Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Kuaishou Technology first quarter 2024 financial results conference call. Please note that English simultaneous interpretation will be provided for management's prepared remarks. This English line will be in listen-only mode. I will now 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 our first quarter 2024 financial results conference call. Joining us today are Mr. Cheng Yixiao, Co-founder, 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 first quarter 2024 results announcement for the three months ended March 31, 2024, issued earlier today. During today's call, management will also discuss certain non-IFRS financial measures. These are provided for additional information and should not replace IFRS-based financial results. For a definition of non-IFRS financial measures, a reconciliation of IFRS to non-IFRS financial results, and related risk factors, please refer to our first quarter 2024 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 consecutive interpretation during the Q&A session. Please note that English interpretation is for convenience purposes only. In the case of any discrepancy, management's statements in their original language will prevail.
Lastly, unless otherwise stated, all currency units mentioned are in RMB. Now, I'll hand the call over to Yixiao.
Hello, everyone, and welcome to Kuaishou's first quarter 2024 earnings conference call. In Q1, our total revenue grew by 16.6% year-over-year to RMB 29.4 billion, with a gross margin close to 55%, adjusted net profit of RMB 4.4 billion, and adjusted net margin of 14.9%. These results greatly outperformed the market. Despite being the typical slow season, we delivered robust operating and financial performance, highlighting strong business resilience and economic moat created by our users and commercial ecosystems. We're off to a great start in 2024. In Q1, we rolled out traffic recommendation mechanism to all users, boosting user experience and monetization efficiency. Our smart marketing solution helped marketing clients improve performances, attracting more budgets.
We're committed to creating an excellent shopping experience for users and have steadily grown our e-commerce business with a dual drive approach of live streaming e-commerce and shelf-based e-commerce. In Q1, we continued to foster a healthier live streaming ecosystem, laying a solid foundation for the platform's sustainable development. We also steadily advanced the R&D and training of our self-developed large language models to empower various business scenarios with AI technology, enabling growth through increased efficiency. Next, I'll discuss our key business developments in Q1. First, user growth and ecosystem construction. In Q1, average DAUs and MAUs on the Kuaishou App reached 394 million and 697 million, growing by 5.2% and 6.6% year-over-year, respectively. The average daily time spent per DAU on the Kuaishou App was 129.5 minutes.
Our total user time spent in Q1 grew by 8.6% year-over-year. These increases reflect our commitment to advancing our high-quality user growth strategy. By catering user needs with great content and continuously improving user experience, we provide more value to our users. For user growth, we optimized our user acquisition channel mix, combining algorithm-based forecast on new user retention rates to increase the ROI of our user growth. We also launched initiatives like exploring diversity of user interest, refining short video elements, and enhancing short video comment ranking strategies. These efforts improved the user experience and increased the user time spent on our platform. For content supply, we backed quality creators with the distinct Kuaishou characteristics and generated differentiated, high-quality, unique Kuaishou IP content for special occasions, giving users more reasons to open the Kuaishou app.
For instance, to celebrate the Year of the Dragon with our vast user base of nearly 400 million, we continued our A Taste of Chinese New Year on Kuaishou activities in 2024, offering a variety of Chinese New Year-themed content. A highlight was Dragon Night, a fan celebration on Kuaishou, hosted by Jackie Chan, who welcomed numerous celebrity friends and Kuaishou hosts. This event attracted over 260 million views, with over 690 million cumulative likes and over 6.63 million peak concurrent users. Additionally, themed programs like Kuaishou One Thousand and One Nights, Fans Gala, Online Festival Fairs, and The Village Basketball Association, not only provide a stage for creators to showcase their talent, but also increase the user stickiness on Kuaishou...
During the Chinese New Year season, 20 titles of Kuaishou Astro short plays received more than 100 million views, with 7 exceeding 300 million views. More various diverse short play series, like Superpowered Team and Grandpa and I, generated huge social buzz, from celebrity-led to co-led, Kuaishou short play is making great advancement. Regarding our search business, we optimize the search function by leveraging large language model technology and refining the landing page for search after watching feature to enhance the user experience. These efforts resulted in improved user penetration and overall search experience. In Q1, the monthly average users for Kuaishou Search increased by more than 15% year-over-year, with the daily searches reaching a peak of nearly 800 million. We actively promoted search commercialization revenue from search. Search marketing services grew by over 50% year-over-year in Q1. Second, online marketing services.
