AI Demand Surges, KINGSOFT CLOUD Q4 Revenue Hits Record High, Non-GAAP EBITDA Doubles Year-on-Year | Earnings News

Benefiting from the explosion in AI demand, KINGSOFT CLOUD has delivered a stellar performance.

On Wednesday, KINGSOFT CLOUD announced its results for the fourth quarter and full year of 2025:

In the fourth quarter, the company's revenue reached a record high of RMB 2.761 billion, a year-on-year increase of 23.7%, with the growth rate accelerating further from previous quarters. Public cloud revenue was RMB 1.902 billion, a significant year-on-year increase of 34.9%, becoming the core engine of growth for the quarter.

The key variable driving the high growth of the public cloud came from AI-related demand: the company disclosed that "billing revenue from the intelligent computing cloud business" reached RMB 926 million in the fourth quarter, a year-on-year increase of up to 95%. Management stated that demand for intelligent cloud computing is expected to remain strong in 2026.

Structural improvement signals appeared on the profitability side: Non-GAAP operating profit was positive for the second consecutive quarter in the fourth quarter, recorded at RMB 54.60 million. Non-GAAP EBITDA was RMB 785 million, doubling year-on-year, with the EBITDA margin rising to 28.4%. However, during the asset-heavy expansion phase, a net loss of RMB 163 million was still recorded under the GAAP measure, and the gross margin declined year-on-year, primarily due to depreciation pushed up by investments in AI computing.

For the full year, total revenue in fiscal year 2025 was RMB 9.559 billion, a year-on-year increase of 22.8%. The GAAP net loss was RMB 944 million, narrowing significantly from RMB 1.979 billion in 2024. Non-GAAP EBITDA reached RMB 2.336 billion, with the EBITDA margin rising to 24.4%.

On the same day, KINGSOFT CLOUD issued an announcement on the Hong Kong Stock Exchange stating that Lei Jun has resigned as a non-executive director of the company due to other work arrangements and will no longer serve as Chairman or Chairman of the Nomination Committee of the Board.

Revenue: Public Cloud Accelerates, Intelligent Computing Cloud Contributes "Largest Increment"

Financial reports show that total revenue in the fourth quarter was RMB 2.761 billion, an 11.4% increase quarter-on-quarter. In terms of structure:

• Public Cloud: Revenue was RMB 1.902 billion, up 34.9% year-on-year and 8.6% quarter-on-quarter. The company primarily attributed the growth to AI demand and disclosed that the billing revenue of the intelligent computing cloud for the quarter was RMB 926 million, up 95% year-on-year.
• Industry Cloud: Revenue was RMB 859 million, up 4.5% year-on-year and 18.4% quarter-on-quarter. The company explained that the sequential improvement in the industry cloud was related to "intensive delivery," while the increased profit contribution from industry cloud projects also supported the sequential recovery of the gross margin this quarter.

In terms of proportion, public cloud revenue accounted for approximately 69% of total revenue in the fourth quarter, while industry cloud accounted for about 31%. Driven by AI computing power demand, KINGSOFT CLOUD's growth is driven more by "intelligent computing" on the public cloud side, whereas industry cloud serves more as a business providing a revenue base and delivery rhythm flexibility.

Costs and Gross Profit: Rapidly Rising Depreciation Drags Down Gross Margin, Sequential Recovery from Industry Cloud

In the fourth quarter, the company's gross profit was RMB 465 million, up 9.2% year-on-year and 22.2% quarter-on-quarter. However, the gross margin was 16.9%, down from 19.1% in the same period last year, reflecting faster upward pressure on costs, especially depreciation pressure related to intelligent computing resources.

Breaking down the key changes in operating costs (RMB 2.296 billion this quarter, +27.1% year-on-year):

• IDC Costs: RMB 812 million, +12.5% year-on-year. The company stated this was mainly due to leasing cabinets to satisfy the expansion of the intelligent computing business.
• Depreciation and Amortization: RMB 741 million, a significant increase compared to the same period last year (year-on-year "doubling" growth), mainly originating from depreciation of servers and network equipment newly purchased or leased and "primarily related to the intelligent computing cloud business."
• Solution Development and Service Costs: RMB 642 million, +15.3% year-on-year. The company stated this was related to the expansion of solution personnel.

Consequently, KINGSOFT CLOUD presented a typical "financial profile of an AI computing power expansion period" this quarter: high revenue growth, synchronized cash consumption and asset expansion, and rapidly rising depreciation suppressing gross margin. On the other hand, the gross margin recovered sequentially compared to the third quarter (15.4%), which the report attributed to the increased profit contribution from industry cloud projects. This means that while advancing asset-heavy intelligent computing businesses, the company is still attempting to offset some cost pressures through project structure and delivery efficiency.

