Kunlun Tech Co (300418) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached RMB 1.76 billion, up 46.1% year-over-year, driven by AI software, short drama, and advertising growth.

• Net loss attributable to shareholders was RMB 769 million, significantly widening from RMB 187 million loss in Q1 2024, mainly due to increased R&D in AI and fair value losses in investments.

• Overseas revenue surged 56.1% to RMB 1.67 billion, now accounting for 94.4% of total revenue, reflecting deepened internationalization.

• AI business commercialization accelerated, with AI music ARR at $12 million and short drama platform Dramawave ARR at $120 million.

• Major losses stemmed from continued investment in large AI models, increased chip subsidiary R&D, and fair value losses in Pony.ai and InUniverse investments (totaling ~RMB 540 million).

Financial highlights

• Operating income: RMB 1.76 billion, up 46.1% year-over-year.

• Net loss attributable to shareholders: RMB 769 million, compared to RMB 187 million loss in Q1 2024.

• Basic and diluted EPS: -0.62, down from -0.15 year-over-year.

• Operating cash flow: -RMB 3 million, down from RMB 107 million in Q1 2024.

• Gross margin declined due to higher sales, management, and R&D expenses.

Outlook and guidance

• AI business expected to further commercialize, with losses projected to narrow over the next three quarters as AI revenue grows.

• Management remains optimistic on autonomous driving and social entertainment, expecting investment portfolio value to recover as markets rebound.

• Continued focus on global expansion and AI technology leadership.