Kingsoft Cloud Holdings Limited

Thank you for standing by. Welcome to the Kingsoft Cloud's fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. 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. Kingstop 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 QR Newsware services. On the call today from Kingstop Cloud, we have our Chairman and CEO, Mr. Liu Tao, Staff of Miss VE, Senior Vice President, Mr. Liu Tao, Senior Vice President, Mr. Tian Kaiyan, Vice President, Ms. Wang Shuang, and Associate Vice President, Mr. Kaiyan. Ms. Zou will review our business strategies, operations, and other company highlights, followed by Ms. Li, who will discuss the financial performance. They will be available to answer your questions during the Q&A session that follows. There will be consecutive integrations. Our integrations are for your convenience and reference purpose only. In case of any discrepancy, management statement in the 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 Security Exchange Act of 1934 as amended and as defined in the U.S. Private Security Solicitation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and the current market and operating conditions, and relate to U.N. standing for known or unknown risks, uncertainties, and other factors. 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 maturely from those in the forward-looking statements. Further information regarding these and other risk uncertainties or factors are included in the company's filings with the US SEC. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise accept 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 is now my pleasure to introduce our Chairman and CEO, Mr. Zou. Please go ahead. Hello, everyone.

Welcome to the 4th quarter of the year of Jin Tianyun, the 4th quarter of the year of Jin Tianyun, the 4th quarter of the year of Jin Tianyun, the 4th quarter of the year of Jin Tianyun, the 4th quarter of the year of Jin Tianyun, The AI industry across the globe has experienced a series of ups and downs. From deep-seekers to multi-multi-sota models, from giant AI to open cloud self-understanding, AI is evolving in an unstoppable way, connecting from models to algorithms, from algorithms to industries. In 2025, Cloud Holdings will continue to go high-end and continue to develop. Embracing opportunities in the AI wave, gaining growth in time. So, Kaiyan Tian So, Kaiyan Tian Thank you for watching. The revenue from Xiaomi Jinshan Ecotourism is increased by 63% The total revenue ratio has been further improved to 29% In the whole year of 2025, our relationship with Xiaomi and Jinshan is up to 94% Another aspect Finally, the profit level continues to increase Hello everyone and thank you and welcome to Kingsoft Cloud fourth quarter and fiscal year 2025 earnings call. I am Tao Zou, 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 deep-seek moment to the active competition among multimodal software models, from the leap of embodied AI into the physical world to open-close, closed-loop capability of understanding and execution. AI is evolving with unstoppable momentum, linking across models, agents, computing powers, to industrial applications, reshaping every sector. As a tightly integrated component of the AI five-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 broad viewing 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 remain 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 Kingspun Ecosystem Partners reached 94% of our annual cap, almost hitting the limit. On the other hand, our external customers, including leading enterprises across a wide range of high growth industries, also shown confidence in our products and services, accounting for around 70% of total revenue. Furthermore, revenue from our top five non-ecosystem customers grew by 44% year-over-year, sustaining strong growth momentum. Last but not least, profitability continued to improve this quarter, with adjusted growth margins increasing quarter-over-quarter to 17.1% and adjusted operating margin reaching 2.0%. We have achieved operating level profitability two quarters in a row, and our self-funding capability has shown sustained and significant year-over-year improvement.

