Kuaishou Defies China Crackdown as Revenue Climbs 33%

(Bloomberg) -- Kuaishou Technology’s revenue increased 33%, defying China’s tech crackdown and intensifying competition with ByteDance Ltd.

Sales rose to 20.5 billion yuan ($3.2 billion) for the three months ended September, versus the 20.1 billion yuan average forecast. Net loss was 7.1 billion yuan, compared with the 8.6 billion yuan loss projected.

Kuaishou, the operator of China’s largest short-video platform after ByteDance’s Douyin, is going on a spending spree to compete with the TikTok owner in both domestic and global markets. It’s also grappling with an influx of social-media rivals including Tencent Holdings Ltd.’s WeChat. Beijing’s broad regulatory scrutiny over industries from education to insurance and real estate is weakening prospects for its burgeoning online advertising business.

In a surprise move announced last month, Su Hua stepped down as the company’s chief executive officer, handing over the leadership role to co-founder Cheng Yixiao to focus on long-term strategy as chairman. The move coincided with a flurry of management shuffles at China’s largest internet firms including ByteDance and e-commerce operator JD.com Inc., as the tech crackdown cows the country’s billionaires into submission.

Kuaishou is aggressively pursuing new content in areas spanning from sports to music and variety shows. It has nabbed the rights to broadcast the 2022 Winter Olympics and produce short-video content for NBA China. And just like Douyin and TikTok, the video-sharing community is morphing into an online bazaar where influencers peddle lipsticks and smartphones to their followers -- the division that includes e-commerce now contributes roughly 10% of total sales. In June, its global products including Kwai and Snack Video chalked up 180 million monthly users outside China, up from 150 million in April.

One of the worst performers among large listings in 2021, Kuaishou has shed roughly $170 billion in market value since hitting a peak in February, less than two weeks after its $5.4 billion initial public offering in Hong Kong. The stock climbed 1.2% in Tuesday trading before the results.

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