{"url_path":"/sec/raasy/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-08","source_url":"https://www.sec.gov/Archives/edgar/data/1804583/0001493152-26-021875-index.html","accession_number":"0001493152-26-021875","cik":"0001804583","ticker":"RAASY","issuer_name":"Cloopen Group Holding Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1804583/0001493152-26-021875-index.html","primary_entity_key":"0001804583","primary_entity_name":"Cloopen Group Holding Ltd"},"word_count":12741,"has_tables":true,"body_markdown":"**ITEM\n5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**\n\n \n\nYou\nshould read the following discussion and analysis of our results of operations and financial condition together with the consolidated\nfinancial statements and related notes included elsewhere in this annual report. This discussion contains forward-looking statements\nbased upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from\nthose anticipated in these forward-looking statements as a result of various factors, including those set forth in the section of this\nannual report captioned “Item 3. Key Information—D. Risk Factors” and in other parts of this annual report. Our fiscal\nyear ends on December 31.\n\n \n\n**A.\nOperating Results**\n\n \n\n**Overview**\n\n \n\nWe\nare a leading multi-capability cloud-based communications solution provider in China offering a full suite of cloud-based communications\nsolutions, covering CPaaS, cloud-based CC and cloud-based UC&C. We serve a diverse and loyal customer base consisting of enterprises\nof all sizes across a variety of industries, including internet, telecommunications, financial services, industrial manufacturing and\nenergy.\n\n \n\nWe\ngenerate our revenues primarily from our CPaaS, cloud-based CC and cloud-based UC&C solutions. We generally charge our customers\nusing our CPaaS solutions on a recurring basis, based on the monthly number of text messages and call minutes facilitated. We charge\nour customers using our cloud-based CC solutions deployed on public cloud on a recurring basis, with a combination of seat subscription\nfees and related resource usage fees. We generally charge our customers using our cloud-based CC solution deployed on private cloud and\ncloud-based UC&C solutions on a project basis. We plan to promote solutions that we offer on a recurring basis to lower customer\nacquisition costs, which we expect would favorably contribute to our profit margins.\n\n \n\nAs\nof December 31, 2023, 2024 and 2025, we had an active customer base of 8,703, 7,529 and 6,151 enterprises, respectively, among which\n121, 114 and 102 were large-enterprise customers, respectively. In 2023, 2024 and 2025, the dollar-based net customer retention rate\nin relation to solutions we offer on a recurring basis was 85.8%, 74.6% and 76.7%, respectively, and the dollar-based net customer\nretention rate for active customers was 89.0%, 77.4% and 79.6%, respectively. We served 279, 337 and 339 customers for our project-based\nsolutions in 2023, 2024 and 2025, respectively. Our revenues increased by 0.4% from RMB571.0 million in 2023 to RMB573.6 million in 2024,\nand decreased by 6.6% to RMB535.7 million (US$76.6 million) in 2025. In 2023, 2024 and 2025, we incurred net loss of RMB412.4 million,\nRMB146.8 million and RMB238.8 million (US$34.1 million), respectively, and our adjusted EBITDA was RMB405.5 million, RMB225.4 million,\nand RMB227.4 million (US$32.5 million), respectively. See “—Non-GAAP Financial Measures” for information on how we\ndefine and calculate the non-GAAP financial measures as well as a reconciliation of non-GAAP adjusted EBITDA to net loss.\n\n \n\n**Factors\nAffecting Our Results of Operations**\n\n \n\nOur\nbusiness and results of operations are affected by China’s overall economic conditions and structural transformations, especially\nthe development of telecommunications industry and cloud-based communications industry, as well as the following industry- and company-specific\nfactors.\n\n \n\n86\n\n \n\n \n\n**Capturing\nmarket opportunity**\n\n \n\nOur\nability to capture market opportunity is critical to our growth prospects. Compared to more developed regions such as the North America\nand Western Europe, enterprises in China are still in the early stages of adopting cloud-based technologies, which presents significant\ngrowth opportunity. The maturity level of China’s network and related infrastructure for cloud computing also provides a solid\nfoundation for rapid adoption of cloud technologies in China.\n\n \n\nIn\naddition, China’s communications industry is highly fragmented, consisting primarily of many local players. The software-based\nnature and scalability of cloud-based communications solutions are well-suited to allow easy deployment across different geographical\nlocations and industries. We focus on applying cloud-based technologies to enterprise communications, leveraging our established partnerships\nwith multiple regional mobile network operators. Equipped with such established business relationships as well as our solutions and proprietary\ntechnologies in AI and video communications, we believe we are well-positioned to capture the significant market opportunity to consolidate\nChina’s cloud-based communications industry. Meanwhile, in order to achieve a larger market share, we will need to devote more\nmanagerial attention and financial and other resources to address the potential challenges faced by a rapidly growing business in an\nevolving industry.\n\n \n\n**Improving\ncustomer acquisition, retention and lifetime value**\n\n \n\nOur\nresults of operations are highly dependent on the total number and the lifetime value of our customers. We have cultivated a large and\ndiverse customer base of enterprises of all sizes and various industries, including internet, telecommunications, financial services,\nindustrial manufacturing and energy. As of December 31, 2023, 2024 and 2025, we had an active customer base of 8,703, 7,529 and 6,151\nenterprises, respectively, among which 121, 114 and 102 were large-enterprise customers, respectively. To retain and grow our customer\nbase, we need to predict future market acceptance and customer demand and continue to invest in sales and marketing to penetrate into\nmore industry verticals and second- and lower-tier cities and further promote our brand image and recognition in China’s cloud-based\ncommunications industry. We also plan to expand our cross-selling and up-selling efforts to existing customers.\n\n \n\n**Introducing\nnew features and solutions**\n\n \n\nTo\ncapitalize on the opportunities from the fast-evolving communications needs of China’s enterprises of all sizes, we believe it\nis critical to continuously develop and introduce new features and solutions that optimize communication efficiency and efficacy and\nenhance operational productivity. We believe our capabilities of developing and offering a comprehensive portfolio of industry-specific\nsolutions that satisfy disparate needs and complex internal integration and deployment requirements contribute to the success of our\nbusiness operations. We must continue to invest in research and development with a focus on AI and video technologies and incorporate\nthese technologies to develop more innovative features and solutions. We will also need to enhance the interaction of product development\nand sales activities and actively seek and analyze customer feedback in order to design new features and solutions catering to customer\ndemands.\n\n \n\n**Optimizing\nproduct offering mix**\n\n \n\nOur\nability to manage our product offering mix affects our results of operations, especially our overall profit margin. For example, our\ncloud-based CC and cloud-based UC&C solutions typically carry higher gross profit margins, as these solutions are more technologically\nadvanced and, therefore, give us greater pricing power. To improve our overall profit margin and achieve higher financial scalability,\nwe will need to continue to shift our focus toward offering solutions with higher profit margins. We also plan to selectively promote\nsolutions that we offer on a recurring basis to lower customer acquisition costs, which we expect would favorably contribute to our profit\nmargins. In addition, we need to serve more customers in targeted industries to lower the incremental industry customization costs and\nto achieve greater economies of scale and higher profit margins from the industries we more broadly serve.\n\n \n\n87\n\n \n\n \n\n**Controlling\ncosts and expenses**\n\n \n\nOne\nof the largest costs we incur during our business operations, particularly for our CPaaS solutions and cloud-based CC solutions that\nwe offer on a recurring basis, is service fees paid for telecommunications resources. In 2023, 2024 and 2025, costs paid for telecommunications\nresources represented 55.0%, 52.0% and 32.3% of our total cost of revenues, respectively. Mobile network operators in China typically\nadjust the unit prices for resources, such as text messages and voice calls, once every several years based on government recommendations.\nA sudden adjustment by major mobile network operators would likely negatively affect our results of operations in current contract periods\nbecause we may not be able to pass on the impact to our customers as a result of fixed unit resource price throughout the current contract\nperiods. On the other hand, we are generally able to pass on the impact from such unit price adjustment to customers relatively quickly\ndue to our relatively short contract periods, which enable us to adjust our resource usage fees from time to time. Additionally, we may\nalso benefit from the increase in the unit resource price in the long term because such price increase could eliminate weaker market\nplayers and strengthen our market leadership position.\n\n \n\nIn\naddition, staff costs and expenses incurred to attract and retain a team of talented staff is a major component of our overall costs\nand expenses. While we strive to optimize our compensation and incentive structure, we remain mindful that investment in human resources\nplays a significant role in maintaining our competitive position. As a significant portion of our overall costs and expenses, our ability\nto control our staff costs and expenses without compromising our competitiveness is critical to our results of operations.\n\n \n\n**Managing\ndevelopment cycle**\n\n \n\nOur\nability to manage the overall development cycle of our project-based solutions affects our revenues and profit margin in specific periods.\nWe generally incur a significant amount of upfront investment and costs in developing new solutions and serving customers in new industries\nto meet their complex communications needs, implementation requirements and industry-specific customizations. We have also historically\nundertaken smaller projects with lower profit margins to enter into the markets for project-based solutions, such as for our cloud-based\nUC&C solutions. These initial development costs and investments may increase our costs and expenses and decrease our overall profit\nmargins in certain periods. We are generally able to replicate our initial solution development and achieve economies of scale quickly\nafter we deliver our industry-specific projects to more customers within the same industry or build upon our existing projects to develop\nsimilar solutions for more customers from other industries. As we continue to standardize our industry-specific solutions for more customers\nin diverse industries, we expect to manage the upfront investment at reasonable level and optimize our development cycle.\n\n \n\n**Strategic\ninvestment and acquisitions**\n\n \n\nWe\nhave made, and intend to continue to make, strategic acquisitions to solidify our current market presence and expand into new industries.