Increasing revenue without increasing profit, Haochen Software is expanding overseas.

21st Century Business Herald reporter Lei Chen

In 2025, in the global CAD software market, three international manufacturers—Dassault, Siemens, and PTC—占占 the leading position in the high-end 3D design field. A domestically developed software vendor from Suzhou is attempting to enter this market that has long been dominated by international vendors through mergers and acquisitions and overseas expansion.

Recently, Haogchen Software (688657.SH) disclosed its 2025 annual report. The company— a domestic software vendor that has focused on the CAD field for more than 20 years—showed in its second full fiscal year after listing the following results: revenue for the period reached RMB 330 million, up nearly 15% year over year; attributable net profit was RMB 50.8016 million, down 19.36% year over year.

Revenue growth alongside profit decline reflects a mismatch between the company’s cost investments and the timing of phased returns during its 3D CAD layout and overseas market expansion.

Increase in revenue, not in profit

In 2025’s four quarters, Haogchen Software’s attributable net profit was RMB 6.8639 million, RMB 19.6931 million, RMB 14.9956 million, and RMB 9.25M, respectively. The profit in the fourth quarter fell 38.3% quarter over quarter compared with the third quarter, while revenue for that quarter was the highest of the year at RMB 102 million.

The direct reason for pressure on the profit side comes from an all-round rise in cost and expenses.

During the reporting period, the company’s selling expenses, administrative expenses, and R&D expenses reached RMB 136 million, RMB 46.2634 million, and RMB 92.6851 million, respectively, with year-over-year increases of 18.06%, 29.81%, and 10.09%. The combined proportion of the three expense items to operating revenue increased from 71.8% in 2024 to 76.3% in 2025.

It is worth noting that although R&D spending as a proportion of operating revenue decreased slightly from 29.13% in 2024 to 27.91%, the absolute figure still remained at a relatively high level. The number of R&D personnel increased from 300 to 315, and the average compensation for R&D personnel increased from RMB 273.8k to RMB 291.6k. Among the 12 in-house projects the company is advancing, projects such as the AI-CAD 2025 new product R&D and special efforts on CAD core technologies are all in the R&D cycle.

(Figure source: Haogchen Software annual report)

Contrasting with the decline in profit is the company’s strong performance in net cash flow from operating activities. During the reporting period, this indicator reached RMB 91.6128 million, up 37.85% year over year—almost double the net profit for the period. Subtotal cash inflows from operating activities were RMB 406 million, of which cash received from sales of goods and provision of services was RMB 359 million, up 14.3% year over year, roughly matching the revenue growth rate. The company explained that the growth in cash flow was mainly due to the implementation of growth strategies across business segments and the effects of prior measures, which drove revenue growth.

By business segment, all three major operating businesses achieved year-over-year growth: software business revenue was RMB 213 million, up 13.69%; cloud-based business revenue was RMB 67.3298 million, up 28.64%; and internet advertising promotion business revenue was RMB 46.4161 million, up 3.51%. Among them, the cloud-based business had the fastest growth rate, and its gross margin also increased by 1.18 percentage points to 89.78%.

For dividends, the 2025 profit distribution proposal approved by the board of directors shows that the company plans to distribute a cash dividend of RMB 6 per 10 shares (including tax) and increase 4.6 shares for every 10 shares via bonus shares. The amount of cash dividends accounts for 76.78% of the company’s attributable net profit for the year. If the amount of repurchased shares is added, the total distribution ratio reaches 96.71%.

Snapping up territory overseas

While consolidating the domestic market, Haogchen Software’s overseas business is becoming an important engine for revenue growth.

The annual report shows that in 2025, the company’s overseas revenue reached RMB 133 million, up 25.88%, and its share of main business revenue increased from 37.1% in 2024 to 40.7%. Meanwhile, revenue from domestic business grew by 8.28% in the same period, meaning the overseas business’s growth rate was more than three times that of the domestic business.

