---
title: "Kuaishou (Trans): Bullish on Kling outlook; shareholder yield lifted to 4% this year"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/41169667.md"
description: "The following is Dolphin Research's Trans of the $Kuaishou-W(01024.HK) 1Q26 earnings call. For our earnings analysis, cf. 'Kuaishou: Comeback rides on Keling'.I. Key earnings highlights recap1) Shareholder returns: In 2026 YTD, the company has repurchased approx. HKD 854 mn (about 17.96 mn shares, ~0.42% of shares outstanding). It maintains a full-year HKD 3 bn annual dividend plan. Total shareholder returns in 2026 (dividends + buybacks) are expected to increase vs. 2025, implying an overall shareholder yield of ~4%..."
datetime: "2026-05-27T13:54:38.000Z"
locales:
  - [en](https://longbridge.com/en/topics/41169667.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/41169667.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/41169667.md)
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# Kuaishou (Trans): Bullish on Kling outlook; shareholder yield lifted to 4% this year

**Below is Dolphin Research's recap of**$KUAISHOU-W(01024.HK)**'s 1Q26 earnings call. For the earnings take, see** [**Kuaishou: Comeback Fueled by Kling**](https://longbridge.cn/topics/41165004?channel=SH000001&invite-code=355628&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=f10fe878-143d-4537-b0b1-95f81dd9560c)**.**

**I. Key takeaways**

1\. **Shareholder returns**: In 2026 YTD, the company repurchased ~HKD 854 mn (~17.96 mn shares, ~0.42% of shares outstanding). It will maintain the HKD 3 bn annual dividend plan for the year, with total 2026 shareholder returns (dividends + buybacks) expected to exceed 2025, implying an overall yield of ~4%.

2\. **CapEx and FCF guide**: 2026 CapEx guidance remains at ~RMB 26 bn, with the bulk front-loaded in 1H. The company has secured forward capacity via proactive procurement and inventory buffers to offset compute price inflation. Even with RMB 26 bn CapEx, it still targets positive full-year FCF at the group level.

3\. **Key financials**: 1Q26 revenue of RMB 33.7 bn (+3.4% YoY), with core commerce (online marketing + other services) up 10.7% YoY. Adj. NP was RMB 3.4 bn with a 10% adj. NPM. GPM was 51.2% (down ~340 bps YoY) mainly on higher revenue-sharing and bandwidth/server costs. Operating CF was RMB 3.1 bn, and end-period cash & equivalents (incl. time deposits, financial assets, and restricted cash) were RMB 117.7 bn.

4\. **Revenue mix**: Online marketing revenue was RMB 19.6 bn (+9.3% YoY). Live-streaming revenue was RMB 8.5 bn. Other services (incl. e-comm and Kling AI) reached RMB 5.6 bn (+15.9% YoY), driven by rapid growth in Kling. R&D expense was RMB 3.6 bn (+9.8% YoY), or 10.7% of revenue, mainly on higher AI investment and SBC.

**II. Earnings call details**

**2.1 Management highlights**

**1) Kling AI progress**

a. 1Q26 Kling AI revenue exceeded RMB 650 mn, up over 300% YoY. ARR was approx. $500 mn in Mar-26, nearly 5x vs. $100 mn in Mar-25.

b. In Feb-26, the Kling 3.0 model suite launched under a universal product framework, supporting text, image, audio, and video outputs. It integrates video understanding, generation, and editing into a one-stop workflow, supports single outputs up to 15 seconds, offers 17 audio/video generation capabilities, and provides strong subject consistency control.

c. On product, Lab Agent was upgraded to build an agent-driven creation system, adding multi-turn edit and multi-view smart shorts. **It also rolled out a Team Plan enabling real-time collaboration for up to 15 users.**

d. The recently launched 'Baseball' Live effect went viral on global social media, pushing Kling AI to the overall top rank on the App Store in 42 countries, including Germany and Brazil.

e. Kling has penetrated professional creation for ad marketing, short dramas, and gaming, sharply cutting production costs and timelines. It has supported Chinese costume dramas and commercial projects such as 'House of David'.

f. For general-purpose models, the self-developed agent coding model (Kode PV2) offers capabilities comparable to leading coding assistants like Claude Code. Trained for Open Fall scenarios, it can handle complex real-world action workflows, and **internal AI code generation penetration has reached 50%.**

g. **My Flicker (upgraded from Code Flicker) has become the universal internal agent platform,** integrating multiple top-tier models with core abilities in proactive response, reasoning/planning, and memory. It covers R&D, product, ops, and data functions.

