Kingsoft Cloud Holdings Ltd (KC) 2024 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Kingsoft Cloud Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. (Operator Instruction) Please be advised that today's conference is being recorded.

美好的一天，感謝您的支持。歡迎參加金山雲2024年第三季財報電話會議。此時，所有參與者都處於只聽模式。演講者演講結束後，將進行問答環節。（操作員指示）請注意，今天的會議正在錄製中。

I would now like to turn the conference over to your speaker today, Nicole Shan. Please go ahead.

我現在想把會議交給今天的發言人 Nicole Shan。請繼續。

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

謝謝你，海蒂。大家好，感謝您今天加入我們。金山雲 2024 年第三季財報已於今日稍早發布，可在我們的 IR 網站 ir.ksyun.com 以及 GlobalNewswire 服務上取得。

On the call today from Kingsoft Cloud, we have our Vice Chairman and CEO, Mr. Zou Tao, and CFO, Mr. Haijian He. Mr. Zou will review our business strategies, operations and the company highlights followed by Mr. He who will discuss the financials and the guidance. They will be available to answer your questions during the Q&A session that follows. There will be conductive interpretation. Our interpretations are for your convenience and reference purpose only. In case of any discrepancies, management's statement in the original language will prevail.

今天，金山雲副董事長兼執行長鄒濤先生和財務長何海建先生出席了金山雲的電話會議。鄒先生將回顧我們的業務策略、營運和公司亮點，隨後何先生將討論財務狀況和指導。他們將在接下來的問答環節回答您的問題。將會有傳導性口譯。我們的解釋僅供您參考和參考。如有任何差異，以管理層的原始語言聲明為準。

Before we begin, I'd 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.

在我們開始之前，我想提醒您，本次電話會議包含經修訂的 1934 年證券交易法第 21E 條含義以及 1995 年美國私人證券訴訟改革法案中定義的前瞻性陳述。

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, 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.

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，這些因素難以預測，其中許多因素超出了公司的控制範圍，這可能會導致公司的實際業績、業績或成就與前瞻性陳述中的結果、業績或成就有重大差異。

Further information regarding these 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.

有關這些和其他風險、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而更新任何前瞻性聲明的義務。最後請注意，除非另有說明，本次電話會議中提到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.

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。

(interpreted) Hello, everyone. Thank you and welcome all for joining Kingsoft Cloud's third quarter 2024 earnings call. I am Tao Zou, CEO of Kingsoft Cloud. This quarter, we continue to see strong results from our unwavering commitment to the high quality and sustainable development strategy. First of all, revenue is on an accelerated growth trajectory.

（譯）大家好。感謝並歡迎大家參加金山雲 2024 年第三季財報電話會議。我是鄒濤，金山雲CEO。本季度，我們堅定不移地實施高品質永續發展策略，並持續取得強勁成果。首先，營收處於加速成長軌道。

Following solid year-over-year and month over month growth in Q2, we have seen our year-over-year growth rate rise to 16% this quarter, outpacing the industry average. This momentum stems from the strategic adjustments we made in 2022 to diversify our revenue structure, leveraging our first mover advantage. Both our public cloud and enterprise cloud businesses achieved double-digit year-over-year growth, driven by a dual engine strategy, resulting in a stronger foundation for continued development.

繼第二季年比穩健成長後，本季年增率升至 16%，超過產業平均。這股動能源自於我們在 2022 年為實現收入結構多元化、利用先發優勢而進行的策略調整。在雙引擎策略驅動下，公有雲和企業雲端業務年比均實現兩位數成長，為持續發展奠定了更堅實的基礎。

Second, our profitability is improving at an even faster pace. After turning EBITDA positive for the first time in Q1 and reaching a margin of 3.2% in Q2, this quarter, it has accelerated to a double-digit margin of 10%. Meanwhile, our adjusted operating loss margin has significantly narrowed from 16.2% in the same quarter last year to 7% this quarter, further solidifying our path towards high quality development.

其次，我們的獲利能力正在以更快的速度提高。繼第一季首次實現 EBITDA 正值並在第二季達到 3.2% 的利潤率後，本季已加速達到 10% 的兩位數利潤率。同時，調整後營業虧損率由去年同季的16.2%大幅收窄至本季的7%，進一步夯實高品質發展之路。

Third, we continue to lead the transformation with AI. The proportion of AI revenue as a percentage of our public cloud business has continued to grow to 31% this quarter. Over the past five consecutive quarters, AI revenue has consistently shown triple-digit year-over-year growth. And this quarter, we saw a remarkable 6.9 fold increase compared to last year, outpacing the industry's growth.

第三，我們繼續以人工智慧引領變革。本季人工智慧營收佔公有雲業務的比例持續成長至31%。過去連續五個季度，人工智慧收入持續呈現三位數年成長。本季度，我們看到與去年相比成長了 6.9 倍，超過了該行業的成長速度。

Our strong profit margins and customer distribution demonstrate the sustainability of this growth. Meanwhile, we are also exploring new AI business models. Having entered into a deep collaboration with Shine Wing, China's leading comprehensive professional services firm. Together, leveraging our full stack AI expertise, we're building a one-stop platform that integrates large model training, inference, application development and long-term operational capabilities.

