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Sunday, 9 November 2014, 23:00 HKT/SGT
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Source: Kingsoft Corporation Limited
Kingsoft Announces 2014 Third Quarter Results
- Global Mobile MAU Hits New Record High
- Strong Growth in Mobile Monetization Capability

HONG KONG, Nov 9, 2014 - (ACN Newswire) - Kingsoft Corporation Limited ("Kingsoft" or the "Company"; SEHK: 03888), a leading Chinese software and Internet service company, has announced its unaudited quarterly results for the three months ended 30 September 2014.

During the period under review, the revenue of Kingsoft increased by 14% quarter-over-quarter and 55% year-over-year to RMB852.2 million. Revenue from the online game, Cheetah Mobile, and office software and others businesses represented 36%, 52% and 12%, respectively, of the total revenue. Gross profit increased by 12% quarter-over-quarter and 51% year-over-year to RMB711.8 million. Profit attributable to owners of the parent in the third quarter increased 95% quarter-over-quarter and 41% year-over-year to RMB230.5 million.

Mr. Jun Lei, Chairman of Kingsoft, commented, "We continue to execute well on our priorities in capitalizing the mobile transformation, reinforcing R&D competence, accelerating the global expansion of mobile applications as well as strengthening the mobile monetization capabilities. We are particularly pleased with the rapid growth of our global mobile MAU, which skyrocketed 180% year-over-year to a new record of 410 million in September 2014. As the mobile internet market is growing explosively, we continue to invest aggressively in the mobile application development and global market penetration, and will make 2014 a milestone in our mobile transformation."

Dr. Hong Jiang Zhang, Chief Executive Officer of Kingsoft, said, "We are pleased to report another quarter with strong top line growth of 14% quarter-over-quarter and 55% year-over-year to a new record of RMB852.2 million. As we continue with our proactive investment strategy to accelerate the global expansion of mobile applications and reinforce our R&D capabilities, the operating profit excluding the impact of share-based compensation costs, declined 25% quarter-over-quarter and 29% year-over-year. I believe that it is right time for us to trade off short term profit for long term greater gains in our capabilities and market share in the future. I am pleased with the outstanding performances and excellent execution of our strategy and priorities, particularly the strong growth momentum of the mobile user base, the progress of mobile monetization and the rapid growth of our cloud services."
FINANCIAL HIGHLIGHTS
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                                    For the 3 months ended
RMB'000 (Unaudited)       30 Sept 2014   30 June 2014   30 Sept 2013 
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Revenue                        852,181        750,506        551,130
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-Online Games                  304,172        307,537        270,984
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-Cheetah Mobile                445,981        353,595        174,692
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-Office Software, Others       102,028         89,374        105,454
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Gross Profit                   711,837        634,221        471,331
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Profit Attributable to
 Owners of the Parent          230,538        118,121        163,276
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Basic EPS (RMB Cents)               20             10             14 
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OPERATIONAL HIGHLIGHTS
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                                    For the 3 months ended
                          30 Sept 2014   30 June 2014   30 Sept 2013
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- ONLINE GAMES
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Daily Average Peak 
     Concurrent Users          617,717        572,374        614,263
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Monthly Ave. Paying Users    2,374,699      2,255,404      1,791,194  
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Monthly Average Revenue per
     Paying User (RMB)              41             43             48
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                          In Sept 2014   In June 2014   In Sept 2013
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- CHEETAH MOBILE
--------------------------------------------------------------------
Mobile Monthly Active 
      Users (Mil)                340.7          284.3          120.3
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Mobile User (Mil)                  65%            67%           N.A.            
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% of Mobile MAU from 
      Overseas Markets           862.2          662.2           N.A.
--------------------------------------------------------------------
MAU of Duba.com Personal 
     Start Page (Mil)             61.6           67.6           39.9
--------------------------------------------------------------------
BUSINESS REVIEW

Online Games Business

For the third quarter of 2014, the revenue from the online game business decreased 1% quarter-over-quarter but increased 12% year-over-year to RMB304.2 million. The year-over-year rise was primarily attributable to the sustained and notable growth of JX Online III with continuous improvement in game experiences and introduction of new expansion packs on quarterly basis.

JX Online III continued to achieve an increase of 10% quarter-over-quarter growth and 48% year-over-year to RMB182.6 million driven by the release of a refined version of the game in July and the in-game celebration for the game's fifth anniversary in August. The largest expansion pack of the year "Cang Xue Long Cheng" for JX Online III will be launched on 24 November, and the revenue and user population of JX Online III are expected to achieve new records.

