IPO approved, plans to raise 1 billion, the continuous loss of The Deep Pupil of Gehring when to turn around the loss?

Text/Yang Jianyong

On January 11, Glenn Deep Pupil registered on the Science and Technology Innovation Board to take effect, and the issuance work will be launched next, which means that another AI unicorn that continues to lose money is about to be listed. It should be pointed out that SenseTime was listed on the Hong Kong Stock Exchange a few days ago, with a market capitalization of more than HK$320 billion (about US$41 billion) and a current market capitalization of HK$228.3 billion (about US$29.3 billion). Although the market value decreased by more than 10 billion US dollars compared with the high level, it still rose by 78.18% compared with the issue price. SenseTime's performance in Hong Kong can be seen to be favored by investors.

Of course, whether SenseTime can reach a new high in the future, the market is also difficult to predict, but compared with the high level has been pulled back by 30%, indicating that the market will gradually become rational and return to value, which will have high reference significance for AI unicorns that will soon land on the science and technology innovation board. At present, including Yuncong Technology, Megvii Technology, Yuntian Lifei, etc., have submitted registration, while Geling Deep Pupil has obtained IPO approval before other AI unicorns. According to the registration draft, Geling Deep Pupil intends to raise 1 billion yuan, of which about 500 million is used for research and development in the direction of artificial intelligence. So what is the color of this AI unicorn?

First of all, from the perspective of revenue, AI unicorns have developed rapidly under the trend of artificial intelligence, and revenue has grown at an exponential rate. Due to the sharp increase in demand for artificial intelligence technology from all walks of life, artificial intelligence has been widely used in all walks of life, which has led to a rapid growth trend in the market. According to the data given earlier by the authoritative research institute IDC, the artificial intelligence market including software, hardware and services will reach 327.5 billion US dollars in 2021. The market's total revenue will reach $554.3 billion by 2024, with a five-year COMPOUND annual growth rate of 17.5%.

In the field of artificial intelligence, countless artificial intelligence innovation enterprises have emerged and developed rapidly. In 2018, 2019, 2020 and the first half of 2021, the revenue of Geling Deep Pupil was 51.96 million yuan, 71.21 million yuan, 243 million yuan and 72.188 million yuan, respectively, and the compound growth rate of revenue in the past three years reached 116.12%, showing a rapid growth trend. Founded in 2013, this AI unicorn is an early explorer and practitioner of the domestic computer vision industry and algorithm technology, focusing on the deep integration of advanced computer vision technology and big data analysis technology with application scenarios, and the artificial intelligence products and solutions provided have been successfully applied in the three major fields of urban management, smart finance, and commercial retail.

Secondly, the revenue concentration of Geling Deep Pupil is high, and the revenue growth is facing uncertainty. In the field of urban management, the main customers are large integrators, and during the reporting period, the revenue of the top five integrators accounted for 84.74%, 60.93%, 40.44% and 60.14% respectively. In the smart finance scenario, it is more dependent on a single customer. During the reporting period, the revenue from the Agricultural Bank of China accounted for 70.91% of the total revenue of the smart finance sector. In the field of smart retail, a single customer accounts for 98.91% of total revenue. It can be seen that The deep pupil of Gren has a single landing scenario in the field of smart finance and commercial retail, which will bring about the risk of income fluctuation.

Third, the profitability of The Deep Pupil of Gren is the biggest problem at present, and the ability to land commercially and the huge loss are the focus of controversy. From 2018 to 2020, the losses of GreenIng Deep Pupil were 74.55 million yuan, 418 million yuan and 78.2 million yuan respectively, and the cumulative loss of three and a half years was 570 million yuan, and the expected loss in 2021 was 65 million to 80 million yuan, and the loss narrowed compared with the previous year, mainly due to the reduction in the share payment expenses expected to be amortized in 2021 compared with the previous year. In response to the continuous loss, Gehring Deep Pupil pointed out that it was mainly due to the fact that it was still in the early stage of rapid growth, the overall scale of revenue was small, the investment in research and development was high, and multiple rounds of equity incentives were implemented, resulting in higher share payments in the expenses during the period. Operating losses narrowed in each period of the reporting period as the Company's revenue grew rapidly.

In view of the future profitability, Geling Deep Pupil said that in the future, with the rapid development of the artificial intelligence industry, the company's solutions in downstream application scenarios will continue to be enriched, and the scale effect will gradually appear, and it is expected that the future operating loss will continue to narrow until it achieves profitability. It is expected that the compound growth rate of main business income in 2020-2023 will be 35.96%, and the revenue in 2023 is expected to exceed 600 million yuan.

Finally, the artificial intelligence industry is becoming increasingly competitive. With the increasing maturity of artificial intelligence technology, the industry has shown a competitive trend of competing with the crowd. In the track where Geling Deep Pupil is located, Shang Tang, Megvii, Yuncong, and Yitu, which are supported by the four little dragons of AI, occupy the main market share. According to the latest data released by IDC, in the first half of 2021, in the market share of computer vision applications of Chinese Intelligent, SenseTime has the highest share and ranks first in the industry. It is followed by Megvii, Hikvision, Yuncong, and Innovative Qizhi and YITU Technology.

At the same time, the artificial intelligence market has brought together many heavyweight players, not only Huawei, BAT heavyweight giants, but also giants from Hikvision, Dahua Shares, iFLYTEK and other market segments. Geling pointed out that at the application level, in the fields of urban management, finance, and commerce, artificial intelligence companies are also facing market competition between leading enterprises and large equipment suppliers in traditional industries. With the continuous development of artificial intelligence, competition in technology, market and other aspects may be further intensified, and the sustainable development and operating performance of industry enterprises are facing certain challenges. Compared with the artificial intelligence enterprises in the same industry, the company's operating scale is relatively small, and the comprehensive competitiveness still needs to be further enhanced.

Before that, the author pointed out that the players on the artificial intelligence track finally competed in the ability to land technology, which is also an important basis for measuring the strength of AI. Overall, due to many factors such as the perfect service of technology giants and the ability to land scenes, the use of artificial intelligence to help all walks of life to transform and upgrade is also reaping the dividends of industry development. For AI unicorns, it is also controversial whether they can maintain sustained growth in the face of an increasingly fierce competitive environment.

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 services and artificial intelligence, and his views and research strategies have been cited by many authoritative media and well-known enterprises.