Kunlun(SZ:300418) Guan Cha Zhe Wang·2025-10-30 10:32Core Viewpoint - Kunlun Wanwei's Q3 2025 report reveals a stark contrast between strong quarterly performance and significant losses over the first three quarters, indicating a strategic "all-in AI" gamble entering a critical investment phase [1][7]. Financial Performance - Q3 revenue reached 2.072 billion yuan, a 56% year-on-year increase, with net profit attributable to shareholders at 190 million yuan, up 180% year-on-year [1]. - For the first nine months of 2025, total revenue grew 51.63% to 5.8 billion yuan, but the company reported a net loss of 665 million yuan, a 6.19% decrease year-on-year [1][2]. Strategic Investments - The reported losses are attributed to strategic investments in AI ecosystem development and commercialization, with significant spending on technology research and application [2]. - Sales expenses surged to 1.828 billion yuan in the first half of 2025, a 95% increase year-on-year, primarily for promoting AI applications like short dramas [2]. Technological Advancements - Kunlun Wanwei has made substantial technological progress, launching multiple AI models and achieving recognition in foundational research [3]. - The company has released several AI models, including the Skywork series and Matrix models, contributing to its competitive edge in the AI space [3]. Revenue Generation - The dramatic increase in Q3 performance is largely attributed to the monetization of the short drama business, DramaWave, which has become a key revenue channel [4]. - DramaWave's gross margin is reported at 83%, with annualized ARR exceeding 240 million USD and monthly revenue surpassing 20 million USD [5]. Cost Management - Despite high promotional costs, the financial data for Q3 indicates a shift towards profitability, with net profit achieved while continuing to invest in marketing [6]. - The company’s ability to generate revenue from its short drama business has begun to outpace its promotional expenditures, marking a transition from an investment phase to a profitability phase [6]. Strategic Outlook - The company's strategy focuses on leveraging high-margin applications like short dramas and the Opera browser to support the costly development of AGI models [7]. - The significant net profit increase in Q3 signals a potential turning point, but the ongoing losses from the first three quarters highlight the need for sustained performance to ensure long-term viability [7].