Editor's Note:

In China's tech circle in 2025, a discussion about SaaS (Software as a Service) is heating up. When Hong Kong-listed software stocks collectively strengthened in early November, with Mobvista seeing a nearly 7% single-day surge and companies like Marketing Wolf and Duiba experiencing share price climbs, the capital market seemed to be sending a signal: this industry, once labeled as 'loss-making' and 'money-burning,' is witnessing a turnaround. From leading companies collectively announcing profitability targets to the emergence of 'small but beautiful' cases with annual revenues in the millions of US dollars in vertical sectors, has the spring of SaaS truly arrived?

As management guru Peter Drucker said, 'Efficiency is doing things right, while effectiveness is doing the right things.' In the SaaS industry, this statement is being validated through practice.

'Cost Reduction and Efficiency Enhancement': A Self-Revolution

Over the past decade, China's SaaS industry has experienced wild growth and collective pain. From 2022 to 2023, the industry entered a winter: layoffs, suspended IPOs, and a cooling-off in investment and financing became the norm. A leading CRM company once suffered ten consecutive years of losses, with its founder admitting, 'We burned hundreds of millions of yuan in marketing expenses every year but couldn't secure stable customer retention.' This dilemma of 'scale without economy' essentially represented the collapse of the industry's early model of 'concealing losses with growth.'

The turning point came in 2024. According to a survey, 99% of SaaS companies began 'tightening their belts': cutting inefficient marketing budgets, optimizing R&D processes, and streamlining organizational structures. An e-commerce SaaS company reduced its sales team from 300 to 80 people but increased investment in customer success teams, raising the renewal rate from 65% to 82%. This shift from 'incremental expansion' to 'deep cultivation of existing customers' was directly reflected in financial data—in the third quarter of 2025, multiple companies achieved positive operating cash flows, with loss margins narrowing by over 50% year-on-year.

Youzan and Weimob. As leading companies in the e-commerce SaaS sector, both achieved profitability turning points in 2025. Youzan's financial report for the first half of 2025 showed a net profit of 72.57 million yuan, turning from losses to profits year-on-year, marking its first half-year profitability since going public via a backdoor listing in 2018. In terms of revenue, it reached 710 million yuan in the first half, up 4% year-on-year, with merchant solution revenue increasing by 10.3% and GMV (Gross Merchandise Volume) reaching 49.8 billion yuan, up 31.6% year-on-year. During the same period, Weimob reported an adjusted net profit of 16.9 million yuan, also turning from losses to profits for the first time since 2021. Although total revenue declined by 10.6% year-on-year to 775 million yuan, adjusted revenue increased by 7.8% year-on-year, with merchant solution business revenue surging by 45.3% year-on-year. Sales and distribution expenses were compressed by 31.2% year-on-year, and R&D expenses decreased by 41.8% year-on-year, demonstrating significant cost control effectiveness.

The data from these two companies indicates that by optimizing cost structures and focusing on core businesses, e-commerce SaaS companies are gradually emerging from the quagmire of losses.

Cost reduction is merely the surface; efficiency enhancement is the core. Taking Kingdee International as an example, its AI-powered financial assistant automates 80% of routine accounting tasks, boosting bookkeeping efficiency for small and micro businesses by 80% and driving the customer renewal rate above 90%. This logic of 'technology-driven efficiency' is reshaping the industry's competitive landscape: companies that previously relied on 'swarm tactics' by sales teams are gradually falling behind, while those with product technology barriers are beginning to dominate the market.

'The essence of the SaaS business model is a game of 'customer lifetime value,' ' noted a partner at an investment firm. As the cost of acquiring new customers (CAC) continues to rise, renewal revenue (NRR) has become a critical indicator for survival. In 2025, a notable trend emerged in the industry: renewal revenue accounted for over 50% of total revenue among leading companies, with some vertical sectors even exceeding 70%.

Beisen. Its financial report for the 2025 fiscal year (ending March 31, 2025) showed revenue of 945 million yuan, up 10.6% year-on-year, with the net loss attributable to shareholders narrowing by 95.4% to 147 million yuan and the gross profit margin rising to 65%. More critically, its operating cash flow turned positive for the first time, reaching 76.929 million yuan, indicating significantly enhanced financial self-sufficiency. In its core business, cloud-based HCM solution revenue increased by 14.2% year-on-year, with subscription revenue retention at 106%, CoreHCM integrated ARR growing by 29%, and the multi-module cross-selling strategy proving highly effective. Beisen's case demonstrates that high renewal rates not only stabilize revenue but also reduce marketing costs through long-term customer retention, ultimately achieving profitability.

Innovators in vertical sectors are also validating this logic. The story of Pallyy's founder, Tim Bennetto, serves as a model example: this social media management platform, created by an individual developer, precisely targeted the niche group of 'social media agency companies,' focusing its core functions from 'data analysis' to 'scheduled posting,' and continuously optimizing SEO and affiliate marketing, ultimately achieving annual revenue of 1 million US dollars. Its key metrics are impressive: customer churn rate dropped from 40% to 15%, and the average usage period of paying users exceeded three years.

AI: A New Dividend for Established Players

While the market still debates whether 'AI will disrupt SaaS,' pioneers have already provided answers with data: in 2025, AI's contribution to the SaaS industry is not about creating new products but making existing products more powerful.

Analysis by Soochow Securities points out that global model innovation has entered an 'orderly and high-quality' phase: GPT-5's input price has dropped by 37.5% compared to its predecessor, while Alibaba's Tongyi Lab released Qwen3-Next, achieving superior performance with only 9.3% of the original model's computational resources. This technological dividend directly translates into cost advantages for SaaS companies—a marketing SaaS company boosted content generation efficiency by fivefold by integrating an AI large model, with model usage costs accounting for only 3% of its revenue.

