Financial Performance - Revenue for the year ended December 31, 2023, was RMB 8,533,611,000, representing a 12% increase from RMB 7,636,743,000 in 2022[3] - Operating profit increased by 19% to RMB 2,226,882,000 from RMB 1,868,682,000 year-over-year[3] - The company reported a profit attributable to equity holders of RMB 483,457,000, a significant recovery from a loss of RMB 6,049,409,000 in the previous year[3] - Basic earnings per share improved to RMB 0.36 from a loss of RMB 4.43 in 2022[3] - The company reported a net profit of RMB 1,215,188,000 for the year, a significant turnaround from a net loss of RMB 5,341,887,000 in the previous year[8] - The company reported a profit of RMB 1,215,188 thousand for the year ended December 31, 2023, compared to a loss of RMB 5,341,887 thousand in 2022, marking a significant turnaround[9] - Total comprehensive income for the year was RMB 1,285,670 thousand, recovering from a loss of RMB 4,841,532 thousand in the previous year[9] - The group reported a pre-tax profit of RMB 1,488,852,000 for the fiscal year ending December 31, 2023, compared to a pre-tax loss of RMB 5,721,343,000 in the previous year[27][25] - The company reported a total comprehensive loss of RMB (5,579,092) thousand for the year, which includes a significant loss of RMB (6,049,409) thousand attributed to the current year[11] Dividends and Equity - The board proposed a final dividend of HKD 0.14 per share, up from HKD 0.13 per share in 2022[5] - The company declared a dividend of RMB 162,831 thousand for the year ended December 31, 2023[10] - The company's equity attributable to owners increased to RMB 10,877,319 thousand as of December 31, 2023, from RMB 10,668,902 thousand at the end of 2022[10] - The total equity attributable to non-controlling interests was RMB 5,284,224 thousand as of December 31, 2023, compared to RMB 4,653,724 thousand in 2022[10] - The proposed final dividend is HKD 0.14 per share, an increase from HKD 0.13 per share in the previous year, totaling RMB 171,374 thousand[39] - The basic earnings attributable to ordinary equity holders for 2023 is RMB 483,457 thousand, a significant recovery from a loss of RMB 6,049,409 thousand in 2022[43] Assets and Liabilities - Total current assets increased to RMB 26,893,214,000 from RMB 23,539,831,000, reflecting a growth of approximately 14%[6] - The company’s total assets less current liabilities increased to RMB 30,314,274,000 from RMB 24,999,680,000, a growth of approximately 21%[7] - The company’s total assets reached RMB 26,573,257 thousand as of December 31, 2023, reflecting growth from the previous year[10] - The company has a deferred tax liability of RMB (74,941) thousand, compared to RMB (640,114) thousand in the previous year[39] - The group’s asset-liability ratio remained stable at 24% as of December 31, 2023, unchanged from the previous year[86] Cash Flow - The net cash flow from operating activities for the year ended December 31, 2023, was RMB 3,488,746 thousand, an increase from RMB 2,573,519 thousand in 2022, representing a growth of approximately 35.5%[12] - The net cash flow used in investing activities for 2023 was RMB (6,476,034) thousand, compared to RMB 4,421,589 thousand in 2022, indicating a significant shift in investment strategy[12] - The net cash flow from financing activities for 2023 was RMB 655,863 thousand, recovering from a net outflow of RMB (619,041) thousand in 2022[12] - The total cash and cash equivalents at the end of 2023 amounted to RMB 8,707,372 thousand, down from RMB 11,018,882 thousand at the end of 2022, reflecting a decrease of approximately 21%[12] - The cash and bank deposits held by the group amounted to RMB 20,271.2 million, accounting for 58% of total assets as of December 31, 2023[86] Research and Development - Research and development costs for the year were RMB 2,683,596,000, compared to RMB 2,552,754,000 in 2022, reflecting a continued investment in innovation[8] - R&D expenses in Q4 2023 amounted to RMB 684.9 million, a 4% increase year-on-year and 2% increase quarter-on-quarter, reflecting ongoing efforts to improve products and services[59] Employee and Compensation - Employee benefits expenses, including director remuneration, totaled RMB 3,765,451,000 for the year ending December 31, 2023, an increase from RMB 3,486,739,000 in 2022[27] - As of December 31, 2023, the company employed approximately 7,199 full-time employees, an increase from 7,116 in 2022[99] - Employee costs, including compensation for directors and senior management, were approximately RMB 3,765.5 million in 2023, compared to RMB 3,486.7 million in 2022[99] Stock Options and Share Repurchase - The company has a stock option plan in place, with 2,529,800 options remaining unexercised as of December 31, 2023, at a weighted average exercise price of HKD 20.25[32] - The 2021 stock option plan allows eligible participants, including directors and employees, to exercise options over a period of 10 years, with 5,500,000 options unexercised as of December 31, 2023, at an average exercise price of HKD 31.69[33] - The share reward plan has 4,182,220 unexercised reward shares as of December 31, 2023, down from 5,999,660 in the previous year, with 2,079,400 shares