Core Viewpoint - Xiaoetong, a SaaS service provider focused on private domain operations, has submitted its prospectus for an IPO in Hong Kong, aiming to tell a growth story despite ongoing losses [1][3]. Financial Performance - Xiaoetong's projected revenues for 2022, 2023, and 2024 are RMB 298.99 million, RMB 415.11 million, and RMB 520.81 million, respectively, with gross profits of RMB 162.25 million, RMB 300.05 million, and RMB 389.38 million [2][15]. - The company reported a reduction in pre-tax losses from RMB 34 million in 2022 to RMB 15 million in 2024, indicating a trend of decreasing losses [3][12]. - In the first half of 2023, Xiaoetong's revenue was RMB 305.6 million, with losses decreasing from RMB 7.73 million to RMB 5.82 million [3][26]. Market Context - The current IPO environment in Hong Kong is favorable, with the market experiencing high activity and significant fundraising, surpassing that of NASDAQ and NYSE [6][7]. - The performance of other SaaS companies like Weimob and Youzan, which have faced valuation challenges despite being market leaders, may impact investor sentiment towards Xiaoetong [8][18]. Customer Base and Strategy - Xiaoetong's strategy emphasizes differentiation through private domain operations and a product-driven approach, with key customer numbers projected to grow from 266 in 2022 to 1,838 by 2025 [9][12]. - The revenue contribution from key customers is expected to increase significantly, from 7.1% in 2022 to 38.1% in the first half of 2025 [12][14]. Cost Structure - The company faces challenges with a high fixed cost structure, particularly in cloud server costs, which have risen from 74% of total costs in 2022 to 92% in the first half of 2025 [12][13]. - As the proportion of key accounts increases, the pressure on costs may impact profit margins, raising concerns about the sustainability of growth [16][17]. Financial Health - Xiaoetong's current liabilities have been consistently high, with a negative net current liability position, indicating potential cash flow challenges [22][24]. - The company has accumulated losses exceeding RMB 90 million over three and a half years, raising questions about its financial stability and the necessity of the IPO [29][30]. Valuation Considerations - The valuation of Xiaoetong at IPO will be critical, as a high valuation could facilitate fundraising and provide liquidity for early investors, while a low valuation may deter investment [32][33]. - The market's perception of SaaS businesses has shifted towards a more cautious stance, emphasizing the need for sustainable profitability [34][36].