KINGSOFT CLOUD's (KC.US, 03896.HK) adjusted EBITDA margin increased to 9.8% in Q3, demonstrating strong growth in operational efficiency and profitability.

On November 19, KINGSOFT CLOUD (KC.US, 03896.HK) released its third quarter financial report for 2024. During the quarter, the company made solid progress in terms of revenue scale, profitability, and operating cash flow. The financial report shows that KINGSOFT CLOUD's Q3 revenue was 1.89 billion yuan, with a rapid growth rate of 16.0% compared to the same period last year; public cloud revenue reached 1.18 billion yuan, a year-on-year growth of 15.6%; industry cloud revenue reached 710 million yuan, a year-on-year growth of 16.7%; adjusted EBITDA was 190 million yuan, and the adjusted EBITDA margin reached 9.8%, continuing to improve steadily on the basis of positive results in the previous two quarters, with a significant year-on-year increase of 12.6 percentage points, fully demonstrating the company's strong growth momentum; the adjusted operating loss rate narrowed from 16.2% year-on-year to 7.4%; the adjusted gross margin reached 16.3%, a year-on-year increase of 4.2 percentage points; operating cash flow was positive at 230 million yuan, demonstrating continued operational efficiency. For over two years, KINGSOFT CLOUD has actively adjusted its focus on "high-quality sustainable development", actively embracing artificial intelligence, and focusing on core business to build technological capabilities and customer reputation throughout the entire process. The significant improvement in profitability indicates that the company's strategy is effective, and the business is achieving healthy and resilient development. The rapid development of AIGC and large models is driving the acceleration of intelligent cloud services, becoming a technological trend. KINGSOFT CLOUD is keenly observing this development direction, upgrading core technologies such as computing, storage, and big data to strengthen its AI capabilities and support the application of large models in various industries. This quarter, the artificial intelligence business drove rapid growth in data cleansing business computing power and storage demand, and the proportion of artificial intelligence revenue in public cloud revenue further increased. The customer base now covers most top general artificial intelligence companies in the industry, and has achieved new breakthroughs in the fields of autonomous driving and intelligent Siasun Robot&Automation. For artificial intelligence customers, the company has launched an all-in-one computing platform that can monitor resources and task scheduling, establishing observable hardware resource operation capabilities, and providing fault isolation and self-healing capabilities through self-developed container service capabilities. This platform has already been launched in the first phase. The company also launched KMR Serverless Spark, a cloud-native fully managed platform for AIGC data cleansing scenarios, which provides flexible, scalable fully managed Spark services that can be quickly started and stopped and are more user-friendly. To meet customer cloud operations and management needs, the company integrates WAF and load balancing product capabilities to enhance cloud-native security capabilities. In addition, the enterprise-level object storage OBS released version 6.6, continuing to meet the storage needs of industry customers. To meet the development needs of AI applications in different scenarios, the company released KINGSOFT CLOUD Hanhai Application Platform 2.0, covering multiple scenarios such as intelligent conversations and content creation. It efficiently builds AI applications with zero code/low code, and the platform has been continuously delivered to government, financial, and other industries. Additionally, the company also launched the KINGSOFT CLOUD Hanhai Training Platform, planning to provide stable, easy-to-use, and high-performance deep learning training environments for customers training large models. KINGSOFT CLOUD's Galaxy platform, which focuses on building, migrating, using, and managing clouds, has released version 3.1.1, enhancing product competitiveness in multiple dimensions such as new hardware platforms, new host operating systems, stronger storage capabilities, and lower cloud construction costs. This platform is fully supporting digital transformation for government and enterprise clients. In the CCID's "2024 China Central SOE Cloud Market Research Report", KINGSOFT CLOUD was listed in the leader quadrant, showing that the Galaxy platform's capabilities are recognized. Benchmark projects are taking root, exploring new opportunities in intelligent transformation with customers KINGSOFT CLOUD has long been focusing on vertical fields such as public services, digital health, and finance, and has launched a series of solutions tailored to industry customer needs, accelerating the landing and application of digital technology in industries. In the era of artificial intelligence, the company will continue to capture new development opportunities with its customers. With its strong product and technical capabilities, the company continues to serve premium clients in the audiovisual industry. During the Paris Olympics, the company provided rebroadcast protection services for several domestic top video platforms, ensuring a smooth, high-definition, and interactive viewing experience for hundreds of millions of viewers globally. For core application scenarios in the public services sector, KINGSOFT CLOUD insists on the integration of cloud and intelligence, actively seizing opportunities in the government cloud and state-owned cloud markets. This quarter, the company signed a cooperation agreement with the Zhuhai High-tech Zone, participating in the cooperation of large model scenarios for the Zhuhai government, helping Zhuhai build a "smart city in the cloud" as a new infrastructure; helping the Shenzhen National High-Tech Industry Innovation Center complete the construction of a data element platform for the Greater Bay Area, by organically integrating data from various sources to assist in building the Guangdong-Hong Kong-Macao Greater Bay Area Data Production Element Circulation Hub Group, Inc. Class A, supporting the development of the digital economy in the Greater Bay Area. With strong industry influence and solid research and development capabilities, the company continues to deepen and strengthen benchmark projects in the field of digital health. During the quarter, leveraging the concept of "developing governance integration", KINGSOFT CLOUD created an integrated data platform for the Yichang Central People's Hospital, supporting unified multi-site operations and assisting in the pilot construction of a tightly integrated medical group in Yichang city; leveraging the KINGSOFT CLOUD KDX industry DaaS platform, the company will work with Wuhan University Zhongnan Hospital to jointly build an integrated, digital national emergency medical rescue base big data center. In the financial sector, the company's product and technical advantages in the field of big data are constantly being demonstrated. By continuously helping top Financial Institutions, Inc. to unlock data value, cooperation with existing clients is deepening. This quarter, the company won the bid for real-time data services for a certain joint-stock bankProject, will assist the bank in building a new generation real-time data platform, fully tap the value of real-time data; provide support for a large-scale model service project for a joint-stock commercial bank, and fully utilize the capabilities of large-scale model to assist the bank in cleaning and standardizing the data on the big data foundation platform, in order to enhance its capabilities in large-scale model applications.Kingsoft Cloud's Vice Chairman and CEO, Zou Tao, said: "After two years of steadfast implementation of the 'High-quality Sustainable Development Strategy,' the company's fundamentals have entered a path of upward and healthy development. Looking ahead, we will continue to enhance profitability and cash generation capabilities, deepen cooperation with Xiaomi Kingsoft Ecological System, strengthen the Wuhan Research and Development Center, fully understand and explore new artificial intelligence opportunities, in order to create value continuously for our customers, shareholders, employees and other stakeholders."