Kingsoft Cloud Q1 Earnings Call Highlights

Key Points

• Kingsoft Cloud posted strong Q1 2026 results, with revenue up 37.2% year over year to RMB 2.7 billion and public cloud revenue rising 47.5%. Adjusted EBITDA reached RMB 748 million, with a 27.6% margin.
• AI cloud became the key growth engine, contributing 50.1% of public cloud revenue for the first time and driving AI business revenue up 91% to RMB 998 million. Management said demand for AI coding, inference and token services is accelerating rapidly.
• Growth is broadening beyond Xiaomi ecosystem customers, with non-ecosystem top-five customer revenue up 66% and AI services expanding into autonomous driving, logistics, fintech, gaming and video streaming. The company also plans heavy infrastructure investment, guiding full-year 2026 capex to roughly RMB 15 billion to RMB 20 billion.

Kingsoft Cloud NASDAQ: KC reported stronger first-quarter 2026 revenue as demand for artificial intelligence-related cloud services accelerated, with management saying AI cloud became the majority contributor to the company’s public cloud services revenue for the first time.

Chairman and CEO Tao Zou said total revenue reached RMB 2.7 billion in the quarter, up 37.2% year over year. Public cloud revenue rose 47.5% to RMB 2.0 billion, while enterprise cloud revenue increased 14.7% to RMB 710 million. Adjusted gross profit was RMB 351 million, and adjusted EBITDA reached RMB 748 million, with an adjusted EBITDA margin of 27.6%, according to Zou.

“Since the beginning of 2026, the continued adoption of AI coding, together with the rapid rise of AI agents, have driven AI to evolve from chat-oriented to action-oriented use cases,” Zou said through a translator. He said that shift is increasing demand for both model inference and training, expanding the cloud computing market opportunity.

AI Cloud Becomes a Larger Revenue Driver

Management said AI cloud gross billings reached RMB 1.0 billion in the quarter, up 90.1% from a year earlier. Zou said AI cloud accounted for 50.1% of public cloud revenue, marking the first time it represented more than half of that segment.

CFO Yi Li said the company’s AI business revenue increased 91% year over year to RMB 998 million. She described the quarter as “a pivotal structural shift” in Kingsoft Cloud’s growth mix.

Zou highlighted rapid growth in the company’s token services business, saying April 2026 revenue from those services was 53 times the level recorded in January. During the question-and-answer session, Senior Vice President Tao Liu said the token business began from a relatively small base at the end of last year and beginning of this year but is benefiting from strong demand from large customers, particularly for AI coding and agent use cases.

Liu said the inference and token services business generally carries a higher margin than traditional cloud computing, supported by technology improvements, algorithm optimization and operating model enhancements. However, he said the company would not provide specific margin figures because the business remains in a rapid expansion phase.

Xiaomi and Kingsoft Ecosystem Revenue Rises

Revenue from the Xiaomi and Kingsoft ecosystem totaled RMB 838 million, up 68.9% year over year and equal to 31.0% of total revenue, Zou said. He said Xiaomi’s investment in its “human-car-home” smart ecosystem and AI initiatives is creating additional opportunities for Kingsoft Cloud.

The company plans to revise annual caps for continuing connected transactions with Xiaomi. Zou said the revised annual caps with Xiaomi and Kingsoft under the 2025-to-2027 framework would reach RMB 14.2 billion.

In response to a question from Goldman Sachs analyst Timothy Zhao about Xiaomi’s MiMo large language model, Liu said most training-related resource demand comes through Kingsoft Cloud and that the company continues to see growing demand. He added that since the launch of MiMo V2, resources have been reallocated toward inference for that model, and management remains optimistic about future inference growth tied to MiMo, while noting that it ultimately depends on Xiaomi’s returns.

Public Cloud Demand Broadens Beyond Ecosystem Customers

Zou said revenue from Kingsoft Cloud’s top five non-ecosystem customers increased 66% year over year. He cited AI cloud services provided to an autonomous driving company to support large-scale data processing and end-to-end neural network training iterations.

The company also said its StarFlow training and inference platform supported token demand from top-tier internet companies. Zou said Kingsoft Cloud’s AI business now spans industries including internet, AI companies, autonomous driving, logistics, fintech, gaming and video streaming.

During the Q&A session, Liu said demand in the second quarter is supported by a “very long list of backlog,” with supply chain constraints being the main limiting factor. He said autonomous driving and robotics customers tend to have strong model training requirements, while internet companies and large language model companies are driving inference demand for AI coding and agents.

Enterprise Cloud Projects and Product Updates

In enterprise cloud, Zou cited several public services, healthcare and enterprise services projects. The company launched a state-owned cloud platform in Shenzhen for state-owned enterprises with security, compliance and data confidentiality needs. It also built a supply chain public information platform in Hubei using an architecture described as a provincial platform plus multiple prefecture and county platforms.

In healthcare, Kingsoft Cloud worked with Union Hospital affiliated with Tongji Medical College of Huazhong University of Science and Technology on a data governance project. The company also signed a contract for a large-scale medical consortium platform project based on its Data Middle Platform.

On the product side, Zou said the StarFlow platform expanded its model ecosystem with new API services for speech recognition and speech synthesis, as well as more image and video generation models. Kingsoft Cloud also launched Agent Engine for developing, deploying and managing AI agents, and introduced one-click agent deployment on cloud hosts for applications including OpenClaw and Hermes.

Costs, Capital Spending and Pricing

Li said total cost of revenues was RMB 2.358 billion, up 43% year over year, mainly due to investment in AI computing resources. Depreciation and amortization rose to RMB 890 million from RMB 379 million a year earlier, reflecting newly acquired and leased servers and network equipment tied largely to the AI business.

Adjusted operating expenses, excluding share-based compensation, were RMB 455 million and remained stable versus both the prior year and prior quarter, Li said. Adjusted operating loss was RMB 60 million, compared with RMB 56 million a year earlier, while adjusted operating loss margin narrowed to 2% from 3%.

Capital expenditures, including third-party financed spending and right-of-use assets obtained through financially settled leases, were RMB 2.985 billion in the quarter. Li said the company expects to keep investing in infrastructure to support expansion and later estimated full-year 2026 capital spending at roughly RMB 15 billion to RMB 20 billion, while noting supply chain capacity is the primary limiting factor.

Senior Vice President Kaiyan Tian said rising upstream prices for components, servers and other materials continued in the first quarter and are expected by market participants to continue into the second quarter and potentially beyond. He said customers believe now is the right time to secure more computing power, making it possible for the company to pass through cost pressures without negatively affecting margins in the current market environment.

Li said first-quarter gross margin was affected by seasonal factors and upfront costs tied to future revenue-generating activities with certain customers. She said the company expects gross margin to recover to a normal level in coming quarters.

About Kingsoft Cloud NASDAQ: KC

Kingsoft Cloud Holdings Limited NASDAQ: KC is a leading provider of cloud computing services in China, offering a comprehensive suite of infrastructure and platform solutions to enterprise customers. Established in 2012 as a subsidiary of Kingsoft Corporation, the company has grown into an independent public entity with dual listings, serving as a critical backbone for digital transformation across multiple industries. Headquartered in Beijing, Kingsoft Cloud leverages advanced technologies to optimize cloud operations and deliver scalable, reliable services.

The company's core offerings span Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS), encompassing compute, storage, database, content delivery networks (CDN) and security solutions.

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