Kingsoft Office Increases Investment in AI

On March 21st, Kingsoft Office officially released its 2022 financial report. It achieved an operating income of 3.885 billion yuan (about $ 0.56 billion), a year-on-year increase of 18.44%; The net profit attributable to owners of the parent company was 1.118 billion yuan, a year-on-year increase of 7.33%; The net profit attributable to owners of the parent company after deducting non-recurring gains and losses was 939 million yuan(about $ 136.39 million), up 11.71% year-on-year.

Kingsoft Office is an office software and service provider, mainly engaged in the design, R&D and sales promotion of WPS Office software products and services. In recent years, stemming from a strategy of “multi-screen, cloud, content, AI and collaboration”, Kingsoft Office’s profit model is now derived from four businesses: personal office service subscriptions, domestic institutional subscription and service business, domestic institutional authorization and Internet advertising promotional services.

With the development of products from tool software to cloud application services, user habits and the development of the digital economy industry, the first three businesses of Kingsoft Office have grown rapidly, while the revenue share of its Internet ad promotion has shrunk year by year due to the company’s active strategic adjustment.

In the past year, subscription business revenue has become an important growth engine for Kingsoft Office. The total revenue of Kingsoft Office’s subscription business in 2022 was 2.742 billion yuan (about $ 0.39 billion), up 43.45% year-on-year, accounting for 71% of company revenue. Among them, the process of domestic institutional customers from one-time product authorizations to regular subscriptions continues to accelerate. The company’s personal subscription business was still the largest source of Kingsoft Office’s revenue in 2022, and its proportion has increased compared with 2021.

Among the company’s main businesses in 2022, Kingsoft Office’s domestic personal office service subscription business revenue was 2.05 billion yuan, up 39.91% year-on-year. The income from its subscription and service business for domestic institutions was 692 million yuan, a year-on-year increase of 55.06%; The authorized business income of domestic institutions was 836 million yuan, a year-on-year decrease of 13.18%, and the transformation process of the company’s subscription system was accelerated.

With the adverse impact of weak global PC and smartphone shipments, Kingsoft Office’s equipment is still very much active. Users are not only using its cloud services, but more people are becoming paying customers.

As of December 31, 2022, the monthly active equipment of the company’s major products was 573 million, up 5.33% year-on-year. Among them, the monthly active devices for the WPS Office PC version were 242 million, a year-on-year increase of 10.5%; The monthly active devices of WPS Office Mobile Edition were 328 million, up 2.18% year-on-year.

In 2022, Kingsoft Office continued to optimize the user experience of its products by enabling crossover use, such as cloud and collaboration, and guided users to use its cloud document services. As of the end of December 2022, the number of cloud documents uploaded by users through the public cloud exceeded 175.2 billion, a year-on-year increase of 35%.

Kingsoft Office is also promoting the transformation of user payments through functional and content-based membership privileges. Paid users increased by 18.12% year-on-year to 29.97 million, in which the proportion of long-term members increased and the membership structure was further optimized.

In terms of domestic institutional customers, during the reporting period, Kingsoft Office served the digital office needs of domestic institutional customers, playing a role in efficiency improvement, data management, security control, industry scenario application and other fields, while promoting the integration of government and enterprise cloud and collaborative office processes.

The financial report shows that the company’s digital office platform-related revenue (including cloud and collaborative products) increased by 57% year-on-year, and 3,990 new government and enterprise customers were added throughout the year, driving the rapid growth of domestic institutional subscription and service business. The number of public cloud SaaS-paying enterprises in the period increased by 51% year-on-year, with renewal rates of paying enterprises exceeding 70%, and the total renewal rate topped 100%, which drove related revenue in the public cloud field to increase by over 100% year-on-year.

However, in terms of its domestic institutional authorization business, Kingsoft Office said that the company laid out its small-town and rural markets and industry innovation business in advance, but institutional customers continued to increase their product purchases due to requiring legal copies of its software, which offset part of the impact of the contraction of innovation orders, resulting in a decrease of 13.18% in domestic institutional authorization business compared with the same period in 2021.

In terms of the company’s Internet ad promotion and other businesses, the revenue of this business in 2022 was 306 million yuan, a decrease of 24.45% compared with the previous year. The company said that it is focusing on user experience, and is trying to reduce interference for users while optimizing its Internet ad services.

At the cost level, Kingsoft Office’s total operating costs in 2022 hit 3.146 billion yuan, an increase of 23.4% compared with 2.55 billion yuan in the same period of 2021.

In 2022, Kingsoft Office R&D invested 1.331 billion yuan, up 23.08% year-on-year, investing about 34% of its income, and employing a total of 2,922 employees, accounting for about 68% of the total number of company-wide employees.

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In the field of AI, Kingsoft Office said that the company is improving its algorithm capabilities, optimizing its document data search function, and promoting the process of product intelligence. At the same time, the company is actively exploring the next generation of the human-computer interaction experience combined with AIGC (Generative AI) and LLM (Large Language Model) technologies, and integrating them into applications such as document translation, listening and reading, Chinese and English proofreading, voice and audio transcription, intelligent assisted writing and typesetting, intelligent analysis of table data, PPT one-click generation and beautification.