Good day, ladies and gentlemen. Thank you for standing by. Welcome to Kuaishou Technology second quarter interim 2022 financial results conference call. Please note that English simultaneous interpretation will be provided for management for their remarks, and the speaker's line will be in listening only mode. Now I'm going to turn the call over to Heather Diwu, Director of Investor Relations at Kuaishou Technology.
Thank you operator. Good evening and good morning to everyone. Welcome to our second quarter interim 2022 financial results conference call. Joining us today are Mr. Cheng Yixiao, Co-founder, Executive Director and CEO, 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. During today's call, management will discuss certain non-IFRS measures and for comparison purposes only. For a definition of non-IFRS financial measures and reconciliation of IFRS to non-IFRS financial results, please refer to our results announcement for the second quarter and interim report ended June 30, 2022, issued earlier today. For today's call, management will use Chinese as the main language. A third party interpreter will provide simultaneous English interpretation of the prepared remark session and a consecutive interpretation during the Q&A session. Please note that English interpretation is for convenience purposes only. In the case of any discrepancy, management statements in the original language will prevail. I will now hand the call over to Yixiao.
Hello everyone. Welcome to Kuaishou second quarter 2022 earnings conference call.
In the second quarter of 2022, we continued to overcome challenges and achieve significant business breakthroughs. Though the pandemic was sporadic and the macroeconomy was volatile, we remained steadfast in the commitment to creating more value for users and society, while also consistently enhancing our operational efficiency. Our domestic DAUs in the second quarter of 2022 reached 247 million, achieving better than average seasonal performance and setting a new record. Meanwhile, our domestic business segment made breakthrough progress, delivering quarterly operating profit two quarters ahead of plan, which clearly shows the health and sustainability of our business model, as well as the effectiveness and efficiency potential of our organization and teams. We launched the Kuaishou Express in the second half of 2019 and have made considerable investment in growing users while paying attention to acquisition efficiency.
The groups have generally turned positive for the first time in nearly a year. Now, I would like to discuss the progress we made with several aspects of our business in the second quarter. First, let's talk about the user metrics and also traffic. In the second quarter of 2022, we continued to achieve high quality and efficient user growth through optimizing our strategies, algorithms, content operation, et cetera. We delivered a record high DAUs of 347 million, adding accelerated growth of 18.5% year-over-year, which, with the lower acquisition and maintenance cost per DAU. Our average MAUs reached 587 million, up by 15.9% year-over-year. An average DAUs to average MAUs ratio also hit a historical high at 59.2%, reflecting Kuaishou's growing user stickiness and vibrancy of our user community.
Furthermore, our average daily time spent per DAU reached 125.2 minutes in the second quarter of 2022, up by 17.1% year-over-year. Our total time spent also grew at a rapid pace of 38.7% year-over-year. More specifically, our user acquisition science, we continue to explore efficient channel and effectively expand existing channels in the targeted manner. At the same time, we actively manage the operation according to our traffic strategy and improve our very unique, you know, session and also at the same time improving efficiency. Also our channel driven strategy also iterative and also we are improving our economic management manner. At the same time we actively manage operations according to our traffic strategy and also improve the kind of the best operation method.
At the same time, by having seasonal iteration, we are also, you know, focusing on our strategy and also efficiency. At the same time with a lower cost, we have also, you know, which also had a significant improvement in both quantity and quality of user growth. User experience is key for retaining user and increasing time spent. Through algorithm operation, we have made more accurate and differentiated recommendation of high quality content, particularly mid to long tail content, thereby enriching user consumption, improving user experience. In the second quarter, the year-on-year growth of our video views even outpaced the growth of total user time spent. Meanwhile, we developed a new perspective on user retention, iterated our simple user labels into a more comprehensive user health index.
