Kingsoft Cloud Holdings Limited (NASDAQ: KC) Q2 2025 Earnings | 08/20/2025

Kingsoft Cloud reported strong growth in Q2 2025, driven primarily by the explosive expansion of its AI business. Revenue accelerated significantly, and the company highlighted its successful strategic pivot to embrace AI opportunities over the past three years.

Key Financial Highlights:

• Revenue: RMB 2.35 billion ($329 million est.), up 24.2% year-over-year (YoY), a significant acceleration from 11% growth in Q1.

• Public Cloud Revenue: RMB 1.63 billion, up 31.7% YoY. This growth was fueled by the AI business.

• Enterprise Cloud Revenue: RMB 724 million, up 10% YoY.

• AI Business Billings: RMB 728.7 million within public cloud, up over 120% YoY and now representing 45% of public cloud revenue.

• Profitability: Adjusted gross profit was RMB 350.6 million, with a margin of 14.9%. The margin was impacted by the cost structure of the expanding AI business and new resource leasing models. Non-GAAP EBITDA profit increased 5.7x YoY.

• Cash: Strong liquidity position with RMB 5.46 billion in cash and equivalents.

• Capex: Capital expenditures were RMB 1.14 billion for the quarter. The full-year 2025 capex plan remains around RMB 10 billion.

Strategic & Operational Updates:

1. AI-Driven Growth: The company's core strategy of "Embracing AI" is the primary growth engine. The AI intelligent computing cloud business has reached a scale nearly equivalent to its traditional base cloud business in just over two years.

2. Ecosystem Strength: Revenue from the Xiaomi and Kingsoft ecosystem reached RMB 629 million, up 70% YoY, and now constitutes 27% of total revenue. The company is actively delivering large computing clusters for Xiaomi's AI and autonomous driving initiatives.

3. Diversified Supply Chain Strategy: Management emphasized a dual-track strategy for procuring AI chips, utilizing both compliant overseas suppliers (like NVIDIA's H20) and domestic Chinese chipmakers to navigate geopolitical uncertainties and ensure supply for its large customers.

4. New Business Models: The company is moving beyond pure self-procurement of hardware to include:

   • Resource Pool/Profit-Sharing Models: Leasing capacity from partners to reduce capital expenditure and debt risk.

   • Agent Model: Procuring, building, and operating clusters on behalf of specific customers.
     These models impact gross margin but improve capital efficiency and risk profile.

5. Enterprise Cloud Focus: Demand in verticals like public services, healthcare, and finance is strong, accelerated by the "DeepSeek" AI model. The company's strategy is to achieve deep "0 to 1" breakthroughs in specific high-potential scenarios rather than spreading efforts too widely.