To The Moon

$Kingsoft Cloud Holdings Ltd(KC)$ is scheduled to release its fiscal Q1 2025 quarterly earnings for period Q1 2025 ended on 31 March 2025 on 28 May 2025 before the U.S. market open.

Revenue: Analysts are forecasting revenue of approximately RMB 2.20 billion (or around $303.4 million USD, based on current exchange rates). This would represent a significant year-over-year increase of around 23.9% compared to Q1 2024.

Earnings Per Share (EPS): The consensus EPS forecast is a loss of ($0.14) per share. While still a loss, this would be an improvement compared to the ($0.21) loss per share reported in Q1 2024, indicating a trend towards reduced losses and potentially improved profitability.

Kingsoft Cloud (KC) Last Positive Earnings Saw A Significant Decline Of 27.78% In Share Price

Kingsoft had a positive earnings call on 19 March 2025 which saw its share price declined by 27.78% since.

The earnings call for Kingsoft Cloud's fourth quarter of 2024 highlighted significant revenue growth and the company's first-time profitability. The AI business and ecosystem partnerships with Xiaomi and Kingsoft drove impressive performance, although there were increased costs related to depreciation and solution development. Overall, the company demonstrated strong growth and strategic execution, outweighing the lowlights.

Kingsoft Cloud (KC) Guidance

During Kingsoft Cloud's fourth quarter and full-year 2024 earnings call, the company reported several key financial metrics and provided strategic guidance. The total revenue for the quarter reached RMB2.23 billion, reflecting a 30% year-over-year growth, with Public Cloud and Enterprise Cloud revenues increasing by 34% and 23%, respectively. The non-GAAP operating profit turned positive for the first time, with an operating margin of 1.1%, representing a 12 percentage point improvement.

The non-GAAP gross profit was RMB 427.7 million, a 63% increase year-over-year, and the non-GAAP EBITDA margin reached 16%. AI-related business showed significant growth, with gross billing reaching RMB 474 million, contributing 34% to Public Cloud revenue. Furthermore, revenues from the Xiaomi and Kingsoft ecosystem grew by 78% year-over-year, amounting to RMB 493 million. For 2025, Kingsoft Cloud anticipates continued revenue growth and profitability improvement, driven by AI advancements and strategic partnerships within the Xiaomi and Kingsoft ecosystem.

What to Look For When Kingsoft Cloud Releases Q1 2025 Earnings

Revenue Growth: Kingsoft Cloud operates in a competitive cloud computing market. Investors will be looking for continued revenue growth, especially in their public cloud and enterprise cloud services.

Kingsoft Cloud achieved a total revenue of RMB2.23 billion in Q4 2024, with a year-over-year growth rate of 30%, doubling the growth from the previous quarter and leading the industry. Public Cloud revenue grew by 34% year-over-year, and Enterprise Cloud revenue increased by 23% year-over-year, showing balanced growth across segments.

Profitability and Margins: A key focus for cloud companies is improving profitability. Investors will examine gross profit margins, operating expenses, and net income (or loss) to assess their path to sustained profitability. Kingsoft Cloud has been working towards improving its margins through optimizing its cost structure and focusing on higher-margin services.

The company achieved profitability for the first time with a non-GAAP operating margin of 1.1%, marking a significant improvement from a previous loss of 10.9%. AI-related business gross billing reached RMB474 million, representing a nearly 500% year-over-year growth and contributing 34% to Public Cloud revenue.

Customer Acquisition and Retention: The number of new customers and the retention rate of existing customers are crucial indicators of market penetration and competitive strength.

Cloud Product and Service Mix: Details on the performance of specific cloud offerings (e.g., IaaS, PaaS, SaaS, industry-specific solutions) will provide insights into their growth drivers.

Industry Trends and Competition: The overall health of the cloud computing market in China and globally, as well as competitive dynamics with larger players like Alibaba Cloud, Tencent Cloud, and Huawei Cloud, will influence Kingsoft Cloud's performance.

