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Kingsoft Office’s Net Profit Up by Nearly 30% in 2019
COVID-19 and China
Image credit: Tim van der Kuip/Unsplash

On March 24, Beijing-based software provider Kingsoft Office (688111:SH), a subsidiary of the Hong Kong bourse-listed Kingsoft Corporation (3888:HK), released its financial report (in Chinese) for 2019. The annual operating income reached CNY 1.58 billion (USD 220 million), up by 39.82% from 2018. Meanwhile, the firm's net profit attributable to shareholders hit CNY 400 million (USD 56.67 million), a year-on-year increase of 28.94%.

Kingsoft Office went public in November in 2019 and the closing stock price as of March 24 is CNY 218 with a 1.87% increase. The company's products are mainly WPS Office software, which can be applied on many mainstream operating platforms such as Windows, Linux, MacOS, Android, IOS; the company's services mainly include office value-added services based on company products and related documents and Internet advertising promotion services.

During the reporting period, the company reached the business revenue of CNY 1.58 billion (USD 220 million), an increase of 39.82% over the previous year. The subscription of the office service business was CNY 680 million (USD 95.78 million), an increase of 73.06% and contributes to 43% of total income. The office software licensing business earned CNY 496 million (USD 69.87 million), an increase of 39.41%, and occupies 31.4%. The Internet advertising promotion business was CNY 404 million (USD 56.91 million), an increase of 5.99% over the past year.

As for the user base, as of December 2019, the company's main products had more than 411 million monthly active users (MAU), of which the WPS Office desktop version has more than 154 million monthly active users. WPS Office Mobile has more than 248 million monthly active users; the company's other products (such as Kingsoft PowerWord, etc.) have close to 10 million monthly active users.

During the Coronavirus, office products were hit by this 'black swan' event and the Kingsoft sharing document product, which is similar to Google docs, became the main driver in the first quarter of 2020. It seems like their story in 2020 after their achievements in 2019 is still one of profit. According to the official statistics of Kingsoft Office, on February 4th the number of Kingsoft users exceeded 100 million. As of March 2 this year, Kingsoft's monthly active users exceeded 239 million.

Not only did the online documentation products attract online users, but all products related to remote work or online sharing are also gaining traction. Other strong players similar to Kingsoft docs include Shimo Document, with monthly PV (Pageview) exceeding 360 million, and Tencent docs with monthly active users exceeded 160 million. Meanwhile, online sharing is sweeping more widely from short videos and education to healthcare and food delivery.

On the same day of publishing the financial report, Kingsoft Office hired the founder of Xiaomi, Lei Jun, as the company's honorary chairman, indirectly holding 11.99% of Kingsoft Office's equity. In his "Open Letter to Investors," he said (in Chinese), "This is the first annual performance answer sheet after Kingsoft Office is listed, and it is a performance answer sheet that gives us full confidence."

Editor: Luke Sheehan

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