By Sherry Qin

Kuaishou Technology is scheduled to report first-quarter results on Tuesday. Here's what you need to know:

NET PROFIT FORECAST: The Beijing-based short-video app operator's first-quarter net profit likely fell 6.1% to 3.87 billion yuan, equivalent to $537.2 million, according to a poll of 19 analysts by Visible Alpha. Its adjusted net profit likely gained 3.2% to 4.53 billion yuan.

REVENUE FORECAST: Kuaishou's revenue likely gained 9.6% to 32.24 billion yuan. Citi analysts expect Kuaishou's earnings to have been supported by its livestreaming e-commerce business. Ad revenue growth was likely muted in the first quarter, the analysts said, citing heavy spending on party games seen in the same period last year. Splash ads over the quarter has also been scaled back, they noted.

Kuaishou's shares are up 17% year to date, partially erasing earlier gains of 31% recorded in the first quarter, boosted by Chinese AI startup DeepSeek's breakthrough and the country's rising enthusiasm over artificial intelligence.

WHAT TO WATCH:

-- Kuaishou's e-commerce growth decelerated in the fourth quarter. Nomura analysts believe that Kuaishou's main rival, Douyin, TikTok's sister app in China, is likely cutting commission rates for its merchants. As a result, Kuaishou's e-commerce monetization may face further pressure. Meanwhile, the entry of Tencent's video accounts and RedNote into livestreaming e-commerce could further intensify competition in an already saturated industry.

--Investors should pay attention to management updates on Kuaishou's AI monetization. The Kuaishou CEO said during an earnings call following the fourth-quarter results that the cumulative revenue of its self-developed video generation tool, Kling, has exceeded 100 million yuan since its commercialization began, up to February 2025. Kuaishou launched Kling AI 2.0 in April, which showed enhancements for more accurate video generation.

--The outlook for Kuaishou's e-commerce and advertising business remains key, as analysts noted there could be more uncertainty ahead amid external challenge facing China's economy.

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

(END) Dow Jones Newswires

May 23, 2025 03:49 ET (07:49 GMT)

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