For Weimeng (02013), 2023 is a critical year in the company's development history. Because 2023 is not only the 10th anniversary since Weimei was founded, but also a new starting point for it to get ready and set sail again.

Meanwhile, on March 28, Weimeng successfully concluded the company's development in 2023 with an impressive annual performance.

According to financial reports, thanks to the recovery of the domestic economy, the recovery of digital demand from retail companies, and the continued advancement of customer service strategies, Weimeng's revenue during the reporting period was 2,228 billion yuan (RMB, same below), up 21.1% year on year; gross profit was 1,484 billion yuan, up 36% year on year; adjusted net loss narrowed sharply by 73.4% compared to the same period in 2022.

Behind our impressive performance, we have benefited from the steady growth of the SaaS and marketing business. Furthermore, during the reporting period, Weimong seized on new technology opportunities and new industry trends, opening up space for the company's future growth in multiple dimensions. While actively exploring AIGC's enabling business development, Weimeng quickly laid out new tracks such as the Middle East, video channels, and skits, and achieved remarkable results, showing the company's keen commercial sense and efficient execution.

Sun Taoyong, CEO of Weimeng, said, “Standing at the critical juncture of Weimong's ten years, facing greater challenges and opportunities, under the guidance of a new mission and vision, we must return to our original intentions, rekindle our passion for entrepreneurship, and start again with the attitude of starting a new business.” Based on this, Weimeng officially divided its business into three sub-groups in 2023, namely Weimeng Enterprise Service, Weimeng Marketing, and Weimeng International, and wants to make international development the company's third growth curve.

If we further analyze the specific development situation of Weimeng in 2023, we can have a clearer and deeper understanding of Weimeng's strategic layout to start again based on its original business and develop a new future.

Big customer results highlight the resilience of the SaaS business

Since 2020, due to the impact of many factors such as repeated epidemics, geopolitical tension, and interest rate hikes in the US, the macroeconomy has continued to be sluggish, and corporate digital transformation budgets have also been impacted as a result, causing the development of the SaaS industry to remain relatively sluggish until 2023.

However, Weimeng's SaaS service (subscription solution service) has shown strong resilience. In mid-2023, Weimeng's SaaS service revenue was 1,349 billion yuan, an increase of 4.5% over the previous year. Among them, smart retail has become a new growth curve for SaaS services. During the reporting period, the revenue of the smart retail business was 613 million yuan, an increase of 19.5% over the previous year, and the proportion of subscription solution revenue increased to 45.5%.

Smart retail's ability to achieve rapid growth results is directly related to Weimeng's successful transformation to mass customization. Since Dake has the characteristics of higher stability, sustainability, and high price, Dake's single customer value content is higher, and it focuses on major customers in the industry, which is the main difference between Weimeng and other similar enterprises.

Based on in-depth insight into the digital business development stages and demand trends of retail enterprises, Weimeng proposed a large customer strategy as early as 2020, and is an enterprise that proposed this strategy earlier in the industry. In order to continue to advance the “big customer” strategy, Weimeng works hard from the two dimensions of core technical ability and core product capability to continuously develop “internal skills” to meet the digital transformation needs of enterprises.

In terms of core technical capabilities, Weimeng has launched a new WOS business operating system. This is a digital business infrastructure that is “fast iterative, strong integration, expandable, and flexible customization”. Weimeng can help enterprises easily manage digital business and operating data, and efficiently transform and deposit it into data assets that enterprises can reuse over a long period of time, achieve global analysis of multiple products and types of data, better feed back management decisions, and ultimately bring true sustainable commercial growth to the enterprise.

During the reporting period, Weimeng's new WOS commercial operating system continued to release the value of digital commerce infrastructure. Its ecosystem application activity continued to grow. API calls increased by 42% year on year, innovative businesses such as Weimeng DTC e-commerce and international e-commerce reduced R&D cost investment by more than 80%, and launch time reduced by 67%. At the same time, large group companies can efficiently create their own applications through capabilities such as B-PaaS. Furthermore, the gross profit of Weimeng's cloud business increased by 38.6%, and the renewal rate for technical services reached 100.5%, initially forming a healthy ecological cycle.

In terms of core product capabilities, the new Weimeng WOS commercial operating system covers businesses such as Weimeng retail, member operations, enterprise assistants, smart shopping guides, etc., to achieve omni-channel integrated user operation, which can effectively solve common problems such as lagging data interaction and uneven system operation experience under multiple system operations in a single business. During the reporting period, the comprehensive penetration rate of the integrated business with new and old customers has exceeded 55%, and the coverage growth rate of the integrated business reached 139% of all new and old customers, indicating that more and more customers are purchasing various products or services from Weimeng.

Thanks to the continuous refinement of core technology and products, and Weimeng's comprehensive deepening of “industry solutions” in 2023, the company's products and services have been widely recognized by major customers in various industries. Peacebird Group, TEP Group, PEAK Group, An Lifang Group, SKEQ Kids in the footwear industry, Moen, Dongyi Risheng, and Mitsubishi in the home furnishing industry, Xiang Piao, Baicao, China Resources Yibao in the fast food processing industry, Lianhua, Mingchuang Premium, Bubble Mart in the supermarket industry, and Yuexing Group, C&D Group, and Jindi Commercial Property in the commercial real estate industry are all Weimeng customers.

