Kingsoft Corp’s Earnings Call: Mixed Sentiment with Growth Highlights

Kingsoft Corp ((HK:3888)) has held its Q1 earnings call. Read on for the main highlights of the call.

Kingsoft Corp’s recent earnings call presented a mixed sentiment, highlighting strong year-on-year growth in revenue, particularly in the WPS 365 business and gaming segment. However, the company faced quarter-on-quarter declines in revenue and profit margins, alongside increased expenses and net losses. Despite these challenges, Kingsoft’s robust cash position and strategic focus on AI and global expansion were noted as positive factors.

Solid Start to 2025 with Revenue Growth

Kingsoft Corp reported a solid start to 2025, with group revenue reaching RMB 2.34 billion, marking a 9% year-over-year increase. The Kingsoft Office Group achieved a 6% year-on-year increase in total revenue, while the WPS individual business generated RMB 857 million, up 11% year-on-year.

WPS 365 Business Growth

The WPS 365 business demonstrated impressive growth, generating RMB 151 million in the first quarter, a 63% year-on-year increase. This growth was driven by the platform’s adoption among private and local state-owned enterprises.

Gaming Segment Performance

Kingsoft’s gaming segment showed strong performance, with total revenue reaching RMB 1.037 billion, a 14% year-on-year increase. Successful titles such as JX3 Online and the anticipated release of Mecha BREAK contributed to this growth.

Strong Cash Position

The company maintained a strong cash position, with cash resources of RMB 26 billion as of March 31, 2025, providing a solid foundation for future investments and strategic initiatives.

Quarter-on-Quarter Revenue Decline

Despite year-on-year growth, Kingsoft experienced a 16% quarter-on-quarter revenue decline to RMB 2,338 million. This was driven by a 13% decrease in office software and services and a 20% decrease in online games revenue.

Decreased Profit Margins

The company’s gross profit decreased by 18% quarter-on-quarter to RMB 1,919 million, with the gross profit margin dropping by 2 percentage points quarter-on-quarter to 82%.

Increased R&D and Selling Expenses

Kingsoft reported increased research and development costs, which rose 16% year-on-year and 13% quarter-on-quarter to RMB 828 million. Additionally, selling and distribution expenses increased by 30% year-on-year.

Net Other Losses

The company faced net other losses of RMB 22 million for the quarter, compared with losses of RMB 4 million and RMB 74 million for the first and fourth quarters of 2024, respectively.

Forward-Looking Guidance

Looking ahead, Kingsoft Corp emphasized its strategic focus on AI integration and global expansion, particularly in office productivity and gaming. With a robust cash position and a commitment to innovation, the company aims to capitalize on growth opportunities in these sectors.

In summary, Kingsoft Corp’s earnings call highlighted a mixed performance, with notable year-on-year revenue growth but challenges in quarter-on-quarter metrics. The company’s strong cash reserves and strategic focus on AI and global expansion offer a positive outlook, despite the current financial pressures.