Financial Performance - The company reported a revenue decrease of 21.1% to RMB593.6 million (US$86.1 million) in 2022, with recurring revenues constituting 64.0% of total revenues[125]. - The company incurred a net loss of RMB975.9 million (US$141.5 million) in 2022, compared to RMB904.5 million in 2021[125]. - The adjusted EBITDA for 2022 was RMB563.4 million (US$81.7 million), up from RMB422.8 million in 2021[125]. - Revenue decreased by 21.1% to RMB593.6 million (USD$86.1 million) in 2022, following a 4.0% increase from RMB723.5 million in 2020 to RMB752.7 million in 2021[188]. - The net loss for the year ended December 31, 2022, was RMB 975,899, compared to a net loss of RMB 904,451 in 2020, indicating an increase in losses of about 7.9%[227]. - The company reported net cash used in operating activities of RMB 567,270 for the year ended December 31, 2022, compared to RMB 238,077 in 2021, indicating a significant increase in cash outflow[232]. Customer Metrics - The active customer base declined from 11,406 in 2021 to 9,980 in 2022, with large-enterprise customers decreasing from 142 to 118 during the same period[125]. - The dollar-based net customer retention rate for recurring solutions dropped to 61.7% in 2022 from 90.2% in 2021[125]. - As of December 31, 2022, the company had approximately 4,600 active customers for its CPaaS solutions, down from 6,600 in 2020[134]. - The dollar-based net customer retention rate for CPaaS solutions decreased to 42.6% in 2022 from 82.2% in 2020, primarily due to a strategic downsizing of lower-margin services[134]. - The company achieved a dollar-based net customer retention rate of 87.3%, 90.2%, and 61.7% for recurring solutions in 2020, 2021, and 2022, respectively[142]. Operational Changes - The company has established its second R&D center in Wuhan, China, in addition to its primary center in Beijing[143]. - The company plans to focus on developing AI and video technologies to introduce new features and solutions[191]. - The company intends to expand its customer base by penetrating more industry verticals and lower-tier cities[190]. - The company has a dedicated research and development team of 652 members as of December 31, 2022, accounting for 46.7% of total employees[143]. Regulatory Environment - The Foreign Investment Law, effective January 1, 2020, replaced previous regulations governing foreign investment in the PRC[151]. - The Cybersecurity Law mandates network operators to fulfill security obligations and protect personal information, with penalties for violations including fines and operational restrictions[155]. - The PRC Data Security Law imposes fines ranging from RMB2 million to RMB10 million for violations that endanger national security, along with potential business suspensions[157]. - The Personal Information Protection Law, effective from November 1, 2021, aims to protect personal information rights and regulates its processing[161]. Shareholder and Corporate Governance - The company raised approximately US$340.2 million in net proceeds from its initial public offering in February 2021[123]. - The aggregate cash compensation for directors and executive officers in 2022 was approximately RMB 10.2 million (US$ 1.5 million)[255]. - The company has established three committees under the board of directors: audit, compensation, and nominating and corporate governance[264][266][267]. - The company has entered into indemnification agreements with directors and executive officers to cover liabilities and expenses incurred in their roles[271]. Legal and Compliance Issues - The company is currently involved in two class action lawsuits related to its initial public offering, with a settlement requiring a payment of $12.0 million[283]. - The company has faced legal proceedings related to intellectual property infringement and labor claims but currently does not anticipate any material adverse effects on its business[283]. - The company has not experienced any significant changes since the date of its audited consolidated financial statements[286]. Cybersecurity Measures - The company has implemented strict protocols for data protection and compliance with applicable laws regarding customer data[316]. - The chief technology officer has over 20 years of experience in risk management, cybersecurity, and information technology, leading the company's cybersecurity efforts[317]. - The company has not experienced any cybersecurity incidents that resulted in operational interruptions or known losses of critical data[317]. - Employees with access to confidential data are bound by confidentiality agreements, with legal obligations to maintain confidentiality even after resignation[317]. Financial Position and Investments - The company has not declared or paid any dividends and does not plan to do so in the foreseeable future, intending to retain available funds for business operations and expansion[284]. - The company may require additional cash resources due to changing business conditions or future developments, including potential acquisitions or investments[220]. - The company has entered into multiple Share Pledge Agreements with various parties, indicating ongoing financial arrangements and commitments[321].

