Kuaishou Technology (KUAISHOU-W) released its 2026 interim report showing modest topline expansion alongside sharply lower profitability, while its AI video subsidiary “Kling AI” delivered triple-digit growth.

Kuaishou generated revenue of RMB69.25 billion for the six months ended 30 June 2026, a 2.40% year-on-year increase. Gross margin slipped to 51.4% from 55.1%, and operating profit fell 23.0% to RMB7.35 billion. Net profit attributable to shareholders dropped 32.0% to RMB6.05 billion; on a non-IFRS basis, adjusted net profit declined 28.5% to RMB7.29 billion, equal to a 10.5% adjusted net margin.

Quarterly trends highlighted a further slowdown. Second-quarter revenue edged up 1.40% to RMB35.54 billion, while profit for the period declined 36.0% to RMB3.15 billion. Adjusted EBITDA fell 7.70% to RMB7.12 billion.

Segment analysis underscores diverging trajectories: • Domestic operations delivered RMB66.91 billion in H1 revenue, up 2.90%, but operating profit fell 30.0% to RMB6.83 billion. • Overseas revenue contracted 10.50% to RMB2.34 billion, with a RMB56 million operating loss versus a RMB47 million profit a year earlier.

By business line, H1 online marketing services rose 6.73% to RMB40.28 billion, while live-streaming revenue slid 13.46% to RMB17.18 billion. “Other services”—principally e-commerce and AI unit Kling—grew 17.27% to RMB11.79 billion.

Kling AI remained the bright spot: second-quarter revenue surpassed RMB0.85 billion, representing growth of more than 200% year-on-year and marking the platform as a key “second growth curve.” The company highlighted native 4K video output and workflow automation tools as recent milestones, citing recognition at Cannes Lions and the Beijing International Film Festival.

User metrics stayed resilient. Average DAUs on the Kuaishou App reached 412.5 million for H1, up 1.0%, while MAUs climbed 10.0% to 784.5 million. However, live-streaming revenue softness reflected a “healthy ecosystem” transition and changing monetisation mix.

Operating expenses climbed—research and development outlays jumped 22.4% to RMB8.20 billion, driven by AI model training—while selling and marketing costs remained broadly flat. Net finance expenses swelled to RMB431 million as the group issued USD1.50 billion and RMB3.50 billion of senior notes in January.

As of 30 June 2026, Kuaishou held RMB121.30 billion in total available funds, including RMB11.70 billion in cash and cash equivalents. Total borrowings increased to RMB27.36 billion, lifting the gearing ratio to 33.3%.

Shareholder returns continued: a final dividend of HK$0.69 per share (approximately RMB3.00 billion in aggregate) was approved and paid in July. During H1 the company repurchased 31.01 million Class B shares for HK$1.27 billion; 28.57 million shares were subsequently cancelled.

Looking ahead, management reiterated commitment to “disciplined” AI investment and deeper integration of large-model technology across marketing, e-commerce and content ecosystems, while cautioning that macro headwinds and competitive intensity may weigh on near-term growth.