Summary of the Conference Call for 山石网科 (ShanShi Network Technology) Company Overview - **Company**: 山石网科 (ShanShi Network Technology) - **Industry**: Cybersecurity and AI Technology Key Financial Performance - **Revenue Growth**: 2025 H1 revenue reached 4.17 billion CNY, a year-on-year increase of approximately 9.46% [3] - **Gross Margin**: Main business gross margin stood at around 71%, leading in the cybersecurity industry [3] - **Net Profit**: Net loss of 76.55 million CNY, but a year-on-year reduction in loss by 4%, with a 53% reduction in Q2 alone, indicating improved profitability [2][3] Strategic Initiatives - **Double A Strategy**: Implementation of "Double A Strategy" (ASEC and AI) to enhance computing power through self-developed ASIC chips and optimize processes using AI, aiming for profitability recovery [2][6] - **ASIC Chip Development**: Self-developed ASIC chips have entered mass production, with expected testing in Q4 2025, laying the groundwork for entering the 信创 (Xinchuang) market [2][7] - **Channel Sales Growth**: Channel sales contracts reached 154 million CNY, a 53% year-on-year increase, with the number of platinum partners rising to 49 [2][7] Operational Efficiency - **Cost Control**: Overall expenses decreased by 7%, with sales expenses down by 25% and R&D expenses down by approximately 5% [4] - **Productivity Improvement**: Overall employee efficiency improved by about 26%, with AI technology enhancing R&D code efficiency by over 20% [4][12] Market Expansion - **Overseas Market Growth**: Hong Kong market grew by 46% in H1 2025, with a target of 50% growth in overseas business by 2026 [4][21] - **Focus on Southeast Asia and Americas**: Strategic localization efforts in Southeast Asia and the Americas, with a focus on government and financial sectors [22][24] Future Development Plans - **Two-Step Strategy**: A two-phase development strategy focusing on brand transformation and platform switching to ISC hardware platform by Q4 2025 [8][10] - **Data Security Growth Target**: Aiming to achieve sales of 100 million CNY in data security and services within three years [9] AI and Technology Integration - **AI for Process**: Significant improvements in R&D efficiency through AI, with a focus on enhancing internal operations and customer solutions [30][31] - **AI Product Acceptance**: Market acceptance of AI products is still developing, with expectations for rapid growth in the next 5 to 10 years [34][35] Challenges and Outlook - **Profitability Outlook**: Optimistic about Q4 2025 performance, with expectations for significant loss reduction and potential profitability [44][45] - **Impact of AI Policies**: Government policies on AI are expected to positively influence the company's data security business [46] Conclusion 山石网科 is strategically positioned to leverage its technological advancements in ASIC and AI to enhance operational efficiency, expand its market presence, and improve profitability in the coming years. The company's focus on cost control, channel partnerships, and international market growth will be critical to achieving its ambitious targets.