China's short-form specialist corporation Kuaishou improved its results by successfully introducing its own artificial intelligence (AI) model. Kuaishou, which runs businesses including short-form video, livestreaming, and e-commerce, is seen as having fostered a new growth pillar by fully applying its AI model across business divisions, led by the launch of the AI video production tool "Kling", at a time when it needed a clear differentiator in competition with platforms such as Douyin.
According to Kuaishou's earnings announcement 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's app had 410 million daily active users (DAU) and surpassed 730 million monthly active users (MAU), up 2%–3% year over year. Kuaishou's results were sluggish in the first quarter of this year, returned to recovery in the second quarter, and rose in the third quarter. The company projected this trend will 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 from 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 to generate meaningful revenue starting this year, emerging as a major business alongside the platform business. Kuaishou's AI business is proceeding along 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 clients. Its targets include advertising and marketing, film and animation, and game production. In collaboration with a short-format drama brand, it produced the world's first AI-created omnibus series "New World Is Loading," recording a cumulative 200 million views and showcasing its technological prowess.
Kuaishou officially launched the "Kling 2.5 Turbo" model in the third quarter. According to local securities firm Dongfang Caifu, the new model improved performance in areas such as reading comprehension, motion expressiveness, aesthetic effect, and style consistency compared with the previous version. This allows it to interpret and execute user commands more accurately and generate more vivid scenes with strengthened storytelling. At the same time, by optimizing engineering, it cut the expense of generating 1080p video by about 30%.
With functions continuously upgraded, Kling's global users surpassed 45 million as of the end of the third quarter. It recorded cumulative generations of 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 will surpass 1 billion yuan (about 206.7 billion won) by year-end. That is more than double the target set at the beginning of the year.
Management projected that the AI video generation market will gradually mature. Chief Executive Officer Cheng Yixiao said at a recent earnings conference, "AI video generation technology is still in its early stages but is developing very quickly. Rapid technological evolution and exploration of product forms are under way," adding, "Kuaishou's Kling is in the 'global first tier.'"
Cheng noted the trend of AI-generated videos interacting with general consumers as OpenAI's video production tool "Sora" and others gain popularity, saying, "Due to these changes, the commercialization pace of video generation apps for general consumers is noticeably accelerating, further expanding commercialization potential." He said the company plans to further accelerate the productization and commercialization of Kling's technology.
◇ Maximizing existing business revenue by applying large models
Kuaishou's AI technology has been applied across its existing platform businesses, boosting revenue. Kuaishou applied purpose-built large models to existing businesses such as advertising, livestreaming, and e-commerce on the platform. The recommendation model "OneRec" predicts and recommends videos and products that match 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 order volume in the third quarter.
As a result, advertising revenue, the platform business's largest revenue source, 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.
Gross merchandise value (GMV), one of the performance indicators for the e-commerce platform, rose more than 15% year over year in the third quarter to 385 billion yuan (about 79.6141 trillion won). Kuaishou said 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 thicker operating framework.
Having benefited significantly from AI, Kuaishou plans to continue investing in advancing its technology. Chief Financial Officer Jin Bing said, "The company is continuously expanding its investment in computing power, especially significantly strengthening training compute resources to maintain Kling's technological competitiveness." He added, "Future investment will focus on upgrading compute infrastructure and deepening technology."