Since the beginning of the year, “digital economy” has been popular all over the world. In the capital market of the Yangtze River Delta, a number of excellent listed companies involved in the field of digital economy have been born, and Hangzhou Raycloud Technology Co.Ltd(688365) (688365) located in Hangzhou, Zhejiang Province is one of them. However, when it will be two years after landing on the science and innovation board, Hangzhou Raycloud Technology Co.Ltd(688365) ‘s share price has fallen all the way from the highest 79.59 yuan / share to 12.43 yuan / share at the closing on February 18, close to the listing and issuance price of 10.8 yuan / share. At the same time, the latest research report on Hangzhou Raycloud Technology Co.Ltd(688365) in the market is still on April 14, 2021.
What is the reason that Hangzhou Raycloud Technology Co.Ltd(688365) with the aura of “the first share of e-commerce SaaS” of overhead A shares was “out of favor” soon after it was listed?
lose two core technicians in two years
Software as a service (hereinafter referred to as “SaaS”), which means software as a service, is an innovative software application model. Before the emergence of SaaS, traditional software needed to pay all costs at one time, and some even needed to build complex servers. SaaS can be used directly as long as it has a network. More importantly, SaaS usually adopts the annual fee model, which is very attractive to small and Micro customers.
Hangzhou Raycloud Technology Co.Ltd(688365) at the beginning of its establishment, it focused on being an e-commerce software service provider. After nearly ten years of development, the company is determined to embrace the capital market. In April 2020, Hangzhou Raycloud Technology Co.Ltd(688365) issued the prospectus of initial public offering and listing on the science and innovation board, and landed on the science and innovation board with the aura of “the first share of e-commerce SaaS”.
From the expression of R & D in the prospectus, Hangzhou Raycloud Technology Co.Ltd(688365) is indeed full of scientific and innovative attributes. The company said that it has an experienced R & D team, has a deep understanding of e-commerce and it industry, can quickly improve product functions and customer experience according to customer needs, provides technical guarantee for the operation and upgrading of existing products, and lays a foundation for the research and development of future products.
However, just two years after the listing, Hangzhou Raycloud Technology Co.Ltd(688365) core technicians left one after another. On February 15, Hangzhou Raycloud Technology Co.Ltd(688365) announced that Zhou Jie, a senior manager mainly involved in the research and development of marketing tools and apaas business framework, had recently resigned. According to the data, Zhou Jie was mainly responsible for Hangzhou Raycloud Technology Co.Ltd(688365) super store manager related business. At the time of resignation, Zhou Jie still held 20000 class II restricted shares in 2021 that had not been exercised. However, according to the relevant provisions of the equity incentive plan, this part of restricted shares will not be vested and invalid.
What is the reason why Zhou Jie would rather give up the exercise of the incentive plan than leave? The explanation given by Hangzhou Raycloud Technology Co.Ltd(688365) is “due to personal career development”. Zhou Jie, who has worked in Hangzhou Raycloud Technology Co.Ltd(688365) for nearly eight years, is not the first core technician to choose to leave. As early as February 2020, Wang Zhen, an NLP algorithm expert of the company, also chose to leave before the publication of the annual report. The reason given at that time was also “due to personal career development”. As for whether the departure of the above two core technicians will have an impact on the relevant business of the company, Hangzhou Raycloud Technology Co.Ltd(688365) gave a negative answer.
Not just the core technicians. In November 2021, the former deputy general manager of Hangzhou Raycloud Technology Co.Ltd(688365) who also held the restricted shares of 2021 that had not been exercised resigned. According to the information in the prospectus, Zhang understood Li once served as the sales director of Hangzhou Raycloud Technology Co.Ltd(688365) .
marketing vs R & D: all want but “favor one over the other”
The impact of the departure of core technicians on the performance of Hangzhou Raycloud Technology Co.Ltd(688365) focusing on product power cannot be judged. At present, the company has to face the problem of increasing income without increasing profit or even loss.
According to the performance forecast previously released by Hangzhou Raycloud Technology Co.Ltd(688365) , the maximum loss in 2021 is expected to be about 66 million yuan. The company explained the reason for the loss in advance as “the company has increased the investment in marketing channel construction and product R & D”. This is not Hangzhou Raycloud Technology Co.Ltd(688365) the first time that this reason has been used. In the 2020 annual report, it explained why the non net profit deducted in the current period decreased by 38.11% year-on-year with “the R & D expenses and sales expenses of SaaS products of large businesses increased more in the reporting period”.
According to the data, Hangzhou Raycloud Technology Co.Ltd(688365) is indeed a combination of R & D and marketing. The company’s R & D expenditure has increased from 84.7298 million yuan in 2018 to 107 million yuan in 2020, which reached 71.6629 million yuan in the first half of 2021. The increase of sales expenses is more significant. By the end of June 2021, this figure has increased from 35.3157 million yuan in the 2019 semi annual report to 88.5728 million yuan. In the first three quarters of 2021, it still maintained a high growth rate of 92.25%.
Why do you attach so much importance to R & D and marketing? Hangzhou Raycloud Technology Co.Ltd(688365) means “2021 is still in the strategic investment period of the company”. According to the information disclosed in relevant announcements, R & D and sales expenses mainly “contribute” to the business of “fast wheat ERP”, “deep drawing intelligence”, “Youcheng series” and other services for medium and large businesses and enterprise customers.
Taking “kuaimai ERP” as an example, the relevant sales revenue in the 2020 semi annual report and 2020 annual report increased by 355.98% and 203.94% respectively. However, according to the semi annual report of 2021, the growth rate of this data suddenly dropped to 86.56%, which was lower than the growth rate of current sales expenses for the first time.
