Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Kuaishou Technology second quarter and interim 2023 financial results conference call. Please note that English simultaneous interpretation will be provided for the management prepared remarks. Please join the English line, listen to the interpretation. The English line will be in listen-only mode. Now I will turn the call over to Mr. Matthew Zhao, VP of Capital Market and Investor Relations at Kuaishou Technology.
Thank you, operator. Good evening, and good morning to everyone. Welcome to the second quarter and interim 2023 financial results conference call. Joining us today are Mr. Cheng Yixiao, Co-founder, Executive Director, and CEO, and Mr. Jin Bing, Chief Financial Officer. Before we start, we would like to remind you that today's discussion may contain forward-looking statements which involve a number of risks and uncertainties.
Actual results and outcomes may differ materially from those mentioned in today's announcement and this discussion. The company does not undertake any obligation to update any forward-looking information, except as required by law. Any information that is important and forward-looking statements, please refer to the public information and also the information published on the IR website as of the end of June of 2023. During today's call, management will also discuss certain non-IFRS financial measures for comparison purposes only. For a definition of non-IFRS financial measures and a reconciliation of IFRS to non-IFRS financial results, please refer to our results announcement for the three and six months ended June 30th of 2023, issued earlier today. 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 consecutive interpretation during the Q&A section.
Please note that English interpretation is for convenience purpose only. In the case of any discrepancy, management statements in the original language will prevail. Also, as otherwise required and stated, all the currencies in this call is Renminbi. Please turn the call over to Yixiao.
Hello, everyone. Welcome to Kuaishou second quarter 2023 earnings conference call. For the second quarter of 2023, we're proud to announce another key profitability milestone, built upon the positive adjusted net profit we attained in the first quarter. We achieved our first ever group-level net profit of non-IFRS since our listing, totaling RMB 1.48 billion, meanwhile, adjusted net profit continued to grow quarter by quarter, reaching RMB 2.69 billion. These reflect our ongoing efforts to scale our vibrant user and content ecosystem, optimize our monetization models, and enhance our operating efficiency.
With the average DAUs and MAUs on the Kuaishou app hitting another set of record highs in the second quarter, our total revenue grew by 27.9% year-over-year to 27.7 billion RMB. This growth highlights the effectiveness of our thriving commercialization ecosystem. Revenues from e-commerce, online marketing, and live broadcasting also experienced strong growth, outperforming the market even outside the peak seasons. Furthermore, our pursuit of new business avenues continues. In the second quarter, we made rapid progress in our overseas and local service businesses. Through exploring brand new scenarios and products, we aim to offer users enhanced content consumption experiences and high-quality services. Next, I'll discuss our key business developments in the second quarter. First, I'd like to talk about the user growth and ecosystem construction.
In the second quarter of 2023, average DAUs and MAUs on the Kuaishou app reached 376 million and 673.3 million, representing year-over-year increases of 8.3% and 14.8% respectively, taking the scale of our user community to a new record high. Average daily time spent per DAU on the Kuaishou app was 117.2 minutes. Despite a slight year-over-year decrease in average daily time spent per DAU due to the shifting user time allocation online and offline of post-pandemic, our total user time spent continued to grow year-over-year, mainly driven by the rapid DAU growth. This reinforces the fact that short video apps remain one of the most compelling and captivating mobile products in the post-pandemic era.
To propel these improvements, we refined our user growth strategies during the second quarter of 2023. In addition to lowering our user acquisition retention costs on both quarter-over-quarter and year-over-year basis through technological and operational means, we also leveraged our high-quality original content for user growth and upgraded one-stop smart targeting platform, while improving our content production efficiency and quality through AI capabilities such as multimedia understanding. This, in turn, helped to increase our user acquisition efficiency. We are also actively exploring new channels for user growth. In the second quarter of 2023, we approved to the specific feasibility of user growth through promotion-related content placement by acquiring new users through advertisement, related e-commerce, and local services. We have always been committed to building an inclusive, highly interactive, and engaged community for users.
By the end of second quarter of 2023, pairs of mutual followers on Kuaishou app exceeded 31.1 billion cumulatively, representing growth of nearly 50% year-over-year. In addition, in the second quarter of 2023, average daily interactions, including likes, comments, and posts on the Kuaishou app, reached 8 billion. With respect to content operations, we constantly operate events in a way that we appeal to public and create native sports programs that public enjoys. With a focus on sports categories with a solid existing fan base, we support a group of influential sports KOLs and create original sports IPs with Kuaishou characteristics. One example was Kuaishou Village Basketball Association in June 2023, while attracted 300 million total live streaming viewers and 2.38 million peak concurrent viewers.
