On August 19, KUAISHOU-W (01024) released its second-quarter 2026 results and held an earnings call. The report showed total revenue of 35.5 billion yuan for the quarter. Core commercial revenue, which includes online marketing services and other services led by e-commerce and Kling AI, grew 7.4% year-on-year. Adjusted net profit reached 3.9 billion yuan, with an adjusted net profit margin of 11%.
In terms of users, the average daily active users of the Kuaishou app hit 412 million in the second quarter, while average monthly active users reached a record high of 797 million. Core commercial revenue continued its growth trajectory, Kling AI's commercialization maintained rapid momentum, and AI continued to enhance operational efficiency across core businesses and the organization, further underscoring Kuaishou's operational resilience.
During the earnings call, Kuaishou's founder and CEO Cheng Yixiao elaborated on the latest progress in Kling AI, organizational AI upgrades, online marketing, and e-commerce operations. CFO Jin Bing disclosed details on cash flow, capital expenditures, and shareholder return plans.
Kling AI Revenue Surges Over 200% Year-on-Year, AI Capabilities Embedded Deeply into Business and Organization
In the second quarter of 2026, Kling AI generated revenue exceeding 850 million yuan, up more than 200% year-on-year. As of June, Kling AI had surpassed 100 million global users, covering 224 countries and regions, with nearly 50,000 enterprise clients. The simultaneous growth in user scale, enterprise clients, and revenue further validates Kling AI's product strength and commercialization potential in the professional creative market.
During the quarter, the Kling AI 3.0 model series introduced the industry's first native 4K video direct-output feature, targeting professional creative scenarios such as film, television, and advertising, enabling high-resolution output without complex post-production. Kling 3.0 Turbo enhanced creative efficiency and reduced production costs while maintaining dynamic quality and audio-visual synchronization. Kling MCP and CLI support AI Agent scheduling for batch creation, expanding workflow automation and intelligent orchestration capabilities.
Cheng Yixiao noted that since its inception, Kling AI has focused on professional content creators, leveraging video generation large models to improve efficiency for professional groups. Kling AI possesses strong prompt comprehension and controllable storyboarding capabilities, helping users achieve precise and coherent creative expression. Its visual quality and production extensibility also meet professional creators' demands for high-quality video content. Following its recent independent funding round, Kling AI's industry competitiveness is expected to strengthen further.
Beyond Kling AI, Kuaishou is pushing AI deeper into its core businesses and organizational operations. Cheng Yixiao revealed that in June 2026, over 92% of Kuaishou employees used various self-developed AI Agent products, with AI code contribution reaching 60% among R&D technical staff. In the second quarter, the average demand delivery cycle for R&D personnel shortened by more than 10% compared to the first quarter. Daily code submissions by AI R&D personnel grew over 70% quarter-on-quarter, with AI contributing to more than 60% of new code.
For industrial recommendation systems, Kuaishou launched AgentX, an Agent-driven R&D closed-loop system. Previously, recommendation strategies required multiple stages from idea to launch, including data analysis, solution design, code modification, experiment configuration, effect observation, and attribution review. AgentX can now serve as the execution entity for recommendation iterations, allowing engineers to focus more on goal setting, critical review, and high-level judgment, thereby improving iteration efficiency and outcomes.
The internal general-purpose Agent MyFlicker has completed Skill-based integration with key internal systems and is now serving all employees comprehensively. Meanwhile, the enterprise-grade large model service and development platform "Kuaishou Wanqing" supports internal AI applications while offering large model infrastructure services to external enterprise clients, achieving solid revenue growth. On OpenRouter, a global large model aggregation platform, several open-source models provided by Kuaishou Wanqing rank among the top in call volume.
Content Supply Expands Growth Space, AI Penetrates Marketing and Merchant Operations
In the second quarter, core commercial revenue, encompassing online marketing services and other services primarily driven by e-commerce and Kling AI, grew 7.4% year-on-year, continuing to underpin Kuaishou's business foundation. AI is simultaneously driving new content supply and marketing demand growth while also embedding itself into marketing campaign execution and merchant operations, enhancing the platform's efficiency in absorbing commercial demand.
