Kingsoft Announces 2022 Annual and Fourth Quarter Results

Mar 22, 2023 | Business

On 21 March 2023, Kingsoft Corporation Limited (“Kingsoft” or the “Company”; HKEx stock code: 03888), a leading Chinese software and Internet service company, has announced its 2022 annual results and fourth quarter results for the period ended 31 December 2022.

For the year of 2022, the revenue of Kingsoft increased 20% year-on-year to RMB7,636.7 million. Revenue from the office software and services and online games and others represented 51% and 49%, respectively, of the Company’s total revenue for the year of 2022. Gross profit for the year of 2022 increased 18% year-on-year to RMB6,177.0 million, while operating profit amounted to RMB1,868.7 million.

For the fourth quarter of 2022, the Company’s revenue increased 16% year-on-year and 15% quarter-on-quarter to RMB2,112.4 million. Revenue from the office software and services and online games and others represented 52% and 48%, respectively, of the Company’s total revenue for the fourth quarter of 2022. Gross profit for the fourth quarter of 2022 increased 20% year-on-year and 19% quarter-on-quarter to RMB1,740.8 million, while operating profit amounted to RMB618.7 million.

Mr. Jun LEI, Chairman of Kingsoft, commented, “2022 was full of challenges and uncertainties, in which we actively embraced changes, maintained strategic focus, and further strengthened our core competitiveness. Kingsoft Office Group was committed to empowering the digital transformation of institutional customers and enhancing the cloud office user experience for individual users. Our business performance showed resilience, with the strategy of ‘multi-screen, cloud, content, artificial intelligence (“AI”) and collaboration’. Online games business focused on the development of premium games, and our flagship and new launched titles gained popularity. All these achievements have given us confidence to keep advancing our strategy in the enterprise services and online games sectors.”

Mr. Tao ZOU, Chief Executive Officer of Kingsoft, added, “The Group’s businesses continued to make robust progress in 2022, with total revenue reaching RMB7,636.7 million, increasing by 20% year-on-year. In 2022, the office software and services business maintained solid growth with revenue of RMB3,890.6 million, up 19% year-on-year. Notably, individual and institutional subscription businesses grew robustly. The online games and others business experienced solid growth, with annual revenue reaching a new record high of RMB3,746.2 million in 2022, up 21% year-on-year, as the result of outstanding performance of JX World III mobile game. Operating profit of the group was RMB1,868.7 million in 2022, increasing significantly by 37% year-on-year. These results reflected the resilience of our business model, efficiency of our business execution, as well as years of investment in R&D of our Group’s core products.”

BUSINESS REVIEW
Office Software and Services
In 2022, revenue from office software and services business increased 19% year-on-year to RMB3,890.6 million. The year-on-year increase was mainly due to the sustainable growth of individual subscription business, and fast growth of institutional subscription business, partially offset by the decreases in institutional licensing and internet advertising businesses of Kingsoft Office Group. Revenue in the fourth quarter increased 21% year-on-year and 9% quarter-on-quarter to RMB1,090.2 million. The year-on-year increase was mainly due to the sustainable growth of individual subscription business, and robust growth of institutional subscription business of Kingsoft Office Group.

Despite the sluggish shipments of global PC and smartphone markets, the number of monthly active devices of Kingsoft Office Group’s main products continued to grow against the trend in 2022. We constantly optimized the user experience of our products in cross-platform scenarios such as cloud and collaboration to encourage users to use cloud document services continuously. By the end of 2022, the number of documents uploaded to the public cloud platform has exceeded 175.2 billion, up 35% year-on-year. We continued to add membership privileges of WPS and Docer to attract users to become paying subscribers, enhance user loyalty, achieve stable growth in the number of paying subscribers, increase the proportion of long-term members, and optimize the membership structure.

Kingsoft Office Group deeply served the digital transformation of domestic government and enterprises, catered for their needs of efficiency improvement, data management, information security and industry scenario applications, and continued to promote their end-to-cloud integration and collaboration process. In response to the government’s demand for standardized, efficient, and long-term electronic document management, we launched an electronic document resource library product. Making full use of cloud computing, big data, AI and other technologies, we assisted party and government agencies in building electronic document resource library platforms and supported the full lifecycle management of electronic documents in digital government construction. For premium enterprise customers, we provided modular digital office empowerment services, continuously advancing the enterprise cloud integration process, addressing core pain points of enterprises, such as “improving efficiency, enhancing data security, and controlling costs”, and assisting enterprises in achieving cost reduction and efficiency improvement. For the public cloud service, our full range of digital office platform products with tiered versions were utilized to encourage customers to use cloud and collaboration applications in high frequency, which enhanced user engagement and payment retention.

