---
title: "Insight into WEIMOB INC's 2024 interim report: Cost reduction and efficiency improvement \"combination punch\" showing significant results, with adjusted net loss significantly narrowed"
description: "WEIMOB INC released its performance announcement for the first half of 2024, with revenue of 867 million RMB. The adjusted net loss narrowed by 81.4% to -46 million RMB. The company expects to achieve"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/213621613.md"
published_at: "2024-09-06T03:43:05.000Z"
---

# Insight into WEIMOB INC's 2024 interim report: Cost reduction and efficiency improvement "combination punch" showing significant results, with adjusted net loss significantly narrowed

> WEIMOB INC released its performance announcement for the first half of 2024, with revenue of 867 million RMB. The adjusted net loss narrowed by 81.4% to -46 million RMB. The company expects to achieve adjusted net profit soon through cost reduction and efficiency improvement measures, ending the loss cycle since 2021. This will drive the improvement of profitability and business model, gradually entering a sustainable growth stage

WEIMOB INC (02013) is getting closer to overall profitability, as evidenced in the company's latest financial report.

On August 21st, WEIMOB INC released its performance announcement for the first half of 2024. According to the announcement, WEIMOB INC's revenue for the reporting period was RMB 867 million; gross profit was RMB 576 million; adjusted net loss was -RMB 46 million, a year-on-year decrease of 81.4%, and operating cash flow has been positive for two and a half consecutive half-years.

Achieving a significant reduction in losses during a downturn in the industry is not easy, and this is the result of WEIMOB INC actively promoting the strategic transformation of reducing costs and increasing efficiency. By tracking WEIMOB INC in the long term, it can be observed that in the first half of this year, WEIMOB INC took a series of cost reduction and efficiency improvement measures to achieve an early balance between profit and loss. These measures include focusing on core businesses, shrinking low-profit businesses; increasing the profit space of high-margin businesses and mature businesses; strict control over headcount and cost savings; cautious external investments and exploration of new businesses, emphasizing the integration and empowerment of new businesses with core businesses. It is under this combination of cost reduction and efficiency improvement measures that WEIMOB INC has significantly reduced losses and is on the verge of achieving overall profitability.

More importantly, after the "lean and muscular" transformation, WEIMOB INC's business structure, revenue model, and profit quality have steadily improved, gradually entering a stage of high-quality and sustainable internal growth. In the future, based on this healthy model, continuous cultivation will lead to sustained improvement in performance.

Based on the current rate of loss reduction, WEIMOB INC will soon achieve a positive adjusted net profit for the full year. At that time, the loss cycle that WEIMOB INC has experienced since 2021 will end, and correspondingly, the stock price decline that started in 2021 may also come to an end, or even usher in a reversal at a major cycle level.

## Significant Results of Cost Reduction and Efficiency Improvement Drive Substantial Narrowing of Losses

Behind WEIMOB INC's strong push for cost reduction and efficiency improvement is the real dilemma facing the industry. In the past two years, the macro economy has continued to stagnate under the influence of multiple factors, with the growth rate of total retail sales of consumer goods slowing down, downstream customers tightening their software needs and IT budgets, making it more difficult for SaaS companies to expand, and the industry entering a period of low development.

As a leader in SaaS for the domestic retail and e-commerce industry, WEIMOB INC was the first to realize the necessity of strategic transformation, actively seeking change, not blindly pursuing revenue scale and growth rate, but emphasizing profit and revenue quality, and deeply implementing the development strategy of cost reduction and efficiency improvement.

**The first thing WEIMOB INC did was to proactively cut off low-profit non-core businesses and concentrate resources on high-quality, high-output businesses.**

WEIMOB INC has made adjustments to its subscription solutions (SaaS) and merchant solutions (marketing) businesses. In terms of subscription solutions, last May, WEIMOB INC divested its smart catering business, no longer including its revenue, and in the first half of 2024, WEIMOB INC further reduced investment in the WeChat business and other small micro-businesses, reduced direct sales cities, reduced the proportion of low-profit customer groups, and focused more on core large customer businesses such as retail. In terms of merchant solutions, WEIMOB INC reduced low-profit TSO and financial businesses, and focused more on serving advertisers' placement businesses.

