Ronglian Technology 2025 Annual Report Analysis: Non-GAAP Net Profit Up 128.18%, Operating Cash Flow Turns Loss into Profit

Operating Revenue: Slight Contraction in Scale, Optimized Business Structure

During the reporting period, Ronglian Technology (rights protection) achieved operating revenue of RMB 1.949 billion, a year-over-year decrease of 3.57% from RMB 2.022 billion in the same period of the previous year. In terms of business structure, system integration revenue was RMB 1.3777 billion, up 3.72% year over year, accounting for 70.66% of total revenue and remaining the core revenue source; technology development and services revenue was RMB 410 million, down 17.57% year over year; and system product revenue was RMB 151 million, down 21.09% year over year.

By industry, revenue growth was achieved in industry application service providers, governments, biomedicine, telecommunications, and the energy industry. Among these, industry application service provider revenue was RMB 603 million, soaring 51.75% year over year, becoming a new growth highlight; while revenue in finance, manufacturing, and other industries declined to varying degrees. Finance industry revenue was RMB 564 million, plunging 25.87% year over year, which was the main drag on the overall decline in revenue.

Profitability Indicators: Material Growth in Profit After Non-recurring Items; Improved Core Profitability

Net Profit and Net Profit After Non-recurring Items

In 2025, the net profit attributable to shareholders of the listed company was RMB 20.0158 million, down 28.79% year over year; however, net profit after deducting non-recurring gains and losses was RMB 14.1681 million, up significantly by 128.18%. Total non-recurring gains and losses were RMB 5.8476 million, mainly including government grants and reversals of allowances for impairment of receivables, etc. In the same period of the previous year, non-recurring gains and losses were RMB 21.8976 million. The significant decrease was the main reason for the decline in net profit, while the growth in net profit after non-recurring items indicates that the company’s core business profitability has been continuously improving.

Earnings Per Share

Basic earnings per share were RMB 0.0303 per share, down 28.71% year over year; earnings per share after non-recurring items were RMB 0.0214 per share, up 128.18% year over year, consistent with the trend in the change of net profit after non-recurring items, reflecting an improvement in the profitability quality of the company’s core business.

Expense Control: Multiple Expense Items Reduced; Control Effect Becomes Evident

Selling Expenses

Selling expenses were RMB 78.81 million, up 2.36% year over year, mainly due to an increase in market activity expenses. During the reporting period, market activity expenses reached RMB 7.5576 million, up 63.36% year over year, showing that the company has increased its investment in market expansion.

Administrative Expenses

Administrative expenses were RMB 74.8543 million, down 8.40% year over year. This was mainly attributable to reductions in projects such as rent and depreciation, and human resources expenses, reflecting the company’s cost-control effectiveness in internal management.

Financial Expenses

Financial expenses were RMB 7.6376 million, up 3.57% year over year, mainly due to an increase in interest expenses. During the reporting period, interest expenses were RMB 11.6763 million, up 22.24% year over year, which is related to the expansion of the company’s short-term borrowings scale.

R&D Expenses

R&D expenses were RMB 64.9262 million, down 4.98% year over year, mainly due to lower human resources expenses. During the reporting period, R&D personnel human resources expenses were RMB 53.6889 million, down 14.54% year over year; however, R&D investment still focuses on technical R&D related to core business.

R&D Personnel Profile: Leaner Team Size, Stable Structure

At the end of the reporting period, the number of R&D personnel was 206, down 9.65% from 228 in the same period of the previous year. The proportion of R&D personnel decreased from 44.36% to 40.97%. In terms of educational background, the number of R&D personnel with bachelor’s degrees, master’s degrees, junior college degrees, and below all decreased, among which the number of R&D personnel with junior college degrees and below decreased by 11.48%, with a relatively larger decline. In terms of age composition, R&D personnel under 30 decreased by 21.05%, while R&D personnel aged 30–40 and those aged 40 and above decreased by 3.77% and 11.90%, respectively. The team streamlining was mainly due to the company optimizing its personnel structure and focusing on core R&D strength.

Cash Flow: Operating Cash Flow Turns Positive; Investing and Financing Cash Flows Fluctuate Significantly

Cash Flow from Operating Activities

Net cash flow from operating activities was RMB 62.7932 million. It turned from loss to profit year over year, with an increase of 150.72%. The main reason is that the company strengthened the management of collecting accounts receivable while optimizing procurement and expense spending. Cash outflow from operating activities decreased by 13.32% year over year. Among them, cash paid for purchase of goods and receipt of labor services decreased by 13.72% year over year, and cash paid to employees and for employees decreased by 14.34% year over year.

Cash Flow from Investing Activities

Net cash flow from investing activities was RMB -82.7179 million. Year over year, it shifted from profit to loss, with a decline of 599.39%. The main reason is that the company’s holdings of bank wealth management products increased significantly this year, and cash paid for investments reached RMB 94.0858 million, up by more than 1,000 times year over year; whereas in the same period of the previous year, it was only RMB 93.0 thousand.

Cash Flow from Financing Activities

Net cash flow from financing activities was RMB 17.5042 million. It shifted from negative to positive year over year, with an increase of 391.30%. The main reason is that the company’s financing scale expanded this year. Cash received from loans obtained was RMB 76.84528 million, up 21.61% year over year. At the same time, cash paid for repayment of debts decreased by 13.90% year over year, which led to a significant increase in net cash inflow from financing activities.

Facing Risks: Four Major Risks Need Attention

Technology Risk

The company operates in fields such as cloud computing, big data, and artificial intelligence, where technological iterations are fast. Changes in the evolution of core technology routes, updates to industry standards, and the integration of cross-domain technologies may all affect the existing product architecture, service models, and competitive landscape. If the company cannot keep up with technology trends in a timely manner, it may lead to technological lag and impact market competitiveness.

Risk of Changes in Industrial Policies

The company’s business is significantly affected by industrial policies. If relevant policies undergo major adjustments or support intensity weakens in the future—especially in emerging areas such as intelligent manufacturing, biomedicine, and artificial intelligence—such changes may adversely affect the company’s business layout, resource investment return, and business growth potential.

Risk of Human Resources and Organizational Fluctuations

As the company transitions into the cloud and data domains, demand for mid-to-senior level talent in areas such as technology, R&D, marketing, and management continues to increase. If the company cannot continuously attract, develop, and retain a sufficient number of high-quality talents, it will adversely affect the implementation of the company’s strategy and its long-term competitiveness.

Risk of Market Environment

The development of the digital economy has intensified industry competition. Internet technology companies may penetrate the enterprise services market across domains, while some downstream industries’ investments in informatization may exhibit cyclical fluctuations. The company’s market expansion and maintenance of market share face challenges.

Remuneration of Executives and Board Members: Clear Compensation for Core Management

Chairman

During the reporting period, Chairman Zhang Liang’s total pre-tax remuneration received from the company was RMB 0, with his main remuneration paid by the unit of the shareholders.

General Manager

During the reporting period, General Manager Zhang Xuguang’s total pre-tax remuneration received from the company was RMB 2.6565 million, the highest among management personnel, reflecting the value of his role as a core operator and manager.

Vice General Managers

During the reporting period, Vice General Manager Li Li’s total pre-tax remuneration received from the company was RMB 0.8099 million; Vice General Manager Deng Qian’s total pre-tax remuneration received from the company was RMB 0.8028 million. The remuneration levels of the two vice general managers are close to each other.

Chief Financial Officer

The Chief Financial Officer is兼任 Vice General Manager Li Li. The total pre-tax remuneration she received from the company is included in the above RMB 0.8099 million.

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