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Kingsoft reports rise in revenue during 'turbulent' time

By Catherine Knowles
Fri 27 Mar 2020
FYI, this story is more than a year old

Kingsoft, the Chinese software and internet services company, has reported an increase in revenue for the year ended 2019, with the majority of revenue coming from cloud services.

According to a statement from the company, Kingsoft increased 39% year on year to RMB8,218.3 million. Revenue from the online games, cloud services and office software and services and others represented 33%, 47% and 20%, respectively for the year.

For the fourth quarter of 2019, the Company's revenue increased 48% year on year and 28% quarter on quarter to RMB2,594.7 million.

Revenue from the online games, cloud services and office software and services and others represented 35%, 43% and 22%, respectively for the fourth quarter.

Gross profit for the fourth quarter of 2019 increased 70% year on year and increased 56% quarter on quarter to RMB1,282.0 million.

Operating profit before share-based compensation costs for the fourth quarter of 2019 was RMB235.0 million, compared to loss of RMB105.4 million in the corresponding period last year.

Kingsoft chief executive officer Tao ZOU says, "Our revenue maintained a stable growth against the backdrop of a dynamic environment thanks to our solid market competitiveness and execution capabilities.

"Meanwhile, annual revenue of cloud services and office software and services and others maintained a strong and rapid growth."

For the year of 2019, the revenue from office software and services and others increased 43% year on year to RMB1,622.3 million. Revenue in the fourth quarter increased 52% year on year and 48% quarter on quarter to RMB565.7 million.

According to a statement from the company, the increase was primarily due to strong revenue growth from WPS Office subscription and licensing services, driven by the expansion of user base, and the increase in consumption frequency and paid conversion rate.

The growth of the office software market, promotion of licensed software in China and the increase in brand recognition and technology positively impacted this segment.

During the period, Kingsoft continued to make progress in working with key government clients and entered into agreements with clients in the fields including energy and finance for comprehensive cooperation in office software.

With the proactive promotion of its cloud office strategy, WPS Office subscription services achieved significant growth during the quarter.

At the beginning of 2020, the demand for cloud office and remote office work by various enterprises has significantly increased, driving the rapid development of online collaboration products like Kingsoft Docs, the company states.

As of 2 March, the number of MAU of Kingsoft Docs has exceeded 239 million. This trend also further fostered user habits and boosted market demand, expanding the potential growth in WPS Office's personal and enterprises subscription services in the future, according to Kingsoft.

For the year of 2019, the revenue of cloud services increased 73% year on year to RMB3,847.2 million. Revenue in the fourth quarter amounted to RMB1,113.3 million.

Kingsoft Cloud entrenched its position in the internet and video sectors while the company continued to focus on technology advancements and further promoted the integration and implementation of technologies such as edge computing, smart high definition and artificial intelligence, the company states.

Kingsoft Cloud made inroads in terms of government and enterprise services, financial services and artificial intelligence of things.

Significantly, Kingsoft Cloud responded to the COVID-19 outbreak and launched eight anti-epidemic products and solutions, covering epidemic prevention and control, collaborative office, remote education and telemedicine.

The Emergency Materials Management System has provided services to more than 10,000 institutions in multiple municipalities and autonomous regions across China upon its launch, the company states.

Going forward, according to the company, Kingsoft Cloud remains committed to the strategic cooperation with Xiaomi's AIoT, increasing the service of oversea business, integration of cloud computing, big data, AI and other technologies with various industry scenarios, striving for cost optimisation, and empowering enterprise clients in their digital transformations.

The company is also considering a possible spin-off and separate listing of Kingsoft Cloud Holdings Limited.

For online games, revenue for the year of 2019 increased 8% year on year to RMB2,748.7 million. Revenue in the fourth quarter increased 39% year on year and 38% quarter on quarter to RMB915.8 million.

Both PC and mobile games recorded stable performance during the year, and revenues improved year on year.

Kingsoft has launched a new expansion pack for its flagship JX Online III PC game in the fourth quarter, resulting in a 24% jump in average daily active users (compared to 30 days prior to the launch) and a record high monthly gross billing in December.

The company's classic PC game JX World achieved year on year growth in both number of gamers and revenue.

For mobile games, Kingsoft's JX Online I continued to perform well during the year with a stable concurrent income.

In addition, the company has launched a new mobile game Double Life World in Japan in September, followed by China in November.

The newly launched mobile game was ranked as the number one in the iOS top free charts on its debut, and subsequently climbed to top five in the top grossing charts.

Kingsoft chairman Jun LEI says, "Amidst a turbulent economic environment, we managed to achieve a satisfactory performance in 2019. Our operating loss margin has been narrowed during the year, mainly due to the significant improvement of the operation efficiency of our cloud business.

"Meanwhile, Beijing Office Software was successfully listed on the SSE STAR Market. Although our investments in the cloud business led to an operating loss in 2019, we recommended the payment of a final dividend of HK$0.1 per share with an aim to reciprocate our shareholders' long-term support.

"Subsequent to the relief of the global COVID-19 pandemic and conclusion of the IPO of Kingsoft Cloud Holdings Limited, we will further review our dividend policy as and when appropriate."

He says, "Going forward, Kingsoft Cloud will be committed to strengthening its market position, by leveraging leading technologies and promoting innovation across various industries.

"We will work with strategic partners to further expand our ecosystem, and to make our cloud computing offerings more accessible globally. In terms of office software and services, WPS will focus on its multi-pronged strategies of 'Cloud, Multi-screen, Content and AI' to solve our users' diverse needs and to maintain our competitive advantages.

"As we continue to seize opportunities arising from enterprises' digital transformation, Kingsoft will maintain its competitive edge in the industry.

"Looking ahead, we see a clear momentum of growth across all our business segments driven by increasing customer demand. We are confident to meet our performance targets in the coming year and create long-term value for our shareholders."

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