Ladies and gentlemen, hello everyone. Welcome to the 1st quarter performance telephone conference of Kuaishou Technology in 2024. Please note that this conference will be held in English. You need to log in to the English channel to listen to the third part of the presentation. Please note that today's conference is being recorded. Now, let's welcome the vice president of the company's capital market and investor relations, Matthew Johnson.
Thank you, Operator. Hello, everyone. Welcome to Kuaishou Technology's first annual phone conference. Today, we have with us the co-founder and CEO of Kuaishou Technology, Mr. Cheng Yixiao, and the Chief Financial Officer of Kuaishou Technology, Mr. Jin Bing. Before we begin, we would like to remind you that today's conference may include preliminary statements,
The conclusion and the result may be different from the conclusion and the result discussed today. In addition to the legal requirements, this company does not have any obligation to update the preliminary information. All important information about this meeting, including preliminary statements, should be based on the company's public information or the performance announcement of the first quarter of 2024 as of March 31, 2024, which was published on the company's IR website earlier today.
In today's telephone conference, the management team will also discuss some financial indicators that are not international accounting standards. Please consider them as supplementary, but cannot replace the company's financial performance indicators compiled according to international accounting standards. For the definition of non-international accounting standards financial indicators, as well as countermeasures to international accounting standards financial performance, and related risk factors, please refer to the company's first quarter performance announcement in 2024.
In today's telephone conference, the management team will use Chinese as the main language of communication. In the first part of the management team's speech, the third-party spokesman will provide English simultaneous translation. In the second part of the Q&A session, the third-party spokesman will provide English interchangeable translation. Translation not only improves the efficiency of the conference, but also helps the translation of Chinese content. Please refer to the original Chinese statement of the management team. Finally, unless there is another explanation, all the monetary units mentioned in the telephone conference will be RMB. Next, let's invite Yixiao to speak. Hello, everyone.
Welcome to Kuaishou's 1st quarter business community meeting. In the 1st quarter of 2020, our total operating revenue increased by 16.6% to 29.4 billion yuan. The gross profit was nearly 55%. After the capital adjustment, the net profit reached 1.4 billion yuan. After the capital adjustment, the net profit reached 14.9%. We achieved a good increase in revenue and profit from the market.
In the traditional sense, we still have strong business performance on operating indicators and financial data, which reflects the strong resilience of public-private business and the mutual integration effect of user ecology and commercial ecology, which is a good start for 2024. In the first quarter, we promoted traffic mixed recommendation mechanisms, coordinated user experience improvement and commercialized conversion efficiency improvement.
We use the smart marketing solution to help our customers get more customer marketing budget. We are committed to creating a better shopping experience for our users. We drive the growth of e-commerce business files with live e-commerce and goods e-commerce. We continue to grow a healthier live e-commerce ecosystem and lay a solid foundation for the sustainable development of the platform.
We are steadily promoting the R&D and training of the large-scale blockchain model. We use AI to enable multiple business scenarios, assist in the improvement of the system, and promote high-quality growth. Next, I will introduce the business progress of the first quarter in detail. First is about user growth and ecological construction. In the first quarter of 2024, the average daily active users and the average monthly active users used by Kuaishou reached 3.94 billion and 6.97 billion respectively.
and increased by 5.2% and 6.6% respectively. The daily usage time of the fast-access app is 129.5 minutes. We continue to achieve steady growth at the traffic end. In the first quarter, the total usage time of users increased by 8.6% respectively. This benefits us to continue to promote high-quality user growth strategies.
Through high-quality content to meet the needs of users, we constantly improve the user experience and provide value to users. In terms of user growth, we optimize the channel structure of user growth. Combined with algorithms to predict the new user flow rate, we improve the ROI of user growth. We have developed a user-interested diversified exploration, short-video component optimization, and short-video comment sequence strategy optimization. At the same time as improving the user experience,
It also brings an improvement in user experience. In terms of content supply, we support high-quality creators with fast hands, and create differentiated high-quality IP content with fast hands at important time nodes. It becomes a reason for users to open their hands quickly. To accompany nearly 400 million users to enjoy China's strong agricultural chain,
快手延续了快手年末2024年春节活动上线了丰富多元的新春主题内容龙子夜成龙家宴广邀明星好友和快手达人共庆佳节节目首播观看量超过2.6亿人次累计点赞量超6.9亿
The highest number of people online at the same time is more than 6.63 million. In addition, a series of themes such as 1001 pages, the Lao Tie Lian Kuan Festival, Yun Shang Temple Festival, and Spring Festival Gala have built a rich stage for the creators and improved the user's age. In the Spring Festival this year, the number of broadcasts exceeded 100 million, and the number of new short films reached 200 million, and the number of broadcasts exceeded 300 million.
Super-capable team members, me and my grandfather, etc. Various topics and content are all over the place. From short films for celebrities to short films for adults, it's a comprehensive development. In the first quarter of 2024, in the field of search business, we strengthened the optimization of large-scale model technology for search optimization, improved the scale and landing experience of watching and collecting scenes, thereby improving the search penetration rate and search experience. On average, the number of users who use Question Search for a month has increased by more than 15%,
The total number of searches in three days has increased by nearly 800 million times. We actively promote the commercialization of the search scene. Search marketing service income has increased by more than 50%. Second, in terms of online marketing business, in the first quarter of 2020, the macroeconomic and consumer markets have returned to normal. Our online marketing service income has increased by 27.4% to 166.5 billion yuan.
