live streaming, with online marketing services showing the strongest growth at **32.6%** and its revenue share increasing to **53.9%** Revenue by Business Segment (YoY) | Business Segment | Q1 2022 (RMB thousand) | % of Total Revenue | Q1 2021 (RMB thousand) | % of Total Revenue | YoY Growth | | :--- | :--- | :--- | :--- | :--- | :--- | | Online Marketing Services | 11,351,470 | 53.9% | 8,557,676 | 50.3% | 32.6% | | Live Streaming | 7,841,970 | 37.2% | 7,250,399 | 42.6% | 8.2% | | Other Services | 1,873,237 | 8.9% | 1,211,375 | 7.1% | 54.6% | | **Total** | **21,066,677** | **100.0%** | **17,019,450** | **100.0%** | **23.8%** | [Cost of Sales](index=9&type=section&id=Cost%20of%20Sales_yoy) Cost of sales increased by **22.5%** YoY to RMB **12.3 billion**, growing slower than revenue, primarily due to higher revenue sharing and content costs, partially offset by cost savings from improved bandwidth utilization efficiency - Cost of sales as a percentage of revenue slightly decreased from **58.9%** to **58.3%**[19](index=19&type=chunk) [Gross Profit and Gross Margin](index=10&type=section&id=Gross%20Profit%20and%20Gross%20Margin_yoy) Gross profit increased by **25.7%** YoY to RMB **8.8 billion**, with gross margin slightly rising from **41.1%** in the prior year to **41.7%** Gross Profit and Gross Margin (YoY) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Gross Profit (RMB thousand) | 8,781,824 | 6,987,795 | | Gross Margin | 41.7% | 41.1% | [Operating Expenses](index=10&type=section&id=Operating%20Expenses_yoy) Operating expense structure significantly optimized, with sales and marketing expenses decreasing **18.6%** YoY to RMB **9.5 billion**, and its revenue percentage dropping sharply from **68.5%** to **45.0%**, while administrative and R&D expenses increased by **23.9%** and **25.3%** respectively due to higher personnel and compensation costs - The decrease in sales and marketing expenses was primarily due to the company adopting more disciplined and effective user acquisition and retention strategies[22](index=22&type=chunk) [Operating Loss and Loss for the Period](index=11&type=section&id=Operating%20Loss%20and%20Loss%20for%20the%20Period_yoy) Operating loss narrowed from RMB **7.3 billion** in the prior year to RMB **5.6 billion**, driven by revenue growth and expense optimization, while loss for the period significantly decreased from RMB **57.8 billion** to RMB **6.3 billion**, primarily due to a RMB **51.3 billion** fair value loss on convertible redeemable preferred shares in the prior year - Operating profit margin improved from **-42.8%** to **-26.8%**[27](index=27&type=chunk) [Q1 2022 vs. Q4 2021 (QoQ Comparison)](index=12&type=section&id=Q1%202022%20vs.%20Q4%202021%20%28QoQ%20Comparison%29) Affected by seasonal factors, total revenue in Q1 2022 decreased by **13.8%** QoQ to RMB **21.1 billion**; despite the revenue decline, effective expense control led to a slight increase in gross margin and a relatively stable operating loss QoQ, demonstrating strong cost management capabilities [Revenue](index=13&type=section&id=Revenue_qoq) Total revenue decreased by **13.8%** QoQ, with online marketing services down **14.2%** due to advertising industry seasonality, live streaming down **11.2%** due to lower average revenue per paying user, and other services (e-commerce) down **20.8%** due to logistics impacts during the Chinese New Year Revenue by Business Segment (QoQ) | Business Segment | Q1 2022 (RMB thousand) | Q4 2021 (RMB thousand) | QoQ Change | | :--- | :--- | :--- | :--- | | Online Marketing Services | 11,351,470 | 13,236,475 | -14.2% | | Live Streaming | 7,841,970 | 8,827,182 | -11.2% | | Other Services | 1,873,237 | 2,366,603 | -20.8% | | **Total** | **21,066,677** | **24,430,260** | **-13.8%** | [Cost of Sales](index=14&type=section&id=Cost%20of%20Sales_qoq) Cost of sales decreased by **14.0%** QoQ to RMB **12.3 billion**, largely consistent with the revenue decline, primarily due to reduced revenue sharing costs and related taxes fluctuating with revenue - Cost of sales as a percentage of revenue slightly decreased from **58.5%** to **58.3%**[40](index=40&type=chunk)[41](index=41&type=chunk) [Gross Profit and Gross Margin](index=15&type=section&id=Gross%20Profit%20and%20Gross%20Margin_qoq) Gross profit decreased by **13.5%** QoQ to RMB **8.8 billion**, but gross margin slightly increased from **41.5%** in the previous quarter to **41.7%**, indicating an improved cost structure Gross Profit and Gross Margin (QoQ) | Metric | Q1 2022 | Q4 2021 | | :--- | :--- | :--- | | Gross Profit (RMB thousand) | 8,781,824 | 10,148,563 | | Gross Margin | 41.7% | 41.5% | [Operating Expenses](index=15&type=section&id=Operating%20Expenses_qoq) All operating expenses decreased QoQ, reflecting the company's effective cost control, with sales and marketing, administrative, and R&D expenses decreasing by **7.2%**, **5.3%**, and **12.3%** respectively - The reduction in expenses was primarily due to more disciplined user acquisition spending and fluctuations in personnel costs[43](index=43&type=chunk) [Operating Loss and Loss for the Period](index=16&type=section&id=Operating%20Loss%20and%20Loss%20for%20the%20Period_qoq) Operating loss was RMB **5.6 billion**, largely consistent with RMB **5.8 billion** in the previous quarter, and loss for the period was RMB **6.3 billion**, also largely consistent with RMB **6.2 billion** in the previous quarter - Operating profit margin was **-26.8%**, compared to **-23.7%** in the previous quarter[46](index=46&type=chunk) [Non-IFRS Measures](index=17&type=section&id=Non-IFRS%20Measures) Under Non-IFRS measures, after excluding non-operating items like share-based payments and fair value changes of investments, Q1 2022 adjusted net loss significantly narrowed to RMB **3.7 billion** from RMB **5.7 billion** in the prior year, and adjusted EBITDA loss was RMB **1.6 billion**, also significantly lower than RMB **4.9 billion** in the prior year Non-IFRS Measures Reconciliation | Metric (RMB thousand) | Q1 2022 | Q4 2021 | Q1 2021 | | :--- | :--- | :--- | :--- | | Loss for the Period | (6,253,896) | (6,202,743) | (57,751,051) | | **Adjusted Net Loss** | **(3,722,265)** | **(3,568,768)** | **(5,650,687)** | | **Adjusted EBITDA** | **(1,551,708)** | **(1,290,186)** | **(4,929,270)** | [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2022, the company held RMB **15.3 billion** in cash and cash equivalents, with net cash used in operating activities of RMB **3.2 billion** and net cash used in investing activities of RMB **13.2 billion** during the quarter, primarily for investments in financial assets and time deposits Q1 2022 Cash Flow Summary | Item (RMB thousand) | Amount | | :--- | :--- | | Net Cash Used in Operating Activities | (3,186,873) | | Net Cash Used in Investing Activities | (13,232,493) | | Net Cash Used in Financing Activities | (770,543) | | **Cash and Cash Equivalents at End of Period** | **15,330,488** | [Financial Statements](index=20&type=section&id=Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss](index=20&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This section presents the unaudited condensed consolidated statement of profit or loss for the three months ended March 31, 2022, detailing key financial data such as revenue, costs, expenses, loss, and loss per share [Condensed Consolidated Statement of Comprehensive Loss](index=21&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Loss) This section provides the unaudited condensed consolidated statement of comprehensive loss for the three months ended March 31, 2022, including loss for the period and other comprehensive income or loss items such as exchange differences [Condensed Consolidated Statement of Financial Position](index=22&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This section presents the unaudited condensed consolidated statement of financial position as of March 31, 2022, detailing the company's assets, liabilities, and equity [Condensed Consolidated Statement of Cash Flows](index=24&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section provides the unaudited condensed consolidated statement of cash flows for the three months ended March 31, 2022, reflecting the company's cash inflows and outflows from operating, investing, and financing activities [Notes to Condensed Consolidated Interim Financial Information](index=25&type=section&id=Notes%20to%20Condensed%20Consolidated%20Interim%20Financial%20Information) This section contains important notes to the condensed consolidated interim financial information, covering the basis of preparation, accounting policies, detailed composition of revenue and expenses, calculation methods for loss per share, and investment details [Other Information](index=31&type=section&id=Other%20Information) [Corporate Governance and Audit](index=31&type=section&id=Corporate%20Governance%20and%20Audit) The company complied with all applicable code provisions of the Corporate Governance Code during the