(Image source: Visual China Group)
On April 25, Blue Whale News reported ( journalist Shao Yuting) that in the evening of April 25, Yonyou Network Technology (600588.SH), a leading enterprise service company, announced that in the first quarter of 2025, the company achieved revenue of 1.378 billion yuan, a year-on-year decline of 21.22%; the net income attributable to shareholders of the listed company was a loss of 0.736 billion yuan, compared to a net loss of 0.453 billion yuan in the same period last year; basic EPS was -0.22 yuan.
In 2023, Yonyou Network Technology experienced its first transition from profit to loss since its listing. In 2024, the company first exhibited a dual decline in revenue and net profit, and the performance continued to deteriorate in 2025. Therefore, Yonyou Network Technology chose to pursue a secondary listing in Hong Kong. On April 22, Yonyou Network Technology officially announced its plan to go to Hong Kong, stating that the plan aims to further promote its global strategy 2.0, enhance connections with overseas capital markets, and further improve the company's comprehensive competitiveness.
This decision came just half a month after the company’s founder Wang Wenjing resumed the CEO position. From being an 'software giant' in A-shares to a 'rookie' in Hong Kong stocks, Yonyou Network's secondary listing is both an opportunity for strategic leap and a reluctant choice of battling against the wall. Faced with an ever-widening loss gap and increasingly tight cash flow, fundraising in Hong Kong may provide an urgent solution, but if the product structure cannot be fundamentally improved and reliance on major clients cannot be broken, this global gamble may evolve into a deeper financial quagmire. With Wang Wenjing at the helm again, can the strategic reconstruction break through?
Performance plummets, cash flow pressure leads to a desperate battle in Hong Kong.
According to the official website, Yonyou Network Technology was established in 1999 and is a provider of enterprise cloud computing services and software, with its main business focused on offering SaaS, PaaS, BaaS, DaaS, and other services to enterprise clients and public organizations.
"North Yonyou, South KINGDEE INT'L," for many years, Yonyou Network Technology has grown into a leading firm in the Domestic Software service industry, once forming a north-south competitive landscape with KINGDEE INT'L. However, with the sweeping transformation in the Software industry, Yonyou Network Technology's performance has significantly declined in recent years, and in 2023, the company experienced its first transition from profit to loss since its listing. The loss continued in 2024, marking the first time the company saw a dual decline in revenue and net income, with net income declining for five consecutive years.
According to the Earnings Reports, in 2024, Yonyou Network Technology's revenue was 9.153 billion yuan, a year-on-year decline of 6.56%; the net loss was 2.069 billion yuan, a year-on-year decline of 121.76%; the net loss attributable to shareholders of the listed company was 2.061 billion yuan, with a basic loss per share of 0.62 yuan/share.
Upon investigating the root causes of financial deterioration, the side effects of the major client strategy are gradually becoming apparent. Specifically, in 2024, large enterprise clients contributed revenue of 5.864 billion yuan, accounting for over 64%, but down 10% year-on-year; medium-sized clients and government clients declined by 9.7% and 7.7% respectively. Yonyou Network Technology stated in its annual report that some customer demands were delayed, leading to a year-on-year decline in contract amounts. Additionally, the company has been pushing harder on the subscription business model, which has had a certain impact on overall short-term revenue.
In 2025, Yonyou Network Technology's performance continues to deteriorate. The Earnings Reports show that in the first quarter of 2025, the company achieved revenue of 1.378 billion yuan, a year-on-year decline of 21.22%; the net income attributable to shareholders of the listed company recorded a loss of 0.736 billion yuan, compared to a net loss of 0.453 billion yuan in the same period last year; the basic EPS was -0.22 yuan.
Regarding the decline in performance, Yonyou Network Technology stated that in January of this year, the contract signing amount saw a significant year-on-year decline, but the contract signing amounts in February and March have returned to positive growth, showing signs of improvement.
In addition to the impact of declining revenue, Yonyou Network Technology's losses were also heavily influenced by R&D investments and staff adjustments. In 2024, Yonyou Network Technology initiated a series of layoff actions, with the annual report showing that by the end of 2024, the total number of employees was 0.0213 million, a reduction of 3,666 compared to the end of the previous year.
However, layoffs did not achieve the intended cost reduction effect. In 2024, the company paid 0.142 billion yuan in severance compensations due to layoffs, leading to a 10.14% year-on-year increase in management expenses, reaching 1.22 billion yuan. In 2025, layoffs continued, with the number of employees decreasing by 1,689 compared to the end of 2024 by the end of the first quarter, and the economic compensation for departing employees increased by 19.92 million yuan year-on-year.
The combination of poor performance and increased expenditures has resulted in continuous pressure on cash flow, therefore, the fundraising for listing in Hong Kong is seen as a key action to fill the financial gap.
The Earnings Reports indicate that in the first quarter of 2025, Yonyou Network Technology's cash flow from operating activities (CFO) was -1.022 billion yuan. By the end of the first quarter, the company's cash funds amounted to only 3.612 billion yuan; there were short-term borrowings of 4.328 billion yuan; non-current liabilities due within one year were 1.095 billion yuan; and long-term borrowings were 1.245 billion yuan.
Wang Wenjing returns to take the helm again; can the strategic restructuring break the deadlock?
During the dark moment of declining performance, the core executives of Yonyou Network also experienced intense upheaval.
In early April 2025, the news of Yonyou Network's founder Wang Wenjing's return was like a deep-water bomb, stirring huge waves in the Capital Markets. Statistics show that since 2021, the position of company president has changed hands four times, with an average tenure of less than 15 months.
In January 2019, 55-year-old Wang Wenjing resigned as president of Yonyou Network, with company veteran Chen Qiangbing taking over. In a letter to colleagues, Wang stated that he would focus on the position of chairman and emphasize work on the company's development strategy, while Chen Qiangbing would be fully responsible for the company's operational management.
However, in 2021, Yonyou Network's net income declined, and Wang Wenjing chose to come out of retirement to serve as president, leading the spin-off of subsidiary IPOs and initiating the largest business organizational model upgrade in the company's history.
In January 2024, Wang Wenjing resigned again, and the presidency was once again assumed by Chen Qiangbing. However, under the pressure of continued losses, Chen Qiangbing chose to leave in January 2025, and Yonyou Network hired its first external president, Huang Chenhong. Information shows that Huang Chenhong has rich executive experience in foreign enterprises, having held key positions at SAP, Dell, and other companies.
At that time, Yonyou Network emphasized that the global market was one of the important development strategies for the company's new phase, and in 2025, the company would further accelerate the advancement of the Global 2.0 strategy, enabling China software to serve more enterprises globally in their digital transformation and innovative development.
However, less than three months after taking over this "hot potato," Huang Chenhong also chose to leave, and the now 61-year-old Wang Wenjing had no choice but to return once again.
Wang Wenjing, who has stepped back from the spotlight for three years, announced his return as CEO, and his comeback is filled with great expectations to turn the tide. In his first week in office, Wang Wenjing proposed a comprehensive implementation of the Global 2.0 strategy, which is based in the Asia-Pacific and serves the Global market. While further deepening efforts in the Southeast Asian market, he also initiated the expansion into the European, North American, Japanese, and Middle Eastern markets, providing localized services for corporate globalization.
As of now, the company has sold and delivered to over 1,300 large and medium-sized enterprise clients in more than 40 countries and regions, of which local overseas customers account for 60%, while Chinese enterprises going overseas account for 40%.
Success is easy, but maintaining it is difficult. Now, Yonyou Network Technology stands at a crossroads of fate. Can Wang Wenjing's return again turn the tide?
