On September 8, the PDF "small giant" Fujian Foxit Software Development Co., Ltd. (abbreviated as "Foxit Software", 688095.SH) was officially listed on the Science and Technology Innovation Board. The issue price was 238.53 yuan, which rose 47.14% at the opening of the day and closed at 309.27 yuan. It is reported that Guosheng Securities gave Foxit an initial buy rating.
According to the prospectus, the controlling shareholder and actual controller of Foxit Software is Mr. Xiong Yuqian. Mr. Xiong Yuqian directly holds 18.489 million shares of the company, accounting for 51.22% of the total share capital before the issuance. Based on the closing price of the day, Xiong Yuqian's net worth is RMB 5.7 billion.
1 overseas contributed more than 90% of revenue, R & D spending is lower than the selling expensesFoxit Software is an internationally operated PDF electronic document solution provider. It currently has more than 560 million direct users and more than 100,000 corporate customers, covering more than 200 countries and regions in the world.
Although Foxit Software is registered in China, its service targets are mainly overseas. Its business focus is on developed countries and regions with a high degree of informatization and a mature software payment awareness.
In the past three years, more than 90% of Foxit's revenue came from overseas. From 2017 to 2019, overseas revenue accounted for 94.78%, 92.81% and 91.60% of Foxit Software's operating revenue, respectively, mainly from the United States, Europe, Japan, Australia and other places. At present, Foxit Software has established multiple subsidiaries in Asia, America, Europe and Australia, and plans to gradually expand into emerging markets such as Russia, Brazil, and India in the future.
Nearly three years, Fu Xin soft main business income accounted for the regional distribution of pieces Source: Prospectus
The prospectus shows that from 2017 to 2019, Foxit Software’s operating income was 220 million yuan, 280 million yuan and 360 million yuan, with an average annual compound growth rate of 29.31%; the company’s net profit was 26.03 million yuan and 39.23 million yuan respectively. And 75.31 million yuan, an average annual compound growth rate of 70.07%.
However, Foxit Software is highly dependent on a single product's revenue. According to the prospectus, Foxit’s main revenue comes from PDF editor and reader products, development platforms and tools, and independent PDF-related products in the cloud. Among them, the proportion of sales revenue of PDF editor and reader products has increased year by year, reaching 77.7% in 2019, which is 7 times that of the development platform and tool service products that account for the second largest revenue contribution.
Operating income of Foxit software products in the past three years, source: prospectus
It is worth noting that, as a software development company, Foxit Software’s sales and management expenses are much higher than R&D expenses.
The prospectus shows that in 2018 compared with 2017 and 2019 compared with 2018, Foxit’s sales expenses increased by 41.53% and 34.73%, and management expenses increased by 28.83% and 24.92%, respectively.
In 2019, Foxit Software’s sales expenses were RMB 147 million, accounting for 39.95% of operating income, and administrative expenses were RMB 63.21 million, accounting for 17.13% of operating income. In the same period, R&D expenditure was 56.65 million yuan, accounting for 15.36% of operating income.
Compared with comparable listed companies in the same period, Foxit Software's sales expense ratio and management expense ratio are higher than the industry average, while the research and development expense ratio is lower than the industry average. This situation is also reflected in the salary of Foxit Software's employees.
The prospectus shows that in 2019, employee salaries accounted for 62.39% and 48.79% of Foxit Software’s sales expenses and management expenses, respectively. The salaries of sales staff and management staff were higher than the average level of comparable listed companies in the same industry.
Although 83.07% of R&D expenses are used for employee compensation, the salary level of R&D personnel has not reached the industry average. It is reported that as of December 31, 2019, Foxit Software has 450 employees, of which technical research and development personnel accounted for 47.56%.
