Q2 2024 Kingsoft Cloud Holdings Limited Earnings Call

August 20, 2024

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Operator: Good day and thank you for standing by. Welcome to the Kingsoft Cloud's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Operator: Good day and thank you for standing by.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You'll then hear an automated message advising your hand is raised.

Operator: Welcome to the Kingsoft Cloud's second quarter 2024 earnings conference call.

Operator: At this time, all participants are in a listen-only mode.

Speaker Change: Good day and thank you for standing by. Welcome to the Kingsoft Cloud's second quarter 2024 earnings conference call.

Operator: After the speaker's presentation, there will be a question and answer session.

Speaker Change: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You'll then hear an automated message advising your hand is raised.

Operator: To ask a question during the session, you will need to press star 1 and 1 on your telephone. You'll then hear an automated message advising your hand is raised.

Operator: To withdraw your question, please press star 1 and 1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Nicole Shan, IR Director of Kingsoft Cloud. Please go ahead.

Operator: To withdraw your question, please press star 1 and 1 again.

Operator: Please be advised today's conference is being recorded.

Speaker Change: To withdraw your question please press star 1 and 1 again.

Operator: I would now like to hand the conference, over to your first speaker today, Nicole Shan, IR Director of Kingsoft Cloud.

Speaker Change: Please be advised today's conference is being recorded.

Speaker Change: I would now like to hand the conference over to your first speaker today, Nicole Shan, IR Director of Kingsoft Cloud. Please go ahead.

Nicole Shan: Please go ahead.

Nicole Shan: Thank you, operator. Hello, everyone, and thank you for joining us today. Kingsoft Cloud's second quarter 2024 news release was distributed earlier today and is available on our IR website at ir.ksyun.com, as well as on global newsware services. On the call today from Kingsoft Cloud, we have our vice chairman and the CEO, Mr. Zhao Tao, and the staff of Mr. Henry He. Mr. Zhao will review our business strategy, operations, and the company highlights, followed by Mr.

Nicole Shan: Thank you, operator.

Nicole Shanahan: thank you operat her all are one and thank you for joining us to today ' up nowd second hold two thousand andnin four on news release was distributed orthere to say and there is available where i on bsite and i r do k s y you and do come as well as on global news our so it is

Nicole Shan: Hello, everyone, and thank you for joining us today.

Nicole Shan: Kingsoft Cloud's second quarter 2024 earnings release was distributed earlier today and is, available on our IR website at ir.ksyun.com, as well as on global newsletter services.

Nicole Shan: He, who will discuss the financials and the guidance. They will be available to answer your questions during the Q&A session that follows. There will be consecutive interpretations. Our interpretations are for your convenience and reference purpose only.

Nicole Shan: On the call today from Kingsoft Cloud, we have our Vice Chairman and the CEO, Mr. Zhou Tao, and the staff of Mr. Henry Hou.

Speaker Change: On the call today from Kingsoft Cloud, we have our Vice Chairman and the CEO , Mr. Zhou Tao, and his deputy, Mr. Henry Huang.

Nicole Shan: Mr. Zhou will review our business strategy, operations, and the company highlights, followed by Mr. Hou, who will discuss the financials and the guidance. They will be available to answer your questions during the Q&A session that follows. There will be consecutive interpretations.

Speaker Change: Mr. Zhao will review our business strategy, operations, and company highlights.

Speaker Change: al that misr ho we ve discuss the financials and the guidance

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Nicole Shan: Our interpretations are for your convenience, and reference purposes only. In case of any discrepancy, management statement in the original language will prevail.

Nicole Shan: In case of any discrepancy, management statement in the original language will prevail. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Security Exchange Act of 1934, as amended and as defined in the U.S. Private Security Litigation Reform Act of 1995.

Nicole Shan: Before we begin, I'd like to remind you that this conference call contains forward-looking, statements within the meaning of Section 21E of the Security Exchange Act of 1934, as amended and as defined in the U.S. Trial and Security Litigation Reform Act of 1995.

Speaker Change: Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Security Exchange Act of 1934, as amended and as defined in the U.S. Tribal Security Litigation Reform Act of 1995.

Nicole Shan: These forward-looking statements are based upon management's current expectations and current, market and operating conditions, and relate to U.N. standing among known or unknown risks, uncertainties, and other factors, of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ maturely from those in the forward-looking statements.

Nicole Shan: These forward-looking statements are based upon management's current expectations and current marketing and operating conditions and relate to U.N. standing on known or unknown risk, uncertainties, and other factors of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ maturely from those in the forward-looking statements. Further information regarding these and other risk, uncertainties, or factors are included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statements. As a result of new information, future events, or otherwise, is not as required under applicable law.

Speaker Change: These forward-looking statements are based upon management's current expectations and current marketing and operating conditions.

Speaker Change: and related UN studies involve known or unknown risks, uncertainties, and other factors, of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ maturely from those in the forward-looking statements.

Nicole Shan: Further information regarding these and other risks, uncertainties, or factors, included in the company's filings with the U.S. SEC.

Speaker Change: Further information regarding this and other risk and certainty of factors are included in the coming filings with the USSEC.

Nicole Shan: The company does not undertake any obligation to update any forward-looking statements.

Nicole Shan: As a result of new information, future events, or otherwise, is not as required under applicable law.

Speaker Change: The company does not undertake any obligation to update any forward-looking statements.

Nicole Shan: Finally, please note that unless otherwise stated, all financial figures mentioned during this conference call are denominated in ERMB.

Speaker Change: As a result of new information, future events, or otherwise, is not as required under applicable law.

Nicole Shan: Finally, please note that unless otherwise stated, all financial figures mentioned during this conference call are denominated in the RMB. It is now my pleasure to introduce our Vice Chairman and the CEO, Mr. Zhao. Please go ahead.

mr gul: Finally, please note that unless otherwise stated, all financial figures mentioned during this conference call are denominated in ERMB. It is now my pleasure to introduce our Vice-Chairman and CEO , Mr. Zhao. Please go ahead. Thank you.

Nicole Shan: It's now my pleasure to introduce our Vice Chairman and CEO, Mr. Zou.

Tao Zou: Please go ahead.

Tao Zou: Thank you. 大家好,欢迎参加金山云2024年第二季度业绩电话会。 I am the CEO of Kingsoft Cloud, Zou Tao. 回顧2022年8月至今,回顧2022年8月至今, 全体金山云同仁团结一心,用两年的时间。 We firmly push for a high-quality sustainable development strategy. 公司面貌焕然一新, First of all, profitability is fundamentally improved. 毛利率从低个为数, 持续稳步提升至17%以上 Bitter Reed. Don't.

Speaker Change: Hello everyone, welcome to the Kingsoft Cloud 2024 Q2 earnings call.

Speaker Change: I am Jin Can Yun CEO Zhou Tao.

Speaker Change: Reviewing from August 2022 to the present

Speaker Change: All the colleagues at Jintianyun are united and will achieve this in two years.

Speaker Change: Firmly promote the strategy of high-quality sustainable development

Speaker Change: The company's appearance has been completely transformed.

Speaker Change: First of all, a fundamental improvement in profitability.

Speaker Change: The gross profit margin has steadily increased from a low single digit to over 17%.

Tao Zou: Thank you.

Tao Zou: 向金银利润和净利润转正稳步迈进其次, 快速拥抱AITC的机遇 Unknown Executive, Huiqun Li, Yucen Liu, Kingsoft Cloud, 从零迅速提升至26% 行业领先坚定清退低利润业务, Today's business accounted for 40%, down to about 20%. A single major customer. Concentration risk is fundamentally solved. Fourth.

Speaker Change: ipai janen zun su panas san

Tao Zou: 向经营利润和净利润转正稳步迈进, 其次,快速拥抱AI机器的机遇新一轮AI业务占公有云比重, 从0迅速提升至26%,行业领先第三,坚定清退低利润业务, 今天业务占比由40%下降至约20%,单一大客户集中风险得到根本解决第四,精细化管理采购资产和运营, 季度成本费用下降近3亿元,占收比15% 第五,左眼长远,武汉研发中心迅速崛起, 已占公司本部员工总数约30% 为公司长期技术利益打下坚实的基础, 完成香港双重主要上市,进入恒生、中指和港股通路筑牢资本市场的基础设施, 这些都为公司的进一步高质量可持续发展奠定了基础我在此向所有长期关心、支持我们的客户、股东和员工朋友们表示诚挚的感谢, 第二,我们正在迅速地接受AIGC的机会由于AI服务的新一轮公众互联网利润增长率由0%降至26% 是业界领先的数字第三,我们坚决面对低端企业, 由于CDN服务的利润增长率从约40%降至20% 并且单独的大型客户集中风险基础上解决了, 第四,我们正在进行精确的管理在购买、资产和运营方面, 由于每月的费用和费用减少至约RMB300亿代表15%的每月收入, 第五,我们正在从长远的角度来看由于武汉的R&D中心迅速地升级, 将近30%的整个工作人员拥有包括Camelot, 建立了持续技术领域的确实基础并且完成了与香港货币交易的两个主要升级, 随后加入了涵盖货币指数和香港货币联系并且确保了我们的资本市场的基础, 下面我向大家具体介绍2024年第二季度的业绩情况本季度,金山云在收入规模,盈利能力,经营现金流方面都取得了新的突破,收入达人民币18.9亿元,不仅环比增长6.5%,还实现了同比增长3.1% 我们的高附加值产品和服务的收入规模增长,抵消了CDN业务主动调整带来的压力,调整后毛利额达人民币3.2亿元,同比增长56.4%,调整后毛利率达17.1%,实现了连续八个季度持续稳步提升,再创历史新高调整后,以毕达额达人民币6059万元,调整后的以毕达率达3.2%,在一季度以毕达转正基础上继续稳步向好,且同比大幅提升6.5个百分点, 我们的现金流达到RMB150亿美元,再次证明我们的现金生产能力。在2024年以来,我们的发展方向并将为长期的健康增长建立一个固实的基础。公有云方面,本季度实现收入12.3亿元,同比增长6.5%,缓比增长4%。我们在小米,金山生态,AI业务,供应链三个方向,都卓有进展。首先,作为小米金山生态的唯一战略云平台,我们紧紧把握生态内企业用云的业务机会。本季度来自小米及金山的收入贡献占比20%,达3.7亿元,同比增长36.9%。其次,AI业务继续发力,本季度AI收入大幅增长至3.3亿元人民币,达到QE AI收入的两倍,占公有云收入比例达26.3%,处于行业领先地位。客户行业分布多元化进一步提升,包括大模型公司,自动驾驶,互联网应用等。我们已建立起具备相当规模的算力资源池,大规模超算网络组网能力业内领先,能够满足万卡级别超算集群的组网托付。第三,建设完善的供应链体系,保障自算资源池规模,控制采购成本,充分利用中西部数据中心资源,相较东部核心城市数据中心成本大幅下降。我们将继续对内严控采购成本,拓展供应商覆盖范围,寻找市场最优价格和服务组合。在公共互联网服务方面,成本达到今年度的RMB1.23亿美元,代表了6.5%的年度增长和4%的四分之一增长。第二,AI业务继续充实。本周,AI收益达到了RMB326亿美元,达到了本周的两倍,并为公共互联网服务的26.3%负责。我们的AI客户基础也更加多元化,包括大语言模型公司、自驾驶、互联网应用和其他。我们设立了一个丰富的数据资源框架,带动业务在大规模的网络能力上,能够支持超级数据框架的网络设施在10,000转移水平。第三,我们建立了一个完整的供应链。操作系統,保持穩定的智慧數據資源流動,並管理購買需求。通過完全利用數據中心的資源在中國中央和西方地區, 需求大幅減少,相比東部的核心城市數據中心。同時,我們嚴格控制了內部購買需求, 擴大供應商的覆蓋,並尋求最佳的價格和質量組合。行業雲方面,本季度實現收入6.6億元。公共服務領域,我們積極把握政務雲、國資雲的項目機會。針對政務、企業兩類應用場景, 以模型能力、大數據、協作辦公為底座,推行標準化運營。在塞迪顧問2024年6月發布的中國政務雲市場研究報告中, 公司位列行業領導者象限。在IDC中國政務雲服務運營服務市場報告中, 位列行業前六,體現了行業市場對於公司裁面能力、市場份額的認可。本季度,我們實現了大模型在公共服務部門落地的標竿項目推進, 將會助力北京住建委打造12345智能決策、智慧問述等項目打造, 提升住建委在匯總統計歸類12345熱線數據的準確性和高效性,提升服務質量和響應速度。數字健康領域,長洲健康雲迎來第五期擴容項目,將滿足客戶新型業務上限, 影像延伸存儲的需求,充分驗證了行業雲客戶及項目的長期合作,建設運營的發展潛力。在AI行業應用領域,我們投資建設的子公司金山智能逐步開始業務推進, 重點把握企業AI軟件應用和交付部署的業務機會。行業模型方面,公司與中國領先的大成律師事務所建立戰略合作關係, 共同成立了法律人工智能聯合實驗室。律師業務數字化轉型邁出了跨越性的一步。我們被列入領導群。在IDC的中國E-政府雲端運營服務市場報告中,我們被列入業界頂尖的六家公司中。這樣的榮譽顯示了我們產品的能力和市場股份。 This quarter, we have promoted the benchmark project of implementing large language models in public services sector, which will assist the Beijing Municipal Commission of Housing and Urban Rural Development in building the 1-2-3-4-5 hotline intelligent decision-making and smart query and data projects, enhancing the accuracy and efficiency of the commission in summarizing statistics and categorizing the 1-2-3-4-5 hotline data, and improving the service quality and response speed.

Speaker Change: shan jing indyan thirteen changer wobull imagine

Speaker Change: She's who?

Speaker Change: Quickly embrace the opportunities of AITC

Speaker Change: The new round of AI business accounts for a proportion of public employees

Speaker Change: Rapidly increased from zero to 26%, leading the industry

Speaker Change: The Sun

Speaker Change: Firmly phase out low-profit businesses

Speaker Change: Today's business share is 40%, down to about 20%, fundamentally resolving the concentration risk of a single major client.

Operator: Good day and thank you for standing by.

Operator: Good day and thank you for standing by. Welcome to the Kingsoft Cloud's second quarter 2024 earnings conference call. At this time all participants are in a listen only mode after the speakers presentation there will be a question and answer session. To ask a question during the session you will need to press star one and one on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question please press star one and one again. Please be advised today's conference is being recorded.

Operator: Welcome to the Kingsoft Cloud's second quarter 2024 earnings conference call.

Tao Zou: 星系话管理采购, More than 3 billion yuan went into total cost. 但修笔15% 但修笔15% 左眼长远 Left eye long and far Wuhan Research and Development Center is reopening, The total number of employees in the company is about 30%. 为公司长期技术利益为公司长期技术利益, Xiaodan Zhao, Tao Zou, Xiaodan Zhang, Haijian He, Nicole Shan, Allen Li, Yucen Liu, Kingsoft Cloud 完成香港雙重主要上市,進入恆生、中指和港股通貨。助劳资本市场的基础设施, These have laid the foundation for the company's further high-quality sustainable development. I would like to thank all of you for your long-term support to our customers, shareholders and employees.

Speaker Change: The Food.

Speaker Change: Refined management of procurement, assets, and operations.

Operator: At this time all participants are in a listen only mode after the speakers presentation there will be a question and answer session.

Speaker Change: Quarterly costs and expenses decreased by nearly 300 million yuan

Operator: To ask a question during the session you will need to press star one and one on your telephone.

Speaker Change: that shall be undersshow

Operator: You'll then hear an automated message advising your hand is raised.

William: So it is very long-term

William: Wuhan R&D Center Rapidly Rises

Operator: To withdraw your question please press star one and one again.

Speaker Change: Done.

Speaker Change: hsze pen bubook you are going on suviet annam s

Operator: Please be advised today's conference is being recorded.

Speaker Change: whereueh kongfu chang chei tuiir tasha tiian strthatese ho

Nicole Shan: I would now like to hand the conference over to your first speaker today, Nicole Shan, IR Director of Kingsoft Cloud.

Nicole Shan: I would now like to hand the conference over to your first speaker today, Nicole Shan, IR Director of Kingsoft Cloud. Please go ahead. Thank you operator. Oh I want and thank you for joining us today. Teamsoft Cloud's second quarter 2024 earnings release was distributed earlier today and is available on our IR website at IR.ksyulin.com as well as on global news where it's so easy.

Speaker Change: Completed dual primary listing in Hong Kong, entered Hang Seng Index, China Index, and Stock Connect.

Nicole Shan: Please go ahead.

Nicole Shan: Thank you operator.

Nicole Shan: Oh I want and thank you for joining us today.

Speaker Change: Strengthen the infrastructure of the capital market

Nicole Shan: Teamsoft Cloud's second quarter 2024 earnings release was distributed earlier today and is available on our IR website at IR.ksyulin.com as well as on global news where it's so easy.

Speaker Change: All of these have laid a foundation for the company's further high-quality and sustainable development.

Speaker Change: I would like to express my sincere gratitude to all our customers, shareholders, and employees who have long cared for and supported us.

Tao Zou: Hello everyone, this has been a presentation of data휴이 교에 등 I'd like to remind you to turn on your computers and, if not, if little fucks around because you don't want to have it Tiere, Hello, everyone.

Tao Zou: Thank you and welcome all for joining Kingsoft Cloud's second quarter 2024 earnings call. I am Zhao Tao, CEO of Kingsoft Cloud. Looking back on the two years since August 2022, our entire Kingsoft Cloud team has firmly executed the high-quality and sustainable development strategy, and the company has undergone a complete transformation. First of all, profitability fundamentally improved, as gross margins steadily increased from low single digits to 17%, adjusted EBITDA margin increased to 3% after turning positive in Q1.

Nicole Shan: On the call today from Kingsoft Cloud we have our watch channel and the CEO Mr. Zhou Tao and the staff of Mr. Henry Ford.

