Text/Wang Huiying

Editor/Midnight

How much money does DingTalk make?

There is a new answer to this question.

On November 14, DingTalk disclosed its core commercialization metrics. In Alibaba's first half of fiscal year 2025 (April 1, 2024, to September 30, 2024), DingTalk's Annual Recurring Revenue (ARR) exceeded US$200 million.

This year is crucial for DingTalk.

Last year, DingTalk was spun off from the Alibaba Cloud system and became fully independent, becoming one of the N's in Alibaba's organizational restructuring. Earlier, in March 2022, DingTalk announced its full commercialization. By the end of March 2023, DingTalk's ARR exceeded US$100 million.

This year, DingTalk's ARR surpassed the US$200 million inflection point and surged towards a new one - profitability. According to Ye Jun's timeline, DingTalk will achieve break-even by 2025 and gradually move towards profitability.

Source: DingTalk WeChat official account

Undoubtedly, profitability is a more imaginative hallmark of a commercial company. However, in the collaborative office market, the arrival of inflection points and the path to success are not as fast, and DingTalk is still on its way.

Four years ago, the mindset towards online office work was immature, and DingTalk was merely an internal SaaS tool for enterprises with only 30 million DAU.

Today, DingTalk has over 700 million users. DingTalk's functionality has expanded, offering not only chatting but also software development and project management; its ecosystem partners have become more diverse, and the industries it serves have become more diversification . DingTalk has transformed from an SaaS tool to a PaaS platform.

Essentially, DingTalk aims to become a true commercial company.

It must learn to walk independently and generate its own revenue. Profitability is a crucial indicator. Currently, DingTalk faces fierce competition in the domestic market and significant challenges in overseas expansion. How to penetrate more industries and unlock new possibilities is the core question DingTalk must answer in the future.

1. How does DingTalk make money?

In 2016, DingTalk was incubated within Alibaba. Wu Zhao, the founder of DingTalk, once said that under the Alibaba umbrella, DingTalk didn't discuss making money or scale but focused on the product.

Over the years, DingTalk made rapid progress in product development but struggled financially. As competitors emerged, DingTalk found itself in a tight spot with unclear commercialization strategies, and losses were a non-negligible issue.

A change occurred in 2020. Alibaba proposed the "Alibaba Cloud + DingTalk" integration strategy. To support the full implementation of this strategy, DingTalk was upgraded to a business unit and fully integrated with Alibaba Cloud, with Ye Jun becoming its leader.

With the new strategic goal from the group and inheriting a project with a strong founder's style, Ye Jun faced considerable pressure: stabilizing the team, reorganizing business operations, and leading DingTalk with full force on the path to commercialization.

Ye Jun set a clear strategy for DingTalk, focusing on B2B and discontinuing C2C products like WoWo and Diandianchong, shifting customer focus from SMEs to large and medium-sized enterprises.

At the annual conference in March 2022, DingTalk announced its full commercialization. Ye Jun outlined three commercialization paths for DingTalk: software subscription with a "three-expertise model," platform application commission, and hardware interface licensing.

Although it was nominally a full commercialization opening, DingTalk did not anticipate commercialization results or set high-speed requirements. This is typical of Ye Jun's style, preferring to prove his judgments and strategies through actions.

In August of last year, it was time to assess the results. At the Ecosystem Conference, DingTalk revealed that as of the end of March 2023, its paid DAU exceeded 23 million, and its ARR surpassed US$100 million - one year after full commercialization, DingTalk reached an important inflection point for SaaS products.

During this period, DingTalk also faced a significant adjustment: leaving Alibaba and growing independently. This meant shedding burdens but also facing the realities of daily operations, making the urgency of profitability more apparent.

As a B2B product with a significant C-end user base, DingTalk turned its attention to individual users.

Last year, DingTalk launched a personal version, re-targeting SMEs. On the other hand, DingTalk was among the first batch to integrate with Alibaba's Tongyi Qianwen large model, enhancing its AI attributes for personal use. In January this year, DingTalk's personal version upgraded its collaboration tab, introducing features like reorganized schedules, meetings, and to-dos. In September, DingTalk launched the "365 Membership" for individuals, providing an AI product package that includes features like DingTalk AI Search and Personal AI Assistant.

