According to some users on Chinese professional networking site Maimai, popular domestic video-sharing platform Kuaishou will lay off 30% of its employees in the near future, while staff cutbacks in its international business have already started.
A large number of employees earning more than 1 million yuan ($157,000) in annual salary have been laid off.
Before the news was revealed, some Weibo users have posted that Kuaishou has started to persuade low-merit pay employees to quit in December. Some insiders said that Kuaishou needs to pay compensation if it directly fires employees, so giving employees a C on their merit pay evaluation form seems a better choice. Kuaishou divides merit pay into four levels: S, A, B and C.
On November 23 this year, Kuaishou released its Q3 financial report, showing that the firm’s revenue in the period was 20.49 billion yuan, up 33.4% year-on-year. Its net loss reached 7.09 billion yuan, while adjusted net loss reached 4.822 billion yuan.
The report also shows that from the beginning of this year to the end of September, cash and cash equivalents owned by Kuaishou have decreased by 14 million yuan. Such a sharp decline in cash flow has created considerable financial pressure on the company.
In the third quarter, Kuaishou’s sales and marketing expenses reached 11 billion yuan, a year-on-year increase of 80.3%. R&D expenditure in Q3 reached 4.2 billion yuan, an increase of 126% compared with 1.9 billion yuan in the same period last year.
In terms of its overseas business, Kuaishou mentioned in its financial report that although its international operations have tightened, core data such as average daily active users and average monthly active users still keep growing.
In a conference call after the Q3 report, Cheng Yixiao, CEO of Kuaishou, said that the firm has always had great determination to reduce costs and increase efficiency, and has started to take action in the third quarter.