The total revenue contribution ratio reached 56.6%. We strongly promote smart marketing solutions in the application of various scenarios, so that the number of active marketing customers in the first quarter has increased by nearly 90%. We help to build chains to guide the traditional meaning of external circulation.
to achieve target users' conversion and exchange transactions. This also enhances our understanding of users and can rely on algorithms to build on active marketing users to explore the potential of online marketing platforms.
In the first quarter, relying on AI and large model capabilities, our smart marketing solution can provide customers with smart creative production, smart marketing launch, and smart user integration. In the smart creative production segment, our AIGC capability can quickly generate better creative content and enhance the ability to launch and diversify creativity. In the first quarter, the sales day of AIGC marketing materials
The consumption peak is more than 10 million. In the smart marketing investment section, our UAX products and full-circle promotion products can provide customers with automated investment capabilities, including bidding, real-time gold plates, and control, etc. In the smart user acquisition section, our AI smart customer service can help customers and target users connect and communicate to improve marketing conversion efficiency. The flow rate of some industries has increased by more than 40%.
In the first quarter, the internal circulation marketing service revenue has exceeded the rapid growth of e-commerce GAV. We have further updated the strategy and capabilities of the full-scale promotion of products, especially the promotion of full-scale commodity products, including material data leaks, creative ability optimization, and many core product functions. And in March, we will open to all customers.
to help e-commerce merchants explore fast and high-quality traffic and increase the scale of GMAV. In terms of smart promotion products, we have tested and launched a self-promotion. In the relevant functions of large-scale products, we have improved the customer's investment effect and investment will. In the first quarter, merchants used full-time promotion products or smart promotion products for marketing. The total consumption of promotion reached 30% of the internal circulation total consumption.
In the first quarter, the revenue of external circulation marketing services has increased by more than the same as the market, especially in the media, games and education industries. For the paid short-term marketing services in the media, we have continuously optimized the inter-chain chain and improved the supply and demand brought by the policy incentives, so that the short-term daily consumption of the first quarter has increased by more than four times.
The fast-paced small game marketing service has also gone through the IAA mode in the first quarter, which has contributed a good amount to the marketing consumption of game customers. The marketing consumption of the education industry has increased nearly three times in the first quarter, mainly due to our digging of user needs to stimulate the budget of marketing customers. Our external loop smart investment product UX has provided customized full-life cycle automated investment solutions for various industry marketing customers to improve customer marketing conversion efficiency.
In the first quarter, the total consumption of URX marketing has increased by more than four times. In terms of brand marketing, we have established a rich brand marketing evidence and customized solution for customers. At the same time, with high-quality content supply, accurate crowd coverage and high-efficiency conversion ability, we have met the marketing goal of customer-brand coordination and obtained the budget of brand customers. During the Spring Festival this year, the number of brand recruiters increased by more than 120%.
The surge in short-term payment content has led many brands, including Tianmao and Honor Mobile, to acquire high-efficiency exposure and effective coverage of the public. We have upgraded the product marketing solution in the automotive industry to make automotive brand marketing and line-of-work management more effective. Recently, we have partnered with Dongfeng Daily to attract traffic through star IPs and men's midfield content.
and the continuous conversion of car retailers within Kuaishou to achieve the full-scale operation of the new car listing scene. The number of brand topics is only 800 million. Third, in terms of e-commerce business, in the first quarter of 2020, we have improved the efficiency of buyers by optimizing operations and continue to provide a rich supply and expand the field of e-commerce. The e-commerce business GDP has increased by 28.2% to 28.8 billion yuan.
The number of e-commerce active buyers in the first quarter has increased by 22% to 1.26 billion. This is mainly due to the rich quality of shopping scenarios such as delivery prices and conversion channels, as well as the upgrade of marketing tools and gameplay. At the same time, we have strengthened policy guidance to bring better experience and security to consumers from after-sales and after-sales all-in-one. We have also rapidly promoted platform-initiated service reception and other services in all directions to improve consumer experience.
During the 2024 Chinese New Year, the number of buyers has increased by more than 60% compared to the previous year. In the first quarter of 2024, the monthly sales of merchants increased by nearly 70%, mainly due to the continuous activation of new merchants. We have greatly optimized and upgraded the platform. The business policy is in line with commercialization, and the overall coverage of brands, big and small merchants is different.
In the first quarter, the number of newly mobilized merchants in the US military continues to grow rapidly. For small and medium-sized businesses, we are encouraging new business owners to open their high-level accounts through the Doujin policy. At the same time, we will support businesses in many aspects, such as guarantee funds, traffic, distribution and training, and optimize business tasks and training systems to help businesses move forward. In the first quarter of 2024, the number of business owners in the US military continued to grow strongly.
During the Chinese New Year, the annual sales of brand-producing goods increased by more than 70% compared to the previous year. Brands' sales increased significantly in both the short-term and long-term markets. In the first quarter, the annual sales of brand-producing goods increased by more than 110% in the short-term and increased by more than 80% in the long-term.
