Thank you, operator. Good evening and good morning to everyone.

Welcome to Kuaishou Technology second quarter and interim 2026 financial conference call. Joining us today are Mr.

Cheng Yixiao, co-founder, Chairman, and CEO, and Mr. Jin Bing, our CFO.

Before we start, please note that today's discussion may contain forward-looking statements, which involve a number of risks and uncertainties. Actual results and outcomes may differ from those discussed.

The company does not undertake any obligation to update any forward-looking information except as required by law. For all important information about this call, including forward-looking statements, please refer to the company's public information for the second quarter and interim 2026 results announcement ended June 30th, 2026 issued earlier today.

During today's call, management will also discuss certain non-IFRS financial measures. These are provided for additional information and should not replace IFRS-based financial results.

For a definition of non-IFRS financial measures and a reconciliation of IFRS to non-IFRS financial results and related risk factors, please refer to our second quarter and interim 2026 results announcement. For today's call, management will use Chinese as the main language.

A third-party interpreter will provide simultaneous English interpretation in the prepared remark session and a Q&A and a consecutive interpretation during the Q&A session. Please note that English interpretation is for convenience purposes only.

In case of any discrepancy, management's original statements will prevail. Lastly, unless otherwise stated, all currency units mentioned are in RMB.

I will now hand the call over to Yixiao.

Hello, everyone. Welcome to Kuaishou second quarter 2026 earnings conference call.

In Q2, amid a complex macroeconomic environment and industry competition, we remained committed to our long-term vision and strategic AI investments, and we achieved high-quality growth. In Q2, the average DAUs on the Kuaishou app reached 412 million.

Total revenues increased by 1.4% year-over-year to RMB35.5 billion. Revenues from our core commercial business, including online marketing services and other services, primarily e-commerce and Kling AI, increased by 7.4% year-over-year.

Adjusted net profit reached RMB3.9 billion with an adjusted net margin of 11%. Overall profitability remained stable, further demonstrating the resilience of our business operations.

Now I'll elaborate the progress of each segment in Q2. First, our AI strategy and progress of our large video generation model, Kling AI.

In Q2, Kling AI continued advancing its vision of empowering everyone to craft captivating stories with AI. Through model breakthroughs, product feature upgrades, and a global creative ecosystem expansion, Kling AI reinforced its global leadership in multimodal video generation.

Kling AI launched native 4K video output in Kling AI 3.0 series. As the industry's first video generation model to support native 4K output, it enables one-click generation of cinema-grade 4K video.

Designed for film, TV, and advertising professionals, it delivers high-resolution visuals without complex post-production, achieving industrial-grade cinematic visual effects. Kling AI also released the 3.0 Turbo model, which maintains stable, high-quality dynamic output and precise audiovisual sync while improving creative efficiency and reducing production costs.

Kling MCP and Kling CLI were officially launched as well, enabling AI agents to dispatch Kling AI for batch content creation and expanding its use case in workflow automation and intelligent orchestration. Kling AI continues to empower professional content creation.

With its technical innovation and creative achievements earning broad industry recognition, at the 2026 Cannes Lions, two advertising videos generated by Kling AI won one Silver Lion and two Bronze Lions, demonstrating recognition of its creative capabilities by one of the world's premier creative awards program. At the 2026 Beijing International Film Festival, multiple Kling AI created works, including Paper Smartphone, were selected for the AIGC section.

Stroke of Genius, with Lu Xun's grandson serving as a literary supervisor, won the Annual Featured Work in Short Play Micro Short Play Award, highlighting Kling AI's strength in empowering professional filmmaking and content creation. Driven by model breakthroughs, continuous product enhancements, and deeper penetration, Kling AI's commercialization maintained strong growth momentum.

In Q2, Kling AI generated revenue of over RMB850 million, up over 200% year-over-year, continuing to lead global AI video commercialization. In Q2, we made solid progress advancing the research and application of our general-purpose large models.

We released Kwai VL 2.0, an upgraded multimodal model that enables deep perception across 256,000 ultralong context and delivers nearly lossless reasoning for long-video temporal understanding. It also became the first Kwai-based model with a built-in agent collaboration mechanism, demonstrating potential for code parsing and tool invocation.

We introduced Agent X, a self-evolving AI agent for industrial recommendation systems that autonomously handles recommendation model and strategy design, performance evaluation, and knowledge accumulation, significantly improving iteration efficiency of our recommendation algorithms. It enables recommendation systems to autonomously drive recommendation model and strategy design, evaluate performance, and accumulate insights, significantly boosting the iteration efficiency in our recommendation algorithms.

In Q2, we developed scenario-based agent capabilities for generating marketing materials across our online marketing services. Tailored to different industries and client needs, we achieved over 70% year-over-year growth in AIGC short video marketing spend in Q2.

We also extended our generative recommendation and intelligent bidding models to live streaming, search, and pan-shelf based e-commerce scenarios. This improved marketing content recommendation effectiveness and unlocked more client marketing spend budgets.

In Q2, our self-developed general-purpose agent, MyFlicker, has integrated skills across key internal systems, began serving all employees. By June, over 92% of employees were using our AI agents, and the AI code contribution rate among R&D engineers reached 60%.

Meanwhile, Wanqing, our enterprise-grade large model platform, integrates high-performance model inference, cost-efficient model customization, and fully managed service. Wanqing supports Kuaishou's internal AI use cases and also external enterprise clients with large model infrastructure.

On OpenRouter, a global AI model aggregation platform, several Wanqing hosted open source models ranked among the top by API call consumption. Second, user growth and content ecosystem.

In Q2, average DAUs on the Kuaishou app reached 412 million. Average MAUs reached 797 million.

We leveraged AI-powered smart placement to improve user acquisition efficiency and boost retention among new and reactivated users. We consistently refined our traffic management to better serve our highly active core users.

We also continued to emphasize our social features. Users with mutual followers engaging in private messaging grew over 15% year-over-year.

