KINGSOFT CLOUD(KC) - 2025 Q1 - Quarterly Report

First Quarter 2025 Financial Highlights Kingsoft Cloud reported strong Q1 2025 performance with 228% AI business gross billing growth, 10.9% revenue increase to RMB 1,970.0 million, significantly narrowed adjusted operating loss, and positive adjusted EBITDA of RMB 318.5 million Management Commentary Kingsoft Cloud reported strong Q1 2025 performance with 228% AI business gross billing growth, 10.9% revenue increase to RMB 1,970.0 million, significantly narrowed adjusted operating loss, and positive adjusted EBITDA of RMB 318.5 million - The gross billing of the AI business surged by 228% year-over-year, reaching RMB 525 million and constituting 39% of public cloud services revenue[3] Financial Metrics (RMB) | Financial Metric | Q1 2025 (RMB) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Total Revenues | 1,970.0M | +10.9% | -11.7% | | Adjusted Gross Profit | 327.7M | +9.6% | -23.4% | | Adjusted Gross Margin | 16.6% | -0.2 p.p. | -2.6 p.p. | | Adjusted Operating Loss | 55.8M | Narrowed by 56% | - | | Adjusted EBITDA Profit | 318.5M | - | - | | Adjusted EBITDA Margin | 16.2% | - | - | Detailed Financial Results This section provides a comprehensive breakdown of the company's financial performance for the first quarter of 2025, covering revenues, costs, profits, and key financial positions Revenues Total revenues for Q1 2025 increased 10.9% year-over-year to RMB 1,970.0 million, driven by ecosystem and AI growth, despite a seasonal 11.7% sequential decrease Total Revenues (RMB) | Period | Total Revenues (RMB) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Q1 2025 | 1,970.0 M | +10.9% | -11.7% | | Q4 2024 | 2,232.1 M | - | - | | Q1 2024 | 1,775.7 M | - | - | - The year-over-year increase was mainly attributed to expanded revenue from Xiaomi and Kingsoft Ecosystem, growth in AI-related customers, and deeper penetration into enterprise cloud customers[4] Public Cloud Services Revenue Public cloud services revenue grew 14.0% year-over-year to RMB 1,353.5 million, driven by AI demand, despite a 4.0% sequential decrease Public Cloud Revenue (RMB) | Period | Public Cloud Revenue (RMB) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Q1 2025 | 1,353.5 M | +14.0% | -4.0% | | Q4 2024 | 1,409.8 M | - | - | | Q1 2024 | 1,187.4 M | - | - | - The year-over-year growth was mainly driven by increased AI demands[5] Enterprise Cloud Services Revenue Enterprise cloud services revenue increased 4.8% year-over-year to RMB 616.5 million, but saw a 25.0% sequential decrease due to seasonal and project delivery impacts Enterprise Cloud Revenue (RMB) | Period | Enterprise Cloud Revenue (RMB) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Q1 2025 | 616.5 M | +4.8% | -25.0% | | Q4 2024 | 822.3 M | - | - | | Q1 2024 | 588.2 M | - | - | - The sequential decrease was attributed to the Chinese New Year impact and different delivery schedules for projects[6] Cost of Revenues Cost of revenues rose 11.4% year-over-year to RMB 1,651.7 million due to AI investments, despite lower IDC costs, while depreciation significantly increased from new AI servers Cost Components (RMB) | Cost Component | Q1 2025 (RMB) | Q1 2024 (RMB) | YoY Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | IDC Costs | 722.8 M | 768.5 M | -6.0% | Strict procurement cost control | | Depreciation & Amortization | 378.5 M | 183.5 M | +106.3% | Depreciation of new servers for AI | | Solution Development & Services | 505.2 M | 446.0 M | +13.3% | Solution personnel expansion | Gross Profit and Gross Margin Gross profit increased 8.5% year-over-year to RMB 318.3 million with a 16.2% margin, while sequential margin decreased due to AI investments and delayed high-margin projects Gross Profit and Margin (RMB) | Metric | Q1 2025 (RMB) | Q1 2024 (RMB) | Q4 2024 (RMB) | | :--- | :--- | :--- | :--- | | Gross Profit (GAAP) | 318.3 M | 293.3 M | 426.0 M | | Gross