Increasing revenue for two consecutive years without profit growth, why hasn't the AI story of "Edge Cloud's First Stock" Cloud Factory been monetized yet?

Ask AI · AI infrastructure businesses require heavy investment; what specific challenges does Yun Cloud Workshop face in its transition?

This article is sourced from The Times Weekly (时代周报), authored by Li Jiaxuan (李佳晅)

Yun Cloud Workshop has fallen into a cycle of “the more it expands, the slimmer the profit.”

On March 26, Yun Cloud Workshop Technology (02512.HK), known as the “first-edge-cloud company,” released its 2025 annual performance report. During the reporting period, the company’s revenue was RMB 944 million (same below), up 33.3% year over year; net profit attributable to shareholders was RMB 11.80 million, down 4.8% year over year; and basic earnings per share were RMB 0.02.

A reporter from The Times Weekly noticed that this marks Yun Cloud Workshop’s second consecutive year since listing in 2024, falling into the situation of “growing revenue but not growing profits.” In 2024, its revenue increased 1.68% to RMB 708 million, while net profit attributable to shareholders fell 13.16% to RMB 12.091 million.

Tianqi investor and veteran artificial intelligence expert Guo Tao analyzed for The Times Weekly reporter that the main reason Yun Cloud Workshop has “increasing revenue without increasing profit” is that its traditional IDC business faces an upper limit to growth, and the industry has fierce homogenized competition.

Founded in 2015, Yun Cloud Workshop Technology Holdings Limited started by providing IDC (internet data center) solution services and gradually developed into a representative enterprise in China’s edge cloud sector. In June 2024, Yun Cloud Workshop listed on the Main Board of the Hong Kong Stock Exchange, dubbed the “first-edge-cloud company.”

In its financial report, Yun Cloud Workshop stated that revenue growth mainly benefited from the continuous expansion of business scale and the rapid development of its IDC solution services and intelligent computing segments. Profit decline was mainly due to increased investment in the early stage of smart computing center construction, rising R&D expenses, and pressure on IDC business gross margins. During the reporting period, the company’s gross margin fell from about 12.7% in 2024 to about 10.2%.

“Data center construction costs are high and the payback period is long. Coupled with customers’ enhanced bargaining power over rack rental fees, gross margins have remained under pressure. The reason it has had two years of revenue growth without profit growth is that revenue growth relies on scale expansion, but unit profits get diluted—leading to the cycle of ‘the more it expands, the slimmer the profit,’” Guo Tao said.

The Times Weekly reporter called Yun Cloud Workshop; as of the time of publication, no response was received.

IDC business gross margin falls to 8.8%

With a single revenue structure, Yun Cloud Workshop is facing gross-margin pressure amid intensifying market competition.

On the business front, Yun Cloud Workshop’s core strategy for 2025 is to focus on “edge cloud + AI services.” Through its core brand, “Lingjing Cloud,” it provides edge computing and AI compute power services by covering edge nodes across more than 2,000 counties and districts nationwide. The company’s customer base includes leading internet companies, as well as governments and multiple industries such as communications, finance, energy, and transportation.

According to the revenue breakdown disclosed in its 2025 financial report, the company’s revenue mainly comes from IDC solution services, edge computing services, and intelligent computing.

Yun Cloud Workshop’s traditional core business, IDC solution services, contributed RMB 759 million, accounting for 80.4% of total revenue. This segment remains the company’s revenue pillar. Its revenue grew 15.2% year over year, and during the year it added 16 new customers. Although IDC business revenue is growing, gross margin fell from 11.6% in 2024 to 8.8%. The company said it actively expanded some businesses with relatively lower profit margins to capture more market share, increasing the proportion of “thin-profit, high-volume” parts, which led to a decline in overall profit levels.

First Shanghai Securities’ analysis believes that, benefiting from the development of cloud computing, blockchain, and IoT technologies, and from the flexibility of business models, China’s IDC solution market will grow from RMB 53.032 billion to RMB 530.32 billion from 2024 to 2028 at a 17.0% CAGR (compound annual growth rate). However, competition will be even fiercer. Compared with traditional IDC, edge computing services have value-added advantages. From 2019 to 2023, China’s edge computing market CAGR was 33.8%. It is expected that from 2024 to 2028, it will rise from RMB 99.4 billion to RMB 310.2 billion.

