To The Moon

$KUAISHOU-W(01024)$ is scheduled to release its fiscal Q1 2025 earnings after the Hong Kong market closes on Tuesday, 27 May 2025.

Revenue: The consensus revenue forecast for Q1 2025 is RMB 32.26 billion, representing a year-over-year increase of approximately 9.70%.

Earnings Per Share (EPS): The consensus EPS forecast for Q1 2025 is RMB0.90, which would represent a year-over-year decrease of approximately 4.31%. This potential dip in EPS despite revenue growth suggests that costs or other factors might be impacting profitability.

Kuaishou Technology (1024.HK) Last Positive Earnings Call Saw Share Price Declined By 17.23%

Kuaishou Technology had a positive earnings call on 25 March 2025 which saw its share price declined by 17.23% since.

The earnings call displayed strong growth in revenue, adjusted net profit, and advancements in AI and e-commerce. However, the decline in live streaming revenue and increased expenses pose challenges.

Kuaishou Technology (1024.HK) Guidance

During the Kuaishou Technology Fourth Quarter and Full Year 2024 Financial Results Conference Call, management provided guidance on several key metrics. For the fourth quarter, average daily active users (DAUs) exceeded 400 million, contributing to a year-over-year revenue growth of 8.7% to RMB35.4 billion. The adjusted net profit for the quarter reached a record high of RMB4.7 billion, with an adjusted net margin of 13.3%. For the full year 2024, total revenue increased by 11.8% year-over-year to RMB 126.9 billion, while adjusted net profit surged by 72.5% to RMB 17.7 billion, achieving an adjusted net margin of 14%.

Online marketing services revenue grew by 13.3% in Q4, reaching RMB20.6 billion, and e-commerce GMV increased by 14.4% year-over-year to RMB 462.1 billion. Management highlighted the significant role of AI in driving these results, particularly through the Kling AI platform, which achieved cumulative revenue exceeding RMB 100 million since monetization began in Q4. Looking forward, Kuaishou plans to invest further in AI advancements while maintaining a focus on profitability and sustainable growth, anticipating that AI investments will impact adjusted net margins by 1% to 2% in 2025.

Factors Influencing Expectations and Investor Sentiment

User Growth and Engagement: Kuaishou's core business relies on its large user base. In Q4 2024, average daily active users (DAUs) on the Kuaishou App were 401.0 million (up 4.8% YoY), and average monthly active users (MAUs) were 735.6 million (up 5.0% YoY). The average daily time spent per DAU was 125.6 minutes. Investors will be looking for continued healthy growth in these metrics for Q1 2025.

Online Marketing Services: This is Kuaishou's largest revenue driver. In 2024, revenue from online marketing services increased by 20.1%. The application of AI technology and optimized smart marketing solutions are key drivers here. Investors will be keen to see if this strong growth continued into Q1 2025.

E-commerce Growth: Total e-commerce GMV (Gross Merchandise Volume) increased by 14.4% in Q4 2024. While still a significant contributor, some reports suggest a slower e-commerce growth might be a concern. The Q1 results will shed light on the current trajectory of their e-commerce business.

E-commerce GMV grew by 14.4% year-over-year in Q4. Online marketing services revenue increased by 13.3% year-over-year in Q4 to RMB20.6 billion.

Live Streaming: Live streaming is another significant revenue component. The performance of this segment will be closely watched.

Revenue from the live-streaming business decreased by 5.1% year-over-year for the full year 2024, with Q4 revenue declining by 2% year-over-year.

AI Strategy and Innovation: Kuaishou has been actively investing in AI, particularly in video generation models like "Kling AI." They recently announced "Kling AI Advances to the 2.0 Era" and features like "Multi-Image Reference" to enhance video creation. This focus on AI is expected to empower their content and commercial ecosystem, and any updates on its monetization or user impact will be important.

Kling AI launched in June, quickly iterated, and became one of the top two large video models globally, with cumulative revenue exceeding RMB100 million since monetization.

Cost Control and Profitability: While revenue growth has been consistent, the slight anticipated dip in EPS suggests that cost management or increased investments might be affecting the bottom line in Q1. Investors will analyze the breakdown of expenses and gross profit margins to understand profitability trends. In Q4 2024, gross profit margin improved to 54.0%.

Adjusted net profit for the full year 2024 increased by 72.5% year-over-year to RMB17.7 billion, with an adjusted net margin of 14%. Selling and marketing expenses increased by 11% year-over-year in Q4, and R&D expenses rose by 4.7% year-over-year, impacting profit margins.

Domestic vs. Overseas Performance: Kuaishou has domestic and overseas segments. In 2024, operating profit from the domestic segment increased, while the operating loss from the overseas segment decreased. Continued improvement in the overseas segment's profitability would be a positive sign.

Overseas revenue maintained rapid growth of 52.9% year-over-year in Q4, with online marketing revenue increasing by 83.5% year-over-year.

What to look for in the actual earnings report

Actual Revenue and EPS: How these figures compare to the consensus estimates (RMB32.26 billion revenue, RMB0.90 EPS) will largely determine the immediate market reaction.

Total revenue for the full year 2024 increased by 11.8% year-over-year to RMB126.9 billion. Q4 revenue grew by 8.7% year-over-year to RMB35.4 billion.

User Metrics: Updates on DAU, MAU, and time spent per user will indicate platform stickiness and growth.

Breakdown of Revenue by Segment: Performance of online marketing services, live streaming, and other services (including e-commerce) will provide insights into their growth drivers.

Gross Profit Margin and Operating Expenses: These will be crucial for understanding the company's profitability and cost management.

Guidance for Q2 and Full Year 2025: Management's outlook on future performance, especially concerning revenue, user growth, and profitability, will be key.

Updates on AI Initiatives: Any specific details on the adoption, impact, or monetization of Kling AI and other AI-powered features will be significant.

Kuaishou Technology (1024.HK) Price Target

Based on 29 analysts from Tiger Brokers offering 12 month price targets for Kuaishou Technology Class B in the last 3 months. The average price target is HK$69.327 with a high forecast of HK$95.00 and a low forecast of HK$50.00. The average price target represents a 43.68% change from the last price of HK$48.75.

Analysts generally have a "Strong Buy" consensus rating for Kuaishou, with an average 12-month price target suggesting significant upside potential. However, some recent analyst reports have slightly lowered EPS estimates for 2025-27, potentially due to factors like foundry capacity constraints in related industries or other operational considerations.

Technical Analysis - Exponential Moving Average (EMA)

At time of writing on the noon break, Kuaishou share price is up modestly by 0.21%, and we can see that for the past week, the momentum is declining which might cause some investors to take a cautious approach.

But if we looked at how the e-commerce GMV have been performing, we are looking at a pretty good revenue contribution from the e-commerce segment.

I think we might see an upside performance after the earnings release tomorrow (27 May) by Kuaishou.

Summary

Kuaishou is expected to show continued revenue growth in Q1 2025, driven by its strong user base and online marketing services. However, profitability might be a key focus, given the slight anticipated decrease in EPS. The market will be attentive to how well Kuaishou balances growth with cost efficiency, and the impact of its AI strategy on its various business segments.

Appreciate if you could share your thoughts in the comment section whether you think Kuaishou e-commerce earnings contribution could help Kuaishou to an earnings beat.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.