Yonyou Network, which started with financial and taxation software, has undergone two iterations and is now transforming into a cloud service business. Since the transformation, the market has never ceased to question UFIDA.
In this regard, Wang Wenjing, chairman and CEO of UFIDA, returned to the front line after two years of absence. After that, news of UFIDA’s reforms continued to spread in the market, from spin-off and listing to accelerating cloud business upgrades, launching blockbuster products, and now China's organizational reforms, and UF's constant new moves, how is it doing now?
Judging from the financial report, in the first half of 2023, UFIDA's research and development expenses exceeded 1 billion yuan. So, what has UFIDA, which has been in the market for 35 years and actively seeking changes, done?
UFIDA lost a new high in the first half of the year, where did the money go?
The financial report shows that in the first half of the year, affected by the adjustment of the organizational structure, UFIDA achieved operating income of 3.37 billion yuan, a year-on-year decrease of 4.73%.
In terms of profit, UFIDA realized a net loss of 845 million yuan, a loss of 256 million yuan in the same period last year, and a year-on-year increase of 589 million yuan in losses. Judging from the data alone, Yonyou Network's revenue declined in the first half of the year, and its losses have not been significantly improved. The difficulty of transformation seems to be still unresolved.
But this does not mean that UFIDA has no chips to break the game.
In terms of expenses, as of the end of the reporting period, the number of employees in the company increased by 2,111 compared with the same period last year, resulting in a year-on-year increase in the sum of operating costs and sales, R&D and management expenses during the reporting period. Among them, the company's research and development expenses in the first half of the year were 1.012 billion yuan, a year-on-year increase of 4.5%, and the research and development expense ratio was 30.05%, a year-on-year increase of 2.7pct. In other words, although UFIDA continues to lose money, it has always spent money on the "blade" of recruiting talents and increasing research and development.
In terms of contract liabilities, the semi-annual report shows that as of June 30, 2023, UFIDA’s contract liabilities were 2.79 billion yuan, a year-on-year increase of 20.2%; cloud business-related contract liabilities were 2.21 billion yuan, a year-on-year increase of 25.9% ; subscription-related contract liabilities were 1.46 billion yuan, a year-on-year increase of 41.5%. Since the implementation and delivery of the software industry is concentrated in the second half of the year, the amount of this contract liability will lay an important foundation for the company's performance rebound in the second half of the year and the growth of the annual performance.
In terms of contract signing, in the first half of the year, the inflection point of contract signing amount of UFIDA Network has appeared. The data shows that the company's overall contract signing amount is 3.13 billion yuan, a year-on-year increase of 3.1%. From a monthly perspective, the impact of the upgrade of UFIDA's business organization model has basically ended. The data shows that the company's contract signing amount decreased by 5.6% year-on-year from January to May, and increased by 20% and 24% year-on-year in June and July respectively. .
The cloud service business, which is the most concerned by the market, performed well overall and maintained a small positive growth. Data show that in the first half of the year, the company's cloud service business achieved revenue of 2.346 billion yuan, a year-on-year increase of 2%. It is worth mentioning that the slight increase in cloud service revenue may be related to the increase in the number of customers . The data shows that the number of new cloud service paying customers was 59,500, and as of the end of the reporting period, the cumulative number of cloud service paying customers was 631,000.
In short, although UFIDA’s losses in the first half of the year continued to expand, the current organizational structure adjustment has begun to show results, R&D investment continues to increase, and the cloud service business that focuses on transformation is also showing an upward trend. Therefore, it can be said that UFIDA's money is spent on key points.
However, the loss in the financial report and the shrinking market value today have made many investors worried-can UFIDA win the turnaround?
UFIDA, which spends money on R&D, has "smashed" what fruits?
For a company in transition, sufficient cash flow is the "confidence". Therefore, one of the reasons why the market and investors currently have insufficient confidence in UFIDA may be that the company's cash flow is not optimistic. The data shows that as of June 30, 2023, the company's net cash flow from operating activities was -1.333 billion yuan, and the net cash flow from investment activities was -312 million yuan.
However, the net cash flow generated by UFIDA through financing activities is still relatively sufficient. The data shows that as of June 30, 2023, the net cash flow generated by the company's financing activities was 2.093 billion yuan.
Being able to continue to be recognized by investors shows that the "technical chassis" of UFIDA is still stable. Data show that in the first half of 2023, Kingdee International's research expenditure will be 829 million yuan, a year-on-year increase of 4.3%. In contrast, UFIDA's R&D investment is nearly 200 million yuan higher, and these investments have also been transformed into "fruitful results."
First, UFIDA continues to polish the BIP product line, which has been recognized by large enterprise customers.
The financial report shows that in the first half of 2023, Yonyou Network will target the large enterprise customer market. The core product YonBIP will achieve a contract value of about 1.2 billion yuan, and the core product renewal rate will reach 104.2%.