**2) User growth and content ecosystem**

a. 1Q26 DAU averaged 413 mn and MAU 771 mn. Per-capita daily time spent remained broadly stable.

b. New interactive features and premium content over Chinese New Year drove record peak DAU. The 2026 CNY Gala saw 150 bn+ live views, 2500 bn+ video plays, and 6.5 bn+ cumulative likes.

c. Multiple original IPs were launched, with CNY animation generated by Kling. Social interactions rose sharply, with users of social features up 25% vs. pre-holiday and users sending DMs up 15%.

**3) Online marketing services**

a. 1Q26 online marketing revenue reached RMB 19.6 bn (+9.3% YoY), with domestic marketing up over 10% YoY. Non-e-comm growth was led by content consumption, local services, and AI apps.

b. Ad spend on AI manga-to-drama surged. By end-Mar-26, peak daily spend on-platform exceeded RMB 20 mn, and AIGC short-video creatives now account for 10% of total short-video marketing spend.

c. In local services, 20 verticals moved to refined ops, spanning **healthcare, industrial/agri materials, education, and autos.** Differentiated solutions improved customer acquisition efficiency and conversion.

d. AI is embedded across the full marketing funnel: pre-campaign AIGC lowers creative barriers, in-flight Universal Auto Placement (UAX) has become the main tool for most clients with new AI Agent features automating ad unit creation/management. Post-campaign, AI-led analytics automate reviews, and digital-employee solutions provide 24/7 automated customer service.

e. For e-comm merchant marketing, active advertisers rose ~33% YoY, and brand ad spend increased 42% YoY. UAX penetration in e-comm marketing continues to climb, and net-transaction-ROI products have reached 45% client penetration, helping lower return rates.

**4) E-commerce**

a. The integration of e-comm with commercial traffic progressed steadily, with high single-digit growth in e-comm commercial traffic in 1Q26. MAU paying users attributable to marketing rose over 20% YoY, and active merchants using paid marketing increased ~40% YoY.

b. For brand merchants, the 'Riding the Wind' program launched in 4Q25 continued, driving all-domain brand GMV up over 25% YoY. Brand ad spend under the program increased 42% YoY.

c. In merchant acquisition, new sign-ups from industrial parks rose 41.8% YoY. SME counts increased, leading to a healthier, more diversified merchant mix.

d. In the KOL ecosystem, daily effective live sessions by anchors with 10k+ followers rose 10.1% YoY. Links for affiliate sales grew 47% YoY, and active KOLs in affiliate programs increased 23.5% YoY.

e. In e-comm search, a generative framework based on latent-space reasoning was fully rolled out, lifting search GMV by ~3% without adding inference cost or latency. Intent-driven search GMV rose 11% YoY, and new/returning buyers in the shopping Mall grew ~6% YoY in Mar.

f. AI upgrades to e-comm: an agent-based one-stop smart shopping system shifts search from user-initiated to AI-guided recommendations, materially improving search conversion. AI real-time product highlight summaries and automated live explanations add over RMB 10 mn in daily GMV per merchant.

g. Overall e-comm take rate has been slightly pressured recently by a lack of a clear macro consumption recovery and compliance-related headwinds on some merchants. The company views this as an opportunity to optimize the merchant ecosystem, which should benefit long-term, sustainable growth.

**5) Live streaming**

a. 1Q26 live revenue was RMB 8.5 bn. The company kept its focus on high-quality content supply and more granular agency management.

b. AI interactive assistants and AI avatar solutions boosted streamer productivity and audience engagement. Kling's video generation materially increased the efficiency of derivative content creation, lifting willingness to pay, and subscriptions for customizable persona products reached 1.1 mn in 1Q26.

c. Kuaishou AI digital-human live streams attracted nearly 50 mn users to interact. The gaming ecosystem strengthened, partnering with 50+ publishers over CNY, and the esports team won the Honor of Kings Spring Split in Apr, driving further momentum.