From the perspective of the industry, the sales of home appliances, men's clothing, sports and jewelry have all contributed to a higher increase. In terms of the linkage between brands and experts, we have launched new experts, small and medium-sized experts, and at the same time provided more large-scale marketing tools to help hit and explode. And in terms of the distribution of experts, we recommend good products to experts through an internal recommendation chain, and help small and medium-sized experts choose products through external team leaders.
the ability to integrate and improve the platform, and in many fields such as short video, it has greatly improved the broadcaster's willingness to broadcast and commercial contribution. In terms of the field, we have achieved strong growth in the product price field. In the first quarter, the product price field grew by a large margin.
accounted for about 25% of the total share. We have made significant progress in supply and demand measurements. In the first quarter, the price of goods increased by more than 50% compared to the daily sales increase, and by more than 60% compared to the daily buyer increase. We will further enhance the product infrastructure and enrich the product range to improve the pricing management system. At the same time, we will focus on the advantages of the core buyer, user, and group demand, including fresh food, customer department stores, etc.
In addition, our short video e-commerce has continued to grow sharply in the first quarter and has increased by nearly 100%.
The supply volume has increased. For example, during the New Year's holiday, the number of orders increased by 98% during the New Year's holiday in 2020. Search FanHuoJia.com and you will see that the number of orders increased by 345% during the New Year's holiday last year. Search ZifuJianWei.com and you will see that the number of orders increased by 164%.
383%. The growth of the two-wheel drive of the content manufacturer and the cargo manufacturer has released more opportunities for business owners. Next, in terms of live business, in the first quarter of 2020, we continue to strive to build a healthy live ecosystem and lay the foundation for the long-term sustainable growth of business.
We strongly support China Medicine Department anchors through online training, offline training, and anchors' tasks. We encourage anchors' activity and quality improvement, accelerate the growth of new anchors, and encourage the improvement of public meetings. At the same time, we continue to promote new types of anchors, such as multi-person scene anchors, large five-shot anchors, and other new types of anchors. In addition, we are innovating new ways of playing and enriching the live-streaming environment. At the end of the first quarter, the number of members of public meetings increased by 50%.
and 50% increase in the number of contracted public broadcasters. In addition, as a reminder of the traditional industry of rich and capable live broadcasters, in the first quarter, fast-paying businesses launched the New Spring Recruitment Association for the employment and recruitment needs after the resumption of the Spring Festival. The number of online activities of local broadcasters and celebrities has increased by more than 180%.
And the number of Japanese land users has also increased by more than 120%. In addition, as of the first quarter of 2020, Idealist's business has already covered more than 100 cities across the country, and there are more than 50,000 co-hosts. Finally, let's talk about the progress of overseas business. We have established a strong and in-depth localization strategy based on the high-efficiency expansion user base in the overseas core market.
to form differentiated advantages. We focus on the production of localized original content, as the local traffic mechanism is optimized and the creators' income is diversified. Content supply is growing rapidly. In Brazil, we are working on projects such as the Brazilian Halloween Festival and the biggest reality show BBB24. Users' popularity continues to improve, which means that the brand awareness and awareness of the brand have been improved. In addition, we have improved the foundation of the power chain,
As one of the sponsors of BVB, KAWAI has created a BVB topic label. As of April 16, the number of views of the accumulated video has reached 1.4 billion times. The stability of the DAU in the core development area of the first quarter has increased, and the time-to-time ratio has also improved. Among them, the DAU ratio in Brazil has increased by 13%. In the first quarter, the daily DAU usage time exceeded 75 minutes.
Therefore, in the first quarter, overseas business revenue reached 9.9 billion yuan, an increase of 193%. We continue to improve operating efficiency. In the first quarter, the overall overseas business operating loss was reduced by 64.7%, and the operating loss was also narrowed.
In terms of overseas online marketing, through the continuous construction of localization marketing capabilities, the ecological construction of the product has been improved, and the efficiency and stability of the customer's investment has been further improved. At the same time, we have been expanding in three aspects from platform, service, and creativity, with the help of marketing nodes such as Buffett and Huangguanjie, to help international and Chinese overseas brands to gain a double benefit. In the first quarter, overseas marketing revenue doubled to three times the growth. During the Basilica Festival,
with a diversified creative plan to create marketing headlines. The total exposure of the event reached 9,560,000 people and successfully boosted the popularity and product reputation of the Brazilian market. At the same time, KAWAI has also carried out a detailed user image analysis for Realme to continue to open up the Brazilian market, further target promotion and achieve long-term business value, providing effective reference bases.
In short, regardless of the current business model or the future possibilities, Google AdWords is still one of the best channels. We will continue to strive to create healthier and more sustainable community content and business environment, and continue to invest in the field of AI technology and enable more business scenarios to improve the user's content consumption experience and
Thank you, Yixiao. Hello, everyone. In the first quarter of 2024, we actively respond to market challenges and adhere to the high-efficiency, high-quality growth strategy of our business.