\nFor example, in March 2021, we acquired all the equity interests of EliteCRM, a leading customer relationship management software provider,\nand in December 2021, we acquired all the equity interests of Zhuge, a user-centric intelligent data solution provider. We intend to\nselectively pursue strategic alliances and investments to further strengthen our competitiveness. We expect to evaluate and execute alliance,\ninvestment and acquisition opportunities that complement and scale up our business, optimize our profitability, help us expand into adjacent\nindustries and add new capabilities to our cloud-based solutions. Our strategic alliances, investments and acquisitions would likely\nimpact our business, results of operations and financial condition.\n\n \n\n**Seasonality**\n\n \n\nOur\nbusiness is subject to seasonal fluctuations. We believe that our quarterly sales are affected by industry buying patterns. Our customers,\nespecially large enterprises, tend to enter into contracts with us in the second half of each year in accordance with their budget cycles.\nAs such, we generally record higher revenues during such periods. In addition, we typically generate lower revenues in the first quarter\nduring or around Chinese New Year holiday. Changes in seasonal trends may cause fluctuations in our results of operations and financial\ncondition.\n\n \n\n88\n\n \n\n \n\n**Key\nOperating Metrics**\n\n****\n\n \n\n  \nAs of/For the Year Ended December 31,\n\n  \n2023  \n2024  \n2025\n\nNumber of active customers \n 8,703  \n 7,529  \n 6,151\n\nNumber of large-enterprise customers \n 121  \n 114  \n 102\n\nPercentage of revenue contribution by large-enterprise customers \n 67.0% \n 68.7% \n 70.1%\n\nDollar-based net customer retention rate \n 85.8% \n 74.6% \n 76.7%\n\n \n\n*The\noperating metrics of EliteCRM and Zhuge are included in the operating metrics as of/for the\nyear ended December 31, 2023, 2024, and 2025.\n\n \n\nOur\ndollar-based net customer retention rate increased from 74.6% in 2024 to 76.7% in 2025, primarily driven by the incremental\nrevenues generated from successful cross-selling to our existing customers, which positively offset the respective declines in the retention\nrates of our CPaaS and cloud-based CC businesses. In 2023, 2024 and 2025, our dollar-based net customer retention rate for active customers\nwas 89.0%, 77.4% and 79.6%, respectively.\n\n \n\nWe\nexpect that, as the applicable regulatory framework becomes more established,\nand as we continuously optimize our existing solutions and develop new features and solutions, our dollar-based net customer retention\nrate will remain stable at a relatively high level.\n\n \n\n**Non-GAAP\nFinancial Measures**\n\n \n\nTo\nsupplement our consolidated financial statements which are presented in accordance with U.S. GAAP, we also use non-GAAP net loss and\nadjusted EBITDA as additional non-GAAP financial measures. We present the non-GAAP financial measures because they are used by our management\nto evaluate our operating performance. We also believe that the non-GAAP financial measures provide useful information to investors and\nothers in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial\nresults across accounting periods and to those of our peer companies.\n\n \n\nWe\ndefine non-GAAP net loss as net loss excluding share-based compensation, (gains)/losses from disposal of subsidiaries, net, impairment\nloss of long-term investments and other operating income. We define adjusted EBITDA as net loss excluding depreciation and amortization,\ninterest income, income tax benefit, share-based compensation, investment income, impairment loss of long-term investments, other operating\nincome, (gains)/losses from disposal of subsidiaries, net, share of (gains)/losses of equity method investments, and foreign currency\nexchange (gains)/losses, net. We believe that non-GAAP financial measures provide useful information to investors and others in understanding\nand evaluating our operating results. The non-GAAP financial measures adjust for the impact of items that we do not consider indicative\nof the operational performance of our business and should not be considered in isolation or construed as an alternative to net loss or\nany other measure of performance or as an indicator of our operating performance. Investors are encouraged to compare the historical\nnon-GAAP financial measures with the most directly comparable GAAP measures. The non-GAAP financial measures presented here may not be\ncomparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently,\nlimiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information\nin its entirety and not rely on a single financial measure.\n\n \n\n89\n\n \n\n \n\nThe\nfollowing table sets forth a reconciliation of our non-GAAP financial measures to net loss for the years indicated.\n\n \n\n \n \n**Year\nEnded December 31,**\n \n\n \n \n**2023**\n \n \n**2024**\n \n \n**2025**\n \n\n \n \n**RMB**\n \n \n**RMB**\n \n \n**RMB**\n \n \n**US$**\n \n\n \n \n \n \n\n**Net\nloss**\n** **\n** **\n**(412,374**\n**)**\n** **\n** **\n**(146,827**\n**)**\n** **\n** **\n**(238,801**\n**)**\n** **\n** **\n**(34,149**\n**)**\n\n**Add:**\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nShare-based compensation\n \n \n22,239\n \n \n \n14,305\n \n \n \n13,193\n \n \n \n1,887\n \n\n(Gains)/losses from\ndisposal of subsidiaries, net\n \n \n—\n \n \n \n(403\n)\n \n \n1,743\n \n \n \n249\n \n\nImpairment loss of long-term\ninvestments\n \n \n8,011\n \n \n \n—\n \n \n \n11,145\n \n \n \n1,594\n \n\nOther operating income\n \n \n—\n \n \n \n(49,530\n)\n \n \n—\n \n \n \n—\n \n\n**Non-GAAP\nnet loss**\n** **\n** **\n**(382,124**\n**)**\n** **\n** **\n**(182,455**\n**)**\n** **\n** **\n**(212,720**\n**)**\n** **\n** **\n**(30,419**\n**)**\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Net\nloss**\n** **\n** **\n**(412,374**\n**)**\n** **\n** **\n**(146,827**\n**)**\n** **\n** **\n**(238,801**\n**)**\n** **\n** **\n**(34,149**\n**)**\n\nAdd:\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nDepreciation and amortization\n \n \n8,775\n \n \n \n**7,634**\n \n \n \n5,058\n \n \n \n723\n \n\nInterest income\n \n \n(26,826\n)\n \n \n**(42,151**\n**)**\n \n \n(10,656\n)\n \n \n(1,524\n)\n\nIncome tax benefit\n \n \n(564\n)\n \n \n(316\n)\n \n \n(820\n)\n \n \n(117\n)\n\n**EBITDA:**\n** **\n** **\n**(430,989**\n**)**\n** **\n** **\n**(181,660**\n**)**\n** **\n** **\n**(245,219**\n**)**\n** **\n** **\n**(35,067**\n**)**\n\nAdjust:\n \n \n　\n \n \n \n　\n \n \n \n \n \n \n \n \n \n\nShare-based compensation\n \n \n22,239\n \n \n \n14,305\n \n \n \n13,193\n \n \n \n1,887\n \n\nInvestment income\n \n \n(563\n)\n \n \n(11,859\n)\n \n \n(10,423\n)\n \n \n(1,490\n)\n\nImpairment loss of long-term\ninvestments\n \n \n8,011\n \n \n \n—\n \n \n \n11,145\n \n \n \n1,594\n \n\nOther operating income\n \n \n—\n \n \n \n(49,530\n)\n \n \n—\n \n \n \n—\n \n\n(Gains)/losses from\ndisposal of subsidiaries, net\n \n \n—\n \n \n \n(403\n)\n \n \n1,743\n \n \n \n249\n \n\nShare of (gains)/losses\nof equity method investments\n \n \n1,470\n \n \n \n(3\n)\n \n \n1,638\n \n \n \n234\n \n\nForeign currency exchange\n(gains)/losses, net\n \n \n(5,699\n)\n \n \n3,717\n \n \n \n513\n \n \n \n73\n \n\n**Adjusted\nEBITDA**\n** **\n** **\n**(405,531**\n**)**\n** **\n** **\n**(225,433**\n**)**\n** **\n** **\n**(227,410**\n**)**\n** **\n** **\n**(32,520**\n**)**\n\n \n\n90\n\n \n\n \n\n**Key\nComponents of Our Results of Operations**\n\n \n\n**Revenues**\n\n \n\nWe\ngenerate revenue primarily from the sales of our CPaaS, cloud-based CC and cloud-based UC&C solutions. In 2023, 2024 and 2025, our\nrevenues were RMB571.0 million, RMB573.6 million and RMB535.7 million (US$76.6 million), respectively. The following table sets forth\nthe breakdown of our total revenues both in absolute amount and as a percentage of total revenues in the years indicated.\n\n \n\n \n \n**Year\nEnded December 31,**\n \n\n \n \n**2023**\n \n \n**2024**\n \n \n**2025**\n \n\n \n \n**RMB**\n \n \n**%**\n \n \n**RMB**\n \n \n**%**\n \n \n**RMB**\n \n \n**US$**\n \n \n**%**\n \n\n \n \n**(in thousands,\nexcept for percentages)**\n \n\n**CPaaS**\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nText\nmessaging\n \n \n136,654\n \n \n \n23.9\n \n \n \n132,242\n \n \n \n23.1\n \n \n \n80,927\n \n \n \n11,572\n \n \n \n15.1\n \n\nVoice\ncalls\n \n \n25,958\n \n \n \n4.5\n \n \n \n35,706\n \n \n \n6.2\n \n \n \n42,739\n \n \n \n6,112\n \n \n \n8.0\n \n\nJointly-operated\nCPaaS\n \n \n15,439\n \n \n \n2.7\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n0.0\n \n\nIoT\n \n \n13,937\n \n \n \n2.4\n \n \n \n21,440\n \n \n \n3.7\n \n \n \n24,931\n \n \n \n3,565\n \n \n \n4.7\n \n\nOthers\n \n \n3,423\n \n \n \n0.6\n \n \n \n18\n \n \n \n—\n \n \n \n69\n \n \n \n10\n \n \n \n0.0\n \n\n**Subtotal**\n** **\n** **\n**195,411**\n** **\n** **\n** **\n**34.2**\n** **\n** **\n** **\n**189,406**\n** **\n** **\n** **\n**33.0**\n** **\n** **\n** **\n**148,666**\n** **\n** **\n** **\n**21,259**\n** **\n** **\n** **\n**27.8**\n** **\n\n**Cloud-based CC**\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nRecurring(1)\n \n \n179,042\n \n \n \n31.4\n \n \n \n150,165\n \n \n \n26.2\n \n \n \n99,917\n \n \n \n14,288\n \n \n \n18.7\n \n\nProject\n \n \n77,919\n \n \n \n13.6\n \n \n \n117,916\n \n \n \n20.6\n \n \n \n119,251\n \n \n \n17,053\n \n \n \n22.3\n \n\n**Subtotal**\n** **\n** **\n**256,961**\n** **\n** **\n** **\n**45.0**\n** **\n** **\n** **\n**268,081**\n** **\n** **\n** **\n**46.8**\n** **\n** **\n** **\n**219,168**\n** **\n** **\n** **\n**31,341**\n** **\n** **\n** **\n**41.0**\n** **\n\n**Cloud-based\nUC&C**\n** **\n** **\n**117,554**\n** **\n** **\n** **\n**20.6**\n** **\n** **\n** **\n**116,079**\n** **\n** **\n** **\n**20.2**\n** **\n** **\n** **\n**162,821**\n** **\n** **\n** **\n**23,282**\n** **\n** **\n** **\n**30.3**\n** **\n\n**Other\nservices**\n** **\n** **\n**1,098**\n** **\n** **\n** **\n**0.2**\n** **\n** **\n** **\n**—**\n** **\n** **\n** **\n**—**\n** **\n** **\n** **\n**5,054**\n** **\n** **\n** **\n**723**\n** **\n** **\n** **\n**0.9**\n** **\n\n**Total\nrevenues**\n** **\n** **\n**571,024**\n** **\n** **\n** **\n**100.0**\n** **\n** **\n** **\n**573,566**\n** **\n** **\n** **\n**100.0**\n** **\n** **\n** **\n5**35,709**\n** **\n** **\n** **\n**76,605**\n** **\n** **\n** **\n**100.0**\n** **\n\n \n\n \n(1)\nIncludes cloud-based CC solutions deployed primarily on public\ncloud, for which we charge a combination of seat subscription fees and related resource usage fees.\n\n \n\nOur\nrevenues from CPaaS solutions primarily include usage-based fees for sending text messages and making voice calls. We generally charge\nour customers on a recurring basis, based on the monthly number of text messages and call minutes facilitated through our CPaaS solutions.\nWe also assist and support mobile network operators in establishing and operating communications service platforms, and recognize revenues\npursuant to the revenue sharing arrangements.\n\n \n\nOur\nrevenues from cloud-based CC solutions primarily consist of seat subscription fees and related resource usage fees, and to a lesser extent,\nsoftware license fees and related service fees. We charge customers using our cloud-based CC solutions deployed on public cloud a combination\nof seat subscription fees and related resource usage fees that are determined according to the capacity and number of functional modules\nembedded as well as the number of texts and call minutes facilitated through our solutions. In 2023, 2024 and 2025, solutions that we\noffer on a recurring basis generated 69.7%, 56.0% and 45.6% of our revenues from cloud-based CC solutions, respectively. We generally\ncharge customers using our solutions deployed on private cloud software license fees and related customized service fees that are negotiated\non a project basis and recognize revenues in accordance with the agreed-upon project milestones. The delivery cycle of our project-based\ncloud-based CC solutions typically ranges from three to 12 months.