**6) Overseas**

a. In core markets such as Brazil, user metrics improved, with DAU and time spent up QoQ.

b. Ad products were strengthened, with localized creatives leveraging content-platform advantages. The focus was on capturing incremental budgets from core clients such as cross-border merchants.

c. In Brazil, e-comm GMV and orders rose YoY. AI-powered content creation and repurposing improved operating efficiency and profitability.

**2.2 Q&A**

**Q: What drove the strong 1Q26 growth in Kling AI revenue? What are the main use cases, and how do you view large video generation models' prospects?**

A: Kling AI revenue topped RMB 650 mn in 1Q26, up over 300% YoY, with ARR at approx. $500 mn in Mar-26 vs. $100 mn in Mar-25. Growth is driven by both enterprise API services and prosumer subscriptions, with rapid increases in paid users and monthly ARPU. Retention for enterprise clients and prosumers remains healthy, underscoring Kling's strong product-market fit and stickiness in professional creation, and laying a foundation for sustainable growth.

Today Kling primarily serves professional creation for ad marketing, short dramas, and gaming. In ad marketing, Kling spans the full visual-production chain from ideation to final shoot, quickly generating near-finished demos early on and carrying through to production. It ensures subject and product consistency across shots and angles, giving advertisers reliable visual support.

In short dramas, Kling can be embedded across the entire workflow from script breakdown and concept design to smart storyboarding and video generation. High automation sharply compresses time and costs, as seen in an AI short that went viral in Apr where two non-professionals completed the full process from boards to final cut in 3 days using Kling, surpassing 1 mn online views. In gaming, Kling turns concept art into dynamic trailers and supports asset generation such as green-screen rendering, in-game narrative sequences, and level demos.

Looking ahead, signals are encouraging this year: AI manga-to-drama is surging, with AI driving multi-fold growth in content supply. As large video models keep breaking through, PGC content (including theatrical films) could see explosive growth, expanding high-quality pro content while adding more personalization and interactivity that may reshape how users engage with content. Given this, Kling has significant monetization potential, and the company remains highly bullish on AI video generation, continuing to invest in compute and talent.

**Q: Beyond Kling, what progress did you make in other AI areas this quarter, especially Agents?**

A: In 1Q26, we made solid strides in using AI to empower the business ecosystem and organizational efficiency.

In e-comm marketing services, we launched an end-to-end AI Agent system covering the full funnel.

1.  In interest inference, generative recommendation converts user behavior into model-readable representations, broadening interest understanding and uncovering deeper consumption patterns.
2.  In creative and merchandising, AI Agents help merchants identify high-potential creatives and products, and boost exposure via traffic allocation, thereby raising ARPU from creative spend.
3.  In bidding decisions, agents blend history, same-day traffic trends, and scenario-based pricing to predict optimal bids, ensuring stability and efficiency. They help merchants hit all-day ROI targets and scale total marketing spend.

In local services, we rolled out three specialized agents: Target User Exploration, Deep Conversion, and Sales. The Target User Exploration Agent uses LLMs to deeply understand lead-based products/services and infer latent user needs on-platform, improving conversion and cost stability. The Deep Conversion Agent uses long-context understanding to capture user intent and optimize toward deep-conversion goals, raising lead efficiency. The Sales Agent integrates merchant-specific and industry knowledge bases to respond like a professional CSR, handling multi-turn dialogues and enabling end-to-end automated workflow management.

On org efficiency, My Flicker (upgraded from CodeFlicker) has become Kuaishou's AI work companion for all employees. It integrates multiple leading models with core agent abilities in proactive response, reasoning/planning, and memory, and can call domain agents for complex tasks. This continues to empower R&D, product, ops, and data teams and elevates employee experience. We will accelerate deeper integration of AI into operations and the organization to create greater value and growth for the company and partners.

**Q: How did the integration of e-comm and commercial traffic perform in 1Q26, and what is the 2026 outlook for e-comm monetization?**

A: The integration essentially aligns distribution mechanisms for e-comm and ads traffic. First, paid marketing helps merchants amplify traffic capture within e-comm, and second, merchants with high GPM and strong ops also receive more ad traffic tilts. Post-integration, e-comm traffic, buyer base, and the number of merchants active across scenarios all increased.

E-comm commercial traffic grew at a high single-digit pace in 1Q26, and effective marketing continued to activate and expand purchasing intent. MAU paying users attributable to marketing rose over 20% YoY, while active merchants using paid marketing increased nearly 40% YoY. This mechanism amplified brand merchants' operating leverage, helping scale operations and optimize merchant structure.