This enhancement has made our incentive model more refined and efficient, improving our system iteration frequency from daily basis to minute-based, and also putting us a generation ahead of our peers in terms of efficiency. Our highly effective user retention strategy also serves as a powerful tool for our ongoing control of user-related costs. With optimizations in content algorithms, operations and more, we further increased the proportion of unsubsidized and minimized subsidized users in our base. In the second quarter, our DAU growth rate and decrease in retention cost per DAU show the healthy DAU growth in our first year. Our inflow of new users continued to increase quarter-over-quarter. These accomplishments boosted our confidence and enabled us to drive forward to our 400 million DAU user target.
In addition to improving efficiency, we also adhere to our growth strategy of creating the creative social platform and user mindset for meaningful results. In the second quarter of 2022, fans of mutual followers of Kuaishou App grew 66% year-on-year, reaching more than 20 billion from 18. With average following per MAU continue to increase more than 300, which reflective of strengthening social stickiness and also user mindset. On the content side, we're thinking of strengthen operations in our large stages vertical while conducting more proactive screenings and overall operations of blockbuster content. Quality has always been our benchmark content vertical in the second quarter of 2022. We further accelerated the growth of our short play content and achieved meaningful results by adding new categories, including family and documentary, and exploring new duration format, which is 5-minute episodes.
Our strategy is to place great emphasis on content and less on production, particularly on the scripting stage. This strategy has consistently produced B blockbusters. Short plays have also contributed significantly to user acquisition and user activeness, especially among young and female users. With key insights into blockbuster content and also stronger operational capability, we recently created several blockbuster entertainment content. Kuaishou uses some strategy of providing entertainment content with high interactions and premium user experience. We organized and hosted Jackie Chan's first local live streaming event and Jay Chou, highly anticipated new album, live streaming event. Jackie Chan's spectacular live streaming event was enjoyed by fans worldwide, joining more than 130 million viewers, including Kuaishou's and Ele.me's users.
Jay Chou's live streaming had over 110 million viewers and over 450 million interactions, and also reservations exceeding 10 million, which is actually a historical high in history of internet. As of June of 2022, Kuaishou had more than 2,000 celebrity accounts, put together, had 870 million followers. Another primary focus of Kuaishou has been to improve the monetization efficiency, and we have continued to implement optimization measures across our ecosystem, product technology and sales capabilities among the aspects of our business. Like most advertisers here in China, we felt pressure from challenging macro environment and also resurgence of pandemic in the first half of the year. For the 6th time, we have an excellent growth of revenue that fully unleashed all our improved monetization released in the short term.
First, we outperformed industry across our business segments and consolidating market share. In the second quarter of 2022, revenue from online marketing service increased by 10.5% year-on-year to RMB 11 billion. Against the weak economic environment, advertisers are conservatively budgeting. We have been more proactively deepening our relationships with advertisers to increase the number of active consumers and also boost overall advertising demand. In the second quarter, the number of active advertisers increased by more than 90% year-over-year. Meanwhile, advertisers' retention rate further improved, reflecting our ad performance and product capabilities. We have also made and implemented several targeted optimization measures. For example, we introduced light version of our products to medium and small customers, making advertising easier and more convenient. In addition, regarding ad performance, we adopted more refined and frequent monitoring and operations to maximize the ROI for advertisers.
Through algorithm operations, we were able to improve targeting intelligence, which allowed us to help the advertisers with budget allocation and getting strategy management to actually improve matching and conversion efficiency. In the second quarter, overall advertising CTR and advertising transaction rate also improved. Growth of advertising from our native e-commerce and business also rebounded during the second quarter, and our e-commerce started to recover after the pandemic surge. In the second quarter, we focused more on building comprehensive e-commerce marketing service capabilities while continuing improving the basic service quality. We further capitalize our dual engine of short video plus live streaming to attract incremental advertising business through the short video e-commerce advertising while improving matching and conversion rate. We've also guided the merchants to conduct combined promotion and operations in both public and private domains that build on top the base of our closed-loop e-commerce platform.