\n\n \n\n91\n\n \n\n \n\nOur\nrevenues from cloud-based UC&C solutions primarily consist of software license fees and related services fees from individual projects,\nand to a lesser extent, service fees relating to maintenance and upgrade services. We negotiate these fees with customers on a project\nbasis and charge them in accordance with the agreed-upon project milestones. The delivery cycle of our project-based cloud-based UC&C\nsolutions typically ranges from three to 12 months. Additionally, we also generate revenues from software development and other technical\nsupport service fees charged on a project basis.\n\n \n\nOur\nrevenues from other services primarily consist of revenues generated from mobile network operator services and cloud-based value-added\nservices.\n\n \n\n**Cost\nof revenues**\n\n \n\nOur\ncost of revenues primarily consists of (1) costs paid for telecommunications resources, (2) outsourcing costs, (3) infrastructure and\nequipment costs, and (4) staff costs related to solution delivery. In 2023, 2024 and 2025, our cost of revenues was RMB366.4 million,\nRMB362.7 million and RMB389.0 million (US$55.6 million), respectively. The following table sets forth the breakdown of our cost of revenues\nby nature both in absolute amount and as a percentage of total cost of revenues in the years indicated.\n\n \n\n \n \n**Year\nEnded December 31,**\n \n\n \n \n**2023**\n \n \n**2024**\n \n \n**2025**\n \n\n \n \n**RMB**\n \n \n**%**\n \n \n**RMB**\n \n \n**%**\n \n \n**RMB**\n \n \n**US$**\n \n \n**%**\n \n\n \n \n**(in thousands,\nexcept for percentages)**\n \n\nCosts of\ntelecommunications resources\n \n \n201,683\n \n \n \n55.0\n \n \n \n188,470\n \n \n \n52.0\n \n \n \n125,635\n \n \n \n17,966\n \n \n \n32.3\n \n\nOutsourcing costs\n \n \n49,264\n \n \n \n13.5\n \n \n \n67,794\n \n \n \n18.7\n \n \n \n105,749\n \n \n \n15,122\n \n \n \n27.2\n \n\nInfrastructure and equipment\ncosts\n \n \n40,011\n \n \n \n10.9\n \n \n \n33,909\n \n \n \n9.3\n \n \n \n72,548\n \n \n \n10,374\n \n \n \n18.7\n \n\nStaff costs\n \n \n68,459\n \n \n \n18.7\n \n \n \n71,388\n \n \n \n19.7\n \n \n \n83,741\n \n \n \n11,975\n \n \n \n21.5\n \n\nRentals and others\n \n \n6,958\n \n \n \n1.9\n \n \n \n1,156\n \n \n \n0.3\n \n \n \n1,290\n \n \n \n184\n \n \n \n0.3\n \n\n**Total\ncost of revenues**\n** **\n** **\n**366,375**\n** **\n** **\n** **\n**100.0**\n** **\n** **\n** **\n**362,717**\n** **\n** **\n** **\n**100.0**\n** **\n** **\n** **\n**388,963**\n** **\n** **\n** **\n**55,621**\n** **\n** **\n** **\n**100.0**\n** **\n\n \n\nCosts\nof telecommunications resources represent fees we pay to mobile network operators based on the number of texts and minutes of voice calls\nwe subscribed for. We typically enter into annual contracts with mobile network operators which set forth the unit price for each text\nmessage and every minute of voice call. In 2023, 2024 and 2025, costs of telecommunications resources represented the largest portion\nof our cost of revenues, representing 55.0%, 52.0% and 32.3% of our total cost of revenues, respectively. We also outsource certain parts\nof the solution delivery and incur outsourcing costs. Infrastructure and equipment costs relate to our use of servers and our purchase\nof hardware and equipment to support our solutions. Staff costs represent compensation paid to employees who primarily deliver solution\ncustomization and perform other services to customers. Rentals and others primarily consist of rental costs related to our leases.\n\n \n\n92\n\n \n\n \n\nThe\nfollowing table sets forth the breakdown of our cost of revenues by service type both in absolute amount and as a percentage of total\ncost of revenues in the years indicated.\n\n \n\n \n \n**Year\nEnded December 31,**\n \n\n \n \n**2023**\n \n \n**2024**\n \n \n**2025**\n \n\n \n \n**RMB**\n \n \n**%**\n \n \n**RMB**\n \n \n**%**\n \n \n**RMB**\n \n \n**US$**\n \n \n**%**\n \n\n \n \n**(in thousands,\nexcept for percentages)**\n \n\n**CPaaS**\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nText\nmessaging\n \n \n128,564\n \n \n \n35.1\n \n \n \n121,444\n \n \n \n33.4\n \n \n \n62,163\n \n \n \n8,889\n \n \n \n16.0\n \n\nVoice\ncalls\n \n \n24,026\n \n \n \n6.6\n \n \n \n32,827\n \n \n \n9.1\n \n \n \n38,705\n \n \n \n5,535\n \n \n \n10.0\n \n\nJointly-operated\nCPaaS\n \n \n262\n \n \n \n0.1\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n0.0\n \n\nIoT\n \n \n—\n \n \n \n—\n \n \n \n13,536\n \n \n \n4\n \n \n \n17,316\n \n \n \n2,476\n \n \n \n4.5\n \n\nOthers\n \n \n2,754\n \n \n \n0.8\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n0.0\n \n\n**Subtotal**\n** **\n** **\n**155,606**\n** **\n** **\n** **\n**42.6**\n** **\n** **\n** **\n**167,507**\n** **\n** **\n** **\n**46.2**\n** **\n** **\n** **\n**118,184**\n** **\n** **\n** **\n**16,900**\n** **\n** **\n** **\n**30.5**\n** **\n\n**Cloud-based CC**\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nRecurring(1)\n \n \n86,109\n \n \n \n23.5\n \n \n \n65,422\n \n \n \n18.0\n \n \n \n50,755\n \n \n \n7,258\n \n \n \n13.0\n \n\nProject\n \n \n42,997\n \n \n \n11.7\n \n \n \n62,265\n \n \n \n17.2\n \n \n \n85,699\n \n \n \n12,255\n \n \n \n22.0\n \n\n**Subtotal**\n** **\n** **\n**129,106**\n** **\n** **\n** **\n**35.2**\n** **\n** **\n** **\n**127,687**\n** **\n** **\n** **\n**35.2**\n** **\n** **\n** **\n**136,454**\n** **\n** **\n** **\n**19,513**\n** **\n** **\n** **\n**35.0**\n** **\n\n**Cloud-based\nUC&C**\n** **\n** **\n**80,722**\n** **\n** **\n** **\n**22.0**\n** **\n** **\n** **\n**67,523**\n** **\n** **\n** **\n**18.6**\n** **\n** **\n** **\n**128,150**\n** **\n** **\n** **\n**18,325**\n** **\n** **\n** **\n**32.9**\n** **\n\n**Other\nservices**\n** **\n** **\n**941**\n** **\n** **\n** **\n**0.3**\n** **\n** **\n** **\n**—**\n** **\n** **\n** **\n**—**\n** **\n** **\n** **\n**6,175**\n** **\n** **\n** **\n**883**\n** **\n** **\n** **\n**1.6**\n** **\n\n**Total\ncost of revenues**\n** **\n** **\n**366,375**\n** **\n** **\n** **\n**100.0**\n** **\n** **\n** **\n**362,717**\n** **\n** **\n** **\n**100.0**\n** **\n** **\n** **\n**388,963**\n** **\n** **\n** **\n**55,621**\n** **\n** **\n** **\n**100.0**\n** **\n\n \n\n \n(1)\nIncludes cloud-based CC solutions deployed primarily on public\ncloud, for which we charge a combination of seat subscription fees and related resource usage fees.\n\n \n\n**Gross\nprofit**\n\n \n\nOur\ngross profit was RMB204.6 million, RMB210.8 million and RMB146.7 million (US$21.0 million) in 2023, 2024 and 2025, respectively. Our\noverall gross profit margin was 35.8%, 36.8% and 27.4%, respectively. The following table sets forth a breakdown of our gross profit\nand gross profit margin.\n\n \n\n \n \n**Year\nEnded December 31,**\n \n\n \n \n**2023**\n \n \n**2024**\n \n \n**2025**\n \n\n \n \n**RMB**\n \n \n**%**\n \n \n**RMB**\n \n \n**%**\n \n \n**RMB**\n \n \n**US$**\n \n \n**%**\n \n\n \n \n**(in thousands,\nexcept for percentages)**\n \n\nCPaaS\n \n \n39,805\n \n \n \n20.4\n \n \n \n21,899\n \n \n \n11.6\n \n \n \n30,482\n \n \n \n4,359\n \n \n \n20.5\n \n\nCloud-based CC(1)\n \n \n127,855\n \n \n \n49.8\n \n \n \n140,394\n \n \n \n52.4\n \n \n \n82,714\n \n \n \n11,828\n \n \n \n37.7\n \n\nCloud-based UC&C\n \n \n36,832\n \n \n \n31.3\n \n \n \n48,556\n \n \n \n41.8\n \n \n \n34,671\n \n \n \n4,957\n \n \n \n21.3\n \n\nOther services\n \n \n157\n \n \n \n14.3\n \n \n \n—\n \n \n \n—\n \n \n \n(1,121\n)\n \n \n(160\n)\n \n \n(22.2\n)\n\n**Total**\n** **\n** **\n**204,649**\n** **\n** **\n** **\n**35.8**\n** **\n** **\n** **\n**210,849**\n** **\n** **\n** **\n**36.8**\n** **\n** **\n** **\n**146,746**\n** **\n** **\n** **\n**20,984**\n** **\n** **\n** **\n**27.4**\n** **\n\n \n\n \n(1)\nThe gross profit margin for cloud-based CC solutions that we\noffer on a recurring basis was 51.9%, 56.4% and 49.2% in 2023, 2024 and 2025, respectively.\n\n \n\nThe\ngross profit margin of our CPaaS solutions and cloud-based CC solutions that we offer on a recurring basis is primarily affected by the\ncosts of telecommunications resources we paid to mobile network operators, which represented a majority of the costs for these solutions\nin 2023, 2024 and 2025. See “—Factors Affecting our Results of Operations—Controlling costs and expenses” for\ndetails of the impacts.\n\n \n\nThe\ngross profit margin of our cloud-based CC solutions on a project basis and cloud-based UC&C solutions is affected primarily by the\nmaturity and complexity of a specific project. See “—Factors Affecting our Results of Operations—Managing development\ncycle” for details of the impacts.\n\n \n\n93\n\n \n\n \n\n**Operating\nexpenses**\n\n \n\nThe\nfollowing table sets forth our operating expenses, both in absolute amount and as a percentage of our total operating expenses, for the\nyears indicated.\n\n \n\n \n \n**Year\nEnded December 31,**\n \n\n \n \n**2023**\n \n \n**2024**\n \n \n**2025**\n \n\n \n \n**RMB**\n \n \n**%**\n \n \n**RMB**\n \n \n**%**\n \n \n**RMB**\n \n \n**US$**\n \n \n**%**\n \n\n \n \n \n**(in thousands,\nexcept for percentages)**\n \n \n\nResearch\nand development expenses\n \n \n222,538\n \n \n \n34.7\n \n \n \n177,000\n \n \n \n38.6\n \n \n \n139,081\n \n \n \n19,888\n \n \n \n35.4\n \n\nSelling and marketing\nexpenses\n \n \n227,543\n \n \n \n35.5\n \n \n \n187,305\n \n \n \n40.9\n \n \n \n142,265\n \n \n \n20,344\n \n \n \n36.3\n \n\nGeneral and administrative\nexpenses\n \n \n191,113\n \n \n \n29.9\n \n \n \n93,916\n \n \n \n20.5\n \n \n \n111,061\n \n \n \n15,882\n \n \n \n28.4\n \n\n**Total**\n** **\n** **\n**641,194**\n** **\n** **\n** **\n**100.0**\n** **\n** **\n** **\n**458,221**\n** **\n** **\n** **\n**100.0**\n** **\n** **\n** **\n**392,407**\n** **\n** **\n** **\n**56,114**\n** **\n** **\n** **\n**100.0**\n** **\n\n \n\n*Research and development expenses*\n\n \n\nOur\nresearch and development expenses were RMB222.5 million, RMB177.0 million and RMB139.1 million (US$19.9 million) in 2023, 2024 and 2025,\nrespectively, primarily representing (1) compensation paid to our research and development staff and (2) technology service expenses\npaid to outsourcing service providers for the development of certain non-core features and functions in cloud-based UC&C solutions.\n\n \n\n*Selling\nand marketing expenses*\n\n \n\nOur\nselling and marketing expenses were RMB227.5 million, RMB187.3 million and RMB142.3 million (US$20.3 million) in 2023, 2024 and 2025,\nrespectively, primarily representing (1) compensation paid to our sales and marketing staff, (2) our spending on online advertisement\nand other online promotional events to reach more customers, and (3) participation and organization of offline events to boost our brand\nimage.\n\n \n\n*General\nand administrative expenses*\n\n \n\nOur\ngeneral and administrative expenses were RMB191.1 million, RMB93.9 million and RMB111.1 million (US$15.9 million) in 2023, 2024 and 2025,\nrespectively, primarily representing (1) compensation paid to our administrative staff and management team, including share-based compensation\nexpenses, (2) professional services fees, rentals and certain administrative expenses, and (3) provision for doubtful accounts.\n\n \n\n94\n\n \n\n \n\n**Results\nof Operations**\n\n \n\nThe\nfollowing table sets forth a summary of our consolidated results of operations for the years indicated, both in absolute amount and as\na percentage of our revenues. You should read this information together with our consolidated financial statements and related notes\nincluded elsewhere in this annual report. The results of operations in any period are not necessarily indicative of the results that\nmay be expected for any future periods.