Ruyun Technology (RYET.US) may face a lukewarm reception for its U.S. listing.
In the latest F-1/A filing submitted on December 9, Ruyun Technology stated that it plans to issue 3.75 million shares at a price between $4 and $5 per share, raising $15 million to $18.75 million.
In the initial F-1 filing submitted to the SEC on December 29, 2023, Ruyun Technology indicated that it would issue 5 million shares of common stock at a price of $5 to $6 per share, raising $25 million to $30 million.
Clearly, in the latest issuance plan, both the number of shares issued and the price have been adjusted downwards compared to the initial plan, resulting in a significant reduction in the fundraising scale, which is often a helpless move for listed companies that are not favored by the market.
This may be somewhat related to Ruyun Technology's lackluster performance. As an AI learning software provider focused on China's K12 education sector, Ruyun Technology's revenues for the fiscal years 2021-2024 (ending March 31) were $11.4994 million, $12.8031 million, $9.1329 million, and $9.154 million, respectively, while the net profits during the same period were $472,400, -$739,500, -$1,242,600, and -$2,104,100. It is evident that Ruyun Technology's revenue has overall declined over the past four years, and after turning from profit to loss, the losses have continued to increase.
<h2>The smart homework learning platform has approximately 230,000 monthly active users</h2>
Since its establishment in 2012, Ruyun Technology has focused on the K-12 education sector in China, bringing AI technology into schools and aiming to reform traditional education and learning models in China, providing schools, teachers, and students with new teaching, learning, and assessment methods in the AI era, thereby enhancing efficiency and reducing burdens in modern education.
As of now, Ruyun Technology has two main product lines: SmartExam® solution (smart examination) and SmartHomework® solution (smart homework). The smart examination solution refers to creating degree-level examination classrooms based on computer room exams for clients, with two main sources of revenue: the development and implementation of the smart examination platform, as well as software customization, hardware sales, and other comprehensive professional examination services.
Since starting to provide computer-based academic examination services for biology subjects in 2013, Ruyun Technology's smart examination solution has expanded to all 11 assessment subjects by 2017, covering question content, scoring and assessment, on-site management, training and supervision, and standard security.
The smart homework solution refers to providing personalized learning solutions for students to learn more effectively, allowing teachers to adjust guidance based on specific student needs. From the revenue structure perspective, Ruyun Technology's smart homework solution has formed a diversified monetization model, including platform development, software customization and content development, licensing services, personalized practice books, MOTK Pro, and various categories of digital services.
Specifically, platform development refers to creating digital teaching platforms for clients, including AI self-study rooms, which can achieve the online digitalization of assignment distribution, submission, grading, and analysis, significantly reducing teachers' workload and accurately improving student performance
Custom software development and content creation refer to SoftCloud Technology designing, developing, and installing customized software for clients, as well as developing educational content for clients. This is a new product line launched by SoftCloud Technology in 2022. Licensing services refer to SoftCloud Technology licensing its question bank to schools or educational enterprises and charging monthly or annual fees.
Personalized workbooks and MOTK Pro are VIP services launched by SoftCloud Technology for students within the system. These two services cover all subject areas from grades 4 to 12, and students can enjoy these services by paying the corresponding subscription fees, distinguishing them from the free student area. Digital services refer to converting publishers' publications into digital formats and charging service fees for this.
According to the prospectus, SoftCloud Technology's online academic question bank in its smart homework solution has accumulated over 10 billion test data points to date, generated by approximately 15.1 million users from over 16,700 schools (including 13,400 schools in Jiangxi Province and more than 3,300 schools in other provinces). With the continuous upgrade of online learning data and artificial intelligence algorithms, SoftCloud Technology internally assesses that the accuracy of tailored effective learning strategies provided to students has reached 97%.
As of March 31, 2024, SoftCloud Technology had approximately 20,177 main paid premium subscription users, a total of about 80,452 subscription users, and approximately 329,092 monthly active users. The company is establishing and deepening strategic business alliances with large national publishers and China Mobile, which have vast customer resources, to acquire new paid subscription users. Meanwhile, as of September 30, 2024, over 15.1 million K-12 students are using SoftCloud Technology's online SmartHomework® learning platform, with approximately 230,000 being monthly active users.
<h2>B-end accelerated expansion leads to increasing losses</h2>
SoftCloud Technology's overall revenue has shown a downward trend since the 2021 fiscal year, which is partly related to the dual reduction policy in the education sector implemented on July 24, 2021. This has led to a large number of subject-based training institutions closing or transforming, resulting in a significant decrease in customer demand, causing a certain contraction in the business scale of SoftCloud Technology's two major product lines in the 2023 fiscal year, with total revenue decreasing by 28.66% year-on-year to $9.1329 million.
