Will the 200 billion market for enterprise office IT services break out?
Author | Wu Lijuan
Editor 丨Li Yiming
Source | Mustang Finance
Renting a computer, how big can the business be?
Recently, E-Point Cloud Limited (hereinafter referred to as "E-Point Cloud") submitted a Prospectus on the Hong Kong Stock Exchange. At the beginning of the establishment of this company, it mainly provided computer-based office supplies rental services, so that enterprises no longer spend a lot of money to buy IT office equipment, and did not have to hire full-time personnel to maintain equipment and computer rooms, but could be used on demand.
In the Prospectus, E-Point Cloud positions itself as an office IT service provider, providing enterprises with one-stop office IT services such as IT equipment leasing, enterprise IT operation and maintenance, fixed asset management system, and equipment recycling in the form of subscription.
IT equipment leasing has been around for a long time, but what makes Easypoint Cloud special is that it claims to create the "office cloud" industry. The so-called office cloud, pointed out in the company's relevant public reports, refers to the cloud service provider to PC terminal computing power as the core to build a computing power pool, through the software system and PC remanufacturing factory to maximize the use of the computing power pool of computing power pool. In fact, it is to provide IT hardware in a service-oriented manner. The advantage of this is that on the one hand, it can concentrate the computing power of the PC side to avoid the vacancy of equipment; on the other hand, it can help enterprises reduce the cost of office expenses and improve profits.
Today, telling the story of the "office cloud" created by himself, YidianYun, founded by Dr. Ji Pengcheng of Tsinghua University, has begun the journey of sprinting into the Hong Kong stock capital market. He wants to build a company with a market value of 100 billion, can he do it?
From "Rent" to "Cloud"
Dr. Tsinghua wants to build a market value enterprise with a market value of 100 billion
In July 2009, Ji Pengcheng graduated from the Department of Automation of Tsinghua University with a doctorate, such an academic background, so that Yi Dianyun has the gene of technology from the beginning of its establishment.
Yidian Cloud, formerly known as Yidian Rent, is operated by Beijing Yidiantao Network Technology Co., Ltd., which was established in 2014 and is mainly engaged in computer leasing.
Since January 2015, Ji Pengcheng has served as Chairman of the Board and Chief Executive Officer of Beijing E-Dot Tao. In addition, since January 2018, he has also served as an independent director of Heilongjiang Mohe Rural Commercial Bank Co., Ltd.
IT equipment such as notebook computers, projectors, and printers is an indispensable hardware facility during the normal operation of enterprises.
According to the Prospectus, traditionally, enterprises (especially small and medium-sized enterprises) have mainly obtained office IT services through procurement models, which has caused a number of long-standing pain points in the industry, such as limited IT operation capabilities, lack of external technical support, hidden costs and uneven service quality.
Easy-to-order is to break this model and provide leasing services for enterprise IT.
Image source: EasyPoint Cloud Mini Program
In 2015, Yidian Leasing successively received a 6 million yuan angel round investment from Hongtai Fund, a Series A financing of US$4.55 million from Matrix Partners China heshun capital, and a series B financing of 120 million yuan in 2017. Since then, Source Code Capital has led a $32 million Series C and $60 million Series D round of financing.
The most recent financing was in March 2021, E-Leasing completed more than 500 million yuan of Series E financing, led by Source Code Capital, and followed by Yunshi Capital and a sovereign fund.
After many years of deep cultivation in the field of office IT leasing, EasyPoint Rent announced that it was renamed Aspoint Cloud, and took the lead in proposing the concept of "office cloud" in the industry, claiming to provide services with PC computing power as the core and promote the development of office IaaS (Infrastructure as a Service) in China.
In the post-epidemic era, "clouds" can be used everywhere in life. "Cloud" services emphasize customer experience as the center and service as the focus.
According to Ji Pengcheng's explanation, from the customer's point of view (demand side), the "office cloud" is a product that packages hardware, hardware services, and Office IT services.
This kind of service is similar to the co-working mode operated by Ucommune Workshop, except that Yidian Cloud does not provide space, but hardware equipment such as computers, and is equipped with corresponding personnel to coordinate services.
Zhang Xiaorong, president of the DeepIn Research Institute, believes that the word "office cloud" has some vague meanings, is not easy to understand, does not accurately convey the advantages of products or services, and is easy to be confused with similar marketing concepts in the market, such as "cloud office platform", which literally means that office software is cloud-based, but it is also bland.
According to public information, Yidian Cloud has launched a set of order receiving systems similar to online car-hailing and takeaway delivery, called "Xuanjie", with an exclusive service hotline and service manager, from one person serving a precinct in the past to a building or a street in the present, which can achieve 2-4 hours to solve the problem.
According to the research institute Frost & Sullivan, ePoint Cloud is The first and largest technology-enabled office IT service provider in China in terms of revenue, number of service equipment and remanufacturing capabilities. As of September 30, 2021, ePoint Cloud has more than 36,000 subscription enterprise customers and more than 1 million subscription devices. In terms of revenue in 2020, Yidian Cloud ranked first with 643 million yuan.