下面我向大家具体介绍2025年第四季度的业务进展 公有云方面 本季度实现收入19亿元 同比增长35% 客户角度 2025年AI能力边界不断拓展 驱动各行各业对AI的全面拥抱 makes our customer base more diverse. Not only does it include the top AI companies and Internet companies, but also a wide range of services to car companies, car dealerships,巨星智能, financial technology, and other new industries. Not only do we grasp the diversified needs of Xiaomi Jinshan Ecotourism, but we also expand and expand our business in the field of ecotourism. From a service perspective, We continue to break through the top-of-the-line group and deliver large-scale self-calculating group services to assist major customers in large-model training and explosive reasoning needs. This quarter, we have delivered a certain top Internet video customer reasoning new group to achieve coverage of its AI business more than 100 million users. We recently signed a financial client of the top Internet home to provide them with a token fee Cloud Holdings Limited This quarter achieved a revenue of 8.6 billion yuan, compared with a sudden increase of 18%. Under the policy drive of AI, the industrial intelligence solution is the main drive of industry development. The professionalism of the investment industry in the model, the practicality in the real business scene, and the high demand for data integration, It also makes cloud services more necessary in the process of promoting industrialization. The AI promotion of industry cloud is stable and resourceful. Not only does it have the potential of the global market, but it is also very important for technology to promote the entire industry. Today, cloud as a technology, with technology, experience, and service capability, the cloud service industry in the 2B field is determined to secure industrial opportunities. In the field of corporate service, We have achieved the key landing point of self-sufficiency business in high-end manufacturing core scenarios. For the top leading enterprise customers in the industry, smart manufacturing, industrial vision, AI research and development, providing stable and efficient algorithmic service support. In the field of digital health, we have officially released the AI application based on the medical smart operation management of the data agent structure. The company's medical big data service has been completed The platform has been upgraded from post-trial statistics to In the field of public service, in this quarter, we are cooperating with operators in the field of computing and computing, to combine the resources and technical advantages of both parties. provide long-term, stable, high-performance business services, and quickly break into the core regions of Shanghai and other central regions. We believe that with the professional ability and experience of the business services in the business industry, the business opportunity of Cloud Holdings is also a huge business opportunity. With the collaboration of Cloud Holdings, the industry is united.

Now, I would like to walk you through the key business highlights for the fourth quarter of 2025. In terms of public cloud services, revenue reached RMB 1.9 billion this quarter, representing a year-over-year increase of 35%. From customer perspective, in 2025, AI continues pushing its boundaries, driving industries to fully embrace it, diversifying our customer base. Beyond leading AI enterprises and internet giants, we now also serve automotive manufacturing, autonomous driving, embodied AI, and FinTech sectors, etc. We've solidified our cooperation within the Xiaomi and Kingsoft ecosystem while capturing new external opportunities. From product and services perspective, we keep pushing the limits of cluster scale. supporting large-scale training and explosive inference demands. Notably in this quarter, we delivered a new inference cluster for top video streaming platforms, serving over 100 million users. We also secured a major FinTech customer using our token-based inference service, who speak highly of our stable model and computing power services. On supply chain front, Despite market uncertainties, our well-established and resilient supply chain, built through years of experience, allowed us to plan ahead strategically and stock keep components dynamically to ensure sustainable business growth. Now, in terms of enterprise cloud, revenue reached RMB $859 million this quarter, a significant quarter-over-quarter increase of 18%. Driven by the AI-plus policy, industrial intelligence solutions have become a key growth driver. The demand for specialized vertical models, real-world application, and strict data compliance makes cloud services more essential than ever in advancing industrial intelligence. The AI business of enterprise cloud is paving the way for steady long-term growth, not only representing a trillion-dollar market opportunity, but also playing a critical role in driving the technological leap across industries. As a B2B cloud service provider with solid technology expertise and enterprise service capabilities, we are well positioned to capture these industrial transformation opportunities. In the area of enterprise services, we achieved key breakthroughs in high-end manufacturing industry. We provided stable and high-performance computing service to the top enterprises to support their process in intelligent manufacturing, industrial vision, and AI R&D. In healthcare space, we launched a data agent-based AI application in healthcare intelligence operation process, marking a paradigm shift from digitalization to intelligence. This analysis through natural dialogue platform enables natural language insights into DRG Cloud Control, moving hospital management from retrospective statistics to proactive intervention. While significantly lowering the barriers to data application, we have further solidified our technical modes and differentiated competitive advantages in high value medical AI scenarios. In public services area, we partnered with telecom operators to provide sustainable and stable high-performance computing structure for the public services sector, successfully entering key markets like Shanghai. We believe that by leveraging Kingsoft Cloud's deep vertical expertise and enterprise service experience, intelligent computing opportunities in the enterprise cloud segment represent a massive industrial frontier, generating synergy with our public cloud business.

