XiaoeTech Aims for IPO Again: The "Advanced Worker" in Tencent's Ecosystem

87 days after the expiration of its first listing application, Xiaoe Inc., a Chinese private - domain SaaS service provider (hereinafter referred to as "XiaoeTech"), has launched another attempt to list on the Hong Kong Stock Exchange.

01

Facing an 1.8 - billion Yuan Gamble Agreement

As an important service provider of private - domain traffic in the WeChat ecosystem, XiaoeTech's core business is to provide SaaS tools to merchants in the WeChat ecosystem, such as building stores, conducting live broadcasts, selling courses, managing customer relationships, and processing payments. As of the end of 2025, XiaoeTech has served over 500,000 merchants and reached 750 million users.

XiaoeTech stated in its prospectus that the company has become a pioneer in the evolution of the e - commerce industry towards interactive marketing.

According to data from CIC, based on 2025 revenue, XiaoeTech ranks first among Chinese interactive private - domain operation solution providers, with a market share of 10.1%, 6.3 percentage points higher than the second - ranked company. In the entire private - domain operation solution market, the company ranks third with a market share of 4.4%.

In 2025, the market size of private - domain operation solutions reached 1.37 billion Yuan, among which the market for interactive private - domain operation solutions in China was 600 million Yuan. XiaoeTech is in a rapidly expanding but still - unsettled market.

Looking at the performance trend, from 2023 to 2025, XiaoeTech's operating income increased from 415 million Yuan to 608 million Yuan, with an average annual compound growth rate of 20.9%. During this period, the gross profit margin also increased steadily, from 72.3% to 75.7%.

However, XiaoeTech has not achieved profitability.

From 2023 to 2025, the net losses were 37.048 million Yuan, 15.083 million Yuan, and 63.948 million Yuan respectively. In 2025, the loss amount increased by 323.97% year - on - year, mainly due to the increase in non - cash fair - value losses of convertible redeemable preferred shares and one - time IPO - related expenses.

Since its establishment, XiaoeTech has undergone six rounds of external financing, attracting investors such as Tencent, Himalayas, and IDG Capital. During this period, the company issued a large number of convertible redeemable preferred shares. These preferred shares are treated as liabilities in accounting, and changes in their fair value directly affect the current profit and loss. In 2023, this item had a gain of 19.562 million Yuan, but in 2025, it turned into a loss of 79.425 million Yuan.

It should be noted that these preferred shares come with a rigid redemption clause.

According to the prospectus, in June 2025, XiaoeTech signed an agreement with preferred - share shareholders, postponing the redemption date from June 30, 2025, to January 31, 2027. At the same time, the two parties agreed that the right of redemption would be automatically suspended from the date of submitting the listing application and would be completely terminated after the listing was completed.

As of the end of 2025, the book value of these preferred shares was as high as 1.819 billion Yuan, while the company's cash and cash equivalents on the books were only 45.576 million Yuan. If the second listing application fails again and the right of redemption is restored, XiaoeTech will face huge redemption pressure.

What is more worthy of attention than the book loss is the change in operating cash flow.

In 2025, XiaoeTech's net operating cash flow decreased by 67.61% year - on - year to 35.002 million Yuan. For a SaaS company characterized by advance payments, this shrinkage points to a deeper problem: either the number of new paying customers is decreasing, or the renewal willingness of old customers is declining.

What is even more intriguing is the long - term silence on the financing side. Since the completion of Series D financing in July 2021, XiaoeTech has not received new external capital injection for nearly five years.

02

Both a Backer and a Variable

This silence at the capital level forms a subtle contrast with Tencent's stance.

As XiaoeTech's largest external shareholder, Tencent holds 16.82% of the shares and is also its largest supplier, accounting for about 43.6% of the procurement amount in 2025.

Tencent, a giant that is both a shareholder and has business ties, has neither divested nor increased its investment in the past five years. This ambiguous attitude is more disturbing than a clear separation, and XiaoeTech's dependence on Tencent is increasing day by day.

Currently, the cost of cloud servers for XiaoeTech accounts for nearly 90% of the total sales cost, and Tencent is the core supplier of cloud servers. In 2025, the cost of cloud servers was about 132 million Yuan, and the amount of procurement from Tencent was about 93.285 million Yuan, accounting for more than 70%.

