Investment Rating - The report does not explicitly state an investment rating for the intelligent software development industry Core Insights - The intelligent software development industry focuses on developing and applying AI technologies to provide intelligent solutions that enhance business efficiency, optimize decision-making, and improve user experience. The industry is characterized by strong technological dependence, short product iteration cycles, and diverse cross-domain applications. China's robust capabilities in this field are driving continuous industry growth, with an expanding market size expected to continue [4][5][12] Industry Overview - The intelligent software development industry can be categorized into various application areas, including office software, embedded software, emerging technology software, information security software, and innovative software [5][10] - The market size of the intelligent software development industry is projected to grow from 1.4669 trillion RMB in 2019 to 2.8223 trillion RMB in 2024, with a compound annual growth rate (CAGR) of 13.98%. From 2025 to 2029, the market size is expected to increase from 3.1977 trillion RMB to 5.2693 trillion RMB, with a CAGR of 13.30% [31][32] Industry Characteristics - The industry exhibits strong technological dependence, with a reliance on diverse development tools and environments, including integrated development environments (IDEs), version control systems, and automated testing tools. As of April 2024, nearly 40 intelligent software development tools have been launched in China, showcasing the sector's technological vitality and innovation [13] - The product iteration cycle in the intelligent software development industry is short, allowing teams to quickly respond to market changes and user feedback, thereby enhancing user experience and satisfaction [14] - The industry demonstrates high diversity and cross-domain applications, with intelligent software being utilized in natural language processing, computer vision, voice recognition, autonomous driving, and financial analysis [15] Development Stages - The intelligent software development industry has evolved through four stages: 1. Emergence (1960-1969): Establishing the foundation for independent development and technological innovation 2. Initiation (1970-2000): The rise of independent database companies laid the groundwork for data processing and management 3. Rapid Growth (2001-2021): The industry began to focus on flexible, efficient, and responsive development methods 4. Maturity (2022-present): The industry has seen widespread penetration across various sectors, driving intelligent transformation and industrial upgrades [16][20] Industry Chain Analysis - The intelligent software development industry chain consists of three main segments: 1. Upstream: Hardware and basic software supply, including computer hardware, embedded chips, and operating systems 2. Midstream: Intelligent software development and research, covering demand research, design, coding, testing, and delivery 3. Downstream: Application and service sectors, including industry-specific software and intelligent solutions [21][22] Competitive Landscape - The market concentration in the intelligent software development industry is high, with leading companies such as iFLYTEK, Yonyou Network Technology, and Shanghai Baoxin Software in the first tier. The second tier includes China Software and Technology Service Corporation and Kingsoft Office Software, while the third tier consists of Beijing SuperMap Software and Inspur Software [38][39]

Group 1: Financial Performance - In 2024, the company achieved a revenue of 23.343 billion, marking an 18.79% year-on-year growth, and a net profit attributable to shareholders of 560 million [1] - The Q1 2025 report showed a revenue of 4.658 billion, a 27.74% increase year-on-year, with net profit and net profit excluding non-recurring items growing by 35.68% and 48.29% respectively [1] - The operating cash flow reached a historical high of 2.495 billion, growing over six times compared to the previous year, attributed to improved sales collection [4] Group 2: Business Strategy and Structure - The company has restructured its business model focusing on optimizing C-end, strengthening B-end, and selectively partnering with G-end clients, leading to improved revenue collection rates [5] - High-margin businesses such as smart education and medical AI have seen an increase in revenue share, maintaining an overall gross margin above 40% [5] - The company’s core business segments, including consumer, education, automotive, and medical, reported significant revenue growth, with smart education revenue reaching 7.229 billion, up 29.94% [5] Group 3: Technological Advancements - The company has established a fully autonomous and controllable AI technology system, integrating domestic computing power and self-developed algorithms, which is crucial for maintaining a competitive edge [6][7] - The Spark-X1 model, launched in April 2024, has shown significant improvements in various tasks, achieving performance levels comparable to leading international models despite having fewer parameters [9][10] - The company’s focus on self-developed foundational models is seen as essential for the application of large models across various industries, enhancing reliability and trust among clients [12][13] Group 4: Market Position and Future Outlook - The company is positioned as a leader in the domestic AI market, with the largest number of bids and bid amounts in 2024 across multiple sectors including communication, finance, and healthcare [10] - The integration of AI technology into smart hardware products has opened new growth avenues, with AI learning machines seeing sales growth exceeding 100% [14] - The company emphasizes the importance of productization to ensure the scalability of AI solutions, aiming to create replicable products that address specific market needs [17][18]