我們強勁的利潤率和客戶分佈證明了這種成長的可持續性。同時，我們也在探索新的人工智慧商業模式。與中國領先的綜合專業服務公司信永中和達成深度合作。借助我們的全端人工智慧專業知識，我們正在建立一個整合大型模型訓練、推理、應用開發和長期營運能力的一站式平台。

Four, we are fully capitalizing on the unique historical opportunity within the Xiaomi and Kingsoft ecosystem. From EV, AIoT, gaming, large language models to WPS AI this quarter our revenues from the ecosystem have increased by 36% year-over-year. We have witnessed fast growth across all of Xiaomi's business lines, among which, notably, its automotive business has garnered strong market recognition.

第四，我們充分利用小米和金山生態系中獨特的歷史機會。從電動車、AIoT、遊戲、大語言模型到WPS AI，本季我們來自生態系統的營收年增了36%。我們見證了小米各業務線的快速成長，尤其是汽車業務獲得了市場的高度認可。

As the sole strategic cloud platform within the Xiaomi and Kingsoft ecosystem, we're fully committed to supporting Xiaomi's autonomous driving, on device and cloud based models among other areas to meet their expanding cloud service needs.

作為小米和金山生態系統內唯一的戰略雲端平台，我們全力支援小米的自動駕駛、端端和雲端模式等領域，以滿足其不斷擴大的雲端服務需求。

Thanks to our industry leading and rapid growth of AI revenue and the practical AI use cases within the Xiaomi and Kingsoft ecosystem, we're able to see the opportunities arising from the market structural changes. Amid a decline in market share for other Internet cloud service providers, our market share has steadily increased.

由於業界領先且快速成長的人工智慧收入，以及小米和金山生態中的實際人工智慧用例，我們能夠看到市場結構變化帶來的機會。在其他網路雲端服務供應商市場佔有率下降的情況下，我們的市佔率穩定上升。

(interpreted) Now let me walk you through the key business highlights for the third quarter of 2024. This quarter, Kingsoft Cloud has made solid progress in revenue scale, profitability, and operating cash flow. Our revenues reached RMB1.89 billion, marking a return to the double-digits growth with a 16% year-over-year increase. The growth in revenue from our high value added products and services offers the pressure -- offsets the pressure from the proactive adjustments in our CDN business.

（解讀）現在讓我帶您了解2024年第三季的主要業務亮點。本季度，金山雲在營收規模、獲利能力、營運現金流等方面均取得紮實進展。收入達人民幣18.9億元，恢復兩位數成長，較去年同期成長16%。我們的高附加價值產品和服務帶來的收入成長帶來了壓力——抵消了我們CDN業務主動調整帶來的壓力。

Adjusted gross profit amounted to RMB308 million, up 56.7% year-over-year. Adjusted gross margin increased to 16.3%, representing a year-over-year increase of 4.2-percentage-points, despite the slight quarter-over-quarter decrease, primarily driven by fluctuations in CDN business profitability.

經調整毛利達人民幣3.08億元，較去年成長56.7%。調整後毛利率增加至16.3%，較去年同期成長4.2個百分點，儘管較上季略有下降，主要是由於CDN業務獲利能力波動所致。

Adjusted EBITDA reached RMB185 million with an adjusted EBITDA margin of 9.8% continuing to improve quickly following the positive turnaround in EBITDA in Q1, and showing a significant year-over-year increase of 13-percentage-points. Net operating cash inflow amounted to RMB228 million, once again demonstrating our strong cash generating ability from operating activities.

調整後 EBITDA 達到 1.85 億元，調整後 EBITDA 利潤率為 9.8%，繼第一季 EBITDA 扭虧為盈後，持續快速改善，年比大幅增加 13 個百分點。經營現金流淨流入人民幣2.28億元，再次展現了我們強大的經營活動現金生成能力。

(interpreted) In terms of public cloud services, revenues reached RMB1.18 billion this quarter, representing a year-on-year increase of 16%. As the sole strategic cloud platform within the Xiaomi and Kingsoft ecosystem, the cloud business opportunities within this ecosystem are fundamental to our growth. This quarter, total revenue contribution from Xiaomi and Kingsoft grew by 36% year-over-year.

(解讀) 公有雲服務方面，本季營收達11.8億元，年增16%。作為小米和金山生態系統中唯一的戰略雲平台，這個生態系統中的雲端商機是我們發展的基礎。本季度，小米和金山軟體的總營收貢獻年增36%。

As Xiaomi's AI fully empowers its entire ecosystem covering human, car, and home, coupled with the advancement of WPS AI, the growth potential of cloud service business driven by the AI era is unprecedented. We are actively capitalizing on the fast growing opportunities in autonomous driving and AI within the ecosystem.

