Kingsoft Corp ((HK:3888)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Kingsoft Corp revealed a mixed sentiment, showcasing robust growth in the office software segment and successful global expansions, particularly in AI integration and gaming. However, challenges were noted in the gaming sector, with revenue declines and specific game performance issues, alongside rising operational costs.
Growth in Office Software and Services
Kingsoft Corp reported a significant increase in revenue from its office software and services business, which grew by 14% year-on-year and 4% quarter-on-quarter, reaching RMB 1,356 million. This growth was primarily driven by the expansion of WPS 365 and the individual business of the Kingsoft Office Group.
Launch of WPS AI 3.0
The release of WPS AI 3.0 marked a major milestone for Kingsoft, as it introduced advanced AI integration into its office software. This update enhanced productivity through new features such as WPS Lingxi, messaging, meeting, and email assistance, positioning the company at the forefront of AI-driven office solutions.
Successful Global Expansion in Gaming
Kingsoft’s sci-fi mech game, Mecha BREAK, achieved significant success in its global expansion. Launched in July, it quickly topped Steam’s Most Played and Trending Games list and received high praise from international media outlets like IGN, highlighting the company’s growing influence in the global gaming market.
Profit Increase
The company’s profit attributable to owners of the parent increased to RMB 532 million for Q2 2025, up from RMB 393 million in Q2 2024 and RMB 284 million in Q1 2025. This reflects Kingsoft’s ability to enhance profitability despite facing challenges in other areas.
Decline in Online Games Revenue
Despite successes, Kingsoft faced a 26% year-on-year and 8% quarter-on-quarter decline in revenue from its online games and other business, totaling RMB 952 million. This decline was attributed to a high base from the previous year, indicating challenges in sustaining growth in this segment.
Increased Costs
The cost of revenue for Kingsoft increased by 5% year-on-year and 8% quarter-on-quarter to RMB 454 million. This rise was due to higher server, bandwidth, and channel costs, which impacted the company’s gross profit margins and highlighted the need for cost management.
Challenges with Mecha BREAK
Despite its initial success, Mecha BREAK faced challenges post-launch, with feedback indicating issues related to player engagement and monetization strategies. This suggests that while the game had a strong start, sustaining its momentum will require strategic adjustments.
Forward-Looking Guidance
Looking ahead, Kingsoft Corp expressed optimism about its continued growth in the office software segment and ongoing global expansion efforts within its gaming business. The company reported total revenue of RMB 2.07 billion for the second quarter of 2025, with significant contributions from the office software business. Despite a decline in the online game segment, Kingsoft remains focused on leveraging its AI capabilities and expanding its international market presence.
In conclusion, Kingsoft Corp’s earnings call painted a picture of a company experiencing both significant growth and notable challenges. While the office software segment and global gaming expansion showed promising results, the decline in online games revenue and increased operational costs pose challenges that the company must address. Nevertheless, Kingsoft’s forward-looking strategies and AI integration efforts suggest a positive trajectory for future growth.