20-F: Baijiayun Faces Revenue Decline, Nasdaq Delisting

Baijiayun Group Ltd. reported a significant revenue decline and net losses for fiscal year 2025, alongside its delisting from Nasdaq and ongoing legal challenges.

Summary

• Baijiayun Group Ltd. is a Cayman Islands holding company operating primarily in China through a Variable Interest Entity (VIE) structure, providing AI video solutions including SaaS/PaaS, cloud and software related solutions, and enterprise AI and system solutions.
• Total revenues decreased by 28.9% to US$42.5 million in fiscal year 2025, down from US$59.8 million in fiscal year 2024 and US$82.2 million in fiscal year 2023.
• The company reported a net loss from continuing operations of US$18.7 million in fiscal year 2025, an improvement from the US$83.1 million net loss in fiscal year 2024, but still a loss compared to US$7.2 million in fiscal year 2023.
• Gross profit decreased by 31.0% to US$9.0 million in fiscal year 2025 from US$13.0 million in fiscal year 2024, with the gross profit margin slightly decreasing to 21.1% from 21.7%.
• Operating expenses significantly decreased by 51.9% to US$30.0 million in fiscal year 2025 from US$62.4 million in fiscal year 2024, primarily due to reductions in share-based compensation, human costs, and marketing expenses.
• The company was delisted from Nasdaq on August 8, 2025, due to non-compliance with the minimum bid price requirement and is now quoted on the OTCID Basic Market under the symbol RTCJF.
• Negative operating cash flow continued, with US$8.1 million used in operating activities in fiscal year 2025.
• Significant impairment losses were recorded in prior years, including US$24.0 million for long-term investment in Hongxin Wanda in FY2024 and goodwill impairment of US$10.6 million in FY2024 and US$1.4 million in FY2025.
• The company recognized an allowance for credit loss of US$10.3 million in FY2023 and US$19.7 million in FY2024 related to a US$30.0 million receivable from the disposition of its BOPET film business, which has not yet been received.
• Two share consolidations were completed: a 1-for-5 reverse stock split effective May 30, 2024, and a 1-for-20 reverse stock split effective May 13, 2025.
• The company is involved in legal proceedings, including a summons for approximately $5.0 million in the New York Supreme Court and arbitrations concerning the Hongxin Wanda investment.

Sentiment

Score: 3

Explanation: The company faces significant financial headwinds, including declining revenues, persistent net losses, and negative operating cash flow. The delisting from Nasdaq to a less liquid market is a major negative event. While there are efforts to reduce operating expenses and some growth in user engagement for specific services, the overall financial health and market position are weak, compounded by regulatory uncertainties and ongoing legal issues.

Positives

• Total customers increased by approximately 11.8% to 4,431 as of June 30, 2025, from 3,985 as of June 30, 2024.
• Total VoD user visits increased to 1,235.6 million in fiscal year 2025, up from 991.8 million in fiscal year 2024.
• Total VoD duration increased to 476.8 million hours in fiscal year 2025, up from 357.3 million hours in fiscal year 2024.
• Operating loss margin improved from negative 82.6% in fiscal year 2024 to negative 49.6% in fiscal year 2025.
• Total operating expenses decreased significantly by 51.9% from US$62.4 million in fiscal year 2024 to US$30.0 million in fiscal year 2025, indicating cost reduction and efficiency improvement.
• The company recorded an income tax benefit of US$4.2 million in fiscal year 2025, compared to US$0.2 million in fiscal year 2024.
• Management concluded that internal control over financial reporting was effective as of June 30, 2025.

Negatives

• Total revenues decreased significantly by 28.9% to US$42.5 million in fiscal year 2025, continuing a downward trend from US$82.2 million in fiscal year 2023.
• The company incurred persistent net losses from continuing operations: US$7.2 million in FY2023, US$83.1 million in FY2024, and US$18.7 million in FY2025.
• Negative operating cash flow continued, with US$8.1 million used in operating activities in fiscal year 2025.
• Delisting from Nasdaq on August 8, 2025, to the less liquid OTCID Basic Market, which may adversely affect trading and the share price.
• Gross profit decreased by 31.0% from US$13.0 million in FY2024 to US$9.0 million in FY2025.
• An allowance for credit loss of US$10.3 million in FY2023 and US$19.7 million in FY2024 was recognized for a US$30.0 million receivable from the Fuwei Disposition, indicating a high risk of non-recovery.
• Recorded a US$24.0 million impairment loss for long-term investment in Hongxin Wanda in FY2024.
• Incurred goodwill impairment losses of US$10.6 million in FY2024 and US$1.4 million in FY2025.
• Ongoing legal proceedings, including a $5.0 million summons and arbitrations, create financial and operational uncertainty.
• The company does not plan to pay any cash dividends in the foreseeable future, limiting shareholder returns to price appreciation.
• The VIE structure, while necessary for PRC operations, introduces unique risks regarding regulatory compliance and operational control.

