Good day, and thank you for standing by. Welcome to the Kingsoft Cloud's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nicole Shan, IRD of Kingsoft Cloud. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us today. Kingsoft Cloud's fourth quarter and fiscal year 2025 earnings release was distributed earlier today and is available on our IR website at ir.ksyun.com as well as on PR Newswire services. On the call today from Kingsoft Cloud, we have our Chairman and CEO, Mr. Zou Tao; CFO, Li Yi; Senior Vice President, Mr. Liu Tao; Senior Vice President, Mr. Tian Kaiyan; Vice President, Ms. [indiscernible]; and Associate Vice President, Mr. [indiscernible]. Mr. Zou will review our business strategies, operations and other company highlights, followed by Ms. Li, who will discuss the financial performance. We will be available to answer your questions during the Q&A session that follows. We will be conducting an interpretation. Our interpretation are for your convenience and reference purpose only. In case of any discrepancy, management statement in our original language will prevail. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors are included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law. Finally, please note that unless otherwise stated, all financial figures mentioned during this conference call are denominated in RMB. It's now my pleasure to introduce our Chairman and CEO, Mr. Zou. Please go ahead.

[Interpreted] Hello, everyone, and thank you, and welcome to Kingsoft Cloud's Fourth Quarter and Fiscal Year 2025 Earnings Call. I am Zou Tao, CEO of Kingsoft Cloud. Since the beginning of 2025, the global AI industry has reached a series of milestones from the democratization sparked by the DeepSeek moment to the active competition among multimodal software models from the leap of embodied AI into the physical world to OpenCloud's closed-loop capability of understanding and execution. AI is evolving with unstoppable momentum linking across models, agents, computing power through industrial applications, reshaping every sector. As a tightly integrated component of the AI 5-layer take, cloud computing is now meeting an unprecedented surge in demand for intelligent computing. This year, we stayed committed to our high-quality and sustainable development strategy, embracing the opportunities in AI era, strengthening our capability through solid execution. We have delivered impressive results, achieving strong financial performance while forging lasting business strength. First, we recorded a historical high quarterly revenue, reaching RMB 2.76 billion, representing a year-over-year growth of 24%, among which revenues from public cloud services increased by 35% to RMB 1.9 billion. Our intelligent computing services keep driving our growth. The gross billing of AI business reached RMB 926 million, representing a 95% year-over-year and contributing 49% of our public cloud services. Second, growth in our ecosystem and external business segment is progressing hand-in-hand. On one hand, our ecosystem partnerships have remained strong and continue to deepen. This quarter, Xiaomi and Kingsoft ecosystem revenue reached RMB 804 million, a 63% year-over-year increase, accounting for 29% of total revenue. For the full year 2025, related party transactions with Xiaomi and Kingsoft ecosystem partners reached 94% of our net annual C, almost hitting the limit. On the other hand, our external customers, including leading enterprises across a…

Thank you, Mr. Zou and [indiscernible], and thank you all for joining the call today. Before we walk through the details of financial results for the fourth quarter and fiscal year 2025, I would like to highlight the following aspects. First, our revenue has achieved record high, RMB 2,761 million this quarter, representing a year-over-year growth rate of 24%. Within that, revenue from public cloud services was RMB 1,902 million, increased by 35% from RMB 1,410 million in the same quarter last year. Unprecedented explosive demand for our AI business drove a 95% year-over-year billing growth, which totaled RMB 926 million. Second, profitability has seen substantial improvement. Driven by shift in our revenue structure, our adjusted gross margin continued its upward trend, rising to 70% from 60% in the previous quarter. Adjusted EBITDA margin reached 28%, up 12 percentage points from 60% in the same quarter last year, though down from 33% last quarter. The year-over-year growth was fueled by a large contribution from AI-related business, where [indiscernible] represents the primary cost component. The sequential decrease was mainly due to a nonrecurring subsidiary received last quarter, which established a high baseline. Notably, we have achieved adjusted operating profit for 2 consecutive quarters, reaching RMB 55 million this quarter, which was a 2% margin. These results validate our ability to monetize intelligent cloud opportunities and our strategic focus on high-quality enterprise services. Third, our cash and cash equivalents achieved RMB 6,018 million, strengthening our ability to further support the investment into AI business. Now I will walk you through our financial results for the fourth quarter of 2025. This quarter, total revenue were RMB 2,761 million. Of this, revenues from public cloud services were RMB 1,902 million, up 35% from RMB 1,410 million in the same quarter last year. Revenues from…

