Kingsoft Cloud Holdings Ltd (KC) 2024 Q1 法說會逐字稿

Good day and thank you for standing by, and welcome to Kingsoft Cloud's first-quarter 2024 earnings conference call. (Operator Instructions) Please be advised that today's conference call is being recorded.

美好的一天，感謝您的耐心等待，歡迎參加金山雲 2024 年第一季財報電話會議。（操作員說明）請注意，今天的電話會議正在錄音。

I would now like to hand the conference over to Nicole Shan, IR Director of Kingsoft Cloud. Please go ahead.

現在我想把會議交給金山雲端IR總監Nicole Shan。請繼續。

Thank you, operator. Hello, everyone, and thank you for joining us today. Kingsoft Cloud's first-quarter 2024 earnings release was distributed earlier today, and is available on our IR website at ir.ksyun.com, as well as on GlobeNewswire services.

謝謝你，接線生。大家好，感謝您今天加入我們。金山雲 2024 年第一季財報已於今天稍早發布，可在我們的 IR 網站 ir.ksyun.com 以及 GlobeNewswire 服務上取得。

On the call today from Kingsoft Cloud, we have our Vice Chairman and CEO, Mr. Zou Tao; and our CFO, Mr. Henry He. Mr. Zou will review our business strategies, operations, and company highlights; followed by Mr. He, who will discuss the financials and the guidance.

今天，金山雲副董事長兼執行長鄒濤先生出席了電話會議。以及我們的財務長何亨利先生。鄒先生將回顧我們的業務策略、營運和公司亮點；接下來是何先生，他將討論財務狀況和指引。

They will be available to answer your questions during the Q&A session that follows. There will be consecutive interpretations. All interpretations are for your convenience and reference purposes only. In case of any discrepancy, the management's statement in the original language will prevail.

他們將在接下來的問答環節回答您的問題。會有連續的解釋。所有解釋僅供您參考和參考。如有任何差異，以管理層的原始聲明為準。

Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended and as defined in the US Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements.

在我們開始之前，我想提醒您，本次電話會議包含 1934 年《證券交易法》第 21E 條（經 1995 年美國私人證券訴訟改革法修訂和定義）含義內的前瞻性陳述。這些前瞻性陳述是基於管理層當前的預期以及當前的市場和經營狀況，並涉及涉及已知或未知風險、不確定性和其他因素的事件，所有這些因素都難以預測，其中許多超出了公司的能力範圍。

Further information regarding this and other risks, uncertainties, or factors are included in the company's filings with the US SEC. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise except as required under applicable law. Finally, please note that unless otherwise stated, all financial figures mentioned during this conference call are denominated in RMB.

有關此風險和其他風險、不確定性或因素的更多資​​訊包含在該公司向美國證券交易委員會提交的文件中。除適用法律要求外，本公司不承擔因新資訊、未來事件或其他原因更新任何前瞻性聲明的義務。最後請注意，除非另有說明，本次電話會議中提及的所有財務數據均以人民幣計價。

It's now my pleasure to introduce our Vice Chairman and CEO, Mr. Zou. Please go ahead. Thank you.

現在我很高興向大家介紹我們的副董事長兼執行長鄒先生。請繼續。謝謝。

Hello, everyone, and thank you all for joining Kingsoft Cloud's first-quarter 2024 earnings call. This quarter, Kingsoft Cloud's high-quality and sustainable development strategy has achieved fruitful results. After more than a year of unwavering optimization and adjustments, and alongside our continuous and steady increase in gross profit margin, we have achieved a milestone of turning adjusted EBITDA positive for the first time since the establishment of Kingsoft Cloud.

大家好，感謝大家參加金山雲2024年第一季財報電話會議。本季度，金山雲高品質永續發展策略取得了豐碩成果。經過一年多堅定不移的最佳化調整，毛利率持續穩定提升，實現了金山雲成立以來首次調整後EBITDA轉正的里程碑。

This milestone demonstrates Kingsoft Cloud's profitability and growth sustaining ability, marking the commencement of a new stage of development. It establishes a robust foundation for our long-term sustainable and healthy progression into 2024 and beyond.

這一里程碑彰顯了金山雲的獲利能力和持續成長能力，標誌著金山雲進入了新的發展階段。它為我們進入 2024 年及以後的長期永續健康發展奠定了堅實的基礎。

Now, I will walk through the business highlights of the first quarter of 2024. This quarter, we continued to achieve dual improvements in both our revenues and profitability. In particular, our total revenues reached RMB1.78 billion, increasing 3.1% quarter over quarter.

下面我就帶大家回顧一下2024年第一季的經營亮點。本季度，我們持續實現收入和獲利能力的雙重提升。其中，我們的總收入達到人民幣17.8億元，季增3.1%。

Adjusted gross profit for the quarter reached around RMB300 million, increasing 54% year over year. Adjusted gross margin saw a significant boost rising by 1.6 percentage points quarter over quarter to reach 16.8%, marking the seventh quarter of consecutive improvement.

