Kuaishou Technology

Thank you, operator. Good evening to everyone.

Welcome to Kuaishou Technology Fourth Quarter and Full Year 2025 Financial Results Conference Call. Joining us today are Mr.

Chen Yixiao, Cofounder, Chairman and CEO; Mr. Jin Bing, Chief Financial Officer.

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 or the fourth quarter and full year 2025 results announcement ended December 31, 2025 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 the non-IFRS financial measures, a reconciliation of IFRS to non-IFRS financial results and related risk factors, please refer to our fourth quarter and full year 2025 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 remarks session and a consecutive interpretation during the Q&A session.

Please note that English interpretation is for the convenience purposes only. In case of any discrepancy, management's standards in the original language will prevail.

Lastly, unless otherwise stated, all currency mentions are in RMB. I will now hand the call over to Yixiao.

[Interpreted] Hello, everyone. Welcome to Kuaishou's Fourth Quarter and Full Year 2025 Earnings Conference Call.

Over the past year, guided by our tech-driven user-centric philosophy, we accelerated the execution of our AI strategy across all major business areas, our Kling AI, multimodal large video generation models maintain a global leading position, and we continue to leverage our advanced capabilities to empower Kuaishou content and commercial systems. These efforts supported a high-quality growth across the user scale, revenue expansion and profitability.

In Q4 2025, average DAUs on the Kuaishou app reached 408 million, representing solid year-over growth. Total revenues for Q4 2025 increased by 11.8% year-over-year to RMB 39.6 billion.

Revenue from our core commercial business, including online marketing services and other services, primarily e-commerce increased by 17.1% year-over-year. Adjusted net profit increased by 16.2% year-over-year to RMB 5.5 billion.

For the full year 2025, average DAUs in Kuaishou app reached 410 million, and total revenues increased by 12.5% year-over-year to RMB 142.8 billion. Adjusted net profit for the full year increased by 16.5% year-over-year to RMB 20.6 billion, with an adjusted net margin of 14.5%.

As we scale AI investments, we continue to deliver steady improvements in the group's overall profitability. Our AI capabilities have become a core engine driving Kuaishou's long-term growth.

Meanwhile, as disclosed in the results announcement given the company's business performance, the Board has recommended the payment of a final dividend of HKD 0.69 per share for the year ended December 31, 2025, amounting to approximately HKD 3 billion in total. This reflects our confidence in company's long-term growth prospects and solid financial position as well as our unwavering commitment to enhancing shareholders' value ensuring the benefits of the company's strong cash flow generation.

We are sincerely grateful for our investors to continue to support quite a steady growth. It would not have been possible without the trust and support of our shareholders.

Looking ahead, by staying closely aligned with the business development and market conditions, we'll flexibly evaluate and continue advancing diversified shareholder returns, including share repurchases and dividend distributions to deliver the fruits of our growth to all our shareholders. Next, I will walk through the details and progress of our major business segment in Q4 2025.

First, our AI strategy and the progress of our large video generation model, Kling AI. Kling AI remained committed to its core vision of empowering everyone to craft competing stories with AI aiming to become the premier inclusive, efficient video regeneration infrastructure for the AI era, while driving continuous breakthroughs in model capability, product experience and monetization.

In Q4 2025, Kling AI accelerated rollout of multiple model upgrades across several iterations. We launched the Kling01, the world's first unified and multimodal video model developed on the multimodal visual language architecture, Kling01 transcends traditional [indiscernible] video generation models by integrating multimodal text video image and subject increasing a single generative managing engine.

Kling01's unified architecture enables end-to-end content creation within 1 model system, allowing users to envision systematically from generation to editing and refinement without switching tools. We also released the Kling Video 2.6 model, which incorporates simultaneous audio visual generation capabilities.

The model can generate a complete video containing natural voiceover, sound effects and ambient audio in single process, enhancing creative efficiency across the AI video creation flow. Kling Video 2.6 also introduced a motion control feature that enables users to replicate a specific movement from uploaded videos or from the online motion library.

By pairing this with the character reference image, users can generate character specific videos with the frame level precision in both body movements and facial expressions. In February 2026, we launched the Kling AI 3.0 model series developed under on all-in-one product framework, Kling 3.0, supports full multimodal input and output, spanning text images, audio and video, integrating video understanding, generation and editing within a single streamlined AI workflow.

This modes unifying multiple tasks within a native multimodal architecture, enable more complex narrative logic, automated story boarding and precise shot control while maintaining strong prompt adherence. Kling AI's innovations in foundational models and product features have paved the way for what is spread commercial applications across professional creative sectors, including marketing, e-commerce, film and television, short plays, animation and gaming.

These capabilities have supported a stronger adoption among professional creators and enterprise clients globally, earning the model's widespread acclaim and accelerating their monetization. In Q4 '25, Kling AI achieved revenue of RMB 314 million.

Notably in December 2025, Kling AI's monthly revenue exceeded USD 20 million, corresponding to an ARR of USD 214 million. At the same time, Kling AI's motion control feature gained significant traction across major global social media platforms, driving widespread discussion and organic distribution.