In terms of industry technology, we are building a large-scale model training, reasoning, and industry intelligent new generation computing service system. Provide from computing service, model training to mass service full-time ability. Our cloud service from general computing to self-calibration priority, AI native, product upgrade. Help thousands of digitalized and intelligent transformation. We continue to improve the technical ability of customers in the need of training and push products, only to provide stable, efficient and easy-to-use digital services for customers. In this quarter, the model of new and old platforms has been upgraded in the field of hardware services, and the promotion, optimization, and AI search capabilities have been launched. Help companies realize the development and landing of Agile through platformization. Gradually build a new ecosystem with Agile operation as the core support, In the context of the digitalization of the industrial cloud and private investment, our cloud platform can support the management of e-shopping, gq, locket network, container, and smart transfer, and other capabilities. We are in a deep state of national carbonization. Deepness cannot support the digitalization of the industry. Standing on the new starting point of the era, looking forward to the infinite possibility of the future makes us feel excited. The digital cloud will continue to walk the road of high-quality, sustainable development. Trust and embrace AI strategic memory in a timely manner, work hard and work hard, polish and generate core product technology solution capabilities, firmly grasp and upgrade huge business opportunities in and out of the ecosystem, clarify the operation management of calculated assets, and continue to improve profitability to create greater value for customers, shareholders, employees, and society.

In terms of products and technology, we are building a next generation computing services system for LLM training, inference, and industrial intelligence, offering full stack capabilities from computing services to model as a service. Our technology upgrades from basic cloud computing to and AI First AI Native Cloud Architecture contributing for digital and intelligent transformation across sectors. We focused on the technology catering to model training and inference scenarios, aiming to provide highly stable, highly efficient and ready to use intelligent computing services. This quarter, our StarFlow platform keeps upgrading with the launch of MCP, a.k.a. Model Context Protocol, Prompt Optimization, and AI Search Features to help enterprises develop and deploy AI agents through a unified platform, gradually building a new ecosystem centered around agent-based operations. For enterprises with private deployment demands, our Galaxy stack provides heterogeneous GPU management, Roki network, and Intelligent Container Staturing capabilities. We also feature full stack localization with indigenous adaptation to empower intelligent transformation across verticals. Standing at a new starting point, looking ahead, we're truly excited by the limitless possibilities that lie before us. We will remain committed to our high quality and sustainable development strategy by embracing the immense opportunities presented by the AI era, developing along with the industry and refining our core technology. We will continue to capture the market opportunities both within and beyond our ecosystem, optimizing the operation of our assets to enhance profitability and thereby create value for our customers, shareholders, employees, and society. I will not have to call to our CFO Mr. Li Yi to go over our financials, for the fourth quarter and fiscal year 2025. Thank you.