In the 2nd quarter, we also introduced several bulk after summer entertainment IPs, such as Summer Star Wish Party, Entertainment Heaven, and Summer Short Play Series. These IPs cover diverse content formats, including celebrity themes, variety shows, and short plays. Entertainment industry celebrities like Jay Chou actively engage with fans on our platform, providing users with rich content to consume and enjoyable social experiences. For our search business, we continue to improve user satisfaction and retention through our optimized search experience and personalized strategy. We continue to increase the penetration rate of search users through smart recommendations with word generation based on large language models. In the 2nd quarter of 2023, Kuaishou Search average monthly users exceeded 440 million, and the number of average daily searches increased by over 30% year-over-year.
Meanwhile, benefiting from our growing search traffic, product upgrades, and improved matching efficiency brought by advertising algorithm iterations, we continue to make progress in the commercialization of our search function, evidenced by a doubling of search and advertising revenue year-over-year. In the second quarter, when currently testing our smart question and answer product of Kuaishou Search, improve intelligence of searches that we leverage the tech capabilities of large language models. Second, on our marketing services. As the advertising market widely recovered, we further increased the monetization efficiency of our online marketing services by enhancing our product capabilities and infrastructure and marking the value of high-quality traffic.
In the second quarter of 2023, our revenue from online marketing services reached RMB 14.3 billion, growing by 30.4% year-over-year, outperforming the market and accounting for 51.7% of our total revenue. Meanwhile, the number of active advertisers on our platform almost doubled in the second quarter of 2023 compared with the same period of last year. Advertising services provided by our native e-commerce merchants maintained robust growth. Momentum continued to outpace GMV growth in the second quarter of 2023. This was partially driven by increased demand for ad placement during the e-commerce promotional season, as was the merchants' strong willingness to place ads on our platform as a result of higher ROI driven by strengthening s helf commerce advertising product capabilities.
We introduced our platform-wide advertising product, upgrade of the Store-wide ROI , aiming to help our native advertisers rely on omni-channel operations through the alignment of advertising, e-commerce, and traffic distribution. This also allowed advertisers to more scientifically and proactively review and evaluate their overall business performance on our platform. In 2Q 2023, we launched advertising placement at scale for optimized processes and mechanisms tailored for brand, merchants, and individual clients, achieving primary progress in the driving our client GMV growth. To enhance our product efficiency through a high level of intelligence, we brought smarter hosting service for our small and medium-sized e-commerce merchants based on platform automatic placement abilities. This increases convenience for ad placement for advertisers, lowering their labor costs while improving their placement efficiency and ROI.
During year-over-year and quarter-over-quarter increases, and among the small and medium-sized e-commerce merchants, we saw traffic in terms of acquisition . In terms of building e-commerce related advertising ecosystem, we developed a tiered approach for the traffic distribution mechanism and supported policies, and as for product capabilities and data infrastructure optimizations, targeting merchants in different stages of operations with diverse needs, by aligning development of advertising and e-commerce services. These initiatives also fostering the healthy growth and prosperity across the native e-commerce advertising ecosystem. Our internal external advertising services showed clear signs of recovery and recorded year-over-year growth in the second quarter of 2023, with quarter-over-quarter growth from industries such as e-commerce, platform, information service, and healthcare, as well as education and training. With a steady path commitment to improving our advertising performances, we have continued to fortify our product capabilities.
First, we improved the quality of our advertiser content, especially through native advertising, which has a considerably higher click-through rate and user conversion rate than the hard sell advertising into higher ROI for advertisers, as well as enhanced user experience. As a result, in the second quarter of 2023, our native advertising penetration rate rose continuously and constantly quarter-over-quarter. Second, we launched an optimized bidding model, focusing on optimized conversion through deep links and retention metrics further down the funnel for some industries. As a result, ad spending from these industries gradually increased. Our revenue from brand advertising increased by over 30% year-over-year in the second quarter of 2023.
As the third largest app in China, Kuaishou brand promotion value has been increasing recognition from a growing number of brand advertisers as we steadily expand our brand advertising resources, optimize our brand product capabilities, further iterate our product development roadmap, and increase demand from brand advertisers during promotional events. In June 2023, we launched a Kuaishou Index platform for our brand advertisers, providing them with insights into ecosystems, content, and creators. This platform offers them effective strategic guidance, ranging from pre-placement analysis to assess an ad plan and post-placement based on multidimensional data. This platform aims to help brand advertisers continuously improve their Kuaishou brand value in Kuaishou. In addition, we continue to reinforce the brand advertisers infrastructure, facilitating precise user asset accumulation and construction of a complete brand marketing matrix to provide advertisers with scenario-specific industrial solutions.
