EX-99.2 3 tm2221644d1_ex99-2.htm EXHIBIT 99.2 tm2221644-1_6k_DIV_21-exh99x2 - none - 11.8125467s
 
Exhibit 99.2​
KINGSOFT CLOUD HOLDINGS LIMITED
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
​ ​ ​
Page
​
​ ​ ​ ​ F-2 ​ ​
​ ​ ​ ​ F-5 ​ ​
​ ​ ​ ​ F-7 ​ ​
​ ​ ​ ​ F-8 ​ ​
​ ​ ​ ​ F-10 ​ ​
 
F-1
 
KINGSOFT CLOUD HOLDINGS LIMITED
AUDITED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2021 AND UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2022
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),
except for number of shares and per share data)
​ ​ ​
As at
​
​ ​ ​
Notes
​ ​
December 31,
2021
​ ​
March 31,
2022
​ ​
March 31,
2022
​
​ ​ ​ ​ ​ ​ ​ ​ ​
RMB
   
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Cash and cash equivalents
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 4,217,528 ​ ​ ​ ​ ​ 3,219,414 ​ ​ ​ ​ ​ 507,850 ​ ​
Restricted cash
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 239,093 ​ ​ ​ ​ ​ 163,025 ​ ​ ​ ​ ​ 25,717 ​ ​
Accounts receivable, net of allowance for credit losses of RMB32,265 and RMB32,384 (US$5,108) as of December 31, 2021 and March 31, 2022, respectively
​ ​ ​ ​ 5 ​ ​ ​ ​ ​ 3,570,975 ​ ​ ​ ​ ​ 3,525,311 ​ ​ ​ ​ ​ 556,104 ​ ​
Short-term investments
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,491,056 ​ ​ ​ ​ ​ 2,384,549 ​ ​ ​ ​ ​ 376,153 ​ ​
Prepayments and other assets
​ ​ ​ ​ 6 ​ ​ ​ ​ ​ 1,687,021 ​ ​ ​ ​ ​ 1,669,145 ​ ​ ​ ​ ​ 263,303 ​ ​
Amounts due from related parties
​ ​ ​ ​ 18 ​ ​ ​ ​ ​ 207,143 ​ ​ ​ ​ ​ 311,306 ​ ​ ​ ​ ​ 49,107 ​ ​
Total current assets
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12,412,816 ​ ​ ​ ​ ​ 11,272,750 ​ ​ ​ ​ ​ 1,778,234 ​ ​
Non-current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Property and equipment, net
​ ​ ​ ​ 7 ​ ​ ​ ​ ​ 2,364,103 ​ ​ ​ ​ ​ 2,421,162 ​ ​ ​ ​ ​ 381,929 ​ ​
Intangible assets, net
​ ​ ​ ​ 8 ​ ​ ​ ​ ​ 1,169,767 ​ ​ ​ ​ ​ 1,121,818 ​ ​ ​ ​ ​ 176,962 ​ ​
Goodwill
​ ​ ​ ​ 9 ​ ​ ​ ​ ​ 4,625,115 ​ ​ ​ ​ ​ 4,609,847 ​ ​ ​ ​ ​ 727,185 ​ ​
Prepayments and other assets
​ ​ ​ ​ 6 ​ ​ ​ ​ ​ 29,066 ​ ​ ​ ​ ​ 23,817 ​ ​ ​ ​ ​ 3,757 ​ ​
Equity investments
​ ​ ​ ​ 2 ​ ​ ​ ​ ​ 207,166 ​ ​ ​ ​ ​ 211,744 ​ ​ ​ ​ ​ 33,402 ​ ​
Amounts due from related parties
​ ​ ​ ​ 18 ​ ​ ​ ​ ​ 5,758 ​ ​ ​ ​ ​ 5,758 ​ ​ ​ ​ ​ 908 ​ ​
Deferred tax assets, net
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,798 ​ ​ ​ ​ ​ 3,637 ​ ​ ​ ​ ​ 574 ​ ​
Operating lease right-of-use assets
​ ​ ​ ​ 10 ​ ​ ​ ​ ​ 256,451 ​ ​ ​ ​ ​ 265,322 ​ ​ ​ ​ ​ 41,854 ​ ​
Total non-current assets
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 8,665,224 ​ ​ ​ ​ ​ 8,663,105 ​ ​ ​ ​ ​ 1,366,571 ​ ​
Total assets
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 21,078,040 ​ ​ ​ ​ ​ 19,935,855 ​ ​ ​ ​ ​ 3,144,805 ​ ​
LIABILITIES, NON-CONTROLLING INTETERSTS AND SHAREHOLDERS’ EQUITY
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Current liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Accounts payable (including accounts payable of the
consolidated VIEs and their subsidiaries without recourse
to the primary beneficiary of RMB2,733,487 and
RMB2,407,188 (US$379,725) as of December 31, 2021
and March 31, 2022, respectively)
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,938,632 ​ ​ ​ ​ ​ 2,580,718 ​ ​ ​ ​ ​ 407,098 ​ ​
The accompanying notes are an integral part of the unaudited interim condensed
consolidated financial statements.
F-2
 
KINGSOFT CLOUD HOLDINGS LIMITED
AUDITED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2021 AND UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2022 (continued)
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),
except for number of shares and per share data)
​ ​ ​
As at
​
​ ​ ​
Notes
​ ​
December 31,
2021
​ ​
March 31,
2022
​ ​
March 31,
2022
​
​ ​ ​ ​ ​ ​ ​ ​ ​
RMB
   
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
Accrued expenses and other liabilities (including accrued expenses and other liabilities of the consolidated VIEs and their subsidiaries without recourse to the primary beneficiary of RMB1,208,868 and RMB868,376 (US$136,983) as of December 31, 2021 and March 31, 2022, respectively)
​ ​ ​ ​ 11 ​ ​ ​ ​ ​ 2,223,840 ​ ​ ​ ​ ​ 1,843,193 ​ ​ ​ ​ ​ 290,757 ​ ​
Short-term bank loans (including short-term bank loans of
the consolidated VIEs and their subsidiaries without
recourse to the primary beneficiary of RMB1,348,166 and
RMB1,485,000 (US$234,253) as of December 31, 2021
and March 31, 2022, respectively)
​ ​ ​ ​ 12 ​ ​ ​ ​ ​ 1,348,166 ​ ​ ​ ​ ​ 1,491,144 ​ ​ ​ ​ ​ 235,222 ​ ​
Income tax payable (including income tax payable of the
consolidated VIEs and their subsidiaries without recourse
to the primary beneficiary of RMB1,026 and RMB nil
(US$ nil) as of December 31, 2021 and March 31, 2022,
respectively)
​ ​ ​ ​ 13 ​ ​ ​ ​ ​ 60,217 ​ ​ ​ ​ ​ 41,482 ​ ​ ​ ​ ​ 6,544 ​ ​
Amounts due to related parties (including amounts due to related parties of the consolidated VIEs and their subsidiaries without recourse to the primary beneficiary of RMB797,731 and RMB789,566 (US$124,551) as of December 31, 2021 and March 31, 2022, respectively)
​ ​ ​ ​ 18 ​ ​ ​ ​ ​ 836,435 ​ ​ ​ ​ ​ 824,737 ​ ​ ​ ​ ​ 130,099 ​ ​
Current operating lease liabilities (including current
operating lease liabilities of the consolidated VIEs and
their subsidiaries without recourse to the primary
beneficiary of RMB70,672 and RMB70,172 (US$11,069)
as of December 31, 2021 and March 31, 2022,
respectively)
​ ​ ​ ​ 10 ​ ​ ​ ​ ​ 108,590 ​ ​ ​ ​ ​ 111,759 ​ ​ ​ ​ ​ 17,630 ​ ​
Total current liabilities
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,515,880 ​ ​ ​ ​ ​ 6,893,033 ​ ​ ​ ​ ​ 1,087,350 ​ ​
Non-current liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Amounts due to related parties (including amounts due to related parties of the consolidated VIEs and their subsidiaries without recourse to the primary beneficiary of RMB472,882 and RMB414,152 (US$65,331) as of December 31, 2021 and March 31, 2022, respectively)
​ ​ ​ ​ 18 ​ ​ ​ ​ ​ 472,882 ​ ​ ​ ​ ​ 414,152 ​ ​ ​ ​ ​ 65,331 ​ ​
The accompanying notes are an integral part of the unaudited interim condensed
consolidated financial statements.
F-3
 
KINGSOFT CLOUD HOLDINGS LIMITED
AUDITED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2021 AND UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2022 (continued)
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),
except for number of shares and per share data)
​ ​ ​
As at
​
​ ​ ​
Notes
​ ​
December 31,
2021
​ ​
March 31,
2022
​ ​
March 31,
2022
​
​ ​ ​ ​ ​ ​ ​ ​ ​
RMB
   
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
Deferred tax liabilities (including deferred tax liabilities of
the consolidated VIEs and their subsidiaries without
recourse to the primary beneficiary of RMB nil and RMB
nil (US$ nil) as of December 31, 2021 and March 31,
2022, respectively)
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 205,889 ​ ​ ​ ​ ​ 198,946 ​ ​ ​ ​ ​ 31,383 ​ ​
Other liabilities (including other liabilities of the
consolidated VIEs and their subsidiaries without recourse
to the primary beneficiary of RMB6,975 and RMB5,985
(US$944) as of December 31, 2021 and March 31, 2022,
respectively)
​ ​ ​ ​ 11 ​ ​ ​ ​ ​ 1,232,677 ​ ​ ​ ​ ​ 1,239,669 ​ ​ ​ ​ ​ 195,553 ​ ​
Non-current operating lease liabilities (including non-
current operating lease liabilities of the consolidated VIEs
and their subsidiaries without recourse to the primary
beneficiary of RMB121,057 and RMB123,595
(US$19,497) as of December 31, 2021 and March 31,
2022, respectively)
​ ​ ​ ​ 10 ​ ​ ​ ​ ​ 158,289 ​ ​ ​ ​ ​ 173,664 ​ ​ ​ ​ ​ 27,395 ​ ​
Total non-current liabilities
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,069,737 ​ ​ ​ ​ ​ 2,026,431 ​ ​ ​ ​ ​ 319,662 ​ ​
Total liabilities
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 9,585,617 ​ ​ ​ ​ ​ 8,919,464 ​ ​ ​ ​ ​ 1,407,012 ​ ​
Shareholders’ equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Ordinary shares (par value of US$0.001 per share; 40,000,000,000 shares authorized as of December 31, 2021 and March 31, 2022; 3,805,284,810 and 3,805,284,801 shares issued, 3,646,381,840 and 3,653,179,567 shares outstanding as of December 31, 2021 and March 31, 2022, respectively)
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 24,782 ​ ​ ​ ​ ​ 24,824 ​ ​ ​ ​ ​ 3,916 ​ ​
Additional paid-in capital
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 18,245,801 ​ ​ ​ ​ ​ 18,341,302 ​ ​ ​ ​ ​ 2,893,269 ​ ​
Accumulated deficit
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (7,458,752) ​ ​ ​ ​ ​ (8,012,001) ​ ​ ​ ​ ​ (1,263,862) ​ ​
Accumulated other comprehensive loss
​ ​ ​ ​ 20 ​ ​ ​ ​ ​ (207,882) ​ ​ ​ ​ ​ (219,621) ​ ​ ​ ​ ​ (34,644) ​ ​
Total Kingsoft Cloud Holdings Limited shareholders’
equity
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10,603,949 ​ ​ ​ ​ ​ 10,134,504 ​ ​ ​ ​ ​ 1,598,679 ​ ​
Non-controlling interests
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 888,474 ​ ​ ​ ​ ​ 881,887 ​ ​ ​ ​ ​ 139,114 ​ ​
Total equity
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 11,492,423 ​ ​ ​ ​ ​ 11,016,391 ​ ​ ​ ​ ​ 1,737,793 ​ ​
Total liabilities, non-controlling interests and shareholders’
equity
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 21,078,040 ​ ​ ​ ​ ​ 19,935,855 ​ ​ ​ ​ ​ 3,144,805 ​ ​
​
The accompanying notes are an integral part of the unaudited interim condensed
consolidated financial statements.
F-4
 
