Foxit Software(SH:688095) Dongxing Securities·2024-11-06 01:53Investment Rating - The report maintains a "Strong Buy" rating for the company [4] Core Views - The company has shown robust revenue growth, with subscription revenue exceeding half of total revenue in Q3 2024, indicating a successful transition to a subscription model [2][4] - The company is expected to release profits in the medium term due to clear cost control measures and a strong growth trajectory supported by artificial intelligence [4] Summary by Sections Financial Performance - For the first three quarters of 2024, the company achieved revenue of 5.09 billion yuan, a year-on-year increase of 15.07%, with a net profit attributable to shareholders of 0.39 billion yuan, marking a return to profitability [1] - In Q3 alone, the company reported revenue of 1.72 billion yuan, a 9.73% increase year-on-year, although net profit showed a loss of 0.24 billion yuan, which was a wider loss compared to the previous year [1] Revenue Composition - Subscription revenue reached 0.90 billion yuan in Q3 2024, a significant year-on-year growth of 62.36%, accounting for 52.52% of total revenue [2] - The Annual Recurring Revenue (ARR) as of the end of Q3 stood at 3.66 billion yuan, reflecting a 46.30% increase from the end of 2023 [2] Cost Management - The gross margin for the first three quarters was 93.71%, slightly down by 1.08 percentage points year-on-year, indicating a strong foundation for future profit release [3] - The company has set clear cost control expectations, focusing on limiting new project investments and controlling personnel increases to enhance long-term profitability [3] Growth Opportunities - The introduction of a separately priced AI assistant is expected to create new growth avenues, with the potential for product price increases due to enhanced features [4] - The company is actively integrating its offerings in the domestic software market, particularly in document solutions, which is anticipated to contribute significantly to profit growth due to low marginal investment [4] Profit Forecast - The company is projected to have net profits of -0.52 billion yuan, -0.26 billion yuan, and 0.54 billion yuan for the years 2024, 2025, and 2026 respectively, with corresponding PE ratios of -120, -239, and 116 times [4][10]