This momentum brought in Kling AI's reach beyond professional creators to a broader mainstream user base. In Q4, '25, we continue to deepen the impact of large AI models to empower our content and our commercial ecosystems while driving further quality and efficiency improvements or organizational infrastructure.

In terms of strengthening the foundation of our content ecosystem, our proprietary multimodal large language model, Kwai Keye-671 billion model has demonstrated strong video comprehension capabilities. Meanwhile, we upgraded our short video and live streaming content understanding in the system and launched a TechNext, our next-generation teching system, which enables more accurate content understanding, driving higher app usage time per user and the retention rate.

In content recommendation, we iterated our end-to-end generator recommendation large model with the launch of OneRec-V2, continuously enhancing the precision of the recommendations. For online marketing services, we further optimized our end-to-end generative recommendation technology by deeply integrating multidimensional business data, we enhanced model performance and improved the precision of online marketing material recommendations.

For intelligent bidding technology, we developed a unified bidding large model built on multi-scenario and multi-objective data. Together, our generated recommendation large models and intelligent bidding models drove roughly 5% of growth in Domestic Online marketing services revenue in Q4 '25.

While reducing the cost of generating online marketing materials, AIGC technology also unlocked additional budgets from our online marketing clients. In Q4, the total spending from online marketing services driven by AIGC marketing materials was nearly RMB 4 billion.

For e-commerce business scenarios, during Q4, we further iterated our end-to-end generative retrieval architecture OneSearch. We introduced editable structured Semantic identifier tailored to the e-commerce business, enhancing sematic understanding for mid- to long-tail search query.

This drove a nearly 3% increase in search order volume in shopping mall in Q4. In addition, we expanded the application of end-to-end regenerative recommendation technology from pan-shelf-based e-commerce to content driven scenarios such as livestreaming rooms and short videos, propelling GMV growth in all e-commerce scenarios.

For live streaming business scenarios, we further refined the AI Universe gift customization feature to deliver better interactivity, reach our dynamic presentation, more refined visual aesthetics, significantly increasing users' willingness to send virtual gifts. To drive the organization efficiency, we have completed the upgrade of our intelligent coding tools, our self-developed AI programming tool CodeFlicker has evolved from a coding assistant to an AI engineer with more engineers adopting the agent-based coding model and the generation rate of new code has roughly risen over -- to over 40%.

Moreover, our AI advancements are underpinned by our investments, and we're going to optimization in computing power infrastructure. Building on the success of our self-operated in-house self-built data center, we are steadily advancing the construction of our new computing power center to continuously elevate server and bandwidth operating efficiency.

Second, user growth and content ecosystem. In Q4 '25, average DAUs on the Kuaishou app reached 408 million, and MAUs reached 741 million with average daily times spent per DAU on the Kuaishou app was 126 minutes.

We're committed to building a vibrant community with the distinctive quality Kuaishou characteristics, continuously strengthening high-quality user growth, differentiated premium content supply, traffic mechanism optimization and interactive scenario development to achieve a healthy, sustainable expansion in both the user scale and traffic to drive the high-quality user growth that we refine user acquisition strategies across channels to continue to optimize the user segments and improve the retention rates. We also leveraged AI technology to enhance push strategies, including resulting in a higher open rate for Kuaishou app.

In addition, we introduced innovative user engagement retention initiatives that are consistently improved ROI. Harnessing our established capabilities and content operations, we supported the growth of benchmark creators like Xinyu the Ostrich Lady and continue to create and cultivate high quality top-tier content IPs with the distinctive Kuaishou characteristics, rural culture and entertainment activities, exemplified by the Village Gateway Mini Stage in able to call rural residents to transition from passive viewers to active on-stage participants, featuring diverse content ranging from intangible cultural heritage performances to agricultural technology demonstrations.

These initiatives enriched the rural culture life and provided a new channel fo showcasing rural culture. We produced the 6th anniversary concert for Teens in Times, which garnered over 680 million live streaming views.

Leveraging live streaming, interactive features and AI-powered creative content, we crafted a shared youthful memory that fosters a mutual bond between the fans and idols. We optimized our traffic mix of increased traffic exposure for top-tier original content, fostering a virtual cycle between content creation and consumption.

In Q4, the number of high-quality content uploads increased more than 15% year-over-year. To further develop engagement scenarios, we continued to innovate private messaging engagement features, driving year-over-year increase of nearly 3 percentage points in daily average penetration rate of private messages among users with mutual followers during the quarter.

Third, online marketing services. In Q4, revenues from online marketing services to reach RMB 23.6 billion, up 14.5% year-over-year.

The accelerated integration and innovative application AI across diverse online marketing service scenarios, not only empowered our ecosystem partners, but also injected a new growth momentum into our online marketing services business. In Q4 '25 within lifestyle service sector, where clients primarily operate under lead-based model, we have the clients to reach users more efficiently and achieve the higher user conversion rates by upgrading our private messaging products and optimizing our algorithms at the same time by continuously expanding into more industries and acquiring new clients.