With Company's focus on the mobile game business strategy, there are thirteen mobile games under development, and two of which will be commercially launched in the fourth quarter.

Cheetah Mobile

In the third quarter of 2014, the revenue from Cheetah Mobile continued to increase 26% quarter-over-quarter and soared 155% year-over-year to RMB446.0 million. The strong increases were primarily due to a solid performance of online marketing services and internet value-added services driven by increased monetization capability of PC-based user traffic as well as significant ramp of global mobile monetization, with global mobile monetization at a faster pace.

Mobile user installation of Cheetah Mobile has reached 862.2 million as of 30 September 2014. Mobile MAU increased 20% quarter-over-quarter and soared 183% year-over-year to 340.7 million in September 2014, approximately 65% of which were from overseas markets, mostly users from the United States, Asia (excluding China) and Europe, compared to approximately 53% in December 2013.

The robust mobile user growth mainly reflected that the mission critical applications continued to gain traffic share and expand rapidly in global markets through efforts in market exploration, market expansion and user experience improvements. The mobile application Clean Master continued to rank No.1 in the Tools category on Google Play. For the third quarter, Cheetah Mobile generated approximately 24% of its revenue from mobile services, compared with approximately 8% a year ago.

Office Software and Others

For the third quarter of 2014, the revenue from the office software and other business rose 14% quarter-over-quarter and decreased 3% year-over-year to RMB102.0 million. The quarter-over-quarter growth mainly reflected the robust increase in revenue contribution from Kingsoft Cloud, the growing revenue from online marketing services driven by monetization of WPS free user traffic, and the steady contribution from the sales of WPS Office.

With the strengthened efforts in global market expansion of WPS mobile business suite, the growth of global mobile MAU of WPS Office increased 127% year-over-year to 59 million in September 2014 compared to 26 million in September 2013. In July, WPS Mail was launched to add another key function to the mobile WPS productivity tools and to improve the email experience of Android users.

The Company also showed material progresses in the development of Kingsoft's cloud computing and cloud storage businesses in the third quarter, after its sale of Kuaipan Personal in September 2014. The Company has set up the game cloud service alliance and gradually started to build a gaming ecosystem. The growth of its enterprise data storage services has been accelerated, driven by the rapid increase in users' data from Xiaomi, WPS and Xunlei. The daily average upload data into Kingsoft's storage services was approximately 230 Tbytes in September 2014, which catalyzed the growth of the company's cloud storage revenue. Leveraging the explosive growth of smart devices, mobile user data and cloud computing, the cloud services of Kingsoft are expected to grow with strong momentum.

"We will continue to execute our mobile and cloud strategy. With the continuous proactive investment in future opportunities, increasing capability of mobile monetization, upcoming major expansion pack for JX Online III and two mobile game releases, as well as the steady growth of WPS Office market share and the fast growing cloud services, we are well on our way to achieve our goal in 2014," concluded Dr. Zhang.


About Kingsoft Corporation Limited

Kingsoft is a leading Chinese software and Internet services company listed on the stock exchange of Hong Kong. It has four subsidiaries including Seasun, Cheetah Mobile, WPS and Kingsoft Cloud. Following the implementation of its "mobile internet transformation" strategy, Kingsoft has completed the comprehensive transformation of its overall business and management models and formed a strategic platform with interactive entertainment, Internet security and office software as the pillars and cloud computing as the new growth driver and source. The Company has approximately 6,000 staff around the world. It has set up R&D centers and offices in Beijing, Zhuhai, Chengdu, Dalian, Guangzhou and Hong Kong and enjoys a large market share overseas in North America, Europe, Japan and Malaysia. In addition to PC desktop products, the Company has launched mobile products such as Clean Master and mobile WPS Office targeting the mobile Internet market. These products rank number one in their respective categories in the global market.

For more information, please visit www.kingsoft.com

Contact:
Kingsoft Corporation Limited
Ms. Francie Lu 
Tel: +86 10 6292 7777 ext.5581
Email: ir@kingsoft.com

Strategic Financial Relations (China) Limited
Ms. Nan Dong
Tel: +852 2527 1628
Email: sprg-kingsoft@sprg.com.hk


Nov 9, 2014 23:00 HKT/SGT
Source: Kingsoft Corporation Limited

Topic: Earnings
Sectors: IT Individual, Gaming
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