In fact, under the circumstances of reduced market demand and intensified competition, SoftCloud Technology's smart examination solution business has shown a clear decline. The proportion of this business in the company's total revenue dropped from 20.3% in the 2021 fiscal year to 6.3% in the 2024 fiscal year, with corresponding revenue falling from $2.34 million to $575,800. Based on market conditions, SoftCloud Technology has adjusted its marketing strategy, focusing more energy on the smart homework solution area.
In terms of results, although the revenue from SoftCloud Technology's smart homework solution in the 2024 fiscal year has not returned to the levels of the 2021 and 2022 fiscal years, it has increased by 14% compared to the 2023 fiscal year, indicating that the smart homework solution business may have bottomed out.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20241217/1734397566703306.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="ryk1.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20241217/1734397566703306.png"/>
However, a detailed breakdown reveals that in recent years, the revenue structure of SoftCloud Technology's smart operation solutions business has undergone significant changes. In the fiscal year 2021, the main sources of revenue within smart operation solutions were digital services, as well as personalized workbooks and MOTK Pro services, which accounted for 44.1% and 16.8% of total revenue, respectively. These two were the core businesses of smart operation solutions, while platform development revenue accounted for 10.9% and licensing revenue accounted for 7.9%.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20241217/1734397582962800.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="ryk2.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20241217/1734397582962800.png"/>
By the fiscal year 2024, the core businesses of SoftCloud Technology's smart operation solutions had shifted to digital services and platform development services, with their revenue accounting for 57.6% and 34.3% of the company's total revenue, respectively. In contrast, the revenue share of personalized workbooks and MOTK Pro services had dropped to only 1%, a significant decline from 16.8% in the fiscal year 2021. This was primarily due to new policies that began in the fiscal year 2022, which restricted the company's distribution capabilities, thereby hindering the sale of products and services aimed at the C-end.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20241217/1734397598641984.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="ryk3.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20241217/1734397598641984.png"/>
In this context, SoftCloud Technology has made a complete redeployment of its smart operation solutions services. The company not only established a new distribution model for personalized workbooks and MOTK Pro services through telecommunications operators to ensure the continued operation of C-end business but also increased its efforts in the development of B-end services such as platform development, software customization, and content development to ensure the steady growth of smart operation solutions. Thanks to the continuous efforts on the B-end, the revenue from smart operation solutions services grew by 14% in the fiscal year 2024.
However, while the adjustment of the business structure for smart operation solutions services has led to revenue growth, there have also been &#34;side effects.&#34; The significant increase in sales and marketing expenses while developing B-end clients has led to a noticeable rise in the proportion of total operating expenses, thereby affecting the company's overall profitability. This is a key reason why SoftCloud Technology's profits turned to losses in the fiscal year 2022 and continued to widen.
According to the prospectus, when SoftCloud Technology was profitable in the fiscal year 2021, its total operating expenses accounted for only 33.7% of revenue. However, in the fiscal years 2022-2024, the proportion of total operating expenses to total revenue was 50%, 51%, and 55%, respectively, showing a continuous upward trend.
Breaking it down, the fastest-growing component of total operating expenses was sales and marketing expenses. From the fiscal years 2021 to 2024, the proportion of this expense to total revenue was 12.9%, 17.1%, 27.4%, and 25.9%, respectively, which had a significant impact on the company's profitability.
Therefore, it is not surprising that SoftCloud Technology has lowered its fundraising amount, as multiple potential operational challenges raise concerns about its fundamentals. The smart examination solutions continue to be weak against a backdrop of reduced market demand and intensified competition. Although the company has increased its efforts to expand smart operation solutions to achieve growth in this business, there has yet to be a stabilization trend for C-end products
The development of the B-end continues to affect the company's profitability, resulting in increased losses. SoftCloud Technology needs to deliver better performance in the future to prove its strength

SoftCloud Technology has significantly reduced its fundraising amount due to poor performance during its listing process in the United States. The latest F-1/A document shows that it plans to issue 3.75 million shares at a price of $4-5 per share, raising $15 million to $18.75 million, a significant decrease from the initial plan. Over the past four years, SoftCloud Technology's revenue has continued to decline, with net profit turning from profit to loss, and losses continuing to expand. The company focuses on China's K12 education and is committed to reforming traditional education models through AI technology

- SoftCloud Technology (RYET.US) is facing challenges in its U.S. IPO, reducing its share offering from 5 million to 3.75 million shares at a lower price range, indicating decreased market interest.  
- The company's revenue has declined over the past four years, with significant losses attributed to the impact of China's education policy changes and increased competition.  
- Despite a 14% revenue growth in its SmartHomework® solutions for fiscal year 2024, rising operational costs and ongoing losses highlight the need for improved performance to regain investor confidence.

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