Kingsoft Announces 2023 Interim and Second Quarter Results

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Kingsoft Announces 2023 Interim and Second Quarter Results
Kingsoft Announces 2023 Interim and Second Quarter Results

AI Product Deployment Accelerates; Subscription Business Continues to Grow
JX Online III Delivers Impressive Results
Snowbreak: Containment Zone Expands into Global Markets

Hong Kong, August 22, 2023: Kingsoft Corporation Limited (“Kingsoft” or the “Company”; HKEx stock code: 03888), a leading Chinese software and Internet service company, has announced its unaudited 2023 interim results and its second-quarter results for the period ended June 30, 2023.

For the first half of 2023, the revenue of Kingsoft increased 13% year-on-year to RMB 4,163.8 million. Revenue from the office software and services business increased 21% year-on-year to RMB2,172.5 million. Revenue from online games and others increased 5% year-on-year to RMB1,991.3 million. Revenue from office software and services, online games, and others represented 52% and 48%, respectively, of total revenue for the first half of 2023. Gross profit for the first half of 2023 increased 16% year-on-year to RMB3,457.2 million, while operating profit increased 24% year-on-year to RMB1,136.0 million.

For the second quarter of 2023, the company’s revenue increased 20% year-on-year to RMB 2,193.5 million. Revenue from the office software and services business increased 21% year-on-year to RMB1,120.8 million. Revenue from online games and other businesses increased 18% year-on-year to RMB1,072.6 million. Revenue from office software and services, online games, and others represented 51% and 49%, respectively, of total revenue for the second quarter of 2023. Gross profit for the second quarter of 2023 increased 25% year-on-year to RMB1,831.8 million, while operating profit increased 61% year-on-year to RMB675.7 million.

Mr. Jun LEI, Chairman of the Company, commented, “Our core businesses achieved robust growth in the second quarter of 2023. Kingsoft Office Group has seized emerging opportunities brought about by large language models (“LLMs”) and actively engages in product development within this field to enhance users’ work efficiency. Meanwhile, the group addresses the digital transformation needs of organisational users, aligning with the ‘multi-screen, cloud, content, artificial intelligence (“AI”), collaboration’ strategy and presenting solid growth in its business performance. The online game business focuses on developing premium games. Flagship JX Online III continued to enjoy popularity among players and achieved record-high quarterly gross billings. Anime game Snowbreak: Containment Zone expanded our user base and tapped into international markets, showcasing our determination to explore new game genres and global markets. The steady progress of our core businesses provides a solid foundation for the execution of our strategy.”

Mr. Tao ZOU, Chief Executive Officer of the Company, added, “The Group achieved strong revenue growth in the second quarter, reaching RMB2,193.5 million, marking a year-on-year increase of 20%. This growth was primarily driven by the exceptional performance of JX Online III and sustainable growth in subscription businesses for both individuals and institutions from Kingsoft Office Group. Operating profit amounted to RMB675.7 million, exhibiting a year-on-year growth of 61%. These achievements reflected our continuous efforts to enhance core competitiveness and get well prepared to seize new opportunities.”

BUSINESS REVIEW

Office software and services

For the first half of 2023, revenue from office software and services businesses increased 21% year-on-year to RMB 2,172.5 million. Revenue in the second quarter increased 21% year-on-year to RMB1,120.8 million. Kingsoft Office Group embraced the opportunities brought about by AI and introduced WPS AI, an intelligent office assistant based on LLMs, and initiated its open beta overseas. The Group unveiled the spring version of WPS Office, enhancing product capabilities and providing a seamless cloud integration experience.

In the individual subscription business, Kingsoft Office Group took comprehensive steps towards improving the user experience. While adhering to a long-term membership strategy, we merged functional and resource-based memberships, upgraded the membership benefits structure, and offered tailored benefits for specific needs.

Related to institutional subscription business, Kingsoft Office Group continued promoting cloud integration and collaborative office progress and delving into business scenarios for government and enterprises. The group deepened its product capabilities to serve industries such as finance, energy, publishing, healthcare, and high-end manufacturing. This involved incubating secure and efficient industry-specific solutions aimed at enhancing organisational efficiency for institutions. We consistently expanded our ecosystem and jointly built digital office application scenarios with partners.

Kingsoft Office Group has closely monitored localization industry policy changes and customer demand and taken the initiative to tap local government and industry localization markets in advance. In terms of overseas business, based on a solid foundation in the mobile sector, we continued to cultivate our user base on desktop platforms. Looking ahead, Kingsoft Office Group will uphold the service concepts of “user first” and “relentless innovation”, ensuring that more users can easily enjoy the benefits of intelligent office solutions.

Online Games and Others

In the first half of 2023, revenue from online games and others increased 5% year-on-year to RMB1,991.3 million, and revenue for the second quarter of 2023 increased by 18% year-on-year to RMB1,072.6 million. Our online gaming business demonstrated outstanding performance over the quarter, reflecting our ability to sustain premium games’ longevity. This success is reflected in the increase in daily active users and gross billings of JX Online III. We have remained committed to enhancing the content and player experience of JX Online III, resulting in a positive response. A self-developed game, Snowbreak: Containment Zone, combining shooting gameplay and anime aesthetics, provided users with a fresh and innovative gaming experience. This game was simultaneously launched on both PC and mobile platforms worldwide. It achieved instant acclaim by topping the free games chart on the iOS App Store in China as well as in major international markets like the US, Japan, and South Korea upon its launch.

Looking ahead, we will maintain our commitment to a user-oriented approach, paying close attention to feedback and suggestions from our players. Meanwhile, we have been enhancing and optimising our games to further enrich the user experience. In the fourth quarter, we plan to launch the upgraded version of the JX Online III PC game, further extending the IP’s vitality. The self-developed mobile game World of Sword Origin, which has received gaming licence approval, is scheduled for release in Mainland China.

Mr. Jun LEI concluded: “We are confident in the future opportunities and challenges. The group will manage core businesses steadily, drive innovation, and create top-tier digital office services and premium gaming content for a global user base. We adhere to technology-driven business, committing to high-quality sustainable development, aiming to deliver better products and services to our users, and creating long-term value for our shareholders.”

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