(Figure source: Haogchen Software annual report)

Behind the growth, the company’s overseas marketing network has continued to expand. As of the end of the reporting period, the company’s offline marketing network covered more than 100 countries and regions worldwide, and it had established stable partnerships with over 70 distributors. Its products cover markets including South Korea, Japan, Poland, India, Thailand, Turkey, Brazil, Italy, Portugal, and others. During the reporting period, in the European region where business maturity is relatively high, the company piloted a transformation from product distribution to full-scale brand marketing, and revenue in the European region increased significantly year over year.

The gross margin performance of the overseas business is also better than that of the domestic business. In 2025, the gross margin of the overseas business was 95.73%, higher than the domestic business’s 90.64%. By sales model, the gross margin under the distribution model was 96.77%, significantly higher than 91.04% under the direct-sales model.

It is worth noting that overseas business expansion has also come with increased cost investment. Promotional advertising expenses within selling expenses increased from RMB 23.79 million in 2024 to RMB 31.11 million, an increase of more than 30%. During the reporting period, the company also strengthened global brand market promotion in a comprehensive manner by organizing multi-level user exchange activities, continuing to carry out user satisfaction surveys, strengthening communication through professional media, and promoting typical customer case studies.

The rapid growth of overseas business is also closely related to the policy environment of the global CAD market. The annual report cites industry analysis indicating that in Europe, multiple countries have already issued BIM mandates. The UK, Italy, Germany, and others have clearly required that specific public projects above a certain scale must adopt BIM technology, and emerging markets in Southeast Asia are also rapidly catching up. This policy environment not only raises the market entry threshold, but also implies a larger space for commercialization.

Mergers and acquisitions to make up for shortfalls

In the 2D CAD field, Haogchen Software has already established a relatively solid foundation for autonomous control. The annual report shows that the company began restructuring the Haogchen CAD software architecture in 2010, breaking away from the limitations of R&D based on ITC source code. It achieved comprehensive self-sufficiency in platform core technologies, and some key technical indicators have approached or reached international advanced levels. During the reporting period, Haogchen CAD completed five version updates, including multiple versions that adapt to HarmonyOS, macOS, and Linux systems, continuously improving cross-platform compatibility.

At the user level, the company’s products cover more than 75% of the enterprises listed in the central enterprises directory issued by the State-owned Assets Supervision and Administration Commission of the State Council in 2025, including China Aerospace Industry Corporation (or entities within its group), China Energy Engineering, State Grid, and other central state-owned enterprises or their subsidiaries.

However, a stable position in the 2D market is not enough to support the company’s participation in top global competition. In the 3D CAD and BIM fields, the annual report cites industry analysis stating that the three international vendors—Dassault, Siemens, and PTC—occupy a dominant position globally and have formed deep barriers within their respective sub-industries such as aerospace, machinery manufacturing, and shipbuilding. According to Future Market Insights data, the global CAD market size in 2025 is expected to reach USD 12.2 billion. Among it, 3D CAD and BIM, as high value-added areas, have long been dominated by international giants.

It is against this backdrop that in April 2025, Haogchen Software spent RMB 47.73 million to complete the acquisition of 100% of shares in the Hungarian company CadLine, thereby capturing the BIM core product ARCHLine.XP held by CadLine. During the reporting period, CadLine contributed operating revenue of RMB 8.8213 million and net profit of RMB 273.8k, initially achieving profitability. Based on this, the company released the Haogchen BIM and AEC design software suite, initially completing the company’s 3D CAD product layout in the engineering design field.

But the acquisitions have also brought significant changes in certain financial indicators. As of the end of 2025, the company’s balance of intangible assets surged from RMB 2.2674 million at the same period in the prior year to RMB 46.9388 million, an increase of 1970.14%; goodwill increased by RMB 1.0657 million.

It is worth noting that the company’s acquisition pace did not stop. In the “Commitments and Contingent Matters” section of the annual report, it is disclosed that as of the end of the reporting period, Haogchen Software and related parties such as Metaworld Corporation and Zi Qian Technology entered into agreements. The company plans to subscribe to preferred shares of the controlling entity of Zi Qian Technology using its own funds of RMB 60 million, indirectly holding 8.45% equity interest in Zi Qian Technology. The annual report indicates that this transaction is still in the preparation and advancement of closing and has not yet been completed.

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