HC Group Inc reported QQ1 2025 revenue of 3,006,484,000 CNY, up 18.8% QoQ and 1.83% YoY, reflecting a meaningful sequential uptick driven by higher activity across its technology-driven and digital services platforms. The quarter yielded an EBITDA of 10,048,000 CNY and an operating income of 7,245,500 CNY, marking a sharp swing from the Q4 2024 period, which posted negative operating income and negative EBITDA. Despite the positive operating trajectory, HC Group remains cash-flow negative on a net basis with a net loss of 11,364,000 CNY and an EPS of -0.0087. Gross profit reached 113,145,000 CNY for QQ1 2025, with a gross margin of 3.76%, up from the prior quarter’s margin but still well below typical IT services benchmarks, signaling ongoing cost-to-revenue challenges or a low-margin mix of services and platforms.
The improvement in operating profitability alongside a robust QoQ revenue uptick suggests the company is stabilizing its cost base and benefitting from better revenue mix, possibly from higher-margin digital services, platform monetization, and B2B/B2C offerings. However, the persistent net loss, modest gross margins, and the absence of detailed R&D spend data warrant close attention to cost structure, working capital efficiency, and the ability to translate operating earnings into positive bottom-line cash flow. Investors should monitor margin expansion catalysts, the execution of platform strategies (hc360, zolcomcn, and Union Cotton/ibuychem platforms), and any management guidance on profitability targets for 2025.