Margin (GAAP) | 16.2% | 16.5% | 19.1% | | Gross Profit (Non-GAAP) | 327.7 M | 299.1 M | 427.7 M | | Gross Margin (Non-GAAP) | 16.6% | 16.8% | 19.2% | - The sequential decrease in margin was mainly due to growing investment in AI and the delay of high-margin enterprise cloud projects in the first quarter[9] Operating Expenses Total operating expenses were RMB 552.5 million, decreasing 2.6% YoY due to cost control but increasing 17.7% QoQ from higher selling, marketing, and R&D expenses Total Operating Expenses (RMB) | Period | Total Operating Expenses (RMB) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Q1 2025 | 552.5 M | -2.6% | +17.7% | | Q4 2024 | 469.5 M | - | - | | Q1 2024 | 567.4 M | - | - | Selling and Marketing Expenses Selling and marketing expenses increased to RMB 144.3 million, up 23.6% YoY and 24.7% QoQ, primarily due to a one-time share-based compensation bonus - The increase in S&M expenses was due to a one-time bonus of share-based compensation[10] General and Administrative Expenses General and administrative expenses were RMB 182.0 million, decreasing 16.8% YoY due to lower credit loss expenses, despite a slight 1.4% QoQ increase - The year-over-year decrease was mainly due to a reduction in credit loss expense[11] Research and Development Expenses Research and development expenses were RMB 226.2 million, down 2.5% YoY but up 29.9% QoQ, reflecting continued investment in R&D personnel and share-based compensation - The sequential increase was driven by continuous investment in R&D personnel and an increase in share-based compensation[12] Operating Loss Operating loss narrowed year-over-year to RMB 234.2 million due to higher gross profit and expense control, though sequential loss increased from lower gross profit and higher share-based compensation Operating Loss (RMB) | Metric | Q1 2025 (RMB) | Q1 2024 (RMB) | Q4 2024 (RMB) | | :--- | :--- | :--- | :--- | | Operating Loss (GAAP) | (234.2 M) | (274.2 M) | (43.5 M) | | Operating Loss (Non-GAAP) | (55.8 M) | (127.0 M) | 24.4 M (Profit) | Net Loss and EBITDA Net loss improved to RMB 316.1 million, with Non-GAAP net loss narrowing to RMB 190.6 million, and Non-GAAP EBITDA reaching a profit of RMB 318.5 million with a 16.2% margin, driven by AI business growth Net Loss and EBITDA (RMB) | Metric | Q1 2025 (RMB) | Q1 2024 (RMB) | Q4 2024 (RMB) | | :--- | :--- | :--- | :--- | | Net Loss (GAAP) | (316.1 M) | (363.6 M) | (200.6 M) | | Net Loss (Non-GAAP) | (190.6 M) | (217.3 M) | (70.3 M) | | Non-GAAP EBITDA | 318.5 M | 33.2 M | 359.7 M | | Non-GAAP EBITDA Margin | 16.2% | 1.9% | 16.1% | | Basic & Diluted EPS | (0.08) | (0.10) | (0.05) | Financial Position Cash and cash equivalents stood at RMB 2,322.7 million as of March 31, 2025, a decrease from year-end 2024 due to operational investments and computing power equipment procurement - Cash and cash equivalents stood at RMB 2,322.7 million as of March 31, 2025[18] - The decrease in cash was primarily due to investments in operations and the procurement of computing power equipment[18] Financial Statements This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of comprehensive loss, and cash flow statements Unaudited Condensed Consolidated Balance Sheets Total assets increased to RMB 19.72 billion as of March 31, 2025, driven by property and equipment, while total liabilities grew to RMB 14.38 billion and total equity slightly decreased Balance Sheet Items (in thousands RMB) | Balance Sheet Item (in thousands RMB) | Mar 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 2,322,674 | 2,648,764 | | Total current assets | 7,138,289 | 6,840,786 | | Property and equipment, net | 6,514,205 | 4,630,052 | | Total assets | 19,721,074 | 17,592,654 | | Total current liabilities | 9,797,843 | 9,159,435 | | Total liabilities | 14,376,429 | 12,087,334 | | Total equity | 5,344,645 | 5,505,320 | Unaudited Condensed Consolidated Statements of