Through technical integration and efficiency improvement, and enhanced core competitiveness, the sustainable development strategy of each business has been fully verified. The financial situation is healthy and stable, and has laid a good foundation for the full-year performance. We continue to pay attention to the efficiency and quality of user growth, and continue to increase technological innovation and high-quality content supply. It also provides a strong support for our sustainable development and profit. In one quarter, the net profit after adjustment reached RMB4399 billion,
By adjusting the net profit rate to close to 15%, profitability is generally born. Next, let's take a closer look at the financial performance of the company in the first quarter of 2020. In the first quarter of 2020, the total gross income of the group reached RMB 294.1 billion yuan, an increase of 16.6%. All the growth mainly came from online marketing services and e-commerce business growth.
In one quarter, online marketing service revenue reached RMB16.7 billion, and increased by 27.4% compared to RMB13.1 billion in the same period in 2023, accounting for a total revenue of 56.6%. This increase is mainly due to the widespread application of smart marketing solutions and the comprehensive improvement of full-scale promotion of product capabilities, which has greatly increased the number of marketing customers and the consumption of marketing investments.
especially the inner loop investment from e-commerce merchants. The gradual recovery of the macroeconomic and consumer markets has also promoted a further release of advertising budget. At the same time, relying on AI technology and big models, we have deeply explored the needs of users, stimulated the budget of marketing customers, and improved the efficiency of conversion. Other service revenue reached RMB 4.2 billion in a quarter, and grew by 47.6% compared to RMB 2.8 billion in the same period in 2023.
This is mainly due to the constant growth of e-commerce GMB and the growth of e-commerce commission income. Through the continuous enrichment of multi-dimensional shopping scenarios such as drugstores, short videos, and improving the supply of high-quality content, at the same time upgrading marketing tools and optimizing platform policies, and continuing to optimize the consumer experience, we have effectively improved the conversion efficiency of buyers, driving the rapid growth of monthly sales and monthly monthly buyers.
to achieve 28.2% of the same growth in e-commerce GIV. In one quarter, the live business revenue is RMB 8.6 billion, which is 8% lower than the RMB 9.3 billion at the same time last year. Facing the challenges of the industry, we continue to enrich the live broadcast scene, bring in innovative gameplay and enhance the quality of live broadcast content, striving to create a healthy and sustainable live broadcast ecosystem.
In terms of cost, the sales cost per quarter is reduced by 1.6% to RMB 13.3 billion, accounting for 45.2% of the total income. This is mainly due to technological means such as bandwidth resource structure optimization. The cost of bandwidth and server replacement is reduced by the same ratio. In the first quarter, the group's gross profit reached RMB 16.1 billion, which increased by 37.6%, and the gross profit rate reached 54.8%.
The share price and return price increased by 8.4 and 1.7 percent respectively. In terms of cost expenditure, the share price increased by 7.6% in the first quarter, up to RMB 9.4 billion. The total income ratio dropped from 34.6% in the same period last year to 31.9% in this quarter. The increase is mainly due to the promotion and investment of business such as e-commerce in Canada.
In the first quarter, R&D expenses fell by 2.6% to RMB 2.8 billion, accounting for 11.6% of total revenue from the same period last year, down to 9.7% this quarter. Administrative expenses fell by 49.7% to RMB 4.6 billion, accounting for 3.6% of total revenue from the same period last year, down to 1.6% this quarter.
The decline in R&D and administrative expenses is mainly due to the reduction in employee welfare expenses, including salary expenses based on shares. In the first quarter, the net profit on the group level grew to about 4.1 billion yuan, and the net loss at the same time last year was 8.8 billion yuan, which was significantly improved. The net profit on the group level has grown to about 4.4 billion yuan,
which is 4,200,000 yuan higher than last year's adjusted net profit. Our asset-asset ratio is still strong. As of March 31, 2024, cash and cash-related goods, regular deposits, cash and financial products, etc. have a total of 6.37 billion yuan. Thanks to the enhancement of our cash-transfer capacity and the improvement of operating capital management efficiency,
In the first quarter of 2024, we earned 5.8 billion yuan in operating activities. In the future, we will continue to pay attention to the balance of traffic ecology and change strategy, and cultivate a healthy and sustainable ecosystem for users and businesses. As business revenue continues to grow, we will further improve operating efficiency and ROI.
利用我们在技术和创新方面的优势,撬动更多变现潜力,为股东和合作伙伴创造长期价值。以上是我们分享的内容,现在请进入问答环节。谢谢。提醒一下,如果您需要提问,请按星字键再按一字键。如果您需要撤回您的问题,请按星二键。
We will now begin the question and answer session. To ask a question, please press star one on your telephone keypad. To request a question, please press star two. Please ask your question in Chinese first and repeat your question again in English.
The first question comes from Lincoln Kong of Goldman Sachs. Your first question comes from Lincoln Kong of Goldman Sachs. Thank you for accepting my question, and congratulations on your strong performance. My question is about e-commerce. Can you share with me the latest progress of e-commerce business?
and we are going to launch the fast hand opt-in mode. Let me translate it for you. So, thank you management for taking my question and congrats on a very strong first quarter result. So, my question is around the e-commerce business. Can management share the progress of our e-commerce shopping mall business? And any more thoughts around the launching of the fast hand select, the sales hosting model here? Thank you. The next question.
Kuaishou's e-commerce business is still at a high-speed development stage, and the selling price industry is one of the e-commerce growth models. In the first quarter of 2024, it achieved a growth rate of more than 50%, which is due to the joint drive of our two ends.