Thank you, Mr. Zhou and Clark. 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 highs, $2,761 million this quarter, representing a year-over-year growth rate of 24%. Within that, revenue from public cloud services was $1,902 million, increased by 35% from $1,410 million in the same quarter last year. Unprecedented explosive demand for AI business drove a 95% year-over-year billing growth, which totaled $926 million. Second, probability has seen substantial improvement. Three by shifts in our revenue structure, our adjusted growth margin continued its upward trend, ranging 50% from 60% in the previous quarter. Adjusted EBITDA margin reached 28%, up 12% 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 participation represented the primary cost component. The sequential decrease was mainly due to a long-recurring subsidiary received last quarter, which established a high baseline. Notably, we have achieved adjusted operating profits for two consecutive quarters, reaching 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 route equivalent achieved 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 was $2,761 million. Of these, revenues from public cloud services were $1,902 million, up 35% from $1,410 million in the same quarter last year. Revenue from enterprise cloud services reached $859 million during this seasonally strong quarter, which was characterized by a high volume of project completion. The total cost of revenues was $2,296 million, up 27% year-over-year, which was mainly due to our investment into infrastructure to support Intelligent Cloud business growth. IPC costs increased by 13% year-over-year, from $724 million to $812 million this quarter. This increase was mainly due to the increasing needs of RACs which serves the expanding AI business. Depreciation and amortization costs increased from $323 million in the same quarter of 2024 to $741 million this quarter. The increase was mainly due to the depreciation of newly acquired and listed servers and network equipment which were mainly allocated to our AI business. Solution development and service costs increased by 50% year-over-year from $557 million in the same quarter of 2024 to $642 million this quarter. The increase was mainly due to the solution personal expansion. Fulfillment costs and other costs were $4,061 million this quarter. Our adjusted gross margin for the quarter was $471 million. increased to 10% year-over-year and 20% quarter-over-quarter. It was mainly due to the expansion of our revenue scale, the enlarged contribution from AI business, and the cost control over IDC racks and servers. Adjusted growth margin increased from 60% last quarter to 70% in this quarter, which was mainly due to the high contribution from enterprise cloud. On the expense side, excluding share-based compensation costs, our total adjusted operating expenses were $459 million, increased by 3% year-over-year and increased 9% quarter-over-quarter. Of which, our adjusted research and development expenses were $181 million, increased by 7% from same quarter last year. Adjusted selling and marketing expenses were $111 million, increased by 3% year-over-year. Adjusted general and administrative expenses were $168 million, decreased by 1% year-over-year. Our adjusted operating profit was $55 million, increased by 124%. for adjusted operating profit of 24 million in the same period last year. The improvement was mainly due to expansion of revenue scale and gross profit, as well as the expense control. The total expense as a percentage of revenue keep decreasing. Adjusted operating profit margin increased from 1% in the same period last year to 2% this quarter. Our non-GAAP EBITDA margin was 785 million, increased by 180% from 360 million in the same quarter last year. Our non-GAAP EBITDA margin achieved 28% compared with 60% in the same quarter last year. It was mainly due to our strong commitment to AI cloud computing development, strategic adjustment of business structure, trained to control over costs and expenses. This quarter, our capital expenditure, including those financed by third parties and right of use assets obtained in exchange for finance lease liabilities were $496 million. For the fall year 2025, our total revenue achieved $959 million. increased by 23% from 7,785 million in 2024, among which revenues from public cloud services were 6,634 million, increased by 33% year-over-year. Revenues from enterprise cloud services were 2,925 million, increased by 5% year-over-year. Adjusted gross profit was 1,542 million, increased by 40% from 1,358 million last year. Adjusted gross margin was 60%, decreased from 70% last year, which was mainly due to the high cost for service and other hardware equipment. Adjusted operating loss was $152 million, narrowed significantly from $431 million. Adjusted operating profit margin was minus 1.6%, narrowed from minus 5.5% last year. Adjusted EBITDA profit was $2,336 million, increased by 2,66% from and the rest of the world. We remain focused on AI-driven strategy, providing customers with high-value Adidas cloud services. That's all for the introduction of our operational and financial results. Thank you all.

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

Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, press star 1 and 1 again. We'll now move on to our first question. Our first question comes from the line of Li Ping Xiao from CICC. Please go ahead. Your line is open.

Good evening, Tao Zou. Thank you for answering my question. First of all, congratulations to the company for achieving a very good self-sufficiency performance. I have two questions here. The first question is about Xiaomi's egg model. Recently, they also launched the MIMO V2 series model and received market reviews. What do you think about the role and positioning of Xiaomi in the Xiaomi AI strategy? And what kind of strategy will be used to surround the service of Xiaomi and Jin Shanxin in the future? Then the second question is about the price increase of this industry. In fact, we have recently seen that there are some other cloud service providers in the industry. There are also some proposed actions. Has the company adjusted the price of AI algorithm service? Or is there a related price increase plan? And then how much of this price increase is this demand to convey? Good evening, Mr. Zhou and Ms. Li. Thanks for taking my questions and congrats for the very good 4Q results. I have two questions here. First, Xiaomi recently launched the MIMO V2 series models, which have received a 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 a demand or driven by the upstream procurement cost to pass through? Thank you.