Comprehensive Loss For Q1 2025, the company reported total revenues of RMB 1,970.0 million, gross profit of RMB 318.3 million, and a narrowed net loss of RMB 316.1 million compared to Q1 2024 Income Statement Items (in thousands RMB) | Income Statement Item (in thousands RMB) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Total revenues | 1,969,977 | 2,232,142 | 1,775,684 | | Gross profit | 318,306 | 425,972 | 293,253 | | Operating loss | (234,201) | (43,511) | (274,157) | | Net loss | (316,110) | (200,642) | (363,616) | | Net loss per share (Basic and diluted) | (0.08) | (0.05) | (0.10) | Reconciliation of GAAP and Non-GAAP Results This section details adjustments from GAAP to non-GAAP metrics, including adding back share-based compensation and amortization for adjusted operating loss and further adjustments for adjusted EBITDA Reconciliation of Gross Profit (in thousands RMB) | | Q1 2025 (RMB) | Q1 2024 (RMB) | | :--- | :--- | :--- | | Gross profit (GAAP) | 318,306 | 293,253 | | Share-based compensation | 9,365 | 5,814 | | Adjusted gross profit (Non-GAAP) | 327,671 | 299,067 | Reconciliation of Net Loss to Adjusted EBITDA (in thousands RMB) | | Q1 2025 (RMB) | Q1 2024 (RMB) | | :--- | :--- | :--- | | Net Loss (GAAP) | (316,110) | (363,616) | | Share-based compensation | 134,611 | 103,595 | | Foreign exchange (loss) gain | (9,051) | 42,737 | | Adjusted net loss (Non-GAAP) | (190,550) | (217,284) | | Adjustments (Interest, Tax, D&A) | 509,093 | 250,471 | | Adjusted EBITDA (Non-GAAP) | 318,543 | 33,187 | Reconciliation of Operating Loss (in thousands RMB) | | Q1 2025 (RMB) | Q1 2024 (RMB) | | :--- | :--- | :--- | | Operating loss (GAAP) | (234,201) | (274,157) | | Share-based compensation | 134,611 | 103,595 | | Amortization of intangible assets | 43,781 | 43,517 | | Adjusted operating loss (Non-GAAP) | (55,809) | (127,045) | Unaudited Condensed Consolidated Statement of Cash Flows Net cash used in operating and investing activities for Q1 2025 totaled RMB 418.4 million and RMB 490.4 million respectively, partially offset by RMB 550.0 million from financing, resulting in a RMB 343.8 million net cash decrease Cash Flow Activities (in thousands RMB) | Cash Flow Activity (in thousands RMB) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | (418,390) | 570,222 | (321,336) | | Net cash used in investing activities | (490,393) | (1,337,978) | (1,169,017) | | Net cash from financing activities | 549,998 | 1,802,762 | 1,112,096 | | Net (decrease) increase in cash | (343,757) | 1,019,712 | (398,721) | Supplementary Information This section provides additional details regarding the company's investor relations activities and the methodology for non-GAAP financial measures Conference Call Information Kingsoft Cloud will host an earnings conference call on May 28, 2025, at 8:15 am U.S. Eastern Time, with pre-registration and a live webcast available on the investor relations website - The earnings call is scheduled for May 28, 2025, at 8:15 am U.S. Eastern Time (8:15 pm Beijing/Hong Kong Time)[20] - A live and archived webcast will be accessible on the company's investor relations website at **http://ir.ksyun.com**[21](index=21&type=chunk) Use of Non-GAAP Financial Measures The company utilizes non-GAAP financial measures, including gross profit, operating loss, net loss, and EBITDA, to supplement U.S. GAAP results for internal evaluation and understanding of operating performance - The company uses non-GAAP measures to review and assess operating performance, as they are used by management to evaluate performance and formulate business plans[24] - Key non-GAAP measures include: Non-GAAP gross profit, Non-GAAP operating (loss) profit, Non-GAAP net loss, and Non-GAAP EBITDA, along with their respective margins[24] - The company acknowledges limitations of non-GAAP measures and provides reconciliations to the nearest U.S. GAAP performance measure[25][26]