Five-Year Consecutive Losses Ended, Kingdee International's Xu Shaoqing: We Won't Have Losses Again in the Future! AI Commercialization and Global Revenue Share Remains Low

Ask AI · How can Kingdee AI’s transformation break through commercialization bottlenecks?

Recently, Kingdee International (00268.HK) officially released its 2025 financial report. During the period, the company achieved total revenue of 7.006 billion yuan, a year-on-year increase of 12.0%; net profit attributable to shareholders was 93 million yuan, and adjusted net profit was approximately 232 million yuan, both turning losses into profits and ending five consecutive years of losses.

At the earnings conference, Xu Shaochun defined AI as Kingdee’s “life-and-death battle in the fourth transformation,” stating, “In the past, we often said that the Chinese software industry is unprofitable, but now we are starting to make money, and in the future, we will no longer lose money—only increasing profitability. In the long term, Kingdee’s AI transformation goal for 2030 is to recreate Kingdee with AI. We hope that by 2030, half of our revenue will come from AI + SaaS, and the other half from AI-native income.” However, considering financial data, management responses, and the competitive landscape of enterprise cloud services, Kingdee International still faces three core issues: weak profitability foundation, lagging AI commercialization, and shallow global expansion. There is a clear gap between strategic vision and practical implementation, and long-term growth potential still faces challenges.

Turning losses into profits but with weak quality, high expenses squeezing profits

Management attributed the turnaround to the scale effect of cloud subscriptions and efficiency gains from AI during the earnings conference, but underlying quality issues remain. From key profitability indicators, the company’s net profit attributable to shareholders was only 93 million yuan, with a net profit margin of about 1.3%; adjusted net profit was 232 million yuan, with an adjusted net profit margin of about 3.3%, still relatively low.

Regarding expense control, management admitted that administrative expenses surged 20.1% year-on-year to 647 million yuan, mainly due to personnel restructuring and increased severance costs. They also acknowledged that although sales expense ratio decreased by 1.1 percentage points year-on-year, overall expense management still faces significant pressure. Notably, profit attributable to equity holders was about 92.91 million yuan, while adjusted profit was 232 million yuan, a difference of approximately 139 million yuan. This discrepancy mainly stems from “share-based compensation” (105 million yuan) and “equity investment gains and goodwill impairments” (39 million yuan), which are non-cash or non-operational items.

Additionally, the company’s subscription-related contract liabilities reached 3.773 billion yuan, up 20.7%, indicating strong future revenue certainty. However, the growth in advance payments has not yet translated into profit realization, and the scale effect of subscriptions has not fully materialized into profits. Meanwhile, Kingdee International has not paid dividends for two consecutive years, and management did not mention any dividend plans at the earnings conference.

In the capital market, since the beginning of the year, Kingdee International’s stock price has continued to fluctuate downward, with a decline of over 30% since the start of the year, and the largest drop exceeding 40%. As of the close on March 23, the stock was at HKD 9.28 per share, with a market capitalization of HKD 32.939 billion.

Cloud and AI transformation enters deep water, scale effects not fully realized

“AI-first” is one of Kingdee International’s three core strategies for 2025. Xu Shaochun clearly stated at the earnings conference that by 2030, “AI-native business and AI-enhanced SaaS business will each account for 50% of revenue,” using AI to reconstruct the enterprise software value system.

During the reporting period, the company completed the full upgrade from “Kingdee Cloud” to “Kingdee AI,” launched China’s first enterprise-level AI-native super portal “XiaoK,” released nearly 20 AI-native intelligent agents covering scenarios such as financial analysis, contract review, and ESG, with 41% of new code generated by AI, reducing R&D delivery cycles by 21%, and winning industry recognition such as the first prize of the “Wu Wenjun Artificial Intelligence Science and Technology Award.”

However, in terms of commercial realization, Kingdee’s AI transformation remains in the “heavy investment, light output” pilot stage, with technical advantages not effectively translating into revenue growth. Financial data shows that in 2025, the contract signing amount related to Kingdee AI was only 356 million yuan, accounting for just 5.1% of total revenue, contributing minimally to overall performance.

In terms of application scenarios, AI is mainly applied in large state-owned enterprises like Liu Steel Group and Shenzhen Energy for ChatBI, intelligent invoice review, and fake trade screening, but has not formed full-process scalable solutions. For medium and small enterprises, AI mainly improves efficiency in bookkeeping, invoicing, and tax reporting, without establishing mature commercial charging models. In the credit AI field, contracts have been signed with major banks like China Construction Bank and Bank of Communications, but industry coverage and revenue scale remain limited.

During the Q&A session, management admitted that current enterprise clients still need time to accept AI management tools, and scenario implementation and value validation require a longer cycle. They also stated that AI R&D investment will remain high in the short term, making it difficult to significantly cut back.

Strengthening global expansion, overseas revenue accounts for less than 2%

Faced with fierce competition in the domestic enterprise cloud service market, Kingdee International has listed “globalization” as one of its three major strategies. Management revealed at the earnings conference that by 2025, the company has established local service networks in Qatar, Vietnam, Thailand, Indonesia, Malaysia, and other Southeast Asian and Middle Eastern regions, signing 463 new high-quality overseas enterprise clients, covering key industries such as modern services, equipment manufacturing, and bulk trade.

However, in terms of contribution to performance, overseas business has yet to form effective support. In 2025, overseas revenue was only 101 million yuan, a 44% increase year-on-year, but only 1.44% of total revenue. Although this is an increase from 70 million yuan in 2024, the absolute scale and proportion remain very low.

Looking at customer structure, Kingdee’s overseas business mainly relies on Chinese-funded companies going abroad. Benchmark clients listed in the financial report, such as Singapore’s CAA Oil, Malaysia’s Revitalization Group, and Vietnam’s NEOTEK, are mostly Chinese or Hong Kong-funded enterprises. Localized customer expansion is still in the early stages.