Shulou(Shulou.com)11/24 Report--

On September 21, Kuaishou 2023 Investor Day was held at its new headquarters Yuan Center. This is the first time that an investor day exchange has been held offline since Kuaishou went public. In the latest disclosure of the second quarter and interim results of 2023, Kuaishou's profitability was further released, recording a group-level international accounting standards net profit of 1.48 billion yuan for the first time after listing, which also attracted much attention of this investor day. Cheng Yixiao, founder and CEO of Kuaishou Technology, attended the exchange meeting, based on Kuaishou's ecological advantages and industry development prospects, explained in detail the company's sustainable growth strategy and the core competitiveness that inspires business imagination in the future.

Talking about the company's development strategy, Cheng Yichao said that at present, on Kuaishou, different roles such as users, creators, and merchants have produced a positive cycle on the platform through multilateral network effects, forming a pluralistic and stable ecology. As a platform, the three most important things of Kuaishou at this stage are still adequate and diversified supply, efficient content distribution and matching, and constantly improving operating mechanisms.

According to Cheng Yixiao, founder and CEO of ▲ Kuaishou, as of the second quarter of 2023, the number of monthly active users of Kuaishou was 673 million, the number of fan creators was 2.7 million +, and the number of monthly active merchants in end B increased by more than 60% year on year. In Cheng Yixiao's view, Kuaishou is first of all the content community, and healthy content ecology and highly viscous user social relationships are the cornerstones of Kuaishou's development, so tamping content ecological construction, strengthening social interaction and enhancing stickiness are still the important points of Kuaishou's development. In addition, based on the huge traffic pool and deep insight into the needs of users, Kuaishou business ecology, including live broadcast, e-commerce, advertising and other multiple services, has also formed a healthy and stable forward flywheel. In the future, Kuaishou will continue to strengthen the minds of users who are "interesting, useful and distinctive" and "can see, shop and buy", make content consumption and transaction performance more in the same direction, and continue to expand the scale of traffic and transactions. At the same time, in addition to commercialization and e-commerce, we continue to explore more diversified B-side business fields, such as real estate, cars, recruitment and so on, so that the connection between merchants and Kuaishou becomes deeper, and at the same time, through the provision of more transaction scenarios, back-feed the consumer mind.

Looking at the growth point of Kuaishou's business ecology from the "troika" that drives revenue

The prosperous content creation ecology has not only brought steady traffic growth for Kuaishou, but also given birth to a vibrant business ecology. According to the financial results, revenue from online marketing services, live streaming and other services (including e-commerce) remained the "troika" that drove Kuaishou's revenue in the second quarter of 2023. Among them, the growth and income share of e-commerce and commercialization are increasing year by year, and the market share is constantly increasing; live broadcast ecology continues to improve, paying attention to long-term and healthy development.

▲ Kuaishou Technology 2023 Investor Day on-site e-commerce business level, benefiting from the combined efforts of supply, demand, infrastructure and other factors, combined with the promotion of 618, the GMV of Kuaishou e-commerce increased by 38.9% in the second quarter of 2023 to 265.5 billion yuan compared with the same period last year.

In terms of ecology, in the past year, the launch of the "Chuanliu Plan" has enabled Dazhen distribution to connect with merchants' self-broadcast GMV data, solving the pain points such as bottlenecks in store broadcasting growth and cold start-up difficulties, and helping merchants to improve business efficiency. On the supply side, thanks to the improvement of product infrastructure and the further promotion of policies such as the flow plan and the support of small and medium-sized businesses, the business efficiency has been improved, and the supply of fast-hand e-commerce has become more diversified. And in August this year, Kuaishou e-commerce launched the core brand subsidy channel "big brand Dabu", with "big brand authentic, good goods at a low price" as the operation core, through distribution in mall channels, search, recommendation and other scenes, further improve the conversion rate of Kuaishou brand goods, but also provide users with more choices.

Cheng Yichao said that in the process of building a positive flywheel for e-commerce growth, on the one hand, Kuaishou will adhere to the basis of good things at low prices and the supremacy of user experience, match better content and goods for buyers, and create a good consumer experience; on the other hand, it will continue to "strengthen" in the supply of diversified features and the efficiency of Shanda matchmaking, and help businesses better integrate into Kuaishou ecology by encouraging talent distribution and merchants' self-broadcast. In addition, Kuaishou is currently improving the ecological construction of shelf e-commerce, which will also bring new increments for it.

In view of the upcoming Singles Day holiday, Kuaishou has also recently released a "helping Shake Plan", which optimizes the mechanism for VJs to help Shanda cooperate better and upgrade GMV, and finally realize the growth transition of VJs.

In terms of commercialization, no matter in terms of commercial income or the number of active customers, Kuaishou has become a value platform for head marketing. In the second quarter, Kuaishou is also constantly optimizing the capacity building of commercial products. The "all-site promotion" products upgraded from "all-store ROI" can help internal circulation advertisers achieve global operation through the coordination of commercialization and e-commerce traffic, while the "Kuaishou Index" products launched in June can provide advertisers with a basis for delivery strategies from multi-dimensional indicators such as brand volume, search, talent analysis, and so on. With the improvement of these infrastructure, the number of Kuaishou active advertisers nearly doubled in the second quarter compared with the same period last year.

