YXT.COM GROUP HOLDING LIMITED American Depository Shares 2026 Q2 Earnings Call

This is Peter Lu, 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. 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 ninefold growth in AI product-related revenue. Our monthly recurring revenue from AI-related products reached 4.4 million RMB as of June 30th, 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. In terms of new business, SalesSmart, our AI-powered sales intelligence and enablement solution, achieved sales of over 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 handing 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 gross 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 reached 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 30th, 2026, we had 2,391 subscription customers, compared with 2,358 as of June 30th, 2025.

More importantly, our net revenue retention rate improved to 102.6%, compared with 103% in the same period last year, showing the stability and the quality of our subscription customer base. Profitability improved meaningfully. Gross margin reached 70.1%, up five percentage 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 9.1% year-over-year to RMB 48.5 million. Sales and marketing expenses decreased by 3% year-over-year, reflecting improved productivity in customer acquisition, conversion, and retention. Research and development expenses increased by 9.8% as we continued to invest in AI product capabilities and R&D talent. We believe this is necessary to support our AI-native strategy and long-term product competitiveness. Our bottom line improved significantly.

Net loss narrowed 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. These 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 SalesSmart 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, sounding clear. Yeah. Great.

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 Wang. I am the Vice President of YXT.COM. 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. The boost in competitiveness is our successful integration of AI products into our existing corporate learning solutions and platforms. In terms of NeoLearning, during the first half of 2026, we signed 32.7 million CNY engagement in terms of contract value. That is approximately 26.8% increase compared to last year's same period.

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 SalesSmart, 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 CNY. 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 TalentNova and NeoLearning product suites. In the first half of 2026, we saw clients needing AI infrastructure, and we provided AI BOX as part of our TalentNova 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 is the answer to your question.