个人订阅业务：3Q24 收入7.62 亿元（同比+17.2%），较2Q 有所降速。截至3Q24 主要产品月活设备数6.18 亿（同比+4.9%），其中PC 端2.77 亿（同比+7.0%），我们判断月活提速增长主要源自较好的海外表现（如南美等西语区增长迅速），而国内月活增长或较为平稳，我们预计累计付费用户数超3,900 万人，ARPU 平稳增长。我们估算3Q24 公司合同负债总额达到27.9亿元（环比增加1.0 亿元），预计3Q24 个人订阅业务流水增速与收入增速相近。WPS AI 方面，公司2H24 战略重点在于更多用户的活跃使用，我们预计AI 活跃用户数和使用时长或持续提升，支持C 端订阅业务增长。3Q24 results are in line with our expectations
The company announced 3Q24 results: revenue of 1.214 billion yuan, +10.5% year over year; net profit to mother 0.318 billion yuan, +8.3% year over year; net profit after deducting non-return to mother 0.303 billion yuan, +6.7% year over year; net operating cash flow of 0.451 billion yuan, +31.2% year over year. Overall 3Q24 results are in line with our expectations.
Development trends
Personal subscription business: 3Q24 revenue of 0.762 billion yuan (+17.2% YoY), down from 2Q. As of 3Q24, the number of monthly active devices for the main products was 0.618 billion (+4.9% year over year), of which 0.277 billion on the PC side (+7.0% year over year). We judge that the increase in monthly activity is mainly due to good overseas performance (such as rapid growth in South America and other Spanish-speaking regions), while domestic monthly activity growth may be relatively stable. We expect the cumulative number of paid users to exceed 39 million, and ARPU is growing steadily. We estimate that the total contract debt of the 3Q24 company reached 2.79 billion yuan (an increase of 0.1 billion yuan over the previous month). We expect the 3Q24 personal subscription business flow growth rate to be similar to the revenue growth rate. In terms of WPS AI, the company's 2H24 strategy focuses on the active use of more users. We expect the number of active AI users and usage time to continue to increase, supporting the growth of the C-side subscription business.
Institutional subscription business: 3Q24 revenue was 0.248 billion yuan (same year on year). This part of the business continued the trend in the first half of the year. Since new customers were mostly large-scale private enterprises and local state-owned enterprises using a pure public cloud subscription model, confirmation of current incremental revenue was limited. We expect the short-term impact of business model transformation to gradually decrease, and subscription contract liabilities formed earlier will gradually be recognized as revenue. We expect that starting 4Q24, the growth rate of corporate institutional subscription business revenue will pick up. Combined with the recovery in downstream demand from central and state-owned enterprises, the growth rate of this part of the business is expected to return to around 10%-15% by 2025. Agency-authorized business:
3Q24 revenue was 0.143 billion yuan (+9.0% YoY), which is a significant improvement over 2Q24. We judge that demand for localization is picking up mainly from local governments. Looking ahead to 4Q24 and 2025, we believe that there is a high degree of certainty where localization will decline further, and that the authorized business of the company may continue to benefit. We expect the growth rate of this part of the business to continue to rise in the next few quarters starting 4Q24, which will drive the company's revenue and profit performance.
Expenses and profit side: The company's 3Q24 new expenses are mainly reflected on the R&D side (R&D expenses +30%, net increase of 0.05 billion yuan month-on-month). We believe that it is mainly due to the entry of new employees during the company recruitment season. We judge that the company's overall personnel planning is still relatively stable, and it will maintain a certain amount of R&D capacity and sufficient reserves under the fluctuation of the macro environment. We expect the company's profit margin to maintain a steady trend.
Profit forecasting and valuation
Keep the company's 2024/2025 revenue forecast basically unchanged; reduce the company's 2024/2025 profit by 3.3%/3.3% to 1.457/1.824 billion yuan in consideration of continued investment in R&D; and keep the 2024/2025 net operating cash flow forecast basically unchanged, considering the company's healthy subscription flow performance. Maintaining an outperforming industry rating, considering the upward trend in the industry valuation center, the target price was raised by 19.5% to 318 yuan (corresponding to 55x 2025eP/OCF), with 20.2% upward space, and the current price corresponds to 46x 2025e P/OCF.
risks
R&D investment exceeded expectations; WPS AI commercial implementation fell short of expectations; the pace of promotion of localization fell short of expectations.