KC - Earnings call transcript Q1 2022 | Kingsoft Cloud Holdings Limited

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Operator

Good day and thank you for standing by. Welcome to Kingsoft Cloud's First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. to conference like to I now, turn over the Ms. And Cloud. IR Manager Shan, of Nicole Kingsoft Thank you. ahead. go Please

Nicole Shan

Thank you, earnings everyone, our on Kingsoft earlier operator. GlobeNewswire Hello, and IR Cloud's us for today as first today. website joining services. at quarter well available XXXX is release ir.ksyun.com, distributed and was on thank as you

our the On today questions that follows. from session He. CEO, highlights, and Wang; be Yulin Mr. Mr. the will Kingsoft Haijian interpretations. our will He, and They answer Q&A call There discuss and the Wang be Mr. business followed by review the your will Mr. to the available company the Cloud, we operations will CFO, who during have guidance. financials consecutive

and statement discrepancy, reference of any the in convenience In prevail. your case only. for management's purpose language are original will interpretations Our

remind factors, I mandated beyond control, Further any new except law. future required undertake achievements are does may U.S. and the a which statements. U.S. events of or are company's this result within meaning risks, included applicable unknown are of these any management's cause uncertainties of of actual to Before the events filings the forward-looking SEC. Act Private the of materially information, differ upon or in Act we with are that based XXXX relate call market expectations like to or known Exchange statements XX-E you other which from in begin, results, the regarding contains as Securities defined of the as factors that conditions and Section company's forward-looking company's difficult predict Securities obligation would conference performance current under and involve the and to or statements update to those many statements company Reform information XXXX. and not other uncertainties forward-looking forward-looking to as which These and operating Litigation the in all current of and risks, as otherwise, The the

figures note mentioned now please Finally, CEO, financial are call conference my all in ahead. Mr. It's introduce Yulin go this denominated during to our pleasure stated, that unless Wang. Please otherwise RMB.

Yulin Wang

[Foreign Language] RMBX.XX first XX% high-end quarter, our guidance which in of Thank of total joining earnings the all XXXX first quarter you the was and we an for revenue call. In above Nicole, billion year-over-year you, thank generated our range. revenues, and increase

starting faced Our XX% public regulations million, cloud billion, market reached revenues cloud services the of RMBXXX.X epidemic. the the from Internet XXXX, sector enterprise communicated, Language] half stable RMBX.XX revenues year-over-year. year-over-year up our headwinds, reached remaining second [Foreign previously and new and As from services pressures

market continued the Internet driven last as year. cloud public to demand companies quality slower a development. initiated change, pace the high quarter strategic our to In we services, For adjustments in response than focus but at traffic on more fourth before grow, of

proactively CDN services more have growth. fast and our enterprise storage facilitating core their downsized cloud resources services, We computing, to including cloud, and allocated

Gross fruit. this the CDN to CDN bear year-over-year. guidance. exceeded decreased pleased adjustments in an XX.X% billings year-over-year is and from downsizing the billings manner. started strategic We services that are progressing In orderly completed cloud the which say of services XX.X% planned for had proactive for quarter, increased adjustments core QX, services we The to our gross

of corresponding optimize across the and our offline interrupted continuously down March, and expect enhancing and operations. significantly market In quarter China resources efficiency promoting Since adopted future and of Language] to the margin improve the the results measures resurgence demand business initiatives delivered gross X.X% in terms improving we to our of costs XXXX. adjusted quarters, evaluate X.X% with and dynamically [Foreign business have profitability, gradual substantial allocation agility slowed profitability. severely fourth of prevention beginning COVID improvements In from to cut

For us, strong down services the sector, scaled XX% year-over-year services, driven traffic growth. we in of billings growth in while Internet the as to gross achieved continued proactively cloud of among CDN remained public demand computing slowdown of the response computing services

public a remain services as As whole. cloud result, our stable a

terms cloud remain demand our services, enormous. In of market enterprise the potential