In Q1, with the macroeconomy and consumer market showing signs of stabilization and gradual recovery, our revenue from online marketing services rose by 27.4% year-over-year to 16.7 billion RMB, accounting for 56.6% of our total revenue. We vigorously promoted the use of our smart marketing solution across various scenarios, boosting active marketing clients by nearly 90% year-over-year in Q1. Furthermore, we guided the traditional external marketing clients to shift their operations natively onto Kuaishou through our self-developed sales funnel conversion path. This transition helped them convert targeted users and complete closed-loop transactions on our platform, enriching our insights to users. By using algorithms to model the conversion of active users into transactions through our marketing activities, we further unlocked the monetization potential of our online marketing services.
In Q1, leveraging our AI and LLM capabilities, our smart marketing solution provided clients with end-to-end solutions to improve efficiency, covering smarter creation, smart placement, smart connection. With our AIGC capabilities for smart creation, we could quickly generate higher quality creative content, diversifying our creative deployments. In Q1, the peak daily spending from the clients with AIGC marketing materials exceeded RMB 10 million. Regarding smart placement, our UAX product and the Omni-Platform Marketing Solution offer clients a range of automated placement functions, like bidding, real-time tracking, and adjustments. In terms of a smart connection, our AI-driven customer service helps clients communicate with targeted users, significantly improving marketing conversion efficiency. In specific industries, the conversion rate from content exposures to lead generation has increased by over 40%. In Q1, revenue from our closed-loop marketing services grew rapidly year-over-year, outpacing the overall e-commerce GMV growth.
We further iterated our Omni-Platform Marketing Solution strategy and capabilities, especially our Omni-Platform Marketing Solution introduced new core features like marketing, material data disclosure, content creation, and editing optimization. We provided all clients with access to these new features in March to help them explore high-quality traffic and expand their GMV. Regarding smart hosting product, we tested it and enabled live streaming hosting functions for major promotion scenarios, improving client marketing performance and a willingness to place ads with us. Merchants' total marketing spending through our Omni-Platform Marketing Solution or smart hosting products accounted for 30% of overall end-to-end closed-loop marketing spending in Q1. In Q1, our year-over-year revenue growth in external marketing services continued to outperform the market, especially in media information, gaming, education sectors.
Within the media information sector, average daily spending in marketing for paid short videos, short plays, rose over fourfold year-over-year. This was fueled by our ongoing optimization of the self-developed sales funnel conversion path and increased supply and demand resulting from incentives policy. On the gaming front, in Q1, we validated the effectiveness of the IAA marketing model for Kuaishou's mini program games, boosting the marketing spending of our gaming clients. Marketing spending in the education sector nearly doubled year-over-year in Q1, driven by our ability to meet growing user demand, resulting in increased budget from marketing clients. Our smart placement product under external marketing services, UAX, provides tailored full lifecycle automated marketing solutions to clients in diverse industries, enhancing their marketing conversion efficiency. Total marketing spending through UAX increased by over four times quarter-over-quarter in Q1.
In brand marketing services, we've established a rich brand marketing metrics and customized solutions for our clients. By leveraging our superior content, precise demographics, targeting, and efficient conversion, we help clients achieve their marketing goals of improving brand awareness and sales conversion. As a result, we have successfully attracted budgets from a wider range of brand clients. The number of brand marketing clients during the 2024 Chinese New Year soared by more than 120% year-over-year. The blockbusters from Kuaishou Astro short plays delivered highly effective exposure and targeted demographics reach for brands like Tmall.com and Honor smartphones, among others. We upgraded our marketing solutions, integrating brand awareness, operational marketing, and sales conversion for clients in the automotive industry, aiming to a more efficient brand marketing and lead operation. Recently, we collaborated with the Dongfeng Nissan to attract traffic using celebrity IPs and KOL recommendations.
