Kuaishou Earnings Drop by a Third, Hit by AI and Creator Costs

Kuaishou Technology earnings fell the most in five years, hit by higher revenue sharing payouts to creators while artificial intelligence outlays drove spending up by more than a third.

Net income slipped 36% to 3.15 billion yuan ($467 million) for the second quarter, the biggest drop since 2021 and marking only the fourth contraction since then.

The cost of both revenue sharing and research and development — which is primarily related to AI spending — rose 35% over the quarter.

Income from its livestreaming business also fell, offsetting most of the growth in its bigger online marketing services business, according to a Wednesday filing. Overall revenue was stable at 35.5 billion yuan, in line with analyst expectations.

Sales growth for Kuaishou’s flagship Kling AI text-to-video also slowed, clocking 200% growth in the second quarter, down from 300% a quarter ago.

“We are cautious about the short-term business outlook as the operating environment has become increasingly complex and challenging,” the company said. The firm will continue to scale Kling AI’s model capabilities and unlock additional commercialization opportunities.

Alibaba Group Holding Ltd. and Tencent Holdings Ltd. are among the clutch of investors that joined a $2.8 billion financing round for Kling AI. Kling is now part of a wave of Chinese AI video services seeking to pull in revenue from global customers, moving to fill a void after OpenAI shuttered Sora.