Kingsoft Cloud Holdings Ltd (KC) 2025 Q1 法說會逐字稿

Good day and thank you for standing by. Welcome to the Kingsoft Cloud's first-quarter 2025 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nicole Shan, IR Director of Kingsoft Cloud. Please go ahead.

您好，感謝您的支持。歡迎參加金山雲2025年第一季財報電話會議。（操作員指示）請注意，今天的會議正在錄音。現在，我想將會議交給今天的演講者，金山雲投資者關係總監 Nicole Shan。請繼續。

Thank you, operator. Hello, everyone, and thank you for joining us today. Kingsoft Cloud's first-quarter 2025 earnings release was distributed earlier today and is available on our IR website at ir.ksyun.com as well as on the PR Newswire services.

謝謝您，接線生。大家好，感謝大家今天加入我們。金山雲 2025 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 PR Newswire 服務上查閱。

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 the company highlights; followed by Mr. He, who will discuss the financial performance. They will be available to answer your questions during the Q&A session that follows. There will be consecutive interpretation. Our interpretations are for your convenience and reference purpose only. In case of any discrepancy, management statement in the original language will prevail.

今天參加金山雲電話會議的有我們的副董事長兼執行長鄒濤先生和財務長何志剛先生。鄒先生將回顧我們的業務策略、營運狀況和公司亮點；隨後何先生將討論財務表現。他們將在隨後的問答環節中回答您的問題。將會有交替傳譯。我們的解釋僅供您方便和參考。如有任何差異，以原文的管理聲明為準。

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 Security Exchange Act of 1934 as amended and as defined in the U.S. Private Security Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectation, current market and operating conditions, and relate to events that involve 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. Further information regarding this and other risks and uncertainties of factors are included in the company's filings with the U.S. SEC. The company that 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.

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 條和 1995 年美國私人證券訴訟改革法案中定義的前瞻性陳述。這些前瞻性陳述是基於管理層當前的預期、當前的市場和營運條件，涉及未知風險、不確定性和其他因素的事件，所有這些因素都難以預測，其中許多因素超出了公司的控制範圍，可能導致公司的實際結果、業績或成就與前瞻性陳述中的結果、業績或成就存在重大差異。有關此因素以及其他風險和不確定因素的更多資​​訊包含在該公司向美國提交的文件中。證券交易委員會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陳述的義務，除非適用法律另有規定。

Finally, please note that unless otherwise stated, all financial figures mentioned during this conference call are denominated in RMB.

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.

現在我很高興介紹我們的副董事長兼執行長鄒先生。請繼續。謝謝。

(Interpreted)

（口譯）

Hello, everyone. Thank you and welcome all for joining Kingsoft Cloud's first-quarter 2025 earnings call. I am Zou Tao, CEO of Kingsoft Cloud.

大家好。感謝並歡迎大家參加金山雲 2025 年第一季財報電話會議。我是金山雲CEO鄒濤。

This quarter, we continued to steadily advance our business to the target on high-quality and sustainable development, centering on key areas of AI. First, we recorded year-over-year revenue growth of 11%, reaching RMB1.97 billion. Both public cloud and enterprise cloud achieved year-over-year growth, among which, public cloud increased by 14%, reaching RMB1.35 billion.

本季度，我們持續圍繞人工智慧重點領域，穩步推動業務朝向高品質、永續發展的目標邁進。一是營業收入年增11%，達到19.7億元。公有雲和企業雲均實現年成長，其中公有雲成長14%，達到13.5億元。

Second, we continued to drive progress with AI. This quarter, AI gross billing reached RMB525 million, representing a year-over-year increase of over 200% and a quarter-over-quarter growth of 11%, further contributing 39% of public cloud revenue. In addition, this quarter, we are accelerating the construction of our computing clusters with more flexible capital deployment, which is expected to launch service officially in the second quarter, further boosting our AI business revenue.

第二，我們持續推動人工智慧進步。本季，AI總流水達5.25億元，年增超過200%，季增11%，進一步貢獻了公有雲收入的39%。此外，本季我們正在加速建設運算集群，資金配置更加靈活，預計將於第二季正式投入使用，進一步提升我們的AI業務收入。

Third, as the only strategic cloud platform of the Xiaomi and Kingsoft ecosystem, our business cooperation with the ecosystem progressed smoothly. This quarter, revenue from Xiaomi and Kingsoft ecosystem reached RMB500 million, up 50% year-over-year, with its contribution to total revenue further increasing to 25%. By fully integrating the strengths of both parties and jointly expanding cloud infrastructure for the AI era, our collaboration with Xiaomi and Kingsoft in the AI space continued to progress and deepen.

第三，作為小米及金山生態圈唯一策略雲平台，我們與生態圈的業務合作進展順利。本季，小米及金山生態圈營收達5億元，年增50%，佔總營收的貢獻進一步提升至25%。透過充分整合雙方優勢，共同拓展面向AI時代的雲端基礎設施，我們與小米、金山在AI領域的合作不斷推進與深化。

Finally, in terms of profitability, this quarter, our non-GAAP gross profit was RMB327 million, representing a year-over-year increase of 9.6%. Non-GAAP EBITDA margin reached 16.2%, an increase of 14.3 percentage points year-over-year, mainly attributable to the continued increase in the proportion of AI business revenue.

