Recently, Yonyou Network (600588. SH) released its 2023 annual report, with annual revenue of 9.796 billion yuan, a year-on-year increase of 5.8%, and net profit attributable to the parent company of -967 million yuan, a year-on-year decrease of 541.3%. This is the company's first annual loss since going public.
It is reported that due to the upgrade of the business organization model, the company's operating costs and expenses will increase more in 2023, which is the main "culprit" of its losses. However, with the completion of the organizational change, the company said that the phased impact on the business and performance has passed.
"Yonyou's loss this time is actually a very normal phenomenon in strategic development. Large-scale increase in R&D investment, we want to really make platforms and products that can replace international manufacturers. Chen Qiangbing, president of Yonyou Network, said in a recent interview with the 21st Century Business Herald.
He told reporters that the current stage of high investment in the company has basically passed, the company is ready to go, and the next step will be to further balance the growth of revenue and the growth of expenses and costs to maintain a certain level of profitability.
Chen Qiangbing. Data map
The "pains" of industrial transformation
Yonyou continued to deepen its hierarchical operation last year.
It is reported that last year, the company launched the largest business organization model upgrade in the company's history, the large enterprise customer business from the original region-based organization model to the industry-based organization model, medium-sized enterprise customer business continued to be carried out in accordance with the regional but national unity, vertical organization.
"The transformation of the industry is to further improve the level of specialization and improve the overall customer service ability, which is in line with customer value. Chen Qiangbing told reporters.
In 2023, in the enterprise-level market, the company's revenue from large, medium and micro enterprises will be 6.519 billion yuan, 1.386 billion yuan and 806 million yuan respectively, an increase of 4.3%, 21.4% and 17.7% year-on-year respectively, and the revenue from cloud services will be 4.731 billion yuan, 865 million yuan and 490 million yuan respectively.
Among them, the business revenue of medium-sized and small and micro enterprise customers increased by 21.4% and 17.7% year-on-year respectively, while the business of large enterprise customers, which accounted for the largest proportion, only increased by 4.3% year-on-year due to the phased impact of the upgrading of business organization model.
Last year, revenue from large enterprise customers fell 9.1% in the first half of the year, but increased by 12.4% in the second half of the year. Among them, the contract value of large enterprise customers excluding subsidiaries increased by more than 30% year-on-year in the second half of the year.
It is understood that compared with small and medium-sized projects, the implementation cycle of large projects is longer, the revenue recognition cycle is also longer, and the signing of large projects in 2023 is mostly concentrated in the second half of the year, so the company's revenue growth rate is affected by changes in the contract structure.
It is worth mentioning that last year, the company's contract signing amount increased by 17.6% year-on-year, and the contract amount of projects above 10 million yuan increased by 71.1% year-on-year.
Du Yu, senior vice president of Yonyou Network and president of the high-end customer solution business group (LBG), told reporters, "Among the tens of millions of projects, generally speaking, 80% of the revenue will probably be confirmed in the 6~12-month cycle, and about 20% of the revenue will exceed one year." ”
In addition, in the government and other public organization markets, the company achieved business revenue of 982 million yuan, a year-on-year decrease of 12.5%. Overseas, the company launched the globalization 2.0 strategy, and while continuing to deepen its business development in Hong Kong, Macao, Taiwan and Southeast Asia, it also started to expand the markets in Europe, North America, the Middle East and Japan.
Although the company's overall revenue increased slightly, it posted its first annual loss last year.
It is reported that the loss is related to the increase in the company's operating costs and expenses, mainly including three aspects: the average annual number of people last year increased by 1,896 compared with 2022, and wages and salaries increased more than the same period last year, travel expenses and marketing expenses increased more, and outsourcing costs increased more year-on-year.
图片来源：IC photo
What's next?
"We chose to do the software track, in fact, we are doing the difficult but right thing, some peers have been losing money for many years, and some have never made a profit. Chen Qiangbing told the 21st Century Business Herald reporter at the recent media communication meeting.
Chen Qiangbing pointed out to reporters that the current stage of high investment in the company has basically passed, and the next step will be to further balance the growth of income and the growth of expenses and costs to maintain the company's profitability of a certain scale.
At the media communication conference, Chen Qiangbing also announced the basic logic of Yonyou Network's business development in 2024.
First of all, it focuses on customer management in the high-end large enterprise market, which is known as high-end customer management within Yonyou, which mainly focuses on three aspects: high value, high efficiency and high efficiency.
"In short, our strategy is to improve our service to strategic customers, expand our industry customers, strengthen our own professional capabilities, leverage the advantages of domain breadth, value leadership and industry solutions, and take advantage of the synergy of multiple product lines. He said.
In terms of BIP's product research and development, he mentioned that the company will continue to adhere to innovation and development with the goal of creating greater customer value. In the process from public cloud to privatization, the company has shortened the originally complex process from one month to three days, and the efficiency of privatization iteration has been improved by more than 100%.
For the mid-range business, Yonyou's strategy and goal in 2024 is to continue to drive the rapid growth of the subscription business while maintaining its leading market share.
"In terms of specific business strategies, we will strengthen the two-wheel drive of direct sales and ecological cooperation. At the same time, YonSuite will achieve full regional coverage and rapid scale, and cloud ERP will lead the way and deepen industry applications. Chen Qiangbing said.
For small and micro enterprises, Chanjet's strategy and goal in 2024 is to continue to provide one-stop enterprise cloud services for small and micro enterprises. He revealed that the company has set a higher goal, that is, to upgrade from the leading financial and tax cloud service for small and micro enterprises in the past to the leading manufacturer of overall cloud services for small and micro enterprises.
"In terms of ecology, our goal is to grow the number of ecosystem partners from less than 20,000 to 100,000. We not only hope that Yonyou can develop itself, but also hope to contribute to our partners and the entire enterprise software and enterprise service ecosystem. Chen Qiangbing mentioned.
For overseas business, he said that the company plans to accelerate the pace of development in North America, Europe, the Middle East, Southeast Asia and the "Belt and Road" region, and will combine the advantages of products and localized service teams, as well as the needs of Chinese enterprises to go overseas, to provide IT, information system and digital intelligence system support for a large number of Chinese enterprises "going global".
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