KC - Kingsoft Cloud Announces Unaudited Second Quarter 2022 Financial Results

BEIJING, Sept. 06, 2022 (GLOBE NEWSWIRE) -- Kingsoft Cloud Holdings Limited (“Kingsoft Cloud” or the “Company”) (NASDAQ: KC), a leading independent cloud service provider in China, today announced its unaudited financial results for the second quarter ended June 30, 2022.

Mr. Tao Zou, Chief Executive Officer of Kingsoft Cloud, commented, “Despite the challenging operating environment since the second half of 2021, we see vast and definite opportunities brought about by digital transformation. It is our firm commitment to tackle the challenges and embrace the opportunities head-on with our unique value propositions, including among others, (1) “building a business led by technology” to continuously perfect our scalable core technologies and products; (2) turn-key solution driven sales to offer readily accessible and tangible value of cloud adoption for traditional enterprises in China; and (3) adhering to neutrality and remaining one of the most trusted cloud service provider across industry verticals. We believe, with such value propositions, we will be able to penetrate deep in existing verticals, while tapping into transferrable expertise and Kingsoft and Xiaomi ecosystem, to strategically expand into new industry vertical for sustainable quality growth.”

Mr. Henry He, Chief Financial Officer of Kingsoft Cloud, added, “Our total revenues amounted to RMB1,906.5 million in the second quarter of 2022. Among which, revenues from public cloud services amounted to RMB1,289.1 million in the second quarter of 2022. As we continued to proactively scale down our CDN services, its gross billing decreased by 30% year-over-year, while computing and storage services’ gross billing increased by 5% year-over-year. Revenues from enterprise cloud services amounted to RMB616.6 million, largely stable year-over-year, as we navigated through challenging operating environment which slowed down bidding and project deployment process during the second quarter. Meanwhile, to drive efficiency, we have executed cost control measures and successfully saved RMB252.6 million in total costs on a sequential basis.

Despite the challenges, we remain confident about our long-term prospect and value. We are pleased to announce that we intend to enter into a repurchase agreement with potential size no more than US$30 million during a 90 days window, subject to agreements to be finalized with repurchase agent. This action is pursuant to and part of the US$100 million repurchase program authorized by the board and announced back in March 2022. As usual, the timing, structure and dollar amount of the repurchase will be subject to, among others, the market conditions, terms to be agreed with the relevant repurchase agent, the trading prices of ADSs, and the relevant securities rules and regulations.”

Second Quarter 2022 Financial Results

Total Revenues reached RMB1,906.5 million (US$284.6 ¹ million), representing a decrease of 12.3% from RMB2,173.7 million in the same period of 2021. The decrease was mainly due to our proactive scaling down of CDN services, with its gross billings decreased by 30% on year-over-year basis, as well as the delays to the deployment and bidding process of our enterprise cloud projects mainly caused by the resurgences of COVID-19.

• Revenues from public cloud services decreased by 16.9% to RMB1,289.1 million (US$192.5 million), compared with RMB1,550.8 million in the same quarter of 2021. The decrease was mainly due to the above-mentioned scaling down of our CDN services, and partially offset by the increase of billings from computing and storage services.
  
  
• Revenues from enterprise cloud services were RMB616.6 million (US$92.0 million), representing a slight decrease of 0.9% from RMB622.1 million in the same quarter of 2021. The slight decrease was mainly due to the difficult operating and market environments as a result of COVID resurgences, which slowed down bidding and project deployment process.
  
  
• Other revenues were RMB0.8 million (US$0.1 million) in the second quarter of 2022.
  

Cost of revenues was RMB1,841.3 million (US$274.9 million), representing a decrease of 12.1% from RMB2,093.9 million last quarter and a decrease of 10.4% from RMB2,055.2 million in the same quarter of 2021. IDC costs decreased by RMB81.3 million from last quarter to RMB1,029.1 million this quarter, in line with our proactive scale down of our CDN services. Depreciation and amortization costs increased slightly by 1.2% quarter-over-quarter to RMB249.1 million as a result of continued capex. Fulfillment costs decreased from RMB184.5 million last quarter to RMB24.7 million this quarter, mainly due to the slowdown of deployment process as a result of the resurgences of COVID-19. Other costs were RMB48.6 million this quarter.

Gross profit was RMB65.2 million (US$9.7 million), compared with RMB80.0 million last quarter and RMB118.5 million in the same period in 2021. Gross margin was 3.4%, compared with 3.7% last quarter and 5.5% in the same period in 2021. Non-GAAP gross profit ² were RMB68.4 million (US$10.2 million), compared with RMB83.6 million last quarter and RMB121.4 million in the same period in 2021. Non-GAAP gross margin was 3.6%, compared with 3.8% last quarter and 5.6% in the same period in 2021.

Total operating expenses were RMB617.2 million (US$92.2 million), compared with RMB612.8 million last quarter and RMB438.9 million in the same period in 2021.

Selling and marketing expenses were RMB146.2 million (US$21.8 million), compared with RMB144.4 million last quarter and RMB96.1 million in the same period in 2021.

General and administrative expenses were RMB250.1 million (US$37.3 million), compared with RMB221.8 million last quarter and RMB110.6 million in the same period in 2021.

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¹ _{This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB6.6981 to US$1.00, the noon buying rate in effect on June 30, 2022 as certified for customs purposes by the Federal Reserve Bank of New York.}
² _{Non-GAAP gross profit is defined as gross profit excluding share-based compensation allocated in the cost of revenues and we define Non-GAAP gross margin as Non-GAAP gross profit as a percentage of revenues. See “Use of Non-GAAP Financial Measures” set forth at the end of this press release.}

Research and development expenses were RMB220.9 million (US$33.0 million), compared with RMB246.6 million last quarter and RMB232.3 million in the same period in 2021.