KINGSOFT CLOUD HOLDINGS LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2022
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),
except for number of shares and per share data)
​ ​ ​
For the three months ended March 31
​
​ ​ ​
Notes
​ ​
2021
​ ​
2022
​ ​
2022
​
​ ​ ​ ​ ​ ​ ​ ​ ​
RMB
(unaudited)
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
Revenues:
​ ​ ​ ​ 4,18 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Public cloud services (including related party amounts of RMB225,903 and RMB265,682 (US$41,910) for the three months ended March 31, 2021 and 2022, respectively)
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,391,833 ​ ​ ​ ​ ​ 1,380,807 ​ ​ ​ ​ ​ 217,817 ​ ​
Enterprise cloud services (including related party amounts of RMB nil and RMB17,313 (US$2,731) for the three months ended March 31, 2021 and 2022, respectively)
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 420,032 ​ ​ ​ ​ ​ 792,509 ​ ​ ​ ​ ​ 125,015 ​ ​
Others
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,667 ​ ​ ​ ​ ​ 493 ​ ​ ​ ​ ​ 78 ​ ​
Total revenues
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,813,532 ​ ​ ​ ​ ​ 2,173,809 ​ ​ ​ ​ ​ 342,910 ​ ​
Cost of revenues (including related party amounts of RMB6 and RMB nil (US$ nil) for the three months ended March 31, 2021 and 2022, respectively)
​ ​ ​ ​ 18 ​ ​ ​ ​ ​ (1,697,029) ​ ​ ​ ​ ​ (2,093,851) ​ ​ ​ ​ ​ (330,297) ​ ​
Gross profit
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 116,503 ​ ​ ​ ​ ​ 79,958 ​ ​ ​ ​ ​ 12,613 ​ ​
Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Selling and marketing expenses
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (112,826) ​ ​ ​ ​ ​ (144,405) ​ ​ ​ ​ ​ (22,779) ​ ​
General and administrative expenses
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (91,177) ​ ​ ​ ​ ​ (221,763) ​ ​ ​ ​ ​ (34,982) ​ ​
Research and development expenses
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (264,636) ​ ​ ​ ​ ​ (246,633) ​ ​ ​ ​ ​ (38,905) ​ ​
Total operating expenses
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (468,639) ​ ​ ​ ​ ​ (612,801) ​ ​ ​ ​ ​ (96,666) ​ ​
Operating loss
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (352,136) ​ ​ ​ ​ ​ (532,843) ​ ​ ​ ​ ​ (84,053) ​ ​
Interest income
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 17,746 ​ ​ ​ ​ ​ 21,157 ​ ​ ​ ​ ​ 3,337 ​ ​
Interest expense
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (3,866) ​ ​ ​ ​ ​ (34,066) ​ ​ ​ ​ ​ (5,374) ​ ​
Foreign exchange loss
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (48,375) ​ ​ ​ ​ ​ (18,741) ​ ​ ​ ​ ​ (2,956) ​ ​
Other gain (loss), net
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5,782 ​ ​ ​ ​ ​ (12,035) ​ ​ ​ ​ ​ (1,898) ​ ​
Other income, net
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,926 ​ ​ ​ ​ ​ 20,038 ​ ​ ​ ​ ​ 3,161 ​ ​
Loss before income taxes
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (378,923) ​ ​ ​ ​ ​ (556,490) ​ ​ ​ ​ ​ (87,783) ​ ​
Income tax (expense) benefit
​ ​ ​ ​ 13 ​ ​ ​ ​ ​ (3,286) ​ ​ ​ ​ ​ 1,670 ​ ​ ​ ​ ​ 263 ​ ​
Net loss
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (382,209) ​ ​ ​ ​ ​ (554,820) ​ ​ ​ ​ ​ (87,520) ​ ​
Less: net income (loss) attributable to non-controlling interests
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 255 ​ ​ ​ ​ ​ (1,571) ​ ​ ​ ​ ​ (248) ​ ​
Net loss attributable to Kingsoft Cloud Holdings
Limited
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (382,464) ​ ​ ​ ​ ​ (553,249) ​ ​ ​ ​ ​ (87,272) ​ ​
The accompanying notes are an integral part of the unaudited interim condensed
consolidated financial statements.
F-5
 
KINGSOFT CLOUD HOLDINGS LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2022 (continued)
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),
except for number of shares and per share data)
​ ​ ​
For the three months ended March 31
​
​ ​ ​
Notes
​ ​
2021
​ ​
2022
​ ​
2022
​
​ ​ ​ ​ ​ ​ ​ ​ ​
RMB
(unaudited)
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
Net loss per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Basic and diluted
​ ​ ​ ​ 16 ​ ​ ​ ​ ​ (0.11) ​ ​ ​ ​ ​ (0.15) ​ ​ ​ ​ ​ (0.02) ​ ​
Shares used in the net loss per share computation:
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Basic and diluted
​ ​ ​ ​ 16 ​ ​ ​ ​ ​ 3,343,336,997 ​ ​ ​ ​ ​ 3,648,282,282 ​ ​ ​ ​ ​ 3,648,282,282 ​ ​
Other comprehensive income (loss), net of tax of nil:
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Foreign currency translation adjustments
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 70,773 ​ ​ ​ ​ ​ (9,764) ​ ​ ​ ​ ​ (1,540) ​ ​
Comprehensive loss
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (311,436) ​ ​ ​ ​ ​ (564,584) ​ ​ ​ ​ ​ (89,060) ​ ​
Less: Comprehensive income attributable to non-controlling interests
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 255 ​ ​ ​ ​ ​ 408 ​ ​ ​ ​ ​ 64 ​ ​
Comprehensive loss attributable to Kingsoft Cloud Holdings Limited shareholders
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (311,691) ​ ​ ​ ​ ​ (564,992) ​ ​ ​ ​ ​ (89,124) ​ ​
​
The accompanying notes are an integral part of the unaudited interim condensed
consolidated financial statements.
F-6
 
KINGSOFT CLOUD HOLDINGS LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2022
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares)
​ ​ ​
Ordinary shares
​ ​
Additional
paid-in
capital
​ ​
Accumulated
other
comprehensive
(loss) income
​ ​
Accumulated
deficit
​ ​
Total Kingsoft
Cloud Holdings
Limited
shareholders’
equity
​ ​
Non-
controlling
interests
​ ​
Total
shareholders’
equity
​
​ ​ ​
Number of
shares*
​ ​
Amount
​
​ ​ ​ ​ ​ ​ ​ ​ ​
RMB
​ ​
RMB
​ ​
RMB
​ ​
RMB
​ ​
RMB
​ ​
RMB
​ ​
RMB
​
Balance as of December 31, 2020
​ ​ ​ ​ 3,339,618,633 ​ ​ ​ ​ ​ 22,801 ​ ​ ​ ​ ​ 14,149,984 ​ ​ ​ ​ ​ (68,440) ​ ​ ​ ​ ​ (5,864,356) ​ ​ ​ ​ ​ 8,239,989 ​ ​ ​ ​ ​ 61 ​ ​ ​ ​ ​ 8,240,050 ​ ​
Adoption of ASC 326
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (5,684) ​ ​ ​ ​ ​ (5,684) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (5,684) ​ ​
Net loss
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (382,464) ​ ​ ​ ​ ​ (382,464) ​ ​ ​ ​ ​ 255 ​ ​ ​ ​ ​ (382,209) ​ ​
Other comprehensive income
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 70,773 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 70,773 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 70,773 ​ ​
Share-based compensation
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 123,113 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 123,113 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 123,113 ​ ​
Exercise and vesting of share-based awards
​ ​ ​ ​ 10,245,675 ​ ​ ​ ​ ​ 67 ​ ​ ​ ​ ​ 4,104 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 4,171 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 4,171 ​ ​
Balance as of March 31, 2021 (unaudited)
​ ​ ​ ​ 3,349,864,308 ​ ​ ​ ​ ​ 22,868 ​ ​ ​ ​ ​ 14,277,201 ​ ​ ​ ​ ​ 2,333 ​ ​ ​ ​ ​ (6,252,504) ​ ​ ​ ​ ​ 8,049,898 ​ ​ ​ ​ ​ 316 ​ ​ ​ ​ ​ 8,050,214 ​ ​
Balance as of December 31,
2021
​ ​ ​ ​ 3,646,381,840 ​ ​ ​ ​ ​ 24,782 ​ ​ ​ ​ ​ 18,245,801 ​ ​ ​ ​ ​ (207,882) ​ ​ ​ ​ ​ (7,458,752) ​ ​ ​ ​ ​ 10,603,949 ​ ​ ​ ​ ​ 888,474 ​ ​ ​ ​ ​ 11,492,423 ​ ​
Net loss
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (553,249) ​ ​ ​ ​ ​ (553,249) ​ ​ ​ ​ ​ (1,571) ​ ​ ​ ​ ​ (554,820) ​ ​
Other comprehensive (loss) income
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (11,743) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (11,743) ​ ​ ​ ​ ​ 1,979 ​ ​ ​ ​ ​ (9,764) ​ ​
Capital contribution from non-controlling interests
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 2,143 ​ ​ ​ ​ ​ 2,143 ​ ​
Disposal of a subsidiary
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 4 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 4 ​ ​ ​ ​ ​ (9,138) ​ ​ ​ ​ ​ (9,134) ​ ​
Share-based compensation
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 93,182 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 93,182 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 93,182 ​ ​
Exercise and vesting of share-based awards
​ ​ ​ ​ 6,797,727 ​ ​ ​ ​ ​ 42 ​ ​ ​ ​ ​ 2,319 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 2,361 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 2,361 ​ ​
Balance as of March 31, 2022 (unaudited)
​ ​ ​ ​ 3,653,179,567 ​ ​ ​ ​ ​ 24,824 ​ ​ ​ ​ ​ 18,341,302 ​ ​ ​ ​ ​ (219,621) ​ ​ ​ ​ ​ (8,012,001) ​ ​ ​ ​ ​ 10,134,504 ​ ​ ​ ​ ​ 881,887 ​ ​ ​ ​ ​ 11,016,391 ​ ​
Balance as of March 31, 2022, in
US$ (unaudited)
​ ​ ​ ​ 3,653,179,567 ​ ​ ​ ​ ​ 3,916 ​ ​ ​ ​ ​ 2,893,269 ​ ​ ​ ​ ​ (34,644) ​ ​ ​ ​ ​ (1,263,862) ​ ​ ​ ​ ​ 1,598,679 ​ ​ ​ ​ ​ 139,114 ​ ​ ​ ​ ​ 1,737,793 ​ ​
​
*
As of March 31, 2021 and 2022, 196,260,647 and 152,105,234 ordinary shares, respectively, were issued in relation to the share awards. These shares are legally issued but not outstanding.
​
The accompanying notes are an integral part of the unaudited interim
condensed consolidated financial statements.
F-7
 