最後，在獲利能力方面，本季我們的非公認會計準則毛利為人民幣3.27億元，較去年同期成長9.6%。Non-GAAP EBITDA 利潤率達到 16.2%，較去年同期增加 14.3 個百分點，主要得益於 AI 業務收入佔比的持續提升。

However, we also witnessed that our profits have experienced some fluctuation quarter-over-quarter, while non-GAAP gross margin declined by 2.6 percentage points quarter-over-quarter to 16.6%. The decline in gross margin was mainly due to declined profit contribution from a lower proportion of enterprise cloud revenue as well as the impact of front-loaded investment of computing resources. The non-GAAP operating profit was impacted by the decline in gross profit, resulting in the loss of RMB55.8 million this quarter.

但我們也看到利潤較上月出現了一些波動，非公認會計準則毛利率較上月下降2.6個百分點至16.6%。毛利率下降主要由於企業雲端收入佔比下降導致的利潤貢獻下降以及計算資源前期投入的影響。非美國通用會計準則營業利潤受到毛利下降的影響，導致本季虧損5,580萬元。

Non-GAAP operating margin was negative 2.8%, representing an improvement of 4.4 percentage points compared with a loss of 7.2 percentage points in the same period last year and turned from a profit to a slight loss quarter-over-quarter.

Non-GAAP營業利益率為-2.8%，較去年同期的虧損7.2個百分點改善4.4個百分點，較上季獲利轉為小幅虧損。

Despite quarter-over-quarter fluctuations in financial performance this quarter and the headwinds of both market pressure and supply chain uncertainties, we remained firmly on track with our long-term strategy and continued to move forward with confidence. We have strengthened our foundation in ecosystem cooperation, computing infrastructure deployment, and AI application, advancing the strategic layout of our company's overall AI cloud services.

儘管本季財務業績環比波動，且面臨市場壓力和供應鏈不確定性等不利因素，但我們依然堅定地堅持長期策略，繼續滿懷信心地向前邁進。我們在生態合作、運算基礎設施部署、AI應用等方面加強基礎建設，推動公司整體AI雲端服務的策略性佈局。

(Interpreted)

（口譯）

Now, let me walk you through the key business highlights for the first quarter of 2025. In public cloud space, revenue reached RMB1.35 billion this quarter, representing a year-over-year increase of 14%. AI business, as a key growth driver, reported a significant increase in gross billings to RMB525 million, up over 200% year-over-year and 11% quarter-over-quarter, accounting for 39% of public cloud revenue, continuing to lead the industry.

現在，讓我向您介紹2025年第一季的主要業務亮點。在公有雲領域，本季營收達到人民幣13.5億元，年增14%。AI業務作為主要成長動力，總開票收入大幅成長至5.25億元，年增超過200%，季增11%，佔公有雲收入的39%，持續維持業界領先。

Based on steady usage growth in ecosystem customers and foundation model customers, computing demands for AI applications in Internet customer business scenarios such as online education and online travel also made breakthroughs.

基於生態客戶、基礎模型客戶使用量穩定成長，線上教育、線上旅遊等網路客戶業務場景對AI應用的算力需求也取得突破。

In the construction of clusters, we efficiently coordinated and responded quickly to the demand schedule of key customers, created benchmark case of delivering full-spectrum cloud services for large-scale clusters within the quarter. In addition, through flexible capital cooperation models, we ensured sufficient underlying computing power supply to support the rapid growth of our AI business.

在集群建設中，高效協調、快速響應重點客戶需求計劃，打造了季度內交付大規模集群全頻譜雲端服務的標竿案例。此外，我們透過靈活的資本合作模式，確保充足的底層算力供應，支撐AI業務的快速成長。

(Interpreted)

（口譯）

In enterprise cloud space, revenue reached RMB616 million this quarter, representing a year-over-year increase of 5%. Affected by seasonal slowdowns in project delivery and acceptance process, enterprise cloud revenue declined quarter-over-quarter.

企業雲領域本季營收達到人民幣6.16億元，較去年同期成長5%。受專案交付驗收流程季節性放緩的影響，企業雲端收入較上季下降。

By industry, in the public service sector, we are advancing the application of AI in public service cloud and the state-owned asset cloud, actively embracing the AI-driven trend.

分產業來看，在公共服務領域，我們正在推動人工智慧在公共服務雲、國資雲的應用，並積極擁抱人工智慧驅動的趨勢。

Kingsoft Cloud has built a rich set of model resources through open source model marketplace, while providing a one-stop model to chain that covers key process, including data processing, model fine-tuning, model evaluation, and model quantization. We remain committed to delivering full-process, one-stop AI services to help customers deeply optimize model performance in their business scenarios.

金山雲透過開源模型市場建立了豐富的模型資源，同時提供涵蓋資料處理、模型微調、模型評估、模型量化等關鍵流程的一站式模型到鏈服務。我們致力於提供全流程、一站式的AI服務，協助客戶在業務場景中深度優化模型效能。

In healthcare sector, we initiated the construction of a platform for mutual recognition and sharing of test and examination results in Wuhan. Kingsoft Cloud's medical imaging cloud capabilities, which have been deployed in regions such as Jiangsu and Chongqing provinces were once again validated. Our capabilities also expanded from imaging scenarios to test and examination scenarios and have been further replicated and extended to the entire Hubei province market.

