A Bright Future of Enterprise Office IT Services

BEIJING, Aug. 17, 2022 /PRNewswire/ — This July, Edianyun entered an exclusive strategic partnership with seewin service, an affiliate of CVTE (stock code: 002841), a world-renowned provider of intelligent interactive solutions with a focus on display and control technology. The product “Intelligent Conference Room”, which can help build up a complete set of closed-loop conference scenario solutions, was also officially launched in Edianyun’s online mall.

After keeping a low profile for years, office IT service has risen to significant prominence.

This February, Edianyun, a leading technology-enabled office IT service provider in China, submitted a prospectus to HKEX and applied for listing on Main Board. According to the prospectus, Edianyun plans to invest in market expansion, service improvement, research and diversification of products, remanufacturing capabilities, and operation efficiency enhancement.

Edianyun engages in technology-enabled office IT services that cover IT infrastructures and manage IT services. It also develops SaaS products to satisfy the digital demands of customers.

Outstanding Customer Retention Rate and Positive Adjusted Net Profit

Edianyun’s revenues come from three business pillars: pay-as-you-go office IT services, sales of devices, SaaS and other services. Pay-as-you-go office IT services are the most essential and account for around 80% of the total revenue. For the first nine months of 2021, this business sector accounted for 85.4% of the total revenue.

Regarding gross revenue, Edianyun has kept a rapid growth tendency in the past few years. The prospectus shows that the incomes for the first nine months in 2019, 2020, and 2021 reached RMB632 million, RMB813 million, and RMB838 million, respectively. In other words, the revenue of the first three quarters of 2021 surpassed that of the whole year of 2020.

Edianyun’s revenues increased by 28.6% from 2019 to 2020 and by 44.8% from the three quarters of 2020 to 2021, indicating that the COVID-19 pandemic has not hindered the progress of Edianyun.

Meanwhile, both the number of active customers and devices under service are increasing substantially. By September 30th, 2021, the relevant numbers grew to 37 thousand and 1.091 million, expanding by 67.34% and 84.9% compared to late  2019.

For the 12 months ending in September 2021, Edianyun’s net dollar retention rate was as high as 124.2%, registering a year-on-year growth of 9.6 percentage points. Net dollar retention rate is a widely used indicator under the subscription model, which refers to the increased amplitude of revenues captured from retained customers during the period. The higher the retention rate is, the higher the customer stickiness and retention are.

As of the first three quarters of 2021, the adjusted net profit of Edianyun reached RMB74.9 million — turning losses into profits.

Edianyun has occupied first-mover advantages in the broader office IT service market.

Enterprise office IT services refer to the services provided to enterprises, and employees for fulfilling the IT demand raised from business operations, including spending related to office software and hardware.

According to Frost & Sullivan, the market size of enterprise office IT services in China expanded from RMB136.4 billion in 2016 to RMB150 billion in 2020 and is expected to reach RMB200 billion in 2025.

Based on the service delivery modes, enterprise office IT services can be divided into the direct buyout mode and usage-based mode. The direct buyout mode refers to the direct purchase of IT infrastructures and permanent software licensing from PC brand owners, software vendors, and distributors. The usage-based mode is a more flexible service mode compared with the direct buyout mode. It aims to cater to the on-demand business operation needs through a pricing mechanism based on actual IT resource usage.

Currently, the usage-based office IT market in China has a penetration rate of merely 2.1% in terms of the number of devices, significantly lower than that of 60.0% in the U.S. market in 2020. The market size of the usage-based office IT industry is expected to reach RMB29.2 billion in 2025, representing enormous growth potential.

According to studies conducted by Frost & Sullivan, Edianyun has been recognized as the first and largest technology-enabled office IT service provider in China in terms of revenue, number of devices under service, and remanufacturing capability. As for revenue, Edianyun occupied a market share of 14.9% in 2020, ranking first in the industry of office IT service under usage-based mode.

As of 2020, Edianyun owns the only remanufacturing factory in China with a computer remanufacturing capacity of over 500,000 sets. By leveraging the cutting-edge remanufacturing technology, Edianyun extends the average service life of devices from three to seven or even ten years, which boosts the utilization efficiency.

With self-developed Nebula system, Edianyun provides services such as device configuration, device/engineering deployment, support, optimization, and lifecycle management services. This system enables Edianyun to manage devices and improve operation efficiency effectively and massively.

If we apply Warren Buffett’s renowned snowball analogy to understand this context, the consistently growing office IT market would be the “long hill” that Edianyun relies upon, and Edianyun’s unique technological strengths such as remanufacturing factory and Nebula system would be the “wet snow”. With the most important two things, “long hill” and “wet snow” identified, Edianyun can surely build their “snowballs” bigger, and usher in the promising future of enterprise office IT business.