granted during the year[35] - The company repurchased a total of 9,490,000 shares at a total cost of approximately HKD 244.53 million during the year ending December 31, 2023[100] - The share repurchase was conducted at prices ranging from HKD 22.2 to HKD 29.05 per share across different months[100] Future Outlook and Strategy - The company plans to continue optimizing its solutions to enhance the digital office experience for enterprise clients, which is expected to drive further growth in subscription services[57] - The company plans to continue exploring digital office service opportunities and enhance product innovation around "multi-screen, cloud, content, collaboration, and AI" in 2024[97] Compliance and Governance - The company has adopted a standard code of conduct for securities trading by directors, confirming compliance for the year ending December 31, 2023[101] - The audit committee reviewed the financial statements for the year ending December 31, 2023, and confirmed adherence to applicable accounting standards[105] - The company has established a governance framework that includes quarterly performance updates to the board, rather than monthly as per the code[106] - Forward-looking statements regarding the company's financial condition and performance are subject to inherent risks and uncertainties[107] - The company emphasizes that actual performance may differ significantly from forward-looking statements due to various risk factors[107]

Financial Data and Key Metrics Changes - Total revenue for Q3 2023 was RMB 2,060 million, representing a year-on-year increase of 12% but a quarter-on-quarter decrease of 6% [4][8] - Operating profit increased by 13% year-on-year to RMB 376 million [4] - Gross profit increased by 14% year-on-year but decreased by 8% quarter-on-quarter to RMB 1,677 million, with a gross profit margin of 81% [10][11] - Profit attributable to owners of the parent was RMB 28 million, compared to a loss of RMB 6,055 million in Q3 2022 [13] Business Line Data and Key Metrics Changes - Revenue from office software and services increased by 9% year-on-year to RMB 1,098 million, while revenue from online games increased by 15% year-on-year to RMB 961 million [8][10] - The individual office subscription business saw improvements in paying ratio and average revenue per paying user due to an optimized membership system [6][9] - Revenue from the online games segment decreased by 10% quarter-on-quarter, primarily due to a decline in revenue from JX3 Online [10] Market Data and Key Metrics Changes - The revenue split was 53% for office software and services and 47% for online games and others [8] - The company expanded its user base in micro, small, and medium-sized enterprises through WPS 365 [7] Company Strategy and Development Direction - The company will continue to focus on AI and collaboration, restructuring office software to enhance user experience [15] - The online games business will maintain its strategy of developing premium games and long-term operations [15] - Strategic cooperation with Alibaba Group and iFlytek aims to build a digital and intelligent service ecosystem [6] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the gaming business outlook, particularly for JX Online III, which typically performs well in Q4 [29] - The company plans to launch new games in the JX series and Code Break in the upcoming year, indicating a focus on both existing IP and new developments [25][30] - The AI strategy is expected to enhance average revenue per user (ARPU) and the number of paying users in the Kingsoft Office business [32] Other Important Information - The company had cash resources of RMB 23 billion as of September 30, 2023 [14] - Share-based compensation costs increased by 15% year-on-year, indicating ongoing investment in talent [11] Q&A Session Summary Question: What are the commercialization plans for JX Online III and the gaming business outlook for next year? - Management confirmed that the monetization model for JX Online III remains unchanged, focusing on fair gameplay and value-added services. The JX3 Ultimate mobile version is expected to launch in the first half of next year, enhancing user interaction [18][19] Question: What is the strategy for growth in the gaming business amid increased competition? - Management acknowledged the increased competition but welcomed the easier access to game licenses. They plan to continue developing the JX series and expand into global markets [24][25] Question: What are the user feedback and revenue impact from the upgraded WPS membership system? - Management reported improvements in both the number of paying users and ARPU, attributing future revenue growth to the AI strategy combined with the membership upgrade [31][32] Question: What is the reason for the increase in expenses this quarter? - The increase in expenses was primarily due to marketing campaigns, but management expects expenses to return to a reasonable level in Q4 [33]