We also optimized the Kuaishou app's core features, comprehensively elevating the user experience through systematic improvements to product features, video playback smoothness, and intelligent interaction. We believe in the power of community and remain committed to strengthening our differentiated, high-quality content ecosystem.

In June and July, we leveraged the World Cup buzz to launch our native IP, Kuaishou World Cup Fans Trophy. Beyond covering trending topics, we launched original events, including the Kuaishou XY Style FC and Dream Chasers Youth Football Tournaments.

Through trend-driven operations, engaging interactions, and community co-creation, we built a sports hub where Kuaishou users could participate. These activities generated 68.2 billion impressions and 360 million cumulative live stream views.

We also continued innovating our copyrighted content partnerships, using a joint operation model to deliver more high-value content to users. We used an e-commerce live streaming model to secure live broadcasting rights for 2026 CBA season.

We also introduced a paid live streaming model for online music performances. In April, we hosted the TOP concert, generating over RMB10 million in sales, achieving a synergy between content and commercialization.

This model also driven grassroots sports events, achieving a notable regional scale, especially in Northwest China. Third, online marketing services.

In Q2, revenue from online marketing services reached RMB20.6 billion, up 4.4% year-over-year. Our non-e-commerce marketing services continued expanding across content consumption, lifestyle services, and AI applications.

Supported by our omni-domain traffic synergy strategy and dedicated programs for brand merchants, e-commerce marketing services remained resilient. We also continued deepening AI applications across the full marketing services lifecycle.

In Q2, the content consumption, lifestyle services, and AI applications continued to drive the year-on-year growth in our non-e-commerce marketing services revenue. In content consumption, AI lowered production costs and reduced creation barriers, driving rapid short play supply growth that catered to broader user preferences.

This enriched our content ecosystem and bolstered related marketing demand. By June, short play supply on Kuaishou, both live-action and AI-generated, had grown over fivefold from January.

In Q2, short play driven marketing spend grew over 100% year-over-year. In lifestyle services, we deepened our presence in sub-verticals like comprehensive and local services while exploring incremental growth opportunities.

We also optimized deep conversion capabilities, enhanced the full-stack lead-driven marketing solutions, and launched the user cohort exploration AI agent. These efforts helped clients to more effectively identify high-intent users, improving lead quality and conversion.

In AI applications, we worked closely with clients to align ad placement with in-app conversion, helping them to improve user retention and conversion. This further strengthened our competitiveness in capturing ad spend from AI application clients.

For e-commerce marketing services in Q2, we strengthened our omni-domain traffic synergy across e-commerce and commercialization business to improve merchant traffic matching efficiency. We conducted more granular merchant segmentation with tiered operations, tailoring product strategies to address merchants' core needs.

We also took a content supply-side approach by managing marketing materials, including incentivizing first-launch content and increasing recommendation diversity. These initiatives optimized the e-commerce marketing material content mix, enabling high-quality content to reach relevant traffic more efficiently and improving our long-term commercial ecosystem.

Despite macro and merchant challenges, we remained committed to traffic support for high-quality merchants. The T2000 brand initiative launched in Q4 last year has delivered promising early results.

Brand merchant marketing spend outperformed our broader e-commerce marketing in Q2. Its revenue contribution continues to grow, and the product-level our net transaction ROI product continued to evolve.

By enhancing omni-scenario transaction bidding capabilities and refining bidding mechanisms and model strategies, client penetration rose from 45% in Q1 to 55% in Q2, effectively helping merchants reduce return rates. In Q2, we continued optimizing AI applications across industry-specific scenarios, improving clients' marketing placement efficiency and strengthening our capacity to capture incremental marketing budgets across sectors.

In content consumption, through content understanding, user matching, and smart placement, AI helped quality content reach users more efficiently. In lifestyle services, AI is applied to marketing material generation, digital human live streaming, conversational business operations, user intent identification, and deep conversion prediction.

These helped merchants lower costs across content creation, placement, and customer services. Number four, our e-commerce business.

In Q2, we advanced our strategy across three areas: growing our paying user base, expanding supply, and deepening e-commerce and commercialization traffic integration. We optimized our merchant ecosystem and mix, strengthened brand and new merchant acquisition and their growth, drove synergies between e-commerce and commercialization.

During the quarter, we focused on growing high-quality buyers while active paying users remained largely stable quarter-over-quarter. As users' omni-domain consumption habits continued developing, we strengthened our private-domain advantages by aligning traffic across diverse scenarios.

This enabled content-driven product recommendation, shelf-based conversion, store repurchases to reinforce one another in a positive growth cycle. We also enhanced cross-scenario synergies and optimized subsidy efficiency, driving balanced growth across content-based and pan-shelf based scenarios.

On the supply side in Q2, we continued onboarding new merchants and advancing brand expansion. Through cost reduction, efficiency improvement, growth incentives, product empowerment, and operational support, we helped new and small and medium-sized merchants grow while further improving our merchant mix.

We launched our upgraded Starline Initiative, offering tiered support programs for brand merchants, large merchants, industrial zone merchants, and SME merchants, helping more merchants scale faster. Supported by these initiatives, newly onboarded merchants grew year-over-year and rose nearly 10% quarter-over-quarter.

New merchants achieving scaled growth in their second month rose nearly 30% year-over-year, reflecting continued improvements in new merchant quality. On the brand merchant side, self-operated GMV from T2000 brands maintained strong year-over-year growth, while their contribution to omni-domain GMV steadily increased.

Marketing spend on brand commercialization also grew rapidly year-over-year, further boosting brand merchants' contribution to the both overall e-commerce GMV and online marketing revenue. By industry, leveraging content-based e-commerce trends, merchants counts in tea, alcohol, and health products, beauty and cosmetics, and fresh food continued growing, unlocking structural growth opportunities.

We continued to improve our KOL ecosystem and structure, enhancing content supply quality. We deepened collaboration with top-tier KOLs, increasing support for mid-tier KOLs in our strong verticals like three rural and anime, and improved the consistency of existing KOLs' performance, reinforcing our e-commerce content foundation.