According to the data, as of 2023, the number of Weimeng smart retail merchants was 6,826, of which 1,306 were brand merchants, and the average order revenue of brand merchants was 105,000 yuan per user. Meanwhile, the total number of paying merchants using Weimeng's SaaS services has reached 96,339. It is worth noting that big customization also had an obvious effect on cost reduction and efficiency. During the reporting period, the gross margin of Weimeng's SaaS business increased to 66.1%, up more than 6 percentage points from 59.5% in 2022.

The sharp rise in volume and price is driving the high growth of the marketing business, and the strong growth momentum is expected to continue

While the steady development of the SaaS business highlights resilience, the marketing business (merchant solutions) has become a new growth curve for Weimeng. According to the data, in 2023, the number of paying merchants in Weimeng's marketing business was 66,905, up 24.23% year on year, and the average revenue per user was 13,127 yuan, up 29.16% year on year. Driven by a two-wheel drive where volume and price have risen sharply, Weimeng's marketing business revenue during the reporting period was 888 million yuan, an increase of 60.48% over the previous year.

There are three main factors why Weimeng's marketing business can achieve rapid growth in 2023: First, demand in the marketing market is gradually picking up, and Weimeng is benefiting from the recovery of the industry.

Second, Weimeng focuses on horizontal integration and vertical expansion of the marketing sector to help the brand achieve global operation and quality efficiency growth.

Specifically, Weimei continues to expand media diversification horizontally and promote deep cultivation of regionalization and industrialization strategies vertically. In terms of multiple media channels, while Weimeng is deeply involved in video channels, it is also developing multi-channel traffic platforms such as Kuaishou, Xiaohongshu, and Alipay to combine the full-link operation advantages of “marketing+tools+operation+ecology” to help brands achieve global operation and quality growth, and also enhance the commercial growth space for Weimeng marketing.

At the same time, Weimeng continues to expand its multi-channel footprint. The company has successively obtained licenses from Kuaishou magnetic engine regional agents in 8 regions including Shanghai and Zhejiang. The annual consumption of service merchants in the Kuaishou circuit in 2023 increased 164% year-on-year. In addition, Weimeng has helped over 50 brands from the apparel, beauty, and FMCG industries complete the cultivation of efficient products in Xiaohongshu, and annual consumption increased 259% year over year. Obviously, the multi-channel and multi-regional layout has achieved obvious results.

Third, Weimeng continues to cultivate video accounts and ushered in a harvest period, and the channel has entered an explosive stage.

According to public data from Tencent, the video channel GMV achieved nearly three-fold growth in 2023. The number of video account orders increased by more than 244%, and the supply of products increased by about 300%; at the same time, the brand is growing strongly on the video account. In 2023, the GMV of brand stores increased by more than 226%, the number of brands entering the market increased by more than 281%, and the number of brand stores breaking 10 million increased by more than 860%.

Such rapid growth data shows that video accounts are unleashing strong growth potential. As a continuing leader in the Tencent ecosystem, Weimeng's basic market within Tencent's advertising system has maintained steady and positive development. As the commercialization process of video channels progressed, the market penetration rate and growth rate of Weimeng marketing remained at the forefront, and consumption increased significantly in consumer goods, health, tourism, automobiles and other industries. Weimeng has become the official operating service provider officially certified by the video account and the annual service provider for video channel delivery.

During the reporting period, the GMV of Weimeng service video merchants increased by 48.5% year on year. The company has now reached out to more than 80% of the TOP 50 celebrities, and has also become the preferred marketing solution service provider for leading merchants in the industry such as Belle Fashion and Schierjia. This caused Weimeng's Tencent advertising consumption to increase 63% year over year in 2023.

It is worth noting that thanks to Weimeng's dominant share of the basic market in Tencent's advertising system, the profit situation of the company's marketing business also improved dramatically. The gross margin during the reporting period was 67.3%, up nearly 9 percentage points from 58.7% in 2022. As commercialization of video accounts accelerates, Weimeng marketing is expected to maintain rapid growth this year.

Lay out new opportunities in the industry in multiple dimensions and continue to expand the commercial landscape

With the SaaS customer strategy and omni-channel marketing integration, Weimeng's two main businesses have established core competitive barriers, thus achieving overall steady growth. At the same time, Weimeng has a keen sense of business trends to seize new technological opportunities and new industry trends, hoping to create new growth space for the company in the future. During the reporting period, Weimei had a layout in various areas such as AIGC, overseas trips to the Middle East, and skits, and achieved remarkable results.

As one of the SaaS companies that use AI technology to restructure its business most rapidly in the industry, Weimeng has become a “leader” in the implementation of AI applications and scenarios, which has enabled it to successfully have a significant first-mover advantage in the industrial opportunities brought about by generative AI.