Kingsoft Office Group has closely monitored the localization industry policy changes and customer demand, and taken the initiative to tap local government and industry localization markets in advance. Starting from the replacement needs of industries such as finance, operators, and energy, we promoted the adoption of the Windows/Linux dual-version annual venue mode and deepened their cloud and collaboration office process.

Looking forward, following the strategy of ‘multi-screen, cloud, content, AI and collaboration’, Kingsoft Office Group will focus on AI to achieve more breakthroughs in technology applications, and continue to explore innovative business models and optimize user experiences. At the same time, we will continuously improve service quality, empower government and enterprises with high-quality products and technological services, and assist them in achieving digital transformation more effectively.

Online Games and others
Revenue from the online games and others business for 2022 increased 21% year-on-year to RMB3,746.2 million. The year-on-year increase was mainly due to the successful launch of several mobile games which broadened our games portfolio in the fourth quarter of 2021, such as JX World III and JX I: Gui Lai, partially offset by decreased revenue from existing games. Revenue for the fourth quarter of 2022 increased 11% year-on-year and 23% quarter-on-quarter to RMB1,022.3 million. The year-on-year increase was mainly due to revenue contribution from JX World III mobile game released in the fourth quarter of 2021, and revenue growth from JX Online III driven by continuous improvement in content, gameplay and overall user experience, partially offset by decreased revenue from existing games.

Online games business continuously cultivated key IP franchises more deeply and broadly, and further enhanced the value of core IPs. Flagship JX Online III marched into its thirteenth year and remained steady, and we put our focus on driving players’ engagement. We launched two expansion packs and conducted multiple in-game events and campaigns to improve player activeness in 2022. In October, the number of daily active accounts achieved a recent high with the successful release of the anniversary expansion pack for JX Online III, Heng Dao Duan Lang. To further enrich our game content, we actively incorporated traditional cultural elements and launched a series of IP crossover campaigns in this game.

JX World III mobile game, one of the classic JX IP, performed strongly in 2022. In order to bring more immersive and authentic wuxia world experience to players, we continued to introduce distinctive gameplay and content to keep players engaged and entertained. We launched three expansion packs in 2022 on the basis of weekly updates. In August, we released the open beta across all platforms in Chinese mainland.

Looking ahead, we will proactively make progress in new game genres and overseas markets. Our new anime games, Snowbreak: Containment Zone and The Other Shore, have received the approval of gaming licenses and are expected to be released in China and aboard from the second half of 2023. We will focus on long-term operation of existing titles. The upgrade version of JX Online III PC game is expected to be launched by the end of 2023, laying the foundation for JX3 Ultimate and ensuring high-quality game iteration.

Mr. Jun LEI concluded, “In 2022, we achieved steady growth. In 2023, we will continue to seek progress while maintaining stability, and drive business growth with technology and service innovation. For office software and services business, we will continue to empower enterprises’ digital transformation, focus on AI to achieve more breakthroughs in technology applications, reconstruct and optimize the membership system, further promote the transformation of subscriptions. For online games business, we will continue to extend the longevity of premium games based on original IPs, actively expand new game genres and pursue opportunities in overseas markets. Amid increasingly fierce industry competition, we believe that by relying on technological innovation, products and services enhancements and operations optimization, we will achieve further high-quality development.”

About Kingsoft Corporation Limited
Kingsoft is a leading software and Internet services company based in China listed on the stock exchange of Hong Kong. It has three main subsidiaries including Kingsoft Office, Seasun and Kingsoft Shiyou. Following the implementation of its “mobile internet transformation” strategy, Kingsoft has completed the comprehensive transformation of its overall business and management models, and formed a strategic platform with office software and interactive entertainment as the pillars and cloud services and AI as the new directions. The Company has more than 7,000 staff around the world and enjoys a large market share in China. For more information, please visit http://www.kingsoft.com.