After this series of adjustments, WEIMOB INC's business structure has been optimized, and revenue quality has also improved. In terms of marketing business, in the first half of 2024, WEIMOB INC's merchant solution gross profit margin increased from 69.4% in the same period of 2023 to 74.5%, with average spending per paying merchant increasing by 24.9% to RMB 215,516, and profitability continuing to improve **In addition to the adjustment of business structure, Weimob continues to improve efficiency and optimize organizational structure, effectively controlling expenses.** In fact, the key reason for Weimob's continuous net loss since 2021 is the decrease in efficiency and the increase in expenses due to channel construction. Since 2021, Weimob has recruited a large number of technical personnel for the development of WOS, leading to a decrease in efficiency. After the smooth release of WOS in 2022, personnel pressure gradually eased, and efficiency began to rise as stability was achieved in 2023.

![wmj.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20240906/1725593622857368.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Open Source Securities stated that since the essence of the SaaS industry is decreasing marginal costs, excellent quality SaaS companies will significantly reduce the proportion of operating costs in the later stages. Therefore, efficiency is a core indicator of measuring operational capabilities. With the control of R&D/marketing personnel and the increase in revenue, it is expected that Weimob's efficiency will enter a period of steady growth, playing a significant role in controlling expenses.

**Furthermore, Weimob is accelerating the empowerment of SaaS business and marketing business with AI technology, further reducing operating costs.** In the past operations, whether it is content output in private domain operations or creative content and strategic consulting in major promotional operations, Weimob needed to invest a large amount of manpower to provide services to customers. However, with the integration of the AI application product WAI and its empowerment of related businesses, Weimob's productivity has been significantly liberated, and the input costs have correspondingly decreased.

In the SaaS scenario, Weimob's WAI has expanded to 58 real commercial application scenarios, covering many industries including clothing and accessories, beauty and skincare, food and beverages, fresh fruits, daily necessities, etc., providing smart operation efficiency for tens of thousands of merchants. In the first half of 2024, the number of active WAI customers increased by 360% compared to the second half of 2023.

In the marketing scenario, Weimob's intelligent creation capabilities based on AIGC have covered all-round marketing scenarios, especially in text-to-text and text-to-image capabilities. During the reporting period, the daily average image generation of WAI reached over 1000, and the content adoption rate reached 40%.

The empowerment of AI in SaaS and marketing businesses not only enhances the market competitiveness of Weimob's product system, accelerates continuous breakthroughs in commercialization, but also plays an important role in improving operational efficiency and reducing operating costs for Weimob. With the accelerated penetration of AI technology, it is expected to further drive down Weimob's operating costs.

From the financial report perspective, based on the implementation of the above multidimensional measures, Weimob's expense ratio has been significantly optimized. During the reporting period, Weimob's sales costs were 292 million yuan, narrowing by 25.9% year-on-year; sales and distribution expenses were 565 million yuan, narrowing by 33.0% year-on-year; general and administrative expenses were 287 million yuan, shrinking by 24.5% year-on-year. It can be said that effective control of expenses has become the key to Weimob's significant reduction in net losses after this adjustment As for the future development trend of WEIMOB's expenditure, Open Source Securities has conducted detailed calculations, indicating that in the next two years, WEIMOB's expense ratio will continue to improve. It is forecasted that WEIMOB's sales expense ratio for 2024-2026 will be 53.9%/49.1%/45.7%, research and development expense ratio will be 15.0%/13.6%/12.5%, and management expense ratio will be 12.0%/11.0%/10.0%. The stable downward trend of the three expenses will not only enhance WEIMOB's profitability but also accelerate profit release.

