Xuan Wu Cloud Announces Interim Results for 2024

Revenue Increased by 22.2% and Net Loss Reduced by Nearly 70% year-on-year

In the first half of 2024,Xuan Wu Cloud achieved total revenue of RMB 647.5 million,reflecting steady growth of 22.2% compared to the same period last year. Net loss was significantly reduced by 69.5% to RMB 6.1 million.

The Company's operating expense ratio decreased by 6.7 percentage points year-on-year,demonstrating significant results in cost reduction and efficiency enhancement.

The Company served a cumulative total of 2,406 clients during the reporting period,our Average Revenue Per User contributed by core clients reached RMB1.9 million,with core clients' net revenue retention rate has further increased to 98.4%.

Revenue from SaaS operations amounted to RMB 365.1 million,representing a year-on-year growth of 39.6%. The revenue percentage of SaaS business surpassed 50% for the first time,reaching 56.4%.

The Marketing Cloud segment reported revenue of RMB 306.5 million,reflecting a year-on-year increase of 41.1%,driven by advanced product capabilities and strong customer acquisition.

Leveraging its leadership in AI technology and a deep understanding of large-scale consumer business scenarios,Xuan Wu Cloud has enhanced customer retention. The Sales Cloud's Annual Recurring Revenue (ARR) reached RMB 21.7 million,up 22.4% year-on-year.

GUANGZHOU,China,Aug. 27,2024 -- Xuan Wu Cloud Technology Holdings Limited (hereinafter referred to as "Xuan Wu Cloud" or "the Company," stock code: 2392.HK),a leading local intelligent CRM services provider in China,announced its interim results for the six months ended June 30,2024,on August 27.

During the reporting period,the Company achieved steady growth by implementing its dual-driven strategy of technology and business. Revenue increased by over 20% year-on-year. Additionally,the Company made significant progress in reducing net losses through careful expense management and effective cost-control measures.

Revenue Up 22.2% year-on-year and SaaS Revenue Percentage Surpasses 50% for the First Time

The announcement reveals that during the reporting period,Xuan Wu Cloud continued its steady progress by expanding its customer base while retaining existing clients. For the first half of 2024,the Company achieved revenue of RMB 647.5 million,representing a year-on-year increase of 22.2%. Notably,revenue from the SaaS segment reached RMB 365.1 million,up 39.6% from the previous year. This is the first time that SaaS revenue has surpassed 50% of total revenue for the first time,reaching 56.4%,highlighting the Company's strategic focus on CRM SaaS.

Additionally,Xuan Wu Cloud maintained its commitment to prudent expense management throughout the period. Following an update to its organizational structure at the end of last year,the Company significantly reduced its net losses,which narrowed by 69.5% to RMB 6.1 million.

During the reporting period,Xuan Wu Cloud,committed to driving digital transformation,served a total of 2,406 clients across four key industries—finance,fast-moving consumer goods (FMCG),public utility and government-related sectors,and TMT. The Company delivered these services through its CRM SaaS products,including the "Three Clouds" (Marketing Cloud,Sales Cloud,Customer Service Cloud),as well as its aPaaS and cPaaS platforms.

Thanks to a long-standing focus on superior service and continuous product improvement,the average revenue per core client reached RMB 1.9 million. Core client revenue accounted for 95.3% of the total client revenue,and the core client net revenue retention rate was 98.4%. In the SaaS segment specifically,the number of clients increased to 1,705,representing a year-on-year growth of 9.9%. Additionally,the ARPU for SaaS client reached RMB 1.5 million,up 14.2% from the previous year. In addition,our SaaS core clients' net revenue retention rate reached 106.1%

The Dual-Driven Strategy of Technology and Business Accelerates Expansion of SaaS Standardized Products

Reflecting on the market trends of the first half of the year,the digital economy has emerged as a central theme,driving the development of new productive capabilities and supporting high-quality economic growth. In this context,Xuan Wu Cloud has continued to implement its dual-driven strategy of technology and business. By the end of the reporting period,the Company had been granted 172 patents and 196 computer software copyrights,with 36 new patents and software copyrights awarded during the first half of the year. In terms of product innovation and service,Xuan Wu Cloud has focused on the digital transformation needs of industry clients,enhancing their business scenarios through intelligent upgrades and supporting their growth. Notably,during the reporting period,the Company intensified its efforts in developing standardized SaaS products,aiming to reduce project costs and expand its customer base among small and medium-sized enterprises.