The average ROI for native advertisers continued to improve in the second quarter. In terms of the brand advertising, we have also expanded our ad spaces and also been constantly innovating new promotion solutions. For example, for KOLs, we launched a lead client innovation platform approach, linking platform plus KOL plus brand. We collected 100 high-quality KOLs based on our content quality and commercial value, and jointly launched various product combinations for brands to fulfill their KOL marketing needs in different scenarios, empowering brands to grow their businesses. The year-over-year growth of our brand advertising in the second quarter of 2022 outweighs that of the overall online marketing services. Our e-commerce business was also affected by the pandemic during the second quarter. Nevertheless, we outperformed the industry due to our advantages in traffic efficiency and e-commerce experience.
E-commerce GMV increased by 31.5% year-over-year to CNY 191.2 billion, with live streaming e-commerce gaining a larger share in the e-commerce market in the second quarter. On the merchant side, more sellers have come to recognize live streaming and e-commerce advantage in traffic efficiency and customer acquisition, as well as the growing number of successful cases. Hence, more merchants are joining Kuaishou's live streaming and e-commerce ecosystem, adopting our promotion strategies, which has helped enrich our merchant supply. For the first half of 2022, the monthly new merchant number increased notably against the same period last year, nearly doubled.
In the second quarter, number of monthly active qualified merchants by more than a third quarter-over-quarter, and number of monthly active brand merchants grew by more than 200% year-over-year. Building on our dominant traffic and enriched commercial content, we maintain close attention to improve the transaction efficiency. To optimize the algorithms starting from this year, we are focused on improving accuracy of providers, seller, and product matching. Regarding users, we have actually stepped up the efforts in exploring our personalized needs to continue to refine the user label and have a better understanding of our users. On the product front, we made significant investment in building a product database and have capturing product descriptions that we can better understand our products. The effect, the efforts significantly enhanced the GPM of our e-commerce live streaming in the second quarter.
The new merchants that are starting up stage, we expanded and invested additional resources on service providers to boost their startup efficiency and help them to speed up growth. In the second quarter of 2022, over 2,000 merchants saw their revenues climb in leaps and bounds through service provider empowerment. Meanwhile, we consistently fortify our trust-based e-commerce ecosystem. In the second quarter, our industry-leading market repeat purchase rate continued to increase year-over-year and quarter-over-quarter, and our trust-based economy further has reinforced consumers' purchase mindset stickiness. Comparable to shelf-based or shelf-based e-commerce, live-streaming e-commerce engaged in earlier stage in the consumer decision-making process. The rounded aspects of content matching and merchandise supply optimize the browsing part of shopping experience, creating a virtuous cycle.
In the second quarter, our monthly active key players actually penetration rate remained in growth from 15%-19.0%. Another highlight of the second quarter performance for live streaming business is revenue growth at an accelerated pace of 19.1% year-over-year to RMB 8.56 billion, particularly due to better effectiveness. First, the strategy adjustments that we made on the content supply since the second half of last year produced excellent results through strengthening collaborations with talent agencies and also empower the content operations of existing teams on Kuaishou, while also onboarding more external professional streamers. We have achieved more cheaper improvements in overall content quality, as well as operational capabilities for our live streaming business.
In Q2 2022, the number of our monthly active streamers exceeded 10 million, among which the number of high-quality active streamers with over 100,000 followers saw double-digit growth year-over-year. In the second quarter, we made more explorations in live streaming product chain and operations to launch more interactive features and new scenario-based user consumption motivations, such as the multi-person live streaming function driven by dual improvement in content values and quality are proposed, also rose further among users, evidenced by 30% year-over-year growth in user time span and live streaming, and also significantly optimized revenue efficiency at our live streaming traffic. As for the algorithms, through real-time matching of live streaming content, we improved our live streaming conversion rate, effective penetration rate, and also paying the ratio, establishing a more efficient and smooth live streaming payment funnel.