Our auto dealer network on the platform then engaged with this traffic, converting it into sales. This resulted in nearly 800 million views for the brand-related content, achieving omni-domain operations for the launch of the new vehicle models. Third, our e-commerce business. In Q1, we enhanced buyer conversion efficiency by our refining operations, further enriching merchandise offerings and expanding e-commerce scenarios. As a result, our e-commerce GMV grew by 28.8% year-over-year to RMB 288.1 billion. On the user front, our e-commerce monthly active paying users grew by 22.4% to 126 million in Q1, mainly due to the expanding shopping scenarios like shelf-based and short video e-commerce, and the ongoing upgrade of marketing tools and features. We also reinforced policy guidance to enhance the end-to-end experience for our consumers during and after sales.
These policies, including speedy refund and proactive service takeover by platform, greatly improved the overall customer experience. During the Chinese New Year promotion, the number of paying users surged by over 60% compared with last year. On the supply side, the number of monthly active merchants grew by nearly 70% year over year in Q1, mainly due to the sustained activity level of newly onboarded merchants. We greatly optimized our policies to attract merchants and augmented marketing capabilities to cover a diverse range of supplier types, from brands and large merchants to small and medium-sized merchants. Consequently, the number of newly onboarded and monthly active merchants continued to grow with a high speed of year over year in Q1.
For small and medium-sized merchants, we roll out generous incentives for new merchants under the Golden Bull policy, supporting their cold start with initiatives for deposits, traffic generation, distribution, and training. The improved incubation and educational resources have equipped merchants to scale up their business on our platform. We maintained strong growth among brand merchants in Q1. During the Chinese New Year promotion, brand GMV surged by over 70% compared with last year. Brand merchants significantly increased their focus on both short videos and shelf-based e-commerce. In Q1, brand GMV leaped by more than 110% in short video segment and over 80% in shelf-based segment year-over-year. Across verticals like consumer electronics and home appliances, men's apparel and sports and jewels, gems and jewelry contributed relatively high growth rates.
We encouraged new, small, and medium-sized KOLs to collaborate with brands in live streaming through the Supernova initiative. We also provided additional marketing tools for large-scale live streaming to assist leading KOLs in making breakthroughs. For KOL distribution, we recommended a high-quality merchandise to KOLs and helped small and medium-sized KOLs to select merchandise via external coordinators. This strategy strengthened our platform's matching capabilities, greatly enhanced streamers' willingness to host live streaming sessions, and amplify their commercial contributions in short video and other e-commerce scenarios. Our shelf-based e-commerce continued its strong growth in Q1. Shelf-based e-commerce GMV outpaced the overall platform growth, accounting for approximately 25% of total GMV. We achieved remarkable strides on both the supply and demand fronts, with more than 50% and 60% year-over-year increases in average daily active merchants and average daily paying users, respectively, in Q1.
We also further enhanced the merchandise infrastructure, enriched merchandise offerings, and improved the price management system. These efforts enable us to fulfill core user groups' needs in key categories such as fresh produce , personal care, and daily necessities. Meanwhile, our short video e-commerce GMV maintained its rapid growth in Q1, nearly doubling year-over-year. Within short video e-commerce, monthly and daily active paying users continued to rise, supported by consistently enriched content offerings. For example, the order volume of our shopping mall during the Chinese New Year promotion soared by 98% compared with last year, with impressive performances across short video search induced and shelf-based e-commerce. GMV from short video embedded shopping link search induced e-commerce and shelf-based e-commerce surged by 345%, 164%, and 383% respectively, compared with last year.
These stellar results highlighted how our dual engine of live streaming and shelf-based e-commerce has been unlocking, you know, more new business opportunity for merchants. Next, regarding our live streaming businesses. In Q1, we continued to build a healthy live stream ecosystem, laying a solid foundation for long-term and sustainable growth. We strongly supported mid-tier streamers, improving their activity and quality through online training, offline lectures, and streamer tasks. This approach accelerated new streamers' growth and incentivized talent agencies to drive their revenue. We also continued to promote emerging categories such as multi-host live streaming and Grand Stage, iterating product features and reaching our live stream ecosystem. By the end of Q1, we had partnered with 50% or more talent agencies and grown the number of talent agency managed streamers on Kuaishou by 50% year-over-year.
