1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
YXT
Event Date
2024-08-16
Sector
Information Technology
Subsector
Software
Offer Range
$11.00
Shares Offered
2.27M
$598.8M
Implied Upside vs Midpoint
Description
Our Mission To empower talent development and corporate success with technology. We are a leader and disruptor of the digital corporate learning industry in China, a market with massive rigid-demand and a total size of RMB126.0 billion in 2023, according to Frost & Sullivan. We have innovated a SaaS model that integrates software and content, effectively assisting customers in the digital transformation of corporate learning. According to Frost & Sullivan, we are the largest digital corporate learning solution provider in China in terms of total revenue, subscription revenue and number of subscription customers in 2023. With our software, we help customers efficiently deploy cloud-based learning platforms at scale. We also offer a broad range of high-quality content, covering the entire corporate learning process of our customers. Such content offerings bring additional monetization opportunities and encourage subscription renewals and upsells. Our comprehensive and highly scalable solutions are suitable for various corporate learning scenarios and can be broadly applied among corporate customers across different industries, scales, and development stages. We develop our software based on the advanced underlying architecture. Our software can be modularized and customized. We help customers rapidly deploy the intelligent learning platform in a plug-and-play manner. Our highly flexible and configurable software products allow our customers to match the use of our software with their specific business needs. Our software is accessible on both mobile and desktop. In addition, users can also access our software on third-party platforms that we collaborate with, such as Tencent WeCom, Ali DingTalk and Lark. We believe that the well-designed learning paths and targeted content with traceable and quantifiable training results are the core of successful corporate learning solutions and the reason why customers choose us. Our advanced and efficient content development system enables us to deliver stackable content with continuous iteration and optimization. Through the combination of in-house development and external collaboration, as of March 31, 2024, we were offering over 8,200 courses covering approximately 20 industries, with a total of over 20,500 learning hours, including over 6,800 hours of proprietary courses. Being customer-centric and result-oriented, we spot the common needs of various enterprises through our domain expertise and insights, and developed modular, systematic and scenario-based professional content. Adoption of technology underpins our success. Leveraging our coverage of 2,434 subscription customers as of March 31, 2024, who are customers with revenues from subscription based corporate learning solutions, in approximately 20 industries, we have accumulated domain expertise and insights across different industries and business scenarios, and constructed systematic labels and knowledge maps. Based on our industry insights and extensive experiences, our personalized recommendation engine then designs suitable learning paths for employees based on their positions and required skills. As a result, our solutions are capable of accurately matching personnel, positions, and courses through personalized recommendation. Our solutions embed key functions such as speech recognition, adaptive learning, intelligent practice partner, anti-cheating for exams and simulation training, making corporate learning more intelligent and effective. Our domain expertise and insights also fully empower all aspects of customer service and marketing. Through the modeling of customer portraits, market conversion and sales strategy, we have continuously discovered new sales opportunities, expanded corporate customer life cycles and improved marketing efficiency. We believe focusing on our customers’ success leads to our own success. Our digital and configurable solutions as well as satisfying customer services allow us to establish an excellent reputation in the market and accumulate a large, high-quality and loyal customer base. Our high-quality customer base includes leading players across many large-scale and high-growth industries, on average covering more than ten of the top 20 players in electric vehicles, healthcare and catering, according to Frost & Sullivan. The number of our subscription customers was 3,439 and 3,230 as of December 31, 2022 and 2023, respectively. The net revenue retention rate of our subscription customers in terms of subscription revenue was 118.1% and 101.4% as of December 31, 2022 and 2023, respectively. CEIBS PG has been deconsolidated from our consolidated financial statements from January 15, 2024. The number of our subscription customers was 3,433 and 2,434 as of March 31, 2023 and 2024, respectively, among which CEIBS PG had 727 subscription customers as of March 31, 2023. The net revenue retention rate of our subscription customers in terms of subscription revenue was 111.1% and 106.1%, respectively, as of March 31, 2023 and 2024. Such decreases in the number of subscription customers and net revenue retention rate of subscription customers were mainly due to our business expansion strategy to focus on large enterprises with strong and steady demand for corporate learning solutions, leading to the deselection of some small and medium-sized customers. Our gross profit margin was 54.0%, 54.1%, 63.5% and 62.6% in 2022, 2023, and the three months ended March 31, 2023 and 2024, respectively. The slight decrease in gross margin from the three months ended March 31, 2023 to the same period in 2024 was mainly due to the change in product mix with different gross margins in the three months ended March 31, 2024 as compared to the same period in 2023 as a result of our strategic focus on corporate learning solution. Nonetheless, we believe that our overall gross margin will increase in the long run, primarily driven by (i) economies of scale and increase of operating efficiency, and (ii) our continuous focus on providing subscription based corporate learning solutions with self-developed content. --- Our principal executive offices are located at Room 501-502, No. 78 East Jinshan Road Huqiu District, Suzhou Jiangsu, 215011, People’s Republic of China. Our telephone number at this address is +86 (512) 6689 9881. Our registered office in the Cayman Islands is located at the Office of Sertus Incorporations (Cayman) Limited, Sertus Chambers, Governors Square, Suite # 5-204, 23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KYI-1104, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc. located at 122 East 42nd Street, 18th Floor, New York, NY 10168. Our principal website is www.yxt.com.