Good day, and welcome to Kingsoft Cloud's Q4 and fiscal year 2021 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your touch-tone telephone. If anyone should require assistance during the conference, please press star then zero to reach an operator. As a reminder, this call is being recorded. I would like to turn the call over to Nicole Shan, IR Manager of Kingsoft Cloud. You may begin.
Thank you, Michelle. Hello, everyone, and thanks for joining us today. Kingsoft Cloud's Q4 and fiscal year 2021 earnings release was distributed earlier today and is available on our IR website at ir.ksyun.com, as well as on global newswire services. On the call today from Kingsoft Cloud, we have our CEO, Mr. Yulin Wang, and the CFO, Mr. Henry He. Mr. Wang will review our business operations and the company highlights, followed by Mr. He, who will discuss the financials and the guidance. They will be available to answer your question during the Q&A session that follows.
There will be consecutive interpretation. Our interpretations are for your convenience and reference purpose only. In case of any discrepancy, management statement in the original language will prevail. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and the current market and operating conditions.
They relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties, all factors are included in the company's filings with the U.S. SEC.
The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise except as required under applicable law. Finally, please note that unless otherwise stated, all financial figures mentioned during this conference call are denominated in RMBs. It's now my pleasure to introduce our CEO, Mr. Yulin Wang, please go ahead.
Thank you, Nicole, and thank you all for joining our Q4 and fiscal year 2021 earnings call. In the Q4 , we generated RMB 2.66 billion in total revenues, representing an increase of 38% year-over-year. Our public cloud services revenues reached RMB 1.53 billion, and our enterprise cloud services revenues reached RMB 1.13 billion, up 111% year-over-year. For the full year of 2021, our total revenues reached RMB 9.06 billion, an increase of 38% year-over-year. Among which our public cloud and enterprise cloud services revenues reached RMB 6.16 billion and RMB 2.90 billion respectively. 2021 was a year full of challenges and opportunities.
The Internet sector faced the pressures from market headwinds, new regulation and the pandemic, especially in the H2 of the year. Within public cloud services, traffic-driven demand continued to grow, but at a slower pace as Internet companies began to take a more cautious approach to investing in new businesses. On the customer front, we continued to execute on our premium customer strategy amid the challenging environment, and we successfully maintained robust customer relationships. As of the end of 2021, the number of our premium customers increased to 593 from 322 in the year of 2020.
Nevertheless, to proactively embrace changes and better align ourselves with the evolving market environment, we conducted a strategic review of our business and carried out repositioning initiatives. High quality growth is at the heart of our priority and the foundation of sustainable long-term development. We intend to optimize resource allocation to our core cloud services, which enjoy healthy margins to achieve above industry core business growth.
现阶段我们已经开始对CDN的服务进行了调整，适应市场需求变化，及时主动地进行了底层资源和团队的效率优化，裁撤了CDN的亏损的节点，平衡供给量与利润指标，保持CDN产品线的健康和可持续性发展。同时逐步将更多资源向计算、大数据、数据库等高毛利率的产品倾斜，加固公司的技术壁垒，进而提升使用粘性。但由于底层供给关系和合约期限限制的影响，这个资源的调整需要一定时间，公司将会在最大化投资收益的指引下尽快完成。尽管这一调整对于第四季度的公有云收入和整体的利润造成了负面影响，但我们预期2022年第一季度的调整后毛利率和EBITDA利润率会优于2021年第四季度的利润情况。同时，这一改变也将为公司中长期发展打好收入结构和利润的基础。预计调整后的EBITDA的利润率在2022年的第四季度将转正。[Foreign Language]
Currently, we have already started adjusting our CDN services. Adapting to the slowdown in CDN demand, we are optimizing our underlying resources, downsizing CDN nodes, improving team efficiency in an effort to balance scale and profitability, and facilitate healthy and sustainable growth. In addition, we gradually optimize resources allocation to our higher margin services, including computing, big data and database products and solutions as we continued to strengthen our technology competitiveness and improve customer stickiness. Due to supply side temporary rigidity resulting from contract term restrictions, it will take some time to fully adjust the relevant resources.
We aim to complete the process as soon as possible to maximize our financial results. While the adjustments had a negative impact on our public cloud revenue and overall margin in Q4, we expect to see our adjusted gross margin and EBITDA margin improved in the Q1 of 2022 compared with Q4 of 2021. Moreover, the adjustment is expected to provide a solid foundation for medium and long term growth with a healthier revenue structure and higher profitability. We expect our quarterly adjusted EBITDA margin to turn positive in the Q4 of 2022.
经过长期的积累，我们已经与大量优质客户建立了稳定的合作关系，这有助于我们深入挖掘客户需求，加快多产品交叉销售。本季度公司已经有重点地进行视频高附加值服务的拓展，同时挖掘有算力需求的应用场景及项目。 [Foreign Language]
With a successful track record and years of experience, we have established close relationships with a large premium customer base. This positions us at the advantageous front line of tapping into our customers deeper needs by exploiting and cross-selling our rich offering portfolio. During the quarter, we selectively expanded our high value added video services and explored business scenarios and projects with high computing power needs, which we can offer.