In the second half of the year, UFIDA continued to upgrade BIP products, and related products and services were increasingly improved. It is reported that on August 19th, Fan Guanjun, Executive Vice President and CTO of UFIDA Network, announced that he would release the latest version of UFIDA BIP3, comprehensively upgrade data services and intelligent services, release 3 new breakthroughs in technology, 2 new developments in application architecture, and 99 New services and application services of 1056 new ISV partners. At the same time, Yonyou BIP also launched a new product "Yonyou BIP Business Network" for global enterprises.
At present, UFIDA BIP products and services have accumulated nearly 100 industry-leading business and management digital intelligence innovation practices, and can provide innovative services covering 10 fields of enterprise production, operation and operation management.
Second, UFIDA officially released YonGPT, the industry's first enterprise service model.
On July 27, UFIDA officially released YonGPT, the industry's first enterprise service model. According to Yonyou.com, YonGPT expands the storage and memory of large models, adapts applications, and dispatches execution capabilities through context memory, knowledge/base table indexing, Prompt engineering, Agent execution, and general tool sets, and combines finance and taxation, manpower, supply chain, and R&D. and other fields of knowledge, expand the professional capabilities of large-scale models, and form a systematic enterprise service large-scale model.
Specifically, the structure of YonGPT consists of three layers, the L0 layer is the base of the general large model, the L1 layer is the YonGPT enterprise service large model, and the L2 layer is the intelligent scene service for the fine-tuning of the domain or industry model.
In addition, at present, YonGPT can adapt to the mainstream large language models in the industry on the base of the lowest general large model, including closed source models such as Baidu's Wenxin Yiyan, and also supports open source models such as Zhiyuan Enlightenment, Mass Spectrometry ChatGLM and LLaMA large model. In foreign countries, YonGPT can also provide services based on ChatGPT.
In short, UFIDA took the lead in launching many market-leading and industry-leading products through rational use of funds. These excellent products with both commercial value and technical value are the company's long-term core value and the "foundation" for growth.
It is precisely because the "foundation" is well laid that UFIDA can retain all kinds of corporate customers.
In terms of large enterprise customer business, the revenue in the first half of 2023 will be 2.148 billion yuan, a year-on-year decrease of 9.1%. This is mainly because the company's organizational model has been upgraded from the original region-based to the industry-based, which has had a certain impact on business operations.
However, since the upgrading and transformation of the organizational model has been basically completed, and gradually entered a good growth track, the company's large enterprise customer business achieved a contract value of 1.74 billion yuan in the first half of the year, a year-on-year increase of 9.2%. In terms of months, the year-on-year decrease of 5.6% from January to April, the year-on-year increase of 7.1% in May, and the year-on-year increase of 25.6% in June. Among them, the amount of business contracts signed in July increased rapidly, with a monthly growth rate of over 60%. As of the end of July, the year-on-year growth rate of the company's cumulative contracted value of large-scale enterprise customer business increased to 13.5%.
It is worth mentioning that in the first half of 2023, the company signed 4 new first-level state-owned enterprises. Branch Group and other enterprises.
In terms of medium-sized enterprise customer business, the revenue in the first half of 2023 will be 554 million yuan, a year-on-year increase of 10.5%. Among them, the cloud service business achieved revenue of 308 million yuan, a year-on-year increase of 25.2%, and the core product renewal rate reached 92.3%.
In terms of small and micro enterprise customer business, the revenue in the first half of 2023 will be 378 million yuan, a year-on-year increase of 12%. Among them, cloud subscription revenue reached 229 million yuan, a year-on-year increase of 28.2%.
In addition, according to Gartner's research, UFIDA is the only Asia-Pacific manufacturer among the top 10 global ERP SaaS market, and the only Chinese manufacturer among the top 10 global application platform software. At the same time, research by IDC and CCID Consulting shows that UFIDA continues to lead the Chinese enterprise cloud service market, taking the No. The large and large enterprise market has ranked first in market share for many years in a row.
To sum up, UFIDA has created a promising road for itself by spending money on research and development. The company's current main business is developing well, and its position as the "big brother" in the industry is still stable.
epilogue
In the first half of 2023, UFIDA, which "sit firmly at the top", posted a new high loss, and the market was in an uproar for a while.
However, Songuo Finance believes that the "loss" of UFIDA may only be temporary. It is undoubtedly a wise move for UFIDA to unswervingly increase investment in R&D and human resources and lay a solid foundation for enterprise development in the "transitional hurdle" of critical survival. In the future, with product upgrades and implementation, the company's potential value will continue to be released, and it is expected to usher in an inflection point in performance in the second half of the year.
Author: Winning Buffett's Fate
Source: Songuo Finance