In the second quarter, the average MPUs for live streaming rose 21.8% year-over-year to 54 million. Within Kuaishou's live streaming ecosystem, Kwai Recruitment, a high potential new business, also made remarkable progress in the second quarter. With advantages in traffic algorithms, core user profiles in our trust-based ecosystem, Kuaishou has struck a balance between cost and efficiency for corporate recruiters, creating economies of scale while providing a highly trusted recruitment and fulfillment experience to users. Also, it is a relatively new business. Kwai Recruitment has quickly gained the recognition and attention of individual and corporate users, with the MAU of Kwai Recruitment reaching 250 million in the second quarter, up 90% relative to the first quarter. Supported by our powerful matching and operational capabilities combined, Kwai Recruitment boosts the industry-leading placement conversion rate.
Also our priority for this year is to cultivate users mindset and grow our scale while improving the service quality. Through short videos and live streaming, we aim to create more social and economic value for both individual users and enterprises. Moving on to our overseas business. In the second quarter, we continued to create different unique content, foster user mindset, and explore more diverse content styles and formats. At the same time, we further increased our investment algorithms and products to optimize user experience so as to achieve high quality and efficient user growth and retention rate. At the end of June of this year, the timespan per DAU in overseas market exceeded 60 minutes, indicating a positive breakthrough in user experience in a growing number of regions, as well as the five-year value gradually gathering momentum.
In the second quarter, we also actively explored more monetization by advertising on live streaming, virtual gifts, bringing more advertisers and partners with more live streaming talent agencies to consolidate and also solidify the foundation for our creator ecosystem. As a result, the revenue for our overseas operations doubled quarter-over-quarter, with narrowing losses. Going forward, we hope to continue to explore how to normalize the overseas growth model. We will complete a new round of organizational restructuring, aiming at further unlocking the organization's vitality and potential, and continuously creating efficient and high-value services for society and users. This concludes my prepared remarks. Now I would like to ask the CFO, Jin Bing. Jin, talk to us about financial performance.
Thank you, Cheng Yixiao, and hello, everyone. We're now going to have a closer look at the financial performance for the second quarter of this year.
First of all, I'm thrilled that Kuaishou made a breakthrough progress in the second quarter. Despite a challenging macroenvironment, our traffic and revenues continued to grow steadily. Meanwhile, our domestic business became profitable at the operating level and also two quarters ahead of schedule. We also achieved positive results in monetization of our overseas business and a 25% revenue growth considering narrowed operating loss. Our revenues for the second quarter increased 13.4% year-over-year to CNY 21.7 billion. The increase was mainly driven by revenue growth in our online marketing services, e-commerce business, and live streaming business.
Revenue from online marketing services reached CNY 7 billion in the second quarter of 2022, up 10.5% year-over-year. This was primarily attributable to our traffic growth and the continuous improvements in our services, productivity and ad performances, which considerably increased the number of retargetings. Meanwhile, as our solid closed loop ecosystem generates improved conversion rates for e-commerce merchants, their contribution to our closed loop online marketing services showed stronger resilience and growth. Other services revenue for the second quarter of 2022 increased by 7.1% year-over-year to CNY 2.1 billion, largely due to the solid growth in e-commerce revenues. Our rich merchandise supply was powered by the growth of well-known brands such as five brands, while our enhanced matching efficiency promoted increase in the monthly active e-commerce paying users.
This, combined with our unique trust-based e-commerce model and empowerment by service providers, enable our e-commerce GMV to increase by 31.5% year-on-year to CNY 91.2 billion. In the second quarter of 2022, revenue from live streaming grew by 19.9% year-on-year to CNY 8.6 billion. This was primarily attributable to improvement in both our live streaming content quality and platform's live streaming operational capabilities, and also as well as the continuous improvement in user content matching efficiency, which propels the growth of average live streaming monthly users of 21.8% year-on-year to 54.2 million. Our COA revenues for the second quarter of 2022 increased by 10.9% year-on-year to CNY 11.9 billion, representing 55% of total revenues. The year-on-year increase was mainly due to two reasons.