該季度調整後毛利約為人民幣3億元，較去年同期成長54%。調整後毛利率較上季大幅提升1.6個百分點，達到16.8%，連續第七個季度改善。

Adjusted EBITDA reached RMB33.19 million, with an adjusted EBITDA margin of 1.9%, representing a significant improvement of 8.9 percentage points year over year.

調整後EBITDA達人民幣3,319萬元，調整後EBITDA率為1.9%，較去年同期大幅提升8.9個百分點。

In terms of public cloud services, revenues reached RMB1.19 billion this quarter, representing an increase of 12.9% quarter over quarter. Excluding the CDN business, public cloud revenues saw a 9% quarter-over-quarter increase. We have seen positive outcomes across our three priorities for public cloud services, namely the Xiaomi and Kingsoft ecosystem, AI business, and CDN strategic adjustments.

公有雲服務方面，本季營收達11.9億元，季增12.9%。剔除CDN業務，公有雲收入較上季成長9%。我們公有雲服務的三大重點，即小米和金山生態、人工智慧業務和CDN策略調整都取得了積極成果。

First of all, serving as the sole strategic cloud platform within the Xiaomi and Kingsoft ecosystem, we firmly grasped the cloud business opportunities within the ecosystem, especially after the launch of Xiaomi SU7 and the commercialization of WPS AI, which led to strong demand for computing power in autonomous driving and AI office use cases. This quarter, revenues contributed by Xiaomi and Kingsoft ecosystem reached 19%, representing an increase of 4 percentage points year over year.

首先，作為小米和金山生態內的唯一策略雲端平台，我們牢牢抓住了生態內的雲端商機，特別是小米SU7推出和WPS AI商業化之後，帶來了強勁的運算需求自動駕駛和人工智慧辦公用例的強大功能。本季，小米和金山生態貢獻的營收達到19%，年增4個百分點。

Secondly, we have been proactive in seizing the strategic opportunities brought about by this round of AIGC and have made significant strides in our AI business. This quarter, AI revenue surged to RMB160 million, an increase of 93% quarter over quarter, accounting for 13.5% of public cloud revenues. This expansion further diversified our customer industry distribution.

其次，我們積極抓住本輪AIGC帶來的策略機遇，人工智慧業務取得長足進步。本季人工智慧收入飆升至人民幣1.6億元，季增93%，佔公有雲收入的13.5%。此次擴張進一步豐富了我們的客戶產業分佈。

On one hand, we continued to invest in infrastructure with capital expenditure exceeding RMB1.2 billion this quarter, establishing a high computing cloud resource pool with substantial scale. On the other hand, recognizing the historic opportunity of AI empowering various industries, we have established Kingsoft AI as a wholly owned subsidiary, seizing the opportunities in intelligent digital transformation of enterprises and professional services.

一方面，我們持續投入基礎設施，本季資本支出超過12億元，建立了頗具規模的高運算雲端資源池。另一方面，我們體認到人工智慧賦能各產業的歷史性機會，成立了全資子公司金山智能，抓住企業智慧化數位轉型和專業服務的機會。

Thirdly, we continued to push forward our strategic adjustments of CDN business. This quarter, CDN revenue remained stable compared to the last quarter, accounting for 23% of total revenues. We remain committed to enhancing profitability of CDN by promoting high value-added product sales externally, rigorously controlling procurement costs internally, expanding supplier coverage, and optimizing market price and service offerings.

第三是持續推動CDN業務策略調整。本季CDN營收較上季維持穩定，佔總營收的23%。我們仍致力於透過外部促進高附加價值產品銷售、內部嚴格控制採購成本、擴大供應商覆蓋範圍、優化市場價格和服務提供來提高CDN的獲利能力。

Moving on to enterprise cloud services. Revenues amounted to RMB590 million. In public service space, we have actively pursued opportunities within public service cloud and state-owned assets cloud. Implementing standardized operation and maintenance, we have leveraged our core components, such as model capabilities, big data and workspace collaboration, targeting applications in the public service and enterprise domain.

轉向企業雲端服務。收入達人民幣5.9億元。在公共服務領域，我們積極尋找公共服務雲、國資雲等機會。實施標準化維運，運用模型能力、大數據、工作空間協作等核心元件，面向公共服務與企業領域應用。

During this quarter, we initiated a trial operation for the Wuhan Optics Valley cloud that we constructed, providing an independent and controllable centralized computing and storage platform for entire Wuhan East Lake High-tech Development Zone. This platform has assisted in collecting data, exploring data sharing, and providing convenient public cloud infrastructure services for science and technology innovation enterprises in the high-tech zone.

本季度，我們建造的武漢光谷雲端開始試運行，為整個武漢東湖高新技術開發區提供獨立可控的集中運算和儲存平台。該平台協助高新區科技創新企業收集資料、探索資料共享、提供便利的公有雲基礎設施服務。

In addition, we have remained attentive to the trend of data asset inclusion on balance sheet. Recently, we convened a seminar on data assets and data elements, engaging experts and scholars from various institutions such as data exchanges, accounting firms, big data centers, and data research institutes to discuss topics such as policy interpretation, data assetization, and state-owned enterprises, cloud services, as well as data asset inclusion practices closely following the business opportunities of data assetization.