在视频领域，公司协助视频客户快手通过使用云主机等计算类产品，建设北京直播源站，综合录制存储、转码调度等能力，助力直播业务的体验提升。 [Foreign Language]
In video space, we provided cloud elastic computing and other computing products to our client Kuaishou, a leading short video platform in China, and facilitated the establishment of its live streaming source station in Beijing. Featuring comprehensive capabilities including but not limited to recording, data storage, transcoding, and dispatching, the station has helped Kuaishou improve the user experience of its live streaming business.
在出行领域，首汽约车成为本次冬奥会独家的专用服务车辆。作为首汽约车数字化合作伙伴，公司提供多种云服务，助力其提供稳定的线上出行服务，包括全面的咨询服务、构建以容器服务为底座、微服务引擎、DevOps、函数计算等关键技术能力的云原生一体化架构，涵盖软件研发流程、计算资源、架构框架、数据存储和处理安全等五大领域。 [Foreign Language]
Turning to the intelligent mobility sector, our customer Shouqi Car-Hailing served as the exclusive taxi service provider for the Beijing Winter Olympic Games. As a digitalization partner of Shouqi Car-Hailing, we provided a full suite of cloud services to help it deliver a stable and smooth online mobility experience. We provided comprehensive consulting services and developed an integrated container service based cloud native architecture. Our solution deployed several key technologies, including microservices, engine, DevOps, function computing, and covered five major areas, including software R&D processes, computing resources, architecture, framework, data storage and processing, as well as security.
在游戏领域，金山云、小米、咪咕互娱、蔚领时代发起的立方米云游戏计划正式落地。云游戏服务登陆小米电视、小米手机。金山云作为云算力提供商，为该合作提供专业的云游戏解决方案服务。 [Foreign Language]
On the gaming front. The Cubic Meter Cloud Gaming Program, which we launched together with Xiaomi, Migu Interactive Entertainment and 蔚领时代, made its official debut on Xiaomi TV and Xiaomi phones. We are proud to provide professional full stack cloud gaming solutions and to serve as a cloud computing power provider.
在行业云方面，受益于数字化发展趋势，行业云的收入继续保持快速增长。此前我们很高兴公告了王首虎将出任公司总裁，负责公共服务业务以及克莱特的运营管理，助力克莱特更快地融入，提升行业云业务的高效发展。首虎自2016年加入克莱特，全面负责运营和管理。加入克莱特前，曾在IBM全球总部出任副总裁，拥有二十七年的公司治理和管理咨询经验。 [Foreign Language]
Moving to the enterprise cloud business. Our revenues maintained fast growth benefiting from the continued trend of digital transformation. Earlier this year, we announced the appointment of Mr. Shouhu Wang as our President in charge of public service business unit, while he continued to be responsible for Camelot operations and management. The appointment will accelerate the integration of Camelot into the company and promote the efficient growth of our enterprise cloud services. Shouhu joined Camelot in 2016 and is currently responsible for its overall operation and management. Before that, he worked as a Vice President at IBM Global Headquarters. He has over 27 years of experience and expertise in corporate governance and management consulting.
在与克莱特的整合方面，过去几个月内，我们已经进行了双方产品技术的整合、客户资源的共享。克莱特已与金山办公达成了首个合作。此外，公司与克莱特正在共同跟进的客户覆盖了互联网、新零售、大消费等多个行业，并且已经在北京、甘肃、江苏、湖北四个省市进行了项目联合交付。今年将会是我们加速团队客户资源、产品技术整合的一年，做深做好客户服务，交叉销售，共同推动公司行业云的快速增长。 [Foreign Language]
Further on the integration with Camelot, we have made progress in terms of resources sharing of each other's technology, products and customer base over the past few months. As part of Kingsoft Cloud, Camelot has started the first cooperation with Kingsoft Office Software. The company and Camelot have been jointly engaging customers ranging from the Internet, new retail to consumer sectors, and jointly work on solution deployment in places including Beijing, Gansu, Jiangsu and Hubei provinces. We expect this year to be a year of accelerated integration of our resources, including technology, products, solutions, talents and customer base, thereby deepen our customer engagement and propel the rapid growth of our enterprise cloud business.
近期全国一体化大数据中心体系完成总体布局设计，东数西算工程正式启动。作为有核心技术能力的云服务公司，我们也在项目中。目前已完成作为十个国家数据中心集群之一的甘肃庆阳数据中心集群的建设，完成该节点首个东数西算的试点项目。同时，公司也在粤港澳大湾区、长三角等算力枢纽节点进行当地的大数据等项目布局。 [Foreign Language]
With the approval of top-down planning of National Integrated Big Data Center Collaborative Innovation System, the construction of 东数西算 for transporting data from eastern regions to western regions for storage and calculation is officially launched. As a leading cloud company with core technology capabilities, we are taking part in this project. Far, we have built a data center and delivered as the first pilot project for the Qingyang Cluster in Gansu Computing Hub, which is one of the ten national clusters. At the same time, we are also deploying big data projects in computing hubs including the Guangdong Hong Kong Macau Greater Bay Area and the Yangtze River Delta Region.