Content consumption is one of the most evident areas of this transformation. As AI lowers production costs and creative barriers, the supply of short dramas and animated dramas is expanding rapidly. In 2025, Kuaishou had 60,000 animated drama titles, with projections reaching 500,000 in 2026. As of June this year, the supply of short dramas, including both live-action and AI-generated content, grew more than fivefold compared to January. This increased content supply has in turn driven marketing demand. In the second quarter, short drama online marketing spending grew over 100% year-on-year. In July 2026, daily average exposure for Kuaishou short dramas reached 230 million.
Cheng Yixiao stated that the short drama industry still has room for further growth, with a gradual shift from quantity expansion to content quality improvement. As the IAA model's share rises, short dramas are evolving into an ecosystem business that combines content consumption value with advertising carrying capacity. Future extensions could include IP derivatives, interactive dramas, virtual companionship, and cultural tourism integration.
Alongside content supply growth, Kuaishou is leveraging AI to improve marketing demand absorption efficiency. In the second quarter, Kuaishou built a scenario-based marketing material production Agent, driving AIGC short video marketing spending up more than 70% year-on-year. Generative recommendation large models and intelligent bidding large models were further extended to scenarios such as live streaming, search, and general merchandise shelves, improving the matching and conversion efficiency between marketing content and target users.
AI's role in marketing is also evolving from point-specific capabilities to complete workflows. On the material production front, Kuaishou has integrated user interest modeling with video production, upgrading from "finding marketing video materials" to "creating videos for users." On the client operations front, AI is entering areas such as business opportunity insights, product selection recommendations, campaign diagnostics, performance review, and customer service, helping clients and service providers standardize and automate labor-intensive tasks, further improving operational efficiency.
Cheng Yixiao further noted that in e-commerce, Kuaishou will continue to refine the merchant ecosystem from the supply side, with brands and industrial belts as the two key investment areas this year. For different merchant groups—including brands, large merchants, industrial belt sellers, and small new entrants—Kuaishou will provide differentiated products, policies, and resource support to help each type find a more suitable operational path. In the second quarter, new merchant onboarding grew nearly 10% quarter-on-quarter, new merchant second-month upgrade rates increased nearly 30% year-on-year, and matching pairs between distribution inventory products and creators grew over 20% year-on-year.
AI capabilities are also further entering merchants' daily operations. In the first half of 2026, over 850,000 merchants used Kuaishou's free AI operational tools, covering scenarios such as product selection and listing, material production, operational diagnostics, intelligent bidding, and intelligent customer service. Kuaishou will continue to improve merchant operational efficiency, stability, and certainty through supply structure optimization, tiered merchant management, and intelligent tools.
Maintaining Positive Free Cash Flow in H2, Balancing Business Expansion with Shareholder Returns
While continuously investing in AI, Kuaishou maintains prudent financial discipline. As of June 30, 2026, the company's total available funds—including cash and cash equivalents, time deposits, financial assets, and restricted cash—reached 121.3 billion yuan. Net cash generated from operating activities in the second quarter amounted to 5.9 billion yuan.
CFO Jin Bing stated that following Kling AI's independent funding round, the company will adopt more flexible forms of cash flow expenditure, including leasing arrangements to meet additional computing power needs, optimizing capital allocation, and improving the group's overall cash flow position to some extent. In terms of cash management and capital expenditure, Kuaishou will continue its prudent financial strategy. Jin noted that the majority of capital expenditures have already been concentrated in the first half of the year, with positive free cash flow in the second quarter, and the target is to maintain positive free cash flow at the group level in the second half.
Regarding shareholder returns, since the start of 2026, Kuaishou has completed approximately HK$2 billion in share buybacks and HK$3 billion in cash dividends, bringing total shareholder returns close to last year's full-year level. Jin Bing said that while firmly advancing its AI strategy, Kuaishou has achieved steady improvement in shareholder return intensity, with total shareholder returns for 2026 expected to exceed last year's figure.
Jin Bing added that while fully embracing the AI era, Kuaishou will continue to fortify its financial safety bottom line, reduce costs and improve efficiency through prudent financial discipline, maintain ample and healthy cash reserves, and achieve a sound balance between business expansion and shareholder returns through a stable financial structure, laying the foundation for long-term high-quality growth.
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