此外，我們也持續關注數據資產納入資產負債表的趨勢。近期，我們召開了資料資產與資料要素研討會，來自資料交易所、會計師事務所、大數據中心、資料研究院等各機構的專家學者就政策解讀、資料資產化、國家治理等議題進行了探討。

In healthcare space, our DaaS platform, medical imaging cloud platform, and integrated electronic medical record platform have all passed evaluations and being selected as one of the first batch of high-quality development panorama of digital medical products and services by China Academy of Information and Communications Technology. This showcases our achievements in product innovation and service capabilities in medical artificial intelligence industry.

在醫療健康領域，我們的DaaS平台、醫學影像雲平台、綜合電子病歷平台均通過評估，並被中國資訊科學研究院評選為首批數位醫療產品和服務高品質發展全景之一。這展示了我們在醫療人工智慧產業的產品創新和服務能力方面所取得的成就。

In financial services space, we provide object to storage expansion services for a leading joint stock bank, with comprehensive storage capabilities such as object storage, file storage, and big data gateways, while making full use of existing clusters.

在金融服務領域，我們為某領先的股份制銀行提供物件到儲存的擴充服務，具備物件儲存、檔案儲存、大數據閘道等全面的儲存能力，同時充分利用現有叢集。

Turning to Camelot. This quarter witnessed stable and healthy revenue and profitability. We have signed up four new well-known customers while maintaining robust relationships with existing major customers. From the perspective of overall ecosystem business developments, Camelot has launched a dedicated cooperation service plan with Xiaomi and Kingsoft ecosystem customers, exploring new models of talent and business operations.

轉向卡米洛特。本季度營收和獲利能力穩定健康。我們簽約了四家新的知名客戶，同時與現有主要客戶保持了牢固的關係。從整體生態業務發展的角度來看，柯萊特與小米、金山生態客戶推出專屬合作服務計劃​​，探索人才和業務營運新模式。

In terms of product and technology, we uphold our principle of building success based on technology and innovation, focusing on delivering best-in-class customer experience across our core product offerings.

在產品和技術方面，我們秉持著基於技術和創新成功的原則，專注於在我們的核心產品中提供一流的客戶體驗。

In the AI space, we have accumulated technology and extensive service experience in deploying 256 and 512 node cluster, achieving automation in large-scale cluster deployment, acceptance, and operation and maintenance management.

在AI領域，我們在部署256、512節點叢集方面累積了技術和豐富的服務經驗，實現了大規模叢集部署、驗收、運維管理的自動化。

In enterprise cloud space, the Galaxy Stack platform released an updated version of its operations and maintenance platform, adding 84 new hardware and performance monitoring capabilities to assist the customers in refined statistical management. At the same time, newer version of the operation platform calculates the usage of cloud resources, such as cloud hosts and networks for all times from a business standpoint, enabling efficient and refined operation. This enhances our intelligence and precision in cloud migration, cloud management, and cloud usage for our customers.

在企業雲端空間，Galaxy Stack平台發表維運平台更新版本，新增84項硬體與效能監控能力，協助客戶精進統計管理。同時，新版營運平台從業務角度時刻計算雲端主機、網路等雲端資源的使用情況，實現高效能精細化營運。這增強了我們為客戶提供雲端遷移、雲端管理和雲端使用方面的智慧性和準確性。

In summary, our high quality and sustainable development strategy has been steadily implemented, achieving the milestone of turning EBITDA positive for the first time. Additionally, revenues have also achieved continuous growth in the past two quarters, and our gross profit margin has improved for seven consecutive quarters.

綜上所述，我們高品質永續發展策略穩步實施，實現了EBITDA首次轉正的里程碑。此外，過去兩個季度的收入也實現了持續增長，毛利率連續七個季度提高。

Looking forward, we will remain committed to our long-term strategy, focusing on high value-added products and services, embracing AI opportunities, promoting technological advancements, and continuing to enhance profitability. By increasing management efficiency, maintaining a strict cost and expense control, enhancing talent training, and expanding our Wuhan R&D center, we are confident that we will continue to create value for our customers, shareholders, employees, and other stakeholders.

展望未來，我們將持續堅持長期策略，聚焦高附加價值產品和服務，擁抱人工智慧機遇，推動技術進步，持續提升獲利能力。透過提高管理效率、嚴格成本費用控制、加強人才培訓、擴大武漢研發中心，我們有信心繼續為客戶、股東、員工和其他利害關係人創造價值。

I will now pass the call over to our CFO, Henry, to go over our financials for the first quarter of 2024. Thank you.

我現在將把電話轉給我們的財務長亨利，讓他檢查我們 2024 年第一季的財務狀況。謝謝。

Thank you, Mr. Zou, and welcome, everyone, for joining the call. Now, I will walk you through the financial results for the first-quarter 2024.

