It was definitely a headache for me as well, but you need a guest agent (like vmwaretools or qemu-guest-agent), a cloud init ready template for the distro of your choice, a cloud init config file (network/user/vendor) and a custom SCSI/ide cloudinit cdrom mounted at boot on your VM. You also can find cloudinit logs on your VM to try and figure out what’s missing or what went wrong.