隨著小米AI全面賦能人、車、家全生態，加上WPS AI的推進，AI時代驅動的雲端服務業務成長潛力空前。我們正在積極利用生態系統內自動駕駛和人工智慧快速成長的機會。

Besides, our AI business continues to gain momentum. This quarter, AI revenue surged to RMB362 million, increased by 11% year quarter-over-quarter and accounting for 31% of public cloud revenues, positioning us as an industry leader. We have built a substantial computing power resource pool leading the industry in large scale supercomputing network capabilities capable of supporting the networking topology of supercomputing clusters at the scale of 10,000 nodes. This computing resource pool enables us to simultaneously deliver the integration and commissioning of supercomputing clusters, while offering the full range of public cloud products.

此外，我們的人工智慧業務持續保持強勁勢頭。本季，人工智慧收入飆升至人民幣3.62億元，季增11%，佔公有雲收入的31%，處於業界領先地位。我們建構了規模領先業界的大規模超算網路能力的算力資源池，可支援萬節點規模的超算叢集網路拓撲。這個運算資源池使我們能夠同時提供超算叢集的整合和調測，同時提供全系列的公有雲產品。

(interpreted) Moving on to enterprise cloud services. Revenues amounted to RMB710 million, representing a year-on-year increase of 16.7%. In public services space, we have actively pursued opportunities within public services cloud and state owned enterprise cloud. Focusing on two key use cases, namely government and enterprises, we are promoting standardized operations, leveraging a foundation built on large model capabilities, big data, and collaborative office tools. This quarter, we started large language models project in Zhuhai high-tech zone, jointly training a large model dedicated to government office work, in collaboration with our customer and Kingsoft office tailored for Zhuhai.

（解釋）轉向企業雲端服務。收入達人民幣7.1億元，較去年成長16.7%。在公共服務領域，我們積極尋找公有服務雲、國企雲等機會。我們圍繞著政府和企業兩大關鍵場景，以大模型能力、大數據、協同辦公工具為基礎，推動標準化營運。本季度，我們在珠海高新區啟動了大型語言模型項目，與客戶和金山辦公室合作，共同訓練一個專門針對政府辦公的大型模型，為珠海量身定制。

We also supported the Shenzhen National High-Tech Industrial Innovation Center in completing the construction of the Greater Bay Area data amortization platform, facilitating trustworthy data circulation. According to the 2024 China central and state owned enterprise markets research report released by a domestic authoritative institution, we have been recognized in the leaders’ quadrant with our project quality and product capabilities on par with those of domestic leading peers.

支持深圳國家高技術產業創新中心完成大灣區資料攤提平台建設，促進資料可信賴流通。根據國內權威機構發布的《2024年中國央企市場研究報告》，我們的專案品質和產品能力與國內領先同行相當，進入領導者象限。

In financial services space, we've reached an agreement with a well-known joint stock bank for real time data service projects. This initiative will assist the bank in constructing a real time publication and subscription model, optimizing real time data collection and management as well as creating a local development platform for real time data to improve development efficiency and quality.

在金融服務領域，我們與一家知名股份制銀行就即時數據服務項目達成了協議。此措施將協助該行建構即時發布訂閱模式，優化即時數據擷取與管理，打造本地即時數據開發平台，提升開​​發效率與品質。

We also established a real time data application center to achieve rapid configuration and management of business applications. Besides, Camelot's business remains stable with significant strides made in the construction of Xiaomi's exclusive service center in Wuhan, which has now exceeded 500 staff members.

我們也建立了即時數據應用中心，實現業務應用的快速配置和管理。此外，卡米洛特業務維持穩定，小米武漢專屬服務中心建設取得重大進展，目前員工人數已超過500人。

(interpreted) In terms of product and technology, we uphold the principle of building success based on technology and innovation, focusing on delivering best-in-class customer experience across our core product offerings. In AI space, we launched a cloud native, fully managed platform designed for AIGC data cleaning use cases. This platform offers quick start-up and shutdown capabilities, is easy to use and provides elastic scalability to meet the dynamic demand of data cleaning tasks.

（解讀）在產品和技術方面，我們秉持以技術和創新為基礎取得成功的原則，專注於在我們的核心產品中提供一流的客戶體驗。在人工智慧領域，我們推出了一個雲端原生、完全託管的平台，專為 AIGC 資料清理用例而設計。該平台提供快速啟動和關閉功能，易於使用，並提供彈性擴展能力，以滿足資料清洗任務的動態需求。

Our AI [Hanhai] application platform is aimed to addressing the needs of AI application development in different use cases, helping to accelerate the creation of AI application through low code solution. Additionally, in an industry report published by the Domestic Authoritative Institution CCID, Kingsoft Cloud's model as a service is recognized in the market leaders’ quadrant.

