Kingsoft Cloud Holdings Ltd (KC) Q1 2026 Earnings Call Highlights: Robust Revenue Growth and ...

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Total Revenue: RMB2.7 billion, a year-over-year growth of 37.2%. Public Cloud Revenue: RMB2.0 billion, a year-over-year increase of 47.5%. Enterprise Cloud Revenue: RMB710 million, a year-over-year increase of 14.7%. AI Cloud Gross Billings: RMB1.0 billion, a year-over-year increase of 90.1%. Adjusted Gross Profit: RMB351 million, up 8.6% year over year. Adjusted EBITDA: RMB748 million, a year-over-year increase of 134.7%. Adjusted EBITDA Margin: 27.6%, an improvement of 11.4 percentage points year over year. Revenue from Xiaomi and Kingsoft Ecosystem: RMB838 million, a year-over-year increase of 68.9%. Cost of Revenues: RMB2,358 million, up 43% year over year. IT Cost: RMB911 million, a year-over-year increase of 26%. Depreciation and Amortization Costs: RMB890 million, up from RMB379 million in the same quarter last year. Adjusted Operating Loss: RMB60 million, an increase from RMB56 million in the same period last year. Non-GAAP EBITDA Profit: RMB748 million, increased by 135% from the same quarter last year. Capital Expenditures: RMB2,985 million, including those financed by third parties and right of use assets.

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Release Date: May 27, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Kingsoft Cloud Holdings Ltd (NASDAQ:KC) reported a total revenue of RMB2.7 billion for Q1 2026, marking a year-over-year growth of 37.2%. Public cloud revenue reached RMB2.0 billion, a year-over-year increase of 47.5%. AI cloud gross billings increased by 90.1% year-over-year, accounting for over half of public cloud revenue for the first time. Revenue from the Xiaomi and Kingsoft ecosystem grew by 68.9% year-over-year, contributing significantly to total revenue. Adjusted EBITDA was RMB748 million, representing a year-over-year increase of 134.7%, with a margin improvement of 11.4 percentage points.

Negative Points

Adjusted gross margin decreased from 70% last quarter to 30% this quarter, primarily due to higher server costs and upfront costs for future revenue-generating activities. Total cost of revenues increased by 43% year-over-year, driven by investments in AI computing resources. Depreciation and amortization costs rose significantly due to newly acquired and leased servers and network equipment. Adjusted operating loss increased by 7% from the same period last year, despite revenue growth. The company faces supply chain restrictions, which limit its ability to meet the strong demand for AI services.

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Q & A Highlights

Q: Could you share the current revenue scale and margin levels of the StarFlow MaaS platform, and what is management's outlook on this business? A: Our token business started from a small base but has seen huge demand from large-scale customers. We are optimistic about its growth but will wait a few more quarters before disclosing more details. The margin levels for this business are generally higher than traditional cloud computing, with improvements from technology advancements and algorithm optimization. However, due to its rapid expansion, we are not providing specific margin numbers at this stage.

Q: Have there been increases in the average pricing for newly signed public cloud contracts in the first and second quarters of this year? A: Yes, there has been a significant increase in demand for our cloud computing services, which has led to price hikes. This trend is expected to continue in Q2 and possibly beyond. The cost pressure from upstream is manageable and should not negatively affect our margins.

Q: What are the main reasons for the drop in gross margin in Q1, and has the product price increase been factored in? A: The 3% decrease in gross margin is due to seasonal factors, with 30% of revenue coming from enterprise cloud, and upfront costs for future revenue-generating activities. We expect the gross margin to recover to normal levels in the coming quarters.

Q: How does management view Kingsoft Cloud's competitive position in the landscape of high demand for computing power and partnerships beyond public cloud vendors? A: We see a shift towards cooperation among former competitors due to the strong AI demand. This reflects complementary capabilities and the need to overcome supply-demand gaps. We view this as a cooperative opportunity rather than purely competitive.

Q: What is the demand outlook for public cloud in Q2 and the second half of the year, and how is the demand mix for inferencing and model training? A: AI demand remains exceedingly strong, with a backlog subject to supply chain restrictions. Sectors like autonomous driving and robotics have strong model training demands, while internet companies and large language models drive inference demand. We have flexible contract arrangements to maximize benefits amid rising upstream costs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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