Kingsoft Investor Relations:
Francie Lu Tel: (86) 10 6292 7777 Email: ir@kingsoft.com
For further queries, please contact Hill+Knowlton Strategies Asia:
Ovina Zhu Tel: (852) 2894 6315 Email: kingsoft@hkstrategies.com


Topic: Press release summary

Kingsoft Cloud’s Dual Primary Hong Kong Listing: Resilience Rooted in Technology-based Business, High-quality Development Expected from Improving Profitability

Jan 1, 2023 | Business

On December 30, Kingsoft Cloud (3896.HK) was officially listed on the Main Board of the Hong Kong Stock Exchange, becoming the “finale” of homecoming listing of Chinese ADRs in 2022. The dual-primary listing provides investors with greater protection and flexibility in terms of trading venues and hours, while listing by way of introduction prevents dilution and regarded as responsible for existing shareholders.

With deep devotion on and cultivation of the industry for ten years, Kingsoft Cloud adhered to building a technology-based business, stayed at the frontier of cloud-native, hybrid cloud, big data and other cutting-edge technologies, and achieved industry practice-and-technology integration. In combination with in-depth understanding of strategically selected verticals, Kingsoft Cloud accomplished fast growth in both business scale and financials. Total premium customers increased from 243 in 2019 to 597 in 2021; revenue CAGR between 2019 and 2021 was 51.3%, significantly outpacing the broader industry’s 36.4%.

In the past year, the overall industry was under pressure due to market headwinds and the impact of COVID-19. Kingsoft Cloud made proactive adjustments, allocated resources in favor of more profitable products and projects to achieve improved sustainability, profitability and operating cash flow. A number of analysts noted that the Company’s gross margin improved significantly in recent 3 quarters, and recorded operating cash inflow for 2 consecutive quarters, well received by the market such that the Company’s share price has nearly doubled from the end of September to December 28. Analysts pointed out that such financial improvements are expected to continue, laying a solid foundation for the stock price to further recover.

Kingsoft Cloud has always been strongly supported by the strategic shareholders Xiaomi and Kingsoft Group. According to the management in recent results roadshow, Kingsoft Cloud, in its future development, will further strengthen collaboration with strategic shareholders in their digital transformation, as well as with the broader ecosystem, and actively explore opportunities in high-value verticals. It is noted that there are 800+ enterprises in the Lei Jun Ecosystem, among which Xiaomi and Kingsoft Group alone have many businesses that are inherently highly compatible with cloud computing, such as office collaboration, gaming, IoT, smartphone cloud storage and computing, as well as electric vehicle. All of these are potential growth opportunities that Kingsoft Cloud may actively explore out of its proximity advantages.

Zou Tao, Vice Chairman and CEO of Kingsoft Cloud, said, “Listing in Hong Kong is an important milestone in the Company’s 10th anniversary, and the Company stands ready for the new decade. First, we will continue to invest in technology, focus on core business, and return to the essence and original aspiration of cloud; second, we will evaluate customers and projects, control costs, balance revenue scale and profitability; meanwhile, we will strengthen ecological synergy, tap into high-quality business opportunities in strategically selected verticals.”

He Haijian, CFO of Kingsoft Cloud, also said, “Primary listing in Hong Kong will broaden our investor base, facilitate our participation in Hong Kong Stock Connect, and open up investment cooperation channels to more Chinese mainland investors. We will maintain the structure of the one-share-one-vote, which is rare among Chinese ADRs, and widely respect and adopt the advice of public investors. We will continue to attach importance to ESG and data security to ensure the stability and security of our services. “


Topic: Press release summary

Sectors: Cloud & Enterprise

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Kingsoft Announces 2021 Third Quarter Results

Nov 17, 2021 | Business

Kingsoft Corporation Limited (“Kingsoft” or the “Company”; HKEx stock code: 03888), a leading Chinese software and Internet service company, has announced its unaudited quarterly results for the three months ended 30 September 2021 (“period under review”).

During the period under review, the revenue of Kingsoft increased 8% year-on-year to RMB1,510.2 million. Revenue from online games and others, and office software and services represented 47% and 53% of the Group’s total revenue for the third quarter of 2021, respectively. Revenue from the office software and services business for the third quarter of 2021 increased 37% year-on-year to RMB803.7 million. Gross profit for the third quarter of 2021 increased 7% year-on-year to RMB1,241.0 million.

