New Stock Outlook | Sunmi Technology: The Internet of Things NETDRAGON is trapped in the dilemma of "increasing revenue without increasing profits", with the question of customer loss year after year questioning the growth.

Business Mi Technology, which is striving to become the first listed company in the commercial Internet of Things market, has once again submitted an application for listing on the Hong Kong Stock Exchange. According to the latest prospectus, this company has grown to become a leader in the global Android BIoT market with its intelligent commercial hardware. However, behind its shining industry position lies its highly single revenue structure - almost all of its revenue comes from the sales of smart devices, and a more worrisome trend is emerging: the total number of paying customers is decreasing year by year. This exposes the company's difficult situation in the transition towards platformization and service orientation. Increasing revenue without increasing profitability Stability of profitability under high investment pressure According to the latest prospectus disclosed by Business Mi Technology, the company's financial performance in the past three years and recent period shows the following key features, reflecting significant challenges to its profit model: Firstly, revenue growth is significantly weak, and the business scale has reached a bottleneck. The total revenue of the company for the years 2022, 2023, and 2024 was 3.404 billion yuan, 3.071 billion yuan, and 3.456 billion yuan respectively, with a 9.8% year-on-year decrease in 2023, and a slight recovery to a level slightly higher than that of 2022 in 2024, but the overall growth stagnated over the three years. For the first nine months of 2025, the revenue only increased by 2.1% year-on-year to 2.241 billion yuan, showing insufficient growth momentum. In addition, the total number of customers of the company has been decreasing continuously (from 2,506 in 2022 to 1,965 at the end of the first nine months of 2025), indicating that its market coverage and customer acquisition capabilities are under pressure. Secondly, the profitability is weak and fluctuates significantly, and the profit margin is at a low level in the industry. Despite fluctuations in gross profit, the company's net profit margin has been at a low level in the long term. The net profit margins for 2022, 2023, and 2024 were 4.7%, 3.3%, and 5.2% respectively, which further decreased to 2.5% in the first nine months of 2025. Especially noteworthy is the significant 36.5% year-on-year decrease in net profit in 2023, indicating significant instability in profitability. As a high-tech company positioning itself as an Internet of Things solution provider, a net profit margin of less than 5% shows that its business model is not highly efficient in profit conversion. Thirdly, the company's operating expenses are high, with research and development and sales expenses continuing to exert sustained pressure on profits. Specifically, the proportion of research and development expenses to revenue has remained above 11%, rising to 13.9% in the first nine months of 2025, indicating that while the company continues to invest in technology, it has not simultaneously driven significant revenue growth, and the efficiency of the investment needs to be verified. Distribution and sales expenses have maintained a proportion of over 10% for a long time, and against the backdrop of a decreasing total number of customers, the benefits of this expense are decreasing, reflecting the high cost of market expansion and customer maintenance. In summary, Business Mi Technology's financial performance exhibits the characteristics of "stagnating revenue, thin profits, and high operating expenses". Although it holds a certain market share in the Android BIoT hardware field, its high dependence on hardware sales, shrinking customer base, and high and rigid cost structure collectively constrain its ability to increase profitability and achieve sustainable growth. Scale dilemma and transformation bottleneck under a heavy hardware-light software model By analyzing the gross profit data of Business Mi Technology's divisions, its business structure presents a clear "hardware-dependent" feature, reflecting the strategic trade-offs the company faces between scaling up and improving the quality of profits, as well as the substantial challenges it faces in the process of transitioning to a service-oriented approach. From a business structure perspective, hardware is absolute dominant, while software contribution is weak. During the reporting period, sales of smart devices were absolutely core, with this sector contributing over 99% of the company's total gross profit and forming the foundation for the company's survival and development. Its gross profit margin fluctuates between 26.5% and 32.4%, which is not high overall and lacks stability. On the other hand, high-margin software services have failed to provide effective support. Although the PaaS platform and customized services business show extremely high gross profit margins (51.1% in 2024, 77.2% in the first nine months of 2025), their gross profit contribution reached its peak in 2023 at only 2.9%, and dropped to less than 1% in 2024. This indicates a significant gap between the strategic slogan of transitioning to high-value-added services and the actual financial contribution. Moreover, within the hardware business, adjustments in product portfolios reveal the company's trade-offs between market share and profit quality. On one hand, the "quantity over quality" strategy is evident: the product line with the highest gross profit contribution is shifting from smart mobile devices (with a long-term gross profit margin exceeding 30%) to smart financial devices (with a gross profit margin of approximately 24%-29%). In 2024, smart financial devices with a gross profit margin of 25.1% contributed 36.7% of total hardware gross profit, becoming the top contributor. This suggests that the company may be lowering its overall profit level by promoting more competitively priced products to gain market share. On the other hand, there is significant profit volatility in products. The gross profit margins of various hardware product lines fluctuate significantly annually (such as the gross profit margin of smart desktop devices fluctuating between 24.1% and 30.4%), reflecting the susceptibility of the hardware business to cost, competition, and product cycle influences, and casting doubt on the sustainability of profitability. In summary, Business Mi Technology's business development follows a clear path: using Android smart hardware as an entry point, rapidly expanding the deployment of devices, establishing market positions, and aiming to convert a large number of hardware users into software and service users based on this foundation. However, the current data exposes a critical breakpoint in this logic: first, economies of scale have not translated into a profit fortress. The company has become a leader in the global Android BIoT hardware market, but the hardware gross profit margin has not significantly improved or come to stabilize as a result, but instead has been under pressure due to the shift in product structure towards lower margins. Second, the channel of "hardware drainage, software monetization" has not been opened: the vast stockpile of devices has not brought in corresponding revenue from software services. The very low proportion of PaaS business demonstrates that the conversion rate from hardware customers to software-paying users is extremely low, and the ecological synergy effect has yet to be unleashed. In conclusion, the current state of Business Mi Technology's business reveals a common strategic dilemma in the Internet of Things field - it is easy to pave the way with hardware, but difficult to monetize software. While the company has successfully established a market position through hardware, it has failed to build a sustainable, high-profit service model that matches it. Its future investment value will no longer depend on a simple increase in hardware shipments, but on whether the company can truly demonstrate its synergy capabilities between hardware and software and its ability to effectively convert device advantages into platform value and recurring service revenue. At present, this key leap has not been achieved.