Li Binghao, my first question, I will answer first. Then Liu Chang, you can talk about it. Let's talk about our strategy. Actually, the first question, I remember it was in 2024, In August of 2020, we held a seminar in the whole Xiaomi JinShan system. At that time, I talked about the AI policy of Xiaomi JinShan. I also clearly stated that the JinShan system will not do the big model by itself, but Xiaomi will definitely do it. As of last year, This includes this year It should be said that at the end of last year Vivo Mimo's VR version and this time the Pro version Continuous release and performance This is actually the specific landing of our entire strategy in 2024 So this is Li Ping's question Let me talk about this background first Talk about the future with VR The release of this Pro and its performance I think this is a big strategy that hasn't changed. As for Cloud Holdings Limited, last year, I talked about it very clearly with everyone. It should have been around this time last year. We talked about it in March. I said that the age of training is gradually getting worse. I think this year, as soon as the open call comes out, I guess no one will question it anymore. In fact, in fact, in the last year, we talked about this strategy at the general meeting in July. Because we know the progress of Xiaomi's model training. We talked about this so-called 1 plus N. For J&J, we are based on this in the future. This 1 refers to Xiaomi's model. N, of course, other, whether it's open source or strategic partner, Right? As a medium-sized cloud company, actually, all of our new and old models have been taken over. All of our new and old models have been taken over. But the key is 1 plus n. The 1 refers to how the future of the unmanned model will evolve. Open source, close source, or 1 plus, 3 plus, etc. Anyway, our 1 refers to Xiaomi's model. This is the whole of our whole, whole, whole, whole, whole, whole, whole, whole, whole, whole, whole, whole, whole, whole, whole, whole, Also, we want this Of course, the internal Xiaomi, on the one hand, serves the internal software environment of Xiaomi Jinshan At the same time, it will also support our service capability and mass capability So, to put it simply, in the next four years We have been developing our strategy blueprint for the next few years. As the development progresses, it will be implemented gradually. The future is still the same. As Jin Shan Yun said, there is no base for 1 plus n. Not only in the training era, we will have good internal and external customers. In the future, in the reasoning era, it will also be based on 1 plus n. 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 team or portfolio of solutions for a whole system where Kingsoft will stay disciplined and not really developing our own large language models which is left for Xiaomi to develop. So, the NEMO model and its widely recognized performance is actually an implementation and manifestation of our overall AI strategy within the Xiaomi and King Software ecosystem. And secondly, back in 2025, so one year later from the internal discussion session, from a KC perspective, we formed a strategy that's called A1 plus N. So the one 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 make our contribution in the inference era that is approaching.

Thank you. I will answer the second question. First of all, from the third quarter of last year, we predicted a large increase in the share price during the quarter of March.

So, we made some savings in advance to provide a certain basis for the natural growth price this year.

So, for the growth of customers, we actually look at it in two ways. One is our existing contracts and existing resources. We will not increase the price of customers in this part. At the same time, within our ability range, if the growth of customer business, we will also maintain the non-growth price. But for the new contracts, for the new customers and the significant increase in the number of customers, we will write a new price with the customer. So there will definitely be a significant increase in price, and in fact, the increase may be relatively large. On the other hand, from the perspective of profitability, on the one hand, we will transfer the increase in price to the customer due to the rise in oil price. On the other hand, because the demand for market supply has become greater, we may increase the price on the basis of the rise in oil price to show our profit increase.

So, the answer comes from our SVP, Mr. Liu. So, a little background again. So, in the Q3 last year, we had anticipated the significant pricing of increase from the supply chain side. And therefore, we had dynamically and strategically stocked up some of the key components. So, we were actually prepared for what's unfolding today. Now, in terms of the price hike that you were asking, so we stick to two principles. Number one, 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, we also, depending on the demand, right, we also try to increase some of the price to reflect and increase our profit.

Thank you. Please stand by. Our next question comes from the line of Wenting Yu from CLSA. Please go ahead. Your line is open.

In the conference, you also said that business will turn from this traditional global mode to this market mode. Will we take similar strategies now? How do you see this change affecting the competitive structure and long-term profitability of the industry? The first question is that what about your cloud service partners? have announced they will shift their cloud business more towards a mass approach from the traditional silver rental and also the subscription model. Will Casey 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 back-end volcano engine. It is adopting a relatively low-price strategy and how do you view the impact on the industry and also on I'll answer first, and then Kaiyan Tian will add to it.

Actually, you mentioned the first one.

I also pay attention to other manufacturers that have released more financial reports than us.