在醫療衛生領域，我們啟動了武漢市檢驗檢測結果互認共享平台建置。金山雲醫療影像雲能力已在江蘇、重慶等地區落地，再次驗證。我們的能力也從影像場景拓展到偵測檢查場景，並進一步複製推廣到整個湖北省市場。

(Interpreted)

（口譯）

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

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，專注於透過我們的核心產品提供一流的客戶體驗。

This quarter, we continue to enhance the product capabilities of our intelligent cloud computing services. Our (inaudible) training and inference platform as a one-stop AI development and deployment platform remains committed to providing enterprises with efficient, elastic, and cost-effective model training and inference services. The integration of high-quality models, including the one from Xiaomi, will further expand the platform's ecosystem capabilities and help customers apply AI technologies in scenarios such as natural language processing, multi-modal interaction, and intelligent decision making.

本季度，我們持續增強智慧雲端運算服務的產品能力。我們的（聽不清楚）訓練和推理平台作為一站式人工智慧開發和部署平台，始終致力於為企業提供高效、彈性、經濟的模型訓練和推理服務。包括小米模型在內的優質模型的集成，將進一步拓展平台的生態能力，幫助客戶將AI技術應用於自然語言處理、多模態互動、智慧決策等場景。

(Interpreted)

（口譯）

Overall, our AI business continued to grow rapidly, and our cloud services have entered a new development cycle.

整體來看，我們的AI業務持續快速成長，雲端服務也進入了新的發展週期。

In the public cloud space, we strengthen our capabilities in infrastructure, training and inference platforms, and AI tools to help customers reduce training costs and improve stability, convenience, and efficiency throughout model development, fine-tuning, and usage.

在公有雲領域，我們加強基礎設施、訓練和推理平台以及AI工具的能力，幫助客戶降低訓練成本，提高模型開發、調優和使用過程中的穩定性、便利性和效率。

In the enterprise cloud space, with a focus on AI, data, and office productivity, we provide one-stop model solutions and services under the trend of enterprise AI-plus scenario development.

在企業雲端領域，我們圍繞著AI、資料、辦公室等場景，在企業AI+場景發展趨勢下，提供一站式模型解決方案與服務。

Looking ahead, we will maintain deep cooperation with the Xiaomi and Kingsoft ecosystem, fully understand and explore new AI opportunities, and continue to create value for our customers, shareholders, employees, and other stakeholders.

展望未來，我們將與小米、金山生態圈保持深度合作，充分理解並探索新的AI機遇，持續為客戶、股東、員工和其他利害關係人創造價值。

I will now pass the call to our CFO, Henry, to go over our financials for the first quarter of 2025. Thank you.

我現在將電話轉給我們的財務長亨利，讓他來回顧我們 2025 年第一季的財務狀況。謝謝。

Thank you, Mr. Zou, and I thank you all for joining the call today. I will now walk you through the financial results for the first quarter of 2025.

謝謝鄒先生，也謝謝大家今天參加電話會議。現在我將向大家介紹2025年第一季的財務表現。

This quarter, our AI strategy continued to drive our growth and laid a foundation for future development. Total revenues for this quarter were RMB1,970 million, reflecting an 11% year-over-year increase. All of these revenues from public cloud services were RMB1,353.5 million, up 14% from RMB1,187.4 million in the same quarter last year. This growth was mainly fueled by a surge in AI-related business with the billing reaching RMB525 million. This quarter, our capital expenditure reached RMB605 million.

本季度，我們的AI策略持續推動我們的成長，並為未來的發展奠定了基礎。本季總營業收入為人民幣19.70億元，年增11%。其中，公有雲服務收入為人民幣13.535億元，較去年同期的人民幣11.874億元成長14%。這一成長主要得益於人工智慧相關業務的激增，營業額達人民幣5.25億元。本季，我們的資本支出達到人民幣6.05億元。

Revenues from enterprise cloud services reached RMB616.5 million, up 5% from RMB588.2 million in the same quarter last year, primarily driven by increased demand in industry solutions. However, we have witnessed a 25% sequential decrease of enterprise cloud revenues, which was mainly due to the seasonality impact.

企業雲端服務收入達到人民幣6.165億元，較去年同期的人民幣5.882億元成長5%，主要得益於產業解決方案需求的成長。然而，我們看到企業雲端收入環比下降25％，這主要是由於季節性的影響。

Total cost of revenue was RMB1,651.7 million, up 11% year-over-year, which was in line with our revenue expansion. IDC costs dropped by 6% year-over-year from RMB768.5 million to RMB722.8 million this quarter, reflecting on execution on cost control and a better reutilization.

總收入成本為人民幣 16.517 億元，較去年同期成長 11%，與我們的營收成長一致。本季IDC成本年減6%，從7.685億元降至7.228億元人民幣，反映成本控制的執行和更好的再利用。

Depreciation and amortization cost increased from RMB183.5 million in the same period of last year to RMB378.5 million this quarter, mainly due to the depreciation of newly acquired high-performance servers, to expand our AI business. Solution development and the service cost rose by 13.3% year-over-year, from RMB446.0 million to RMB505.2 million driven by expansion in personnel to support revenue growth. Fulfillment costs and other costs was RMB3.1 million and RMB42.1 million this quarter, respectively.

折舊及攤銷成本由去年同期的人民幣1.835億元增加至本季度的人民幣3.785億元，主要由於為擴大我們的人工智慧業務而對新購置的高性能伺服器進行折舊。解決方案開發和服務成本年增13.3%，從人民幣4.460億元增至人民幣5.052億元，主要得益於人員擴張以支持收入成長。本季履約成本及其他成本分別為人民幣310萬元及人民幣4,210萬元。

Our adjusted gross profit for the quarter was RMB327.7 million, a 9.6% increase year-over-year, while a decrease of 23.4% quarter-over-quarter. Adjusted gross margin was 16.6% in this quarter, compared with 16.8% in the first quarter of 2024 and 19.2% in the fourth quarter last year. Our adjusted gross margin has been negatively impacted by the seasonality for enterprise cloud services and at higher upfront investments into servers and the racks for AI business.

