IPO News | Youyou Network (600588.SH) Second Listing The Hong Kong Stock Exchange is the largest market participant in the Chinese enterprise software and services market

The Zhitong Finance App learned that according to the Hong Kong Stock Exchange's disclosure on December 29, Yonyou Network Technology Co., Ltd. (600588.SH for short) submitted a listing application to the main board of the Hong Kong Stock Exchange, with CMB International and CITIC Securities as co-sponsors. This is the second time this year that the company has submitted a listing application to the Hong Kong Stock Exchange on June 27. According to Frost & Sullivan, in terms of revenue in 2024, the company is the largest market participant in the Chinese enterprise software and service market, with a market share of 4.1%. In terms of overseas revenue in 2024, the company is also the largest domestic enterprise software company in China.

Company profile

According to the prospectus, Yonyou Network is a leading enterprise software and intelligent service provider, dedicated to R&D, innovation, sales and service of enterprise digital intelligence software and intelligent services using AI, big data, and cloud computing as the core technologies.

Since its establishment, Yonyou Network has evolved from an accounting-centered system to a comprehensive enterprise system to today's digital intelligence platform. In line with this trend, the company's core products have evolved from financial management software to enterprise resource planning (ERP) software to the strategic transformation of the Youyou Business Innovation Platform (BIP). At the stage where accounting is the core (stage 1.0), the company became a well-known financial software brand in China. Entering the integrated enterprise management stage (phase 2.0), the company became a well-known ERP software supplier in the Asia-Pacific region. Entering a new era, the company launched a next-generation business innovation platform: Yonyou BIP (stage 3.0) to help enterprises complete the advancement of comprehensive digital intelligence capabilities for online, data-driven, and intelligent business operations.

Youyou Network provides a rich matrix of enterprise software and intelligent service products, including cloud services and software products. The company's cloud services mainly include BIP series products, U9 cloud, products provided by Changjietong, and the company's industry-specific solutions.

Yonyou BIP is the core platform for the company's cloud services. The integrated platform aims to provide comprehensive tools, capabilities and resource support for the digital transformation and intelligent operation of enterprises. The company's user BIP product line includes YonBIP for large enterprises and YonSuite for medium-sized enterprises. Using BIP effectively solves problems such as application silos of traditional enterprise software, data fragmentation, and independent AI models that are out of touch with actual enterprise workflows, and accurately matches the advanced needs of enterprises in digital intelligence transformation.

The company maintains a good track record in providing end-to-end services to large enterprises, enabling the company to develop a set of products and services, and extend the company's market coverage to medium-sized enterprises and small and micro enterprises. The company achieved customer coverage of 76% of the 2024 Fortune China 500 companies. From 2022 to 2024, the number of the company's cloud service customers increased by 31.5%, while the six months ended June 30, 2024 to the six months ended June 30, 2025 increased by 4.7%. The company provides cloud services and software products through a subscription and/or licensing fee model. The company also provides supporting services such as implementation, product support and maintenance. These services cover the entire customer life cycle - from initial deployment to post-deployment optimization, and support the whole process.

Since 2003, Youyou Network's strong brand influence in China and the wider Asia-Pacific market has supported overseas expansion, making the company a digital transformation partner for global enterprises. As of June 30, 2025, the company has formed an experienced overseas team with 12 branches, and has accumulated services for more than 1,400 overseas customers. Of these, 60% are overseas local customers and 40% are Chinese overseas customers. The company's customers span 40+ countries and regions. It is the Chinese enterprise software manufacturer with the widest range of business in the world, and is also the Chinese enterprise software manufacturer with the largest overseas business revenue.

Financial data

revenue

In 2022, 2023, 2024, and 2025 for the six months ended June 30, the company achieved revenue of approximately RMB 8.890 billion (RMB, same below), RMB 9.443 billion, RMB 8.817 billion, and RMB 3.434 billion, respectively. The company's revenue fluctuations are mainly due to longer customer acquisition and delivery cycles associated with the complex needs of top customers, as well as the company's transformation to promote next-generation cloud services (especially the user BIP product line).

Gross profit and gross profit margin

In 2022, 2023, 2024, and 2025 for the six months ended June 30, the company recorded gross profit of approximately RMB 4.892 billion, RMB 4.651 billion, RMB 4,057 billion, and RMB 1,603 billion respectively, with corresponding gross margins of 55.0%, 49.3%, 46.0%, and 46.7%.