[Performance Highlights](index=1&type=section&id=Performance%20Highlights) [Summary of Financial Data](index=1&type=section&id=Summary%20of%20Financial%20Data) The Group's Q3 2023 revenue grew 12% YoY to RMB 2.06 billion, with operating profit up 13% YoY to RMB 376 million, and profit attributable to owners of the parent turning profitable at RMB 28.49 million Q3 2023 Financial Summary | Metric | Q3 2023 (RMB thousands) | Q3 2022 (RMB thousands) | Q2 2023 (RMB thousands) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 2,059,679 | 1,837,127 | 2,193,490 | 12% | (6)% | | Operating Profit | 376,073 | 331,770 | 675,713 | 13% | (44)% | | Profit/(Loss) attributable to owners of the parent | 28,492 | (6,054,914) | 57,187 | Not Applicable | (50)% | | Basic earnings/(loss) per share (RMB) | 0.02 | (4.44) | 0.04 | Not Applicable | (50)% | [Summary of Operational Data](index=2&type=section&id=Summary%20of%20Operational%20Data) As of September 2023, monthly active devices for office software reached 589 million, while cumulative paying users grew 16% YoY to 33.24 million Office Software Operational Data | Metric | Sep 2023 | Sep 2022 | Jun 2023 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Monthly Active Devices (Millions) | 589 | 578 | 584 | 2% | 1% | | Cumulative Paying Users (Millions) | 33.24 | 28.56 | - | 16% | - | [Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This quarter's total revenue reached RMB 2.06 billion, yielding a gross profit of RMB 1.677 billion and an operating profit of RMB 376 million, with profit attributable to owners of the parent at RMB 28.49 million Q3 2023 Key Profit or Loss Items (RMB thousands) | Item | Q3 2023 | Q3 2022 | Q2 2023 | | :--- | :--- | :--- | :--- | | **Revenue** | **2,059,679** | **1,837,127** | **2,193,490** | | Office Software and Services | 1,098,325 | 1,004,726 | 1,120,845 | | Online Games and Others | 961,354 | 832,401 | 1,072,645 | | **Gross Profit** | **1,676,854** | **1,466,175** | **1,831,846** | | **Operating Profit** | **376,073** | **331,770** | **675,713** | | **Profit/(Loss) for the period** | **171,907** | **(5,917,334)** | **267,777** | | Profit/(Loss) attributable to owners of the parent | 28,492 | (6,054,914) | 57,187 | [Condensed Consolidated Statement of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) The quarter's profit for the period was RMB 172 million, but after other comprehensive losses, total comprehensive income was RMB 128 million, with a loss of RMB 13.03 million attributable to owners of the parent Q3 2023 Summary of Comprehensive Income (RMB thousands) | Item | Q3 2023 | Q3 2022 | Q2 2023 | | :--- | :--- | :--- | :--- | | Profit/(Loss) for the period | 171,907 | (5,917,334) | 267,777 | | Other comprehensive income/(loss) for the period | (43,591) | 327,281 | 243,738 | | **Total comprehensive income/(loss) for the period** | **128,316** | **(5,590,053)** | **511,515** | | Attributable to owners of the parent | (13,030) | (5,746,881) | 283,296 | | Attributable to non-controlling interests | 141,346 | 156,828 | 228,219 | [Condensed Consolidated Statement of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of September 30, 2023, the Group reported total assets of RMB 34.08 billion, total liabilities of RMB 7.75 billion, and net assets of RMB 26.33 billion, demonstrating strong liquidity Summary of Financial Position (As of September 30, 2023) | Item | Amount (RMB thousands) | | :--- | :--- | | Total Non-current Assets | 8,457,500 | | Total Current Assets | 25,623,162 | | Total Current Liabilities | 4,222,033 | | Total Non-current Liabilities | 3,529,067 | | **Net Assets** | **26,329,562** | | **Total Equity** | **26,329,562** | [Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) In Q3 2023, net cash used in operating activities was RMB 552 million, net cash used in investing activities was RMB 3.53 billion, with period-end cash and bank balances at RMB 19.748 billion Q3 2023 Summary of Cash Flows (RMB thousands) | Item | Q3 2023 | Q3 2022 | Q2 2023 | | :--- | :--- | :--- | :--- | | Net cash flow from operating activities | (552,445) | 288,104 | 1,944,992 | | Net cash flow from investing activities | (3,530,178) | (1,409,192) | 1,596,252 | | Net cash flow from financing activities | (50,911) | (45,776) | 1,105,903 | | Net (decrease)/increase in cash and cash equivalents | (4,133,534) | (1,166,864) | 4,647,147 | | **Cash and bank balances at end of period** | **19,747,717** | **12,251,351** | **21,684,511** | - Excluding the impact of payments for Q2 collections, net cash generated from operating activities for the quarter was **RMB 447.5 million**[10](index=10&type=chunk) [Notes to the Financial Statements](index=8&type=section&id=Notes%20to%20the%20Financial%20Statements) [Company Information and Business Overview](index=8&type=section&id=Company%20Information%20and%20Business%20Overview) Kingsoft Corporation Limited, listed on the HKEX, primarily operates in two core businesses: WPS Office software and services, and PC and mobile game development and provision - The Group's core businesses are divided into two segments: office software (WPS Office) and online games[11](index=11&type=chunk) [Basis of Preparation and Principal Accounting Policies](index=8&type=section&id=Basis%20of%20Preparation%20and%20Principal%20Accounting%20Policies) These interim financial statements are prepared under IAS 34, consistent with 2022 policies, incorporating new standards effective January 1, 2023, with restated