此外，作为北京政务云的供应商，冬奥会重保期间，金山云基于在北京政务云平台中提供的安全防护手段，包括资源保障、现场值守服务、自动告警服务、安全保障服务等工作，为二十多个委办局、三百多套政府服务系统提供高效安全的保障及支撑。 [Foreign Language]
In addition, as Beijing's public service cloud provider, we provided intensive cybersecurity support and services to the public service platform during the Beijing 2022 Winter Olympics. We implemented various cybersecurity protection measures, including resource guarantee, automatic alarm service, on-site support service, and cybersecurity guarantee services. By doing so, we safeguarded the efficient and stable operations of over 300 public service systems for more than 20 departments and bureaus.
现在有请我们的CFO Henry为大家介绍四季度及全年的财务业绩。谢谢。 [Foreign Language]
I will now pass the call over to our CFO, Henry, to go over our financials for the quarter.
Thank you, Yulin, and welcome everyone for joining the call. Before diving into the financial details, I would like to walk you through the following summaries for the past quarter. Our total revenue reached RMB 2.66 billion in Q4, representing a strong revenue growth of 38.3% year over year. Our core cloud business, including computing, storage and enterprise cloud services, increased by 61.4% this quarter. The gross margin of this quarter declined sequentially due to the adverse impact from our CDN product. Despite the challenging market environment, we were able to maintain stable relationships with our premium customers, including leading Internet clients. However, as the new technology budgets from the Internet sector clients in general
Have been increasing at a slower pace than expected. Starting from H2 of last year, the demand to us has been softened and affected our public cloud revenue on the top line, and also affected our resource efficiency connected to our bottom line. Our CDN services had adverse impact on our gross profit in total. We are in the view that such impact is temporary, and it is being addressed by a few optimization initiatives already adopted. We expect you to see our adjusted gross margin and adjusted EBITDA margin to improve in Q1 2022 compared with Q4 2021, where we'll also take more active cost control measures, implement optimal resource allocation plans, and improve our overall operational efficiency to achieve adjusted EBITDA breakeven in Q4 2022.
As of December 31st, 2021, we had cash and cash equivalents and short-term investments amounting to RMB 6.71 billion, providing us sufficiently for operations. We will maintain our disciplined approach to CapEx and also expect to keep our full-year CapEx plan in the range of RMB 1 billion-RMB 1.5 billion for 2022. Now I will go through our financials in more detail. In Q4, cost of revenue grew 44% year-over-year to RMB 2.63 billion. The major cost component was IDC cost, consisting of bandwidth and cabinet costs. During the quarter, we continued to incur IDC cost we committed in the early part of 2021, despite weaker than expected demand. Further, we disposed of some lower-utilized IDC resources, causing certain one-time expenses.
As a result, IDC costs grew 20.2% year-over-year to RMB 1.32 billion in Q4. Depreciation and amortization costs were RMB 227.3 million. Staff costs were RMB 361.8 million. The increase reflected staff cost of delivering enterprise cloud project by Camelot. Other costs increased by 30.4% to RMB 720.7 million, which was mainly due to the revenue growth and offset by the cost saving synergies from Camelot and improving deployment efficiency. In terms of expenses, we have carried out integration with Camelot to maximize synergies, including organizational alignment and integration based on our business needs and product research plans. It cost one-time expenses for the quarter.
The impact expected to gradually decrease starting from Q1 2022, and expenses as a percentage of total revenue expected to be at a similar level with previous quarters. Total non-GAAP operating expenses were RMB 538.4 million, increasing sequentially from RMB 432.8 million in Q3. Excluding share-based compensation and G&A, adjusted R&D expenses were two hundred and forty-four point four million RMB. As a percentage of total revenue, R&D expenses decreased slightly from 9.5% in Q3 to 9.2% this quarter. Adjusted selling and marketing expenses were RMB 124.8 million. As a percentage of total revenue, they increased from 4.2% in Q3 to 4.7% this quarter. Adjusted G&A expenses were RMB 169.2 million.
As a percentage of total revenue, they increased from 4.2% in Q3 to 6.4% this quarter. As of December 31st, 2021, we had sufficient cash and cash equivalents and short-term deposits amount to RMB 6.71 billion. During this quarter, the CapEx was RMB 178 million, and the full-year CapEx was RMB 735 million. In addition, to provide our shareholders with greater liquidity and protection, we have already launched the preparation for dual primary listing in Main Board of Hong Kong Stock Exchange. We are one of very few Chinese ADRs with a simple one share, one vote, single class share structure.
Before our spin-off IPO on Nasdaq in 2020, we had been a subsidiary of Kingsoft Group for almost a decade, whereby Kingsoft Group itself in Hong Kong is a listed company with transparent track record of disclosures, including ours. While the ongoing exploration is subject to various factors from regulatory approvals and market conditions, we believe the above-mentioned factors present us favorable conditions. Based on prevailing market practice and the listing rules, assuming a successful dual primary listing, the Hong Kong listing status will not be contingent on U.S. listing status, and the case would be for secondary listing as defined in Hong Kong listing rules.