謝謝鄒先生，也歡迎大家加入我們的電話會議。現在，我將向您介紹 2024 年第一季的財務表現。

We are very pleased to see our adjusted EBITDA margin turn profit for the first time with our adjusted gross margin has been consecutively improving for seven quarters, verifying the well-executed of our strategy of high-quality, and sustainable development. Having successfully achieved profitable EBITDA margin, we would like to highlight the following three key efforts we have made to yield the results.

我們很高興看到調整後EBITDA利潤率首次轉虧為盈，調整後毛利率已連續七季持續改善，驗證了我們高品質、永續發展策略的良好執行。在成功實現 EBITDA 利潤率獲利後，我們想強調一下我們為取得成果所做的以下三項關鍵努力。

First of all, we strategically adjusted our revenue mix under the guidance of high quality and a sustainable development strategy. During the past year, we scaled down proactively our CDN services with low-margin profile. This quarter, CDN services contributed around 23% of our total revenue compared with over 50% in the peak time, looking back into 2020. Meanwhile, we expand our revenue from high-margin AI business achieving RMB160 million this quarter, contributing around 13% of our public cloud revenues.

首先，我們以高品質和永續發展策略為指導，對收入結構進行策略性調整。在過去的一年裡，我們在低利潤的情況下主動縮減了 CDN 服務的規模。回顧 2020 年，本季 CDN 服務貢獻了我們總收入的 23% 左右，而高峰期則超過 50%。同時，我們擴大了高利潤人工智慧業務的收入，本季達到 1.6 億元，約占我們公有雲收入的 13%。

Second, both of our public cloud and enterprise cloud services improved their margins in 2023 and the quarters beyond compared with 2022. Since last year, we focused on high-margin products and services, and we select carefully about our clients, which yield better margin profiles.

其次，與 2022 年相比，我們的公有雲和企業雲服務在 2023 年及以後幾季的利潤率均有所提高。自去年以來，我們專注於高利潤產品和服務，並仔細選擇客戶，從而產生更好的利潤狀況。

Third, we have been taking strict measures and a supply chain strategy to cut down our costs and expenses. We have streamlined our procurement process and enlarged our supply force to achieve higher cost effectiveness. We also closely monitor the daily operation expenses. These key initiatives bear fruit in this quarter by recording EBITDA profit, and we believe these are still potentials in the future, and we will keep our commitment into improving our profitabilities.

第三，我們一直採取嚴格的措施和供應鏈策略來降低成本和費用。我們簡化了採購流程並擴大了供應力量，以實現更高的成本效益。我們也密切監控日常營運費用。這些關鍵舉措在本季度取得了成果，錄得了 EBITDA 利潤，我們相信這些在未來仍然具有潛力，我們將繼續致力於提高獲利能力。

Our adjusted gross profit continued to grow to RMB299.1 million, increased by 53.8% year over year, representing adjusted gross margin of 16.8%, which is a record high for the company, and improved 1.6 percentage points (sic - see page 6, "6.4 percentage points") compared with last quarter.

調整後毛利持續成長至人民幣2.991億元，年增53.8%，調整後毛利率達16.8%，創公司歷史新高，提升1.6個百分點（原文如此 - 見第6頁，與上一季相比“ 6.4 個百分點」）。

Our adjusted EBITDA narrowed from negative RMB130.5 million in the same period of last year and a negative RMB27.7 million in the last quarter to positive RMB33.2 million this quarter. Adjusted EBITDA margin further narrowed from negative 7% in the same period of last year and a negative 1.6% in the last quarter to positive 1.9% this quarter.

我們的調整後 EBITDA 從去年同期的負人民幣 1.305 億元和上季度的負人民幣 2,770 萬元收窄至本季的正人民幣 3,320 萬元。調整後 EBITDA 利潤率進一步收窄，從去年同期的負 7% 和上一季的負 1.6% 收窄至本季的正 1.9%。

Our total revenues were RMB1,775.7 million this quarter, increased by 3.1% sequentially, of which revenues from public cloud services were RMB1,187.4 million, representing an increase of 12.9% compared with RMB1,052 million in the last quarter. The increase was primarily due to the expansion from AI-related revenues and a relatively stable scale of our CDN business.

本季我們的總收入為人民幣 17.757 億元，季增 3.1%，其中公有雲服務收入為人民幣 11.874 億元，比上季度的人民幣 10.52 億元增長 12.9%。這一成長主要是由於人工智慧相關收入的擴大以及CDN業務規模的相對穩定。

Revenues from enterprise cloud services were RMB588.2 million, representing an increase from RMB670.3 million in the last quarter, as fewer projects are scheduled for delivery during the Chinese New Year holiday period.

企業雲端服務收入為人民幣588.2百萬元，較上季的人民幣670.3百萬元增加，原因是春節假期期間計畫交付的項目較少。

We continue to enhance our cost control measures, expanding our coverage of suppliers to search for better service quality and procurement prices. Total cost of revenue decreased by 11.2% year over year and a relatively stable quarter over quarter to RMB1,482.4 million. IDC costs decreased significantly by 11.9% year over year from RMB872.4 million to RMB768.5 million this quarter. The decrease was in line with the scaling down of our CDN services.

