The latest financial results show that Kuaishou's Q2 performance exceeded expectations, with revenue growing 13% year-over-year to 35 billion yuan and adjusted net profit increasing 20% year-over-year, driven by strong growth in core advertising and e-commerce businesses.
Most notably, its AI video generation application "Kling" generated 250 million yuan in Q2 revenue, up 67% quarter-over-quarter. Kuaishou has also raised its full-year 2025 Kling revenue guidance to $125 million, doubling previous expectations.
Multiple investment banks believe Kuaishou's profit guidance for Kling remains overly conservative. JPMorgan stated that while this guidance suggests relatively moderate growth in the second half, Kling's revenue recognition involves delays, and actual cash collections this quarter may have exceeded 300 million yuan.
Goldman Sachs projects that Kling's total revenue will continue rapid growth over the next two years, reaching $250 million and $365 million in 2026 and 2027, respectively.
**Kling Revenue Recognition Involves Delays, Guidance Appears Conservative**
JPMorgan considers Kling's Q2 revenue of 250 million yuan "seemingly underwhelming," falling short of its 300 million yuan forecast.
The bank noted that Kling's revenue recognition involves a delay period, with the model from cash top-ups to actual AI consumption similar to mobile gaming, estimating that actual Q2 cash collections may have exceeded 300 million yuan.
Goldman Sachs believes that judging Kling's potential should not focus solely on annual guidance figures, but rather on its current growth momentum. The bank reported that Kling's revenue continued accelerating into Q3, with this strong quarter-over-quarter growth trend being the core basis for their projections significantly exceeding company guidance.
The bank expects Kling's total revenue to continue rapid growth over the next two years, reaching $250 million and $365 million in 2026 and 2027, respectively.
Bank of America is relatively optimistic about Kling's performance, considering the 250 million yuan revenue in line with its 240 million yuan expectation, emphasizing that Kling has become the world's highest-revenue AI video generation platform. The bank expects Kling's Q3 revenue to continue growing quarter-over-quarter.
Barclays expressed caution regarding revenue guidance, suggesting that based on Q2 run rates, the full-year target of $125 million indicates "relatively moderate growth in the second half."
**Core Business Performance Exceeds Expectations, Driven by Advertising and E-commerce**
While market attention focuses on AI, Kuaishou's main businesses demonstrated strong resilience, providing a solid financial foundation for the company's long-term investments.
Financial results show that Kuaishou's core online marketing services revenue grew 13% year-over-year, significantly accelerating from Q1's 8% growth rate. JPMorgan stated this was primarily driven by external advertising (digital content, local services) and e-commerce business.
E-commerce business became another highlight, with GMV growing 18% year-over-year, higher than Q1's 15%. Bank of America noted that e-commerce growth was mainly driven by shelf-based e-commerce GMV growing over 40% and short-video e-commerce GMV growing over 30%. The company achieved improved monetization rates by providing more value-added services to streamers and merchants.
Barclays analysis suggests that Kuaishou achieved above-industry-average growth in both advertising and e-commerce sectors. Advertising business benefited from AI-optimized intelligent marketing solutions, with strong demand in content consumption, local services, and automotive industries. However, the bank cautioned that overseas advertising revenue may decline year-over-year in Q3 due to Brazil payment policy changes.
Goldman Sachs analysis indicated that solid core businesses ensure Kuaishou has sufficient "ammunition" to support continued investment in high-potential new businesses like Kling AI without bearing premature profitability pressure.
**AI Investment and Profitability Balance Draw Attention**
Kuaishou demonstrated a positive attitude toward AI investment, raising full-year capital expenditure to 12 billion yuan, primarily for Kling-related investments. The company stated it will double down on AI-related investments while committing to limit AI investment impact on full-year profitability to 1-2 percentage points.
JPMorgan believes that Kuaishou's ability to maintain stable profit margins while investing in AI demonstrates strong execution capabilities. Adjusted operating profit margin increased 2.2 percentage points both quarter-over-quarter and year-over-year, mainly benefiting from revenue mix shifting toward higher-margin advertising and e-commerce businesses, and sales and marketing expense ratio declining 2.4 percentage points year-over-year.
Bank of America emphasized that while Kling has achieved gross profit profitability, the company expects incremental investment in inference computing capacity to have controllable impact on the income statement. From a medium to long-term perspective, Kuaishou believes Kling still has further room for reducing training and inference costs, with AI investment releasing sustainable growth momentum for the entire business ecosystem.