

Company Information and Report Overview Company Basic Information Kingsoft Corporation Limited (Stock Code: 03888) announced its unaudited results for the three and six months ended June 30, 2025, detailing its incorporation in 1998 and HKEX listing in 2007 - Kingsoft Corporation Limited (Stock Code: 03888) announced its unaudited results for the three and six months ended June 30, 20252 - The company was incorporated on March 20, 1998, re-domiciled to the Cayman Islands on November 15, 2005, and listed on the Main Board of the Hong Kong Stock Exchange on October 9, 200710 Basis of Preparation and Accounting Policies The interim consolidated financial statements are prepared under IAS 34, to be read with the 2024 annual statements, with IAS 21 (Amendment) adopted without significant impact - The condensed interim consolidated financial statements are prepared in accordance with International Accounting Standard 34 and should be read in conjunction with the annual consolidated financial statements as of December 31, 202412 - The group first adopted International Accounting Standard 21 (Amendment) 'Lack of Exchangeability' this period, which had no significant financial impact on the Group15 Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2025, total revenue reached RMB 4,645.4 million, growing 0.75%, while profit attributable to owners of the parent increased 20.41% to RMB 816.3 million Condensed Consolidated Statement of Profit or Loss Key Data (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 4,645,407 | 4,610,641 | +0.75% | | Operating Profit | 984,111 | 1,395,615 | -29.50% | | Profit Before Tax | 1,360,710 | 1,288,837 | +5.57% | | Profit for the Period | 1,208,126 | 1,198,130 | +0.83% | | Profit Attributable to Owners of the Parent | 816,314 | 677,923 | +20.41% | | Basic Earnings Per Share (RMB Yuan) | 0.60 | 0.51 | +17.65% | Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2025, total comprehensive income decreased 8.00% to RMB 1,130.1 million, while comprehensive income attributable to owners of the parent increased 5.79% to RMB 747.5 million Condensed Consolidated Statement of Comprehensive Income Key Data (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Profit for the Period | 1,208,126 | 1,198,130 | +0.83% | | Other Comprehensive Income/(Loss) for the Period (After Tax) | (77,983) | 29,902 | -361.46% | | Total Comprehensive Income for the Period | 1,130,143 | 1,228,032 | -8.00% | | Attributable to Owners of the Parent | 747,489 | 706,576 | +5.79% | | Non-controlling Interests | 382,654 | 521,456 | -26.62% | Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets less current liabilities increased 9.7% to RMB 32,429.6 million, with net assets growing 9.77% to RMB 31,189.0 million compared to year-end 2024 Condensed Consolidated Statement of Financial Position Key Data (As of June 30) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 8,557,580 | 8,044,078 | +6.38% | | Total Current Assets | 28,907,624 | 30,240,397 | -4.39% | | Total Current Liabilities | 5,035,584 | 8,716,614 | -42.23% | | Net Current Assets | 23,872,040 | 21,523,783 | +10.91% | | Net Assets | 31,189,009 | 28,412,402 | +9.77% | | Total Equity | 31,189,009 | 28,412,402 | +9.77% | Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2025, total equity attributable to owners of the parent increased 11.9% to RMB 25,124.0 million, with total comprehensive income for the period at RMB 1,130.1 million - As of June 30, 2025, total equity attributable to owners of the parent amounted to RMB 25,123,970 thousand, an increase of 11.9% from RMB 22,456,276 thousand as of January 1, 20257 - Total comprehensive income for the period was RMB 1,130,143 thousand7 - In the first half of 2025, the company issued new shares through the conversion of convertible bonds and conducted share repurchases7 Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2025, net cash from operating activities decreased 51.62% to RMB 664.9 million, while investing activities generated RMB 1,917.5 million, with period-end cash and cash equivalents at RMB 4,592.7 million Condensed Consolidated Statement of Cash Flows Key Data (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 664,862 | 1,374,262 | -51.62% | | Net Cash Flow from Investing Activities (Generated From / Used In) | 1,917,486 | (6,787,751) | Turnaround to positive | | Net Cash Flow Used in Financing Activities | (1,676,506) | (869,442) | +92.82% | | Net Increase/(Decrease) in Cash and Cash Equivalents | 905,842 | (6,282,931) | Turnaround to positive | | Cash and Cash Equivalents at End of Period | 4,592,697 | 2,430,983 | +89.09% | Notes to Financial Statements Operating Segments The