Core Insights - 2025 was marked by commercial and political tensions affecting all market sectors, leading to a cautious approach from customers and a decrease in investments [5][6] - The company has successfully transitioned towards a SaaS model, with recurring revenues representing 75% of total revenues and a significant growth in SaaS subscriptions [7][14] Financial Performance - Total revenues for 2025 were €506.7 million, a decrease of 2% compared to 2024, with recurring revenues up by 2% [14][16] - Annual Recurring Revenue (ARR) reached €97.2 million, reflecting a 14% increase [15][16] - EBITDA before non-recurring items was €79.7 million, down 8%, with an EBITDA margin of 15.7% [16][18] - Net income for the year was €25.6 million, a decline of 14% [16][18] Fourth Quarter Highlights - In Q4 2025, revenues decreased by 2%, with recurring revenues increasing by 1% [10][11] - The backlog for perpetual software licenses and equipment decreased by €11.8 million compared to the start of the year [11] - EBITDA for Q4 was €18.1 million, down 8%, with a margin of 14.7% [11][12] Strategic Roadmap - The Lectra 4.0 strategy aims to position the company as a key player in Industry 4.0 by 2030, focusing on premium positioning and customer integration [20][21] - The company plans to maintain high R&D investments at around 12% of annual revenues to enhance AI and big data integration [21][22] - The strategic roadmap includes targeted acquisitions to strengthen skills and enhance the solution portfolio [28][29] Future Outlook - The company targets an increase in EBITDA margin by 120 to 180 basis points per year, assuming stable equipment orders [27] - Lectra aims for average annual growth in SaaS ARR of around 15%, contributing to recurring contract revenue growth of 5% to 8% [33]

Investment Ratings - Maintain Buy on Empyrean, Kingdee, and Kingsoft Office; Neutral on Yonyou and Glodon; Sell on ZWSOFT, Thundersoft, Primarius, and Sangfor [1] Core Insights - The average revenue growth for the software sector in 1Q25 was 6% YoY, while the average net margin was -3% due to weak seasonality [4][10] - Companies are focusing on high-quality products with better margins, new product upgrades, and AI features to drive growth in 2H25 [1] - Profitability improvement is a key focus, with companies implementing headcount optimization and cost control measures [1] Company Summaries Glodon - 1Q25 revenues decreased by 5% YoY to Rmb1.2 billion, attributed to muted demand from the property market and headcount optimization [6] - The company is enhancing its AI capabilities and focusing on cost management and product mix improvement [7] - Earnings estimates for 2025-27E have been revised down by 18%/16%/14% mainly due to lower revenue from construction management software [11] Thundersoft - 1Q25 revenue grew by 25% YoY, supported by IoT software and smartphone software recovery [16] - Gross margin improved to 36.3%, but Opex ratio increased to 32.6% due to higher spending on AI edge solution development [16] - Earnings estimates for 2025-27E have been revised down by 2% across the board, reflecting higher Opex spending [20] Empyrean - 1Q25 revenues increased by 10% YoY to Rmb234 million, with expectations for sequential growth due to new product ramp-up [25] - The company plans to expand its digital EDA tools and has announced an acquisition plan for Xpeedic [25][26] - Earnings estimates for 2025-27E have been revised down by 42%/27%/20% mainly due to lower revenues from panel EDA tools [29] Yonyou - 1Q25 revenue decreased by 21% YoY to Rmb1.4 billion, missing estimates due to a slowdown in new project wins and migration to a subscription model [33] - The company reported a net loss of Rmb736 million, attributed to lower gross margin and higher Opex spending [33]