Kingsoft Cloud AI Revenue Soars 120% as Strategic Partnerships and New Procurement Models Drive Growth

Kingsoft Cloud AI Sales Surge 120%

Kingsoft Cloud (NASDAQ:KC) announced its second quarter 2025 earnings on August 20, reporting a total revenue of RMB 2.35 billion. Public cloud revenue grew 32% year-over-year (YoY), while AI-related gross billings soared by more than 120% YoY. The company’s leadership highlighted a strategic shift in capital expenditures, margin effects due to AI infrastructure investments, and strong growth in ecosystem partnerships—signs that point to ongoing expansion and evolving business models.

AI Revenue Growth Accelerates

AI-related gross billings reached RMB 728.7 million, accounting for 45% of public cloud revenue and showing over 120% YoY growth. This surge is mainly fueled by demand from large language model clients and ecosystem partners. Such growth reflects the wider industry trend where generative AI adoption is expanding the cloud market and driving infrastructure investments.

The CEO stated, “This quarter, AI gross billings reached RMB 728 million, a year-over-year increase of over 120% and quarter-over-quarter growth of 39%. Over the past two-plus years, while successfully growing our core cloud business, we have also built an intelligent computing cloud business of nearly equal scale.”

This rapid expansion demonstrates Kingsoft Cloud’s shift toward technology-intensive offerings, strengthening its competitive position in China’s cloud sector.

CapEx and Procurement Model Shift Impacts Margins

Kingsoft Cloud’s annual capital expenditure guidance remains around RMB 10 billion, with roughly half spent in the first half of 2025. The company is adopting a mix of asset ownership, profit sharing, and agent models to optimize capital demands and risk. This change has led to a decline in adjusted gross margin due to increased leasing and upfront costs tied to AI clusters. However, this is a strategic tradeoff aimed at lowering debt and increasing operational flexibility.

The CEO explained, “Since the second half of 2024, we shifted to new procurement models like the resource pool and profit sharing. These reduce our CapEx level and offer lower ratios. Although there is a slight drop in gross margin, we see this as a successful strategic move.”

This evolving procurement approach helps balance revenue growth, margin stability, and financial leverage, making Kingsoft Cloud more resilient amid market fluctuations and supply chain challenges.

Strategic Partnerships Boost Ecosystem Revenue

Revenue from Xiaomi and Kingsoft ecosystem partners grew by 70% YoY to RMB 629 million, contributing 27% of total revenue. In the first half of 2025, revenue from these partners totaled RMB 1.13 billion, which accounts for 40% of the total annual cap of related product transactions. These partnerships solidify Kingsoft Cloud’s role as a key infrastructure provider for major technology groups.

The CEO commented, “Revenue from Xiaomi and Kingsoft ecosystem reached RMB 629 million this quarter, up 70% YoY, making up 27% of our total revenue. With business opportunities expanding, we are confident in further growth of our ecosystem collaborations in the second half of the year.”

Deepening these relationships supports faster scaling of both AI and traditional cloud solutions, enhancing Kingsoft Cloud’s long-term growth outlook.

Looking Ahead

• Management expects stronger revenue growth in the second half of 2025, driven by expanding AI clusters for Xiaomi and rising enterprise cloud demand, especially in public service and financial sectors.
• Full-year CapEx remains at approximately RMB 10 billion, with continued flexible adjustments between self-owned, leasing, and agent models based on client needs.
• Gross margin is expected to stabilize at current levels, with ongoing monitoring of procurement mix impacts.

For sales professionals, Kingsoft Cloud’s results highlight the importance of aligning with companies that are adapting their infrastructure investment strategies and expanding AI offerings. Understanding these shifts can reveal new opportunities for selling cloud services and AI solutions in a rapidly changing market.

To stay ahead in AI and cloud sales, consider exploring targeted training options like those at Complete AI Training, which offers courses tailored to current industry trends and technology adoption.