本季調整後毛利為人民幣3.277億元，年增9.6%，季減23.4%。本季調整後毛利率為16.6%，2024年第一季為16.8%，去年第四季為19.2%。我們的調整後毛利率受到企業雲端服務季節性以及人工智慧業務伺服器和機架前期投資增加的負面影響。

On the expense side, excluding share-based compensation, our total adjusted operating expenses were RMB427.3 million, a decrease of 9% year-over-year, and a 4.3% quarter-over-quarter, of which, our adjusted R&D expenses was RMB200.8 million, increased by 4% from the same quarter last year. Adjusted selling and marketing expenses were RMB107.8 million, increased by 10.1% year-over-year. Adjusted G&A expenses were RMB118.7 million decreased significantly by 13.6% year-over-year due to the decline of (inaudible).

費用方面，扣除股權激勵費用後，我們的調整後總營運費用為人民幣 4.273 億元，年減 9%，季增 4.3%，其中，我們的調整後研發費用為 2.008 億元，較去年同期成長 4%。調整後銷售及行銷費用為人民幣1.078億元，較去年成長10.1%。調整後一般及行政開支為人民幣 1.187 億元，年減 13.6%，原因是（聽不清楚）。

Our adjusted operating loss was RMB55.8 million, narrowed by 56% from RMB127.0 million in the same period of last year. The improvement was mainly due to increase of gross profit and a decrease of credit loss expenses. However, the adjusted operating profit turned loss from last quarter, which is mainly due to the decrease of gross profit in this quarter.

調整後營運虧損為5,580萬元人民幣，較去年同期的1.27億元收窄56%。此改善主要由於毛利增加及信貸損失費用減少。但調整後營業利潤較上季轉虧，主要由於本季毛利下降所致。

Our non-GAAP EBITDA profit was RMB318.5 million, increased by (inaudible) RMB33.2 million in the same quarter of last year. Our non-GAAP EBITDA margin achieved 16.2%, compared with 1.9% in the same quarter last year. It was mainly due to our strong commitment to AI cloud computing development, strategic adjustments, business structure, and our strict control over cost and expenses.

我們的非公認會計準則 EBITDA 利潤為人民幣 3.185 億元，較去年同期增加（聽不清楚） 3,320 萬元。我們的非公認會計準則 EBITDA 利潤率達到 16.2%，而去年同期為 1.9%。主要得益於我們對AI雲端運算發展的大力投入、策略調整、業務結構調整以及對成本費用的嚴格控制。

As of March 31, 2025, our cash and cash equivalent totaled RMB2,322.7 million providing a strong liquidity position to support operations and AI investments.

截至2025年3月31日，我們的現金及現金等價物總額為人民幣23.227億元，為支援營運和人工智慧投資提供了強大的流動性。

Looking ahead, our cloud infrastructure is ready to serve in a short time. The demand from ecosystems and other AI application scenarios not only fueled our business growth, but also reinforced our confidence in this trajectory. With demand for AI cloud service continues to grow, we are well-positioned to capture and capitalize on AI capital opportunities. Thank you.

展望未來，我們的雲端基礎設施將在短時間內投入使用。生態系統和其他人工智慧應用場景的需求不僅推動了我們的業務成長，也增強了我們對這一軌蹟的信心。隨著對人工智慧雲端服務的需求不斷增長，我們已做好準備抓住並利用人工智慧資本機會。謝謝。

Thank you. That concludes our prepared remarks. Thank you for your attention. I'm now happy to take your questions. Please ask your question in both Mandarin, Chinese, and English if possible. Operator, please go ahead. Thank you.

謝謝。我們的準備好的演講到此結束。感謝您的關注。我現在很高興回答大家的提問。如果可能，請用國語、中文和英文提問。接線員，請繼續。謝謝。

(Operator Instructions)

（操作員指示）

Brian Gong, Citi.

花旗銀行的 Brian Gong。

I will translate myself. Thanks to management. So one is in the third quarter, for both public cloud and enterprise cloud, the growth seems a little bit weaker than our previous expectation. What are the reasons behind this and how should we see the full-year growth right now? And secondly, recently, Xiaomi released its own large language model. Can management elaborate what's the latest demand from Xiaomi? Thank you.

我會自己翻譯。感謝管理層。因此，在第三季度，無論是公有雲還是企業雲，成長似乎都比我們之前的預期要弱一些。這背後的原因是什麼？我們現在應該如何看待全年的成長？其次，最近小米發布了自己的大型語言模型。管理階層能否詳細說明小米的最新需求是什麼？謝謝。

(Interpreted)

（口譯）

Thank you very much for your question. So in relation to your first question about the declined speed in terms of both public cloud and enterprise cloud, as we noted in the prepared remarks, especially for the enterprise cloud, this is quite evident. That includes impact for both our own enterprise cloud services as well as the business from Camelot. Because obviously, Q1, there's the factor of the Chinese New Year and a lot of customers for enterprise cloud business are still doing their budgeting.