Comparison of the per capita salary of R&D personnel between Foxit Software and comparable listed companies in the same industry in the past three years, source: prospectus
In this regard, Foxit Software explained that the per capita salary level of overseas managers is higher due to the higher local salary levels in the country where they are located, and some of the company's senior executives receive salaries overseas. Most of the R&D personnel are located in second-tier cities such as Fuzhou, Hefei, and Nanjing. Due to differences in the level of regional economic development, there are certain differences in salaries from those in first-tier cities such as Beijing and Shenzhen where comparable companies in the same industry are mainly located.
2The world needs "small and beautiful"The founder of Foxit Software, Yuqian Xiong, entered the Junior Class of the University of Science and Technology of China at the age of 15 to study computer science. After graduation, he first worked at the National Astronomical Observatory of Beijing, Chinese Academy of Sciences, and then went to the "Silicon Valley" of the United States for further study as the technical director of Bexcom Pte. Ltd.. In 2001, 31-year-old Xiong Yuqian returned to China to start his own business and founded Foxit Software in Fuzhou.
At that time, Adobe was the dominant player in the field of PDF documents. After returning to China, Xiong Yuqian led a team to develop proprietary software for other companies and needed to seek technical authorization from Adobe. However, Adobe's commercial terms were more demanding, so they were forced to choose independent research and development. After more than a year of development, Foxit Reader 1.0 version came out at the end of 2004 and soon became one of the most popular free software that year.
At that time, the Adobe software was large and comprehensive, and the reading experience was very poor. Reading a page of a document often took several minutes to load. Foxit Software chose to use the C language for the bottom layer and C++ for the upper layer to ensure the efficiency of software operation, make the software run faster and consume less CPU resources. On the other hand, it can also cater to market development trends and cover mainstream mobile platforms such as iOS and Android.
For the next two decades, Foxit Software has been focusing on the specific field of PDF, constantly refactoring its products, and continuously investing in technology.
It is precisely because it is "small and beautiful" that Foxit PDF is favored by Amazon and Google.
In 2009, Amazon Kindle was well received by the market shortly after it came out, but because about 80% of the world's electronic documents are in PDF file format, supporting reading PDF documents has become a very important function of Kindle. In the beginning, the Adobe reader selected by Amazon did not perform well on the Kindle, and encountered problems such as slow experience, frequent crashes, and frequent failure of some files to open.
After all, "This manufacturer's PDF technology is not designed for mobile platforms," Xiong Yuqian explained. At that time, Foxit used a computer isolated from the outside world to demonstrate the source code to Amazon in order to prove that the code was independently developed, and thus obtained the trust of Amazon.
In 2011, Amazon increased its investment in Kindle and became a strategic investment partner of Foxit. It became Foxit's second largest shareholder in 2016 and did not announce its withdrawal until last year.
In 2014, Google open sourced a project called PDFium, mainly for packaging it into the Chrome browser, so that developers can incorporate it into various platform applications, and provide users with PDFs including reading, editing, creating, managing and protecting PDFs. The function of the document. The rendering engine, an important part of the PDFium library, uses Foxit’s PDF technology, which is also one of Foxit’s core technologies.
After obtaining the endorsements of Amazon and Google, Foxit Software's development has been significantly smoother.
According to the prospectus, many Internet giants apply Foxit Software's product technology to their main products, such as Amazon Kindle products, Google Chrome browser, Google Android mobile platform, and Microsoft SharePoint platform. In addition, the company's main customers include the Canadian Shared Services Agency, ConocoPhillips, Pearson Group, Commerzbank and other internationally renowned companies and institutions, and provide software products and services to a large number of small and medium-sized enterprises and individual users.
In 2018, in an exclusive interview with People’s Daily Online, Xiong Yuqian said: “The more companies focus on the research and development of core technologies, the greater the opportunities in the market.” At present, the number of people directly and indirectly using Foxit PDF technology has exceeded 1.2 billion. "The future development is to further improve the core technology, in addition to the traditional PDF, the development of interconnected PDF to achieve document tracking and authorization functions." As a light asset software development company, its core technology plays an important role in supporting the company's development.