## Exploring income increment from multiple dimensions to enhance income quality

Through strategic contraction and measures to control various expense ratios, WEIMOB has maintained a streamlined and efficient business structure. At the same time, WEIMOB is also delving into core businesses to seek incremental income and profits. This is reflected in the expansion and deep cultivation of the two core businesses of subscription solutions and merchant solutions, as well as the cautious layout of new businesses such as AI.

**1\. Accelerating penetration of SaaS business into mid-tier customer groups**

Since proposing the "large customer" strategy, WEIMOB has continued to deepen its retail business, and its leading advantage in the large customer field has been continuously strengthened. In the first half of 2024, WEIMOB accounted for 47% of the top 100 fashion retailers in China, 43% of the top 100 commercial real estate companies, and 40% of the top 100 chain convenience stores. During the same period, WEIMOB continued to penetrate and maintain leadership in the clothing, fast-moving consumer goods, and building materials industries, with the proportion of top 100 merchants in cooperation increasing by 19%, 163%, and 111% respectively.

To explore the growth space of the SaaS business, WEIMOB is accelerating its penetration into mid-tier industries, flexibly adjusting product lines and pricing strategies, launching more cost-effective solutions, and thereby increasing penetration in mid-tier markets.

Open Source Securities pointed out that WEIMOB has achieved a growth flywheel for "super large customers - KA customers - mid-tier customers" in retail SaaS. Specifically, based on a competitive product matrix, WEIMOB, on one hand, leverages close cooperation with Tencent Smart Retail to attract super large customers and enhance visibility; on the other hand, with a relatively complete direct sales team, it steadily acquires KA customers in advantageous industries and emerging industries every year, establishes benchmark cases, accumulates industry know-how, launches products that meet industry personalization, and accelerates the speed of connecting with mid-tier customers.

At the same time, WEIMOB is focusing on developing solutions for more segmented scenarios to explore potential customers. During the reporting period, WEIMOB developed corresponding scenario solutions around wholesale, local life, and store online traffic, which better fit the pain points in the operation process of enterprises, further expanding the types of customers.

Thanks to the continuous advancement of the large customer strategy and the accelerated penetration into mid-tier markets, the growth space of WEIMOB's SaaS business has further opened up, especially in retail as the "ballast stone" of the SaaS business, with stable and considerable growth. During the reporting period, WEIMOB's retail revenue was 304 million yuan, with a year-on-year organic growth of 3.1%; the number of WEIMOB's retail merchants was 8,011, including 1,307 brand merchants, showing continuous and stable growth; the proportion of retail revenue to subscription solution revenue also increased from 44% in the same period last year to 62.4% **Worth mentioning is that in the first half of the year, WEIMOB adjusted the order cloud service fees, interface call fees, and message push service fees for merchants, with a certain amount of exemption for merchants within the ecosystem, while charging fees for excess amounts. It is foreseeable that this move will generate long-term stable cash flow and have a positive impact on the company's financial situation.**

**2\. In-depth layout of marketing business across multiple channels**

While WEIMOB's SaaS services are steadily developing, its marketing business has shown stronger growth momentum. In the first half of 2024, WEIMOB's precise delivery of merchant solutions generated approximately RMB 8.342 billion in gross revenue, a year-on-year increase of 19.4%. This is mainly due to WEIMOB's continuous deepening of cooperation with Tencent's ecosystem, including Video Number, and its extensive layout on platforms such as Kwai and Xiaohongshu to explore new growth.

Within Tencent's ecosystem, in the first half of 2024, WEIMOB's Tencent advertising consumption increased by 19% year-on-year. Especially in the field of Video Number, as the official operation service provider for WeChat Video Number, WEIMOB can provide brands with one-stop solutions. It has served over 70% of annual influencers on Video Number, and about 60% of live broadcasts by influencers with a single GMV exceeding 20 million yuan have WEIMOB's marketing participation.

On platforms such as Kwai and Xiaohongshu, WEIMOB's growth rate is also considerable. In the first half of 2024, the annual consumption of WEIMOB's marketing services on Kwai increased by 78% year-on-year; brand clients in industries such as fashion, beauty, and fast-moving consumer goods served by WEIMOB on Xiaohongshu platform achieved efficient product seeding, with advertising consumption increasing by 152% year-on-year.