\n\n \n\n  \nYear Ended December 31,\n\n  \n2023 \n2024 \n2025\n\n  \nRMB \n% \nRMB \n% \nRMB \nUS$ \n%\n\n  \n(in thousands, except for percentages)\n\nRevenues \n 571,024  \n 100.0  \n 573,566  \n 100.0  \n 535,709  \n 76,605  \n 100.0 \n\nCost of revenues \n (366,375) \n (64.2) \n (362,717) \n (63.2) \n (388,963) \n (55,621) \n (72.6)\n\nGross profit \n 204,649  \n 35.8  \n 210,849  \n 36.8  \n 146,746  \n 20,984  \n 27.4 \n\nOperating expenses: \n    \n    \n    \n    \n    \n    \n   \n\nSelling and marketing expenses \n (227,543) \n (39.8) \n (187,305) \n (32.7) \n (142,265) \n (20,344) \n (26.6)\n\nGeneral and administrative expenses \n (191,113) \n (33.5) \n (93,916) \n (16.4) \n (111,061) \n (15,882) \n (20.7)\n\nOther operating income \n    \n —    \n 49,530  \n 8.6  \n —    \n —    \n —   \n\nResearch and development expenses \n (222,538) \n (39.0) \n (177,000) \n (30.9) \n (139,081) \n (19,888) \n (26.0)\n\nTotal operating expenses \n (641,194) \n (112.3) \n (408,691) \n (71.3) \n (392,407) \n (56,114) \n (73.3)\n\nOperating loss \n (436,545) \n (76.4) \n (197,842) \n (34.5) \n (245,661) \n (35,130) \n (45.9)\n\nInterest income \n 26,826  \n 4.7  \n 42,151  \n 7.3  \n 10,656  \n 1,524  \n 2.0 \n\nInvestment income \n 563  \n —    \n 11,859  \n 2  \n 10,423  \n 1,490  \n 2 \n\nShare of gains (losses) of equity method investments \n (1,470) \n (0.3) \n 3  \n —    \n (1,638) \n (234) \n (0.3)\n\nImpairment loss of long-term investments \n (8,011) \n (1.4) \n —    \n —    \n (11,145) \n (1,594) \n (2.1)\n\nGains (losses) from disposal of subsidiaries, net \n    \n —    \n 403  \n 0.1  \n (1,743) \n (249) \n (0.3)\n\nForeign currency exchange gains (losses), net \n 5,699  \n 1.0  \n (3,717) \n (0.6) \n (513) \n (73) \n (0.1)\n\nLoss before income taxes \n (412,938) \n (72.3) \n (147,143) \n (25.7) \n (239,621) \n (34,266) \n (44.7)\n\nIncome tax benefit \n 564  \n 0.1  \n 316  \n 0.1  \n 820  \n 117 \n 0.2 \n\nNet loss \n (412,374) \n (72.2) \n (146,827) \n (25.6) \n (238,801) \n (34,149) \n (44.6)\n\n \n\n95\n\n \n\n** **\n\n****\n\n**Year\nEnded December 31, 2025 Compared to Year Ended December 31, 2024**\n\n \n\n*Revenues*\n\n \n\nOur\nrevenues decreased by 6.6% from RMB573.6 million in 2024 to RMB535.7 million (US$76.6 million) in 2025, primarily due to the following.\n\n \n\n●Revenues\nfrom our CPaaS solutions decreased by 21.5% from RMB189.4 million in 2024 to RMB148.7 million\n(US$21.3 million) in 2025, respectively, primarily due to a 38.8% decrease in revenues generated\nfrom our text messaging services from RMB132.2 million in 2024 to RMB80.9 million (US$11.6\nmillion) in 2025, which was primarily due to our strategic adjustment of business, partially\noffset by a 19.7% increase in revenues generated from our voice calls services from RMB35.7\nmillion in 2024 to RMB42.7 million (US$6.1 million) in 2025, which was primarily due to\nthe increased demands from our customers.\n\n   \n\n●Revenues\nfrom our cloud-based CC solutions decreased by 18.2% from RMB268.1 million in 2024 to RMB219.2 million (US$31.3 million) in 2025.\nOur recurring revenues decreased by 33.5% from RMB150.2 million in 2024 to RMB99.9 million (US$14.3 million) in 2025, primarily due\nto the decreased demands from our customers. Our project-based revenues remained relatively stable at RMB117.9 million in 2024 and\nRMB119.3 million (US$17.1 million) in 2025.\n\n   \n\n●Revenues\nfrom our cloud-based UC&C solutions increased by 40.3% from RMB116.1 million in 2024\nto RMB162.8 million (US$23.3 million) in 2025, primarily due to our business development\nand project delivery.\n\n \n\n*Cost\nof revenues*\n\n \n\nOur\ncost of revenues increased by 7.2% from RMB362.7 million in 2024 to RMB389.0 million (US$55.6 million) in 2025, primarily due to the\nfollowing.\n\n \n\n●Cost\nof revenues from our CPaaS solutions decreased by 29.4% from RMB167.5 million in 2024 to\nRMB118.2 million (US$16.9 million) in 2025, primarily due to (1) a 48.7% decrease in costs\nrelated to text messaging from RMB121.1 million in 2024 to RMB62.2 million in 2025 mainly\ndue to the decreased usages of text messages, and (2) a 17.9% increase in costs related to\nvoice call services from RMB32.8 million in 2024 to RMB38.7 million in 2025, which was mainly\ndue to the increased usages of voice calls.\n\n   \n\n●Cost\nof revenues from our cloud-based CC solutions increased by 6.9% from RMB127.7 million in 2024 to RMB136.5 million (US$19.5 million) in\n2025, primarily due to (1) a 37.6% increase in cost of revenues from our project-based cloud-based CC solutions from RMB62.3 million\nin 2024 to RMB85.7 million (US$12.3 million) in 2025 mainly due to the increased infrastructure and equipment costs and outsourcing\ncosts for certain projects that we undertook, and (2) a 22.4% decrease in cost of revenues from our subscription-based cloud-based CC\nsolutions from RMB65.4 million in 2024 to RMB50.8 million (US$7.3 million) in 2025 mainly due to as a result of decreased business scale.\n\n   \n\n●Cost\nof revenues from our cloud-based UC&C solutions increased by 89.8% from RMB67.5 million\nin 2024 to RMB128.1 million (US$18.3 million) in 2025, primarily due to the increased business\nscale and the increased percentage of infrastructure and equipment costs and outsourcing\ncosts for certain projects that we undertook.\n\n \n\n*Gross\nprofit*\n\n \n\nAs\na result of the foregoing, our gross profit decreased by 30.6% from RMB210.8 million in 2024 to RMB146.7 million (US$21.0 million) in\n2025. Our gross profit margin decreased from 36.8% in 2024 to 27.4% in 2025, primarily due to (1) a lower proportion of revenues generated\nfrom our cloud-based CC solutions, which typically have higher profit margins as compared to CPaaS solutions; and (2) the decreased gross\nprofit margin from our cloud-based UC&C solutions and project-based cloud-based CC solutions.\n\n \n\n96\n\n \n\n \n\n*Operating\nexpenses*\n\n \n\n●Research\nand development expenses. Our research and development expenses decreased by 21.4% from RMB177.0\nmillion in 2024 to RMB139.1 million (US$19.9 million) in 2025, primarily due to the\ndecrease in R&D staff expenses resulting from decreases\nin the headcount of and the compensation level for our R&D personnel.\n\n   \n\n●Selling\nand marketing expenses. Our selling and marketing expenses decreased by 24.0% from RMB187.3\nmillion in 2024 to RMB142.3 million (US$20.3 million) in 2025, primarily due to (1) a 23.7%\ndecrease in staff expenses of RMB27.8 million (US$4.0 million), mainly due to decreases\nin the headcount of and the compensation level for our sales and marketing personnel, (2)\na 27.4% decrease in market development and operational expenses of RMB10.7 million (US$1.5\nmillion), mainly due to our expenses control measures, and (3) a 29.6% decrease in share-based\ncompensation expenses of RMB3.3 million (US$0.5 million), mainly due to a decrease in amortized\nexpenses as the options vested.\n\n   \n\n●General\nand administrative expenses. Our general and administrative expenses increased by 18.3% from RMB93.9 million in 2024 to RMB111.1 million\n(US$15.9 million) in 2025, primarily due to (1) a 35.4% increase in staff expenses of RMB19.0 million (US$2.7 million), mainly due to\nincrease in headcount of management personnel, partially offset by a 24.6% decrease in professional service fees of RMB6.7 million\n(US$1.0 million).\n\n   \n\n●Other\noperating income. our operating income decreased by 100% from RMB49.5 million in 2024 to nil in 2025, primarily because we ceased the cooperation with some customers and the advances from the customers will not refund\nin the future according to the suspension agreements in 2024.\n\n \n\n*Operating\nloss*\n\n \n\nAs\na result of the foregoing, our operating loss increased by 24.2% from RMB197.8 million in 2024 to RMB245.7 million (US$35.1 million)\nin 2025.\n\n \n\n*Other\nincome and expenses*\n\n \n\n●Interest\nincome. Our interest income decreased by 74.7% from RMB42.2 million in 2024 to RMB10.7 million\n(US$1.5 million) in 2025, primarily due to the decreases in average deposits and interest\nrate.\n\n   \n\n●Investment\nincome. Our investment income decreased by 12.1% from RMB11.9 million in 2024 to RMB10.4 million\n(US$1.5 million) in 2025, primarily due to the decreased realized gain related to short-term\ninvestments.\n\n   \n\n●Share\nof losses of equity method investments. We recorded share of gains of equity method investments\nof RMB3,000 in 2024, and share of losses of equity method investments of RMB1.6 million (US$0.2\nmillion) in 2025, primarily due to the gains (losses) incurred by the equity investees that\nwe invested in.\n\n   \n\n●Impairment\nloss of long-term investments. We incurred impairment loss of long-term investments of nil\nin 2024 and RMB11.1 million (US$1.6 million) in 2025, primarily due to a non-temporary impairment\nof the long-term investments.\n\n   \n\n●Gains\n(losses) from disposal of subsidiaries, net. We recorded gains from disposal of subsidiaries\nof RMB0.4 million in 2024, and losses from disposal of subsidiaries of RMB1.7 million (US$0.2\nmillion) in 2025, primarily due to the disposal of subsidiaries.\n\n   \n\n●Foreign\ncurrency exchange losses, net. We recorded foreign currency exchange losses of RMB3.7 million\nin 2024 and RMB0.5 million (US$0.07 million) in 2025, primarily due to fluctuations in exchange\nrate between U.S. dollars and Renminbi.\n\n \n\n*Income\ntax benefit*\n\n \n\nWe\nrecorded income tax benefit of RMB0.3 million and RMB0.8 million (US$0.1 million) in 2024 and 2025, respectively.\n\n \n\n*Net\nloss*\n\n \n\nAs\na result of the foregoing, our net loss increased by 62.6% from RMB146.8 million in 2024 to RMB238.8 million (US$34.1 million) in 2025.\n\n \n\n97\n\n \n\n \n\n**Year\nEnded December 31, 2024 Compared to Year Ended December 31, 2023**\n\n \n\n*Revenues*\n\n \n\nOur\nrevenues increased by 0.4% from RMB571.0 million in 2023 to RMB573.6 million in 2024, primarily due to the following.\n\n \n\n●Revenues\nfrom our CPaaS solutions decreased by 3.1% from RMB195.4 million in 2023 to RMB 189.4 million in 2024, primarily due to a 37.6% increase in revenues generated from our\nvoice calls services from RMB26.0 million in 2023 to RMB35.7 million in\n2024, which was primarily due to business recovery from the impact of COVID-19 pandemic,\npartially offset by a significant decrease in revenues generated from our jointly-operated\nCPaaS services from RMB15.4 million in 2023 to nil in 2024 because we terminated the cooperation\nwith respect to one of the communications service platforms jointly operated with mobile\nnetwork operators in 2023.\n\n   \n\n●Revenues\nfrom our cloud-based CC solutions increased by 4.3% from RMB257.0 million in 2023 to RMB268.1\nmillion in 2024. Our recurring revenues decreased by 16.1% from RMB179.0\nmillion in 2023 to RMB150.2 million in 2024, primarily due to the decreased\ndemands from our customers. Our project-based revenues increased by 51.3% from RMB77.9 million\nin 2023 to RMB117.9 million in 2024, primarily due to an increase in the\nnumber of projects as a result of our business expansion.\n\n   \n\n●Revenues\nfrom our cloud-based UC&C solutions decreased by 1.3% from RMB117.6 million in 2023 to\nRMB116.1 million in 2024, primarily due to the decreased demands from our\ncustomers.\n\n \n\n*Cost\nof revenues*\n\n \n\nOur\ncost of revenues decreased by 1.0% from RMB366.4 million in 2023 to RMB362.7 million in 2024, primarily due to the\nfollowing.\n\n \n\n●Cost\nof revenues from our CPaaS solutions increased by 7.6% from RMB155.6 million in 2023 to RMB167.5\nmillion in 2024, primarily due to the increase of RMB 13.5 million in costs related to IOT, as the Company start selling IOT devices in 2024, while\nthere was only IOT services in 2023.