Talking about the future opportunities for the commercialization of Kuaishou, Wang Jianwei, the head of Kuaishou's commercialization business, said that on the one hand, it will vigorously promote native advertising, encourage brand creation to be closer to Kuaishou and users' content material, and let advertising be content. while improving the efficiency of the transformation of commercial traffic, continue to enhance the carrying space of commercialization On the other hand, through the continuous improvement of commercial infrastructure, through the matching of big data and the big model, we will help customers identify value groups efficiently and match accurately, so as to improve the delivery of ROI. At the same time, as the new-line cities (new consumer front-line cities) have become new growth potential points for major brands, Kuaishou's unique crowd value has also been further highlighted, making it a brand marketing home that can not be ignored.

Wang Jianwei, head of the commercial business of ▲ Kuaishou, and in the increasingly competitive field of local life, Kuaishou related business is in the early stage of rapid growth. In the second quarter of this year, around the local life business, Kuaishou specially launched the "Flying Bird Plan" to build Kuaishou local life ecology with more people through flow support, local good goods, 100 training, and so on. According to the data, compared with January 2023, the number of consumers of fast-hand local life in June increased by 498%, the realized scale of talent increased by 212%, and the scale of high-quality talent increased by 816%.

Talking about the core development point of Kuaishou local life business, Xiaogu, the person in charge of Kuaishou local life business, said that in the future, it will focus on several aspects. First, the demand side, around the performance-to-price ratio, optimize the commodity price comparison engine, deepen the product mind of "dare to compare price" and "trust purchase", and bring users the most cost-effective consumption experience. Second, the supply side, accelerate the expansion of cities and categories, attract more local businesses to move in, and constantly enrich the types of supply, such as wine, tourism, comprehensive and other categories. Third, on the content side, continue to make short videos and live broadcasts to improve transaction efficiency through richer content forms. Fourth, from the point of view of the platform, around the supply of high-quality goods and content, through the iteration of technology, infrastructure and strategy to improve the matching efficiency of goods, content and users.

Xiao Gu, the head of ▲ Kuaishou's local life business, gives full play to his technical advantages to enter the big model track and continues to broaden the application scene of AI.

As a national-level short video live digital community, Kuaishou maintains a healthy growth trend in users, content, commerce and other aspects, which is inseparable from the huge technology investment behind it. In the past decade, Kuaishou has accumulated a series of advanced technology infrastructure, including big data, audio and video, algorithms, computing, storage, network, including a solid technology base, enabling business development.

Yu Bing, head of the Kuaishou R & D line, put forward the "1x 4" standard of good technology on Investor Day, in which "1" refers to advanced architecture; "4" refers to "strong capability", "high efficiency", "business orientation" and "stability and security" respectively.

Yu Bingyubing, head of the ▲ Kuaishou R & D line, said that controlling costs and improving efficiency is one of the priorities of Kuaishou technology at this stage. In the past few years, Kuaishou has obviously optimized its share of R & D resources. This year, Kuaishou Wulanchabu data center has been put into production, and it is planned to build one of the largest "big data + artificial intelligence" data centers in Asia, which can hold 300000 servers. It is expected that the annual power saving will reach about 500 million kilowatt-hours, and the total cost and energy consumption of IDC will be reduced by more than 30%.

An aerial view of the ▲ Kuaishou Ulanchabu data center. Take video compression and transcoding as an example. At present, Kuaishou's cloud intelligent video processing chip SL200 has been deployed on a large scale in the data center and used in the foreground business. The chip has an industry-leading extremely high compression ratio, and 16 of the 24 indicators of 4K and 1080p in the 2022MSU World Encoder Competition, it can provide high-definition video transcoding of 4K60 frames, and a transcoding server is equivalent to the efficiency of hundreds of traditional servers, which will save the company hundreds of millions of yuan every year. " Good technology can not only maintain the security and stability of the technology base, but also make all kinds of weapons and empower upper-level business. " Yu Bing said.

In the field of AGI, which has attracted much attention from the outside world, Yu Yue, head of Kuaishou master station business and community science, said that based on the current technology accumulation in the field of large models, Kuaishou has achieved the landing of several AI application scenarios.

Yu Yue, head of business and community science at ▲ Kuaishou master station, recently started internal testing of Kolors, a large model of Wenshengtu, and tested AI's function of AI in short video comments on the site based on the model. By inputting all kinds of creative text, users can generate a large number of style pictures with one click, which makes it more convenient to interact with each other in the comment area. This is also the first time in the industry that AIGC capabilities have been applied under the review area of large-scale App core business scenarios.

Prior to the ▲ AI review in August, Kuaishou announced an internal test of the self-developed large language model "KwaiYii" and tested the "AI conversation" function in Kuaishou App based on the big language model. With the support of this AI assistant, users can find the anchors or videos they are interested in more efficiently.