我們的AI【瀚海】應用平台旨在滿足不同用例下的AI應用開發需求，透過低程式碼解決方案幫助加速AI應用的創建。此外，在國內權威機構賽迪研究院發布的行業報告中，金山雲的服務模式被認可為市場領導者象限。

(interpreted) In summary, after two years of steadfast implementation of the high quality and sustainable development strategy, Kingsoft Cloud fundamentals have entered a phase of healthy upward growth. Looking forward, we will continue to enhance our profitability and cash generating capabilities, deepen cooperation with the Xiaomi Kingsoft ecosystem, strengthened Wuhan Research Center and developed comprehensive understanding of new AI and explore such opportunities, thereby continuously creating value for our customers, shareholders, employees, and other stakeholders.

（解讀）綜上所述，經過兩年的堅定實施高品質永續發展策略，金山雲基本面已進入健康向上成長階段。展望未來，我們將繼續提升獲利能力和現金生成能力，深化與小米金山生態系統的合作，加強武漢研究中心，全面了解新人工智慧並探索此類機會，從而不斷為客戶、股東、員工創造價值和其他利害關係人。

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

我現在將電話轉接給我們的財務長海健，讓他檢查我們 2024 年第三季的財務狀況。謝謝。

Thank you, Mr. Zou, and thank you all for joining the call today. I will now walk you through our financial results for the third quarter of 2024. I would like to highlight the three areas of progress. Regarding the performance of this quarter, first of all, in this quarter, the company achieved a double-digit year-over-year growth in total revenue, reaching RMB1885.6 million, which is two times of the high single-digit average growth rate of the industry, restoring the high speed growth of the revenue.

謝謝鄒先生，也謝謝大家今天參加電話會議。現在，我將向您介紹我們 2024 年第三季的財務表現。我想強調三個方面的進展。關於本季業績，首先，本季公司總營收年增，達到兩位數成長，達到人民幣18.856億元，是高個位數平均成長的兩倍產業增速回升，營收恢復高速成長。

There are three aspects we would like to highlight. First, thanks to the first mover advantage of our revenue structure adjustments starting from 2022, differentiated us from situation of our competitors in the market. Both of our public cloud and industry cloud have already benefited from the development trend of AI business, achieving double-digit year-over-year growth, respectively. This has laid out a solid foundation for the balanced growth of the future business.

我們想強調三個面向。首先，由於我們從2022年開始的收入結構調整的先發優勢，使我們在市場上與競爭對手形成了差異化的優勢。我們的公有雲和產業雲都已經受益於人工智慧業務的發展趨勢，分別實現了兩位數的年成長。這為未來業務的均衡成長奠定了堅實的基礎。

Second, in this quarter, our AI gross billings reached RMB362 million, accounting for as high as 31% of the public cloud revenue. It has achieved a three digit year-on-year growth for five consecutive quarters, far exceeding the industry average level.

其次，本季我們的AI總流水達到3.62億元，佔公有雲收入的比例高達31%。連續五個季度實現三位數年增，遠超行業平均。

Third, we have repositioned the business strategy of the company. Regarding the strong performance of Xiaomi's new EV cars, as well as Kingsoft Games and WPS AI, the ecosystem business progress has exceeded market expectations. Thanks to the excessive demand of customers within the Xiaomi and Kingsoft ecosystem, the revenue growth of our ecosystem customers in a single quarter has exceeded 36% year-on-year, laying a good foundation for the growth of ecosystem customer in the future. The proportion of public cloud revenue contributed by the ecosystem client in this quarter has already reached 28%.

第三，我們重新定位了公司的經營策略。小米新能源車、金山遊戲、WPS AI的強勁表現，生態業務進展超乎市場預期。由於小米和金山生態內客戶的過度需求，我們的生態客戶單季營收年增超過36%，為未來生態客戶的成長奠定了良好的基礎。本季生態系客戶端貢獻的公有雲收入佔比已達28%。

Second, in terms of profit, the expansion of our gross profit and EBITDA profit far exceeds industry average, compared with adjusted gross profit margin of only 3.6% in the quarter, before the company carried out business structure adjustments and AI transformation in Q2 of 2022. Today, we have reached a 4.5 times growth of the margin expansion to 16.3%. The adjusted EBITDA profit margin has been significantly improved from a loss of 8.6% in Q2 of 2022 to a profit of 9.8%, with increase of 18.4-percentage-points. The company revenue structure adjustments and AI strategic transformation have achieved remarkable results.

其次，在利潤方面，我們的毛利和EBITDA利潤的擴張遠超行業平均水平，而在公司2022年第二季度進行業務結構調整和人工智慧轉型之前，該季度調整後的毛利率僅為3.6% 。如今，我們的利潤率成長了 4.5 倍，達到 16.3%。調整後EBITDA利潤率大幅改善，從2022年第二季的虧損8.6%改善為獲利9.8%，提升18.4個百分點。公司營收結構調整與AI策略轉型成效顯著。

Thirdly, due to the effective progress of high-quality business and strong cash flow contribution brought about by the successful transformation of AI business in this quarter, we have achieved net inflow of operating cash flow reaching RMB228 million. In terms of the outlook, we have achieved a turning point for our successful AI strategy and also Xiaomi Kingsoft ecosystem strategy.

