China National Software & Service Company (600536) Q3 2024 earnings summary

Executive summary

• Revenue for Q3 2024 was RMB 936.63 million, down 42.32% year-over-year; YTD revenue was RMB 2.92 billion, down 29.77% year-over-year.

• Net loss attributable to shareholders in Q3 was RMB 64.90 million, a 169.67% increase in loss year-over-year; YTD net loss was RMB 337.55 million, narrowing by 20.05% year-over-year.

• Basic and diluted EPS for Q3 were both -0.08 RMB, and YTD were -0.40 RMB, improving 29.10% year-over-year.

• Operating cash flow for the first nine months was negative RMB 1.18 billion, a 13.55% improvement year-over-year.

Financial highlights

• Gross margin improved as higher-margin proprietary software increased in revenue mix.

• Operating costs fell 40.26% YTD due to lower business volume and a shift to higher-margin products.

• R&D expenses decreased 32.81% YTD due to personnel optimization.

• Investment income and other income declined sharply due to fewer government subsidies and no major asset disposals this year.

• Net cash from financing activities rose 2,027.59% YTD, mainly from increased bank borrowings.

Outlook and guidance

• Management continues to focus on core business, improving contract gross margins, and cost control.

• Product competitiveness and efficiency initiatives are expected to support further margin improvement.