Kingsoft Cloud Holdings Ltd. Q4 FY2024 earnings call

• Revenue growth: Total revenue grew 30% YOY to RMB2.23 billion, with Public Cloud up 34% and Enterprise Cloud up 22.7%.
• Profitability: Non-GAAP operating profit turned positive for the first time, non-GAAP gross profit reached RMB427.7 million (+63% YOY), non-GAAP gross margin 19.2%, non-GAAP EBITDA margin 16%.
• AI-related business: AI-related gross billing RMB474 million, ~500% YOY growth, 34% of Public Cloud revenue.
• Ecosystem: Revenues from Xiaomi and Kingsoft ecosystem amounted to RMB493 million, up 78% YOY, 22% of total revenue.
• Business highlights: Public Cloud capitalizing on Xiaomi ecosystem and WPS AI; Enterprise Cloud in Public Services and Digital Healthcare; launched ninth-generation cloud server, proprietary training and inference platform.

For the fourth quarter of 2024, total revenue was RMB2.23 billion, doubling the year-over-year growth rate to 30%. Public Cloud revenue grew by 34% year-over-year to RMB1.4 billion, with AI-related gross billing reaching RMB474 million, representing nearly 500% year-over-year growth and 34% of Public Cloud revenue. Enterprise Cloud revenue grew by 22.7% year-over-year to RMB822.3 million. Public Cloud contributed approximately 62.7% of total revenue (RMB1.4 billion / RMB2.23 billion), and Enterprise Cloud contributed approximately 37.3% (RMB822.3 million / RMB2.23 billion).

• Expect revenue growth of Public Cloud and Enterprise Cloud to accelerate in 2025.
• Expect to deliver positive non-GAAP operating profit in the full year of 2025.

• Forward-looking statements based on current expectations and market conditions involve known/unknown risks, uncertainties beyond the company's control that may cause actual results to differ materially from forward-looking statements. Further risks detailed in company filings with the U.S. SEC.

Q: Regarding industry outlook and impact of AI on cloud computing industry, and 2025 capital expenditure plan.

A: Tao Zou mentioned DeepSeek's impact on AI and cloud industry, Haijian He discussed AI investment including OpEx and CapEx, with total AI investment in past four quarters around RMB8-10 billion and plans for 2025.

Q: Expectation for 2025 revenue growth and long-term profitability trend.

A: Haijian He mentioned 30% YOY revenue growth in Q4 2024, strong foundation for growth, and margin improvement with EBITDA margin exceeding industry average.

Q: AI inference demand and outlook for legacy Public Cloud business.

A: Tao Zou said AI inference demand increasing due to DeepSeek, but time needed for financial statement impact; Haijian He discussed asset depreciation policy and healthy asset balance sheet.

Q: Impact of falling prices of high-performance AI service on pricing strategy.

A: Haijian He stated Kingsoft Cloud has higher margin than traditional ICE services, different pricing model for AI-related services linked to value, shifting to AI cloud and solution services company.