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Kuaishou Technology, a China video and e-commerce platform that competes with larger homegrown rival ByteDance, said on Tuesday its operating loss quadrupled in the fourth quarter of 2021 to 5.79 billion yuan, or about $904 million from 1.37 billion a year earlier amid an increase in marketing and research expenses. Covid-19 outbreak in China was adding uncertainty to the outlook, it noted.

Revenue in the last three months of 2021 increased by 35% to 24.4 billion yuan from 18.1 billion yuan on gains in online ads, e-commerce and livestreaming.

Kuaishou’s Hong Kong-traded shares have lost 70% of their value in the past year. For all of 2021, Kuaishou lost 78 billion yuan on revenue of 81 billion yuan. About 28 billion yuan of that loss was from operations. (See financial details here.)

Kuaishou’s $5 billion IPO last year – which attracted Capital Group, Temasek, Invesco, Fidelity International, Blackrock, Boyu Capital, Morgan Stanley and the Abu Dhabi Investment Authority as cornerstone investors – underscored how China, the world’s No. 2 economy and No. 1 number user of mobile phone users, has been making a mark in the global media and entertainment industry.

China’s early recovery from the worst of Covid-19 pandemic has given way to more disruptions this year, however, particularly this month in Shanghai, one of Asia’s main business hubs, and Kuaishou said containment was uncertain. “During the outbreak of Covid-19, including the emergence of the Delta and Omicron virus variants, the PRC (People’s Republic of China) government adopted various social distancing initiatives in response to the pandemic, and many people turned to online social and entertainment activities in lieu of physical gatherings. Consequently, there was a surge in demand for internet and mobile services.”

“However,” Kuaishou continued, “the surge in demand was offset by certain factors, including (i) decreased advertising spending from certain of our advertisers who experienced uncertainties in their business operations due to the further spread of Covid-19 and its multiple variants, which in turn affected our online marketing service revenue; (ii) reduced incomes and declined consumption of our users as a result of the economic disruption caused by the Covid-19 pandemic, which had an impact on the revenue from our live streaming business and the growth of our e-commerce GMV (gross merchandise value); and (iii) supply chain disruptions and logistics challenges that had limited our merchants’ capabilities to provide merchandise and services to our users, affecting our e-commerce GMV.”

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“While there has been improvement in the Covid-19 situation in China,” Kuaishou said, “we are uncertain as to when the outbreak of Covid-19 will continue to be contained, and we also cannot predict if the impact will be long-lasting. In particular, the recent emergence of the Omicron virus variant, a Covid-19 virus variant that is significantly more infectious than its predecessors, could affect the overall business sentiment. We took a series of measures in response to the outbreak to protect our employees in compliance with governments’ measures, including, among others, remote working arrangements for our employees and travel restrictions or suspension. These measures temporarily reduced the capacity and efficiency of our operations.

Kuaishou still has a market cap worth approximately $41 billion; chairman Su Hua has a fortune worth $4.9 billion and CEO Cheng Yixiao is worth $3.8 billion on the Forbes Real-Time Billionaires List today.

ByteDance operates short video platforms Douyin in China and TikTok internationally.

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@rflannerychina

Source: Forbes

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