第三，本季由於優質業務的有效進展以及人工智慧業務成功轉型帶來的強勁現金流貢獻，我們實現了經營性現金流淨流入2.28億元。從前景來看，我們成功的人工智慧策略和小米金山生態策略已經實現了轉捩點。

Going forward, for the fourth quarter of 2024, we are happy to provide the following guidance for the performance of Q4. First of all, thanks to the parallel two drivers of both public cloud and enterprise cloud, we will continue to deliver healthy growth for Q4. We expect to achieve accelerated growth rate for the total revenues in Q4 2024, exceeding the average growth rate of industry.

展望未來，對於 2024 年第四季度，我們很高興為第四季度的業績提供以下指引。首先，由於公有雲和企業雲兩大驅動的並行，我們第四季將持續實現健康成長。我們預計2024年第四季總營收將實現加速成長，超過產業平均成長速度。

Second, we expect our profitability will continue to improve. For the adjusted operating profit, we expect to deliver significant accelerated improvement in Q4.

其次，我們預期我們的獲利能力將持續改善。對於調整後的營業利潤，我們預計第四季將出現顯著的加速改善。

Third, for the AI business and the Xiaomi Kingsoft ecosystem strategy, we believe the revenue contribution will continue to grow. As a result, we will continue to take more market shares from competitors going forward. Meanwhile, given the promising growth of AI and the cloud demand from both Xiaomi and Kingsoft Group, for upcoming connected party transaction applications with our shareholders and the stock exchange in Hong Kong, we are applying for revenue to be generated from Xiaomi and Kingsoft Group for the next three years with a cap of RMB11.3 billion, (technical difficulty) revenue of RMB1.1 billion in the financial year of 2023, providing solid support for company revenue and profit growth.

第三，對於AI業務和小米金山生態策略，我們認為收入貢獻將持續成長。因此，我們將繼續從競爭對手那裡奪取更多的市場份額。同時，鑑於人工智慧的良好成長以及小米和金山集團的雲端需求，為即將與我們的股東和香港證券交易所申請關聯方交易，我們正在申請從小米和金山集團產生的收入未來三年上限113億元，2023財年（技術難度）營收11億元，為公司營收及利潤成長提供堅實支撐。

Now, let's dive into the details of our financial results. Total revenue of this quarter were RMB1885.6 million, reflecting a 16% year-over-year increase, of which revenues from public cloud services were RMB1175.5 million, up 15.6% from RMB1016.6 million in the same quarter last year. This growth was primarily driven by a significant increase in AI related revenues, which reached RMB362 million, partially offset by the scaling down of CDN services due to higher bandwidth costs and price adjustments with certain customers.

現在，讓我們深入了解我們的財務表現的詳細資訊。本季總收入為人民幣1885.6百萬元，年增16%，其中公有雲服務收入為人民幣1,175.5百萬元，較去年同期的人民幣1016.6百萬元增長15.6%。這一增長主要得益於人工智慧相關收入的大幅增長，達到人民幣3.62億元，但部分被頻寬成本上升和某些客戶的價格調整導致的CDN服務規模縮減所抵消。

Revenues from enterprise cloud reached RMB710 million up from RMB608.5 million in the same quarter last year, primarily driven by increased demand in selected verticals and a growth in Camelot's IT solutions. We have continued to enhance our cost control by expanding our supply base and optimizing procurement cost, which has improved both service quality and pricing.

企業雲端收入從去年同期的人民幣6.085億元增至人民幣7.1億元，主要是由於特定垂直行業的需求增加以及Camelot IT解決方案的成長所推動。我們持續加強成本控制，擴大供應基礎，優化採購成本，提高了服務品質和價格。

Total cost of revenue was RMB1582.2 million, up 10.7% year-over-year, but remained stable quarter over quarter. IDC cost dropped significantly by 8.7% year-over-year from RMB737.7 million to RMB673.8 million this quarter, reflecting the strategic scaling down of our CDN services and the batch rep utilization.

總收入成本為人民幣1,582.2百萬元，較去年同期成長10.7%，但較上季維持穩定。本季 IDC 成本較去年同期大幅下降 8.7%，從人民幣 7.377 億元降至人民幣 6.738 億元，反映出我們的 CDN 服務策略性縮減和批量代表利用率。

Depreciation and amortization costs increased from RMB200.4 million in the same period of last year to RMB297.5 million this quarter, mainly due to the depreciation of newly acquired GPU service. Solution development and service costs rose by 70.3% year-over-year from RMB425.3 million to RMB499 million, driven by expansion in Camelot personnel to support revenue growth.

折舊及攤銷成本由去年同期的人民幣200.4百萬元增加至本季的人民幣297.5百萬元，主要是由於新收購的GPU服務的折舊所致。由於卡米洛特人員擴張以支持收入增長，解決方案開發和服務成本同比增長 70.3%，從人民幣 4.253 億元增至人民幣 4.99 億元。

Fulfilment costs and other costs were RMB59.5 million and RMB52.3 million this quarter, respectively. Our adjusted gross profit for the quarter was RMB307.6 million, a 56.7% increase year-over-year, with an adjusted gross margin of 16.3%.