First, an increase in revenue sharing costs and related tax, and which were aligned with our revenue growth. Second, the increase in content cost as part of the other cost of revenues resulting from our continued efforts in diversifying the content verticals and enriching content ecosystem. However, during the quarter, we were able to partially offset the impact of these factors by optimizing efficiencies of our bandwidth usage and reducing our bandwidth expenses and server and storage costs. Gross profit for the second quarter of 2022 reached RMB 9.8 billion, growing 16.5% year-on-year. Gross profit margin in second quarter of 2022 was 45%, improving from 43.28% in second quarter of 2021, an increase of 3.3 percentage points quarter-over-quarter.
Our year-on-year increase in margin was primarily as a result of further optimizing for bandwidth and server efficiency, which drove the decrease in ratio of bandwidth and depreciation to revenue. However, a quarter-over-quarter improvement to gross profit margin was mainly due to optimization of revenue share and cost and related taxes. Selling and marketing expenses were CNY 20.8 billion for the second quarter of 2022, decreased by 22.2% year-over-year and 10.7% quarter-over-quarter, representing 40.4% of revenues, a significant decline of 18.5 percentage points from 58.9% in the second quarter of 2021. This decrease resulted from our improved acquisition efficiency and optimization in content algorithms and operations, which led to more disciplined and efficient spending to our user acquisition and maintenance while sustaining strong traffic growth.
Administrative expenses for the second quarter of 2022 were RMB 960 million, increased by 10.6% year-over-year, primarily due to an increase in share-based compensation expenses. Research and development expenses for the second quarter of 2022 were RMB 3.3 billion, decreased by 16.1% year-over-year and 6.8% quarter-on-quarter. Primarily due to decrease in employee benefits expenses, including the related share-based compensation expenses. Our operating loss for the second quarter of 2022 continued its downward trend, narrowing to RMB 3.1 billion, an improvement from RMB 7.2 billion in the second quarter of 2021 and RMB 5.6 billion in the first quarter of 2022.
As a result, our operating margin increased by 23.6 percentage points year-over-year and 12.7 percentage points quarter-over-quarter, improving from -37.7% in the second quarter of 2021 to -14.1% in the current reporting quarter. Adjusted net loss for the second quarter of 2022 was RMB 1.3 billion, narrowing substantially from RMB 3.7 billion in the first quarter of 2022 and RMB 5.0 billion in the second half of 2021. This resulted in adjusted net profit margin improvement from -26.6% in the second quarter of 2021 to -6% in the second quarter of 2022, representing an increase of 20.2 percentage points year-over-year and 11.7 percentage points quarter-over-quarter.
We remain at healthy balances with cash and cash equivalents, time deposits, restricted cash and wealth management products of RMB 41.26 billion as of June 30, 2022. Going forward, we will continue to reinforce the monetization abilities of our various business while embracing change and adapting to an evolving macro environment. With its steady paths, commitment to sustainable growth and profitable improvement to our growth level, we will enhance our operational efficiency and effectively execute our long-term development strategies. This concludes our prepared remarks. We'll now open for quest ions. Operator, please go ahead.
[Foreign language]
As a reminder, if you like to ask question, please press star one and wait for your name to be announced. If you would like to cancel your request, you can also press the pound or hash key.
The first question comes from the line of Alex Poon from Morgan Stanley. Please ask your question.
[Foreign language]
Thanks management for taking my question. Congrats on very strong quarter. My question is related to our e-commerce business.
Our second quarter GMV growth was much better than expectation. Can management describe to us how's our e-commerce ecosystem developing so far? How will we tackle the changes after the COVID for the consumer behavior change?
[Foreign language]
Thank you for the question. In the second quarter, we continue to build our trust-based, experience-centric, e-commerce ecosystem and speed up improving sales conversion by leveraging live streaming as the main venue. Trust is the cornerstone of our ecosystem, and also as we continue to improve our user rights and interests protection system and the penetration of orders under the trust purchase, which is part of our system further increased. In particular, our high compensation policy, nine times refund for each fake item, now covers more than half of orders, which is industry leading, and we are confident to further improve it. We further enhanced platform governance and also presented user feedback at various points in the purchase process in the form like repeat customer recognition index, and to further strengthen users' confidence in merchants and our platform.