By integrating KOL resources with distinctive product offerings nationwide, we deepened our penetration in industry zones and launched content marketing initiatives like product origin tracking live streams. These efforts strengthened the synergy content and supply, empowered KOLs, and improved merchants' conversion.

We also expanded our KOL base through in-platform incubation, talent agency partnerships, and external acquisition. To boost streaming frequency, we refined our incentive policies.

In Q2, the number of streamers with over 10,000 followers grew year-over-year, while KOL streaming frequency continued to increase steadily. On the distribution pool development, we leveraged AI to enhance product capabilities, creating a more targeted system, further boosting the vibrancy of our distribution system.

In Q2, active KOLs distribution penetration continued rising year-over-year, and merchant KOL matches grew over 20% year-over-year. In Q2, throughout the full lifecycle merchants, we continued optimizing AI capabilities across e-commerce scenarios, helping merchants reduce costs, improve efficiency, and driving intelligent operations.

These initiatives validated AI's evolution from a productivity tool into a comprehensive business execution solution. In Q2, over 850,000 merchants used our free AI business tools across product selection and listing, marketing material creation, business analysis, smart placement, and AI-powered customer service.

These AI tools provided merchants with end-to-end operational support and capability enhancement. Next, our live streaming business.

Q2 live streaming revenue reached RMB8.7 billion. We focused on supply-side health and leveraged AI to empower live streaming products, driving ecosystem quality and product innovation.

On the supply side, we launched the Confluence Initiative, providing streamer acquisition incentives, early-stage growth support, and ecosystem governance to steadily expand the supply of new streamers from talent agencies and improve their early traction and efficiency. We also strengthened independent streamer operations, focusing on identifying high-value independent streamers to solidify our live streaming supply foundation.

We also encouraged top streamers to expand into group live formats, leveraging their traffic and influence to enrich high-quality live streaming content supply. On the product and technology front, AI further empowered live streaming rooms powered by Kling AI.

AI gifts with customizable special effects continued to evolve, offering more formats and capabilities and boosting users' willingness to pay. In Q2, AI gifts sent by users surpassed 6 million.

AI-driven content understanding continued optimizing our live streaming recommendation strategies, enabling more precise matching between streamers and users, supporting paying users' growth. Intelligent live streaming gift recommendation and ranking features based on real-time multimodal signals improved users' payment experience and efficiency.

AI tools like AI interaction assistant and digital avatar solutions were further refined, improving streamers' service efficiency. Finally, our overseas business progress.

In Q2, we remained committed to high-value growth strategy, strengthening our overseas foundation in profitability, long-term operation, and localization. On traffic and content, we maintained refined user acquisition, enhanced local content, and expanded community creator networks, fostering an engaging atmosphere around real-life scenarios and deepening content consumption among core users.

For overseas online marketing services, we capitalized on major events such as Festa Junina and the World Cup driven by AI in-depth ROI analysis, user group insights, innovative product features, and industry-specific strategies. We helped marketing clients capture key marketing periods and achieve rapid growth.

We also unlocked the monetization potential in short plays and other content formats. Together with our marketing services capabilities, this formed a dual-engine growth model while accelerating expansion into growth sectors such as e-commerce.

Our overseas e-commerce GMV and order volume continued solid year-over-year growth in Q2. At the same time, we drove growth in average order value through product mix optimization and quality supply while maintaining solid operational efficiency and profitability.

Looking ahead to second half, amid growing external challenges, we will remain steadfast in advancing our core AI strategy, leveraging our technological and ecosystem strengths to navigate headwinds. While we face short-term revenue pressure and heavy investment AI investments, we will maintain our long-term focus and continue expanding the commercial exploration of AI to empower Kuaishou's content and commercial ecosystems.

As we pursue near-term breakthroughs and high-quality growth over the long term, we remain committed to creating long-term value for our users and platform partners. That concludes my prepared remarks.

Next, I'll hand it over to Jin Bing, who will review the company's financial update for the second quarter.

Thank you, Yixiao, and hello, everyone. In Q2, we continued to deeply integrate AI technologies across our business scenarios.

As a result, we achieved high-quality growth throughout our overall business amid a complex environment. The comprehensive application of AI has become an engine driving the company's long-term development.

It continued to empower our content ecosystem, enhance user experience, while providing merchants and advertisers with end-to-end intelligent business operation tools. For our platform partners, these capabilities helped reduce costs and improve efficiency.

It also injected new growth momentum into our business. In Q2, the group's total revenues reached RMB35.5 billion.

Adjusted net profit reached RMB3.9 billion in the second quarter with an adjusted net margin of 11%. The group's overall profitability remained at a healthy level.

Now let's take a closer look. Our total revenue grew 1.4% year-over-year to RMB35.5 billion in Q2.

The increase was mainly driven by growth of our online marketing services and Kling AI business. Online marketing services revenue increased 4.4% to RMB20.6 billion in Q2 from RMB19.8 billion in the same period last year.

This growth was primarily attributable to deepening application of AI in online marketing services, which effectively enhanced our clients' marketing placement efficiency, driving more marketing spend. Revenue from other services, including e-commerce and Kling AI business, reached RMB6.2 billion in Q2, up 18.5% from RMB5.2 billion in the same period last year.

The increase was mainly driven by continued expansion of our Kling AI business. As Kling AI achieved breakthroughs in model capabilities, continuous product enhancements, and deeper penetration across professional creative scenarios, its commercialization continued to maintain strong growth momentum.

In Q2, our live streaming revenue was RMB8.7 billion. We consistently cultivated high-quality content, leveraged AI-powered product innovations, and enhanced the quality of our ecosystem to develop a rich and healthy live streaming ecosystem, diverse, high-quality content.

Cost of revenues increased 10.7% year-over-year to RMB17.2 billion in Q2, accounting for 48.4% of total revenues. The increase was mainly due to higher revenue-sharing costs and related taxes in line with our revenue growth.

