Kingsoft Cloud Holdings Limited (NASDAQ:KC) Q2 2023 Earnings Call Transcript

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But I will say that in the old days, let’s say, last year, a year before as you mentioned, there are certain quarters, our CDN business gross margin was negative in certain regions, certain notes. But right now, we do have relatively stable positive gross margin of the CDN business where it’s really not as high as a public cloud product. The second part is gross margin of the cloud — public cloud services including computing network and storage definitely higher and I think CDN products are much higher than CDN products in terms of the gross margin and we’re trying to improving the percentage of their revenue from their products, so if you’re putting that everything together, I think in few quarters when we’re looking ahead given that we do have a lot of efforts on the resource management and cost control, hopefully, the spread between the computing and storage versus the CDN will be expanded and the computing and storage database and network products will deliver even higher gross margin going forward given the changes we have.

So I don’t want to provide a detailed guidance on the gross margin by product, as I mentioned, is really a dynamic and really kind of fluid in certain situation but overall I can tell you that from a management perspective, we’re aiming for a relatively expansion for the public cloud gross margin as a whole and we try to manage on that. And one more point is you don’t have to split that out because one client they will use multiple product lines and in one IDC centers, we may deliver different products, and one resources we’re trying to and provide more utilization as well. So it’s not really from the very single, straightforward line of calculation. So hopefully you can understand. On the second point is, I think the earlier question from Tim was really regarding enterprise cloud.

It’s not really about the PaaS or SaaS within the public cloud, really two different [indiscernible] put this way. So the enterprise cloud side, as I mentioned, our PaaS and SaaS level, they are packaging with solution and our services and we do see that service convert to a higher margin and on the public cloud. I don’t want to provide a detailed guidance because as I mentioned, once AI is coming, all the business new model is changing. When we’re talking about the most and other things was mentioned, we don’t want to kind of develop and divided by the — got a traditional concept of ICE and ICE products, but we are aiming for the mass products and services as a whole package. And as a whole, I think the margin will be much higher than the traditional ICE and computing service going forward.

Thank you, Allen.

Allen Li: Thank you.

Operator: Thank you. Due to time constraints, this concludes our question-and-answer session. So I’ll hand the call back to you for closing remarks.

Nicole Shan: Thank you, operator. Thank you all once again for joining us today. if you have any further questions, please feel free to contact us. Look forward to speaking with you again next quarter. Have a nice day. Thank you.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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