YXT

Market Shift & AI Strategy Validation

• Enterprise AI adoption has shifted from checking for basic AI capabilities to requiring AI that delivers measurable business outcomes, improved productivity, and organizational knowledge accumulation. Meaningful AI integration is now a core competitive differentiator, aligning with YXT.COM's 2026 strategic direction.
• The company's AI transformation strategy (integrating AI into existing business and building AI-native new businesses) delivered strong results: AI product-related revenue grew nearly nine-fold YoY, with monthly recurring revenue from AI products reaching 4.4 million RMB as of June 30, 2026, up from 500,000 RMB YoY.

Core Operational Progress

• For the existing corporate learning business: AI integration improved new customer acquisition and existing account expansion, with newly signed customers increasing nearly 50% YoY, and net dollar retention improving 2.3 percentage points YoY. As of June 30, 2026, total subscription customers reached 2,391, up from 2,358 YoY, and net revenue retention improved to 102.6% YoY, demonstrating stable, high-quality subscription customer base.
• For new AI-native business: Sales Smart, the AI-powered sales intelligence and enablement solution, crossed RMB 5 million in H1 2026 revenue, marking a successful first expansion from corporate learning to broader productivity enablement within the same sales domain.
• Internal operational transformation: The company systematically adopted AI to restructure product development, customer delivery, and marketing processes, delivering improvements in gross margin, operational efficiency, and cash flow.

Financial Performance Highlights

• Gross margin reached 70.1%, up 5 percentage points YoY, driven by higher-quality revenue mix, focus on large enterprise subscriptions, AI-enabled productivity gains, and ongoing cost optimization.
• Cost of revenue decreased 9.1% YoY to RMB 48.5 million; sales and marketing expenses decreased 3% YoY, reflecting improved customer acquisition, conversion, and retention productivity.
• R&D expenses increased 9.8% YoY as the company continued investing in AI product capabilities and R&D talent to support long-term AI-native competitiveness.
• Net loss narrowed significantly to RMB 14.4 million from RMB 73.9 million YoY; adjusted net loss narrowed 80.9% YoY, demonstrating operating leverage from improved revenue mix and disciplined expense management.

• Management expects gross margin to increase further in the second half of 2026 compared to H1 2026, and will continue to expand gross margin in future years as the continuous AI transformation delivers additional operational efficiency gains.
• The company will maintain three core strategic priorities going forward: 1) Deepen focus on large enterprise customers and improve customer lifetime value; 2) Scale AI-related products including Sales Smart and other AI-enabled knowledge and productivity solutions; 3) Continue balancing investment in AI innovation with disciplined cost control and operational efficiency to drive sustainable high-quality growth.

1. Corporate Learning Solutions: Total revenue of RMB 158.2 million in H1 2026, up from RMB 152.4 million year-over-year (YoY), accounting for 97.6% of total company revenue. Subscription-based corporate learning solutions (the core sub-segment) generated RMB 151.8 million in revenue.
2. AI-native New Product (Sales Smart): Generated over RMB 5 million in H1 2026 revenue, with total signed contract value of over RMB 5.3 million, representing 3.1% of total company revenue.
3. AI Box: Management discontinued marketing AI Box as a separate product segment and integrated its AI infrastructure capabilities into the existing Talent Nova and Neo Learning product suites, with no standalone revenue reported. Total company revenue for H1 2026 was RMB 162.1 million, a 6% increase YoY.

No specific risks or operational failures were discussed or disclosed during this earnings call.

Q: Can you update progress across each of your four product lines: Talent Nova, Neo Learning, Sales Smart, and AI Box?

A: Talent Nova, the core corporate learning platform, signed more than 120 new clients in H1 2026, a 48% increase YoY, driven by successful AI product integration. Neo Learning recorded RMB 32.7 million in contract value, a 26.8% YoY increase, with most growth coming from AI-related learning products. Sales Smart won over 20 new clients with RMB 5.3 million in total contract value. AI Box was integrated into the Talent Nova and Neo Learning product suites rather than marketed as a separate line, and is now offered as embedded AI infrastructure for client solutions.

Q: Gross margin expanded significantly YoY in H1 2026; can this expansion continue into H2 2026 and future years?

A: The 5 percentage point YoY gross margin increase reflects AI-driven operational efficiency, optimized organizational structure and workflows, and reduced staff costs. Management confirmed that gross margin will be higher in H2 2026 than in H1 2026, and expects gross margin to continue expanding in future years as the continuous AI transformation delivers sustained efficiency and business outcome benefits.