Kuaishou Officially Files its IPO Prospectus in HKEX as ByteDance Seeks Pre-IPO Round of Financing

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On the evening of Nov. 5, Beijing time, Chinese short video giant Kuaishou officially submitted its prospectus to the Hong Kong Stock Exchange, ending the months long speculation of when the company would go public. This would mean that Kuaishou beats Douyin parent ByteDance, its biggest competitor in mainland China to start the process of becoming a public company.

According to the prospectus, Kuaishou’s operating revenue in the first half of 2020 was 25.3 billion yuan, up 48% from the same period last year. The company also reports a revenue of 8.3 billion yuan, 20.3 billion yuan and 39.1 billion yuan respectively in 2017, 2018 and 2019.

Kuaishou reported an average 302 million DAU (daily active users) and 776 million MAU (monthly active users) in the six months ended June 30, 2020, taking account of both Kuaishou app and its WeChat based mini-program. The company has made reaching an average of 300 million DAU a goal as early as late 2019, setting last Spring Festival as a deadline.

The prospectus also discloses the company’s main revenue sources: live streaming, online marketing services and other businesses (e-commerce, online games and other add-up services), among which live-streaming accounts were the biggest chunk. From 2017 to 2019, revenue from Kuaishou’s live streaming business was 7.9 billion yuan, 18.6 billion yuan and 31.4 billion yuan. In the first six months of 2020, the revenue of Kuaishou live-streaming reached 17.3 billion yuan. However, as Kuaishou diversifies its business, the revenue share of live-streaming is decreasing year by year, from 95.3% in 2017 to 68.5% in the first half of 2020.

In the first half of 2020, the revenue of Kuaishou’s online marketing services reached 7.2 billion yuan, up 222.5% year-on-year. In the past three years, Kuaishou’s online marketing services accounted for 4.7%, 8.2% and 19.0% of the total revenue respectively, rising to 28.3% in first half of 2020.

In 2018, Kuaishou started its e-commerce business, and by the first half of 2020, the GMV scale will exceed 100 billion yuan. According to the prospectus, GMV contributed by the platform increased from 96.6 million yuan in 2018 to 59.6 billion yuan in 2019, and from 3.4 billion yuan in the first half of 2019 to 109.6 billion yuan in the first half of 2020. According to Chinese tech news outlet 36Kr, the GMV target of Kuaishou’s e-commerce business in 2020 is 250 billion yuan.

Kuaishou e-commerce business benefits from its high user viscosity generated by the social functions of the platform. According to the prospectus, in the first six months of 2020, the average monthly repurchase rate of Kuaishou users exceeded 60%.

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Kuaishou’s biggest rival ByteDance is also looking to get part of its business listed in Hong Kong, according to Bloomberg. The TikTok owner is reportedly talking with investors for a $2 billion Pre-IPO round of financing. Upon completion, ByteDance will be valued at $180 billion. Per 36Kr, ByteDance will form a spin-off company comprised of its three main businesses that are more mature, Douyin, Toutiao and Xigua Video, in an effort to get a higher valuation.