Kingsoft (3888) Q4 2023 earnings summary

Executive summary

• FY2023 revenue rose 12% YoY to RMB8,533.6 million; operating profit increased 19% to RMB2,226.9 million.

• Profit attributable to owners was RMB483.5 million, versus a restated loss of RMB6,049.4 million in 2022, largely reflecting the prior-year Kingsoft Cloud impairment.

• FY2023 operating profit before share-based compensation costs increased 19% YoY to RMB2,540.8 million.

Financial highlights

• FY2023 gross profit rose 14% YoY to RMB7,030.3 million; gross margin increased 1 percentage point to 82%.

• FY2023 profit for the year was RMB1,215.2 million; basic and diluted EPS were RMB0.36 and RMB0.34, respectively.

• Q4 revenue increased 9% YoY and 12% QoQ to RMB2,310.1 million; gross profit rose 9% YoY to RMB1,896.3 million.

• Q4 operating profit was RMB714.8 million; profit attributable to owners reached RMB205.4 million, versus RMB47.6 million in Q4 2022 and RMB28.5 million in Q3 2023.

• Q4 parent profit excluding share-based compensation costs was RMB257.0 million; excluding that cost, net margin was 11%, versus 4% in Q4 2022 and 3% in Q3 2023.

Outlook and guidance

• 2024 priorities include advancing AI and collaboration office products, improving user experience, and pursuing digital-office opportunities with individual and institutional users.

• Planned game initiatives include JX3 Ultimate across multiple platforms, further development of Mecha BREAK, and continued optimization of Snowbreak: Containment Zone.

• WPS AI entered public beta in Chinese Mainland in Q4 2023; further commercialization and applications in government and enterprise office settings are being pursued.