Kingsoft Cloud Announces Unaudited First Quarter 2021 Financial Results

Rhea-AI Summary

Kingsoft Cloud Holdings Limited (NASDAQ: KC) reported its Q1 2021 financial results, achieving total revenues of RMB1,813.5 million (US$1276.8 million), a 30.3% increase from RMB1,391.0 million in Q1 2020. Revenues from public cloud services grew to RMB1,391.8 million (US$212.4 million), marking a fifth consecutive quarter of growth. Enterprise cloud services surged by 131.3% year-over-year to RMB420.0 million (US$64.1 million). Despite a gross profit increase of 64.5% to RMB116.5 million, the company reported a net loss of RMB382.2 million (US$58.3 million). For Q2 2021, Kingsoft Cloud expects revenues between RMB2.13 billion and RMB2.23 billion.

Positive

• Total revenues increased by 30.3% year-over-year to RMB1,813.5 million.
• Public cloud revenues grew for five consecutive quarters, reaching RMB1,391.8 million.
• Enterprise cloud services revenues surged by 131.3% to RMB420.0 million.
• Gross profit rose by 64.5% to RMB116.5 million, marking a gross margin increase to 6.4%.
• Non-GAAP gross profit also increased by 64.4% to RMB122.0 million.

Negative

• Net loss widened to RMB382.2 million compared to RMB331.6 million in Q1 2020.
• Operating loss increased to RMB352.1 million from RMB288.8 million a year earlier.
• Despite revenue growth, research and development expenses rose by 35.2% to RMB264.6 million.

BEIJING, May 18, 2021 (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 first quarter ended March 31, 2021.

First Quarter 2021 Financial Highlights

• Total revenues were RMB1,813.5 million (US$¹276.8 million) in the first quarter of 2021, compared with RMB1,391.0 million in the first quarter of 2020. Having been increasing for five consecutive quarters, revenues from public cloud services were RMB1,391.8 million (US$212.4 million), compared with RMB1,208.5 million in the same period of 2020. Revenues from enterprise cloud services were RMB420.0 million (US$64.1 million), representing an increase of 131.3% from RMB181.6 million in the same period of 2020.
• Gross profit increased by 64.5% to RMB116.5 million (US$17.8 million) from RMB70.8 million in the same period of 2020. Gross margin was 6.4%, increased from 5.1% in the same period of 2020.
• Non-GAAP gross profit², increased by 64.4% to RMB122.0 million (US$18.6 million) from RMB74.2 million in the same period of 2020. Non-GAAP gross margin was 6.7%, increased from 5.3% non-GAAP gross margin in the same period of 2020.
  

Mr. Yulin Wang, Chief Executive Officer of Kingsoft Cloud, commented, “In this quarter, we generated RMB1.81 billion in total revenues, among which public cloud and enterprise cloud accounted for RMB1.39 billion and RMB420.0 million, respectively. In addition to successfully executing our strategy of serving premium customers, we continued to improve our large-scale, highly stable and high-performance enterprise-level products and solutions that cater to growing demand across verticals including the internet, healthcare, financial services and public services sectors.

In April, we published both our first annual report and our first Environmental, Social and Governance (ESG) Report post our IPO. Even though it is not a mandatory disclosure requirement in the US, we took the initiatives to disclose our ESG progress in less than a year after we went public. This speaks to our commitment to integrate ESG practices into our day-to-day business operations, and to constantly improve the management of our business.”

___________________

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 RMB6.5518 to US$1.00, the noon buying rate in effect on March 31, 2021 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 “Reconciliation of GAAP and Non-GAAP results” set forth at the end of this press release.

Mr. Henry He, Chief Financial Officer of Kingsoft Cloud added that, “We are pleased to see that our products and solutions continued to gain tractions among our customers. Our total revenues were RMB1.81 billion this quarter. Among that, revenues from public cloud services were RMB1.39 billion. Due to our high quality services and robust relations with our premium customers, revenues from public cloud services have been increasing for five consecutive quarters. Our enterprise cloud services revenues were RMB420.0 million, representing an increase of 131.3% year-over-year. We achieved record high quarterly adjusted gross profit of RMB122.0 million in first quarter. Our adjusted gross margin for this quarter increased from 4.9% last quarter to 6.7% this quarter. For the second quarter of 2021, we expect our total revenues to be between RMB2.13 billion and RMB2.23 billion, representing an accelerated year-over-year growth of 39% to 45%.”

