Key takeaway

In 2025, the company reported operating revenue of RMB 5.929 billion, representing a year-on-year increase of 15.78%; net profit attributable to shareholders of RMB 1.836 billion, up 11.63% year-on-year; and adjusted net profit attributable to shareholders of RMB 1.803 billion, reflecting a 15.82% year-onyear growth. In 2025, WPS personal revenue reached RMB 3.626 billion, representing a year-on-year increase of 10.42%; WPS 365 revenue totaled RMB 720 million, up 64.93% year-over-year; while WPS software revenue amounted to RMB 1.461 billion, showing a 15.24% year-on-year growth. Considering the company's proactive embrace of AI transformation and the rapid growth in WPS AI's monthly active users (MAU), we believe the company is well-positioned to convert AI product MAUs into paying users, thereby driving performance growth. We forecast the company's operating revenue for 2026-2028 to reach RMB 6.986/8.274/9.718 billion, representing year-on-year growth of 17.83%/18.44%/17.46%, respectively. Net profit attributable to shareholders is projected at RMB 2.171/2.613/3.129 billion, with year-on-year growth of 18.23%/20.35%/19.76%, corresponding to P/E multiples of 49/41/34x. We maintain "Buy" rating.

Event

KINGSOFT OFFICE released its 2025 results. During the reporting period, the company achieved operating revenue of RMB 5.929 billion, representing a year-on-year increase of 15.78%; net profit attributable to shareholders of the parent company reached RMB 1.836 billion, up 11.63% year-on-year; and non-GAAP net profit attributable to shareholders of the parent company amounted to RMB 1.803 billion, reflecting a 15.82% year-on-year growth.

Thesis

Steady operational performance with continuous expansion of the AI R&D team. In 2025, the company reported operating revenue of RMB 5.929 billion, representing a year-on-year increase of 15.78%; net profit attributable to shareholders of RMB 1.836 billion, up 11.63% year-on-year; and adjusted net profit attributable to shareholders of RMB 1.803 billion, reflecting a 15.82% year-on-year growth. In 2025, the company achieved a gross profit margin of 85.95%, representing a year-on-year increase of 0.81 percentage point. The selling/administrative/R&D/financing expense ratios were 19.22%/7.99%/35.34%/0.01%, with year-on-year changes of -0.14, 0.13, 2.23, and 0.32 percentage points, respectively. Among these figures, the company's R&D expenses in 2025 reached RMB 2.095 billion, representing a year-on-year increase of 23.57%. This growth was primarily driven by the company's proactive adoption of AI trends and continuous investment in AI product development, with an R&D expense ratio of approximately 35.34%. By the end of the period, the company had 3,979 R&D personnel, marking a 14.57% year-on-year increase and accounting for about 65.79% of the total workforce, thereby establishing a solid foundation for technological iteration and product innovation.

The consumer (C-end) and government (G-end) businesses remain relatively stable, while WPS 365 continues to show strong growth. In 2025, WPS's personal revenue reached RMB 3.626 billion, marking a year-on-year increase of 10.42%. The MAU (monthly active users) reached 678 million, reflecting a 7.29% yearon- year growth. This included 329 million users for the PC version (up 13.18% YoY) and 349 million for the mobile version (up 2.28% YoY). Among these, domestic personal business revenue reached RMB 3.344 billion, a year-on-year increase of 7.87%, with annual paying individual users totaling 46.15 million, up 10.67% year-overyear; overseas personal business revenue amounted to RMB 282 million, a year-on-year increase of 53.67%, with annual paying individual users reaching 2.85 million, up 63.39% year-over-year. WPS 365 revenue reached RMB 720 million, marking a year-on-year increase of 64.93%. The company introduced the Knowledge Augmented Generation (KAG) framework to address AI hallucinations, accelerating its penetration among Fortune Global 500 companies and major government/enterprise clients (including China Mobile and the General Administration of Customs). WPS software revenue reached RMB 1.461 billion, marking a year-on-year increase of 15.24%. The company maintained its leading market share in both flow and layout documents, while achieving significant results in implementing specialized government solutions such as AI-powered official document writing.

WPS AI's monthly active users surpassed 80 million, with new products centered on end-to-end agent automation. By the end of 2025, WPS AI's domestic monthly active users surpassed 80.13 million, marking a 307% year-on-year increase, with average daily token consumption exceeding 200 billion—a more than 12-fold year-on-year growth. The company launched the office intelligence agent "WPS Lingxi," which include s three major agents for presentations, spreadsheets, and documents, marking the evolution from an auxiliary tool to an intelligent collaborator. The spreadsheet agent incorporates native capabilities to ensure traceable data results; the presentation agent supports natural language generation and fine-tuned modifications; the document agent significantly enhances document processing efficiency. Looking ahead to 2026, the company will focus on WPS AI 4.0, enhancing full-process task automation for Office Agent. By strengthening core capabilities such as agent task planning and tool utilization, we aim to improve autonomous completion of complex office tasks—advancing AI's evolution from an assistive tool to an intelligent collaborator.

Investment recommendation: Given the company's proactive adoption of AI transformation and the rapid growth in WPS AI's monthly active users, we believe the company is well-positioned to convert AI product users into paying subscribers, thereby boosting performance. We project the company's operating revenue for 2026- 2028 to reach RMB 6.986/8.274/9.718 billion, representing year-on-year growth of 17.83%/18.44%/17.46%, respectively. Net profit attributable to shareholders is estimated at RMB 2.171/2.613/3.129 billion, with year-onyear growth of 18.23%/20.35%/19.76%, corresponding to P/E multiples of 49x/41x/34x. We maintain "Buy" rating.

Risks

(1) The company's product pricing may fall short of expectations; given that WPS AI features are similar to Microsoft 365 Copilot, Kingsoft's product pricing could underperform projections. (2) Increased industry competition: AI technology may become more accessible, and competitors may introduce similar products, leading to heightened market competition. (3) AI implementation underperforms expectations: If the effectiveness of AI models fails to meet projections, it could negatively impact business operations. (4) Institutional business progress lags behind expectations: B2B procurement budgets are influenced by both policy and internal business growth, with localized product purchases particularly affected by policy. Due to external factors, the adoption of localized products this year may not meet targets, hindering the company's institutional business development.