本季履行成本和其他成本分別為人民幣 5,950 萬元和人民幣 5,230 萬元。本季調整後毛利為人民幣3.076億元，年增56.7%，調整後毛利率為16.3%。

On the expenses side, excluding share based compensation and impairment of long-lived assets, our total adjusted operating expenses were RMB491.2 million, a decrease of 2.6% year-over-year and 11.5% quarter-over-quarter, of which our adjusted R&D expenses were RMB232.3 million, up 16.1% from last quarter, due to higher personnel costs.

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4.912億元，較去年同期下降2.6%，季減11.5%，其中由於人員成本上升，調整後研發費用為人民幣2.323億元，較上季成長16.1%。

Adjusted selling and marketing expenses were RMB110.6 million, down from RMB117.5 million last quarter, representing 5.9% of total revenues. Adjusted G&A expenses were RMB148.3 million, significantly lower than RMB237.7 million last quarter, reflecting strong cost control and a reduction in credit losses. As of September 30, 2024, our cash and cash equivalents totalled RMB1,617.9 million providing a strong liquidity position to support our operations and AI investments. Our capital expenditure and assets obtained through financial leasing reached RMB1.22 billion, majority of which are used to invest in servers to support AI business.

調整後的銷售和行銷費用為人民幣 1.106 億元，低於上季的 1.175 億元，佔總收入的 5.9%。調整後的一般及行政費用為人民幣 1.483 億元，顯著低於上季度的人民幣 2.377 億元，反映出強有力的成本控制和信貸損失的減少。截至2024年9月30日，我們的現金及現金等價物總額為人民幣16.179億元，為支持我們的營運和人工智慧投資提供了強大的流動性狀況。我們的資本支出和透過融資租賃獲得的資產達到人民幣12.2億元，其中大部分用於投資伺服器以支援人工智慧業務。

Looking ahead, we remain committed to the principle of high quality and sustainable development. We expect ongoing revenue growth, driven by deeper collaborations with Xiaomi and the Kingsoft ecosystems, further expansion of AI related gross billings and a continued reduction of low margin CDN business. We also expect to achieve another milestone in adjusted operating profit in the near future. Thank you.

展望未來，我們將繼續堅持高品質、永續發展的原則。我們預計，在與小米和金山生態系統的深入合作、人工智慧相關總營收的進一步擴大以及低利潤 CDN 業務的持續減少的推動下，收入將持續增長。我們也預計在不久的將來在調整後的營業利潤方面將實現另一個里程碑。謝謝。

This concludes our prepared remarks. Thanks for your attention. We are now happy to take your questions. Please ask your question in both Mandarin, Chinese and English, if possible. Operator, please go ahead. Thank you.

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、中文和英文提問。接線員，請繼續。謝謝。

(Operator Instructions) Xiaodan Zhang, CICC.

（操作員指示） 張曉丹，CICC。

(interpreted) So thanks management for taking my questions and I've got two questions here. First of all, on the revenue contribution from Xiaomi and Kingsoft Group has been continuously increasing over the past quarters. Could you please share with us your views on the growth potentials of those strategic customers as well as your service strategy?

（翻譯）感謝管理階層提出我的問題，我這裡有兩個問題。首先，小米和金山集團的營收貢獻在過去幾季不斷增加。您能否與我們分享您對這些策略客戶的成長潛力的看法以及您的服務策略？

Secondly, could you please share your outlook on adjusted EBITDA margin, as well as operating margin, taking into consideration the depreciation and amortization expenses and the rising AI related CapEx?

其次，考慮到折舊和攤銷費用以及不斷上升的人工智慧相關資本支出，您能否分享一下您對調整後 EBITDA 利潤率以及營業利潤率的展望？

Yes, as you have seen, the business opportunities coming from the Xiaomi and Kingsoft ecosystem has been increasing very quickly and steadily. Thanks to the unprecedented AI opportunities since last year, since the AI opportunities. And of course, the business -- the AI related business opportunity itself with Xiaomi and Kingsoft Corporation has been developing fairly fast. As you would have seen from the Xiaomi results released yesterday, which is set to be historically strongest results, the Xiaomi EV delivery has been very strong.

是的，正如你所看到的，來自小米和金山生態系統的商機一直在快速且穩定地成長。感謝自去年以來前所未有的人工智慧機會。當然，小米和金山公司的人工智慧相關業務本身也發展得相當快。正如您從昨天發布的小米業績中看到的那樣，這將是歷史上最強勁的業績，小米電動車的交付量非常強勁。

So therefore, the cloud service utilization and use cases cantered around the growth of Xiaomi has a solid foundation to grow. And also I have mentioned that on the WTS office side, where they have been cantered around on AI capabilities to promote new AI related functions as well as the solid growth in paid customers for AI function, this all have been driving the cloud usage on the cloud side, which is our revenue.

