Prospect | KUAISHOU-W Q1 revenue may exceed expectations! Net loss is expected to narrow significantly.

Just today! On Monday, May 22, after the Hong Kong stock market, KUAISHOU-W will announce its first-quarter results. Prior to the results, the stock had risen by more than 6%.

The market generally expects KUAISHOU-W to achieve revenue between RMB 24.8 billion and RMB 25 billion in the quarter, a year-on-year increase of 18%-19%, and a quarter-on-quarter decrease of about 12%; the adjusted net loss is between RMB 220 million and RMB 400 million, a year-on-year decrease of 89%-94%; the gross profit margin is expected to increase by about 46% year-on-year.

Overall, KUAISHOU-W's revenue side is expected to exceed expectations, and e-commerce, advertising, and live streaming are expected to grow healthily.

Steady traffic growth

The market expects KUAISHOU-W's daily active users to be about 370 million in the quarter, a year-on-year increase of 6%-7%; the average daily usage time per capita is 132 minutes, a year-on-year increase of 3%, and a quarter-on-quarter decrease.

TF Securities stated that this is mainly due to the increase in offline user time in the first quarter. It is expected that the company will rely on rich and high-quality content supply (pan-knowledge, sports, entertainment, and other vertical content) to achieve steady growth in traffic, and the total traffic (DAU* duration) and social attributes will continue to improve.

Advertising revenue may recover

The market expects KUAISHOU-W's marketing business revenue to exceed RMB 13 billion in the quarter, a year-on-year increase of 15%-16%.

Guohai Securities further predicts that KUAISHOU-W's internal circulation advertising maintains a growth rate higher than GMV (total merchandise trading volume), and the overall proportion of advertising revenue continues to increase; the external circulation still has certain pressure, but the overall trend is showing signs of recovery, and it is expected to recover positive growth in the second half of 2023.

TF Securities stated that as the macroeconomic situation steadily recovers, the demand of advertisers may recover, which may drive the recovery of advertising revenue growth rate; it is expected that the company's internal circulation advertising revenue will maintain high-speed growth with GMV growth rate, which may be the main driving factor for advertising revenue growth in the quarter.

Live streaming is better than expected

The market expects KUAISHOU-W's live streaming tipping revenue to increase by 17% year-on-year to about RMB 9.1 billion, better than previously expected.

TF Securities believes that the revenue growth is mainly due to the company's active introduction of top guilds and anchors, continuous enrichment of live streaming supply, and optimization of live streaming ecology; looking ahead, the company is expected to meet the needs of users in different scenarios through rich product forms (such as Kuaiqin and Ideal Home), further improving the monthly payment rate of live streaming.

E-commerce

The market expects KUAISHOU-W's e-commerce GMV to exceed RMB 220 billion in the quarter, a year-on-year increase of about 30%, mainly driven by major promotional activities such as the New Year's goods festival and International Women's Day.

TF Securities also stated that considering the company's active promotion of fast distribution business, the commission of influencer distribution may bring an increase in e-commerce monetization rate, and it is expected that other service revenue will increase by 41% year-on-year to RMB 2.6 billion. As the supply side continues to attract merchants to settle in and brand building progresses, it is recommended to continue to pay attention to the company's transaction situation during the 618 period.