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actively with needs choice institutions to we year, their another business. for are this like cloud with transformation cloud licenses, on Therefore, industry services. Now cloud margin the customers gaming launch the quality on transformation. [Foreign cloud of with drive transferring of from onto cloud cloud our demand and to enterprises recent improvements, gaming companies have Moving services. to progress games. also verticals. been the ongoing our public believe keep long-run, business have core we and digital cooperation company been enterprise digital non-traffic intact on service adoption services, season Internet the increasingly plan in gaming Language] turning the that the In release top making board and save services new costs support strong. growth, driven for growth remains across to to the where remains natural of internal at and increase mention more front, massive Language] are to to For we environment engaging will that focus on-premise [Foreign game on along enterprises efficiency our incremental our computing operations with and driving their We'd their gaming trends several

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from magnitude landmark service infrastructure to provide Life to insurance will bid we China. project companies a in jointly banking management it deployment transitioning cloud build unified the and for In since among insurance challenges, this pioneers on-premise financial to public leading networks, COVID regional by data management cloud and recognition structure, During image data topic healthcare in an China as Cloud a insurance become hybrid Insurance, complicated for to public Technology This storage platform. environments cities healthcare company the services [Foreign Solutions institutions, varying to key started. products provide the won't cloud. needs improving space, cloud digitalization important medical ICBC space, Healthcare including high a we In represents quarter, health sector, and address and digitalization of their of Language] upgrade has levels to smart size, data, several requirements regions.

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Suzhou governance, a Hubei We infrastructure in high the quality urgently and an cloud we analysis, where quick following up stable and we research to foundation we our The Province containment cloud and In together providing complex system and in teams margin data since Hubei resurgence set Shanghai action have but since dedicated term Jiangsu the infrastructure this put province of and As and local to conclusion, potentials. healthcare building deployed support. for economic took growth, Wuhan special epidemic efforts. a containment. for term Kunshan support [Foreign sharing, academic and Province, revenue a Cloud prevention collection, March, resources mid-to-long project integration, to Language] will City, the aggregation, data year expansion infrastructure last project enables pressure our won with control, In for and City thanks be middle to success another carries disease platform. on QX computing have solid the epidemic laid year, long the we improvement. strategic adjustment build short-term environment information with

our quality stability development, our we pursue high ahead, business to while will adhere and Looking and direction strategic improving and steady profitability.

services call over [Foreign over quarter. strength We you. premium stable pass financials customer will Language] go to our first the technological fully Haijian and our the efficient to for CFO, our will to base. cloud leverage I provide now to Thank our

Haijian He

call. welcome and Yulin, the you, Thank everyone for joining

highlights for I would you the walk quarter. like Before following turning into detail, past the the to through financial

of which and RMBX.XX RMBX.XX enterprise from including in computing, of all, year-over-year. of billion revenue to this range a XX.X% represents core cloud increased reached our that, by RMBX.XX services guidance, growth First quarter. above QX, high-end our that Within total year-over-year storage, cloud billion our the services, billion XX%

pleased gross previous quarter cost have negative to to this by EBITDA Adjusted Adjusted from to control margin increased our XXX% in previous we to margin RMBXX.X negative narrowed execution. million. making quarter been X.X% strategy in this largely The this in XX.X% quarter. from for X.X% quarter-over-quarter significant quarter. are we adjusted Second, that X.X% gross increased progress the profit quarter see

technology year, affect CDN as As to half since QX services we allocated softened bottom connected our the resources line. services. from downsized in demand been our core budgets expected. more last last have efficiency to new response Internet to proactively our year, and resource we market us has the clients of to been the and slower quarter, last general second from increasing cloud pace In a change, than sector in introduced Starting the at

taken XXXX. cost are have though we to environment, achieve overall challenging improved margin efficiency. in and are breakeven track on the we still QX macroeconomic believe EBITDA control facing active operational Even we adjusted We measures quarterly

March sufficient was quarter this liquidity RMBXXX.X from cash demand equivalents well amounting to our high to as we for computing XXXX, providing of investments primarily of billion, The CapEx for cash million. was [cater XX, RMBX.X cash services, for we the into] quarter. short-term performing The and Third, had [ph] us as and core increasing service payment operations. the the ordered due which procurement last service, our as increase