Nicole Shan: On the call today from Kingsoft Cloud we have our watch channel and the CEO Mr. Zhou Tao and the staff of Mr. Henry Ford. Mr. Zhou will reveal our business strategy operations and the company highlights follow by Mr. Huang who will discuss the financials and the guidance. There will be a little about to answer your questions during the two years session that follows. There will be consecutive interpretations, all interpretations of loyal colleagues and the reference for the only. In case of any discrimsy management statement in our original language we won't go well.

Speaker Change: Hello everyone. Thank you and welcome all for joining Kingsoft Cloud's second quarter 2024 earnings call. I am Zhou Tao, CEO of Kingsoft Cloud.

Nicole Shan: Mr. Zhou will reveal our business strategy operations and the company highlights follow by Mr. Huang who will discuss the financials and the guidance.

Speaker Change: Looking back on the two years since August 2022, our entire Kingsoft Cloud team has firmly executed the high-quality and sustainable development strategy.

Nicole Shan: There will be a little about to answer your questions during the two years session that follows.

Nicole Shan: There will be consecutive interpretations, all interpretations of loyal colleagues and the reference for the only.

Speaker Change: And the company has undergone a complete transformation.

Nicole Shan: In case of any discrimsy management statement in our original language we won't go well.

Speaker Change: First of all, profitability fundamentally improved, as gross margins steadily increased from low single digits to 17%.

Nicole Shan: Before we begin I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Security Exchange Act of 1934 as amended and asked if one in the U.S, trial is the critical litigation reform act of 1995. It's forward-looking statements based on management's current expectations and the current marketing and operating conditions and relate to even selling well-known or known rates and earnings and other factors of which are difficult to predict and the manual for which are beyond the company's control which may cause the company's actual results, performance, or achievements to differ maturely from those in the forward-looking statements.

Speaker Change: Adjusted EBITDA margin increased to 3% after turning positive in Q1 and we are well on track to turn operating and net profit positive.

Tao Zou: And we are well on track to turn operating and net profit positive. Second, swiftly embracing AIGC opportunities. But this new round of AI services revenue contribution to public cloud increased from 0 to 26 percent, a leading figure in the industry. Third, firmly facing out low-margin business, as CDN services revenue contribution decreased from approximately 40% to 20%.

Nicole Shan: It's forward-looking statements based on management's current expectations and the current marketing and operating conditions and relate to even selling well-known or known rates and earnings and other factors of which are difficult to predict and the manual for which are beyond the company's control which may cause the company's actual results, performance, or achievements to differ maturely from those in the forward-looking statements.

Speaker Change: Second, swiftly embracing AIGC opportunities.

Speaker Change: as this new round of ai services revenue contribution to public cloud increaseed from zero to twenty-six percent a leading figure in the industry

Speaker Change: Third, firmly phasing out low-margin businesses.

Speaker Change: As CDN services revenue contribution decreased from approximately 40% to 20%.

Tao Zou: And along with that, single large customer concentration risk fundamentally resolved, implementing refined management in aspects of procurement, assets, and operations, as quarterly costs and expenses decreased by approximately RMB 300 million, representing 15% of quarterly revenue, taking long-term perspectives, as Wuhan R&D Center quickly scaled up to hosting approximately 30% of the entire workforce, including Camelot, laying a solid foundation for sustained technological leadership, as well as completing dual primary listing on Hong Kong Stock Exchange, followed by inclusion into the Hang Seng Composite Index and Hong Kong Stock Connect, solidifying our capital markets infrastructure. All of these have laid solid foundation to the high quality and sustainable development in the future.

Nicole Shan: What are the information regarding these and other experiences of factors included in the company's findings with the U.S, as easy?

Nicole Shan: What are the information regarding these and other experiences of factors included in the company's findings with the U.S, as easy? The company does now undertake any obligation to update any forward-looking statements. As a result of new information future events or otherwise, is that as required under Apple's law?

Speaker Change: And along with that, single large customer concentration risk fundamentally resolved.

Nicole Shan: The company does now undertake any obligation to update any forward-looking statements.

Speaker Change: Fourth, implementing refined management in aspects of procurement, assets, and operation, as quarterly costs and expenses decrease by approximately RMB 300 million, representing 15% of quarterly revenues.

Nicole Shan: As a result of new information future events or otherwise, is that as required under Apple's law?

Nicole Shan: Finally please note that unless otherwise stated, our financial figures mentioned during this conference call at the number 19 ERNB.

Tao Zou: It's now my pleasure to introduce our last term on the CEO, Mr. Joe.

Tao Zou: It's now my pleasure to introduce our last term on the CEO, Mr. Joe. Please go ahead. Thank you. [inaudible][inaudible] This year, more than 40,000 people in the U.S, will be able to get the results. In the fourth, the economy, the management of the economy, the production, and the luck. The system, the cost, the price, the price, the price, the price, the price, the price, the price, the price. [inaudible] the price, the price, the price, the price, the price, the price, the price, the price, the price, the price,[inaudible] the price, the price, the price, the price,[inaudible] All of these have laid solid foundation to the high quality and sustainable development in the future.

Speaker Change: taking long-term perspectives.

willhan: Wuhan R&D Center quickly scaled up to hosting approximately 30% of the entire workforce.

Tao Zou: Please go ahead.

Tao Zou: Thank you.

Speaker Change: including camwal laying a solid foundation for a sustained technological leadership as well as completing du a primary liting on h kong ck change followed by inclusion into the hungong comped index and hong kong stock concts sol idifying our capital markets infrastructure

Tao Zou: [inaudible][inaudible] This year, more than 40,000 people in the U.S, will be able to get the results.

Speaker Change: All of these have laid solid foundation to the high quality and sustainable development in the future. I would like to express our sincere gratitude to all our customers, shareholders, and employees who have consistently supported and cared for us over the long term.

Tao Zou: I would like to express our sincere gratitude to all our customers, shareholders, and employees who have consistently supported and cared for us over the long term. 下面,我向大家具体介绍2024年第二季度的业绩情况 Next, I will introduce the results of the second quarter of 2024.

Speaker Change: Next, I will specifically introduce the performance for the second quarter of 2024. In this quarter, Kingsoft Cloud has shown improvements in revenue scale and profitability.

Tao Zou: 金山云在收入规模,盈利能力,金山云在收入规模,盈利能力, has made new breakthroughs in cash flow management. 收入达人民币18.9亿元, The growth of Huanbi is 6.5%, and the growth of Tongbi is 3.1%. Our high-added-value products and services have increased in terms of revenue, which has offset the pressure on CDN businesses to adjust. After adjustment, the毛利額 reached RMB3.2 billion.

Speaker Change: New breakthroughs have been achieved in operating cash flow.

Speaker Change: showwillard and be surved into ean

Speaker Change: Not only did it achieve a month-on-month growth of 6.5%, but it also achieved a year-on-year growth of 3.1%.

Speaker Change: The revenue growth from our high value-added products and services offset the pressure caused by the proactive adjustments in the CDN business.

Tao Zou: 同比增長56.4% After adjustment, the毛利率 reached 17.1%, which achieved a steady increase for eight consecutive quarters, and a record high. After adjustment, EBITDA reaches RMB60.59 million, and EBITDA rate after adjustment reaches, Just a little bit, On the basis of the E-G6 EBITDA transition, we will continue to move steadily and significantly increase our share price by 6.5%. 金银现金净流入1.5亿元, The ability to conduct activities and vote continues to be proven.

Speaker Change: Adjusted gross profit reached RMB 320 million

Speaker Change: Year-on-year growth of 56.4%

Tao Zou: In the fourth, the economy, the management of the economy, the production, and the luck.

Speaker Change: The adjusted gross profit margin reached 17.1%, achieving continuous steady growth for eight consecutive quarters, setting a new historical high.

Tao Zou: The system, the cost, the price, the price, the price, the price, the price, the price, the price, the price.

Speaker Change: After adjustment, the adjusted EBITDA and Darin Coin amount to 60.59 million yuan.

Tao Zou: [inaudible] the price, the price, the price, the price, the price, the price, the price, the price, the price, the price,[inaudible] the price, the price, the price, the price,[inaudible] All of these have laid solid foundation to the high quality and sustainable development in the future.

Speaker Change: 3.2%

Speaker Change: On the basis of turning a significant deficit into a surplus in the first quarter, it continued to improve steadily, with a year-on-year increase of 6.5 percentage points.

Speaker Change: Net cash inflow from operations is 150 million yuan

Tao Zou: The increase in the number of financial industry indicators indicates that Kingsoft Cloud's high-quality sustainable development strategy has been implemented. The company's development is entering a new phase. 为2024年及以后的长期健康发展奠定了坚实基础, Now I will walk you through the business highlights of the second quarter, 2024. This quarter, Kingsoft Cloud has achieved new breakthroughs in terms of revenue scale, profitability and operating cash flow. In particular, our revenues reached RMB 1.89 billion, not only a sequential growth of 6.5%, but also a year-over-year expansion of 3.1%. Revenue from high-value-added products and services has grown, offsetting pressure brought about by our proactive adjustment of the CDN services. Adjusted gross profit reached RMB323 million, increased by 56.4% year-over-year.

Speaker Change: Business activities and the ability to create knowledge continue to be proven.

Speaker Change: The improvement of numerous financial performance indicators signifies the implementation of Kingsoft Cloud's high-quality sustainable development strategy, marking a new stage in the company's development.

Speaker Change: we earling arnoia gholders han kian kad in the aujustities

Speaker Change: Now I will walk you through the business highlights of the second quarter, 2024. This quarter, Kingsoft Cloud has achieved new breakthroughs in terms of revenue scale, profitability, and operating cash flow.

Speaker Change: in particular our revenues reached r m b one point eight nine billion not only a sequential growth of six point five centse but also a year-over-year expansion of three point one percent

Speaker Change: Revenue from high value-added products and services has grown, offsetting pressure brought about by our proactive adjustment of the CDN services.

Speaker Change: Adjusted gross profits reached RMB 323 million, increased by 56.4% year-over-year.

Tao Zou: Adjusted gross margin increased to 17.1%, marking the eighth quarter of consecutive improvement, adjusted EBITDA reached RMB 60.59 million and adjusted EBITDA margin reached 3.2%, a sequential improvement after the milestone of turning positive in Q1 and a significant increase of 6.5 percentage points year over year. Net operating cash inflow amounted to RMB 150 million, once again demonstrating our cash-generating ability from operating activities. The improvement of various financial performance indicators signifies that Kingsoft Cloud's high-quality and sustainable development strategy has been effective, marking a new phase in our development and laying a solid foundation for long-term healthy growth in 2024 and beyond.

Speaker Change: Adjusted gross margin increased to 17.1%, marking the 8th quarter of consecutive improvement.

Speaker Change: Adjusted EBITDA reached RMB 60.59 million and adjusted EBITDA margin reached 3.2%, a sequential improvement after the milestone of turning positive in Q1 and a significant increase of 6.5 percentage points year over year.

Speaker Change: Net operating cash inflow amounted to RMB $150 million, once again demonstrating our cash generating ability from operating activities.

Speaker Change: The improvement of various financial performance indicators signifies that Kingsoft Cloud's high-quality and sustainable development strategy has been effective, marking a new phase in our development and laying a solid foundation for long-term healthy growth in 2024 and beyond.

Tao Zou: 公有云方面,本季度实现收入,公有云方面,本季度实现收入, 12.3 billion yuan, growth of 6.5% want to bericaounces 我们在小米金山生态, Business, supply chain, all three directions are making progress. First of all, as the only strategic cloud platform of Xiaomi Jinshan Ecology, We are taking full advantage of the business opportunities of ecological enterprises. In this quarter, the income contribution from Xiaomi and Kingshan accounted for 20% to 3.7 billion yuan, which is a 36.9% increase.

Speaker Change: In the public cloud sector, revenue for this quarter reached 1.23 billion yuan, representing a year-on-year growth of 6.5%.

Speaker Change: one be come up pcent

Speaker Change: We are in the Xiaomi Kingsoft ecosystem

Speaker Change: are y kia ser function to throw youro tinda

Speaker Change: First of all, as the only strategic cloud platform of Xiaomi Kingsoft ecosystem

Speaker Change: We are seizing the business opportunities of enterprises using the cloud within our ecosystem. This quarter, the revenue contribution from Xiaomi and Kingsoft accounted for 20%.

Tao Zou: I would like to express our sincere gratitude to all our customers, shareholders and employees who have consistently supported and cared for us over the long time.

Tao Zou: I would like to express our sincere gratitude to all our customers, shareholders and employees who have consistently supported and cared for us over the long time. In the last six years, the new breakthrough has been made. The number of employees is 18.9 billion yuan. The number of employees is 6.5 billion yuan. The number of employees is 3.1 billion yuan. Our high quality is the product and the number of employees' income is increasing. The pressure of the shareholders in the company is increasing. The number of employees is 3.2 billion yuan. The number of employees is 56.4 billion.

Speaker Change: 8.37 billion yuan, a year-on-year increase of 36.9%

Tao Zou: Sisu, AI business continues to flourish. This quarter, AI revenue has grown significantly to 3.3 billion yuan. 5-0.

Speaker Change: Secondly, the AI business continues to gain momentum, with AI revenue significantly increasing to 330 million RMB this quarter.

Tao Zou: 达到QE AI收入的两倍,占公有云收入比例达26.3% who is currently standing 9th right now standing in 9th place. 客户行业分布多元化进一步提升,包括大模型公司,自动驾驶,互联网应用等。 We have established a fairly large-scale financial resource system. 大规模超算网络组网能力业内领先,能够满足万卡超算网络组网能力,能够满足万卡超算网络组网能力, 网卡级别超算机群的主网托福 Wacom Super Computer Group's Mainnet Token 第三 Third 建设完善的供应链体系,保障资产资源此规模。 Thank you! 通分利用, 中西部数据中心资源,相较东部核心城市数据,中心成本大幅下降,我们将继续, We will monitor the cost of purchasing and expand the scope of supplier coverage to find the best price and service combination in the market. In terms of public cloud services, revenues reached RMB 1.23 billion this quarter, representing a year-over-year increase of 6.5 percent and a quarter-over-quarter increase of 4 percent. We have seen positive outcomes across our three priorities for public cloud services, namely, the Xiaomi and Kingsoft ecosystem. AI Businesses and Supply Chain.

Speaker Change: Taobao

Speaker Change: Achieve twice the QE AI revenue, accounting for 26.3% of public cloud revenue

Tao Zou: In the last six years, the new breakthrough has been made.

Tao Zou: The number of employees is 18.9 billion yuan.

Speaker Change: at the forefront of the industry

Tao Zou: The number of employees is 6.5 billion yuan.

Speaker Change: khhaani firmbookok toy hat i buthisism pa ota more ences to asia who are notck new do

Tao Zou: The number of employees is 3.1 billion yuan.

Tao Zou: Our high quality is the product and the number of employees' income is increasing.

Speaker Change: We have established a sizable pool of computing resources.

Tao Zou: The pressure of the shareholders in the company is increasing.

Speaker Change: The large-scale supercomputing network setup capability is industry-leading, able to meet the networking requirements of supercomputing clusters at the ten-thousand-card level.

Tao Zou: The number of employees is 3.2 billion yuan.

Tao Zou: The number of employees is 56.4 billion.

Speaker Change: he said

Tao Zou: [inaudible][inaudible] to be the first to be[inaudible] of of of of of of of of of of of of System, securing the scale of a stable intelligent computing resource pool and managing procurement costs, but slowly utilizing data standards, resources, essential and Western regions of China, costs that significantly reduce compared to the data standards in the core cities in the east.

Speaker Change: Build a comprehensive supply chain system to ensure the scale of its own resources.

Speaker Change: Control console dog cost, make full use of it

Speaker Change: The cost of data center resources in the Midwest has significantly decreased compared to the core cities in the East. We will continue to strictly control procurement costs internally, expand the range of suppliers, and seek the best combination of price and service in the market.

Speaker Change: In terms of public cloud services, revenues reached RMB 1.23 billion this quarter, representing a year-over-year increase of 6.5 percent and a quarter-over-quarter increase of 4 percent.

Speaker Change: We have seen positive outcomes across our three priorities for public cloud services, namely the Xiaomi and Kingsoft ecosystem, AI businesses, and supply chain.

Tao Zou: First of all, serving as the sole strategic cloud platform within the Xiaomi and Kingsoft ecosystems. We firmly grasp the cloud business opportunities within the ecosystem. This quarter, revenue contribution from Xiaomi and Kingsoft reached 20%, amounting to RMB 370 million, and witnessed a year-over-year increase of 36.9%.

Speaker Change: First of all, serving as the sole strategic cloud platform within the Xiaomi and Kingsoft ecosystem.

Speaker Change: We firmly grasp the cloud business opportunities within the ecosystem.

Speaker Change: This quarter, revenue contribution from Xiaomi and Kingsoft reached 20%, amounting to RMB370 million, and witnessed a year-over-year increase of 36.9%.

Tao Zou: Secondly, AI businesses continue to bear fruit. In the first quarter, AI revenue surged to RMB 326 million, doubling the amount in the first quarter and accounting for 26.3% of public cloud revenues, an industry-leading position. Our AI customer base also further diversified, including large language model companies, self-driving, internet applications, and others. We have established a substantial computing resource pool, leading the industry in large-scale network capabilities, capable of supporting the networking topology of supercomputing clusters at the 10,000-chip level.

Speaker Change: Secondly, AI businesses continue to bear fruit.

Speaker Change: This quarter, AI revenue surged to RMB 326 million, doubling the amount in first quarter and accounting for 26.3% of public cloud revenues, an industry-leading position.

Speaker Change: Our AI customer base also further diversified, including large language model companies, self-driving, internet applications, and others.

Speaker Change: We have established a substantial computing resource pool, leading the industry in large-scale network capabilities capable of supporting the networking topology of supercomputing clusters at the 10,000-chip level.