We broadened our online marketing client base and generated incremental marketing placements. In addition, as the lifestyle service actor clients are predominantly small and medium-sized business, we leveraged AIGC tools to enhance their ability to produce market materials.

These enhancements for the barriers for marketing placement and drove further growth in online marketing spending. In Q4, content consumption sector, led by short plays, comic-style short plays, mini games along with the application sector were the key growth revenue driver for the non-e-commerce online marketing services.

In the content consumption sector, short plays continue to sustain solid growth by optimizing marketing materials exposure format. So we increased the marketing spending in short play vertical meanwhile, empowered by the deep integration of AI technologies.

Comic style short plays advanced rapidly through continuously comprehensive supporting programs and rolling out the comic style short play AI agent, we further expanded high-quality and diverse content supply to capture emerging growth opportunities in the sector. Moreover, rising market budgets from clients across the AI application vertical, we leveraged our insights into industry placement pace and market trends to consistently optimize resource allocation and commercial efficiency, effectively channeling and capturing marketing placement and spending from AI application clients.

In Q4, for online marketing products, we continued to upgrade offerings including our UAX placement solutions, the AIGC marketing material solutions, live streaming digital human solutions and digital employee solutions. These enhancements helped to lower various marketing placements, improved client placement experience and drive further growth in online marketing spending.

Specifically during the quarter, UAX developed a periodic delivery and account level smart replacement product. These upgrades enable clients to extend managed campaign cycles and alert system management from the app unit level to account levels, thereby improving overall delivery efficiency, raising the selling floor campaign scale and providing more stable cost performance for our clients.

In Q4, penetration rate of our UAX placement solutions accounted for nearly 80% of the non-e-commerce marketing spending and its penetration rate among active users exceeded at 90%. For e-commerce marketing services following our consolidation of e-commerce business and related online marketing team made September last year to advance traffic synergy, we established our closed-loop capabilities and pricing traffic, transaction, online marketing conversion and merchant services.

This was designed to align our platform's overall revenue growth with merchant mix refinement, enabling e-commerce merchant in GPM and CPM for marketing services to improve in tandem in Q4. In first half of 2025, we essentially completed capability refinement of our omni platform marketing solution.

In the second half, we focused on addressing differentiated scenario needs across diverse customer segments, effectively increasing incremental GMV generated for e-commerce merchants across omni-domain scenarios and enhancing business stability. In Q4, our omni platform market inclusions accounted for even greater share of our total e-commerce marketing spending, rising further to 75%.

Our omni platform product promotion achieved full coverage across products and scenarios, becoming the primary placement offering for our e-commerce marketing services. Our fully managed the auto placement and product combo for small and medium-sized merchants gained broader adoption and recognition, driving a significant increase in spending by these customers.

In Q4, by continuously optimizing our pan-shelf-based e-commerce scenarios and strengthening the synergy of omni domain supply and aligned distribution, our e-commerce marketing services revenue pan-shelf-based scenarios increased rapidly year-over-year. Fourth, our e-commerce business.

In Q4 '25, our e-commerce GMV grew 12.9% year-over-year to RMB 521.8 billion, building on the systematic omni domain operations category for their integrated pathway between public domain, traffic conversion and private domain asset accumulation, unlocking a new growth engine for merchants and supporting their stable, sustainable operational development across diverse scenarios. During Q4, we continue to empower merchants, strengthen their private domains and operational efficiency, broadening a variety of supply as a result, repeat purchase frequency of active e-commerce merchant users further increased year-over-year.

Meanwhile, by enhancing the operations of our key product categories, anymore precisely identifying the needs of our core user bases, we drove continued growth in ARPPU. In Q4 2025, we mobilized the combined strength of service provider agencies and industrial zones to broaden our e-commerce supply, guided by a full life cycle framework.

For new merchant development, we deepened our cost reductions and efficiency enhancement, stepped up incubation programs for new merchants, strengthened support for merchants from industrial zones and for the optimized business environment. Collectively, these measures bring force to merchants operational stability, empowered both new merchants in a small and medium-sized merchants to grow and enhance long-term predictability, sustainability of merchant operations during Q4.

Both newly onboarding merchants and newly onboarded active merchants growing year-over-year and quarter-over-quarter, driving our active merchant base to another record high, up 7.3% year-over-year. Furthermore, in Q4, we launched the Voyage Initiative focusing on in-depth partnerships with the top tier brands in diverse sectors through a coordinated resource empowerment and initiative aimed at a pioneer new model of mutually reinforcing growth for both the platform and the brand.

At the end of December, we began to capture early benefits from our high-quality product and content supply as well as merchant mix optimization. In terms of our live streaming scenario development, the Pop-Up Follower Red Envelopes initiative, which was launched in Q3 to drive targeted follow growth, achieving a meaningful result.

By increasing the streaming frequency of streamers with over 10,000 followers, the program drove a 12.7% year-over-year increase in the number of average daily active streamers hosting live sessions with over 10,000 followers, further reinforcing virtuous cycle follower growth and transaction performance in Q4. Through coordinated operations with agencies and leading to organizations, we expanded our KOL supply to further empower KOLs, we advanced our platform endorsed product offerings, which are trusted by both merchants and KOLs building on this foundation, our KOL Blockbuster Initiative focus on high-demand product categories, highlighting our platform's strong order aggregation capabilities and driving greater KOL participation and distribution.

