On March 27, Beijing-based enterprise service software company Yonyou (600588:SH) published (in Chinese) its annual financial report for last year. Their annual operating income reached CNY 8.51 billion (USD 1.2 billion), up by 10.5% from 2018; net profit attributable to shareholders achieved CNY 1.18 billion (USD 170 million), a year-on-year growth of 93.3%. As of the end of 2019, this software provider owned total assets worth CNY 17.54 billion (USD 2.47 billion).
For the past four quarters financial performance, the operating income increased from CNY 1.25 billion(USD 176.2 million) of Q1 to CNY 3.5 billion(USD 493.2 million) of Q4. Meanwhile, as for net profit, the first quarter showed the highest of CNY 82 million(USD 11.56 million), but the third quarter is the only negative which presented data of -CNY 35 million( -USD 4.93 million).
During the reporting period, the company's cloud service business (excluding financial cloud service business) revenue increased by 131.6% compared to 2018, accounting for 23.15% of total revenue. Software business revenue decreased by 6.9% year-on-year,occupying the most which is 61.05%.Payment services business revenue increased by 319.1%, accounting for 7.64%. Revenue from the Internet investment and financing information service industry decreased by 41.0% year-on-year, taking the share of 7.54%.
Closed as of March 27, the stock price of Yonyon is CNY 42 (USD 5.92), with a market value of CY 108.8 billion (USD 15.33 billion). Except this main player of the cloud enterprise service industry, other players including Kingdee (0268:HK), Glodon Software(002410:SH) and Shiji Information Technology(002153:SH). Yonyon started its cloud transformation from 2015, Kingdee started from 2011 while its 2019 net loss of CNY 170 million (USD 23.96 million) mainly related to cloud service. Similar to these two participants, Glodon Software and Shiji are on their way to cloud service transformation.
In the trend of digital transformation for almost all the industries in China, these transform service providers aiming to seize opportunities in this huge wave. Besides their competitors who focused on cloud service for enterprise, they will also face opponents from other sectors especially Internet giants such as Alipay, which announced its future goal of helping enterprises complete digital changes. This is a time of enterprises’ digital and cloud-computing shifts, as 'to customers' traffic is basically divided up, 'to Business' is waving and several runners are standing in the race.