我們不斷加強成本控制措施，擴大供應商覆蓋範圍，尋求更好的服務品質和採購價格。總營收成本年減 11.2%，季減 14.824 億元。國際資料中心本季成本大幅下降 11.9%，從 8.724 億元降至人民幣 7.685 億元。這一下降與我們 CDN 服務規模的縮減一致。

Depreciation and amortization costs decreased by 18.3% from RMB224.6 million in the same quarter last year to RMB183.5 million this quarter. The decrease was mainly due to the previous impairment of our long-lived assets and partially offset by the depreciation of new service we acquired.

折舊及攤銷成本由去年同季度的人民幣2.246億元下降18.3%至本季的人民幣1.835億元。減少的主要原因是我們的長期資產之前的減值，並被我們收購的新服務的折舊部分抵消。

Solution development and services costs increased by 5.3% year over year, from RMB423.6 million to RMB446.0 million this quarter. The increase was mainly due to the solution personnel expansion of Camelot.

本季解決方案開發和服務成本年增 5.3%，從 4.236 億元增加到 4.460 億元。這一增長主要是由於Camelot的解決方案人員擴張所致。

Fulfillment costs and other costs were RMB36.1 million and RMB48.3 million this quarter, respectively.

本季的履行成本和其他成本分別為人民幣 3,610 萬元和人民幣 4,830 萬元。

Adjusted gross profit for this quarter increased by 53.8% year over year to RMB299.1 million, representing adjusted gross margin of 16.8% this quarter compared with 10.4% in the same period of last year and 15.2% last quarter, making another record high, as well as the third consecutive quarter of steady margin improvement.

本季經調整毛利為年增53.8%至 2.991億元，本季經調整毛利率為16.8%，去年同期為10.4%，上季為15.2%，再創歷史新高。穩步提高。

In terms of expenses, excluding share-based compensation and impairments of our long-lived assets, our total adjusted operating expenses were [RMB469.6 million], decreased by 21.2% year over year and 5.1% from last quarter, of which our adjusted R&D expenses were RMB193.0 million, increased by 18.8% from last quarter. The increase was mainly due to our continuous investment into technology.

費用方面，剔除股權激勵與長期資產減值，調整後營業費用總額為[人民幣4.696億元]，年減21.2%，較上季下降5.1%，其中調整後營運費用為[人民幣4.696億元]，年減21.2%，季減5.1%。這項成長主要得益於我們對科技的持續投入。

Adjusted selling and marketing expenses were RMB97.9 million, representing a decrease of 8.3% from RMB106.7 million last quarter. Adjusted G&A expenses were decreased by 20.8% from RMB225.6 million last quarter to RMB178.7 million. The decrease was mainly due to the strict control over daily operational expenses and a decrease of bad debt provisions.

調整後銷售及行銷費用為人民幣9,790萬元，較上季人民幣1.067億元下降8.3%。調整後的一般及行政費用由上季的 2.256 億元減少 20.8% 至 1.787 億元。減少的主要原因是嚴格控制日常經營費用以及壞帳準備減少。

As of March 31, 2024, our cash and cash equivalents amounted to RMB1.8 billion, providing us liquidity for operations and investments into AI. The capital expenditures for this quarter were RMB1,212.2 million, as we invested in our infrastructure to build a sustainable AI business.

截至2024年3月31日，我們的現金及現金等價物達人民幣18億元，為我們的營運和人工智慧投資提供流動性。本季的資本支出為人民幣 12.122 億元，用於投資基礎設施以打造可持續的人工智慧業務。

In April, we released our ESG report for 2023, providing an in depth review of the company's progress in the last year in its ESG practices, including business ethics, responsible operation, talent development, green development, sustainable supply chain, and corporate responsibility.

4月，我們發布了2023年ESG報告，深入回顧了公司過去一年在商業道德、責任運營、人才發展、綠色發展、永續供應鏈、企業責任等ESG實踐方面的進展。

In 2023, we were awarded as a member out of a total of TOP 88 companies in the first edition of S&P Global's Sustainable Yearbook China Edition. We are also rated as a single A rating in MSCI ESG rating, leading in the whole ADR stock for China. We will fulfill our social responsibility and create value to our customers, employees, shareholders, suppliers and whole society.

2023年，我們從第一版《標普全球永續發展年鑑中國版》的88家企業中脫穎而出，成為其中一員。我們在 MSCI ESG 評級中也被評為單一 A 級，在中國 ADR 股票整體中處於領先地位。我們將履行社會責任，為客戶、員工、股東、供應商和全社會創造價值。

Looking ahead, our core principle of high quality and sustainable development, we keep taking initiatives to improve our revenue quality, cutting down costs and expenses, and improve our profitability. The breakeven of EBITDA is a well beginning for us, and we expect the more balanced and healthy business performance and the financial results are coming in the future. Thank you.