Thank you, operator. This concludes our prepared remarks. We are now happy to take your questions. Please ask your question in both Chinese and English, if possible. Operator, please go ahead.

[Operator Instructions] Our first question comes from the line of Liping Zhao from CICC.

Congrats for the very good 4Q results. I have 2 questions here. First, Xiaomi recently launched the MiMo-V2 series models, which have received positive market feedback. How should we view our role and positioning within Xiaomi's AI strategy? And what strategies will be implemented around Xiaomi and Kingsoft service going forward? And secondly, how does the management view the current pricing uptrend in the cloud service industry? Has the company already adjusted prices for AI computing services? Or are there any related plans in place? To what extent are those price adjustments driven by demand or driven by the upstream procurement cost pass-through?

[Interpreted] The answer comes from our CEO, Mr. Tao Zou. So a little bit of background. So back in 2024, I think that was in August, we had an internal discussion around the development of AI and models for the whole Xiaomi and Kingsoft ecosystem. So the idea was that the whole Xiaomi and Kingsoft ecosystem will form a [indiscernible] portfolio of solutions where -- a whole system where Kingsoft will stay disciplined and not really developing our own large language models, which is left to -- for Xiaomi to develop. So the MiMo model and its widely recognized performance is actually an implementation and manifestation of our overall AI strategy within the Xiaomi and Kingsoft ecosystem. And secondly, back in 2025, so 1 year later from the internal discussion session, from a KC perspective, we formed a strategy that's called 1+N. So the 1 here actually refers to the Xiaomi MiMo model, which is the key to KC's inference strategy. So in the future, we will continue to adhere to this strategy, which essentially means that within the ecosystem, we will continue to serve the Xiaomi and Kingsoft ecosystem. And for external customers, we will also try to monetize our model as-a-service capabilities, thereby not only in the training area that we were able to make our revenue and profits, but also we will make our contribution in the inference era that is approaching.

[Interpreted] So the answer comes from our SVP, Mr. Liu Tao. So as a bit of background again. So in the Q3 last year, we had anticipated the significant pricing increase from the supply chain side. And therefore, we had dynamically and strategically stocked up some of the key components. So we did have -- so we were actually prepared for this -- what's unfolding today. Now in terms of the price hike that you were asking, so we stick to 2 principles. Number one, if we already -- for some of the customers and business where we already have contracts in place and where we have the stocking of the underlying resources, we tend to not increase the pricing. However, for some of the new customers, new contracts, especially with significant increase of usage, there's going to be significant price hiking in these kind of scenarios. Now also in terms of profitability, one thing is that we will actually try to pass through some of the upstream cost increases to our customers. And secondly, for -- we also -- depending on the demand, right, we also try to increase some of the price to reflect and increase our profit.

Our next question comes from the line of Wenting Yu from CLSA.

The first question is that some of your cloud service partners have announced they will shift their cloud business more towards [indiscernible] from the traditional server rental and also the subscription model. Will KC adopt a similar strategy? And how do you view the impact of this trend on industry competition and long-term profit margins? And the second question is regarding the impact from the [indiscernible] engine. It is adopting a relatively low price strategy. And how do you view the impact on the industry and also on potentially our business this year?