First quarter 2021 Financial Results

Total Revenues reached RMB1,813.5 million (US$276.8 million), compared with RMB1,391.0 million in the same period of 2020. The increases were primarily due to the growth in both public cloud services and enterprise cloud services for our premium customers.

• Revenues from public cloud services were RMB1,391.8 million (US$212.4 million), compared with RMB1,208.5 million in the same period of 2020. Revenues from public cloud services have been increasing for five consecutive quarters.
• Revenues from enterprise cloud services were RMB420.0 million (US$64.1 million), representing an increase of 131.3% from RMB181.6 million in the same period of 2020.
• Other revenues were RMB1.7 million (US$0.3 million).
  

Cost of revenues was RMB1,697.0 million (US$259.0 million), representing an increase of 28.5% from RMB1,320.2 million in the same period of 2020, primarily attributable to increase in IDC costs and other costs. IDC costs increased by 21.0% to RMB1,113.2 million (US$169.9 million) from RMB920.2 million in the same period of 2020. The increase in IDC costs was in line with the Company’s expanding business and was partially offset by improved efficiency and utilization of bandwidth. Depreciation and amortization costs was RMB174.8 million (US$26.7 million), compared with RMB204.8 million in the same period of 2020.

Gross profit increased by 64.5% to RMB116.5 million (US$17.8 million), from RMB70.8 million in the same period in 2020. Gross margin was 6.4%, compared with 5.1% in the same period in 2020.

Non-GAAP gross profit increased by 64.4% to RMB122.0 million (US$18.6 million), from RMB74.2 million in the same period in 2020. Non-GAAP gross margin was 6.7%, compared with 5.3% in the same period in 2020. The increase was primarily due to our continued leverage on economies of scale, as well as the increasing margin contribution from enterprise cloud.

Selling and marketing expenses were RMB112.8 million (US$17.2 million), representing an increase of 28.2% from RMB88.0 million in the same period in 2020, mainly due to an increase in share-based compensation expenses and social insurance fees.

General and administrative expenses were RMB91.2 million (US$13.9 million), an increase of 20.0% from RMB76.0 million in the same period in 2020, mainly due to the increase in share-based compensation expenses, as well as the expenses for legal, accounting and other administrative and compliance affairs.

Research and development expenses were RMB264.6 million (US$40.4 million), an increase of 35.2% from RMB195.7 million in the same period in 2020, primarily due to the increase in share-based compensation expenses, salaries and social insurance fees.

Operating loss was RMB352.1 million (US$53.7 million), compared with RMB288.8 million in the same quarter of 2020.

Net loss was RMB382.2 million (US$58.3 million), compared with RMB331.6 million in the same quarter of 2020.

Non-GAAP net loss was RMB218.4 million (US$33.3 million), compared with RMB243.4 million in the same quarter of 2020.

Non-GAAP EBITDA was RMB-48.6 million (US$-7.4 million), compared with RMB-39.4 million in the same quarter of 2020. The decrease of Non-GAAP EBITDA was due to the increase of personnel expenses in terms of social insurance fees. Non-GAAP EBITDA margin was -2.7%, compared to -2.8% in the same quarter of 2020.

Basic and diluted net loss per share was RMB0.11 (US$0.02), compared with RMB0.39 in the same quarter of 2020.

Cash and cash equivalents and short-term investments were RMB5,455.8 million (US$832.7 million) as of March 31, 2021, compared to RMB6,117.7 million as of December 31, 2020.

