Beijing Kingsoft Office Software (688111) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw significant growth in revenue and profitability, driven by strong gaming and office software performance, especially from Seasun and the JX3 Online series.

• Total revenue reached RMB 2.915 billion, up 42% year-on-year and 18% quarter-on-quarter; operating profit hit a record RMB 1.14 billion, up 204% year-on-year and 44% quarter-on-quarter.

• Office software contributed 41% of revenue, while online games and others made up 59%.

• Cash flow from operating activities increased 31.20% year-over-year to RMB 451 million in Q3.

• Monthly active devices reached 618 million as of September 2024, up 4.92% year-over-year.

Financial highlights

• Office software and services revenue rose 10% year-on-year and 2% quarter-on-quarter to RMB 1.207 billion, led by domestic individual subscriptions and AI-driven features.

• Online games and others revenue surged 78% year-on-year and 33% quarter-on-quarter to RMB 1.708 billion, mainly due to JX3 Online and JX3 Ultimate.

• Gross profit increased 46% year-on-year and 20% quarter-on-quarter to RMB 2.454 billion; gross margin improved to 84%.

• Net profit attributable to owners was RMB 430 million, up from RMB 28 million a year ago.

• Net cash from operating activities was RMB 1.387 billion; cash resources stood at RMB 25 billion as of September 30, 2024.

Outlook and guidance

• Continued long-term investment in AI and collaboration for office software, with plans to expand overseas markets in 2025.

• Game business expects to launch five new titles in 2025, including three self-developed and two agency games, aiming for another strong year.

• Annual game revenue growth for 2024 is projected at 30%.

• AI-powered product upgrades (WPS AI 2.0) and cloud services are expected to drive user engagement and subscription growth.

• Focus on expanding in the public cloud and enterprise markets, especially among private and local state-owned enterprises.