Kingsoft Cloud Holdings (NASDAQ:KC) reported a fiscal third-quarter 2024 revenue of 1.89 billion Chinese yuan ($268.7 million), up by 16.0% year-on-year, beating the analyst consensus estimate of $247.46 million.

The accelerated growth of high-quality businesses, such as AI, has offset the decline in the low-margin CDN business due to strategic proactive adjustments.

Kingsoft clocked an adjusted loss per ADS of 14 cents, which aligns with the analyst estimate. The stock price climbed after the print.

Revenues from public cloud services increased by 15.6% year over year to $167.5 million, mainly due to the growth of AI demands. Revenues from enterprise cloud services were $101.2 million, an increase of 16.7% Y/Y.

The adjusted gross profit was 307.6 million Chinese yuan ($43.8 million) versus 196.3 million Chinese yuan Y/Y.

The margin expanded by 420 bps to 16.3% due to strategic revenue mix adjustment, optimized enterprise cloud project selection, and efficient cost control measures.

Kingsoft held $230.6 million in cash and equivalents as of September end.

Kingsoft Cloud's CEO, Tao Zou, emphasized the company's commitment to its "High-quality and Sustainable Development Strategy," which drove 16% topline growth in third-quarter of 2024. The AI business expanded to 362 million Chinese yuan, representing 31% of public cloud revenue. Revenues from the Xiaomi and Kingsoft Ecosystem surged by 36% year-over-year, capitalizing on opportunities in sectors like EVs, LLM, and WPS AI, reinforcing confidence in the company's strategic direction.

CFO Henry He highlighted the company's strong quarterly performance, marked by double-digit revenue growth to 1.89 billion Chinese yuan and significant profitability improvements. Gross profit and EBITDA profit growth outpaced industry averages. The adjusted EBITDA margin saw a remarkable turnaround, reflecting the success of the company's revenue structure adjustment and AI-focused transformation.

Outlook: The company anticipates robust growth in the fourth quarter of 2024, driven by stable performance in public and enterprise cloud segments. It expects an accelerated revenue growth rate during the quarter and continued improvements in profitability. Operating profit and adjusted operating profit will likely show significant progress.

Kingsoft Cloud Holdings stock surged over 21% year-to-date.

Price Action: KC stock is up 3.48% at $4.49 at the last check on Tuesday.