Kingsoft Cloud Announces Unaudited Third Quarter 2021 Financial Results

Nov 24, 2021

BEIJING, Nov. 24, 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 third quarter ended September 30, 2021.

Mr. Yulin Wang, Chief Executive Officer of Kingsoft Cloud, commented, “As the largest independent cloud service provider in China, we continue to execute our growth strategies as we strive to ‘become the most trusted cloud partner for our customers, and create the digital future together’. Despite headwinds in the macro environment, we are making great strides in building and strengthening relationships with premium customers. Last quarter we engaged with Meituan as our new customer. We have seen these newly engaged premium customers continue to contribute more to our incremental public cloud revenues. We are proud to announce that Pinduoduo, one of the largest e-commerce platforms in China, became a new customer this quarter. We expect the new customer engagement trend continue to boost our public cloud growth. In addition, we have captured the new opportunities amid the regulation changes and started working with Shouqi, one of the emerging ride-hailing applications to empower them navigating the shifting landscape in China since July this year. Through these cooperation, we made further progress in enriching and diversifying our products and solution offerings in different sectors. And lastly, we are on track of integrating Camelot as a part of our efforts to build out our enterprise cloud services business. They currently serve over 500 premium customers and own multiple fulfillment centers, and we are now working on cross selling our services and enhancing our execution capabilities. We believe we are well positioned for long-term and healthy growth in this new era of digitalization.”

Mr. Henry He, Chief Financial Officer of Kingsoft Cloud added, “Our total revenues were RMB2,413.8 million, up 40% year-over-year. Revenue from public cloud services was RMB1,686.0 million. For the second time in a row, our public cloud incremental revenues rose over RMB100 million sequentially, and it was the seventh consecutive quarterly revenue increase since our IPO. Revenue from enterprise cloud services was RMB726.9 million, a year-over-year increase of 78%. In October, we held our inaugural Kingsoft Cloud Summit & Investor Day. We would like to express our appreciation for all those who attended and for your continued support.”

Third Quarter 2021 Financial Results

Total Revenues reached RMB2,413.8 million (US$374.61 million), representing an increase of 39.6% from RMB1,728.8 million in the same period of 2020. The increases were due to the growth in both public cloud services and enterprise cloud services for our premium customers.

  • Revenues from public cloud services were RMB1,686.0 million (US$261.7 million), representing an increase of 28.7% from RMB1,309.7 million in the same period of 2020 and a quarter-over-quarter incremental increase of RMB135.2 million. Revenues from public cloud services have been increasing for seven consecutive quarters since our first quarterly results after IPO. The increase was mainly due to our stable relations with top premium customers, engagement with new high-profile customers and cross-selling of our diversified products and solutions.
  • Revenues from enterprise cloud services were RMB726.9 million (US$112.8 million), representing an increase of 77.7% from RMB409.1 million in the same period of 2020. The increase was mainly due to the strong demand in the market and our capabilities to provide industry-specific solutions, partially offset by the power shortage issues which delayed certain delivery process of enterprise cloud projects.
  • Other revenues were RMB0.9 million (US$0.1 million).

_______________
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 RMB6.4434 to US$1.00, the noon buying rate in effect on September 30, 2021 as certified for customs purposes by the Federal Reserve Bank of New York.

Cost of revenues was RMB2,325.4 million (US$360.9 million), representing an increase of 43.9% from RMB1,615.9 million in the same period of 2020. IDC costs increased by 33.1% to RMB1,410.9 million (US$219.0 million) from RMB1,060.1 million in the same period of 2020, in line with the Company’s expanding business. Depreciation and amortization costs were RMB200.0 million (US$31.0 million), compared with RMB156.5 million in the same period of 2020.

Gross profit decreased by 21.7% to RMB88.4 million (US$13.7 million), from RMB112.9 million in the same period in 2020. Gross margin was 3.7%, compared with 6.5% in the same period in 2020.

Non-GAAP gross profit2 decreased by 19.7% to RMB92.2 million (US$14.3 million), from RMB114.8 million in the same period in 2020. Non- GAAP gross margin was 3.8%, compared with 6.6% in the same period in 2020. The decrease was primarily due to lower than expected utilization of our underlying public cloud infrastructure which was budgeted based on demand forecast as of the beginning of the year, and industry-wide public cloud demand turned out to be lower than expected.

Selling and marketing expenses were RMB132.2 million (US$20.5 million), compared with RMB96.8 million in the same period in 2020.

General and administrative expenses were RMB156.6 million (US$24.3 million), compared with RMB91.3 million in the same period in 2020.