Risks

• Operating in an emerging and evolving market, the video cloud market in China, which may develop more slowly or differently than expected, potentially leading to revenue decline or failure to grow.
• Dependence on acquiring and retaining customers and increasing usage of customer applications; failure to do so could harm business, results of operations, and financial condition.
• The market is competitive, and an inability to compete effectively could harm business, results of operations, and financial condition.
• If the platform does not achieve sufficient market acceptance, financial results and competitive position will suffer.
• Inability to manage business growth or execute strategies effectively could materially and adversely affect business and prospects.
• The company has incurred, and may continue to incur, net losses and negative operating cash flow.
• Limited operating history makes it difficult to evaluate current business and prospects, leading to fluctuating results of operations.
• A substantial portion of revenues is generated from a limited number of customers; the loss of, or a significant reduction in usage by, one or more major customers would result in lower revenues.
• Failure to effectively develop and expand sales and marketing capabilities could harm the ability to increase the customer base and achieve broader market acceptance.
• Granting share-based awards could lead to substantial share-based compensation expenses and significant dilutive effect to existing shareholders.
• Natural disasters, widespread health epidemics (like COVID-19), or other outbreaks could have a material adverse effect on business operations.
• The company is required to obtain and maintain permits, filings, and licenses to operate its business in China; any failure to do so could have a material adverse impact.
• Acquisitions, investments, dispositions, or divestments may divert management's attention, incur debt, dilute shareholders, or prove less favorable than expected.
• Substantial costs may be incurred in protecting or defending intellectual property rights, and the company may become involved in disputes relating to alleged infringement of others' intellectual property rights.
• Dependence on the continued services of senior management; the loss of any key personnel could adversely affect business.
• Insufficient transmission bandwidth and co-location space could result in disruptions to the platform and loss of revenues.
• Use of open-source software could negatively affect the ability to sell products and subject the company to possible litigation.
• Breaches of networks or systems, or those of service providers, could degrade business, compromise data, result in significant losses, damage reputation, and expose the company to liability.
• Business is subject to a variety of PRC laws and regulations, including those regarding privacy, cybersecurity, and data protection; non-compliance could harm business.
• Significant uncertainties exist in relation to the interpretation and implementation of, or proposed changes to, PRC laws, regulations, and policies regarding the industries in which the company or its customers operate.
• The Chinese government exerts substantial influence over business conduct and may intervene or influence operations at any time, potentially limiting the ability to offer securities overseas.
• Changes in the political and economic policies of the PRC government could adversely affect business, results of operations, and financial condition.
• Recent regulatory developments in China may result in the PRC government exerting more oversight and control over overseas listings and offerings, potentially requiring CSRC approval for capital raising activities.
• Contractual arrangements with VIEs are governed by PRC laws, making enforcement difficult and potentially less effective than equity ownership.
• The Class A ordinary shares will be delisted and prohibited from trading in the over-the-counter market under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect or investigate the auditor for two consecutive years.
• The trading price of the Class A ordinary shares is likely to be volatile, which could result in substantial losses to investors.
• Substantial future sales or perceived sales of Class A ordinary shares in the public market could cause the price to decline and depress the ability to raise funds.
• The dual-class share structure with different voting rights significantly limits the ability of Class A shareholders to influence corporate matters.
• Outstanding warrants to subscribe for Class A ordinary shares held by certain investors may not ultimately be exercised, potentially affecting the shareholding structure and financial condition.
• The company may be a passive foreign investment company (PFIC) for U.S. federal income tax purposes, which could result in adverse U.S. federal income tax consequences to U.S. investors.
• Difficulties in protecting interests and limited ability to protect rights through U.S. courts because the company is incorporated under Cayman Islands law.
• Certain judgments obtained against the company by shareholders may not be enforceable due to operations and assets being primarily in China.
• The corporate structure, together with applicable law, may impede shareholders from asserting claims against the company.
• Corporate governance practices differ significantly from Nasdaq listing standards, potentially affording less protection to shareholders.
• The delisting of Class A ordinary shares from Nasdaq may continue to have a material adverse effect on trading and price.
• The company will not pay dividends for the foreseeable future, so investors must rely on price appreciation for return on investment.
• Techniques employed by short sellers may drive down the market price of Class A ordinary shares.
• If securities or industry analysts do not publish research or publish inaccurate or unfavorable research, the market price and trading volume could decline.
• Failure to implement or maintain an effective system of internal controls may adversely affect investor confidence and the market price of Class A ordinary shares.
• Uncertainties exist with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment of a non-Chinese company.
• The company will be subject to restrictions on currency exchange in China.
• PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent making loans or additional capital contributions.
• Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject the company to penalties.
• Any failure to comply with PRC regulations regarding employee equity incentive plans may subject PRC plan participants or the company to fines and other legal or administrative sanctions.
• The discontinuation of preferential tax treatment available in China could adversely affect business, results of operations, and financial condition.
• The company and its non-PRC subsidiaries may be treated as resident enterprises for PRC tax purposes under the EIT Law, potentially subjecting global income to PRC income tax.
• Litigation and negative publicity surrounding China-based companies listed in the United States may result in increased regulatory scrutiny.