Furthermore, WEIMOB's marketing and the commercial short video track laid out by its subsidiary Banfan Technology have made significant progress. During the 618 promotion period, Banfan Technology collaborated with Kwai to create a custom commercial short video "Rebirth: I Am a Special Agent in the AI World" for JD.com. Since its launch on June 1st, the total number of views has exceeded 400 million.

It can be seen that the diversified channel layout and the successful introduction of commercial short videos have opened up growth space for WEIMOB's marketing business. The strategy of exploring incremental opportunities in the marketing market has achieved significant results. With continuous deepening of the layout, the marketing business is expected to maintain high growth.

**3\. Seizing the AI opportunity, cautiously exploring new markets**

While exploring new growth spaces in the mature sectors of SaaS services and marketing business, WEIMOB has also seized the industrial opportunity of AI to explore new markets. On June 25th, WEIMOB launched the AI application product "WAI Pro" for enterprise customers. This product is currently mainly targeted at enterprise-level customers such as brand merchants, 4A advertising agencies, marketing operation teams, and content creation teams, providing AI application technology services corresponding to the three major business needs of "marketing insights, content creation, and business consulting."

It is worth noting that WAI Pro is not a "brand new" product. It is an independent AI application based on the long-standing product technology and professional service capabilities of WAI in WEIMOB's SaaS and marketing business. In short, the products and functions of WAI Pro have been validated in WEIMOB's SaaS and marketing business, and have been productized only after helping businesses achieve efficiency. This means that the market feedback and commercial prospects of WAI Pro are reliable, making it a low-risk investment attempt.\*\* Moreover, the enterprise-level AI market where WAI Pro is located is vast. According to data from the InfoQ Research Center, the AGI application market is expected to reach 454.36 billion yuan by 2030, with the enterprise market accounting for 67% of the market share, leading the development of AGI applications. The launch of WAI Pro will help Weimob accelerate its capture of the blue ocean market in enterprise-level AI applications.

## China's SaaS Enters a New Stage: From Expansion to Contraction, From Revenue First to Operational Efficiency First

An industry consensus is that the Chinese SaaS industry, after years of development, has transitioned from a high-speed expansion phase to a phase of contraction, driven by both macroeconomic reasons and the natural progression of industry development cycles. Against this backdrop, the operational philosophy of SaaS companies has gradually shifted from focusing solely on revenue scale to prioritizing operational efficiency and revenue quality. Weimob's latest semi-annual report is the best reflection of this industry trend.

Looking at this financial report, as a leading player in the industry, Weimob's strategic transformation has been validated by its performance, bringing it closer to overall profitability. It is foreseeable that after honing its internal capabilities during the industry downturn, Weimob will have a more solid development momentum during the industry recovery and upswing periods. Once it crosses the breakeven point, profit growth will also see faster acceleration.

Open Source Securities predicts that Weimob's revenue for 2024-2026 will be 2.51/2.95/3.39 billion yuan respectively, with corresponding growth rates of 12.8%/17.2%/15.0%. The adjusted net profits for the same period are expected to be 50/200/360 million yuan.

From the perspective of the capital market, Weimob's stock price is currently at an absolute low since the adjustment in 2021, with valuation compressed to a relatively low level of 1.48 times PB, failing to reflect the market's expectation of Weimob's net profit growth in the next two years. Once Weimob's performance is released as expected, it will be a classic turnaround scenario. The stock price, which was initially affected by net profit turning into losses, will end the decline as net profit turns into gains. The stock price may experience a "Davis double hit", being driven by both profit release and valuation expansion, leading Weimob's stock price to break out of a large cyclical reversal trend.

Therefore, now may be a good time for long-term positioning in Weimob. With the premise of net profit growth driving the fundamentals upwards, the downside potential for the stock price, which is still at the bottom, is limited, while the upside potential is multiple times higher, presenting a significant value investment opportunity that investors should pay close attention to

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.