reporting period, and the audit committee reviewed the unaudited interim financial statements for the quarter and discussed them with the auditors - The company complied with all applicable code provisions of the Corporate Governance Code for the three months ended March 31, 2022[78](index=78&type=chunk) - The review committee has reviewed the unaudited interim financial statements for the quarter, and there were no disagreements between the Board and the review committee[79](index=79&type=chunk) [Definitions](index=33&type=section&id=Definitions) This section provides detailed definitions for specific terms used in the report, such as 'Daily Active Users', 'E-commerce Gross Merchandise Value', and 'Class A Shares', to ensure accurate understanding of the report content

Financial Performance - Total revenue for 2021 was RMB 81,081,513 thousand, a significant increase from RMB 58,776,097 thousand in 2020, representing a year-on-year growth of 38.0%[22] - The company reported a net loss of RMB 78,077,101 thousand for 2021, compared to a net loss of RMB 116,635,242 thousand in 2020, showing a reduction in losses by 32.9%[18] - Adjusted EBITDA for 2021 was RMB (12,953,371) thousand, compared to RMB (3,531,086) thousand in 2020, indicating a decline in operational performance[18] - The adjusted net loss for the year was RMB (18,851,769) thousand, compared to RMB (7,863,818) thousand in the previous year, indicating a worsening of financial performance[18] - The company reported a total revenue of RMB 81.1 billion for the year ended December 31, 2021, compared to RMB 58.8 billion for the previous year, marking a significant increase[36] - The adjusted net loss for 2021 was RMB 18.9 billion, compared to RMB 7.9 billion in 2020[36] - Operating loss for 2021 was RMB 27.7 billion, with an operating margin of negative 34.2%, compared to an operating loss of RMB 10.3 billion and a margin of negative 17.6% in 2020[53] - The company recorded a net loss of RMB 6.2 billion in Q4 2021, compared to a net loss of RMB 19.3 billion in Q4 2020[86] User Engagement - Average daily active users reached 308.2 million in 2021, up from 264.6 million in 2020, indicating a growth of 16.5%[20] - The average monthly active users increased to 544.2 million in 2021, compared to 481.1 million in 2020, reflecting a growth of 13.1%[20] - The average daily usage time per active user increased to 111.5 minutes in 2021, compared to 87.3 minutes in 2020, an increase of 27.6%[20] - The average daily active users (DAUs) and monthly active users (MAUs) reached 323.3 million and 578.0 million, respectively, with year-on-year growth of 19.2% and 21.5%[26] - The average daily usage time per DAU increased by 32.3% to 118.9 minutes in Q4 2021[26] - The company reported a significant increase in user engagement, with a year-over-year growth of 30% in active users[171] Revenue Streams - The total e-commerce transaction volume for 2021 was RMB 680,036.1 million, a substantial rise from RMB 381,168.5 million in 2020, marking an increase of 78.5%[20] - Kuaishou's online marketing services revenue in Q4 2021 was RMB 13.2 billion, a year-on-year increase of 55.5%[28] - The total revenue from online marketing services for 2021 was RMB 42.7 billion, reflecting a year-on-year growth of 95.2%[28] - Live streaming revenue decreased by 6.7% from RMB 33.2 billion in 2020 to RMB 31.0 billion in 2021, due to the effective control of COVID-19 allowing users to return to normal life[39] - Other services revenue surged by 99.9% from RMB 3.7 billion in 2020 to RMB 7.4 billion in 2021, driven by optimization of supply, content, services, technology, and user experience[40] Cost and Expenses - The gross profit margin for 2021 was 41.5%, down from 47.0% in 2020, reflecting a decrease of 5.5 percentage points[18] - Sales and marketing expenses surged by 50.8% from RMB 6.8 billion in Q4 2020 to RMB 10.2 billion in Q4 2021, increasing as a percentage of total revenue from 37.5% to 41.9%[77] - Research and development expenses grew by 128.4% from RMB 6.5 billion in 2020 to RMB 15.0 billion in 2021, reflecting continued investment in big data and advanced technologies[50] - Administrative expenses increased by 102.8% from RMB 1.7 billion in 2020 to RMB 3.4 billion in 2021, primarily due to an increase in administrative staff and related compensation expenses[49] Strategic Initiatives - The company aims to enhance its market expansion strategies and invest in new technologies to drive future growth[19] - The company