Q2 FY2026
Filed Aug 19, 2026Kingsoft Cloud reported record total revenue of RMB3,072.0 million, up 30.8% year-over-year, and positive GAAP operating profit of RMB23.0 million in Q2 2026.
Revenue growth accelerated sequentially, public cloud revenue grew 45.1% year-over-year, gross margin expanded, and the company reached positive GAAP operating profit while adjusted operating profit margin reached 4.0%.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenuesGAAP | RMB3,072.0 million (US$452.8 million) | increased by 13.6% | increased by 30.8% |
| Cost of revenuesGAAP | RMB2,605.8 million (US$384.0 million) | – | increase of 29.6% |
| Gross profitGAAP | RMB466.2 million (US$68.7 million) | – | increase of 37.6% |
| Gross marginGAAP | 15.2% | – | – |
| Adjusted gross profitnon-GAAP | RMB471.7 million (US$69.5 million) | – | increased by 34.6% |
| Adjusted gross marginnon-GAAP | 15.4% | – | – |
| Total operating expensesGAAP | RMB443.2 million (US$65.3 million) | decreased by 13.4% | decreased by 33.4% |
| Selling and marketing expensesGAAP | RMB113.1 million (US$16.7 million) | decreased by 8.6% | decreased by 14.3% |
| General and administrative expensesGAAP | RMB140.2 million (US$20.6 million) | decreased by 28.0% | decreased by 58.7% |
| Research and development expensesGAAP | RMB189.9 million (US$28.0 million) | decreased by 1.8% | decreased by 2.3% |
| Operating profitGAAP | RMB23.0 million (US$3.4 million) | – | – |
| Operating profit marginGAAP | 0.7% | – | – |
| Adjusted operating profitnon-GAAP | RMB124.0 million (US$18.3 million) | – | – |
| Adjusted operating profit marginnon-GAAP | 4.0% | – | – |
| Normalized adjusted operating profitnon-GAAP | RMB88.9 million (US$13.1 million) | – | – |
| Normalized adjusted operating profit marginnon-GAAP | 2.9% | – | – |
| Net lossGAAP | RMB93.0 million (US$13.7 million) | narrowed by 72.9% | narrowed by 79.6% |
| Net loss marginGAAP | -3.0% | – | – |
| Non-GAAP net lossnon-GAAP | RMB59.8 million (US$8.8 million) | – | – |
| Adjusted net loss marginnon-GAAP | -1.9% | – | – |
| Basic and diluted net loss per shareGAAP | RMB0.02 (US$0.00) | – | – |
| Adjusted EBITDAnon-GAAP | RMB1,100.5 million (US$162.2 million) | – | – |
| Adjusted EBITDA marginnon-GAAP | 35.8% | – | – |
| Normalized adjusted EBITDAnon-GAAP | RMB1,065.4 million (US$157.0 million) | – | – |
| Normalized adjusted EBITDA marginnon-GAAP | 34.7% | – | – |
| AI cloud gross billingsother | RMB1,327 million (US$195.6 million) | – | grew 82% year-over-year |
| AI cloud gross billings as a percentage of public cloud revenueother | 56% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Public cloud servicesThe increase was mainly driven by growing demand for AI cloud services. | RMB2,357.6 million (US$347.5 million) | increased by 18.1% | increased by 45.1% |
| Enterprise cloud servicesNo driver was provided. | RMB714.3 million (US$105.3 million) | increase of 1.0% | decrease of 1.3% |
What drove it
- Total revenue growth was mainly due to revenue growth from AI-related customers, supported by continued upgrades to AI infrastructure and product offerings.
- Public cloud growth was driven by growing demand for AI cloud services.
- Gross-margin expansion was mainly due to higher profit contribution from the AI cloud business.
- IDC costs increased by 23.3% year-over-year, largely in line with revenue expansion.
- Depreciation and amortization increased mainly due to depreciation of newly acquired and leased servers and network equipment mainly related to the AI cloud business.
- Selling and marketing expense declined due to lower share-based compensation and personnel costs.
- General and administrative expense declined due to lower credit loss expenses and share-based compensation.
- Research and development expense declined year-over-year due to lower personnel costs and share-based compensation.
Concerns
- Enterprise cloud services revenue decreased by 1.3% year-over-year.
- Cash and cash equivalents declined to RMB4,674.3 million as of June 30, 2026 from RMB6,018.0 million as of December 31, 2025, mainly due to investment in procurement of computing power equipment.
- Cost of revenues increased by 29.6% year-over-year amid continued investment in AI computing resources.
- The company reported a GAAP net loss of RMB93.0 million and a non-GAAP net loss of RMB59.8 million.
- Capital expenditures, including capitalized assets through leasing arrangements, amounted to RMB3.3 billion in Q2 and increased from Q1.
What to watch
- The sustainability of AI cloud gross billings growth, which grew 82% year-over-year and represented 56% of public cloud revenue.
- Whether enterprise cloud services return to year-over-year growth.
- Gross-margin progression as AI cloud services provide a higher profit contribution.
- The effect of continuing computing-power equipment investment on cash and cash equivalents, investing cash flow, depreciation and amortization, and borrowings.
- Whether positive GAAP operating profit and the 4.0% adjusted operating profit margin can be maintained.
Balance sheet and cash flow
- Cash and cash equivalents were RMB4,674.3 million (US$688.9 million) as of June 30, 2026, compared with RMB6,018.0 million as of December 31, 2025.