Of course, compared to B-end functional synergy and commercialization explorations, DingTalk's C-end user experience and commercialization are still in the exploratory stage. DingTalk needs to find the connection point between B-end and C-end.

At the recent DingTalk Autumn Summit, Ye Jun summarized that in the past year, DingTalk has continuously deepened its value to enterprises through a model combining PLG (Product-Led Growth and PaaS-Driven Foundation) and SLG (Sales-Led Growth and Service-Driven Growth), providing superior experiences and services.

'DingTalk has paved a commercialization path suitable for China's B2B industry,' said Ye Jun.

Reflecting these efforts in data, in the first half of fiscal year 2025, DingTalk's ARR exceeded US$200 million; for the entire fiscal year 2025 (April 1, 2024, to March 30, 2025), DingTalk's software subscription annualized revenue is expected to exceed US$400 million.

With DingTalk generating revenue, Ye Jun is now confident in setting goals. He expects DingTalk to achieve break-even by 2025.

Looking at the market as a whole, it is a fact that enterprises' willingness to pay for office software is insufficient, and there is not a standard direct proportional relationship between the number of users and paid revenue.

To capture market share, the industry once adopted a free model, which takes time to cultivate market mindset. According to the "2021 China SaaS Survey Report," the paid rate for office software in China is less than 15%, while in European and American markets, it exceeds 70%.

Even today, for some SMEs, the free version can meet their needs, and their willingness to pay is predictable. For large enterprises, with complex internal structures and limited acceptance of digitization, the return cycle for "DingTalk-like" services is long.

Since taking over, Ye Jun has always aligned DingTalk's commercialization goals with its growth. After independence, Alibaba's attitude towards innovative independent subsidiaries like DingTalk is to continue investing over a 3-5 year cycle. DingTalk must generate revenue, achieve break-even, and ultimately become profitable - without slackening in any step.

2. Entering more challenging industries, DingTalk faces considerable challenges

On November 14, DingTalk chose Zhuhai as the venue for this year's Autumn Summit, with the theme "Send Me to the Clouds." Correspondingly, from November 12 to November 17, the 15th China Zhuhai Airshow was in full swing in Zhuhai.

Both Zhuhai and DingTalk have set their sights on the low-altitude economy.

The low-altitude economy is currently in the spotlight. In March this year, the low-altitude economy was included in the government work report for the first time, bringing it to the forefront. The industry believes that the low-altitude economy, characterized by high-tech dominance, high-efficiency operations, and high-quality development, represents new productive forces with broad development prospects.

The low-altitude economy refers to a comprehensive economic model centered around low-altitude airspace (primarily below 1000 meters, extending to no more than 3000 meters as needed), utilizing vertical take-off and landing aircraft and unmanned aerial vehicles as carriers, and driving the integrated development of related fields through various low-altitude flight activities such as passenger and cargo transportation and other operations.

This includes various aircraft such as drones, helicopters, and electric vertical take-off and landing aircraft (eVTOL, or "flying cars") and their widespread applications in logistics, agriculture, environmental protection, urban construction, film and television production, emergency rescue, and other fields.

According to DingTalk's data on the low-altitude economy industry, over 60% of low-altitude economy enterprises are already using DingTalk. Among the six enterprises that have applied for manned flight tests, four, including Hafei Aerospace Technology and Future Aerospace, are already using DingTalk.

Source: DingTalk WeChat official account

Ye Jun also revealed that a significant number of enterprises in different segments of the low-altitude economy chain, including batteries, power systems, flight controls, navigation, and airframes, represented by Contemporary Amperex Technology Co. Limited (CATL), have chosen DingTalk as their digital transformation platform.

The problem is that the industry is emerging, and no one knows how to approach digital transformation. There are almost no digital benchmarks within the industry, and most enterprises are navigating uncharted waters. More importantly, the low-altitude economy encompasses a long and complex industrial chain, including the construction of multiple scenarios such as air traffic control, civil aviation, drone manufacturing, and network communications. Cross-domain cooperation is crucial in this process.

