Yxt.com Group Holding (YXT) FY 2026 earnings call transcript

Hello, everyone. This is Peter Liu, founder and chairman of YXT. COM. Thank you for joining our 2026 first half earning conference call.

In the first half of 2026, we saw an important shift in enterprise AI adoption. Customers didn't ask whether a product has AI capabilities. They asked whether AI can improve their business outcomes, shorten capability building cycles, accumulate organizational knowledge more thoroughly, and support actual execution. In addition, having AI in the product suite was no longer an option for us. Not only that, having meaningful AI with productivity level value became the key differentiator. This was exactly the same direction YXT. COM took going into 2026. We achieved a nearly nine-fold growth in AI product-related revenue. Our monthly recurring revenue from AI-related products reached 4.4 million RMB as of June 30, 2026, compared with 500,000 RMB a year earlier.

The driving force behind the ninefold growth of AI products are adding AI to our existing business and innovating AI-native new businesses. In terms of existing business, we integrated AI into our existing corporate learning business and improved our competitiveness in both acquiring new clients and expanding the existing engagements. In the first half of 2026, the number of newly signed customers increased by nearly 50% compared with the same period last year. Our net dollar retention rate also improved by about 2.3 percentage points. And in terms of new business, SalesMart, our AI-powered sales intelligence and enablement solution, achieved sales of over RMB, 5 million RMB during the same period.

This marked the first successful step in expanding from corporate learning business to productivity enablement business in the same sales domain. Through the first half of 2026, we proved our strategy of intelligent productivity to be effective, and we are even more confident about it now. We will strive to assist enterprises turn knowledge into capabilities experiences into assets and individual capacity into organizational intelligent productivity As more and more companies embrace AI as AI goes from a chatbot to productivity levers we will see an even bigger addressable market with more and more definite needs One last piece of information I'd like to share with you before turning over is the transformation of our own operation. During the first half of 2026, we adopted AI more systematically and transformed how we build products, how we deliver customer value, and how we market ourselves.

The benefits of such AI adoption and transformation can be indicated by our gross margin, our operational efficiency, and our cash flow. And for those details, I will now turn the call over to Shen Cao, our chief financial officer, to review our financial performance.

Thank you, Peter, and hello, everyone. In the first half of 2026, our strategic transformation began to show clearer financial results. After a period of business mix optimization and customer portfolio adjustment, we returned to revenue growth, expanded growth margin, and significantly narrowed our losses. Total revenues increased by 6% year-over-year to RMB 162.1 million. Revenues from corporate learning solutions were RMB $158.2 million, compared with RMB $152.4 million in the same period last year. Subscription-based corporate learning solutions reaches RMB 151.8 million, supported by our focus on large enterprise customers and AI-enabled products. Our customer structure continued to improve. As of June 30, 2026, we had 2,391 subscription customers compared with 2,358 as of June 30, 2025. More importantly, our net revenue retention rate improved to 102.6% compared with 103% in the same period last year.

Show the stability and the quality of our subscription customer base. Profitability improved meaningfully. Gross margin reaches 70.1%, up 5% points from 65.1 a year earlier. This improvement was driven by our higher quality revenue mix. Continued focus on large enterprise subscription customers, AI enabled productivity gains and ongoing cost optimization. Cost of revenues decreased by 9 year to RMB 48 million Sales and marketing expenses decreased by 3 year reflecting improved productivity in customer acquisition conversion and retention Research and development expenses increased by 9.8%. As we continue to invest in AI product capabilities and RMD talent, We believe this is necessary to support our AI-native strategy and long-term product competitiveness. Our bottom line improved significantly. Net loss narrows to RMB 14.4 million from RMB 73.9 million in the same period last year.

Adjusted net loss narrowed by 80.9% year-over-year to RMB 12.2 million. This results demonstrate the operating leverage created by our improved revenue mix, higher gross margin, and disciplined expense management.

Looking ahead, we will continue to execute around three priorities. First, we will deepen our focus on large enterprise customers and improve customer lifetime value. Second, we will scale AI-related products, including SalesMart and other AI-enabled knowledge and productivity solutions.

Third, we will continue to balance investment in AI innovation with disciplined cost control and operational efficiency. In summary, the first half of 2026 was a period in which our AI-native transformation began to translate into business momentum and financial improvements. We are encouraged by our progress and remain focused on driving sustainable, high-quality growth. Thank you. We are now happy to take your questions.

Yes, I'm in.

Thank you, Catherine, for the question. I will try to answer the questions and provide some of the updates in the four lines of business. This is Alan Wong. I'm the vice president of YXT. COM. And to answer your question, TalentNova is our main business line. As the market leader in corporate learning platform, in 2026, we continue to sign new customers. We signed more than 120 clients, a more than 48% increase compared to last year's same period. And the boost in competitiveness is our successful integration of AI products into our existing corporate learning solutions and platforms In terms of new learning during the first half of 2026 we signed 32 million RMB engagement in terms of contract value That approximately 26 increase compared to last year same period And the majority of the increase came from AI-related products, such as AI-augmented blended learning, or AI-orchestrated practice, or AI-curated courses.

In terms of SalesMART, our AI-native sales enablement and productivity boost business, we won over 20 new clients with a total signed contract value of more than 5.3 million RMB.

Lastly, in terms of AI Box, adjusting to market landscape, we decided not to market AI Box as a separate business line, but integrated AI Box into our Telenova and Neo Learning product suites. In the first half of 2026, we saw clients needing AI infrastructure, and we provided AI Box as part of our Telenova service to the clients. So we have quite successfully pushed all four business lines to the market and saw significant growth in terms of revenue. Catherine, I think that's the answer to our question.

Thank you for your question. Growth margin was 70.1% in the six months ended June 30, 2026, compared with 65.1% in the same period of last year. We're presenting an increase of 5 percentage points. The gross in revenue, gross margin, and customer space. The significant decrease of net loss reflected the benefits of our AI transformation, AI-driven operational efficiencies, and also helped optimize our organizational structure and the workflows, leading to meaningful reductions in staff costs. Our improvements in revenue growth and cost efficiency is continuous, and this transcends our financial foundation, which means we expect we would achieve a higher gross margin in the second half of 2026.

Yes.

Yes, we believe we'll continue to boost our gross margin because our AI transformation is a continuous progress, and we will continue to see benefits in both operational efficiency and business outcomes. So, yes, we do expect to see that.

Thank you, Catherine.