Revenue Grows as Merchant Count Declines: YOUZAN Pivots to Per-Customer Value

On August 13, YOUZAN (06051.HK) released its financial results for the first half of 2026. During the reporting period, the company achieved revenue of approximately RMB 770 million, a year-on-year increase of about 8%; gross profit was around RMB 500 million, also up by roughly 8% year-on-year; adjusted EBITDA stood at approximately RMB 72.7 million, with net cash inflow from operating activities amounting to about RMB 47.15 million.

From a revenue structure perspective, subscription solutions generated approximately RMB 400 million, while merchant solutions contributed around RMB 370 million, with both business lines showing growth compared to the same period last year. In the first half of 2025, YOUZAN’s revenue from subscription solutions and merchant solutions was RMB 374 million and RMB 338 million, respectively. This comparison indicates that the decline in subscription business has halted, while merchant solutions continue to drive incremental growth.

These two revenue streams correspond to different business models. Subscription solutions primarily include SaaS product subscription fees and cloud service fees paid by merchants when their transaction volume exceeds agreed-upon thresholds. Merchant solutions are more closely tied to transaction scale, encompassing value-added services such as transaction processing, logistics, distribution, consumer protection, and promotion. The latter fluctuates with merchant order volumes and Gross Merchandise Volume (GMV), representing a significant revenue source as YOUZAN shifts from merely collecting software fees to participating in merchants' operational processes.

In the first half of the year, the GMV generated by merchants through YOUZAN’s solutions reached approximately RMB 51.6 billion, a year-on-year increase of about 4%. Notably, the store business GMV grew by around 13% year-on-year, significantly outpacing the overall growth rate.

In the first half of 2025, YOUZAN’s GMV totaled RMB 49.8 billion, with the store SaaS business contributing approximately RMB 25.5 billion. The continued growth of the store business indicates that YOUZAN’s current strategic focus has expanded beyond helping merchants set up online stores on platforms like WeChat. It now extends to retail chains and local lifestyle stores, covering membership management, cashier systems, appointment scheduling, inventory control, and multi-platform operations.

However, the number of merchants has yet to resume growth. As of the end of June 2026, YOUZAN had 51,633 existing paying merchants, a decrease of approximately 2.2% from the 52,809 recorded at the end of 2025.

The simultaneous occurrence of GMV and revenue growth alongside a decline in the number of paying merchants suggests that growth is driven more by changes in merchant structure and individual merchant contributions rather than customer base expansion. This reflects the operational characteristics formed in recent years as YOUZAN reduced low-value customers and shifted its focus toward brand merchants and chain store clients.

YOUZAN’s gross margin in the first half of the year was approximately 65.5%, largely stable with a slight increase compared to 65.4% in the same period of 2025.

Businesses within merchant solutions, such as logistics and transaction services, generate revenue but also incur corresponding costs for logistics, insurance, and transactions. Consequently, their gross margins are typically lower than those of software subscription businesses. Therefore, while an increased proportion of value-added services can diversify revenue sources, it does not necessarily boost the overall gross margin synchronously.

Profitability metrics also require careful distinction. Adjusted EBITDA is a non-HKFRS measure and is not equivalent to net profit. On August 3, the company previewed that net profit for the first half was expected to range between RMB 65 million and RMB 72 million, lower than the approximately RMB 72.57 million recorded in the same period of 2025. The primary reasons were the expansion of the sales team and increased investment in AI projects. In other words, while YOUZAN remains profitable and maintains positive net cash flow from operations, its profit growth has not kept pace with revenue growth.

AI is a new business area where YOUZAN is heavily investing this year.

The company disclosed that over 20,000 merchants are currently using its AI products. It has sequentially launched products such as the store operation agent "YOUZAN Lobster," "AI Customer Sales" for customer service and sales scenarios, and "Add Me Recommendation Officer." In 2025, the number of merchants actively using YOUZAN’s AI agents was 18,220, with total annual calls exceeding 36 million.

However, based on financial disclosures, YOUZAN has not separately reported AI product revenue, renewal rates, or gross margins. Furthermore, the more than 20,000 merchants using these products are not entirely equivalent to paying customers.

Therefore, the current role of AI is more clearly defined in two aspects: first, improving the functionality of existing SaaS products and enhancing merchant usage efficiency; second, adding new chargeable items for scenarios such as customer sales, marketing, and store operations. Whether AI can form an independent and sustainable revenue source still requires observation of subsequent commercialization data.

Overall, YOUZAN’s changes in the first half do not signify a return to relying on merchant count expansion. Instead, amid a continuing decline in the total number of merchants, growth was achieved through the store business, value-added services, and increased revenue per merchant. Positive trends in revenue, gross profit, and cash flow indicate that previous operational adjustments are still effective. However, profit growth is impacted by sales and AI investments. Whether subscription growth can be sustained and whether AI revenue can be independently verified remain two key indicators for assessing the quality of its growth.