Kingsoft Cloud's Strong Performance Drives Stock Surge After Q4 Earnings Report

Kingsoft Cloud Holdings Ltd KC shares are trading higher after the company reported a fourth-quarter fiscal 2023 revenue of $242.6 million, marginally beating the consensus of $242.4 million. Revenues fell 19.2% Y/Y.

Adjusted earnings per ADS was $(0.05), beating the analyst consensus of $(0.16) loss. The stock price soared after the results.

The decrease in revenue was mainly due to the proactive scale-down of services for content delivery network (CDN) customers and the phasing-out of loss-making clients.

Revenues from public cloud services decreased by 21.7%, and enterprise cloud services fell by 14.7%.

The adjusted gross profit was $37.0 million (CNY262.5 million), up from CNY168.5 million in the same period in 2022. The adjusted gross margin was 15.2%, compared with 7.9% in the same period in 2022.

The significant improvements in gross profit and margin were mainly due to strategic adjustment of revenue mix, optimized enterprise cloud project selection, and efficient cost control measures.

Kingsoft held $317.7 million in cash and equivalents as of December 31, 2023.

Mr. Tao Zou, Chief Executive Officer of Kingsoft Cloud, commented, We increasingly tapped into the structural and tangible opportunities of AI related cloud computing demands within the Xiaomi and Kingsoft ecosystem, while partnering with well-known independent AI unicorns in long-term strategic cooperation, altogether contributing approximately 8% of revenues from public cloud services in the fourth quarter 2023. In terms of technology, we founded our AI research center, and have launched our Model as a Services (MaaS) mutual trust dedicated zone solutions, which was pioneered in data security features of MaaS solutions.”

The stock lost 29% last year. Investors can gain exposure to the stock via Direxion Work From Home ETF WFH and IShares MSCI China Small-Cap ETF ECNS.

Price Action: KC shares traded higher by 18.80% at $3.82 on the last check Wednesday.

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