Summary of China Software Industry Conference Call Industry Overview - The China software industry experienced a growth of **15.1% YoY** in August 2025, an increase from **14.9%** in July and **14.0%** in June 2025, indicating a positive trend in the sector [1][10] - Cumulative revenues for the first eight months of 2025 (8M25) grew by **12.6% YoY**, compared to **11.2% YoY** in the same period of 2024 [1][18] Key Insights - The growth in the software market is supported by increased spending on AI tools by consumer clients and successful project wins in the business sector, particularly in enterprise and government [1][10] - The **Small and Medium Business (SMB) Purchasing Managers' Index (PMI)** improved to **48.2** in September 2025 from **46.6** in August, although it remains below the **49.3** level seen in May 2025, suggesting a gradual recovery in client IT spending [10][17] - The integration of AI capabilities into software applications is expected to drive sequential growth in the coming months [1][10] Segment Performance - In August, segments such as **semi design**, **cloud computing**, and **basic software** outperformed others [2] - The **AI software products** segment showed strong performance, with notable increases in Monthly Active Users (MAU) for productivity tools and video/image generation tools [2][5] Financial Metrics - The aggregate revenue of software companies in China reached **Rmb1.3 trillion (US$183 billion)** in August 2025, with a net margin of **17.4%**, slightly down from **18.2%** in July [18][19] - The net income for the software sector in August was **Rmb230 billion (US$32 billion)**, contributing to an 8M25 net margin of **13.7%**, which is an improvement from **13.1%** in 7M25 [19][26] Market Dynamics - The IT services segment remains the largest contributor to revenue, accounting for **68%** of total revenues, followed by software products at **22%** and embedded system software at **8%** [25][29] - The revenue from non-China markets increased to **US$6.5 billion**, representing an overseas exposure of **3.5%**, up from **3.2%** in July 2025 [25][30] Investment Recommendations - Companies highlighted for potential investment include **Sensetime** (AI), **Kingsoft Office** (Office Software), **Kingdee** (ERP), **Hundsun** (Finance), **TUYA** (IoT software), and **Empyrean** (EDA software) [3] Conclusion - The China software industry is on a positive trajectory with strong growth in AI spending and improving SMB sentiment, indicating a favorable environment for investment and expansion in the sector [1][10][18]