But I don't think this is a new approach. This itself is a trend in the development of eight models. . . . . . . . So, from the training stage to the application stage So, this is the process of mass service of this model machine ability From this point of view, we started the test in September last year and officially launched the new platform in October In fact, it is the same, but we think Because we are a medium-sized business, we can connect this model anyway In fact, this is also the fastest business in our history. So I think this is not a special form of a certain manufacturer. I think everyone will go this way, including the last question I talked about just now. Xiaomi, I think it's gradually growing.

The second is to be honest, I think this, this, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh,

So, Kaiyan Tian So, I don't think this will be a real landing. Of course, They may know more about the details. I would like to add something. I would like to add something.

The adjustment of the official market price may be just a promotional form. They may be facing a C-end school client. But the actual trading price, in the industry we have observed, regardless of which manufacturer, in the final trading price, they are all well-trained. So, I think that the price drop or the low price competition may be a

Okay, so regarding your question on the shifting to model-as-a-service strategy, we have noted some of the other tier companies who released their results earlier than us mentioning this. However, my view is that this is not actually some new concept. It is actually one of the inevitable stages of the development of AI as well as large-language models. from the training that we do to create them to a certain phase that they become applicable and workable in our day-to-day work and life. So, in relation to our own inference related work model to 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 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 the model-as-a-service business to them as well to cater to their inference needs. Now, as to the second question about the price change for Volcano Engine, 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 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, in 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 us 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.

Thank you.

Our next question comes from the line of Timothy Zhao from Goldman Sachs. Please go ahead. Your line is open.

How is EBITDA and OP's outlook? Especially considering that we have a relatively obvious increase in the overall profit rate in 2025. In addition, how should we look at the capital spending of Gafax in 2022? And considering our current reserves, including... So, Kaiyan Tian My first question is on your financial outlook. Just wondering if you can share some color. 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 thoughts and considering the balance sheet and also the payment from certain customers do you think it's possible to further raise your capital plan given the rising AI demand and secondly is the is regarding the third-party revenue in the AI outlook. I was wondering if you can share more detail, Kyler, on what specific portal 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. Thank you.

All right. I will take the CapEx first. For 2026, we expect total CapEx and controlled assets to exceed RMB 10 billion, representing expansion from 2025 level. On funding structure, we expect approximately half our CapEx is targeted to be covered by customer prepayment arrangements, which will significantly reduce safer 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 incumbency. For the funding provision and financing needs, we currently have no equity finance plan. 2026 capital expenditure are security three, four, First, proceeds from our 2025 financing. And the second, customer operating receipts. And the third, the strategic customer prepayment. And the fourth, the commitment created facilities from banks and financial institutions. Incremental resource requirements. 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 e-beta rate will improve much better in 2026 as well.

Okay, let me answer the second question. Regarding the growth rate of non-small-meters, As you can see in the report we just published, in the past quarter, the growth rate of our non-minimum business is about the same as the growth rate of 44%.

In fact, there is a very abundant growth rate of non-minimum business.

Mainly from what we just mentioned today, the growth rate of our Internet customers' self-driving and robot business. From today, or from our perspective, to 2026, We see that the demand for non-小米 is extremely large. Maybe from the total demand scale, it is significantly larger than the demand for millet. Of course, this also has to do with how much of it we can satisfy. So we think that in 2026, the growth of non- millet businesses may be very fast. It depends on how fast it is, how much resources we can get in the end.

So from a product point of view, on the one hand, it is the computing power.

In this computing power, we think that there may be more than half of the computing demand will come from the demand for reasoning. On the other hand, the new products we mentioned today, our token products, have seen extremely rapid growth, especially in less than a month, less than a month since the outbreak of the small lobster in the past. So we predict that new products will have a significant growth this year, and the price-to-value ratio of this product will also be higher than our traditional calculated products. From the customer's point of view, all kinds of model companies, including large companies, and corresponding training, So, if you look at the past results as discussed in the prepared remarks, so the top five 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 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 wrapping of financial results coming from that demand will actually be dependent on how much resources we're able to secure and to deliver to such customers. Now, from the perspective of products and solutions, 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 the result, of course, from the very good application, very good application and increasing penetration for agents and the core application.

Thank you. Due to time constraints, this concludes our tonight's session. Thank you once again for joining us today. If you have any other questions, please feel free to contact us. We look forward to speaking with you again next quarter. Thank you all.

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers please stand by.