The penetration of KOL within our distribution pool continued to improve with a number of active KOLs more than doubling year-over-year, supported by our platform endorsed product offerings, mid-tier to small and medium-sized KOLs were able to overcome product selection challenges and with platform traffic support, they achieved meaningful leaps in operational scale. In Q4, our omni domain operations ecosystem, including pan-shelf-based e-commerce and short videos, continue to demonstrate steady and resilient development.

In Q4, the contribution of pan-shelf-based e-commerce GMV to total e-commerce GMV remained broadly stable quarter-over-quarter. We continue to expand our supply scale driving sustaining year-over-year and quarter-over-quarter increases in average daily active merchants for pan-shelf-based e-commerce.

Super Links and the official channel for platform recommended products continue to strengthen its role as a core operational tool for shelf-based offerings, which achieved a record growth during the quarter. In Q4, Super Links penetration rate and pan-shelf-based e-commerce product cards reached 19.1%.

We also encouraged merchants to expand omni domain operations by leveraging our marketing hosting tools. We guided merchants in content-based scenarios towards shelf-based operations significantly increasing the penetration rate of active merchants using our marketing hosting tools quarter-over-quarter.

During Q4, we further advanced our short-video e-commerce content supply, prioritizing refined merchant-centric operations. By continuously leveraging the synergy between short videos and live streaming, we enriched our high-quality content supply and optimized funnel efficiency.

These efforts led for a significant growth in short video e-commerce GMV, which continued to outpace overall e-commerce GMV growth. In Q4 '25, we deepened AI integration across e-commerce scenarios delivering tangible efficiency gains for merchants while supporting their growth.

The broader rollout of OneRec, OneSearch and other large language model technologies across the e-commerce scenarios continue to generate incremental value. powered by e-commerce knowledge graph and leveraging large models' world knowledge and reasoning capabilities, we strengthened our foundational understanding of products, videos and users.

This enabled a more accurate long-term user-interest modeling, improved recommendation diversity and drove higher revisit and repurchase behavior. E-commerce content new generation capabilities have also advanced during the fourth quarter.

Features such as live streaming highlights and AI-assisted content creation further strengthened merchants across scenario operating capabilities, propelling step change growth in both content output and GMV. To improve operating efficiency, we launched an AI-powered order analysis feature in Q4, helping merchants identify abnormal orders more effectively, reduce pre-shipment refund rates.

Next, regarding our live streaming business. In Q4, live streaming revenue was RMB 9.7 billion.

We remain focused on fostering healthy live streaming ecosystem during the quarter, oriented towards high-quality, value-driven content and reinforcing the platform's community-centric core. For live streaming supply, we continue to intensify in professional operations of our core competitive categories, including group live streaming and multi-host live streaming, while strengthening coordinated development across multiple categories.

This enriched our live streaming content operations portfolio and drove us to develop improvements on the supply side, better serving users diversified preferences. Our Grand Stage deepened integration between online and offline scenarios supporting the incubation of distinctive streamers on our platform while increasing user engagement.

On the product side powered by Kling AI video generation capabilities, our AI universe gives a series with customizable special effects, enhanced interactive feature experience, dynamic motion rendering and visual aesthetics. As of the end of the fourth quarter, the number of cumulative AI Universe gift creations succeeded 1 million.

In addition, we expanded the application of the AI capabilities in our live streaming rooms, empowering streamers with AI Interaction Assistant and AI Digital Avatar Solutions to improve streamers' service efficiency. In Q4, our live streaming+ model extended the boundaries of the live streaming ecosystem while also unlocking additional commercial value.

Through refined operations, our Ideal Housing and Kwai Hire business deliver both quality improvement and efficient gains. In Q4, the average monthly number of Ideal Housing paying clients increased by over 40% year-over-year.

Finally, our overseas business progress. In Q4, we remain firmly committed to our high-value growth strategy, supporting a virtuous business cycle across our overseas business.

Despite a complex market dynamics, we achieved a steady growth in overseas business. On the traffic front, while improving customer acquisition efficiency and optimizing our user growth structure, we strengthened the user mind share for the Kuaishou community by expanding the supply of content with a distinctive Kuaishou characteristics, further broadening our core user base.

Brazil, our key markets of our overseas development, maintained stable DAUs and time spent per DAU. For online marketing services, we captured the industry opportunity to expand brand presence in Brazil, growing our client base across diverse industries.

In addition, we upgraded our products and solutions and actively exploring the new content-driven marketing scenarios, including short videos to improve client performance visibility and unlock new growth momentum supporting our client's long-term development. Our e-commerce business in Brazil achieved a steady year-over-year growth in GMV transaction scale and order volume in Q4, supported by AIGC driven improvement in e-commerce content and quality and operational efficiency and aided by more refiner logistic cost to management, our overseas profitability improved significantly.