We could be eligible to be included as a constituent of Hang Seng Composite Index series, potentially. We may also be eligible to be added into China-Hong Kong Stock Connect in the future. Through the process, we are expected to grab opportunities to further cooperate with our strategic partners, enlarge a more diversified shareholder base, and improve liquidity for shareholders. In the meanwhile, we have always maintained close and multidimensional cooperation with our strategic shareholders, namely Kingsoft Group and Xiaomi. Recently, to further strengthen our capital ties, we signed a strategic cooperation and anti-dilution agreement with both parties.
According to the agreement, Kingsoft Group and Xiaomi will have the right to participate in our subsequent capital market financing transactions and increase their investment on a pro rata basis, subject to regulatory approval and market conditions. Finally, in terms of data security and privacy, we have attained the enterprise privacy and data governance certification from trustee. Privacy protection has always been one of our key priorities. We have been and will remain committed to managing data in compliance with laws and regulations, industry best practice, and the leading international standards to provide a stable and a secure data environment for our stakeholders.
The company is also preparing the 2021 ESG report, which is expected to be published in May. We do understand our shareholders focus on company revenue and profit outlook, especially during the volatile market environment. We would like to offer more details to help our shareholders to understand the company priorities and objectives. First of all, we expect our total revenue to be between RMB 2.05 billion and RMB 2.15 billion for the Q1 of 2022, representing a year-over-year increase of 13%-19%. We deprioritize our investment into CDN product and improve mix of high-quality cloud product offerings.
As a result, the revenue of CDN product could be declined by approximately 20%-25% year-over-year in Q1 2021. We expect revenue from our core cloud services, including high-quality computing services and enterprise cloud services, to remain rapid and healthy growth, increasing by around 49%-55% year-over-year in Q1 2022. Second, we are also of the view that our profitability is expected to improve starting Q1 2022. The adjusted growth margin and adjusted EBITDA margin will be higher in the Q1 of 2022 compared with Q4. On the stable market condition assumptions, we expect our quarterly adjusted EBITDA margin to turn breakeven by Q4 2022. We will continue to remain prudent on CapEx plan.
We expect our full-year CapEx for 2022 will be between RMB 1 billion-RMB 1.5 billion, which will be sufficient to support the sustainable growth of our high-quality product offerings. We would like also to point out that on a typical cloud economic model, generating revenues from existing demands only require relatively small size of maintenance CapEx. The CapEx plan for 2022 will be prioritized to meet the new incremental demands of high-quality products, of which the company has a good level of discretion to adjust under different market conditions. Finally, we are hearing voices from shareholders, and the company is in a view that current market valuation significantly deviates from our long-term intrinsic value.
The company is currently actively exploring various capital market options and tools, including but not limited to adopting share repurchase programs to deliver long-term values to our shareholders. All these forecasts and comments above are based on our current and preliminary views of the market and operational conditions, which are subject to change. Thank you.
Thank you. This concludes our prepared remarks. Thanks for your attention, and we are now happy to take your questions. Please ask your question in both Mandarin and English if possible. Operator, please go ahead. Thank you.
As a reminder, if you'd like to ask a question, please press star then one. If your question has been answered and you'd like to remove yourself from the queue, press the pound key. Our first question comes from Brian Gong with Citi. Your line is open.
Good evening, management. Thanks for taking my question. I have two questions. First is that, how should we look at public cloud growth for the full year 2022, you know, given the macro softness? Will our restructure be done, and how will we drive strong growth on computing and storage services? The second question is on enterprise cloud. Can management share growth outlook about this segment? What would be the organic growth look like, and what would be Camelot growth rate? Thank you.
Brian, would you like to just briefly translate your question into Chinese for our listeners?
I will translate myself. Thank you. Management accepts my question. I have two questions. The first is how we look at the public cloud growth for the full year 2022. You know, can we, given the macro softness, will our restructure, when will it end? Then how do we go, that is, drive to keep this computing and storage, these two businesses, maintaining a high rate of growth? The second question is about our industry cloud. Can the management share the outlook for the industry cloud growth for the whole year of 2022? One is the internal growth side. The other aspect is the growth of Camelot. A general situation. Thank you.
Oh, thank you. The situation of public cloud is this. The current main clients of public cloud are actually still mainly in the internet industry. The internet industry, in fact, we see that from the H2 of 2021, actually the entire industry's development has slowed down. The main reason is actually still this regulatory factor.
