Is AI going to devour SaaS? Kingsoft Office's financial report provides the opposite answer.

Ask AI · Which performance figures from Kingsoft Office rebut the AI threat narrative?

Whether in China or the U.S., in today’s capital markets, a highly consistent—and also very suspicious—view is taking shape, driven by the improvement of AI capabilities:

AI will ultimately swallow SaaS, and SaaS industry valuation multiples will rapidly shrink.

The spread of this SaaS doomsday narrative has a signature event: around Feb 5, 2026, the release of AI Agent tools such as Anthropic Claude Cowork. On that day, U.S.-listed SaaS company valuations evaporated by about $285 billion in just 48 hours (some reports say it was close to $300 billion).

This is also what Wall Street traders describe as the start of a “SaaSpocalypse” (the Great Software Extinction): over the following week, the market value of U.S. software and services stocks fell by nearly $1 trillion; within a month, some core companies together lost more than $730 billion.

At the same time, China’s capital markets are no exception:

Under the tide of mixed results, in the Wind Hong Kong SaaS Index, major constituent stocks such as Kingsoft International generally fell by more than 30–40% over a two-month period;

On the A-share market, domestic office-software leader Kingsoft Office—despite delivering an excellent annual performance—still could not stop its share price from dropping rapidly by nearly 30% from Feb 4.

One part of the backdrop is that although Kingsoft Office has experienced 10 years of rapid growth, its current PB band (price-to-book ratio) is in the historical lowest 10% range:

In fact, the noise of collective fear of species extinction is masking clear, standout counter-information in Kingsoft Office’s 2025 annual report:

● Kingsoft Office’s 2025 financials delivered revenue of RMB 5.929 billion (+15.78%), and non-GAAP net profit of RMB 1.803 billion (+15.82%).

● WPS 365 business revenue was RMB 720 million, up 64.93% year over year, with revenue growth rates exceeding 60% for four consecutive quarters.

● WPS personal business was RMB 3.626 billion (+10.42%), with overseas revenue up 53.67%; and WPS software business was RMB 1.461 billion (+15.24%).

● AI commercialization accelerates: WPS AI domestic MAUs reached 80.13 million (+307%), and average daily Token calls exceeded 200 billion (+12x).

It’s worth pointing out that in 2025, Kingsoft Office planned to distribute RMB 12.5228 in dividends per 10 shares (totaling about RMB 580 million), with a dividend payout ratio of over 31%: this shows absolutely no timidness about winter, but instead reflects management’s optimism about the certainty of future software.

In our view, the high level of contrast in this sentiment couldn’t be more obvious:

The value of this annual report points not only to Kingsoft Office’s rapid growth across each operating “North Star” metric, but more importantly: today, when the SaaS doomsday narrative is in full swing, Kingsoft Office’s valuation logic in the AI era is being quietly rebuilt, and investors are failing to see its huge valuation elasticity.

01

Deconstructing the SaaS doomsday narrative: Kingsoft Office has a more elastic revenue model

Let’s take a reverse approach and dissect today’s mainstream market anxiety. In our view, the arguments behind this doomsday narrative are threefold:

A. AI Agents replace the traditional SaaS layer; open source is the big trend, and people build it themselves rather than buying.

B. The model shifts to pay-for-outcomes, and the per-seat pricing model collapses.

C. AI inference costs increase, and only companies with deep integration of Agents can survive.

One more thing: take a close look, and you’ll find that in today’s Silicon Valley these doomsday views—intentionally or not—have become dominant. Their main drivers are investors behind AI.

For example, Meta board member Chamath has emphasized that AI will rewrite vertical SaaS, compress maintenance revenue, and ultimately compress valuation multiples.

Meanwhile, the Macrohard project also shows AI Agents directly operating interfaces and simulating human employees to complete complex workflows, which seems to further support the “software being swallowed” narrative.

But setting aside the messaging warfare these AI giants wage against the software industry, in our view, these arguments don’t hold up under careful scrutiny. More than anything, they are a massive shockwave of reverse FOMO that has been manufactured and amplified.

First, open-source office tools have never become mainstream long term, and the AI Agent era won’t be an exception.

In the absence of large models, open-source tools such as Libre Office, Only Office, POI, and Minimax have long existed in the market. However, their positioning has never been to replace mature commercial office software.

Open-source office tools have huge similarities with today’s once-hot open-source AI agents:

Open-source products can achieve some penetration in free use cases, but they still cannot provide enterprise-grade security sandboxes, compliant audits, seamless cross-platform collaboration, or a massive template ecosystem.

And like Kingsoft Office, the moat built over 38 years—document format compatibility, WPS 365’s ability to turn knowledge into an asset, and government/enterprise-level private deployment—are barriers that open-source tools cannot reach.

We can use a set of numbers to support this view:

In 2025, WPS AI’s domestic monthly active users reached 80.13 million (+307%). Globally, monthly active devices were 678 million, and overseas monthly active devices were 245 million. Paid user growth was 63.39%. Clearly, these data show that users are not pursuing “pure open source”; they are seeking reliable, secure solutions with a track record.

