Entering the earnings season, the third quarter financial reports of listed companies have been disclosed. Affected by the big environment, the financial reports of many companies are slightly "flat", but there are also many highlights. In 2021, more and more companies are releasing the growth rate of the Internet of Things business in their financial reports, regarding it as the company's new revenue pillar. For example, Qualcomm mentioned in the earnings report that its IoT division revenue in the fourth quarter of 2021 increased by 66% year-on-year, Silicon Labs' business revenue of nearly 60% came from the Internet of Things, NXP's industrial and IoT end market revenue increased by 18% year-on-year, and PTC also mentioned in the report that its growth was mainly driven by the Internet of Things business, an increase of 50% year-on-year.
In the financial report released by the global IoT development platform Tuya Intelligence (NYSE: TUYA) in this quarter, there are two data dimensions worth paying attention to: first, the company's overall gross profit margin increased by 8.2 percentage points year-on-year to 42.6%, setting a new single-quarter high, and has achieved growth for five consecutive quarters; second, SaaS and other business revenue is about 302% in the first three quarters of the year-on-year, with rapid momentum. This means that Tuya's higher-value products have been "paid" by the market, and the advantages of cloud service leaders based on platform + software have gradually become prominent.
Tuya Intelligent's third quarter 2021 financial report data
In fact, "when will the Internet of Things really explode" has been constantly proposed and discussed. In 2017, a report released by Cisco pointed out that 60% of IoT projects ended in failure. But now, as can be seen from the financial reports of various companies, the situation has reversed, and enterprises have begun to get a real return on investment from the Internet of Things project, picking up the "fruits of success". At the macro level, the Internet of Things has become one of the keywords of the new round of technology cycle. Not long ago, the Ministry of Industry and Information Technology, the Cyberspace Administration of China and other 8 departments jointly issued the "Three-year Action Plan for the Construction of New Infrastructure of the Internet of Things (2021-2023)" (hereinafter referred to as the "Action Plan"),which put forward four major actions and 12 key tasks, and clarified that by the end of 2023, the new infrastructure of the Internet of Things will be initially built in major cities in China, drawing a clear blueprint for the Internet of Things.
The east wind of the Internet of Things is coming
The Action Plan gives clear and unambiguous guidance on Technological Innovation of the Internet of Things, Industrial Ecology Construction, Application Promotion in Key Areas and Safety Management. For example, by strengthening policy guidance, coordinating technological innovation, breaking through key core technologies, and making up for industrial shortcomings such as high-end sensors and Internet of Things chips, we will focus on promoting the large-scale deployment of the Internet of Things in 12 industries in the three major areas of social governance, industry application, and people's livelihood consumption. What is particularly noteworthy is that in the Action Plan, the "Internet of Things Integration Application Development Action" is described as a separate section, which shows that the competent authorities are highly concerned about the integration of the Internet of Things and thousands of industries.
In fact, after years of continuous penetration, Internet of Things technology has been gradually applied to many fields such as smart industry, smart agriculture, smart wine tourism, smart pension, smart retail, smart energy, smart transportation and travel. For example, Caihe Street in Hangzhou, which is a pilot project for future communities in Zhejiang Province, is a typical case of smart community building. Hangzhou Caihe Street has 36 old residential areas built in the 1980s and 1990s, dirty and chaotic once made community residents frown, with the help of Internet of Things technology, these old residential areas built for nearly 40 years to achieve a new look, not only the elderly living alone have a perfect care and safety management system, community residents have also lived an intelligent life of App call elevators, access control safe passage, and rapid access of vehicles.
The Internet of Things has made life more convenient and turned factories into "smart factories" . With a history of 45 years, Hongshi Electric Appliances has been focusing on the traditional electrician market, and with the advent of the wave of intelligence, Hongshi Electric Appliances has begun to seek new changes with the help of Internet of Things technology. Nowadays, in the production workshop of Hongshi Electric Appliances, automation equipment has replaced manual monitoring, which has increased the monitoring efficiency by more than 3 times, and through the Tuya Cloud Intelligent MANUFACTURing PMS system, the abnormal number of Hongshi Electrical Appliances production has dropped by more than 50%, basically eliminating the situation of labeling errors and material chaos.