KINGSOFT CLOUD HOLDINGS LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2022
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)
​ ​ ​
For the three months ended March 31
​
​ ​ ​
2021
​ ​
2022
​ ​
2022
​
​ ​ ​
RMB
(unaudited)
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Net loss
​ ​ ​ ​ (382,209) ​ ​ ​ ​ ​ (554,820) ​ ​ ​ ​ ​ (87,520) ​ ​
Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Depreciation and amortization
​ ​ ​ ​ 180,466 ​ ​ ​ ​ ​ 287,481 ​ ​ ​ ​ ​ 45,349 ​ ​
Share-based compensation
​ ​ ​ ​ 123,113 ​ ​ ​ ​ ​ 93,182 ​ ​ ​ ​ ​ 14,699 ​ ​
Provision for credit losses
​ ​ ​ ​ 13,096 ​ ​ ​ ​ ​ 66,431 ​ ​ ​ ​ ​ 10,479 ​ ​
Changes in fair value of financial instruments
​ ​ ​ ​ (5,782) ​ ​ ​ ​ ​ 123 ​ ​ ​ ​ ​ 19 ​ ​
Impairment of equity investments
​ ​ ​ ​ — ​ ​ ​ ​ ​ 5,000 ​ ​ ​ ​ ​ 789 ​ ​
Changes in fair value of purchase consideration of a business acquisition
​ ​ ​ ​ — ​ ​ ​ ​ ​ 6,912 ​ ​ ​ ​ ​ 1,090 ​ ​
Impairment of contract costs
​ ​ ​ ​ — ​ ​ ​ ​ ​ 3,431 ​ ​ ​ ​ ​ 541 ​ ​
Foreign exchange loss
​ ​ ​ ​ 48,375 ​ ​ ​ ​ ​ 18,741 ​ ​ ​ ​ ​ 2,956 ​ ​
Deferred income tax
​ ​ ​ ​ (29) ​ ​ ​ ​ ​ (2,782) ​ ​ ​ ​ ​ (439) ​ ​
Non-cash operating lease expenses
​ ​ ​ ​ 14,564 ​ ​ ​ ​ ​ 18,129 ​ ​ ​ ​ ​ 2,860 ​ ​
Gain on disposal of property and equipment
​ ​ ​ ​ (1) ​ ​ ​ ​ ​ (2,986) ​ ​ ​ ​ ​ (471) ​ ​
Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Accounts receivable
​ ​ ​ ​ (315,107) ​ ​ ​ ​ ​ (24,299) ​ ​ ​ ​ ​ (3,832) ​ ​
Prepayment and other assets
​ ​ ​ ​ (87,632) ​ ​ ​ ​ ​ 70,927 ​ ​ ​ ​ ​ 11,188 ​ ​
Amounts due from related parties
​ ​ ​ ​ 15,629 ​ ​ ​ ​ ​ (104,162) ​ ​ ​ ​ ​ (16,431) ​ ​
Accounts payable
​ ​ ​ ​ 117,955 ​ ​ ​ ​ ​ (339,292) ​ ​ ​ ​ ​ (53,522) ​ ​
Accrued expenses and other liabilities
​ ​ ​ ​ (224,425) ​ ​ ​ ​ ​ (138,184) ​ ​ ​ ​ ​ (21,798) ​ ​
Operating lease liabilities
​ ​ ​ ​ (1,767) ​ ​ ​ ​ ​ (8,455) ​ ​ ​ ​ ​ (1,334) ​ ​
Amounts due to related parties
​ ​ ​ ​ 3,347 ​ ​ ​ ​ ​ (2,650) ​ ​ ​ ​ ​ (418) ​ ​
Income tax payable
​ ​ ​ ​ 3,256 ​ ​ ​ ​ ​ (18,735) ​ ​ ​ ​ ​ (2,955) ​ ​
Net cash used in operating activities
​ ​ ​ ​ (497,151) ​ ​ ​ ​ ​ (626,008) ​ ​ ​ ​ ​ (98,750) ​ ​
CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Purchases of property and equipment
​ ​ ​ ​ (212,172) ​ ​ ​ ​ ​ (620,953) ​ ​ ​ ​ ​ (97,953) ​ ​
Disposals of property and equipment
​ ​ ​ ​ — ​ ​ ​ ​ ​ 3,720 ​ ​ ​ ​ ​ 587 ​ ​
Purchases of intangible assets
​ ​ ​ ​ (1,249) ​ ​ ​ ​ ​ (1,413) ​ ​ ​ ​ ​ (223) ​ ​
Purchases of short-term investments
​ ​ ​ ​ (496,476) ​ ​ ​ ​ ​ (861,033) ​ ​ ​ ​ ​ (135,824) ​ ​
Proceeds from maturities of short-term investments
​ ​ ​ ​ 543,952 ​ ​ ​ ​ ​ 957,525 ​ ​ ​ ​ ​ 151,046 ​ ​
Acquisition of business, net of cash acquired
​ ​ ​ ​ (72,835) ​ ​ ​ ​ ​ (35) ​ ​ ​ ​ ​ (6) ​ ​
Disposal of a subsidiary
​ ​ ​ ​ — ​ ​ ​ ​ ​ (2,577) ​ ​ ​ ​ ​ (407) ​ ​
Asset-related government grants received
​ ​ ​ ​ 600 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Net cash used in investing activities
​ ​ ​ ​ (238,180) ​ ​ ​ ​ ​ (524,766) ​ ​ ​ ​ ​ (82,780) ​ ​
The accompanying notes are an integral part of the unaudited interim
condensed consolidated financial statements.
F-8
 
KINGSOFT CLOUD HOLDINGS LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2022 (continued)
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)
​ ​ ​
Notes
​ ​
For the three months ended March 31
​
​ ​ ​ ​ ​ ​ ​ ​ ​
2021
​ ​
2022
​ ​
2022
​
​ ​ ​ ​ ​ ​ ​ ​ ​
RMB
(unaudited)
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Repayment of short-term bank loans
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (30,000) ​ ​ ​ ​ ​ (4,732) ​ ​
Proceeds from short-term bank loans
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 96,000 ​ ​ ​ ​ ​ 172,977 ​ ​ ​ ​ ​ 27,286 ​ ​
Payments of offering cost
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1,311) ​ ​ ​ ​ ​ (297) ​ ​ ​ ​ ​ (47) ​ ​
Capital contribution from non-controlling interests
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 2,143 ​ ​ ​ ​ ​ 338 ​ ​
Repayment of loans due to related parties
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (54,788) ​ ​ ​ ​ ​ (8,643) ​ ​
Proceeds from exercise of options
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 4,165 ​ ​ ​ ​ ​ 7,574 ​ ​ ​ ​ ​ 1,195 ​ ​
Net cash generated from financing activities
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 98,854 ​ ​ ​ ​ ​ 97,609 ​ ​ ​ ​ ​ 15,397 ​ ​
Effect of exchange rate changes on cash and cash equivalents, and restricted cash
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5,251 ​ ​ ​ ​ ​ (21,017) ​ ​ ​ ​ ​ (3,315) ​ ​
Net decrease in cash and cash equivalents, and restricted
cash
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (636,477) ​ ​ ​ ​ ​ (1,053,165) ​ ​ ​ ​ ​ (166,133) ​ ​
Cash and cash equivalents, and restricted cash at beginning of
period
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,424,674 ​ ​ ​ ​ ​ 4,456,621 ​ ​ ​ ​ ​ 703,015 ​ ​
Cash and cash equivalents, and restricted cash at end of
period
​ ​ ​ ​ ​ ​ ​ ​ ​
​
2,793,448
 ​ ​ ​ ​
​
3,382,439
 ​ ​ ​ ​
​
533,567
 ​ ​
Supplemental disclosures of cash flow information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Restricted cash
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 163,025 ​ ​ ​ ​ ​ 25,717 ​ ​
Income taxes paid
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 59 ​ ​ ​ ​ ​ 19,845 ​ ​ ​ ​ ​ 3,130 ​ ​
Interest expense paid
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,664 ​ ​ ​ ​ ​ 45,654 ​ ​ ​ ​ ​ 7,202 ​ ​
Cash payments for operating leases
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 578,086 ​ ​ ​ ​ ​ 1,409 ​ ​ ​ ​ ​ 222 ​ ​
Non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Purchases of property and equipment included in accrued expenses and other liabilities
​ ​ ​ ​ 11 ​ ​ ​ ​ ​ 198,180 ​ ​ ​ ​ ​ 524,581 ​ ​ ​ ​ ​ 82,751 ​ ​
Right-of-use assets obtained in exchange for operating lease liabilities
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 23,980 ​ ​ ​ ​ ​ 3,783 ​ ​
Offering costs included in accrued expenses and other liabilities
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 3,016 ​ ​ ​ ​ ​ 475 ​ ​
The accompanying notes are an integral part of the unaudited interim
condensed consolidated financial statements.
F-9
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
1. ORGANIZATION AND BASIS OF PRESENTATION
Kingsoft Cloud Holdings Limited (the “Company”) is a limited liability company incorporated in the Cayman Islands on January 3, 2012. The Company, its subsidiaries, the variable interest entities and subsidiaries of the variable interest entities are hereinafter collectively referred to as the “Group”. The Group is principally engaged in the provision of cloud services. The Company does not conduct any substantive operations on its own but instead conducts its primary business operations through its subsidiaries, variable interest entities, and subsidiaries of the variable interest entities, which are located in the People’s Republic of China (the “PRC”), Hong Kong (“HK”) and the United States (the “U.S.”).
The Company’s principal subsidiaries, variable interest entities, and subsidiaries of its variable interest entities, are as follows:
​
Name
​ ​
Place of
establishment
​ ​
Date of
establishment/​
acquisition
 ​ ​
Percentage of
equity interest
attributable
to the
Company
​ ​
Principal activities
​
​ Subsidiaries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​
Kingsoft Cloud Corporation Limited
​ ​
HK
​ ​
February 1, 2012
​ ​
100%
​ ​
Cloud services
​
​
Beijing Kingsoft Cloud Technology Co., Ltd.
​ ​
PRC
​ ​
April 9, 2012
​ ​
100%
​ ​
Research and development
​
​
Beijing Yunxiang Zhisheng Technology Co., Ltd.
​ ​
PRC
​ ​
December 15, 2015
​ ​
100%
​ ​
Research and development
​
​
Camelot Technology Co., Ltd. (“Beijing Camelot”)
​ ​
PRC
​ ​
September 3, 2021
​ ​
82.15%
​ ​
Enterprise digital solutions and related services
​
​ Variable interest entities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​
Zhuhai Kingsoft Cloud Technology Co., Ltd.
​ ​
PRC
​ ​
November 9, 2012
​ ​
Nil
​ ​
Investment holding
​
​
Kingsoft Cloud (Beijing) Information Technology Co., Ltd.
​ ​
PRC
​ ​
April 13, 2018
​ ​
Nil
​ ​
Investment holding
​
​ Variable interest entities’ subsidiaries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​
Kingsoft Cloud (Tianjin) Technology Development Co., Ltd.
​ ​
PRC
​ ​
May 30, 2019
​ ​
Nil
​ ​
Cloud services
​
​
Wuhan Kingsoft Cloud Information Technology Co., Ltd.
​ ​
PRC
​ ​
December 26, 2017
​ ​
Nil
​ ​
Cloud services
​
​
Beijing Kingsoft Cloud Network Technology Co., Ltd.
​ ​
PRC
​ ​
November 9, 2012
​ ​
Nil
​ ​
Cloud services
​
​
Beijing Jinxun Ruibo Network Technology Co., Ltd.
​ ​
PRC
​ ​
December 17, 2015
​ ​
Nil
​ ​
Cloud services
​
​
Nanjing Qianyi Shixun Information Technology Co., Ltd.
​ ​
PRC
​ ​
March 31, 2016
​ ​
Nil
​ ​
Cloud services
​
 