Outstanding ordinary shares were 3,349,864,308 as of March 31, 2021, equivalent to about 223,324,287 ADSs

Business Outlook

For the second quarter of 2021, the Company expects total revenues to be between RMB2.13 billion and RMB2.23 billion, representing an accelerated year-over-year growth of 39% to 45%. 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, May 18, 2021, 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 http://apac.directeventreg.com/registration/event/7573216. Once preregistration has been completed, participants will receive dial-in numbers, direct event passcode, and a unique registrant ID.

To join the conference, simply dial the number in the calendar invite you receive after preregistering, enter the passcode followed by your registrant ID, and you will join the conference instantly.

A telephone replay of the call will be available after the conclusion of the conference call through 9:00 a.m. U.S. Eastern Time, May 26, 2021. The dial-in details for the replay are as follows:

International: +61-2-8199-0299
U.S. Toll Free: +1-855-452-5696
Mainland China Toll Free: 800-870-0206
Hong Kong Toll Free: 800-963-117
Conference ID: 7573216

A live and archived webcast of the conference call will also be available at 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 (loss) profit, Non-GAAP gross margin, Non-GAAP EBITDA and Non-GAAP EBITDA 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 (loss) profit as gross (loss) profit excluding share- based compensation allocated in the cost of revenues, and we define Non-GAAP gross margin as Non-GAAP gross (loss) profit as a percentage of revenues. We define Non-GAAP net loss as net loss excluding share-based compensation, foreign exchange (gain) loss, changes in fair value of financial instruments and other (income) expense, net. 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.

Exchange 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 RMB6.5518 to US$1.00, the noon buying rate in effect on March 31, 2021 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 fourth 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 Kingsoft Cloud Holdings Limited

Kingsoft Cloud Holdings Limited (NASDAQ: KC) is a leading independent cloud service provider in China. Kingsoft Cloud has built a comprehensive and reliable cloud platform consisting of extensive cloud infrastructure, cutting-edge cloud products and well-architected industry-specific solutions across public cloud and enterprise cloud.

For more information, please visit: http://ir.ksyun.com.

For investor and media inquiries, please contact:

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

Christensen In China
Mr. Eric Yuan
Phone: +86-10-5900-1548
E-mail: Eyuan@christensenir.com

In US
Ms. Linda Bergkamp Phone: +1-480-614-3004
E-mail: lbergkamp@christensenir.com

 

KINGSOFT CLOUD HOLDINGS LIMITED UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (All amounts in thousands)
	Dec 31, 2020		Mar 31, 2021		Mar 31, 2021
	RMB		RMB		US$
ASSETS
Current assets:
Cash and cash equivalents	3,424,674		2,793,448		426,363
Accounts receivable, net	2,334,871		2,760,187		421,287
Short-term investments	2,693,019		2,662,318		406,349
Prepayments and other assets	887,086		982,607		149,975
Amounts due from related parties	205,068		193,240		29,494
Total current assets	9,544,718		9,391,800		1,433,468
Non-current assets:
Property and equipment, net	1,956,790		1,945,060		296,874
Intangible assets, net	16,573		14,085		2,150
Prepayments and other assets	11,824		17,113		2,612
Equity investments	126,583		132,538		20,229
Goodwill	-		74,577		11,383
Amounts due from related parties	5,758		5,758		879
Operating lease right-of-use assets	266,968		279,142		42,605
Total non-current assets	2,384,496		2,468,273		376,732
Total assets	11,929,214		11,860,073		1,810,200
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	2,057,355		2,302,376		351,411
Accrued expenses and other liabilities	845,374		592,828		90,483
Short-term bank loans	278,488		377,788		57,662
Long-term bank loan, current portion	74,351		74,351		11,348
Income tax payable	20,564		23,820		3,636
Amounts due to related parties	112,998		116,345		17,758
Current operating lease liabilities	76,469		83,469		12,740
Total current liabilities	3,465,599		3,570,977		545,038
Non-current liabilities:
Deferred tax liabilities	29		-		-
Other liabilities	40,578		36,630		5,591
Non-current operating lease liabilities	182,958		200,928		30,668
Total non-current liabilities	223,565		237,558		36,259
Total liabilities	3,689,164		3,808,535		581,297
Shareholders’ equity:
Ordinary shares	22,801		22,868		3,490
Additional paid-in capital	14,149,984		14,277,201		2,179,126
Accumulated deficit	(5,864,356	)	(6,252,504	)	(954,319	)
Accumulated other comprehensive (loss) income	(68,440	)	2,333		356
Total Kingsoft Cloud Holdings Limited shareholders’ equity	8,239,989		8,049,898		1,228,653
Noncontrolling interests	61		1,640		250
Total equity	8,240,050		8,051,538		1,228,903
Total liabilities, mezzanine equity and shareholders’ equity	11,929,214		11,860,073		1,810,200