The 'Riding the Wind' initiative, launched last year, focuses on brand expansion and traffic synergy, driving all-domain brand GMV up over 25% YoY this year. Brand ad spend under the program rose 42% YoY, and both new and existing brands contributed more to overall e-comm GMV and commercialization, sustaining robust YoY growth.

Near term, a muted macro consumption backdrop and compliance headwinds for some merchants may slightly weigh on overall take-rate expansion, but we will keep strengthening foundational smart-delivery capabilities (incl. UAX and storewide managed services). We will further the traffic-integration mechanism, focus on higher-quality products and content supply, and keep directing traffic to brands/merchants with balanced operating capabilities.

While take-rate growth may be modestly pressured near term, we see this as a chance to reinforce the merchant ecosystem. Structurally optimizing the ecosystem should underpin healthier, more sustainable growth long term.

**Q: What drives the growth of AI manga-to-drama, and how sustainable is it?**

A: In 1Q26, marketing spend on manga-to-drama rose over 10x YoY and over 150% QoQ, with peak single-day spend exceeding RMB 20 mn by end-Mar-26. The core driver is a sharp drop in production costs due to AI, which rapidly expands supply and, in turn, stimulates both consumption and marketing demand.

On supply, AI now handles many steps, including character design, storyboarding, SFX/VO, and post-editing, eliminating the need for actors, locations, and camera gear, and compressing production cycles to just 3–4 weeks. Per-title production cost is ~RMB 80k–150k, roughly 70% lower than traditional short dramas, lowering barriers for creators/studios and speeding supply expansion. Third-party data show ~47k new AI manga-to-drama releases in Mar-26 alone vs. 33k in all of 2025, and in 1Q26, the daily active count of such titles with marketing spend on-platform rose 25% QoQ. The surge in supply further scaled marketing spend.

On demand, AI manga-to-drama serves existing short-drama fans while expanding into fantasy, xianxia, and sci-fi by overcoming live-action cost and technical limits. This reaches broader audiences and supports more diverse consumption needs.

Kuaishou's early moves were also a key catalyst. Since 2025, it has tracked and invested in this emerging track, providing traffic subsidies and cash incentives at RMB 100 mn scale, and building the infrastructure for supply and monetization ahead of time. On the supply side, it has grown the UGC ecosystem by onboarding more creators and small/mid studios, and facilitating precise IP licensing and manga adaptation matching to convert quality IP into AI-driven content efficiently. Kuaishou's mature consumption and commercialization ecosystem helps absorb the growing supply, distribute quality content, and amplify monetization potential.

We remain optimistic about sustained growth and expect strong momentum in the mid term. Third-party data estimate the China AI manga-to-drama market will exceed RMB 30 bn in 2026 and RMB 85 bn by 2030. With an active user base, industry-leading video generation models, and established distribution/monetization, Kuaishou is confident in driving this segment via deep content-tech synergy.

**Q: What is your cash-flow management strategy? How about CapEx and shareholder returns, and what are the implications for cash flow?**

A: We follow a prudent capital policy to maximize efficiency while safeguarding safety and liquidity. 2026 CapEx guidance stays at ~RMB 26 bn with most spend in 1H, and we do not plan adjustments currently. We have also built forward compute procurement and inventory buffers to manage market volatility from rising compute prices, helping lock in advantaged capacity and control costs.

On shareholder returns, our priority is sustainable long-term value. We aim to deliver through steady dividends, buybacks, and diversified mechanisms, reflecting confidence in long-term prospects and strong cash generation. On top of the HKD 3 bn annual dividend this year, we will continue active buybacks, and total 2026 shareholder returns (dividends + buybacks) should exceed 2025, implying an overall yield of ~4%.

Even with RMB 26 bn CapEx, we still target positive full-year group FCF. With targeted, high-precision investments, we aim for stronger profitability ahead. While advancing our AI strategy, we will tightly manage financial risks and maintain ample cash, building a resilient balance sheet for durable, high-quality growth in the AI era.

Risk disclosure and statement:[Dolphin Research Disclaimer and General Disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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## Comments (1)

- **一等就是一年多 · 2026-05-27T14:41:28.000Z · 👍 1**: Like