(Under the Non-GAAP measure, after excluding share-based compensation expenses included in operating costs, the Non-GAAP gross margin for the quarter was 17.1%, which is not significantly different from the GAAP measure, indicating that the main cause of gross margin pressure remains "hard costs" such as depreciation.)

Expenses: Sales Expenses Decreased Quarter-on-Quarter, but Share-Based Compensation Pushed Up Administrative Spending

In the fourth quarter, total operating expenses were RMB 532 million, up 13.3% year-on-year and essentially flat (+1.1%) quarter-on-quarter. By category:

• Selling and Marketing Expenses: RMB 123 million, up 6.2% year-on-year, but down 19.2% quarter-on-quarter.
• General and Administrative Expenses: RMB 219 million, up 21.8% year-on-year and 25.4% quarter-on-quarter. The company stated this was mainly due to an increase in share-based compensation expenses.
• Research and Development Expenses: RMB 190 million, up 9.2% year-on-year and down 4.7% quarter-on-quarter.

Overall, expense ratios did not spiral out of control, but the impact of share-based compensation on the GAAP income statement is increasing, which is one of the important reasons the company emphasizes Non-GAAP metrics.

Profitability: Non-GAAP Operating Profit "Turns Positive" Trend Continues, but One-Time Gains and Financial Expense Pressure Warrant Attention

The income statement exhibits the characteristic of "operational improvement, while net profit is still weighed down by the financial side":

• GAAP Operating Loss: The operating loss in the fourth quarter was RMB 66.45 million, widening from the RMB 43.51 million loss in the same period last year, but narrowing significantly from the RMB 145 million loss in the third quarter.

• Non-GAAP Operating Profit: Profit for the quarter was RMB 54.60 million (operating margin of approximately 2.0%). The company stated it has achieved positive Non-GAAP operating profit for two consecutive quarters.

  • Notably, the company also disclosed a "normalized" figure: excluding the RMB 72.66 million gain from the sale of property and equipment, the normalized Non-GAAP operating profit was -RMB 18.08 million (operating margin of approximately -0.7%). This implies that the company is very close to achieving comprehensive and stable profitability at the operating level, though some one-time factors caused fluctuations this quarter.

• GAAP Net Loss: RMB 163 million (net loss margin of -5.9%), narrowing from RMB 201 million in the same period last year, but widening significantly from the third quarter (net loss of RMB 7.847 million).

• Rising interest expenses are a major source of pressure on net profit: Interest expenses for the quarter were RMB 153 million, significantly higher than RMB 61.82 million in the same period last year and higher than RMB 137 million in the third quarter. During the phase of intelligent computing capital expenditure and financing expansion, the erosion of the income statement by financial costs is more direct.

• Non-GAAP EBITDA: RMB 785 million, +118.3% year-on-year, with an EBITDA margin of 28.4%. If asset disposal gains are excluded, normalized Non-GAAP EBITDA was RMB 713 million, corresponding to a margin of 25.8%.

Cash Flow and Balance Sheet: Operating Cash Flow Strengthens, Financing "Refueling" Offsets High-Intensity Capital Expenditure

On the cash flow side, the company achieved the following in the fourth quarter:

• Net cash inflow from operating activities of RMB 1.043 billion (compared to RMB 570 million in the same period last year), indicating a significantly enhanced operating cash generation capability amid revenue expansion, collections, and cost/expense controls.
• Net cash outflow from investing activities of RMB 428 million, remaining in a phase of high capital expenditure.
• Net cash inflow from financing activities of RMB 1.514 billion, corresponding to the company's described financial logic where "equity financing inflows are offset by capital expenditures."

As of the end of 2025:

• Cash and cash equivalents were RMB 6.018 billion (up significantly from RMB 3.955 billion at the end of the third quarter).
• Net property and equipment rose to RMB 10.095 billion (from RMB 4.630 billion at the end of the previous year), directly reflecting the increasing scale of investment in intelligent computing-related servers and network equipment.
• Borrowings expanded simultaneously: short-term borrowings were RMB 3.348 billion, and long-term borrowings were RMB 30.24 billion. In the "supply first" phase of AI computing power, asset expansion, rising depreciation, and increasing interest expenses often occur simultaneously. Subsequent margin recovery will rely more on whether intelligent computing resource utilization, unit prices, and customer structure can be continuously optimized.