Since 2023, global SaaS leader Salesforce (Salesforce) has actively deployed AI, improved profit margins, and achieved a sharp recovery in stock prices (over 100% increase), allowing the market to once again see the vitality of SaaS industry leaders. In this context, Maifushi, a leading domestic marketing and sales SaaS company, is also actively attacking the capital market and moving on the fast track of development.

According to the Zhitong Finance App, according to the Hong Kong Stock Exchange's disclosure on April 23, Mifushi passed the Hong Kong Stock Exchange's main board listing hearing, and China Finance Bank International were co-sponsors.

The cumulative loss over three years is about 660 million yuan

According to the prospectus, Maifushi is a marketing and sales SaaS solution provider in China. The company provides marketing and sales SaaS solutions through the MarketingForce platform. From 2021 to 2023 (hereinafter referred to as the reporting period), the company's SaaS business and precision marketing services contributed almost five to five percent of revenue.

Specifically, in the SaaS business, the company provides enterprises with cloud-based SaaS products to ensure effective and efficient marketing and sales management for various use cases. During the track record period, it mainly provided two iconic SaaS products, T-Cloud and Zhenke, which combined a series of functional modules to solve the pain points faced by enterprises in marketing and sales activities. As of December 31, 2023, there are 237 functional modules available for SaaS products. Users can subscribe and add additional functional modules to the SaaS products they subscribe to for more personalized results.

During the reporting period, the number of users in the company's SaaS business reached 24,127, 23,647 and 25,495, respectively. In the same year, the average contract value for each SaaS user was 4,5026 yuan (unit: RMB, same below), 41,584 yuan, and 51238 yuan, respectively.

Furthermore, Maifushi's precision marketing service business has established a diversified customer base and has a good track record in serving leading companies with a high willingness to pay. During the reporting period, the company served 845, 998 and 1,042 advertisers respectively. Each advertiser spent an average of 5.5 million yuan, 5.9 million yuan and 6.1 million yuan respectively.

Thanks to the growth in the scale of the two businesses, McFTSE's revenue increased day by day, to reach 887 million yuan, 1,143 million yuan, and 1,232 billion yuan, respectively. However, the company's hematopoietic capacity is still insufficient. During the same period, the company lost about 273 million yuan, 216 million yuan, and 169 million yuan respectively, with a cumulative loss of about 660 million yuan over three years.

The Zhitong Finance App notes that the gross sales margin level of Maifushi is not low. During the reporting period, the company's comprehensive gross margin reached 54.5%, 49%, and 57.3%, respectively. High gross profit performance did not translate into high profits, mainly cost-side expenses, especially marketing and sales expenses. During the period, the company's sales expenses were about 280 million yuan, 310 million yuan and 330 million yuan respectively, with a compound annual growth rate of 7.24%; sales expenses accounted for about 104.24%, 145.52%, and 192.83% of losses, respectively. Simply put, as the scale of revenue grew, so did Maifushi's sales expenses. What is gratifying is that the company's losses are gradually narrowing. This may indicate that as the business scale effect is gradually unleashed, the profitability of Maifushi is expected to further improve.

Using Salesforce as a guide to the underlying logic of McFTSE's growth

The market for marketing and sales SaaS solutions in China is currently growing. According to Frost & Sullivan's data, in terms of 2022 revenue, Maifushi is the largest marketing and sales SaaS solution provider in China, accounting for 2.6% of the market share.

However, due to the highly fragmented competitive landscape of the marketing and sales SaaS solutions market in China, the leading edge of Mifushi is not significant, and the gap with the second-largest “player” in the industry (2.1% market share) has not clearly widened. Under competitive struggle, companies are cleaning up corresponding increases in expenses in order to acquire customers and increase customer retention rates. This also explains the increase in the company's sales expenses.

However, looking at Salesforce, the global SaaS leader, we can divide the SaaS company's growth model into three stages: one is to break through a single product; the second is to enter surrounding fields and platformize at the same time to allow third-party developers to develop various applications on software; and the third is to launch an acquisition model to expand TAM and form sales collaboration. Currently, Salesforce is in the third phase. The market share of core products is high. It continues to rely on mergers and acquisitions to achieve growth. The growth rate of the main business is slowing down, and profit margins are declining due to acquisitions. Too many acquisitions, no organic growth. Currently, we are in the stage of strategic restructuring: reducing costs, integrating and acquiring companies, and increasing profit margins again.

The return of Maifushi itself can be found to be in the second phase. The company provides a comprehensive cloud solution covering the entire marketing and sales management process of the enterprise through the Marketingforce platform. As of December 31, 2023, the company has developed and launched 237 functional modules, which have promoted the development, iteration and upgrading of its products.

Therefore, judging from this logic, the growth momentum of Maifushi comes from two aspects. One is vertical expansion of the business, forming effective business collaboration through acquisitions and expansion; the second is continuous growth in the scale of the industry.

According to Frost & Sullivan, the market for marketing and sales of SaaS solutions grew from RMB 7.3 billion in 2018 to RMB 20.6 billion in 2022, with a CAGR of 29.7% from 2018 to 2022. The market size for marketing and sales of SaaS solutions is expected to reach RMB 74.5 billion in 2027, with a CAGR of 29.3% from 2022 to 2027.

Although the current market for marketing and selling SaaS solutions is relatively small, Chinese companies are on the rise in the trend of subscribing to SaaS solutions. Looking ahead, more and more Chinese companies are expected to use SaaS solutions for marketing and sales because of their advantages such as flexible subscription options, high scalability, easy implementation, and low maintenance requirements.

However, whether it is business upgrading and expansion or market size expansion, Maifushi requires a large amount of financial support, and the company is currently still in a state of loss. Unfortunately, the company admits that losses may continue in the future due to risk factors. The company pointed out that the loss was mainly due to the large amount of money it invested in the development and sale and marketing of SaaS products and interest expenses on preferred shares. Furthermore, in order to support the company's expanded business scale, the additional administrative staff has also led to an increase in administrative expenses. If the company is unable to generate sufficient revenue and manage its expenses, the company may continue to generate significant losses and record cumulative losses in the future, and may not be able to achieve or subsequently maintain profitability.

According to the Zhitong Finance App, judging from the development of the marketing and sales SaaS solution industry and the growth of Maifushi's business, it may become a target worth paying attention to in the domestic SaaS industry after listing, but profitability has always been a hurdle that Maifushi cannot bypass in its growth path.