plans to focus on enhancing user engagement and optimizing algorithms to increase user consumption and strengthen recommendation mechanisms[35] - The company plans to continue expanding its user base and enhancing content quality to drive future growth[74] - The company is exploring potential acquisitions to strengthen its technology portfolio, with a budget of $300 million allocated for this purpose[171] Organizational Changes - A significant organizational restructuring was completed in September 2021, enhancing core capabilities in operations and monetization[25] - The management team has undergone changes, with Mr. Su no longer serving as CEO since October 29, 2021, and Mr. Cheng taking over the role[169] - The company has appointed Mr. Jin as CFO effective January 17, 2022, responsible for overall financial management and capital market activities[169] Shareholder Information - The company has a total of 4,226,773,225 shares issued, consisting of 766,237,001 Class A shares and 3,460,536,224 Class B shares[183] - Major shareholder Suhua holds 427,469,521 Class A shares, representing 55.79% of the total shares[181] - The ownership structure indicates significant concentration with the top two shareholders controlling over 99% of Class A shares[181] Future Outlook - The company has set a revenue guidance of $3 billion for the next fiscal year, indicating a growth target of 20%[171] - New product launches are expected to contribute an additional $500 million in revenue in the next fiscal year[171] - The company is investing $200 million in research and development for new technologies aimed at enhancing user experience[171] Compliance and Governance - The company emphasizes the importance of independent directors, confirming their independence in accordance with listing rules[155] - The board includes independent directors who provide oversight and independent judgment on corporate governance matters[164] - The company is committed to maintaining compliance with listing regulations regarding share ownership and voting rights[154]

Financial Performance - Total revenue for Q2 2021 reached RMB 19.14 billion, a year-on-year increase of 48.8% compared to RMB 12.86 billion in Q2 2020[30] - Gross profit for Q2 2021 was RMB 8.38 billion, representing a gross margin of 43.8%, up from 34.5% in the same period last year[30] - Total revenue for the first half of 2021 was RMB 36.16 billion, a year-on-year increase of 42.8% compared to RMB 25.32 billion in the first half of 2020[31] - Revenue increased by 48.8% from RMB 12.9 billion in Q2 2020 to RMB 19.1 billion in Q2 2021, driven mainly by online marketing services and other services including e-commerce[60] - Gross profit rose by 89.0% from RMB 4.4 billion in Q2 2020 to RMB 8.4 billion in Q2 2021, with gross margin improving from 34.5% to 43.8%[69] - Operating loss widened to RMB 7.2 billion in Q2 2021, compared to a loss of RMB 2.5 billion in Q2 2020[69] - Adjusted net loss was RMB 4.8 billion in Q2 2021, compared to RMB 1.9 billion in Q2 2020[69] - The company recorded a net loss of RMB 7.0 billion in Q2 2021, compared to a net loss of RMB 37.6 billion in Q2 2020[77] - The company reported a net loss attributable to equity holders for the six months was RMB 64,785.560 million, compared to RMB 68,091.207 million in the same period of 2020, showing a slight improvement of about 4.8%[186] User Engagement - Average daily active users (DAUs) increased to 293.2 million in Q2 2021, compared to 262.1 million in Q2 2020, reflecting a growth of 11.4%[34] - Average monthly active users (MAUs) reached 506.2 million in Q2 2021, up from 474.3 million in Q2 2020, marking a growth of 6.4%[34] - Daily active users of Kuaishou reached 293.2 million in Q2 2021, with a year-on-year growth of 11.9%[38] - Average daily usage time per active user increased to 106.9 minutes, reflecting a quarter-on-quarter growth of 7.7% and a year-on-year growth of 25.2%[38] - The ratio of average daily active users to average monthly active users reached 57.9%, up by 1.1 percentage points quarter-on-quarter[38] Revenue Streams - Online marketing services revenue grew by 156.2% year-on-year to RMB 10 billion in Q2 2021, contributing over 50% to total revenue[37] - Revenue from online marketing services grew by 156.2% year-on-year to RMB 10 billion in Q2 2021[41] - Live streaming revenue decreased by 13.7% to RMB 7.2 billion in Q2 2021, representing 37.6% of total revenue[63] - Other services revenue increased by 212.9% to RMB 2 billion