Tao Zou: Thirdly, we built a comprehensive supply chain system, securing the scale of a stable intelligent computing resource pool and managing procurement costs. By fully utilizing data centers resources in central and western regions of China, costs are significantly reduced compared to the data centers in the core cities in the east. Meanwhile, we strictly control internal procurement costs, expand coverage of suppliers and seek the best combination of price and quality, realized a revenue of more than 50 million yuan hoping that the threshold of renewable energy can be fulfilled in the end. Without Chiu's assertion of profitability, the Ministry of Energy endeavored to secure more than 60 million yuan of renewable energy thus reaching a G20 reconciliation goal.

Speaker Change: Thirdly, we built a comprehensive supply chain system, securing the scale of a stable intelligent computing resource pool and managing human costs.

Speaker Change: By fully utilizing data centers resources in central and western regions of China, costs are significantly reduced compared to the data centers in the poor cities in the East.

Speaker Change: Meanwhile, we strictly control internal procurement costs, expand coverage of suppliers, and seek the best combination of price and quality.

Speaker Change: In terms of industry operations, revenue for this quarter reached 660 million yuan.

Speaker Change: In the public service sector, we actively seize project opportunities from Zheng Yun and Guo Zhiyun.

Speaker Change: For the two application scenarios of government affairs and enterprises, use model capabilities and big data collaborative office as the foundation to promote standardized operations.

Tao Zou: This December our program programs will be launching an Simon Challenge, In the field of public service, we actively seize the opportunity of Zheng Yun and Guo Ziyun's projects. For business, government, and enterprise applications, we use model capabilities and large data to work as a base and carry out standardized operations. 在赛迪顾问2020年6月发布的中国政务员市场研究报告中 In the June 2020 report published by SIDI, Unknown Executive, Huiqun Li, Yucen Liu, Kingsoft Cloud 行业领导者象限, The ITC中國政務員服務运营服务市场报告中位列行业前六,体现了行业市场对于公司产品能力市场份额的认可。本季度,我们实现了大模型在公共服务部门落地的标杆项目推进, 将会助力北京成为全球最大的服务部门。 Zhu Jianwei, Da Zhao, 12345, Zhi Neng Jue Ce, Zhi Hui Wen Shu, Deng Xia Mu Da Zhao.

Speaker Change: In the market research report on Chinese government officials released by Cedric Consultants in June 2020, the company was listed

Speaker Change: Industry leader downward

Speaker Change: i did see two quten million two

Speaker Change: Ranked among the top six in the industry in the operations service market report, reflecting the industry's recognition of the company's product capabilities and market share.

Speaker Change: This quarter, we have advanced a benchmark project for the implementation of large models in the public service sector, which will assist Beijing.

Speaker Change: Assist the Construction Committee in creating projects such as 12345 Intelligent Decision-Making and Smart Inquiry.

Tao Zou: 提升住建委在汇总统计归类12345热线数据的准确性和高效性,提升服务质量和响应速度。数字健康领域,长洲健康云迎来第五期扩容项目,将满足客户新型业务上线。 or Yongxiao Yanxin 巡述的需求充分证明更验证了行业云客户及项目的长期合作建设运营的发展潜力, In the field of AI industry applications, our investment-building subsidiary, Jinshan Intelligence, is gradually starting to promote business, focusing on the business opportunities of enterprise AI software applications and inter-departmental deployment. 行业模型方面,公司与中国领先的大成律师事务所建立战略合作关系,共同成立了法律人工智能联合实验室。于是業務數字化轉型邁出了跨越性的一步, Moving on to Enterprise Cloud Services, where revenues amounted to RMB $657 million. In public services space, we have actively pursued opportunities within public service cloud and state-owned enterprise cloud. Implementing standardized operation and maintenance.

Speaker Change: Enhance the accuracy and efficiency of the Housing and Urban-Rural Development Committee in summarizing, classifying, and compiling data from the 12345 hotline, and improve service quality and response speed.

Tao Zou: In healthcare space, Changzhou Health Cloud has launched its Phase 5 expansion. It will meet the requirements of new business scenarios and the needs of extended archive, of healthcare images, fully validating the potential to establish long-term cooperation for construction and operation of industry cloud customers and projects.

Speaker Change: In the field of digital health, Changzhou Health Cloud is welcoming its fifth expansion project, which will meet the needs of new business launches for customers.

Speaker Change: The demand for extended image storage fully validates the long-term cooperation with industry cloud customers and projects, as well as the development potential of construction and operation.

Speaker Change: In the field of AI industry applications, our subsidiary Kingsoft Intelligence, which we have invested in and built, is gradually starting to advance its business. It focuses on seizing business opportunities in enterprise AI software applications and delivery deployment.

Speaker Change: In terms of industry models, the company has established a strategic partnership with China's leading Dacheng Law Offices to jointly set up a Legal Artificial Intelligence Joint Laboratory.

Speaker Change: The digital transformation of legal services has taken a significant leap forward.

Speaker Change: Moving on to Enterprise Cloud Services, where revenues amounted to RMB657 million.

Speaker Change: In public services space, we have actively pursued opportunities within public service cloud and state-owned enterprise cloud.

Tao Zou: We have leveraged our core components, such as models, big data, and workspace collaboration, targeting use cases in a public service and enterprise domain. The China e-government cloud market research report released in June 2024 by CCID, a leading consulting company in China. We are ranked in the leaders quadrant. In the China e-Government Cloud Operations Service Market Report by IDC, we ranked at the top six companies in the industry. That ranks reflect recognition from the industry markets for our product capabilities and market share.

Speaker Change: Implementing standardized operation and maintenance, we have leveraged our core components such as models, big data, and workspace collaboration, targeting use cases in a public service and enterprise domains.

Speaker Change: In the China e-government cloud market research report released in June 2024 by CCID, a leading consulting company in China, we are ranked in the leaders quadrant.

Speaker Change: In the China e-government cloud operation service market report by IDC, we ranked as the top six companies in the industry.

Speaker Change: Such ranks reflect recognition from the industry market for our product capabilities and market share.

Tao Zou: This quarter, we have promoted the benchmark project of implementing large language models in public services sector, which will assist the Beijing Municipal Commission of Housing and Urban Rural Development in building the 1-2-3-4-5 hotline intelligent decision making and smart query and data project, enhancing the accuracy and efficiency of the commission in summarizing statistics and categorizing the 1-2-3-4-5 hotline data and improving the service quality and response speed.

Speaker Change: This quarter, we have promoted the benchmark project of implementing large language models in public services sector.

Speaker Change: which will assist the Beijing Municipal Commission of Housing and Urban Rural Development in building the 12345 Hotline Intelligent Decision Making.

Speaker Change: and smart quurry and data projects enhancing the accuracy and efficiency of the commission in summarizing statistics and categorizing the one two three for five toline data and improving the service quality and response bes

Tao Zou: In the healthcare space, Changzhou Health Cloud has launched its Phase 5 expansion. It will meet the requirements of new business scenarios and the needs of extended archives of healthcare images, fully validating the potential to establish long-term cooperation for construction and operation of industry cloud customers and projects. AI industry applications. Kingsoft AI, a subsidiary invested and established by us, has gradually started to promote its business, focusing on seizing business opportunities in enterprise AI software application and delivery deployment.

Speaker Change: in health care space

Speaker Change: Changzhou Health Cloud has launched its Phase 5 expansion.

Speaker Change: It will meet the requirements of new business scenarios and the needs of extended archives of healthcare images, fully validating the potential to establish long-term cooperation for construction and operation of industry cloud customers and projects.

Tao Zou: In AI industry applications, Kingsoft AI, a subsidiary invested and established by us, has gradually started to promote its business, focusing on seizing business opportunities in enterprise AI software applications and delivery deployment.

Tao Zou: Meanwhile, we strictly control internal procurement costs, expand coverage of suppliers and seek the best combination of private and quality.

Speaker Change: In AI industry applications, Kingsoft AI, a subsidiary invested and established by us, has gradually started to promote its business, focusing on seizing business opportunities in enterprise AI software applications and delivery deployments.

Tao Zou: In terms of industry models, we officially launched a strategic cooperation with Denton's, law firm, a leading law firm in China, and established the Joint Laboratory of Legal, Artificial Intelligence, taking a leap forward in digital transformation of law industry.

Tao Zou: In terms of industry models, we officially launched a strategic cooperation with Denton's law firm, a leading law firm in China, and established the Joint Laboratory of Legal Artificial Intelligence, taking a leap forward in digital transformation of law industry. In terms of product technology, we continue to hold on to the technical benefits and focus on building the first-class customer experience of core products. In terms of AI, based on AI customers' increasing demand for data cleaning, we have integrated products such as rock metal and object storage.

Speaker Change: In terms of industry models, we officially launched a strategic cooperation with Denton's law firm, a leading law firm in China, and established the Joint Laboratory of Legal Artificial Intelligence, taking a leap forward in digital transformation of law industry.

Tao Zou: In terms of product technology, we continue to hold on to technical benefits, focusing on, the first-class customer experience of core products.

Speaker Change: tr tuce of amia or mtissui in cities will be j j bad our cloon having the eto clover ti yet

Tao Zou: In terms of AI, based on the increasing data cleaning needs of AI customers, we have, integrated products such as rotary metal, object storage, and other types of data cleaning solutions for text, images, videos, and other types of data cleaning.

Speaker Change: In terms of AI, based on the increasing data cleaning needs of AI customers, we have integrated products such as bare metal and object storage.

Tao Zou: [inaudible] This quarter, we have promoted the benchmark project of implementing large language models in public service sector, which will assist the Beijing Municipal Commission of Housing and Urban Rural Development in building the 12345 Hardline Intelligent Decision Making and Smart Query and Data Project, enhancing the accuracy and efficiency of the commission, in summarizing statistics and categorizing the 12345 Hardline data and improving the service quality and response speed.

Tao Zou: 形成针对文本、图片、视频等类型数据清洗的整体解决方案, 满足预训人员数据集,微调数据集成。 to do so. 行业云领域,迎合云推出了低成本,高密度的专有云平台。高密集型的单实力成本实现下降最高60% Increased strength to 300% In terms of product and technology, we uphold the principles of building success based on technology and innovation, focusing on delivering best-in-class customer experience across our core product offerings. AI space. In response to surging data cleansing demands from AI clients, we have integrated products like bare metal and object storage to create a holistic solution for data cleansing accommodating text, images, and videos. This multimodal solution is tailored to meet the data cleansing requirements for the creation of both pre-training and fine-tuning data, enterprise cloud space.

Speaker Change: since sometimesly rebered tohere suian d lat suited changinly the turny d vire man to ocregioner should tr reity with house su jees hong solity something to use su you changeenti the shut of yalso

Tao Zou: We have satisfied the needs of data cleaning as required by the data generation requirement, of the data training data set.

Tao Zou: In the industry cloud sector, Kingsoft launched a low-cost, high-density cloud platform.

Speaker Change: In the industry cloud sector, Galaxy Cloud has launched a low-cost, high-density private cloud platform.

Tao Zou: Compared to the original standard configuration, the single-strength cost of high-precision, models has dropped by 64%, and the strength density has increased by more than 300%.

Speaker Change: Standard configuration, high-density single strength cost reduction up to 64%

Tao Zou: In terms of product and technology, we uphold the principles of building success based on, technology and innovation, focusing on delivering best-in-class customer experience across our core product offerings.

Speaker Change: Strength density increased by up to 300%

Speaker Change: In terms of product and technology, we uphold the principles of building success based on technology and innovation, focusing on delivering fast and plus customer experience across our core product offerings.

Tao Zou: In AI space, in response to surging data cleansing demands from AI clients, we have integrated, products like bare metal and object storage to create a holistic solution for data cleansing accommodating text, images, and videos. This multimodal solution is tailored to meet the data cleansing requirements for the creation, of both pre-training and fine-tuning data sets.

Speaker Change: in aispace in response to surging data cleaning demand from ai clients

Speaker Change: We have integrated products like bare metal and object storage to create a holistic solution for data cleansing accommodating text, images, and videos.

Speaker Change: this monmoo solution is tailored to meet the data cleaning requirements for the creation of so pretraining and fine tuning dataence

Tao Zou: In enterprise cloud space, the Galaxy Stack platform released a proprietary cloud platform, with low cost and high density. Compared to the original standard configuration, the high-density version has achieved a maximum, reduction of 64% in cost per instance and an increase of up to 300% in instance density.

Tao Zou: The Galaxy Stack platform released a proprietary cloud platform with low cost and high density. The High Density version has achieved a maximum reduction of 64% in cost per instance and an increase of up to 300% in instance density. From here again. 经过过去两年,高质量可持续发展战略的坚定实施, The basic aspect of Kingsoft Cloud has been rejuvenated.

Speaker Change: In enterprise cloud space, the Galaxy Stack platform released a proprietary cloud platform with low cost and high density.

Speaker Change: Compared to original standard configuration, the high-density version has achieved a maximum reduction of 64% in cost per instance and an increase of up to 300% in instance density.

Tao Zou: Over the past two years, the high-quality and sustainable development strategy has been firmly, implemented, and the basic aspect of the Galaxy Cloud has been reborn.

Speaker Change: From here again

Speaker Change: After the steadfast implementation of the high-quality sustainable development strategy over the past two years

Tao Zou: 展望未来,我们将继续提升盈利和现金造学能力,与小米金山生态深度合作,强化武汉研发中心,全面理解和探索新的AI机遇,从而为我们的客户,股东,员工和其他利益方持续创造价值。接下来,有请CFO Perry为大家介绍阿基度财务业绩。谢谢。 After turning a profit in adjusted EBITDA margin last quarter, we continued with this positive trend with 60.6 million RMB in EBITDA and 3.2% in EBITDA margin, demonstrating our successful execution of a high-quality sustainable development strategy.

Tao Zou: In the near future, we will continue to improve our profitability and the ability to generate cash. 与小米集团生态深度合作, Wuhan Research and Development Center, comprehensive understanding and exploration of new AI opportunities, and thus continue to create value for our customers, shareholders, employees and other stakeholders. 接下来有请CFO Kerry 为大家介绍阿基督财务业绩谢谢, In summary, after two years of step-by-step implementation of the high-quality and sustainable development strategy, Kingsoft Cloud's fundamentals have undergone a complete transformation. Looking forward, we will continue to enhance our profitability and cash-generating capabilities, deepen cooperation with Xiaomi and Kingsoft's ecosystem, strengthen Wuhan Research Center, and develop comprehensive understanding of new AI and explore such opportunities, thereby continuously creating value for our customers, shareholders, employees, and other stakeholders. I will now pass the call over to our CFO Henry to go over our financials for the second quarter of 2024. Thank you.

Speaker Change: The fundamentals of Qingshan Yun have been completely renewed.

Speaker Change: Looking ahead, we will continue to enhance our profitability and cash generation capabilities.

Speaker Change: Deep integration and cooperation with Xiaomi's ecosystem

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Speaker Change: Next, let's welcome CFO Kerry to present the financial performance for the second quarter. Thank you.

Speaker Change: In summary, after two years of step-by-step implementation of the high quality and sustainable development strategy

Speaker Change: kings of cloud fundamentals have undergone a complete transformation

Speaker Change: Looking forward, we will continue to enhance our profitability and cash-generating capabilities.

Speaker Change: Deepened cooperation with Xiaomi and Kingsoft's ecosystem strengthened Wuhan Research Center and developed comprehensive understanding of new AI and explored such opportunities, thereby continuously creating value for our customers, shareholders, employees, and other stakeholders.

Speaker Change: I will now pass the call over to our CFO Henry to go over our financials for second quarter 2024.

Tao Zou: In healthcare space, Challenger Health Cloud has launched its space-fired expansion. It will meet the requirements of new business scenarios in the needs of extended archive of healthcare images, fully validating potential to establish long-term operation for construction and operation of industry cloud customers and projects. In AI industry applications, Kingsoft AI, a subsidiary invested and established by us, has gradually started to promote its business, focusing on seeding business opportunities in enterprise AI software applications and delivery deployments.

Haijian He: Thank you, Chairman Zhao. Thank you, Ms. Zhao, and I welcome everyone for joining the call. Now I will walk you through our financial results for the second quarter of 2020. We would like to highlight three key areas of progress. First, we are very pleased with ongoing improvements in our financial matrix. By applying the first principle thinking, we are committed to a profit-focused approach, have led to consecutive increases in our gross profit.

Speaker Change: ok here i don't know

Henry: Thank you, Ms. Zhao, and I welcome everyone for joining the call.

Henry: Now I will walk you through our financial results for the second quarter of 2024.

Speaker Change: We would like to highlight three key areas of progress.

Speaker Change: First, we are very pleased with ongoing improvements in our financial matrix.

Tao Zou: In AI industry applications, Kingsoft AI, a subsidiary invested and established by us, has gradually started to promote its business, focusing on seeding business opportunities in enterprise AI software applications and delivery deployments.

Speaker Change: By applying the first principle thinking, we are committed to a profit-focused approach that has led to consecutive increases in our gross profit, gross margin, EBITDA profit, and EBITDA margin over the past several quarters.

Haijian He: Gross Margin, EBITDA Profit, and EBITDA Margin over the past several quarters. This quarter, our adjusted gross margin reached 17.1%, marking eight consecutive quarters of steady growth, while adjusted gross profit hit 333.4 million RMB. After turning a profit in adjusted EBITDA margin last quarter, we continued with this positive trend.

Tao Zou: In terms of industry models, we officially launched a strategic corporation with Denton's Law firm, a leading law firm in China, and established the joint laboratory of legal artificial intelligence, taking a leap forward in digital transformation of law industry. [inaudible] In terms of product and technology, we uphold the principles of building success based on technology and innovation, focusing on delivering vast in-class customer experience across our core product offerings. In AI space, in response to searching data cleansing demand from AI clients, we have integrated products like bare metal and object storage to create a holistic solution for data cleansing accommodating text, images, and videos. This model model solution is tailored to meet the data cleansing requirements for the creation of both pre-training and fine-tuning data sets.