VIE Structure and Foreign Investment - The VIE structure is used to replicate foreign investment in China-based companies, allowing the company to control and receive economic benefits from affiliated entities despite restrictions on direct foreign investment [41]. - Revenues from affiliated entities accounted for substantially all of the company's total revenues in 2019, 2020, and 2021 [45]. - The company faces potential restrictions on transferring funds or assets due to PRC government interventions, which could impact its financial operations [47]. - The VIE structure poses unique risks, including potential breaches of contractual arrangements by VIE shareholders, which could adversely affect operational control [42]. Financial Performance and Dividends - The company has not paid any dividends or made distributions to shareholders, including U.S. investors, since 2019 [46]. - The company expects to distribute earnings and settle service fees based on business needs, with no dividends anticipated in the foreseeable future [46]. - The company reported significant net losses of RMB233.5 million, RMB425.2 million, and RMB904.5 million (US$141.9 million) for the years 2019, 2020, and 2021 respectively, with operating cash outflows of RMB161.6 million, RMB216.5 million, and RMB238.1 million (US$37.4 million) during the same periods [86]. - The company has incurred substantial investments in developing new cloud-based communication solutions and enhancing existing ones, which continue to drive negative cash flows [86]. Regulatory Compliance and Risks - The company has obtained necessary licenses and permits for operations in China, but future compliance with evolving regulations remains uncertain [49]. - The company is subject to the Cybersecurity Review Measures, which may require compliance for operations affecting national security [49]. - The company is required to comply with extensive and evolving laws and regulations in the PRC, which may adversely affect its business prospects [60]. - The company may face significant compliance costs due to new cybersecurity laws and regulations, which could adversely affect business performance [137]. Legal and Litigation Issues - Significant legal and other expenses were incurred due to employee misconduct and transaction irregularities, impacting the company's financial position and reputation [63]. - The company has faced class action lawsuits from securities purchasers, which could materially affect its business and financial condition [65]. - The SEC settlement regarding employee misconduct resulted in the loss of certain exemptions under federal securities laws [63]. - The company has been the target of cyberattacks, which, while not materially significant to date, pose ongoing risks to operations [146]. Internal Controls and Financial Reporting - Material weaknesses in internal control over financial reporting were identified, including insufficient accounting personnel and lack of documented financial closing policies [68][69]. - The company is implementing remedial measures to address identified weaknesses, including employee training and improving internal policies [70]. - The company has experienced delays in SEC filings due to material weaknesses in internal control over financial reporting, which could affect investor confidence [76]. Market Competition and Customer Relations - The company faces intense competition in the cloud-based communications market, with pricing pressures from competitors offering lower-priced solutions [96]. - The company must attract new customers and retain existing ones to increase revenues, which is contingent on the quality and competitiveness of its solutions [78]. - The company has experienced customer loss during the COVID-19 outbreak, primarily due to a decrease in the number of smaller enterprise customers [148]. - The company has experienced challenges in configuring and implementing solutions for large enterprises, which may affect customer satisfaction and retention [110]. Growth and Expansion Strategies - The company has established overseas subsidiaries in Japan, Philippines, Malaysia, South Korea, Singapore, and Mexico, with plans for further expansion into the Middle East and South America [185]. - The company recognizes revenues over the subscription term, which means downturns in new sales may not immediately impact current results but will affect future revenues [177]. - The company has plans to enhance customer support and innovate solutions to maintain high levels of customer satisfaction as it focuses on serving large enterprises [158]. - Future international expansion will require significant investment and may expose the company to new operational risks [187]. Financial Management and Capital Needs - The company may require additional capital for growth, which could involve selling equity or debt securities, potentially diluting existing shareholders [193]. - The company has incurred substantial share-based compensation expenses, with 26,385,975 Class A ordinary shares options granted under the 2016 Plan as of the report date [182]. - Share-based compensation expenses increased from RMB27.1 million in 2019 to RMB277.6 million (US$43.6 million) in 2021, with unrecognized expenses of RMB87.3 million (US$13.7 million) and RMB133.9 million (US$21.0 million) as of December 31, 2021 [184]. Risks Related to Data and Cybersecurity - The company has access to sensitive data and must comply with evolving data privacy and cybersecurity regulations, which could lead to significant penalties if not adhered to [127][130]. - The PRC Data Security Law, effective September 1, 2021, imposes obligations on entities regarding data security and introduces a tiered protection system based on data importance [131][132]. - The company must comply with various data protection and cybersecurity practices of suppliers and contractors, which adds to operational complexity [142]. - The interpretation and enforcement of new laws and regulations regarding data protection and cybersecurity remain uncertain, potentially impacting business operations [137]. Operational Challenges and Risks - The company faces significant operational strains due to its expansion, necessitating investments in operational, financial, and managerial controls [157]. - The company has outsourced certain non-core software development activities, which may lead to operational difficulties if service providers fail to meet standards [181]. - The company relies on third-party cloud infrastructure, making it vulnerable to disruptions that could adversely affect its business and financial condition [169]. - Errors or defects in solutions could lead to reputational damage and loss of customers, adversely affecting financial results [114].

Revenue Diversification - No customers individually represented greater than 10.0% of total revenues in 2018, 2019, and 2020, indicating a diversified revenue base [735]. - No customers represented greater than 10.0% of accounts receivable, net, as of December 31, 2019, and 2020, reflecting stable credit risk management [736]. Contract Management - Contract liabilities to customers did not exceed 10.0% of total contract liabilities for the years 2018, 2019, and 2020, indicating effective contract management [737]. Currency Risk Exposure - The Renminbi depreciated approximately 5% against the U.S. dollar in 2018 and further depreciated by 4% in 2019, highlighting currency risk exposure [742]. - The company does not currently have significant direct foreign exchange risk, as substantially all revenues and expenses are denominated in Renminbi [741]. - A 10% appreciation of the U.S. dollar against the Renminbi would result in an increase of RMB22.3 million in cash and cash equivalents [744]. Financial Position - As of December 31, 2020, the company had U.S. dollar-denominated cash and cash equivalents of RMB223.4 million [744]. Credit Risk Management - The investment policy requires cash and short-term investments to be placed with high-quality financial institutions to limit credit risk [738]. - The company conducts credit evaluations on customers prior to delivery of goods or services, ensuring a robust credit risk assessment process [739].