This poses significant challenges for DingTalk. On the one hand, DingTalk is not a specialist in the low-altitude economy industry. On the other hand, DingTalk lacks partners who have successfully undergone digital transformation in the low-altitude economy. Coordinating the entire industrial chain and full-scenario digitization is undoubtedly a process starting from scratch.

The R&D cycle is tight, cross-regional collaboration is difficult, and there is a shortage of digital talent - these are all pressures on the digital transformation of the low-altitude economy.

At this point, adhering to its PaaS-only philosophy, DingTalk chooses to collaborate with ecosystem partners. Taking the low-altitude economy as an example, DingTalk has jointly released an exclusive digital solution for the low-altitude economy industry with four ecosystem partners: Yinlibo, Songying Technology, Jimeng Intelligence, and Jinmeng Aviation. This solution reportedly includes features such as DingTalk Docs and Teambition.

Meanwhile, leveraging its AI foundation capabilities, DingTalk has also launched "Selected AI Assistants," with the first batch including six AI assistants such as Work Order Assistant, Excel Assistant, and Legal Assistant. Additionally, DingTalk and its ecosystem partners have released industry-specific AI solutions covering manufacturing, healthcare, retail, education, and other sectors.

For the industry, DingTalk has also joined forces with ecosystem partners to launch the "AI Solution Center," providing customized AI products and delivery services with industry expertise. Currently, it covers industries such as healthcare, manufacturing, education, retail, internet, finance, transportation infrastructure, and aviation, allowing enterprises to choose based on their needs.

Over the years, DingTalk's ecosystem has continued to expand, with the industry constantly evolving.

In a 2021 media interview, when discussing the industries DingTalk is most deeply involved in, Ye Jun listed the following:

'The first major industry is education, where we provide home-school communication and teaching management solutions;'"The second major industry is the internet, where we originated. Many internet companies use DingTalk, including well-known platforms like Himalaya and Soul. Alone, Alibaba generates over 40 million documents on DingTalk annually;'"The third major industry is manufacturing, which is growing at the fastest rate;'"The fourth major industry is healthcare, with nearly half of public hospitals in China using DingTalk;'"The fifth and sixth are government services and catering.'"At that time, with Alibaba's "Alibaba Cloud + DingTalk" integration strategy, DingTalk had the support of Alibaba Cloud and the Alibaba Group. Nowadays, DingTalk is self-reliant and naturally needs to seek growth in new industries. As Ye Jun said, DingTalk is about to celebrate its 10th anniversary, and "we want to spend the next ten years accompanying new productive industries, such as the low-altitude economy, embodied intelligence, and eVTOL, as well as new products in these fields."

On this path, new industries will have higher requirements for DingTalk's digital capabilities, collaboration abilities, and user experience. DingTalk still needs to continuously strengthen its competitive advantages and create its unique features to gain the favor of more customers.

3. Seeking growth overseas, DingTalk's "expansion" is not easy

For a long time, DingTalk's team of 1,500 people served 20 million enterprise organizations. With limited manpower, DingTalk had not ventured into many areas, such as hardware and internationalization.

This year, the DingTalk team has grown to 1,800 people, serving over 25 million enterprise organizations, and DingTalk's personnel efficiency has increased. Based on an estimated software subscription revenue of 2.8 billion yuan for fiscal year 2025, DingTalk's personnel efficiency exceeds 1.5 million yuan per year, approaching that of international SaaS software companies.

With improved personnel efficiency, DingTalk aims to accomplish more. As the domestic collaborative office market slows down and competition intensifies, going overseas has become a consensus across industries. DingTalk, which has achieved a certain scale domestically, is determined to go global.

Strategically, DingTalk has prioritized going overseas as a strategic-level project. In terms of actions, DingTalk has started recruiting for its team.

According to 36Kr reports, several departments within DingTalk, including product research and development, solutions, sales, and marketing, have formed mixed teams by selecting personnel. Additionally, DingTalk has begun recruiting employees in regions such as Malaysia, Indonesia, and Singapore on LinkedIn, primarily for positions such as regional managers and solution managers.