F-10
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
1. ORGANIZATION AND BASIS OF PRESENTATION (continued)
These unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information using accounting policies that are consistent with those used in the preparation of the Company’s audited consolidated financial statements for the year ended December 31, 2021.
In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, operating results and cash flows of the Company for each of the periods presented. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for any other interim period or for the full year of 2022. The consolidated balance sheet as of December 31, 2021 was derived from the audited consolidated financial statements at that date but does not include all of the disclosures required by U.S. GAAP for annual financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2021.
To comply with PRC laws and regulations which prohibit foreign control of companies that engage in value-added telecommunication services, the Group primarily conducts its business in the PRC through its variable interest entities, Zhuhai Kingsoft Cloud Technology Co., Ltd. and Kingsoft Cloud (Beijing) Information Technology Co., Ltd., and subsidiaries of its variable interest entities (collectively, the “VIEs”). The equity interests of the VIEs are legally held by PRC shareholders (the “Nominee Shareholders”). Despite the lack of technical majority ownership, the Company through Beijing Kingsoft Cloud Technology Co., Ltd. and Beijing Yunxiang Zhisheng Technology Co., Ltd. (collectively, the “WFOE”) has effective control of the VIEs through a series of contractual arrangements (the “Contractual Agreements”) and a parent-subsidiary relationship exists between the Company and the VIEs. Through the Contractual Agreements, the Nominee Shareholders effectively assigned all of their voting rights underlying their equity interests in the VIEs to the Company and therefore, the Company has the power to direct the activities of the VIEs that most significantly impact its economic performance. The Company also has the ability and obligation to absorb substantially all of the profits and all the expected losses of the VIEs that potentially could be significant to the VIEs. Therefore, the Company is the primary beneficiary of the VIEs. Based on the above, the Company consolidates the VIEs in accordance with SEC Regulation SX-3A-02 and Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”).
 
F-11
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
1. ORGANIZATION AND BASIS OF PRESENTATION (continued)
The following table sets forth the assets, liabilities, results of operations and cash flows of the VIEs and VIEs’ subsidiaries included in the Company’s condensed consolidated balance sheets, interim condensed consolidated statements of comprehensive loss and interim condensed consolidated statements of cash flows:
​ ​ ​
As at
​
​ ​ ​
December 31,
2021
​ ​
March 31,
2022
​ ​
March 31,
2022
​
​ ​ ​
RMB
​ ​
RMB
​ ​
US$
​
​ ​ ​ ​ ​ ​ ​ ​ ​
(unaudited)
​ ​
(unaudited)
​
ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Cash and cash equivalents
​ ​ ​ ​ 2,209,647 ​ ​ ​ ​ ​ 1,195,395 ​ ​ ​ ​ ​ 188,568 ​ ​
Restricted cash
​ ​ ​ ​ 89,704 ​ ​ ​ ​ ​ 14,350 ​ ​ ​ ​ ​ 2,264 ​ ​
Accounts receivable, net of allowance for credit losses of RMB30,082 and RMB20,245 (US$3,194) as of December 31, 2021 and March 31, 2022, respectively
​ ​ ​ ​ 3,170,860 ​ ​ ​ ​ ​ 3,062,754 ​ ​ ​ ​ ​ 483,137 ​ ​
Prepayments and other assets
​ ​ ​ ​ 907,350 ​ ​ ​ ​ ​ 967,939 ​ ​ ​ ​ ​ 152,689 ​ ​
Amounts due from related parties
​ ​ ​ ​ 184,137 ​ ​ ​ ​ ​ 285,703 ​ ​ ​ ​ ​ 45,069 ​ ​
Amounts due from subsidiaries of the Group
​ ​ ​ ​ 2,157,428 ​ ​ ​ ​ ​ 2,000,443 ​ ​ ​ ​ ​ 315,562 ​ ​
Total current assets
​ ​ ​ ​ 8,719,126 ​ ​ ​ ​ ​ 7,526,584 ​ ​ ​ ​ ​ 1,187,289 ​ ​
Non-current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Property and equipment, net
​ ​ ​ ​ 2,157,093 ​ ​ ​ ​ ​ 2,188,702 ​ ​ ​ ​ ​ 345,260 ​ ​
Intangible assets, net
​ ​ ​ ​ 93,662 ​ ​ ​ ​ ​ 83,152 ​ ​ ​ ​ ​ 13,117 ​ ​
Prepayments and other assets
​ ​ ​ ​ 27,036 ​ ​ ​ ​ ​ 23,374 ​ ​ ​ ​ ​ 3,687 ​ ​
Goodwill
​ ​ ​ ​ 64,082 ​ ​ ​ ​ ​ 48,814 ​ ​ ​ ​ ​ 7,700 ​ ​
Equity investments
​ ​ ​ ​ 162,244 ​ ​ ​ ​ ​ 167,185 ​ ​ ​ ​ ​ 26,373 ​ ​
Amounts due from related parties
​ ​ ​ ​ 4,712 ​ ​ ​ ​ ​ 4,712 ​ ​ ​ ​ ​ 743 ​ ​
Operating lease right-of-use assets
​ ​ ​ ​ 184,908 ​ ​ ​ ​ ​ 178,098 ​ ​ ​ ​ ​ 28,095 ​ ​
Total non-current assets
​ ​ ​ ​ 2,693,737 ​ ​ ​ ​ ​ 2,694,037 ​ ​ ​ ​ ​ 424,975 ​ ​
Total assets
​ ​ ​ ​ 11,412,863 ​ ​ ​ ​ ​ 10,220,621 ​ ​ ​ ​ ​ 1,612,264 ​ ​
LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Current liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Accounts payable
​ ​ ​ ​ 2,733,487 ​ ​ ​ ​ ​ 2,407,188 ​ ​ ​ ​ ​ 379,725 ​ ​
Accrued expenses and other liabilities
​ ​ ​ ​ 1,208,868 ​ ​ ​ ​ ​ 868,376 ​ ​ ​ ​ ​ 136,983 ​ ​
Short-term bank loans
​ ​ ​ ​ 1,348,166 ​ ​ ​ ​ ​ 1,485,000 ​ ​ ​ ​ ​ 234,253 ​ ​
Income tax payable
​ ​ ​ ​ 1,026 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Amounts due to related parties
​ ​ ​ ​ 797,731 ​ ​ ​ ​ ​ 789,566 ​ ​ ​ ​ ​ 124,551 ​ ​
Current operating lease liabilities
​ ​ ​ ​ 70,672 ​ ​ ​ ​ ​ 70,172 ​ ​ ​ ​ ​ 11,069 ​ ​
Amounts due to subsidiaries of the Group
​ ​ ​ ​ 1,597,946 ​ ​ ​ ​ ​ 1,943,554 ​ ​ ​ ​ ​ 306,589 ​ ​
Total current liabilities
​ ​ ​ ​ 7,757,896 ​ ​ ​ ​ ​ 7,563,856 ​ ​ ​ ​ ​ 1,193,170 ​ ​
Non-current liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Other liabilities
​ ​ ​ ​ 6,975 ​ ​ ​ ​ ​ 5,985 ​ ​ ​ ​ ​ 944 ​ ​
Non-current operating lease liabilities
​ ​ ​ ​ 121,057 ​ ​ ​ ​ ​ 123,595 ​ ​ ​ ​ ​ 19,497 ​ ​
Amounts due to related parties
​ ​ ​ ​ 472,882 ​ ​ ​ ​ ​ 414,152 ​ ​ ​ ​ ​ 65,331 ​ ​
Amounts due to subsidiaries of the Group
​ ​ ​ ​ 7,486,525 ​ ​ ​ ​ ​ 7,057,639 ​ ​ ​ ​ ​ 1,113,315 ​ ​
Total non-current liabilities
​ ​ ​ ​ 8,087,439 ​ ​ ​ ​ ​ 7,601,371 ​ ​ ​ ​ ​ 1,199,087 ​ ​
Total liabilities
​ ​ ​ ​ 15,845,335 ​ ​ ​ ​ ​ 15,165,227 ​ ​ ​ ​ ​ 2,392,257 ​ ​
 
F-12
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
1. ORGANIZATION AND BASIS OF PRESENTATION (continued)
​ ​ ​
For the three months ended March 31
​
​ ​ ​
2021
​ ​
2022
​ ​
2022
​
​ ​ ​
RMB
(unaudited)
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
Revenues
​ ​ ​ ​ 1,688,141 ​ ​ ​ ​ ​ 1,453,024 ​ ​ ​ ​ ​ 229,209 ​ ​
Net loss
​ ​ ​ ​ (380,102) ​ ​ ​ ​ ​ (571,892) ​ ​ ​ ​ ​ (90,214) ​ ​
Net cash used in operating activities
​ ​ ​ ​ (518,574) ​ ​ ​ ​ ​ (597,343) ​ ​ ​ ​ ​ (94,228) ​ ​
Net cash used in investing activities
​ ​ ​ ​ (217,870) ​ ​ ​ ​ ​ (583,552) ​ ​ ​ ​ ​ (92,053) ​ ​
Net cash generated from financing activities
​ ​ ​ ​ 604,689 ​ ​ ​ ​ ​ 82,046 ​ ​ ​ ​ ​ 12,942 ​ ​
The carrying amounts of the assets, liabilities, and the results of operations of the VIEs and their subsidiaries are presented in aggregate due to the similarity of the purpose and design of the VIEs and their subsidiaries, the nature of the assets in these VIEs and their subsidiaries and the type of the involvement of the Company in these VIEs and their subsidiaries.
The revenue-producing assets that are held by the VIEs and their subsidiaries comprise mainly electronic equipment, and data center machinery and equipment. The VIEs and their subsidiaries contributed an aggregate of 93.09% and 66.84% of the Group’s consolidated revenue for the three months ended March 31, 2021 and 2022, respectively, after elimination of inter-entity transactions.
As of March 31, 2022, other than RMB750,000 (US$118,310) of VIEs’ subsidiaries’ electronic equipment that was secured for the loans borrowed from Xiaomi Group (Note 18), and RMB14,350 (US$2,264) of a VIE’s subsidiary’s restricted cash that was secured for certain payables to suppliers and to guarantee certain revenue contracts, there was no other pledge or collateralization of the VIEs and VIEs’ subsidiaries’ assets that can only be used to settle obligations of the VIEs and VIEs’ subsidiaries. Other than the amounts due to subsidiaries of the Group (which are eliminated upon consolidation), all remaining liabilities of the VIEs and VIE’s subsidiaries are without recourse to the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in the Group’s interim condensed consolidated financial statements include, but are not limited to, allowance for credit losses for accounts receivable, contract assets and amounts due from related parties, measurement of operating lease right-of-use assets and lease liabilities, impairment of long-lived assets, impairment of goodwill, useful lives of long-lived assets, realization of deferred tax assets, uncertain tax positions, share-based compensation expense, the purchase price allocation and fair value of non-controlling interests and contingent consideration with respect to business combinations, the fair value of equity investments and standalone selling prices of performance obligation of revenue contracts. Management bases the estimates on historical experience and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could materially differ from those estimates.
 
