Report: Xiaohongshu is expected to make a profit of $500 million this year.

Due to the rapid growth of its e-commerce business, Xiaohongshu is expected to exceed profit expectations this year.

According to sources, Xiaohongshu's e-commerce business has achieved significant results this year, with an expected net profit of $500 million, far exceeding the company's initial estimate of less than $50 million in profit.

This achievement highlights the success of Xiaohongshu's e-commerce business and may lead to a new round of financing or ultimately its first initial public offering (IPO).

Founded in June 2013, Xiaohongshu has completed six rounds of financing, with a total funding amount of over $900 million. The latest round of financing was in November 2021, raising $500 million. After this round of financing, Xiaohongshu's valuation has reached $20 billion.

Compared to its Western counterparts, Xiaohongshu's achievements in e-commerce are particularly noteworthy. Platforms like Meta Platforms' Instagram and Pinterest have been struggling for years to convert their massive traffic into online business revenue. This year, Instagram closed its live shopping feature and shifted its focus to advertising.

As a content community, Xiaohongshu has experienced rapid development. In 2022, Xiaohongshu's daily active users (DAU) exceeded 100 million, and monthly active users (MAU) exceeded 260 million. The average daily usage time per user has increased from 26.49 minutes in 2018 to 55.31 minutes in 2022.

With a large user base, Xiaohongshu has already explored an e-commerce business model centered around "buyers." At the Buyers Conference in August this year, Xiaohongshu's COO Conan pointed out, "Individuals are the most dynamic e-commerce force on Xiaohongshu." In the past year and a half, the number of buyers and creators on the platform has grown 27 times, the number of active merchants has grown 10 times, and the number of purchasing users has grown 12 times.