非常感謝您的提問。因此，關於您的第一個問題，即公有雲和企業雲的速度下降，正如我們在準備好的評論中所指出的，特別是對於企業雲來說，這是非常明顯的。這包括對我們自己的企業雲端服務以及 Camelot 業務的影響。因為顯然，第一季有中國新年的因素，許多企業雲端業務的客戶仍在做預算。

Now, in terms of the public cloud, as we mentioned before, the public cloud business of Kingsoft Cloud focuses mainly on key customers, which typically are large customers, and they have their own cycle of the construction of the clusters before they can actually get online and to generate revenue. So in fact, in the first quarter, we have delivered a 512-node cluster to our key customers of Omnia. However, that delivery time point was only at the end of March. And therefore, the revenue and profit reflection as in the financial numbers will only be shown in the next quarter, which is the second quarter, Q2.

現在，就公有雲而言，正如我們之前提到的，金山雲的公有雲業務主要關注關鍵客戶，這些客戶通常都是大客戶，他們有自己的集群建設週期，然後才能真正上線並產生收入。事實上，在第一季度，我們已經向 Omnia 的關鍵客戶交付了一個 512 節點的叢集。但那個交貨時間點才3月底。因此，財務數字中反映的收入和利潤將在下一季度，即第二季度 Q2 中顯示。

Now, in relation to your question about the model from Xiaomi, in fact, the Xiaomi 7-billion parameter model was actually trained from our cluster. In fact, the tremendous growth of KC's AI business has much to do with the demand coming from Xiaomi. In the long term perspective, the tremendous demand for model inference coming from Xiaomi still has significant potential. However, since we're serving Xiaomi, the pace of Xiaomi's demand has a lot to do with when and the amount -- the revenue and profits will show on our financial statements on a quarterly basis.

現在，關於您關於小米模型的問題，事實上，小米 70 億參數模型實際上是從我們的集群中訓練出來的。事實上，KC人工智慧業務的巨大成長與來自小米的需求有很大關係。從長遠來看，小米對模型推理的巨大需求仍然具有巨大的潛力。但因為我們是服務小米的，所以小米的需求節奏和時間、數量有很大關係——收入和利潤會按季度體現在我們的財務報表上。

Next question, please, operator? Thank you.

接線員，請問下一個問題？謝謝。

(inaudible), CICC.

（聽不清楚），中金公司。

Thanks, management, for taking my questions. And first of all, I noticed that the Kingsoft Cloud and Kingsoft Office has recently jointly launched an AI all-in-one model machine for government affairs sector. So how do you view the business opportunities in the government affairs AI field? And also, could you introduce the pricing models of this all-in-one machine? And secondly, could you please update on the non-GAAP Op margin outlook for the subsequent quarters? Thank you.

謝謝管理層回答我的問題。首先我注意到，金山雲和金山辦公室近期共同推出了一款針對政務領域的AI一體機。那麼您如何看待政務AI領域的商業機會？另外可以介紹一下這款一體機的定價模式嗎？其次，您能否更新一下後續季度的非 GAAP 營業利潤率前景？謝謝。

(Interpreted)

（口譯）

So let me quickly translate. So as rightly pointed out, the market for AI in the office automation targeting the government space has been developing very fast. And therefore, that's the reason why Kingsoft Cloud come together with Kingsoft Office to jointly develop and offer a plan or a solution to such market which has been actually validated by the market. So that integrated solution is actually an integration of both software and hardware. And notably, in the software portion, there's the AI components that helps them to become more efficient in office scenarios. And this is targeted for Chinese government agencies in various layers and various tiers.

所以讓我快速翻譯一下。正如正確指出的那樣，針對政府領域的辦公室自動化人工智慧市場發展非常迅速。所以金山雲才會和金山辦公一起來共同開發，提供針對這個市場的方案或解決方案，而這個方案或解決方案，是經過市場實際驗證的。所以整合解決方案其實是軟體和硬體的整合。值得注意的是，在軟體部分，有人工智慧元件可以幫助他們提高辦公室場景的效率。這是針對中國各級、各階層的政府機構。

Now, in terms of the pricing question you asked, it actually varies based on the different configuration of hardware that we are providing to the customers. So the pricing can actually vary by quite a lot.

現在，就您提出的定價問題而言，它實際上是根據我們向客戶提供的不同硬體配置而有所不同。因此定價實際上可能會有很大差異。

Thank you for the question on the margin side. I think probably a few things I'd want to point out. So given the seasonality in Q1, as probably many of you understand that, primarily, OpEx is the human capital expenses. So the salaries, compensation, bonuses, so on and so forth. So in Q1, basically, we not only need to incur the normal salary payment, but also there's a bonus and also a certain kind of employee benefits also incurred in Q1 during the holiday seasons, as you understand. Given the revenue side was affected by the delay of certain projects and also the top line growth has been affected by seasonality, so the variation of the top line growth largely affected the bottom line. So the cost structure, especially on the salary and compensation, are relatively fixed. So that's why it's kind of affecting the Op margin in Q1. It's kind of very straight line, the reason.

感謝您在邊際方面提出的問題。我想可能有幾點我想指出。因此，考慮到第一季的季節性，許多人可能都明白，營運支出主要是人力資本支出。例如薪水、薪酬、獎金等等。因此，在第一季度，基本上，我們不僅需要支付正常的工資，而且在第一季度的假期期間還會支付獎金和某種員工福利，正如您所了解的那樣。由於收入方面受到某些項目延遲的影響，而且營業收入成長也受到季節性的影響，因此營業收入成長的變化在很大程度上影響了利潤。因此成本結構，特別是工資和薪酬，相對固定。這就是它對第一季的營運利潤率產生影響的原因。原因就在於此，這是一條非常直線。

So going forward, I think given the better margin profile, for example, the AI projects and our relationship with our ecosystem partners, especially for Xiaomi, as our CEO, Mr. Zou, just mentioned, the big projects will likely deploy on the way and it will be largely a booked starting from Q2 going forward. So hopefully, our top line growth will drive a better margin expansion in the following quarters. So we are in the view that our Op margin will be better in the following quarters. It depends on the top line growth, the pacing of that, and the scale of the revenue quality in the following quarters.