展望未來，我們將堅持高品質、永續發展的核心原則，不斷採取措施，提高收入質量，降低成本費用，提高獲利能力。EBITDA 的損益平衡對我們來說是一個良好的開端，我們預期未來的業務表現和財務表現將更加平衡和健康。謝謝。

This concludes our prepared remarks. Thanks for your attention. We are now happy to take your questions. Please ask your questions in both Mandarin and English, if possible.

我們準備好的演講到此結束。感謝您的關注。我們現在很樂意回答您的問題。如果可能的話，請用國語和英文提問。

Operator, please go ahead. Thank you.

接線員，請繼續。謝謝。

(Operator Instructions) Xiaodan Zhang, CICC.

（操作員指示） 張曉丹，CICC。

So thanks, management, for taking my questions. I got two questions here. First of all, what is your expectations for the adjusted EBITDA margin improvement pace for the subsequent quarters? And secondly, how are you going to cope with the increasingly aggressive pricing strategies of IC and large language model vendors? Thank you.

謝謝管理層回答我的問題。我在這裡有兩個問題。首先，您對後續季度調整後的 EBITDA 利潤率改善速度有何預期？其次，您將如何應對 IC 和大型語言模型供應商日益激進的定價策略？謝謝。

Yeah. Thank you, (inaudible). So I probably will take on the first question. So as we mentioned in the prepared remarks, we're actually happy to see during the 12 years of history of Kingsoft Cloud is actually the first quarter we hit the EBITDA margin breakeven. And the underlying drivers, as we mentioned, are very clear.

是的。謝謝你，（聽不清楚）。所以我可能會回答第一個問題。正如我們在準備好的發言中提到的，我們實際上很高興看到在金山雲的 12 年曆史中，我們實際上是第一個季度實現了 EBITDA 利潤率盈虧平衡。正如我們所提到的，潛在的驅動因素非常明確。

And we believe that those drivers will continue to unleash the value and profits in the following quarters, namely: the better mix of the revenue from different BUs, the high-margin contribution from AI business, the revamping of the supply chain tactics, which are actively changing many of the suppliers to remain competitive in the cost side, and also, we improved the internal operational efficiency by streamlining certain internal operation initiatives and process. So these are the things. Obviously, other companies do the same, but I think we do in a better committed way and we will carry for a long way.

我們相信這些驅動因素將在接下來的幾個季度繼續釋放價值和利潤，即：不同BU收入的更好組合、人工智慧業務的高利潤貢獻、供應鏈策略的改進，這些都是積極改變許多供應商以維持成本方面的競爭力，同時，我們透過簡化某些內部營運措施和流程來提高內部營運效率。這些就是事情。顯然，其他公司也這樣做，但我認為我們會以更堅定的方式去做，我們將走得更遠。

And also if we're looking forward, we believe partial of the benefits on the profit from the initiatives we already took will continue to have the results in the coming year quarters. And in addition, as you can see that, we also have the better trends to go with the higher growth on the top line. So I think that will also give a good kick into the bottom line of the profitability as well.

而且，如果我們展望未來，我們相信我們已經採取的舉措所帶來的部分利潤將在未來的幾個季度繼續產生結果。此外，正如您所看到的，隨著收入的更高成長，我們也有更好的趨勢。因此，我認為這也將大大提高獲利能力。

So in short, I think we are not going to say it's going to be onetime profitability on the EBITDA line. It will be consistent and it will be probably carried along in the following quarters. And we also see the improving better gross margin will also kick down to the EBITDA margin line as well. So I think sequentially, we'll see a better gross margin carryforward and also will be a narrowed spread between the gross margin and EBITDA margin.

簡而言之，我認為我們不會說 EBITDA 會一次實現盈利。它將是一致的，並且可能會在接下來的幾個季度中繼續下去。我們也看到，毛利率的改善也將降低 EBITDA 利潤率線。因此，我認為接下來，我們將看到更好的毛利率結轉，並且毛利率和 EBITDA 利潤率之間的利差也將縮小。

So we'll see probably a more accelerated trend of the EBITDA margin improvement as well. I think there's other two things we can share. Obviously, we're not going to give a numeric guidance on the EBITDA margin going forward. But I think we're going to achieve kind of industry top level of the tier players in a very similar ballpark number of the gross margin and EBITDA margin line.

因此，我們也可能看到 EBITDA 利潤率改善的加速趨勢。我認為我們還有另外兩件事可以分享。顯然，我們不會對未來的 EBITDA 利潤率提供數位指導。但我認為我們將在毛利率和 EBITDA 利潤率線非常相似的情況下達到行業頂級水平。

And what I can commit is, the EBITDA margin breakeven for this quarter is not going to be a onetime off event. So we are pretty confident both gross margin and EBITDA margin will continue to improve in several quarters down the road as well. Thank you.

我可以承諾的是，本季的 EBITDA 利潤率損益平衡不會是一次性事件。因此，我們非常有信心毛利率和 EBITDA 利潤率將在未來幾季繼續改善。謝謝。

Okay. So I'll just very quickly summarize and translate. So to be quite honest, it is something that we had expected already. As I mentioned, people have noted the price cut of large language model offered by ByteDance, Alibaba, and Baidu, and I've also commented on this, which is a sign that the large language model development in China has entered a stage of relatively mature, which I would call, the round of competition which eliminates some of the players.