Looking back over the past year despite multiple challenges, we anchored our core AI-first strategy, leveraging our profound technological expertise, a thriving diverse content ecosystem and continuously enhanced infrastructure and commercial footprint. We collaborated with ecosystem partners to drive systematic growth.

Looking ahead, although challenges will intensify, we remain steadfastly guided by our user needs. We're deeply cultivated the building of a one inclusive and a universally accessible digital community, while continuously deepening the seamless integration of AI technologies across our business.

This empowers our merchants and marketing clients to effectively elevate their operational productivity. Staying true to our long-term vision, we will deliver a superior user experiences, build broader platform for our partners and create a more sustainable value for our shareholders, collectively unlocking new growth opportunities in the AI era.

That concludes my prepared remarks. Next, our CFO, Bing will review the company's financial data for the fourth quarter and full year 2025.

[Interpreted] Thank you, Yixiao, and hello, everyone. Looking back to the past year, we significantly progressed our AI strategy and achieved remarkable results, leveraging our advanced AI capabilities.

We strengthened Kuaishou's content and commercial ecosystems, delivering high-quality growth across both our operational and financial metrics. We continue to refine our user growth and retention strategies, resulting in an average DAUs reaching 410 million for the full year.

At the same time, we deepened the application of AI large model across multiple business scenarios delivering superior experience for our users, creators and business partners while further improving our operational efficiency. For the full year of 2025, total revenue grew 12.5% year-over-year to RMB 142.8 billion.

Adjusted net profit reached RMB 20.6 billion, up 16.5% year-over-year with an adjusted net margin of 14.5%. Importantly, we achieved this growth while continuing to scale our investments in AI, making steady improvements to the group's overall profitability throughout the year.

Now let's take a closer look at our Q4 financial performance. Our total revenue grew 11.8% year-over-year to RMB 39.6 billion in Q4.

The increase was mainly driven by growth across normal marketing services, e-commerce and Kling AI. Online marketing services revenue increased 14.5% to RMB 23.6 billion in Q4 from RMB 20.6 billion in the same period last year.

The growth was primarily driven by AI-powered upgrades to our online marketing product solutions which improved the conversion efficiency and grow higher spend from our marketing clients. Revenue from other services, including e-commerce and Kling AI business reached RMB 6.3 billion in Q4, up 28% from RMB 4.9 billion in the same period last year.

The increase was mainly driven by growth in e-commerce GMV, which boosted our e-commerce commission income. And by the continued expansion of our Kling AI business by continuously refining Kling AI's financial models and developing more innovative features, we have expanded this to a range of applications for professional creators and driven new breakthrough in commercialization.

In Q4, our live streaming revenue was RMB 9.7 billion. We continue fostering a rich healthy live streaming ecosystem.

At the same time, we refined operations across our core categories, providing users with a more diverse high-quality content, leveraging the end powered product innovation. We also drove greater user engagement through high-quality live streaming content.

Cost of revenues increased 9.2% year-over-year to RMB 17.7 billion in Q4, accounting for 44.9% of total revenue. The increase was mainly due to higher revenue sharing costs and related taxes in line with our revenue growth.

In Q4, our gross profit grew 14.1% year-over-year to RMB 21.8 billion. Gross profit margin was 55.1%, up 1.1 percentage points year-over-year.

Turning to expenses in Q4. Selling and marketing expenses were RMB 11.4 billion compared with RMB 11.3 billion in the same period last year.

Selling and marketing expenses declined to 28.8% of total revenue, down from 32% in Q4 last year, reflecting the stronger effectiveness of our sales and marketing. R&D expenses increased 20.1% year-over-year to RMB 4.1 billion, accounting for 10.5% of total revenue.

Increase was really due to higher employee benefit expenses, including share-based compensation expenses and increased investments in AI. Administrative expenses was -- were RMB 930 million compared with RMB 8.7 million in the same period last year.

And administrative expenses accounted for 2.4% of total revenue, largely flat year-over-year. Group level net profit for Q4 was RMB 5.2 billion.

Group level adjusted net of profit rose 16.2% year-over-year to RMB 5.5 billion with an adjusted net margin of 13.8%. Our balance sheet remains robust.

Cash and cash equivalent, time deposit financial assets and restricted cash totaled RMB 104.9 billion as of December 31, 2025. Net cash generated from operating activities in Q4 was RMB 7.3 billion.

Additionally, we actively delivered on our commitment to shareholder returns based on the market conditions. As of December 31, we had repurchased approximately HKD 3.12 billion or around 56.78 million shares, representing about 1.32 percent of our total shares outstanding for 20.

Next, I'll provide a quick overview of our financial performance for the full year. For the full year of 2025, our group's total revenue reached RMB 142.8 billion, up 12.5% year-over-year.

This includes online marketing services revenue of RMB 81.5 billion, which rose 12.5% year-over-year. Revenue from our online -- our live streaming business increased by 5.5% year-over-year to RMB 39.1 billion.

Revenue from other services, including our e-commerce business, totaled RMB 22.2 billion, an increase of 27.6% year-over-year. Gross profit margin expanded by 0.4 percentage points year-over-year to 55% in 2025.