- Restricted cash was RMB54,963 thousand (US$8,101 thousand) as of June 30, 2026, compared with RMB99,194 thousand as of December 31, 2025.
- Short-term borrowings were RMB3,256,926 thousand (US$480,011 thousand) as of June 30, 2026, compared with RMB3,348,279 thousand as of December 31, 2025.
- Long-term borrowings were RMB3,424,480 thousand (US$504,706 thousand) as of June 30, 2026, compared with RMB3,023,538 thousand as of December 31, 2025.
- Total assets were RMB30,703,570 thousand (US$4,525,147 thousand) as of June 30, 2026, compared with RMB26,729,189 thousand as of December 31, 2025.
- Total liabilities were RMB21,808,858 thousand (US$3,214,229 thousand) as of June 30, 2026, compared with RMB17,416,155 thousand as of December 31, 2025.
- Net cash generated from operating activities was RMB2,850,866 thousand (US$420,166 thousand), compared with RMB1,460,134 thousand in the same quarter of 2025 and RMB533,978 thousand last quarter.
- Net cash used in investing activities was RMB2,912,812 thousand (US$429,295 thousand), compared with RMB887,832 thousand in the same quarter of 2025 and RMB1,630,049 thousand last quarter.
- Net cash used in financing activities was RMB109,637 thousand (US$16,158 thousand), compared with net cash generated from financing activities of RMB2,552,561 thousand in the same quarter of 2025 and RMB7,606 thousand last quarter.
- Cash, cash equivalents and restricted cash at end of period was RMB4,729,293 thousand (US$697,012 thousand), compared with RMB5,517,128 thousand in the same quarter of 2025 and RMB4,950,694 thousand last quarter.
- Capital expenditures, including capitalized assets through leasing arrangements, amounted to RMB3.3 billion in Q2.
Analysis
Kingsoft Cloud delivered record Q2 2026 revenue of RMB3,072.0 million, up 30.8% year-over-year and 13.6% quarter-over-quarter. Public cloud services were the principal growth engine, rising 45.1% year-over-year and 18.1% sequentially to RMB2,357.6 million. Management attributed the advance to AI-related customers, continuing AI infrastructure and product upgrades, and demand for AI cloud services. AI cloud gross billings reached RMB1,327 million, grew 82% year-over-year, and represented 56% of public cloud revenue. Enterprise cloud services remained a weak point, declining 1.3% year-over-year, although revenue increased 1.0% sequentially.
Profitability improved materially. Gross profit increased 37.6% year-over-year to RMB466.2 million, exceeding revenue growth, while GAAP gross margin rose to 15.2% from 14.4% a year earlier and 12.8% last quarter. Adjusted gross margin reached 15.4%. The company identified the higher profit contribution from its AI cloud business as the source of margin expansion. Cost of revenues still increased 29.6% year-over-year as Kingsoft Cloud continued to invest in AI computing resources, with depreciation and amortization increasing to RMB963.8 million from RMB552.0 million in the prior-year quarter.
Operating leverage was pronounced. Total operating expenses declined 33.4% year-over-year and 13.4% sequentially to RMB443.2 million. GAAP operating profit was RMB23.0 million, compared with operating losses in both comparison periods, and GAAP operating margin was 0.7%. Adjusted operating profit was RMB124.0 million with a 4.0% margin, while normalized adjusted operating profit excluding gain on disposal of property and equipment was RMB88.9 million with a 2.9% margin. The company remained loss-making below operating income, reporting a GAAP net loss of RMB93.0 million, though this narrowed substantially from both the prior-year quarter and Q1 2026.
Cash generation from operations was RMB2,850,866 thousand, but investment spending was also substantial. Net cash used in investing activities was RMB2,912,812 thousand, and management said capital expenditures including capitalized assets through leasing arrangements amounted to RMB3.3 billion in Q2, increasing from Q1. Cash and cash equivalents declined to RMB4,674.3 million from RMB6,018.0 million at December 31, 2025, primarily because of procurement of computing power equipment. Short-term borrowings declined from December 31, 2025, while long-term borrowings increased.
The release did not provide forward financial guidance. The reported period therefore centers on whether AI cloud demand can continue to support public-cloud growth and further margin expansion while the company manages the elevated capital requirements associated with computing power equipment. Enterprise cloud performance, the durability of positive GAAP operating profit, investment cash outflows, cash balances, and debt are the primary reported areas requiring attention.
Management, verbatim
We are excited to deliver a quarter of both strong growth and profitability. Gross billings from our AI cloud business grew 82% year-over-year, representing 56% of public cloud revenue, driven by incremental contributions from our AI cloud infrastructure services as well as Model-as-a-Service (MaaS) offerings.
Tao Zou, Chief Executive Officer
We delivered a strong quarter, with total revenue reaching a record high of RMB3,072.0 million, representing an increase of 30.8% year-over-year. Adjusted gross profit increased by 34.6% year-over-year to RMB471.7 million, with an adjusted gross margin of 15.4%, an improvement from last quarter.
Yi Li, Chief Financial Officer
Not in the filing
stated, not guessed- Forward revenue guidance
- Forward gross-margin guidance
- Forward operating-expense guidance
- Forward tax-rate guidance
- Prior-period outlook for comparison
- Free cash flow
- Share repurchases
- Dividends
- Capital-return program
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.