Source: Visual China
Reporter丨He Jipai Editor丨Yan Zi is
Kingsoft Cloud, who suffered a huge loss, tripped his brother.
On October 7, Lei Jun issued an announcement. Affected by the sluggish share price of Kingsoft Cloud and its recent financial performance, Kingsoft Software is reevaluating its recoverable amount of Kingsoft Cloud investment.
As of the end of September, the amount before tax is expected to be up to 6.5 billion yuan, and the specific amount is to be determined.
Kingsoft Software expects to record significant losses in the first nine months of this year. As soon as the speech of
ended, Kingsoft Software's stock price plummeted by nearly 16%, hitting a new low in the past two years, with a total market value of HK$25.4 billion.
Kingsoft Cloud was spun off by Kingsoft Software and will be listed independently in 2020. In terms of the relationship between the two companies, Kingsoft Software is the largest shareholder of Kingsoft Cloud, with a shareholding ratio of 37.4%.
screenshot from Kingsoft Cloud Prospectus
The two companies belong to the Lei Jun system, and both losses are lost.
drags down profits
At this time, sets up impairment because of Kingsoft Cloud's poor performance.
After Kingsoft Cloud went public in the United States, its stock price once surged to US$74, but now the price per share is only US$2.1, falling to only about 10% of the issue price.
's stock price cannot rise and its performance is weak. In the second quarter of this year, Kingsoft Cloud's revenue fell 12.3% year-on-year to 1.91 billion yuan, with a net loss of 810 million yuan, an increase of 267% year-on-year.
Kingsoft Software's financial report shows that in 2020, the loss of the joint venture company was 245 million yuan, partly offset by the profit confirmed by Cheetah Mobile .
By 2021, Cheetah Mobile also suffered losses, and the two associate companies of immediately brought a loss of 1.3 billion yuan.
In the first half of this year, Kingsoft Software recorded a loss of 690 million yuan, continuing to expand. Strictly affected by the significant losses of the associated companies, the company's net profit in the second quarter turned from year to year and month to month.
Cloud is a very important business. Lei Jun once said bluntly that "only you can survive if you dare to burn money."
A founder of a cloud service company told 21CBR that putting aside the concept of cloud computing , IaaS is essentially a traditional leasing model, building the IT infrastructure environment needed by customers and renting out virtual basic resources.
"Under this model, it must have a scale effect. Only when the scale is large enough can it have a cost advantage."
Many independent cloud manufacturers, including Kingsoft Cloud, are big losses. "The higher the proportion of IaaS, the worse the cloud service provider's ability to make money."
Tongqi Lianzhi
For this cloud that has been "ischemia" for many years, Kingsoft Software is a blood transfusion site.
In July this year, Kingsoft Cloud submitted a prospectus for listing back to Hong Kong, and 6 pages were spent in the document specifically explaining its relationship with Kingsoft Software.
Until 2019, Kingsoft Software was one of Kingsoft Cloud's five major customers. Last year, Kingsoft Software's cloud service fee was 157 million yuan.
According to the agreement, from 2022 to 2024, Kingsoft Cloud will provide cloud services to Kingsoft Software for an annual recommended upper limit of more than 800 million in three years.
major shareholders built bridges and paved the way, but they failed to get the explosion of Kingsoft Cloud.
Kingsoft Cloud predicts that its revenue in the third quarter of 2022 will be between 1.95 billion yuan and 2.15 billion yuan, a year-on-year decline of about 10-20%. From this point of view, its previously set goal of break-even in the fourth quarter of this year will be more conservative.
This means that it will take time for Kingsoft Cloud to achieve profitability, and Kingsoft Software's return cycle will be extended.
An intuitive comparison: As of the end of June 2022, Kingsoft Software held an investment of up to 11.92 billion yuan in associate companies, while Kingsoft Cloud's current market value is only 3.65 billion yuan.
Lei Jun’s new announcement is expected to generate impairment provisions of 5.6 billion to 6.5 billion yuan, which is about half of the investment amount of 11.9 billion yuan.
Kingsoft Cloud is an associate company after all, and the impairment provision will not affect Kingsoft Software's own cash flow and performance.
Over the past six months, the company has fallen continuously. One of the major reasons is that its main business is under short-term pressure.
main business is under pressure
Kingsoft Software's two main businesses, both games and office are facing challenges.
In the second quarter of this year, although the company's gaming business increased by 31% year-on-year, it fell by 7% month-on-month.
all year round, the issuance of game version number is uncertain, and the pace of launching new products is uncertain. The performance of
office business is worth paying attention to. Since 2018, Kingsoft Software's incremental revenue has gradually contributed to more than gaming, becoming the main driving force for revenue growth.
In the second quarter of this year, office software and service revenue increased by 18% year-on-year, mainly driven by the growth of individual and institutional subscription business, but the revenue of institutions authorized business continued to decline, mainly due to the decrease in order increase of credit innovation.
WPS is the core of the office business and the ballast product of Kingsoft Software. Among them, personal subscription is the focus, and the strategy of "free + value-added services" is mainly for individual users.
In July this year, WPS frequently became a hot search because it was exposed to delete user local documents, and fell into a crisis of trust. Kingsoft Office mentioned in response to the controversy that the core of the incident lies in the suspected violation of the online document, so access is prohibited. The biggest difference between an online document and a local file is whether it is uploaded to the WPS cloud.
, coincidentally, Kingsoft Software "touched" twice this year because of the cloud.
cloud, games and office software, perhaps Lei Jun has not devoted his efforts at the moment, and building a car is the last time he bet on all his business.
Just the day before Kingsoft Software's disclosure announcement, he also shared his reading experience on Weibo with "My Years at General Motors".
