Release Date: March 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue grew by 10.2% to RMB6.26 billion, with ARR increasing by 20% to RMB3.43 billion.
- Operating cash flow reached RMB935 million, surpassing the previous commitment of RMB900 million, marking a 43.1% YoY growth.
- The company completed a significant share buyback, canceling 110 million shares, which accounted for 3% of the total shares outstanding at the beginning of 2024.
- Kingdee's cloud service business showed profit improvement, with profitability increasing from 3% in H2 2023 to 6% in 2024.
- The company is actively investing in AI, with plans to leverage AI to enhance product offerings and operational efficiency, aiming to become a leading enterprise management AI company by 2030.
Negative Points
- Despite narrowing the net loss by 32.5%, the company is still not profitable, with a net loss attributable to shareholders.
- The profitability fluctuations are due to the timing of revenue confirmation, causing gaps in profitability between H1 and H2.
- The large enterprises market remains challenging, requiring selective project and client engagement.
- The company faces external challenges such as macroeconomic conditions and tariff impacts, which could affect growth projections.
- There is uncertainty in the AI pricing model, with the company still exploring options like token-based charging, which could impact future revenue streams.
Q & A Highlights
Q: What is Kingdee's philosophy for AI product innovation, and how does it differ from international players? Also, what is the charging model for AI services?
A: Shao Chun Xu, CEO, explained that Kingdee is at the same starting line as international players in AI innovation. The company is leveraging its Cosmic platform to roll out AI features across various business functions. The current charging model is SaaS-based, but they are exploring token-based options for AI services.
Q: How has the Galaxy business been affected, and what is the outlook for its growth and profitability?
A: Shao Chun Xu, CEO, noted that the Galaxy business was impacted by external factors like COVID-19, but the central government’s push for digital transformation in SMEs is expected to drive growth. The Galaxy product is transitioning to a live SaaS model, which should improve profitability and growth in 2025 and 2026.
Q: Can you elaborate on the profitability of the Galaxy product and the company's growth targets for 2025?
A: Bo Lin, CFO, stated that the Galaxy product's operating profit margin is over 20%, and the company is cautious but optimistic about stable growth. Kingdee aims for positive profit and increased operating cash flow in 2025, despite macroeconomic challenges.
Q: What is the progress of AI applications across different business lines, and what is the timeline for their development?
A: Yong Zhang, President, mentioned that Kingdee is developing AI agents for large, medium, and small enterprises on its Cosmic platform. The company is focusing on creating adaptive AI solutions tailored to different industries, with ongoing development across all business lines.
Q: How has AI impacted customer acquisition and partnerships, and what are the future plans?
A: Shao Chun Xu, CEO, highlighted that AI has generated significant interest, leading to crowded marketing events. Kingdee plans to leverage standardized products and partner with professional vendors to enhance product delivery and customer satisfaction.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