Revenues from the Xiaomi and Kingsoft ecosystem amounted to RMB493 million, up 78% year-over-year, with the ecosystem's share of total revenues increasing to 22%.

Guidance for Q2 and Full Year 2025: Management's outlook on future revenue, profitability, and strategic priorities will be critical for investor sentiment.

Cost Optimization and Efficiency: Kingsoft Cloud has been emphasizing cost management. The Q1 results will show the effectiveness of these efforts.

Depreciation and amortization costs rose significantly from RMB 146.9 million to RMB 343.1 million this quarter, mainly due to newly acquired GPU services. Solution development and service costs increased by 10.8% year-over-year to RMB 557 million, driven by the expansion in Camelot personnel to support revenue growth.

Key Factors and Trends to Watch

Revenue Growth Trajectory: The expected nearly 24% revenue growth is a positive sign for Kingsoft Cloud in the competitive Chinese cloud market. This indicates continued demand for their services.

Investors will be keen to see if this growth is sustained and if they can meet or exceed the consensus estimate.

Path to Profitability: The forecasted reduction in EPS loss (from -$0.21 to -$0.14) is a crucial indicator. It suggests that Kingsoft Cloud's efforts in cost optimization and focusing on higher-margin services are yielding results.

Look for details on gross profit margins and operating expenses. An improvement in these areas will be key to showing a clearer path to overall profitability. The company has been working towards reversing negative net margins.

Public Cloud vs. Enterprise Cloud Performance: Kingsoft Cloud offers both public cloud and enterprise cloud services. Understanding which segments are driving growth and profitability will be important. The enterprise cloud segment often carries higher margins and greater customer stickiness.

The company has been actively expanding its market share through comprehensive cloud solutions and industry-specific offerings, particularly in areas like AI and mobile internet.

Customer Acquisition and Retention: While not explicitly forecasted in the same way as revenue/EPS, any commentary on new customer wins, expansion with existing clients, and customer retention rates will be vital.

Increased adoption of their services across various sectors would underscore their competitive positioning.

Competitive Landscape in China: The Chinese cloud market is highly competitive, with dominant players like Alibaba Cloud and Tencent Cloud. Kingsoft Cloud's ability to carve out and expand its niche, possibly through specialized solutions or cost efficiency, is critical.

Kingsoft Cloud (KC) Price Target

Based on 6 analysts from Tiger Brokers offering 12 month price targets for Kingsoft Cloud Holdings in the last 3 months. The average price target is $20.18 with a high forecast of $25.00 and a low forecast of $14.80. The average price target represents a 54.48% change from the last price of $13.06.

Analyst ratings currently lean positive, with some firms issuing "Buy" ratings and average price targets suggesting significant potential upside (e.g., around $18.28, which is about 35% above recent trading prices).

The Q1 results will either validate or challenge these positive outlooks. Nomura notably upgraded Kingsoft Cloud to "Buy" earlier in May 2025.

Technical Analysis - Exponential Moving Average (EMA)

Kingsoft management's financial outlook for Q2 2025 and the full fiscal year 2025 will provide insight into their confidence and strategic direction. Investors will want to see improvements in free cash flow, as the company has historically had significant outlays on operations and capital investments.

If we looked at the stock trading which is in a negative momentum which saw the price near the 26-EMA and 50-EMA, and KC had experience trouble making out of the sideway trading, so the bears and bulls are neither in control now, so investors are concerned about the cost management, or rather whether KC can improve their free cash flow.

So I think when market open on Tuesday (27 May), we might see some investors planning to adjust their positions.

Summary

For Kingsoft Cloud's Q1 2025 earnings, the market will be focused on evidence of continued revenue growth and a tangible reduction in losses, moving the company closer to profitability.

I think the guidance for full fiscal year 2025 and whether we can see an improvements in its free cash flow might showed us the confidence level of investors for this stock.

Appreciate if you could share your thoughts in the comment section whether you think Kingsoft could show an improvement in its free cash flow and better guidance for fiscal year 2025.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.