According to the information disclosed in the Hangzhou Raycloud Technology Co.Ltd(688365) prospectus, the payment penetration rate of SaaS business of medium and large businesses has been close to 100%. Then, does the increase of sales expenses lead to the increase of sales revenue mean that relevant businesses have ushered in a growth bottleneck? In this regard, the reporter dialed the telephone of Hangzhou Raycloud Technology Co.Ltd(688365) securities department, and the staff replied: “the relevant business is steadily advancing.”
In addition, as for the renewal rate of “fast wheat ERP” proposed by the reporter, and whether there is a problem that the renewal rate is poor at present, and the sales expenses are mainly used to develop new customers without being maximized, The other party said: “it is inconvenient to disclose the renewal rate data. In view of the industry law of high input in the early stage and continuous output in the later stage of SaaS industry, with the continuous maturity of the company’s products, the benefits generated by the corresponding input will be realized one by one. At present, the definition of ‘not being used to the maximum’ is too one-sided.”
It needs to be verified whether re marketing can bring enough returns. There are also new situations in the R & D level that Hangzhou Raycloud Technology Co.Ltd(688365) often talks about. Although R & D expenditure continued to rise and the number of R & D personnel exceeded 500 at the end of June 2021, both the proportion of R & D personnel in the total number of the company and the average salary of R & D personnel showed a downward trend – from 2019 to the end of June 2021, the data of the former decreased from 32.31% to 25.37%, while the latter decreased from 259900 yuan to 214900 yuan. Only from the average salary data, there is a conflict with Hangzhou Raycloud Technology Co.Ltd(688365) ‘s statement that “the company increases salary in order to attract talents” in the financial report.
It is worth mentioning that while the proportion of Hangzhou Raycloud Technology Co.Ltd(688365) R & D personnel is declining, the number of sales personnel is soaring. According to the 2020 annual report, the company’s sales staff soared from 426 in the previous period to 1045, an increase of more than 100%.
From the statement in the performance forecast, Hangzhou Raycloud Technology Co.Ltd(688365) should put R & D and marketing in the same important position, but from the data, the company seems to pay more attention to marketing.
For the reporter’s question about whether the company pays more attention to marketing than R & D, the above staff explained: “since October 2021, the company has established a R & D center in Changsha, and the overall employment cost in Changsha is lower than that in Hangzhou. This is because Sura has reduced the average salary of the company’s overall R & D personnel, so there is no situation of paying more attention to marketing than R & D.”
When can Ali’s dependence disappear?
On the other hand, even if the increase in revenue does not increase profits and the loss in performance in advance, we still need to work together with R & D and marketing, which may reflect Hangzhou Raycloud Technology Co.Ltd(688365) the “concern” about the business composition.
Before founding Hangzhou Raycloud Technology Co.Ltd(688365) , Tan Guanghua, the actual controller of the company, worked in Ali. At that time, Alibaba opened its own service market and allowed interface access. Tan Guanghua simply quit his job and invested in SaaS development. Hangzhou Raycloud Technology Co.Ltd(688365) successfully became the first batch of Alibaba e-commerce SaaS With his understanding of Alibaba, Tan Guanghua led Hangzhou Raycloud Technology Co.Ltd(688365) to quickly become the leader of e-commerce SaaS. Its “super store manager” has ranked first in Alibaba’s related categories of paid software for many years. After Hangzhou Raycloud Technology Co.Ltd(688365) landed in a shares, Hangzhou Ali Venture Capital Co., Ltd. also became one of the top ten shareholders of Hangzhou Raycloud Technology Co.Ltd(688365) . It is worth mentioning that the office address of Hangzhou Raycloud Technology Co.Ltd(688365) is only less than 2km away from Ali park.
However, Hangzhou Raycloud Technology Co.Ltd(688365) after the rise of Ali, it has always been unable to jump out of this circle. Hangzhou Raycloud Technology Co.Ltd(688365) at present, the coverage includes the main integrated e-commerce platforms such as Taobao, tmall, jd.com and Suning, as well as the leading e-commerce in the subdivided industries such as 1688, express, pinduoduo, hungry, mushroom street and lazada. Among them, there are many figures of Ali department.
According to the Hangzhou Raycloud Technology Co.Ltd(688365) prospectus, most of the revenue of SaaS products comes from Taobao and tmall, while the revenue on e-commerce platforms such as jd.com and pinduoduo is small. However, Hangzhou Raycloud Technology Co.Ltd(688365) or has realized the possible risks of over reliance on Alibaba, and the multi platform strategy has been pushed to the front.
However, according to the data of the first three quarters of 2019 in the prospectus, the improvement of income structure has little effect. In the current SaaS product revenue, Taobao and tmall platforms accounted for 82.42%. After listing, the relevant data were not published in the financial report. However, Hangzhou Raycloud Technology Co.Ltd(688365) often mentioned in the financial report that the income of “express assistant” business on pinduoduo platform maintained a high level of growth, with a year-on-year increase of 49.99% in the first half of 2020 and 52.86% in the first half of 2021.
According to the prospectus, “express assistant” is a representative product of Hangzhou Raycloud Technology Co.Ltd(688365) multi platform strategy. In the first three quarters of 2019, it recorded a revenue of 13.097 million yuan on pinduoduo platform. However, the staff did not reply to the reporter’s inquiry about the current income of the “express assistant” pinduoduo platform. For the current proportion of the income distribution of each platform, the staff said: “it’s inconvenient to disclose.”
