However, the company swung to a loss in that period, reporting an adjusted net loss of 7.24 billion yuan as marketing expenses ballooned.
Kuaishou said it had 262.4 million daily active users for its app in the first nine months of 2020, up from 165.2 million in the same period in 2019. Its monthly paying users grew to 59.9 million from 48.5 million in that period.
The company makes money off its users in a number of ways.
1. Live-streaming: The main revenue driver is its live streaming business. This involves users buying virtual items from Kuaishou to gift to their favourite streamers. Live streaming revenue brought in 25.31 billion yuan of revenue in the first nine months of 2020, accounting for around 62% of total sales.
2. Ads and online marketing: Kuaishou also makes money from online marketing services or advertising which brought in 13.34 billion yuan in the the nine months ended Sep. 30, a more than 200% year-on-year rise. This accounted for around 32% of total revenue.
3. E-commerce and games: The Chinese tech firm has also began venturing into e-commerce and mobile games. Users can purchase items from online streamers via the Kuaishou app. Kuaishou said that 204.06 billion yuan worth of transactions were facilitated via its app in the first nine months of 2020 — a rise of more than 1,100%. Not all of this will translate directly into revenue for Kuaishou.
In November, the Chinese government also introduced rules around live-streaming shopping which includes limits on user spending and restrictions on minors buying items.
The markets in which we operate are highly competitive, and we face significant competition …
“Given that the internet business is highly regulated in China, intensified government regulation of the short video, live streaming and e-commerce industries in China could also restrict our ability to maintain or increase our user base or the user traffic to our platform, which will materially and negatively impact our business operations and financial results,” Kuaishou warned in its IPO prospectus.
The company is also a competitor to Douyin, the Chinese version of short video sharing app TikTok, run by internet giant ByteDance. Douyin has 600 million daily active users versus Kuaishou’s 262.4 million users.
Tencent, a major investor in Kuaishou, has also launched its own short video feature within its WeChat messaging app. Competition is also ramping up.
“The markets in which we operate are highly competitive, and we face significant competition from internet companies that operate content-based social platforms, online marketing businesses and e-commerce platforms in China,” Kuaishou said.
“If we fail to compete effectively, our business, financial condition, results of operations and prospects may be materially and adversely affected.”