In addition, as the examples of our live streaming plus services empowering traditional industries, Kuai Hire launched the New Year job fair in Q1 to address job seeking and recruitment needs following the Chinese New Year. The event featured various online activities hosted by KOLs and well-known enterprises. In Q1, daily average number of resume submissions soared by over 180% and the average daily average number of users submitting resumes increased by over 120%, both on a year-over-year basis. Additionally, by the end of Q1, Ideal Housing expanded its reach to over 100 cities nationwide and established partnerships with over 50,000 streamers. Finally, regarding our overseas business progress, we've established differentiated advantages in key overseas markets by effectively expanding our user base and implementing a robust localization strategy.
With focus on localized original content generation, we rapidly grow our content supply by optimizing our platform's traffic mechanism and diversifying creators' income sources. We capitalize on events like Brazilian Carnival and Brazil's largest reality show, BBB 24, among others, to consistently increase user activities. These initiatives help to fortify Kuaishou brand awareness and recognition, laying the groundwork for enhancing monetization. As one of the BBB sponsors, Kuaishou created related topics on social media, specifically for BBB. By the time the show ended, since it had attracted 14 billion cumulative views. In Q1, DAUs in our key markets grew rapidly, with average daily time spent per DAU improving both year-over-year and quarter-over-quarter. Notably, DAUs in Brazil rose by 13% year-over-year, and the average daily time spent per DAU exceeded 75 minutes.
As a result, revenue from overseas business reached RMB 991 million in Q1, up 193.2% year-over-year. As we continue to boost operating efficiency, we successfully narrowed our overseas operating loss by 67.4% year-over-year, with operating loss also reduced quarter-over-quarter. In terms of overseas online marketing services, we continuously refine our localized marketing capabilities and enhance our product ecosystem. These efforts have further improved advertisers' marketing efficiency and placement stability. Additionally, we focus on developing platform capabilities, service quality, and creativity. By leveraging marketing opportunities from events such as the Brazilian Carnival, we've also boosted both brand awareness and sales conversion for international and Chinese brands operating overseas. In Q1, marketing revenue from overseas business surged by nearly threefold year-over-year.
During the Brazilian Carnival, Kuaishou helped a Chinese smartphone brand, Realme, create a blockbuster marketing campaign through diversified creative solutions, leading to a total of 95.6 million exposures. This successful event shaped Realme's brand awareness and product reputation in the Brazilian market. Kuaishou also developed a detailed user profile analysis for Realme, providing valuable data points for the brand's ongoing expansion efforts in Brazil, and targeted promotional strategies and long-term operations. To sum up, the business model and the future potential of short video, combined with the live streaming, continues to be where we see one of the greatest opportunities for our business. We are also committed to building healthier and more sustainable community content and commercial ecosystem, investing in AI technology and empowering more business scenarios.
Dedicating our resources to those areas will help us elevate users' content consumption experience, and deliver augmented value to our users, providing more possibilities for quality and efficiency improvements for merchants and marketing clients in the ecosystem. That concludes my prepared remarks. Next, you will hear from our CEO, Mr. Cheng Yixiao, who will discuss the company's financial performance for Q1.
Thank you, Yixiao, and hello, everyone. In the first quarter, we actively navigated the market challenges, adhering to the strategy of high quality, efficient business growth. By integrating technology and boosting efficiency, we reinforced our core strengths. Our sustainable strategies across all of our business are well executed, showing a healthy and robust financial position that marks a strong start to the year.
Our focus on the user growth and efficiency and quality, coupled with significant enhancements in technology and premium content quality, has laid a solid foundation for the sustainable monetization and profitability. Our adjusted net profit reached RMB 4.39 billion in Q1, with an adjusted net profit margin close to 15%, showing a substantial increase in profitability. Now, let's have a closer look at our financial performance for Q1. Our group's revenue grew by 16.6% year-over-year to RMB 29.4 billion, mainly driven by growth in our online marketing services and e-commerce business. Online marketing services revenue increased by 27.4% to RMB 16.7 billion, from RMB 13.1 billion in Q1 last year, and accounted for 56.6% of total revenues. This growth was mainly driven by online...
