1. KC's Q1 2025 revenue grew 10.9% year-over-year to RMB1,970 million. 2. AI business gross billing surged 228% year-over-year, comprising 39% of services. 3. Adjusted operating loss improved 56% from last year, indicating better cost control. 4. Seasonal impacts led to quarterly revenue decline; enterprise cloud faced downward pressure. 5. Cash and cash equivalents dropped due to investments in computing power.
KC's strong year-over-year revenue growth, especially in AI, suggests increasing market demand and a positive trend, similar to other tech stocks after strong earnings reports. For instance, companies like Amazon and Microsoft saw stock increases following strong cloud service demand during recent quarters.
The significant growth in revenue and AI integration positions KC favorably. The recognition of artificial intelligence as a core growth area aligns with market trends, making this report highly relevant to investors.
The immediate upward market reaction can be expected as earnings reports often lead to quick stock price movements, but sustained growth will depend on consistent performance in future quarters.
Kingsoft Cloud Holdings Limited ("Kingsoft Cloud" or the "Company") (NASDAQ: KC and HKEX: 3896), a leading cloud service provider in China, today announced its unaudited financial results for the first quarter ended March 31, 2025.
Mr. Tao Zou, Chief Executive Officer of Kingsoft Cloud, commented, "Despite uncertainties in global supply chain, we believe the importance for cloud services as infrastructure in the AI-era is gaining greater traction. This quarter, our gross billing of AI business increased by 228% year-over-year to RMB525 million, accounting for 39% of our public cloud services. We are confident and fully committed into our AI related investment and high-quality and sustainable business development."
Mr. Henry He, Chief Financial Officer of Kingsoft Cloud, added, "Our revenue increased by 10.9% year-over-year, achieving RMB1,970.0 million for the first quarter; however sequentially we experienced seasonal decrease. Our adjusted gross profit was RMB327.7 million, increased by 9.6% year-over-year and decreased by 23.4% quarter-over-quarter. Adjusted gross margin was 16.6% in this quarter, compared with 16.8% in the first quarter 2024 and 19.2% in the fourth quarter last year. Our adjusted operating loss was RMB55.8 million, narrowed by 56% from RMB127.0 million in the same period last year. Our adjusted EBITDA profit achieved RMB318.5 million, representing an adjusted EBITDA margin of 16.2%."
Total Revenues reached RMB1,970.0 million (US$271.5 million), increased by 10.9% year-over-year from RMB1,775.7 million in the same quarter of 2024 and decreased by 11.7% quarter-over-quarter from RMB2,232.1 million in the fourth quarter of 2024. The year-over-year increase was mainly due to the expanded revenue from Xiaomi and Kingsoft Ecosystem and AI related customers and our further penetration into enterprise cloud customers. The quarter-over-quarter decrease was mainly due to the seasonality impact for enterprise cloud.
Revenues from public cloud services were RMB1,353.5 million (US$186.5 million), increased by 14.0% from RMB1,187.4 million in the same quarter of 2024 and decreased by 4.0% from RMB1,409.8 million last quarter. The year-over-year increase was mainly due to the growth of AI demands.
Revenues from enterprise cloud services were RMB616.5 million (US$85.0 million), representing an increase of 4.8% from RMB588.2 million in the same quarter of 2024 and a decrease of 25.0% from RMB822.3 million last quarter. The sequential decrease was mainly due to the Chinese New Year impact and differentiated delivery schedules for various projects.
Other revenues were nil this quarter.
Cost of revenues was RMB1,651.7 million (US$227.6 million), representing an increase of 11.4% from RMB1,482.4 million in the same quarter of 2024, which was mainly due to our investment into AI computing resources. IDC costs decreased by 6.0% year-over-year from RMB768.5 million to RMB722.8 million (US$99.6 million) this quarter. The decrease was mainly due to our strict control over procurement costs.
Depreciation and amortization costs increased from RMB183.5 million in the same quarter of 2024 to RMB378.5 million (US$52.2 million) this quarter. The increase was mainly due to the depreciation of newly acquired servers which were allocated to AI business. Solution development and services costs increased by 13.3% year-over-year from RMB446.0 million in the same quarter of 2024 to RMB505.2 million (US$69.6 million) this quarter.
Gross profit was RMB318.3 million (US$43.9 million), representing an increase of 8.5% from RMB293.3 million in the same quarter of 2024, demonstrating our improvements in revenue quality and structure. Gross margin was 16.2%, remaining stable compared with 16.5% in the same period in 2024. Non-GAAP gross profit was RMB327.7 million (US$45.2 million), compared with RMB299.1 million in the same period in 2024.
Total operating expenses were RMB552.5 million (US$76.1 million), decreased by 2.6% from RMB567.4 million in the same quarter last year and increased by 17.7% from RMB469.5 million last quarter. Among which:
Operating loss was RMB234.2 million (US$32.3 million), compared with operating loss of RMB274.2 million in the same quarter of 2024. Net loss was RMB316.1 million (US$43.6 million), compared with net loss of RMB363.6 million in the same quarter of 2024. Basic and diluted net loss per share was RMB0.08 (US$0.01), compared with RMB0.10 in the same quarter of 2024.
Kingsoft Cloud's management will host an earnings conference call on Wednesday, May 28, 2025 at 8:15 am, U.S. Eastern Time (8:15 pm, Beijing/Hong Kong Time on the same day).
Participants can register for the conference call by navigating to this link. Once preregistration has been completed, participants will receive dial-in numbers, direct event passcode, and a unique access PIN.
Additionally, a live and archived webcast of the conference call will also be available on the Company's investor relations website at http://ir.ksyun.com.
Kingsoft Cloud Holdings Limited (NASDAQ: KC and HKEX: 3896) is a leading cloud service provider in China. For more information, please visit: http://ir.ksyun.com.