IEIT's Q3 revenue and net profit both declined, with accounts receivable surging by 147.62% | Financial Report Insights

As a leading domestic server provider, Inspur Information's rapid growth in the first three quarters was mainly driven by the demand for AI servers. However, both revenue and profit declined in Q3.

Inspur Information announced its latest financial report on Thursday. Key points are as follows:

• Financial performance: Q3 revenue was 40.48 billion yuan, a year-on-year decrease of 1.55%, with a net profit attributable to shareholders of 683 million yuan, a slight year-on-year decrease of 1.34%; revenue for the first three quarters reached 120.67 billion yuan, a year-on-year increase of 44.85%; net profit attributable to shareholders was 1.482 billion yuan, a year-on-year increase of 15.35%;
• Cash flow pressure: As of the end of Q3, the net operating cash flow was -12.57 billion yuan, worsening by 33.48% year-on-year; accounts receivable surged by 147.62% to 28.83 billion yuan, and inventory increased by 41.73% to 57.65 billion yuan;
• Expansion of financing scale: Short-term loans skyrocketed by 1146.01% to 17.39 billion yuan; financial expenses increased by 123.37%; contract liabilities grew by 178.92% to 31.54 billion yuan;
• Expansion of asset scale: Total assets reached 109.33 billion yuan, an increase of 53.50% compared to the beginning of the year; the asset-liability ratio rose to 80.42%.

Revenue and net profit both declined in Q3

In Q3, Inspur Information achieved operating revenue of 40.48 billion yuan, a year-on-year decrease of 1.55%. Although the quarterly operating revenue slightly declined, the cumulative operating revenue for the first three quarters reached 120.67 billion yuan, a year-on-year increase of 44.85%.

More concerning is that the net profit attributable to shareholders was 683 million yuan, a year-on-year decrease of 1.34%, and the net profit after deducting non-recurring gains and losses decreased by 9.13% year-on-year to 662 million yuan.

The financial report shows that operating costs increased by 47.69% year-on-year, exceeding the revenue growth rate by nearly 3 percentage points, which directly squeezed the gross profit margin. At the same time, financial expenses surged by 123.37% year-on-year, mainly due to the significant increase in interest expenses resulting from the expansion of financing scale.

Cash flow pressure

Cash flow continues to be under pressure. In the first three quarters, the net outflow of operating cash flow was 12.574 billion yuan, compared to an outflow of 9.42 billion yuan in the same period last year, worsening by 33.48%. There are two main reasons behind this:

Accounts receivable soared from 11.643 billion yuan at the beginning of the year to 28.83 billion yuan, an increase of 147.62%, accounting for 26.4% of total assets. The company explained this as "business scale expansion, with accounts receivable not yet due for collection."

Inventory also expanded from 40.679 billion yuan to 57.654 billion yuan, an increase of 41.73%. The company attributed this to "increased operational stocking."

To support business expansion, short-term loans surged from 1.395 billion yuan at the beginning of the year to 17.385 billion yuan, an increase of 1146.01%; contract liabilities (advance payments) also rose from 11.31 billion yuan to 31.545 billion yuan, an increase of 178.92%