Based on the above, our gross profit was RMB18.3 billion in Q2 compared to RMB19.5 billion in the same period last year. Gross profit margin was 51.6% compared to 55.7% in the same period last year.

Turning to expenses, in Q2, selling and marketing expenses were RMB9.9 billion compared to RMB10.5 billion in the same period last year. Selling and marketing expenses decreased to 27.9% of total revenues from 30% in Q2 last year, primarily attributable to the lower spending for promotional activities.

R&D expenses increased 34.7% year-over-year to RMB4.6 billion, accounting for 12.9% of total revenues. The increase was mainly due to increased investments in AI, including related training costs.

Administrative expenses were RMB895 million compared to RMB897 million in the same period last year, remaining relatively stable year-over-year. Group-level net profit for Q2 was RMB3.2 billion.

Group-level adjusted net profit was RMB3.9 billion with an adjusted net margin of 11%. Our balance sheet remains robust.

Cash and cash equivalents, time deposits, and financial assets and restricted cash totaled RMB121.3 billion as of June 30th, 2026. Net cash generated from operating activities in Q2 was RMB5.9 billion.

Additionally, we actively leverage on our commitment to shareholder returns based on market conditions. As of today, we had repurchased approximately HK$1,970 million or around 43.3 million shares, representing about 1% of our total shares outstanding for 2026.

Looking ahead to the second half, as Yixiao mentioned, amid external challenges, we expect to face near-term challenges as pressure on revenue and our continued investment in AI both weigh on profitability. We will continue to uphold our technology-driven, user-centric philosophy while remaining deeply focused on our users' needs.

We remain staunchly committed to advancing AI and leveraging our leading AI technologies to further empower our content ecosystem and commercial value chain. At the same time, we will apply prudent financial discipline to reduce costs and improve efficiency.

This will further strengthen the company's core competitiveness moat and create long-term value for our users, partners, and shareholders. That concludes our prepared remarks.

Now we can open for the call for Q&A.

Hey, 谢谢管理层接受我的提问，也恭喜我们有一个非常稳健的主业，还有Kling的非常强劲的增长。我一个问题是关于Kling的竞争格局，还有迭代的方向。近期我们也看到很多家的视频生成的模型都在持续的更新，我们应该怎么看待这个视频生成模型的竞争格局，还有Kling的竞争的策略会是什么呢？我自己翻译一下。Thank you, management, for taking my questions and congrats on the very stable core operation and robust growth of Kling. I have a question regarding Kling competitive landscape and the iteration direction.

Recently, multiple video generation large language models have been updated successively. How should we view the current competitive landscape of the video generation models, and what is Kling competitive strategy?

Thank you.

谢谢你的问题啊。全球视频内容生产赛道呢，是一个达到1,500亿美金的巨大市场。AI视频生成模型具有极大的渗透潜力。我们认为，目前AI视频生成赛道处于百花齐放、共同推动行业增量的一个繁荣期。众多的玩家依托自身的平台生态、垂直场景和技术力进行差异化的竞争，持续拓宽在广告电商、电影、短剧、和游戏等众多场景和商业化的边界。但是，相较于大语言模型相对偏分散的市场竞争格局，AI视频生成赛道目前呈现出超头部地位清晰、第一梯队集中度较高的特点。视频生成模型对于算力、数据、人才、和技术也都提出了更高的要求。 Thanks for your question.

The global market for video content generation represents a massive $150 billion opportunity. AI video generation models have substantial potential for user adoption.

We believe the AI video generation segment is currently in a vibrant phase, with diverse stakeholders maximizing their strengths to drive industry upside. As industry players leverage their respective platform ecosystems, vertical scenarios, and technological capabilities to compete through differentiation, the commercialization boundaries of AI video generation continue to expand across diverse scenarios, including advertising, e-commerce, films, short plays, and gaming.

Compared with relatively fragmented competitive landscape of large language models, today's AI video generation segment features more concentrated market structure, with a clear dominant leaders and a higher level of concentration among Tier 1 players. Video generation models also requires significantly greater levels of computing power, data, talent, and technology.

过去两年以来呢，Kling AI一直稳居AI视频生成赛道的第一梯队。Kling AI团队持续具备行业前瞻的战略判断能力和执行力。2024年6月，我们推出全球首个可商用的DiT架构视频模型产品；2025年4月，我们发布全球首个多模态视觉语言mVL交互机制；2025年12月，我们推出全球首个omni-model多模态视频生成模型。我们不断用成绩证明，Kling AI团队是一支研究和工程能力双强、并具备战略执行力的全球顶尖团队。近期，Kling AI完成了独立融资，这将进一步提升其行业的竞争力。 Over the past two years, Kling AI has consistently remained among the Tier 1 players in the AI video generation segment.

The Kling AI team continuing to demonstrate strategic foresight into industry and strong execution capabilities. In June 2024, we launched the world's first commercially available video model product based on the DiT architecture.

In April 2025, we introduced the world's first multimodal visual language interaction architecture, mVL. In December 2025, we released the world's first omni-model based multimodal video generation model.

Our track record has consistently proven that the Kling AI team is among the industry's top teams worldwide, leading with a strong research, engineering, and strategic execution capabilities. Recently, Kling AI closed an independent financing round, which will further enhance its competitiveness in the industry.

Kling自成立起就聚焦于服务专业内容的创作者，通过视频生成大模型技术，提升以视频创作为职业、具备持续付费能力的专业群体的工作效率。Kling AI具备较强的提示词理解和可控分镜能力，能够帮助用户实现精准、连贯的创意表达。在画质表现和制作延展性方面，Kling AI也能满足专业创作者对高质量视频内容的需求。Kling AI是全球首个实现原生4K支出的视频模型，用户无需额外超分或后续放大，一键生成4K视频，画面更清晰、细节更丰富、质感也更具电影感。 Since its launch, Kling AI has focused on serving professional content creators by leveraging video generation large model technology to improve the productivity of professional creators who make video creation their career and have sustainable purchasing power.