Speaker Change: This quarter, our adjusted growth margin reached 17.1 percent, marking eight consecutive quarters of steady growth.

Speaker Change: While adjusted gross profit hit 333.4 million RMB.

Speaker Change: after turning a profit in adjusted ebita margin last quarter we continued with the positive trend with sixty point six million r mb in ebitda and a three point two percent in ebitda margin

Haijian He: 60.6 million RMB in EBITDA and 3.2% in EBITDA margin. Demonstrating our successful execution of a high quality sustainable development strategy. Second, this quarter, our revenue reached. 1,891.8 million RMB, reverting to a positive increasing trend with a 3.1% increase year-over-year increase and a 6.5% rise quarter-over-quarter.

Tao Zou: [inaudible] In terms of product and technology, we uphold the principles of building success based on technology and innovation, focusing on delivering vast in-class customer experience across our core product offerings.

Speaker Change: de mon trading our successful execution of a high quality sustainable development strategy

Tao Zou: Second, this quarter, our revenue reached 1,891.8 million RMB, reverting to a positive increasing trend with a 3.1% increase year-over-year increase and a 6.5% rise quarter-over-quarter. By strategically adjusting our revenue mix in line with our high-quality and sustainable development strategy, we have allocated more resources to develop high-value services. This quarter, our AI revenues grew to 326 million RMB, making up 26% of our total public cloud services revenue, doubled the amount from last quarter.

Speaker Change: Second, this quarter, our revenue reached

Speaker Change: one thousand eight hundred and ninety one point eight million rb reverting to a posveritive of increasing trend with a three point one percent increase year-over-year increase and a six point five percent rise quarter over quarter

Haijian He: By strategically adjusting our revenue mix in line with our high-quality and sustainable development strategy, we have allocated more resources to develop high-value services. Last quarter, our AI revenues grew to 326 million RMB, making up 26% are what Total Public Cloud Services revenue, doubled the amount from last quarter. We have established resilient supply chain, scalable computing power, and a long-term partnership with customers to support our growing AI revenue. In response to costs, pressure, and a low margin, we have strategically reduced the proportion of our CDN services to 19% of total revenue, down from 23% last quarter.

Speaker Change: by a strategically adjusting our revenue mix in line with our high quality and asustainable of the element strategy we have allocated more resources to develop high value services

Speaker Change: This quarter, our AI revenues grew to 326 million RMB.

Tao Zou: In AI space, in response to searching data cleansing demand from AI clients, we have integrated products like bare metal and object storage to create a holistic solution for data cleansing accommodating text, images, and videos. This model model solution is tailored to meet the data cleansing requirements for the creation of both pre-training and fine-tuning data sets.

Speaker Change: making up pointy six percent of our total public cloud services revenue doubled the amount from last quarter

Tao Zou: We have established resilient supply chain, scalable computing power, and a long-term partnership with customers to support our growing AI revenue, revenues.

Speaker Change: we have established resilient supply chain scalable computing power and the long-term partnership with customers to support our growing ai revenues

Tao Zou: In response to cost, pressure, and a low margin, we have strategically reduced the proportion of our CDN services to 19% of total revenue, down from 23% last quarter.

Tao Zou: In enterprise cloud space, the Egalithic stack platform released a proprietary cloud platform with low cost and high density. Compared to original standard configuration, the high density version has achieved a maximum reduction of 64% in the cost per instance and an increase of up to 300% in instant density. [inaudible] In terms of product and technology, we continue to work hard to achieve the core of the core of the core of the core of the core of the core of the core of technology. [inaudible] We will continue to improve our ability and confidence in the future.

Speaker Change: In response to cost, pressure, and a low margin, we have strategically reduced the proportion of our CDN services to 19% of total revenue.

Tao Zou: Third, we have recorded a net inflow of operating cash flow amounting to 151.2 million RMB.

Haijian He: Third, we have recorded a net inflow of operating cash flow amounting to 151.2 million RMB. We also secure various financial channels to support our AI business, including but not limited to our loan facilities from Kingsoft Corporation. Financial Leading, and other bank loans.

Speaker Change: down from 23% last quarter.

Speaker Change: Third, we have recorded a net inflow of operating cash flow amounting to 151.2 million RMB.

Tao Zou: We also secured various financial channels to support our AI business, including but, not limited to our loan facilities from Kingsoft Corporation, financial leasing, and other bank loans.

Tao Zou: [inaudible] In terms of product and technology, we continue to work hard to achieve the core of the core of the core of the core of the core of the core of the core of technology.

Speaker Change: We also secure various financial channels to support our AI business.

Tao Zou: [inaudible] We will continue to improve our ability and confidence in the future.

Speaker Change: including but not limited to our loan facilities from Kingsoft Corporation, financial leasing and other bank loans.

Tao Zou: Here are the details of our financial results. Total revenues for this quarter were 1,891.8 million RMB, a 3.1% increase year-over-year, of which revenues from public cloud services were 1,234.5 million RMB, up 4% from 1,187.4 million RMB last quarter, primarily driven by the growth in AI-related revenues to 326 million RMB. Revenues from enterprise cloud services reached 657.2 million RMB, up from, 588.2 million RMB last quarter, due to accelerated project deliveries this quarter.

Haijian He: Here are the details of our financial results. Total revenues for this quarter were 1,891.8 million RMB. 3.1% increase year-over-year, of which revenues from public cloud services were 1,234.5 million RMB, up 4%, from 1187.4 million RMB last quarter, primarily driven by the growth in AI related revenues to 326 million RMB. Revenues from enterprise cloud services reached 657.2 million RMB up from 588.2 million RMB last quarter. YouTube Accelerated project deliveries this quarter. We have continued to enhance our cost control, expanding our supply base to improve services quality and procurement price.

Haijian He: Total cost of revenue decreased by 3.4% year-over-year and remained stable quarter-over-quarter at 1,573.4 million RMB. IDC costs dropped significantly by 14.4% year-over-year from 860.7 million RMB, to 728.2 million RMB this quarter, reflecting the strategic scaling down of our CDS service, optimized utility of a rack usage.

Speaker Change: Here are the details of our financial results.

Speaker Change: futal revenues for this quarter were one thousand eight hundred and ninety one point eight mill rb

Speaker Change: a three point one percent increase year-over-year of which revenues from public he services were one thousand two hundred thirty four point five mayly r and b up four percent

Speaker Change: From 1,187.4 million RMB last quarter, primarily driven by the growth in AI-related revenues to 326 million RMB.

Speaker Change: revenues from enterprise toalth levels reach six hundred fifty seven point two min r b up from five hundred and fifty five hundred eighty eight point two million are in big last quarter youue to accelerate a project deliveries this quarter

Tao Zou: We have continued to enhance our cost control, expanding our supply base to improve services, quality and procurement prices. Total cost of revenue decreased by 3.4% year-over-year, and remained stable quarter-over-quarter at 1,573.4 million RMB. IDC costs dropped significantly by 14.4% year-over-year, from 860.7 million RMB to 728.2 million RMB this quarter, reflecting the strategic scaling down of our CDS services and optimized utility of rack usage.

Speaker Change: We have continued to enhance our cost control, expanding our supply base to improve services quality and procurement prices.

Speaker Change: total coough of revenue decreased by threety point four percent yearover-year and the remain the stable quarter quarter at one thousand to five hundred andseventy three point four mill a rb

Speaker Change: i dc costs djorog significantly by fourteen point four percent year over-year from eight hundred and eight eight hundred and sixty point seven mill a r andb

Speaker Change: to 728.2 million RMB this quarter, reflecting the strategic scaling down of our CDS services.

Haijian He: Depreciation and amortization costs increased from 202.1 million RMB in the same period of last year to 265.9 million this quarter, mainly due to the depreciation of new servers acquired. Solution development and services cost increased by 8.4% year-over-year from 452.9 million RMB, to 491.1 million RMB due to the solution personnel expansion of Camelot, which was in line with the revenue growth. Fulfillment costs and other costs were 37.6 million RMB and 50.6 million RMB this quarter respectively.

Speaker Change: and Optimize Utility of a RAC Usage.

Tao Zou: Depreciation and amortization costs increased from 202.1 million RMB in the same period of last year to 265.9 million this quarter, mainly due to the depreciation of new servers acquired.

Speaker Change: Depreciation and amortization costs increased from 202.1 million RMB in the same period of last year to 265.9 million this quarter, mainly due to the depreciation of new servers acquired.

Tao Zou: Solution development and services costs increased by 8.4% year-over-year, from 452.9 million, RMB to 491.1 million RMB, due to the solution personnel expansion of Camelot, which was in line with the revenue growth.

Speaker Change: solution the other mttenna services costs increased by eight point four percent year over year from to four hundred fifty two point nine million r and b

Speaker Change: to four hundred and nety one point one may r andb due to the solution personnel expansion of camealges which was in line with the revenue growth

Tao Zou: Fulfillment costs and other costs were 37.6 million RMB and 50.6 million RMB this quarter, respectively.

Speaker Change: Fulfillment costs and other costs were 37.6 million RMB and 50.6 million RMB this quarter, respectively.

Tao Zou: Our adjusted gross profit for the quarter This marks a new record and the 8th consecutive quarters of steady margin improvement, up, from 11.3% last year and 16.8% last quarter.

Haijian He: Our adjusted gross profit for the quarter was 323.4 million RMB, a 56.4% increase year-over-year, with an adjusted gross margin of 17.1%. This marks a new record and the eighth consecutive quarters of steady margin improvement, up from 11.3% last year and 16.8% last quarter, in terms of expenses, including share-based compensation and impairments of long-lived assets. Our total adjusted operating expenses were 555.3 million RMB, slightly increased by 3.2% year-over-year and 18.3% quarter-over-quarter, of which our adjusted R&D expenses were 200.1 million RMB.

Speaker Change: Our adjusted gross profit for the quarter was 323.4 million RMB, a 56.4% increase year-over-year, with an adjusted gross margin of 17.1%.

Speaker Change: This marks a new record and the eighth consecutive quarters of steady margin improvement.

Speaker Change: up from eleven point three percent last year and sixteen point eight percent last quarter

Tao Zou: In terms of expenses, excluding share-based compensation and impairments of long-lived, assets, our total adjusted operating expenses were 555.3 million RMB, slightly increased by 3.2% year-over-year and 18.3% quarter-over-quarter, of which our adjusted R&D expenses were 200.1 million RMB, a 3.7% increase from last quarter due to the personnel cost increase. Adjusted selling and marketing expenses were 117.5 million RMB, up from 97.9 million RMB, last quarter, representing 6.2% of total revenues.

Speaker Change: In terms of expenses,

Speaker Change: excluding share-based compensation and impairment of long-lived assets.

Speaker Change: our total adjusted operating expenses was five hundred fifty five point three million r mb u to increase by three point two percent year over-year and eighteen point thirty percent quarter quarter

Tao Zou: In response to cost, pressure, and the low margin, we have strategically reduced the proportion of our CDN services to 19% of total revenue down from 23% last quarter Third, we have recorded a net inflow of operating cash flow amounting to 151.2 million RMB We also we also secured various financial channels to support our AI business, including but not limited to our loan facilities from Kingsoft Corporation, financial leasing and other bank loans.

Henry Huang: In response to cost, pressure, and the low margin, we have strategically reduced the proportion of our CDN services to 19% of total revenue down from 23% last quarter Third, we have recorded a net inflow of operating cash flow amounting to 151.2 million RMB We also we also secured various financial channels to support our AI business, including but not limited to our loan facilities from Kingsoft Corporation, financial leasing and other bank loans. Here are the details of our financial results, total revenues for this quarter were 1,891.8 million RMB, a 3.1% increase year over year, of which revenues from public cloud services were 1,234.5 million RMB, up 4% from 1,187.4 million RMB last quarter, primarily driven by the growth in AI related revenues to 326 million RMB.

Speaker Change: of which our adjusted R&D expenses were 200.1 million RMB.

Haijian He: 3.7% increase, from last quarter due to the personnel cost increase. Justly Selling at a Marketing Expense, were 117.5 million RMB, up from 97.9 million RMB last quarter, representing 6.2% of total revenue. Adjusted G&A expenses were 237.7 million RMB compared to 178.7 million RMB last quarter.

Speaker Change: three point seven percent increase from last quarter due to the personnel cost increase

Speaker Change: Just List Selling and Marketing Expenses

Speaker Change: were 117.5 million RMB, up from 97.9 million RMB last quarter, representing 6.2% of total revenues.

Tao Zou: Adjusted G&A expenses were 237.7 million RMB, compared to 178.7 million RMB last quarter.

Speaker Change: Adjusted G&A expenses were 237.7 million RMB compared to 178.7 million RMB last quarter.

Tao Zou: As of June 30, 2024, our cash and cash equivalents totaled 1,837.8 million RMB, providing strong, liquidity for operations and AI investments. Capital expenditures for this quarter were 654.8 million RMB, reflecting our investments, in infrastructure to support a sustainable AI business.

Haijian He: As of June 30, 2024, our cash and cash equivalent, totaled 1,837.8 million RMB, providing strong equity for operations and AI investment. Capital expenditures for this quarter was 654.8 million RMB, reflecting our investments in infrastructure to support a sustainable AI business. Looking ahead, we remain committed to the principle of high quality and sustainable development. We will continue to enhance revenue quality, reduce costs and expenses, and improve profitability. Thank you.

Henry Huang: Here are the details of our financial results, total revenues for this quarter were 1,891.8 million RMB, a 3.1% increase year over year, of which revenues from public cloud services were 1,234.5 million RMB, up 4% from 1,187.4 million RMB last quarter, primarily driven by the growth in AI related revenues to 326 million RMB. Revenue from enterprise cloud services reached 657.2 million RMB, up from 550, 588.2 million RMB last quarter due to accelerated project deliveries this quarter.

Speaker Change: as of june thirty two thousand and twenty four our cash in a cash equivalence total over to one thousand eight hhundred thirty- seven point eight min r providing a strong liquidity while operations and ai investments

Speaker Change: however expenditures for this quarter was six hundred and fifty four point eight minutehour reflecting our investments in infrastructure to support our sustainable ai business

Tao Zou: Looking ahead, we remain committed to the principle of high quality and sustainable, development.

Speaker Change: looking ahead we remain committed to the principle of high-quality and a sustainable development

Tao Zou: We will continue to enhance revenue quality, reduce costs and expenses, and improve profitability.

Henry Huang: Revenue from enterprise cloud services reached 657.2 million RMB, up from 550, 588.2 million RMB last quarter due to accelerated project deliveries this quarter. We have continued to enhance our cost control expanding our supply base to improve services quality and procurement prices. Total cost of revenue decreased by 3.4% year over year and remained stable quarter quarter at 1,573.4 million RMB. IDC costs dropped significantly by 14.4% year over year from 860.7 million RMB, to 728.2 million RMB this quarter, reflecting the strategic scaling down of our CDS services, an optimized utility of a RAC usage.

Speaker Change: We will continue to enhance revenue quality, reduce costs and expenses, and improve profitability.

Tao Zou: Thank you.

Tao Zou: This concludes our prepared remarks.

Operator: This concludes our preparatory remarks. Thanks for your attention. We are now happy to take your questions. Please ask your questions in both Chinese Mandarin and English if possible. Operator, please go ahead. Thank you. Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, you can press star 1 and 1 again.

Tao Zou: Thanks for your attention.

Tao Zou: We are now happy to take your questions.

Operator: Please ask your question in both Chinese Mandarin and English, if possible. Operator, please go ahead.

Speaker Change: okaythis come loes our ortar remarks and toil mission while now have you to take our cusashion please ask our country both chinese and mar english con i'll me our please go ahand thank you

Operator: Thank you.

Henry Huang: We have continued to enhance our cost control expanding our supply base to improve services quality and procurement prices.

Operator: To ask a question, you will need to press star 1 and 1 on your telephone and wait for, your name to be announced. And to withdraw your question, you can press star 1 and 1 again.

Speaker Change: Thank you. To ask a question you will need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question you can press star 1 and 1 again.

Henry Huang: Total cost of revenue decreased by 3.4% year over year and remained stable quarter quarter at 1,573.4 million RMB. IDC costs dropped significantly by 14.4% year over year from 860.7 million RMB, to 728.2 million RMB this quarter, reflecting the strategic scaling down of our CDS services, an optimized utility of a RAC usage.

Operator: Thank you. We will now take our first question. This is from the line of Xiaodan Zhang from CICC. Please go ahead, your line is open.

Operator: Thank you.

Operator: We will now take our first question.

Xiao Dan Zhang: This is from the line of Xiao Dan Zhang from CICC.

Speaker Change: Thank you. We will now take our first question.

Operator: Please go ahead.

Operator: Your line is open.

Speaker Change #100: this is from the line of shell dan dang from c toase go ahead on line is open

Xiaodan Zhang: Mr. Zhao, Henry, Clark, Nicole, good evening. Thank you for accepting my question. I have two questions to ask. The first question is about our capital expenditure. I see that our total capital expenditure in the first two quarters of this year should have exceeded the level of last year. How do we look at the pace of capital expenditure in the following quarters? The second question is about our AI-related business. The company has been actively investing in AI-related algorithms since last year.

Speaker Change #101: it's also harry cler call lect show ssayit' that you when she's something ia and deal and you for going the but them hydro are kind do ment in turn up but der them heed you know should go it in ion chya and no shri here now what that your horors should you do the hydidated or should look go drat landounder

Henry Huang: Appreciation and emancipation cost increased from 200.02.1 million RMB in the same period of last year to 265.9 million in this quarter, meaning due to the depreciation of new servers acquired. Solution development and services cost increased by 8.4% year over year from 452.9 million RMB to 491.1 million RMB due to the solution personnel expansion of Kamalot which was in line with the revenue growth. For fieldmen costs and other costs were 37.6 million RMB and 50.6 million RMB this quarter respectively.