从目前的情况来看，二零二二年的预测，整个行业现在大家还是持谨慎态度。尤其是各大互联网公司，目前都更多地聚焦在自己的核心业务产品的稳健增长，但是对于新业务新方向的拓展，其实还是偏谨慎的。从这个角度来说的话，其实公有云的需求的增速我们认为是谨慎的。但是另一方面，因为各个互联网公司都在开始聚焦核心业务，降本增效，那这样会导致对公有云的使用的需求反而会占比会增加。同时尤其是多云的需求，使得他们对客户的成本的优化还是比较明显的。所以从我们目前看到的情况，我们自己看到Q3、Q4的情况，包括到二零二二年预期的话，我们认为我们的公有云的增速应该还是比较乐观的。那相对而言的话，CDN的业务的调整是我们自己做了适当的调整，从行业的用户的数量和使用时长类的业务来看的话，其实没有什么特别明显的变化，而且在二零二二年其实还是增长的。目前的问题是因为业务受到政策整顿的问题，使得这个业务的波动性变大，那业务的波动性的话，会使得我们的资源和产品的效率变低，那直接影响就是我们的利润率的情况会变得不好。所以在这个情况之下的话，我们和我们的客户一起，对业务进行了一些调整，主要是针对效率的提升。另外我们也主动地放弃了一些相对效率较低的节点和资源，并且也放弃了一些波动和不稳定的业务数量。所以CDN的这个业务的话，我们刚刚听Harry讲到的话，我们其实是在目前在做这个调整。但其他的像计算和存储这样的业务的话，其实受到的影响目前相对较少，还是一个非常稳健的情况在提升。所以我们自己看到的情况就是二二年的情况，尤其在Q1的话，我们的CDN经过调整之后，我们其实有一个比较明显的下降，但是非CDN的其他的云的业务，公有云，还有行业内业务其实都还是保持一个非常快速的增长。那第二个问题就是您刚刚问到的这个调整的话，我们因为供应链周期，还有我们跟客户的服务的延续性的问题，大概在Q4整体的框架上已经做得差不多。那然后在Q1的话，我们认为应该大部分能够调整完。所以其实从Q1开始，我们的各项指标开始向好。那然后刚刚开始也讲到，我们自己有信心，还是比较乐观，在二零二二年的Q4能够实现EBITDA的转正。然后行业云的情况，其实和公有云的情况和互联网行业其实是不一样的，那整个行业云的客户其实包括金融、医疗、公共服务，其实包括各个行业，我们现在看到其实从二零二一年的Q4到二零二二年，其实还是呈现出了一个比较迅猛的需求的增长，整个中国的宏观的对于信息化的需求其实还是在增加的。现在的问题其实反而是疫情的影响，使得行业云的不确定性增加了。所以其实需求是巨大的，但是不确定性的话，现在是我们面临的一个问题，所以我们现在认为它是空间巨大，但是我们作为一个企业来说，可能要在运营风险上做一定的平衡，我们自己的发展和增长，我们还是会更多地偏稳健，会评估项目的风险质量、实施周期以及可能的环境或者疫情对我们造成的影响。整体上来说，我们到去年的Q4和克莱特之间的业务已经实现了整合，所以现在我们看到我们的行业内的项目其实已经是金山云和克莱特的产品资源，还有客户资源都已经在打通在一起向前前进了。所以整个我们的行业云的发展其实还会是比较快速的，谢谢。
Allow me to briefly translate what the CEO answered. In terms of public cloud, we think that our view is actually similar to a lot of the larger firms in the Internet space, which obviously were experiencing a slowdown in 2021 of the demand from the Internet space, which constitutes the majority of our public cloud business customer base. However, I think on one hand, we are seeing the demand slowing down, but on the other hand, because of this, these customers in the Internet space are also doing cost cutting, which migrating and increasing the use of public cloud will actually benefit them from saving costs.
Therefore, the general observation and what we see is that our new demand for our public cloud service seems to be slowing down. However, the usage percentage, we actually do believe that there is a potential for that number to increase. For that same reason, we do see that from 2022- 2023 and 2024 on a medium term time frame, we do feel that we're relatively optimistic for the growth of public cloud service.
The situation around CDN is a little bit different, because basically we see that the time spent on our videos actually remained quite okay. However, the issue is actually around the uncertainty and volatility of the business, which caused our efficiency and our profit margin to decrease. Therefore, that brought about the adjustment that we talked about in the prepared remarks, and to get rid of some of the lower efficiency resources and CDN nodes. However, it is also worth pointing out that in the computing and storage side of the business within the public cloud business, it is much less impacted and we're still seeing robust growth.
As Henry commented just now, while the CDN business we are adjusting downwards, the non-CDN business is still growing significantly and fast, and at a fast pace. In terms of enterprise cloud, we see a very strong growth demand from the Q4 of 2021 throughout to 2022. We think the issue is with the COVID situation, we do believe that the demand is there. There's tremendous demand for industry cloud, for enterprise cloud. However, the issue is that the COVID situation increased the uncertainty of such projects.
What we as an enterprise need to do is to comprehensively evaluate enterprise cloud projects, in all this demand, huge demand in the market, from the parameters of implementation cycles, from project quality, etc. To balance out that business scale and profitability and robust growth of this business. In terms of our integration with Camelot, we have actually made great inroads into co-integration with Camelot in the Q4 of last year. Actually we are jointly working on engaging with customers, starting that time, which we also see great potential in improving and growing the business. Thank you.
Thank you. That's very helpful.
Our next question comes from Liping Zhao with CICC. Your line is open.
叶总、Henry总，晚上好，感谢接受我的提问。我这边有两个问题，第一个问题是关于行业云的竞争，因为我们也看到像阿里、腾讯，包括华为云在行业云的参与度是越来越积极，我不知道咱们公司在这个打单的过程中是否有明显地感觉到竞争的加剧，而且我们目前公司专注的这个行业领域，比如说像医疗、金融、公共服务这些，竞争格局有没有一些变化，同时对我们行业云的这个margin，会不会有一些影响？然后第二个问题是关于我们这个公有云产品的，不知道能不能请管理层介绍一下2022年我们这个产品研发主要会专注在哪些方向。那我自己快速翻译一下。 [Foreign Language] Thanks for taking my questions. I have two questions here. So first is about the competition. As we can see that Alibaba, Tencent and Huawei are becoming more and more active in enterprise cloud. So is the competition heating up in the verticals like healthcare, financial industry and public service, etc? And will this impact the company's enterprise cloud margin in the coming quarters?