When the application of the Internet of Things penetrates into all aspects of life, the needs and industrial patterns of the Internet of Things industry are also quietly changing. On the one hand, after a long period of survival of the fittest and increased investment, the industry has begun to centralize, the gap between the forerunner and the latecomer is expanding, and the ecological advantage has begun to appear. On the other hand, as the Internet of Things enters the application landing stage, the demand for fast delivery and easy-to-use IoT solutions has become increasingly large, which has made neutral and open platform companies such as Tuya Intelligent popular. Because these enterprises provide the ability to quickly develop, deploy, and manage applications, So that IoT developers do not need to consider the underlying infrastructure expansion, protocol docking, third-party system docking and other issues.
This is reflected in the financial report, Tuya Intelligent's third quarter 2021 financial report shows that with a rich Connected by Tuya (CBT) device ecology and strong network effects, the number of deviceSKUs supported by Tuya Intelligent Empowerment in the third quarter increased by more than 500,000 from 410,000 at the end of the second quarter. On the other hand, the number of registered developers on the platform also continues to grow, with more than 440,000 developers as of the third quarter.
Unleash the Technological Force for the "Double Carbon" target
The realization of the Internet of Things in more industries and in-depth applications has also made its value in promoting the realization of the "double carbon" goal begin to appear. Forecasts for IoT, edge computing and networking technologies released by market consultancy Forrester for 2022 show that edge and IoT will be used more to reduce emissions. As more companies focus on reducing carbon emissions, the use of edge computing and connected devices can effectively monitor the environment, asset management and supply chain efficiency, making production processes more sustainable.
In fact, in the process of promoting the achievement of the "double carbon" goal, from individual families to buildings, industries, parks and other scenarios, Internet of Things technology has long been an important means to achieve carbon monitoring and carbon verification. Fritz Werder, general manager of Tuya Intelligent North America headquarters, proposed in an interview with CNBC that smart homes based on Internet of Things technology can integrate different devices and analyze energy consumption and usage behaviors to better achieve energy saving and consumption reduction.
Fritz Werder, General Manager of Tuya Smart North America Headquarters
Tuya Intelligence has also already launched smart energy solutions, supported by Internet of Things technology, based on rich hardware ecology, developer ecology and comprehensive energy control capabilities, providing hardware equipment such as meters, sensors, controllers, integrated energy monitoring and operation and maintenance management tools for home, building, industry, park and other scenarios, to achieve closed-loop management of power supply, power grid, load and energy storage, thereby improving energy production and utilization efficiency and reducing energy costs.
In addition, many companies have launched industry vertical IoT solutions to promote the achievement of the "double carbon" goal. For example, Hikvision has released the "Solid Waste Life Cycle Intelligent Supervision Platform", with the help of the Internet of Things and other technologies, to help the ecological environment department from the generation, collection, storage, transfer, disposal and other aspects of intelligent management, reduce energy consumption. Lenovo Group announced that it will firmly implement the "3S" strategy of intelligent Internet of Things, intelligent infrastructure and industry intelligence, promote the intelligent upgrading of the industry, and achieve cost reduction and efficiency increase.
The "double carbon" goal has promoted the explosion of the ESG concept with sustainable development at its core. ESG is seen as an intangible asset of a company that will enhance the business and social ethics of the enterprise, thereby enabling it to achieve long-term value growth. At present, when rating companies, the world's major ESG rating agencies consider how corporate carbon emissions or corporate governance risks affect their business models, cash flows, etc. in long-term value. This means that once included in the ESG index, the sustainability and long-term value of listed companies are recognized by the global capital market.
ESG has also received widespread attention from listed companies, and in recent years, the number of companies that publicly disclose ESG information in their earnings reports is increasing rapidly. As an important starting point for achieving the goal of "double carbon", IoT-related enterprises have taken the lead in "picking the fruit". Tuya Intelligence, Haier Zhijia, Changfei Fiber Optics, Legend Holdings, etc. were included in the FTSE Global Stock Index Series China Index in September this year, including the FTSE Large Cap Index, ftse Global Market Index (large and medium-sized), FTSE Full Market Index (large, medium and small), FTSE Complete All Market Index and Emerging Markets ESG Low Carbon Select Index. This shows that companies that adhere to long-term value and sustainable development are being valued by capital markets.
The Internet of Things is regarded as a scientific and technological revolution after the mobile Internet, and the epidemic has further catalyzed the outbreak of the Internet of Things. From the continuous innovation of Internet of Things technology, to the landing application in all walks of life, to the surge of ESG concepts, we can realize that the era of the Internet of Things has indeed come, and how to seize the opportunity of the times and catch the "high-speed train" of the Internet of Things is the first priority of enterprises and investors at present.