IPO was postponed, and the huge loss of more than 24 billion Yuancheng Technology is the color of the technology?

Text/Yang Jianyong

On the occasion of SenseTime's IPO in Hong Kong, it was suddenly changed, resulting in forced adjustment of the listing process, and the application money received will be refunded to the applicant in full. Under the public offering plan, a total of 1.5 billion Class B shares will be offered worldwide at offer prices ranging from HK$3.85 to HK$3.99 per share, with an expected net proceed of approximately HK$5,655 million (approximately US$730 million). However, this is a certain gap from the previously rumored $1 billion to $2 billion. In addition, with the postponement of sensetime's global launch and listing, what is the color of the AI unicorn created by more than 3,000 scientists?

First of all, continuous loss is one of the biggest problems, losses not only show a trend of rising year by year, but also the amount of losses is amazing. In the past three and a half years, SenseTime has lost more than 24 billion yuan. In 2018, 2019, 2020 and the first half of 2021, the loss was 3.432 billion yuan, 4.967 billion yuan, 12.158 billion yuan and 3.713 billion yuan respectively, and the cumulative loss in three and a half years reached 24.27 billion yuan. Of course, the large losses were mainly due to the fair value losses of preferred stock.

During this period, SenseTime's adjusted net EBITDA losses were $150 million, $1.155 billion, $707 million and $578 million, respectively, with a total three-and-a-half-year adjusted loss of $2.59 billion. SenseTime said in its application submission that since its inception, it has incurred continuous operating losses and net losses. It is expected to record a significant increase in net loss in 2021. At the same time, it is impossible to achieve or continue to maintain profitability in the future.

It should be pointed out that the other AI Tigers have also recorded huge losses for a long time in the past. The data disclosed by Yun from Technology shows that in 2018, 2019 and 2020, the losses were 181 million, 1.708 billion and 690 million yuan respectively, the loss in the first half of 2021 was 323 million yuan, and the cumulative loss in the past three and a half years was 2.9 billion yuan, while the loss of Yitu Technology exceeded 7.2 billion yuan during this period.

Second, artificial intelligence is increasingly competitive. With the increasing maturity of artificial intelligence technology, the industry has shown a competitive trend of competing with the crowd. There are not only Huawei and BAT heavyweight giants, but also giants from Hikvision, Dahua Shares, iFLYTEK and other market segments. For AI unicorns, commercial landing capabilities and huge losses are the focus of controversy, and they also face competition from technology giants. Among them, SenseTime's disclosure pointed out that competitors may have a longer history of business operations, or have/will have access to more financial resources, more advanced technical capabilities, and a wider range of customer groups and relationships than we do.

In addition, as we expand into areas such as cloud services, competitors, the basis of competition will be different, and may face more competitors. Increased competition can lead to lower volumes, lower prices, lower profit margins, or loss of market share. In the author's opinion, the players on the artificial intelligence track will eventually compete in the ability to land technology, which is also an important basis for measuring the strength of AI. At this year's 2021 World Artificial Intelligence Conference, the author saw exhibitors focus more on AI landing scenarios.

As the world's third and Asia-Pacific cloud giant, Alibaba Cloud's many innovations such as artificial intelligence and Internet of Things have been widely used through the cloud to help fully intelligentize. With the unique ability of "Cloud-To-Intelligence Integration", Baidu Intelligent Cloud is accelerating the empowerment of smart energy, smart city, intelligent manufacturing, intelligent customer service, smart finance and other industries to achieve production efficiency improvement and production mode change. As a manufacturer practicing the implementation of artificial intelligence applications, iFLYTEK comprehensively demonstrated the application achievements of AI+ city, AI+ education, AI+ medical, AI+ industry, AI+ life, and AI+ office.

At present, SenseTime's AI landing scenarios are mainly in the four major sectors of smart business, smart city, smart life, and smart car. Revenue streams are mainly software licensing, AI hardware and software products and related services, as well as the provision of software and hardware integrated products and related services that combine ARTIFICIAL intelligence chips or ARTIFICIAL intelligence sensors to enable AI models to operate efficiently. Among them, smart business and smart city are the core sectors, accounting for 86.8% of total revenue. The smart city business covers 119 cities from 21 in 2018 to 119 cities in the first half of 2021.

Finally, artificial intelligence as a technology trend in the next few decades, in recent years, there is no hotter industry than artificial intelligence, bringing about a booming trend of artificial intelligence. SenseTime, which is on this track, also reaps the dividends brought by the development of artificial intelligence. Over the past few years, SenseTime has seen strong revenue growth. In 2018, the revenue scale was 1.853 billion yuan, and it will grow to 3.446 billion yuan by 2020, with a compound annual growth rate of 36.4%.

According to the data given earlier by the authoritative research agency IDC, in 2021, the artificial intelligence market including software, hardware and services will reach 327.5 billion US dollars. The market's total revenue will reach $554.3 billion by 2024, with a five-year COMPOUND annual growth rate of 17.5%. In addition, in the market share of computer vision applications of Chinese Intelligence, SenseTime has the highest share and ranks first in the industry. As of June 30, 2021, SenseTime has built the world's largest computer vision model. The model has more than 30 billion parameters.

Conclusion

Technology landing, continuous losses, intensified competition and many other factors, the road to the listing of AI unicorns is also extremely bumpy, long-term losses contain huge risks, whether it can be favored by investors will face a huge test. After all, the ability to make one's own blood is particularly important. The perfect service of technology giants, the ability to land scenes and many other factors, while helping the intelligent transformation of thousands of industries, also harvest industry dividends.

Yang Jianyong, a contributor to Forbes China and winner of the NetEase 2020 Most Influential Award, is committed to in-depth interpretation of cutting-edge technologies such as the Internet of Things, cloud computing and artificial intelligence, and his views and research strategies have been cited by many authoritative media and well-known enterprises.