Second is about public cloud. What's management's key R&D focus in 2022? Thanks.
好，第一个谈到行业云，就是我刚刚也提到目前我们看到中国的行业云的市场空间还是巨大的，而且明显能看到各个行业的需求的增速其实还是在增加的。所以我们认为，就是在中国2022年的话，行业云其实存在着巨大的这个增速和空间。那在这种情况下，就是我们和其他的云厂商，大家目前面临的问题其实都还是满足客户需求的问题。这个，实事求是地讲，从去年Q4到现在，大家面临的问题其实不是竞争的问题。第一个问题是，因为疫情和相关的一些环境的变化，导致大家的项目的实施进度的问题。第二个就是说因为行业的需求爆发很快，而且这个参与到的行业越来越多，所以我们能看到就是大家现在是不是能够满足客户需求的问题。因为行业云相比公有云，在复杂程度上，在交付周期，在本地的服务化其实还是有非常多的不同的。所以其实现在的竞争基本上还是自身的能力的提升为主。第二个就是看看大家对目前的这个外部环境变化的这个情况。然后我们自身的优势其实现在还是非常明显的。那第一个，其实我们所专注的领域像医疗、金融和公共服务，目前依然还是在中国的整个的行业云领域里面，应该是增速最快，也相对来说因为时间做得比较久，也相对最成熟的几个行业。我们因为已经在这里面专注了一段时间，所以其实已经有比较好的这个客户优势和产品优势。 [Foreign Language]
第二一个呢，就是因为我们和这个去年和克莱特的整合其实非常快速。这样的话使得我们现在在今年的这个项目的交付能力，以及后期的服务能力方面，目前在行业内是领先的。尤其是现在像疫情的情况，不是很稳定的情况下，其实我们现在在中国的跨地域的交付和服务能力，其实现在是我们一个很强的优势，这是行业云方面。那公有云的产品方面的话呢，其实主要是两块。第一个呢，就是原本的IaaS层的产品，现在其实主要是在规模、能力和性能几个方面上的提升。其次，随着客户的使用越来越成熟，那现在在PaaS端，在大数据、数据库、容器引擎等领域的产品呢，其实增长也很快速，所以我们也会在这方面持续投入。因为这些产品它并不是一个从零到一的新产品，云计算的产品的延续性其实是非常好的，所以我们其实现在在已有的基础上会使得我们的产品更加稳定，性能更加强大。那第二一个的话呢，就是刚刚讲到跟行业云相关的，就是目前我们会，大家都在加大，就是说在公有云领域的已经成熟和被广泛应用的产品，那在行业云的使用上，如何使得它能够跟行业客户的需求结合得更紧密，并且使得项目的研发、实施和交付的周期能够更快速，后期的服务和运营更平滑。这个其实是目前产品的一个主要的，也是一个主要的研发方向。好，谢谢。 [Foreign Language]
Okay, thank you.
Our next question comes from Thomas Chong with Jefferies. Your line is open.
晚上好，谢谢管理层来接受我的提问。我的问题是关于监管的环境的，管理层可以分享一下，对新一年的看法吗？另外的话还想问一下，因为现在的经济环境，还有就是疫情的反复，我们应该怎么看呢，上半年跟下半年的情况呢？最后的话呢，是想再问一下，对我们长期的margin的profile的有看法。 [Foreign Language] Thanks management for taking my questions. I have three questions. My first question is about the update of the regulatory environment.
Second is about the growth rate in the first and the H2 , given the macro headwinds and the COVID situation. My third question is about our long term margin assumption. Thank you.
