Xiaohongshu's profit soars in Q1

Red, a social media and e-commerce platform also known as Xiaohongshu in China, has reportedly had its net profit surge five-fold in the first quarter of this year after ramping up advertising from retailers targeting generation-Z female consumers.

Xiaohongshu’s net profit was US$200 million in the three months ended March 31, the Financial Times newspaper reported, citing two people briefed on the figures. Revenue jumped 67% to US$1 billion from a year earlier.

Shanghai-based startup Xiaohongshu has not yet released a financial report.

Xiaohongshu is one of the fastest-growing social media platforms in China, with its monthly active users increasing by 20% to 312 million last year from the prior one. It also swung into the black with a net profit of US$500 million in 2023 on revenue soaring 85% to US$3.7 billion.

Advertising has always been a major part of Xiaohongshu’s revenue, accounting for around 80% of its total income in 2022. However, that share slightly declined last year due to the firm’s increasing focus on e-commerce.

Xiaohongshu has not disclosed any revenue figures related to its e-commerce business but has mentioned growth several times.

The number of users placing orders on Xiaohongshu’s livestream studios has surged 9.8 times over the past year and a half, the platform’s head of e-commerce operations said at an event July 25. The number of collaborating brands jumped 5.2 times, the person added.

Xiaohongshu will support small and medium-sized businesses, chief marketing officer Zhi Heng said Sept. 13. The number of such companies operating on the platform soared 379% in the six months ended June 30 from a year ago, while the gross merchandise value of these firms leaped 436%.

However, Xiaohongshu finds it difficult to compete with specialized e-commerce platforms, as small and medium-sized businesses are more concerned with the promotional value of the platform, according to some businesses.

Xiaohongshu hopes to go public in Hong Kong, according to the Financial Times report.