Clearly, token calls have costs, so open source cannot be a viable commercial model. Most enterprises or individual users will not seek to build it themselves. Ultimately, commercial office software remains the only feasible business model.

Second, users’ core need is to “solve problems,” not to obsess over technical paths.

From the user’s perspective, even in the AI era, users still need a stable, trustworthy, and visual work foundation.

Take the example of a lobster: running a pure AI Agent in the wild is prone to hallucinations, security risks, or loss of formatting control. Meanwhile, Kingsoft Office’s 38-year scenario heritage, private-domain data governance, and visual editing capabilities are exactly the necessary carriers for agents to execute reliably.

We can use Huang Renxun’s remarks in a GTC 2025 speech to prove this:

Every year, the world generates data—about 90% of it is unstructured (PDFs, documents, video, audio, etc.). AI needs multimodal capabilities to transform it into searchable and analyzable resources. Structured data processing already has mature platforms today; unstructured data is the scarcest fuel in the AI era.

Large models are “smart brains,” but they lack scenario workflows, compliance systems, and the “hands and feet” for execution. Without Kingsoft Office’s 38-year accumulation of unstructured data assets and mature sandboxes, AI cannot deliver deterministic outcomes.

Industry data shows that AI Agents can bring productivity improvements of 25–40% or even more. For individual users, this means completing document/spreadsheet/PPT/knowledge management faster and reducing learning costs. As AI office scenario penetration continues to rise, traditional tools and AI-native apps will only become complementary.

Finally, office software is evolving toward AIOffice, and users can choose higher-efficiency approaches by scenario, with pricing models gradually blending as well.

In my view, in the long run, as large-model coding capabilities improve, the new application paradigm of AI will lower the barrier for users to adopt it. This is actually a major positive for Kingsoft Office’s revenue model:

Let’s revisit the core argument in the SaaS doomsday narrative: the per-seat model will be replaced. If fewer employees are needed, fewer seats are sold, and the entire model collapses.

But clearly, this doesn’t apply to Kingsoft Office, which can encapsulate agents. As AI capability strengthens, Kingsoft Office has found that users begin calling more agents and consuming more tokens. This creates two effects:

An increase in Kingsoft Office’s free-to-paid conversion rate, and an increase in per-user token consumption after shifting to pay-for-outcomes. Both effects are extremely favorable for Kingsoft Office’s business performance.

We can break down this issue in detail using Kingsoft Office’s 2025 annual report data:

WPS AI domestic MAUs exceed 80.13 million, up 307%, and average daily Token call volume exceeds 200 billion, up more than 12x. So what is the main reason for the high token calls?

First is Kingsoft Office’s massive user base + high penetration. WPS Office globally has more than 678 million monthly active devices, including 329 million on the PC side. AI features are “plug-and-play” embedded in familiar interfaces, lowering the usage threshold. Users naturally transition from traditional editing to AI assistance (writing, summarizing, generating formulas, one-click PPT making, etc.), resulting in extremely high daily interaction frequency.

Second is the “heavy token consumption” characteristic of Kingsoft Office’s office scenarios: office tasks require long-document summarization, table data analysis, multiple rounds of PPT revisions, PDF extraction + rewriting, knowledge base queries, and so on—requiring large context windows and multiple iterations (both input and output tokens are high).

And agents such as WPS Lingxi that support “chat while editing” and cross-component operations further increase multi-round dialogue and tool calls; token consumption per single task is far higher than simple chatting.

Especially for dense processing of unstructured data—documents, tables, and presentations are core office materials—AI multimodal understanding and generation will repeatedly invoke the model.

Finally, pricing for AI membership / WPS membership is also driving paid users to use more advanced features.

From AIGC (content generation) to Copilot (smart assistant) to Insight (knowledge insights), the functionality keeps deepening. After Kingsoft Office launched WPS Lingxi in 2025, there are increasingly more end-to-end tasks across scenarios.

A very clear conclusion is that as AI agents are encapsulated, Kingsoft Office’s paid user penetration rate will continue to rise, and revenue generated from pay-for-outcomes by already-paid users will continue to increase.

As for the claim that market expectations will shift to pure token-based charging in the future and that software will become a mere “channel,” that obviously isn’t true. Even today, for C-end businesses that consume tokens, the structure is still subscription packages. For B-end businesses, although tokens may be involved, token costs will quickly decline into general resources, making it equally difficult for tokens to become a burden for software platforms.

These views directly rebut the claim that Kingsoft Office’s pricing model is collapsing:

In the AI era, users still need Kingsoft Office to deliver a plug-and-play experience: secure sandboxes, data lakes, and knowledge assetization. In the AI era, the value of these things is greatly increased—not decreased. Kingsoft Office’s revenue model will become more elastic, and the rapid increase in user calls proves this.

02

Overseas and government/enterprise “two-wheel” Agentization benefits, with Kingsoft Office efficiency rising fast

Beyond the logic used to disprove the SaaS doomsday narrative, in this annual report Kingsoft Office’s overseas business and government/enterprise business also maintain very strong competitiveness:

Kingsoft Office’s overseas MAUs were 245 million, paid user growth was 63%, and revenue growth was more than 50%. In 2025, overseas WPS personal business revenue was RMB 282 million (+53.67%), and cumulative annual paid individual users reached 2.85 million (+63.39%).