With this, we aim to empower brands to operate on Kuaishou more effectively on a longer horizon. Third, our e-commerce business. In the second quarter of 2023, we made solid progress in our e-commerce business through synergetic effect in the supply, demand, and infrastructure, along with the major promotions. As a result, our GMV increased by 38.9% year-over-year to reach 265.5 billion RMB, far outpacing the industry and further boosting our market share. In terms of infrastructure, we comprehensively popularize and apply scoring system for merchandise, merchant experience, and KOL reputation. This application of such indicators for identifying high-quality merchant service and content help to funnel the traffic on our platform to premium merchants, thereby continuously enhancing supply quality.
On this basis, we synergize user content consumption behavior by algorithm, refine and enrich the structures, merchandise information, optimize algorithm models to improve real-time interest match and accuracy, and enhance the conversion efficiency of e-commerce content through a more logical and intelligent traffic sorting mechanisms. On supply side, we're delighted to see an increased number of merchants and brands viewing Kuaishou as one of the main home bases during the second quarter of 2023. We focused our efforts on 10 major industries, including apparel, 3C, and other categories. We amplify our platform's influence through activities such as inviting merchants in 100 cities and merchandise selection meetings, while building benchmarking cases for our brand new merchants. As a result, we achieved high double-digit year-over-year growth in the number of newly onboarded business merchants during the second quarter.
Regarding merchant empowerment, we offer preferential traffic allocation and other supportive policies to our targeted high-potential merchants, while improving the merchant training systems, altogether driving a high double-digit year-over-year growth in GMV for small and medium-sized merchants in the reported quarter. In the second quarter, while brand e-commerce continued to deliver impressive results, GMV from brands, including Kuai Brands, continued to increase quarter-over-quarter, accounting for over 30% of our total GMV for e-commerce. Brands of self-operated live streaming continued to gain momentum, and brand GMV increased by about 80% year-over-year. This growth is attributable to several factors.
First, our promotions of brand have been progressing smoothly, leveraging quality of the platform influence and also the deep insights for users' needs to implement targeted promotions on our onboarded brands, leading to a 29% year-over-year increase in number of newly added brands in the second quarter of 2023. Second, operation front, we achieved a major breakthrough in the Stream Initiatives, specifically, we upgraded our traffic strategy in the second quarter, empowering the more merchants to achieve from the traffic. We also leveraged the Kuaishou KOL ecosystem unique advantages to help a brand identify, consume the various operating stages, including during the initial operations and following the launch of new products, thereby enhancing the conversion efficiency.
For example, a well-known outdoor brand and brand experienced a 30-fold increase in average monthly GMV of the self-operated live streaming, thanks to the support of our Stream Initiative. This is significantly growth, further promote brands to scale up their advertising placement on the platform by orders of magnitude. Aided by the Stream Initiative, KOLs have been gaining the access to a broader selection of high-quality products for distribution by efficient matching products and platform, will continue to improve the supply quality, providing KOLs participating in the Stream Initiatives with corresponding traffic support. This fostering value cycle of the virtual cycle on the platform, KOLs and brand merchants, resulting in the continuous increase of brands attention and investment on platform.
In addition to the Stream Initiative, we launched a traffic support, a plan for brands that are Chuanliu Plan, enhance the second, the self-operated live streaming capabilities and content quality through daily marketing and promotion events, helping them to explore their distinctive development path. As a result, the number of branded merchants with the scale exceeding RMB 100 million increased by over 90% during June 18th shopping festival. A number of major brands achieved closed-loop conversion from making the recommendations and funneling traffic through short video and the transaction to transaction via live streaming. Furthermore, they innovated the marketing content and collaborated with KOLs for distributors to create a broad-based merchant, increasing to 200% year-over-year growth and branded value during the period, and further user asset accumulation, laying a solid foundation for sustainable operations.
On the demand side, the number of monthly active paying users, which exceeded 110 million in the second quarter, remained the main driver for GMV growth, as their penetration rate rose to high teen. The solid performance was primarily attributable to the more refined approach of the tier user operational platform, as well as the smart subsidies and the product feature iterations, further expand the premium paying users consumption breadth and increase the thickness. As we operate in our supply, with our users of better products and services, while enhancing their experience. Both average order price and monthly purchase frequency achieved year-over-year growth in the second quarter of 2023. In the second quarter, we continued to make efforts in shelf, a shelf-based realm of the complementary content e-commerce and better meet the intent-driven shopping needs of highly active paying users.
We achieved a good, good progress by promoting a new shopping mall, by entering the product on a Kuai Brand landing page, and diversifying the supply of merchandise card, and exploring the cart situation with content. Additionally, we further optimized our product search function to better identify the intention through algorithm. We improved the product relevance of search results, leading to a 90% year-over-year growth in search GMV in the second quarter. Regarding our live streaming business. In the second quarter of 2023, live streaming revenue grew by 16.4% year-over-year to approximately 10 billion RMB, as we achieved double-digit year-over-year growth in monthly outgroup. This increases with attributable to our constant efforts in enriching our live streaming offering, optimizing the live streaming ecosystem, exploring user preferences and needs.
