The company attributes the narrowing of net losses in Q1 to the good progress of subscription transformation. In Q1 of 2023 and 2024, the proportion of subscription revenue to operating revenue will be 35% and 44%, respectively; the subscription renewal rate of core products has been stable at over 90%; Fujian Foxit Software Development Joint Stock will focus on creating enterprise-level AI applications.
On June 17th, in the earnings conference for 2023 and the first quarter of 2024, Foxit Software's chairman and CEO, Xiong Yuqian, said that the company's focus on traditional PDF product development was on continuous product iteration and upgrading, as well as improving AI capability. In terms of product structure, the operating income of 10-30 billion yuan products was 401/1288/60 million yuan respectively.
Under the wave of artificial intelligence, software companies are committed to promoting the application of AI technology. In terms of AI layout, Foxit Software disclosed in its annual report that its core product PDF editor added AI assistant function.
However, most of the AIGC applications that can be implemented are for office and drawing classes. The profit model is mainly subscription and pay-as-you-go. In the field of PDF, Foxit Software stated that the application of artificial intelligence-related technologies can provide more intelligent document solutions and promote knowledge workers to improve their efficiency in obtaining and processing content.
Foxit Software revealed in recent institutional research that it will focus on building enterprise-level AI applications in terms of AI technology, mainly in two research and development directions: extracting structured data, extracting key data from documents; and building enterprise-level knowledge bases.
The specific product form of enterprise-level AI services is the intelligent document processing platform. Foxit Software disclosed that the intelligent document processing platform has already signed pilot projects in the education industry and the political and legal system.
However, Foxit Software has not yet disclosed the revenue brought by its AI business. In addition, the company's net loss in 2023 was relatively severe, with a net loss attributable to shareholders of -90.941 million yuan, and the loss ratio has greatly expanded. The net loss in the first quarter of this year continued, and the net loss reached 10.61 million yuan, but the loss narrowed by 6.47% year-on-year.
Foxit Software explained that the main cost of new projects lies in the labor costs incurred. The company will strictly control personnel growth and plan to reduce net investment in new projects in the future. According to the company's annual report, Foxit Software increased 43 R&D personnel in 2023, and the overall compensation increased by 45.4128 million yuan compared with 2022.
Xiong Yuqian, Chairman and CEO of Foxit Software, said at the earnings conference: "The main cost generated by investment in new projects are labor costs. The company will strictly control personnel growth and plan to reduce net investment in new projects." According to the company's annual report, compared with 2022, Foxit Software added 43 R&D personnel in 2023, and the overall compensation increased by 45.4128 million yuan.
Regarding the narrowing of net loss in the first quarter of this year, Foxit Software said that it was mainly due to the good progress of its subscription transformation. It is reported that Foxit Software started its subscription transformation in the second half of 2022, and its subscription model is mainly pay-per-year. The annual report shows that in 2023 and the first quarter of 2024, the proportion of subscription revenue to operating revenue was 35% and 44%, respectively. "The subscription renewal rate of the company's core products has remained stable at over 90%." Xiong Yuqian added.
Foxit Software also disclosed the research and development progress of other products at the earnings conference. Xiong Yuqian said that some of the company's new products aimed at vertical markets, such as Foxit Home Decoration and Foxit Ship Drawing Management System, are still being polished; projects such as electronic drawing collaboration system and intelligent document solution are still in the research phase.