Summary of Conference Call Records Industry Overview - The conference call discusses the software industry in China, focusing on nine companies: Kingsoft Office, Empyrean, Glodon, Thundersoft, Yonyou, Kingdee, iFlytek, ZWSOFT, and Sangfor. [1][2] Key Points and Arguments Revenue Growth and Profitability - Overall revenue growth is expected to recover in 2Q25 compared to 1Q25 due to improving client order momentum, although IT spending in certain segments, such as construction, may face near-term challenges. [1] - Profit growth is anticipated to remain weak in 2Q25, with potential improvement in 2H25 driven by better operational efficiency and headcount optimization. [1] Company-Specific Insights 1. **Kingsoft Office (KO)** - Expected revenue growth of 10% YoY in 2Q25, reaching Rmb1.3 billion, supported by an increase in paying users for upgraded WPS AI features. [7] - Focus on AI features upgrade and extending trial periods to expand the user base. [7] - Earnings revised down by 2% for 2025-27E due to lower revenues from ToB solutions. [16] 2. **Empyrean** - Anticipated revenue growth of 27% YoY in 2Q25, driven by expanding digital/memory EDA tools and increased client spending. [8] - Opex ratio expected to remain high at 114%. [8] - Earnings revised down by 3% for 2025-27E due to lower revenues from analog EDA tools. [20] 3. **Glodon** - Revenue growth projected at 2% YoY in 2Q25, with improving net margin expected at 4.2%. [10] - New business drivers include infrastructure and urban renewal projects. [11] - Earnings revised down by 6% for 2025-28E due to lower revenues from construction cost tools. [26] 4. **Thundersoft** - Expected revenue growth of 20% YoY in 2Q25, supported by IoT business growth from AI edge devices. [13] - Earnings revised down by 5% for 2025-27E due to lower revenues from automotive software. [30] 5. **Yonyou** - Revenue guidance for 2Q25 is in line, with a narrowed net loss expected. [14] - Earnings revised up by 1% for 2026/27E due to higher revenues from Gen-AI spending. [35] 6. **Kingdee** - Expected revenue growth of 13% YoY in 1H25, supported by large-scale enterprise client spending. [14] - Earnings revised up by 1% for 2026/27E due to improved operational efficiency. [38] 7. **iFlytek** - Midpoint revenue growth for 2Q25 is guided at 11% YoY, with a net loss expected due to higher spending on AI models. [15] Market Trends and Strategic Focus - Key questions for the upcoming results season include AI product upgrades, client IT spending outlook, headcount plans, and new business opportunities in vertical expansion and non-China markets. [1] - Companies are focusing on enhancing operational efficiency and exploring new business avenues to drive growth amid challenging market conditions. [1] Additional Important Insights - The conference highlights the importance of AI integration across various software solutions, with companies like Kingsoft Office and iFlytek leading in AI product development. [7][15] - The overall sentiment indicates cautious optimism for the second half of 2025, with expectations of improved profitability as companies adapt to market conditions and enhance their product offerings. [1][8]