Yxt.Com Group Holding Limited(YXT) - 2024 Q4 - Annual Report

Financial Performance - Pro forma revenue for the year ended December 31, 2023, was RMB 424,016 thousand, a decrease of 1.4% compared to RMB 430,636 thousand in 2022 [537]. - Adjusted net loss for 2023 was RMB 277,634 thousand, compared to RMB 522,610 thousand in 2022, reflecting a 46.8% improvement [544]. - Adjusted net loss margin improved to 65.5% in 2023 from 121.4% in 2022 [544]. - Adjusted EBITDA for 2023 was RMB (260,413) thousand, an improvement from RMB (510,995) thousand in 2022 [547]. - Adjusted EBITDA margin improved to 61.4% in 2023 from 118.7% in 2022 [547]. - The company incurred a net loss of RMB 229,838 thousand for the year ended December 31, 2023, compared to RMB 640,295 thousand in 2022 [547]. - Adjusted net loss for 2023 was RMB 277.6 million, a decrease from RMB 522.6 million in 2022, representing a 47% improvement [544]. - Adjusted EBITDA for 2023 was RMB 260.4 million, compared to RMB 511.0 million in 2022, indicating a 49% reduction in losses [547]. - Net loss narrowed to RMB 92.1 million (US$12.6 million) in 2024, compared to a net loss of RMB 229.8 million in 2023 [533]. Revenue and Customer Metrics - Total revenues for the company were RMB430.6 million, RMB424.0 million, and RMB331.2 million (US$45.4 million) for 2022, 2023, and 2024, respectively, with corporate learning solutions accounting for 98.5%, 97.1%, and 98.3% of total revenues [498][500]. - The number of subscription customers decreased from 3,439 in 2022 to 2,405 in 2024, with a net revenue retention rate of 118.1%, 101.4%, and 100.9% for the same years, reflecting a shift towards larger enterprises [496][497]. - Subscription revenues for 2024 decreased to RMB301.8 million (US$41.3 million), representing 91.1$3.3 million) in 2024, accounting for 7.2% of total revenues, a significant drop from RMB64.0 million in 2023 [508]. - Revenues from corporate learning solutions decreased by 20.9% to RMB325.6 million (US$44.6 million) in 2024 [519]. Cash Flow and Liquidity - As of December 31, 2024, the company had cash and cash equivalents of RMB 417.9 million (US$57.3 million) [558]. - The company expects current cash and anticipated cash flow from operations to meet cash needs for at least the next 12 months [558]. - Net cash used in operating activities was RMB257.0 million in 2023, with a net loss of RMB229.8 million [562]. - Net cash used in operating activities was RMB211.7 million (US$29.0 million) for the year ended December 31, 2024, with a net loss of RMB92.1 million (US$12.6 million) [560]. - Net cash generated from financing activities was RMB241.9 million in 2023, primarily due to proceeds from borrowings of RMB269.8 million [568]. - Net cash generated from financing activities was RMB173.7 million (US$23.8 million) in 2024, primarily from proceeds of short-term borrowings of RMB110.0 million (US$15.1 million) and long-term borrowings of RMB138.0 million (US$18.9 million) [567]. - The outstanding balance of borrowings as of December 31, 2024, was RMB288.5 million (US$39.5 million), with a weighted average interest rate of approximately 3.68% [571]. Operating Expenses and Investments - Operating expenses totaled RMB863.1 million, RMB563.8 million, and RMB398.7 million (US$54.6 million) for 2022, 2023, and 2024, with sales and marketing expenses accounting for 80.1$0.2 million) for the years 2022, 2023, and 2024, respectively, indicating a focus on growth through investment [574]. - The company allocates a substantial portion of operating expenses to research and development to fuel growth and innovation [578]. - Research and development expenses decreased by 34.2% from RMB176.5 million in 2023 to RMB116.1 million (US$15.9 million) in 2024, accounting for 35.1$19.0 million) in 2024, representing 41.8% of total revenues [512]. Taxation and Financial Strategy - The company is not subject to income or capital gains tax in the Cayman Islands, where it is incorporated [548]. - The PRC enterprise income tax rate is generally 25%, but certain subsidiaries benefit from a reduced rate of 15% as "High-tech Enterprises" [550]. - The company may benefit from a reduced withholding tax rate of 5% on dividends received from PRC subsidiaries, subject to meeting specific conditions [552]. - The company has tax planning strategies in place to mitigate potential unfavorable tax consequences related to its operations in China [555]. - The company has not entered into any financial guarantees or derivative contracts that could impact its financial obligations, indicating a conservative financial strategy [575]. Operational Efficiency and Future Outlook - The company aims to optimize its product offering mix to enhance profitability, focusing on subscription-based corporate learning solutions with self-developed content [491]. - The company expects to benefit from economies of scale and improved operational efficiency, which should lead to a decrease in costs as a percentage of revenues in the long run [503]. - The company plans to continue investing in research and development to enhance its technology capabilities and expand its content library, which may incur significant upfront costs [492].