Manycore Tech (Kujiale) – China’s 3D Interior Design, Decoration & Construction Cloud Platform Competition – 4 August 2021

According to Manycore Tech’s prospectus, the AEC (architecture, engineering and construction) industry is made up of two market segments. One is the construction industry, which covers interior DDC (design, decoration and construction), as well as the design and construction of residential, commercial and industrial buildings. The other is civil engineering, covering the design and construction of roads, bridges, tunnels and other public infrastructure. In addition, iResearch predicts that China’s AEC software market will grow from RMB 14.7bn in 2020 to RMB 44.8bn in 2025, with a CAGR of 25%. China’s interior DDC software market is expected to grow from RMB 3.9bn in 2020 to RMB 14.5bn in 2025, with a CAGR of 30.1%. The penetration rate of cloud-based interior DDC software in China will grow from 29.8% in 2020 to 80.3% in 2025. Based on your frontline market experience, could you analyse the scale, future growth rate and development trend of the interior DDC software segment where Manycore Tech is in?

According to iResearch, Manycore Tech had an average MAU of about 1.5 million in Q1 2021, becoming the  most popular 3D interior DDC software in the world. According to the revenue of RMB 353m disclosed in  2020, the company is the largest interior DDC software supplier in China, accounting for about 10.3% of the  market. Could you first introduce the product features and technical capabilities of Kujiale, Coohom, Modelo and Meijian under Manycore Tech? What are their respective downstream clients and application scenarios? 

Among these products, you mentioned that Coohom brings low annual revenue, contributing less than 1% of the total probably. What are the contributions of Kujiale, Modelo and Meijian to the company’s revenue? What is the growth trend of each product?

Kujiale accounts for 10.3% of the domestic interior DDC software market. Manycore Tech has a 56.5% share of the market for cloud-based home interior DDC software, about twice the share of the second largest player. Also, its technology is ahead of its peers. How big is the technical gap between Modelo and its competitors? Do you think Kujiale will make Modelo more competitive through iterations in the future?

In the field of interior DDC software, Kujiale mainly competes with Homkoo, Yfang and 3vjia. What are their annual revenue, market share and the competitive landscape?

What is the target client group of 3vjia? Is it looking at its own ecosystem or is it focused on competing with Kujiale for independent third parties?

How big do you think the domestic KA market and SME market are? If only focusing on SMEs, what growth potential will 3vjia have in the future?

How does Kujiale compete with established, locally deployed 3D CAD providers, such as 3D Max and SketchUp? Do you think Kujiale will grab more of their market share in the future?

Back to the development strategy of Manycore Tech. The company has announced “four new strategies” of “from home to full space, from design to full link, from tools to full ecology and from China to the world”. At present, the company has officially entered the public building decoration sector, focusing on restaurants, retail stores, offices and other public building decoration scenarios. Can you analyse Manycore Tech’s product and business expansion over the past few years? What is its strategy for expanding into other markets besides cloud-based home decoration design?

How are Kujiale and 3vjia different in terms of their products’ modules and functions? Does Kujiale also provide the building information modelling (BIM) tools or the back-end software that 3vjia offers and you have mentioned earlier? Could you compare their competencies?

Could you introduce Manycore Tech’s strategy “from tools to full ecology”? You have just said that 3vjia aims to develop its own product ecosystem while Kujiale still mainly focuses on developing design tools. How could Kujiale change in the future?

In terms of Manycore Tech’s strategy “from China to the world”, it seems that Coohom’s business volume overseas has not been ideal. Do you think that is because there are better cloud-based products overseas or do you think it is because the company did not invest enough in promoting Coohom in the global market?

Manycore Tech’s revenue in 2019, 2020 and Q1 2021 was RMB 282m, RMB 353m and RMB 100m respectively. Its revenue was mainly generated by offering software and subscription services as well as professional services, including the services in modelling, design and project implementation, which only contributed 7% of the overall revenue. Most of the revenue came from offering subscription services and 90% of the revenue in this sector was driven by enterprise clients. Could you introduce Manycore Tech’s enterprise client profiles and classification? Do its enterprise clients include decoration companies, furniture brands, interior design studios and real estate developers? How would you classify the clients? How did Kujiale solve the pain points for the different types of key clients? Could you also talk about their abilities to pay?

You have mentioned earlier that Kujiale does not target professionals. Who are the professionals you were referring to? Did you mean the designers in design institutes or famous designers at decoration companies?

Manycore Tech has published that it had 20,806 enterprise clients in Q1 2021, up by 69% YoY, among which 5,084 were senior clients and 267 were KAs, which generates net revenue retention rates of 97% and 125% respectively. Senior clients refer to enterprise clients with more than five registered accounts and KAs are those having contributed over RMB 200,000 to the company’s revenue. Senior clients generated subscription revenue of RMB 219m, RMB 271m and RMB 77m in 2019, 2020 and Q1 2021 respectively, accounting for 82%, 81% and 79% of the company’s overall subscription revenue. What are the proportions of senior clients and KAs in the different types of clients you have just talked about? What’s the growth potential of senior and KAs in industries offering full house customisation solutions and furnishing products as well as the home appliance industry and decoration industry in the future?

How’s Kujiale ability in BIM now? As for the domestic and global market, it seems that Glodon is also engaged in BIM and Autodesk excels in this field. What’s your opinion on the opportunities that Kujiale’s BIM may have in the industry that is hard to be replaced?

What do you think of the company’s potential in cross-sales or additional purchases of existing clients? You’ve especially mentioned a case where the annual revenue increased from RMB 300,000 to RMB 4m. We’d like to learn more about such cases. Is it possible to replicate such clients to expand the sales potential?

On average, in terms of the KAs that contribute over RMB 200,000, is ARR increasing year by year?

In terms of the service to key accounts as you just mentioned, do you think there will be a high demand for customisation in the future? Or will Kujiale try to accumulate its experience in customisation but with a focus on enriching the standardised products to reduce the labour cost?

Now the sales and R&D expense ratios of Manycore Tech are extremely high, hitting 60-70%. The R&D expense ratio even achieved 98% in Q1 2021. Do you think the sales expense ratio will decrease in the future? How will the customer acquisition efficiency and cost change?