The company released its 2024 semi-annual report, and achieved revenue of 30.975 billion yuan in 24Q2, an increase of 11.6% year on year. Bloomberg agreed to expect 30.368 billion yuan, corresponding to a year-on-year growth rate of 9.5%. Adjusted net profit was 4.68 billion yuan, and Bloomberg's agreed forecast was 4.339 billion yuan.
Total traffic continues to grow steadily, and the search penetration rate exceeds 70%. 24Q2 DAU and MAU reached 0.395 billion and 0.692 billion, respectively, up 5.1% and 2.7% year over year, respectively. The Kuaishou app's single DAU was used for 122 minutes. The user traffic side achieved accelerated growth, and the total usage time of Kuaishou app users increased 9.5% year over year. This is mainly due to improved user experience through upgraded traffic distribution mechanisms and scenario construction with insight into user needs, as well as improved user retention and increased ROI in user growth through algorithm optimization.
The recovery of circular advertising outside the commercial dimension is accelerating, and the recovery of e-commerce is relatively weak. Looking at the segment, 1) 24Q2 live streaming revenue was 9.302 billion yuan, a year-on-year decrease of 6.7%, exceeding Bloomberg's consensus forecast of 8.3%, accounting for 30% of total revenue. The refined operation model continues to be iterated. By the end of 24Q2, the number of signed guild organizations had increased by nearly 50% year on year, and the number of signed guild anchors had increased by 60% year on year. 2) 24Q2 online marketing service revenue was 17.515 billion yuan, up 22.1% year on year, slightly lower than Bloomberg's agreed expectations, accounting for 56.5% of total revenue.
Intelligent marketing solution optimization has brought higher bids from marketing customers. Revenue from external circulation marketing services increased significantly, particularly in media information, e-commerce platforms and the local lifestyle industry. 3) 24Q2 Other business revenue was 4.158 billion yuan, up 21.3% year over year, slightly lower than Bloomberg's agreed expectations, accounting for 13.4% of total revenue.
GMV was 305.254 billion yuan, lower than Bloomberg's consensus forecast, with a year-on-year increase of 15% and a monetization rate of 1.4%.
On the user side, e-commerce monthly active buyers increased 14.1% year-on-year to 0.131 billion in 24Q2, and the monthly active user penetration rate reached a record high of 18.9%. On the merchant side, the number of sales merchants increased by more than 50% year-on-year in 24Q2. The GMV in the 24Q2 pan-shelf market accounted for more than 25%, and the average number of daily sales companies/daily buyers grew by more than 50%/70% year-on-year, respectively.
The company's profitability continues to improve, and profit margins continue to exceed expectations. 24Q2 gross profit was 17.135 billion yuan, up 23% year on year, gross margin was 55.3%, and gross margin increased 0.5 pct month-on-month. Sales and marketing expenses were 10.04 billion yuan, up 16.3% year on year, and the sales expense ratio was 32.4%, up 1.3 pct year on year. The 24Q2 administrative expenditure was 0.792 billion yuan, a year-on-year decrease of 16.2%, and the management fee ratio was 2.6%, a year-on-year decrease of 0.8 pct. 24Q2 R&D expenditure was 2.805 billion yuan, a year-on-year decrease of 11.1%. The R&D expenditure rate was 9.1%, a year-on-year decrease of 2.3 pcts. The adjusted net profit for 24Q2 was 4.679 billion yuan, up 73.7% year over year.
The adjusted net interest rate was 15.1%, up 5.4pct year over year. 24Q2 domestic operating profit was 4.498 billion yuan, up 48.3% year-on-year, and the domestic operating profit margin was 15%. 24Q2 overseas operating profit was -0.277 billion yuan, up 64.5% year on year, and overseas operating margin -25.5%.
Lay out the future and enable business development through continuous technological innovation. 24Q2 has begun comprehensive testing of Keling AI, a large model for video generation, and introduced a membership system to users around the world to further upgrade model functions; Wenshengtu's AI generation model is officially open source to encourage collaboration and ecosystem prosperity. Currently, the company's AI matrix has been seamlessly embedded into multiple business scenarios to support content creation, content understanding and recommendation, and user interaction. In 24H1, nearly 0.02 million merchants used AI matrices to optimize operations on the Kuaishou platform. In 24Q2, AIGC marketing material consumption from marketing customers peaked at RMB 20 million per day.
Maintain a “Highly Recommended” investment rating. Considering the smooth restructuring of the company's organizational structure and significant profit expansion, we slightly raised the adjusted net profit for 24-25 to 173.7/235.7 billion (previous value was 169.7/228.0) billion yuan. We continue to be optimistic about the company's commercialization ability and ability to reduce costs and increase efficiency as a scarce short video leader, and maintain a “Highly Recommended” rating.
Risk warning: business growth falls short of expectations, risk of macro-fluctuations, risk of high costs, loss of users