Profit during the year/period

In 2022, 2023, 2024, and 2025 for the six months ended June 30, the company recorded annual profit of approximately $225 million, -933 million yuan, -2,070 million yuan, and -981 million yuan respectively.

Industry Overview

The global enterprise software and services market grew from US$258.4 billion in 2020 to US$381.3 billion in 2024, with a CAGR of 10.2% between 2020 and 2024. Looking ahead, the global enterprise software and services market size (in terms of revenue) is expected to reach US$671.7 billion by 2029, with a CAGR of 12.0% between 2024 and 2029.

Although the Chinese market has large differences in business complexity, IT budget as a share of revenue, progress in cloud transformation, and recognition of subscription fee models compared to the US, China has developed into the second largest enterprise software and service market in the world after the US, and there is still plenty of room for development in the future.

In terms of revenue, the market size of China's enterprise software and services market has grown from RMB 140 billion in 2020 to RMB 211.9 billion in 2024, with a compound annual growth rate of 10.9% from 2020 to 2024. Looking ahead, in terms of revenue, the market size of the Chinese enterprise software and services market is expected to reach RMB 381.6 billion in 2029, with a CAGR of 12.5% from 2024 to 2029.

The main cost components of companies in the Chinese enterprise software and service market (or more broadly, in the technical services industry) are mainly salary and benefit expenses paid to employees. The average urban salary of private company employees in China's information transmission, software and IT service industries increased from RMB 101,300 in 2020 to RMB 123,200 in 2024, reflecting a compound annual growth rate of 5.0% from 2020 to 2024. The year-on-year increase in average wages has been slowing down in recent years. The average urban wage of private company employees in China's information transmission, software and IT service industries is expected to continue to grow, but the growth rate will be more moderate compared to historical trends. The compound annual growth rate from 2024 to 2029 is 3.2%. A steady increase in the costs of enterprise software and service providers is considered normal, without any significant fluctuation, and is not expected to have a significant adverse impact on their operations.

Board Information

The company's board of directors will be composed of eight directors, including five executive directors and three independent non-executive directors. According to the articles of association, directors are elected and appointed by shareholders for a term of three years. After the term of office expires, they can be re-elected. According to relevant Chinese laws and regulations, independent non-executive directors cannot be re-elected for more than six years.

Shareholding structure

Mr. Wang Wenjing held 26.96%, 11.47%, and 3.16% of the shares through Beijing Yonyou Technology, Shanghai Yonyou Technology, and Yonyou Research Institute, respectively, for a total of 41.59%; Shanghai Yibei held 3.75% of the shares; Gongqingcheng Youfu held 2.35% of the shares; and other A-share shareholders held a total of 52.31% of the shares.

As of the last practical date, (i) Beijing Yonyou Technology (a company directly owned by Mr. Wang) held 921,161,630 shares; (ii) Shanghai Yonyou Technology (a company directly and indirectly owned by Mr. Wang) held 392,069,275 shares; and (iii) Yonyou Research Institute (a company directly owned by Mr. Wang) held 107,848,606 shares. Therefore, according to securities and futures regulations, Mr. Wang, Beijing Yonyou Technology, Shanghai Yonyou Technology, and Youyou Research Institute are deemed to have interests in A-shares held by Beijing Yonyou Technology, Shanghai Yonyou Technology, and Youyou Research Institute.

In order to obtain financing to meet personal needs, the controlling shareholders of the company pledge a number of A-shares to certain Chinese financial institutions as collateral from time to time. As of the last practical date, the controlling shareholder of the company has pledged 421,630,000 A shares, accounting for about 12.34% of the company's total issued share capital, as collateral for several Chinese financial institutions regulated by the China Financial Supervisory Authority and/or the China Securities Regulatory Commission. These share pledges will remain valid after listing on Hong Kong stocks.

Intermediary team

Co-sponsors: CMB International Capital Limited and CITIC Securities (Hong Kong) Limited.

Company Legal Advisors: Hong Kong Law and US Law: Kaiyi Law Firm; Related Chinese Law: Jingtian Gongcheng Law Firm.

Co-sponsor Legal Adviser: Regarding Hong Kong law and US law: Smith & Phil; relating to Chinese law: Tianyuan Law Firm.

Reporting accountant and independent auditor: Ernst & Young.

Industry consultant: Frost & Sullivan (Beijing) Consulting Co., Ltd. Shanghai Branch.

Compliance Advisor: First Shanghai Finance Co., Ltd.