More profound changes are occurring at the product level. After embedding an AI assistant into its ERP system, Kingdee International increased customer invoicing efficiency by 40% and tax filing efficiency by 60%; DingTalk's enterprise email intelligent search function reduced the time users spent searching for historical emails by 70%. These 'micro-innovations,' though seemingly insignificant, precisely address pain points for enterprise users: according to an IDC survey, among Chinese enterprise users' core demands for SaaS products in 2025, 'efficiency enhancement' ranked first at 68%, far surpassing 'functional innovation' at 22%. This aligns with Peter Drucker's assertion that effectiveness is the key to doing the right things, and AI is empowering SaaS companies to enhance effectiveness and meet core user needs.

The comeback story of DingTalk's enterprise email is highly representative. This 'ancient' product, launched 20 years ago, increased its renewal rate from 60% to 80% and its annual revenue from tens of millions to nearly 300 million yuan through deep integration with a collaborative office platform. The key turning point came in 2020 with a strategic adjustment: merging the email team into the larger DingTalk platform, achieving seamless integration of account passwords, contact lists, and calendars, and introducing AI-powered intelligent email composition and reply functions. This 'free basic features + paid value-added services' model has made customers 'increasingly reliant the longer they use it.'

Marketing Wolf. In the first half of 2025, Marketing Wolf achieved revenue of 930 million yuan, up 25.5% year-on-year, with an adjusted net profit of 84.721 million yuan, soaring by 77.7% year-on-year and surpassing the entire previous year's level in just six months. AI + SaaS business revenue increased by 26.0% year-on-year, with a gross profit margin of 80.4% and recurring revenue accounting for 84.5%. Its international expansion was particularly notable: foreign trade business revenue increased by 89.0% year-on-year, serving 982 foreign trade clients and leveraging an AI foreign trade digital employee matrix and T-Cloud foreign trade product system to cover 49 language versions and reach over 95% of the world's language regions. Marketing Wolf's case demonstrates that AI not only enhances product efficiency but also opens up new market spaces through scenario expansion.

While general-purpose SaaS companies struggle with transformation, vertical sector SaaS companies have achieved rapid growth through 'small but beautiful' business models. By deeply binding to specific industry demands, these companies have built irreplaceable competitive barriers.

From 'Hundred-Regiment Battle' to 'Meticulous Cultivation'

The profitability turning point in the SaaS industry is closely tied to supply-side reforms. From 2023 to 2025, the industry underwent a brutal consolidation: according to a job platform, the number of SaaS-related job postings declined by 58% year-on-year, and over 40% of entrepreneurs transitioned to other fields. This 'capacity reduction' process, though painful, created dividend for survivors.

The optimized competitive landscape is directly reflected in pricing power. In 2022, a CRM company lowered its product price to 60% of the industry average to seize market share, resulting in a gross profit margin below 30%. By 2025, leading companies began collectively raising prices: an e-commerce SaaS company increased its basic package price by 20%, with only a 3-percentage-point increase in customer churn rate. This 'price recovery' confidence stems from customer recognition of product value—when renewal rates become the core indicator of SaaS company health, low-price competition strategies naturally become ineffective.

Bright Dream AI. In the first half of 2025, Bright Dream AI's revenue increased by 11.78% year-on-year to 262 million yuan, with the net loss attributable to shareholders narrowing by 64.85% to 12.1134 million yuan and achieving profitability in the second quarter. Its net cash flow from operating activities surged by 218.54% year-on-year to 35.9039 million yuan. In terms of business highlights, revenue from SaaS products for large merchants increased by 22.73% year-on-year, enterprise service SaaS revenue grew by 14.65% year-on-year, and revenue from the Douyin platform increased by 81.98% year-on-year. Bright Dream AI's case demonstrates that by focusing on core customer groups and optimizing product structures, companies can stand out during industry consolidation.

The shift in capital market attitudes is even more symbolic. In 2022, China's SaaS industry saw 280 financing events, but funds were concentrated among leading companies; by 2025, the number of financing events dropped to 120, but the average deal size increased by 80%. Capital shifted from 'scattergun investment' to 'precision irrigation,' driving the industry from 'scale-oriented' to 'profit-oriented.'

Conclusion

Despite multiple favorable factors, the SaaS industry still faces three hurdles:

First, regional disparities in customer willingness to pay. A survey shows that SaaS penetration among enterprises in first-tier cities reaches 35%, while only 12% in third- and fourth-tier cities. How to unlock the lower-tier market through 'lightweight products + regionalized services' is key to the industry's next phase of growth.

Second, data security concerns. According to the Cloud Security Alliance (CSA), SaaS misconfigurations cause 63% of security incidents. In 2025, a collaborative office platform was fined tens of millions of yuan for a data breach, exposing compliance shortcomings during rapid expansion.

Third, homogenization of AI applications. When all companies claim 'AI + SaaS,' how to avoid falling into the trap of 'feature stacking'? The lesson from an HR SaaS company is worth heeding: its AI interview function, with an accuracy rate below 60%, was abandoned by customers within three months of launch.

The profitability turning point in the SaaS industry is the result of technological dividends, market laws, and commercial essence: when AI addresses efficiency pain points, when renewal rates validate business models, and when the industry completes capacity reduction, companies that adhere to 'customer value first' have finally ushered in their spring.

However, the spring of SaaS belongs to those who are prepared. This spring is reserved for long-termists who uphold 'vision + persistence + listening to users'—not chasing trends but cultivating value; not burning money for scale but creating irreplaceable customer stickiness through technology.

When Hong Kong-listed software stocks perform a 'Davis Double Play' in the capital market and 'small but beautiful' companies emerge in vertical sectors, has the spring of SaaS truly arrived?