\n\n   \n\n●Cost\nof revenues from our cloud-based CC solutions decreased by 1.1% from RMB129.1 million in\n2023 to RMB127.7 million in 2024, primarily due to (1) a 44.8% increase\nin cost of revenues from our project-based cloud-based CC solutions from RMB43.0 million\nin 2023 to RMB62.3 million in 2024 mainly due to the increased business\nscale and the increased outsourcing costs for certain projects that we undertook, and (2)\na 24.0% decrease in cost of revenues from our subscription-based cloud-based CC solutions\nfrom RMB86.1 million in 2023 to RMB65.4 million in 2024 mainly due to the\ndecreased business scale and the decrease in the number of minutes of voice calls that we\nfacilitated through our solutions.\n\n   \n\n●Cost\nof revenues from our cloud-based UC&C solutions decreased by 16.4% from RMB80.7 million\nin 2023 to RMB67.5 million in 2024, primarily due to the decreased business\nscale.\n\n \n\n*Gross\nprofit*\n\n \n\nAs\na result of the foregoing, our gross profit increased by 3.0% from RMB204.6 million in 2023 to RMB210.8 million in\n2024. Our gross profit margin increased from 35.8% in 2023 to 36.8% in 2024, primarily due to primarily due to a greater portion of revenues\ngenerated from our cloud-based CC solutions, which typically have higher profit margins as compared to CPaaS solutions.\n\n \n\n*Operating\nexpenses*\n\n \n\n●Research\nand development expenses. Our research and development expenses decreased by 20.5% from RMB222.5\nmillion in 2023 to RMB177.0 million in 2024, primarily due to (1) a 24.5%\ndecrease in the R&D staff expenses of RMB43.7 million (US$6.0 million), mainly due to\ndecreases in the headcount of and the compensation level for our R&D personnel, and (2)\na 32.0% decrease in lease expenses of RMB2.7 million, which was in line\nwith the reduced R&D headcount.\n\n   \n\n●Selling\nand marketing expenses. Our selling and marketing expenses decreased by 17.7% from RMB227.5\nmillion in 2023 to RMB187.3 million in 2024, primarily due to (1) a 26.2%\ndecrease in staff expenses of RMB41.5 million, mainly due to decreases in\nthe headcount of and the compensation level for our sales and marketing personnel, and (2)\na 8.7% decrease in spending on advertising campaigns and marketing activities of RMB3.7 million, mainly due to our expenses control measures..\n\n \n\n98\n\n \n\n \n\n●General\nand administrative expenses. Our general and administrative expenses decreased by 50.9% from\nRMB191.1 million in 2023 to RMB93.9 million in 2024, primarily due to (1)\na 61.4% decrease in the service fees paid to third parties of RMB43.1 million,\nmainly due to the settlement of the Class Action in 2023, (2) a 16.9% decrease in staff expenses\nof RMB10.9 million, mainly due to decreases in the headcount of and the\ncompensation level for our management and administrative personnel, (3) a 79.4% decrease\nin share-based compensation expenses of RMB13.5 million, mainly due to a\ndecrease in amortized expenses as the options vested, and (4) a significant decrease in allowance\nfor doubtful accounts of RMB20.3 million.\n\n   \n\n●Other\noperating income. We recorded other operating income of RMB49.5 million in 2024, as compared to nil in 2023, primarily because we ceased the cooperation with some\ncustomers and the advances from the customers will not refund in the future according to\nthe suspension agreements.\n\n \n\n*Operating\nloss*\n\n \n\nAs\na result of the foregoing, our operating loss decreased from RMB436.5 million in 2023 to RMB197.8million in 2024.\n\n \n\n*Other\nincome and expenses*\n\n \n\n●Interest\nincome. Our interest income increased by 57.1% from RMB26.8 million in 2023 to RMB 42.2 million in 2024, primarily due to an increase in average deposit interest rate and\ncash and cash equivalent balance denominated in USD.\n\n   \n\n●Investment\nincome. We recorded investment income of RMB11.9 million in 2024, as compared\nto RMB0.6 million in 2023, primarily relating to the increased realized gain related to short-term\ninvestments.\n\n   \n\n●Share\nof gains (losses) of equity method investments. We recorded share of losses of equity method\ninvestments of RMB1.5 million in 2023, and share of gains of equity method investments of\nRMB3,000 in 2024, primarily due to the gains (losses) incurred by an equity investee\nthat we invested in.\n\n   \n\n●Impairment\nloss of long-term investments. We incurred impairment loss of long-term investments of nil\nin 2024, as compared to RMB8.0 million in 2023, primarily due to a non-temporary impairment\nof the long-term investments in 2023.\n\n   \n\n●Gains\nfrom disposal of subsidiaries, net. We recorded gains from disposal of subsidiaries of RMB0.4\nmillion in 2024, as compared to nil in 2023, primarily due to we had no disposal\nin 2023.\n\n   \n\n●Foreign\ncurrency exchange gains (losses), net. We recorded foreign currency exchange losses of RMB3.7\nmillion in 2024, as compared to foreign currency exchange gains of RMB5.7\nmillion in 2023, primarily due to fluctuations in exchange rate between U.S. dollars and\nRenminbi.\n\n \n\n*Income\ntax benefit*\n\n \n\nWe\nincurred income tax benefit of RMB0.6 million and RMB0.3 million in 2023 and 2024, respectively.\n\n \n\n*Net\nloss*\n\n \n\nAs\na result of the foregoing, our net loss decreased by 64.4% from RMB412.4 million in 2023 to RMB146.8 million in 2024.\n\n \n\n**B.\nLiquidity and Capital Resources**\n\n \n\nIn\n2023, 2024 and 2025, we incurred net loss of RMB412.4 million, RMB146.8 million and RMB238.8 million (US$34.1 million), and our net cash\nused in operating activities was RMB516.2 million, RMB180.2 million and RMB231.0 million (US$33.0 million) in the same years, respectively.\nIn 2023, 2024 and 2025, no cash provided by/ (used in) financing activities of nil, nil and nil, respectively. In 2023 and 2024, net\ncash provided by investing activities was RMB351.3 million and RMB460.2 million, respectively, and in 2025, net cash used in investing\nactivities was RMB80.2 million (US$11.5 million).\n\n \n\nBased\nupon service type and our assessment of customers’ credit and ongoing relationships, our payment terms typically range from 60\nto 180 days after our customers have been billed. Days sales outstanding, calculated by gross accounts receivable outstanding as of\nthe year end divided by revenues for the year and multiplied by the number of days in such year, were 156 days, 131 days and 158 days\nfor 2023, 2024 and 2025, respectively. Our days sales outstanding decreased from 156 days in 2023 to 131 days in 2024, primarily because\nwe have strengthened the Company’s collection management of accounts receivable. Our days sales outstanding increased from 131\ndays in 2024 to 158 days in 2025, primarily because we extended payment cycles for large customers to maintain stable customer relationship.\nWe will closely monitor our outstanding accounts receivable and follow up with relevant customers on a continuous basis in order to collect\noverdue balances.\n\n \n\n99\n\n \n\n \n\nIn\nDecember 2021, we obtained secured bank loans of RMB5.5 million (US$0.9 million) from the business acquisition of Zhuge, which were\nsecured by the founder of Zhuge. Such bank borrowings were paid off in full in 2022. As of December 31, 2025, we did not have\nshort-term bank borrowings.\n\n \n\nAs\nof December 31, 2025, 74.5% of our cash and cash equivalents were held in China, and 55.1% were held by the VIE and denominated in Renminbi.\nAlthough we consolidate the results of the affiliated entities, we do not have direct access to the cash and cash equivalents or future\nearnings of the affiliated entities. However, a portion of the cash balances of the affiliated entities will be paid to us pursuant to\nour contractual arrangements with the affiliated entities. For restrictions and limitations on liquidity and capital resources as a result\nof our corporate structure, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Holding\nCompany Structure.”\n\n \n\nWe\nbelieve that our existing cash and cash equivalents and anticipated cash flows from operating and financing activities will be sufficient\nto meet our anticipated working capital requirements, and capital expenditures in the ordinary course of business for the next 12 months.\nWe may, however, require additional cash resources due to changing business conditions or other future developments, including acquisitions\nor investments we may decide to selectively pursue. If our existing cash resources are insufficient to meet our requirements, we may\nseek to issue equity or debt securities or obtain credit facilities. The issue of additional equity securities would result in further\ndilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating\ncovenants that would restrict our operations. We cannot assure you that financing will be available in the amounts we need or on terms\nacceptable to us, if at all. If we are unable to obtain additional equity or debt financing as required, our business operations and\nprospects may suffer. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We\nmay need additional capital, and we may be unable to obtain such capital in a timely manner or on acceptable terms, or at all.”\n\n \n\nThe\nfollowing table sets forth a summary of our cash flows for the years indicated.\n\n \n\n  \nYear Ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nRMB  \nRMB  \nRMB  \nUS$ \n\n  \n  \n\nNet cash used in operating activities \n (516,202) \n (180,240) \n (231,019) \n (33,037)\n\nNet cash provided by/(used in) investing activities \n 351,294  \n 460,228  \n (80,192) \n (11,468)\n\nNet cash used in financing activities \n —  \n —  \n —  \n — \n\nEffect of foreign currency exchange rate changes on cash \n 20,092  \n (11,922) \n 12,937  \n 1,851 \n\nNet increase/(decrease) in cash and restricted cash \n (144,816) \n 268,066  \n (298,274) \n (42,654)\n\nCash and restricted cash at the beginning of the year \n 527,265  \n 382,449  \n 650,515  \n 93,023 \n\nCash and restricted cash at the end of the year \n 382,449  \n 650,515  \n 352,241  \n 50,369 \n\n \n\n100\n\n \n\n** **\n\n**Operating\nactivities**\n\n \n\nNet cash used in operating activities was RMB231.0 million (US$33.0 million) in 2025, primarily due to net loss of RMB238.8 million (US$34.1\nmillion), adjusted primarily by (1) noncash items including share-based compensation of RMB13.2 million (US$1.9 million), allowance for doubtful accounts of RMB2.8 million (US$0.4 million), depreciation of property and equipment and amortization of intangible\nassets of RMB5.1 million (US$0.7 million), amortization of right-of-use asset and interest on lease liabilities of RMB2.0 million (US$0.3\nmillion), impairment loss of long-term investments of RMB11.1 million (US$1.6 million), losses from disposal of subsidiaries of RMB1.7\nmillion (US$0.2 million), partially offset by investment income of RMB10.4 million (US$1.5 million), (2) changes in working capital that\nnegatively affected operating cash flow, including an increase in contract assets of RMB24.6 million (US$3.5 million) primarily due to\nthe increased amounts of unbilled work performed for project-based solutions, an increase in accounts receivable of RMB27.0 million (US$3.9\nmillion) primarily due to slower collection from customers, and a decrease in contract liabilities of RMB6.6 million (US$0.9 million)\nprimarily as a result of the decrease in cash received from customers in advance, and (3) changes in working capital that positively affected\noperating cash flow, including an increase in accounts payable of RMB34.3 million (US$4.9 million) primarily due to our effective management\nof payments to equipment providers and outsourcing service providers.