On the supply side, we further enhanced the professionalism of live streamers by fostering close collaborations with talent agencies. We implemented differentiated policies to cater to talent agencies, diverse operating models, offering a more incentives to new and small-sized talent agencies, and empower them to enhance their operational value. In the second quarter of 2023, the monthly number of talent agencies we partnered with grew by over 40% year-over-year, while the number of active streamers managed by agencies increased by over 70% year-over-year, reaching, reaching to a record high in terms of penetration of our percentage of our total active streamers. We will continue our policy support for high-quality content, providing high-quality talent agencies, while with the greater flexibility and assistance in nurturing streamers, to empower both talent agencies and streamers to achieve operational growth.
As we place the significant emphasis on fostering a healthy and sustainable live streaming ecosystem, we remain dedicated on investing in popular content verticals and nurturing the streamers, principally driven by our pursuit of high-quality content. For example, in the traditional Chinese cultural vertical, we identify promising promising streamers by factors such as content quality, growth, potential follower base, and revenue generating capabilities, and adjust the traffic support to the content vertical accordingly. We also increased traditional cultural content in the overall distribution on our platform. Furthermore, we actively developed more innovative interactive live streaming tools to stimulate user engagement, incubating the fresh categories that combine interactive activities and with live streaming. Furthermore, our live streaming plus services empowering the traditional industries also continues to progress.
A benchmark case of this innovative exploration was Kwai Hire, which experienced a 298% year-over-year increase in daily average resume submissions during the second quarter of 2023, with daily average number of users submitting resumes also more than double year-over-year. Moreover, by the end of June 2023, Ideal Housing expanded its reach in over 90 different cities nationwide, achieving cumulative gross transaction value of more than RMB 10 billion in the second quarter of 2023. Also, in the second quarter of 2023, the daily average viewers are quite big. Live streaming reached over 25 million, showing a steady penetration increase.
Finally, in terms of overseas business progress, in the second quarter of 2023, we further deepened the presence and efforts in key overseas markets, solidifying our content ecosystem for creators, refining monetization strategies, and continuously optimizing operation efficiency. DAUs and user time spent in core overseas markets continued to grow year-over-year. Total revenue of our overseas business reached RMB 147 million in the second quarter of 2023, recording year-over-year growth for over 300%. Meanwhile, we remain committed to cost reduction, efficient improvement, leading to a 51.4% year-over-year decrease in overall operating losses in the second quarter of 2023, which also further narrow quarter-by-quarter.
On the advertising front, we focus on key advertisers industries, improving product features, and optimize their performance, while enhancing product infrastructure and expanding brand advertising resources by strengthening local operation capabilities. By growing new monetization models, we aim to boost our traffic monetization efficiency and drive revenue multiplication. As for live streaming services, we maintain our efforts in expanding collaboration with talent agencies, enrich and content supply, and offering enhanced interactive experiences, aided by the introduction of new monetization features and activities. Our revenue generation efficiency also improved, along with the optimization of live streaming traffic distribution, as the pay rati o in our core regions, constantly experience continued growth. Looking ahead, we will remain committed to building a vibrant community with a fair, inclusive traffic distribution mechanism as a foundation.
We'll also further develop online marketing, e-commerce, and live streaming businesses by strengthening infrastructure analogies to better engage our users and business partners, while capturing incremental growth opportunities with new initiatives such as local services. With these advancements, alongside the tremendous traffic and deeply embedded trust across our ecosystem, we are confident that we will continue to expand our business with a brand awareness across the complementary business segments. Meanwhile, with a key focus on operational excellence, we look forward to further our goal of sustainable development. This concludes my prepared remarks. Thank you. Next, our CFO, Mr. Jin Bing, will discuss the company's financial performance for the second quarter of 2023.
Thank you, Yixiao, and hello, everyone.
As Yixiao mentioned in the beginning, we made another profitability breakthrough during the second quarter of 2023, achieving our first quarterly IFRS net profit of RMB 1.48 billion at the group level. Our adjusted net profit continued to rise quarter-over-quarter, reaching RMB 2.69 billion. This progress was driven by the healthy and continuous expansion of our ecosystem, our reinforced monetization capabilities across our business lines, and our remaining efforts to strengthen operation efficiency. Thanks to our continuous refined user experience and community operations, as well as premium content and services supported by our constantly iterated infrastructure construction algorithm, our user community continued to flourish during the second quarter, evidenced by record highs in average DAUs and average MAUs.