comparative data for IAS 12 amendments - The financial statements are prepared in accordance with International Accounting Standards, adopting new standards effective in 2023, with retrospective application of amendments to IAS 12 (Deferred Tax)[12](index=12&type=chunk)[14](index=14&type=chunk) [Management Discussion and Analysis](index=10&type=section&id=Management%20Discussion%20and%20Analysis) [Financial Performance Analysis](index=10&type=section&id=Financial%20Performance%20Analysis) In Q3 2023, total revenue grew 12% YoY, but operating profit declined 44% QoQ due to increased marketing and administrative expenses, while profit attributable to owners of the parent turned profitable [Revenue](index=10&type=section&id=Revenue) Q3 total revenue grew 12% YoY to RMB 2.06 billion, driven by 9% growth in office software and services and 15% growth in online games and others - Office software business grew **9% YoY**, primarily driven by individual and institutional subscription services, partially offset by a decline in institutional licensing business[15](index=15&type=chunk) - Online game business grew **15% YoY**, benefiting from revenue growth of "Jian Wang 3" and contributions from the new game "Snowbreak: Containment Zone" launched in July[15](index=15&type=chunk) [Costs and Gross Profit](index=10&type=section&id=Costs%20and%20Gross%20Profit) Q3 gross profit increased 14% YoY to RMB 1.677 billion, with a gross margin of 81%, reflecting increased staff and server costs - This quarter's gross margin was **81%**, up **1 percentage point YoY** but down **3 percentage points QoQ**[16](index=16&type=chunk) [Operating Expenses](index=10&type=section&id=Operating%20Expenses) Operating expenses significantly increased this quarter, with selling and distribution expenses surging 24% YoY and 47% QoQ due to new game marketing, and administrative expenses up 20% YoY - Selling and distribution expenses increased **24% YoY** and **47% QoQ**, primarily due to marketing and promotion for new games[18](index=18&type=chunk) - Administrative expenses increased **20% YoY**, mainly due to higher staff-related expenses[18](index=18&type=chunk) [Profit / (Loss) Analysis](index=11&type=section&id=Profit%20%2F%20%28Loss%29%20Analysis) Profit attributable to owners of the parent was RMB 28.5 million this quarter, a significant turnaround from a RMB 6.055 billion loss last year, though lower than the previous quarter - The significant loss in **Q3 2022** was primarily due to impairment provisions for the investment in **Kingsoft Cloud**[19](index=19&type=chunk) - Profit attributable to owners of the parent for **Q3 2023** was **RMB 28.5 million**, successfully turning from loss to profit[22](index=22&type=chunk) [Liquidity and Financial Resources](index=12&type=section&id=Liquidity%20and%20Financial%20Resources) As of September 30, 2023, the Group maintained a strong cash position of RMB 19.748 billion, a healthy 23% gearing ratio, and faced foreign exchange risk from RMB 3.7 billion in non-RMB deposits - As of the quarter-end, the Group's total cash resources (including cash, bank balances, and certain financial assets) amounted to **RMB 23.149 billion**[24](index=24&type=chunk) - The gearing ratio (total liabilities/total assets) was **23%**, indicating a sound financial position[24](index=24&type=chunk) - The Group holds **RMB 3.7 billion** in non-RMB denominated deposits, posing foreign exchange fluctuation risk[25](index=25&type=chunk) [Cash Flow Analysis](index=13&type=section&id=Cash%20Flow%20Analysis) This quarter saw net cash used in operating activities of RMB 552 million, a contrast to prior periods, with capital expenditure increasing to RMB 160 million - For the three months ended September 30, 2023, net cash used in operating activities was **RMB 552 million**[26](index=26&type=chunk) - Capital expenditure for the quarter was **RMB 159.7 million**, a **51% YoY increase**[27](index=27&type=chunk) [Management Overview and Outlook](index=14&type=section&id=Management%20Overview%20and%20Outlook) [Management Commentary](index=14&type=section&id=Management%20Commentary) Management reported steady Q3 core business development, with Kingsoft Office advancing AI and collaboration strategies, and online games maintaining vitality through new content and successful launches - Kingsoft Office Group focuses on "AI" and "collaboration" strategies, investing in independent R&D of small and medium models, and forming strategic partnerships with Alibaba Cloud and iFlytek[28](index=28&type=chunk) - In online games, "Jian Wang 3" launched a new expansion, "Jian Xia World: Origin" had a successful open beta, and the mobile version "Jian Wang 3: Wujie" has obtained its license, with a planned launch in the first half of next year[28](index=28&type=chunk) [Future Outlook](index=15&type=section&id=Future%20Outlook) The company plans continued R&D investment in core businesses, with Kingsoft Office focusing on AI and collaboration, and online games on developing and operating high-quality titles for sustainable growth - In the future, Kingsoft Office will focus on **AI** and **collaboration** to re-architect office software; the online game business will continue to develop high-quality titles and operate them long-term[29](index=29&type=chunk) - The company will steadfastly continue to invest in core business R&D to enhance core competitiveness and achieve high-quality sustainable development[29](index=29&type=chunk)

