Q2 2026 Kingsoft Cloud Holdings Ltd Earnings Call Transcript
Key Points
- Total revenue hit a record RMB3.07 billion, up 31% year-over-year, with AI cloud gross billings surging 82% to RMB1.33 billion, now 56% of public cloud revenue.
- Adjusted gross margin improved to 15.4%, up 2.4 percentage points quarter-over-quarter, and adjusted operating profit turned positive for the first time with a record 4.0% margin.
- Mass (Model-as-a-Service) revenue grew over 12x quarter-over-quarter, driven by strong adoption of open-source models and agentic workloads.
- Customer mix diversified: Xiaomi-Kingsoft ecosystem revenue grew 28% year-over-year, while top 5 non-ecosystem customers grew 51%, reducing concentration risk.
- Management successfully passed through price hikes in storage and computing power to customers, improving profitability in some cases, and is expanding asset-light managed services.
- Enterprise cloud revenue declined 1% year-over-year, impacted by upstream price hikes delaying SOE and government budget decisions, though management cites seasonality and business mix shifts.
- Capex and right-of-use assets reached RMB3.3 billion in Q2, up from RMB2.9 billion last quarter, with full-year guidance unchanged at RMB6.2 billion, indicating heavy investment pressure.
- Adjusted net loss was RMB6 million, though narrowed significantly from RMB300 million a year ago, still not profitable on a net basis.
- Chip supply constraints remain a long-term challenge, requiring reliance on multiple suppliers and domestic chip compatibility, which could limit scalability.
- Adjusted EBITDA margin declined to 36% from 70% in the same quarter last year, due to higher depreciation costs from AI infrastructure buildout.
Good morning, ladies and gentlemen, and thank you for standing by for Kingsoft Cloud's Second Quarter 2026 Earnings Conference Call. (Operator Instructions) Please note that today's call is being recorded. I will now turn the call over to Mr. Jackie Zou, Senior Director of Capital Markets at Kingsoft Cloud. Jackie, please go ahead.
Thank you, operator. Hello, everyone, and thank you for joining us today. Kingsoft Cloud's Second Quarter 2026 earnings release was issued earlier today and is available on our IR website and DuoReswire. Joining us today are Ms. Zou Tao, Chairman and CEO; Ms. Yi Li, CFO, Mr. Liu Tao, Senior Vice President; Mr. Ken Kayan, Senior Vice President; Mr. Yu Jung, Vice President Mr. Joe Rio, Batumi Vice President; and Mr. Clark Ken, Board Secretary and Associate Vice President.
Mr. Zou will discuss our business performance and key developments followed by Ms. Li with a review of our financial results. Management will then take
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