Kling AI features strong prompt understanding and controllable storyboard capabilities, enabling users to achieve precise and coherent creative expression. In terms of visual quality and production scalability, Kling AI also satisfies professional creators' needs for high-quality video content.

Kling AI is world's first video generation model supporting native 4K output. Users can generate 4K videos with a single click without the need for additional upscaling or post-processing, resulting in a clear visuals, richer details, and a more cinematic look and feel.

总之，我们对Kling AI在视频生成赛道的长期竞争力充满信心。随着模型能力的持续迭代、产品体验不断完善、以及专业创作者生态和商业化场景的进一步拓展，Kling AI将在AI视频生成产业快速渗透的过程中，持续释放增长的潜力。 Overall, we are highly confident in Kling AI's long-term competitiveness in the AI video generation segment as model capabilities continuously iterate, product experience continues to improve, and professional creator ecosystem and commercialization scenarios further expanded.

At the same time, the AI video generation sector is rapidly gaining broader adoption, and Kling AI will consistently unlock greater growth potential. Thank you.

Thank you, operator. Next question, please.

谢谢管理层接受我的提问。那我是想问也是关于AI战略，就除了Kling AI以外，这个季度在其他的这个AI方面，快手的业务有哪些进展？Thank you, management, for taking my question. My question is also about the AI strategy.

Other than Kling AI, this quarter, what are the other areas in terms of the AI development Kuaishou has seen? Thank you.

谢谢你的问题。本季度呢，公司在AI领域的进展不仅体现在Kling AI的持续迭代上，更在组织效能提升、线上营销服务场景落地、以及核心推荐系统迭代等方面取得了实质性的成果。 During the quarter, our AI advancements extended beyond Kling AI iteration.

We also made tangible achievements across organizational efficiency, AI applications in online marketing services scenarios, and our core recommendation systems iterations. 在线上营销服务落地方面，我们将AI深度融入AIGC素材生成、智能出价、及生成式推荐等关键环节。在素材生成端，我们通过打通用户兴趣建模与视频生产，实现了从找营销视频素材到为用户创造视频的升级。在智能出价端，Agent系统能够结合营销客户的投放账户历史与转化目标，提供自我学习、持续修正的自动投放策略，有效保障了客户的长期价值与投放效果，并取得了良好的收益。而生成式推荐让模型真正读懂广告内容和用户需求，把商品、直播、搜索横向信息转成语义表达，从而提升人货匹配效率。

Regarding AI applications in online marketing services scenarios, we have deeply integrated AI across key processes, including the generation of AIGC marketing materials, intelligent bidding, and generative recommendation. In the generation of marketing materials, we connected the user interest modeling with video production capabilities, enabling an upgrade from searching for marketing material for videos to creating videos tailored for users.

On the intelligent bidding front, leveraging marketing clients' historical account data on marketing placement and conversion goals, our agent system developed self-learning and continuously optimized automated bidding strategies. This effectively improved long-term customer value and marketing placement performance, delivering strong ROIs.

For generative recommendation, our models can truly understand advertising content and user needs. By converting products, live streams, search queries, and industry information into semantic representations, we improved user-product matching efficiency.

在推荐系统迭代方面，我们推出了Agent驱动的研化研发闭环产品Agent X。过去呢，推荐策略从想法到上线，往往要经过数据分析、方案设计、生产代码修改、实验配置、AB观测、指标回归、和复盘沉淀等多个环节，高度依赖算法工程师的手工推进，效率受限。如今，Agent已成为推荐迭代的执行主体，将工程师从大量重复性工作中解放出来，使其能专注于目标设定、关键审核、与高阶判断，大幅提升了推荐策略的迭代效率与最终结果。 Regarding the iteration of our recommendation systems, we launched Agent X, an agent-driven R&D closed loop.

In past, taking a recommendation strategy from idea to launch often involved multiple steps, including data analysis, solution design, product code modification, experiment configuration, AB testing and monitoring, metric attribution, and post-launch review. This process relied heavily on manual execution by algorithm engineers, which limited efficiency.

Today, our agent serves as the execution engine for recommendation iteration, freeing engineers from a wide range of repetitive tasks and enabling them to focus on goal setting, critical reviews, and higher-level judgment and decision-making. As a result, we significantly enhance both the iteration efficiency and performance of our recommendation strategies.

在组织提效与赋能方面，公司自研的包括MyFlicker在内的Agent产品，员工使用渗透率已经超过了90%，全面覆盖技术研发、数据分析、业务运营等多个部门，大幅提升了内部效能。以技术研发效能为例，2026年第二季度，研发技术人员的平均需求交付周期较第一季度缩短超过了10%。同时，AI研发人员日均提交代码行数提升超过了70%，AI代码贡献率已经突破了60%。快手万擎也在高效支持快手内部AI使用场景的同时，为众多外部企业客户提供大模型基础设施服务，取得了不错的收入增长。 In terms of organizational efficiency improvement and organizational enablement, our in-house developed agent tools, including MyFlicker, have achieved over 90% employee adoption.

They fully cover diverse functions, including technology R&D, data analytics, business operations. These tools have significantly enhanced our internal productivity.

Using technological R&D productivity as an example, in the second quarter of 2026, our technological R&D team's average delivery cycle was shortened by more than 10% compared with the first quarter. Meanwhile, the average daily lines of code submitted on AI-assisted R&D increased by over 70% sequentially.

AI's contribution rate to newly added code exceeded 60%. Kuaishou Wanqing not only efficiently supports internal AI use cases, but also provide large model infrastructure services to a wide range of external enterprise clients, achieving strong revenue growth.

总之，我们将持续以AI技术深度赋能业务与组织，不断扩宽应用边界，与广大合作伙伴携手共同探索，并创造更具想象力的商业价值与增长空间。 In summary, we will consistently harness AI to deeply empower our business and our organization, continue to expand the boundaries of AI applications, and work together with our partners to jointly explore and create more innovative business value and greater growth upside.

Thank you.

Thank you, operator. Next question, please.