[Interpreted] Okay. So regarding your question on the shifting to model as a service strategy, we have noted some of the other peer companies who released their results earlier than us mentioning it. However, my view is that this is not actually some new concept. It is actually one of the inevitable stage of the development of AI as well as large language models from the training that we do to create them to a certain stage that they become applicable and workable in our day-to-day work and life. So in relation to our own inference-related work, model as a service work, we actually launched the StarFlow platform, as we mentioned in the prepared remarks last year. And because we are a neutral platform, we were able to host essentially all of the open source models, including also the model coming from Xiaomi to provide model as-a-service business, where this is essentially actually the fastest-growing business in the history of the company. Actually, so we talked about the Xiaomi MiMo model earlier, the way that we're providing services for Xiaomi MiMo model is also a model as-a-service business. And also for some of the large language model customers that we used to -- and we're still providing training services to them, we also provide model as-a-services business to them as well to cater to their inference needs. Now as to your second question about the price change for [indiscernible], I haven't really noticed that particular piece of news. However, the general market dynamics today is that on one hand, we're seeing explosive growth on the demand side. And we're seeing a particularly high price hiking from the supply chain side. So I do not personally think that under such circumstances, changing price to a lower level would actually be implementable and applicable in the real world. Now what I have focused more is the price hiking information from, for example, AliCloud. We have worked with them together. We have been in the industry together for many years, and this is the first time that we've seen them hiking their price. And also an addition from our SVP, Mr. Liu Tao, is that there is a difference between the catalog price and the actual price that the companies that offer as cloud players and our customers engage into. So the change in catalog price is more of a marketing kind of purpose, and it does not necessarily mean the actual price that companies enter into business.

Our next question comes from the line of Timothy Zhao from Goldman Sachs.

My first question is on your financial outlook. Just wondering if you can share some color on how we should think about the revenue, EBITDA, operating profit growth outlook for this year? And also on the capital expenditure plan, what is your thought and considering the balance sheet and also the prepayment from certain customers, do you think it's possible to further raise your CapEx plan given the rising AI demand? And secondly is regarding the third-party revenue in the AI outlook. Just wondering if you can share more detailed color on your -- what specific product or what type of customers are driving the third-party AI growth? And also what is the breakdown and outlook between the mix of AI training versus AI inferences?

All right. I will take the CapEx first. For 2026, we expect total CapEx and control assets to exceed RMB 10 billion, representing expansion from 2025 level. On funding structure, we expect approximately half of our CapEx is targeted to be covered by customer prepayment arrangements, which will significantly reduce safe funding requirements. Additionally, we plan to access more assets through short- and long-term leases with payment structure and operating cash flows to minimize upfront capital encumbrance. For the funding position and financing needs, we currently have no equity finance plans. 2026 capital expenditure are secured through 4 channels. First, proceeds from our 2025 financing; and second, customer operating receipts; and third, the strategic customer prepayments; and the fourth, the commitment credit facilities from banks and financial institutions. Incremental resource requirement will be made primarily through leasing to preserve balance sheet flexibility. For the guidance for the 2026, we expect our growth rate will accelerate and the EBITDA rate will improve much in 2026 as well.

[Interpreted] So if you look at the past results as described -- as discussed in the prepared remarks, the -- for the top 5 non-ecosystem customers combined revenue for year-over-year basis revenue growth was 44%, which is really strong growth. So those would include Internet companies, autonomous driving and robotics. And then in terms of looking forward into the year of 2026, we do see extremely large demand coming from outside of the ecosystem. And to some extent that such demand is actually higher than the demand from our ecosystem. So the final revenue or financial results coming from that demand will actually be determined -- will actually be dependent on how much resources we're able to secure and deliver to such customers. Now from the perspective of products and solutions, we have -- we're actually seeing more than half of the potential demand coming in for inference versus training. And then for the StarFlow platform, which we discussed earlier, it's growing really fast for that business, and we're seeing better profit margin coming from that particular business. And this is a result, of course, from the very good application, very good application and increasing penetration for agents and core applications. Thank you.

Thank you. Due to time constraint, this concludes our Q&A session. Thank you once again for joining us today. If you have any other questions, please feel free to contact us. Look forward to speaking with you again next quarter. Have a nice day. Thank you all.

This concludes today's conference call. Thank you for participating. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]