好的。所以我會很快總結和翻譯。老實說，這是我們已經預料到的。正如我所提到的，人們已經注意到字節跳動、阿里巴巴、百度等大語言模型的降價，我也對此發表了評論，這表明中國的大語言模型發展已經進入了相對成熟的階段。 ，我稱之為淘汰一些球員的一輪比賽。

However, I think it's important to mention one point that what, we, at Kingsoft Cloud do is different from what this large language model players do because we actually provide services and computing power to the large language model players. But we don't do like large language model ourselves. And therefore, the importance for us is that what we are closely looking at is whether these customers of us, namely the independent large language model players in the market, are going to be able to survive this competition and remain a player in the market.

不過我覺得有一點很重要，我們金山雲做的事情和這個大型語言模型廠商做的事情是不一樣的，因為我們實際上是給大型語言模型廠商提供服務和算力的。但我們自己不喜歡大型語言模型。因此，對我們來說重要的是，我們密切關注的是我們的這些客戶，即市場上獨立的大型語言模型參與者，是否能夠在這場競爭中生存並繼續作為市場參與者。

From the current situation, we have seen that many of them have secured a very large amount of financing in recent past. And therefore, overall, we evaluate the situation for these customers to be relatively robust, at least in the next one or two years, which is well within our contract period.

從目前的情況來看，我們看到他們中的許多人在最近一段時間都獲得了非常大量的融資。因此，總的來說，我們評估這些客戶的情況相對穩健，至少在未來一兩年內，這完全在我們的合約期間內。

From the long-term standpoint, we do think that this is a stage of development of large language model in China that is going to come, which is not going to be that sustainable for all kinds of players to remain on the table. However, we do think that vertical application models -- for vertical application models, there's a good chance that many of them will be able to have their own niche and unique markets in the market competition.

從長遠來看，我們確實認為中國大型語言模型的發展階段即將到來，但對於所有類型的參與者來說，這個發展階段並不可持續。然而，我們確實認為垂直應用模型——對於垂直應用模型來說，他們中的許多人很有可能在市場競爭中擁有自己的利基和獨特的市場。

Timothy Zhao, Goldman Sachs.

提摩西·趙，高盛。

Thank you, management, for taking my question. My question is regarding AI and the relevant investments. I do notice that the AI revenue actually showed strong Q-on-Q growth either from an absolute number perspective or as a percentage of revenue. Just wondering if management can share any color on what is driving that very significant AI revenue growth.

謝謝管理層回答我的問題。我的問題是關於人工智慧和相關投資的。我確實注意到，無論是從絕對數字角度還是收入的百分比來看，人工智慧收入實際上都顯示出強勁的環比增長。只是想知道管理層是否可以分享推動人工智慧收入顯著成長的因素。

And secondly, on CapEx, as you mentioned, you already spent around RMB1.2 billion CapEx. I was just wondering if management has any guidance into the total CapEx for this year? Thank you

其次，在資本支出方面，正如您所提到的，您已經花費了約 12 億元的資本支出。我只是想知道管理層是否對今年的總資本支出有任何指導？謝謝

Thank you, Tim. Probably, I'll take on part of the question and our SVP also will probably give more color on the business side as well. So regarding the investments, so I think we are probably still in the early age and there's still a lot of opportunities. We want to invest into the right clients. As we mentioned, we want to carefully select the clients. But after we committed to the client, as we are getting to know client better, we will continue to make more investments.

謝謝你，提姆。也許我會回答部分問題，我們的高級副總裁也可能會在業務方面提供更多的資訊。因此，關於投資，我認為我們可能仍處於早期階段，仍然有很多機會。我們希望投資合適的客戶。正如我們所提到的，我們要仔細選擇客戶。但在我們向客戶做出承諾之後，隨著我們對客戶的了解越來越深入，我們將繼續進行更多的投資。

So the RMB1.2 billion for this quarter, I think, it's only part of the demand we received from the clients, and we'll continue to invest more in the following quarters, which we think will result in a higher revenue in the following quarters.

因此，我認為本季的12 億元人民幣只是我們從客戶那裡收到的需求的一部分，我們將在接下來的幾個季度繼續增加投資，我們認為這將在接下來的時間內帶來更高的收入宿舍。

But on the other hand, given the AI business itself carry a better margin and the supply-demand trend in the market is more balanced, so we are actually changing the way we use our money as you probably realize that not only we're using our equity capital, but also we leverage different sources, including the financial leasing, including some operational leasing, including the bank borrowing and other partnerships with -- for example, with the suppliers that will provide certain credits to us as well.

但另一方面，考慮到人工智慧業務本身有更好的利潤率，而且市場的供需趨勢更加平衡，所以我們實際上正在改變我們使用資金的方式，因為你可能意識到，不僅我們在使用我們的股本，但我們也利用不同的來源，包括金融租賃，包括一些經營租賃，包括銀行借款和其他合作夥伴關係——例如，與也將為我們提供某些信貸的供應商的合作夥伴關係。

So I think we are going to explore as many channels as possible to extend the capital we have. So the thing I want to mention, we don't want to set a cap about how much we want to invest into AI just because the cash we have on the balance sheet, right? So I think you can model for different level of the ceilings on the cash number we have today.