\n\n \n\nNet\ncash used in operating activities was RMB180.2 million in 2024, primarily due to net loss of RMB146.8 million, adjusted primarily by\n(1) non-cash items including share-based compensation of RMB14.3 million, a decrease of allowance for doubtful accounts RMB3.9 million,\ndepreciation of property and equipment and amortization of intangible assets of RMB7.6 million, amortization of right-of-use asset and\ninterest on lease liabilities of RMB8.5 million, investment income of RMB 11.9 million, unrealized foreign exchange losses of RMB3.7\nmillion, (2) changes in working capital that negatively affected operating cash flow, including a decrease in accrued expenses and other\ncurrent liabilities of RMB22.5 million primarily due to our timely payments to third parties, a decrease in contract liabilities of RMB57.1\nmillion primarily as a result of the decrease in cash received from customers, and an increase in contract assets of RMB13.0 million\nprimarily due to the increased amounts to issue invoices to our project based on customers, and (3) changes in working capital that positively\naffected operating cash flow, including a decrease in accounts receivable of RMB38.6 million primarily due our strengthened collection\nmanagement of accounts receivable, and an increase in accounts payable of RMB7.8 million primarily due to our effectively management\nof payments to mobile network operators for telecommunications resources.\n\n \n\nNet\ncash used in operating activities was RMB516.2 million in 2023, primarily due to net loss of RMB412.4 million, adjusted primarily by\n(1) non-cash items including share-based compensation of RMB22.2 million, allowance for doubtful accounts RMB16.5 million, depreciation\nof property and equipment and amortization of intangible assets of RMB8.8 million, impairment loss of long-term investments of RMB8.0\nmillion, (2) changes in working capital that negatively affected operating cash flow, including a decrease in accrued expenses and other\ncurrent liabilities of RMB118.2 million primarily relating to payment for U.S class action, a decrease in accounts payable of RMB34.4\nmillion primarily due to the increase of payment to mobile network operators for telecommunications resources, and an increase in accounts\nreceivable from third parties, net of RMB28.1 million primarily due to the decrease in customer collections, and (3) changes in working\ncapital that positively affected operating cash flow, including a decrease in contract assets of RMB26.7 million primarily as such amounts\nwere reclassified into accounts receivable following our issuance of invoices.\n\n \n\n101\n\n \n\n** **\n\n**Investing\nactivities**\n\n \n\nNet\ncash used in investing activities was RMB80.2 million (US$11.5 million) in 2025, primarily due to cash paid for term deposits of RMB1,501.8\nmillion (US$214.7 million), cash paid for purchase of short-term investments of RMB434.6 million (US$62.1 million), and cash paid for\npurchase of long-term investments of RMB12.0 million (US$1.7 million), partially offset by cash received from maturity of term deposits\nof RMB1,510.2 million (US$216.0 million) and cash received from sale of short-term investments of RMB358.7 million (US$51.3 million).\n\n \n\nNet\ncash provided by investing activities was RMB460.2 million in 2024, primarily due to cash received from maturity of term deposits of\nRMB1,571.5 million and cash received from sale of short-term investments of RMB357.8 million, partially offset by cash paid for term\ndeposits of RMB1,243.9 million and cash paid for purchase of short-term investments of RMB222.0 million.\n\n \n\nNet\ncash provided by investing activities was RMB351.3 million in 2023, primarily due to cash received from maturity of term deposits of\nRMB1,308.9 million and cash received from sale of short-term investments of RMB24.7 million, partially offset by cash paid for term deposits\nof RMB938.5 million and cash paid for purchase of short-term investments of RMB28.2 million.\n\n \n\n**Financing\nactivities**\n\n \n\nWe\ndid not incur net cash used in or provided by financing activities in 2023, 2024 and 2025, primarily because we possessed sufficient\ncash and did not engage in any financing activity in those years.\n\n \n\n**Capital\nExpenditures**\n\n \n\nOur\ncapital expenditures are incurred primarily in connection with purchase of property and equipment such as computer, software and office\nequipment and purchase of intangible assets including software copyrights and telecommunication business licenses. Our capital expenditures\nwere RMB1.8 million, RMB3.2 million and RMB0.8 million (US$0.1 million) in 2023, 2024 and 2025, respectively. We intend to fund our future\ncapital expenditures with our existing cash balance.\n\n \n\n**Holding\nCompany Structure**\n\n \n\nWe\nconduct our operations primarily through our subsidiaries and the affiliated entities in China. As a result, our ability to pay dividends\ndepends upon dividends paid by our subsidiaries and fees paid by the affiliated entities. If our subsidiaries or any newly formed subsidiaries\nincur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.\n\n \n\nIn\naddition, our subsidiaries in China are permitted to pay dividends to us only out of their retained earnings, if any, as determined in\naccordance with the Accounting Standards for Business Enterprise as promulgated by the MOF, or PRC GAAP. Under PRC law, each of our PRC\nsubsidiaries and the affiliated entities is required to set aside at least 10% of its after-tax profits each year, if any, to fund a\nstatutory surplus reserve until such reserve reaches 50% of its registered capital. In addition, our subsidiaries in China may allocate\na portion of their after-tax profits based on PRC GAAP to enterprise expansion funds as well as staff bonus and welfare funds at its\ndiscretion, and the affiliated entities may allocate a portion of their after-tax profits based on PRC GAAP to a discretionary surplus\nfund at their discretion. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate\nfuture losses in excess of retained earnings of the respective companies, the statutory reserve funds are not distributable as cash dividends.\n\n \n\nAs\nan offshore holding company, we are permitted under PRC laws and regulations to provide funding from the proceeds of our offshore fundraising\nactivities to our PRC subsidiaries only through loans or capital contributions, and to the affiliated entities only through loans, in\neach case subject to the satisfaction of the applicable government registration and approval requirements. See “Item 3. Key Information—D.\nRisk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by\noffshore holding companies and governmental control of currency conversion may affect our ability to capitalize or otherwise fund our\nPRC operations.” As a result, there is uncertainty with respect to our ability to provide prompt financial support to our PRC subsidiaries\nand the affiliated entities in China when needed.\n\n \n\n102\n\n \n\n \n\n**Financial\nInformation Related to the VIE**\n\n \n\nThe\nfollowing tables present the consolidating schedule of financial information relating to Cloopen Group Holding Limited, or the Parent,\nconsolidated affiliated entities and non-VIE consolidated entities as of and for the years ended December 31, 2023, 2024 and 2025.\n\n \n\n**Selected\nconsolidated statements of comprehensive loss data**\n\n \n\n  \nYear\nended December 31, 2023 \n\n  \nParent  \nConsolidated\n\naffiliated\nentities  \nNon-VIE\n\nconsolidated\nentities  \nInter-company\n\nelimination  \nGroup\n\nconsolidated \n\n  \n**(RMB\nin thousands)** \n\n  \n  \n\nTotal revenues \n—  \n553,910  \n45,600  \n(28,486) \n571,024 \n\nCost of revenues \n —  \n (346,257) \n (49,906) \n 29,788  \n (366,375)\n\nGross profit \n —  \n 207,653  \n (4,306) \n 1,302  \n 204,649 \n\nOperating expenses \n (89,953) \n (439,508) \n (92,566) \n (19,167) \n (641,194)\n\nOperating loss \n (89,953) \n (231,855) \n (96,872) \n (17,865) \n (436,545)\n\nLoss before income taxes \n (89,953) \n (233,465) \n (103,841) \n 14,321  \n (412,938)\n\nNet loss \n (89,953) \n (232,856) \n (103,885) \n 14,320  \n (412,374)\n\n \n\n  \nYear\nended December 31, 2024 \n\n  \nParent  \nConsolidated\n\naffiliated\nentities  \nNon-VIE\n\nconsolidated\nentities  \nInter-company\n\nelimination  \nGroup\n\nconsolidated \n\n  \n**(RMB\nin thousands)** \n\n  \n  \n\nTotal revenues \n —  \n 563,277  \n 55,685  \n (45,396) \n 573,566 \n\nCost of revenues \n —  \n (360,984) \n (43,748) \n 42,015  \n (362,717)\n\nGross profit \n —  \n 202,293  \n 11,937  \n (3,381) \n 210,849 \n\nOperating expenses \n (32,074) \n (222,378) \n (103,961) \n (50,278) \n (408,691)\n\nOperating loss \n (32,074) \n (20,085) \n (92,024) \n (53,659) \n (197,842)\n\nLoss before income taxes \n (32,074) \n (33,370) \n (89,806) \n 8,107  \n (147,143)\n\nNet loss \n (32,074) \n (33,078) \n (89,781) \n 8,106  \n (146,827)\n\n \n\n  \nYear\nended December 31, 2025 \n\n  \nParent  \nConsolidated\n\naffiliated\nentities  \nNon-VIE\n\nconsolidated\nentities  \nInter-company\n\nelimination  \nGroup\n\nconsolidated \n\n  \n(RMB\nin thousands) \n\n  \n  \n\nTotal revenues \n —  \n 495,463  \n 5,552  \n 34,694  \n 535,709 \n\nCost\nof revenues \n —  \n (343,066) \n (59,609) \n 13,712  \n (388,963)\n\nGross profit \n —  \n 152,397  \n (54,057) \n 48,406  \n 146,746 \n\nOperating\nexpenses \n (26,860) \n (237,092) \n (127,237) \n (1,218) \n (392,407)\n\nOperating loss \n (26,860) \n (84,695) \n (181,294) \n 47,188  \n (245,661)\n\nLoss\nbefore income taxes \n (26,860) \n (83,689) \n (131,243) \n 2,171  \n (239,621)\n\nNet\nloss \n (26,860) \n (82,869) \n (131,243) \n 2,171  \n (238,801)\n\n \n\n103\n\n \n\n** **\n\n**Selected\nconsolidated balance sheets data**\n\n \n\n  \n\n**As of December 31, 2023**\n\n \n\n  \nParent  \nConsolidated\naffiliated\nentities  \nNon-VIE\nconsolidated\nentities  \nInter-company\nelimination  \nGroup\nconsolidated \n\n  \n(RMB in thousands) \n\n  \n  \n\nTotal current assets \n 145,207  \n 509,400  \n 1,142,659  \n (163,853) \n 1,633,413 \n\nTotal non-current assets \n 1,108,131  \n 213,207  \n 2,264,779  \n (3,435,442) \n 150,675 \n\nTotal assets \n 1,253,338  \n 722,607  \n 3,407,438  \n (3,599,295) \n 1,784,088 \n\nTotal current liabilities \n 52,372  \n 2,728,417  \n 22,400  \n (2,217,187) \n 586,002 \n\nTotal non-current liabilities \n —  \n 2,799  \n 249  \n —  \n 3,048 \n\nTotal liabilities\n \n 52,372  \n 2,731,216  \n 22,649  \n (2,217,187) \n 589,050 \n\nTotal shareholders’ equity attributable to Cloopen Group Holding Limited \n 1,200,966  \n (2,002,681) \n 3,384,789  \n (1,382,108) \n 1,200,966 \n\nNon-controlling interests \n —  \n (5,928) \n —  \n —  \n (5,928)\n\nTotal liabilities and shareholders’ equity \n 1,253,338  \n 722,607  \n 3,407,438  \n (3,599,295) \n 1,784,088 \n\n \n\n  \n\n**As\nof December 31, 2024**\n\n \n\n  \nParent  \nConsolidated\n\naffiliated\nentities  \nNon-VIE\n\nconsolidated\nentities  \nInter-company\n\nelimination  \nGroup\n\nconsolidated \n\n  \n**(RMB\nin thousands)** \n\n  \n  \n\nTotal\ncurrent assets \n 263,126  \n 421,886  \n 805,866  \n (55,199) \n 1,435,679 \n\nTotal\nnon-current assets \n 993,075  \n 233,663  \n 2,569,349  \n (3,653,387) \n 142,700 \n\nTotal\nassets \n 1,256,201  \n 655,549  \n 3,375,215  \n (3,708,586) \n 1,578,379 \n\nTotal\ncurrent liabilities \n 181,624  \n 2,655,390  \n (120,570) \n (2,207,841) \n 508,603 \n\nTotal\nnon-current liabilities \n —  \n 3,173  \n 2,024  \n —  \n 5,197 \n\nTotal\nliabilities \n 181,624  \n 2,658,563  \n (118,546) \n (2,207,841) \n 513,800 \n\nTotal\nshareholders’ equity attributable to Cloopen Group Holding Limited \n 1,074,577  \n (1,993,016) \n 3,493,761  \n (1,500,745) \n 1,074,577 \n\nNon-controlling\ninterests \n —  \n (9,998) \n —  \n —  \n (9,998)\n\nTotal\nliabilities and shareholders’ equity \n 1,256,201  \n 655,549  \n 3,375,215  \n (3,708,586) \n 1,578,379 \n\n \n\n  \nAs of December 31, 2025 \n\n  \nParent  \nConsolidated\naffiliated\nentities  \nNon-VIE\nconsolidated\nentities  \nInter-company\nelimination  \nGroup\nconsolidated \n\n  \n(RMB in thousands) \n\n  \n   \n   \n   \n   \n  \n\nTotal current assets \n 186,497  \n 490,383  \n 627,861  \n (68,575) \n 1,236,166 \n\nTotal non-current assets \n 765,636  \n 68,053  \n 2,959,800  \n (3,653,387) \n 140,102 \n\nTotal assets \n 952,133  \n 558,436  \n 3,587,661  \n (3,721,962) \n 1,376,268 \n\nTotal current