好，那第一个就是整体的行业监管相关措施的情况。目前我觉得几个层面吧。第一个，我们自身还是保持我们自己最高的一个合规要求，与监管机构保持日常的良好沟通。因为做云计算的产业，包括在数据安全等等领域，我们其实自身的合规要求也是非常重要的。第二个，对于整个行业的监管的措施来看，我们目前没有更明确的信息，就是说比如说行业的相关的监管或者是具体措施会做出什么样，目前在互联网领域其实还是不是很清晰。但是传统的行业云的需求，其实我们也看到，在政府相关的支持力度还是蛮大的，包括像东数西算，相关的政策已经出来了。另外一个，整体的在包括像中概股的相关的情况下，我们还是谨慎乐观的，而且也看到了国家的一些相关的政策，还有一些相关的精神，其实在逐渐的发布出来，所以这是目前的关于政策的情况。那第二个就是我们自身的业务的增速的话，我们刚刚讲的其实目前看，整个行业无论是公有云还是行业云的需求，其实还是很旺盛的。那上半年的话呢，我觉得相对来讲，因为无论是行业还是像我们的云的这个公司，其实都还是在针对2021年下半年的一些快速的变化在做出调整。所以可能2022年的上半年，其实大家在调整期。那如果一旦相关的政策或者是大的环境明朗之后呢，其实我们能看到整个行业的创新能力和需求还是很旺盛的。所以我们认为，今年的增速在上半年可能会相比去年慢一些，但是下半年的话应该会能够恢复。那与此相关联的我们自身的情况，其实刚刚也讲到，其实也主要是在针对目前的变化做调整，那这个调整基本上也已经接近完成。所以实际上我们在提升业务的稳定性，通过提升业务的稳定性，提升自身的效率，并且改善财务指标方面的话呢，我们自己还是目前认为取得了非常快速的进展。所以刚刚Henry在讲到我们的财务部分的时候，我们也提到，Q4应该是我们的一个比较大的调整期，然后2023年的Q1的话，相关的指标已经开始逐渐改善，然后我们自己对于今年的整体的到Q4的EBITDA转正还是乐观和有信心的。那到了明年的话，那会进入到一个我们自己认为在经营效率、在利润方面会进入到一个非常快速的提升的阶段。好，谢谢。 [Foreign Language]
In terms of regulatory environment, I'd like to answer this question from several perspectives. The first is the compliance of ourselves as a business. We maintain daily communication and frequent communication with our regulators, which we continue to maintain the highest regulatory and compliance standards to ourselves. Then secondly is the general regulatory policies to the Internet sectors. On that regard, we haven't seen more clear signals from the regulators. However, on the industry cloud or enterprise cloud side, we continue to see our government policy support, including the 东数西算 which is transporting instant data for western computation project.
The third level of this question is the general attitude from the government towards Chinese ADRs, which we are happy to see some of the stabilizing signals, which we will continue to monitor. In terms of growth and profitability. Looking forward, we do think that for the H1 of 2022, it is likely to be still an adjustment period, where companies, especially Internet companies, will continue to adjust for the policy changes that happened in 2021. However, we do believe that as the general environment, the policy guidance becomes clear, we are still confident with the innovation capability of the sector in general, and then which we believe will further drive the recovery and growth of the industry and also our business in the H2 of the year.
Now in terms of ourselves, as we mentioned, the adjustment and repositioning of the business, we have made great inroads and progress in that regard, and we have almost completed the adjustment in order to improve our efficiencies and stability and also improving our financial performance. We do think that you know, the improvement of our financial performance stability is well on track in 2022 and confident of the EBITDA growth adjusted EBITDA margin breaking even in the Q4 of 2022. We do think that in the following year will also prove to be a year of improving margin profile. Thank you.
Our next question comes from Joel Ying with Nomura. Your line is open.
感谢管理层。我有两个问题，首先想了解一下，就是2021年我们全年的public cloud这块的收入里面有多少是CDN的占比大概是多少，然后对于这个我们CDN业务就是有一定的调整，以后2022年这个预期大概是怎么样的。然后第二个问题是关于我们的员工数，因为刚才我们也提到这个，企业云、行业云对这个，我们的交付能力是有一定的要求的，那么未来，首先问一下2021年底的时候我们大概有多少的员工，尤其是R&D员工有多少，然后2022年会有没有新的招聘计划，大概会招多少人？有没有这样的一个可以透露的信息。我自己很快翻一下。 [Foreign Language] So I actually have two questions.
The first one is what is the percentage of the CDN business as of total public cloud business in 2021? What's our expectation for 2022? Second question is how many employees do we have at this moment by end of 2021, and how much percentage is about for R&D staff, and how many we are going to recruit in 2022? Thank you.
Yeah sure. Yeah. Thank you, Joel. This is Henry. If you really looking back for the past few years, you may already observe the trend that the CDN business has declined gradually as a percentage of our total revenue. For the year of 2021, our CDN revenue as a percent of total revenue already declined below in the range of 30%-40%. Our intention to further reduce the revenue contribution from the CDN products carry out into the year of 2022. I have actually two major objectives. First one is we want to cutting back even while we have remained relatively stable relationships with our top clients in terms of dollar value.
In terms of percentage, I think in 2022, the CDN business will contribute hopefully less than 20 or 25 to 25% of the total revenue. That will give us a more diversified revenue streams and offer a relatively higher quality of the revenue contribution. This is actually the first point. Again, I think when we evaluate which client or which region or which nodes we adjust, we are looking deeper into our client relationships and also we are looking into the cross sell opportunities into the computing and storage, and we will not harm our relationships with the clients, as well as losing a lot of opportunities into cross-selling for other products.
To the second question, as you probably already remember that last year we completed acquisition of Camelot, which as Yulin mentioned, gave us a great outreach in a nationwide network for delivery, especially in a challenging COVID environment. We are also making some adjustments in the process of realizing our synergies in terms of the team integration. There are a few information we can share. First of all, for the overlapping functions, we did some active adjustments and alignment and team integrations that actually will give us more efficiency of the delivery capacity.
In terms of the total R&D personnel, as we disclosed in our IPO prospectus, which actually very stable percentage and levels, over 60%, 60% of Kingsoft Cloud employees are R&D related functions, and our total employee size, including the Camelot team, has increased significantly by end of last year if you compare with the number of 2020, and I think that will give us a great capacity to deliver our services from the original cloud native technology like us, but also give our client higher quality of services.