Group operates in two reportable segments: office software and services, and entertainment software and others, with H1 2025 revenues of RMB 2,657.1 million and RMB 1,988.3 million respectively - The Group's business is divided into two reportable operating segments: office software and services (WPS Office, WPS 365, WPS AI, etc.) and entertainment software and others (game development and services)1320 Operating Segment Revenue and Performance (For the six months ended June 30) | Segment | 2025 Revenue (RMB thousands) | 2024 Revenue (RMB thousands) | 2025 Performance (RMB thousands) | 2024 Performance (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Office Software and Services | 2,657,122 | 2,413,079 | 656,834 | 640,228 | | Entertainment Software and Others | 1,988,285 | 2,197,562 | 326,435 | 753,612 | | Total | 4,645,407 | 4,610,641 | 983,269 | 1,393,840 | Profit Before Tax Details For the six months ended June 30, 2025, profit before tax was RMB 1,360.7 million, with significant deductions including RMB 2,160.5 million for employee benefits and RMB 54.3 million for interest expenses Key Deductions from Profit Before Tax (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Employee Benefit Expenses | 2,160,535 | 1,997,549 | | Depreciation of Property, Plant and Equipment | 80,507 | 75,609 | | Interest on Lease Liabilities, Convertible Bonds and Other Liabilities | 54,345 | 88,334 | | Impairment of Trade and Other Receivables | 3,199 | 1,597 | Income Tax Expense For the six months ended June 30, 2025, income tax expense significantly increased to RMB 152.6 million, primarily due to deferred tax expense from the deemed disposal of Kingsoft Cloud Income Tax Expense (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current Income Tax | 109,536 | 210,060 | | Deferred Income Tax | 43,048 | (119,353) | | Income Tax Expense | 152,584 | 90,707 | - The increase in income tax expense was primarily due to the accrued deferred tax expense arising from the deemed disposal of Kingsoft Cloud in the second quarter of 20254456 Dividends Policy The 2024 final dividend of HKD 0.15 per share was paid on May 29, 2025, totaling RMB 190.5 million, while no interim dividend was declared for the first half of 2025 - The 2024 final dividend of HKD 0.15 per ordinary share was approved by shareholders on May 29, 2025, with an actual payment of RMB 190.5 million24 - The Board has resolved not to declare any interim dividend for the six months ended June 30, 202524 Earnings Per Share For the six months ended June 30, 2025, basic earnings per share increased to RMB 0.60, and diluted earnings per share rose to RMB 0.59, both up from the prior period Earnings Per Share (For the six months ended June 30) | Indicator | 2025 (RMB Yuan) | 2024 (RMB Yuan) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share | 0.60 | 0.51 | +17.65% | | Diluted Earnings Per Share | 0.59 | 0.49 | +20.41% | - Basic earnings per share are calculated based on the profit for the period attributable to ordinary equity holders of the parent and the weighted average number of ordinary shares outstanding25 Trade Receivables and Payables As of June 30, 2025, total trade receivables were RMB 732.5 million, while total trade payables stood at RMB 594.7 million Trade Receivables Aging Analysis (As of June 30) | Aging | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | 0 to 30 days | 224,190 | 211,974 | | 31 to 60 days | 76,683 | 81,886 | | 61 to 90 days | 18,688 | 42,522 | | 91 to 365 days | 213,316 | 162,367 | | 1 to 2 years | 129,710 | 141,409 | | Over 2 years | 69,950 | 57,912 | | Total | 732,537 | 698,070 | Trade Payables Aging Analysis (As of June 30) | Aging | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | 0 to 30 days | 224,487 | 165,181 | | 31 to 60 days | 110,535 | 69,328 | | 61 to 90 days | 35,342 | 44,993 | | 91 to 365 days | 149,500 | 129,407 | | Over 1 year | 74,848 | 69,472 | | Total | 594,712 | 478,381 | Convertible Bonds The HKD 3,100 million five-year convertible bonds issued in 2020 matured and were fully redeemed on April 29, 2025, with HKD 2,274 million converted to shares and HKD 826 million redeemed - The HKD 3,100 million five-year convertible bonds issued in 2020 matured and were fully redeemed on April 29, 20252930 - As of April 17, 2025, approximately HKD 2,274 million in principal was converted into 65,401,193 shares at HKD 34.77 per share30 - The remaining outstanding convertible bonds of approximately HKD 826 million were redeemed by the company30 Financial Summary and Performance Analysis Q2 2025 Performance Comparison In Q2 2025, total revenue declined 7% to RMB 2,307.4 million, with office software revenue up 