Thanks for the question. Our e-commerce business is experiencing rapid growth. As one of the growth engines of our e-commerce business, shelf-based e-commerce achieved high-speed growth of more than 50% year-over-year in Q1 of 2024, driven by increases in both supply and demand.
From the user's perspective, the value of selling goods is to better meet the user's specific needs, bring new buyers to the market, and promote the consumer evaluation of active buyers. We have fully opened the mall type for the user's daily growth and specific needs. At the same time, we have opened the first special sale of DaPaiDaPu, which greatly improves the user's purchase quality in the mall. In the first quarter, the daily number of buyers in our mall increased by more than 70%.
Behind the rapid growth of data, we have seen the growth of consumer demand in the shopping mall scene. Our users are gradually developing shopping habits in fast-food shopping malls. This also means that shopping mall business has a long-term development potential.
From the perspective of business owners, more and more business owners are finding their way to the warehouse to help different business owners and products of different types to get better business opportunities on the platform. The business demand of brand owners and white-collar business owners continues to grow. In the first quarter, the number of daily sales of our store increased by more than 70%.
At the same time, we are constantly improving the construction of supply chains. In the first quarter, we opened up Northwest Express Service. Merchants can transfer goods from the Northwest to the Northwest Express. At the same time as ensuring that logistics fail, the cost of transport will be greatly reduced, helping merchants to open up the remote market.
On the user side, shelf-based e-commerce value proposition to users lies in better meeting users' predictable shopping needs, attracting new users to our platform, and heightening the consumption frequency of our active users.
Targeting on users' growing predictable needs, we opened full access to the Shopping Mall tab, as well as sections like Big Brand, Big Subsidy, and Special Sale at low prices to significantly strengthen users' mindset of making purchases in our Shopping Mall. In Q1, the number of average daily buyers of our Shopping Mall soared by over 70% year over year. The rapid growth indicates a rising consumption demand in our Shopping Mall scenarios,
where users are gradually developing browsing and searching habits. This clearly shows the long-term potential for our shopping mall business. On the merchant side, more and more merchants have found their path to operations in the shelf-based e-commerce realm, thanks to our efforts in help merchants with the different operational capacities and merchandise categories to acquire business opportunities on our platform.
As the operational needs of both brand merchants and white label merchants continually grow, the number of average daily active merchants surged rapidly by more than 70% year over year. Meanwhile, we continue to improve our supply chain capabilities and launched a consolidated shipping service for Northwest China in Q1, which allows merchants to ship merchandise to consumers in Northwest China through transit consolidation warehouses.
This service considerably lowered shipping costs while ensuring logistics timeless, which has helped merchants expand into remote markets.
We have seen some business owners in the development of Kuaishou E-commerce this year, especially the traditional business owners, including some of the original business owners of the industrial generation. They have a deep accumulation on the supply chain and also hope to set up their own business on a new platform like Kuaishou E-commerce. However, due to the lack of marketing promotion and sales channels, they are often faced with the situation of having good products but not being able to sell them.
Therefore, we launched Kuaishou Youxuan to provide official sales promotion services for merchants and reduce the threshold for business owners. Merchants only need to promote products, shipments and customer after-sales services, and Kuaishou is responsible for the operation and promotion of product sales. In this cooperation, both platforms and merchants have found their more suitable positions to do their best business.
During the rapid development of our e-commerce business in recent years, we have seen some merchants' operational pain points firsthand, especially traditional merchants, including original manufacturers at the industry zones. These merchants already have deep-seated supply chain expertise and are looking to work with new platforms like Kuaishou to develop their business. They have good quality products, but lack marketing and sales channels. To address this pain point, we launched Kuaishou's Choice,
providing merchants with platform sales hosting services to give them a pathway to enter the market and lower their operational threshold. Under this model, merchants only need to be responsible for carting, delivering, and providing customer services, while Kuaishou takes care of the SKU operations, marketing, and sales. This cooperative relationship allows both the platform and the merchants to do what they do best.
At the same time, we can rely on the comprehensive sales data on the fast phone. We can more clearly identify the content items in the platform, thereby improving the efficiency of the product selection and pricing link, and provide a definitive sales channel and sales chain to businesses through traffic integration and scale-up operation.
Leveraging the full sales data of our e-commerce platform, we could more clearly identify which product categories or single SKUs have the potential to become blockbusters. This helps us to elevate the efficiency of product selection and pricing,
Moreover, through traffic integration and large-scale operations, we offer merchants predictable sales channels and sales funnel conversion paths. This service reduces merchants' operating costs on Kuaishou and facilitates rapid transactions on our platform, providing merchants with viable solutions for their operations.
Our shopping mall will roll out more marketing features during the
June 18th Shopping Festival to meet user shopping needs and help merchants achieve high sales. Going forward, we hope to integrate shelf-based and content-based e-commerce segments more deeply and complementarily, which will become the sustainable driving force of our e-commerce business. This will help more merchants achieve omni-domain operations more effectively and attract more business opportunities. Thank you, operator. Next question, please.
The next question comes from Thomas Chong of Jefferies. Your next question comes from Thomas Chong of Jefferies.
