China National Software & Service Company (600536) Q2 2024 earnings summary

Executive summary

• Revenue for H1 2024 was RMB 1.98 billion, down 21.73% year-over-year; net loss attributable to shareholders narrowed to RMB -273 million, a 47.09% improvement year-over-year.

• Gross margin improved as higher-margin proprietary software products increased in proportion, despite overall business volume decline.

• The company continued to focus on core cybersecurity and proprietary software, with strategic advances in operating systems and digital transformation solutions.

• Significant cost control and efficiency measures led to a 31.95% reduction in operating costs and a 30.71% decrease in R&D expenses year-over-year.

• No interim dividend or capital increase from reserves was proposed for the period.

Financial highlights

• Operating income: RMB 1.98 billion, down 21.73% year-over-year.

• Net loss attributable to shareholders: RMB -273 million, improved by 47.09% year-over-year.

• Basic and diluted EPS: RMB -0.32, up from RMB -0.74 year-over-year.

• Net cash outflow from operating activities: RMB -1.26 billion, improved from RMB -1.58 billion year-over-year.

• Gross margin increased due to a higher share of proprietary software products.

Outlook and guidance

• The company will continue to focus on cybersecurity, proprietary software, and digital transformation, leveraging its strong brand and government support.

• Plans to further enhance product competitiveness, expand market share in key sectors, and deepen cost control and efficiency initiatives.

• Ongoing investment in R&D and ecosystem partnerships to drive long-term growth.