For generating shareholders. full-year we prudently cloud long-term billion. capital through expect our Last, form proactively share during of development year-over-year American our Directors offset company program, which and of our keep authorized RMBX allocated our services primarily strong plan that financials detail. a the million stable total CDN company announce growth. billion targets repurchase confidence due recently is expenditure growth We've at high to we in growth Today, XX.X% to pleased resources It quarter. online US$XXX in entered service year-over-year now server demonstrating has repurchase period. shares of of go XXXX, our depository this RMBX.X to our which our the our in firmly our and shares was narrowed will the executed XX-month to a of Revenues RMBX.XX and our to value the remained cloud range I up a ordinary billion we quality Board are decrease to by to the have core commitment of to year-over-year down. from XX.X% business, computing public to into in

of services, from terms delivery certain and products, has remain enterprises the even COVID-XX enterprise though market disrupted In cloud demand organizations offline traditional strong. of

year-over-year XX% of increase solid RMBXXX.X million. a achieved to services cloud enterprise Our

cost quarter and of with Total our decreased this XX% have cost from billion quarter. and last of In CDN of quarter. bandwidth cost to RMBX.XX revenues by a cost and effectiveness It The decreased IDC consistent by control in-line this RMBXXX.X of adjustment quarter-over-quarter billion. optimization, RMBX.XX cabinets trend was business. to terms achieved remained we decreased million

from third-party Other RMBXX.X of cost this It products costs this represents the by million. development, development X% and the solution quarter. cost RMBXXX.X Fulfillment to the by consists personnel. fulfillment, services solutions. and RMBXXX.X Solution to costs quarter of Depreciation to were and and million. RMBXXX.X our payments purchasing it our services to decreased XX% amortization million million quarter-over-quarter and quarter-over-quarter were costs services of technologies, design, increased demands

personnel expenses, optimization compared with of decreased have year. terms In efficiency the organizational preliminary Resulting we and last expenses improvement. completed QX

Excluding X.X% marketing share-based compensation RMBXXX.X year. were Within that, expenses expenses from million, RMBXXX.X RMBXXX.X million, in R&D remained million total increased with RMBXXX.X Adjusted D&A, expenses G&A sequentially million Adjusted adjusted were last compared compared operating and RMBXXX.X with and RMBXXX.X adjusted million were million, expenses selling at last last QX stable quarter. RMBXXX.X quarter. by million.

deposits XX, we of of and As cash short-term March RMBX.X cash billion. XXXX, sufficient equivalents had and

performance from During were was increase RMBXXX.X strategic of expenditures capital this the services computing the purchase to mainly incremental The core of quarter, increasing to and demand high-end million. due storage. services meet

company will prudently RMBX range will in gender core our appointed diversity nominating the female governance services. cloud ESG, to CapEx of billion Governance Meanwhile, allocated a and We early Report we our level] highlight to be and were primarily Environmental, and from XXXX overseeing workplace our I demand enhancing would the expect its [ph], has RMBX.X [poor for along billion, inclusivity. have May. Annual with corporate initiatives which independent committee first full-year the Social released at that Directors, ESG responsible Report Board for our the meet of Board from

Looking we improvement. keep balance on between a expansion and ahead, margin focusing revenue

It X% representing short-term revenue increase mainly expect positive RMBX.X resurgence. negative due business X.X%. to delay of the the year-over-year RMBX.X in offline We of quarter second billion to the fulfillment between our for is the total to about middle enterprise cloud and billion of be of XXXX, a COVID-XX

pandemic. opportunities We will continue to embrace post

keep QX market believe XXXX. adjusted to the we QX. compared gross track We the achieve on it quarter, EBITDA be we margin are assumptions, also adjusted in trend. continue the upward view stable will The to higher with by will margin that profitability second our quarterly condition in are Under breakeven

are above All current forecasts preliminary are these change. and conditions, and operational of views which market our of the comments based to on and subject

market up the have closely shareholders. during to March of the XX-month capital and shares was the delivered repurchase by on to which already lots program, of Board US$XXX based condition, were from period. from addition, hearing a million shareholders all in In we the share commenced the authorized feedback purchase value We

We we with Kong maximize both track are listing moving in plan independent with U.S. and Stock seek listing forward Hong maintain to we Finally, Hong Kong status Exchange on protection shareholders. our the and are this progress. to of our

the audit of with in the capital [U.S. positive the the will progress adjust in timeline Given on we shareholders. recent to proactively the combined execution our and monitor [ph] our fluctuation final safeguard interest carefully incorporation] global negotiation markets, existing

