(Yicai Global) Aug. 12 -- Shares in China Youzan plummeted 15.25 percent today after the Chinese e-commerce Software-as-a-Service provider reported its first decline in quarterly revenue in almost five years and widening losses as its biggest customer turns away from outsourcing technical support to in-house systems.

Hangzhou-based Youzan’s share price [HKG:8083] closed at HKD1 (USD0.13) today. It is now 77 percent below the record high reached in February.

Youzan’s net loss expanded 65 percent in the three months ended March 31 from the same period last year to CNY199 million (USD30.7 million), according to the Hangzhou-based firm’s latest earnings report released yesterday. Revenue dropped 2.5 percent to CNY803 million (USD124 million).

“In the first half, we observed that our main client Kuaishou is still trying to develop its own closed e-commerce ecosystem, so our transaction volume from Kuaishou continues to shrink," Chief Financial Officer Yu Tao said on the earnings call.

Beijing-based Kuaishou used to account for 40 percent of Youzan’s business volume. This has now halved and is expected to further decline to between 10 percent and 15 percent over the course of the year, Yu said.

As more and more entertainment platforms such as Kuaishou and TikTok’s Chinese version Douyin branch into e-commerce, they have started to develop their own technical toolkits to help merchants open online stores and are relying less on the services provided by external technical support providers such as Youzan.

SaaS is a distribution model in which software programs are hosted by a third party on external servers. Users pay a subscription fee to access the program over the Internet, rather than downloading them onto their own computers. This can be a time-consuming endeavor and requires a lot of storage space.

Editor: Kim Taylor