Financial Performance - The total revenue for the first half of 2023 reached RMB 4,163.8 million, a 12.9% increase compared to RMB 3,687.2 million in the same period of 2022[12]. - The company reported a net profit of RMB 605.7 million for the first half of 2023, compared to RMB 335.9 million in the same period of 2022, marking an increase of 80.2%[12]. - Operating profit for the first half of 2023 was RMB 1,136.0 million, representing a 23.8% increase from RMB 918.2 million in the first half of 2022[12]. - Total revenue for Q2 2023 reached RMB 2,193.5 million, a year-on-year increase of 20% and a quarter-on-quarter increase of 11%[18]. - Gross profit for Q2 2023 was RMB 1,831.8 million, reflecting a 25% year-on-year growth, with a gross margin of 84%[19]. - The profit attributable to the company's owners for H1 2023 was RMB 249.5 million, compared to a loss of RMB 42.1 million in the same period last year[44]. User Metrics - The number of cumulative paying users increased by 16% year-on-year to 33.24 million as of June 30, 2023, up from 28.56 million in 2022[8]. - The monthly active devices for key products reached 584 million in June 2023, a 2% increase from 570 million in June 2022[8]. Research and Development - Research and development costs for the first half of 2023 were RMB 1,326.7 million, an increase from RMB 1,250.5 million in the first half of 2022[12]. - R&D expenses for Q2 2023 amounted to RMB 665.7 million, a 4% increase year-on-year[20]. - The company plans to invest approximately RMB 1,900 million in the Wuhan park construction to enhance R&D capabilities, expected to be operational by 2025[57]. Cash and Assets - Cash and bank deposits as of June 30, 2023, amounted to RMB 21,684.5 million, representing 62% of total assets, with a debt-to-asset ratio of 26%[46]. - The company's total assets as of June 30, 2023, amounted to RMB 29,159,025,000, reflecting an increase from RMB 28,794,566,000 at the beginning of the year[138]. - Total non-current assets as of June 30, 2023, were RMB 8,683,650 thousand, compared to RMB 8,348,124 thousand at the end of 2022[133]. Shareholder Information - Major shareholders include Color Link Management Limited with 12.83% ownership (174,818,191 shares) and Tencent Holdings Limited with 7.84% ownership (106,784,515 shares) as of June 30, 2023[102]. - As of June 30, 2023, the total number of shares held by Lei Jun is 308,157,048, accounting for 22.61% of the issued share capital[62]. Stock Options and Incentives - The company has implemented a share option scheme in 2011, which has no options available for grant as of June 30, 2023[71]. - The total number of unexercised stock options as of June 30, 2023, is 5,500,000 shares, with an exercise price of HKD 31.69[76]. - The company aims to attract and retain talent through the 2021 stock option plan and the share award plan[74][80]. Financial Liabilities - The company's debt-to-asset ratio increased to 26% as of June 30, 2023, compared to 24% at the end of 2022[117]. - The company reported a total comprehensive income of RMB 793,541 thousand for the six months ended June 30, 2023, compared to RMB 631,874 thousand in the same period of 2022[130]. Revenue Breakdown - Revenue from office software and services was RMB 1,120.8 million, up 21% year-on-year, driven by sustained growth in personal and institutional subscription businesses[18]. - Revenue from online games and other businesses was RMB 1,072.6 million, an 18% year-on-year increase, primarily due to the continued updates and user experience improvements of "Jian Wang 3"[18]. - Revenue from software and related services sales and subscriptions reached RMB 2,099,933 thousand, up from RMB 1,715,271 thousand in the previous year, indicating a growth of about 22.4%[169]. Employee Information - The company has a total of 7,086 full-time employees as of June 30, 2023, a decrease from 7,174 employees as of June 30, 2022[106]. - Total salary costs for the six months ended June 30, 2023, amounted to RMB 1,865.2 million, compared to RMB 1,715.5 million for the same period in 2022, reflecting an increase of approximately 8.7%[106]. Tax and Compliance - The company reported a total tax expense of RMB 1,471 thousand for the six months ended June 30, 2023, down from RMB 2,304 thousand in the same period of 2022[155]. - The company is currently evaluating its risks related to the OECD's Pillar Two tax reforms, which may impact future financial reporting and tax liabilities[155].

Kingsoft Corporation Limited (OTCPK:KSFTF) Q2 2023 Earnings Conference Call August 22, 2023 7:00 AM ET Company Participants Francie Lu - Investor Relations Tao ZOU - Executive Director and Chief Executive Officer Yi LI - Acting Chief Financial Officer Conference Call Participants Xiaodan Zhang - CICC Linlin Yang - GF Securitites Hao Yang - Founder Securities Operator Good day and thank you for standing by. Welcome to the Q2 2023 Kingsoft Corporation Earnings Conference Call. At this time, all participants a ...

