Summary of the Conference Call on China IT Services & Software Industry Industry Overview - The conference call focused on the **China IT Services & Software** industry, specifically the performance of A-share companies in **3Q25**. - **60%** of the covered companies reported a **miss** in results for 3Q25, compared to **27%** in 2Q25, indicating a trend of muted growth in the sector [1][2][4]. Key Insights - **Revenue Trends**: The overall revenue growth for IT service/software companies remained soft, with a **3% YoY decline** in the IT Services/Cybersecurity sub-sector. In contrast, the AI sector experienced the highest revenue growth at **13% YoY** [3][20]. - **Opex Control**: Companies are exercising ongoing operational expenditure (Opex) control, which has led to a **5% YoY decline** in Opex for the ERP SaaS sector [23]. - **AI Monetization**: Companies with capabilities to monetize AI-related applications, such as **Kingdee** and **iFlytek**, are expected to see better growth prospects [2][4]. Company Performance - **Kingdee**: Maintained as the top pick due to its resilient ERP SaaS business and potential for AI monetization. Reported a **3Q25 subscription ARR** increase of **18% YoY** to **Rmb3.86 billion** [4][23]. - **VenusTech**: Identified as the least preferred pick, with a **45% YoY revenue decline** in 3Q25 due to soft downstream demand. The company's recovery path is uncertain [4][28]. - **Yonyou**: Reported a **4% YoY revenue growth** but faced operational losses. The company is expected to struggle to reach break-even this year [23]. Sector Performance - **Overall Sector Growth**: The IT services industry recorded a **14.3% YoY revenue growth** in 9M25, while the software products and information security sectors posted **10.9%** and **6.9%** growth, respectively [9][12]. - **Cybersecurity Sector**: Revenue declined by **3% YoY** in 3Q25, indicating ongoing challenges in demand [28]. - **Automobile Software Services**: Companies like **ThunderSoft** reported a **43% YoY revenue increase**, driven by smart IoT demand, although gross margins were under pressure [26]. Market Outlook - The near-term outlook for the sector remains cautious, with expectations of continued soft demand from downstream customers. Actual recovery is anticipated to take time [2][20]. - The AI sector is expected to continue its growth trajectory, but traditional business budgets are likely to be constrained, impacting overall IT spending [2][20]. Additional Insights - **Revenue Growth by Segment**: The AI sector's revenue growth was the strongest at **13%**, while IT services and cybersecurity sectors faced declines [20]. - **Cost Control Measures**: Companies are focusing on stringent cost control, with Opex in the ERP SaaS sector declining by **5% YoY** [23]. - **Future Expectations**: Companies are optimistic about AI deployment and its potential to drive future growth, but they remain cautious about traditional business segments [2][20]. This summary encapsulates the key points discussed during the conference call, highlighting the current state and future outlook of the China IT Services & Software industry.