Core Viewpoint - Microsoft has officially shut down Skype, marking the end of its status as the world's largest voice communication software [3]. Group 1: Rise and Fall of Skype - Skype was developed in 2003 by two Estonian programmers, aiming to enable free communication across geographical boundaries through its unique peer-to-peer (P2P) technology [15][16][17]. - The software gained rapid popularity, reaching 11 million users in its first year, 54 million by 2005, and over 400 million by 2008, becoming a leading instant messaging platform [23]. - By 2013, Skype had 300 million monthly active users and held a 36% market share in the international calling sector [25]. - However, by 2023, Skype's monthly active users had declined to 17 million, with daily active users dropping to 3.6 million, significantly lower than competitors like WeChat and WhatsApp [27][28]. Group 2: Reasons for Decline - Skype's decline is attributed to three ownership changes and a significant redesign in 2017 that negatively impacted user experience [30][32]. - The first ownership change occurred in 2005 when eBay acquired Skype for $2.6 billion, followed by a sale of a majority stake in 2009, and finally, Microsoft's acquisition for $8.5 billion in 2011 [30]. - The 2017 redesign led to a drop in app ratings from 3.5 stars to 1.5 stars, further alienating users [30][32]. - The rise of mobile internet and the emergence of competitors like WhatsApp and WeChat, which were designed for mobile use, highlighted Skype's shortcomings in adapting to new user needs [40][43]. Group 3: Industry Trends and Insights - The decline of Skype illustrates the importance of continuous innovation and integration within a larger ecosystem to maintain relevance in the tech industry [74]. - Skype's initial advantage of P2P technology diminished as internet costs decreased and mobile networks became prevalent, making its technology less unique [39][40]. - The shift towards social features in communication apps, as seen with WeChat and WhatsApp, created a competitive landscape where Skype's focus on being a communication tool was insufficient [49][50]. - Skype's inability to establish a sustainable revenue model, primarily relying on international call charges, led to significant financial losses, totaling over $1.2 billion from 2016 to 2020 [56][57]. Group 4: Lessons Learned - The story of Skype serves as a cautionary tale for technology companies, emphasizing that early technological advantages can fade without ongoing development and strategic integration into broader ecosystems [74]. - Companies must adapt to changing market dynamics and user preferences to avoid obsolescence, as demonstrated by Skype's failure to compete effectively against more versatile platforms [74].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% in the next 6-12 months [5]. Core Insights - The company's FY24 revenue was 1.44 billion RMB, a year-over-year decrease of 2.78%, while Q4 2024 revenue showed a slight increase of 0.43% year-over-year [2]. - The company reported a net loss of 163 million RMB for FY24, primarily due to a goodwill impairment of 59.06 million RMB [2]. - The gross margin for FY24 was 93.22%, reflecting a decrease of 1.58 percentage points year-over-year, attributed to rising costs of AI servers [2]. - The company has seen a gradual recovery in revenue since Q3 2024, with Q1 2025 revenue increasing by 6.06% year-over-year [2]. Revenue Breakdown - Video creative products generated 961 million RMB in revenue, a slight increase of 0.06% year-over-year, accounting for 66.76% of total revenue [3]. - Practical tools revenue decreased by 8.70% year-over-year to 234 million RMB, while document creative products and drawing creative products also saw declines of 10.13% and 5.88%, respectively [3]. - International revenue accounted for 90.51% of total revenue, totaling 1.30 billion RMB, with a year-over-year decrease of 3.51% [3]. Expense Analysis - R&D, sales, and management expense ratios for FY24 were 30.72%, 58.94%, and 11.40%, respectively, with significant increases in sales expenses [4]. - In Q1 2025, the R&D expense ratio decreased to 27.79%, while the sales expense ratio increased to 62.78% [4]. - The company reported AI-related revenue of 67 million RMB in FY24, doubling year-over-year, and has integrated AI tools to enhance productivity [4]. Profit Forecast and Valuation - Revenue projections for 2025 to 2027 are set at 1.68 billion RMB, 1.97 billion RMB, and 2.36 billion RMB, respectively, with net profit estimates of 1 million RMB, 175 million RMB, and 218 million RMB [5]. - The current stock price corresponds to a price-to-sales (P/S) ratio of approximately 6.3, 5.4, and 4.5 for the years 2025 to 2027 [5].

Investment Rating - The report maintains a "Buy" rating for the company, with expected revenue growth and profitability improvements in the coming years [5]. Core Views - The company reported a revenue of 1.44 billion RMB for FY24, a year-over-year decrease of 2.78%, but showed signs of recovery with a 6.06% increase in Q1 2025 [2]. - The net profit for FY24 was a loss of 163 million RMB, primarily due to goodwill impairment of 59.06 million RMB, indicating challenges in profitability [2]. - The gross margin for FY24 was 93.22%, slightly down from the previous year, attributed to rising costs in AI server operations [2]. Revenue and Profit Analysis - FY24 revenue breakdown shows video creative products generated 961 million RMB, a slight increase of 0.06%, while practical tools and document creative categories saw declines of 8.70% and 10.13% respectively [3]. - International revenue accounted for 90.51% of total revenue, amounting to 1.30 billion RMB, with a year-over-year decrease of 3.51% [3]. Expense Structure - The company increased its R&D, sales, and management expense ratios to 30.72%, 58.94%, and 11.40% respectively in FY24, indicating a strategic focus on growth despite the losses [4]. - In Q1 2025, the sales expense ratio rose significantly to 62.78%, reflecting increased investment in sales efforts [4]. Future Projections - Revenue forecasts for 2025 to 2027 are set at 1.68 billion RMB, 1.97 billion RMB, and 2.36 billion RMB respectively, with expected net profits turning positive in 2025 [5]. - The projected price-to-sales (P/S) ratios for the next three years are approximately 6.3, 5.4, and 4.5 times, indicating a favorable valuation trend [5].