Annual results were under year-on-year pressure, and profit declined significantly in the fourth quarter. In 2024, the company achieved revenue of 9.153 billion yuan, -6.57% year-on-year, and realized net profit to mother of -2.061 billion yuan, or -113.13% year-on-year. Looking at Q4 alone, the company achieved revenue of 3.415 billion yuan, -16.48% year-on-year, and realized net profit to mother of -0.606 billion yuan, or -1058.37% year-on-year. The company's revenue pressure is mainly due to: 1) phased delays in demand from some customers, putting pressure on performance; 2) promoting the subscription business model, which has an impact on overall short-term revenue. In addition to the above factors, the company's profits are also affected by non-recurrent factors such as personnel adjustments and impairment losses. The company's current negative impact on profits is gradually being cleared, and net profit is expected to bottom up.

The proportion of core products increased, and large customers continued to introduce them. In 2024, the company's cloud service business revenue was 6.85 billion yuan, of which the core product BIP3 achieved revenue of 3.14 billion yuan, accounting for an overall revenue ratio of +2.4 percentage points year-on-year. In terms of customers, cloud service revenue for medium-sized enterprises increased 7.9% year on year, and YonSuite renewal rate increased to 95%; small and micro enterprises achieved cloud subscription revenue of 0.66 billion yuan, +34.1% year on year, and net profit doubled year on year; YonBip renewal rate for large enterprise customers reached 91.5%, and Tier 1 central enterprises signed 7 new contracts, bringing the total number of contracts to 44. The company's contract debt was $3.05 billion, +8.8% YoY. Among them, cloud business-related contract liabilities were 2.78 billion yuan, +13.0% year over year, and subscription related contract liabilities were 2.31 billion yuan, +25.9% year over year. The company continues to add new major customers, laying the foundation for the release of core products. Related contract liabilities have increased, and revenue performance is guaranteed to a certain extent.

Overseas business continues to advance, and products fully embrace AI. In 2024, the company's overseas business revenue increased by more than 50% year on year. It established new subsidiaries in Vietnam, Japan, Germany, etc., and helped Chinese companies such as China Harbour and Gree to go overseas. It has delivered a total of 1,300 overseas customers in more than 40 countries and regions. In the new product field, the company released YongPt2.0, a major enterprise service model. Through 1 large model platform, 2 application frameworks (Agent and RAG), and a closed loop of data in the application, it effectively connects enterprise needs and general big models, covering more than 100 scenarios such as finance, manpower, supply chain, etc., and landed in leading customers such as China Merchants Group (HR Digital Intelligence Employees) and China Minmetals (Financial Digital Intelligence Employees). The company's core product, BIP3, released R5 and R6 versions to comprehensively enhance AI integration, data services, and globalization capabilities, and achieve a 50% year-on-year reduction in resource consumption and a 30% reduction in operation and maintenance costs.

Risk warning: Increased competition in the industry, falling short of expectations in the development and marketing of new products, overseas business risks, loss or shortage of key technical talents, etc.

Investment advice: Maintain an “better than the market” rating. Affected by changes in the company's downstream demand, net profit to mother is expected to be 0.554/0.256/1.051 billion yuan in 2025-2027. The company is the world's leading enterprise service provider, comprehensively promotes AI product research and development, and continues to be introduced by major customers. Considering the gradual clarification of factors influencing the company's profits, performance is expected to gradually recover and maintain the “superior to the market” rating.