Our adjusted net profit for the full year of 2025 was RMB 20.6 billion, up 16.5% year-over-year with an adjusted net margin of 14.5%. Looking ahead, we will continue to prioritize the user needs and we remain committed to investing in AI, leveraging our leading AI capabilities.

We will drive further innovation across Kuaishou's content and commercial ecosystems, maintaining our core competitive edge in the rapidly evolving market and delivering high-quality and sustainable long-term growth for the company. Here concludes our prepared remarks.

Now we can open for Q&A.

[Foreign Language] Congrats on the solid fourth quarter results. My question is about Kling AI.

So we have seen an accelerating pace for various video generation models across the industry, including CDAS 2.0 launching recently. So what's the impact for the overall industry and to Kling itself.

And therefore 2026, what are the strategy or the plans for Kling in terms of our model capability, product upgrade as well as monetization?

[Interpreted] Thank you for the question. As we mentioned before, large video generation models are highly complex, both the input and output modalities are open-ended, which allows for considerable flexibility in technical pathways and product strategies, leaving significant room for innovation.

At this stage, we believe video generation technologies and products are so far from maturity, but especially from diverse players in the ecosystem can help exonerate industry advancement and better meet user needs. Recent accelerated updates to large video generation models, including CDAS 2.0 and others have brought positive momentum to the industry.

While lowering the threshold for everyday users to create content, they also have increased the penetration of AI video generation across a wider range of applications scenarios, effectively expanding the overall market. CDAS 2.0 adopts the multimodal input architecture, which aligns with the Kling01 model we released in December last year, underscoring our revisionary early positioning in multiple iterations centered on multimodal capabilities.

Kling AI continues to maintain globally leading position in both model and product capabilities. Kling AI was ranked among the top video generation models by artificial analysis.ai with exceptional benchmark scores.

Regarding character consistency and controllability, fiscal realism and stability in complex scenarios, including AI 3.0 model series demonstrate stronger performance reinforcing Kling AI's differentiated advantages among professional creators and enterprise clients. Kling AI played a key role in the production of virtual singing and visual effects in the recent hit drama supports into cloud shares produced by film and TV.

It delivered high quality and commercial-grade content while significantly reducing production costs. The partnership is a primary example of Kling AI's commercial value in top-tier film and television production.

It validates our focus on film and television production scenarios, as the live strategic direction. In terms of revenue, Kling AI maintained a strong month-over-month growth throughout the year, reaching an annualized revenue run rate or ARR of over USD 300 million in January.

Based on what we are seeing now, we are confident that Kling AI's revenue in 2026 will more than double. Regarding Kling AI's model iteration over the past year, we have consistently evolved in the unified native multimodal path.

When we launched the Kling AI 2.0, we introduced the concept of multimodal visual language or MVL which enables creative expression by combining multiple modalities and addresses the limitations of pure text interactions. With the release of the Kling01 large model in December 2025, we advanced the MVL interaction architecture even more, enabling multimodal inputs across text, image and video.

Around the same time, we launched our Kling 2.6 model for simultaneous audio visual generation, multimodal product capabilities. In February this year, we launched the Kling AI 3.0 model series, developed under an all-in-one product framework and this series towards full multimodal input and output within a single model.

Looking ahead, we plan to expand the many modalities in our models to further enhance controllability and video generation, including modality for motion and facial expressions. We will also focus on addressing the configuration and consistency challenges of complex scenarios.

Meanwhile, on the product front, we will keep advancing our AI agent capabilities to enable fully automated end-to-end content creation. The goal is to empower our models to automatically plan storyboards based on user needs, ensure consistency across characters and scenarios and simultaneously generate well-aligned audio and visual design lighting, visual term and camera movement.

Overall, Kling AI remains committed with its vision of empowering everyone to craft [indiscernible] stories with AI. We will continuously refine our model and product capabilities, sustaining Kling AI's global leadership in technology, product and commercial monetization.

[Interpreted] So my question is related to the AI investment strategy. So besides the multimodal and video generation area which related to Kling AI, where do -- what are the other segments that management thinks are worse, more investment in the future?

[Interpreted] Thank you for the question. Regarding the direction of our AI investments, beyond the multimodal video generation domains, we will continue to invest in the research and development of an application of large models across our content and commercial ecosystem scenarios such as large generative recommendation models and large multimodal understanding models.

In terms of the large generative recommendation models, over the past few quarters, we have seen significant potential for generative models in recommendation scenarios and we will continue to explore in this direction. For example, in our online marketing recommendation system, we are exploring deeper integrations between generative models and our ranking architecture, shifting from single request optimization to long-term value modeling.

In terms of the model capabilities, by leveraging our lens to introduce a stronger logic reasoning, inference and broader world knowledge, we are attempting to break the data feedback loop problem found in traditional recommendation systems. Concurrently, we are building a native, highly concurrent and scalable next-generation ranking architecture for large recommendation models.