According to XiaoeTech's forecast, this procurement amount will increase to 135 million Yuan in 2028. It should be noted that the cloud - service procurement framework signed between the two parties will expire on December 31, 2028. At that time, there are uncertainties regarding the renewal terms and prices.

An even greater concern is that Tencent is constantly improving its private - domain infrastructure.

Although the two are still in a symbiotic relationship, Tencent is building a closed - loop infrastructure from access to transactions in the private - domain field, and the living space for third - party service providers is being gradually compressed. According to data from April 2026, WeCom has served over 14 million enterprises and organizations, serving over 750 million WeChat users per day. In addition, more than 59,000 service providers have settled in WeChat Mini - Programs.

There is also a more subtle signal. In September 2025, during the window period after XiaoeTech's first listing application, Himalayas, an early strategic shareholder, transferred its 7.6% stake to Gaocheng Investment and Hillhouse Capital at a price of $26.6 million and cashed out.

This timing is thought - provoking. Three months before Himalayas announced its full divestment, in June 2025, Tencent Music officially announced the acquisition of Himalayas, and the acquisition was officially completed by May 2026.

This means that Tencent could have obtained an additional 7.6% indirect stake through the acquisition of Himalayas and further increased its position. However, it did not choose to do so and allowed Himalayas to cash out before the deal was completed.

Five years without additional investment and the active abandonment of an easily obtainable indirect stake, the signals released by Tencent at the equity level are worth pondering. As the expiration date of the cloud - service procurement framework approaches and the indirect stake is abandoned, XiaoeTech's importance in the Tencent ecosystem is being re - evaluated.

If XiaoeTech cannot become an indispensable part of Tencent's ecosystem, the over - 70% dependence on cloud services will no longer be a two - way bond but a one - way risk exposure.

03

Customer Loss and Regulatory Scrutiny

Beyond the capital structure and ecological positioning, the real situation at the operational level is more worthy of examination.

The net revenue retention rate (NRR) is one of the most core health indicators in the SaaS industry, measuring the change in revenue contributed by the same group of old customers over a period of time.

From 2023 to 2025, XiaoeTech's NRR dropped from 146.6% to 100.2%, approaching the critical point of stagnant growth and relying on new customers to drive growth. However, XiaoeTech's customer acquisition cost is rising rapidly, increasing from 9,264 Yuan in 2023 to 13,800 Yuan in 2025.

Meanwhile, the number of XiaoeTech's channel partners has shrunk sharply, dropping from 212 in 2023 to 67 in 2025.

The prospectus states that this is the company's active optimization of the distribution network, shifting from the channel model to the direct - sales model. However, regardless of the reason, the contraction of the channel means that the path to acquire long - tail customers is narrowing, and these customers are the key to diluting customer acquisition costs.

The change in customers also confirms this. In the first quarter of 2026, the number of XiaoeTech's key customers (i.e., merchants with annual payments exceeding 100,000 Yuan) decreased from 1,689 to 1,486, and the number of non - key customers also decreased from 38,100 to 32,300.

The average customer price has also declined. The per - capita revenue of key customers dropped from 123,300 Yuan in 2025 to 114,000 Yuan in the first quarter of 2026. Not only are large customers leaving, but they are also downgrading.

More troublesome than the deterioration of operational data is the compliance issue. As a technology service provider, XiaoeTech has been under regulatory scrutiny several times in recent years due to platform content issues.

In 2023 and 2025, the Shenzhen Market Supervision and Administration Bureau issued fines to XiaoeTech twice, both for failing to fulfill the obligation of qualification review for settled merchants. Official media such as CCTV have also named and criticized issues such as "miracle doctors" promoting false traditional Chinese medicine courses and illegal stock - recommendation on the XiaoeTech platform.

On the Heima Complaint Platform, there are more than 4,000 complaints related to XiaoeTech, involving false advertising and weak supervision. For a company aiming for a Hong Kong IPO, these problems are not only a loss of brand reputation but also a real obstacle to listing.

This article is from the WeChat official account "Insight IPO" (ID: dongcha - ipo). Author: Pan Yan, Editor: Wei Fanxi. Republished by 36Kr with permission.