Thanks, management, for taking my question. My question is regarding online marketing service. As companies achieve robust revenue growth in online marketing service in Q1, looking ahead, what will be the driving forces for further revenue growth? Thank you. Thank you for your question. In the first quarter, our online sales revenue reached 166.5 billion yuan, an increase of 27.4%.
our internal and external cycles have all achieved considerable growth. We have provided our customers with better marketing solutions, which has led to an improvement in eCPM. This is because we have provided our customers with the goal of deepening the chain through joint modeling and other measures, and through the smart marketing solutions provided by the large model, we have provided our customers with the ability to bring the whole chain to fruition.
Thanks for your question. In Q1, online marketing services revenue reached 16.65 billion RMB, up 27.4% year-over-year. Both closed-loop e-commerce marketing services and external marketing services grew remarkably as we provided better marketing solutions to clients, driving eCPM improvement.
Our growth was led by our success in bringing clients deeper sales funnel conversion passes for targeted demographics through measures such as joint modeling, as well as end-to-end efficiency enhancement from our LLM-driven smart marketing solutions.
In the future, we believe that the growth of online marketing revenue will mainly depend on the improvement of eCPM and AddLoad, especially on eCPM. We will agree that there is still a lot of room for improvement.
We will continue to work for our customers in the field of deep chain target conversion, which can bring better customer prices. The smart marketing solution based on large-scale capability has already made good profits in the field of smart creative production, smart marketing placement and smart interaction integration.
In the future, we are looking forward to large models that can help us achieve greater breakthroughs in the understanding of user values and distribution of marketing content. In terms of the improvement of AdLoad, we will build on the original marketing material to make the original marketing content and natural content co-exist on the traffic to achieve the real marketing content and improve the upper limit of AdLoad
Looking ahead, we believe our online marketing services revenue growth will mainly be led by advancements in eCPM and AdMob.
eCPM in particular is one of the key metrics where we still have significant room for improvement compared with our peers. We will continue to deepen the sales on a conversion path for our clients targeted demographics, which will lead to better bids from clients.
Our LLM-based smart marketing solutions have already shown promising results in areas such as smart creative content production, smart marketing placements, and smart interaction and connection. Going forward, we also expect LLMs to help us achieve greater breakthroughs in understanding users' preferences and distributing marketing content. In terms of ad load enhancement,
We will integrate native marketing content with organic content by refining native marketing materials, achieving a true marketing as content approach, which will increase the ad loads upper limit. In Q1, the spending of external native marketing materials grew by 30% quarter over quarter, with a consistent increase in the share of external marketing spending from native marketing materials.
In addition, we also found some potential business opportunities. In the automotive industry, many automotive brand manufacturers have seen huge consumption potential in the new market. And our automotive industry solution also brings more customers to invest in the main factory and the rear car market.
在教育行业我们发现服务好平台内快手和新优势人群在职业教育和兴趣课程等方面的需求看到了同比更高增长的可能在全媒资讯行业我们在去年底实现了短距行业的自建链路闭环经营
It has also brought great growth in paid short-term marketing consumption. This year, we look forward to replicating the industry of small games and novels. Not only can it bring better user experience and market growth, but it can also accumulate more back-end data and make more accurate recommendations. In short, we will continue to exert our strength in the field of industry optimization, smart marketing solutions, generation and algorithm optimization, etc.
In addition, we have discovered opportunities in some prospective industries. In the automobile industry, many auto brands have seen the huge potential of the lower-tier market, and our integrated marketing solutions that combine brand awareness, sales conversion, and operation marketing for the automobile industry
have brought us more budget allocations from auto manufacturers and aftermarket clients. In the education industry, there is potential for higher year-over-year growth by addressing our core demographics user needs for professional education and interest-based courses.
In the media and information industry, marketing spending of paid short plays increased month over month based on the closed-loop operation of our self-developed conversion path for short plays, which we established at the end of last year. This year, we will work to replicate this model in media program games and online literature industries.
not only elevating user experience and amplifying user time span, but also accumulating more post-link conversion data to enhance recommendation accuracy. In general, we will continue to refine industry-specific operations, iterate smart marketing products, and optimize algorithms to bring better marketing placement and a conversion to clients. We are very confident we can grow our online marketing services revenue at a faster pace than the industry.
Thank you, operator. Next question, please. Next question comes from Felix Liu of UBS. Your next question comes from Felix Liu of UBS.
Thank you, management, for taking my questions, and congratulations on the very strong Q1 results. Could management share more color on the latest developments and your strategy and tactics for local services in 2024? Thank you.
Thank you for your question. After a year and a half of development, we have a deeper understanding of users' needs and preferences for local life content. We have also successfully verified the commercial model of fast local life in some core cities. We are also more clear about the strategic approach of the month-to-month obligation. In terms of consumption becoming the driving force for economic growth and the user consumption potential of the new market, we hope that fast local life can bring greater growth opportunities for businesses in 2024.
Thanks for your question. After a year and a half, we have deeper understanding on users' needs and preferences for local service content. We also validated the business model for our local services in some core cities and have a clear picture of our strategy and tactics for the business. Now, consumer spending is a driving economic force with great potential for unleashing user consumption in lower tier market. With this backdrop, we think
our local services can bring more new customers and greater incremental opportunities for merchants in 2024.
We continue to promote multi-species health development. In the first quarter, we used the winter and spring holidays to cooperate with travel agencies and OTAs to greatly enrich the supply of nine species.