Through system design and foundational engineering upgrades, we aim to ensure that the expansion of computing power and parameter scale translate into performance improvements. In the direction of the large multimodal understanding models, our proprietary multimodal foundational large language KwaiYii empowers Kuaishou's content understanding infrastructure.

In core short video and live streaming scenarios, KwaiYii performs video parsing and user behavior inference effectively driving improvements in the user time spend and retention metrics. Moving forward, we'll upgrade our AI capabilities from one-way passive Q&A to a long-term contextual understanding and a complex task processing further expanded the application to core monetization scenarios such as online marketing services and e-commerce and develop practical intelligence assistance with multimodal interaction capabilities to drive greater commercial value.

In 2026, we will also explore the application of agent capabilities across other various business areas. For example, in online marketing scenarios, we are developing an AI agent that delivers automated marketing placement for our e-commerce merchants.

This covers the entire workflow from intelligent product selection, creative editing and AI-generated materials, smart bidding and dynamic pricing and customer support and post placement data analysis, lowering the threshold for clients to place marketing materials and improving placement of performance and cost stability. Additionally, we will also explore sales AI agents for lead focused sectors, helping clients improve lead conversion efficiency and reduce customer acquisition costs.

In e-commerce scenarios, we will improve the user search experience through the development of a search and recommendation agent, driving higher user search-based order volumes. We will also explore agent-based automated computing power optimization.

We will further share our progress on these fronts with you at appropriate time. Finally, we will also advance the construction of the new computing power centers.

Computing power is the core foundation and underlying support of our AI development, meeting the company's demand for R&D iteration, model training and inference enhancement. We have integrated the construction of computing centers into our strategic planning, aiming to solidify the computing foundation for AI development.

By reserving expansion space to accommodate long-term needs, these centers will deeply support core tasks such as AI algorithm optimization and large model training, empowering our AI innovation with a robust computing foundation. In summary, we will continue to deeply calibrate the R&D of core technologies and their implementation across multiple scenarios.

With firm computing investments and a deep AI talent pipeline, we will empower our content ecosystem and realize continuous growth in commercial value of our ecosystem partners. Thank you.

[Interpreted] On e-commerce, how should we think about the growth strategies in 2026? How should we think about the trend this year and the growth opportunities?

[Interpreted] Thanks for the question. Our broad focus for 2026 remains on returning to the essence of Kuaishou's content-based e-commerce and on maximizing our strengths as the content platform.

Our growth strategy spans across 3 areas. First, we'll focus on the supply side reforms to continuously refine supply and consistently offer good products.

As mentioned earlier, in Q4 2025, we launched a Voyage Initiative to provide a targeted support for top-tier brands. It's designed to help them quickly achieve strong start and sustained growth within the Kuaishou ecosystem.

In 2026, we will also invest in more resources on the supply side, primarily across 4 areas: merchant traffic, product, operations and services. Our focus will extend beyond brands to include merchants in the key industrial zones.

We already identified 100 priority industrial zones and we are actively managing them. Meanwhile, we are working closely with our e-commerce industry team, small- and medium-sized merchant team and service providers to empower our new merchants.

As the e-commerce market matures and macroeconomic dynamics remain challenging, the relationship between platforms and the brand is being reshaped. Platforms are evolving from single transaction roles to collaborative partners that grow alongside merchants.

As we empower merchants more effectively, we also plan to refine the platforms, the supply ecosystem and provide users with a wider variety of products. Second, we will continuously improve in paying user acquisition and penetration.

Currently, there's still significant growth potential in a number of e-commerce monthly average paying users. In 2026, we'll focus on exploring and better understanding users' interest in e-commerce content.

We will also optimize our traffic strategies and leverage effective subsidy mechanisms and across scenario synergies to boost paying user conversion and scaled growth within superior products. Third, we will further optimize resource integration.

This quarter, we have seen some preliminary success in implementing traffic synergy. Moving forward, we aim to deepen the integration between e-commerce and commercialization, enhanced coupon synergy, improved subsidy efficiency and optimize the overall resource allocation and investment efficiency.

We believe that the inherent conversion advantages of content-based e-commerce will continue to drive its penetration in the online retail market. Over the past year, categories such as men's and sportswear and fresh food grew rapidly.

We expect these verticals to maintain their growth momentum this year. As we just mentioned about ramping supply in 2026 and leveraging intelligent operational tools to help merchants reduce costs and improve efficiency while offering them a clear, more certain path for growth.

We expect even more structural growth opportunities in content-based e-commerce. In 2026, we expect Kuaishou e-commerce to achieve steady, high-quality growth.

Under the promise of high-quality growth, we will further strengthen our e-commerce monetization capabilities and deepen the foundational capabilities of our omni platform marketing solution and smart placement products. We expect that the core incremental growth for e-commerce marketing service revenue will come from 3 areas.

First, scale expansion. By focusing on key verticals and broadening industry supply, we aim to scale monetization through e-commerce marketing services in categories such as cosmetic sports and outdoors, fresh food and home furnishings.

Second, efficiency improvement. We will actively bring in more brand clients, optimize client composition and integrate resources to drive aligned growth for both GMV and marketing spending.