F-13
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Convenience translation
Amounts in U.S. dollars are presented for the convenience of the reader and are translated at the noon buying rate of RMB6.3393 per US$1.00 on March 31, 2022 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.
Restricted cash
Restricted cash mainly represents the cash reserved in escrow accounts for purchase consideration in relation to a business acquisition, cash secured for certain payables to suppliers and advances paid by certain customers to guarantee the Group’s performance under certain revenue contracts.
Equity investments
The Group’s equity investments are long-term investments in unlisted companies based in the PRC over which the Group neither has significant influence nor control through investment in common stock or in-substance common stock. As of December 31, 2021 and March 31, 2022, the carrying amounts of the Group’s equity investments measured using the measurement alternative were RMB207,166 and RMB211,744 (US$33,402), respectively, including accumulated impairment of RMB nil and RMB5,000 (US$789), and accumulated upward adjustment of RMB96,793 and RMB96,793 (US$15,269), respectively. The Group recognized RMB5,782 and RMB nil (US$ nil) of unrealized gains (upward adjustments), and RMB nil and RMB nil (US$ nil) of unrealized losses (downward adjustments) resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer in other gain (loss), net on the interim condensed consolidated statements of comprehensive loss for the three months ended March 31, 2021 and 2022, respectively.
In February 2022, the Group disposed certain equity interests in Beijing Yunshu Xunlian Technology Co., Ltd. (“Beijing Yunshu”), and deconsolidated Beijing Yunshu’s financial results from the Group’s consolidated financial statements from the date of disposal. The Group measured its remaining interests in Beijing Yunshu at fair value upon deconsolidation, and the loss recognized from the disposal of Beijing Yunshu was immaterial. Subsequent to the deconsolidation, the Group owns 15.63% equity interests in Beijing Yunshu and the remaining equity interests are accounted for using the measurement alternative.
Fair value measurements
Financial instruments of the Group primarily include cash and cash equivalents, restricted cash, short-term investments, accounts receivable, contract assets, equity investments, accounts payable, purchase consideration payable, certain other liabilities, amounts due from and due to related parties and bank loans. For equity investments, the Group elected to use the measurement alternative to measure those investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any. The Group, with the assistance of an independent third-party valuation firm, determined the estimated fair value of its equity investments using the alternative measurement. The carrying amounts of the bank loans approximate to their fair values due to the fact that the related interest rates approximate the interest rates currently offered by financial institutions for similar debt instruments of comparable maturities. The Group measures its purchase consideration payable at fair value on a recurring basis. The fair value of purchase consideration payable is estimated by discounting cash flows using interest rates currently available for similar debts instruments of comparable maturities (Level 2 fair value measurement). The Group applies ASC 820 in measuring fair value. ASC 820 defines fair
 
F-14
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value measurements (continued)
value, establishes a framework for measuring fair value and requires disclosures to be provided on fair value measurement. The carrying amounts of the remaining financial instruments approximate to their fair values because of their short-term maturities.
ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1 — 
Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
​
Level 2 — Include other inputs that are directly or indirectly observable in the marketplace.
Level 3 — Unobservable inputs which are supported by little or no market activity.
ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.
Adoption of ASC 326
On January 1, 2021, the Group adopted ASC 326, Credit Losses (“ASC 326”) which replaced previously issued guidance regarding the impairment of financial instruments with an expected loss methodology that will result in more timely recognition of credit losses. The Group used a modified retrospective approach and did not restate the comparable prior periods, which resulted in a cumulative effect to increase the opening balance of accumulated deficit on January 1, 2021 by RMB5,684 (US$897).
Accounts receivable and contract assets, net
The Group maintains an allowance for credit losses in accordance with ASC 326 and records the allowance for credit losses as an offset to accounts receivable and contract assets, and the estimated credit losses charged to the allowance is classified as “General and administrative expenses” in the interim condensed consolidated statements of comprehensive loss. The Group assesses collectability by reviewing accounts receivable and contract assets on a collective basis where similar characteristics exist and on an individual basis when the Group identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Group considers historical collectability based on past due status, the age of the accounts receivable and contract assets balances, credit quality of the Group’s customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Group’s ability to collect from customers.
Share-based compensation
The Group applies ASC 718, Compensation — Stock Compensation (“ASC 718”), to account for its employee share-based payments. In accordance with ASC 718, the Group determines whether an award should be classified and accounted for as a liability award or equity award. All the Group’s share-based awards to
 
F-15
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Share-based compensation (continued)
employees only and are classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values.
The Group uses the accelerated method for all awards granted with graded vesting based on service conditions, and elected to account for forfeitures as they occur. The Group, with the assistance of an independent third party valuation firm, determined the fair value of the share-based awards granted to employees. The binomial option pricing model was applied in determining the estimated fair value of the options granted to employees.
A change in the terms or conditions of share options is accounted for as a modification of share-based awards. The Group calculates the incremental compensation cost of a modification as the excess of the fair value of the modified option over the fair value of the original option immediately before its terms are modified, measured based on the share price and other pertinent factors at the modification date. For vested share-based awards, the Group recognizes incremental compensation cost in the period the modification occurred. For unvested share-based award, the Group recognizes, over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date.
Concentration of credit risks
The Group expects that there is no significant credit risk associated with cash and cash equivalents, restricted cash and short-term investments, which were held by reputable financial institutions in the jurisdictions where the Company, its subsidiaries, the VIEs and the subsidiaries of VIEs are located. The Group believes that it is not exposed to unusual risks as these financial institutions have high credit quality.
Accounts receivable and contract assets are typically unsecured and are derived from revenues earned from reputable customers. As of December 31, 2021 and March 31, 2022, the Group had two customers, with accounts receivable balances exceeding 10% of the total accounts receivable balances. As of December 31, 2021, the Group had one customer, with a contract asset balance exceeding 10% of the total contract asset balance. As of March 31, 2022, no individual customer accounted for more than 10% of the total contract assets balance. The risks with respect to accounts receivable and contract assets are mitigated by credit evaluations the Group performs on its customers and its ongoing monitoring process of outstanding balances.
Impact of COVID-19
For the three months ended March 31, 2021 and 2022, COVID-19 has had immaterial impact on the Group’s operations. There are still uncertainties of COVID-19’s future impact, and the extent of the impact will depend on a number of factors, including the duration and severity of the pandemic; the uneven impact to certain industries; and the macroeconomic impact of government measures to contain the spread of COVID-19 and related government stimulus measures. As a result, certain of the Group’s estimates and assumptions, including allowance for credit losses, equity investments, long-lived assets and goodwill subject to impairment assessments, require increased judgment and carry a higher degree of variability and volatility that could result in material changes to the Group’s estimates in future periods.
Recent accounting pronouncements
In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires certain annual disclosures about
 
F-16
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent accounting pronouncements (continued)
transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This update is effective for annual periods beginning after December 15, 2021, and early application is permitted. This guidance should be applied either prospectively to all transactions that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or retrospectively to those transactions. The Group adopted this guidance on January 1, 2022 and does not expect any material impact on the Group’s consolidated financial statements as a result of adopting the new standard.
3. BUSINESS COMBINATION
Acquisition of Shenzhen Yunfan
In March 2021, the Group completed the acquisition of 100% equity interest in Shenzhen Yunfan Acceleration Technology Co., Ltd. and its subsidiary (collectively, “Shenzhen Yunfan”). Shenzhen Yunfan is mainly engaged in providing content distribution, acceleration and other cloud-related IaaS and PaaS edge computing solutions, and the acquisition is expected to enhance the Group’s expertise in public cloud services. The results of Shenzhen Yunfan have been included in the Group’s consolidated financial statements since April 2021.
The total cash purchase price consideration was RMB126,400 (US$19,939). The Group recognized RMB586 (US$92) of net assets acquired excluding intangible assets, RMB77,000 (US$12,146) of intangible assets which comprised of technology, trademark and domain name, and RMB48,814 (US$7,700) of goodwill resulted from the acquisition. Goodwill recognized represents the expected synergies from integrating Shenzhen Yunfan with the Group’s existing cloud business and is not deductible for tax purposes.
Acquisition of Camelot
In September 2021, the Group completed the acquisition of Camelot Technology Co., Ltd. and its subsidiaries (collectively referred to as “Camelot”). Camelot is mainly engaged in enterprise digital solutions and enterprise digital services, and the acquisition is expected to further develop the Group’s enterprise cloud business. The results of Camelot have been included in the consolidated financial statements of the Group since September 2021.
The total purchase consideration was RMB5,290,553 (US$834,564), which consisted of cash consideration of RMB751,974 (US$118,621) and equity consideration of RMB4,538,579 (US$715,943). Goodwill recognized represents the expected synergies from integrating Camelot with the Group’s existing enterprise cloud business and is not tax deductible. The table below summarizes the estimated fair values of the assets acquired and liabilities assumed from Camelot as of the acquisition date:
 
F-17
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
3. BUSINESS COMBINATION (continued)
Acquisition of Camelot (continued)
​ ​ ​
Camelot
​
​ ​ ​
RMB
​ ​
US$
​
Total fair value of purchase consideration
​ ​ ​ ​ 5,290,553 ​ ​ ​ ​ ​ 834,564 ​ ​
Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Cash and cash equivalents
​ ​ ​ ​ 618,439 ​ ​ ​ ​ ​ 97,556 ​ ​
Restricted cash
​ ​ ​ ​ 1,126 ​ ​ ​ ​ ​ 178 ​ ​
Accounts receivable and other assets
​ ​ ​ ​ 940,297 ​ ​ ​ ​ ​ 148,329 ​ ​
Property and equipment, net
​ ​ ​ ​ 12,224 ​ ​ ​ ​ ​ 1,928 ​ ​
Intangible assets:
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Customer relationship
​ ​ ​ ​ 620,100 ​ ​ ​ ​ ​ 97,818 ​ ​
Trademarks
​ ​ ​ ​ 474,000 ​ ​ ​ ​ ​ 74,772 ​ ​
Copyrights
​ ​ ​ ​ 34,100 ​ ​ ​ ​ ​ 5,379 ​ ​
Deferred tax assets
​ ​ ​ ​ 59,060 ​ ​ ​ ​ ​ 9,316 ​ ​
Deferred tax liabilities
​ ​ ​ ​ (268,490) ​ ​ ​ ​ ​ (42,353) ​ ​
Accounts payable and other liabilities
​ ​ ​ ​ (878,885) ​ ​ ​ ​ ​ (138,641) ​ ​
Non-controlling interests
​ ​ ​ ​ (882,451) ​ ​ ​ ​ ​ (139,203) ​ ​
Goodwill
​ ​ ​ ​ 4,561,033 ​ ​ ​ ​ ​ 719,485 ​ ​
The purchase price allocation of Camelot is substantially complete with the exception of, primarily, certain tax matters. Any measurement period adjustments resulting from the finalization of the Group’s purchase price allocation are not expected to be material.
The valuations used in the purchase price allocation for the acquisitions were determined by the Group with the assistance of independent third-party valuation firms using the income approach (a Level 3 measurement). Significant assumptions used in the valuation of intangible assets included projected revenue growth rates, operating margin, customer attrition rates, royalty rates and discount rate. Non-controlling interests at the acquisition date was measured by applying the equity percentage held by non-controlling shareholders and a discount for lack of control premium to the fair value of the acquired business of Camelot.
 
