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By Meg Flippin, Benzinga
Thanks to rapid internet penetration in China over the past decade, advances in artificial intelligence and the acceleration of the digital economy in one of the world’s most populous countries, digital learning, particularly among companies, seems to be taking off.
As of 2023, the digital corporate learning market in China was valued at RMB 126.0 billion, according to Frost & Sullivan. Its forecast is to reach RMB 300.0 billion in 2028, growing at a CAGR of 18.9%. Among large enterprises in China, the market is projected to grow at an even higher CAGR of 20.5%.
It makes sense that companies are embracing digital training, even without considering the disruptive impact of AI. Not only does digital training reduce costs for enterprises, it gives companies of all sizes access to a wide range of learning resources that can improve engagement and increase outcomes among workers. The old way of training, which typically relies on in-person educators to address a broad group of workers, tends to be more costly and can be relatively untargeted.
With digital training, employees can learn at their own pace and engage in content geared toward their unique needs, which many enterprises are betting will improve engagement and outcomes. It comes at a time when AI, machine learning and other technology developments are reshaping the way we work and the skills we need. Enterprise self-training is expected to play an important role in readying the workers of tomorrow.
While China’s enterprise digital learning market has shown growth in recent years, one company citing Frost & Sullivan data believes there’s still significant room for improvement in the penetration rate of enterprise digital learning.
Welcome To The Era Of Self-Training
That’s what YXT.com – or YXT.com Group (NASDAQ: YXT) – the Chinese digital enterprise learning solutions provider, is betting on. The company is leveraging a SaaS services model to usher in a new era in corporate training, allowing companies to target content to specific groups and skill sets online.
It’s why YXT.com has 2,545 customers in about 20 industries, including over 200 Chinese Fortune 500 enterprises. Some sectors using YXT.com’s digital learning software include manufacturing, new retail, catering, finance and automotive. YXT.com counts well-known enterprises like Schneider Electric SE (OTC: SBGSY), Shiseido Co. Ltd (OTC: SSDOY), Sany Group, Yunnan Baiyao Group Co. Ltd (SHE: 000538), Huazhu Group (NASDAQ:HTHT) and NIO Inc. (NYSE: NIO) as customers.
Among its subscription customers, YXT.com says the net revenue retention rate was 106.1% at the end of March. At last check, YXT.com offered its customers more than 8,200 courses with a total learning time of over 20,500 hours. Of that, 6,800 hours are proprietary courses.
Technology Underpins The Offering
YXT.com can offer so much digital learning content thanks to its focus on leveraging technology to provide customers with targeted training and learning paths for employees based on their positions and required skills. Using the insights the company has gleaned across different industries and business scenarios, YXT.com says it can offer companies a personalized recommendation engine that designs optimal learning paths for employees. The company says its solutions accurately match personnel, positions and courses for employees across China. Embedded in its learning platforms are speech recognition, adaptive learning, anti-cheating and simulation training, which make corporate learning more intelligent, exciting and effective, reports YXT.com.
Cash In The Coffers After IPO
The company’s successes include a U.S. listing. YXT.com went public on the NASDAQ in August, raising $25 million. Proceeds of its IPO are going to grow the business via research and development and technology investments, brand marketing and business promotions. The company is targeting enterprises with over 1,000 employees with its digital training platform. It’s an area of the market that Frost & Sullivan predicts will grow at a CAGR of 20.5% from now until 2028. YXT.com says focusing on large enterprise customers is speeding its path to profitability. The company says large enterprises have recurring annual budgets in place for enterprise learning, which gives YXT.com access to more stable revenue. Since focusing on large enterprises, the company says it has reduced sales, R&D and management expenses.
"YXT.com's successful listing on the US NASDAQ is an important milestone in the company's development journey and a new starting point,” YXT.com’s founder and chairman Lu Ruize said at the time of the IPO. “After completing the listing, YXT.com will leverage the power of the capital market to provide more competitive products and better services to customers with stronger technological capabilities in the AI era, promoting the digital and intelligent development of China's human resources technology and enhancing the global competitiveness of Chinese enterprises."
YXT.com’s stock may not be as high as when it went public in August, suffering from what may be a lack of attention from the capital market. Still, the company sees a big opportunity in bringing China’s workforce into the digital age thanks to its technology-driven adaptive learning SaaS model, and Frost & Sullivan data cited by the company in a regulatory filing states that YXT.com was already the largest digital corporate learning solution provider in China in terms of total revenue, subscription revenue and number of subscription customers in 2023.
With the digital training market taking off and a client roster that includes big-name companies, YXT.com may be worth keeping an eye on for those interested in the market.
Featured photo by Headway on Unsplash.
Benzinga is a leading financial media and data provider, known for delivering accurate, timely, and actionable financial information to empower investors and traders.
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