[Financial Data](index=2&type=section&id=Financial%20Data) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) For the six months ended June 30, 2023, the Group's total revenue grew 13% to **RMB 4.16 billion**, operating profit increased 24% to **RMB 1.14 billion**, and profit attributable to owners of the parent turned profitable at **RMB 250 million**, with operating cash flow significantly up to **RMB 2.31 billion** Key Financial Data for the Six Months Ended June 30, 2023 | Metric | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | **Revenue** | 4,163,797 | 3,687,167 | +12.9% | | **Gross Profit** | 3,457,239 | 2,969,986 | +16.4% | | **Operating Profit** | 1,136,015 | 918,179 | +23.7% | | **Profit for the Period** | 605,725 | 335,935 | +80.3% | | **Profit/(Loss) Attributable to Owners of the Parent** | 249,530 | (42,064) | Turned Profitable | | **Basic EPS (RMB)** | 0.18 | (0.03) | Turned Profitable | Summary of Balance Sheet as of June 30, 2023 | Metric | June 30, 2023 (RMB thousands) | Dec 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | **Total Assets** | 34,890,675 | 31,887,955 | | **Total Liabilities** | 8,978,605 | 7,731,488 | | **Total Equity** | 25,912,070 | 24,156,467 | | **Cash and Bank Balances** | 21,684,511 | 18,201,410 | Summary of Cash Flows for the Six Months Ended June 30, 2023 | Metric | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | | :--- | :--- | :--- | | **Net Cash Flow from Operating Activities** | 2,307,572 | 1,053,441 | | **Net Cash Flow Used in Investing Activities** | (1,482,629) | (456,902) | | **Net Cash Flow from/(Used in) Financing Activities** | 989,023 | (499,495) | [Summary of Notes to Financial Statements](index=9&type=section&id=Summary%20of%20Notes%20to%20Financial%20Statements) The Group primarily operates in office software and services and entertainment software and others, with the former generating **RMB 2.17 billion** revenue and **RMB 500 million** segment profit, and the latter **RMB 1.99 billion** revenue and **RMB 630 million** segment profit; no interim dividend was declared - The Group primarily engages in two main businesses: (a) designing, researching, developing, and marketing WPS Office software products and services; and (b) researching and developing games, as well as providing PC and mobile game services[9](index=9&type=chunk)[13](index=13&type=chunk) Segment Results for H1 2023 | Operating Segment | Revenue (RMB thousands) | Segment Profit (RMB thousands) | | :--- | :--- | :--- | | **Office Software and Services** | 2,172,497 | 502,912 | | **Entertainment Software and Others** | 1,991,300 | 630,418 | | **Total** | 4,163,797 | 1,133,330 | - The Board has resolved not to declare any interim dividend for the six months ended June 30, 2023[20](index=20&type=chunk) - The five-year convertible bonds with a principal amount of **HKD 3.1 billion** and an annual interest rate of 0.625%, issued in April 2020, had no conversions or redemptions during the reporting period[28](index=28&type=chunk) [Operations Summary](index=17&type=section&id=Operations%20Summary) As of June 2023, monthly active devices for office software main products reached **584 million**, a 2% year-on-year increase, with cumulative paying users growing 16% to **33.24 million** Key Operating Data for Office Software | Metric | June 2023 | June 2022 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | **Monthly Active Devices for Main Products (millions)** | 584 | 570 | +2% | | **Cumulative Paying Users (millions)** | 33.24 | 28.56 | +16% | [Management Discussion and Analysis](index=20&type=section&id=Management%20Discussion%20and%20Analysis) [Q2 2023 Performance Analysis](index=20&type=section&id=Q2%202023%20Performance%20Analysis) In Q2 2023, the Group's total revenue grew 20% to **RMB 2.19 billion**, with office software and services revenue up 21% and online game revenue up 18% due to strong 'Jian Wang 3' performance; gross profit margin improved to 84%, and operating profit significantly increased by 61% Q2 2023 Revenue Performance | Business Segment | Revenue (RMB millions) | Y-o-Y Change | Q-o-Q Change | | :--- | :--- | :--- | :--- | | **Office Software and Services** | 1,120.8 | +21% | +7% | | **Online Games and Others** | 1,072.6 | +18% | +17% | | **Total** | 2,193.5 | +20% | +11% | - The year-on-year growth in office software business was primarily driven by the sustainable growth of domestic personal and institutional office subscription businesses[32](index=32&type=chunk) - The growth in online game business was mainly due to significant revenue increase from 'Jian Wang 3' through continuous updates and user experience optimization[32](index=32&type=chunk) - The gross profit margin for Q2 was **84%**, an increase of four percentage points from the same period last year, primarily due to changes in revenue mix[33](index=33&type=chunk) - Operating profit before share-based compensation costs was **RMB 767 million**, a 59% year-on-year increase[35](index=35&type=chunk) [H1 2023 Performance