Company trends

Recent situation of the company

We organized Kuaishou Technology's non-transactional management anti-roadshow, and the company answered questions about users, commercialization, fees and regulation that investors were concerned about.

Keystone

In terms of users: the company observed that the number of users in the fourth quarter was good, without the usual seasonal month-on-month decline. The company believes that the increase in the duration of user use is a natural growth driven by demand.

Commercialization: the company expects e-commerce, advertising and live streaming revenue to exceed previous guidelines in the fourth quarter. 1) Advertising: the company expects that under the weak macro environment, external advertisers will increase their requirements for advertising effect. Kuaishou Technology advertising is based on effective advertising, and the company believes that it can continue to obtain more advertising share, and the year-on-year growth rate may be low before and after a high trend; internal circular advertising growth is better, the ROI level of business advertisers is higher, and the company believes that there is still room to improve the monetization rate of circular advertising in the future. 2) E-commerce: the company plans to continue to optimize its supply chain capacity, hoping to increase the proportion of brand sales to 20% this year from less than 10% last year. The company encourages merchants to combine shop broadcasting with talent cooperation to achieve a balance between GMV growth and ROI launch. In 2021, the company began to explore the content of local life, believing that Kuaishou Technology's traffic and Meituan's business network will achieve win-win results, forming a positive cycle of products, services and evaluation, while helping talent realize better. The company said that it will do more exploration in the field of service consumption in the future. 3) Live broadcast: the company expects live broadcast revenue to grow from high to low double digits year on year in 2022, and will maintain a gross profit margin of 32-35% for a long time.

In terms of profits, the company began to control overseas market expenses in the third quarter of 2021 and began to optimize domestic delivery in August. The optimization and retention of new user channels has improved the efficiency of user acquisition. The market expense in the fourth quarter is lower than the company's expectation, and the company expects the adjusted operating loss to be reduced by about 2 billion yuan compared with the third quarter. The company expects that overseas investment in 2022 will not exceed 2021, domestic subsidies will also decline, user incentives and subsidies for e-commerce and advertising may be strengthened, and the overall marketing expense rate will continue to improve.

Regulatory aspects: 1) tax: the settlement between anchors and merchants does not affect the company's income, but the platform conducts self-inspection to promote individual anchors to pay reasonable taxes at the same time to ensure their legitimate compliance with the business; 2) algorithm and data protection: the company currently has no online algorithm recommendation shutdown function, and plans to go online in the future The company launched the personalized recommendation shutdown feature in November. Currently, less than 1% of users are closed, which has no impact on user traffic. The company plans to further strengthen the audit on the content side to ensure that users see positive, healthy content that meets the regulatory requirements of the algorithm.

Risk

User growth or commercialization is less than expected, costs or expenses are higher than expected, content and other regulatory risks.