Kuaishou Profit Tops Estimates, Boosted by AI Technology

By Sherry Qin

Kuaishou Technology delivered another quarter of stronger-than-expected profit, buoyed by steady growth in its core advertising and e-commerce businesses and the increased monetization of its Kling AI video-generation tool.

Like its Chinese tech peers, Kuaishou--China's second-largest short-video platform after TikTok's sister app Douyin--has been spending big on artificial intelligence as competition in the short-video industry heats up. Its AI efforts have largely centered on the self-developed video-generation tool it hopes will help creators and businesses produce more attractive and engaging content and ads.

The Beijing-based company on Wednesday reported a 37% increase in third-quarter net profit to 4.49 billion yuan, equivalent to $631.7 million. That beat the 4.18 billion yuan expected by analysts in a FactSet poll. Adjusting for share-based compensation expenses and net fair-value changes on investments, net profit rose 26%, it said.

Revenue climbed 14% from a year earlier to 35.55 billion yuan, in line with market expectations of 35.30 billion yuan.

Kuaishou's other services segment, which includes e-commerce and Kling AI, was the biggest top-line growth driver in the quarter, with revenue rising 41%.

"As Kling AI continued to expand into a wider range of application scenarios, it has achieved further breakthroughs in revenue growth," the company said.

Revenue from the AI tool surpassed 300 million yuan in the third quarter, following more than 400 million yuan generated in the first half, on track to exceed the company's previous guidance of $100 million for the whole year.

Analysts have pointed out the vast market potential of AI video generation, with applications across sectors including movies, animation and advertising. The recent release of OpenAI's Sora 2--its latest video-generation model--has already garnered much attention, potentially accelerating the adoption of the tools further. Analysts at DBS put the total addressable market that Kling AI could tap at roughly $60 billion in a bull-case scenario.

Kuaishou's Hong Kong-listed shares have risen more than 50% this year as investors cheer Kling AI's monetization prospects. Unlike other AI models and tools developed by Chinese companies, Kling is emerging as a rare Chinese application with global monetization potential, with 70% of its current users outside of China.

"AI adoption in content generation and distribution is expected to deliver tangible benefits to core advertising and e-commerce, while resilient purchasing power from lower-tier city users should further support above-industry growth," DBS analysts said in a recent note.

Kuaishou in September released Kling AI 2.5 Turbo, boasting better prompt comprehension and enhanced capabilities in movements and facial expressions, while being nearly one-third cheaper than the previous 2.1 model.

In the third quarter, its sales from online marketing services, which account for more than half of revenue, rose 14%, thanks to decent gross merchandise value growth and the adoption of AI technologies.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

November 19, 2025 04:24 ET (09:24 GMT)