因此，展望未來，我認為，鑑於更好的利潤率，例如人工智慧專案以及我們與生態系統合作夥伴的關係，特別是對於小米而言，正如我們的執行長鄒先生剛才提到的，大專案可能會在途中部署，並且從第二季度開始將在很大程度上被預訂。因此，希望我們的營收成長能推動接下來幾季利潤率的更好擴張。因此，我們認為我們的營業利潤率在接下來的幾季將會更好。這取決於營收成長、成長速度以及接下來幾季的營收品質規模。

But on the other end, we also want to point out, given the EBITDA margin will be likely better, compared with the Op margin, given the nature of the AI business, as the AI business penetration become higher in the public cloud services, hopefully, the EBITDA margin can be recovered a little bit faster than the Op margin side. So I think I will encourage the audience to probably closely track our growth margin profile and EBITDA margin profile as well as the R&D cost which are primarily linked to the expenses and the compensation and the salaries of employees. I think these are factors that are going to be the leading indicator for the Op margin going forward for the following quarters.

但另一方面，我們也想指出，考慮到 EBITDA 利潤率可能會比 Op 利潤率更好，考慮到 AI 業務的性質，隨著 AI 業務在公共雲服務中的滲透率越來越高，希望 EBITDA 利潤率能夠比 Op 利潤率恢復得更快一些。因此，我想我會鼓勵觀眾密切關注我們的成長利潤率狀況和 EBITDA 利潤率狀況以及研發成本，這些主要與費用、薪資和員工薪資相關。我認為這些因素將成為未來幾季營業利潤率的領先指標。

So while we don't give a formal guidance, I understand Brian also mentioned this, for the full-year top line revenue in the call today, but we are in the view that the margin profile in the following quarters, likely, especially in the second half of this year, will be better than the first half of this year. And at this moment, we don't give kind of formal management guidance for the top line, but the margin profile will continue to be better, especially in the second half of this year. Thank you.

因此，雖然我們沒有給出正式的指導，但我知道布萊恩在今天的電話會議上也提到了全年營業收入，但我們認為接下來幾季的利潤率狀況可能會更好，尤其是今年下半年，會比今年上半年更好。目前，我們還沒有給出關於營收的正式管理指導，但利潤率狀況將繼續好轉，尤其是在今年下半年。謝謝。

Thank you.

謝謝。

Thomas Chong, Jefferies.

湯瑪斯‧張 (Thomas Chong)，傑富瑞 (Jefferies)。

Thanks, management, for taking my question. My first question is about the AI CapEx and the OpEx breakdown. Can we have an update last quarter? And my second question is about our quarterly CapEx in Q2. Does the chip ban issue affect the sequential momentum in the CapEx? And my third question is more about the industry landscape. Given that customers are now using more smaller models more than larger models, would that affect the cloud revenue? Thank you.

謝謝管理層回答我的問題。我的第一個問題是關於 AI 資本支出和營運支出的細目。我們可以獲得上個季度的更新資訊嗎？我的第二個問題是關於我們第二季的季度資本支出。晶片禁令問題是否會影響資本支出的連續成長動能？我的第三個問題是關於產業格局的。鑑於客戶現在使用小型模型多於大型模型，這會影響雲端收入嗎？謝謝。

Thank you, Thomas. I will take the first question. And I defer, to CEO, Mr. Zou, for the second and third questions.

謝謝你，托馬斯。我來回答第一個問題。第二和第三個問題請執行長鄒先生回答。

(spoken in foreign language)

（用外語說）

The first question regarding the capital expenditures. I have mentioned, in this quarter, our total CapEx was RMB6,005 million for the first quarter of this year. So, if, the audience remembers since last year, we actually diversified the way we're financing the investment into AI especially infrastructure, construction.

第一個問題關於資本支出。我剛才提到，今年第一季，我們的總資本支出為人民幣60.05億元。因此，如果觀眾還記得的話，自去年以來，我們實際上已經實現了對人工智慧投資的融資方式多樣化，尤其是對基礎設施和建築的投資。

So our own cash to be used for the cap back is one part, but also we are going to, for example, doing the financial leasing, the operation leasing our with our partners, for example, Xiaomi as well. But also we are going to get the financing, for example, the bank loans and a certain leasing agreements with the state-owned banks in China locally as well as some leasing companies in China as well to arrange certain of the balance sheet of financing arrangements. So I think these are the three ways that we're financing the total AI infrastructure demand.

因此，我們用自己的現金來收回資本是一部分，但我們也將與合作夥伴（例如小米）進行融資租賃和營業租賃。但我們也將獲得融資，例如銀行貸款以及與中國國有銀行以及中國的一些租賃公司簽訂的某些租賃協議，以安排某些融資安排的資產負債表。所以我認為這是我們為整個人工智慧基礎設施需求提供資金的三種方式。

So all of that, I think the reason you probably point out the total CapEx for this quarter as kind of $600 million for this quarter. But I think our total investment into AI because we also start to leasing certain servers from third parties to reduce our burden to pay out-of-pocket, from own cash. So there's a certain leasing and a rental agreement we actually start to negotiate and set up with third party staff from Q1. So hopefully, for next quarter, we're going to give some updates regarding our total spending, including both our own cash out-of-pocket, but also the leasing agreement we'll start to arrange with third parties. So this is going to be the total investment of the AI infrastructure from our definition.