Research and development expenses were RMB268.7 million (US$41.7 million), compared with RMB167.6 million in the same period in 2020.

The increase in expenses was primarily due to the increase in salaries, social insurance fees and share-based compensation expenses.

Operating loss was RMB469.1 million (US$72.8 million), compared with operating loss of RMB242.8 million in the same quarter of 2020.

Net loss was RMB506.7 million (US$78.6 million), compared with net loss of RMB105.3 million in the same quarter of 2020.

Non-GAAP net loss was RMB363.7 million (US$56.4 million), compared with net loss of RMB169.1 million in the same quarter of 2020.

Non-GAAP EBITDA was RMB-140.6 million (US$-21.8 million), compared with RMB-26.3 million in the same quarter of 2020. The decrease of Non-GAAP EBITDA was due to the changes of gross profits, the increase of personnel expenses and one time off Camelot transaction expenses. Non-GAAP EBITDA margin was -5.8%, compared with -1.5% in the same quarter of 2020.

Basic and diluted net loss per share was RMB0.15 (US$0.02), compared with RMB0.03 in the same quarter of 2020.

Cash and cash equivalents and short-term investments were RMB5,994.7 million (US$930.4 million) as of September 30, 2021, compared to RMB5,474.9 million as of June 30, 2021.

Outstanding ordinary shares were 3,625,037,000 as of September 30, 2021, equivalent to about 241,669,133 ADSs.

_______________
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.

Business Outlook

For the fourth quarter of 2021, the Company expects total revenues to be between RMB2.63 billion and RMB2.83 billion, representing a year- over-year growth of 37% to 47%. 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 Wednesday, November 24, 2021, at 7:00 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/3224539. 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 8:00 a.m. U.S. Eastern Time, December 2, 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: 3224539

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 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 and other (income) expense, net, and we define Non-GAAP net loss margin as Non-GAAP 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.

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 RMB6.4434 to US$1.00, the noon buying rate in effect on September 30, 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
Email: Eyuan@christensenir.com

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

 
KINGSOFT CLOUD HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
 Dec 31,
2020
Sep 30,
2021
Sep 30,
2021
 RMBRMBUS$
ASSETS   
Current assets:   
Cash and cash equivalents3,424,674 3,444,174 534,527 
Restricted cash 150,593 23,372 
Accounts receivable, net2,334,871 4,431,060 687,690 
Short-term investments2,693,019 2,550,488 395,830 
Prepayments and other assets887,086 1,127,668 175,011 
Amounts due from related parties205,068 270,572 41,992 
Total current assets9,544,718 11,974,555 1,858,422 
Non-current assets:   
Property and equipment, net1,956,790 2,058,794 319,520 
Intangible assets, net16,573 1,252,198 194,338 
Prepayments and other assets11,824 49,291 7,650 
Equity investments126,583 88,757 13,775 
Goodwill- 4,402,568 683,268 
Amounts due from related parties5,758 5,758 894 
Operating lease right-of-use assets266,968 257,153 39,910 
Deferred tax assets 16,515 2,563 
Total non-current assets2,384,496 8,131,034 1,261,918 
Total assets11,929,214 20,105,589 3,120,340 
    
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current liabilities:   
Short-term bank loans278,488 901,455 139,904 
Accounts payable2,057,355 3,151,825 489,156 
Accrued expenses and other current liabilities845,374 1,458,523 226,359 
Long-term bank loan, current portion74,351.00   
Income tax payable20,564 79,673 12,365 
Amounts due to related parties112,998 263,930 40,961 
Current operating lease liabilities76,469 74,638 11,584 
Total current liabilities3,465,599 5,930,044 920,329 
    
Non-current liabilities:   
Deferred tax liabilities29 251,081 38,967 
Amounts due to related parties 425,762 66,077 
Other liabilities40,578 1,256,123 194,947 
Non-current operating lease liabilities182,958 181,622 28,187 
Total non-current liabilities223,565 2,114,588 328,178 
Total liabilities3,689,164 8,044,632 1,248,507 
Shareholders’ equity:   
Ordinary shares22,801 24,645 3,825 
Additional paid-in capital14,149,984 18,112,182 2,810,968 
Accumulated deficit(5,864,356)(6,980,829)(1,083,408)
Accumulated other comprehensive loss(68,440)(88,882)(13,794)
Total Kingsoft Cloud Holdings Limited shareholders’ equity8,239,989 11,067,116 1,717,591 
Noncontrolling interests61 993,841 154,242 
Total equity8,240,050 12,060,957 1,871,833 
Total liabilities and shareholders’ equity11,929,214 20,105,589 3,120,340 
    

For the business combinations occurred during the period, the Company is in the process of finalizing valuations of the net identifiable assets acquired. As the Company receives additional information during the measurement period, the fair values assigned to the assets and liabilities may be adjusted.

