Kingsoft Cloud Turns Profitable as AI and MaaS Surge

Record revenue and first positive operating profit highlight a strategic pivot to neutral AI cloud services.

KC · Earnings Call · 2026-08-19

A Milestone Quarter

Kingsoft Cloud delivered a record second quarter, with revenue of RMB 3.07 billion (up 31% YoY) and—more importantly—its first-ever positive adjusted operating profit. CFO Li Yi summarized the moment: “our quarter revenue reached over RMB 3 billion for the first time in our company's history… We returned to breakeven at operating income level this quarter and recorded an adjusted operating profit margin of 4%.” — Yi Li, CFO · 2026-08-19 The engine is unmistakably AI: AI cloud gross billings surged 82% to RMB 1.33 billion, now 56% of public cloud revenue, while the MaaS business grew more than 12x sequentially. Adjusted gross margin rose 2.4pp QoQ to 15.4%, and adjusted EBITDA margin hit 36% versus 17% a year ago—a clear sign that the company is no longer sacrificing profitability for growth.

The Neutral Cloud Advantage

CEO Zou Tao framed the quarter around a strategic repositioning:

The rapid growth of the open source model ecosystem is creating significant opportunities for neutral cloud providers.
Tao Zou, Chairman and CEO · 2026-08-19

That is a pointed contrast to full-stack rivals with in-house models. As an executive explained in Q&A: “We do not have to sell those large language models that our affiliated companies have to offer. And as a result, we're able to actually sell… the models that our customers like the most.” — Unknown Executive, Executive · 2026-08-19 This neutrality lets Kingsoft host any model—from GLM to Xiaomi's MiMo—and monetize the computing power layer without locking customers into a proprietary stack. It is a subtle but powerful differentiator: they win by being the best plumber, not the landlord of a single model.

Open Source Tailwind

The company explicitly highlighted how open-source LLMs are boosting demand. SVP Liu Tao noted “we're seeing increasingly users from Mainland China adopting and using this Made in China large language model… the choice usually is the price for value kind of models, which are essentially the Chinese models.” — Tao Liu, SVP · 2026-08-19 This is a fresh development—prior calls focused more on training demand from large customers. Now the price hike environment is passing through: storage and compute prices are being raised with limited pushback, improving margins even as upstream costs climb. The company also launched AgentKit and upgraded StarFlow to handle 120 models, underscoring its bet that enterprises will demand multi-model orchestration rather than lock-in.

The Road Ahead

Investment in AI infrastructure continues at a rapid pace: CapEx plus right-of-use assets reached RMB 3.3 billion in Q2, with the full-year base case unchanged at RMB 15 billion. Meanwhile, Enterprise Cloud business revenue dipped 1% YoY, but management attributes this to seasonality and a deliberate shift from project-based to operating-based models (which are classified under public cloud). They are also branching into verticals like AI for science, embodied AI, and autonomous driving. The trajectory is clear: as MaaS scales and margins expand, this could be the start of a sustainable profitability story rather than a one-quarter blip. Prior guidance about pricing power and MaaS margins is now showing up in the numbers, and the company's neutral positioning looks increasingly well-timed as open source reshapes the landscape.