F-18
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
4. REVENUES
The following table presents the Group’s revenues from contracts with customers disaggregated by material revenue category:
​ ​ ​
For the three months ended March 31
​
​ ​ ​
2021
​ ​
2022
​ ​
2022
​
​ ​ ​
RMB
(unaudited)
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
Public cloud services recognized over time
​ ​ ​ ​ 1,391,833 ​ ​ ​ ​ ​ 1,380,807 ​ ​ ​ ​ ​ 217,817 ​ ​
Enterprise cloud services: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Recognized at a point in time
​ ​ ​ ​ 417,906 ​ ​ ​ ​ ​ 265,609 ​ ​ ​ ​ ​ 41,899 ​ ​
Recognized over time
​ ​ ​ ​ 2,126 ​ ​ ​ ​ ​ 526,900 ​ ​ ​ ​ ​ 83,116 ​ ​
​ ​ ​ ​ ​ 420,032 ​ ​ ​ ​ ​ 792,509 ​ ​ ​ ​ ​ 125,015 ​ ​
Others: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Recognized at a point in time
​ ​ ​ ​ 1,025 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Recognized over time
​ ​ ​ ​ 642 ​ ​ ​ ​ ​ 493 ​ ​ ​ ​ ​ 78 ​ ​
​ ​ ​ ​ ​ 1,667 ​ ​ ​ ​ ​ 493 ​ ​ ​ ​ ​ 78 ​ ​
​ ​ ​ ​ ​ 1,813,532 ​ ​ ​ ​ ​ 2,173,809 ​ ​ ​ ​ ​ 342,910 ​ ​
The transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at March 31, 2022 are primarily related to enterprise cloud services, which are as follows:
​ ​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
Within one year
​ ​ ​ ​ 37,226 ​ ​ ​ ​ ​ 5,872 ​ ​
More than one year
​ ​ ​ ​ 27,197 ​ ​ ​ ​ ​ 4,290 ​ ​
Total
​ ​ ​ ​ 64,423 ​ ​ ​ ​ ​ 10,162 ​ ​
Contract Balances
Contract liabilities relate to contracts where the Group received payments but has not yet satisfied the related performance obligations. The advance consideration received from customers for the services is a contract liability until services are provided to the customer.
​ ​ ​
For the three months ended March 31
​
​ ​ ​
2021
​ ​
2022
​ ​
2022
​
​ ​ ​
RMB
(unaudited)
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
Revenue recognized from amounts included in contract liabilities at the beginning of the period
​ ​ ​ ​ 35,439 ​ ​ ​ ​ ​ 103,873 ​ ​ ​ ​ ​ 16,386 ​ ​
5. ACCOUNTS RECEIVABLE, NET
​ ​ ​
As at
​
​ ​ ​
December 31,
2021
​ ​
March 31,
2022
​ ​
March 31,
2022
​
​ ​ ​
RMB
​ ​
RMB
​ ​
US$
​
​ ​ ​ ​ ​ ​ ​ ​ ​
(unaudited)
​ ​
(unaudited)
​
Accounts receivable
​ ​ ​ ​ 3,603,240 ​ ​ ​ ​ ​ 3,557,695 ​ ​ ​ ​ ​ 561,212 ​ ​
Allowance for credit losses
​ ​ ​ ​ (32,265) ​ ​ ​ ​ ​ (32,384) ​ ​ ​ ​ ​ (5,108) ​ ​
Accounts receivable, net
​ ​ ​ ​ 3,570,975 ​ ​ ​ ​ ​ 3,525,311 ​ ​ ​ ​ ​ 556,104 ​ ​
 
F-19
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
5. ACCOUNTS RECEIVABLE, NET (continued)
The movements of the allowance for credit losses were as follows:
​ ​ ​
For the three months ended March 31
​
​ ​ ​
2021
​ ​
2022
​ ​
2022
​
​ ​ ​
RMB
(unaudited)
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
Balance at beginning of the period
​ ​ ​ ​ 15,770 ​ ​ ​ ​ ​ 32,265 ​ ​ ​ ​ ​ 5,090 ​ ​
Adoption of ASC 326*
​ ​ ​ ​ 5,684 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Provision for expected credit losses
​ ​ ​ ​ 13,096 ​ ​ ​ ​ ​ 78,811 ​ ​ ​ ​ ​ 12,431 ​ ​
Write-offs charged against the allowance
​ ​ ​ ​ (24,783) ​ ​ ​ ​ ​ (67,903) ​ ​ ​ ​ ​ (10,711) ​ ​
Recoveries during the period
​ ​ ​ ​ — ​ ​ ​ ​ ​ (10,789) ​ ​ ​ ​ ​ (1,702) ​ ​
Balance at end of the period
​ ​ ​ ​ 9,767 ​ ​ ​ ​ ​ 32,384 ​ ​ ​ ​ ​ 5,108 ​ ​
​
*
Starting from January 1, 2021, the Group adopted ASC 326, which amends previously issued guidance regarding the impairment of financial instruments by creating an impairment model that is based on expected losses rather than incurred losses. The Group used a modified retrospective approach with a cumulative effect of increasing the opening balance of accumulated deficit approximately of RMB5,684 (US$897).
​
6. PREPAYMENTS AND OTHER ASSETS
​ ​ ​
As at
​
​ ​ ​
December 31,
2021
​ ​
March 31,
2022
​ ​
March 31,
2022
​
​ ​ ​
RMB
​ ​
RMB
​ ​
US$
​
​ ​ ​ ​ ​ ​ ​ ​ ​
(unaudited)
​ ​
(unaudited)
​
Current portion: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Prepayments to suppliers
​ ​ ​ ​ 162,528 ​ ​ ​ ​ ​ 158,622 ​ ​ ​ ​ ​ 25,022 ​ ​
Contract costs*
​ ​ ​ ​ 145,628 ​ ​ ​ ​ ​ 151,153 ​ ​ ​ ​ ​ 23,844 ​ ​
Contract assets, net**
​ ​ ​ ​ 550,068 ​ ​ ​ ​ ​ 528,691 ​ ​ ​ ​ ​ 83,399 ​ ​
VAT prepayments
​ ​ ​ ​ 619,391 ​ ​ ​ ​ ​ 670,080 ​ ​ ​ ​ ​ 105,704 ​ ​
Interest receivable
​ ​ ​ ​ 21,463 ​ ​ ​ ​ ​ 18,027 ​ ​ ​ ​ ​ 2,844 ​ ​
Individual income tax receivable*** (Note 11)
​ ​ ​ ​ 48,949 ​ ​ ​ ​ ​ 5,669 ​ ​ ​ ​ ​ 894 ​ ​
Others
​ ​ ​ ​ 138,994 ​ ​ ​ ​ ​ 136,903 ​ ​ ​ ​ ​ 21,596 ​ ​
​ ​ ​ ​ ​ 1,687,021 ​ ​ ​ ​ ​ 1,669,145 ​ ​ ​ ​ ​ 263,303 ​ ​
Non-current portion: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Prepayments for electronic equipment
​ ​ ​ ​ 25,388 ​ ​ ​ ​ ​ 20,965 ​ ​ ​ ​ ​ 3,307 ​ ​
Others
​ ​ ​ ​ 3,678 ​ ​ ​ ​ ​ 2,852 ​ ​ ​ ​ ​ 450 ​ ​
​ ​ ​ ​ ​ 29,066 ​ ​ ​ ​ ​ 23,817 ​ ​ ​ ​ ​ 3,757 ​ ​
​
*
Represents costs incurred in advance of revenue recognition arising from direct and incremental costs related to enterprise cloud services provided. Such contract costs are recognized as cost of revenue upon the recognition of the related revenues.
​
**
Represents the Group’s rights to consideration for work completed in relation to its services performed but not billed at the end of respective periods. The allowance for credit losses on contract assets was RMB1,591 and RMB nil (US$ nil) as of December 31, 2021 and March 31, 2022, respectively. The amounts charged to expenses for credit losses on contract assets and recoveries from the allowance were RMB2,586 (US$409) and RMB4,177 (US$659) for the three months ended March 31, 2022, respectively.
​
***
Represents amounts due from certain employees related to their individual income taxes (“IIT”) arising from exercise and vesting of share-based awards.
​
 
F-20
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
7. PROPERTY AND EQUIPMENT, NET
​ ​ ​
As at
​
​ ​ ​
December 31,
2021
​ ​
March 31,
2022
​ ​
March 31,
2022
​
​ ​ ​
RMB
​ ​
RMB
​ ​
US$
​
​ ​ ​ ​ ​ ​ ​ ​ ​
(unaudited)
​ ​
(unaudited)
​
Electronic equipment
​ ​ ​ ​ 5,123,149 ​ ​ ​ ​ ​ 5,410,893 ​ ​ ​ ​ ​ 853,547 ​ ​
Office equipment and fixtures
​ ​ ​ ​ 15,462 ​ ​ ​ ​ ​ 15,768 ​ ​ ​ ​ ​ 2,487 ​ ​
Data center machinery and equipment
​ ​ ​ ​ 144,328 ​ ​ ​ ​ ​ 144,328 ​ ​ ​ ​ ​ 22,767 ​ ​
Building
​ ​ ​ ​ 15,768 ​ ​ ​ ​ ​ 158,434 ​ ​ ​ ​ ​ 24,993 ​ ​
Construction in progress
​ ​ ​ ​ 147,817 ​ ​ ​ ​ ​ 3,435 ​ ​ ​ ​ ​ 542 ​ ​
​ ​ ​ ​ ​ 5,446,524 ​ ​ ​ ​ ​ 5,732,858 ​ ​ ​ ​ ​ 904,336 ​ ​
Less: accumulated depreciation
​ ​ ​ ​ (3,082,421) ​ ​ ​ ​ ​ (3,311,696) ​ ​ ​ ​ ​ (522,407) ​ ​
Property and equipment, net
​ ​ ​ ​ 2,364,103 ​ ​ ​ ​ ​ 2,421,162 ​ ​ ​ ​ ​ 381,929 ​ ​
Depreciation expense of the property and equipment for the three months ended March 31, 2021 and 2022 was RMB176,683 and RMB244,727 (US$38,605), respectively.
8. INTANGIBLE ASSETS, NET
​ ​ ​
As at
​
​ ​ ​
December 31,
2021
​ ​
March 31,
2022
​ ​
March 31,
2022
​
​ ​ ​
RMB
​ ​
RMB
​ ​
US$
​
​ ​ ​ ​ ​ ​ ​ ​ ​
(unaudited)
​ ​
(unaudited)
​
Customer relationships
​ ​ ​ ​ 620,100 ​ ​ ​ ​ ​ 620,833 ​ ​ ​ ​ ​ 97,934 ​ ​
Patents and technologies
​ ​ ​ ​ 67,900 ​ ​ ​ ​ ​ 60,900 ​ ​ ​ ​ ​ 9,607 ​ ​
Trademarks and domain names
​ ​ ​ ​ 497,098 ​ ​ ​ ​ ​ 497,043 ​ ​ ​ ​ ​ 78,407 ​ ​
Software and copyrights
​ ​ ​ ​ 71,752 ​ ​ ​ ​ ​ 77,800 ​ ​ ​ ​ ​ 12,273 ​ ​
Others
​ ​ ​ ​ 3,637 ​ ​ ​ ​ ​ 3,147 ​ ​ ​ ​ ​ 496 ​ ​
​ ​ ​ ​ ​ 1,260,487 ​ ​ ​ ​ ​ 1,259,723 ​ ​ ​ ​ ​ 198,717 ​ ​
Less: accumulated amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Customer relationships
​ ​ ​ ​ (32,637) ​ ​ ​ ​ ​ (57,146) ​ ​ ​ ​ ​ (9,016) ​ ​
Patents and technologies
​ ​ ​ ​ (8,138) ​ ​ ​ ​ ​ (10,150) ​ ​ ​ ​ ​ (1,601) ​ ​
Trademarks and domain names
​ ​ ​ ​ (20,722) ​ ​ ​ ​ ​ (33,093) ​ ​ ​ ​ ​ (5,220) ​ ​
Software and copyrights
​ ​ ​ ​ (26,692) ​ ​ ​ ​ ​ (35,042) ​ ​ ​ ​ ​ (5,528) ​ ​
Others
​ ​ ​ ​ (2,531) ​ ​ ​ ​ ​ (2,474) ​ ​ ​ ​ ​ (390) ​ ​
​ ​ ​ ​ ​ (90,720) ​ ​ ​ ​ ​ (137,905) ​ ​ ​ ​ ​ (21,755) ​ ​
Intangible assets, net
​ ​ ​ ​ 1,169,767 ​ ​ ​ ​ ​ 1,121,818 ​ ​ ​ ​ ​ 176,962 ​ ​
Amortization expense of intangible assets for the three months ended March 31, 2021 and 2022 was RMB3,783 and RMB42,754 (US$6,744), respectively. As of March 31, 2022, estimated amortization expense of the existing intangible assets for each of the next five years is as follows:
 