liabilities \n 110,750  \n 2,804,831  \n (58,790) \n (2,316,318) \n 540,473 \n\nTotal non-current liabilities \n —  \n 2,262  \n 1,599  \n —  \n 3,861 \n\nTotal liabilities \n 110,750  \n 2,807,093  \n (57,191) \n (2,316,318) \n 544,334 \n\nTotal shareholders’ equity attributable to Cloopen Group Holding Limited \n 841,383  \n (2,239,208) \n 3,644,852  \n (1,405,644) \n 841,383 \n\nNon-controlling interests \n —  \n (9,449) \n —  \n —  \n (9,449)\n\nTotal liabilities and shareholders’ equity \n 952,133  \n 558,436  \n 3,587,661  \n (3,721,962) \n 1,376,268 \n\n \n\n  \n\n**Year\nended December 31, 2023**\n\n \n\n  \nParent  \nConsolidated\n\naffiliated\nentities  \nNon-VIE\n\nconsolidated\nentities  \nInter-company\n\nelimination  \nGroup\n\nconsolidated \n\n  \n**(RMB\nin thousands)** \n\n  \n  \n\nNet\ncash used in operating activities \n (133,979) \n (184,395) \n (197,828) \n    \n (516,202)\n\nNet\ncash used in investing activities \n (569,407) \n (6,700) \n (860,399) \n 1,787,800  \n 351,294 \n\nNet\ncash provided by financing activities \n —  \n 218,926  \n 1,568,874  \n (1,787,800) \n — \n\n \n\n104\n\n \n\n \n\n  \n\n**As\nof December 31, 2024**\n\n \n\n  \nParent  \nConsolidated\n\naffiliated\nentities  \nNon-VIE\n\nconsolidated\nentities  \nInter-company\n\nelimination  \nGroup\n\nconsolidated \n\n  \n**(RMB\nin thousands)** \n\n  \n  \n\nNet cash used in operating activities \n 115,285  \n 46,516  \n (342,041) \n —  \n (180,240)\n\nNet cash used in investing activities \n (486) \n (3,216) \n 35,173  \n 428,757  \n 460,228 \n\nNet cash provided by financing activities \n —  \n (4,712) \n 4,712  \n —  \n — \n\n \n\n  \nYear ended December 31, 2025 \n\n  \nParent  \nConsolidated\naffiliated\nentities  \nNon-VIE\nconsolidated\nentities  \nInter-company\nelimination  \nGroup\nconsolidated \n\n  \n(RMB in thousands) \n\n  \n  \n\nNet cash used in operating activities \n (32,515) \n (46,311) \n (152,193) \n —  \n (231,019)\n\nNet cash used in investing activities \n (185,787) \n (12,508) \n (25,663) \n 143,766  \n (80,192)\n\nNet cash provided by financing activities \n —  \n 76,333  \n (76,333) \n —  \n — \n\n \n\n**Off-Balance\nSheet Arrangements**\n\n \n\nWe\nhave not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have\nnot entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not\nreflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred\nto an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest\nin any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or\nproduct development services with us.\n\n \n\n**Commitments**\n\n \n\nThe\nfollowing table sets forth our contractual obligations as of December 31, 2025.\n\n \n\n  \n   \n   \n**Year\nEnding December 31,** \n\n  \nTotal  \n2026 \n2027  \n2028 \n\n  \nRMB  \nUS$  \nRMB \nRMB  \nRMB \n\n  \n(in thousands) \n\nPurchase commitments* \n 32,159  \n 4,599  \n31,871 \n 288  \n — \n\n \n\n*Relates\nto purchase of software and equipment. The purchase commitments are contracted but not yet\nreflected in the consolidated financial statements as of December 31, 2025.\n\n \n\nSave\nas disclosed above, we did not have any significant capital or other commitments, long term obligations or guarantees as of December\n31, 2025.\n\n \n\n**C.\nResearch and Development, Patents and Licenses, etc.**\n\n \n\nSee\n“Item 4. Information on the Company—B. Business Overview—Research and Development” and “Item 4. Information\non the Company—B. Business Overview— Intellectual Property.”\n\n \n\n**D.\nTrend Information**\n\n \n\nOther\nthan as disclosed in this annual report, we are not aware of any trend, uncertainty, demand, commitment or event for the year of 2025\nthat are reasonably likely to have a material adverse effect on our revenues, income, profitability, liquidity or capital resources,\nor that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.\n\n \n\n105\n\n \n\n \n\n**E.\nCritical Accounting Estimates**\n\n \n\nWe\nprepared the consolidated financial statements in accordance with U.S. GAAP. When reviewing our financial statements, you should consider\nour selection of critical accounting policies, our judgments and other uncertainties affecting our applications of those policies and\nthe sensitivity of reported results to changes of such policies, judgments and uncertainties. We believe the following accounting policies\ninvolve the most significant judgments and estimates used in the preparation of our financial statements. You should read the following\ndescriptions of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other\ndisclosures included in this annual report.\n\n \n\n**Revenue\nrecognition**\n\n \n\nWe\naccount for our revenue contracts in accordance with ASC Topic 606, Revenue from Contracts with Customers (ASC 606). According to ASC\n606, revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects\nthe consideration we expect to be entitled to in exchange for those goods or services. We determine revenue recognition through the following\nsteps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction\nprice, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the\nentity satisfies a performance obligation.\n\n \n\nWe\ngenerate substantially all of our revenues from the following services and products:\n\n \n\n1)CPaaS,\nwhich allows customers to send text messages and place voice calls using our cloud-based\nplatform;\n\n   \n\n2)Cloud-based\nCC, with which customers can operate their virtual contact centers and access related value-added\nservices using our cloud-based platform; and\n\n   \n\n3)Cloud-based\nUC&C, where we create customized communications software on customers’ private\nclouds to meet their specific needs and deliver the software licenses to customers.\n\n \n\nWe\nrecognize revenue upon the transfer of control of promised products or services provided to our customers, in the amount of consideration\nwe expect to receive for those products or services (excluding sales taxes collected on behalf of government authorities). Our revenue\ncontracts generally do not include a right of return in relation to the delivered products or services.\n\n \n\nThe\ntiming of revenue recognition may differ from the timing of invoicing to our customers. We record a contract asset when revenue is recognized\nprior to invoicing, and a contract liability when payment is received from a customer in advance of revenue recognition. We generally\nissue invoices based on contract terms, which may be when the services are completed, upon customer acceptance of our deliverables or\nat preset milestones. Payments are due with standard payment terms which are generally not more than 90 days from invoice issuance.\n\n \n\n*CPaaS\nrevenues*\n\n \n\nWe\naccount for revenue from customers’ usage of text message and voice call services on our CPaaS platform as two separate performance\nobligations. Our service fees are determined by applying the contractual unit price to the monthly usage volume of text messages sent\nor minutes of voice calls placed and a contractual monthly fixed charge per subscriber multiplied by the number of subscribers recorded\nby our CPaaS platform where relevant. The cloud-based services to send text messages and place voice calls are sold separately to customers\nwith observable standalone selling prices.\n\n \n\nWe\nalso provide services as an agent in provision of CPaaS platforms to customers. We have identified one performance obligation and recognized\nthe revenues, on a monthly basis, at the amount equal to the difference between the amount charged to the customers and the amount charged\nby telecommunication operators.\n\n \n\n106\n\n \n\n \n\nThe\nservice contracts are generally with a length between three and 12 months and renewable at the latest fee rates of the renewed contract\nservices on the contract renewal date. The option of renewal does not provide the customer with a material right that it otherwise could\nnot obtain without entering into that contract, therefore the renewal option was not recognized as a separate performance obligation\nin the contract. The service contracts do not grant us or customers a unilateral right to terminate the contracts before completion.\n\n \n\n*Cloud-based\nCC revenues*\n\n \n\nCustomers\nsubscribe to our basic cloud-based CC services at a fixed monthly fee and pay for other value-added services on a usage basis. We recognize\nthe monthly service fees ratably over the contract period during which we are obligated to grant customers continuous access to those\nbasic cloud-based CC services. Revenue for other value-added services on top of the basic subscription is determined by applying the\ncontractual unit price to the monthly usage volume and recognized when the related services are provided to customers. The basic subscription\nis sold to customers at the same price with or without the value-added services, so the transaction price is allocated on the basis of\nobservable stand-alone selling prices.\n\n \n\nThe\nservice contracts are generally with a length between three and 12 months and renewable at the latest fee rates of the renewed contract\nservices on the contract renewal date. The option of renewal does not provide customers with a material right that it otherwise could\nnot obtain without entering into that contract, therefore the renewal option was not recognized as a separate performance obligation\nin the contract. The service contracts do not grant us or customers a unilateral right to terminate the contracts before completion.\n\n \n\nWe\nalso offer customized cloud-based CC solutions to customers with tailored functionalities and interfacing capabilities suitable to their\ncomplicated IT environment. We have identified that the nature of our overall promise to customers as the provision of an appropriately\ncustomized and interfaced software solution comprising the customized CC license and other highly interdependent and interrelated services,\nand have accounted for the promise as one combined performance obligation. We apply an iterative process to design, test and implement\nthe software in customers’ IT environment and recognizes revenue for this performance obligation over a period of time during which\nthe control of the customized cloud-based CC solution is progressively transferred to the customers. We use an input method to estimate\nprogress, based on the proportion of the labor hours incurred relative to the estimated total labor hours. We also offer standard or\nnon-complex cloud-based CC solutions to customers, and have identified one performance obligation in the agreement and recognized revenue\nupon delivery of standard software. Our cloud-based CC contracts generally include a standard assurance-type warranty.\n\n \n\n*Cloud-based\nUC&C revenues*\n\n \n\nWe\noffer customized cloud-based UC&C solutions to customers with tailored functionalities and interfacing capabilities suitable to their\ncomplicated IT environment. We have identified that the nature of our overall promise to customers as the provision of an appropriately\ncustomized and interfaced software solution comprising the customized UC&C license and other highly interdependent and interrelated\nservices, and have accounted for the promise as one combined performance obligation. We apply an iterative process to design, test and\nimplement the software in customers’ IT environment and recognize revenue for this performance obligation over a period of time\nduring which the control of the customized UC&C solution is progressively transferred to the customers. We use an input method to\nestimate progress, based on the proportion of the labor hours incurred relative to the estimated total labor hours. We also offer standard\nor non-complex cloud-based UC&C solutions to customers, and have identified one performance obligation in the agreement and recognized\nrevenue upon delivery of standard software. Our cloud-based UC&C contracts generally include a standard assurance-type warranty.