IDC, an influential consulting giant in the field of IT market research, recently released the "IDC Chinese Human Capital Management (HCM) SaaS Market Tracking Report for the First Half of 2023".
According to the report, the top player in China's HCM SaaS market, Beisen, is 15A 3% market share is firmly at the top of the list. Since 2016, Beisen has led the way for seven consecutive years and is moving towards the hegemony of the "Eight Crowns".
IDC divides HCM SaaS into six sub-markets: Performance Management, Recruitment, Talent Acquisition, Core-HR, Workforce Management, Xi Management, and Compensation Management. Looking at the market data in 2022, recruitment and performance SaaS have the highest market share, and Core-HR and performance management SaaS have the fastest market growth.
At the same time, Beisen occupies a leading position in the three key sub-markets of core-HR, recruitment management and performance management, demonstrating its unassailable leadership position.
On November 27, Beisen released its interim results and financial report for the year ended September 30, 2023, let us take a peek at it and deeply explain why Beisen is far ahead in the HCM SaaS market.
The latest 2023 2024 interim results report released by Beisen Holdings disclosed that its revenue reached 400 for the six months ended September 30, 20235 million yuan, a year-on-year increase of 142%。
Revenue is generated primarily by two segments: Cloud HCM Solutions and Professional Services. The cloud HCM solution is based on 296$5 million dominated, up 17 percent from the same period last year1%。With the gradual growth of the proportion of business, it can be reasonably expected that the overall profitability of Beisen will also rise steadily.
The ARR (annual recurring revenue) of Beisen Core HCM products has increased significantly, with a growth rate of 351%, 300 new customers in half a year. In addition, performance ARR increased by 32 percent year-on-year3%, 169 new customers in half a year;The ARR of Xue Xi Cloud increased by 84% year-on-year5%, 130 new customers in half a year. The growth of data reflects the value of products, and in the post-epidemic era, Beisen has continuously improved product function iteration and innovation based on the perspective of business needs, which has won the favor of many customers.
In addition, Beisen disclosed a large loss, mainly due to changes in the fair value of redeemable convertible preferred shares and an increase in share-based payments. In fact, the company has taken proactive cost control measures, and the adjusted net loss has decreased by 43% year-on-year5%。
Beisen has also made progress in improving gross margins. Excluding share-based payments, the company's overall gross margin (non-IFRS) was 637%, an improvement of 9 from the same period last year5%, both in terms of products and services. This improvement not only reflects the company's ability to control costs and improve efficiency, but also indicates future earnings potential.
From the perspective of customer groups, the total number of customers in fiscal year 2023 will be 5,341, serving enterprises in many industries such as IT Internet, high-tech manufacturing, big medical, new energy, big retail, big consumption, etc., covering most of the top ten enterprises, and becoming an important partner to support the development of these industries.
In the current volatile market environment, the SaaS industry is gradually expanding its service area to medium and large customer groups. After all, large enterprises have a clear advantage over small and medium-sized enterprises in terms of willingness and ability to pay. Therefore, Beisen's future strategy focuses on deepening key industries and continuing to focus on central enterprises, state-owned enterprises and large customers, so as to further expand its business boundaries while consolidating its market position.
It can also be found in the financial report that Beisen's subscription revenue retention rate (NDR) reached 1040%, according to the latest September survey data, the Net Promoter Score (NPS) is 283。In general, a subscription revenue retention rate of more than 100% indicates that the company is able to generate increased revenue from annual subscription updates from existing customers. Two data shows that the subscription revenue retention rate of Beisen not only breaks through this threshold, but also demonstrates the loyalty of old users to the product.
Among the common business models in the industry, the domestic HR SaaS market can be roughly divided into two categories: integrated and single-module. In the early days, many enterprise customers preferred to purchase a single module system from different companies to meet their business needs. But over time, this model has exposed a variety of problems, such as breakpoints in business processes, lack of system scalability, difficulties in data integration, and poor employee experience.
This has led to the emergence of market demand for integrated HR SaaS products, representing a new development direction of human resources digitalization. From local application to comprehensive expansion, from module fragmentation to integrated integration of scenarios and data, and from HR-centric to multi-dimensional perspective of full collaboration.
Morgan Stanley's research report accurately summarizes the core advantages of the integrated model. From the demand side, the all-in-one HCM software can comprehensively collect and integrate data across modules, providing managers with a more comprehensive view of human resource managementFrom the best aspect, integration not only creates more opportunities for cross-selling, but also allows for seamless deployment of different modules on the same cloud platform, increasing customer ARPU with minimal cost.
It is in this kind of market transformation that Beisen's firm and effective integrated HR SaaS strategy has achieved contrarian growth despite the impact of the epidemic and the economic downturn. It builds an integrated product architecture that seamlessly collaborates with sub-modules such as recruitment, personnel, compensation, leave, performance, Xi, development and offboarding. This not only makes the customer's business scenario more coherent, but also has significant advantages in terms of data uniformity and user experience.
From the financial report, it can be found that the integrated solution, with its significant scalability and synergies, is increasingly winning the favor of customers. As of September 30, 2023, the ARR of Beisen Core HCM's integrated solution has reached 484% and 114% subscription revenue retentionThe proportion of ARR for the integration of recruitment and testing reached 233%, with 137 new customers in half a year, further proving its attractiveness in the market and its potential for stable growth.
On the other hand, the integrated SaaS product system is often built on the PaaS platform, which is one of the key factors that differentiate Beisen from other HCM software vendors.
In addition, Beisen has strengthened technological innovation and continuously integrated AI capabilities into its own products to form an "AI Family" product family for HR application scenarios and activate enterprise efficiency. The application of technology not only strengthens the competitiveness of Beisen's products, but also opens up new market opportunities for it.
According to IDC, China's HCM SaaS market is expected to reach $2.6 billion by 2027. Over the next five years, the market will grow rapidly at a compound annual growth rate (CAGR) of 33%, becoming the core driver of the growth of the entire SaaS market in China.
In the future, in the face of fierce market competition, Beisen will continue to maintain its leading position in the market with its firm market strategy and innovative product advantages.
In the second half of this year, the SaaS industry once again became the focus of heated discussions in the market, especially about the so-called "capital winter". However, this seemingly unfavorable environment is actually not all bad for the SaaS industry.
The boom in capital has twice pushed SaaS to an almost frenzied state. The overheated capital injection has caused many enterprises to lose their calm and self-motivation. However, since 2022, with the ebb of capital, China's enterprise service market has entered a trough period, and more and more business founders have begun to give up unrealistic illusions and instead focus on building a more stable ecosystem, giving up the blind pursuit of scale expansion, and bringing the entire industry back to a healthy development track.
Today, as the capital markets change the valuation of SaaS, the only option facing Beisen and other companies is to be truly performance-oriented. Externally, we focus on a customer-centric service system, actively embrace ecological partners, and create more use and practical value for new and old users. Internally, improve human efficiency, control costs, practice the company's strategy, gradually realize the refined operation of services, and improve the efficiency of internal and external collaboration, so as to comprehensively enhance the efficiency of the enterprise.
In the post-epidemic period, Beisen is not only a market participant, but also an evangelist of inheritance. Although the road is difficult and full of thorns, who can say that it is not another village. Beisen, the future can be expected.