More online marketing clients, higher spending, particularly from e-commerce merchants. Adoption of our smart marketing solutions and enhanced capabilities, our omni-platform marketing products have further fueled this growth. Gradual recovery in the macroeconomy and consumer market also promoted advertisers' budget allocation. Leveraging our AI and LLM model capabilities, we have been able to deeply tap into users' needs, boosting marketing budget allocation and conversion efficiency. Other services revenue grew by 47.6% to RMB 4.2 billion, from RMB 2.8 billion in Q1 last year, mainly driven by the continuous, increase in e-commerce GMV, which boosted e-commerce commission income. We enriched our diverse shopping scenarios, expanded high-quality content offerings, upgraded marketing tools, and optimized platform policies.
These efforts greatly improved the consumer experience and the buyer conversion efficiency, leading to a rapid growth in monthly active merchants and monthly active paying users, driving 28.2% year-over-year increase in e-commerce GMV. Our live streaming revenue was RMB 8.6 billion, a decrease of 8% from RMB 9.3 billion in Q1 last year. Despite industry challenges, we continue to innovate live streaming scenarios, promote emerging categories, deepen our focus on high-quality content to foster a sustainable and healthy live streaming ecosystem. In Q1, our cost of revenues decreased by 1.6% to RMB 13.3 billion, and accounted for 45.2% of total revenues, mainly due to technology upgrades, such as optimizing the structure of bandwidth resources, which cut down on both bandwidth expenses and server custody costs year over year.
Gross profit grew by 37.6% year-over-year to RMB 16.1 billion, and our gross profit margin improved to 54.8%, expanding by 8.4 and 1.7 percentage points year-over-year and quarter-over-quarter, respectively. Moving to expenses. Selling and marketing expenses increased by 7.6% year-over-year to RMB 9.4 billion, accounting for 31.9% of total revenues, down from 34.6 in Q1 last year. The year-over-year growth was mainly due to increased spending on business promotions, including e-commerce business and et cetera. R&D expenses were 2.8 billion RMB, decreasing by 2.6 year-over-year. R&D accounted for 9.7 of total revenues, dropping from 11.6 in Q1 last year. Administrative expenses decreased by 40-...
9.7% year-over-year to RMB 462 million, accounting for 1.6% of total revenues, down from 3.6% in the same period last year. The decrease in R&D and administrative expenses was mainly due to lower employee benefit expenses, including related share-based compensation expenses. Group-level net profit for Q1 rose to RMB 4 billion, a significant improvement from a net loss of RMB 876 million in Q1 last year. Group-level adjusted net profit rose to RMB 4.4 billion, a considerable leap from RMB 42 million in Q1 last year. Our balance sheet remains robust, with cash and cash equivalents, time deposits, restricted cash and wealth management products of RMB 63.7 billion as of March 31st.
Through our enhanced monetization capabilities and efficient working capital management, we generated a positive operating net cash flow of RMB 5.8 billion in Q1. Looking ahead, we are committed to optimizing the balance between our traffic ecosystem and the monetization strategies to cultivate a healthy and sustainable ecosystem for users and merchants. We'll continue improving efficiency and maximizing ROI as our revenues expand. Leveraging our advantages in technology and innovation, we aim to unlock more monetization potential and create long-term value for our shareholders and partners. This concludes our prepared remarks. Operator, please now open the call for questions.
[Foreign language] 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. [Foreign language] Goldman Sachs [Foreign language] Lincoln Kong. Your first question comes from Lincoln Kong of Goldman Sachs [Foreign language].
[Foreign language] So thank you very much for taking my question and congrats on a very strong first quarter result. So my question is around the e-commerce business. Can management share the progress of our e-commerce shopping mall business? And any more thoughts around the launching of Kuaishou Select, the sales hosting model here. Thank you.
[Foreign language] Thanks for your question. Our e-commerce business is experiencing rapid growth. As one of the growth engines of our e-commerce business, shelf-based e-commerce achieved high speed growth of more than 50% year-over-year in Q1 of 2024, driven by increases in both supply and demand. [Foreign language].
On the user side, shelf-based e-commerce value proposition to users lies in better meeting users' predictable shopping needs, attracting new users to our platform and heightening the consumption frequency of our active users. Targeting users' growing predictable needs, we opened full access to the shopping mall tab, as well as sections like Big Brand, Big Subsidy, and special sale at low prices to significantly strengthen users' mindset of making purchases in our shopping mall. In Q1, the number of average daily buyers of our shopping mall soared by over 70% year-over-year. The rapid growth indicates a rising consumption demand in our shopping mall scenarios, where users are gradually developing, browsing, and searching habits. This clearly shows the long-term potential for our shopping mall business.