因此，圍繞小米成長的雲端服務利用率和用例具有堅實的成長基礎。我還提到，在WTS辦公室方面，他們一直在圍繞人工智慧能力來推廣新的人工智慧相關功能，以及人工智慧功能的付費客戶的穩健成長，這些都推動了雲端應用的使用。我們的收入。

So the conclusion is the solid growth of the Xiaomi and Kingsoft ecosystem, their business laid solid foundation for the revenue growth and for the business opportunity of Kingsoft Cloud. And we believe that we are still in this very good business momentum to further grow.

所以結論是小米和金山生態系統的穩健成長，他們的業務為收入成長和金山雲的商業機會奠定了堅實的基礎。我們相信，我們仍處於這種非常良好的業務動能中，可以進一步成長。

Thank you, Xiaodan. I probably will comment on the second question regarding the margin expansion. So as I mentioned in my prepared remarks, I think the sequencing we are seeing is our continued expansion from the gross margin to the EBITDA margin then drop to the operating profit. So back in 2022, at that time, our gross margin was as little as only around 3%.

謝謝你，小丹。我可能會評論有關利潤率擴張的第二個問題。正如我在準備好的演講中提到的，我認為我們看到的順序是我們從毛利率持續擴張到 EBITDA 利潤率，然後下降到營業利潤。那麼回到2022年，當時我們的毛利率只有3%左右。

And this quarter, we are reaching to a certain level. We think it's getting even closer to the top tier player in the market in terms of the gross margin in the near-term. And for the EBITDA margin, you can also notice that the EBITDA margin has converted from a loss of 8.6% in Q2 2022 to a positive around 10% this quarter.

本季度，我們達到了一定水準。我們認為，就近期毛利率而言，它會更接近市場頂級企業。對於 EBITDA 利潤率，您還可以注意到，EBITDA 利潤率已從 2022 年第二季的 8.6% 虧損轉為本季約 10% 的正值。

And I think the expansion, the speed of expansion of EBITDA margin will be faster than the gross margin expansion. And in addition, I think our EBITDA margin given the AI has already contributed around one-third of the total public revenue, which is also higher than the major peers on the street. And I think given that reason, our EBITDA margin will continue to deliver a much higher expansion speed compared with the peers of the industry as well.

而且我認為在擴張方面，EBITDA利潤率的擴張速度將會快於毛利率的擴張。此外，我認為考慮到人工智慧已經貢獻了公共總收入的三分之一左右，我們的 EBITDA 利潤率也高於街上的主要同業。我認為，鑑於這個原因，我們的 EBITDA 利潤率將繼續以比業內同業更高的擴張速度。

So in addition, as you speak about the operating margin, as you noticed, our expense of control and cost cutting in terms of operations as well as improving efficiency in operations all contributed to the operating line as well. So I think we're hoping for the near-term, we can deliver a positive surprise to the shareholders. You may see accelerated and a significant improvement of the operating profit in the very near term. And hopefully, we can keep that track after we made a breakeven in the near-term.

此外，當您談到營業利潤率時，正如您所注意到的，我們在營運方面的控制費用和成本削減以及營運效率的提高也都對營運線做出了貢獻。所以我認為我們希望在短期內能夠為股東帶來正面的驚喜。您可能會在短期內看到營業利潤的加速和顯著改善。希望我們在短期內實現損益平衡後能夠維持這股勢頭。

But at this moment, we're not providing formal guidance for the timing, but hopefully, we can keep the speed and expansion from the gross margin to EBITDA and then to the operating profit as a trend you may observe.

但目前，我們還沒有提供正式的時間指導，但希望我們能夠維持從毛利率到 EBITDA 再到營業利潤的速度和擴張，作為您可能觀察到的趨勢。

Timothy Zhao, Goldman

趙蒂莫，高​​盛

(interpreted) Thank you, management, for taking my questions. I have two questions here. The first is regarding the margin profile of your AI business as well as the revenue from Xiaomi and Kingsoft Group. So just wondering how the margin compares to the overall margin profile of public cloud?

（解釋）謝謝管理層回答我的問題。我在這裡有兩個問題。第一個是關於人工智慧業務的利潤狀況以及小米和金山集團的收入。那麼只是想知道利潤率與公有雲的整體利潤率相比如何？

And secondly, just wondering on your outlook for the CapEx for this year and next year, and how we plan to utilize the resources either on the balance sheet or off balance sheet to meet the funding resources demand to grow your business and especially the AI business?

其次，想知道您對今年和明年的資本支出的展望，以及我們計劃如何利用資產負債表上或表外的資源來滿足您的業務（尤其是人工智慧業務）發展的資金資源需求？

Happy to take on those two questions. The first question, as you all know, we are not disclosing the separate line of gross margin for each of the product line given, as you know, sometimes each customer, they may use multiple different business segments. It's a bit difficult to separate that. But happy to provide some high level guidance on that.