However, the edge computing business that many brokers are bullish on has not been able to support Yun Cloud Workshop’s revenue banner—and in fact has increased revenue without it, actually declining. The financial report shows that Yun Cloud Workshop’s edge computing services generated RMB 42 million in full-year revenue, down 15.1% year over year, accounting for 4.4% of total revenue. The company said this was mainly affected by the phase changes in usage by large customers.

The new intelligent computing business represented by AI compute power services started from zero revenue in 2024, and in 2025 contributed about RMB 140 million, accounting for 15.2% of total revenue.

Guo Tao believes that Yun Cloud Workshop’s key challenge right now is to balance “staying with the old” and “innovating.” Yun Cloud Workshop needs to find differentiation within its traditional IDC business—such as deeply focusing on customized services for specific industries and increasing the added value per rack. For its AI compute power business, it must identify the right sub-scenarios for entry and avoid blanket expansion. It can first link up with compute power rental needs from small and medium-sized tech companies, accumulate experience and cash flow with small orders, and then gradually scale up.

A two-impasse situation during the transition

The industry transformation triggered by AI makes it inevitable for IDC companies to transition.

China Institute of Industrial Research (中研普华) believes that the explosive evolution of generative AI technology is reshaping demand patterns. Smart computing demand has become the core engine driving market growth. Deployment demand for high-density racks and heterogeneous computing architectures is surging, accelerating the evolution of existing data centers toward artificial intelligence data centers (AIDC).

In other words, generative AI has changed users’ compute power needs. Ordinary facilities in traditional IDC data halls cannot meet them. They must be upgraded into smart computing centers that can run AI in order not to be left behind by the times.

According to data from Tech-Con (科智咨询), in 2025 the market size of China’s smart computing center sector reached RMB 128.9 billion, up 18.7% year over year. It is expected to reach RMB 288.6 billion by 2028, with a CAGR of over 30%. AI compute power demand has become the core growth engine for the industry.

While stabilizing traditional business, steadily expanding AI compute power business is a challenge that IDC companies generally face.

After combing through information, The Times Weekly reporter found that leading IDC vendors such as Runze Technology (润泽科技) and 万国数据 are all accelerating their AI compute power deployments. In 2025, Runze Technology delivered AI compute power racks at large scale, while 万国数据 signed long-term compute power rental agreements with major model vendors such as ByteDance and Zhipu AI.

In its earlier research report, Tech-Con (科智咨询) pointed out that for small and medium-sized IDC companies, transformation is more difficult due to constraints in capital and technology.

Yun Cloud Workshop is also accelerating its own transition plan. In 2025, it made multiple investments around “edge cloud + AI services.” The company, through cooperation with AMD, landed a smart computing center in Wuxi and built a heterogeneous compute power cluster integrating domestically produced and internationally advanced GPUs. It also launched industry large-model solutions for sectors including transportation, government affairs, and industrial applications, expanding scenarios for AI deployment.

In March this year, Yun Cloud Workshop announced that it would jointly build an OPC large-model public service platform with the China Academy of Information and Communications Technology (中国信息通信研究院). It will integrate diversified GPU computing power resources including NVIDIA, AMD, and Ascend (昇腾), providing elastic compute power scheduling, model deployment, and API calling services—lowering the barrier for AI startups.

Yun Cloud Workshop has frequently rolled out plans in both AI compute power and platform ecosystems. Yet because the deployment cycle is long and the monetization speed of new businesses is slow, it has actually further amplified the pressure during the transition period.

Guo Tao believes that AI compute power centers require massive upfront investment. From server deployment and power system support to cooling technology upgrades, continuous funding is needed. Moreover, cultivating customers and ramping up orders require time; in the short term, it is hard for them to contribute meaningful incremental revenue and profit, resulting in a gap period between old and new businesses.

“If the company keeps competing internally in low-gross-margin businesses, or blindly ramps up new businesses and puts pressure on the capital chain, Yun Cloud Workshop’s situation may become even more passive,” Guo Tao said.