14% and network games down 26%, while profit attributable to owners of the parent increased 35.3% to RMB 532.4 million Q2 2025 Key Financial Data (Year-on-Year/Quarter-on-Quarter) | Indicator | Q2 2025 (RMB thousands) | Q2 2024 (RMB thousands) | Year-on-Year Change (%) | Q1 2025 (RMB thousands) | Quarter-on-Quarter Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 2,307,412 | 2,473,766 | -6.73% | 2,337,995 | -1.31% | | Office Software and Services Revenue | 1,355,653 | 1,187,730 | +14.14% | 1,301,469 | +4.16% | | Network Games and Other Revenue | 951,759 | 1,286,036 | -25.99% | 1,036,526 | -8.18% | | Operating Profit | 382,658 | 794,037 | -51.84% | 601,453 | -36.38% | | Profit Attributable to Owners of the Parent | 532,440 | 393,353 | +35.36% | 283,874 | +87.56% | Q2 Revenue Analysis - In Q2 2025, total revenue was RMB 2,307.4 million, a 7% year-on-year decrease and a 1% quarter-on-quarter decrease35 - Office software and services business revenue increased by 14% year-on-year, primarily due to the growth of WPS 365 and WPS personal business, driven by enhanced product capabilities, industry penetration for WPS 365, and improved AI features and user experience for WPS personal business35 - Network games and other business revenue decreased by 26% year-on-year, mainly due to the high base effect of ACG game 'Snowbreak: Containment Zone' and 'Jian Wang 3' in Q2 202435 Q2 Cost of Revenue and Gross Profit - In Q2 2025, cost of revenue was RMB 453.8 million, a 5% year-on-year increase and an 8% quarter-on-quarter increase, primarily due to increased server, bandwidth, and procurement costs driven by the growth of Kingsoft Office Group's business36 - Gross profit was RMB 1,853.6 million, a 9% year-on-year decrease, with a gross profit margin of 80%, down 3 percentage points year-on-year36 Q2 Operating Expenses - Research and development costs were RMB 853.8 million, a 15% year-on-year increase, driven by continuous investment in AI and collaboration capabilities and increased investment in new game categories37 - Sales and distribution expenses were RMB 424.0 million, a 12% year-on-year increase, primarily due to increased marketing and promotional activities for Kingsoft Office Group and pre-launch activities for new games38 - Administrative expenses were RMB 173.6 million, a 12% year-on-year increase, mainly due to increased personnel-related expenses for Kingsoft Office Group39 - Share-based compensation expenses were RMB 71.1 million, a 13% year-on-year decrease and a 32% quarter-on-quarter increase, primarily due to the grant of award shares to selected employees of certain subsidiaries during the quarter40 Q2 Other Income and Associates' Results - In Q2 2025, net other income was RMB 442.9 million, primarily due to the recognition of a gain from the deemed disposal of Kingsoft Cloud arising from the dilutive effect of Kingsoft Cloud's new share issuance42 - Share of losses of associates was RMB 170.1 million, largely consistent with the prior period43 Q2 Profit Attributable to Owners of the Parent - In Q2 2025, profit attributable to owners of the parent was RMB 532.4 million, a 35.3% year-on-year increase45 - Profit attributable to owners of the parent before share-based compensation expenses was RMB 569.6 million, with a net profit margin of 25%46 H1 2025 Performance Comparison In H1 2025, total revenue grew 1% to RMB 4,645.4 million, with office software revenue up 10% and network games down 10%, while profit attributable to owners of the parent increased 20.4% to RMB 816.3 million H1 2025 Key Financial Data (Year-on-Year) | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 4,645,407 | 4,610,641 | +0.75% | | Office Software and Services Revenue | 2,657,122 | 2,413,079 | +10.11% | | Network Games and Other Revenue | 1,988,285 | 2,197,562 | -9.52% | | Operating Profit | 984,111 | 1,395,615 | -29.50% | | Profit Attributable to Owners of the Parent | 816,314 | 677,923 | +20.41% | H1 Revenue Analysis - In H1 2025, total revenue was RMB 4,645.4 million, a 1% year-on-year increase47 - Office software and services business revenue increased by 10% year-on-year, primarily due to the growth of WPS personal business (product capabilities, user experience, commercial strategy optimization) and WPS 365 business (product capabilities, services, solution promotion)47 - Network games and other business revenue decreased by 10% year-on-year, mainly due to the high base effect of 'Snowbreak: Containment Zone' and 'JX World: Origin' in H1 2024, partially offset by the growth of 'Jian Wang 3'47 H1 Cost of Revenue and Gross Profit - In H1 2025, cost of revenue was RMB 873.2 million, a 5% year-on-year increase, primarily