China's short-form specialist corporation Kuaishou (快手) improved its results by successfully adopting its own artificial intelligence (AI) model. Operating short-form video, livestreaming, and e-commerce businesses, Kuaishou was seen as needing a clear differentiator in competition with platforms such as Douyin (抖音, the Chinese version of TikTok). Starting with the launch of the AI video production tool "Kling (可灵, Kling)," it fully applied AI models across various business units to cultivate a new growth pillar, according to assessments.
According to Kuaishou's earnings release on the 21st, third-quarter revenue was 35.554 billion yuan (about 7.35 trillion won), up 14.2% from a year earlier, and operating profit was 5.3 billion yuan (about 1.1 trillion won), up 70% from a year earlier. As of the end of the third quarter, Kuaishou app daily active users (DAUs) surpassed 410 million and monthly active users (MAUs) surpassed 730 million, up 2%–3% from a year earlier. Kuaishou's results were sluggish in the first quarter of this year, rebounded in the second quarter, and rose in the third quarter. The company projected this trend would continue through the fourth quarter.
According to the business report, Kuaishou's core business is the short-form platform, and its largest revenue source is advertising. It also generates revenue in livestreaming and e-commerce, and it runs an O2O (online-to-offline) business selling offline store discount and reservation vouchers.
In particular, the AI business, which was rolled out in earnest last year, began producing meaningful revenue this year, emerging as a major business alongside the platform business. Kuaishou's AI business is proceeding on two tracks: ▲ the video-generation model "Kling" and ▲ maximizing platform revenue using large models.
◇ Video production tool "Kling" emerges as a new cash cow
Kling currently provides video production services to more than 20,000 domestic and overseas corporate customers. The targets include advertising and marketing, film and animation, and game production. In collaboration with a short drama brand, it produced the world's first AI-created omnibus series "New World Is Loading," showcasing its technology with a cumulative 200 million views.
Kuaishou officially released the "Kling 2.5 Turbo" model in the third quarter. According to local securities firm Dongfang Caifu, the new model improved performance in reading comprehension, motion expression, aesthetic effect, and style consistency compared with the previous version. This allows it to interpret and execute user commands more precisely and generate more vivid scenes with enhanced storytelling. At the same time, through engineering optimization, it cut the expense of generating 1080p video by about 30%.
With functions continuously upgraded, Kling's global user count surpassed 45 million as of the end of the third quarter. Cumulative generations reached 200 million videos and 400 million images. Kling posted total revenue of 700 million yuan (about 144.7 billion won) in the first to third quarters, and Kuaishou projected it would surpass 1 billion yuan (about 206.7 billion won) by year-end. That is more than double the target set at the start of the year.
Management projected that the AI video-generation market will gradually mature. Chief Executive Officer Cheng Yixiao (程一笑) said at a recent earnings conference that "AI video-generation technology is still in its early stage but is developing very rapidly. Rapid technological evolution and exploration of product forms are underway," adding that "Kuaishou's Kling belongs to the 'global first tier.'"
Cheng noted the popularity of OpenAI's video production tool "Sora," among others, and the trend of AI-generated videos interacting with general consumers, saying, "Because of these changes, commercialization of video-generation apps for general consumers is accelerating noticeably, further expanding commercial possibilities." He also said the company plans to further accelerate the productization and commercialization of Kling's technology.
◇ Applying large models to maximize revenue from existing businesses
Kuaishou's AI technology is being applied across its existing platform businesses to grow revenue. Kuaishou applied large models by use case to its existing businesses, including advertising, livestreaming, and e-commerce on the platform. The recommendation model "OneRec" predicts and recommends videos and products tailored to user preferences, increasing time spent and return rates. The e-commerce search model "OneSearch" was deployed to improve product matching accuracy, contributing to a 5% increase in shopping-mall search orders in the third quarter.
As a result, advertising sales, the largest revenue source of the platform business, reached 20.1 billion yuan (about 4.1565 trillion won) in the third quarter. That was up 14% from a year earlier and accounted for 56% of total revenue. Kuaishou said AI technology contributed about 5% of the increase in domestic advertising revenue.
Among e-commerce platform performance indicators, gross merchandise value (GMV) recorded 385 billion yuan (about 79.6141 trillion won) in the third quarter, up more than 15% from a year earlier. Kuaishou explained that this was because the platform provided various seller-support policies, traffic support, and "intelligent tools" using AI, helping sellers attract more customers and build a more robust operating structure.
Having clearly benefited from AI, Kuaishou plans to continue investing in advancing the technology. Chief Financial Officer Jin Bing (金秉) said, "The company is continuously expanding investment in computing power and has significantly strengthened training compute resources in particular to maintain Kling's technological competitiveness." He added, "Future investments will focus on upgrading compute infrastructure and deepening the technology."