Future Outlook

The company expects to continue distributing earnings and settling service fees owed under contractual arrangements but does not anticipate declaring dividends in the foreseeable future, intending to retain future earnings for business development and expansion. Management plans to continuously increase research and development investment to improve existing software and platforms, aiming for new business breakthroughs like real-time communications, and will invest significantly in sales and marketing to explore new business lines and enhance brand image. The company anticipates many development and growth opportunities in audio and video related sectors due to advancements in 5G, AI, and IoT, and increased demand for online interaction. While believing existing cash and cash equivalents will be sufficient for the next 12 months, the company acknowledges it may require additional capital and may seek to issue equity or debt securities or obtain credit facilities.

Management Comments

• We expect to continue to distribute earnings and settle the service fees owed under the contractual arrangements at the request of Zhejiang WFOE and based on our business needs, and do not expect to declare dividend in the foreseeable future.
• We intend to continuously increase research and development investment to improve the performance of our existing software and platform which may have new business breakthroughs, such as real-time communications (RTC).
• We intend to continue to invest significantly in sales and marketing efforts to explore new business lines and improve our brand image and influence.
• We believe that our existing cash and cash equivalents and anticipated cash flows from continued operations and investing activities will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months.

Industry Context

The video cloud market in China is in an early but rapidly evolving stage, driven by advancements in 5G, AI, and IoT, and increased demand for online interaction, particularly accelerated by the COVID-19 pandemic. The Chinese government's 14th Five-Year Plan for the Digital Economy further supports the growth of cloud and video services. The company operates in a competitive landscape with providers of real-time engagement services, customized cloud software, and integrated hardware solutions. It positions itself as a unique player offering both SaaS and PaaS services, aiming to be an industry enabler with a deep understanding of customer demands across various sectors like education, finance, and healthcare.

Comparison to Industry Standards

• The company believes its robust technology infrastructure can support live streaming for up to 1,000,000 users simultaneously with a latency below 200 milliseconds under typical networking conditions.
• The company states its use of C++ for video decoding reduces latency on the streaming side to one to three seconds, which it claims 'far exceeds the performances of industry peers'.

Management Changes

Corporate Governance

Legal Proceedings

• In July 2025, a holder of Notes filed a summons in the Supreme Court of the State of New York, seeking approximately $5.0 million from Baijiayun Group Ltd. The motion for summary judgment remains pending before the court as of October 16, 2025.
• Since 2024, a series of arbitrations have arisen between the company and Beijing Jiufang Tailai Culture Co., Ltd. regarding the investment in Hongxin Wanda Technology Co., Ltd. Both parties have initiated arbitration proceedings, with cases remaining pending before the arbitral tribunal.