Thank both the the closely right conditions. listing We final timeline the market dynamics market you. monitor proceed regulatory The will decision time. subject and prudently at to and are approvals and and regulatory

Nicole Shan

ask go Mandarin your and English you. you. questions. Please possible. to Thank please happy your are ahead. in our prepared questions Thank Operator, now This if [indiscernible]. concludes we And take remarks both

Operator

from Instructions] comes [Operator Chong ask from first Thomas you. Our line the Thank Please of question. your Jefferies. question

Thomas Chong

want growth? QX to what I a scenario Thanks get week about confidence for question the point. Language] negative want the Can our and we level April, [Foreign you. already monthly seeing at some terms talking we guidance? thoughts high-end, first of Thank we would just sense low-end hitting comment now, are guidance. just the color of May, in low-end get the passed taking to So, about My our right this management think be Under that respectively? we about about is because June, and given revenue about June, the questions. And my have the are management trend the in

Yulin Wang

for [Foreign you Language] your much question. So thank very

mainly as to So, the And impacted according see, you second essentially, can I the quarter services. is two by COVID elaborated situation. the just

basically that in and our their China in have In started of that increasing some our our The because not large, impacted. the limited. and terms control on we're data last end business those been QX the other any of already the we week, And scope is expense timing as impacted exceeded of in is projects of of has public has terms and the the projects increased impact. some the we impact Northern the enterprise the centers for relatively cloud operations, think deployments, cloud situation ongoing, that expectation. But China implementation, measure towards it's see for on side still have cloud several but hand that resume delivery as especially far of impact having is June. is amount bidding, impact the are the small weeks material of can enterprise Eastern the the services, and There the that, since the projects. to we end some the in

to So, progress possible. as time we the the up are with much catch trying to meet target as

has leads that that to towards the prepared you. So, end of us Thank the remarks. guidance the provided Haijian

Operator

you. Thank

comes Please Sophie Our CICC. go the from from next of ahead. line Chang question

Sophie Chang

Sophie is This for and taking management from CICC, thanks questions. my

So, within of those shall tier change? any we top And companies. core we our how do of in I KC? just many so value news will their the many expect like customers we've the [Foreign of dollar accordingly, change key wonder demand? KC’s headcount And heard across any Language] expect customers, cutting headcount about adjustments Internet which

Yulin Wang

question. Language] much you [Foreign Thank very for your

that terms So, some of the focusing we of is public are the them which our market conglomerate, on customers. know predominantly in cloud, Internet

in due mentioned CDN our to we in downsized that proactively And actually, what CDN that's adjustments changes we business. expected. the expectation the of business are unfolding we happening quarter the expected and exactly we to mentioned, according what for volatility had increased changes, see you that had So, as of those had and this already

asked able it observing cloud usage. customers supply, when a profitable made their with for is our which also is cost, didn't of focusing therefore, increased is consistent space, cloud downwards And of you the COVID quarter for of cloud that command as public the good [indiscernible] first the about have are the And year. of the Camelot, of services. year, business And integration we business last ours we by impacted we adjusting cost KC which non-CDN increase certainly, includes mostly in the expectation. new integration business, they in progress earlier but is of situation end of which the you terms and we're headcount are to part by question, discussed the has by also largely for incentive customers acquisition those last their for ask completion more adoption, the is an the And Now the enterprise we know adjustments. I non-CDN cloud the that, to again employees, which In Since of CDN second for them completed reduction for particularly the on with savings. been have Camelot started amounts measures. another

now, KC headcount and this but we together combined as expect remain year, a you. roughly Camelot number and of people combined or to largely we of that XX,XXX small have with Thank a So, throughout for stable. relatively decline stable

Operator

Thank you.

from your comes Please Our Kyna question. Suisse. from next question ask Credit Wong

Kyna Wong

second a pandemic impact perhaps actually be some end figure quarter I due some – adjusted And wanted industry [Foreign we question out management? from is the to that and first wanted question Language] second The of that detail the of question I see change the in is completed you. is cloud [provisions] like the by And I projects this about impact trend by the or public the here. Thank some cannot landscape to from cloud, on about to hear sharing because enterprise the the the impacted the quarter, more government [ph] the this first and/or do follow-up year project. because actually budget

