Written by Yang Jianyong

Yonyou Network, as one of the representative enterprise management software companies in China, has been deeply rooted in the enterprise services field for 36 years. Its market value once peaked at over 170 billion yuan, but now stands at only 31 billion yuan. Compared to its past glory, it now seems bleak and regrettable. Of course, the decrease in market value by hundreds of billions is influenced by many factors such as the capital market environment, but the company's own operational capabilities are also a concern for investors.

Starting from financial software, to enterprise management software, and then transitioning to cloud services, Yonyou Network has kept up with the times and adapted to change. Unfortunately, it is facing transformation pains, shifting from profitability to losses. In particular, the largest business organization model upgrade in its history was initiated in 2023, which had a significant impact on performance, resulting in a full-year loss of 967 million yuan in 2023. This was the first annual loss in over 20 years since its listing, and the amount of the loss was substantial.

Entering 2024, Yonyou Network's profitability has not improved, continuing the large losses from last year. According to the performance forecast, the estimated loss for the first half of 2024 is between 750 million and 884 million yuan, with an additional loss of 38.88 million yuan to a reduced loss of 95.12 million yuan year-on-year. However, there was improvement in the second quarter, with a year-on-year reduced loss of 17.35 million to 150 million yuan in a single quarter.

Regarding the reasons for the losses, Yonyou Network pointed out that business operations exhibit seasonal characteristics, with the proportion of first-half revenue to annual revenue being lower than the proportion of first-half costs to annual costs. Secondly, the amortization amount of intangible assets formed by R&D investment increased by approximately 150 million yuan year-on-year. Additionally, the change in fair value of other non-current financial assets resulted in a year-on-year decrease in profit and loss of approximately 50 million yuan.

It should be noted that despite continuing losses and even an expansion of those losses, Yonyou Network's revenue remains robust as always. Revenue for the first half of 2024 is expected to be between 3.7 billion and 3.88 billion yuan, an increase of 10% to 15% year-on-year. Benefiting from the transformation of its business model and active customer expansion, Yonyou has been able to maintain positive revenue growth, demonstrating that its business organization model upgrade has been completed, and the phased impact on business and performance has passed. The business is gradually entering a good growth trajectory and is expected to embark on the next growth cycle.

In the first half of 2024, Yonyou Network has gained recognition from many Fortune 500 companies, central and state-owned enterprises, and industry leaders, and has concluded a series of major cooperation projects. Yonyou has transformed from a financial software company in the past to a digital and intelligent software and services enterprise. Relying on Yonyou BIP, it is jointly achieving digital and intelligent enterprises and moving towards high-quality development.

Meanwhile, benefiting from the generative AI trend, which is reshaping various industries and creating enormous commercial value, enterprises will accelerate their intelligent upgrades, leading to strong demand for new technologies such as AI, IoT, and cloud computing. In particular, generative AI has a significant impact on the growth of the cloud services market.

Facing the opportunities embedded in large models, Yonyou also released the enterprise service large model YonGPT on July 27, 2023, as well as a wealth of data services and intelligent services that integrate large model capabilities, redefining the form of enterprise services and continuously enriching intelligent scenario services. This empowers enterprises to enter the era of AI popularization and application, enabling comprehensive digital and intelligent business innovation.

As AI technology continues to mature and its application fields rapidly expand, enterprises' demand for AI has shifted from a single functional requirement to deep coverage of all business scenarios. Enterprises expect AI to penetrate every detail of their business. Yonyou BIP deeply integrates AI with business scenarios, constructing AI+enterprise applications in ten major areas, comprehensively covering finance, human resources, marketing, procurement, supply chain, manufacturing, R&D, projects, assets, collaboration, and other businesses. It leverages AI technology to transform and reshape business scenarios, achieving automation of business processes, intelligent decision-making, and innovation in products and business models.

Taking XCMG Group as an example, with the help of YonGPT's intelligent technology, it has significantly improved the accuracy and efficiency of the recruitment process. Meanwhile, Sinochem uses YonGPT's AI capabilities to optimize the intelligent recruitment process, enabling managers to quickly identify and match suitable talent, demonstrating the practical application value of YonGPT in enterprise talent management. To date, more than 40,000 large and medium-sized enterprises have chosen Yonyou BIP to promote digital and intelligent business innovation, and more than 660,000 small and micro-enterprises are using Changjietong cloud service products.

Finally, leveraging AI large models to empower the digital transformation of various industries is the core driving force behind the successive launch of large model services by many technology vendors. At the same time, all sectors are committed to leveraging the transformative capabilities of generative AI, which will create enormous commercial value and bring about historic industrial opportunities. As a result, companies surrounding the cloud ecosystem will benefit, helping enterprises accelerate their digital transformation and innovation while further growing their cloud services segments.

Yang Jianyong, a Forbes China contributor, expresses his personal views. He is dedicated to deeply interpreting cutting-edge technologies such as IoT, cloud services, AI, and smart homes.