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 Nine Months Ended
 Sep 30,
2020
March 31,
2021
Jun 30,
2021
Sep 30,
2021
Sep 30,
2021
Sep 30,
2020
Sep 30,
2021
Sep 30,
2021
 RMBRMBRMBRMBUS$RMBRMBUS$
Revenues:        
Public cloud services1,309,693 1,391,833 1,550,777 1,685,999 261,663 3,805,346 4,628,609 718,349 
Enterprise cloud services409,101 420,032 622,145 726,865 112,808 836,769 1,769,042 274,551 
Others10,049 1,667 765 971 151 12,446 3,403 528 
Total revenues1,728,843 1,813,532 2,173,687 2,413,835 374,622 4,654,561 6,401,054 993,428 
Cost of revenues(1,615,945)(1,697,029)(2,055,205)(2,325,423)(360,900)(4,390,148)(6,077,657)(943,238)
Gross profit 112,898 116,503 118,482 88,412 13,722 264,413 323,397 50,190 
Operating expenses:        
Selling and marketing expenses(96,802)(112,826)(96,058)(132,202)(20,517)(294,545)(341,086)(52,936)
General and administrative expenses(91,338)(91,177)(110,637)(156,573)(24,300)(337,736)(358,387)(55,621)
Research and development expenses(167,590)(264,636)(232,252)(268,721)(41,705)(594,068)(765,609)(118,821)
         
Total operating expenses(355,730)(468,639)(438,947)(557,496)(86,522)(1,226,349)(1,465,082)(227,378)
Operating loss(242,832)(352,136)(320,465)(469,084)(72,800)(961,936)(1,141,685)(177,188)
Interest income24,414 17,746 18,927 14,668 2,276 55,446 51,341 7,968 
Interest expense(3,940)(3,866)(6,689)(14,277)(2,216)(7,615)(24,832)(3,854)
Foreign exchange gain (loss)117,714 (48,375)71,277 (32,443)(5,035)74,687 (9,541)(1,481)
Other gain2,825 5,782 15,357 - - 3,023 21,139 3,281 
Other income (expense), net515 1,926 4,464 (596)(92)(9,086)5,794 899 
Loss before income taxes(101,304)(378,923)(217,129)(501,732)(77,867)(845,481)(1,097,784)(170,375)
Income tax expense(4,033)(3,286)(3,469)(5,004)(777)(11,559)(11,759)(1,825)
Net loss(105,337)(382,209)(220,598)(506,736)(78,644)(857,040)(1,109,543)(172,200)
Less: net income (loss) attributable to noncontrolling interests196 255 (244)1,232 191 7 1,243 193 
Net loss attributable to Kingsoft Cloud Holdings Limited(105,533)(382,464)(220,354)(507,968)(78,835)(857,047)(1,110,786)(172,393)
Accretion to redemption value of redeemable convertible preferred shares- - - - - (19,768)- - 
Net loss attributable to ordinary shareholders(105,533)(382,464)(220,354)(507,968)(78,835)(876,815)(1,110,786)(172,393)
         
Net loss per share:        
Basic and diluted(0.03)(0.11)(0.07)(0.15)(0.02)(0.42)(0.33)(0.05)
Shares used in the net loss per share computation:        
Basic and diluted3,153,524,558 3,343,336,997 3,351,178,745 3,437,397,527 3,437,397,527 2,098,997,211 3,377,952,450 3,377,952,450 
Other comprehensive (loss) income, net of tax of nil:        
Foreign currency translation adjustments(277,166)70,773 (132,888)41,673 6,468 (225,134)(20,442)(3,173)
Comprehensive loss(382,503)(311,436)(353,486)(465,063)(72,176)(1,082,174)(1,129,985)(175,373)
Less: Comprehensive income (loss) attributable to noncontrolling interests196 255 (244)1,232 191 7 1,243 193 
Comprehensive loss attributable to Kingsoft Cloud Holdings Limited shareholders(382,699)(311,691)(353,242)(466,295)(72,367)(1,082,181)(1,131,228)(175,566)
Accretion to redemption value of redeemable convertible preferred shares- - - - - (19,768)- - 
Comprehensive loss attributable to ordinary shareholders(382,699)(311,691)(353,242)(466,295)(72,367)(1,101,949)(1,131,228)(175,566)
         