As early as February 2023, Weimeng reached an in-depth cooperation with Baidu Wenxin to explore the future development of “AI+SaaS”. By May 2023, Weimeng officially released WAI, an AI application product based on a large model. Up to now, Weimeng WAI has achieved large-scale application popularity through major marketing promotions such as 618 and Double Eleven. WAI has expanded to more than 50 application scenarios, covering the multiple business needs of merchants in digital business operations, and has improved the efficiency of smart operations for over 42,000 businesses.

Taking private domain operations as an example, Hongdou Home Operators have generated hundreds of marketing documents around scenarios such as new product promotion, member registration guidance, and community/circle of friends marketing activities through shared copywriting and rhetoric generated by WAI, with a copy availability rate of 70%.

At the same time, Weimeng WAI also provides AI technical support for the marketing business. During the Double 12 period, the usage rate of Weimeng's WAI Wensheng Map function increased by more than 470% month-on-month, with the number of product posters produced increasing by more than 270% month-on-month. The Wensheng video model has aroused buzz in the industry. In terms of short video generation, Weimeng WAI has achieved low-cost and efficient generation of short video materials that meet brand marketing requirements, and is closely integrated with the full-link production process.

From this perspective, through the multi-dimensional AIGC layout, Weimeng has achieved accelerated penetration into the full chain business scenario of merchants, and has achieved rapid expansion in the number of customers using it. This not only made Weimeng's AI application launch speed industry leader, but also made Weimeng an industry benchmark for “AI+SaaS” two-wheel drive development.

While exploring AIGC's enabling business development, Weimeng's development in international business also deserves investors' attention. Since its launch, internationalization has been one of the key points of Weimeng's development. After three years of intensive cultivation, Weimeng's international advertising business ushered in a major explosion. In 2022, Weimeng's overseas advertising business increased tenfold year-on-year, with monthly performance exceeding 10 million. Weimeng marketing has achieved in-depth value exploration of overseas marketing in the financial, online service, fitness, home, auto parts and other industries.

In order to expand and strengthen its international business, which is already showing an explosive trend, Weimeng established a “Weimeng International” subsidiary in October 2023, and Sun Taoyong temporarily became the chairman and CEO of Weimeng International. It can be seen that Weimeng attaches importance to international business.

As of March 11, 2024, Weimeng announced the launch of the “SuperApp Solution”, focusing on developing technology to go overseas. Based on nearly 10 years of SaaS product technical capabilities and industry service experience, SuperApp replicates and exports China's small program business ecology and mature experience to overseas markets.

Currently, based on the SuperApp solution, Weimeng has cooperated with a major telecom operator in the Middle East. The launch of the SuperApp solution also marks Weimong's beginning to radiate the underlying technology, ecosystem capabilities, and consumer management experience of SaaS into a new stage of product driven and technology driven. In view of Weimeng's continued efforts in internationalization, the international business will bring new growth in performance to Weimeng in 2024 will be a probable event, and international business is expected to become Weimei's third growth curve.

Furthermore, Weimei's entry into the skit circuit based on business synergy also made the market full of imagination. On March 6, Weimeng issued an announcement stating that the company will strategically invest in mergers and acquisitions of bibimbap technology to lay out a short drama circuit. After the transaction is completed, Weimong will acquire 53.5% of Bibimbap Technology's shares.

There are two main reasons for entering the skit market. First, the skit industry is exploding. According to data from Ai Media Consulting, China's online short drama market reached 37.39 billion yuan in 2023, an increase of 267.65% over the previous year. Although the development history of skits is short, the market size in 2023 has reached 70% of the film market, showing the popularity of the short drama market; Ai Media Consulting predicts that by 2027, China's short drama market is expected to reach RMB 10.68 billion, which means that the compound annual growth rate from 2023 to 2027 is nearly 30%, which is a golden track of high growth.

Second, years of accumulation have given Weimeng a significant advantage in the short drama market. Weimeng Marketing has accumulated industry-leading experience and ready-made shooting resources over the past few years. The multi-scene short video bases built in Shanghai, Changsha and other places can be directly shared as resources to improve creative production efficiency and reduce content production costs. In the field of investment and monetization, Weimeng has mature full-link and comprehensive marketing solutions, has accumulated rich marketing experience, and has fully integrated into mainstream domestic short video platforms such as Video Accounts, Kuaishou, Xiaohongshu, Douyin, Watermelon Video, and Volcano Short Video. With high-quality filming resources and the ability to accurately distribute global traffic, Weimeng is expected to create a growth curve for new commercial scenarios on the golden track of short dramas.

summed

“Rekindling the passion for entrepreneurship and striving for a bigger dream” is the title of Weimeng CEO Sun Taoyong's letter to all members. Weimeng has indeed made a beautiful start to a new journey in 2023. While promoting the steady growth of the SaaS and marketing business, it has made a multi-dimensional layout with efficient execution to expand new growth points. Weimeng's commercial landscape is constantly expanding around its existing advantages. The development prospects are exciting, and its intrinsic value will also be fission.

However, judging from the company's stock price, which is still low, the market has yet to detect a shift in Weimeng's real value, and this may be a good opportunity to obtain excess profits. In the future, as Weimeng continues to advance its business layout in various dimensions, the continued release of its performance will drive the company's value back.