Operating loss was RMB552.0 million (US$82.4 million), compared with operating loss of RMB532.8 million last quarter and RMB320.5 million in the same quarter of 2021.

Net loss was RMB810.5 million (US$121.0 million), compared with net loss of RMB554.8 million last quarter and RMB220.6 million in the same quarter of 2021. The increase of net loss was mainly due to the significant depreciation of RMB against USD, resulting foreign exchange loss of RMB229.2 million this quarter.

Non-GAAP net loss was RMB451.7 million (US$67.4 million), compared with net loss of RMB450.9 million last quarter and RMB235.6 million in the same quarter of 2021.

Non-GAAP EBITDA was RMB-147.7 million (US$-22.1 million), compared with RMB-152.2 million last quarter and RMB-55.3 million in the same quarter of 2021. Non-GAAP EBITDA margin was -7.7%, compared with -7.0% last quarter and -2.5% in the same quarter of 2021.

Basic and diluted net loss per share was RMB0.22 (US$0.03), compared with RMB0.15 last quarter and RMB0.07 in the same quarter of 2021.

Cash and cash equivalents and short-term investments were RMB5,352.0 million (US$799.0 million) as of June 30, 2022, compared to RMB5,604.0 million as of March 31, 2022.

Outstanding ordinary shares were 3,663,417,840 as of June 30, 2022, equivalent to about 244,227,856 ADSs.

Business Outlook

For the third quarter of 2022, the Company expects total revenues to be between RMB1.95 billion and RMB2.15 billion, representing a quarter-over-quarter increase of 2.3% to 12.8%. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change.

Conference Call Information

The Company will hold a conference call on Tuesday, September 6, 2022, at 8:00 A.M. Eastern Time (8:00 P.M. Beijing/Hong Kong Time on the same day) to discuss the financial results.

Participants can register for the conference call by navigating to https://register.vevent.com/register/BI70b64716007f4342b0ab1c4119d00611. Once preregistration has been completed, each participant will receive dial-in details, including dial-in numbers and a unique access PIN.

To join the conference, simply dial the number in the email you receive after preregistering followed by the access PIN, and you will join the conference instantly.

Additionally, a live and archived webcast of the conference call will also be available on the Company’s investor relations website at http://ir.ksyun.com .

Use of Non-GAAP Financial Measures

The unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In evaluating our business, we consider and use certain non-GAAP measures, Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP EBITDA, Non-GAAP EBITDA margin, Non-GAAP net loss and Non-GAAP net loss margin, as supplemental measures to review and assess our operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define Non-GAAP gross profit as gross profit excluding share-based compensation allocated in the cost of revenues, and we define Non-GAAP gross margin as Non-GAAP gross profit as a percentage of revenues. We define Non-GAAP net loss as net loss excluding share-based compensation, foreign exchange gain (loss), other gain (loss), net and other income (expense), net and we define Non-GAAP net loss margin as adjusted net loss as a percentage of revenues. We define Non-GAAP EBITDA as Non-GAAP net loss excluding interest income, interest expense, income tax expense and depreciation and amortization, and we define Non-GAAP EBITDA margin as Non-GAAP EBITDA as a percentage of revenues. We present these non-GAAP financial measures because they are used by our management to evaluate our operating performance and formulate business plans. We also believe that the use of these non-GAAP measures facilitates investors’ assessment of our operating performance.

These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using these non-GAAP financial measures is that they do not reflect all items of income and expense that affect our operations. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

We compensate for these limitations by reconciling these non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

Exchan g e Rate Information

This press release contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from RMB to U.S. dollars, in this press release, were made at a rate of RMB6.6981 to US$1.00, the noon buying rate in effect on June 30, 2022 as certified for customs purposes by the Federal Reserve Bank of New York.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the Business Outlook, and quotations from management in this announcement, as well as Kingsoft Cloud’s strategic and operational plans, contain forward-looking statements. Kingsoft Cloud may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Kingsoft Cloud’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Kingsoft Cloud’s goals and strategies; Kingsoft Cloud’s future business development, results of operations and financial condition; relevant government policies and regulations relating to Kingsoft Cloud’s business and industry; the expected growth of the cloud service market in China; the expectation regarding the rate at which to gain customers, especially Premium Customers; Kingsoft Cloud’s ability to monetize the customer base; fluctuations in general economic and business conditions in China; the impact of the COVID-19 to Kingsoft Cloud’s business operations and the economy in China and elsewhere generally; China’s political or social conditions and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Kingsoft Cloud’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Kingsoft Cloud does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Kin g soft Cloud Holdin g s Limited

Kingsoft Cloud Holdings Limited (NASDAQ: KC) is a leading independent cloud service provider in China. With extensive cloud infrastructure, cutting- edge cloud-native products based on vigorous cloud technology research and development capabilities, well-architected industry-specific solutions and end- to-end fulfillment and deployment, Kingsoft Cloud offers comprehensive, reliable and trusted cloud service to customers in strategically selected verticals.

For more information, please visit: http://ir.ks y un.com .

For investor and media inquiries , p lease contact:

Kingsoft Cloud Holdings Limited
Nicole Shan
Tel: +86 (10) 6292-7777 Ext. 6300
Email: ksc-ir @ kin g soft.com

Christensen
In China
Mr. Eric Yuan
Phone: +86-10-5900-1548
Email: e y uan @ christensenir.com

In US
Ms. Linda Bergkamp
Phone: +1-480-6143004
Email: lber g kamp @ christensenir.com