❯ Kuaishou Q2 Net Profit Down 36% YoY, Kling AI Revenue Up Over 200% to Surpass 850 Million Yuan

EARNINGSKuaishou reported second-quarter total revenue of 35.5 billion yuan, up just 1.4% year over year. Net profit for the period was 3.152 billion yuan, down 36% year over year, the steepest decline since 2021. Adjusted net profit was 3.9 billion yuan, with an adjusted net margin of 11.0%.

KLING LEADSThe report’s bright spot is concentrated in one place: video-generation model Kling AI generated over 850 million yuan in second-quarter revenue, up more than 200% year over year, with cumulative first-half revenue above 1.5 billion yuan, global users surpassing 100 million, and coverage across 224 countries and regions. Core commercial business revenue — including e-commerce and Kling — rose 7.4% year over year, while live-streaming revenue fell to 8.7 billion yuan, which the company said was a deliberate trade of near-term monetization for ecosystem health.

PROFIT DRAINGross margin fell 4.1 percentage points year over year, which the company attributed to increased AI model training spending. Kling’s revenue growth and Kuaishou’s profit decline are two sides of the same coin.

CASH FLOWManagement said it would keep free cash flow positive in the second half, setting a ceiling on how much can be invested in Kling. What this earnings report rewrites is the commercialization outlook for China’s AI video: 850 million yuan in a single quarter and an annualized run rate above 3 billion yuan show that generative video is no longer a business that can survive on funding alone — but every yuan of that revenue is currently being deducted from core-business profit.

▪ SIGNALKling’s revenue curve and Kuaishou’s profit curve are heading in opposite directions. How many quarters can this scissors gap hold? The answer lies in second-half free cash flow.