Xiao Dan Zhang: The second question is about our AI-related business.

Xiao Dan Zhang: The company has been actively investing in AI-related algorithms since last year.

Speaker Change #101: Then the second question is about our AI-related business. The company has actually been actively investing in AI-related computing power since last year. As of now, what is our return on investment?

Xiao Dan Zhang: What is our investment return rate so far?

Xiao Dan Zhang: How is the company's contribution to AI revenue this year?

Henry Huang: Solution development and services cost increased by 8.4% year over year from 452.9 million RMB to 491.1 million RMB due to the solution personnel expansion of Kamalot which was in line with the revenue growth.

Xiao Dan Zhang: Let me quickly translate my question.

Speaker Change #101: now s in y is chy ntri ai shoulder going shaal trapck

Xiao Dan Zhang: Thanks management for taking my questions.

Xiaodan Zhang: So far, let's see what our investment return rate is like. How does the company look forward to this year's AI revenue contribution? Let me quickly translate my question. So thanks management for taking my questions. And I got two questions here.

Xiao Dan Zhang: I got two questions here.

Speaker Change #101: and now question the frs out bent

Xiao Dan Zhang: First of all, could you please update us on your CapEx guidance for the next two quarters?

Xiaodan Zhang: First of all, could you please update us on your CapEx guidance for the next two quarters? And secondly, could you give us some color on the ROI of your AI investment? And how is your expectation for the AI revenue contribution for the full year? Thank you.

Speaker Change #102: So thanks, management, for taking my questions, and I've got two questions here. First of all, could you please update us on your CapEx guidance for the next two quarters? And secondly, could you give us some color on the ROI of your AI investment, and how is your expectation for the AI revenue contribution for the full year? Thank you.

Xiao Dan Zhang: And secondly, could you give us some color on the ROI of your AI investment and how is, your expectation for the AI revenue contribution for the full year?

Henry Huang: For fieldmen costs and other costs were 37.6 million RMB and 50.6 million RMB this quarter respectively.

Xiao Dan Zhang: Thank you.

Unknown Executive: Thank you, Xiaodan, I will answer the first question regarding the CapEx. So I think, first of all, I think you pointed out correctly, this year we are actually accelerating, our investment in, we think, a very good area of potential business growth opportunities. Most of the CapEx, I think probably over 95%, or even higher, are relating directly to the, AI investment, which we think is a very good positive opportunity for us.

Haijian He: Thank you, Xiaodan. I will answer the first question regarding the Capex. So I think, first of all, I think you pointed out correctly, this year we are actually accelerating our investment in, we think, a very good area of, That's your Business Roles opportunity, most of the, I think probably over 95% or even higher are relating directly to the AI investment. Let's call it... Community, SWAT.

Henry Huang: Our adjusted growth profit for the quarter was 323.4 million RMB of 56.4% increase year This marks a new record and the eight consecutive quarters of steady margin improvement up from 11.3% last year and 16.8% last quarter. In terms of expenses, excluding share-based compensation and impairments of long-lived assets, our total adjusted operating expenses was 5.55.3 million RMB. Slightly increased by 3.2% year over year and 18.3% quarter over quarter, of which our adjusted R&D expenses were 211 million RMB.

Speaker Change #103: ten so then ok enough without e when he regarding the capex

Speaker Change #104: so i think i think first of all i think point out correctly this year we actually accelerating our investment in we think a very good area of

Speaker Change #104: ancial business grow opportunities

Speaker Change #105: the most of the capex are see product over ninety percent or you are higher are relating directly through the i investment which we sing is a very good quality of

Henry Huang: In terms of expenses, excluding share-based compensation and impairments of long-lived assets, our total adjusted operating expenses was 5.55.3 million RMB. Slightly increased by 3.2% year over year and 18.3% quarter over quarter, of which our adjusted R&D expenses were 211 million RMB. 3.7% increase from last quarter due to the personnel cost increase, adjusted selling and the marketing expenses were 117.5 million RMB up from 97.9 million RMB last quarter, representing 6.2% of total revenues. Adjusted the GNA expenses were 237.7 million RMB compared to 178.7 million RMB last quarter.

Unknown Executive: So, at this moment, while we cannot give a full guidance for the four-year CapEx investment, but I think we can probably look into two different areas.

Speaker Change #106: opportunity philoss

Haijian He: So. At this moment, while we cannot give a full guidance for the four-year CapEx investment, but I think we can probably look into two different areas. First of all is, for this quarter, you may also notice that we recorded a net cash inflow from our patient side, which is around about 151 million RMB. And I think you can already see that the CABEX investment into the good area of business already converted into a positive inflow from operations. So this actually is the first.

Speaker Change #106: so

Speaker Change #106: at this moment while we cannot give our four guidance for the full year cax investment but i think we can probably look into two different areas vers of allas for this quarter you may also notice that we recorded a net cash inflow from operation side

Unknown Executive: First of all is, for this quarter, you may also notice that we recorded a net cash inflow, from our patient side, which is around about 151 million RMB.

Unknown Executive: And I think you can already see that the CapEx investment into the good area of business, already converted into a positive inflow from our patient cash flow.

Henry Huang: 3.7% increase from last quarter due to the personnel cost increase, adjusted selling and the marketing expenses were 117.5 million RMB up from 97.9 million RMB last quarter, representing 6.2% of total revenues. Adjusted the GNA expenses were 237.7 million RMB compared to 178.7 million RMB last quarter.

Speaker Change #107: which is around about one hundred and fifty one minill a r andb and i think you can already see that the caabpex investment into the good area of busvennessiness already converted things for a polit inflow from operation cash flow so thiss actually the first point

Unknown Executive: So that's actually the first point.

Unknown Executive: So the second point is, we also expanded our financing channels.

Haijian He: The second point is... We also expanded our financing channel. For example, you also notice, Last year, we secured the financing support from Kingsoft Group, as well as the leasing potential opportunities from Xiaomi Group as well. But this year, especially in the last two quarters, we also got great support from, for example, the national policy banks, the state-owned financial institutions, including both banks and also the leasing companies.

Speaker Change #107: so the second point is we also expanded our finascing channels

Unknown Executive: For example, you also notice, last year we secured the financing support from Kingshore Group, as well as the leasing potential opportunities from Xiaomi Group as well.

Speaker Change #108: for example you also knownotice

Speaker Change #108: last year we secure the financing support from kingsof group as well as the leasing potential opportunities from i group as well but this year especially in the last two quarters

Unknown Executive: But this year, especially in the last two quarters, we also got great support from, for example, the national policy banks, the state-owned financial institutions, including both banks and also the leasing companies.

Henry Huang: As of June 30, 2024, our cash and the cash equivalence totaled 1,837.8 million RMB providing strong liquidity for operations and AI investments. Capital expenditures for this quarter were 654.8 million RMB reflecting our investments in infrastructure to support a sustainable AI business.

Speaker Change #108: we also get great support from example the national policy banks the state own the financiing institutions

Unknown Executive: So in that way, we actually do not limit ourselves with a certain cap of the CapEx investment, just to look at the only amount of our cash balance today.

Haijian He: So in that way, we actually do not limit ourselves with a certain cap of the CAVAC investments, just to look in the only amount of our cash balance today. So my point is, giving those additional opportunity and financing channels, we actually can reopen and have a very high ceiling of the financial capability we can get to support the AI investment. The third point is, given the investment is long-term, we also measure very carefully regarding the profitability, and Bellatine of the... And at this moment, we are happy to share, most of our AI clients are well-known names, probably also noticed on the market.

Speaker Change #108: including both banks and also the leasing companies

Speaker Change #108: so in that way we actually do not limit ourselves with a certain cap of the caabbac investments just to looking the only amount our cash planners today

Unknown Executive: So my point is, given those additional opportunities and financing channels, we actually can reopen and have a very high ceiling of the financial capability we can get to support an AI investment.

Speaker Change #108: so my point is giving those tradditional opportunity and a financing channels we actually can reopen and have a very high stealing of the fairs of capability get to support they i investment

Henry Huang: Looking ahead, we remain committed to the principle of high quality and sustainable development over continuous enhanced revenue quality, reduced cost and expenses and improved profitability.

Unknown Executive: The third point is, given the investment is long-term, we also measure very carefully regarding the profitability and the sustainability of those investments.

Speaker Change #108: the third point is given the investment is a long term we also measure a very carefully regarding the profitability and theassis the neabity of those investment

Unknown Executive: And at this moment, we are happy to share most of our AI clients are well-known names.

Henry Huang: This concludes our program.

Nicole Shan: This concludes our program. Thanks for all your attention and we are now having you to take our questions. Please ask our questions in both Chinese and Mandarin and English. If possible, please go ahead. Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. That's where we draw your question. You can press star 1 and 1 again. Thank you.

Henry Huang: Thanks for all your attention and we are now having you to take our questions.

Unknown Executive: We will now take our first question.

Speaker Change #109: and at this moment we can happy to share most of all ai client are the well known name you'll probably also notice on the market

Henry Huang: Please ask our questions in both Chinese and Mandarin and English. If possible, please go ahead.

Unknown Executive: You probably also know this on the market.

Henry Huang: Thank you.

Unknown Executive: And the second, we do also have a very long-term contract from sales side, which can secure the incoming cash flow, as well as the client opportunities, and the potential upside to secure more business from the same client as a recurring basis.

Haijian He: And second, we do also have a very long-term contract from sales side, which can secure the incoming cash flow as well as the client opportunities, to secure more business from the same client as the recurring- to secure more business from the same client as the recurring- So I remember first few quarters ago, we talked about recurring as most important driver for our profitability. I think right now, given the AI, we do see that recurring revenue percentage much higher if you compare with the old, so-called, the only ICE services in the old model we did.

Operator: To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced.

Speaker Change #109: and the second we do also have a very long-term contrasts from self sideite which can secure incoming cash flow as well as a clientopportunities with a potential upside to secure more business from its in cineent as a recurring basis

Operator: That's where we draw your question.

Operator: You can press star 1 and 1 again.

Unknown Executive: So I remember first few quarters ago, we talked about recurring as most important driver for our profitability. I think right now, given the AI, we do see that recurring revenue percentage are much higher, if you compare with the old, so-called, the only ICE services in the old model we did before.

Operator: Thank you.

Operator: We will now take our first question.

Speaker Change #110: so i remember first few quarters ago we talk about the recurring as most important driver for our profitability i think right now given aei we do see that recurring revenue percentage a much higher if you compare with the old so called the only ice services in the whole model we did before so i think that

Xiaodan Zhang: This is from the line of Sheldon Zhang from CIC.

Sheldon Zhang: This is from the line of Sheldon Zhang from CIC. Please go ahead. Your line is open.

Xiaodan Zhang: Please go ahead.

Xiaodan Zhang: Your line is open.

Unknown Executive: Mr. Zhou, Henry Clark, you are finally done.

Sheldon Zhang: Mr. Zhou, Henry Clark, you are finally done. Thank you for your question. I have two questions to ask. The first question is related to our capital capital. I see that the capital capital of the past two years should be filled with the whole year. Now, we are going to see how the capital capital capital is growing.

Unknown Executive: Thank you for your question.

Haijian He: So I think that, The three areas I just mentioned can come to a conclusion that we do not limit ourselves with the cash we already have today. We can have more opportunity to increase investment with the capacity. Number two, every dollar we invest today, the ROE and also the recurring cash flow to serve those liabilities and increase in the revenue will be very long-term and very secure. And the third is, we also use our capacity, to a good universe of the client, especially the AI company in the market in China today.

Unknown Executive: I think that three areas I just mentioned can come to a conclusion that we do not limit ourselves, with the cash we already have today. We can have more opportunity to increase investment with the capacity.

Xiaodan Zhang: I have two questions to ask.

Xiaodan Zhang: The first question is related to our capital capital.

Xiaodan Zhang: I see that the capital capital of the past two years should be filled with the whole year.

Speaker Change #110: three areas i just mentioned can come to a conclusion that

Speaker Change #110: we do not limit ourselves whereest the cash we already have today we can have more community increasing investment with the capacity number two every doaring mest today the re and also the recurring cash flow to serve those liability and increase in the revenue will be avery long term and a very secured

Xiaodan Zhang: Now, we are going to see how the capital capital capital is growing.

Unknown Executive: Number two, every dollar we invest today, the ROE and also the recurring cash flow, to serve those liability and increase in the revenue will be very long-term and very sustainable.

Xiaodan Zhang: The second question is related to the AI industry.

Xiaodan Zhang: Mr. Zhou, from the start of last year, you have been in the capital capital of the past three years.

Sheldon Zhang: The second question is related to the AI industry. Mr. Zhou, from the start of last year, you have been in the capital capital of the past three years. You will see how our capital capital is growing. Mr. Zhou, how do you feel about the whole year?

Unknown Executive: And the third is, we also use our capacity to secure a good universe of the client.

Xiaodan Zhang: You will see how our capital capital is growing.

Unknown Executive: I will ask a question.

Speaker Change #110: and the third is we also use our capacity to secure a good universe of the client

Xiaodan Zhang: Mr. Zhou, how do you feel about the whole year?

Unknown Executive: Especially the AI company in the market in China today.

Haijian He: I think we are leading, with the revenues with the financing sources we have and we can match in those two sides for the long-term going forward. But last note, I think Xiaodan, you probably want to have a ballpark number, which I can mention that the total capex for this year will be always probably a few times if you look at it from ballpark number compared with last year, and that will actually have a very good possibility, to accelerated revenue growth on the top line in the coming. And for the second question, I'll let Tao Zou answer it.

Unknown Executive: I think we are leading on the front with the revenues, with the financing sources we have, and we can match in those two sides for the long term going forward.

Xiaodan Zhang: I will ask a question.

Speaker Change #111: especially the ai company in the market in china i think we are leading on the fronancet with the revenues w financing sources we have and can matchine those two sides for the long term going forward

Timothy Zhao: So thanks management for taking my questions and I got two questions here.

Xiaodan Zhang: So thanks management for taking my questions and I got two questions here. First of all, could you please update us on your CAPEX guidance for the next two quarters? Secondly, could you give us some color on the ROI of your AI investment and how is your expectation for the AI revenue contribution for the full year?

Timothy Zhao: First of all, could you please update us on your CAPEX guidance for the next two quarters?

Unknown Executive: But last note, I think Xiaodan, you probably want to have a ballpark number, which I can mention that the total capex for this year will be always probably a few times, if you look at it from ballpark number compared with last year.

Timothy Zhao: Secondly, could you give us some color on the ROI of your AI investment and how is your expectation for the AI revenue contribution for the full year?

Speaker Change #112: but last note i in i want to have an a boall p number which had con mention that the total capex what this year will be always probab few times if you look at on b fock number of compares last year and that it will actually have a very good positive possibility

Timothy Zhao: Thank you.

Unknown Executive: And that will actually have a very good possibility to convert to, an accelerated revenue growth on the top line in the coming quarters.

Tao Zou: Thank you, Xiaodan, for coming up with that, Yiguang, here regarding the Quebec.

Tao Zou: Thank you. Thank you, Xiaodan, for coming up with that, Yiguang, here regarding the Quebec. So, I think, first of all, I think you are point out correctly, this year, we're actually accelerating our investment in, we think, a very good area of financial business growth opportunities. The most of the Quebec, I think, over 95% or even higher are relating directly to the AI investment, which we think is a very good quality of opportunities for us.

Unknown Executive: Thank you.

Speaker Change #112: to convert to an accelerated revenue growth on the top line in the coming quarters. Thank you.

Tao Zou: So, I think, first of all, I think you are point out correctly, this year, we're actually accelerating our investment in, we think, a very good area of financial business growth opportunities.

Unknown Executive: And for the second question, let's have Tao Zou to answer it for you.

Tao Zou: Okay, Xiaodan, hello.

Speaker Change #113: now theard ion see to hhold again with

Tao Zou: Hello Xiaodan, I think we should have a talk Liu Tao can make a supplement later Actually, we should split it into three parts, I'm going to summarize it as a joint training. We are adding to the... The... The... The... The... The... The... Qi, Dai, [inaudible] 刚才已经谈到了大城,其实不光是在律师这边,还包括在审计,在银行也记得这个模型应用法 Also remember the model application method, Ensemble will be attacked 应该说取得了一些实质性进展, 目前暂时还没有去披露,在讯上我们跟办公的 of China. He had so many friends and their stories were new.

Tao Zou: Well, let me think about it, and let's get to the point.

Tao Zou: Later, Tao can also make a supplement.

Speaker Change #114: there's any how to tell anymore i some se you hasn't c of that out side the pur of a per former so these are as con cer by

Tao Zou: In fact, our AI is divided into three parts.

Tao Zou: The most of the Quebec, I think, over 95% or even higher are relating directly to the AI investment, which we think is a very good quality of opportunities for us.

Tao Zou: I will summarize it as a supply training.

Tao Zou: Yes, that's it. The supply of AI for big model training, and in fact, we have just talked about it.

Speaker Change #114: we're ing about that to get from ld mer to the

Tao Zou: So, at this moment, while we cannot give up, four guidance for the four year Quebec investment, but I think we can probably look into two different areas.

Tao Zou: So, at this moment, while we cannot give up, four guidance for the four year Quebec investment, but I think we can probably look into two different areas. First of all, for this quarter, you may also notice that we recorded a net cash inflow from our patient site, which is around about 151 million RMB. And I think you can already see that the Quebec investment into the good area of business already converted into a positive inflow from our patient cash flow.

Speaker Change #115: we are added is the commotion shoun and that studing opinion

Tao Zou: I just talked about the big city.

Speaker Change #115: youp

Tao Zou: In fact, we are not only in the green sea, but also in the audit, in the bank, and in the model application of enterprises.

