Xuan Wu Cloud, the largest domestic provider of intelligent CRM services, disclosed its interim results on the evening of August 29th, marking its first financial report since going public. According to the report, the company achieved a revenue of RMB449 million, with an adjusted net profit of RMB9.2 million, representing a remarkable year-on-year growth rate of 35.3%. It is worth noting that the driving force behind Xuan Wu Cloud's performance during the reporting period was primarily attributed to its focus on the CRM SaaS service sector in recent years, indicating that the company's strategic development plan is progressing smoothly.

Market analysts have pointed out that the digital economy has risen to become a national strategy, with an increasing demand for enterprise digital transformation. Especially in the current economic slowdown and the weakening market traffic dividend, enterprises are increasingly seeking refined customer operations and cost reduction while enhancing efficiency. As a result, the demand for CRM solutions has been growing rapidly. Xuan Wu Cloud, as a leading player in the intelligent CRM industry, is poised to seize greater opportunities for performance expansion, aligning with the flourishing market demand.

CRM SaaS Experiences Rapid Growth and Improved Overall Profitability

The interim report indicates that Xuan Wu Cloud achieved a revenue of 449 million RMB during the reporting period, reflecting a year-on-year growth of 6.7%. The adjusted net profit amounted to 9.2 million RMB, with a notable year-on-year increase of 35.3%. It is important to note that the adjustments made by Xuan Wu Cloud are associated with expenses incurred during its initial public offering (IPO). These expenses are not recurring operating costs for the company but rather one-time impacts on the financial statements, signifying that they will not affect the company's future performance.

Therefore, the increase in Xuan Wu Cloud's adjusted net profit also serves as a more accurate testament to the progress achieved by the company in the first half of the year on the operational front. 

Regarding the performance growth during the reporting period, Xuan Wu Cloud attributes it to two factors. Firstly, the overall revenue and gross profit margin of the company have increased. Secondly, the company has diligently executed its established strategy by maintaining a focus on providing high-margin CRM SaaS services, which has led to the growth of this business and subsequently boosted the overall gross profit margin.

According to the interim report, Xuan Wu Cloud's CRM SaaS services encompass Marketing Cloud, Sales Cloud, and Service Cloud, enabling the company to provide comprehensive intelligent CRM services to its clients throughout the entire life cycle, from initial marketing to after-sales service. During the reporting period, Xuan Wu Cloud's CRM SaaS services experienced rapid growth, achieving a revenue of RMB222 million, representing a year-on-year increase of 26.9%. Notably, the Marketing Cloud segment of the company contributed significantly to this growth, generating a revenue of RMB184 million, with a year-on-year increase of 33.5%. This was primarily driven by the increased sales of the ICC module, a product under the Marketing Cloud.

The flourishing expansion of the CRM SaaS business has not only propelled a surge in overall revenue but also fortified Xuan Wu Cloud's profitability with its penchant for higher gross profit margins. Data reveals that during the reporting period, Xuan Wu Cloud boasted an impressive gross profit of RMB110 million, marking a remarkable year-on-year growth of 18%.

It is understood that the focus on CRM SaaS services is a well-established strategic move for Xuan Wu Cloud after it went public. In the previously disclosed allocation of funds raised from the IPO, it was explicitly stated that 40% of the HKD 183.7 million raised would be utilized to enhance and expand CRM SaaS services through continuous innovation. Additionally, approximately 10% of the funds would be selectively allocated for strategic investments and acquisitions. Looking at the key drivers behind the growth in performance during the first half of the year, it is evident that Xuan Wu Cloud has taken a firm step forward in its focused CRM SaaS strategy.

With a Steadfast Commitment to Innovation and Research, Xuan Wu Cloud Has Consistently Strengthened Its Market Competitiveness

According to the recent disclosure, Xuan Wu Cloud emerges as the largest domestic provider of intelligent CRM services, based on the revenue generated by the sector in 2021. The company's core operations include both CRM PaaS and CRM SaaS services.

In order to maintain its industry leadership, Xuan Wu Cloud has always attached great importance to research and development innovation. During the reporting period, Xuan Wu Cloud continuously iterated and upgraded its product portfolio, bringing forth new offerings. According to the announcement, Xuan Wu Cloud's research and development team has developed several new features to enhance its CRM SaaS service.