due to increased server, bandwidth, and channel costs driven by the growth of Kingsoft Office Group's business48 - Gross profit was RMB 3,772.2 million, consistent with the prior period, with a gross profit margin of 81%, down 1 percentage point year-on-year48 H1 Operating Expenses - Research and development costs were RMB 1,681.6 million, a 16% year-on-year increase, primarily due to increased headcount at Kingsoft Office Group, higher outsourcing expenses for new game categories, and increased AI-related expenses49 - Sales and distribution expenses were RMB 764.5 million, a 19% year-on-year increase, primarily due to increased promotion and advertising efforts to support pre-launch activities for new games50 - Administrative expenses were RMB 333.9 million, a 6% year-on-year increase51 - Share-based compensation expenses were RMB 124.8 million, a 21% year-on-year decrease52 H1 Other Income and Associates' Results - In H1 2025, net other income was RMB 420.6 million, compared to a loss of RMB 16.6 million in the prior period, primarily due to the dilutive effect of Kingsoft Cloud's new share issuance54 - Share of losses of associates was RMB 322.8 million, a narrowing from a loss of RMB 337.9 million in the prior period55 H1 Profit Attributable to Owners of the Parent - In H1 2025, profit attributable to owners of the parent was RMB 816.3 million, a 20.4% year-on-year increase57 - Profit attributable to owners of the parent before share-based compensation expenses was RMB 885.6 million, with a net profit margin of 19%58 Liquidity and Financial Resources Cash Position and Gearing Ratio As of June 30, 2025, the Group's cash and bank balances totaled RMB 22,594.0 million, with total cash resources at RMB 25,156.2 million, and a gearing ratio of 17%, down from 26% at year-end 2024 - As of June 30, 2025, the Group's cash and bank balances were RMB 22,594.0 million, with restricted cash of RMB 3.0 million59 - The Group's total cash resources (including cash and bank balances, restricted cash, and financial assets measured at fair value through profit or loss) amounted to RMB 25,156.2 million60 - The gearing ratio was 17%, a significant decrease from 26% as of December 31, 202459 Operating Cash Flow and Capital Expenditure For the six months ended June 30, 2025, net cash from operating activities decreased 51.6% to RMB 664.9 million, while cash used for capital expenditure increased 23.3% to RMB 202.6 million - For the six months ended June 30, 2025, net cash generated from operating activities was RMB 664.9 million, a 51.6% year-on-year decrease62 - Cash used for capital expenditure was RMB 202.6 million, a 23.3% year-on-year increase63 Foreign Currency Risk Management As of June 30, 2025, the Group held RMB 4,191.3 million in non-RMB denominated financial assets, facing foreign exchange rate fluctuation risks due to a lack of cost-effective hedging - As of June 30, 2025, the Group held financial assets denominated in non-RMB currencies, primarily deposits, totaling RMB 4,191.3 million61 - Due to the lack of cost-effective hedging measures, the Group is exposed to the risk of losses arising from foreign exchange rate fluctuations61 Business Review and Outlook Overall Strategy and Management Comments Chairman Mr. Lei Jun highlighted steady progress in core businesses, with Kingsoft Office focusing on AI, collaboration, and internationalization, and network games on content innovation and global expansion, while CEO Mr. Zou Tao noted robust office software growth and high base effects for network games in Q2 - Chairman Mr. Lei Jun stated that the company is steadily advancing its core businesses around established strategies and firmly planning for the future, with Kingsoft Office Group focusing on 'AI, Collaboration, and Internationalization' as strategic priorities, and the network games business continuing content innovation and global expansion64 - CEO Mr. Zou Tao noted that Q2 total revenue decreased by 7% year-on-year, with office software and services revenue increasing by 14% year-on-year, while network games and other business revenue decreased by 26% year-on-year due to a high base effect64 Office Software and Services Business In June 2025, global WPS Office MAU reached 651 million (up 9%), with cumulative paying users at 41.79 million (up 10%), driven by the launch of WPS AI 3.0 and 'WPS Lingxi', and R&D for a new international version WPS Office Operating Data (As of June) | Indicator | June 2025 | June 2024 | Year-on-Year Change (%) | March 2025 | Quarter-on-Quarter Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Global WPS Office Monthly Active Devices (millions) | 651 | 600 | +8.50% | 647 | +0.62% | | Cumulative Paying Users (millions) | 41.79 | 38.15 | +9.54% | N/A | N/A | - The company launched WPS AI 3.0 and the native Office AI assistant 'WPS Lingxi', achieving native embedding of AI capabilities and deep participation in office workflows, marking a shift from tool-based AI applications to collaborative intelligent agents64 - WPS personal business completed the rollout of AI features and initiated new product promotions; the overseas market commenced R&D for a new international version of WPS; WPS 365 business continued to penetrate industries and scenarios, actively promoting the implementation of AI projects65 Network Games and Other Business Flagship IP 'Jian Wang 3' maintained user activity, 'JX Love Zero' launched, and self-developed sci-fi mecha game 'Mecha Break' received high ratings in its July global open beta, with 'Goose Goose Duck' and 'Cats & Soup: Magic Recipe' obtaining licenses for H2 launch - Flagship IP 'Jian Wang 3' maintained user activity through stable content updates and continuous technical optimization65 - Self-developed sci-fi mecha game 'Mecha Break' had its global open beta in July, topping Steam's most popular games list and receiving high ratings from international authoritative gaming media65 - Social deduction game 'Goose Goose Duck' obtained its license in June, with pre-orders exceeding 5 million, and is expected to launch in the second half of the year; the sequel to 'Cats & Soup', 'Cats & Soup: Magic Recipe', obtained its license in May66 Future Outlook Kingsoft Office Group will increase R&D in AI and collaboration for broader industry adoption, while the network games business will focus on premium games, IP ecosystem development, and global expansion for long-term operation - Kingsoft Office Group will continue to increase R&D investment in AI and collaboration, promoting the implementation of products and services in more office scenarios across various industries66 - The network games business will continue to focus on premium games, deepen IP ecosystem development, and steadily advance its global strategic layout for long-term operation66 Other Information Employees and Remuneration Policy As of June 30, 2025, the Group had 8,471 full-time employees primarily in Beijing, Zhuhai, and Wuhan, with H1 total remuneration costs of RMB 2,160.5 million, up 8.2% year-on-year - As of June 30, 2025, the Group had 8,471 full-time employees, primarily located in Beijing, Zhuhai, and Wuhan, China67 - For the six months ended June 30, 2025, total remuneration costs were RMB 2,160.5 million, an 8.2% year-on-year increase67 - Employee remuneration is determined based on industry practice, qualifications, experience, and performance, with share awards and share options also provided67 Share Repurchases For the six months ended June 30, 2025, the company repurchased 1,570,000 ordinary shares on the Stock Exchange at a total cost of approximately HKD 52.28 million, aiming to return surplus funds and enhance shareholder value - For the six months ended June 30, 2025, the company repurchased a total of 1,570,000 of its own ordinary shares on the Stock Exchange, at a total cost of approximately HKD 52.28 million68 - The share repurchases aim to return surplus funds to shareholders and enhance shareholder value68 Audit Committee Review The Audit Committee reviewed the Group's unaudited interim financial information for the six months ended June 30, 2025, discussing accounting principles, internal controls, and financial reporting with management - The Audit Committee, composed of independent non-executive directors, assists the Board in providing an independent review of financial statements and internal control systems69 - The Audit Committee has reviewed the Group's unaudited interim financial information for the six months ended June 30, 202569 Corporate Governance and Compliance The company complied with the Listing Rules' Model Code for securities transactions, with directors confirming adherence, and generally followed the Corporate Governance Code, except for provision D.1.2 regarding quarterly management updates to the Board - The company has adopted and complied with the Model Code for Securities Transactions in Appendix C3 of the Listing Rules, and directors have confirmed compliance throughout the reporting period70 - The company generally complied with the Corporate Governance Code, except for provision D.1.2 (management providing monthly business updates to the Board), as management currently reports quarterly71 - The Board believes that the current quarterly reporting is sufficient to discharge its duties and will continue to review it71