Analysis](index=23&type=section&id=H1%202023%20Performance%20Analysis) In H1 2023, the Group's total revenue grew 13% to **RMB 4.16 billion**, with office software and services revenue up 21% and online games and others revenue up 5%; gross profit margin improved to 83%, and profit attributable to owners of the parent turned profitable at **RMB 250 million** H1 2023 Revenue Performance | Business Segment | Revenue (RMB millions) | Y-o-Y Change | | :--- | :--- | :--- | | **Office Software and Services** | 2,172.5 | +21% | | **Online Games and Others** | 1,991.3 | +5% | | **Total** | 4,163.8 | +13% | - The gross profit margin for H1 was **83%**, an increase of two percentage points from the same period last year[41](index=41&type=chunk) - Research and development costs increased by 6% year-on-year to **RMB 1.33 billion**, primarily due to increased employee-related expenses at Kingsoft Office Group[42](index=42&type=chunk) - Profit attributable to owners of the parent for H1 was **RMB 249.5 million**, compared to a loss of **RMB 42.1 million** in the same period last year[44](index=44&type=chunk) [Liquidity and Financial Resources](index=25&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2023, the Group maintained a strong cash position with **RMB 21.68 billion** in cash and bank balances and a healthy gearing ratio of **26%**, while net cash from operating activities in H1 significantly increased to **RMB 2.31 billion** Financial Position Summary | Metric | June 30, 2023 | | :--- | :--- | | **Cash and Bank Balances** | RMB 21,684.5 millions | | **Gearing Ratio** | 26% | - Net cash generated from operating activities in H1 2023 was **RMB 2.308 billion**, a significant increase from **RMB 1.053 billion** in the same period last year[47](index=47&type=chunk) [Business Review and Outlook](index=26&type=section&id=Business%20Review%20and%20Outlook) The Group's core businesses developed steadily, with Kingsoft Office launching WPS AI and deepening digital transformation services, while flagship game 'Jian Wang 3' achieved record-high revenue and 'Snowbreak: Containment Zone' expanded globally; the Group plans to continue driving innovation - Kingsoft Office Group seized the opportunity of large language models, actively investing in R&D to launch **WPS AI**, an intelligent office assistant based on large language models, and commenced public beta testing overseas[49](index=49&type=chunk) - The office software business continues to advance government and enterprise cloud-integrated and collaborative office solutions, and incubate industry-agnostic solutions, centered on a 'multi-screen, cloud, content, AI, collaboration' strategy[49](index=49&type=chunk) - The flagship game 'Jian Wang 3' achieved record-high quarterly revenue, with both daily active users and revenue maintaining year-on-year growth[49](index=49&type=chunk)[50](index=50&type=chunk) - The self-developed anime-style shooter 'Snowbreak: Containment Zone' was simultaneously released globally on PC and mobile platforms, expanding its user base and entering overseas markets[49](index=49&type=chunk)[50](index=50&type=chunk) - Future plans include launching an upgraded performance version of 'Jian Wang 3' PC game in Q4, and the self-developed mobile game 'Jian Xia World: Origin', which has obtained a license, will also be launched in mainland China[50](index=50&type=chunk) [Other Information](index=28&type=section&id=Other%20Information) [Corporate Governance and Personnel](index=28&type=section&id=Corporate%20Governance%20and%20Personnel) As of June 30, 2023, the Group had **7,086** full-time employees with **RMB 1.865 billion** in H1 staff costs; the Audit Committee reviewed interim financial data, and the company complied with corporate governance codes, except for quarterly management reporting to the Board - As of June 30, 2023, the Group had **7,086** full-time employees, with total staff costs of **RMB 1.865 billion** for H1[51](index=51&type=chunk) - The Audit Committee has reviewed the Group's unaudited interim financial information for the six months ended June 30, 2023[53](index=53&type=chunk) - The company has complied with all applicable provisions of the Corporate Governance Code, except that management provides business updates to the Board quarterly instead of monthly as recommended by the code[55](index=55&type=chunk)

[2 -> 29] Good day and thank you for standing by. Welcome to the Q1 2023 Kingsoft Cooperation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. [30 -> 57] To withdraw your question, please press star one and one again. Please be advised ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負責，對其準確性或完整性亦不發表 任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或因依賴該等內容而引致之任何損失承擔任 何責任。 Kingsoft Corporation Limited 金 山 軟 件 有 限 公 司 （於開曼群島持續經營的有限公司） （股份代號：03888） （可換股債券代號：40210） 截 至 二 零 二 三 年 三 月 三 十 一 日 止 三 個 月 業 績 公 告 金山軟件有限公司（「本公司」）董事（「董事」）會（「董事會」）公佈本公司及其附屬公司（「本 集團」或「金山」）截至二零二三年三月三十一日止三個月未經審計的業績。 財務資料摘要 截至下列日期止三個月 二零二三年 二零二二年 二零二二年 三月 三月 十二月 三十一日 三十一日 三十一日 同比變動 環比變動 人民幣千元 人民幣千元 人民幣千元 % % （未經審計）（未經審計）（未經審計） （經重述） （經重述） ...

