KINGSOFT's Q1 revenue reached 2.338 billion yuan, achieving a year-on-year growth of 9%, but a quarter-on-quarter decline of 16%, with net profit remaining basically flat year-on-year. The revenue from the WPS software business declined quarter-on-quarter, mainly due to the impact of the new procurement process for Xinchuang in 2025. R&amp;D costs surged by 16% year-on-year, primarily for AI-related expenditures.
On the 28th, KINGSOFT announced its Q1 2025 financial report:
<blockquote>
<ul>
<li>Q1 2025 revenue of 2.338 billion yuan, a year-on-year increase of 9%, a quarter-on-quarter decrease of 16%</li>
<li>Net profit attributable to the parent company of 284 million yuan, basically flat year-on-year, a quarter-on-quarter decrease of 38%</li>
<li>Gross margin of 82%, up 1 percentage point year-on-year, down 2 percentage points quarter-on-quarter</li>
<li>R&amp;D costs of 828 million yuan, a year-on-year surge of 16%, with R&amp;D investment accounting for 35% of revenue</li>
</ul>
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/14eb824a-d2fd-49bb-8b02-24fc4c490fce.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/14eb824a-d2fd-49bb-8b02-24fc4c490fce.png"/>
</blockquote>
In terms of specific business:
<blockquote>
<ul>
<li>Office software business revenue of 1.301 billion yuan, a year-on-year increase of 6%, accounting for 56% of total revenue</li>
<li>Gaming business revenue of 1.037 billion yuan, a year-on-year increase of 14%, accounting for 44% of total revenue</li>
<li>Global monthly active devices for WPS reached 647 million, a year-on-year increase of 8%</li>
<li>Cumulative paid users in mainland China reached 41.7 million, a year-on-year increase of 17%</li>
</ul>
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3096258b-7073-450a-bd71-901df2129eb7.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3096258b-7073-450a-bd71-901df2129eb7.png"/>
</blockquote>
<h2>KINGSOFT's First Quarter Growth Slows, Profit Under Pressure</h2>
KINGSOFT's revenue for the first quarter of 2025 reached 2.338 billion yuan, a year-on-year increase of 9%, but a quarter-on-quarter decline of 16%. The year-on-year growth was mainly driven by the growth of the office software and services business and the online gaming and other businesses.
Among them, the revenue from the office software and services business was 1.302 billion yuan, a year-on-year increase of 6%, accounting for 56% of total revenue; the revenue from online gaming and other businesses was 1.037 billion yuan, a year-on-year increase of 14%, accounting for 44% of total revenue.
Despite the revenue growth, the company's profit is under pressure. During the reporting period, the net profit attributable to the shareholders of KINGSOFT was 284 million yuan, basically flat compared to the same period last year, but down 38% quarter-on-quarter. Basic earnings per share and diluted earnings per share were both 0.21 yuan, unchanged year-on-year, but down 40% and 38% quarter-on-quarter, respectively.
<h2>AI Transformation Accelerates, but Software Business Declines Due to Xinchuang Impact</h2>
In terms of WPS personal business, in the first quarter, the global monthly active devices for WPS reached 647 million, a year-on-year increase of 8%, with paid users reaching 41.7 million, a year-on-year increase of 17%. The company has clearly stated its &#34;operational strategy centered on increasing the number of AI active users,&#34; as WPS transitions from traditional office software to an AI-driven intelligent office platform. The WPS 365 business has achieved strong growth by helping organizational-level clients realize intelligent office solutions, accelerating coverage of private enterprises and local state-owned enterprises
However, the WPS software business has declined due to the impact of the new procurement process under the Xinchuang 2025 initiative, which has partially offset the growth of other businesses. Additionally, the revenue from the office software and services business decreased by 13% quarter-on-quarter, mainly due to the reduction in the WPS software business.
In terms of expenses, KINGSOFT's R&amp;D costs reached 828 million RMB, a year-on-year increase of 16% and a quarter-on-quarter increase of 13%. This growth is mainly due to the increase in the number of employees and AI-related expenditures, as well as increased investment in new game categories within the online gaming business.
<h2>Online Games: Core IP Stable, but Slow Commercialization Updates Weigh on Revenue</h2>
In terms of gaming business, the company's revenue in the first quarter was 1.037 billion RMB, a year-on-year increase of 14%, but a quarter-on-quarter decrease of 20%. The growth was mainly due to increased server and bandwidth costs, as well as increased channel expenses related to new games.
The anime-style games &#34;Dust White Zone&#34; and &#34;Jian Wang 3&#34; contributed stable revenue as core IPs, but the &#34;limited commercialization content updates released in Q1 2025&#34; led to a 20% quarter-on-quarter decline in revenue for this segment.

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KINGSOFT's Q1 revenue was 2.338 billion yuan, achieving a year-on-year growth of 9%, but a quarter-on-quarter decline of 16%, with net profit remaining basically flat year-on-year. The revenue from the WPS software business decreased quarter-on-quarter, mainly due to the impact of the new procurement process for Xinchuang in 2025. R&D costs surged 16% year-on-year, primarily for AI-related expenditures

- Kingsoft Software reported Q1 2025 revenue of 2.338 billion yuan, a 9% year-on-year increase but a 16% quarter-on-quarter decline.  
- The net profit remained stable year-on-year at 284 million yuan, though it fell 38% from the previous quarter, with R&D costs rising 16% due to AI-related expenses.  
- The WPS software business faced a decline influenced by new procurement processes, while the gaming sector saw a 14% year-on-year revenue increase, despite a 20% drop from the previous quarter.

KINGSOFT Q1 revenue increased by 9% year-on-year, net profit remained flat year-on-year, and AI R&D investment surged | Financial Report Insights