Kingsoft Cloud Turns the Corner: AI Drives First-Ever Adjusted Net Profit and Surging Margins in Q3 2025
AI-Led Revenue Growth Pushes Kingsoft Cloud to Adjusted Profitability
Kingsoft Cloud’s third-quarter 2025 earnings signal a pivotal shift for the company. Fueled by rapid AI adoption, total revenue rose to RMB2,478.03 million ($348.09 million), up 31.4% from the same quarter in 2024. Notably, public cloud revenues surged 49.1% to RMB1,752.33 million ($246.15 million), driven by robust demand for intelligent computing and AI-related services.
The real story: Kingsoft Cloud posted its first positive adjusted net profit of RMB28.73 million ($4.04 million), a stark improvement from last year’s RMB236.70 million loss. Management credited this turnaround to strong cost control and non-recurring income. Revenue from the Xiaomi-Kingsoft ecosystem also soared 83.8% year-over-year, reflecting effective strategic partnerships and growing market presence.
Margins Expand Sharply as AI Drives Efficiency
Cost discipline, improved product mix, and AI expansion sharply lifted operating margins. Adjusted EBITDA came in at RMB826.60 million ($116.11 million), jumping 345.9% year-over-year. The adjusted EBITDA margin climbed to a standout 33.4%—up from 9.8% in Q3 2024.
The non-GAAP operating profit also swung to a positive RMB15.36 million ($2.16 million), after persistent losses in prior periods. However, headline gross margin dipped to 15.4% from 16.1%, a trade-off attributed to heavier investment in servers and AI computing equipment.
| Q3 2024 | Q2 2025 | Q3 2025 | Q3 2025 (USD) | |
|---|---|---|---|---|
| Revenue (mn RMB) | 1,885.57 | 2,349.23 | 2,478.03 | 348.09 |
| Public Cloud (mn RMB) | 1,175.54 | 1,625.31 | 1,752.33 | 246.15 |
| AI Gross Billing (mn RMB) | 355.57* | - | 782.40 | 109.88 |
| Adj. EBITDA (mn RMB) | 185.39 | 406.03 | 826.60 | 116.11 |
| Adj. EBITDA Margin (%) | 9.8 | 17.3 | 33.4 | - |
| Adj. Net Profit (mn RMB) | -236.70 | -300.48 | 28.73 | 4.04 |
*2024 AI business billing estimated from growth rates. Source: Kingsoft Cloud Q3 2025 Results
Xiaomi Ecosystem Revenue Soars, AI Business Shows Exceptional Momentum
The Xiaomi-Kingsoft ecosystem partnership continues to exceed expectations. In Q3 2025, revenue from this segment hit RMB690.80 million—a dramatic 83.8% increase year-over-year. Meanwhile, the AI segment booked RMB782.40 million in gross billings, surging 120% versus the prior year. Management believes ongoing AI integration and ecosystem collaborations will drive further gains across verticals.
Cash, Costs, and Capital Expenditure—A Look at the Balance Sheet
Despite aggressive investment in servers and AI hardware, Kingsoft Cloud finished the quarter with RMB3,954.53 million ($555.49 million) in cash and equivalents. Capital expenditures and debt repayments explain a sequential decline from Q2, yet liquidity remains solid for continued expansion.
| Balance Sheet Item | Sep 30, 2025 (RMB, mn) | Sep 30, 2025 (USD, mn) |
|---|---|---|
| Cash & Equivalents | 3,954.53 | 555.49 |
| Total Assets | 25,652.41 | 3,603.37 |
| Total Liabilities | 18,577.54 | 2,609.57 |
| Total Equity | 7,074.87 | 993.80 |
Takeaway: AI Investment Pays Off, but Execution and Capital Management Remain Key
Kingsoft Cloud’s Q3 2025 marks a turning point: AI-driven revenue acceleration, first-ever positive adjusted net profit, and margin expansion driven by improved scale and discipline. Yet, as investments ramp up in AI infrastructure, monitoring cash burn and continued operating efficiency will be critical in future quarters.
Investors may want to watch how further ecosystem integration and new AI business lines unfold, as well as management’s ability to translate robust topline momentum into sustainable long-term profitability.
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