Financial Performance - Total revenue for Kingsoft in 2022 reached RMB 7,636.7 million, a year-on-year increase of 20%[12]. - Revenue from office software and services was RMB 3,890.6 million, up 19% year-on-year, driven by strong growth in personal and institutional subscription services[12]. - Revenue from online games and other businesses reached a record high of RMB 3,746.2 million, reflecting a 21% year-on-year increase, primarily due to the strong performance of the mobile game "Swordman World 3"[12]. - Operating profit for the group was RMB 1,868.7 million, representing a significant year-on-year growth of 37%[12]. - The gross profit for 2022 was RMB 6,177.00 million, up from RMB 5,214.29 million in 2021, showing an increase of about 18.5%[25]. - The operating profit for the year was RMB 1,868.68 million, compared to RMB 1,360.58 million in 2021, indicating a growth of approximately 37.3%[25]. - The revenue for 2022 was RMB 7,636.7 million, representing a 20% increase year-on-year, with office software and services accounting for 51% and online games and others for 49% of total revenue[26]. - The total revenue for the company in 2022 was RMB 7,636.74 million, compared to RMB 6,371.41 million in 2021, marking a growth of approximately 19.8%[25]. User Engagement and Growth - In 2022, the number of monthly active devices for major products reached 573 million, a 5% increase year-over-year[20]. - The total number of paid users increased to 29.97 million, representing an 18% year-over-year growth[20][21]. - The management team highlighted a 15% increase in user engagement year-over-year, indicating strong customer retention and satisfaction[68]. - Future outlook includes a projected revenue growth of 20% for the next fiscal year, driven by new product launches and market expansion strategies[69]. Strategic Focus and Innovation - The company continues to focus on digital transformation needs for enterprise-level users and enhancing cloud office experiences for individual users[12]. - The company plans to focus on AI technology and digital transformation services to drive future growth[15][19]. - The company aims to enhance user experience and service quality through continuous innovation and optimization of its membership system[15][19]. - The company emphasizes a strategic focus on "multi-screen, cloud, content, AI, and collaboration" to strengthen its core competitiveness[12]. - The company aims to improve operational efficiency by 10% through strategic cost management initiatives[74]. Research and Development - Research and development costs rose to RMB 2,552.8 million, a 10% increase year-on-year, due to increased investment in cloud and collaboration services[28]. - The company is investing heavily in R&D, with a budget allocation of 10% of revenue aimed at developing innovative technologies and products[70]. Corporate Governance - The company is committed to maintaining high levels of corporate governance to protect shareholder interests and enhance corporate value[78]. - The board has reviewed and confirmed compliance with the corporate governance code, except for specific provisions regarding attendance and reporting frequency[78]. - The board consists of seven members, including one executive director, three non-executive directors, and three independent non-executive directors, ensuring a third of the board is independent[89]. - The company has established a new compliance framework to enhance corporate governance and risk management practices[76]. - The board is responsible for overseeing the company's operations and ensuring compliance with legal and regulatory requirements[85]. Environmental, Social, and Governance (ESG) - The board of directors emphasizes the importance of ESG (Environmental, Social, and Governance) strategies, aiming for a 30% reduction in carbon footprint by 2025[75]. - The company aims to identify and assess significant ESG-related risks and opportunities, ensuring compliance with relevant policies and regulations[115]. - The Environmental, Social, and Governance Committee currently consists of four directors, including three independent non-executive directors[113]. Shareholder Engagement - The company emphasizes the importance of effective communication with shareholders to enhance investor relations and ensure timely disclosure of information[132]. - The company has established a policy in place for shareholders to propose matters for discussion at general meetings, promoting shareholder engagement[138]. - The company actively engages with investors through various channels, including online and offline meetings, to address their concerns and provide necessary information[134]. Stock Incentive Plans - The company has adopted stock option plans to incentivize and reward eligible participants, with details available in the financial statements[167]. - The maximum number of shares that may be issued under the 2021 share option plan is capped at 10% of the total shares issued as of December 9, 2021, which amounts to 137,020,371 shares[174]. - The total fair value of the awarded shares under the share incentive plan for the year 2022 was RMB 67,303,000[185]. - The share incentive plan allows for the issuance of up to 50,832,211 shares, with specific limits on special incentive plans[188]. Financial Position - As of December 31, 2022, the group's cash and bank deposits totaled RMB 18,201.4 million, representing 57% of total assets[41]. - The net loss attributable to equity holders of the parent company for 2022 was RMB 6,048.2 million, compared to a profit of RMB 395.3 million in the previous year[38]. - Total assets as of December 31, 2022, were RMB 31,888.0 million, while total liabilities were RMB 7,733.1 million[159]. - Employee costs, including directors and senior management remuneration, were approximately RMB 3,486.7 million for 2022, compared to RMB 3,003.7 million in 2021[154].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負責，對其準確性或完整性亦不發表 任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或因依賴該等內容而引致之任何損失承擔任 何責任。 Kingsoft Corporation Limited 金 山 軟 件 有 限 公 司 （於開曼群島持續經營的有限公司） （股份代號：03888） （可換股債券代號：40210） 截 至 二 零 二 二 年 十 二 月 三 十 一 日 止 年 度 業 績 公 告 金山軟件有限公司（「本公司」）董事（「董事」）會（「董事會」）謹此公佈本公司及其附屬公 司（「本集團」）截至二零二二年十二月三十一日止年度之經審核業績。該等業績已由本 公司核數師安永會計師事務所根據《香港審計準則》審核。此外，該等業績亦已由本公司 的審核委員會（「審核委員會」）審閱。 財務資料概要 截至十二月三十一日止年度 二零二二年 二零二一年 同比變動 人民幣千元 人民幣千元 % 收益 7,636,743 6,371,406 20 營運溢利 1,868,682 1,360,583 37 扣除股份酬金成本前的營運溢利 2,129,476 1 ...