We also strive to unlock the potential of high, high quality traffic and create additional value for users, merchants, and advertisers, while focusing on business plan expenses, management, and sustainable development, quality improvement, and efficiency enhancement. As a result, we deliver a turnaround of our group's bottom line. Now, let's have a closer look at the financial performance for the second quarter of 2023. In the second quarter of 2023, our group's revenues grew by 27.9% year-over-year to RMB 27.7 billion, accelerating from 19.7% in the first quarter of 2023. This acceleration was driven by significantly higher quarter-over-quarter growth rates in our online marketing services and other services, in particular, our e-commerce business.
Revenue from our online marketing services increased by 30.4% year-over-year to RMB 14.3 billion in the second quarter. This growth was driven by our merchants' continuous investments in user assets, as well as the robust growth momentum of advertising services led by our native e-commerce merchants, we, which continued to outpace GMV growth. These were propelled by e-commerce promotions during the second quarter. This was also driven by the efforts of further strengthening, our data infrastructure, optimize the product capabilities, leading to a resumption of positive year-over-year growth of our external advertising service during the quarter.
Our other services revenues reached RMB 3.4 billion in the second quarter, representing a robust growth of 61.4% year-over-year growth, primarily built on our e-commerce business strong growth momentum, with e-commerce GMV of up nearly 40% year-over-year. During the quarter, we continued to optimize our e-commerce operating strategy, focusing on enhancing infrastructure and amplifying our platform share of voice, while empowering brands and merchants with our adverse strengthening e-commerce capabilities, as a result in both number of active merchants and monthly active buyers increased year-over-year. Revenue from live streaming business grew by 16.4% year-over-year to RMB 10 billion in the second quarter.
This increase was primarily propelled by our sustained year-over-year monthly ARPU growth, as we remain committed to exploring user needs and constantly enhancing user experience by enriching content offerings and optimizing our live streaming ecosystem. For the second quarter of 2023, our cost of revenues increased by 15.8% year-over-year to RMB 13.8 billion, representing 49.8% total revenue. This increase was due to the increase in revenue sharing costs and related taxes in line with our revenue growth. Gross profit for the second quarter of 2023 grew by 42.6% year-over-year, and 19% quarter-over-quarter to RMB 13.9 billion.
Gross profit margin reached 50.2% this quarter, expanding by 0.2 and 3.8 percentage points year-over-year and quarter-over-quarter, respectively, benefiting from our top line growth and effective cost control measures. Moving to expenses. Selling and marketing expenses for the 2Q 2023 decreased by 1.4% year-over-year to RMB 8.6 billion, accounting for 31.1% of total revenues in this quarter, down from 40.4% in the 2Q 2022, largely due to our more efficient and disciplined spending of user acquisition and retention.
Research and development expenses were RMB 3.2 billion for the second quarter, decreasing by 3.9% year-over-year, and accounting for 11.4% of total revenues in this quarter, dropping from 15.1% in the second quarter of 2022, primarily due to the decrease in employee benefit expenses, including related share-based compensation expenses. Administrative expenses decreased by 1.1% year-over-year to RMB 900 million for the second quarter, accounting for 3.4% of total revenues, down from 4.4% in the second quarter of 2022.
In the second quarter of 2023, we achieved a net profit of RMB 1.5 billion at the group level, marking our group's first IFRS net profit since listing and a significant turnaround from a net loss of RMB 900 million in the first quarter of 2023, and a net loss of RMB 3.2 billion in the second quarter of 2022. Our balance sheet remained strong, with cash and cash equivalents, time deposits, restricted cash and wealth management products of RMB 50.5 billion as of June 30th of 2023. Owing to our enhanced monetization capabilities and working capital management efficiency, we generated a positive operating net cash flow of RMB 6.4 billion for the second quarter of 2023.
In conclusion, our trust-based ecosystem, vibrant development, and our sustainably improved profitability demonstrated the effectiveness of our business strategies. Going forward, we will continue to enhance our platform's appeal to users, advertisers, and merchants by honoring our infrastructure, offering premium content, and optimizing user experience while leveraging our enhanced full suite of online marketing and e-commerce capabilities to empower advertisers and merchants. Meanwhile, we will remain focused on bolstering our monetization efficiency and operation efficiency. We are confident that these measures will drive further operating efficiency enhancements and reinforce our competitive market position for the rest of 2023 and years to come. This concludes our prepared remarks and now we're open for questions. Operator, please go ahead.
We will now begin the question and answer session. To ask a question, please press star one on your telephone keypad. To withdraw your question, please press star two. Please ask your question in Chinese first, and repeat your question again in English. Your first question comes from Lincoln Kong of Goldman Sachs. Please go ahead.
hey,
Thanks to your questions. Our shopping mall has attracted broad attention. As we emphasized to our merchant, at this year's Kuaishou E-commerce Gravity Conference, shelf-based e-commerce is an expansion of our content and an important aspect of Kuaishou's omni-domain e-commerce business strategy. Although the mall is still in the testing and ramp-up stage, shelf-based GMV still achieved, high double-digit year-over-year growth in the second quarter.