所以我認為我們將探索盡可能多的管道來擴大我們擁有的資本。所以我想提的是，我們不想因為資產負債表上有現金就設定對人工智慧的投資上限，對嗎？所以我認為你可以對我們今天擁有的現金數量的不同級別的上限進行建模。

So I think that's -- on your second question. So if you put a total number on the 2024, I think the total investment, including the CapEx, including the investments in the R&D expenses we put on AI team, including different ways -- we have flexible ways to work with suppliers, I think the total investment into AI for this year is going to be a few more times multiplied by this quarter's number. I think that's probably the ballpark number I can give. And that will yield, again, a better and a much higher AI revenue in the following quarters.

所以我認為這是關於你的第二個問題。所以如果你把2024年的總數算出來，我認為總投資，包括資本支出，包括我們對人工智慧團隊的研發費用的投資，包括不同的方式——我認為我們有靈活的方式與供應商合作今年人工智慧的總投資將是本季投資的幾倍。我想這可能是我能給的大概數字。這將在接下來的幾季再次帶來更好、更高的人工智慧收入。

And for the opportunity of the AI business, one thing I just want to start and Liu Tao can add on the following points. So the demand from client actually carry a more diversified way. So not only one vertical from, for example, a big model company, but also, as you can see, as AI business getting to the year two, right, last year from year zero, then into the year two, more clients and different type of clients will use the AI computing power not only for the computing itself, but also will carry with applications, data scenarios from all different verticals, including Internet, including probably the financial services, the legal and auditing and other, for example, public sector clients will all probably use that.

對於人工智慧業務的機會，我只想開始一件事，劉濤可以補充以下幾點。所以客戶的需求其實是更加多元化的。因此，不僅是一個垂直領域，例如，一家大型模型公司，而且，正如你所看到的，隨著人工智慧業務進入第二年，對吧，去年從零開始，然後進入第二年，更多的客戶和不同的這類客戶不僅會將AI算力用於計算本身，還會承載包括互聯網在內的各個不同垂直領域的應用、數據場景，可能還包括金融服務、法律和審計等其他領域，例如公共領域。

And actually, those revenue will gradually come in and book into different -- the products we have today. So I think probably that's the better mix and diversified revenue streams we're happy to see in the following quarter as well.

事實上，這些收入將逐漸進入並計入不同的產品——我們今天擁有的產品。因此，我認為這可能是我們很高興在下個季度看到的更好的組合和多元化的收入來源。

Yeah. We just mentioned that we have many incomes from different type of companies. For example, the AI companies, they are now building the base cluster in our cloud. So as we mentioned on the report, we have built about 256 or even 512 clusters. So these kind of companies will expand their new clusters on the cloud. So we were expecting in the new quarters, we will have better revenues.

是的。我們剛才提到我們有很多來自不同類型公司的收入。例如人工智慧公司，他們現在正在我們的雲端中建立基礎集群。正如我們在報告中提到的，我們已經建立了大約 256 個甚至 512 個集群。所以這類公司會在雲端上擴展他們的新集群。因此，我們預計在新季度，我們將獲得更好的收入。

And also, you can see that all cloud companies, we have the requirement not only on the hard drive technologies, but also on the language models technologies. And also we have some customers from the Internet companies. They are creating their own language models. And now, not only can provide cluster services for them, but also we can help them to train their own models and even dealing with their new data.

而且大家可以看到，所有的雲端公司，我們不只對硬碟技術有要求，對語言模型技術也有要求。我們也有一些來自網路公司的客戶。他們正在創建自己的語言模型。而現在，我們不僅可以為他們提供叢集服務，還可以幫助他們訓練自己的模型，甚至處理他們的新資料。

And also, we can see some GC companies, which is something like picture and videos, they are also having the increasing requirement. So this requirement while -- we were expecting increase on that. Thank you.

另外，我們可以看到一些GC公司，像是圖片、影片之類的，他們的要求也越來越高。因此，我們預計這項要求會增加。謝謝。

Thank you, operator.

謝謝你，接線生。

Yea. I show no further questions at this time. I would now like to turn the call back over to Nicole Shan for closing remarks.

是的。我目前沒有提出任何進一步的問題。我現在想將電話轉回給 Nicole Shan，讓其結束語。

Thank you, operator. Thank you, once again, for joining us today. If you have any further questions, please feel free to contact us. Look forward to speaking with you again next quarter. Have a nice day. Thank you.

謝謝你，接線生。再次感謝您今天加入我們。如果您還有任何疑問，請隨時與我們聯繫。期待下個季度再次與您交談。祝你今天過得愉快。謝謝。

This concludes today's conference call. Thank you for your participation. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。

Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

本筆錄中的英語陳述是由現場通話中的口譯員說出的。口譯員由贊助本次活動的公司提供。