We continue to lead the industry in e-commerce monthly repeat purchase rate, which had increased both quarter-over-quarter and year-over-year.
[Foreign language]
If private domains is the foundation for merchants to operate effectively over time on Kuaishou, our public domain traffic can help merchants quickly get through the cold start stage and raise their operating ceiling. This quarter, we focused on enhancing the conversion rate of public domain traffic by enriching and refining product and user tags and improving the accuracy of matching merchandise and users. For the period, the GPM of public domain e-commerce live streaming increased by high double-digit percentage points year-over-year and continued to grow quarter-over-quarter. By offering high quality merchandise and services to strengthen repeat purchase and private domain traffic conversion, we have created a highly efficient dual-engine model with public and private domain.
[Foreign language]
Our e-commerce business would not have achieved better-than-expected growth this quarter without our continued expansion in high quality resources on supply side. During the first half of 2022, the number of monthly new merchants increased significantly by more than 90% year-over-year. More and more merchants gradually recognize the value of live streaming, e-commerce, live product display and efficient interactions, as well as its higher conversion rate. We are also actively expanding our reach to high quality merchants in municipal zones, and also our plan is to deploy services in 100 municipal zones by the end of this year.
At the end of first half, we were over halfway there with more than 10 industries covered. On the brand supply side, we continue to promote more brands, particularly private brands, to provide consumers with more abundant and high-quality merchandise, while further enhancing user awareness of brands to our platform. In the second quarter, the number of monthly active brand merchants more than doubled year-over-year. Among them, an internationally renowned beauty and cosmetic brand achieved average monthly GMV of RMB 200 million in the first quarter on our platform. During the 616 Shopping Festival, our total brand GMV increased more than 5-fold year-over-year. In terms of private brands, the number of monthly active private brand merchants doubled quarter-over-quarter. In addition to our presence in apparel and cosmetic categories where live streaming, e-commerce holds an advantage.
Private brands are also featured in categories such as food and beverages, home appliances, home furniture, and also other products.
[Foreign language]
As for the second part of your question, given the pandemic resurgence in many places in the first half of this year, with their offline operations under pressure, many merchants were more willing to explore online sales channels.
At the same time, the pandemic also fueled the desire of traditional online merchants to find new growth channels, giving our team leverage to speed up the signing up of new merchants. This year, we continue to strengthen our support for startup merchants by establishing an exclusive traffic pool and providing them with diverse products and marketing tools and one-on-one operation services. Furthermore, our service providers are providing more targeted services to address new merchants' barriers, you know, pain points, and also in relation to product selection and also operation at the early stage, helping them jump-starting and also achieving GMV growth. In the second quarter, the net monthly retention rates of the new merchants increased significantly year-over-year and quarter-over-quarter both.
The time between cold start to sales lift off of new merchants shortened by nearly 15% year-over-year.
[Foreign language]
In addition, we could see users being more price sensitive and more rational in the post-pandemic era, which resonates well with our honesty for quality goods and reasonable prices philosophy.
We bring more exposure to merchants capable of providing a high value experience ratio, and this in turn encourages merchants to keep refining their products and services. At the same time, we continue to improve the quality of product fulfillment and after-sale services so consumers can buy affordable and trustworthy products. Although affected by the pandemic and the uncertainty, consumption overall was depressed during the 616 Shopping Festival, we noticed beauty and cosmetics, also the home appliances and other categories on Kuaishou maintained relatively healthy recovery. Furthermore, consumer spending on staples such as food and beverages saw rapid development during the pandemic.
Although in the food and beverage vertical, the penetration rate of live streaming e-commerce is still relatively low, we believe there is a great upside potential with the streamers providing precise expression and also vivid display of food taste and flavor, as well as the bulk sales model.