...
[Foreign language]
Specifically, search has always been a critical component of our shelf-based e-commerce business.
As Kuaishou uses e-commerce mindset matures, their intent-driven shopping needs can be better satisfied through the search function. In the first half of this year, we further optimized our e-commerce infrastructure to empower the search function. First, we optimized the landing page display for e-commerce content by strengthening the post view search feature and adding more entry points. During the promotion period in the second quarter, we also increased the exposure of e-commerce related keywords and enhanced search retrievals, which drove a constantly higher share of e-commerce search users as a proportion of overall search users. Meanwhile, we strengthen the search intent recognition, optimize merchandise display, and improve the end purchase path efficiency.
In the second quarter, search GMV maintained rapid growth, increasing by 90% year-over-year. In the second half of the year, we will continue to improve the accuracy of intent recognition and relevance of display products, aiming to unlock more demand and strengthen the sales conversion through more accurate matching and more refined operations.
[Foreign language]
In terms of stores, we will focus on content, shelf, sales, conversion improvements, and mind share building. To that end, we will strive to capitalize on omni-domain traffic while optimizing user experience through trust building, improved store decoration, and on shelf products. In the second quarter, stores continued to contribute to increase in the shelf-based GMV. In the third quarter, we will further optimize the store infrastructure and traffic distribution mechanism and foster user demand through various channels.
[Foreign language]
In the second quarter, we also made a good progress in our shopping mall. Notably, we promoted merchandise cards on the new shopping mall interface section of buyers home pages. This, in addition to our construction and popularization of merchandise scores, has deepened our understanding of products and laid a foundation for shelf-based e-commerce. On the supply side, merchandising infrastructure such as on shelf items in stores, merchandise information optimization, and improved playback continues to empower the shopping mall.
In terms of resource aggregation, we have seen that, this year, more and more merchants have chosen shelf-based e-commerce operations as their main focus during the cold start stage, and the shopping malls penetration, I mean, potential need to be further tapped. In the second half of the year, we will implement the grayscale testing of shopping malls, primary entrance, and utilize the test results along with user feedback to continuously optimize our shopping mall. In the longer term, we will integrate shelf-based e-commerce with live streaming and capitalize on repeat purchases and other strong shopping mentalities in the shopping mall features.
Other shelf-based fields, while strengthening the key merchandise operations and marketing capabilities to make the shelf-based e-commerce a new growth engine for the omni-domain operations of Kuaishou E-commerce.
Thank you, operator. Next question, please.
Your next question comes from Kenneth Fong. Kenneth Fong, please go ahead.
Hey, Matthew. [Foreign language]
[Foreign language]
Thank you, management, for taking my questions and congrats on the very strong set of results. As the overall traffic growth gradually slow, what is the future growth driver for our platform monetization going forward? Can management also share with us what we have seen in external ad performance and the key opportunities for second half? Thank you.
[Foreign language]
Thank you for your questions. From the traffic point of view, either from the total user time span or the total number of video views, each seems sufficient at present. This, the primary drivers of future monetization growth mainly come from the ad loads, upside potential, as well as the CPM improvement.
[Foreign language]
Looking back at the past two years, our ad load has been steadily improving at a controllable pace under the premise of limited negative impact on the user experience.
First, on the product and the research side, we continue to explore traffic allocation and its sales mechanisms, aiming to improve ad load with a high value user and enhance content advertising and matching. Second, through native advertising, one of the key projects this year, we further ensured user experience and time spent by elevating the supply of high quality ad materials and designing advertising with user sensitivity, among other strategies.
Taking these efforts into consideration, we believe that ad load still has upside potential, provided that user experience is preserved.
[Foreign language]
On the other hand, with respect to CPM, we expect it to gradually increase alongside a gradual recovery of advertising on the supply side.
We also anticipate improvement as we continue to promote matching efficiency optimization while upgrading the CPM related product and research. Specifically, we will focus more on model optimization, user cohort explorations, and other measures to enhance the user conversion rate. We will also continue to upgrade placement mechanisms for native advertising materials, as I just mentioned. We expect these to drive the advertising conversion rate for advertisers, thereby further improving our CPM.
[Foreign language]
Regarding your second question, as we entered the summer holiday and implemented our support policies for certain key industries, we have seen a continuous sequential growth of advertising placements from top industries, including gaming and information services.
Due to the recent lack of large-scale promotion events, advertising placement from e-commerce platforms experienced a sequential decline. However, advertising expenditures from other industries, such as education and finance, also improved sequentially as they entered a peak period during the summer holiday. As such, total July ad expenditures for external advertising services reached the highest level since April of last year.
