Kuaishou Technology

Q2 total revenue was RMB 35.5 billion, up 1.4% year over year. Online marketing services revenue was RMB 20.6 billion, up 4.4% year over year; other services, including e-commerce and Kling AI, were RMB 6.2 billion, up 18.5%; live streaming revenue was RMB 8.7 billion. Gross profit was RMB 18.3 billion versus RMB 19.5 billion a year ago, and gross margin was 51.6% versus 55.7%. Group net profit was RMB 3.2 billion, adjusted net profit was RMB 3.9 billion, and adjusted net margin was 11%. Cash and cash equivalents, time deposits, financial assets and restricted cash totaled RMB 121.3 billion as of June 30, 2026, and operating cash flow was RMB 5.9 billion. Looking ahead, management said it expects near-term revenue pressure and continued AI investment to weigh on profitability in the second half, but it aims to maintain positive group-level free cash flow and said full-year shareholder returns should exceed last year’s level.

The CEO framed the quarter as “high-quality growth” despite a complex macro backdrop, emphasizing that Kuaishou is staying committed to its long-term AI strategy. He highlighted Kling AI, broader model development, and AI-powered improvements across marketing, recommendation, and e-commerce as the main strategic priorities. His tone was confident but cautious, repeatedly noting short-term revenue pressure and heavy AI investment while stressing long-term value creation.

The CFO said Q2 revenue reached RMB 35.5 billion, adjusted net profit was RMB 3.9 billion, and adjusted net margin was 11%, underscoring that profitability remained healthy. He noted cost of revenue rose 10.7% to RMB 17.2 billion, gross margin fell to 51.6%, selling and marketing expenses declined to RMB 9.9 billion, and R&D rose 34.7% to RMB 4.6 billion because of AI-related training costs. He also highlighted a strong balance sheet with RMB 121.3 billion in cash, time deposits, financial assets and restricted cash, RMB 5.9 billion of operating cash flow, and about HKD 1,970 million of repurchases covering roughly 43.3 million shares.

Analysts focused on Kling AI’s competitive position, management’s broader AI strategy, merchant pressure in e-commerce, the outlook for online marketing services, and cash flow after Kling’s financing. Management said the AI video market is still early and concentrated among Tier 1 players, and argued Kling’s professional-creator focus, native 4K output, and recent financing support its competitiveness. On merchant and ad trends, management said second-half e-commerce marketing service revenue and commission income face pressure, while online marketing services will continue to be shaped by macro conditions and higher comparables, but AI should improve ROI, conversion, and budget capture. On cash flow, management said CapEx was front-loaded, Q2 cash flow was positive, and it expects positive group free cash flow in the second half.