At the same time, Kuaishou has created a "full-mode large model AIGC solution". Based on the self-developed pedestal large model, it provides users with a variety of technical capabilities, including text generation, image generation, 3D material generation, audio generation, video generation and so on. In live e-commerce, local life, Kuaishou and other scenarios, Kuaishou also launched the digital human product "Kuaishou Smart broadcast", which allows anchors to quickly create their own digital twins, use digital people to quickly start live streaming and produce short videos.

With the arrival of AI business to usher in a new round of peaks, the integration of technology and industry and the richness of scene applications are increasing rapidly. Kuaishou, which has a user base and strong social attributes, has rich data resources and can provide strong support for the development of its AI technology in the future.

Strike a balance between commercial value and social value to create the most warm and trusted online community

Kuaishou, which began to explore the international layout in 2017, has now covered 24 countries and has found its own rhythm in constant trying. The data show that Kuaishou's overseas business has significantly reduced costs in the past year and achieved significant growth in DAU and duration in core countries. Among them, the overseas division of Q2 recorded business income of 447 million yuan in 2023, an increase of more than 300% over the same period last year. At the same time, due to the steady improvement in operating efficiency, the overall operating loss of Q2 overseas market in 2023 decreased by 51.4% compared with the same period last year. Ma Hongbin, head of Kuaishou's international business, said that next, Kuaishou will continue to focus on Latin America, the Middle East, Southeast Asia and other core regions, more accurately go deep into the local market, and combine local characteristics to continuously enrich commercialization, e-commerce live streaming and other games, improve cash ability and operational efficiency, and build international enterprises with a global vision.

Ma Hongbin, head of ▲ Kuaishou's international business, with the deep combination of multimedia and AI technology, Kuaishou will continue to cultivate AI technology, promote the development of product form and user experience, and explore the second curve of short video business. In Cheng Yixiao's view, AGI is the core competitiveness facing the future. On the one hand, subversive technological innovation can bring new traffic entrances, on the other hand, it can greatly improve efficiency by combining with existing scenarios. Relying on the advantages of talent, resource reserve and huge business ecology, AGI will better enable Kuaishou core application scenarios to achieve full-link change from the consumer side, the supply side to the platform side.

For Kuaishou, the construction and improvement of content ecology is not only the basis of building a commercial closed loop, but also the focus of future development. At the level of user consumption, Kuaishou will continue to focus on content supply and social interaction, optimize recommendation technology, improve content diversity, enhance content consumption experience and help users capture new interests. At the same time, Kuaishou will optimize the comment scene and on-screen comments to create a good community atmosphere, continue to strengthen the social relationship between users, and enhance the mind of the private domain. At the creator level, Kuaishou will fully support creators from the aspects of flow, cash, service, etc. In the coming year, it plans to invest more than 4000 billion to support 7 million high-quality creators and help platform creators realize more than 100 billion. At the search level, Kuaishou will continue to improve users' active search mentality and search satisfaction, providing strong support for the search transformation effect of content consumption, e-commerce, advertising and other scenarios.

Finally, according to the company's financial performance and capital situation in the first half of the year, Jin Bing, chief financial officer of Kuaishou Technology, said that in the first half of 2023, not only the total income of Kuaishou increased by 24% year-on-year to 53 billion yuan, but also the adjusted net profit also significantly reversed losses compared with the same period last year. The adjusted profit in the first half reached 2.7 billion yuan. Not only that, in the second quarter of this year, the group's overall gross profit margin also exceeded 50% for the first time, benefiting from the optimization of the income structure on the one hand and a series of measures to improve quality and efficiency of the company on the other.

Jin Bing, chief financial officer of ▲ Kuaishou Technology, in addition, Jin Bing also disclosed Kuaishou's cash reserves at this stage. According to reports, as of June 30, 2023, Kuaishou cash reserves reached 50.5 billion, with a net operating cash inflow of 8.2 billion in the first half of the year, reflecting the group's strong cash base and high risk resistance.

Of course, as an influential inclusive digital community, Kuaishou has also been promoting the sustainable development of ESG. In 2022, Kuaishou will continue to carry out a number of energy conservation and emission reduction efforts to achieve the environmental goals of clean energy use, energy conservation, water conservation, waste emissions and greenhouse gas emission reduction, and plans to achieve 100% clean energy use in self-built data centers by 2030. In terms of greater social responsibility, by 2022, Kuaishou has donated more than 200 million yuan for public welfare; the whole ecology of Kuaishou platform has led to 36.21 million employment opportunities; and more than 22 million people have earned income from inclusive flow distribution and ecological prosperity. In the future, Kuaishou will continue to focus on rural revitalization, high-quality employment and support for vulnerable groups, take into account social and commercial values in the process of company development, and make continuous efforts to fulfill social responsibility.

Cheng Yixiao said at the end of the speech, "grasp the future and be loyal to the mission. I believe that driven by both technology and mission, Kuaishou can achieve high-quality development through efficient growth on this fast-growing short video track."

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