With the help of fast-paced people and content advantages, we have created such as Tangshan, Nanhu Tourist Resort and other landmark cases. In terms of content, we continue to work with high-quality adults to help adults shorten the growth cycle through multi-platform policies. We contribute to the high-quality content ecology by increasing the number of non-capable creators. In the first quarter, the number of distributors increased by 32% compared to the previous year. The number of effective broadcasters increased by 62% compared to the previous year.
As for our recent developments, first on the supply side, we have been continuously optimizing industry-specific merchandise and conducting targeted programs in core categories, making breakthroughs in certain product categories. As a result, in Q1 of 2024,
The number of average daily active merchants and the number of merchandises rose by 29% and 38% quarter over quarter, respectively. We continue to develop multiple categories. In Q1, capitalizing on the key winter vacation and the Chinese New Year promotion period, we cooperated with traditional and online travel agencies to enrich the variety of offerings within the hotel and travel categories.
By leveraging our user base and content advantages, we created a benchmark cases such as the Townshend South Lake scenic area. Content wise, we continue to work with top-notch KOLs.
Through various policies, we helped shorten KOL's growth cycles and empowered creators to increase income on our platform, jointly building a high-quality content ecosystem. In Q1, the number of KOLs distributing products grew by 32%, and the number of daily average active streamers hosting live sessions increased by 62%, both on a quarter-over-quarter basis.
Through improving the basic functional construction, enriching marketing and gameplay, and so on, we continue to enhance the user's ability to open up their local life. At the same time as improving the efficiency of the providers, we insist on establishing an equal value-for-money system. In addition, we continue to enhance the ability of experts and merchants to make appointments, optimize the management system, and improve the efficiency of platform management to improve the user experience. According to the record, the number of daily payment users has increased by nearly nine times.
On the demand side, we made continuous efforts to strengthen users' mentality in accessing our local services by improving basic functionalities and enriching marketing features. This allows us to consistently reinforce the idea of value for money to users while enhancing subsidy efficiency. In addition, we continue to fortify KOL and merchants' fulfillment capabilities, optimize our platform's governance system, and boost governance efficiency
or aimed at elevating user experience. In Q1, average daily paying users of local services skyrocketed by nearly 9% year-over-year. In terms of platform comparison, by using public-private linkage, we can adjust traffic structure, user experience, and transaction value to optimize local content and promote traffic distribution efficiency.
Regarding our platform's matching capability, we adjusted our traffic mix by synergizing public and private domains. This optimized our local content distribution efficiency in recommended traffic,
elevating both user experience and transactional value. As a result, our local services GPM for both short video and live streaming continues to increase quarter over quarter in Q1 and drove a rapid GM lead growth. About the strategic focus of the local business for the past 24 years. First, it is industrialization. We hope to combine different industrial characteristics to do economic operations.
to continue to grow Daochuan products steadily. For Daozhong and Jiulv, we need to implement a differentiated product growth strategy. In the second-tier commodity strategy, by cooperating with service providers and strengthening our own operability, we will strengthen the price level on the basis of improving the efficiency of supply and demand, and advocate low-priced friendly products to provide extremely cost-effective products for users.
Thirdly, we need to be considerate of local service content, especially physical content. Content is the biggest difference between us and the price. It is also the key to doing this job well. Only by doing the content well can we get more users' consumption-related local life content, so that we can attract business owners to provide good products and services for users, thereby realizing the users and business value of the platform.
As for our strategic priorities in 2024, first we will tailor our operations to the characteristics of different industries to achieve industry-specific refined operations. We will steadily expand the scale of our in-store dining services while implementing differentiated category growth strategies for general in-store business and the hotel and travel business.
Second, on the product strategy front, by working with service providers and strengthening our own operational capabilities, we will strengthen the user's price mentality with higher subsidy efficiency. We will advocate affordable prices for superior quality goods to provide users with products that offer the best value for their money. Third, we will boost both the quality and quantity of our local services content with a focus on quality.
Content is our biggest differentiator compared with the shelf-based platforms and is central to our ability to run this business. By providing excellent content, we can attract more users and help merchants and KOLs provide good products and services to users, increasing the user and commercial value of our platform. Thank you all for your time. Next question, please.
Your next question comes from Alex Poon of Morgan Stanley.
Thank you management for taking my question and congrats on very strong results.
The company has just announced a new buy-back program of up to 16 billion Hong Kong dollars over the next three years. What are the main considerations in formulating this amount and what is the expected pace of execution? Thank you very much. Thank you for your question. We have been working hard to create more value for shareholders. After the first group level adjustment profit in the first quarter last year, we immediately announced
the 40 billion Hong Kong dollars return plan has also been recognized by the market. In addition, we have also combined the new rules of the joint-stock exchange. Since last year, on December 18, we have started to implement an automatic share return plan. This plan is part of the 40 billion Hong Kong dollars return plan, so that the company can perform the return action during the limited period stipulated by the joint-stock exchange. As of May 22, the company has used a total return amount of about 3.31 billion Hong Kong dollars. The return share is about 60715,000.
Thank you for your question. We are committed to creating more value for our shareholders, especially in terms of capital return.