[Foreign language]
As for opportunities on external advertising services in the second half of this year. First, the gaming industry, we noticed that dark horse emergence of mini program games last year. In 2023, the market size of the industry assessment will reach RMB 35 billion. In addition, developers have launched a large number of new releases recently, and they have clear advertising needs for summer traffic. Kuaishou has a large young user base in tier 3 and tier 4 cities, who have not yet been reached via traditional channels. Currently, our advertising share in the mini program game industry is relatively low. This year, we built a dedicated team to provide these advertisers with the integrated solution to optimize game effects.
We also ramp up our incentives and support policies for ad agents, all in an effort to gain additional market share.
[Foreign language]
Second, in the information services industry, short plays and certain social tools will provide better opportunities under the stimulation of abundant summer traffic. Leveraging Kuaishou's pregnant massive user base of 260 million DAUs. Paid short plays is one of the fastest growing tracks of Kuaishou. In the first half of the year, we further optimized the existing purchase path for mini programs and short plays. In July, we launched our native mini program advertising services, closing the loop for paid short plays within the Kuaishou platform. This can not only drive more organic traffic for paid short plays, but also improve their ROIs. Thus, we expect to gain additional advertising placements from paid short plays. Additionally, for our native advertising project, incremental and spending historically came mainly from the gaming and information services industries.
We are further expanding the scope of native materials in industries such as finance and education, which we believe that will drive incremental ad spend growth. Finally, with many e-commerce industry promotional events coming up in the second half of the year, and considering the pandemic impact at the end of last year, we expect e-commerce platforms, advertising placements will rebound and recover in the second half. Thank you, operator. Next question, please.
[Foreign language] Your next question comes from Alex Poon of Morgan Stanley. [Foreign language]
[Foreign language] M y question is related to our new businesses, such as local services and blue collar recruitment, etc. Can management share the latest update of these new businesses? Thank you so much.
[Foreign language]
Thank you for your question. The local service market is becoming increasingly competitive. Competition translates to more possibilities. As a short video platform with high quality traffic, we are ready to seize the opportunities that come with the industry advancements and the reshaping of the competitive landscape to grasp the market share. Currently, our local service business is in the early rapid growth stage, with a quarter-over-quarter GMV increase of around 200% in the second quarter.
[Foreign language]
In the second quarter, we accelerated the establishment of MVP, leveraging a high quality city rollout strategy, and onboarded more local merchants and merchandise. Also added operations in core cities like Beijing. In key cities, we build our own BD team and match merchants with local KOLs to enrich supply. This led to approximately 200% quarter-over-quarter increase in both the number of high quality KOLs, as well as the number of high quality products with high merchandise scores. In terms of supply, we continued to strengthen our in-store dining supply to expand our share of voice. Meanwhile, we capitalized the trend of offline travel recovery to create blockbuster hotel and travel products in core cities, fortifying our mind share among users.
This quarter, we also leveraged live streaming on top of the short videos, offering the richer content formats to increase user participation and interaction, while providing more detailed information on products and mechanisms. We also enhanced content ecosystem governance, fully utilized our traffic advantages, optimized our traffic distribution systems, facilitated high-quality supply, and improved transaction and settlement paths in live streaming, plus short videos, plus search, with the goal of improving transaction efficiency. This not only significantly improved the user NPS, but also increased the overall local service buyer base by nearly fivefold from January to June.
[Foreign language]
Looking forward to the second half of the year, we will continue to cultivate our presence in key cities, enrich supply, build a trusted KOL ecosystem, and optimize our traffic mix based on a broad public domain and a stable private domain, while continuing to increase GMV, we will refine our subsidy strategy to achieve more efficient user conversions. Recently, we launched the Flying Bird Project, which will provide more support in the forms of traffic, high quality local products, training sessions, and cash incentives, etc. To co-build Kuaishou's local service ecosystem with KOLs.
[Foreign language]
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[Foreign language]
Our Kwai Hire business also made good progress in the second quarter, with the average number of daily resume submissions increasing by 290% year-over-year. In July, the average number of daily resume submissions have stabilized at more than 500,000. On the supply side, our jobs have covered more than 200 cities across the country, with over 200 secondary position categories. Our businesses progress is mainly due to our continuous upgrading of Kwai Hire product capabilities and our ongoing optimization of traffic strategies. In terms of building product capabilities, we focus on three areas, including content, consultation, and our aggregation hub, which holistically stimulate our users job hunting needs. To optimize traffic strategy, we have developed Kwai Hire proprietary recommendation model to distribute its content traffic, and this has improved matching accuracy among Kwai Hire content and users, while allowing the businesses with better service capabilities to obtain greater traffic support.
Thank you, operator. Next question, please.
