Yonyou Network (600588.SH) Analysis of Q4 Turnaround to Profit and AI Transformation Results

Based on the latest collected data, I will conduct a professional analysis of Yonyou Network’s Q4 performance and AI transformation results.

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According to Yonyou Network’s 2025 annual performance forecast, the company expects a net loss attributable to shareholders of the parent company of RMB 1.3 billion to RMB 1.39 billion for 2025, representing a year-over-year (YoY) loss reduction of RMB 671 million to RMB 761 million. More importantly,

[1][2].

Specific calculations show that the company recorded a net loss of RMB 454 million in Q3 2025. Based on this, the net profit for Q4 is estimated to be approximately RMB 8.15 million to RMB 98.15 million, marking a fundamental shift from significant losses to profitability[1].

Financial Indicator	2024	2025	Change
Net Profit Attributable to Parent Company	-RMB 2.061 billion	-RMB 1.3 billion to -RMB 1.39 billion	YoY loss reduction of 32-37%
Operating Revenue	~RMB 9.1 billion (negative growth)	RMB 9.17 billion to RMB 9.27 billion	Stabilized and turned positive
Operating Cash Flow	~-RMB 300 million	Over RMB 700 million	YoY improvement of RMB 1 billion
Net Profit Excluding Non-Recurring Items	-RMB 2.038 billion	-RMB 1.45 billion to -RMB 1.54 billion	YoY loss reduction of 24-29%

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Yonyou Network achieved substantial breakthroughs in its AI transformation in 2025:

• AI-related contract signings exceeded RMB 730 million in the first three quarters, accounting for a significant proportion of total contract signings in the same period (which grew 7.8% YoY)[3]
• The number of customers signing up for the “Yonyou BIP Enterprise AI” smart product exceeded 100, with new key customers including Kailuan Group, Kweichow Moutai, China Duty Free Group, BBMG Group, Ningbo Huaxiang, Aimer Co., Ltd., Dowell Technology, and Jinhe Tibetan Medicine[3]

• Grandly launched the major version of its core product,
  Yonyou BIP 5
  , which features the core advantage of native integration of “AI × Data × Processes”[3]
• The enterprise service large model
  YonGPT
  has formed a
  model matrix
  covering vertical large language models, multi-modal large models, vector models, recommendation models, classification/ranking models, and operational optimization/forecasting models[3]
• Officially released
  BIP 5.0 Data Agent
  , launching a series of Data Agent intelligent products represented by “Enterprise Operation Analysis Assistant”, “Procurement Analysis Assistant”, and “Inventory Health Advisor”, which enable intelligent querying, automatic attribution, simulation and prediction, and support multi-Agent collaboration and proactive decision-making[3]

• Yonyou BIP generated revenue of
  RMB 2.15 billion in the first three quarters, representing a YoY increase of 15.8%
  , with a single-quarter YoY growth of
  31.9%
  in Q3[3]

In 2025, Yonyou Network proposed the

strategy and launched “Yonyou BIP Enterprise AI”, which features “unified enterprise digital-intelligent infrastructure, embedded into core enterprise businesses, reliable results, and safety and compliance”[4]. The company was the first to integrate the DeepSeek large model, and combined with YonGPT, a vertical large model focused on enterprise business and operation management, and the BIP intelligent platform, it has formed a digital-intelligent infrastructure of “general AI capabilities + industry know-how”[4].

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Yonyou Network’s subscription transformation strategy continues to advance, with continuous optimization of its business structure:

Indicator	End of Q3 2024	End of Q3 2025	YoY Growth
Proportion of Cloud Service Revenue	74.7%	77.0%	+2.3 pct
Subscription-Related Contract Liabilities	RMB 2.01 billion	RMB 2.54 billion	+26.6%
ARR of Cloud Services	RMB 2.39 billion	RMB 2.78 billion	+16.3%
Growth Rate of Subscription-Related Revenue	-	14.0% YoY	-
Cumulative Paid Cloud Service Customers	~873,000	1,011,000	+138,000[3]

• Large Enterprise Customers:
  Revenue in the first three quarters was RMB 3.617 billion, representing a YoY increase of 2.4%, with a YoY growth of 13.5% in Q3; the renewal rate of the core product YonBIP reached
  95.4%
  [5]
• Medium-Sized Enterprise Customers:
  Revenue in the first three quarters was RMB 727 million, with subscription business revenue growing 36.3% YoY; the renewal rate of YonSuite was
  94.0%
  [5]
• Small and Micro Enterprise Customers:
  Changjietong, a subsidiary controlled by Yonyou, achieved a net profit attributable to the parent company of
  RMB 42.55 million in the first three quarters
  , turning from a loss in the same period last year to profitability[3]

As of the end of Q3 2025, the company has signed contracts with a total of

, an increase of 6 from the beginning of the year; it has served a total of [3]. It successfully signed contracts with central SOEs and industry-leading enterprises including China Nuclear Power Engineering, China Academy of Machinery Science and Technology, China Nonferrous Mining Group, China Electrical Equipment Group, Nam Kwong Group, Capital Airport Holding Company, Agricultural Development Bank of China, China International Capital Corporation, Fujian China Tobacco, JPMorgan Chase, and ThyssenKrupp AG[3].