After our group level adjusted net profit turned positive in Q1 last year, we immediately announced a HK$4 billion repurchase program, which was well recognized by the market. On December 18th last year, we also implemented an
automatic share repurchase plan in accordance with the new rules of the Hong Kong Stock Exchange. This plan is part of the Hong Kong $4 billion repurchase program, allowing our company to execute repurchases during the exchange's designated restricted period. As of the closing of trading on May 21st, we had repurchased around 61.74 billion shares, accounting for about 1.4% of our total share outstanding.
and for a total of approximately HK$3.09 billion in aggregate. And this figure has amounted to 1.7% of our total shares outstanding as of May 22nd. There are some changes out there. These repurchases demonstrate our genuine commitment to returning value to our shareholders and our confidence in the company's value.
Because the original 4 billion Hong Kong dollars return plan will expire at the shareholders' meeting in June this year, we have applied to the board of directors for a new return plan of no more than 1.6 billion Hong Kong dollars in the next three years. In the current market environment, this new return plan also shows our confidence in the company's value and the determination to return to shareholders. When we formulated this plan, we considered the current situation of the company's cash flow and the profits for the next three years.
As the original four billion Hong Kong dollars repurchase program will expire upon the shareholder meeting in June this year. Thank you, operator. Next question, please.
The next question comes from Xueqin Zhang of CICC.
My question is about AI. Can management share the latest progress on your AI and large language model? Thank you. Thank you for your question.
In the first quarter of 2024, we steadily promoted the improvement of the performance of the large-scale model and accelerated the application of large-scale models in various business scenarios. In terms of model performance improvement, we have improved the performance of data and models in the training stage.
Based on the optimization of the architecture, we have made a breakthrough in the reinforcement learning system, and our 17.5 billion-scale large-scale model has reached the level of GDP 4.0 after the update. In addition, we have also launched the first multi-meta large-scale model recently.
Thanks for your question. In Q1, we steadily improved the functions of our self-developed LLMs and speed up their application in various business scenarios. For improving model performance based on pre-training data and model architecture optimization, we made technological breakthroughs in RLHF.
This made the overall performance of our updated 175-billion-scale LLM to approach that of GPT 4.0. Moreover, we recently unveiled our first multi-model LLM. Next, I would like to focus on the application of our large model in business scenarios. This quarter, I made it clear that
I'd also like to elaborate on our LLM's application and business scenarios. In Q1, we specified our LLM application strategy of upgrading understanding, facilitating integration, and exploring generation.
We made notable progress in Omni-Domain LLM content understanding, AI integrations, interactions, digital humans in business scenarios, and AIG fee among others.
Our multi-modal large-scale model can help us deepen our understanding of short videos and live content, the understanding of the comment area, and the user behavior. Therefore, it is better to recommend natural content, marketing content, and e-commerce content. At the same time as increasing the user market, it also brings an improvement in marketing placement and e-commerce sales. Second, in terms of AI interaction, we have focused on the usefulness of small pieces of AI, which has greatly improved the accuracy of reply, and launched multiple conversations
Regarding OmniDomain LLM content understanding, our multi-model LLM helped us gain a deeper understanding of short video and live streaming content and user comments, as well as explore users' behaviors and interests. In doing so, we aim to better recommend organic,
marketing and e-commerce content, improving marketing spending and e-commerce GMV while amplifying user time spent. On the AI interaction side, we focus on the usefulness of AI-QI, where we significantly enhanced its reply accuracy rate and launched multi-round dialogues in image and text functions. In Q1, the user penetration of AI-QI grew tremendously, with the number of daily users exceeding 1.5 million at its peak, making our community more interactive.
Finally, in terms of digital people and AI machines in commercial scenarios, our large model capacity covers multiple scenarios, such as short video live streaming and smart customer service. AI short video products can provide customers with the ability to make short video scripts, dig up materials, and automatically upload them. AI digital people live streaming can provide customers with virtual people live streaming for up to 24 hours. And smart customer service can help customers automatically identify problems and solve various information problems more smoothly and naturally through multiple conversations.
The application of the large model in the above scene greatly reduces the cost of customer acquisition. It also brings us customers to market the amount of lights, and to record the live broadcast of AITC and short video material, but the consumption peak has exceeded 10 million. The deep integration of large model and short video and live business scenes also makes us more determined to invest in large model research and development. We will continue to bring you more progress in the future.
Lastly, for digital humans in business scenarios in AIGC, our LLM capabilities cover a range of scenarios, including short video, live streaming, and smart customer services. Specifically, our AI products for short video scenarios can provide clients with short video script creation, material discovery, and automatic marketing placement capabilities. Our AI digital human live streaming offers clients the ability of virtual person live streaming 24-7.
and our smart customer services can help clients automatically identify questions and solve various queries more smoothly and naturally through multiple rounds of dialogues. LLM's application in these scenarios considerably lowered our clients' customer acquisition costs and brought us incremental marketing placement opportunities from clients. In Q1, daily spending of AIGC live streaming and short video material surpassed 10 million at its peak.
The deep integration of LLMs with short view and live streaming business hours also boosted our commitment to R&D investments in LLMs. We will continue to share more of our progress in LLMs as they unfold going forward. Let's come to the end of QA session. Back to you, Bob Bishop.
Thank you once again for joining us today. If you have any further questions, please contact our capital market and investor relations team at any time. Thank you.