AI demand surges, Kingsoft Cloud's Q4 revenue hits a new high, Non-GAAP EBITDA doubles year-over-year | Earnings Report Insights

Ask AI · How do AI requirements reshape Kingsoft Cloud’s financial performance?

Benefiting from the explosion in AI demand, Kingsoft Cloud has turned in an impressive set of results.

On Wednesday, Kingsoft Cloud released its results for the fourth quarter of 2025 and the full year:

In the fourth quarter, the company’s revenue hit a record high, reaching RMB 2.76B, up 23.7% year over year; the growth rate accelerated further compared with the prior quarter. Of this, public cloud revenue was RMB 1.9B, surging 34.9% year over year, becoming the core engine of growth this quarter.

A key variable behind the high growth in public cloud came from AI-related demand: the company disclosed that in the fourth quarter, “billings revenue from its intelligent computing cloud business” reached RMB 926 million, up a striking 95% year over year. Management said it expects that intelligent cloud computing demand will remain strong in 2026.

There are signs of structural improvement on the profitability front: in the fourth quarter, Non-GAAP operating profit was positive for the second consecutive quarter, recording RMB 54.6 million. Non-GAAP EBITDA was RMB 785 million, doubling year over year, and the EBITDA margin rose to 28.4%. However, during the phase of heavy-asset expansion, the GAAP basis still recorded a net loss of RMB 163 million, and gross margin declined year over year, mainly due to depreciation pressures boosted by intelligent computing investments.

For the full year, total revenue for fiscal year 2025 was RMB 9.56B, up 22.8% year over year. GAAP net loss was RMB 944 million, down sharply from RMB 1.98B in 2024. Non-GAAP EBITDA reached RMB 2.34B, with the EBITDA margin rising to 24.4%.

Revenue: Public cloud speeds up, intelligent computing cloud contributes the “largest incremental gain”

The financial report shows that in the fourth quarter, total revenue was RMB 2.76B, up 11.4% quarter over quarter. In terms of structure:

• Public cloud: Revenue was RMB 1.9B, up 34.9% year over year and up 8.6% quarter over quarter. The company said it mainly attributes the growth to AI demand, and disclosed that intelligent computing cloud billings revenue for the quarter was RMB 926 million, up 95% year over year.
• Industry cloud: Revenue was RMB 859 million, up 4.5% year over year and up 18.4% quarter over quarter. The company explained that the quarter-over-quarter improvement in industry cloud was related to “intensive delivery,” and that an increase in industry cloud project profit contribution also supported the quarter-over-quarter rebound in gross margin.

In terms of share, public cloud revenue accounted for about 69% of total revenue in the fourth quarter, while industry cloud accounted for about 31%. Driven by AI compute capacity demand, Kingsoft Cloud’s growth was more pulled from “intelligent computing” within the public cloud side, while industry cloud functioned more like a business providing revenue base and delivery-pace flexibility.

Costs and gross margin: Depreciation rises quickly and weighs on gross margin; the quarter-over-quarter recovery comes from industry cloud

In the fourth quarter, the company’s gross profit was RMB 465 million, up 9.2% year over year and up 22.2% quarter over quarter. But gross margin was 16.9%, down from 19.1% in the same period last year, reflecting that costs were rising faster on the cost side, especially depreciation pressure related to intelligent computing resources.

Breaking down operating costs (RMB 2.3B for the quarter, up 27.1% year over year), key changes included:

• IDC costs: RMB 812 million, up 12.5% year over year. The company said this was mainly because it leased server racks to meet the expansion of intelligent computing business.
• Depreciation and amortization: RMB 741 million, significantly higher than the same period last year (a “doubling” increase year over year). This was mainly due to depreciation of servers and network equipment purchased/leased recently, and “mainly related to intelligent computing cloud business.”
• Solution development and service costs: RMB 642 million, up 15.3% year over year. The company said this was related to expansion of solution personnel.

Therefore, in the quarter, Kingsoft Cloud showed a typical “AI compute capacity expansion phase” financial profile: high revenue growth, cash consumption and asset expansion moving in sync, and rapid depreciation rising that suppressed gross margin. On the other hand, gross margin recovered quarter over quarter from the third quarter (15.4%); the financial report attributed this to improved industry cloud project profit contribution, meaning that while the company pushes forward with heavy-asset intelligent computing business, it is still trying to offset part of the cost pressure through project structure and delivery efficiency.

