Event: The 2024 semi-annual report was published by Youyou Network. With 2024H1, the company achieved revenue of 3.805 billion yuan, +12.93% year-on-year; net profit after deduction was -0.794 billion yuan, a year-on-year decrease of 0.146 billion yuan.
Performance was in line with expectations, revenue grew steadily, and gross margin continued to rise. 2024H1, the company's comprehensive gross margin was 52.55% (+3.70pct year on year); the cost control effect was remarkable, with a sales expense ratio of 30.04% (-2.02pct year on year), and the management expenses ratio was 14.86% (year-on-year -0.26pct); the company further optimized the business organization and talent structure and controlled personnel size. The number of employees was 22,658, -12% year on year, compared to -9% at the end of 2023. 2024Q2's profitability continued to improve in a single quarter. The company achieved revenue of 2.056 billion yuan, +8.51% year over year; realized net profit after deduction of 0.342 billion yuan, a year-on-year loss reduction of 0.101 billion yuan; and gross margin for the single quarter was 54.0%, +3.2pct month-on-month.
Cloud service business revenue and subscription-related contract liabilities are growing rapidly. 2024H1, the company's cloud service business revenue was 2.845 billion yuan, +21.3% year over year, accounting for 74.8% of revenue (+5.2pct year over year); subscription related contract debt was 1.95 billion yuan, +33.8% year over year; cloud service business ARR maintained a growing trend, reaching 2.33 billion yuan, +13.1% year over year; the cumulative number of cloud service paying customers was 0.7968 million, adding 0.0818 million.
YonBIP is developing well, and the business cloud transformation of medium and micro enterprises is accelerating. 2024H1, by market: 1) Large enterprise customer business revenue was 2.388 billion yuan, +11.2% year over year; of these, cloud revenue was 1.765 billion yuan, +16.8% year over year. YonBIP's revenue was +42.1% YoY, and the renewal rate was 101.1%. 2) The business revenue of medium-sized enterprise customers was 0.6 billion yuan, +8.3% year over year; of these, cloud revenue was 0.429 billion yuan, up 39.1% year over year. YonSuite revenue was +116.1% year-on-year, and the renewal rate continued to increase to 92.4%. 3) Changjietong's revenue was 0.456 billion yuan, +20.4% year over year; cloud subscription revenue was 0.309 billion yuan, +35.3% year over year.
Investment advice: The company is a domestic ERP leader, and we are optimistic that profits will return to growth after the organizational model is upgraded. We expect the company's revenue to 2024-2026 to be 11.3, 13, and 15 billion yuan, respectively, and net profit to mother of 0.093, 0.4, and 0.737 billion yuan respectively, maintaining a “buy” rating.
Risk warning: Product development and promotion fall short of expectations, customer acquisition falls short of expectations, and changes in customer budgets.