WPS International Edition’s R&D was launched, supporting a unified global office experience across regions and languages, compatible with Microsoft 365 formats, with consistent interfaces for interoperability.

Today, Chinese companies expanding overseas no longer need to “depend on” the Microsoft ecosystem. Kingsoft Office wins this new blue ocean with cost-effectiveness, safe and controllable deployment, and AI-native capabilities.

On the government/enterprise side, Kingsoft Office today covers government institutions, state-owned enterprises, private enterprises, and foreign benchmark organizations. WPS 365 not only achieved rapid growth but also accumulated unstructured data; with the “Enterprise Brain” rolled out in 2026, the advantages of high token calls plus compliant sandboxes are especially significant.

A set of figures illustrates this: in 2025, WPS 365 business revenue was RMB 720 million (+64.93%), and revenue growth rates exceeded 60% for four consecutive quarters. It has served more than one million enterprise customer organizations and 18,000 top government/enterprise customers, covering industries such as finance, energy, communications, transportation, high-end manufacturing, and education.

Among China’s top 500 private enterprises, more than 70% of listed companies choose WPS 365 to enhance quality and efficiency, and 90% of the China-listed companies in the Fortune Global 500 use WPS 365.

WPS 365 has rolled out vertical solutions such as a healthcare version, an education version, and a government affairs version. Through the KAG (knowledge-enhanced generation) framework, it addresses pain points of AI hallucinations and professional scenario adaptation, building an “intelligent knowledge foundation.” The demand from government and enterprise customers for data security, compliance, and private deployment aligns closely with Kingsoft Office’s self-controlled innovation engine “Light Boat”; Agentization further amplifies collaboration efficiency and token consumption, forming a virtuous cycle.

In addition, AI itself is also greatly improving Kingsoft Office’s internal efficiency.

In the annual report, Kingsoft Office plans to invest RMB 100 million into coding Token by 2026, with the goal of using 6,000 people to produce results equivalent to 20,000–30,000 people; releasing 30% of resources for innovation; and shifting performance evaluation toward AI application capabilities. Today, at Kingsoft Office, teams that do not embrace the “classical” workforce approach to AI will be eliminated. Higher R&D investment will generate higher operating leverage.

As AI tools are fully embedded into internal coding, documentation, and testing workflows, and per-capita productivity multiplies—accelerating new product iteration—we are witnessing the birth of a Kingsoft Office where everyone embraces AI.

03

In the AI era, Kingsoft Office valuation is being reshaped, bringing greater elasticity

As we said earlier, traditional SaaS valuation looks at subscription numbers. In the AI era, Kingsoft Office’s valuation is based on the write-off rate of its agent capabilities to solve problems; compared with before, its non-structured data processing capability and monetization elasticity are larger, not smaller:

In 2025, Kingsoft Office’s personal business was RMB 3.626 billion (+10.42%); WPS 365 delivered rapid growth; software business revenue was RMB 1.461 billion (+15.24%). High R&D investment (35% expense ratio) is being converted into long-term premiums, proving that users recognize the AI value of Kingsoft Office’s WPS. High token usage itself is the best proof of this data.

Unlike the market’s mainstream software doomsday narrative, we believe Kingsoft Office’s valuation in the AI era will be more elastic. There are three reasons:

First, Kingsoft Office has a deep moat in unstructured data. This is the biggest advantage in the Agent era: Kingsoft Office holds 90% of a company’s unstructured data (documents, tables, etc.), making it the scarcest fuel in the AI era—far beyond pure large-model companies.

Second, Kingsoft Office is one of the few companies that can achieve strong synergy between Agents and the software foundation: WPS sandboxes plus a plug-and-play interface enable agents to reliably achieve “instructions-to-actions.” Mixed interactions between LUI and GUI increase user stickiness and token consumption.

Finally, Kingsoft Office’s business model resilience is stronger in the Agent era: on the C-end, it maintains high-certainty tiered subscription payments; on the B-end, token billing forms a positive cycle as costs decline. With WPS 365 and overseas business accelerating monetization, and with its own AI efficiency gains, increased R&D investment (35%) translates into multiplied per-capita efficiency. Under the logic of benefiting from agentization in 2026, Kingsoft Office’s advantage will only become more evident.

04

Conclusion

The 2025 financial results and high dividends are Kingsoft Office’s optimistic signal for the AI Agent era, yet the market hasn’t captured it:

For Kingsoft Office, strengthening AI capabilities is not a threat—it’s a roaring engine that amplifies 38 years of accumulation. In the future, this logic will show even more clearly in this company’s valuation elasticity.

In any era, excess returns belong to the brave who look through noise and to the long-distance runners who endure through cycles. Today, while SaaS investors are collectively hypnotized by the software doomsday narrative, Kingsoft Office’s outstanding performance is sending entirely different signals.