所以所有這些，我認為您可能指出本季的總資本支出為 6 億美元的原因。但我認為我們對人工智慧的總投資是因為我們也開始從第三方租賃某些伺服器，以減輕我們自掏腰包支付的負擔。因此，我們實際上從第一季開始與第三方員工協商並制定特定的租賃和租借協議。因此，希望在下個季度，我們能夠提供一些有關我們總支出的最新信息，包括我們自己的現金支出，以及我們將開始與第三方安排的租賃協議。所以根據我們的定義，這將是人工智慧基礎設施的總投資。

So we're going to likely have some update for next quarter because we just start to arrange those agreements with third parties to ensure to reduce and save and to be more efficient in terms of our own cash management. So I think right now, we give the number on the total CapEx. But the leasing plus the CapEx plus our own cash will be another update for next quarter.

因此，我們可能會在下個季度進行一些更新，因為我們剛開始與第三方達成協議，以確保減少和節省，並提高我們自己的現金管理效率。所以我認為現在我們給出了總資本支出的數字。但租賃加上資本支出加上我們自己的現金將是下個季度的另一個更新。

And also given the opex, as I mentinoed in the earnings calls, our R&D expenses for this quarter is around kind of RMB200 million and the sales expenses is around RMB108 million. And the management SG&A is around RMB119 million. So if you're putting the three numbers together, it's roughly about RMB400 million on the OpEx side, including R&D, sales and marketing, and SG&A. I think this probably can give you a kind of a color regarding the total OpEx plus CapEx on a quarterly basis. Thank you.

而且考慮到營運支出，正如我在收益電話會議上提到的，我們本季的研發費用約為人民幣 2 億元，銷售費用約為人民幣 1.08 億元。管理SG&A費用約為人民幣1.19億元。因此，如果將這三個數字加在一起，營運支出約為 4 億元人民幣，包括研發、銷售和行銷以及銷售、一般和行政費用。我認為這可能可以讓您了解每季的總營運支出加上資本支出的情況。謝謝。

Thank you, guys.

謝謝你們。

(Interpreted)

（口譯）

Okay, so very quickly to translate Mr. Zou's response to the chip ban question. Honestly and very frankly, there surely will be impact, right? However, this is actually not the same time for similar kind of restrictions to be imposed on chips. We have experienced similar things before. And so before this round of restriction actually hit us, we have had some inventory and storage. So therefore, the short-term impact is not that material.

好的，那讓我們來快速翻譯一下鄒先生對晶片禁令問題的回答。老實說，坦白說，肯定會有影響，對吧？然而，這實際上並不是對晶片實施類似限制的同一時間。我們以前也經歷過類似的事情。因此，在這一輪限制措施真正對我們造成影響之前，我們已經有一些庫存和儲存。因此，短期影響並不那麼重大。

However, from mid to long-term perspective, there will be meaningful impact for both the Kingsoft Cloud as a company and for the industry as a whole as well. We mentioned before, since 2023, we have already strengthened our cooperation with made in China computing resources. And we have managed to continue that cooperation since then.

但從中長期來看，無論對金山雲公司還是整個產業，都將產生重大影響。我們先前提到，從2023年開始，我們已經加強了與中國製造的運算資源的合作。自那時起，我們就一直保持著這種合作。

And in light of the similar restrictions, we have made and we have been well prepared for the gradual substitution of made in China computing resources should restrictions continue to be more restrictive.

並且鑑於類似的限制，如果限制繼續變得更加嚴格，我們已經做好了逐步替代中國製造的計算資源的準備。

(Interpreted)

（口譯）

So the basic conclusion is that there's no negative impact for revenue and profitability for Kingsoft Cloud. And the reasoning (inaudible). The first one is for the traditional large language model customers, their models have been 100-billion parameter large language models. And it has historically been using our computing power for training and inferences, and this part is actually not impacted.

因此基本結論是，這對金山雲的收入和獲利能力沒有負面影響。理由如下（聽不清楚）。第一個是針對傳統的大語言模型客戶，他們的模型已經是千億參數的大語言模型。而且它歷來都在利用我們的運算能力進行訓練和推理，這部分其實並沒有受到影響。

And secondly, for the more traditional internet space customers, they have actually always been using relatively smaller models, including the 30B and 10B kind of parameter amounts for our business. So this for us is actually incremental amount for our revenue development.

其次，對於比較傳統的網路空間客戶來說，他們其實一直在使用相對較小的模型，包括我們業務的30B、10B那種參數量。所以對我們來說這其實是收入發展的增量。

And thirdly, in terms of the future for the Xiaomi and Kingsoft ecosystem, we also expect to have actually positive impact coming from the more prevailing usage of relatively small models because more of the model inference would originally come from outside of the Kingsoft Cloud computing power infrastructure from other companies. Actually, when the Xiaomi and Kingsoft ecosystem started to adopt more medium-sized or smaller-sized models, they were actually starting to use more of Kingsoft Cloud computing resources. So that's actually another part of potential incremental revenue and profit for us.

第三，就小米和金山生態系統的未來而言，我們也預期更普遍地使用相對較小的模型將帶來正面的影響，因為更多的模型推理最初來自金山雲端運算能力基礎設施之外的其他公司。事實上，當小米和金山生態系統開始採用更多中型或小型機型時，它們實際上開始更多地使用金山雲端運算資源。所以這實際上是我們潛在的增量收入和利潤的另一部分。

Thank you. Next question, please.