很高興回答這兩個問題。第一個問題，眾所周知，我們不會透露每個產品線的單獨毛利率，因為您知道，有時每個客戶，他們可能會使用多個不同的業務部門。要把它分開有點困難。但很高興就此提供一些高水準的指導。

Overall, the AI-related computing related products are delivering much higher gross margin compared with the traditional, the public cloud services, including the traditional storage and networking. And our entire public cloud gross margin is higher than enterprise cloud in most cases.

總體而言，與傳統的公有雲服務（包括傳統的儲存和網路）相比，人工智慧相關的運算相關產品的毛利率要高得多。而且我們整個公有雲的毛利率在大多數情況下是高於企業雲的。

But however, as Mr. Tao Zou also mentioned in his prepared remarks, the reason why this quarter we're delivering much stronger and robust top-line growth as well as the margin expansion is our both public cloud and enterprise cloud have achieved double-digits YoY growth, which is unlike other peers on the market, because we actually did our business strategy adjustment much earlier back in two years ago. So we do see both parallel growth drivers has been very solid for this quarter.

不過，正如鄒濤先生在準備好的發言中也提到的那樣，本季度我們之所以能夠實現更加強勁的營收成長以及利潤率擴張，是因為我們的公有雲和企業雲都實現了雙倍成長。 數字年增，這與市場上的其他同業不同，因為我們實際上早在兩年前就進行了業務策略調整。因此，我們確實看到本季這兩個並行成長動力都非常強勁。

Coming back to your margin question, I think if we want to take in order the different product lines, I think the current revenue contribution for the incremental revenue, especially the AI delivered double-digits gross margin and a double-digits EBITDA margin. The traditional public cloud also delivered a decent gross margin as well. But, when you look at EBITDA margin, I think AI is also doing a very good margin as well.

回到你的利潤率問題，我認為如果我們要對不同的產品線進行排序，我認為當前的收入對增量收入的貢獻，特別是人工智慧提供了兩位數的毛利率和兩位數的EBITDA 利潤率。傳統的公有雲也帶來了不錯的毛利率。但是，當你看看 EBITDA 利潤率時，我認為人工智慧的利潤率也非常好。

Our traditional non-public cloud services, especially for the CDN as you know, we have already planned out the scaling down as planned, which we actually execute very effectively. The margin contribution from CDN has been very effective and well on our budget. So, we did very in line of the budget. So, these are the first question I probably want to mention.

我們傳統的非公有雲服務，特別是大家知道的CDN，我們已經按照計劃進行了縮減，實際上執行得非常有效。CDN 的利潤貢獻非常有效且符合我們的預算。所以，我們做得非常符合預算。所以，這些是我可能想提的第一個問題。

The second part is given the CapEx, I think the one part I want to mention is we actually have already secured many of the additional CapEx resources, including the banks, financial leasing companies as well as the state owned enterprises, which actually can cooperate with us to invest together into the GPU and AI investments. But more importantly, as I mentioned also in my prepared remarks, for the next three years, we are currently applying for the cap of the related party transaction from both Xiaomi and Kingsoft around RMB11.3 billion for next three years, which is about 10 times over this year's number.

第二部分是CapEx，我想我想提的一個部分是我們實際上已經獲得了許多額外的CapEx資源，包括銀行、金融租賃公司以及國有企業，這些資源實際上可以與我們共同投資GPU 和AI 領域。但更重要的是，正如我在準備好的發言中也提到的，未來三年，我們目前正在申請小米和金山的關聯交易未來三年的上限約為人民幣113億元，即約10年。是今年的數倍。

So from that budget, we are going to look into more closer financial support from shareholders and we are confident we will not dilute the public shareholders in terms of the additional share issuance or the potential transactions that maybe dilutive to the public shareholders, we will keep that in mind.

因此，根據該預算，我們將尋求股東更密切的財務支持，我們有信心不會在增發股票或可能稀釋公眾股東的潛在交易方面稀釋公眾股東的權益，我們將保留記住這一點。

And the strong support from both business and CapEx from the major to shareholders will be very important for our company growth as well as the margin expansion and the robust financial position for the next few years. And we have our internal discussion for the annual budget meeting as well. I think we will talk about that in the later quarter and you may find that we'll maintain a very robust way to managing both leverage as well as the investment speed to the AI investment.

從大股東到股東的業務和資本支出的大力支持對於我們公司的發展以及未來幾年的利潤率擴張和穩健的財務狀況都非常重要。我們也對年度預算會議進行了內部討論。我想我們會在下個季度討論這個問題，你可能會發現我們將保持一種非常穩健的方式來管理槓桿以及人工智慧投資的投資速度。

This concludes today's question-and-answer session. I will now hand back to Nicole Shan for closing remarks.

今天的問答環節到此結束。現在我將請 Nicole Shan 致閉幕詞。

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

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，請隨時聯繫 IR 團隊。期待下個季度再次與您交談。祝你今天過得愉快。謝謝。再見。

This concludes today's conference call. Thank you for participating. 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。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

此文字記錄中標記（翻譯）的部分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。