Cloud service provider Kingsoft faces pressures from increased competition, margins under strain, and geopolitical risks, prompting analysts to advise holding off on investing in their stock.
Kingsoft Cloud Falls Short in Q1 2025, Ascribing Revenue Miss to Enterprise Cloud Services Impacted by Chinese New Year
Kingsoft Cloud, a NASDAQ-listed firm (KC), revealed its Q1 2025 financial results, reporting lower-than-expected revenue and adjusted EBITDA due to a shortfall in the enterprise cloud segment. This decline could be attributed to a complex of factors, including the Chinese New Year.
In a press release, Kingsoft Cloud disclosed that its enterprise cloud services increased 4.8% year-over-year (YoY), amounting to RMB616.5 million. This growth rate, however, is comparatively slower than the advancements seen in public cloud and AI businesses.
The Chinese New Year holiday, usually celebrated in late January or early February, may influence business operations and customer activity with nationwide festivities and a week-long break. Nevertheless, no clear causal link has been established between the holiday and Kingsoft Cloud's enterprise cloud revenue performance in Q1 2025.
Highlights of Kingsoft Cloud's Q1 2025 Financial Performance:
- Total revenue surged by 10.9% YoY to RMB1,970.0 million ($271.5 million), representing a drop of 11.7% quarter-over-quarter (QoQ).
- Public cloud revenues grew by 14% YoY to RMB1,353.5 million.
- Enterprise cloud revenues increased by 4.8% YoY to RMB616.5 million.
- The AI business showed impressive progress, as gross billing escalated 228% YoY to RMB525 million, accounting for approximately 39% of public cloud services.
- Adjusted EBITDA reached RMB318.5 million with an impressive 16.2% margin, marking a substantial improvement from Q1 2024.
- Net Loss diminished to RMB316.1 million from RMB363.6 million in Q1 2024.
- Maintained liquidity, as cash and equivalents were reported at RMB2,322.7 million as of March 31, 2025.
Kingsoft Cloud's Q1 2025 results show a growth in total revenue, public cloud, and AI services. However, enterprise cloud services demonstrated minimal expansion, potentially due to the influence of the Chinese New Year. Although the correlation between the holiday and Kingsoft Cloud's enterprise cloud revenue performance is not explicitly stated, it might be worth investigating further as businesses in China may be impacted by the annual celebrations and consequent disruptions to operations and customer interaction.
The decline in Kingsoft Cloud's enterprise cloud revenue in Q1 2025, as reported by the NASDAQ-listed firm, might be related to the impact of the Chinese New Year on technology-driven business operations and customer activity. Despite the growth in total revenue, public cloud, and AI services, the enterprise cloud segment, which is a crucial aspect of finance, demonstrated minimal expansion during this period.