Mr. Jun LEI, Chairman of Kingsoft, commented, “Our overall business grew steadily during the quarter. Kingsoft Office Group focused on addressing user needs to enhance its products and services, and continued to pursue its strategy of ‘multi-screen, cloud, content, artificial intelligence (“AI”) and collaboration’. Meanwhile, our online game business adhered its ‘premium’ games strategy.”

Mr. Tao ZOU, Chief Executive Officer of the Company, added, “The Group’s business continued to grow in the third quarter with revenue reaching RMB1,510.2 million, up 8% year-on-year. Driven by the continued growth of licensing and subscription services businesses, our office software and services business maintained strong growth momentum in the third quarter with revenue reaching RMB803.7 million, up 37% year-on-year.”

BUSINESS REVIEW
Office Software and Services
The strong year-on-year revenue growth of licensing business was primarily driven by the growing cloud office and licensing business in the government and enterprise market and the increasing demand for localization. Kingsoft Office Group continued to improve the services quality of its localization business by joining the Trusted Computing Group, where it worked with different partners to set up a multi-dimensional cooperative program. The program focuses on document services to effectively promote the integration of cloud products with digital government and state-owned cloud projects. Meanwhile, Kingsoft Office Group actively participated in the pilot exercise of the newly-launched industry localization business and gained recognition from clients.

The subscription service business continued to maintain a robust growth during the quarter. Kingsoft Office Group strived to optimize collaboration office scenarios and launched new solutions to effectively maintain stable growth in active users and paying users, resulting in transition of paying user habits from casual to long-term needs. As of the end of September 2021, the number of monthly active devices of its key products amounted to 521 million, up 14% year-on-year. With increasing demand for cloud and collaboration office solutions, the number of users of WPS Docs in the third quarter already exceeded the peak recorded during the COVID-19 pandemic. In order to cater to small and medium-sized enterprises’ and teams’ demand for collaboration and convenient office solutions, Kingsoft Office Group has invested in ActionSoft, a low-code Platform as a Service (“PaaS”) provider, and aimed to develop a digital transformation solution to achieve the synergy of office scenarios and business scenarios.

Online Games and others
In the third quarter, the online game business continued to maintain a stable performance quarter-on-quarter. Revenue from the flagship JX Online III PC game and the classic JX 2D PC games achieved steady growth demonstrating the sustainable longevity and vitality of the core IP. In August, Kingsoft celebrated the 12th anniversary of JX Online III PC game and launched theme activities with collaboration between traditional and contemporary Chinese culture. These activities received wide acclaim from younger generation of gamers. In October, Kingsoft launched Bei Tian Yao Zong, the anniversary expansion pack for JX Online III PC game, and a new section with the theme of traditional Chinese medicine and upgraded gameplay that has been popular among gamers. In addition, JX I: Gui Lai was released in China on 15 October 2021.

During the third quarter, the domestic games industry adapted to new regulations. We are proactively embracing the new regulatory environment which we believe would contribute to a more sustainable development path for the gaming industry. Forging ahead, Kingsoft will continue our integration of development and operation of new game genres to create a diversified content ecosystem while strengthening the performance of Kingsoft’s core IP products.”

Mr. Jun LEI concluded, “In the third quarter, our core businesses continued to expand and contributed solid results to the Group. Looking forward, we will focus on exploring opportunities of the enterprise services market and online games market, continuing to expand R&D investment, as well as enhancing our products and services, aiming to provide our users and partners with valuable products and services experience and drive long-term returns for our shareholders.”

About Kingsoft Corporation Limited
Kingsoft is a leading software and Internet services company based in China listed on the stock exchange of Hong Kong. It has two subsidiaries including Kingsoft Office and Seasun. Following the implementation of its “mobile internet transformation” strategy, Kingsoft has completed the comprehensive transformation of its overall businesses and management models and formed a strategic platform with interactive entertainment and office software as the pillars and cloud services and AI as the new directions. The Company has more than 6,000 staff around the world and enjoys a large market share in China. For more information, please visit http://www.kingsoft.com.

Kingsoft Investor Relations:
Francie Lu Tel: (86) 10 6292 7777 Email: ir@kingsoft.com

For further queries, please contact Hill+Knowlton Strategies Asia:
Ovina Zhu Tel: (852) 2894 6315 Email: kingsoft@hkstrategies.com


Topic: Press release summary