Building a localized team is the first step for DingTalk to go global, but subsequent team management and product experience are crucial for DingTalk to establish a firm foothold.

At the 10th Innovation Annual Meeting of the Yabuli China Entrepreneurs Forum in June this year, when discussing the difficulties of going global, Ye Jun admitted that product capability issues were more apparent in previous years. DingTalk's products were previously designed based on the Chinese environment, but in recent years, due to many customer requests, DingTalk has made numerous improvements.

In terms of product experience, some overseas enterprises can manage domestic and international teams uniformly using a single DingTalk account system. DingTalk's IM chat and video conferencing applications have also introduced many internationalization-related features, including language translation and intelligent time zone switching.

In terms of the product ecosystem, a source close to DingTalk told 36Kr that DingTalk has cooperated with a number of ecosystem partners to establish an ecosystem for overseas services. Currently, DingTalk's open platform offers applications in various fields such as market/category positioning, customer management, cross-border payments, network security, and personnel management.

In fact, DingTalk's focus on going global is inseparable from the wave of Chinese enterprises going overseas. According to statistics from the General Administration of Customs, China's total import and export value of goods trade reached 28.58 trillion yuan in the first eight months of 2024, a year-on-year increase of 6%.

Chinese enterprises are gradually enhancing their competitiveness in the global market, but going overseas exposes them to an entirely new market with a more complex environment and more severe challenges. As enterprises forge ahead, they need a stable rear base. Especially in the context of intelligent transformation, a cross-time and cross-regional management tool can significantly enhance efficiency.

From a global market perspective, according to predictions by the global data statistics company Statista, the global collaborative office software market size will reach US$14.06 billion in 2022 and is expected to reach US$18.4 billion by 2027, with a compound annual growth rate of 5.50% from 2022 to 2027.

The overseas market presents significant opportunities, accompanied by challenges.

At this stage, for collaborative office products, serving Chinese enterprises going overseas or local enterprises overseas is not easy.

Taking DingTalk as an example, when serving Chinese enterprises, it cannot avoid competition with Lark, which has been deployed overseas since 2019. When serving local enterprises, players like Zoom and Slack have already captured the user mindset. Compared to these two paths, neither has a first-mover advantage, and both face issues such as low willingness to pay among Chinese enterprises and a lack of recognition among local enterprises.

Judging from the current strategy, DingTalk's overseas expansion is primarily to meet the overseas collaborative management needs of Chinese enterprises, especially those in leading industries such as photovoltaics, lithium batteries, and electric vehicles. DingTalk mentioned that its internationalization strategy primarily serves hundreds of Chinese enterprises with overseas operations, including JinkoSolar, Trina Solar, and Sungrow Power Supply.

For DingTalk, whether serving domestic enterprises going overseas or local enterprises, it faces strong competition. In terms of timing, DingTalk has lost the first-mover advantage, and the AI large model may be an opportunity for overtaking on curves.

At the "Make 2024 DingTalk Ecosystem Conference" in June this year, DingTalk fully opened its models, with seven AI large models - Tongyi Qianwen, MiniMax, Dark Side of the Moon, Zhipu AI, Orion Star, Zero-One Everything, and Baichuan Intelligence - integrated into DingTalk.

Obviously, this provides users with more choices and a more open ecosystem for DingTalk, which can also boost its overseas expansion. However, the large models are still more of an investment than a return, especially after becoming self-sufficient, and the statement "using large models to help the ecosystem rebuild products" must now pay more attention to costs.

Currently, based on the actual situation, DingTalk will inevitably have to invest more in overseas expansion, localized operations, cross-border management, and software development. Balancing the input-output ratio poses a new challenge.

Regardless, with the 2025 breakeven target looming, DingTalk's top priority remains commercialization. By tackling emerging industries and exploring overseas markets with a combination of strategies, DingTalk still needs to strike a balance between scale and profitability.

(The lead image of this article is from DingTalk's official WeChat account.)