Day and thank you for standing by. Welcome to the YXT.COM first six months of 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Peter Lu, Founder and Chairman of YXT.COM. Sir, please go ahead.
Hello, everyone. This is Peter Lu, Founder and Chairman of YXT.COM. Thank you for joining our 2026 first half earning conference call. In the first half of 2026, we saw an important shift in enterprise AI adoption. Customers didn't ask whether a product has AI capabilities. They asked whether AI can improve their business outcomes, shorten capability building cycles, accumulate organizational knowledge more thoroughly, and support actual execution. Having AI in the product suite was no longer an option for us. Not only that, having meaningful AI with productivity level value became the key differentiator. This was exactly the same direction YXT.COM took going into 2026. We achieved a nearly ninefold growth in AI product-related revenue. Our monthly recurring revenue from AI-related products reached CNY 4.4 million as of June 30th, 2026, compared with CNY 500,000 a year earlier.
The driving force behind the ninefold growth of AI products are adding AI to our existing business and innovating AI-native new businesses. In terms of existing business, we integrated AI into our existing corporate learning business and improved our competitiveness in both acquiring new clients and expanding the existing engagements. In the first half of 2026, the number of newly signed customers increased by nearly 50% compared with the same period last year. Our net dollar retention rate also improved by about 2.3 percentage points. In terms of new business, SaleSmart, our AI-powered sales intelligence and enablement solution, achieved sales of over CNY 5 million during the same period. This marked the first successful step in expanding from corporate learning business to productivity enablement business in the same sales domain.
Through the first half of 2026, we proved our strategy of intelligent productivity to be effective, and we are even more confident about it now. We will strive to assist enterprises turn knowledge into capabilities, experiences into assets, and individual capacity into organizational intelligent productivity. As more and more companies embrace AI, as AI goes from a chatbot to productivity levers, we will see an even bigger addressable market with more and more definite needs. One last piece of information I'd like to share with you before handing over is the transformation of our own operation. During the first half of 2026, we adopted AI more systematically and transformed how we build products, how we deliver customer value, and how we market ourselves. The benefits of such AI adoption and transformation can be indicated by our gross margin, our operational efficiency, and our cash flow.
And for those details, I will now turn the call over to Shen Cao, our Chief Financial Officer, to review our financial performance.
Thank you, Peter, and hello, everyone. In the first half of 2026, our strategic transformation began to show clearer financial results. After a period of business mix optimization and customer portfolio adjustment, we returned to revenue growth, expanded gross margin, and significantly narrowed our losses. Total revenues increased by 6% year-over-year to CNY 162.1 million. Revenues from corporate learning solutions were CNY 158.2 million, compared with CNY 152.4 million in the same period last year. Subscription-based corporate learning solutions reached CNY 151.8 million. Supported by our focus on large enterprise customers and AI-enabled products, our customer structure continued to improve. As of June 30th, 2026, we had 2,391 subscription customers, compared with 2,358 as of June 30th, 2025.
More importantly, our net revenue retention rate improved to 102.6%, compared with 103% in the same period last year, showing the stability and the quality of our subscription customer base. Profitability improved meaningfully. Gross margin reached 70.1%, up five percentage points from 65.1% a year earlier. This improvement was driven by our higher quality revenue mix, continued focus on large enterprise subscription customers, AI-enabled productivity gains, and ongoing cost optimization. Cost of revenues decreased by 9.1% year-over-year to CNY 48.5 million. Sales and marketing expenses decreased by 3% year-over-year, reflecting improved productivity in customer acquisition, conversion, and retention. Research and development expenses increased by 9.8% as we continued to invest in AI product capabilities and R&D talent. We believe this is necessary to support our AI-native strategy and long-term product competitiveness. Our bottom line improved significantly.
Net loss narrowed to CNY 14.4 million from CNY 73.9 million in the same period last year. Adjusted net loss narrowed by 80.9% year-over-year to CNY 12.2 million. These results demonstrate the operating leverage created by our improved revenue mix, higher gross margin, and disciplined expense management. Looking ahead, we will continue to execute around three priorities. First, we will deepen our focus on large enterprise customers and improve customer lifetime value. Second, we will scale AI-related products, including SalesSmart and other AI-enabled knowledge and productivity solutions. Third, we will continue to balance investment in AI innovation with disciplined cost control and operational efficiency. In summary, the first half of 2026 was a period in which our AI-native transformation began to translate into business momentum and financial improvements. We are encouraged by our progress and remain focused on driving sustainable high-quality growth. Thank you.
We are now happy to take your questions.
Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question is going to come from the line of Katherine Thompson with Edison. Your line is open. Please go ahead.
Hi there. Just check you can hear me okay?
Yes, sounding clear.
Yeah. Great. Thank you. A couple of questions for you. The first one, could you just talk me through the progress you've made with each of your four product lines, so TalentNova, NeoLearning, SaleSmart, and AI BOX?
Thank you, Katherine, for the question. I will try to answer the questions and provide some of the updates in the four lines of business. This is Alan Wang. I am the Vice President of YXT.COM. To answer your question, TalentNova is our main business line. As the market leader in corporate learning platform, in 2026, we continue to sign new customers. We signed more than 120 clients, a more than 48% increase compared to last year's same period. The boost in competitiveness is our successful integration of AI products into our existing corporate learning solutions and platforms. In terms of NeoLearning, during the first half of 2026, we signed CNY 32.7 million engagement in terms of contract value. That is approximately 26.8% increase compared to last year's same period.
The majority of the increase came from AI-related products, such as AI-augmented blended learning or AI-orchestrated practice or AI-curated courses. In terms of SalesSmart, our AI-native sales enablement and productivity boost business, we won over 20 new clients with a total signed contract value of more than CNY 5.3 million . Lastly, in terms of AI BOX, adjusting to market landscape, we decided not to market AI BOX as a separate business line, but integrated AI BOX into our TalentNova and NeoLearning product suites. In the first half of 2026, we saw clients needing AI infrastructure, and we provided AI BOX as part of our TalentNova service to the clients. So we have quite successfully pushed all four business lines to the market, and saw significant growth in terms of revenue. Katherine, I think that is the answer to your question.
Yeah. That is really helpful. Thank you. Secondly, looking at the gross margin. Clearly there was big expansion year-over-year in H1. Are you able to give any sense of whether that margin can carry on increasing into H2 and then also into future years?
Okay. Thank you. Thank you question. Gross margin was 70.1% in the six months ended June 30, 2026, compared with 65.1% in the same period of last year, representing an increase of 5 percentage points. The growth in revenue, gross margin, and customers base. The significant decrease of net loss reflected the benefits of our AI transformation, AI-driven operational efficiencies, and also helped optimize our organizational structure and workflows, leading to meaningful reductions in staff costs. Our improvements in revenue growth and cost efficiencies continues and strengthens our financial foundation, which means we expect we would achieve a higher gross margin in the second half of 2026. Thanks.
Sorry, I missed the last part of that. You expect to get a higher gross margin in H2 compared to H1?
Yes.
Yeah. Okay. In future years, do you think you can still expand it further?
Yes. We believe we'll continue to boost our gross margin because our AI transformation is a continuous progress, and we will continue to see benefits in both operational efficiency and business outcomes. Yes, we do expect to see that.
Right. Okay. Thank you.
Thank you, Katherine.
Thank you. This is going to conclude today's question and answer session. Ladies and gentlemen, this will also conclude today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.