Kingsoft Cloud Q2 Revenue Grows 30.8% Year-on-Year, Reaches Record High, AI Drives Significant Profitability Improvement | Earnings Report Highlights

The wave of demand for artificial intelligence is rapidly accelerating Kingsoft Cloud’s performance realization. Kingsoft Cloud’s Q2 revenue surpassed the RMB 3 billion threshold for the first time, and achieved a historic turnaround in operating profit, marking the beginning of actual returns from its AI infrastructure investment.

According to the unaudited Q2 financial results for the period ending June 30, 2026 announced by Kingsoft Cloud on August 19, total revenue reached RMB 3.072 billion, a year-on-year increase of 30.8%, setting a new quarterly record. Among them, intelligent computing cloud (AI cloud) billed revenue grew 82% year-on-year, accounting for 56% of public cloud revenue. This quarter, the company recorded positive operating profit (GAAP) for the first time, with an adjusted operating margin of 4.0%, a significant improvement from -7.1% in the same period last year.

While profitability improved, the company is still in a net loss position, though the loss has narrowed significantly. Net loss for Q2 was RMB 92.98 million, narrowing by 79.6% from RMB 457 million in the same period last year. However, the continuously expanding capital expenditures put pressure on cash reserves — capital expenditure (including assets capitalized through leasing arrangements) reached RMB 3.3 billion in Q2, with cash and cash equivalents falling from RMB 6.018 billion at the end of 2025 to RMB 4.674 billion.

AI-related business was the core driving force for this quarter’s performance jump. Public cloud service revenue reached RMB 2.358 billion, a year-on-year increase of 45.1% and a quarter-on-quarter increase of 18.1%, leading by a wide margin across the company’s two major business segments. Among these, intelligent computing cloud (AI cloud) billed revenue was RMB 1.327 billion, with growth mainly driven by artificial intelligence cloud infrastructure services and incremental contribution from Model-as-a-Service (MaaS) products.

By comparison, industry cloud service revenue was RMB 714 million, down slightly by 1.3% year-on-year, with only a marginal 1.0% quarter-on-quarter increase, indicating that traditional enterprise cloud business still faces growth pressure.

The rapid shift in revenue structure towards AI drove the proportion of public cloud in total revenue higher, laying the foundation for continued improvement in gross margin.

This quarter’s gross profit was RMB 466 million, up 37.6% year-on-year, with a gross margin rising to 15.2%, higher than 14.4% for the same period last year and 12.8% in the previous quarter, continuing the improvement trend for two consecutive quarters.

A drastic reduction in operating expenses also contributed significantly. Total operating expenses for this quarter were RMB 443 million, a decrease of 33.4% year-on-year, with general and administrative expenses dropping sharply by 58.7% year-on-year to RMB 140 million, mainly due to reductions in credit loss provisions and equity incentive expenses. Sales and marketing expenses and R&D expenses also decreased by 14.3% and 2.3% year-on-year, respectively.

A combination of contracting expenses and rapid revenue growth resulted in a positive operating profit of RMB 23 million at the operating level, compared with an operating loss of RMB 327 million a year earlier. Non-GAAP operating profit reached RMB 124 million, with adjusted EBITDA margin further expanding to 35.8%, nearly double the 17.3% in the same period last year.

To support the rapid expansion of its AI computing power business, Kingsoft Cloud continues to intensify hardware investment. Q2 depreciation and amortization costs reached RMB 964 million, a year-on-year increase of 74.6%, mainly driven by the depreciation of newly purchased and leased servers and network equipment related to intelligent computing cloud business. The balance sheet shows net property and equipment increased from RMB 10.095 billion at the end of 2025 to RMB 13.725 billion.

Cash pressure has escalated accordingly. As of June 30, 2026, the company’s cash and cash equivalents stood at RMB 4.674 billion, a decrease of approximately RMB 1.344 billion from the end of 2025, which the company attributed to ongoing investment in computing power equipment. Meanwhile, net accounts receivable increased from RMB 1.74 billion at the beginning of the year to RMB 2.433 billion, while total current liabilities also rose to RMB 10.861 billion.

Looking at the first half as a whole, Kingsoft Cloud’s total revenue for H1 2026 was RMB 5.776 billion, a year-on-year increase of 33.7%, with growth accelerating compared to full-year 2025. However, net loss attributable to the company in the first half was RMB 437 million, an increase of 43.4% year-on-year, mainly dragged down by a sharp surge in interest expenses (up 54.3% year-on-year to RMB 320 million).

The company’s management remains optimistic about its profitability trajectory. In the earnings statement, the CEO said the company will continue to implement a high-quality, sustainable growth strategy, deepen cooperation with customers inside and outside the ecosystem, and consolidate its market position. The CFO emphasized that the company remains committed to investing in sustainable long-term growth, while profitability continues to improve under the dual drivers of positive AI demand and operational optimization.