[Foreign language]
As a trusted e-commerce platform with fast expanding traffic advantage, increasing matching efficiency and also the product supply, we believe standard products also have much room for penetration to our platform. We are stepping up efforts to develop shopping more like functions including Kuaishou Shop entry point, search box, and also guess what you like feature, which can help users who have a clear shopping target to find where exactly to get what they need. Better cater to users' repeat purchase demand and keep reinforcing their purchasing mindsets on Kuaishou. We believe in a medium to long term, the total GMV of the live streaming e-commerce industry centered on short video platforms can reach CNY 6 trillion, and we will continue to strengthen our leadership in this industry.
[Foreign language]
Next question comes from the line of Thomas Chong of Jefferies. Please go ahead.
[Foreign language]
Thanks, management, for taking my questions, and congratulations on a very strong set of results as well as a quick looking positive for the domestic business. May I ask management, when you think of operational efficiencies and ROI, approach on investment, how should we think about our top line growth and achieve a better result? Thank you.
[Foreign language]
Thank you for the question. It is indeed very exciting that domestic business growth even two quarters ahead of schedule. We made efforts on several fronts. First of all, our gross margin. To begin with, while maintaining steady revenue growth, we made breakthroughs in our revenue sharing cost management. As our core business grew in scale and influence, we innovatively designed and optimized a more effective revenue sharing mechanism, lowering the revenue sharing cost and also related taxes as a percentage of revenue by 2.5 percentage points quarter-over-quarter.
[Foreign language]
Secondly, upholding the principle of using technology to heighten the efficiency and with efficiency, keeping costs under control. We focus on tech upgrade to achieve the ultimate in cost effectiveness. In terms of server technologies, we advanced the dedicated management of resources and implemented the technological innovations, which improved computing and storage resources utilization rates, helping us to minimize the unit resource costs. In the first half of the year, while the total domestic time span grew by over 40% year-over-year, our bandwidth costs per 1,000 minutes in China fell significantly year-over-year. The ratio of bandwidth and server costs to revenue dropped by over three percentage points, and that contributed markedly to our overall gross margin improvement.
As for audio and video technologies, we carried out advanced technology research and developed applications which, combined with multiple video codec algorithms, image enhancement, and audio compression algorithms, reduced considerably our total bandwidth usage. Our self-developed codec algorithm, KVC, is the industry's first next-generation video algorithm standard, widely promoted and used online. The large-scale launch of PCDN and other device-cloud interaction and integration technologies have substantially increased the promotion of free and low-cost bandwidth usage.
[Foreign language]
Regarding expenses. In terms of selling and marketing expenses, since the third quarter of last year, while ensuring user growth, we have been able to keep lowering the acquisition and retention costs per DAU through organizational restructuring, efficiency enhancements, and technology iterations. We also strengthened refined management of our operations. Competition eased compared with last year. In the second quarter, with rapid traffic growth maintained and also user number reaching a new high, selling and marketing expenses as a percentage of revenue declined by 18.5 percentage points year-over-year.
[Foreign language]
Lastly, we significantly optimized our personnel-related cost-to-revenue ratio through a series of organizational restructuring and efficiency enhancement initiatives, moving closer to the industry-leading level.
[Foreign language]
The concerted efforts of all in the company, we notably narrowed our losses. We will continue to explore more monetization models and improve the monetization efficiency, where while following an efficient growth path to increase revenue while reducing costs, and also which will give us a solid foundation to unlock the value in the medium to long term.
[Foreign language]
The next question comes from the line of Kenneth Fong of Credit Suisse. Please ask your question.
[Foreign langage]
Congrats on the strong quarter and thanks for taking my question. I have a question about Kwai Recruitment. Can you update us on the latest progress, growth strategy, as well as the plans for monetization? Thank you.
