Advertisement
IPO
BusinessCompanies

Tencent-backed app Kuaishou looks for more ways to monetise millions of users, trim losses after Hong Kong IPO gets go-head

  • Company says its profitability remained uncertain as it struggled to monetise its huge user base
  • Kuaishou’s losses amounted to 9.4 billion yuan in the first 11 months of 2020, down from 68 billion yuan in the first half, according to a stock exchange filing

Reading Time:2 minutes
Why you can trust SCMP
The Beijing-based company said it had 262 million daily active users as of September last year. Photo: Reuters
Cheryl Arcibal
Tencent-backed video-sharing app Kuaishou Technology said it was looking to expand its monetisation model and reverse losses, having won approval for a US$5 billion to US$6 billion initial public offering in Hong Kong.
Advertisement

The Beijing-based company, which is the world’s second-largest such app, said in a filing with the Hong Kong stock exchange late on Friday that its profitability remained uncertain as it continued to struggle to find ways to make money from its huge user base, reach and engagement. It said it had 262 million daily active users as of September last year.

Kuaishou’s statement underscores the struggle that internet companies face in China – they might attract large number of users, but monetising and making a profit from this remains largely elusive. The country’s population at 1.4 billion and mobile internet use, at 873 million as of 2019, respectively, are the world’s largest. But internet access and content in China is among the most regulated in the world, which potentially restricts the gains web-based platforms can make.

Kuaishou’s losses amounted to 9.4 billion yuan (US$1.45 billion) in the first 11 months of 2020, lower than the 68 billion yuan it reported in the first half, according to the filing. Access to its platform is free, and it generates revenue primarily from the sale of virtual items, provision of online marketing services and commission income from e-commerce sales on its platform.

“The time it will take for us to achieve profitability hinges on our ability to effectively monetise our product and service offerings, and continuously growing revenues in a cost-effective way, which we may not successfully achieve,” the company said. “While our future revenue growth will depend on the realisation of our monetisation strategies, our ability to grow cost-effectively will primarily depend on improvements in our operational efficiency.”

It said its operational efficiency would also depend on factors such as its ability to retain and attract users, and to further enhance its services. Profits will also be determined by the continued popularity of the short-video format, and the popularity of content formats in China and the development of other social platforms. These external factors “are beyond” the company’s control, Kuaishou added.

Advertisement