Kingsoft (3888) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached RMB 2.915 billion, up 42% year-on-year and 18% quarter-on-quarter, driven by strong gaming and office software performance.

• Operating profit hit a record RMB 1.144 billion, up 204% year-on-year and 44% quarter-on-quarter.

• Profit attributable to owners was RMB 430 million; adjusted profit (excluding share-based compensation) was RMB 453 million.

• AI-powered office solutions and successful online games, especially JX3 Online and JX3 Ultimate, drove growth.

Financial highlights

• Office software and services revenue: RMB 1.207 billion, up 10% year-on-year and 2% quarter-on-quarter.

• Online games and others revenue: RMB 1.708 billion, up 78% year-on-year and 33% quarter-on-quarter.

• Gross profit: RMB 2.454 billion, up 46% year-on-year and 20% quarter-on-quarter; gross margin at 84%.

• Net cash from operating activities: RMB 1.387 billion; cash resources at period end: RMB 25 billion.

• R&D costs: RMB 861 million, up 28% year-on-year, reflecting AI and collaboration investment.

Outlook and guidance

• Expecting annual game business growth of about 30% for 2024; five new games planned for next year.

• Continued long-term investment in AI and collaboration for office software; overseas expansion prioritized from next year.

• Institutional subscription and licensing expected to benefit from improved macro environment and government spending.

• Online games business to prioritize innovation and quality, with new releases and content planned.