KINGSOFT CLOUD HOLDINGS LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (All amounts in thousands, except for share and per share data)
	Three Months Ended
	Mar 31, 2020		Dec 31, 2020		Mar 31, 2021		Mar 31, 2021
	RMB		RMB		RMB		US$
Revenues:
Public cloud services	1,208,514		1,361,505		1,391,833		212,435
Enterprise cloud services	181,587		535,920		420,032		64,109
Others	862		25,321		1,667		254
Total revenues	1,390,963		1,922,746		1,813,532		276,798
Cost of revenues	(1,320,192	)	(1,830,176	)	(1,697,029	)	(259,017	)
Gross profit	70,771		92,570		116,503		17,781
Operating expenses:
Selling and marketing expenses	(87,968	)	(114,666	)	(112,826	)	(17,221	)
General and administrative expenses	(75,977	)	(42,156	)	(91,177	)	(13,916	)
Research and development expenses	(195,650	)	(181,062	)	(264,636	)	(40,391	)
Total operating expenses	(359,595	)	(337,884	)	(468,639	)	(71,528	)
Operating loss	(288,824	)	(245,314	)	(352,136	)	(53,747	)
Interest income	10,095		21,672		17,746		2,709
Interest expense	(1,884	)	(1,838	)	(3,866	)	(590	)
Foreign exchange (loss) gain	(40,144	)	114,113		(48,375	)	(7,383	)
Changes in fair value of financial instruments	198		11,278		5,782		883
Other (expense) income, net	(5,259	)	(1,724	)	1,926		294
Loss before income taxes	(325,818	)	(101,813	)	(378,923	)	(57,834	)
Income tax expense	(5,829	)	(3,345	)	(3,286	)	(502	)
Net loss	(331,647	)	(105,158	)	(382,209	)	(58,336	)
Less: net (loss) income attributable to noncontrolling interests	(306	)	54		255		39
Net loss attributable to Kingsoft Cloud Holdings Limited	(331,341	)	(105,212	)	(382,464	)	(58,375	)
Accretion to redemption value of redeemable convertible preferred shares	(19,768	)	-		-		-
Net loss attributable to ordinary shareholders	(351,109	)	(105,212	)	(382,464	)	(58,375	)
Net loss per share:
Basic and diluted	(0.39	)	(0.03	)	(0.11	)	(0.02	)
Shares used in the net loss per share computation:
Basic and diluted	898,305,836		3,299,623,515		3,343,336,997		3,343,336,997
Other comprehensive income (loss), net of tax of nil:
Foreign currency translation adjustments	51,349		(327,654	)	70,773		10,802
Comprehensive loss	(280,298	)	(432,812	)	(311,436	)	(47,534	)
Less: Comprehensive (loss) income attributable to noncontrolling interests	(306	)	54		255		39
Comprehensive loss attributable to Kingsoft Cloud Holdings Limited shareholders	(279,992	)	(432,866	)	(311,691	)	(47,573	)
Accretion to redemption value of redeemable convertible preferred shares	(19,768	)	-		-		-
Comprehensive loss attributable to ordinary shareholders	(299,760	)	(432,866	)	(311,691	)	(47,573	)