F-21
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
8. INTANGIBLE ASSETS, NET (continued)
​ ​ ​
RMB
​ ​
US$
​
​ ​ ​
(unaudited)
​ ​
(unaudited)
​
Remaining nine months of 2022
​ ​ ​ ​ 127,673 ​ ​ ​ ​ ​ 20,140 ​ ​
2023
​ ​ ​ ​ 169,313 ​ ​ ​ ​ ​ 26,708 ​ ​
2024
​ ​ ​ ​ 167,653 ​ ​ ​ ​ ​ 26,447 ​ ​
2025
​ ​ ​ ​ 165,195 ​ ​ ​ ​ ​ 26,059 ​ ​
2026 and thereafter
​ ​ ​ ​ 491,984 ​ ​ ​ ​ ​ 77,608 ​ ​
Total
​ ​ ​ ​ 1,121,818 ​ ​ ​ ​ ​ 176,962 ​ ​
9. GOODWILL
The changes in the carrying amount of goodwill were as follows:
​ ​ ​
Cloud service
and solutions
​ ​
Cloud-based
digital solutions
and services
​ ​
Total
​
​ ​ ​
RMB
​ ​
RMB
​ ​
RMB
​
Balance as of December 31, 2021
​ ​ ​ ​ 3,669,031 ​ ​ ​ ​ ​ 956,084 ​ ​ ​ ​ ​ 4,625,115 ​ ​
Disposal of a subsidiary (unaudited)
​ ​ ​ ​ (15,268) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (15,268) ​ ​
Balance as of March 31, 2022 (unaudited)
​ ​ ​ ​ 3,653,763 ​ ​ ​ ​ ​ 956,084 ​ ​ ​ ​ ​ 4,609,847 ​ ​
Balance as of March 31, 2022, in US$ (unaudited)
​ ​ ​ ​ 576,367 ​ ​ ​ ​ ​ 150,818 ​ ​ ​ ​ ​ 727,185 ​ ​
10. LEASES
As of March 31, 2022, the undiscounted future minimum payments under the Group’s operating lease liabilities and reconciliation to the operating lease liabilities recognized on the interim condensed consolidated balance sheets were as below:
​ ​ ​
RMB
​ ​
US$
​
​ ​ ​
(unaudited)
​ ​
(unaudited)
​
Remaining nine months of 2022
​ ​ ​ ​ 110,655 ​ ​ ​ ​ ​ 17,455 ​ ​
2023
​ ​ ​ ​ 64,238 ​ ​ ​ ​ ​ 10,133 ​ ​
2024
​ ​ ​ ​ 55,303 ​ ​ ​ ​ ​ 8,724 ​ ​
2025
​ ​ ​ ​ 34,042 ​ ​ ​ ​ ​ 5,370 ​ ​
2026 and thereafter
​ ​ ​ ​ 75,599 ​ ​ ​ ​ ​ 11,925 ​ ​
Total future lease payments
​ ​ ​ ​ 339,837 ​ ​ ​ ​ ​ 53,607 ​ ​
Less: imputed interest
​ ​ ​ ​ (54,414) ​ ​ ​ ​ ​ (8,582) ​ ​
Total lease liability balance
​ ​ ​ ​ 285,423 ​ ​ ​ ​ ​ 45,025 ​ ​
 
F-22
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
​ ​ ​
As at
​
​ ​ ​
December 31,
2021
​ ​
March 31,
2022
​ ​
March 31,
2022
​
​ ​ ​
RMB
​ ​
RMB
​ ​
US$
​
​ ​ ​ ​ ​ ​ ​ ​ ​
(unaudited)
​ ​
(unaudited)
​
Current portion: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Customer advances
​ ​ ​ ​ 378,957 ​ ​ ​ ​ ​ 341,712 ​ ​ ​ ​ ​ 53,904 ​ ​
Salary and welfare payable
​ ​ ​ ​ 600,775 ​ ​ ​ ​ ​ 534,855 ​ ​ ​ ​ ​ 84,371 ​ ​
Purchase of property and equipment
​ ​ ​ ​ 759,391 ​ ​ ​ ​ ​ 524,581 ​ ​ ​ ​ ​ 82,751 ​ ​
Accrued expenses
​ ​ ​ ​ 116,021 ​ ​ ​ ​ ​ 101,039 ​ ​ ​ ​ ​ 15,939 ​ ​
Other tax and surcharges payable
​ ​ ​ ​ 91,287 ​ ​ ​ ​ ​ 83,455 ​ ​ ​ ​ ​ 13,165 ​ ​
Deferred government grants
​ ​ ​ ​ 8,488 ​ ​ ​ ​ ​ 5,339 ​ ​ ​ ​ ​ 842 ​ ​
Purchase consideration payable*
​ ​ ​ ​ 148,038 ​ ​ ​ ​ ​ 147,399 ​ ​ ​ ​ ​ 23,252 ​ ​
Individual income tax payable** (Note 6)
​ ​ ​ ​ 48,949 ​ ​ ​ ​ ​ 2,418 ​ ​ ​ ​ ​ 381 ​ ​
Others
​ ​ ​ ​ 71,934 ​ ​ ​ ​ ​ 102,395 ​ ​ ​ ​ ​ 16,152 ​ ​
​ ​ ​ ​ ​ 2,223,840 ​ ​ ​ ​ ​ 1,843,193 ​ ​ ​ ​ ​ 290,757 ​ ​
Non-current portion: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Deferred government grants
​ ​ ​ ​ 6,975 ​ ​ ​ ​ ​ 5,985 ​ ​ ​ ​ ​ 944 ​ ​
Purchase consideration payable*
​ ​ ​ ​ 1,180,470 ​ ​ ​ ​ ​ 1,187,382 ​ ​ ​ ​ ​ 187,305 ​ ​
Others
​ ​ ​ ​ 45,232 ​ ​ ​ ​ ​ 46,302 ​ ​ ​ ​ ​ 7,304 ​ ​
​ ​ ​ ​ ​ 1,232,677 ​ ​ ​ ​ ​ 1,239,669 ​ ​ ​ ​ ​ 195,553 ​ ​
​
*
The amount represents the remaining purchase consideration to acquire Camelot. As of March 31, 2022, the current portion represents amounts reserved in escrow accounts, among which, RMB123,654 (US$19,506) was released to the selling shareholders in May 2022. The non-current portion of RMB253,171 (US$39,937) and RMB934,211 (US$147,368) will be settled by cash and ordinary shares of the Company, respectively, by June 30, 2023.
​
**
Represents IIT payable to the tax bureau on behalf of certain employees related to their exercise and vesting of share-based awards.
​
12. BANK LOANS
​ ​ ​
As at
​
​ ​ ​
December 31,
2021
​ ​
March 31,
2022
​ ​
March 31,
2022
​
​ ​ ​
RMB
​ ​
RMB
​ ​
US$
​
​ ​ ​ ​ ​ ​ ​ ​ ​
(unaudited)
​ ​
(unaudited)
​
Short-term bank loans
​ ​ ​ ​ 1,348,166 ​ ​ ​ ​ ​ 1,491,144 ​ ​ ​ ​ ​ 235,222 ​ ​
The weighted average interest rate for the outstanding short-term bank loans as of December 31, 2021 and March 31, 2022 was 4.59% and 4.59%, respectively.
There are no commitment fees and conditions under which lines may be withdrawn associated with the Group’s unused facilities.
 
F-23
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
13. TAXATION
There is an immaterial provision for income taxes because the Company and a majority of its consolidated entities are in a current loss position for all the periods presented. The Company recorded a full valuation allowance against deferred tax assets of a majority of its consolidated entities because they were in a cumulative loss position as of December 31, 2021 and March 31, 2022.
As of December 31, 2021 and March 31, 2022, the Group had unrecognized tax benefits of RMB59,049 and RMB41,345 (US$6,522), of which RMB43,095 and RMB24,118 (US$3,805), respectively, were deducted against the deferred tax assets on tax losses carried forward, and the remaining amounts of RMB15,954 and RMB17,227 (US$2,717), respectively, were presented in other liabilities in the interim condensed consolidated balance sheets. The Group’s unrecognized tax benefits for the years ended December 31, 2021 and March 31, 2022, were primarily related to the tax-deduction of accrued interest expenses and profit before tax differences. It is possible that the amount of unrecognized benefits will change in the next 12 months; however, an estimate of the range of the possible change cannot be made at this moment. As of December 31, 2021 and March 31, 2022, there are RMB15,954 and RMB17,227 (US$2,717) of unrecognized tax benefits that if recognized would impact the annual effective tax rate, respectively. For the periods presented, the Group did not record any interest related to unrecognized tax benefits. In general, the tax authorities have three to five years to conduct examinations of the tax filings of the Group’s subsidiaries. Accordingly, the subsidiaries’ tax years of 2018 through 2021 remain open to examination by the respective tax authorities.
14. SHARE-BASED PAYMENTS
During the three months ended March 31, 2022, the Board of Directors approved the grants of 76,895,312 awards and 8,417,040 awards to employees under the Share Award Scheme and Share Option Scheme, respectively. The share-based awards are accounted for as equity awards and generally contain service vesting conditions, which generally vest over a period from two to five years. The fair value of the awarded shares is the price of the Company’s publicly traded shares at their respective grant dates.
Fair value of share options
The fair value of share options was determined using the binomial tree model, with the assistance from an independent third-party appraiser. The binomial model requires the input of highly subjective assumptions, including the expected share price volatility and the exercise multiple. For expected volatility, the Company has made reference to historical volatility of several comparable companies. The exercise multiple was estimated as the average ratio of the stock price to the exercise price of when employees would decide to voluntarily exercise their vested options. As the Company did not have sufficient information of past employee exercise history, it has considered the statistics on exercise patterns of employees compiled by Huddart and Lang in Huddart, S., and M. Lang. 1996. “Employee Stock Option Exercises: An Empirical Analysis.” Journal of Accounting and Economics, vol. 21, no. 1 (February):5-43, which are widely adopted by valuers as authoritative guidance on expected exercise multiples. For the employee exit rate, which represents the annual turnover rate of employees leaving services, the Group uses the historical employee exiting data to have an estimate of that input. The risk-free rate for the period within the contractual life of the options is based on the market yield of U.S. Treasury Bonds in effect at the time of grant.
 