Also we can provide a wider range of product and research in house. I think that give us not only a capacity, but also more flexibility to adjust more investment into the cloud native technology, especially moving to the PaaS and the SaaS functions, including the containers, Docker, big data and database, as Yilin just mentioned. Thank you.
Thank you, Henry.
Our next question comes from Kyna Wong with Credit Suisse. Your line is open.
管理层，谢谢给我提问的机会。我有两个问题。第一个就是CapEx的一个预期，就是十到十五个亿，在2022年，那里面其实会怎么breakdown呢？因为就是它里面之前有计划的一些self build，就是自建的一些IDC的计划会不会改变？因为现在就是整个business的这个运营方向是比较着重一些high value的那个云的服务，但是之前的CDN可能就需要再去调整，那原先已经有一些resources的资源可能需要调整的时候，你还会不会再增加这个自建的IDC，这是第一个问题。第二个呢，就是我看到在cost of revenue，就是在成本上面，有一部分就是有一个increase，有一个增加是基于这个bandwidth的一个lock up usage，就是你之前可能已经签订的，就是已经在年初已经谈好的一个bandwidth部分，那在今年2022年初的时候，这一块应该还是可以跟合作厂商，就是跟那个运营商这边可能再重新签订这个使用的一个量的话或价格，那这样其实在2022年的成本是否应该会比较合理，而且有多少的这个毛利率的一个改善是可以从这个角度去思考的。 [Foreign Language]
Let me translate myself. The first question is about the CapEx breakdown, how much will be the self-build IDC spending given business restructuring implemented for 2022. The second one is about one of the costs involved lock-up usage of bandwidth by that actually redundancy caused by the redundancy of underlying resources. We believe like it could be some like contract that you sign with the operator about the bandwidth, where should we expect the end of the lock-up period? If we should consider that the overall cost structure will improve in 2022 after you have a new contract review with the operator. Yes.
好，谢谢。第一个您刚才问到的就是关于CapEx的预期，尤其是2022年的，那按照我们的业务的增长情况，因为云计算的业务的规划，其实有一个相对比较前置的生产资料的准备和建设周期，所以实际上我们公司历年的CapEx的投入的规划和实际的执行情况都还是非常精确的，只是在2021年，因为行业政策的一些比较大的调整，这个使得我们年初的一些计划出现了一些波动。那刚刚讲到我们在去年的Q4开始针对业务做了一些调整，那目前主要是在CDN这一块，其实现在的情况还是讲，就其实包括CDN在内，业务的需求还是很大，而且在增长的，但是它的波动性会使得我们的效率和毛利率情况有变化。所以我们其实在业务的调整上，我们是主动放弃了一些低效率的、业务波动性比较大的业务，以及一些相对来说毛利比较差的一些节点。那这个节奏大概在去年的Q4和今年的Q1已经基本上完成了。那另外还有涉及到一些IDC和带宽的相关的资源配置，就是您的第二个问题，那这个其实它是遇到一些供应链的合同，以及还有一点很重要的是跟客户的服务的延续性的问题，所以它相对来说需要一个周期，那目前这个工作呢，也已经基本上完成了，所以这样会使得我们从Q1开始，我们的整体的毛利率和EBITDA的利润率其实都是一个持续向上提升的过程，然后它的效率就是我们刚刚讲的，我们其实还是比较乐观，在今年Q4的话，整体的EBITDA就能够实现转正。那第二个就是CapEx的其他的像公有云、行业云的投资，因为它依然还保持着一个非常快速的增长，只是我们去年在Q4的时候，因为疫情的原因，还有一些资源的调配的原因，我们相对比较谨慎，所以我们相比每年的Q4，我们2021年的Q4的CapEx的投入会略少一些，那这个主要其实是一个节奏的问题，那这个在2022年其实还会进入到一个正常的节奏范围内。包括刚刚您提到的像自建的IDC的计划，我们都还是按照原来的计划在进行。目前这一块我们认为还是，无论从效率上还是业务的稳健程度上，我们自己还是认为还是可以的。好，谢谢。 [Foreign Language]
Tina, to answer your question, based on the nature of cloud computing business, there's always a lead time which we need to consider and plan in order to prepare the resources for providing the service. In previous years, our budgeting and actual money spent on CapEx have been relatively accurate. It is really only last year because of the overall market volatility that there is some adjustments. You know I've mentioned earlier in answering other questions, the adjustment mainly focuses on the CDN business, whereby in fact the demand is still there and huge. However, from our perspective, it is because of the increase in volatility that decreases our efficiency and profitability.
Therefore we are downsizing that business. However that adjustment has largely completed in the Q4 and with some of the remainder to be completed in the Q1 this year. As you rightly pointed out, because the underlying resource for the IDC does require a cycle for renegotiation, and that has primarily been completed as well. We do expect to see a margin improvement starting the Q1 of this year. In terms of CapEx, the self-construction of IDC CapEx has been ongoing as planned, and you know for every year the Q4 has been relatively less than the other quarter due to seasonality in terms of CapEx. However last year is a little bit less because of the adjustment that we conducted, so we were a little bit cautious in the pacing of that. However we will catch up with that in this year. Thank you.