Within the sphere of Marketing Cloud, Xuan Wu Cloud has devised an autonomous APP messaging delivery channel, enhancing the variety and efficiency of message dissemination. Such efforts have augmented the existing array of message delivery channels, ensuring optimal outreach and engagement. Turning our attention to Sales Cloud, Xuan Wu Cloud has unveiled an upgraded iteration of its intelligent "100" platform, which injects tailored functionalities to accommodate diverse business models, catering to both channel-focused products and collaborative ventures with manufacturers. Furthermore, the company has developed a retail terminal management system module, seamlessly integrating store endpoints with consumers, fostering a holistic shopping experience. Within the Customer Service Cloud domain, Xuan Wu Cloud's cloud-based call center introduces a three-way calling feature, streamlining communication channels for enhanced efficiency. In the customer service cloud area, the company's cloud call center has introduced the three-way calling feature to enhance communication efficiency. The dialogue robot is also capable of performing functions such as seamless transition between robots and customer service personnel (human-robot coupling) and detecting disconnected numbers, which improves the performance of customer service agents. Beyond these advancements, Xuan Wu Cloud has made strides in the realm of AIoT with an achievement in the development of an intelligent air curtain cabinet, capable of real-time recognition of product display conditions. This innovation promptly alerts business personnel of stockouts and other substandard scenarios, enabling swift adjustments and ensuring seamless operations.

In the realm of CRM PaaS services, Xuan Wu Cloud has unveiled a suite of new applications aimed at enhancing the speed and accuracy of artificial intelligence-driven product recognition. Besides, the company has also developed the capability to identify products offline on mobile devices. Moreover, Xuan Wu Cloud has undertaken upgrades to its data intelligence platform, bolstering internal controls through innovative features such as detecting fraudulent activities in inspection stores within industries like fast-moving consumer goods, as well as employing remote verification to expose deceptive displays. These enhancements aim to identify and combat fraudulent behavior effectively.

According to an official report from Xuan Wu Cloud, its ICC product witnessed substantial sales growth in the first half of the year. The ICC 3.0 version recently obtained the Huawei Kunpeng Technology Certification after successfully completing interoperability testing on Huawei's public cloud platform (Kunpeng). This achievement highlights its capability to fully adapt to domestic chips, servers, operating systems, and databases, ensuring compliance with the requirements for domestic independence and control.

Market Size Set to Enter the Trillion-RMB Range, Poised for Rapid Growth Period

With the deepening of digital transformation and the waning market dividend of traffic, more and more enterprises are increasing their demand for precise and end-to-end life cycle customer management. This trend has fueled the rising popularity of enterprise services in the internet industry.

Recently, Tencent, one of China's leading internet giants, released its semi-annual report, revealing that in the second quarter of 2022, its revenue from ToB (business-to-business) services reached 42.2 billion RMB, accounting for over 30% of the total revenue for five consecutive quarters. It is evident that Tencent has positioned enterprise SaaS as one of the growth drivers for the company's second growth curve, and the software service market in the ToB sector has once again become a highly coveted opportunity for many industry giants.

Among them, according to data from iResearch, CRM has emerged as the largest segment within vertical SaaS at the enterprise level in China, capturing a substantial market share of 17%. With the increasing market awareness of intelligent CRM, it is poised to experience rapid market expansion and seize the opportunity for substantial growth.

According to a report by Frost & Sullivan, the Total Addressable Market (TAM) of the intelligent CRM service market has grown from 25.1 billion RMB in 2017 to 71.8 billion RMB in 2021, with a compound annual growth rate of 30.1%. It is projected to continue growing at a compound annual growth rate of 31.3% and reach 280 billion RMB by 2026. This indicates that the future intelligent CRM service market is poised for rapid development.

Returning to Xuan Wu Cloud, amidst the industry's imminent entry into the trillion-RMB scale, the company may soon experience a period of performance release, seizing the opportunity for its own growth.

Short-term prospects for Xuan Wu Cloud are promising. According to the company's previous prospectus, the revenue in the intelligent CRM industry exhibits seasonal characteristics, with the first quarter typically experiencing lower income compared to the other three quarters.

This implies that Xuan Wu Cloud's performance in the second half of the year is likely to outperform the first half. The company also stated in its report that it expects to maintain the upward momentum from the first half, as the second half traditionally generates higher revenue. Furthermore, with the increasing demand for CRM services and the utilization of funds raised through the IPO to implement various initiatives, Xuan Wu Cloud anticipates even greater business performance in the second half of 2022.

Looking at the long term, the digital economy has become a national strategic priority during the "14th Five-Year Plan" period, and digital transformation has become the trend across various industries. This signifies that numerous segments within the digital landscape have received a policy boost, acting as “catalysts” for growth. As a leading player in the intelligent CRM sector, Xuan Wu Cloud is poised to be one of the first beneficiaries, paving the way for further expansion in terms of performance and possibilities.