Related Party Transactions

• Sales to Nanjing Guosheng Huaxing Technology Co., Ltd. (controlled by Mr. Gangjiang Li) of US$6,000 in FY2024 and US$2.1 million in FY2023.
• Sales to Suzhou Semitech Technology Co., Ltd. (controlled by Mr. Gangjiang Li) of US$13,000 in FY2023.
• Sales to Jinan Zhongshi Huiyun Technology Co., Ltd. (controlled by Mr. Gangjiang Li and Mr. Yi Ma) of US$2.4 million in FY2023.
• Sales to Beijing Huatu Hongyang Education & Culture Co., Ltd. (a former shareholder) of US$512,699 in FY2023.
• Purchases of labor outsourcing services from Nanjing Guosheng Huaxing Technology Co., Ltd. of US$65,000 in FY2024 and US$35,131 in FY2023.
• Return of US$7,000 in connection with purchases from Jinan Zhongshi Huiyun Technology Co., Ltd. in FY2024, following purchases of US$413,686 in FY2023.
• Purchases from Shenzhen Zhixie Yunbi Technology Co., Ltd. (controlled by Mr. Gangjiang Li) of US$445 in FY2023.
• Prepayments to Nanjing Guosheng Huaxing Technology Co., Ltd. of US$65,847 as of June 30, 2025.
• Amounts due to Beijing Guosheng Huaxing Technology Co., Ltd. (controlled by Mr. Gangjiang Li) of US$67,005 as of June 30, 2025.
• Amounts due to Beijing Zhongshi Huiyun Technology Co., Ltd. (controlled by Mr. Gangjiang Li) of US$50,254 as of June 30, 2025.
• In June 2023, the company agreed to sell 15% of its equity interest in Hongxin Wanda to Mr. Gangjiang Li for RMB88.0 million (approximately $12.1 million) in cash, and another 15% to Shanghai Jiani Jiarui (controlled by Mr. Gangjiang Li) in exchange for fund shares; these transactions were not consummated as of June 30, 2025.
• Nanjing BaiJiaYun provided a guarantee for a RMB46.0 million (approximately $6.3 million) loan from the Industrial and Commercial Bank of China to Nanjing Baishi Cloud, which was released in July 2025.

Stakeholder Impact

• Shareholders face significant risks due to declining revenues, persistent net losses, negative operating cash flow, and the delisting from Nasdaq to a less liquid market. The dual-class share structure limits the influence of Class A shareholders, and no dividends are expected in the foreseeable future.
• Employees have been subject to workforce reductions in sales, marketing, and R&D, though share-based compensation plans are in place to attract and retain key personnel.
• Customers have seen an increase in total numbers and VoD user visits/duration, but overall revenue decline suggests potential shifts in service mix or lower revenue per customer.
• Creditors are exposed to the company's financial instability, including outstanding short-term borrowings and convertible notes, and the uncertainty surrounding the recovery of a US$30.0 million receivable from a disposition.
• Suppliers may experience reduced demand for hardware and services due to the company's cost-cutting efforts and revenue declines.

Next Steps

• Continue to distribute earnings and settle service fees owed under contractual arrangements.
• Retain future earnings for business development, operation, and expansion.
• Continuously increase research and development investment to improve existing software and platform, aiming for new business breakthroughs.
• Invest significantly in sales and marketing efforts to explore new business lines and improve brand image and influence.
• Monitor and assess developments in PRC cybersecurity and data privacy regulations to ensure compliance.
• File with the CSRC within three business days after the closing of any subsequent offerings of securities.
• Address ongoing legal proceedings, including the NY Supreme Court summons and arbitrations regarding the Hongxin Wanda investment.
• Potentially seek additional equity or debt financing if existing cash resources are insufficient to meet future requirements.
• Continue to focus on expanding new technology paths, cultivating vertical scenarios, and developing AI, while improving customer experience through strategic layout such as software optimization plus hardware adaptation.

Key Dates

Recommendation

The company's financial performance is severely deteriorating, marked by consistent revenue declines, substantial net losses, and negative operating cash flow across multiple fiscal years. The delisting from Nasdaq to the OTCID Basic Market significantly reduces liquidity, transparency, and investor confidence. Furthermore, the company faces considerable financial risks including large impairment losses on investments and goodwill, a substantial unrecovered receivable from a disposition, and ongoing legal challenges. While management is implementing cost-cutting measures, the overall outlook is highly unfavorable, suggesting a high probability of further share price depreciation and potential capital erosion for investors.

Keywords

AI video solutions, SaaS, PaaS, Cloud computing, Enterprise AI, China market, SEC filing, Form 20-F, Nasdaq delisting, VIE structure, Financial performance, Risk management, Corporate governance, Cybersecurity, PRC regulations, Share consolidation, Net loss, Revenue decline, Operating cash flow, Impairment losses, Legal proceedings