Yulin Wang

some to think essentially impact side, [Foreign factor usage just short-term public concentrated impact limited cloud is And any maybe for that impact the I COVID quarter enterprise the question se. the the have mainly – uplifting you per the does of question. the have business] for because pretty the situation not first much it's cloud after side. the show enterprise almost not the the place, material And the for cloud resurgence Language] Thank for actually COVID first on And side, cloud actually take COVID the Chinese started quarter, [ph], impact covering material impact very it's to there impact especially answer of situation spring for festival much COVID was about the second that to the impact, your severe. relatively do does [short start quarter but so is we the the any to public full think the

time for of that's some there because of And second the that bidding the seeing measure, early there's already kinds that's during projects still do we process if essentially that communication So, the up due And customers, got control think measures. are we with two according prospective of quarter perspective, with our in for the to look take there no control type, lost on which process delayed to June is especially we it's and we risk not a can material. catch full-year customers we're that's material guidance on a in we're and those in as currently the see think the essentially One full-year customers change those healthcare we is to projects within respect, that the situations. still it, of delays terms the currently projects. of sort June, missing time think during and is public in service the

we're necessarily speaking, don't to basis cloud full-year think full-year guidance business. to now. on generally that We still adjust think for the we guidance the enterprise track deliver any right for So, of

smooth very customers] for channel cloud very public we our Internet smooth for with those open included [key Now, three and has communicating with the customers our a and them. have side, communication main been [ph],

are of that's all mentioned, you our part the things not that despite expectation. So, challenges changes those and

relatively driven customers, the the quarter, customers as and demand. there evidenced by the faster growth a of see, the, for both the For first been both also that disclosed non-traffic we you new in usage and for can has numbers existing just

dynamics, think the focusing that's we think services, edge the also financial reinforcing. nice this competitive terms in has after been And healthcare, are particular entry the we're of industry know. our verticals and the to something in So, years service those verticals for relatively of many to that mainly, public that And competitive barrier we the operation, actually high. Internet,

do we material really we cloud the you. see dynamics. think to change in not So, that enterprise compared Thank

Haijian He

if Kyna, a offer data [indiscernible]. happy to also, may I few to points more help

all, First around public report, in remember, rate of if the clients disclosed retention cloud you our for dollar recent annual the was for last XXX%. year

even contribution, the we decrease this year, above So active believe a considered doing of [ph] CDN basis] this is but number the revenue [rolling QX XXX%. into still it's

actually board revenue growth on at you a QX, the the the of look CDN basis. has delivered solid for year-over-year versus [previous around [ph] XX% growth clients. cloud second the business, our And that is, our very revenue itself opportunities base if business computing of the the the public computing across mix] a actually So point of of of a in

the I number market think industry especially in conditions. in average QX, also above difficult this very is the

So, if And check together, the the spent [indiscernible] to you putting you infrastructures spent expenditures, already QX revenue we producing our covered the RMBXXX and started the can basically base, we two money if that year, in actually of tell high-end you're QX immediately. the about with in demand this from the relative servers demand Internet a pretty you number okay. fundamental see may numbers cross our client computing million,

clients lot our of issues the the CapEx for efficiently expenditure So, will demand computing converting especially to is business. and and not risk so regarding the on storage revenue there for if quickly QX, and be in a

and from public I and numbers from help business and clients. storage cloud especially the of a can think growth, high-end these probably you few the foundation are you. form relatively Thank computing

Kyna Wong

very you. Thanks, helpful. Thank

Operator

you. Thank

from Our Nomura. comes go next question Joel Please Ying from ahead.