KINGSOFT CLOUD HOLDINGS LIMITED 
RECONCILIATION OF GAAP AND NON-GAAP RESULTS 
(All amounts in thousands, except for percentage) 
 Three Months EndedNine Months Ended
 Sep 30,
2020
March 31,
2021
Jun 30,
2021
Sep 30,
2021
Sep 30,
2021
Sep 30,
2020
Sep 30,
2021
Sep 30,
2021
 RMBRMBRMBRMBUS$RMBRMBUS$
Gross profit112,898116,503118,48288,41213,722264,413323,39750,190
Adjustments:        
– Share-based compensation expenses1,8585,4992,9613,7415818,29312,2011,894
Adjusted gross profit114,756122,002121,44392,15314,303272,706335,59852,084
         



KINGSOFT CLOUD HOLDINGS LIMITED 
RECONCILIATION OF GAAP AND NON-GAAP RESULTS 
(All amounts in thousands, except for percentage) 
 Three Months Ended Nine Months Ended
 Sep 30,
2020
March 31,
2021
Jun 30,
2021
Sep 30,
2021
Sep 30,
2020
Sep 30,
2021
Gross margin6.5%6.4%5.5%3.7%5.7%5.1%
Adjusted gross margin6.6%6.7%5.6%3.8%5.9%5.2%
       



KINGSOFT CLOUD HOLDINGS LIMITED 
RECONCILIATION OF GAAP AND NON-GAAP RESULTS 
(All amounts in thousands, except for percentage) 
 Three Months EndedNine Months Ended
 Sep 30,
2020
March 31,
2021
Jun 30,
2021
Sep 30,
2021
Sep 30,
2021
Sep 30,
2020
Sep 30,
2021
Sep 30,
2021
 RMBRMBRMBRMBUS$RMBRMBUS$
Net Loss(105,337)(382,209)(220,598)(506,736)(78,644)(857,040)(1,109,543)(172,200)
Adjustments:        
– Share-based compensation expenses57,339 123,113 76,092 110,006 17,073 275,571 309,211 47,989 
– Foreign exchange (gain) loss(117,714)48,375 (71,277)32,443 5,035 (74,687)9,541 1,481 
– Other gain(2,825)(5,782)(15,357)- - (3,023)(21,139)(3,281)
– Other (income) expense, net(515)(1,926)(4,464)596 92 9,086 (5,794)(899)
Adjusted net loss(169,052)(218,429)(235,604)(363,691)(56,444)(650,093)(817,724)(126,910)
Adjustments:        
– Interest income(24,414)(17,746)(18,927)(14,668)(2,276)(55,446)(51,341)(7,968)
– Interest expense3,940 3,866 6,689 14,277 2,216 7,615 24,832 3,854 
– Income tax expense4,033 3,286 3,469 5,004 777 11,559 11,759 1,825 
– Depreciation and amortization159,199 180,466 189,123 218,450 33,903 584,788 588,039 91,262 
Adjusted EBITDA(26,294)(48,557)(55,250)(140,628)(21,824)(101,577)(244,435)(37,937)
         



KINGSOFT CLOUD HOLDINGS LIMITED 
RECONCILIATION OF GAAP AND NON-GAAP RESULTS 
(All amounts in thousands, except for percentage) 
 Three Months EndedNine Months Ended
 Sep 30,
2020
March 31,
2021
Jun 30,
2021
Sep 30,
2021
Sep 30,
2020
Sep 30,
2021
Net loss margin(6.1%)(21.1%)(10.1%)(21.0%)(18.4%)(17.3%)
Adjusted net loss margin(9.8%)(12.0%)(10.8%)(15.1%)(14.0%)(12.8%)
Adjusted EBITDA margin(1.5%)(2.7%)(2.5%)(5.8%)(2.2%)(3.8%)
       



KINGSOFT CLOUD HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(All amounts in thousands)
 Three Months Ended
 Sep 30,
2020
Sep 30,
2021
Sep 30,
2021
 RMBRMBUS$
Net cash (used in) generated from operating activities(103,510)13,9262,161
Net cash (used in) generated from investing activities(1,037,103)99,44215,433
Net cash generated from financing activities1,770,098 526,16481,659
Effect of exchange rate changes on cash, cash equivalents and restricted cash(73,469)61696
Net increase in cash, cash equivalents and restricted cash629,485 639,53299,253
Cash, cash equivalents and restricted cash at beginning of period3,310,487 2,954,619458,550
Cash, cash equivalents and restricted cash at end of period3,866,503 3,594,767557,899