Investment Rating - The report maintains a "Buy" rating for the financial technology sector, particularly for C-end companies benefiting from an active capital market [2][23][37]. Core Insights - The report highlights the continuous optimism for financial technology, with C-end companies directly benefiting from the active capital market [2][4]. - Key companies such as Desay SV, DaoTong Technology, and Huada Jiutian have shown significant performance improvements, with Desay SV exceeding expectations in overseas markets and DaoTong leveraging AI strategies effectively [2][19][25][34]. - The report anticipates a strong correlation between the revenue of financial technology C-end companies and the trading volume in the market, projecting over 50% year-on-year revenue growth for Q2 2025 [5][9]. Summary by Sections Financial Technology Sector - The report emphasizes the active trading environment in the market, with a total margin balance exceeding 2 trillion yuan, indicating sustained trading activity [4][5]. - The average daily trading volume for the Shanghai Composite Index in Q2 2025 was 498.8 billion yuan, a year-on-year increase of 36%, while the Shenzhen Component Index saw an average of 733.2 billion yuan, up 59% year-on-year [4][5]. Key Company Updates - **Desay SV**: Reported a revenue of 14.644 billion yuan in H1 2025, a 25.25% increase year-on-year, with a net profit of 1.223 billion yuan, up 45.82% [19][20][23]. - **DaoTong Technology**: Achieved a revenue of 2.345 billion yuan in H1 2025, a 27.3% increase, with a net profit of 480 million yuan, up 24.3% [25][26]. - **Huada Jiutian**: Generated a total revenue of 502 million yuan in H1 2025, a 13.01% increase, despite a net profit decline due to increased stock payment expenses [31][32]. Investment Opportunities - The report identifies several key investment targets within the financial technology sector, including companies like Kingsoft Office, Wanxing Technology, and DaoTong Technology, which are positioned to benefit from the ongoing market dynamics [2][39]. - The report also highlights the potential for B-end financial technology companies to benefit from the active market, including firms like New大陆 and 恒生电子 [18].

Financial Data and Key Metrics Changes - First quarter core revenue was $966 million, slightly less than the prior year period on a constant currency basis, in line with expectations [24] - Adjusted EBITDA grew 9% year over year to $175 million, with a margin expansion of 270 basis points to 17.9% [27] - Non-GAAP fully diluted earnings per share increased 56% year over year to $0.64 [27] Business Line Data and Key Metrics Changes - Self-service banking revenue grew 1% year over year to $624 million, driven by a 6% increase in combined software and services revenues [28] - ATM as a Service revenue grew 24% year over year to $57 million, with a 44% increase in unique customer count [30] - Network segment revenue was $299 million, down 4% year over year, with cash withdrawal transactions approximately 3.5% lower than the prior year [32] Market Data and Key Metrics Changes - The Allpoint cash withdrawals grew modestly, while cash deposits increased more than 200% year over year [32] - Adjusted EBITDA margin for the Network segment was 29%, expanding approximately 150 basis points year over year [32] Company Strategy and Development Direction - The company aims to grow efficiently, develop a service-first culture, and embrace simplicity to enhance operational efficiency [12][14] - The strategy focuses on increasing service revenue opportunities and improving customer trust through sustained excellence [13] - The company is optimistic about expanding its ATM as a Service business, particularly in North America and Europe [30][84] Management's Comments on Operating Environment and Future Outlook - Management noted that over 70% of revenue comes from recurring services, which are resilient in uncertain economic environments [10] - The company expects total core revenue to grow 3% to 6% on a constant currency basis for the full year 2025 [41] - Tariff exposure is primarily related to hardware and parts, with plans to mitigate potential costs [40] Other Important Information - The company reaffirmed its full-year 2025 guidance despite external uncertainties, expecting adjusted EBITDA to grow 7% to 10% [41] - The backlog for ATM as a Service units is up 25% year over year, indicating strong demand [66] Q&A Session Questions and Answers Question: Can you provide more color on overall backlog this year relative to last? - Management indicated that this year is expected to be the best hardware year since 2019, with strong demand and a good backlog [47][48] Question: How is the balance sheet informing your view on potential buyback timing? - The company aims to use free cash flow to reduce leverage below three times, with plans for share repurchases once cash flow stabilizes [52][54] Question: Can you comment on withdrawal transactions in North America versus the rest of the world? - Withdrawal transactions in North America were stable, while the UK experienced a high single-digit decrease [92] Question: What is the game plan for LibertyX? - Management acknowledged that LibertyX has been de-emphasized due to regulatory changes impacting profitability, and they are exploring ways to monetize Bitcoin at the device [95] Question: Are there any M&A opportunities being cultivated? - The company has a long list of potential M&A ideas, focusing on low-cost opportunities to enhance its fleet and technology [98]