Joel Ying

situation, we questions. first cloud business public the CDN I is, question as of [Foreign both deliver XQ for enterprise but of percentage I the for because XXXX? market, we're are on business. CDN market R&D cloud second enterprise correct? have public focused I into Can Language] sector am is still a release the focused about one and a are we And understanding short-term two maybe My you. strategy, public cloud to based long-term, cloud, Thank [two-wheel] guess, both partner enterprise on we into [ph] on total business,

Haijian He

happy and few on opportunity Joel, CDN the important the question. are top line sure. only risk budgeting. the take balance considerations when also the think revenue use not planning We contribution, to first we want to Yes, as There but a concentration about to well.

few dimensions track So, annual an there are will on basis. important we

Kingsoft for Cloud. And will than First number of a of want Kingsoft no of the total XX% that assuming or revenue XX% around the is, XXXX. assume business of all, more range total XXXX, single of we two point contributing client be are revenue financial we to Cloud CDN around year as the

total has see say, historical in right QX. that historically, years So, as about in in when XX% XX% we Cloud Kingsoft look decreased XX% a let's already around to the CDN of of happy contribution below revenue revenue at that strategy QX, I we're to think from

I few revenue, network of the percentage we'll And because see combination. infrastructure, very think we it the the but total dollar coming relatively will about in mentioned a is two So, efficiency of mix affect Thank as be important the gradually down when in in quarters, I total [ph], clear. remain more trend dimension whole stable important CDN the guidance numbers, next you. our the of year beginning I think as and the value the of think quarters] the will the absolute revenue will but [following

Operator

you. Thank

Morgan. question. from from next Our ask JP Yao Alex your comes question Please

Alex Yao

from they your impact adoption to or to of to will without the And or to And They or digitization budget slow of of strong likely those cloud solution very to down be or with lot flexibility the to top the able do or make [Foreign pressure stage has they solutions out immediate will guess the So, facing or adopt make is or adoption? observation, own the Based operation another question is they from cloud have strongly the, COVID monetization are more allocation Thank to efficient? economic more are these macro, allocation the in their use to the – the from more adoption answer committed the cloud slowdown solutions. cloud in their Language] demand they still to follow-up a way, after without very efficient to the the COVID be how put adopt year. my on the you. enterprise impact? right business efficiency of if line is cloud improvements this figure enterprise clouds do, impact corporate on I the with kind cloud budget narrow demand see

Yulin Wang

sure And incentive So, prior those see the on, cloud Language] for kind driven to the which business questions, the driven to customers add side, that is, [Foreign was we forward? two the we be do continue wheel strong answer one public demand whether about And actually reduction continues going or model to very of the for demand. for just driven being the by by cost multi-cloud certainly. the of

the to type And verticals specializing. for side, enterprise that we're it actually business. be of we So, differs cloud to the continue this across committed

to business. and the from I've have, sector technology as For for been there demand years example, in for financial that in comes demand And their we China, XX has covering developing and the the of just top continues services and banks mentioned demand the in requirement sector, from for XX% in prepared actually although remarks, customers. been the many elastic those be

even budgeting. not to their related it's So,

increased it So, of you demand, doesn't and by fact can this – the one any evidenced industry, that have process of demand can a more in driving and management also impact actually the project. the granularity the to we healthcare and increased projects as understand, COVID of And increased actually healthcare and healthcare kind which projects. the COVID also that as – thereby this, And institutions government situation second the agents lot is for well. [indiscernible]

of heard projects. public our those we changing the cancellation haven't communication from efficiency or therefore potential with For services and customers, side, budgeting the of about really

So, the that's basically situation. you. Thank

Operator

you. Alright. Thank

from Thompson your comes question next question. Our from Please ask Wu UBS.

Thompson Wu

And specifically? cloud and China's Alex then if adoption My impact? first lot if behalf long-term, macro company what over he/she what its in there just asking, with fourth asked impact would what situation is, will guidance? has company of breakeven about, to adjusted question has full-year the XXXX Language] then given question verticals guidance call, on the given so, [Foreign you. enterprise full-year the know are relationship quarter, Thank reaching EBITDA second of on beyond And has investors how investor the is the point any a like asking an

Yulin Wang

Language] [Foreign Okay.

mainly remains So, experience, that Internet China, feel care from of cloud what [public in be customers. and like outside] we as policy to really situation [ph] business development our sector the it's can not impacted, as we market with well our company, public remains the customers about We our materially the strong our robust the think in side, services because are that for for going general macroeconomic experience we stable, but growth. understand

canceling or So, our canceling also that wave that. we – optimistic the of are mentioned significant also opportunities projects expect year or see side, central And materially there we incentive of been of the customers and policies us with we as on there now, be half the some seize. just might cloud to a for for macroeconomic relatively sign And the second changing hasn't any have enterprise budget. government their the

pace So admittedly period about that that's remain the speaking cloud have that measures second impacts And had impact, are those uncertainty enterprise optimistic. of particular for we of part in but the we and think time. COVID quarter business, the some for control so overall don't – mainly the –

