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金山软件(03888) - 2023 Q3 - 季度业绩

Performance Highlights Summary of Financial Data 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 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 Condensed Consolidated Statement of Profit or Loss 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 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 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 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 million10 Notes to the Financial Statements Company Information and Business Overview 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 games11 Basis of Preparation and Principal Accounting Policies 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)1214 Management Discussion and Analysis Financial Performance Analysis 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 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 business15 - 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 July15 Costs and Gross Profit 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 QoQ16 Operating Expenses 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 games18 - Administrative expenses increased 20% YoY, mainly due to higher staff-related expenses18 Profit / (Loss) Analysis 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 Cloud19 - Profit attributable to owners of the parent for Q3 2023 was RMB 28.5 million, successfully turning from loss to profit22 Liquidity and Financial Resources 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 billion24 - The gearing ratio (total liabilities/total assets) was 23%, indicating a sound financial position24 - The Group holds RMB 3.7 billion in non-RMB denominated deposits, posing foreign exchange fluctuation risk25 Cash Flow Analysis 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 million26 - Capital expenditure for the quarter was RMB 159.7 million, a 51% YoY increase27 Management Overview and Outlook Management Commentary 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 iFlytek28 - 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 year28 Future Outlook 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-term29 - The company will steadfastly continue to invest in core business R&D to enhance core competitiveness and achieve high-quality sustainable development29