On August 20, 2026, Kingsoft Cloud Holdings Ltd (NASDAQ: KC) released its financial results for the first half of 2026, covering the period ending June 30. The company generated total revenue of 5.776 billion yuan, marking a 33.7% year-over-year increase, while its net loss narrowed by 43.5% to 437 million yuan. The surge in AI cloud demand emerged as the primary growth catalyst, propelling public cloud revenue up 46.2% from the prior year.
Public cloud service revenue climbed to 4.354 billion yuan, up from 2.979 billion yuan in the same period last year. Industry cloud services contributed 1.422 billion yuan, a 6.1% increase compared to the prior year. As AI cloud expanded rapidly, infrastructure costs rose significantly. Internet data center costs hit 1.901 billion yuan in the first half, up 24.6% year over year, while depreciation and amortization expenses jumped 91.6% to 1.783 billion yuan. The company attributed the higher depreciation to newly acquired and leased servers and network equipment tied to its AI cloud operations.
Where to begin: The higher depreciation burden weighed on gross margins during the period. Gross profit reached 812 million yuan, up 23.6% year over year, but the gross margin slipped to 14.1% from 15.2% in the prior year. Adjusted gross margin also declined, falling to 14.3% from 15.7%.
Profitability improvements outpaced revenue growth. Operating losses narrowed to 143 million yuan from 561 million yuan in the same period last year. Adjusted operating profit reached 64.14 million yuan, reversing a 222 million yuan loss in the prior year. After excluding gains from the disposal of property and equipment, normalized adjusted operating profit stood at 29.12 million yuan, compared to a 230 million yuan loss a year ago. Adjusted EBITDA surged 155% to 1.848 billion yuan, with the EBITDA margin expanding from 16.8% to 32.0%. Adjusted net loss shrank to 297 million yuan from 491 million yuan.
Cost discipline played a key role in narrowing losses. Sales and marketing expenses fell to 237 million yuan, while general and administrative expenses dropped to 335 million yuan. Research and development spending decreased to 383 million yuan from 420 million yuan. Total operating expenses declined to 955 million yuan from 1.218 billion yuan.
At the same time, Kingsoft Cloud continued to ramp up investments in AI infrastructure. As of the end of June, the company operated two data centers primarily in China, housing approximately 102,900 servers. Capital expenditures and acquired lease assets for the first half totaled 6.242 billion yuan, up roughly 26% from 4.946 billion yuan in the prior year. These heavy investments are now visible in both the balance sheet and cash flow. Net cash generated from operating activities reached 3.385 billion yuan, while investing activities consumed 4.543 billion yuan in cash. Cash and cash equivalents stood at 4.674 billion yuan as of June 30, down 22.3% from the end of 2025. The debt-to-asset ratio rose to 71.0% from 65.2% at the close of last year.
The company employed 14,394 staff members as of the end of June. Research and development personnel numbered 1,114, representing 8% of the workforce, while solution development and services staff totaled 12,107, accounting for 84%.
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