Haijian He

you, thank Thompson. Yes,

question second you’re the on the On the right. [ph] profitability, of [buckets]

hit we higher as in QX the one in of week of QX, June, we of margin in in margin. also will our think are we XXXX. I gross expecting be think non-GAAP general and breakeven I we And mentioned, EBITDA margin upward so likely XXXX than quarterly of gross the the keep trend are already can to hopefully QX

with computing and of and based a executing will terms of total a CEO full-year internally On given in you. so that peers. whole, but the storage revenue, as the our the lot official our Thank guidance change part, a services, And quarterly on are a pace the total the no of executing the same target hopefully including one-time on will compared total are impact generally in that we're basis, [ph] the [enterprise] higher while we COVID-XX, major and work hopefully, and there's given the mentioned, budget the not for QX I be industry think control remain full-year the average grow revenue a track of Yulin cost And third, total on bucket we a providing the second is total as while that at while core on diversification of and and of the mix budget. we're internally. cloud the doing there clients,

Operator

you. Thank Great.

Our from Please your Goldman Timothy Sachs. ask from comes question final Chow question.

Timothy Chow

we expect implement Thank quarter, cost, the rest cost Thank you control was cost especially my as other on we And IDC how big [ph] initiatives Language] much full-year? in taking from for declines this and first side, see in going can IDC further year? for the [Foreign we [QonQ] QX there question control decline to for a cost are you. what of is question. the management My

Haijian He

Yes.

on Let me share very quickly [indiscernible]. this

think I period solid in we – on see time, do of a great the a very we even do short trend results.

you're right, costs. IDC on about we're So, RMBXXX million saving approximately

cabinets, know, under to the leasing of rent the are and there you item, IDC within paid the majority we a expenses they As portion which costs, the cost cost. the bandwidth are are IDC

our the down capacities to saving and we I and few go because think CapEx the bandwidth buying was that year, there costs, their the more and strategy leverage energies, IDC will still the few to the taking IDC forward, locations, budgeting costs are further of will CDN working downloading and decrease initiatives So, we spending to last have reason high a since are we're assuming going performance [indiscernible] major you infrastructures. including including to GPUs including our on of frankly are planning D&A technology upstreaming QX we're of working adjustment of things on the that. advanced don't better know rental optimize as business but the the

a that think the cost good financial that EBITDA also because of important reduce with the fulfillment further expenses revenue, seeing II is times, and in that think don’t affect affecting D&A cost back. I have items as mathematically expenses those doing two are III. assuming while and Camelot room are Phase we items. I integration more good to development was are adding into as recurring products the lot of two so the CapEx two D&A especially the items higher that there solutions, converting you in understand, were and we're margin, will selling will And The the we the may giving healthcare, margin, a and further will a will not a already Phase those and business few services the also affect given the drive

the expenses will revenue. So, the reduced the of scalability given initial recurring those fulfillment R&D be basis and and

think G&A adjust I value room have and Regarding resources see a the while R&D, the also to technologies. strategy will I continue I dollar have flat, will some spend core we may decrease The but think on time remain flexibility to think that. the we G&A, and going and the and on potential some forward, sales the to marketing relatively

be but the in different been Thank things few strict prudent So, few think initiatives, those has unfolded majority navigate and to the internal work we approach have and quarters, in will but a already place. of prioritize I next very you. completed a

Operator

much Great. your for all questions. you Thank very

So, I'll closing the call now for turn remarks. back to Nicole

Nicole Shan

thank for joining [ph] today. and Thank you again [Amber] once you, us

contact quarter. speaking Look further please any next to Thank Have questions free you. nice have with you you forward If a to day. us. feel again

Operator

conference This you. participating. Thank you for does today. for conclude Thank our

may all You disconnect.

Kingsoft Cloud Holdings Limited (KC) 8 Jun 222022 Q1 Earnings call transcript