in Q2 2021, primarily due to the expansion of e-commerce business[64] - E-commerce transaction volume reached RMB 145.40 billion in the first half of 2021, significantly up from RMB 72.52 billion in the same period last year[34] Expenses and Losses - The company reported an operating loss of RMB 14.51 billion for the first half of 2021, which is a 91.7% increase from RMB 7.57 billion in the same period last year[31] - Total sales and marketing expenses rose by 100.8% to RMB 11.3 billion in Q2 2021, increasing as a percentage of total revenue from 43.6% to 58.9%[70] - Administrative expenses increased by 149.4% to RMB 864.2 million in Q2 2021, with the percentage of total revenue rising from 2.7% to 4.5%[71] - Research and development expenses grew to RMB 3.9 billion in Q2 2021, accounting for 20.4% of total revenue[69] - R&D expenses increased by 198.1% from RMB 1.3 billion in Q2 2020 to RMB 3.9 billion in Q2 2021, accounting for 20.4% of total revenue[73] E-commerce Development - The contribution rate of Kuaishou's closed-loop e-commerce model increased from 66.4% in 2020 to 90.7% in Q2 2021, indicating a significant enhancement in e-commerce infrastructure and tools for merchants[46] - The average daily active user penetration rate for e-commerce on the Kuaishou app increased, alongside a growth in the average order value for e-commerce transactions in Q2 2021[47] - The e-commerce transaction value for emerging categories such as men's clothing, home appliances, and household goods saw rapid growth in Q2 2021, contributing to an increase in total e-commerce transaction value[47] - The "Trust Card" initiative was launched in Q2 2021, offering consumers guarantees such as no-return refunds and seven-day unconditional returns, aimed at enhancing consumer protection and overall experience[48] Strategic Initiatives - The company aims to enhance user experience and improve monetization capabilities through unique content and ecosystem development[37] - Kuaishou launched the "Magnetic Bull" platform in Q2 2021, enhancing algorithm efficiency and advertising monetization capabilities[42] - The company is committed to leveraging its board's expertise to navigate market challenges and opportunities effectively[158] - The company has been involved in strategic investments and acquisitions to foster collaboration within its ecosystem[152] - The company continues to prioritize strategic investments to drive growth and maintain competitive advantages in the market[152] International Expansion - Kuaishou's overseas market strategy focuses on high-density populations with a strong acceptance of short video culture, targeting South America, Southeast Asia, and the Middle East in H1 2021[50] - As of June 2021, Kuaishou's overseas monthly active users exceeded 180 million, reflecting significant growth and user engagement in international markets[50] - The company became the official sponsor and social media platform for the 2021 Copa America in Brazil, enhancing user engagement and activity in the South American market[50] Corporate Governance - The company has committed to maintaining high standards of corporate governance, which is crucial for its development and shareholder protection[165] - The company has established an audit committee to review and supervise the financial reporting process, risk management, and internal control systems[175] - The board believes that having the same individual serve as both Chairman and CEO enhances unified leadership and effective strategic planning[165] Shareholder Information - As of June 30, 2021, the total issued share capital of the company is 4,158,932,037 shares, consisting of 766,237,001 Class A shares and 3,392,695,036 Class B shares[135] - The company has a dual-class share structure, with Class A shares having 10 votes per share and Class B shares having one vote per share[149] - The total percentage of Class B shares held by major shareholders indicates a strong institutional interest in the company[136]