晚上好，谢谢管理层接受我的提问。在宏观需求还有行业竞争还是不确定的背景下，我们如何缓解商家的压力，助力商家的成长？在下半年的话，我们如何看待电商发展的一个趋势？Good evening, thanks management for taking my questions. In light of the uncertainties of macro environment and industry competition, what are our strategies to reduce merchants' operational pressure and empower merchants to growth?

On the other hand, how should we think about the online shopping outlook in second half? Thank you.

谢谢你的问题。二季度宏观需求仍然承压，行业竞争依然激烈。在这样的环境下，商家追求的是确定性，这也是我们商家侧工作的出发点。基于商家的经营类型做分型经营，用更匹配的组织、政策、和资源，让不同类型的商家都能在快手找到适合自己的成长路径。

Thank you for your question. In Q2, macro demand remained under pressure while industry competition remained intense.

Against this backdrop, merchants are seeking greater visibility and certainty in their business operations. This also shapes our merchant-side initiatives.

We segmented merchants based on their business profiles and implemented tiered operations. By offering more tailored operational support, initiatives, and resources, we helped merchants of all types find the right growth opportunities on Kuaishou.

首先呢，围绕商家的经营类型，我们从二季度起调整了供给团队的分工，针对不同类型的商家核心需求，匹配差异化产品策略、分样政策、资源，使其回到更加合理的水平。过去，不同类型商家获得的政策与资源与其贡献和诉求存在错配。品牌商家缺少足够专业的服务；广告型商家所获得的电商资源与其收入贡献差异明显；而自带流量丰富的人设型、内容型商家更需要的是经营的可持续性。为此，我们把品牌商家集中到专业团队统一负责；对广告型商家收敛错配的电商资源；对人设型和内容型商家，重点通过全域触达粉丝，帮助其提升经营的可持续性。在此基础上，我们对于品牌大商、产业带商家、和中小商家，继续分层定向扶持，保持政策的稳定性和连续性，让资源投向更精准。 First, starting in Q2, we restructured our merchant-facing teams by business type, aligning differentiated strategies with each segment's core needs and bringing policies and resources back to more appropriate levels.

Previously, support was misaligned. Brand merchants lacked dedicated professional services.

Ad-driven merchants received e-commerce resources disproportionate to their revenue contribution. Influencer and content-driven merchants, already rich in organic traffic, needed sustainability above all.

We have since centralized brand merchants under a specialized team, reallocated mismatched resources away from ad-driven merchants, and used full-platform fan reach to improve long-term viability for influencer and content-driven merchants. Building on this, we continue tiered, targeted support for brands, large merchants, industry zone merchants, and SMBs, maintaining policy stability and continuity while ensuring more precise resource allocation.

同时呢，AI也是我们帮助商家降本增效的重要抓手。在素材生产、智能营销、智能售后、和智能客服等场景，AI能力已深度应用到商家的日常经营和成本治理中，帮商家把省下来的钱投到真正的增长上。 Meanwhile, we deeply integrated AI capabilities into merchants' daily operations and cost management across scenarios such as marketing material creation, intelligent marketing, intelligent after-sales services, and AI-powered customer service.

This helped merchants reinvest into more productive growth initiatives. 品牌和产业带是我们今年坚定的在供给侧的两个重点投入方向。从去年四季度开始，相关合规政策的收紧拉平了不同商家之间的合规成本，商家对经营投流ROI要求变得更高，而品牌侧商家经营能力和稳定性的优势正在释放。加上AI大幅降低了内容制作门槛，以及我们把品牌补贴更聚焦地投到核心爆品，品牌商家在快手的经营进入了良性循环。我们看到这些品牌商家在平台上落地生根、坚定做经营，而不是简单地做曝光和外挂跳转化。二季度，品牌自卖GMV占大盘比例、品牌商家投放消耗占总消耗的比例，均实现稳定提升。产业带侧，我们借助服务商深耕全国各地产业带，赋能产地商家。今年已先后在内蒙古、云南、山东、江苏等地持续推进，把精政策、成长激励落到实处，让区域特色商家在快手扎根下来，实现规模化的经营。

This year, brands and industry zones remained our two strategic priorities on the supply side. Since Q4 last year, tightening relevant compliance regulations has narrowed the gap in compliance costs across different merchants, leading merchants to set higher ROI requirements for their marketing investments.

Against this backdrop, brand merchants' advantages in operational capabilities and business stability became increasingly evident. Meanwhile, AI has significantly lowered the barriers to content creation.

We have further focused brand subsidies on key blockbuster products. As a result, brand merchants have entered a positive growth cycle on Kuaishou.

We were pleased to see brand merchants demonstrated genuine commitment to the platform and focused on building and growing their businesses rather than simply using Kuaishou for brand exposure or to drive transaction off platform. In Q2, the contribution of self-operated GMV from brands to overall GMV increased steadily, while the share of marketing spend from brand merchants in total marketing spend also grew steadily.

On the industry zone side, we leveraged service providers to deepen our presence across industry zones nationwide and empower local merchants. This year, we have gradually rolled out this model in regions including Inner Mongolia, Yunnan, Shandong, and Jiangsu.

Through this operational initiatives and growth incentives, we provide tangible support to merchants with distinctive regional offerings, helping them establish a foothold on Kuaishou and scale their businesses. 关于下半年的趋势，我们的判断是，消费大盘仍处于温和修复的过程中。用户从可选消费向必选消费的迁移还在延续，这意味着商家对于确定性的要求会越来越高，单纯依靠流量的红利的增长方式已经过去。在持续给予商家流量资源和佣金率支持的同时，我们预计下半年电商营销服务收入和佣金收入会同比承压。对平台而言，这既是挑战也是契机，我们会继续推动流量融合机制，向有长效经营能力和意愿的品牌和均衡型商家倾斜，持续深化智能化投放能力，帮助商家提升投放的确定性。我们相信，把商家的分型经营做扎实，把供给结构调健康，电商业务就能在结构性的机会中获得高质量的增长，这也是我们穿越周期、实现长期和持续发展必须做的事。

Looking ahead to the second half, we believe the overall consumer demand will continue its moderate recovery, while the shift in consumer spending from discretionary to essential categories will persist. This means that merchants will increasingly prioritize greater predictability in their business operations, and the days of relying purely on traffic dividends to drive business growth are behind us.