(On a Non-GAAP basis, after excluding equity incentive expenses that are recorded in operating costs, the Non-GAAP gross margin for the quarter was 17.1%, which is not far from the GAAP basis. This indicates that the main cause of gross margin pressure is still “hard costs” such as depreciation.)

Expenses: Sales expenses decline quarter over quarter, but equity incentives raise management-side spending

Total operating expenses in the fourth quarter were RMB 532 million, up 13.3% year over year, and roughly flat quarter over quarter (+1.1%). By segment:

• Sales and marketing expenses: RMB 123 million, up 6.2% year over year, but down 19.2% quarter over quarter.
• General and administrative expenses: RMB 219 million, up 21.8% year over year and up 25.4% quarter over quarter. The company said this was mainly due to an increase in equity incentive expenses.
• R&D expenses: RMB 190 million, up 9.2% year over year, but down 4.7% quarter over quarter.

Overall, there was no uncontrolled spike in the expense ratio, but the impact of equity incentives on the GAAP income statement is increasing. This is also one of the key backgrounds behind the company’s emphasis on Non-GAAP metrics.

Profitability: The “turn to positive” in Non-GAAP operating profit continues, but attention is needed on one-time gains and financial expense pressure

The income statement shows the characteristics of “operating-side improvement, with net profit still dragged down by the financial side”:

• GAAP operating loss: In the fourth quarter, operating loss was RMB 66.45 million, expanding from a loss of RMB 43.51 million in the same period last year, but narrowing significantly compared with the third quarter’s loss of RMB 145 million.

• Non-GAAP operating profit: The company reported profit of RMB 54.6 million for the quarter (operating profit margin of about 2.0%). The company said it has achieved positive Non-GAAP operating profit for two consecutive quarters.

  • It is worth noting that the company also disclosed a “normalized” basis: if excluding the impact of gains from the sale of properties and equipment of RMB 72.66 million, normalized Non-GAAP operating profit would be RMB -18.08 million (operating profit margin of about -0.7%). This means the company is very close to being fully and stably profitable at the operating level, but there were still certain one-time factors affecting the quarter.

• GAAP net loss: RMB 163 million (net loss margin of -5.9%). This narrowed compared with a net loss of RMB 201 million in the same period last year, but widened significantly compared with the third quarter (net loss of RMB 7.85M).

• Rising interest expenses are an important source of pressure on net profit. In the quarter, interest expense was RMB 153 million, significantly higher than RMB 61.82 million in the same period last year and also higher than RMB 137 million in the third quarter. In the stage of intelligent computing capital expenditures and financing expansion, financial costs eroded the income statement more directly.

• Non-GAAP EBITDA: RMB 785 million, up 118.3% year over year, with an EBITDA margin of 28.4%. If excluding gains from asset disposal, normalized Non-GAAP EBITDA was RMB 713 million, corresponding to a profit margin of 25.8%.

Cash flow and balance sheet: Operating cash flow turns stronger; financing “injects capital” to offset heavy-capex intensity

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

• Net cash inflow from operating activities of RMB 1.04B (RMB 570 million in the same period last year). This shows that with revenue expansion, cash collection, and cost/expense control, the company’s ability to generate operating cash significantly improved.
• Net cash outflow from investing activities of RMB 428 million, still in a high capital expenditure phase.
• Net cash inflow from financing activities of RMB 1.51B, corresponding to the company’s stated funding logic of a “stock equity financing inflow being offset by capital expenditures.”

As of the end of 2025:

• Cash and cash equivalents were RMB 6.02B (up sharply from RMB 3.95B at the end of the third quarter).
• Net property and equipment increased to RMB 10.1B (from RMB 4.63 billion at the end of last year), directly reflecting the scale increase in investments such as intelligent computing-related servers and network equipment.
• Borrowings expanded in parallel: short-term borrowings of RMB 3.35B and long-term borrowings of RMB 3.02B. In the stage where AI compute “supply leads the way,” asset expansion, rising depreciation, and higher interest expenses often appear at the same time. In the future, the restoration of profit margins will depend more on whether intelligent computing resource utilization rates, unit pricing, and customer mix can continue to be optimized.