TLDR: Kingsoft Cloud (NASDAQ: KC) reported a remarkable 120% year-over-year increase in AI-related gross billings for the second quarter of 2025, reaching RMB 728.7 million. This surge, accounting for 45% of public cloud revenue, was fueled by robust demand from large language model clients and strategic ecosystem partnerships. Despite a slight dip in adjusted gross margin due to a shift towards new, capital-light procurement models, the company’s total revenue grew 24% YoY to RMB 2.35 billion, showcasing its successful transition to technology-intensive offerings and strengthening its position in China’s cloud market.
Kingsoft Cloud Holdings Ltd (NASDAQ: KC) has announced a stellar performance in its second-quarter 2025 financial report, with AI-related gross billings soaring by over 120% year-over-year (YoY). The company, a prominent player in China’s cloud market, reported total revenue of RMB 2.35 billion, marking a 24% increase compared to the same period last year. Public cloud revenue alone saw a 32% YoY rise, reaching RMB 1.63 billion.
The driving force behind this impressive growth is the burgeoning demand from large language model (LLM) clients and expanding ecosystem partnerships. AI-related gross billings for Q2 2025 totaled RMB 728.7 million (approximately 728-730 million yuan), constituting a significant 45% of the public cloud revenue. This segment also demonstrated strong quarter-over-quarter growth of 39%.
CEO Tao Zou highlighted the strategic importance of this shift, stating, “This quarter, AI gross billings reached RMB 728 million, a year-over-year increase of over 120% and quarter-over-quarter growth of 39%, accounting for 45% of public cloud revenue. Over the past two-plus years, alongside high-quality growth in our basic cloud business, we have built an intelligent computing cloud business of nearly equivalent scale.”
Kingsoft Cloud’s success in AI aligns with a broader industry trend where the adoption of generative AI is rapidly expanding the cloud market and driving substantial infrastructure investments.
The company’s leadership also detailed a strategic shift in capital expenditures (CapEx) and procurement models. Since the second half of 2024, Kingsoft Cloud has transitioned to new procurement models, such as resource pools and profit-sharing arrangements. While these models are designed to reduce CapEx levels and offer lower ratios, they have resulted in a slight decline in adjusted gross margin due to increased leasing and upfront costs associated with AI clusters. However, management views this as a successful strategic move aimed at lowering debt and increasing operational flexibility.
Further bolstering its performance, revenue from Xiaomi and other Kingsoft ecosystem partners grew by 70% YoY, contributing RMB 629 million and accounting for 27% of the total revenue.
Other key financial highlights for Q2 2025 include: * Adjusted gross profit increased by 8.4% YoY to RMB 350.6 million. * Non-GAAP EBITDA profit surged by 507.1% YoY, reaching RMB 406 million (or 410 million yuan). * The adjusted EBITDA margin stood at 17.3%, an increase of 14.1 percentage points YoY. * As of June 30, 2025, cash and cash equivalents were reported at RMB 5,464.1 million.
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This rapid expansion of AI revenue streams underscores Kingsoft Cloud’s effective transition towards more technology-intensive offerings, significantly strengthening its competitive position within China’s dynamic cloud computing sector.