Speaker Change #115: it

Speaker Change #115: she orgonising handle on to wal up and get down j to comele a b and boonto the ues of the frt is o ession gtaing how

Tao Zou: First of all, for this quarter, you may also notice that we recorded a net cash inflow from our patient site, which is around about 151 million RMB.

Tao Zou: In terms of application, we should say that we have made some substantial progress.

Speaker Change #115: shegy that moion a you know sound that what the day

Tao Zou: Yes, it may not be disclosed at present.

Tao Zou: And I think you can already see that the Quebec investment into the good area of business already converted into a positive inflow from our patient cash flow.

Speaker Change #115: in vesor rio some the centina the most temactature al per pil the soon of them them by moment to way up what had sun that it a de

Tao Zou: In terms of training, we have been working with the office, to establish a model training for state-owned enterprises. In fact, we have had this practice for nearly a year.

Tao Zou: So, this is actually the first point.

Tao Zou: So, this is actually the first point. So, the second point is, we also expanded our financing channels. For example, you also notice, last year, we secured the financing support from things of group, as well as the leasing potential opportunities from Xiaomi Group as well. But this year, especially in the last two quarters, we also get great support from, for example, the national policy banks, the state-owned financial institutions, including both banks and also the leasing companies.

Tao Zou: So, the second point is, we also expanded our financing channels.

Tao Zou: So, in that way, we actually do not limit ourselves with a certain cap of the Quebec investment, just to looking the only amount of our cash balance today. So, my point is, giving those additional opportunities and financing channels, we actually can reopen and have a very high ceiling of the financial capability with regard to the support of AI investment. The third point is, given investment is a long term, we also measure very carefully regarding the profitability and the sustainability of those investments.

Tao Zou: And the government model of the office today, will be officially launched and applied in practice.

Speaker Change #115: was in chana to the joining anda doesn't subu

Tao Zou: For example, you also notice, last year, we secured the financing support from things of group, as well as the leasing potential opportunities from Xiaomi Group as well.

Speaker Change #116: in shan neigh gener bun near two question some as it turnms to t p intensity in your

Tao Zou: These are the three dimensions.

Tao Zou: [inaudible] Sanlo Weidu, Mu Qian, Weidu, Tao Zou, Xiaodan Zhang, Haijian 台务上看到的进展情况啊,当然我们也关注了友商的啊,其实如果按同比来算,我们其实等于说是百分之一百。十倍一千多,对,这个其实意义不大,因为去年上半年呢,我们这个规模还小,但是对比QE呢,我们依然有了一个翻倍的成本。 as usual. These ideas can easily be integrated into product development. 这个这个围绕这个金融啊这个审计呀这个这个历史这些, 行业啊,我们相信还有很多人, I believe there will be a lot of people in this industry, and helping you to have further progress and a better power. 然后回报率,你刚才下单,你核心问的是回报率啊,这个确实,其实我在前一周也谈过。 Our general overview, and the supply issue we just mentioned, There's a lot of. There's a lot of. There's a.

Tao Zou: At present, the progress seen from finance, of course, we are also concerned about business.

Tao Zou: Interestingly, coworkers would chat through Facebook, I want to show you the evidence of the attack today. I want to show you the evidence of the attack today. Facility in New York.

Speaker Change #116: isn't this the somem way to move in to high was some kind of that in far don or me under some is move back only our volven that terms sort of

Tao Zou: But this year, especially in the last two quarters, we also get great support from, for example, the national policy banks, the state-owned financial institutions, including both banks and also the leasing companies.

Tao Zou: In fact, if we compare it, our growth rate is more than 1,000 times.

Tao Zou: Yes, it doesn't really matter.

Speaker Change #116: sothat

Tao Zou: Because in the first half of last year, our size was quite small. But compared to Q1, we still have a growth rate of three times.

Speaker Change #117: so very tendor they there good ar you to next so many and that one primiz your and to be the cleaner on the annual lagoors can foundm be tong that

Tao Zou: So, in that way, we actually do not limit ourselves with a certain cap of the Quebec investment, just to looking the only amount of our cash balance today.

Tao Zou: So in general, this is mainly reflected in the supply angle at present.

Speaker Change #118: so you don't have st takeken to it out who can big su some inthe hash that owner only did a job should this sound charge where i would that you

Tao Zou: In fact, in the future, we believe that we will have better prospects and space in the field of finance, auditing, and lawyers.

Tao Zou: So, my point is, giving those additional opportunities and financing channels, we actually can reopen and have a very high ceiling of the financial capability with regard to the support of AI investment.

Speaker Change #119: we are in a teor that in a senia to be suicited

Tao Zou: The third point is, given investment is a long term, we also measure very carefully regarding the profitability and the sustainability of those investments.

Speaker Change #119: since you ahaangera was what from sana h

Tao Zou: As for the return rate, you just mentioned that the core issue is the return rate.

Speaker Change #120: how do you don't donknowt how to change you how coner or

Tao Zou: In fact, I have talked about it before.

Speaker Change #120: regalready present the su or the r to the what they end you go through your cant book

Tao Zou: In general, the overall return rate of the supply sector is relatively high compared to some traditional cloud business.

Tao Zou: And at this moment, we can have you to share most of our AI clients, the well-known names, you'll probably also notice on the market.

Tao Zou: And at this moment, we can have you to share most of our AI clients, the well-known names, you'll probably also notice on the market. And the second, we do also have a very long term contract from self-site, which can secure the incoming cash flow as well as the client opportunities, with the potential outside to secure more business from the same client as a recurring basis. So, I remember first few quarters ago, we talked about recurring as most important driver for our profitability.

Speaker Change #121: when' talking read b ility to who on to jb home who you go

Tao Zou: Cloud business is still relatively high. Unknown Executive, Huiqun Li, Yucen Liu, Kingsoft Cloud, So I'm going to catch up to y'all. Call it. She also works hard at the headquaters to maintain training.

Speaker Change #121: was give the these six ions so some jo time the year il jama hasn't has a dollars the mitunddo pe up and just don't have to al igor gi don' go to the mo and he get that so we

Tao Zou: And the second, we do also have a very long term contract from self-site, which can secure the incoming cash flow as well as the client opportunities, with the potential outside to secure more business from the same client as a recurring basis.

Tao Zou: We may not have disclosed it separately.

Tao Zou: But overall, it is relatively high.

Tao Zou: The overall return rate of the company, has also been greatly reduced.

Tao Zou: Then there is the prospect.

Tao Zou: As for the prospect, you just mentioned the prospect of future AI contributions. In my opinion, based on the information we have so far, In fact, we focused on several industries in addition to this kind of model training. I'm going to talk to him. I'm going to talk to him.

Tao Zou: You just talked about the prospects of future AI contributions.

Tao Zou: So, I remember first few quarters ago, we talked about recurring as most important driver for our profitability. I think right now, given the AI, we do see that recurring revenue percentage are much higher if you compare with the old so-called or the only ICE services in the old model we did before.

Speaker Change #121: yeah

Tao Zou: I think, from my personal point of view, from the information I have gathered so far, 其实我们重点谈了几个行业,除了这种模型训练,先谈供,供这个为主。我们在自动驾驶,包括汽车行业的自动驾驶,包括巨声科技,巨声智能,其实就是机器人这个领域, 实际上我们都认为还有比较大的空间。自动驾驶大家很清楚,其实就是特斯拉的FSD发布以来, 其实还是蛮震撼的,我们判断几乎所有的头部的这几家新势力造车厂,包括小米, 我觉得都有这个计划去布局,实际上有几家我们已经做了比较深的沟通,所以这块未来的增长空间还是依然很大。其实另外机器人这块,据我们了解的情况,至少目前某家最近已经达到30亿的融资了。所以大模型本身在机器人方面,使得机器人赋予了它智慧,这种本身我们也是判断是在汽车这个行业应用之外,可能会是一个更广阔的市场和空间。我们也一直在密切关注,并且实际上有了一些实质性进展,当然在Q2还没体现出来,所以这一块我们认为也是未来想象空间非常非常大。所以这是只供的这块,用的这块我们也相信,随着我们跟这几个行业级客户的深入的战略合作,成果会在下个年以及在明年陆陆续续展现。其实为我们去年提的一站Smart服务的战略可能会提供一个坚实的实践基础。所以我们虽然没有对外很重点谈,但实际上随着这几个项目基本上已经算是落地了,剩下的就是随着合作的深入,成果逐渐的展现,我们还是坚信这条为企业AI赋能的这条路,或者叫AI进入千行百业,这是一个更有想象的蓝海空间。所以综合来讲,我还是延续我之前几个季度说的,从去年6月金正恩全会上我就说了,我们全面进入AI时代,我们叫all in AI,战略的升级,从目前一年多的时间来看取得了非常显著的进展。对未来的信心也是,随着这一年的时间,我们应该讲是信心更重,斗志更强。布置也会像刚才Harry也会介绍的。 So in terms of AI, I really want to take this opportunity to elaborate a little bit about my overall thoughts.

Speaker Change #121: now you talked more and the you end up with without ir get a time lot work about a work go go in the one there are to just clo ten ger found the since i cut

Tao Zou: I think right now, given the AI, we do see that recurring revenue percentage are much higher if you compare with the old so-called or the only ICE services in the old model we did before. So, I think that three areas, I just mentioned, can come to a conclusion that we do not limit ourselves with the cash we already have today. We can have more opportunity to increase investment with the capacity. Number two, every dollar we invest today, the RWE and also the recurring cash flow to serve those by a penalty and increase in the revenue will be a very long term and the very and the third is, we also use our capacity to secure a good universe of the client, especially the AI company in the market in China.

Speaker Change #121: yeah

Speaker Change #121: so want to the techlog h year bac toer was here one of the city was second hun much a temple no way on the sim similar of

Tao Zou: So, I think that three areas, I just mentioned, can come to a conclusion that we do not limit ourselves with the cash we already have today. We can have more opportunity to increase investment with the capacity.

Tao Zou: 自动驾驶自动驾驶, Well.. Bye everyone. [inaudible] 巨聲科技,機器人這個領域, We all think there is still a lot of room for improvement. Unknown Executive, Huiqun Li, Yucen Liu, Kingsoft Cloud, We have a lot of work to do. We have a lot of work to do. 步的这几家这个这个新能这个新势力到手场吧包括小米, But I don't know who you are, right? I don't know who you are, I don't know who you are, Watch.

Speaker Change #121: to caion

Speaker Change #122: a bgo

Tao Zou: Number two, every dollar we invest today, the RWE and also the recurring cash flow to serve those by a penalty and increase in the revenue will be a very long term and the very and the third is, we also use our capacity to secure a good universe of the client, especially the AI company in the market in China.

Speaker Change #123: 's a higher atom casha or what develo there cution quities decen d un say teach and beggreing in that is how one though we remain high without powera to indengian

Speaker Change #124: estion that i continued with his a jud to ththroughve adversity public by his asimmental hand le one one planan vent you soil over the

Tao Zou: I think we are leading on the front with the revenues, with the financing sources we have, and we can mention those two sides for the long term going forward.

Tao Zou: I think we are leading on the front with the revenues, with the financing sources we have, and we can mention those two sides for the long term going forward. But last note, I think Xiaodan, you probably want to have a ballpark number, which I can mention that the total catbacks for this year will be always probably few times, if you look at it from ballpark number compared to last year, and that will actually have a very good positive possibility to convert to an accelerated revenue growth of the top 5 in the coming quarters.

Speaker Change #124: hold that particular guard the oigunal and thevery ch offso happened or was out

Tao Zou: 上有有有有有有有有几家, is Unknown Executive, Huiqun Li, Yucen Liu, Kingsoft Cloud, country, and China. So you guys just food. 当模型本身啊,在机器人方面。 Ji Qian, Fu Yu, Xia Xiaodan Zhang, Li, Yucen Liu, Xiaodan 本身其實我們也是判斷是也是, Consultants, quexueguan.com 可能会是一个更广阔的事实, Well, for me. . . . Qinqiang, Qinqiang, Qinqiang.

Speaker Change #125: to we will take a che have pyou about so so this arue your vie beaut ttime what wecanans it' reaction to go home so take a away turn out in the half year got

Tao Zou: But last note, I think Xiaodan, you probably want to have a ballpark number, which I can mention that the total catbacks for this year will be always probably few times, if you look at it from ballpark number compared to last year, and that will actually have a very good positive possibility to convert to an accelerated revenue growth of the top 5 in the coming quarters.

Speaker Change #126: she's they t and don't have one west a

Speaker Change #127: we woman out the chinpart to sum ten

Speaker Change #128: ap didn't prin about our statally there also

Unknown Executive: Thank you.

Speaker Change #129: so i just a pumbling but p should ' didndon't exact that you uniformia just so that ta food to look are the penion is what aappend for ess

Speaker Change #130: a ke than i knew to v on an offphicical gop one coles of the tine

Speaker Change #131: so me if you give choason

Tao Zou: This is our day. I have made some substantial progress. Of course, it is not yet reflected in Q2. 最快的我们认为 So the fastest we think is, 未来想象空间非常广, This is just a piece of work. It's just a piece of work.

Speaker Change #132: he's a day b day day day

Speaker Change #133: me a bun to tinhere this not right

Speaker Change #134: yourlat us in that as of the time that you are itance have so so if we say ' very many

Speaker Change #135: and we ize some times in your fed ouple

Tao Zou: We believe in each other too, 跟这几个海岸级客户的深入的战略合作成果会在下个年以及在明年陆陆续续的展现, Wei Wanbin 去年提的一站Smart服务的战略。对,所以我们虽然没有对外对外对外对外对外对外对外对外对外对外对外对外重点谈实际上随着这几个项目, Chief, Chief, and Xiaodan Zhang. 上市落地了,剩下的就是随着合作的深入成果逐渐的展现。 We still firmly believe that... Liu Zou, Xiaodan Zhang, Li, Yucen Liu, Xiaodan Zhang, Haijian, Xiaozhan Zhao, Unknown Executive, Huiqun Li, Yucen Liu, Kingsoft Cloud He's got a lot of thoughts on him. [inaudible] Accounting. So.

Speaker Change #135: so in decence of under pt you they youumit the kind of and one you s t then this is the hind coth with some move and some your hootour

Speaker Change #136: to war with a al in the deendaning union an ction that is a new woman and the trini best masses would soundb conomic

Speaker Change #136: will be ater the stute

Speaker Change #137: they so you won't s ommeill the way to tr

Speaker Change #138: to me at p actuallyally consideredthat that if for someone the g t ber sho the inightse of godeala sometimes children to just so ca of the shaal two what going to ship woman has changed the help not in which he fore a bit home s

Speaker Change #139: what jolt uryou will chair home that year to see that couldn't cl seber

Speaker Change #140: it about hyengen

Tao Zou: I'm going to continue what I said in the past few weeks. I said it at the June meeting of Kingsoft Cloud last year. 全面进入AI时代,我们叫all-in-AI, This is the life of this place. From the past year, it has been a long time for me to hate it, of foreign affairs.

Unknown Executive: [inaudible] view from the point of view from the point of view from the point of view from the point of view[inaudible] the family, including the family.

Unknown Executive: Thank you. [inaudible] view from the point of view from the point of view from the point of view from the point of view[inaudible] the family, including the family. The family, including the family, including the family. Let me translate what Mr. Zou said.

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Tao Zou: 这一年的时间呢,我们应该讲是... 信心更准,斗志更强,步子也会像刚才Henry也会介绍的,我们恭喜Kathryn, the job, a for more information on the product. For more information on the product, please visit our website at www.kingsoftcloud.com. 自己富能的企业的需求, University of Tohono O'odham.

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Tao Zou: Okay, let me just translate, simply translate what Mr. Zhao said. So in terms of AI, I really want to take this opportunity to elaborate a little bit about my overall thoughts. So in my mind, it's really about three dimensions.

Speaker Change #145: that's comomant

Speaker Change #146: okay let me just translations thesucexpate what mr do had so in terms of i really want to take this opportunity to elaborate a little bit of about my comoverall st

Tao Zou: So in my mind, it's really about three dimensions.

Tao Zou: One is the supply of computing power, the second is the inference, which is the application of the artificial intelligence, and the third is the training. Which from the current financials that you are able to see, obviously, which is a tremendous growth. For example, it's ten times year-over-year growth, and two times the AI revenue growth versus the first quarter. But all these numbers that you're currently seeing are mostly coming from the area of the supply of computing power.

Tao Zou: One is the supply of computing power, the second is the inference, which is the application, of the artificial intelligence, and the third is the training, which from the current financials that you are able to see, obviously, which is a tremendous growth, for example, it's ten times year-over-year growth and two times the AI revenue growth versus the first quarter.

Speaker Change #147: so in my mind i's really about three dimensions one is the supply of computing power the second is the inference which is the application of the artificial intelligence in the third is the training

Speaker Change #148: which from the condifferentials that you are able to seeing obviously which is trecommended

Speaker Change #149: resu with ten times year-over-year growth two times

Tao Zou: So all these numbers that you're currently seeing are mostly coming from the area of, the supply of computing power.

Speaker Change #149: the ai revenue growth versus the first quarter but all these numbers that you'recurrently seeing are mostly coming from the area of the supply of computing power

Tao Zou: However, I do think that in the future, the potential room for revenue and for business in terms of training and in terms of for the application of the models have far more potential. Now, circling back to your question about the ROI, I have to say that the GP margin for the AI business is far higher than that of the other parts of the business, which is also a major contributing factor for the improvement of the company's overall GP margin.

Tao Zou: However, I do think that in the future, the potential room for revenue and for business, in terms of training and in terms of for the application of the models have far more potential.

Speaker Change #150: however 're ucing that in the future the tential room

Speaker Change #150: for revenue and offor business in terms of training and in terms of for the application of the models have far are more potential

Tao Zou: Now, circling back to your question about the ROI, I have to say that the GP margin, for the AI business is far higher than that of the other parts of the business, which is also a major contributing factor for the improvement of the company's overall GP margin.

