In 2025, amid ongoing macroeconomic uncertainties, the enterprise software industry stands at a critical juncture. On one side lies the steady growth driven by the maturing SaaS business model, while on the other side, the AI wave brings disruptive changes that are reshaping the industry's fundamental logic. At this intersection, KINGDEE INT'L has delivered a financial report marking a transition to profitability. The significance extends beyond mere numerical improvement, serving as a validation of its business model and technological direction.
Over the past five years, KINGDEE INT'L has navigated a path emblematic of Chinese SaaS companies—transitioning from traditional software to cloud subscriptions, and now exploring a second growth curve powered by AI. Throughout this journey, the company faced profit pressures, valuation fluctuations, and market skepticism. However, 2025 has seen a directional shift in these variables: not only has the company returned to profitability, but the quality of its growth and future prospects have also improved simultaneously.
Financially, the company reported annual revenue of approximately 7.006 billion yuan, a 12% year-on-year increase. Net profit attributable to shareholders reached about 93 million yuan, successfully turning last year's loss into a profit. Adjusted net profit stood at 232 million yuan, while operating cash flow further improved to 1.097 billion yuan. More importantly, these results reflect two key trends: the full validation of the subscription-based business model and the transition of AI strategy from concept to implementation.
2025 has been designated by KINGDEE INT'L's management as the acceleration year for "AI transformation." As stated by the company's Chairman, Xu Shaochun, AI transformation is expected to be much faster than the cloud transition. Over the next three to five years, KINGDEE INT'L aims to use AI to "recreate" itself. At this financial inflection point of returning to profitability, what supports this ambitious vision of self-reinvention?
The dual improvement in profit and cash flow indicates that KINGDEE INT'L has successfully validated its business model. If one keyword summarizes the company’s operational changes in 2025, it is that "structure" matters more than "scale." Subscription revenue grew by 20.9% year-on-year to 3.556 billion yuan, accounting for more than half of total revenue. This marks a fundamental shift from one-time software sales to a recurring revenue model.
The essence of the subscription model lies in transforming uncertain transactions into sustainable relationships. Unlike traditional software, its strength is not short-term explosive growth but long-term stability. This characteristic is increasingly evident in the financial data: annual recurring revenue (ARR) approached 4.1 billion yuan, growing at nearly 20%, while contract liabilities continued to rise, providing greater revenue visibility.
In terms of profitability, the improvement was primarily driven by the higher proportion of high-margin subscription business. The company's overall gross margin rose to over 67%, with the subscription business margin reaching an exceptionally high level of 96.5%. This structure naturally amplifies profit potential. On the expense side, both sales and R&D expense ratios declined while revenue continued to grow, indicating that the company has moved beyond the "high-investment-for-growth" phase into an "efficiency-driven growth" cycle. This is a critical inflection point for SaaS companies—once a virtuous cycle is established, profit elasticity tends to sustain.
The company's cash flow performance further confirms this trend: operating cash flow reached approximately 1.097 billion yuan in 2025, a 17.6% increase year-on-year. From a customer perspective, structural optimization is also apparent. In the large enterprise segment, the renewal rate for core products reached 110%, indicating not only contract renewals but also expanded usage. The renewal rate for mid-sized enterprises approached 100%, while small and micro enterprises maintained a high level. Such high renewal rates reflect the continuous delivery of customer value.
Notably, KINGDEE INT'L's efforts in the large enterprise market have begun to yield results. By securing contracts with central state-owned enterprises and global Fortune 500 companies such as China Energy, CRRC Group, and China Life Insurance, the company has not only enhanced its brand endorsement but also leveraged the digital transformation needs of these "anchor" clients to drive subscription conversions across entire industrial chains. Today, KINGDEE INT'L's subscription model has evolved from "theoretically sound" to "financially validated." This milestone provides a more stable growth foundation and creates room for further technological investment.
If the subscription model addresses "how to sustain earnings," then AI answers the question, "what future earnings can be generated?" Over the past year, AI has brought both disruption and imagination to the enterprise software industry. While some worry that AI may diminish the value of SaaS, others believe it will reshape the software landscape. KINGDEE INT'L's approach has been one of active integration rather than passive adaptation.
In 2025, the company upgraded its "KINGDEE Cloud" to "KINGDEE AI," launching an AI-native interface called "Xiao K" and nearly 20 intelligent agent products covering scenarios such as financial analysis, contract review, and recruitment. This move signifies a shift from "feature叠加" to "architectural重构." More critically, AI has begun generating actual revenue, with AI-related contract values reaching 356 million yuan during the reporting period. Although still modest in scale, this represents a crucial step from technological exploration to commercial validation. For any new technology, the ability to translate into revenue determines its long-term value.
KINGDEE INT'L's AI strategy is distinctly "scenario-oriented." Rather than focusing on general-purpose large models, the company emphasizes building intelligent agents based on actual enterprise business processes. While this approach may progress more gradually, it is more likely to create customer stickiness and competitive barriers. This strategy is supported by the company's long-term accumulation of data and industry expertise. Serving over a million enterprises, KINGDEE INT'L has amassed vast amounts of business data and process models. In the AI era, this data is not just a resource but infrastructure—determining whether AI can truly understand business operations rather than remaining a superficial application.
Internally, AI has significantly impacted operational efficiency. According to the company, over 40% of new code is now AI-generated, with some scenarios achieving fully automated development. This indicates that AI is not only a new revenue stream but also a means to optimize cost structures and enhance R&D efficiency.
From a broader perspective, AI is transforming the role of enterprise software. Traditional ERP systems function primarily as "recording tools," while AI-driven systems are gradually gaining "analytical and decision-making capabilities." This shift elevates software from an operational tool to a strategic decision-support platform, implying higher value potential.
At the 2025 annual results conference, the company set a goal for 2030: half of its revenue will come from "AI-native businesses" and the other half from "AI-enhanced SaaS businesses." This target is ambitious, but the path is becoming clearer. On one hand, the company will drive AI adoption among existing clients to increase per-customer value; on the other, it will explore new markets with AI-native products.
It is important to recognize that AI is still in its early stages, and the pace of commercialization remains uncertain. However, it is clear that AI is becoming a key variable reshaping the industry landscape. Those who can sooner transition from being "tool providers" to "intelligent platforms" are more likely to seize the initiative.
In summary, a clear logic underpins KINGDEE INT'L's development trajectory in recent years: first enduring the costs of transformation, then reaping the benefits of a new business model, and finally layering in technological innovation. 2025 represents the convergence of the second and third phases. The subscription model is beginning to unlock profitability, while the AI strategy is opening new growth avenues. Together, they are shifting the company from "recovering growth" to "redefining its business logic."
The true value of this financial report lies not in a single year’s profit improvement, but in validating a pathway: enterprise software companies can achieve successive leaps—from traditional models to cloud subscriptions, and then to AI-driven transformation—through long-term strategic perseverance. While uncertainties remain, it is evident that KINGDEE INT'L is no longer merely adapting to change but actively seeking to define it. In this sense, 2025 is not an endpoint but a new starting point.