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Kingsoft Cloud Falls 2% on Missing Q3 Revenue

Chinese independent cloud service provider Kingsoft Cloud Holdings Ltd. (KC) delivered mixed third-quarter results, with earnings exceeding and revenue missing analysts’ estimates. Following the news, shares fell 2% and closed at $19.31 on November 24.

Mixed Results

Kingsoft’s total revenue grew 47.1% year-over-year to $374.62 million, but failed to meet the consensus estimate of $392.8 million. The solid revenue growth was driven by an increase in both public cloud services and enterprise cloud services for its premium customers.

On a positive note, the company posted a quarterly loss of 2 cents per share, 18 cents better than the analysts’ estimated loss of $0.20 per share.

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Management Comments

CEO of the company, Yulin Wang said, “Despite headwinds in the macro-environment, we are making great strides in building and strengthening relationships with premium customers.”

The CEO further added, “We have captured the new opportunities amid the regulation changes and started working with Shouqi, one of the emerging ride-hailing applications to empower them navigating the shifting landscape in China since July this year. Through this cooperation, we made further progress in enriching and diversifying our products and solution offerings in different sectors. And lastly, we are on track of integrating Camelot as a part of our efforts to build out our enterprise cloud services business.”

Target Price

Overall, the stock has a Moderate Buy consensus rating based on 2 Buys and 1 Hold. The average Kingsoft Cloud price target of $37.33 implies 93.3% upside potential to current levels. Shares have lost 47.5% over the past year.

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