In addition, EasyPoint Cloud has a very clear plan for the next three to five years. According to the Global Network, in the next five years, Yidian Cloud will continue to maintain an annual revenue growth of more than 70%, and in 2025, it will become a Chinese enterprise with a market value of 100 billion.
Revenue is single, with a loss of nearly 500 million yuan in the past 3 years
Is the business of renting a computer easy to do?
According to the prospectus, according to the revenue structure, the revenue of EasyPoint Cloud is composed of on-demand office IT services, sales of equipment, SaaS (software services provided through the network) and other services. Among them, the use of office IT services as its main source of income, from 2019 to the first three quarters of 2021, the revenue of this business accounted for 78.5%, 79.1% and 85.4%, respectively, and the revenue tended to be single.
Image source: Yi Dianyun "Prospectus"
The share of equipment sold fell to 13 percent in 2021, while SaaS and other services accounted for even less revenue, less than 2 percent in the last three years.
It is worth mentioning that SaaS is one of the service models for cloud computing. Zhang Xiaorong said that cloud computing is a capital-intensive and technology-intensive industry. To do this business, companies need to invest a lot of money. Cloud computing has broad prospects, is an important infrastructure for the development of digital society, the state has done a major cloud computing policy planning, various domestic organizations and institutions and government and enterprise units have the need to enter the cloud, but in reality encountered problems. Today, economic growth is sluggish, domestic demand is insufficient, and the willingness of small and medium-sized enterprises to pay for cloud services has declined, and the market is cooling.
From 2019 to the first three quarters of 2021, Yidian Cloud achieved operating income of 632 million yuan, 813 million yuan and 838 million yuan respectively, and the gross profit margin was 38%, 41.4% and 48.4% respectively.
Although the business of EasyPoint Cloud has a high gross profit margin, it is not profitable during the same period. From 2019 to the first three quarters of 2021, the loss was 255 million, 88 million yuan and 135 million yuan respectively, with a cumulative loss of nearly 500 million yuan, and the expenditure on sales and marketing was large.
According to the Prospectus, the marketing expenses in the above stages accounted for 16.5%, 14.6% and 15.9% of the current revenue respectively, and half of its total staff were sales and marketing personnel.
E-Point Cloud's customers are mainly small and medium-sized enterprises, and in the Prospectus, they also mentioned the risks they face. The business of SMEs is vulnerable to macroeconomic or industry-wide impacts, and may therefore also have a material adverse impact on E-Point Cloud's operating results and financial position. In addition, the ability of enterprises to make payments is also one of the unpredictable risks, and the increase in payment arrears will have a negative impact on their liquidity position.
At the same time, the total amount of trade receivables of EasyPoint Cloud is also rising. From 2019 to the first three quarters of 2021, this part of the payment (before deducting the impairment loss under the expected credit loss model) was 160 million yuan, 224 million yuan and 288 million yuan, respectively.
In addition, EasyPoint Cloud is highly dependent on the top five suppliers, and the procurement costs spent on suppliers are also increasing year by year.
Yidianyun also has high liabilities, with current and non-current borrowings reaching RMB900 million, RMB1.2 billion and RMB1.3 billion respectively in the first three quarters of 2019-2021.
Zhang Xiaorong believes that the computer rental industry has a long history, but the format is not innovative enough, the market growth is slow, the growth rate is far behind the speed of urban Internet development, generally in economically underdeveloped areas, the use of poor economic level to develop business.
According to China Insight Consulting, the number of Chinese companies is expected to grow from 26 million in 2016 to 43.3 million in 2020, and is expected to reach 80.7 million in 2026, with a compound annual growth rate of 10.9% from 2020 to 2026.
Small and medium-sized enterprises are an important part of Chinese enterprises, guanyan report network statistics, in the past five years, the number of small and medium-sized enterprises in the mainland to maintain a steady growth trend, is expected to 2021 to 2025 is still growing, 2025 the number of small and medium-sized enterprises will reach more than 76 million.
According to Frost & Sullivan data, the market size of enterprise office IT services increased from 136.4 billion yuan in 2016 to 150 billion yuan in 2020, and is expected to reach 200 billion yuan in 2025.
On the other hand, compared with the 60% market penetration rate in the United States, the penetration rate of China's paid office IT industry is only 2.1%, which is still in the early stages of development, so the growth potential is huge. In terms of revenue, in 2020, the market size of the usage-based payment segment accounted for only 2.9% of the Chinese enterprise office IT services market, significantly lower than the 53% of the US market.
In addition to Easy Point Cloud, Founded in 2013, Xiao Xiong U Rent is also a company that serves enterprise IT office equipment scenes. Aiqi investigation shows that Xiaoxiong U rent has experienced 8 rounds of financing, and investors include Lenovo Venture Capital, JD Group, Tencent Investment, etc.
The huge market, the favor of capital, renren renting machine, 52 rental machine and other IT office equipment leasing companies have been established, making this industry lively.
The "China IT Office Equipment Operation Industry Research Report" believes that IT office equipment operation can help enterprises light asset operation, which is prevalent in developed countries such as Europe and the United States. Many multinational companies such as Google, Walmart, Amazon and other companies have quickly become industry leaders after adopting asset-light operations.
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