Earnings Report Analysis: SaaS+AI Dual Engine Drives Kingsoft Software into an Accelerated Realization Phase

The explosion of generative AI has prompted the tech industry to reconsider an ancient yet crucial question: whoever controls the productivity gateway controls the future business order.

Over the past decade, office software, as a part of the productivity gateway, has been largely viewed as a stable but unimaginative business, with growth relying on subscriptions and licenses, and a relatively solidified market structure. However, as AI begins to deeply intervene in knowledge production, office tools are no longer just efficiency aids; they are transforming into intelligent hubs between individuals and organizations.

Recently, Kingsoft disclosed its full-year 2025 performance: operating revenue reached RMB 5.929 billion, a year-on-year increase of 15.78%; net profit attributable to the parent company was RMB 1.843 billion, a year-on-year increase of 12.03%. On the surface, this is a stable report card that meets expectations. But if dissected, it reveals a more strategically significant structural transformation behind it.

The WPS personal business remains solid, with the proportion of AI-related revenue continuously increasing; WPS 365 revenue from the enterprise side grew by nearly 65% year-on-year, becoming the biggest highlight. This means Kingsoft is transitioning from a domestic substitution tool to a productivity platform for the AI era.

But the real question is not whether this company can continue to grow, but whether it can complete the leap from a tool to a platform during the critical window period when AI is reshaping the office gateway.

When Office Software Becomes the AI Gateway, Kingsoft's Growth Logic is Being Rewritten

In the traditional software cycle, the core of office software competition was functionality and compatibility. But in the AI era, the focus of competition has fundamentally changed: whoever can deeply embed into workflows can control users and data.

The 2025 financial report shows that Kingsoft's WPS personal business revenue reached RMB 3.626 billion, a year-on-year increase of 10.42%. Behind this structural change is a deeper trend: personal subscriptions have entered a mature stage, and the real growth driver comes from the enhancement of user value, not simply the expansion of user scale.

And AI has become a key variable. The rapid growth of WPS AI's monthly active users means AI is no longer a single-point tool but a high-frequency feature. Capabilities such as document generation, data analysis, and content organization are embedded into daily workflows, transforming office software from a "passive tool" into an "active collaborator."

This transformation path is highly similar to Microsoft's implementation of Copilot in Microsoft 365, but it has unique characteristics for the Chinese market.

Unlike the dominance of large enterprises in overseas markets, the structure of Chinese enterprises is more fragmented, with small and medium-sized enterprises being extremely sensitive to efficiency and cost. In this environment, AI office is not only a technological competition but also a competition in scenarios and pricing. Kingsoft has formed a differentiated advantage through lightweight AI capabilities and localized data security strategies.

More importantly, office software is becoming one of the most certain application scenarios in the AI era. Compared to the commercial uncertainty of general large models, the office scenario has high frequency, rigid demand, and quantifiable value.

Enterprises are willing to pay for efficiency and also for automation. This business logic makes AI office easier to achieve a closed loop than many ToC applications.

This is also the reason why the capital market is re-evaluating office software. In the AI wave, manufacturers with a user base, data accumulation, and product gateways find it easier to build moats. Kingsoft is not a leader in AI technology, but it possesses a more important asset: real work scenarios.

However, opportunities and risks coexist. The business model of AI office is not yet stable, and balancing high computing costs with subscription prices remains a challenge. At the same time, users' dependence on AI features is still in the formative stage. Once technological progress slows, or users become sensitive to payments, the growth pace may fluctuate.

Therefore, the true significance of this financial report lies not in short-term growth but in proving that AI office has entered the commercialization stage.

The Explosion of WPS 365 Reflects a Structural Inflection Point in China's SaaS Market

If the personal business is the foundation, then the rapid growth of WPS 365 represents the future imagination space. In 2025, Kingsoft's revenue from this business was approximately RMB 720 million, a year-on-year increase of 64.93%. This growth rate not only reflects product competitiveness but also indicates that China's enterprise service market is entering a new cycle.

In the past, China's SaaS market has long faced issues such as insufficient payment habits and limited enterprise digitalization levels. However, with the rise in demand for remote collaboration, data security, and cloudification, enterprises' acceptance of collaborative office software has significantly improved. The addition of AI further strengthens this trend.

In enterprise environments, the value of AI is far higher than in personal use. Automated report generation, process automation, knowledge management, and cross-team collaboration directly impact enterprise costs and decision-making efficiency. This transforms office software from a single-point tool into a core system for organizational operations.

This logic is highly consistent with the development paths of Salesforce and Google in the global market. Once enterprises embed key business processes into a platform, the migration cost is high, and platform stickiness significantly increases.

For Kingsoft, WPS 365 is not only a product upgrade but also a business model upgrade. Transitioning from one-time licenses to continuous subscriptions, and from software sales to service revenue, this transformation means more stable cash flow and higher valuation imagination space.

But the real challenges also follow. First, China's enterprise SaaS is still in the education stage, with customers being highly price-sensitive. How to find a balance between AI costs and customer value is a problem all vendors must face.

Secondly, cloud vendors and large internet companies are accelerating their layout in enterprise services, making competition more intense. Third, AI office will ultimately move towards ecosystem competition; whoever can build a developer and plugin system can become the platform.

From a more macro perspective, the rise of AI office also means that China's software industry is undergoing a paradigm shift. From "replacing foreign products" to "creating new productivity models," competition is no longer limited to features but revolves around efficiency and intelligence.

This also explains why Kingsoft continues to increase R&D investment while maintaining profitability. Short-term profit growth is not the only goal; more importantly, it is about establishing long-term barriers in the AI era.

Conclusion

In the AI wave, the real winners are often not the most technologically advanced companies, but the enterprises that first find high-frequency scenarios and complete business closed loops. Office software precisely meets this condition.

Kingsoft's 2025 performance is neither explosive growth nor steady expansion of traditional software, but a quiet and profound transformation. AI is changing the growth structure of this company and reshaping the competitive logic of the entire office software industry.

In the coming years, competition in AI office will shift from product capabilities to ecosystems and platforms. From this perspective, this seemingly stable financial report might just be the beginning of China's software industry moving towards a new cycle.

Author: Sang Yu

Source: Hong Kong Stock Research Society