Core Viewpoints - Beisen's business barriers are solid, and its integrated architecture drives product differentiation advantages [1] - The ROI of products like AI Interviewer can be clearly measured, with a clear path for implementation expected [1] - The company is projected to achieve revenue of RMB 11.4 billion, 13.3 billion, and 15.5 billion for FY2026-28, with year-on-year growth rates of 21%, 16%, and 17% respectively [1] Financial Performance - In FY1H26, Beisen's cloud business revenue reached RMB 5.16 billion, a year-on-year increase of 18.2% [1] - The subscription revenue from cloud HCM was RMB 4.14 billion, growing by 22.2% year-on-year, accounting for 80.3% of total revenue [1] - The overall gross margin improved to 68.9%, up 4.4 percentage points year-on-year [1] AI Product Commercialization - Beisen's AI products have achieved faster commercialization compared to domestic and international peers, contributing over RMB 26 million in new contract value [2] - The AI Interviewer has penetrated approximately 410 clients, demonstrating successful upselling logic within existing customers [2] - AI products are expected to surpass RMB 60 million in contract value in FY26, becoming a second growth curve alongside Core HCM [2] Market Position and Trends - Beisen holds a 15% market share in China's HCM SaaS market, maintaining the leading position for nine consecutive years [3] - The acceptance of public cloud and AI deployment models has improved, benefiting Beisen's competitive environment in state-owned enterprises [3] - The company is expected to maintain a growth rate of 15-20% in the medium term due to the expanding market for domestic alternatives [3] Addressing Market Needs - Beisen's AI products address significant recruitment needs in the labor market, with a potential market size exceeding RMB 10 billion for interview screening alone [4] - The AI coaching product can tap into a market worth over RMB 2.3 billion by reducing traditional training costs [4] M&A and Integration Effects - The acquisition of Ku Academy has driven a 305% year-on-year increase in annual recurring revenue (ARR), approaching 4,500 clients [5] - The integration of SaaS products is expected to enhance profit margins through cost coordination effects [5] - The unified PaaS platform allows for optimization of overlapping roles post-acquisition, improving overall efficiency [5]

Core Insights - The company reported significant growth in its unaudited consolidated performance for the six months ending September 30, 2025, with total revenue reaching RMB 516.0 million, a year-on-year increase of 18.2% [1] - The core business, cloud-based HCM solutions, contributed RMB 414.1 million in revenue, reflecting a 22.2% year-on-year growth and accounting for 80.3% of total revenue [1] - The adjusted gross margin improved to nearly 70%, and the adjusted net margin reached 3.8%, marking a substantial improvement of 11.6 percentage points, achieving profitability [1] Business Performance - The overall subscription revenue retention rate remained stable at 105%, indicating strong customer loyalty and renewal capabilities [1] - The annual recurring revenue (ARR) for Core HCM integrated solutions grew at a rapid pace of 27%, with ARR accounting for 58% of total revenue [1] - The learning business also experienced explosive growth, with ARR nearing RMB 100 million, a staggering increase of 305% year-on-year, serving nearly 4,500 customers [2] AI Innovations - The company launched AI Family 2.0, which includes ten AI assistants covering over 50 HR scenarios and 500 AI features, enhancing the efficiency and intelligence of HR management solutions [2] - New contract amounts for AI Family exceeded RMB 26 million, with over 800 customers, including nearly RMB 10 million for the AI Interviewer product [4] - The AI Leadership Coach also showed strong market competitiveness, with new contracts exceeding RMB 6 million and nearly 100 customers [4] Future Outlook - The company aims to continue its R&D investments to deepen its AI strategy and introduce AI Agents tailored to customer business scenarios [5] - The focus will be on large customer strategies, addressing the in-depth needs of enterprises with over 10,000 employees, and enhancing customer success and service systems [5] - Ongoing strategic acquisitions are expected to drive higher growth and long-term value, creating stable and substantial returns for investors [5]

Core Viewpoint - The successful implementation of AI products relies more on understanding customer business scenarios and industry know-how rather than just technical capabilities [2][10][11]. Group 1: Challenges in AI Product Implementation - The main challenge in transitioning AI products from internal testing to customer delivery is effectively matching the product to the customer's business context [2][5]. - AI products must be designed with a customer-centric approach, integrating industry-specific knowledge to ensure success [2][11]. - Patience is crucial during the product refinement process to ensure maturity before scaling sales [2][4][36]. Group 2: Strategic Shifts and Product Development - In 2024, the company shifted its strategy to focus on chargeable AI products that address specific end-to-end business problems [3][34]. - The development process for AI products has been adjusted to allow for rapid iterations, with cycles shortened to two to three weeks [4][6]. - The company has identified seven key AI agents to target specific business needs, including AI recruitment assistants and interviewers [3][34]. Group 3: Customer Engagement and Feedback - Engaging with customers during the product development phase is essential to gather real-time feedback and ensure the product meets their needs [4][6]. - The company emphasizes the importance of understanding customer requirements and adapting the product accordingly, which may involve significant customization [20][21]. Group 4: Market Positioning and Pricing - AI products should be positioned as standalone solutions that solve high-value business problems rather than mere extensions of existing functionalities [7][8]. - The pricing model for AI products varies, with options including per-seat fees or charges based on usage metrics, such as the number of interviews conducted [34]. Group 5: Future Directions and Industry Trends - The company recognizes the evolving landscape of AI technology and its potential to disrupt traditional business models, leading to a more open approach to AI integration [18][19]. - There is a growing demand for AI solutions in the SaaS sector, with clients increasingly favoring AI-related products [31].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a projected investment return exceeding the market benchmark by more than 15% over the next 6-12 months [4]. Core Insights - The company is expected to achieve total revenue of RMB 943 million in FY25, representing a year-on-year growth of approximately 10%. The cloud HCM solutions revenue is projected to reach RMB 730 million, growing by 16% year-on-year, while professional services revenue is anticipated to decline by 6% to RMB 210 million [1][4]. - The company has initiated an AI strategy in 2024, launching a suite of AI-powered HR SaaS products, which includes seven AI assistants designed to enhance recruitment and employee experience [3]. Summary by Sections Financial Performance - For FY25, the adjusted net loss is estimated at RMB 60 million, corresponding to an adjusted net loss margin of -6.4% [1]. - The company’s revenue forecast for FY26 is set at RMB 1,043 million, with a further increase to RMB 1,150 million in FY27 [5]. Business Segments - In FY25H1, the cloud HCM solutions revenue reached RMB 340 million, marking a year-on-year increase of 14.3%. The Core HCM integrated ARR grew by 28%, accounting for 55% of total revenue, with nearly 2,100 clients [2]. - The acquisition of the HR SaaS platform KuXueYuan for RMB 180 million is expected to enhance market position and facilitate cross-selling opportunities, leveraging the existing customer base of both companies [2]. AI Development - The AI Interviewer product has shown rapid commercialization, with over 120 clients by January 2025, and is projected to reach 200 clients by the end of March 2025, with an ARR of RMB 7-8 million [3]. - The AI Employee Assistant is designed to provide 24/7 support, improving employee self-service experiences [3].