\n\n \n\n**Share-based\ncompensation**\n\n \n\nShare-based\nawards granted to the founders and employees in the form of restricted shares are measured at the grant date fair value of the awards,\nand are recognized as compensation expense using the graded-vesting schedules over the requisite service period for each separately vesting\nportion (or tranche) of the award. We elect to recognize the effect of forfeitures in compensation cost when they occur. To the extent\nthe required vesting conditions are not met resulting in the forfeiture of the share-based awards, previously recognized compensation\nexpense relating to those awards is reversed.\n\n \n\n107\n\n \n\n \n\nShare-based\ncompensation in relation to the restricted ordinary shares is measured based on the fair value of our ordinary shares at the award grant\ndate, which is estimated using the income approach and equity allocation method. Estimating the fair value of our ordinary shares involves\nsignificant assumptions that might not be observable in the market, and a number of complex and subjective variables, discount rate,\nrisk-free interest rate and subjective judgments regarding our projected financial and operating results, our unique business risks,\nthe liquidity of our ordinary shares and our operating history and prospects at the time of the grant. Share-based compensation in relation\nto the share options is estimated using the binomial option pricing model. The determination of the fair value of share options is affected\nby the price of our ordinary shares as well as the assumptions regarding a number of complex and subjective variables, including the\nexpected share price volatility, risk-free interest rate, exercise multiple and expected dividend yield. The fair value of these awards\nwas determined by our management with the assistance from a valuation report prepared by an independent valuation firm using our management’s\nestimates and assumptions.\n\n \n\nIn\nJanuary 2017, we adopted the 2016 Plan. Under the 2016 Plan, we granted nil, 1,000,000 and nil share options to our directors, officers\nand employees for 2023, 2024 and 2025, respectively. In January 2021, we adopted the 2021 Plan, under which restricted share units to\npurchase 11,707,389 Class A ordinary shares have been granted as of the date of this annual report, excluding those repurchased. See\n“Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans” for more information\nin respect of the key terms of the 2016 Plan and the 2021 Plan and the outstanding options granted under such plans as of the date of\nthis annual report. Further, in connection with the acquisition of EliteCRM in March 2021, we issued 2,411,177 Class A ordinary shares\nin the form of restricted shares as equity awards to certain management members of EliteCRM. In addition, in connection with the acquisition\nof Zhuge in December 2021, we issued 468,455 Class A ordinary shares in the form of restricted shares as equity awards to certain management\nmembers of Zhuge (excluding those repurchased pursuant to performance target adjustments). These restricted shares were issued under\na private placement pursuant to an exemption or exclusion from the registration requirements under the Securities Act, subject to certain\nvesting schedule and forfeiture to the extent any share remains unvested in case of early termination of employment.\n\n \n\nThe\nweighted average grant date fair value of the share options granted was nil, US$0.29 and nil for 2023, 2024 and 2025, respectively. The\nfair values of the options granted are estimated on the dates of grant using the binomial option pricing model with the following assumptions\nused.\n\n \n\n  \nYear\nEnded \n\n  \nDecember\n31, 2025 \n\nRisk-free rate of return(1) \n 2.50%\n\nVolatility(2) \n 45.0%\n\nExpected dividend yield(3) \n 0%\n\nExercise multiple(4) \n 2.20 \n\nFair value of underlying ordinary share \n US$0.30-\nUS$0.52 \n\nExpiration terms(5) \n 10\nyears  \n\n \n\n(1)We\nestimate risk-free interest rate based on the yield to maturity of U.S. treasury bonds denominated\nin U.S. dollars for a term consistent with the expected term of our options in effect at\nthe option valuation date.\n\n   \n\n(2)We\nestimate expected volatility based on the historical volatility of comparable peer public\ncompanies with a time horizon close to the expected term of our options.\n\n   \n\n(3)Expected\ndividend yield is zero as we do not anticipate any dividend payments in the foreseeable future.\n\n   \n\n(4)We\nestimate the expected exercise multiple as the average ratio of the stock price to the exercise\nprice of when our employees will decide to voluntarily exercise their vested options. As\nwe did not have sufficient information of past employee exercise history, it was estimated\nby referencing to a widely-accepted academic research publication.\n\n   \n\n(5)Expiration\nterm is the contract life of the options.\n\n \n\n108\n\n \n\n \n\nIn\n2023, 2024 and 2025, we recorded share-based compensation expenses of RMB22.2 million, RMB14.3 million and RMB13.2 million (US$1.9 million)\nrelated to our share options, restricted shares, ordinary shares issued to management employees to acquire their equity interests in\nmajority-owned subsidiaries. The following table sets forth the breakdown of our share-based compensation expenses both in absolute amount\nand as a percentage of total share-based compensation expenses in the years indicated.\n\n \n\n  \nYear Ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nRMB  \n%  \nRMB  \n%  \nRMB  \nUS$  \n% \n\n  \n(in thousands, except for percentages) \n\nCost of revenues \n 3  \n -  \n -  \n -  \n -  \n -  \n - \n\nResearch and development expenses \n 1,660  \n 7.5  \n (490) \n (3.4) \n 2,013.0  \n 288.0  \n 15.3 \n\nSelling and marketing expenses \n 3,639  \n 16.4  \n 11,314  \n 79.1  \n 7,969.0  \n 1,140.0  \n 60.4 \n\nGeneral and administrative expenses \n 16,937  \n 76.1  \n 3,481  \n 24.3  \n 3,211.0  \n 459.0  \n 24.3 \n\n**Total**** **\n** ****22,239**** **** **\n** ****100.0**** **** **\n** ****14,305**** **** **\n** ****100.0**** **** **\n** ****13,193.0**** **** **\n** ****1,887.0**** **** **\n** ****100.0**** **\n\n \n\n**Recent\nAccounting Pronouncements**\n\n \n\nFor\ndetailed discussion on recent accounting pronouncements, see Note 2(ii) to our consolidated financial statements included elsewhere in\nthis annual report.\n\n \n\n**Taxation**\n\n \n\n**Cayman\nIslands**\n\n \n\nWe\nare incorporated in the Cayman Islands. The Cayman Islands currently levies no taxes on individuals or corporations based upon profits,\nincome, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely\nto be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed\nin, or after execution, brought within the jurisdiction of the Cayman Islands. In addition, the Cayman Islands does not impose withholding\ntax on dividend payments.\n\n \n\n**Hong\nKong**\n\n \n\nUnder\nthe current Hong Kong Inland Revenue Ordinance, our Hong Kong subsidiary is subject to Hong Kong Special Administrative Region profits\ntax at the rate of 16.5% on its taxable income generated from the operations in Hong Kong. Payments of dividends by the Hong Kong subsidiary\nto the Company is not subject to withholding tax in Hong Kong. A two-tiered profits tax rates regime was introduced in 2018 where the\nfirst HK$2.0 million of assessable profits earned by a company will be taxed at half of the current tax rate at 8.25%, whilst the remaining\nprofits will continue to be taxed at 16.5%. There is an anti-fragmentation measure where each group will have to nominate only one company\nin the group to benefit from the progressive rates. No material provision for Hong Kong profits tax has been made in the financial statements\nas the subsidiary in Hong Kong has no assessable profits for the years ended December 31, 2023, 2024 and 2025.\n\n \n\n**Japan**\n\n \n\nOur\nJapan subsidiary, Cloopen Japan Co., Ltd., is subject to Japanese corporation tax (including national corporation tax, local enterprise\ntax and other income-based taxes) on its worldwide income. The statutory effective tax rate is approximately 30% to 34%, depending on\nthe size of the company.\n\n \n\nDividends\npaid by a Japanese company are generally subject to Japanese withholding tax. If the Japanese company paying dividends is a non-listed\ncompany and the payee is a non-resident of Japan, the rate of such withholding tax is 20.42% under Japanese tax law. We enjoy preferential\nwithholding tax rate of 10% under Japan-China tax treaty.\n\n \n\n109\n\n \n\n \n\n**PRC**\n\n \n\nOur\nPRC subsidiaries and affiliated entities are subject to the EIT Law and are taxed at the statutory income tax rate of 25%, unless otherwise\nspecified. Certain of the affiliated entities were recognized as HNTEs and were entitled to a preferential enterprise income tax rate\nof 15%. The HNTE status is subject to annual evaluation and a requirement that relevant entities re-apply for HNTE status every three\nyears.\n\n \n\nOur\nPRC subsidiaries and affiliated entities are subject to value added tax, or VAT. Revenues from providing cloud communication services\nand communication devices sales are generally subject to VAT at the rate of 6% and 13% since April 1, 2019, or 6% and 16% between May\n1, 2018 and April 1, 2019, or 6% and 17% before May 1, 2018, and subsequently paid to PRC tax authorities after netting input VAT on\npurchases. The excess of output VAT over input VAT is reflected in accrued expenses and other current liabilities, and the excess of\ninput VAT over output VAT is reflected in prepayments and other current assets in the consolidated balance sheets.\n\n \n\nThe\nEIT law imposes a withholding income tax of 10% on dividends distributed by a foreign investment enterprise, or FIE, to its immediate\nholding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment\nor place within China or if the received dividends have no connection with the establishment or place of such immediate holding company\nwithin China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for\na different withholding arrangement. The Cayman Islands, where we are incorporated, does not have such tax treaty with China. According\nto the arrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention\nof Fiscal Evasion in August 2006, dividends paid by an FIE in China to its immediate holding company in Hong Kong will be subject to\nwithholding tax at a rate of no more than 5% if the immediate holding company in Hong Kong owns directly at least 25% of the shares of\nthe FIE and could be recognized as a beneficial owner of the dividend from PRC tax perspective. We did not record any dividend withholding\ntax, as our PRC subsidiaries and affiliated entities have no retained earnings in any of the periods presented.\n\n \n\nThe\nEIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “*de facto* management\nbody” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income\ntax at the rate of 25% for its global income. The Implementing Rules of the EIT Law define the location of the “*de facto*\nmanagement body” as “the place where the exercising, in substance, of the overall management and control of the production\nand business operation, personnel, accounting, property, etc., of a non-PRC enterprise is located.” Based on a review of surrounding\nfacts and circumstances, we believe that our operations outside the PRC will unlikely be considered a “resident enterprise”\nfor PRC tax purposes. If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident\nenterprise” under the EIT Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Item\n3. Key Information—D. Risk Factors—Risks\nRelated to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification\ncould result in unfavorable tax consequences to us and our non-PRC shareholders or the ADSs holders.”"}