Speaker Change #151: now soircome back to a question about the rroi on i have to say that the gp margin for the ai business

Speaker Change #151: is far higher than dthat of the other partth of the business which is also a main major contributing factor for the improvement of the company's overall jp margin

Tao Zou: Now, looking ahead, I would also like to talk about it from two different dimensions.

Tao Zou: Now, looking ahead, I would also like to talk about it from two different dimensions. One is the supply of computing power, and the second is the inference and the application of AI capabilities. Now, in the first dimension, two areas poses a lot of opportunities. One is electric vehicles, and in particular, the autonomous driving demands for the EV space. Which since the launch of Tesla's FSD, we have been engaging with a lot of EV firms. And all of them have significant and real kind of tangible intention to do this, and to implement, and to train their own autonomous driving models.

Speaker Change #152: now looking ahead i would also like to talk about it from two different dimensions one is the supply of computing power and the second is the inference and the application of ai capabilities

Tao Zou: One is the supply of computing power, and the second is the inference and the application, of AI capabilities.

Tao Zou: Now, in the first dimension, two areas poses a lot of opportunities.

Tao Zou: So this is a lot of space for our business opportunity. Now, the second one is robotics, which essentially empowers robots with artificial intelligence. So we do think we will be having a lot of opportunities in this area as well. Noticeably, there's one certain company, which I'm not gonna mention its name, has secured a 3 billion RMB financing recently. So the confidence is very high in this space. Now, the second dimension about the inference or the use cases for the model capability, as we have talked about in prepared remarks, some of the projects that we have collaborated with some of our partners are being implemented as we deepen such collaboration.

Tao Zou: One is electric vehicles, and in particular, the autonomous driving demand for the EV space, which since the launch of Tesla's FSD, we have been engaging with a lot of EV firms, and all of them have significant and real kind of tangible intention to do this and to implement and to train their own autonomous driving models.

Speaker Change #153: now in the first imagine two areas opposes a lot of opportunities one is electric vehicles i anyin particular the autonomous driving demand for the eb space

Speaker Change #153: which seems the launch of t thatf at the we have been engaging with a lot of ev firms and all of them have significant and real contangible intention

Speaker Change #153: to do this entry to implement them to train their own autonomous driving models

Tao Zou: So, this is a lot of space for our business opportunity.

Tao Zou: Now, the second one is robotics, which essentially empowers robots with artificial intelligence.

Speaker Change #153: so this is a lot of space for our business opportunity now the second one is robotics which essentially empowers roboust

Tao Zou: So, we do think we will be having a lot of opportunities in this area as well.

Speaker Change #154: with artificial intelligence so we do think we be having a lot of opportunities in this area as well noticeably there's one certain company which i'm not going to mention this name has secured a three billion are in b financing recently so the competenence is very high in this in the space

Tao Zou: Noticeably, there's one certain company, which I'm not going to mention its name, has secured, a 3 billion RMB financing recently, so the confidence is very high in this space.

Tao Zou: Now, the second dimension about the inference or the use cases for the model capability, as we have talked about in prepared remarks, some of the projects that we have collaborated with some of our partners are being implemented as we deepen such collaboration, and the progress and achievements elaborated in this area, we do think that this is actually going to be laying a solid foundation for the one-stop mass model as a services that we aim to provide in this space.

Speaker Change #154: now the second dimension about the inference or the useth cases or the model capability

Speaker Change #155: as we have talked about prepared remarks

Speaker Change #155: some of the project

Speaker Change #155: that we have collaborated with some of our partners are being implemented as we de such collaboration and the progress and the progress and achievements

Tao Zou: And the progress and achievements elaborated in this area, we do think that this is actually gonna be laying a solid foundation for the one-stop mass model as a services that we aim to provide in this space.

Speaker Change #155: elaborated in this in in this areas we do think that this is actually going to be laying a solid foundation for the one stop mass amlot of the service serves that we aim to provide in this space

Tao Zou: So, in summary, we do think that our overall strategy of Boeing AI since June last year, has been very fruitful, and we look forward to continue our pace in its investment and development.

Tao Zou: So in summary, we do think that our overall strategy of all in AI since June last year has been very fruitful and we look forward to continue our pace in its investment and development. For your next question, please. Thank you.

Speaker Change #155: so in summary we do think that our overall strategy of oing ai since june last year has been very fruitful and we look forward to continue our pace inits investment and development

Tao Zou: Thank you.

Speaker Change #156: our next country f thank you

Operator: We'll now take our next question. This is from Timothy Zhao from Goldman Sachs. Please go ahead.

Speaker Change #157: thank you

Speaker Change #157: will i take our next question

Speaker Change #158: this is from attimthytail from goldman saacks please go ahead

Tao Zou: 谢谢, 接下来的问题来自Goldman Sachs的Timothy Zhao, 好的,感谢关于曾接受我的提问的周总和Henry Clark,Nicole,晚上好那我这边有两条问题想要请教一下, 第一条问题是我看到我们来自于小米和金山集团的收入在这个季度有一个非常强劲的增长, 也占到了我们整体收入的一个20% 那我不知道可不可以请关于曾再多分享一下, 我们看到这个增速的来源是哪些那这些收入之中来自于, 比如说AI的收入占比分别会有多少那另外随着小米的汽车在下半年越来越多, 以及WPS的AI的这个货币化的进展那我们怎么去想在今年下半年甚至更长期, 来自于小米和金山的收入的贡献这是第一个问题, 那第二个问题想请教一下关于非AI这边我们看到这个CDN的, 收入在这个季度有进一步的下行那想请教一下, 我们认为到一个什么样的水平那整个CDN的这个水平, 是我们觉得是一个比较合适的水平那大概就是这两个问题, 我很快翻译一下谢谢你接受我的提问, 我这里有两个问题以及在长期以来, 我们有更多的车子来自小米在街上, 以及金山的WPS贡献您怎么看这个收入贡献, 第二个问题是关于CDN的收入贡献, 我们看到CDN的收入贡献在继续下降, 能否分享一些想法关于这家公司的收入贡献, 在接下来的时间谢谢, 谢谢Tim 我回答第一个问题, 然后请邹总和我们CDN团队的负责人讲一下第二个问题, 第一个问题是关于相关的团队的收入贡献, 我认为Tim是对的我认为我们看到了, 几个非常重要的领导的正面信息, 关于将来的收入贡献我认为第一个是, 正如我们提到的给小米和金山, 我们尤其是给小米和金山团队我们提供了更多资源, 我们尽快提高了我们的供应商的收入贡献, 如同我们几个月前提到的我认为这是一个非常好的机会, 给金山团队所以在这一半, 小米和金山团队的收入贡献增长了大约36.9% 在一年之内并且为这一半, 占用了大约370亿RMB 我认为这是一个非常好的信息, 因为它证明了我们的能力为非常重要的内部项目, 服务包括小米和金山团队, 包括WTS 所以我认为这种情况, 以及自驾驶的应用以及AI相关的服务, 是非常重要的驾驶对于这些机会, 我们也很高兴地看到由于这个趋势, 也许在今年年底当我们转到新的金融年, 我们可能要求投资者给予我们增强, 相关团队的收入资金资助所以我也想和大家分享, 这个好消息也许在下个两三个月, 在投资者会议中我们会提出, 更高的收入资金资助 to prove that we do have a great visibility of the internal revenue from related parties.

Timothy Zhao: Thank you for accepting my question. Good evening, Mr. Zhao, Henry, Claire, and Nicole. I have two questions to ask. The first question is that I see that the income of Xiaomi and Jinshan Group has increased dramatically this quarter, and it has accounted for 20% of our total income. Can you please share with us what are the sources of this increase? How much of this income is from the income of AI? In the second half of this year, with the increase of Xiaomi's cars and the monetization of WPS's AI, how do we think about the longer-term contribution of Xiaomi and Jinshan Group in the second half of this year?

Unknown Executive: The family, including the family, including the family.

Unknown Executive: The second part is relating the AI revenue contribution. I would say that the incremental revenue from our internal parties are primarily due to, the AI-related revenues.

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Unknown Executive: Let me translate what Mr. Zou said.

Tao Zou: So in terms of AI, I really want to take this opportunity to elaborate a little bit about my overall thoughts.

Tao Zou: So in terms of AI, I really want to take this opportunity to elaborate a little bit about my overall thoughts. So in my mind, it's really about three dimensions. One is the supply of computing power. The second is the inference, which is the application of the artificial intelligence. And the third is the training, which from the current financials that you are able to see, obviously, which is a tremendous growth. For example, it's 10 times year-over-year growth and two times the AI revenue growth versus the first quarter.

Speaker Change #161: now just show don't like show a show er jump and be to sho now you ise just tell me the chche i have any your door w here hope you h inger now war patricial in a seven can ance like to some questattent through the question

Tao Zou: So in my mind, it's really about three dimensions.

Tao Zou: One is the supply of computing power.

Tao Zou: But all these numbers that you're currently seeing are mostly coming from the area of the supply of computing power. However, I do think that in the future, the potential room for revenue and for business in terms of training and in terms of the application of the models have a far more potential. Now, a second factor of question about the ROI, I have to say that the GP margin for the AI business is far higher than the other parts of the business, which is also a major contributing factor for the improvement of the company's overall GP margin.

Tao Zou: The second is the inference, which is the application of the artificial intelligence.

Unknown Executive: So that's the first point.

Tao Zou: And the third is the training, which from the current financials that you are able to see, obviously, which is a tremendous growth. For example, it's 10 times year-over-year growth and two times the AI revenue growth versus the first quarter.

Speaker Change #162: so de al and he

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Speaker Change #162: sh ri to your geniebuddt assessing something el yourself woman way you go me on the level natge of co ity and therical shshipiction showman should she could be or should arshripp that should when you quite ia

Tao Zou: But all these numbers that you're currently seeing are mostly coming from the area of the supply of computing power.

Timothy Zhao: The second question is about the income of CDN in Feiyue Edge. What level do we think is appropriate for CDN? I will quickly translate these two questions. Thank you, Maijin, for taking my question. I have two questions here.

Unknown Executive: The second point is around half of the AI total revenue, as you'll notice that, is actually, approximately one quarter of the revenue of public cloud for this quarter.

Tao Zou: However, I do think that in the future, the potential room for revenue and for business in terms of training and in terms of the application of the models have a far more potential.

Timothy Zhao: And the first question is regarding the revenue contribution from Xiaomi and the Kingsoft group. As I noticed that there was a very strong revenue growth, in the past quarter, and the total revenue contribution already achieved to 20% of the total revenue. So may I ask, what is the driver behind that, and what is the AI-related revenue contribution from Xiaomi and the Kingsoft Group to their revenue to Kingsoft Cloud?

Speaker Change #163: thank you imag ine for taking my question i have two questions here in the first question regarding that the reue ribution front she me and kkinghimself group has said noticed that there was a very strong revenue growth

Speaker Change #164: in in the past quarter and the total running contribution

Tao Zou: Now, a second factor of question about the ROI, I have to say that the GP margin for the AI business is far higher than the other parts of the business, which is also a major contributing factor for the improvement of the company's overall GP margin.

Speaker Change #165: already to twenty percent of the total revenue so what is the driver behind and what is related revenue contribution from shai and kings out group to your revenue to king sto cld and into the second half of this year and into a longer term given we have more cars fromon show me on the street as well as w p s mitation from himself group how do you think about the revenue outlook from here

Timothy Zhao: And into the second half of this year, and into the longer term, given we have more cars from Xiaomi on the street, as well as the AWS monetization from Kingsoft Group, how do we think about the revenue outlook from here? And the second question is regarding the CDN revenue, as we see a continual proactive downscaling of the CDN revenue. Could you share any thoughts on the outlook for this business model going forward? Thank you. Thank you, Tim.

Tao Zou: Now, looking ahead, I would also like to talk about it from two different dimensions.

Tao Zou: Now, looking ahead, I would also like to talk about it from two different dimensions. One is the supply of computing power and the second is the difference and the application of AI capabilities. Now, in the first dimension, two areas poses a lot of opportunities. One is the electric vehicle. And in particular, the autonomous driving demand for the EV space, which since the launch of Tesla's FSD, we have been engaging with a lot of EV firms, and all of them have significant and real kind of tangible intentions to do this and to implement and to train their own autonomous driving models.

Tao Zou: One is the supply of computing power and the second is the difference and the application of AI capabilities.

Speaker Change #166: and the second question is raing in the cdm revenue as we see a continued proactive dum scaling of the cdm revenue crement share and you saw around outlook for this business going forward thank you

Tao Zou: Now, in the first dimension, two areas poses a lot of opportunities.

Tao Zou: One is the electric vehicle. And in particular, the autonomous driving demand for the EV space, which since the launch of Tesla's FSD, we have been engaging with a lot of EV firms, and all of them have significant and real kind of tangible intentions to do this and to implement and to train their own autonomous driving models.

Haijian He: I'll answer the first question, and then I'll ask Mr. Zou and our CDN team to answer the second question. The first question regarding the related parties' revenue contribution, I think Tim, you're right. I think we do see a few very important leading positive signals regarding the revenue potential growth in the future. I think the first of all is really, as we mentioned, giving a stronger business connection. Especially with the Xiaomi and the Kingsoft group, we allocated more resources and we prioritized the revenue and the client demands from our internal client. As we mentioned a few months ago, I think this is actually a very good opportunity for Kingsoft Cloud. So for this quarter, the revenue from Xiaomi and the Kingsoft group increased around 36.9% year over year.

Speaker Change #167: yes thank you can without e and you those on home midian conund fority of jarw the first pressure in regarding the related parties r the contribution i think c right

Speaker Change #168: i think we do see a few very important leading positive fsigninals regarding the reue ashure growth in the future i the first of yearsis really as we imagioned giving a stronger business connections

Tao Zou: So, this is a lot of space for our business opportunity.

Tao Zou: So, this is a lot of space for our business opportunity. Now, the second one is robotics, which essentially empowers robots with artificial intelligence. So, we do think we will be having a lot of opportunities in this area as well, noticeably, there's one certain company which I'm not going to mention its name has secured a $3 billion RMB financing recently. So, the confidence is very high in this space. Now, the second dimension about the inference or the use cases or the model capability, as we have talked about in prepared remarks, some of the projects that we have collaborated with some of our partners are being implemented, as we deepen such collaboration and the progress and the achievements elaborated in this area. We do think that this is actually going to be laying a solid foundation for the one-stop mass model of the services that we aim to provide in this space.

Tao Zou: Now, the second one is robotics, which essentially empowers robots with artificial intelligence.

Tao Zou: So, we do think we will be having a lot of opportunities in this area as well, noticeably, there's one certain company which I'm not going to mention its name has secured a $3 billion RMB financing recently.

Speaker Change #169: especially with the sheme and the king of group we out of gettinga more resources and we re prior highest the around a client demand from our internal client

Speaker Change #169: as we mentioned a few milthsago i this is actually very a good oortunity four p for come cl so for this quarter the revenue from mei and a king staf group

Tao Zou: So, the confidence is very high in this space.

Tao Zou: Now, the second dimension about the inference or the use cases or the model capability, as we have talked about in prepared remarks, some of the projects that we have collaborated with some of our partners are being implemented, as we deepen such collaboration and the progress and the achievements elaborated in this area.

Haijian He: And contributing to about 370 million RMB for this quarter alone. I think it is a very positive signal, given it is a proven of our capability to serve very important internal client, including Xiaomi and Kingsoft, including WPS as well. So I think the scenario and applications from auto driving, from the AI related staff services, a very important driver for this opportunity.

Speaker Change #169: increased around thirty-six point nnine percent year-over-year and a contributing to about three hundred and seventy million r and veicle this quarter along

Speaker Change #170: i think there is a very positive signal given it is a proven a hollow caabad capability to serve very important in plan inpro i m making us oft

Speaker Change #170: including w yes as well so i think the scenario and applications from auto driving from the ai related st services

Tao Zou: We do think that this is actually going to be laying a solid foundation for the one-stop mass model of the services that we aim to provide in this space.

Haijian He: And we're also happy to see, given this trend going forward, maybe it is possible by end of this year, as we are turning to a new financial year, we may asking the shareholders to give us an increasing cap of the related party revenue approval. So I just want to also share this good news with you that maybe for the next two or three quarters in the shareholder meetings, we are going to happy to propose a higher ceiling of the revenue. All in all, it is, are primarily due to the AI-related revenues. So that's the first point.

Speaker Change #171: a very important drior for this opportunities and we also have to see given this trend going forward maybe it is possible by end of this year as we are turning to a new financial year we may asking the shareholders to give us an increasing cap of the relative party revenue approval

Tao Zou: So, in summary, we do think that our overall strategy of oil in AI since June last year has been very fruitful and we look forward to continue our pace in the innovative development.

Tao Zou: Thank you.

Unknown Executive: Thank you.

Timothy Zhao: We'll now take our next question.

Speaker Change #171: so i just want to also share this good news resue that maybe for the next two of three quarters in the shareholder meetings we are going to have it to propose a higher feelaling of the revenue cap

Timothy Zhao: We'll now take our next question. This is from Timothy Zhao, from Goldman Sachs. Please go ahead. In the first question regarding the revenue contribution from Xiaomi and the Kingsoft Group, I've noticed that there was a very strong revenue growth. In the past quarter and the total revenue contribution, already achieved 20% of the total revenue. So may I ask what is the driver behind that and what is the AI-related revenue contribution from Xiaomi and the Kingsoft Group to the revenue to Kingsoft Cloud.

Timothy Zhao: This is from Timothy Zhao, from Goldman Sachs.

Timothy Zhao: Please go ahead.

