Kingsoft Corp ((HK:3888)) has held its Q4 earnings call. Read on for the main highlights of the call.
Kingsoft Corp’s recent earnings call painted a picture of robust financial health, underscored by record-breaking revenue and profit growth. The company’s performance was buoyed by substantial gains in its gaming and office software sectors. However, the call also highlighted concerns over increased research and development expenses and significant losses from affiliates and other sources.
Record Revenue Growth
Kingsoft Corp reported a remarkable total revenue of RMB2.915 billion, reflecting a year-on-year increase of 42% and a quarter-on-quarter rise of 18%. The operating profit reached a record high of RMB1.14 billion, marking a 204% increase from the previous year and a 44% increase from the last quarter.
Strong Performance in Gaming Segment
The gaming sector was a standout performer, generating RMB1.708 billion in revenue, which represents a 78% increase year-on-year and a 33% increase quarter-on-quarter. The game JX3 Ultimate was particularly successful, achieving 11.46 million monthly active users in its first open beta month.
Expansion of Office Software Business
Kingsoft Office Group also showed significant growth, contributing RMB1.207 billion in revenue. This marks a 10% increase year-on-year and a 2% increase quarter-on-quarter. Notably, domestic individual office subscription revenue increased by 17.2% year-on-year.
Increased User Base
The company’s user base expanded to 618 million monthly active users, a 4.9% increase year-on-year. This includes 277 million PC users, up 7%, and 338 million mobile users, up 3.4%.
Successful AI Integration
AI integration played a crucial role in Kingsoft’s success. Features like WPS AI 2.0 significantly boosted user engagement and conversion rates, contributing to the company’s revenue growth.
Increased R&D Costs
Despite the revenue growth, Kingsoft faced increased R&D costs, which rose 28% year-on-year and 16% quarter-on-quarter to RMB861 million. This was attributed to headcount growth and performance-based bonuses.
Losses from Affiliates
The company reported a share of losses from associates amounting to RMB428 million for the quarter, which was an increase compared to previous quarters.
Net Other Losses
Kingsoft also experienced net other losses of RMB63 million for the quarter, a significant shift from gains of RMB18 million in the same quarter last year.
Forward-Looking Guidance
Looking ahead, Kingsoft Corporation is optimistic about sustained growth and innovation. The company aims to continue leveraging AI and expanding into international markets, with a strategic focus on enhancing its office software and gaming sectors. The recent financial growth, with total revenue reaching RMB2.915 billion, sets a promising foundation for future endeavors.
In conclusion, Kingsoft Corp’s earnings call highlighted a strong financial performance, driven by impressive growth in its gaming and office software sectors. While challenges such as increased R&D expenses and losses from affiliates were noted, the company’s forward-looking strategies and focus on AI integration suggest a positive trajectory for future growth.