F-24
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
14. SHARE-BASED PAYMENTS (continued)
Fair value of share options (continued)
The assumptions used to estimate the fair value of the share options granted are as follows:
​ ​ ​
For the three months ended March 31
​
​ ​ ​
2021
​ ​
2022
​
Risk-free rate
​ ​
1.13% – 1.62%
​ ​
1.75% – 2.00%
​
Expected volatility range
​ ​
37.00% – 38.03%
​ ​
35.62% – 42.06%
​
Exercise multiple
​ ​
2.20 – 2.80
​ ​
2.20
​
Fair market value per ordinary share as at valuation dates
​ ​
US$3.04 – US$3.49
​ ​
US$0.33 – US$0.73
​
Share based compensation expense for the three months ended March 31, 2021 and 2022 was RMB123,113 and RMB93,182, respectively.
15. RESTRICTED NET ASSETS
Under PRC laws and regulations, there are restrictions on the Company’s PRC subsidiaries and the VIEs with respect to transferring certain of their net assets to the Company either in the form of dividends, loans, or advances. Amounts of net assets restricted include paid in capital and statutory reserve funds of the Company’s PRC subsidiaries and the net assets of the VIEs and VIEs’ subsidiaries in which the Company has no legal ownership, totaling RMB3,590,295 (US$566,355) as of March 31, 2022.
16. LOSS PER SHARE
Basic and diluted loss per share for the periods presented are calculated as follows:
​ ​ ​
For the three months ended March 31
​
​ ​ ​
2021
​ ​
2022
​ ​
2022
​
​ ​ ​
RMB
(unaudited)
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Net loss attributable to ordinary shareholders – basic and diluted
​ ​ ​ ​ (382,464) ​ ​ ​ ​ ​ (553,249) ​ ​ ​ ​ ​ (87,272) ​ ​
Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Weighted average number of ordinary shares outstanding – basic and diluted
​ ​ ​ ​ 3,343,336,997 ​ ​ ​ ​ ​ 3,648,282,282 ​ ​ ​ ​ ​ 3,648,282,282 ​ ​
Basic and diluted loss per share
​ ​ ​ ​ (0.11) ​ ​ ​ ​ ​ (0.15) ​ ​ ​ ​ ​ (0.02) ​ ​
For the periods presented herein, the computation of basic loss per share using the two-class method is not applicable. The effects of all outstanding options and awarded shares were excluded from the computation of diluted loss per share for the periods presented as their effects would be anti-dilutive.
17. TREASURY STOCK
In March 2022, the Company was authorized to adopt a share repurchase program under which the Company may repurchase up to US$100,000 of its ordinary shares in the form of ADSs during a twelve-month period. As of March 31, 2022, no shares have been repurchased by the Company.
 
F-25
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
18. RELATED PARTY TRANSACTIONS
a)
Related Parties
​
Name of related parties
​ ​
Relationship with the Group
​
Kingsoft Corporation Limited (“Kingsoft”) and its subsidiaries (“Kingsoft Group”) ​ ​ Principal shareholder of the Company ​
Xiaomi Corporation and its subsidiaries (“Xiaomi Group”) ​ ​ Entities controlled by a director of the Company ​
​
b)
The Group had the following related party transactions:
​
​ ​ ​
For the three months ended March 31
​
​ ​ ​
2021
​ ​
2022
​ ​
2022
​
​ ​ ​
RMB
(unaudited)
​ ​
RMB
(unaudited)
​ ​
US$
(unaudited)
​
Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Public cloud services provided to Xiaomi Group
​ ​ ​ ​ 193,913 ​ ​ ​ ​ ​ 220,741 ​ ​ ​ ​ ​ 34,821 ​ ​
Public cloud services provided to Kingsoft Group
​ ​ ​ ​ 31,990 ​ ​ ​ ​ ​ 44,941 ​ ​ ​ ​ ​ 7,089 ​ ​
Enterprise cloud services provided to Xiaomi Group
​ ​ ​ ​ — ​ ​ ​ ​ ​ 15,275 ​ ​ ​ ​ ​ 2,410 ​ ​
Enterprise cloud services provided to Kingsoft Group
​ ​ ​ ​ — ​ ​ ​ ​ ​ 2,038 ​ ​ ​ ​ ​ 321 ​ ​
​ ​ ​ ​ ​ 225,903 ​ ​ ​ ​ ​ 282,995 ​ ​ ​ ​ ​ 44,641 ​ ​
Purchase of devices from Xiaomi Group
​ ​ ​ ​ 69 ​ ​ ​ ​ ​ 29 ​ ​ ​ ​ ​ 5 ​ ​
Interest expense on loan due to Xiaomi Group
​ ​ ​ ​ — ​ ​ ​ ​ ​ 11,386 ​ ​ ​ ​ ​ 1,796 ​ ​
Interest expense on loan due to Kingsoft Group
​ ​ ​ ​ — ​ ​ ​ ​ ​ 5,812 ​ ​ ​ ​ ​ 917 ​ ​
Rental of building from Xiaomi Group*
​ ​ ​ ​ 16,662 ​ ​ ​ ​ ​ 13,305 ​ ​ ​ ​ ​ 2,099 ​ ​
Administrative services from Kingsoft Group
​ ​ ​ ​ 3,025 ​ ​ ​ ​ ​ 3,557 ​ ​ ​ ​ ​ 561 ​ ​
​ ​ ​ ​ ​ 19,756 ​ ​ ​ ​ ​ 34,089 ​ ​ ​ ​ ​ 5,378 ​ ​
​
*
The Group entered into agreements to lease building and office space from Xiaomi Group. As of December 31, 2021 and March 31, 2022, the related operating lease right-of-use assets amounted to RMB210,551 and RMB201,889 (US$31,847) and operating lease liabilities amounted to RMB238,180 and RMB241,445 (US$38,087), respectively.
​
 
F-26
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
18. RELATED PARTY TRANSACTIONS (continued)
c)
The Group had the following related party balances at the end of the periods:
​
​ ​ ​
As at
​
​ ​ ​
December 31,
2021
​ ​
March 31,
2022
​ ​
March 31,
2022
​
​ ​ ​
RMB
​ ​
RMB
​ ​
US$
​
​ ​ ​ ​ ​ ​ ​ ​ ​
(unaudited)
​ ​
(unaudited)
​
Amounts due from related parties: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Xiaomi Group
​ ​ ​ ​ 175,170 ​ ​ ​ ​ ​ 270,138 ​ ​ ​ ​ ​ 42,613 ​ ​
Kingsoft Group
​ ​ ​ ​ 37,731 ​ ​ ​ ​ ​ 46,926 ​ ​ ​ ​ ​ 7,402 ​ ​
​ ​ ​ ​ ​ 212,901 ​ ​ ​ ​ ​ 317,064 ​ ​ ​ ​ ​ 50,015 ​ ​
Amounts due to related parties: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Kingsoft Group*
​ ​ ​ ​ 544,376 ​ ​ ​ ​ ​ 543,330 ​ ​ ​ ​ ​ 85,708 ​ ​
Xiaomi Group**
​ ​ ​ ​ 764,941 ​ ​ ​ ​ ​ 695,559 ​ ​ ​ ​ ​ 109,722 ​ ​
​ ​ ​ ​ ​ 1,309,317 ​ ​ ​ ​ ​ 1,238,889 ​ ​ ​ ​ ​ 195,430 ​ ​
​
*
During 2021, the Group entered into a loan agreement with Kingsoft Group for an aggregate principal amount of RMB500,000 (US$78,873) bearing a fixed annual interest rate of 4.65%. The loan will be repaid in November 2022.
​
**
During 2021, the Group entered into several loan agreements with Xiaomi Group which are secured by the Group’s electronic equipment. As of December 31, 2021 and March 31, 2022, the fixed interest rate for these loans was 4.36%. As of December 31, 2021 and March 31, 2022, the current portion of the loans was RMB236,206 and RMB238,543 (US$37,629), and the non-current portion of the loans was RMB472,882 and RMB414,152 (US$65,331), respectively. Under the terms of the agreements, the Group will repay in fixed quarterly installments over 3 years according to the following schedule:
​
​ ​ ​
2022
​ ​
2022
​
​ ​ ​
RMB
​ ​
US$
​
Remaining nine months of 2022
​ ​ ​ ​ 179,813 ​ ​ ​ ​ ​ 28,365 ​ ​
2023
​ ​ ​ ​ 241,168 ​ ​ ​ ​ ​ 38,043 ​ ​
2024
​ ​ ​ ​ 231,714 ​ ​ ​ ​ ​ 36,552 ​ ​
​ ​ ​ ​ ​ 652,695 ​ ​ ​ ​ ​ 102,960 ​ ​
All the balances with related parties except for the loans from Xiaomi Group were unsecured. All outstanding balances except for loans from Xiaomi Group and Kingsoft Group are repayable on demand unless otherwise disclosed. The credit losses for the amount due from related parties were immaterial for the periods presented.
19. COMMITMENTS AND CONTINGENCIES
Capital expenditure commitments
The Group has commitments for the construction of a data center of RMB34,312 (US$5,413) at March 31, 2022, which are scheduled to be paid within one year.
Contingencies
The Group is currently not involved in any legal or administrative proceedings that may have a material adverse impact on the Group’s business, financial position or results of operations.
 
F-27
 
KINGSOFT CLOUD HOLDINGS LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)
except for number of shares and per share data)
20. ACCUMULATED OTHER COMPREHENSIVE LOSS
​ ​ ​
RMB
​
Balance as of January 1, 2021
​ ​ ​ ​ (68,440) ​ ​
Foreign currency translation adjustments, net of tax of nil
​ ​ ​ ​ 70,773 ​ ​
Balance as of March 31, 2021 (unaudited)
​ ​ ​ ​ 2,333 ​ ​
Balance as of January 1, 2022
​ ​ ​ ​ (207,882) ​ ​
Disposal during the year
​ ​ ​ ​ 4 ​ ​
Foreign currency translation adjustments, net of tax of nil
​ ​ ​ ​ (11,743) ​ ​
Balance as of March 31, 2022 (unaudited)
​ ​ ​ ​ (219,621) ​ ​
Balance as of March 31, 2022, in US$ (unaudited)
​ ​ ​ ​ (34,644) ​ ​
There have been no reclassifications out of accumulated other comprehensive loss to net loss for the periods presented.
21. SUBSEQUENT EVENT
In June 2022, the Company entered into a cash enhanced share repurchase agreement with Goldman Sachs International (“GSI”), and prepaid US$5,000 to GSI for a written put option on the Company’s ordinary shares. The transaction will be settled in September 2022.
 
F-28