On the merchant side, more and more merchants have found their path to operations in the shelf-based e-commerce realm, thanks to our efforts in help merchants with the different operational capacities and merchandise categories to acquire business opportunities on our platform. As the operational needs of both brand merchants and white label merchants continually grow, the number of average daily active merchants surged rapidly by more than 70% year-over-year. Meanwhile, we continue to improve our supply chain capabilities and launched a consolidated shipping service for Northwest China in Q1, which allows merchants to ship merchandise to consumers in Northwest China through transit consolidation warehouses. This service considerably lowered shipping costs while ensuring logistics timelines, which has helped merchants expand into remote markets.
During the rapid development of our e-commerce business in recent years, we have seen some merchants' operational pain points firsthand, especially traditional merchants, including original manufacturers at the industry zones. These merchants already have deep-seated supply chain expertise and are looking to work with new platforms like Kuaishou to develop their business. They have good quality products, but lack marketing and sales channels. To address this pain point, we launched Kuaishou's Choice, providing merchants with platform sales hosting services to give them a pathway to enter the market and lower their operational thresholds. Under this model, merchants only need to be responsible for carting, delivering, and providing customer services, while Kuaishou takes care of the SKU operations, marketing, and sales. This cooperative relationship allows both the platform and merchants to do what they do best.
Leveraging the full set of sales data of our e-commerce platform, we could more clearly identify which product categories or single SKU have the potential to become blockbusters. This helps us to elevate the efficiency of product selection and pricing. Moreover, through traffic integration and large-scale operations, we offer merchants predictable sales channels and sales funnel conversion paths. This service reduces merchants' operating costs on Kuaishou and facilitates rapid transactions on our platform, providing merchants with viable solutions for their operations. Our shopping mall will roll out more marketing features during the June 18 shopping festival to meet user shopping needs and help merchants achieve high sales. Going forward, we hope to integrate shelf-based and content-based e-commerce segments more deeply and complementarily, which will become the sustainable driving force of our e-commerce business.
This will help more merchants achieve omni-domain operations more effectively and attract more business opportunities.
Thank you, operator. Next question, please.
[Foreign language] Your next question comes from Thomas Chong of Jefferies.
[Foreign language] Thanks, management, for taking my question. My question is regarding online marketing service. As company achieve robust revenue growth in online marketing service in Q1, looking ahead, what will be the driving forces for further revenue growth? Thank you.
[Foreign language] Thanks for your question. In Q1, online marketing services revenue reached 16.65 billion RMB, up 27.4% year-over-year. Both closed the loop e-commerce marketing services and external marketing services grew remarkably as we provided better marketing solutions to clients, driving eCPM improvements. Our growth was led by our success in bringing clients deeper sales funnel conversion passes for targeted demographics through measures such as joint modeling, as well as end-to-end efficiency enhancements from our LLM driven smart marketing solutions. [Foreign language] Looking ahead, we believe our online marketing services revenue growth will mainly be led by investments in eCPM and ad load. eCPM in particular, is one of the key metrics where we still have significant room for improvement compared with our peers.
We will continue to deepen the sales funnel conversion path for our clients' targeted demographics, which will lead to better bids from clients. Our LLM-based smart marketing solutions have already shown promising results in areas such as smart creative, content production, smart marketing placements, and smart interaction and connection. Going forward, we also expect LLMs to help us achieve greater breakthroughs in understanding users' preferences and distributing marketing content. In terms of ad load enhancements, we will integrate native marketing content with organic content by refining native marketing materials, achieving a true marketing as content approach, which will increase the ad load's upper limit.
In Q1, the spending of external native marketing materials grew by 30% quarter-over-quarter, with a consistent increase in the share of external marketing spending from native marketing materials. In addition, we have discovered opportunities in some prospective industries. In the automobile industry, many auto brands have seen the huge potential of lower tier market and our integrated marketing solutions that combine brand awareness, sales conversion and operation marketing for the automobile industry, have brought us more budget allocations from auto manufacturers and aftermarket clients. In the education industry, there is potential for higher year-over-year growth by addressing our core demographics, user needs for professional education and interest-based courses. In the media and information industry, marketing spending of paid short plays increased month-over-month, based on the closed loop operation of our self-developed conversion path for short plays, which we established at the end of last year.
