C 端业务持续增长，AI 促进付费率提升。公司24Q3 个人办公业务实现收入7.6 亿元，同比+17.2%。主要系AI 2.0 产品新增写作、数据助手等，场景丰富后拉动付费率持续提升，此外，月活设备数量也实现了增长，WPS Office PC 版月度活跃设备数2.77 亿，同比+6.95%。Key points of investment:
The company released the 24Q3 report. According to the announcement, the company achieved revenue of 1.214 billion yuan in 24Q3, +10.5% year-on-year; realized net profit of 0.318 billion yuan to mother, +8.3% year-on-year. The company achieved overall revenue of 3.627 billion yuan in 24Q1-Q3, +10.9% year-on-year; realized net profit of 1.04 billion yuan to mother, +16.4% year-on-year. Overall performance was in line with expectations.
The operating cash flow performance was impressive, and the advantages of the subscription system were demonstrated. The company achieved net operating cash flow of 0.45 billion yuan in 24Q3, +31.2% year-on-year; 24Q1-Q3 achieved an overall net operating cash flow of 1.08 billion yuan, +15.0% year-on-year. We believe that it is mainly due to the increase in the proportion of C-side products and the increase in the quality of B-side subscription payments. The subscription advantage shows a higher quality of development.
The C-side business continues to grow, and AI is driving up payment rates. The company's 24Q3 personal office business achieved revenue of 0.76 billion yuan, +17.2% year-on-year. Mainly AI 2.0 products added writing, data assistants, etc., which led to a continuous increase in payment rates after scenarios were enriched. Furthermore, the number of monthly active devices also increased. The number of monthly active devices in the WPS Office PC version was 0.277 billion, +6.95% compared to the same period last year.
B-side subscriptions were under phased pressure, and the Xinchuang business began to resume. 24Q3 institutional subscriptions achieved revenue of 0.25 billion yuan, which is the same as the previous year. Relying on B-side WPS 365, the company is expected to expand from large central state-owned enterprises to local state-owned enterprises and large private enterprises. Currently, the product is still quite cost-effective compared to Microsoft 365. The agency's authorized business achieved revenue of 0.14 billion yuan, +9% over the same period last year. The Xinchuang division fully lays out the sinking market, which is expected to further drive growth.
SaaS+Xinchuang+AI, the valuation is expected to increase further. The company's 24Q3 growth rate increased marginally, and optimistic economic expectations will positively drive the company's B-side and G-side businesses currently under pressure. Furthermore, in the upward phase of risk appetite, scarce competitive patterns, scalable business models, and broad market space are expected to become important supports for the company's upward valuation.
Maintain a “buy” rating. Maintaining the profit forecast, the company is expected to achieve revenue of 5.25, 6.48, and 8.2 billion yuan in 24-26, respectively, and is expected to achieve net profit of 1.51, 1.92, and 2.46 billion yuan. As a domestic digital office leader, the company also enjoyed AIGC's transformation dividends, improved cost performance compared to previous valuations, and maintained a “buy” rating.
Risk warning: AIGC product application results fall short of expectations; challenges from industry giants and new entrants; the pace of subsequent release of the Xinchuang business may fluctuate.
