Kingsoft Cloud Q2 Earnings Call Highlights

Kingsoft Cloud (NASDAQ:KC) reported record second-quarter revenue as demand for artificial intelligence cloud services accelerated, while the company said adjusted operating profit turned positive for the first time.

Total revenue for the quarter reached CNY 3.07 billion, up 31% from a year earlier and 40% sequentially, according to Chief Financial Officer Li Yi. Public cloud services revenue rose 45% year over year to CNY 2.36 billion, while enterprise cloud services revenue was CNY 740 million, down 1% from the prior-year period.

Chairman and Chief Executive Officer Zou Tao said AI-related demand was the principal growth driver. AI cloud gross billings increased 82% year over year to CNY 1.33 billion and accounted for 56% of public cloud revenue. MaaS, or Model-as-a-Service, revenue grew more than 12 times from the first quarter level, he said.

Profitability Improves as Revenue Mix Shifts

Zou said the company’s adjusted gross margin reached 15.4%, improving 2.4 percentage points from the first quarter, while adjusted operating margin reached 4%. Kingsoft Cloud recorded adjusted operating profit of CNY 124 million, compared with an adjusted operating loss of CNY 166 million a year earlier.

Li attributed the operating improvement to larger revenue scale, improved public cloud margins and tighter expense control. Adjusted operating expenses fell to CNY 391 million from CNY 561 million in the same quarter last year. Adjusted general and administrative expenses declined 61% year over year, which the company said was largely due to lower credit-loss expenses.

Adjusted net loss narrowed to CNY 6 million from CNY 300 million in the year-earlier quarter. Non-GAAP EBITDA rose 171% year over year to CNY 1.1 billion.

The company ended June with CNY 4.67 billion in cash and cash equivalents, down from CNY 4.90 billion at the end of March, which Li said reflected continued investment in AI infrastructure.

AI Cloud, MaaS Platform Expansion

Kingsoft Cloud said its StarFlow MaaS platform had deployed 120 models and served more than 230 enterprise customers. The company said it has been launching major new models on the platform in step with their market releases and has enhanced enterprise-level access capabilities.

Management also highlighted the launch of AgentKit, a platform designed to help enterprises develop production-grade AI agents. The product includes tools for secure sandbox environments, knowledge and memory management, and evaluation and governance, according to the company.

During the quarter, Kingsoft Cloud delivered large-scale computing clusters to customers in embodied AI and autonomous driving, Zou said. It also expanded cooperation with a leading AI-for-science customer to support that customer’s new-business growth.

In the Xiaomi and Kingsoft ecosystem, revenue reached CNY 810 million, up 28% year over year and representing 26% of Kingsoft Cloud’s total revenue. Public cloud revenue from Xiaomi and Kingsoft rose 54% in the first half, management said. In June, shareholders approved an increase in transaction caps associated with Xiaomi, bringing the combined cap for 2026 and 2027 to CNY 10 billion, 39% above the prior level.

Enterprise Cloud and Capital Spending

Enterprise cloud revenue included projects in public services, digital health and enterprise services. Kingsoft Cloud said it signed an agreement with the Nanjing Communications Administration of the Yangtze River to develop Jianghai Cloud, a digital infrastructure platform for Yangtze River shipping. It also cited cooperation with the Wuhan Municipal Data Bureau and Wuhan Cloud, as well as a project involving a cloud-based virtual surgery platform deployed in more than 30 hospitals.

Responding to questions about slower enterprise cloud growth, Vice President Li Yijun said recent changes in upstream supply pricing have affected budgeting and decision-making among government agencies and state-owned enterprises. He added that enterprise cloud revenue recognition tends to be concentrated in the second half of the year and that the company has a delivery pipeline for that period.

Li Yijun also said part of the trend reflects a deliberate shift from project-based business toward operating-based models, with some of that business classified as public cloud for financial reporting purposes.

Kingsoft Cloud continued to invest heavily in computing capacity. Li said capital expenditures, together with capitalized assets obtained through lease arrangements, reached CNY 6.2 billion in the first half, representing more than 75% of the company’s full-year capital-expenditure plan. The company maintained its full-year capital-expenditure base case of CNY 15 billion.

Management Discusses MaaS Strategy

Senior Vice President Liu Tao said Kingsoft Cloud’s MaaS strategy is differentiated by its position as a neutral cloud provider without its own proprietary large language model. That allows the company to offer models based on customer preferences rather than prioritizing an affiliated model, management said.

The company said it views MaaS and computing-power services as complementary. Computing-power contracts generally provide longer-term utilization and more predictable economics, management said, while MaaS is affected by token pricing, the release of new models and operating efficiency.

Management said the company has raised prices for storage and computing-power services in some cases, aiming to offset higher costs and preserve or improve margins. It also said it has seen opportunities to provide managed services for customer-owned computing resources, an asset-light model that management said can carry higher gross margins.

About Kingsoft Cloud (NASDAQ:KC)

Kingsoft Cloud Holdings Limited (NASDAQ: KC) is a leading provider of cloud computing services in China, offering a comprehensive suite of infrastructure and platform solutions to enterprise customers. Established in 2012 as a subsidiary of Kingsoft Corporation, the company has grown into an independent public entity with dual listings, serving as a critical backbone for digital transformation across multiple industries. Headquartered in Beijing, Kingsoft Cloud leverages advanced technologies to optimize cloud operations and deliver scalable, reliable services.

The company's core offerings span Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS), encompassing compute, storage, database, content delivery networks (CDN) and security solutions.

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