Kingsoft Corporation Limited (“Kingsoft” or the “Company”; SEHK stock code: 03888), a leading developer, distributor and service provider of entertainment software, Internet security service and application software in China, announced its unaudited interim results for the three and six months ended 30 June 2012.
For the second quarter this year, revenue of Kingsoft increased by 10 percent quarter-over-quarter and 23 percent year-over-year to RMB322.5 million, and gross profit increased by 16 percent quarter-over-quarter and 23 percent year-over-year to RMB281.6 million. For the first half of 2012, revenue recorded was RMB615.1million while gross profit was RMB524.5 million, with a strong 24 percent and 23 percent year-over-year increase respectively. Revenue mainly came from the entertainment and applications software businesses which represented 65 percent and 35 percent respectively of the total revenue for the second quarter of 2012.
Dr HongJiang Zhang, CEO of Kingsoft commented, “We are pleased to report strong top and bottom line growth on a sequential and year-over-year basis for the second quarter of 2012. With quarterly revenue exceeding RMB300 million, we have enjoyed a solid and healthy growth in revenue from all of our major business lines.”
Entertainment Software Business
For the second quarter of 2012, revenue from the entertainment software business increased by 9 percent quarter-over-quarter and 21 percent year-over-year to RMB208.7 million. The monthly average paying users increased by 10 percent quarter-over-quarter and 17 percent year-over-year to 1.46 million. The sequential and year-over-year rises were mainly due to the continued popularity of the Company’s core game – JX Online III. Driven by the release of the new expansion pack Light up the Fire in April 2012, JX Online III has achieved record revenue and popularity, driving a rapid growth of its paying accounts and the quarter-over-quarter increase in the monthly average paying users. Another new expansion pack Wakened Dragon of Erhai for JX Online III was released in July 2012, which has further boosted the already high popularity of the game. At the same time, JX Online World, another of the Company’s games, has demonstrated solid growth in the second quarter since the release of the expansion pack Heroic-Western Dragon in March.
In terms of new games, the open beta testing of our new 3D MMO, Legend of the Holy World started in July and has been well accepted by gamers. Legend of Moon is targeted for commercial release in September after the final round of testing in April. Ma La Jiang Hu, a Q version of 3D role-playing game, is scheduled for open beta testing in the second half of the year. To further extend the Company’s game pipeline, development of several web-games and mobile games is also in full swing, with one planned for release in the second half of 2012.
Internet Security Service and WPS Office Software
Revenue from the application software business increased by 23 percent quarter-over-quarter and 25 percent year-over-year to RMB112.1 million. The remarkable performance in advertising and promotion revenue from Kingsoft Internet Security (“KIS”) marked a new milestone of its monetisation capability and the successful transformation of its business model. Kingsoft WPS Office has also generated strong business revenue, mainly benefiting from the enhanced awareness of the importance of copyright protection in China and the continued improvement of the Company’s products.
The monthly active user base of WPS Office Personal has recently expanded to more than 30 million. On 29 July, Kingsoft WPS Office for Android vaulted into the first place in the “business” category of free applications as ranked in Google Play. WPS Office for Android has long reigned in first place within seven countries and regions including Britain, Germany, Australia and Taiwan. In July, it has also jumped into first place in a number of major markets including the United States, France, Canada, Singapore and Hong Kong. By the end of June this year, Kingsoft WPS Office has been purchased and installed widely by all provincial governments in China. Kingsoft WPS Office was awarded the WIPO Golden Award in June, which represents the highest level of achievement in global intellectual property. These outstanding performances have demonstrated that Kingsoft WPS Office has maintained the leading position in China market and has successfully expanded into mobile Internet market.
After Kingsoft PowerWord Android v5 was officially launched in April 2012, the number of users has exceeded 10 million in just three months. The number of downloads and installations is increasing rapidly, underscoring the significant improvement of the upgrade of the Kingsoft PowerWord product series.
Meanwhile, as a Kingsoft Cloud initiative, Kuaipan records a continuous growth in its user base, resulting from continued improvement in user experiences and new features. The Company entered a strategic partnership with Skyworth TV to provide cloud storage service to Skyworth Cloud TV users. The partnership with Xiaomi has led to the release of personal data storage service on Xiaomi phones. Kingsoft Cloud will continue to push corporation in depth with more partners including application developers who develop mobile apps based on Kingsoft cloud storage platform.
Dr HongJiang Zhang concluded, “We are continuing our effort in developing a variety of products and services based on mobile Internet and cloud service. With the impressive growth of JX Online III, our new games pipeline, the successful transformation and turnaround of KIS business, and the continued strong sales of WPS Office and its fast expansion into mobile devices, we believe we have laid a solid foundation for a successful second half of 2012.”
About Kingsoft Corporation Limited
Kingsoft is a leading Internet-based developer, distributor and service provider of entertainment software, Internet security and application software in China. Since the commercial launch of its first office applications software, WPS 1.0, in 1989 followed by over 20 years of innovative endeavors, Kingsoft has become well recognised as a leading software brand in China. Kingsoft has also rejuvenated itself by successfully transiting from “the King of package software” legacy to become an Internet application based model of Software as a Service.
Kingsoft’s main business encompasses on-line games, Internet security and application software. The Company utilises the Internet as an effective and relatively secure channel to market and distribute its products, and has built an extensive sales and distribution network. Kingsoft launches numerous well-known software products such as WPS Office, Kingsoft PowerWord, Kingsoft Internet Security and online games, including the JX Series and the First Myth series to retail customers, corporate clients and government bodies in China. The Company is currently building a converged user platform for its diversified product portfolio and providing users with a variety of value-added services.
Enhancing the quality of digitalised lifestyle has been the mission of Kingsoft. Headquartered in Beijing, Kingsoft has set up R&D centers in Zhuhai, Beijing, Dalian and Chengdu. In addition to possessing strong R&D capabilities, Kingsoft has introduced top Internet and on-line game operation talents to its management team with the aim to enhancing user engagement and improving the efficiency of operations. Kingsoft will continue developing new products and expanding its market share in China, while vigorously penetrating into other overseas markets. For more information, please visitwww.kingsoft.com.
Kingsoft Corporation Limited
Michelle Feng Harnett
Tel: (86) 10 82325515