謝謝。請回答下一個問題。

Wenting Yu, CLSA.

餘文婷，里昂證券。

So the first question is can management share the recent gross margin transfer AI cloud leasing services? Previously, we observed the aggressive price competition in the industry, mainly focused on model API pricing. Are we seeing the pricing pressure extend to the AI server leasing business as well?

因此第一個問題是管理階層能否分享最近的毛利率轉移AI雲租賃服務？先前，我們觀察到業界價格競爭激烈，主要集中在模型API定價。我們是否看到定價壓力也延伸到了人工智慧伺服器租賃業務？

And the second question is following the open sourcing of R1 by DeepSeek, how do we see the latest dynamics of model training demand? Well, there is incremental demand for post-training models, the open source release of R1 may also lead to some model vendors abandon further iteration. So how should we evaluate these two factors and their overall impact in the industry? Thank you.

第二個問題是，隨著DeepSeek開源R1，我們如何看待模型訓練需求的最新動態？那麼，訓練後模型的需求是增量的，R1的開源發布也可能導致一些模型廠商放棄進一步的迭代。那麼，我們該如何評價這兩個因素以及它們對產業的整體影響呢？謝謝。

(Interpreted)

（口譯）

So in relation to the AI cloud service margin or pricing pressure question, let me respond to you from two dimensions which is internal and external. So externally, as you rightly pointed out, we're actually seeing a sort of market concentration for AI players as our customers. Therefore, they do have some impact to our new projects which we entered into more recently. And the impact would largely depend on the project size. However, for the old long-term contracts that we have signed in the past and for those projects that we entered into in the past, there's no meaningful or no material impact.

那麼關於AI雲端服務利潤率或定價壓力的問題，我從內部和外部兩個維度來回答你。因此，從外部來看，正如您正確指出的那樣，我們實際上看到了人工智慧參與者作為我們客戶的市場集中。因此，它們確實對我們最近開展的新項目產生了一些影響。其影響很大程度取決於專案規模。然而，對於我們過去簽署的舊長期合約以及過去達成的項目來說，並沒有什麼重大影響。

Another point I want to point out is that starting from the second half of 2024, we're increasingly leveraging the so-called resource pool supply chain to expand our infrastructure. So the strategy basically is for top KA customers, we use our own cash and dry powder and CapEx to build the infrastructure and to provide cloud service to them. However, for non-top customers who are increasingly leveraging the partners who will supply us the servers and computing resources and we jointly together to provide cloud service to these customers. And because these are partners that provide resources, we actually also have to share some of the profit with them. So this is like a partnership in profit-sharing model. And for that reason, that new or emerging supply chain model has also, to some extent, negatively impacted the gross margin level of the company.

我想指出的另一點是，從2024年下半年開始，我們將越來越多地利用所謂的資源池供應鏈來擴展我們的基礎設施。因此，我們的策略基本上是針對頂級 KA 客戶，我們使用自己的現金、資金和資本支出來建立基礎設施並為他們提供雲端服務。然而，對於非頂級客戶來說，我們越來越多地利用合作夥伴為我們提供伺服器和運算資源，然後我們共同為這些客戶提供雲端服務。而且因為這些都是提供資源的合作夥伴，我們其實也必須與他們分享部分利潤。這就像是一種利潤分享模式的合作。因此，這種新的或新興的供應鏈模式也在一定程度上對公司的毛利率水準產生了負面影響。

(Interpreted)

（口譯）

So in response to your question regarding the impact of open source of DeepSeek-R1 to the demand of model training, my answer to you is just coming from our SVP, Mr. Liu Tao. So the old batch of large language model companies, the so-called (inaudible) large language model companies, we have seen their demand shrinking to some extent due to the success of DeepSeek. However, most of the contracts that we entered with them are long-term contracts which we have entered in the past. So as we responded in the first question, the impact is very limited.

所以關於你提到的DeepSeek-R1開源對模型訓練需求的影響的問題，我的回答正好來自我們的高級副總裁劉濤先生。因此，老一批大型語言模型公司，所謂的（聽不清楚）大型語言模型公司，由於DeepSeek的成功，我們看到它們的需求有所萎縮。不過，我們與他們簽訂的大多數合約都是過去簽訂的長期合約。正如我們在第一個問題中回答的那樣，影響非常有限。

However, there's also a group of other companies other than those large language model companies, some of them coming from the Internet space, some from other emerging industries, they are inspired by the success of DeepSeek and also think that by using relatively manageable resources, they will also potentially be able to train (inaudible) state-of-the-art model. So therefore, we're seeing increasing demand coming from these customers as well. So all in all, we don't see a negative impact from the success of the DeepSeek model.

然而，除了那些大型語言模型公司之外，還有一批其他公司，其中一些來自互聯網領域，一些來自其他新興行業，他們受到 DeepSeek 成功的啟發，也認為透過使用相對可管理的資源，他們也有可能訓練（聽不清楚）最先進的模型。因此，我們也看到這些客戶的需求不斷增長。總而言之，我們並沒有看到 DeepSeek 模式的成功帶來負面影響。

Operator?

操作員？

Thank you. There are no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.

謝謝。目前沒有其他問題。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 marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

本記錄中標記（已翻譯）的部分是由現場通話中的翻譯人員說的。翻譯由贊助此活動的公司提供。