Speaker Change #171: to prove that we do have a great big abity of the internal revenue from a related parties

Speaker Change #171: the second part relating the ai revenue contribution i would say that the incremental revenue from our internal parties

Speaker Change #171: primarily due to the ai related to revenues so this the first point the second point is

Haijian He: The second point is, around half of the AI total revenue, as you'll notice that is actually approximately, quarter of the revenue of public cloud for this quarter. Let's say half are coming from related parties, but also the other more than half are from external clients. I think that strikes a good balance regarding, we prove our ability to serve internal clients, but also have equal capability to have those services and products for the outside clients.

Speaker Change #171: ah

Speaker Change #171: around half of the ai total revenue as 'll notice that it's actually a approximately

Unknown Executive: Let's say half are coming from related parties, but also the other more than half are from, external clients.

Speaker Change #171: one quarter of the revenue of public half for this quarter

Speaker Change #171: let's say half but come from relab parties but also they other more than half up from the external clients

Unknown Executive: I think that strikes a good balance regarding we prove our ability to serve internal clients, but also have equal capability to have those services and products for the outside clients.

Speaker Change #172: i think that strikes of good banance

Speaker Change #173: regarding we prove our capability to serve internal client but also have equal capability

Unknown Executive: As you may notice that, our outside clients are also, most of them are the tier one AI, model companies in the China tech space today.

Haijian He: As you may notice that our outside clients are also, most of them are the tier one AI model companies in the China tech space today. I think that actually strikes true balance from internal and outside, but also.

Speaker Change #173: to have those services and products for outside clinesents as you may notice that our outside timesinesents are also most of them other tier one a i model companies in the tryrend to pack space today i think that actually structkes two balance from internal and outside but also

Unknown Executive: I think that actually strikes true balance from internal and outside, but also to see, potential increase, especially the visibility of the potential upside of the revenue growth going forward.

Haijian He: I'm going to talk a little bit about the potential increase, especially the visibility of the potential upside of the revenue growth going forward. And the last note on the first question, I want to mention that given you can find, that you can observe our growth margin has been improving steadily, the incremental dollar of the growth profit are also primarily due to the contribution from our AI relationship. And given we are carefully select the AI clients today, and we think those revenue can be sustainable.

Timothy Zhao: In the first question regarding the revenue contribution from Xiaomi and the Kingsoft Group, I've noticed that there was a very strong revenue growth.

Speaker Change #174: to see potential increase especially the visibility of the upside of the revenue growth going forward and the last note on the first question

Unknown Executive: The last note on the first question, I want to mention that given you can find, you can, observe our growth margin has improving steadily, the incremental dollar of the growth profit are also primarily due to the contribution from our AI-related business.

Timothy Zhao: In the past quarter and the total revenue contribution, already achieved 20% of the total revenue.

Speaker Change #175: i to mention that given you can find that you of the worse maria have improving statily the incremental dollar of the gross profit are also primarily due to contribution from our ir-related business

Timothy Zhao: So may I ask what is the driver behind that and what is the AI-related revenue contribution from Xiaomi and the Kingsoft Group to the revenue to Kingsoft Cloud.

Unknown Executive: Given we are carefully select the AI clients today, and we think those revenue can be sustainable, secure, and visible going forward, and we are going to also learn from past experience that we will control, for example, the business contracts and the business model, and also notice the potential risks in working on those revenues, and we can also strike a return and a risk profile for the profits and the contracts we are working on in the AI space.

Timothy Zhao: In the second half of this year and into a longer term, given we have more cars from Xiaomi on the street, as well as the WPS monetization from Kingsoft Group, how do we think about the revenue outlook from here. The second question is regarding the CDN revenue, as we see a continued proactive downscaling of the CDN revenue. Please share any thoughts on the outlook for this business line going forward. Thank you.

Speaker Change #175: and given we are carefully select the ai client today and we think those revenue can be sustainable

Haijian He: We are going to also learn about past experiences that will control, for example, the business contracts and the business model and also notice the potential risks in working on those, News. And we can also strike a return and a risk profile for the profits and the contracts we are working on. I think that's all for the first part of the question. 然后下面第二个关于边运和CDN的业务,请我们的业务,我们的副总统写作业。家人听那个音乐今天正好 [inaudible] Tao Zou Tao Zou, Hello, I am the person in charge of the CDN part of Kingsoft Cloud Cloud.

Speaker Change #175: secured and a visible going forward and we're going to also learn about past experience that we will control for example the business contracts and this model and also notice the potential risks in working out those

Timothy Zhao: The second question is regarding the CDN revenue, as we see a continued proactive downscaling of the CDN revenue.

Timothy Zhao: Please share any thoughts on the outlook for this business line going forward.

Speaker Change #175: revenues and we can also strike a return and a risk profile for the profits and contract to our working on

Unknown Executive: I think that's all for the first part of the question.

Timothy Zhao: Thank you.

Henry Huang: Yes, thank you, Tim.

Tao Zou: Yes, thank you, Tim. I'll go back to the first question regarding the related parties revenue contribution. I think Tim, you're right. I think we do see a few very important leading positive signals regarding the revenue potential growth in the future. I think the first of all is really, as we mentioned, giving a stronger business connections, especially with the Xiaomi and the Kingsoft Group, we allocate more resources and we prioritize the revenue and the client demands from our internal client.

Unknown Executive: The second part is about the business of Bianyun and CDN, and I would like to ask our, business partner to do a reply.

Henry Huang: I'll go back to the first question regarding the related parties revenue contribution.

Speaker Change #176: i think thats all for the for the first part of the question going you' bearing in the on the fogo fromunshe had way of this

Unknown Executive: Because it's a good day today, our vice president of CDN business, Mr. Bao, is also here.

Speaker Change #177: there team make a new ingent home neighour who thesyindia with a dever

Henry Huang: I think Tim, you're right.

Henry Huang: I think we do see a few very important leading positive signals regarding the revenue potential growth in the future.

Unknown Executive: The second question, I would like to ask him to answer it for you.

Speaker Change #178: at bottom that be has done a centser power the the younger and he was a ch color of way da

Unknown Executive: Hello, I am the person in charge of CDN business of Jishan Jun.

Henry Huang: I think the first of all is really, as we mentioned, giving a stronger business connections, especially with the Xiaomi and the Kingsoft Group, we allocate more resources and we prioritize the revenue and the client demands from our internal client.

Unknown Executive: I would like to answer your second question.

Tao Zou: I just want to answer your second question. As for the CDN business, maybe we should first distinguish its type. The standard CDN business, what we are giving up now is the standard low-profit CDN business. But the CDN business also contains high capital, high growth, and high technical value. From our overall plan, our standard CDNC business basically reduces to about 300 million RMB per quarter of human capital income. This is our standard volume, which is the lowest volume, not lower than this.

Speaker Change #178: and then of was your neighho unknowion they go to and this there has other but i in at the when s the k and the how leg relation over today woman one found logy that doll b there is of video they're itting him all have a g you called something up capital

Tao Zou: Based on this, the dynamic acceleration, live-streaming acceleration, live-streaming conversion, these are all high-capacity CDNC businesses. So our CDNC business as a whole is about 300 million RMB. I don't know if I can answer this question. So I think the right way to understand, to think about this question is that we have to make a distinction between two types of CDM business. One is the standard CDM business, which is typically marked by a lower profit margin. And there's other kind of CDM business which represents usually higher margins. For example, like the live broadcasting acceleration, the dynamic acceleration, etc.

Unknown Executive: As for CDN business, we need to first distinguish its type.

Unknown Executive: The standard CDN business, what we are giving up now is the standard low-profit CDN business.

Unknown Executive: But CDN business also includes high-capacity, high-growth, and high technical value services.

Henry Huang: As we mentioned a few months ago, I think this is actually a very good opportunity for Kingsoft Cloud.

Tao Zou: As we mentioned a few months ago, I think this is actually a very good opportunity for Kingsoft Cloud. For this quarter, the revenue from Xiaomi and Kingsoft Group increased around 36.9% year-over-year and contributing to about 370 million RMB for this quarter alone. I think it is a very positive signal given it is a proven of our capabilities to serve very important internal client including Xiaomi and Kingsoft, including WPS as well. I think the scenario and applications from auto-driving from the AI-related staff services are very important drivers for this opportunity.

Unknown Executive: From our entire plan, our standard CDN business will basically reduce the volume of, human capital income of about 300 million yuan per quarter, which is our standard volume, which is the lowest volume, not lower than this. On the basis of this, we are now increasing dynamic acceleration, live acceleration, live conversion, which are all high-capacity CDN business. So our entire CDN business will expand in the future.

Henry Huang: For this quarter, the revenue from Xiaomi and Kingsoft Group increased around 36.9% year-over-year and contributing to about 370 million RMB for this quarter alone.

Speaker Change #178: from the ver now woman the g nothing in here now should ot now but he do study or though that in the me that to eal eag woman does il t proly because i that there hundred how don't the t

Henry Huang: I think it is a very positive signal given it is a proven of our capabilities to serve very important internal client including Xiaomi and Kingsoft, including WPS as well.

Speaker Change #179: your body housele name that youyour ud amma g that inind we rote ro in jun al with that that you listen to the de mod inthe half of the lead say

Unknown Executive: But the lowest-capacity income part, our lowest is 300 million yuan.

Henry Huang: I think the scenario and applications from auto-driving from the AI-related staff services are very important drivers for this opportunity.

Unknown Executive: 这个是否能回答您的问题?

Speaker Change #180: about was cleate particular shouldmonnot with imance

Henry Huang: We also have to see, given this trend going forward, maybe it is possible by end of this year, as we are turning to a new financial year, we may asking the shareholders to give us an increasing cap of the related party revenue approval.

Tao Zou: We also have to see, given this trend going forward, maybe it is possible by end of this year, as we are turning to a new financial year, we may asking the shareholders to give us an increasing cap of the related party revenue approval. I just want to also share this good news with you that maybe for the next two or three quarters in the shareholder meetings, we are going to be happy to propose a higher ceiling of the revenue, to prove that we do have a great visibility of the internal revenue from a related parties.

Speaker Change #181: so i think the right way to to understand to think about this question is that we have to make a distinction between two types of sit business one is the

Tao Zou: And this usually has higher margin because they have their higher value added. So my quick answer is that for the first type of standard CDM business, the minimum amount that we aim to maintain on a quarterly basis is 300 million RMB. And I do not expect it to be lower than that.

Speaker Change #182: the standard cm business which is typically marked by lower promty margin and this other kind of syd business which represents really high margins

Henry Huang: I just want to also share this good news with you that maybe for the next two or three quarters in the shareholder meetings, we are going to be happy to propose a higher ceiling of the revenue, to prove that we do have a great visibility of the internal revenue from a related parties.

Speaker Change #182: for example like the

Speaker Change #182: like broadcasting acceleration that dynamic ant solalers in etc and this usually has high margin because they have there are higher value added so my click answer is that in for the first time of standard vm business

Unknown Executive: because they have their higher value added.

Unknown Executive: So my quick answer is that for the first type of standard CDN business, the minimum amount that we aim to maintain on a quarterly basis is 300 million RMB.

Speaker Change #183: the minimum amount that end to remain maintain on a quarterly bas is three hundred million rm b and i do not expect to be lower than that as serves at the base for our business overall business and then we'll continue to invest and to expand a higher imaggin part of the tim business

Henry Huang: The second part is relating the AI, revenue contribution.

Tao Zou: The second part is relating the AI, revenue contribution. I will say that the incremental revenue from our internal parties are primarily due to the AI-related revenues. The second point is around half of the AI total revenue, as you'll notice that it's actually approximately one quarter of the revenue of public cloud for this quarter. Let's say half are coming from related parties, but also they add a more than half up from the external clients.

Unknown Executive: And I do not expect it to be lower than that.

Henry Huang: I will say that the incremental revenue from our internal parties are primarily due to the AI-related revenues.

Tao Zou: That serves as a base for our overall business. And then we'll continue to invest and to expand the higher margin part of the CDM business. Yeah, that concludes my. Thank you. Thank you, Team Z.

Unknown Executive: That serves as a base for our overall business.

Unknown Executive: And then we'll continue to invest and to expand the higher margin part of the CDN business.

Henry Huang: The second point is around half of the AI total revenue, as you'll notice that it's actually approximately one quarter of the revenue of public cloud for this quarter.

Unknown Executive: Yeah, that concludes my answer.

Speaker Change #183: yeah that comes with my answer

Nicole Shan: And this concludes our event. Thank you. There are no further questions at this time, so we'll now hand back to Nicole Shan for any closing remarks. Thank you, and thank you all once again for joining us today. If you have any further questions, please feel free to contact us. We look forward to speaking with you again next quarter. Until next time, thank you all. Bye. Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.

Speaker Change #184: thank you

Speaker Change #185: yes thank you to the and thisdiscusple verorgiseice

Henry Huang: Let's say half are coming from related parties, but also they add a more than half up from the external clients.

Operator: Thank you.

Operator: There are no further questions at this time.

Nicole Shan: So we'll now hand back to Nicole Shan for any closing remarks.

nickel shanfanny: thank you there are no further questions at this time soi will now hand back tonickel shanfanny closing remarks

Henry Huang: I think that strikes a good balance regarding we prove our capabilities to serve internal clients, but also have equal capabilities to have those services and products for outside clients.

Tao Zou: I think that strikes a good balance regarding we prove our capabilities to serve internal clients, but also have equal capabilities to have those services and products for outside clients. As you may notice that our outside clients are also, most of them are the Tier 1 AI model companies in the trying to take space today. I think that actually strikes two balance from internal and outside, but also to see potential increase, especially the visibility of the potential upside of the last note on the first question.

Nicole Shan: Thank you and thank you all once again for joining us today.

Nicole Shan: If you have any further questions, please feel free to contact us.

Speaker Change #187: thank you and then thank you all once again ful join us today if you have i for ther questions please gofer to a come ass welook forward to speakinglywe do again next quter as day thank you all fivefirst

Nicole Shan: We look forward to speaking with you again next quarter.

Nicole Shan: Until next time, thank you all.

Nicole Shan: Bye.

Operator: Thank you.

Henry Huang: As you may notice that our outside clients are also, most of them are the Tier 1 AI model companies in the trying to take space today.

Operator: This concludes today's conference call.

Speaker Change #188: thank you this conclude today's conference call thank you for participating and you may now disconnect

Henry Huang: I think that actually strikes two balance from internal and outside, but also to see potential increase, especially the visibility of the potential upside of the last note on the first question.

Henry Huang: I want to mention that given you can observe our growth model has improved steadily, the incremental dollar of the growth profit are also primarily due to the contribution from our AI-related business, and given we are carefully select the AI client today, and we think those revenue can be sustainable, secured, and visible going forward, and we're going to also learn about past experience that will control, for example, the business contracts and the business model, and also notice the potential risks in working on those revenues, and we can also strike a return and a risk profile for the profits and the contracts working on the AI.

Tao Zou: I want to mention that given you can observe our growth model has improved steadily, the incremental dollar of the growth profit are also primarily due to the contribution from our AI-related business, and given we are carefully select the AI client today, and we think those revenue can be sustainable, secured, and visible going forward, and we're going to also learn about past experience that will control, for example, the business contracts and the business model, and also notice the potential risks in working on those revenues, and we can also strike a return and a risk profile for the profits and the contracts working on the AI. I think that's all for the first part of the question.

Henry Huang: I think that's all for the first part of the question.

Henry Huang: [inaudible] I think the right way to understand, to think about this question, is that we have to make a distinction between two types of city and business.

Tao Zou: [inaudible] I think the right way to understand, to think about this question, is that we have to make a distinction between two types of city and business. One is the standard city and business, which is typically marked by a law of profit and margin. And it's the other kind of city and business, which represents usually higher margins. For example, like the live broadcasting acceleration, the dynamic acceleration, et cetera. And this usually has a higher margin, because they have their higher value added.

Henry Huang: One is the standard city and business, which is typically marked by a law of profit and margin.

Tao Zou: So my quick answer is that for the first type of standard city and business, the minimum amount that we aim to maintain on a quarterly basis is 300 million RMB. And I do not expect it to be lower than that, that serves as a base for our business or our business. And then we'll continue to invest and to expand the higher margin part of the TDM business.

Henry Huang: And it's the other kind of city and business, which represents usually higher margins.

Tao Zou: Yeah, that concludes my answer. Thank you.

Henry Huang: For example, like the live broadcasting acceleration, the dynamic acceleration, et cetera.

Henry Huang: And this usually has a higher margin, because they have their higher value added.

Henry Huang: So my quick answer is that for the first type of standard city and business, the minimum amount that we aim to maintain on a quarterly basis is 300 million RMB.

Henry Huang: And I do not expect it to be lower than that, that serves as a base for our business or our business.

Henry Huang: And then we'll continue to invest and to expand the higher margin part of the TDM business.

Henry Huang: Yeah, that concludes my answer.

Henry Huang: Thank you.

Henry Huang: Thank you, Timothy.

Unknown Executive: Thank you, Timothy. And this concludes our challenge. Thank you.

Nicole Shan: And this concludes our challenge.

Nicole Shan: Thank you.

Nicole Shan: There were no further questions at this time, so we'll now hand back to Nicole Shan for any closing remarks.

Nicole Shan: Thank you, and thank you all once again for joining us today to see how many further questions please feel free to come forward to speaking with you on the next corner on the next day.

Nicole Shan: Thank you all.

Unknown Executive: Bye. Thank you.

Operator: Bye.

Operator: Thank you.

Operator: Let's conclude today's conference call. Thank you for participating, and you may now disconnect.

Unknown Executive: Let's conclude today's conference call.

Unknown Executive: Thank you for participating, and you may now disconnect. [inaudible] thank you, thank you, thank you, thank you,[inaudible]

Operator: Thank you for participating and you may now disconnect.

unknown: 詞曲李宗盛, 演唱李宗盛 [inaudible] 演唱李宗盛

Operator: [inaudible] thank you, thank you, thank you, thank you,[inaudible]

Q2 2024 Kingsoft Cloud Holdings Limited Earnings Call

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