...This year, we will work to replicate this model in mini program games and online literature industries. Not only elevating user experience and amplifying user time spent, but also accumulating more post-link conversion data to enhance recommendation accuracy. In general, we will continue to refine industry-specific operations, iterate smart marketing products, and optimize algorithms to bring better marketing placement and conversion to clients. We are very confident we can grow our online marketing services revenue at a faster pace than the industry.
Thank you, operator. Next question, please.
[Foreign language] Your next question comes from Felix Liu of UBS. [Foreign language]
[Foreign language] Thank you, management, for taking my questions, and congratulations on the very strong Q1 results. Can management share more color on the latest developments and your strategy and tactics for local services in 2024? Thank you.
[Foreign language] Thanks for your question. After a year and a half, we have deeper understanding on users' needs and preferences for local service content. We also validated the business model for our local services in some core cities, and have a clear picture of our strategy and tactics for the business. Now, consumer spending is a driving economic force with great potential for unleashing user consumption in lower tier market. With this backdrop, we think our local services can bring more new customers and greater incremental opportunities for merchants in 2024. [Foreign language]
As for our recent developments, first, on the supply side, we have been continuously optimizing industry-specific merchandise and conducting targeted programs in core categories, making breakthroughs in certain product categories. As a result, in Q1 of 2024, the number of average daily active merchants and the number of merchandises rose by 29% and 38% quarter-over-quarter, respectively. We continue to develop multiple categories. In Q1, capitalizing on the key winter vacation and the Chinese New Year promotion period, we cooperated with traditional and online travel agencies to enrich the variety of offerings within the hotel and travel ind- categories.
By leveraging our user base and content advantages, we created benchmark cases such as the Tangshan South Lake Scenic Area. Content-wise, we continue to work with top-notch KOLs. Through various policies, we helped shorten the KOLs growth cycles, and empowered creators to increase income on our platform, jointly building a high-quality content ecosystem. In Q1, the number of KOLs distributing products grew by 32%, and the number of daily average active streamers hosting live sessions increased by 62%, both on a quarter-over-quarter basis. [Foreign language]
On the demand side, we made continuous efforts to strengthen users' mentality in accessing our local services by improving basic functionalities and enriching marketing features. This allows us to consistently reinforce the idea of value for money to users, while enhancing subsidy efficiency. In addition, we continue to fortify KOLs and merchants' fulfillment capabilities. Optimize our platform's governance system and boost governance efficiency, all aimed at elevating user experience. In Q1, average daily paying users of local services skyrocketed by nearly 9 x year-over-year. [Foreign language]
Regarding our platform's matching capability, we adjusted our traffic mix by synergizing public and private domains. This optimized our local content distribution efficiency in recommended traffic, elevating both user experience and transactional value. As a result, our local services GPM for both short video and live streaming continues to increase quarter-over-quarter in Q1, and drove rapid GMV growth. As for our strategic priorities in 2024, first, we will tailor our operations to the characteristics of different industries to achieve industry-specific refined operations.
We will steadily expand the scale of our in-store dining services while implementing differentiated category growth strategies for general in-store business and the hotel and travel business. Second, on the product strategy front, by working with service providers and strengthening our own operational capabilities, we will strengthen the user's price mentality with higher subsidy efficiency. We will advocate affordable prices for superior quality goods to provide users with products that offer the best value for their money. Third, we will boost both the quality and quantity of our local services content, with a focus on quality. Content is our biggest differentiator compared with the shelf-based platforms, and is central to our ability to run this business. By providing excellent content, we can attract more users and help merchants and KOLs provide good products and services to users, increasing the user and commercial value of our platform.
Thank you, operator. Next question, please.
[Foreign language] Your next question comes from Alex Poon of Morgan Stanley.
[Foreign language] Thank you, management, for taking my question, and congrats on very strong results. The company has just announced a new buyback program of up to HKD 16 billion over the next 3 years. What are the main considerations in formulating this amount, and what is the expected pace of execution? Thank you very much.