While we continue to provide merchants with traffic resources and commission rate support, we expect e-commerce marketing service revenue and commission income to face pressure in the second half. For the platform, this represents both challenges and opportunities.

We'll continue to steer our traffic synergy strategy toward brands and balanced-profile merchants with both the capability and commitment to sustain long-term operations, while further strengthening our intelligent placement capabilities to help merchants achieve greater predictability in their marketing placement. We believe that by strengthening our tiered merchant operations and optimizing our supply structure, we will capture structural opportunities to drive high-quality growth in our e-commerce business.

This is also essential to rising above short-term cycles and achieving sustainable, long-term growth. Thank you.

Thank you, operator. Next question, please.

谢谢管理层给我机会问问题。我想问一下这个下半年的非电商类的线上营销服务，就是广告的发展趋势。然后还有就是本季度AI的能力对线上广告业务的赋能效果和实际影响如何呢？So, my question is on the non-e-commerce advertising. How does management assess the trend of this segment service in the second half of this year?

Also, what has been the enablement and the impact of AI on the online marketing service for this quarter? Thank you.

谢谢你的问题。线上营销服务的增长受宏观经济、客户营销预算的影响。展望下半年，我们认为外部环境的可视度仍然有限。同时，AI应用、即时零售行业在去年下半年增长较快，今年下半年面临较高的基数，客户预算也受到行业竞争节奏和投放策略的影响。但同时，我们也看到一些结构性的行业机会。 Thank you for the question.

The growth of online marketing services is affected by the broader macroeconomic environment and our clients' marketing budgets. Looking into the second half of this year, we believe visibility on the external environment remains limited.

Meanwhile, AI applications and instant retail, which grew rapidly in the second half of last year, will face a relatively high base in the second half of this year. Customer budgets will also be affected by industry competition dynamics and changes in marketing strategies.

That said, we continue to see structural opportunities in some industries. 第一呢，是以短剧为代表的内容消费。我们认为这个行业还没有到增长的天花板。AI持续重塑短剧行业供给，显著降低聚集生产成本和制作周期，带来更多题材、更多内容形态、和更丰富的供给。2025年，快手漫剧集数为6万部，2026年我们预计将达到50万部。未来行业发展还会从逐步从数量扩张转向内容质量的提升。与此同时，我们看到短剧的内容生态价值更加的凸显。2026年的7月，快手短剧用户的日均曝光规模已经达到2.3亿。短剧的变现模式也在演变，IAP的占比越来越高，意味着短剧逐步发展成具备内容消费价值和广告承载能力的生态型业务。此外，展望未来，内容形态可能进一步超越单纯观看看，向IP衍生、互动剧、虚拟陪伴、以及文旅文创融合等方向延展，这些都可能带来新的内容消费和商业化机会。围绕这些趋势，我们会抓住内容消费的发展机会，通过分账激励、全域流量扶持、和优质内容版权合作，帮助好内容获得更稳定的流量和商业回报。

First, in the content consumption sector, led by short plays, we believe this market still has room to grow. AI continued to reshape the supply side of short play segment, significantly reducing production costs and shortening production cycles while enabling a broader range of genres, content formats, and richer supply.

In 2025, the number of comic-style short plays episodes on Kuaishou was 60,000, and we expect this number to reach 500,000 in 2026. Going forward, we expect the industry to gradually shift from quantity expansion to content quality improvement.

Meanwhile, the value of short play content ecosystem has become increasingly evident, with the daily impressions on Kuaishou short plays reaching 230 million in July 2026. The monetization model for short plays has also evolved.

In-app ads account for an increasingly larger share, indicating that short plays are gradually developing into an ecosystem-based business model that combines content consumption value with incremental marketing inventory. Looking ahead, content formats could potentially extend beyond traditional viewing into areas such as IP adaptations and spin-offs, interactive short plays, and virtual companionship, and integrating content with cultural tourism and creative industries.

These new formats could unlock new opportunities for content consumption and monetization. Against these trends, we expect to capture the growth opportunities in content consumption through revenue-sharing incentives, omni-domain traffic support, and partnership with high-quality content copyright holders.

Our platform's high-quality content will achieve more stable traffic and monetization returns. 第二呢，在一些细分行业，我们过去的渗透并不充分，未来还有进一步增长的空间。比如在生活服务行业，这个行业和宏观环境关联度较高，但其内部细分行业非常多，不同行业的商家经营模式、用户的决策链路、和转化目标差异较大。因此，我们会继续通过更精细的行业运营，挖掘美容、美体、家装、房产等垂直赛道的增长机会。在游戏行业，游戏内容在快手平台有较大的用户消费基础，但商业化仍然相对薄弱。未来我们会探索游戏直播、游戏内容与广告预算结合的机会。此外，在AI时代，小游戏制作门槛进一步降低，也可能带来新的小游戏供给和营销需求。

Second, we'll still have room to grow in certain verticals where our penetration remains insufficient. For example, in the lifestyle services sector, the business is closely tied to the broader macro environment, but it also covers wide range of verticals, each with substantially different merchant operating models, user decision-making journeys, and conversion goals.

This will allow us to continue unlocking incremental growth opportunities in verticals such as beauty and wellness, home renovation and decoration, and real estate through more refined, industry-specific operations. In the gaming vertical, there's a strong gaming content consumption on Kuaishou, but monetization is still catching up.

We're currently exploring opportunities to better connect gaming live streaming and game content with marketing budgets to unlock more monetization potential. In the AI era, the barriers to developing mini-games are also becoming even lower, which could drive more supply and incremental marketing demand.