Women's apparel and health care will be a particular focus where we can enhance monetization efficiency. Third, sector expansion.

We will expand into sectors where we lag our competitors, such as maternal and children pad and consumer electronics, identifying clear opportunities in driving breakthroughs. In addition, we are also looking to continuously improve monetization efficiency in shelf-based e-commerce.

By expanding omni domain product supply, we can increase merchants' marketing budgets on product cards. In short, guided by the e-commerce growth strategy and monetization road map we outlined for 2026, we will take a steady, disciplined approach.

We will focus on the right long-term initiatives while leveraging our content platform strengths to better meet the consumption needs of our users.

[Interpreted] Sorry, just let me finish the English translation in addition to e-commerce, what are the main advertisement industry growth opportunities in 2026? And how do we plan to capture these opportunities?

[Interpreted] Thank you for your question. From a sectoral perspective, we believe the key growth opportunities this year will mainly come from 3 sectors: lifestyle service, comic-style short plays and AI applications.

In the lifestyle service sector, we have seen a continued shift in user behavior from traditional search platforms toward content platforms. Short videos and live streaming formats are more effective at building user trust, reducing decision-making friction and improving conversion efficiency.

In addition, the lifestyle service sector continues to deepen its online penetration for merchants in sectors like agriculture, materials, education and automotive. Online platforms are gradually becoming key channels for our marketing and customer acquisition and the platform level will continue to upgrade our products to help merchants reach their potential customers more effectively, while enhancing our in-platform interaction capabilities to improve conversion rates.

Moreover, clients in the lifestyle service sector are mostly small and medium-sized merchants that require strong customer service and operational support. Through our AIGC marketing material solutions, we help small- and medium-sized merchants generate marketing materials at a low cost.

In addition, our AI-powered customer service solutions to enable merchants to provide 24/7 online support. In the content construction sector, as AI technology significantly improves content production efficiency and lowers production costs, the emerging content format, comic style short plays is advancing rapidly.

As a top-tier player, Kuaishou has the dual advantage of our mature short-play ecosystem and the world-leading video generation model by deeply integrating content and technology, where building a comic-style short-play ecosystem that spans the entire value chain from tools and content to distribution. Additionally, we introduced a full-scale comic-style short-play support program covering computing power, traffic and other resources.

These continuously enrich the platform's comic-style short-play content supply and boost online marketing spending in this category. Since the second half of last year, the total spending from online marketing services driven by Kuaishou's comic-style short-play has increased rapidly.

In March this year, peak daily marketing spending exceeded RMB 15 million. The AI application sector is also what we view as another key growth driver for 2026.

As the AI technology continues to advance and new applications emerge, the industry remains in a rapid growth phase. We expect depending on the relevant sectors to continue growing significantly in 2026.

Against this backdrop, we will strengthen and refine our operations for our clients, continuously optimize short and long-term retention metrics, helping clients maximize the user lifetime value, all of which will prompt AI application clients to increase both their marketing spending scale and commitment on our platform. In summary, for 2026, harnessing our product upgrade content ecosystem development and refine our operations for our clients in priority sectors.

We aim to better capture incremental growth opportunities in the lifestyle service sector, comic-style short-play and AI applications, driving solid growth in our online marketing services revenue.

Operator, last question, please.

[Interpreted] You have repeatedly mentioned the construction of computing power centers. So my question is, could management share your plan scale of AI-related CapEx in 2026?

And the key area of your investment? So how will this CapEx investment affect your overall profit margin?

[Interpreted] Thanks for the question. As Yixiao said, over the past year, we have fully deepened our AI strategy, our multimodal large leader generation model, Kling AI has achieved impressive results in technology and advancement, product duration and commercial monetization.

At the same time, AI has delivered strong value empowering our content and commercial ecosystems, reinforcing our commitment and confidence to continue investing in AI. In 2026, we expected the group's total CapEx to reach approximately RMB 26 billion, an increase of about RMB 11 billion compared with 2025.

This covers computing resources for Kling AI's large models and other foundational models as well as routine server procurements such as off-line data storage and processing and investments in data and computing center infrastructure. The increase in CapEx for Kling AI's large models is partly due to higher inference computing needs from our expanding user base and revenue scale.

It also takes into consideration of our major Kling AI model upgrades scheduled for the year, which require additional investment in training computing power. With advancement of model iteration in the future, we will also flexibly allocate computing resources between inference and training to maximize the efficiency of computing resource utilization.

I would also like to emphasize that we are highly focused on cash flow management and maintaining ample cash reserves in 2025 despite approximately RMB 15 billion in CapEx, the group delivered nearly RMB 12 billion in free cash inflow for the year. For 2026, even with increased CapEx, we aim to continue maintaining positive free cash flow at the group level for the full year.

We believe that every investment today will efficiently translate into future profit drivers. As we stay focused on long-term technology investments, we will maintain disciplined financial management and ample cash reserves.

Our robust balance sheet will empower the group's sustainable high-quality growth in the AI era. Thank you.

That concludes the Q&A session. Thank you, operator.

Thank you, operator. [Foreign Language]