[Foreign language] Thank you for your question. We are committed to creating more value for our shareholders, especially in terms of, capital return. After our group level adjusted net profit turned positive in Q1 last year, we immediately announced a, HKD 4 billion repurchase program, which was well recognized by the market. On December the eighteenth last year, we also implemented an, automatic share repurchase plan in accordance with the new rules of the Hong Kong Stock Exchange. This plan is part of the Hong Kong, four billion Hong Kong dollars repurchase program, allowing our company to execute repurchases during the exchange's designated restricted period.
As of the closing of trading on May twenty-first, we had repurchased around 61.74 million shares, accounting for about 1.4% of our total share outstanding, and for a total of approximately HKD 3.909 billion in aggregate. And this figure has amounted to 1.7% of our total shares outstanding, as of May twenty-second. There are some changes out there. These repurchases demonstrate our genuine commitment to returning value to our shareholders and our confidence in the company's value. [Foreign language]
As the original HKD 4 billion repurchase program will expire upon the shareholder meeting in June this year. We have put forth a new repurchase program with the board of directors for up to HKD 16 billion over the next 3 years. In the current market environment, and this new repurchase program is also a testament to our confidence in the company's value and commitment to returning value to shareholders. This program is based on a thorough analysis that includes our cash flow position and market expectations for profitability over the next 3 years, and cash reserves, among others. [Foreign language]
The actual implementation of the new program will depend on comprehensive considerations based on the capital market environment. We will prudently arrange the pace and intensity of share repurchases to continuously enhance shareholder returns.
Thank you, operator. Next question, please.
[Foreign language] Your next question comes from Xueqing Zhang of CICC。[Foreign language]
[Foreign language] Thanks, management for taking my question, and congratulations on another strong quarter. My question is about AI. Could management share the latest progress on your AI and the large language model? Thank you.
[Foreign language]n Thanks for your question. In Q1, we externally improved the functions of our self-developed LLMs and sped up their application in various business scenarios. For improving model performance based on pre-training data and model architecture optimization, we made a technological breakthrough in RLHF. This made the overall performance of our updated 175 billion scale LLM to approach that of GPT 4.0. Moreover, we recently unveiled our first multimodal LLM. [Foreign language] I'd also like to elaborate on our LLM's application and business scenarios. In Q1, we specified our LLM application strategy of upgrading, understanding, facilitating integration, and exploring generation. We made notable progress in omni-domain LLM, content understanding, AI integrations, interactions, digital humans in business scenarios, and AIGC, among others. [Foreign language]
Regarding omni-domain LLM content understanding, our multimodal LLM helped us gain a deeper understanding of short video and live streaming content and user comments, as well as explore users' behaviors and interests. In doing so, we aim to better recommend organic marketing and e-commerce content, improving marketing spending and e-commerce GMV, while amplifying user time spent. On the AI interaction side, we focus on the usefulness of AI Kwai, where we significantly enhanced its reply accuracy rate and launched multi-round dialogues and image and text functions. In Q1, the user penetration of the AI Kwai grew tremendously, with the number of daily users exceeding 1.5 million at its peak, making our community more interactive.
Lastly, for digital humans in business scenarios and AIGC, our LLM capabilities cover a range of scenarios, including short video, live streaming, and smart customer services. Specifically, our AI products for short video scenarios can provide clients with short video script creation, material discovery, and automatic marketing placement capabilities. Our AI digital human live streaming offers clients the ability of virtual person live streaming 24/7. Our smart customer services can help clients automatically identify questions and solve various queries more smoothly and naturally through multiple rounds of dialogues. LLM's application in these scenarios considerably lowered our client's customer acquisition costs and brought us incremental marketing placement opportunities from clients. In Q1, daily spending of AIGC, live streaming and short video materials surpassed RMB 10 million at its peak.
The deep integration of LLMs with short video and live streaming business scenarios also boosted our commitment to R&D investments in LLMs. We will continue to share more of our progress in LLMs as they unfold going forward. Let's come to the end of the Q&A session. Back to you, operator.
[Foreign language]
[Foreign language] Thank you once again for joining us today. If you have any further questions, please contact our capital market and investor relations team at any time. Thank you.