KINGSOFT CLOUD HOLDINGS LIMITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS (All amounts in thousands, except for percentage)
	Three Months Ended
	Mar 31, 2020	Dec 31, 2020	Mar 31, 2021	Mar 31, 2021
	RMB	RMB	RMB	US$
Gross profit	70,771	92,570	116,503	17,781
Adjustments:
– Share-based compensation expenses	3,426	2,321	5,499	839
Adjusted gross profit	74,197	94,891	122,002	18,620

KINGSOFT CLOUD HOLDINGS LIMITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS (All amounts in thousands, except for percentage)
	Three Months Ended
	Mar 31, 2020	Dec 31, 2020	Mar 31, 2021
Gross margin	5.1%	4.8%	6.4%
Adjusted gross margin	5.3%	4.9%	6.7%

KINGSOFT CLOUD HOLDINGS LIMITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS (All amounts in thousands, except for percentage)
	Three Months Ended
	Mar 31, 2020		Dec 31, 2020		Mar 31, 2021		Mar 31, 2021
	RMB		RMB		RMB		US$
Net Loss	(331,647	)	(105,158	)	(382,209	)	(58,336	)
Adjustments:
– Share-based compensation expenses	43,084		54,543		123,113		18,790
– Foreign exchange loss (gain)	40,144		(114,113	)	48,375		7,383
– Changes in fair value of financial instruments	(198	)	(11,278	)	(5,782	)	(883	)
– Other expense (income), net	5,259		1,724		(1,926	)	(294	)
Adjusted net loss	(243,358	)	(174,282	)	(218,429	)	(33,340	)
Adjustments:
– Interest income	(10,095	)	(21,672	)	(17,746	)	(2,709	)
– Interest expense	1,884		1,838		3,866		590
– Income tax expense	5,829		3,345		3,286		502
– Depreciation and amortization	206,362		173,250		180,466		27,544
Adjusted EBITDA	(39,378	)	(17,521	)	(48,557	)	(7,413	)

KINGSOFT CLOUD HOLDINGS LIMITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS (All amounts in thousands, except for percentage)
	Three Months Ended
	Mar 31, 2020	Dec 31, 2020	Mar 31, 2021
Net loss margin	-23.8%	-5.5%	-21.1%
Adjusted net loss margin	-17.5%	-9.1%	-12.0%
Adjusted EBITDA Margin	-2.8%	-0.9%	-2.7%

KINGSOFT CLOUD HOLDINGS LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (All amounts in thousands)
	Three Months Ended
	Mar 31, 2020		Dec 31, 2020		Mar 31, 2021		Mar 31, 2021
	RMB		RMB		RMB		US$
Net cash generated from (used in) operating activities	93,887		(278,242	)	(497,151	)	(75,880	)
Net cash used in investing activities	(294,953	)	(308,729	)	(238,180	)	(36,353	)
Net cash generated from financing activities	138,900		208,211		98,854		15,088
Effect of exchange rate changes on cash and cash equivalents	8,775		(63,069	)	5,251		801
Net decrease in cash and cash equivalents	(62,166	)	(378,760	)	(636,477	)	(97,145	)
Cash and cash equivalents at beginning of period	2,023,263		3,866,503		3,424,674		522,707
Cash and cash equivalents at end of period	1,969,872		3,424,674		2,793,448		426,363

FAQ

What were Kingsoft Cloud's Q1 2021 revenue figures?

Kingsoft Cloud reported total revenues of RMB1,813.5 million (US$1276.8 million) for Q1 2021.

How much did Kingsoft Cloud's enterprise cloud services grow in Q1 2021?

Enterprise cloud services revenues increased by 131.3% to RMB420.0 million year-over-year.

What is Kingsoft Cloud's expected revenue range for Q2 2021?

Kingsoft Cloud expects total revenues to be between RMB2.13 billion and RMB2.23 billion for Q2 2021.

What was the net loss reported by Kingsoft Cloud in Q1 2021?

Kingsoft Cloud reported a net loss of RMB382.2 million (US$58.3 million) in Q1 2021.

How did gross profit change for Kingsoft Cloud in Q1 2021?

Gross profit increased by 64.5% to RMB116.5 million in Q1 2021.