[Foreign language] Your next question comes from Wei Fang of Mizuho, [Foreign language]
[Foreign language] Thanks for taking my questions and congrats on achieving positive IFRS net profits. Can you help update us on your full-year breakeven output as well as the trajectory for gross margin and OpEx? Thank you.
[Foreign language]
Thank you for the question. With the joint efforts of all Kuaishou's departments, we made another breakthrough in our cost reduction and efficiency enhancement endeavors and hit another major profitability milestone, achieving the first ever group level quarterly IFRS net profit since our listing on a stock exchange in 2021. Our net profit reached RMB 1.48 billion, and adjusted net profit reached RMB 2.69 billion. These achievements benefited from the healthy and continued expansion of our ecosystem, strengthened monetization capabilities across the business line and our unremitting efforts to enhance our operation efficiency.
[Foreign language]
Looking ahead for the full-year, we expect our revenues for each business line will remain solid growth momentum, which with further improvement in our operation efficiency, we expect our gross profit margin for the full-year to be close to 50%, representing a significant increase compared to the pre- prior year. As mentioned in previous quarters, the factors driving the continuous gross profit margin expansion include, first, the change in our revenue mix as advertising and e-commerce businesses with higher gross profit margin contribute larger share of the revenue. Second, our effectively controlled and optimized revenue sharing costs. Third, we continue to leverage technological innovations and to improve the server and bandwidth usage efficiency.
[Foreign language]
In terms of selling and marketing expenses, we expect the absolute number for the full-year to remain stable compared to last year, while DAUs will achieve a mid-single digit increase for this year. While ensuring the realization of our user growth and user time spent target, we will refine our operation to further optimize acquisition cost per user and retention cost per DAU through technological and operational means. In summary, we believe that with the continuous implementation of measures to improve quality and enhance efficiency, we could steadily improve our group's profitability.
Thank you, operator. Next question, please.
[Foreign language] Your next question comes from Thomas Chung of Jefferies. [Foreign language]
[Foreign language] Thanks management for taking my questions, and congratulations on a very strong set of results. My question is about our AI strategies. Can management comments about, the latest progress on large language models and of course, about the future? Thank you.
[Foreign language]
[Foreign language]
Thanks to your question. We disclose some of our progress with respect to the LLMs at the recent annual Guanghe Creators Conference. Currently, our R&D team is making progress in LLM development and training as planned. We have co-currently developed and trained multiple LLMs with tens of billions of parameters. At the same time, our self-developed LLM called KwaiYii, is undergoing internal testing, providing business teams with standard APIs and customized product collaboration solutions. As indicated through testing various LLMs of the same scale in our industry, several of our LLMs indicators are at the industrial leading level. Yet, we think that it is more important to continue building our LLMs foundation and strive to benchmark the world's most advanced models. When the time is right, we will disclose further details publicly of the progress of our LLMs.
[Foreign language]
By leveraging our accumulated technical expertise on LLMs, we have successfully developed several application scenarios. First, in terms of search, we conducted internal testing of our intelligent Q&A product on July 8th, and launched internal testing of AI Dialogue on August 8th. On August 18th, we officially launched the Kuaishou AI Dialogue feature in the Android version of the Kuaishou app for internal testing. This is the first LLM-based intelligent Q&A product put into application in the short video and live streaming industries. It can provide users with new functions like intelligent Q&A and text creation in search scenarios
[Foreign language]
Second, in terms of AIGC, we created a full-moda l LLM, AIGC solution. Based on our self-developed foundation LLMs, we can provide users with multiple technical capabilities, including text, image, 3D, audio, and video generation, covering the whole creation process from inspiration to idea generation, from the multifaceted provision of creative materials to intelligent production. In addition, for scenarios such as live streaming, e-commerce, local services, and Kwai Hire, we also launched a digital human product, Kuaishou Smart Host, which empowers the host to quickly create their own digital twin and use digital humans to start hosting live streaming events and creating short videos. [Foreign language]
[Foreign language] Lastly, regarding recommendation algorithms, we have accumulated substantial experience in the modeling user behavior sequences over the past few years.
We've self-developed a user behavior modeling solution, which has led to significant business benefits. The success of LLMs in natural language modeling has provided us with new insights, leading us to believe that user behavior sequences can be modeled similarly to the modeling of large language sequences within LLMs.
This can thereby enhance our understanding of short video and live streaming behaviors, enabling better matching through recommendation algorithms and improving the ROI of content recommendations. [Foreign language] We firmly believe that short video platforms can greatly benefit from the advances in AI technology. As such, Kuaishou will persistently drive LLM development and training while ensuring the rational and efficient allocation of manpower and other resources.
We will also actively seek opportunities to integrate LLMs into diverse business scenarios.
Thank you, operator. That's the conclusion of our Q&A session.