Specifically,as a business segment dedicated to the digital and intelligent upgrade of marketing strategies for the clients in industries such as finance and government-related enterprises,the Marketing Cloud has closely tracked the policy trends in the financial industry during the reporting period and has persistently delved into the understanding of clients' needs. The Marketing Cloud secured new contracts with several leading banks in East China,West China,and Northwest China,generating revenue of RMB 306.5 million,a year-on-year increase of 41.1%. Regarding products,the Marketing Cloud's flagship offering,integrated communication centre ("ICC"),on the basis of comprehensive compatibility with domestic localization,has released version 5.3.0,which further enriches the product modules by introducing features such as,among others,multiple legal entity mode/international SMS/contract signing copies to cater to the diverse and emerging business requirements of an increasing number of financial clients,while also addressing the repurchase and additional purchase needs of existing customers. Meanwhile,the ICC has conducted specialized optimization for the iPush functionality,launching a version tailored for the securities industry,thereby accelerating breakthroughs into more niche sectors.

Simultaneously,as the key driver of the Company's secondary growth phase,the Sales Cloud segment focused on a comprehensive upgrade of client product usage during the reporting period,supported by the aPaaS platform. This approach aimed to enhance user experience and strengthen client retention. Additionally,the Sales Cloud continued to prioritize the development of standardized products,refining the operational foundation of these products. Through the "Mass Innovation Products" initiative,the Company has promoted the release of over 20 project components. Leveraging the foundational capabilities of Xuantao,the Company's multi-modal large model for the mass consumption industry,the AI standardized product matrix has been further expanded,with the addition of new projects such as image stitching models and historical database duplication checks.

Additionally,as a standardized product facilitating FMCG clients in achieving digital marketing for intelligent retail stores,the AIoT intelligent fridge experienced smooth market expansion in the first half of the year,with several major dairy and beverage clients signing on. In terms of collaboration models,the Company has introduced an independent AI model cooperation solution to cater to clients' personalized needs. As a result of these developments,the Sales Cloud achieved revenue of RMB 43.1 million,reflecting a year-on-year increase of 34.9%. Meanwhile,the ARR for Sales Cloud reached RMB 21.7 million,representing a year-on-year increase of 22.4 %.

Based on multi-channel customer communication and full process business management,the Service Cloud provides intelligent customer services with human-machine coupling throughout the entire industry chain. During the reporting period,the Service Cloud introduced distinctive features specific to the consumer finance industry,such as intelligent case initiation,voice message,and industry statements,which enhanced customer willingness to pay and product competitiveness. In the meantime,the number of paid seats in the contact centre increased by 42.8% year-on-year.

In parallel with its strong domestic performance,Xuan Wu Cloud has been actively expanding its international presence and ecosystem partnerships. During the reporting period,the Company concentrated on supporting domestic clients in extending their marketing efforts to Southeast Asia,South Asia,and Latin America. In the meantime,the Company has been actively exploring overseas ecosystem collaborations,establishing core resources,enhancing risk control capabilities,and improving operational support for our business. In terms of domestic ecological cooperation,Xuan Wu Cloud continued to strengthen cooperation with cloud vendors such as Huawei Cloud. During the reporting period,it has signed a HarmonyOS cooperation agreement with Huawei,the Company's "Smart Sales 100" and "iPush" products will start developing the native application in HarmonyOS. This move will also provide more diversified choices and more intelligent and convenient product service experiences for the clients.

