The company's performance was slightly better than expected: 24Q2 revenue was 30.975 billion yuan, up 11.6% year over year, slightly better than the agreed forecast. The adjusted profit was $4.679 billion, better than the agreed estimate of $4.338 billion; the adjusted net profit margin was 15.1%, better than the agreed estimate of 14.3%.
Benefiting from the rich supply of content, the platform's traffic is growing steadily. 2024Q2 Kuaishou achieved accelerated growth on the user traffic side, and total user usage time increased 9.5% year over year (7% for Q1). The Q2 Kuaishou application's DAU reached 0.395 billion, up 5.1% year on year, and MAU reached 0.692 billion, up 2.7% year on year; from the perspective of stickiness, the DAU/MAU ratio was 57.1%, which increased year on month, and user stickiness was high; from a time perspective, DAU single user time was 122 minutes, up 4% year over year. Q2 The company enhances the user experience through the upgrading of traffic distribution mechanisms and scenario construction with insight into user needs; creates an active community atmosphere through measures such as optimizing the ranking of popular reviews in the comment area, thereby improving the long-term retention rate of users and achieving high-quality DAU growth.
Core business revenue is basically in line with expectations, and e-commerce GMV growth has slowed. 1) 2024Q2 Kuaishou's live streaming business revenue was 9.3 billion yuan, a year-on-year decrease of 7%, better than expected. 2) Online marketing service revenue increased 22% year over year to 17.5 billion yuan, which is basically in line with consistent expectations. Among them, external circulation advertising performed well. The year-on-year growth rate increased compared to 24Q1, especially in industries such as media information, e-commerce platforms, and local lifestyle; internal circulation advertising revenue grew steadily, and the advertising consumption of small and medium-sized businesses increased 60% year over year. 3) Other revenue, including e-commerce revenue, increased 21% year over year to 4.2 billion yuan, which is basically in line with consistent expectations. 2024Q2 Kuaishou e-commerce's GMV increased 15% year over year to 305.3 billion yuan, lower than market expectations. We believe it was mainly affected by changes in the consumer environment and competition strategies of other e-commerce platforms. Q2 pan-shelves continued to drive market growth (order volume increased 65% year-on-year during the 618 promotion period), accounting for more than 25% of the total GMV. In 24Q3, we expect e-commerce GMV to continue to grow 15% year-on-year, while other revenue growth is slightly faster than e-commerce GMV.
Costs and expenses are effectively controlled, and profit margins are better than expected. Q2 The company's adjusted net profit margin reached 15%.
Thanks to revenue structure optimization, effective control and optimization of cost sharing, and improving server and bandwidth usage efficiency through technological innovation, etc., the gross margin for Q2 exceeded 55%, which was better than Bloomberg's unanimous expectations. The R&D cost rate and management cost ratio also decreased by 2.3 pct/0.8 pct year on year, respectively. There was a slight increase in the sales expense ratio, mainly due to increased expenses for promotional activities. With the improvement of the revenue structure and further improvement in operating efficiency, we believe that medium- to long-term companies are still expected to achieve the adjusted net interest rate target of 20%.
Profit forecast and investment rating: The company's Q2 profit was better than we expected, but considering the weak overall consumption environment and changes in the competitive environment, we slightly raised the company's 2024 adjusted net profit forecast of 17.2 billion yuan to 17.5 billion yuan, maintaining the 2025-2026 24.2/31.6 billion forecast, corresponding to the 2024-2026 adjusted PE of 10/7/6 x, maintaining a “buy” rating.
Risk warning: market competition risk, risk of commercialization falling short of expectations, risk of international situation