On the evening of August 19, Beijing Kingsoft Office Software, Inc. (688111.SH) released its 2026 semi-annual report: first-half revenue reached 3.313 billion yuan, up 24.69% year-on-year, while net profit attributable to shareholders hit 2.518 billion yuan, a surge of 236.94%. The profit growth rate was nearly ten times that of revenue.

This profit jump was actually flagged in advance. On July 28, Kingsoft Office disclosed a performance forecast, projecting that net profit attributable to shareholders for the first half would rise more than twofold, while cautioning that this was primarily due to investment gains from certain external investment funds. After excluding these investment gains and share-based payment expenses, the adjusted net profit growth was expected to largely align with revenue growth. When the semi-annual report landed, this assessment was confirmed: the adjusted net profit attributable to shareholders, which reflects core business profitability, stood at 1.087 billion yuan, up 28.29% year-on-year—a far cry from the book net profit of 2.518 billion yuan. To understand this report, one must first separate these two sets of accounts.

Which of the three business lines is truly driving revenue?

The company's revenue mainly consists of WPS personal business, WPS 365 business, and WPS software business, plus smaller other businesses, totaling 3.313 billion yuan in the first half. Among them, the largest segment, WPS personal business, contributed 2.014 billion yuan, up 15.20% year-on-year; the fastest-growing was WPS 365 business, with revenue of 497 million yuan, up 60.84%; and WPS software business, targeting government and enterprise clients, achieved 722 million yuan, up 33.36%.

The growth in WPS personal business was largely driven by AI capabilities penetrating office scenarios. As of the reporting period, WPS Office's global monthly active devices reached 676 million, up 3.87% year-on-year, with PC-side growth accelerating noticeably while mobile-side saw a slight decline, reflecting divergent trends between the two platforms. In terms of revenue structure, domestic personal business revenue was 1.833 billion yuan, up 13.19% year-on-year, with cumulative annual paying users reaching 48.25 million, up 15.44%; overseas business revenue was $26.1013 million, up 43.79% year-on-year, making it the fastest-growing segment within the personal business, with overseas monthly active devices already hitting 244 million.

Although WPS 365 business remains small in scale, its 60.84% growth rate was the most impressive among the three main lines, driven by AI product iterations for organizational clients and continued adoption in key industry sectors. The 33.36% growth in WPS software business is more attributable to sustained demand for domestic substitution in the IT application innovation sector. These clients are primarily central and local government enterprises, with procurement rhythms closely tied to the pace of domestic replacement, making seasonality and policy factors stronger than in the other two segments.

Breaking down the investment gains in the income statement

Digging into the income statement, the answer is clear. In the first half, investment gains reached 1.914 billion yuan, up more than tenfold year-on-year, which the report attributed to increased gains from investments in associates and joint ventures. Boosted by this, total profit reached 2.765 billion yuan, up 254.50% year-on-year. Specifically, two investment entities in which the company participates in decision-making but does not consolidate—Shenzhen Shunying Private Equity Investment Fund and Beijing Shunjin Shunying Enterprise Management Partnership—in which the company holds 58.8235% and 99.9986% stakes respectively, contributed a combined 1.761 billion yuan in profit impact during the reporting period, recorded under the long-term equity investment account.

This also explains another change on the balance sheet: long-term equity investment balances surged more than twofold from the end of last year to 3.468 billion yuan. It should be noted that the company has already cautioned in its performance forecast that the valuations of these funds' portfolio companies are subject to significant uncertainty due to macroeconomic conditions, capital market trends, industry cycles, and other factors. In other words, this 1.914 billion yuan is closer to a one-time financial contribution rather than a repeatable operational result. After stripping out this factor, the adjusted net profit attributable to shareholders was 1.087 billion yuan, up 28.29% year-on-year—slightly higher than revenue growth but far below the book net profit's 236.94% increase, and more reflective of the core business's actual growth trajectory.

During the same period, R&D investment reached 1.152 billion yuan, up 20.17% year-on-year, accounting for approximately 34.76% of revenue, slightly down from 36.07% in the same period last year—mainly because revenue grew faster, not because R&D spending slowed. At period-end, R&D personnel reached 3,962, up over 10% year-on-year, representing more than 60% of total employees. Net cash flow from operating activities was 643 million yuan, down 12.96% year-on-year, which the company explained was mainly due to increased salary and tax expenses; excluding the prepaid income tax impact corresponding to the current period's investment gains floating income, operating cash flow actually grew year-on-year.

AI in practice: from feature additions to standalone products

If last year's first-half AI story was mainly reflected in embedded features like AI PPT and AI spreadsheet assistants within WPS Office, the biggest change this half is that AI has begun to appear in the financial report as standalone products. For individual users, the company launched a new version of "Lingxi" in the first half, positioned as a "professional personal office assistant," emphasizing not scattered features but contextual understanding, task execution, and outcome delivery for complex office tasks. On the commercialization front, the company has begun exploring a hybrid billing model of "subscription + AI usage" on top of its subscription base.

For organizational clients, the company released the AI product WPS Comate, positioned as an enterprise-level unified AI entry point, providing AI with enterprise-specific business context. It has already implemented 26 typical expert scenarios across 11 major domains including HR, administration, finance, and legal. Since the product launch, hundreds of mid-to-large enterprises from manufacturing, education, finance, logistics, and retail sectors have reached co-creation intentions with the company. Among the new benchmark clients added by WPS 365 in the first half were names like CNNC, PetroChina, and Industrial Securities. While consolidating its position among central and state-owned enterprises, the company is also expanding its channel ecosystem to private enterprises, foreign-funded companies, and local state-owned enterprises, similarly exploring a "seats + AI usage" billing model.

This wave of intensive AI-native product launches roughly aligns with macro policy rhythms. As of the reporting period, the company's total assets stood at 20.88 billion yuan, up 15.00% from the end of last year; net assets attributable to shareholders were 15.077 billion yuan, up 17.30%. There have also been changes in the funding structure: monetary funds nearly doubled from the end of last year to 1.388 billion yuan, mainly due to an increased share of demand deposits; trading financial assets used for short-term wealth management decreased notably, mainly due to a lower proportion of structured deposits; meanwhile, time deposits maturing within one year increased significantly, as the company's overall cash-like assets shift from short-term wealth management products to time deposits and demand funds.

Conclusion: two curves moving at different paces

Assembling this semi-annual report reveals two curves that are not fully synchronized: one is the core business curve, with WPS personal business, WPS 365, and WPS software business growing at rates ranging from double digits to 60%, as AI-native products evolve from feature additions to standalone products with independent billing models, maintaining a steady pace; the other is the book profit curve, substantially inflated by 1.761 billion yuan in investment gains from two private equity investment funds. Within the 236.94% net profit growth rate, a considerable portion comes from non-recurring gains that the company itself has flagged as carrying significant uncertainty. For a company still in the early stages of commercializing AI-native products, the adjusted net profit of 1.087 billion yuan with a 28.29% growth rate may better illustrate the core business's true growth trajectory than the book figure of 2.518 billion yuan.

(This article does not constitute any investment advice; any actions taken based on this are at your own risk.)