Accelerated standardization of products to cover mid-tier customers and aiming for full-year breakeven

For the second half of 2024,Xuan Wu Cloud stated in its announcement that the company will closely seize the opportunity presented by the digital economy era. Supported by our AI and DI technologies,our intelligent CRM products will assist more enterprises in achieving high-quality digital and intelligence transformation.

First,with respect to the Company's second growth curve,Sales Cloud. Xuan Wu Cloud have upgraded the brand of Sales Cloud from "Xuanxun" to "Xuantong". In this regard,Mr. CHENYongHui,Chairman of Xuan Wu Cloud,said that "Tong" represents AI visual recognition and data insight in the context of AI,which is precisely relevant to numerous scenarios in the consumer goods industry involving visual AI and data applications. The transition from "Xun" to "Tong" signifies the empowerment of intelligence as wings,and the value enhancement from "connection"to"intelligent recognition,data insight,intelligent operation,and industrial interconnection". The brandupgrade will also help us continue to focus on the top 100 customers in the consumer goods industry,and drive the iterative upgrade of existing customer businesses through SaaS+AI products (Sales Cloud + AI + DI + AIOT),and build a standardised product system to enhance our average revenue per consumer.

At the same time,Xuan Wu Cloud will continue to leverage our large-scale models and deep industry experience to further integrate AI and DI technologies into our intelligent CRM products. On this basis,the company will invest in our distribution channels to accelerate the coverage of our standardised products among mid-tier customers. This part of the business will also become a new growth engine for the Company's future development and can further enhance our market share.

In the second half of 2024,our Marketing Cloud business segment will continue to investigate the needs of financial and Government-related clients for the digital and intelligent transformation of their business processes,and assist clients in deeply mining their data value through products such as ICC and DMP,helping customers in the construction of comprehensive user personas,and enhancing their operational management capabilities,thereby ensuring precise marketing reach and conversion capabilities. Regarding 5G technology,Xuan Wu Cloud will enhance the underlying communication capabilities of 5G messaging on our cPaaS platform,opening it up for efficient integration with a wider range of communication products.

Overseas business will also continue to be one of Xuan Wu Cloud's new growth engines. Xuan Wu Cloud will focus on specific countries in Southeast Asia,Latin America and other regions,prioritizing the development of core resources to ensure the stability of our business operation. In terms of clients,while actively expanding our market presence,we will also assess the overseas marketing needs of our domestic clients,aiming to achieve cross-selling and further enhance client stickiness.

Mr. CHEN YongHui,says,"in the second half of 2024,we are committed to maintaining the steady development of our business while continuously enhancing the Company's self-sustaining capabilities,improving profitability,and strengthening shareholders' returns,striving to achieve a break-even position in our annual performance."

Financial Results

Six months ended 30 June

2024

RMB'000

2023

RMB'000

Change

%

Revenue

647,469

529,963

22.2

Gross profit

101,249

100,611

0.6

Operating (loss)/profit

(4,106)

(19,612)

(79.1)

(Loss)/profit before income tax

(5,912)

(20,715)

(71.5)

(Loss)/profit and total comprehensive (loss)/income

(6,140)

(20,155)

(69.5)

Six months ended 30 June

2024

RMB'000

Change

%

Revenue（By Service Segment）

CRM PaaS

282,411

268,397

5.2

CRM SaaS

365,058

261,566

39.6

Total Group

647,963

22.2

About XuanWu Cloud:

Xuan Wu Cloud Technology Holdings Limited,the largest local intelligent CRM service provider in China(stock code 2392.HK),which was successfully listed on the Main Board of The Stock Exchange of Hong Kong Limited on 8 July,2022. The company's domestic operating entity is Xuan Wu Technology,which has established a marketing service system covering 34 provinces and cities across China. Xuan Wu Cloud has aPaaS,cPaaS,AI,and DI platform as technical base,with Marketing Cloud,Service Cloud as core SaaS product applications,aiming to provide customers with multi-touch,all-channel,entire business cycle management of intelligent CRM products and services.