关于AI对于线上营销服务的赋能，面对客户更加关注提效降本和营销投放ROI的趋势，AI是我们帮助客户提效降本、撬动客户营销投放预算的重要手段。具体来看，第一是在营销素材上，AI明显降低了制作门槛。比如在生活服务、AI工具等行业，AI帮助客户或服商更快、更低地降低成本，产出适合快手用户的内容和素材，也推动了相关行业营销需求的增长。第二，是在客户运营环节，AI正在深入商机洞察、选品建议、投放诊断、效果复盘、和人工客服等更多工作流，帮助客户和服务商把过去大量依赖人工的环节标准化、自动化，从而提升经营效率。同时，在平台侧，我们也在持续用AI模型提升广告系统的匹配和转化效率。比如通过更好的素材理解、用户兴趣理解、智能出价、和智能调价能力，让线上营销客户的预算更高效地匹配到合适的人群和场景。 Regarding AI's empowerment of online marketing services, as our clients place greater emphasis on operating efficiency and marketing placement ROI, AI has become an important lever for us to help clients improve efficiency, reduce costs, and unlock additional marketing budgets.

Specifically, for marketing materials, AI has significantly lowered the barriers to content creation. For example, in industries such as local services and AI tools, AI helps customers and service providers produce content and marketing materials that are more suitable for Kuaishou users in a faster and a more cost-effective way, which has also driven growth in marketing demand from these industries.

Secondly, in customer operations, AI is being applied to more workflow such as business opportunity insights, product selection suggestions, placement diagnostics, and performance review as well as customer service. This helps customers and service providers standardize and automate processes that previously relied heavily on manual work, thereby improving operating efficiency.

Meanwhile, on the platform side, we continue to see AI models to improve the matching and conversion efficiency of our advertising system. For example, through better understanding of marketing materials and user interests, as well as intelligent bidding and intelligent price adjustment capabilities, we can help advertisers match their budgets more efficiently with the right users and scenarios.

总之，下半年线上营销服务仍存在结构性增长的机会。AI将继续作为提升营销效率和投放回报的重要能力，推动客户经营提效和商业化增长。 In summary, structural growth opportunities for online marketing services will continue to emerge in the second half.

We'll continue to harness AI as a key capability to optimize marketing efficiency and marketing placement ROI, driving operational efficiency improvements and commercialization growth for our clients. Thank you.

Thank you, operator. The last question, please.

管理层晚上好，感谢接受我的提问。那也恭喜Kling近期完成了独立的融资。那我问题其实是关于公司现金流的。Kling在完成融资之后，对快手母公司现金流会有什么样的一个影响？那公司呢就是关于今年下半年的现金流的一个支出，有没有什么规划？那我们下半年的一个现金流情况是怎么样呢？Good evening, management. Thanks for taking my questions.

After Kling's finished its financing, what is the impact on Kuaishou's cash flow? Looking forward to the second half year, what is your plan for cash flow expenditure and the total cash flow situation?

Thank you.

Kling在完成融资后，会在现金流支出上面采取更灵活的方式，包括通过租赁等方式，解决更多的算力需求，进一步优化资金的配置。这将在一定程度上改善集团整体的现金流情况。在现金管理与资本开支方面，我们会持续坚持稳健的财务策略。从执行节奏上看，大部分的资本开支已在上半年集中落地。从结果上看，公司二季度自由现金流为正。我们的目标是下半年集团层面的自由现金流为正。 After the completion of Kling AI's financing, we will have more flexibility in managing cash flow expenditures, including addressing additional computing power needs through leasing and other approaches.

This will further optimize capital allocation and, to some extent, improve the group's overall cash flow position. Regarding cash management and capital expenditures, we will continue to adhere to a prudent financial strategy.

In terms of execution, the majority of our capex was heavily front-loaded in the first half of the year. As a result, the company achieved a positive cash flow in the second quarter, and our objective is to maintain positive group-level free cash flow in the second half of this year.

那么在股东回报方面，我们始终将创造长期价值作为核心导向，持续践行积极的回馈政策。今年以来，公司累计完成约20亿港币的股份回购，及30亿港币的现金分红。股东回报总额已接近去年全年水平。在坚定推进AI战略投入的背景下，我们依然实现了股东回报力度的稳步提升，预计2026年全年股东回报总额将超越去年的水平。这一系列举措，不仅是对股东的切实回馈，也反映出公司具备持续创造现金流的能力，以及对业务长期发展的信心。 On shareholder returns, we have always focused on creating long-term value and consistently executed a proactive shareholder return strategy.

Since the beginning of the year, the company has completed share repurchases at an aggregate consideration of approximately HK$2 billion, and the company has paid HK$3 billion in cash dividends. Total shareholder returns have already reached close to last year's full-year level.

While remaining firmly committed to investing in our AI strategy, we have steadily enhanced shareholder returns. We expect the total shareholder returns for the 2026 full year to exceed last year's level.

These initiatives not only represent a tangible return to our shareholders, but also demonstrate the company's ability to generate sustainable cash flows and its confidence in the long-term development of our business. 在全力拥抱AI时代的同时，公司会持续筑牢财务安全底线，以审慎的财务纪律降本增效，保持充裕的健康现金储备。我们将以稳健的财务结构作为压舱石，在业务扩张与股东回报之间实现良性平衡，为高质量的长期增长奠定坚实的基础。

We fully embrace the AI era, and at the same time, we'll continue to safeguard and strengthen our company's financial foundation. We are committed to driving cost reductions and efficiency improvements through prudent financial discipline while maintaining a robust and healthy cash position.

Harnessing our resilient financial structure as the cornerstone, we will achieve a healthy and sustainable balance between business expansion and shareholder returns, laying a solid foundation for high-quality, long-term growth. Thank you.

Thank you, operator. That is the end of the Q&A session.

Thank you, operator. 感谢大家今天的参与。如果您还有更多问题，欢迎随时与快手的资本市场及投资者关系团队取得联系。谢谢大家。

Thank you once again for joining us today. If you have any further questions, please contact our Capital Market and IR team at any time.

Thank you.