Financial Performance - Total revenue for 2020 reached RMB 58,776,097 thousand, representing a 50.2% increase from RMB 39,120,348 thousand in 2019[15] - Gross profit for 2020 was RMB 23,814,637 thousand, with a gross margin of 40.5%, up from 36.1% in 2019[15] - The company reported a net loss attributable to equity holders of RMB 116,635,242 thousand for 2020, a significant increase of 493.5% compared to RMB 19,651,534 thousand in 2019[15] - The adjusted EBITDA for 2020 was a loss of RMB 3,616,075 thousand, compared to a profit of RMB 3,591,370 thousand in 2019[15] - Operating loss for 2020 was RMB 10,319,953 thousand, compared to a profit of RMB 688,684 thousand in 2019[15] - The company reported a substantial increase in other comprehensive income, amounting to RMB 10,639,268 thousand for 2020, compared to a loss of RMB 928,335 thousand in 2019[19] - Adjusted net loss for 2020 was RMB 7.95 billion, compared to an adjusted net profit of RMB 1.03 billion in 2019[31] - The company incurred a pre-tax loss of RMB 117.2 billion for the year 2020, primarily due to fair value changes of convertible redeemable preferred shares and increased sales and marketing investments[114] User Engagement - Average daily active users (DAUs) increased to 264.6 million in 2020 from 175.6 million in 2019, marking a growth of 50.7%[18] - Average monthly active users (MAUs) rose to 481.1 million in 2020, compared to 330.4 million in 2019, reflecting a growth of 45.6%[18] - The average daily usage time per active user increased by 17.0% to 87.3 minutes in 2020, compared to 74.6 minutes in 2019[22] - Over 25% of average monthly active users on the Kuaishou app were content creators in 2020, highlighting the platform's engagement[22] Revenue Streams - Online marketing services revenue surged by 194.6% to RMB 21.9 billion in 2020, accounting for 37.2% of total revenue, compared to 19.0% in 2019[23] - The total e-commerce transaction volume on the platform reached RMB 381,168.5 million in 2020, a substantial increase from RMB 59,641.1 million in 2019[18] - Live streaming revenue grew by 5.6% from RMB 31.4 billion in 2019 to RMB 33.2 billion in 2020, attributed to an increase in the number of paying users[38] - Average monthly paying users for live streaming rose by 17.8% from 48.9 million in 2019 to 57.6 million in 2020[38] - Other services revenue increased over 13.3 times from RMB 259.5 million in 2019 to RMB 3.71 billion in 2020, mainly due to the expansion of e-commerce[40] Cost Management - Total sales cost increased from RMB 25 billion in 2019 to RMB 35 billion in 2020, representing 63.9% of total revenue[34] - Research and development expenses surged by 122.4% from RMB 2.9 billion in 2019 to RMB 6.5 billion in 2020, driven by investments in AI and big data technologies[48] - Sales and marketing expenses increased by 169.8% from RMB 9.9 billion in 2019 to RMB 26.6 billion in 2020, accounting for 45.3% of total revenue[46] - The company’s cost management strategies have resulted in a 5% reduction in operational expenses, enhancing overall profitability[152] Assets and Liabilities - The total assets of the company reached RMB 52.15 billion in 2020, up from RMB 32.41 billion in 2019[20] - Non-current liabilities increased significantly to RMB 189.01 billion in 2020, compared to RMB 72.77 billion in 2019[20] - The company’s total liabilities increased due to strategic decisions to expand user base and enhance user engagement[114] Strategic Initiatives - The company plans to continue investing in its ecosystem and enhancing user experience through diverse content and improved services in 2021[28] - The company aims to enhance its technological capabilities and expand its ecosystem and monetization abilities as part of its future development strategy[128] - The company is actively involved in strategic investments and acquisitions to foster collaboration within its ecosystem[147] Shareholder Information - The company has no plans to distribute any dividends to shareholders in the foreseeable future, and the board does not recommend a final dividend for the year ended December 31, 2020[126] - The company’s shareholding structure shows that 79.21% of the issued share capital is held by other shareholders, with the largest shareholders holding 10.28% and 8.15% respectively[132] - The company has a dual-class share structure, with Class A shares having 10 votes per share and Class B shares having one vote per share[144] Compliance and Governance - The company has confirmed compliance with applicable laws and regulations, with no incidents leading to fines or penalties during the reporting period[140] - The company has established a remuneration committee to review and recommend the remuneration of directors and senior management, ensuring a formal and transparent process[169] - The company has not been involved in any legal proceedings that would significantly adversely affect its business, financial condition, or operating performance during the reporting period[140]