[Management View]
Kingsoft Cloud Holdings Limited (KC) reported accelerated revenue growth driven by AI-related business and contributions from major ecosystem customers. The company is realigning its capital structure through new procurement and profit-sharing models to balance growth, CapEx, and risk.

[Outlook]
Management anticipates stronger revenue growth in the second half of 2025 compared to the first half. The company is focusing on expanding AI deployment in verticals like public services, finance, and healthcare.

[Financial Performance]
- Total revenue: RMB 2.35 billion for Q2 2025, up 24% YoY.
- Public cloud revenue: RMB 1.63 billion, up 32% YoY.
- Enterprise cloud revenue: RMB 724 million, up 10% YoY.
- AI gross billings: RMB 728.7 million, up 120% YoY.
- Adjusted gross profit: Up 8.4% YoY and 7% QoQ.
- Adjusted operating loss: RMB 166 million.
- Non-GAAP EBITDA profit: RMB 406 million.

[Q&A Highlights]
Question 1: Management share the outlook and guidance on the revenue outlook for the second half of this year and the first half of next year? How is the investment pace in AI and infrastructure driving growth? (Line breaks here)
Answer: The second half revenue growth is expected to be stronger than the first half. Kingsoft Cloud is delivering a larger cluster for Xiaomi's computing power demand. The market demand for AI remains strong, with some players investing heavily in model training and others in inference computing power. The shift to new procurement models, including profit sharing, has led to a slight decrease in gross profit margin but achieved strategic goals of lower CapEx and gearing ratios.

Question 2: Could management update on your capital expenditure plan for this year? What is the expectation for AI computing power that will be ready to use at the year-end? (Line breaks here)
Answer: The total CapEx for the year is around RMB 10 billion, with RMB 5 billion spent in the first half. Kingsoft Cloud is adjusting procurement processes based on customer demand. The enterprise cloud revenue growth in Q2 was driven by strong demand from public services, healthcare, education, and financial services sectors. The company is focusing on a few key verticals to achieve breakthroughs and expects better growth in the second half.

Question 3: How has the current chip supply situation affected your strategy? (Line breaks here)
Answer: Kingsoft Cloud has been closely monitoring the supply chain and collaborating with domestic chip suppliers. Despite geopolitical uncertainties, there has been no material impact on the company's ability to meet customer demand. In the longer term, if there is explosive growth in AI applications, there may be a risk that domestic chip supply will not meet demand.

[Sentiment Analysis]
The tone of the management was cautiously optimistic, focusing on strategic adjustments and strong AI demand. Analysts were concerned about gross margin trends and supply chain risks but acknowledged the company's proactive measures.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | Q2 2024 |
|----------------------------|---------------|---------------|---------------|
| Total Revenue | RMB 2.35B | RMB 2.19B | RMB 1.89B |
| Public Cloud Revenue | RMB 1.63B | RMB 1.55B | RMB 1.23B |
| Enterprise Cloud Revenue | RMB 724M | RMB 690M | RMB 658M |
| AI Gross Billings | RMB 728.7M | RMB 524.2M | RMB 331.2M |
| Adjusted Gross Profit | RMB 1.18B | RMB 1.10B | RMB 1.09B |
| Adjusted Operating Loss | RMB 166M | RMB 178M | RMB 188.5M |
| Non-GAAP EBITDA Profit | RMB 406M | RMB 380M | RMB 56M |

[Risks and Concerns]
- Potential supply chain disruptions due to geopolitical events.
- Gross margin pressure from higher service costs and price competition.
- Dependence on domestic chip supply to meet future AI demand.

[Final Takeaway]
Kingsoft Cloud's Q2 2025 performance was marked by significant growth in AI-related business and strategic adjustments in procurement models. The company is well-positioned to capitalize on AI opportunities, with strong revenue growth expected in the second half. However, potential supply chain risks and gross margin pressures remain key concerns for investors.