[Foreign language]
Thanks for your question. First, China's blue-collar population exceeds 450 million, accounting for half of the country's working population and are the most in-demand workers in the country. With the population bonus diminishing and also the labor shortages arise, the blue-collar recruitment market has become supply- or user-driven. Further, we have noticed that in the past, these users have not been adequately served and blue-collar recruitment market has many pain points, such as inadequate access to information, false information, inconsistent contract performance, quality, etc., etc. For employers, they also face challenges that require urgent attention, such as low recruitment conversion rate, high recruitment costs, and also poor economies of scale. In the post-pandemic era, we have spotted opportunities in blue-collar recruitment.
Also, as the most favored short video and live streaming platform of blue collar users, we see it as our responsibility to step up and deliver better solutions to industries, giving superior user experience to blue collar workers and higher conversion efficiency to enterprises.
[Foreign language]
Kuaishou's advantages in online blue collar recruitment efficiency and experience are primarily built on our three core competencies. The first one is the scale of our user base. In the second quarter of this year, the unique MAUs of Kwai Recruitment reached 250 million, making it online blue collar recruitment platform with the largest user base here in China. Equally important is the impact of our user base on the business conversion model. Compared with daily recruitment or entertainment, consumption, job hunting is a low-frequency user behavior. As blue collar workers change jobs 3-5 times a year, for conventional recruitment platform, users will uninstall the app or the app will become idle after a job is found. Consequently, a larger budget has to be used on user acquisition, and eventually recruiters pay the bill for higher operation and traffic costs.
However, here at Kuaishou, our rich short video and also live streaming content play a crucial role in driving user acquisition and retention. Building on this advantage, we provide recruitment services effectively, improving the operating efficiency, while also lowering recruitment costs for enterprises.
[Foreign language]
Second factor is our ability to build trust. Trust is absolutely critical in blue collar recruitment. Taking the secondary industry as an example, 80% of the blue collar job seekers are job hunting across provinces. Considering the impact of the pandemic, it is very important for these job seekers to have a better understanding of potential employers and also positions so that they can save relevant expenses. The interactive model of Kuaishou live streaming allows users to obtain crucial information such as work environment and job content while establishing trust with live streamers and employers. Such trust-based real-time interactive job hunting experience cannot be satisfied by traditional search experience or job listing. In addition, since our streamers have accumulated a valuable user assets on Kuaishou, they are motivated to honor their service agreements for offline stages of the recruitment process.
Kuaishou also provide users with a complaint channel. Our long-term operation mindset and trust-based model gradually cultivates it through the mutual trust and public supervision, providing recruitment experiences and conversion rates far exceeding the traditional bargaining model, and also ultimately reduce the dispatch of false information and fraud against users during contract fulfillment offline. The third advantage is our distribution and matching capability. With vast and diverse traffic, Kuaishou excels in nationwide traffic distribution. Our efficient traffic matching and the economies of scale make us well suited for large scale and rapid blue-collar recruitment. Our industry-leading NMU technology is capable of deeply understanding the multimedia content, which combined with user characteristics recognition enables better recruiting cold start of data.
In addition, we introduce algorithm technology to precisely match supply and demand, while also boosting public domain traffic allocation, thereby improving both number of views and successful conversion rates. Ultimately build a highly efficient, accurate and authentic service chain. From recruiters' feedback, our placement conversion rate is very competitive in the industry, and we are one of the most effective option for enterprises. In summary, the advantages of our advanced business model, the real-time interactive nature of live streaming, and the trust factor deeply embedded in our DNA has lowered the job-hunting threshold for blue-collar workers and increased the recruitment conversion rate for enterprises. Our monetization. We've initiated small scale trials of advertisements and achieved promising initial results. We are also exploring more in-depth monetization models.
This year, we will continue to refine our operations and content, expand the scale of job applications, improve traffic utilization efficiency, and test our business models. We expect the online penetration rate of blue-collar recruitment to reach 30% in 2025 or 2026, and the market size to reach around $100 billion. We hope to capitalize on advantages to enhance the recruitment experience for the entire industry, while improving online conversion rate and capturing a leading share of $100 billion online blue-collar recruitment market.