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Yonyou Network’s losses narrowed significantly in 2025, mainly due to the following:

• Operating revenue shifted from negative growth in the previous year to stabilization and positive growth[1]
• Contract signing revenue resumed positive growth starting from Q2, with a YoY increase of 7.8% in the first three quarters[3]
• The revenue growth rate of the core product BIP increased significantly, with a YoY growth of 31.9% in Q3[3]

• The company continued to strengthen operation management and control staff size and cost expenses[3]
• Selling expenses were RMB 10.05753 billion, representing a YoY decrease of 12.0%[5]
• The number of employees decreased by 1,689 compared to the beginning of the year, while economic compensation for resigned employees increased by RMB 19.92 million YoY[4]

• The net cash flow from operating activities improved significantly by RMB 1.11 billion YoY[3]
• The full-year net operating cash flow exceeded RMB 700 million, representing an improvement of RMB 1 billion compared to the same period last year[1]

The company’s costs and expenses were relatively high in 2025, with

(mainly amortization of intangible assets formed from R&D of new-generation products oriented towards digitalization and intelligentization), representing a YoY increase of approximately RMB 240 million[1][2]. This is one of the main factors affecting the company’s profitability, but it is also a necessary cost for the company’s continued investment in AI transformation.

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As a leading domestic enterprise service provider, Yonyou Network maintains a leading position in the medium and large enterprise customer market:

• Accounts for
  58%
  of China’s hundred-billion-yuan enterprises
• Accounts for
  56%
  of Fortune China 500 enterprises
• Accounts for
  70%
  of China’s major port enterprises
• Serves
  9 out of China’s top 10 liquor enterprises

From an industry comparison perspective, Yonyou Network and Kingdee International (00268.HK) are both leading enterprises in China’s enterprise service SaaS sector:

Comparison Dimension	Yonyou Network	Kingdee International
AI Contract Signings (H1 2025)	Over RMB 150 million	Over RMB 150 million
AI Product Positioning	YonGPT, BIP Enterprise AI	Skyline AI Agent Platform 2.0
Subscription Transformation Progress	Cloud revenue accounts for 77.0%	Cloud revenue accounts for approximately 70-75%
Customer Structure	Dominated by large enterprises	Dominated by small and medium-sized enterprises

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1. The Q4 turnaround to profit
   marks the emergence of an inflection point in the company’s operations, with continued improvement in fundamentals
2. AI transformation is accelerating implementation
   , with rapid growth in AI-related contract signing amounts and the number of customers signing up for smart products exceeding 100
3. Subscription transformation has achieved remarkable results
   , with cloud service ARR growing 16.3% and the number of paid customers exceeding 1 million
4. Cash flow has improved significantly
   , with full-year net operating cash flow exceeding RMB 700 million, representing an improvement of RMB 1 billion compared to last year
5. Continuous breakthroughs with key customers
   , with steady growth in the number of central SOEs and Fortune China 500 customers, and strong customer stickiness (renewal rate of over 95%)

1. Risk of Sustained Losses
   : Although losses have narrowed significantly, the company has not yet achieved full-year profitability
2. Intangible Asset Amortization Pressure
   : The amortization amount of approximately RMB 1.24 billion will continue to affect profit performance
3. ROI Cycle for AI Investment
   : There is a time lag between contract signing and revenue recognition for AI businesses
4. Intensified Competition
   : Competitors such as Kingdee International are also accelerating their AI transformation, leading to fierce market competition
5. Macroeconomic Impact
   : Enterprises’ willingness to spend on IT may be affected by the macroeconomic environment

From a P/S valuation perspective, referring to Salesforce’s historical P/S valuation range of 6-11x, combined with Yonyou Network’s cloud business revenue growth rate and industry position, the company’s cloud business has certain valuation support. As the results of AI transformation gradually emerge and the proportion of subscription revenue continues to increase, the room for valuation recovery is worthy of attention.

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Yonyou Network achieved a turnaround to profit in Q4 2025, marking the phased success of its “AI + Subscription” dual-drive strategy. In terms of AI transformation results, the company has made significant progress in product launches, contract signings, and customer expansion: AI-related contract signings exceeded RMB 730 million, the number of customers signing up for smart products exceeded 100, and revenue from the core product BIP increased 15.8% YoY.

In terms of subscription transformation, the proportion of revenue from cloud services rose to 77.0%, ARR grew 16.3%, the number of paid customers exceeded 1 million, the renewal rate remained at a high level of 94-95%, and operating cash flow improved significantly by RMB 1 billion. These data indicate that the company’s subscription model transformation has entered the harvest period.

Looking ahead, with the in-depth application of AI technology in the enterprise service sector, Yonyou Network is expected to continue to benefit from the wave of digital-intelligent transformation, relying on its profound accumulation in the large enterprise customer market and continuous iteration of AI products. However, investors need to pay attention to the continued impact of intangible asset amortization on profits, as well as changes in the industry competitive landscape.

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[1] CLS - “Expected 2025 Net Loss of RMB 1.3 Billion - RMB 1.39 Billion; Achieved Turnaround to Profit in Q4” (https://www.cls.cn/detail/2256320)

[2] Securities Times - “Yonyou Network: Expected 2025 Net Loss of RMB 1.3 Billion - RMB 1.39 Billion, YoY Loss Reduction” (https://www.stcn.com/article/detail/3590153.html)

[3] Yonyou Network 2025 Third Quarterly Report (https://stockmc.xueqiu.com/202510/600588_20251031_A1OF.pdf)

[4] Yonyou Network 2025 First Quarterly Report (https://static.cninfo.com.cn/finalpage/2025-04-26/1223316109.PDF)

[5] Yonyou Network 2025 Semi-Annual Report (http://static.cninfo.com.cn/finalpage/2025-08-27/1224579433.PDF)

[6] Dongguan Securities - “AI and IT Application Innovation Soar Together, Helping the Office Software Leader Achieve Valuation Reassessment” (https://pdf.dfcfw.com/pdf/H3_AP202512311812002525_1.pdf)