When the four enterprises of Cloudcong Technology, SenseTime, Megvii Technology and YITU Technology were crowned by the market as the "FOUR Little Dragons of AI (Artificial Intelligence)", they also became the most concerned new stars in the industry spotlight.
On April 6, Yun was approved for registration from the Science and Technology Innovation Board IPO, which is only one step away from listing. At present, among the "FOUR LITTLE DRAGONS OF AI", SenseTime (HK:00020) landed on the Hong Kong Stock Exchange at the end of last year; the IPO of Megvii Technology Innovation Board passed in September last year, and then submitted for registration, and the current review status is suspended; and the IPO road of Yitu Technology's Science and Technology Innovation Board was terminated on June 30 last year.
Zhou Xi, the founder of Yuncong Technology, was the deputy director of the Institute of Information of the Chongqing Institute of The Chinese Academy of Sciences and was selected for the "Hundred Talents Program" of the Chinese Academy of Sciences. In 2015, Zhou Xi established Yuncong Technology, and the initial artificial intelligence project was incubated from the Chongqing Research Institute of the Chinese Academy of Sciences, and many core technical personnel also came from the Chinese Academy of Sciences system.
Although the "debut configuration" is excellent, the cloud has not gone smoothly from the road of technology listing.
Red Star Capital Bureau noted that as early as December 3, 2020, Yun's IPO application from the Science and Technology Innovation Board was accepted by the Shanghai Stock Exchange, and it entered the inquiry state on December 31 of that year, and was approved on July 20, 2021. But it wasn't until April 6 this year that Cloud's application for registration from the Technology IPO was approved, during which time it took 16 months.
At the financial report level, Yuncong Technology is still in a state of continuous loss, from 2018 to 2020 and the first half of 2021, a total loss of 3.008 billion yuan in these 3 and a half years.
While the halo is gathered, while the listing is "bumpy", how is the current situation of the cloud that is about to be listed from the current situation of technology operation and the imagination of the future?
(i)
Split the cloud from the technology revenue structure
Artificial intelligence is the main source of revenue
According to the prospectus of Yuncong Technology, in the 2018-2020 fiscal year, the company's operating income was 484 million yuan, 807 million yuan and 755 million yuan, respectively. In 2018 and 2019, the company's revenue growth rate was 650.2% and 66.8%, respectively; in 2020 or affected by the epidemic, the company's revenue fell by 6.5% year-on-year.
The latest financial report shows that in the first half of 2021, Cloud achieved revenue of 455 million yuan from technology, an increase of 105.7% year-on-year, and the overall revenue has picked up.
Source: Prospectus, Red Star Capital Bureau
From the perspective of the cloud from the perspective of technology revenue structure, it is mainly composed of two parts of the business of human-machine collaborative operating system and artificial intelligence solutions. At present, the artificial intelligence solutions business is the company's most important source of revenue.
According to the prospectus, from 2018 to 2020, the revenue of cloud from the technology human-machine collaborative operating system business was 0.31 billion yuan, 183 million yuan and 237 million yuan respectively, accounting for 6.4%, 22.7% and 31.4% of the total revenue, respectively. The revenue contribution of this business is increasing.
From 2018 to 2020, the revenue of cloud from the technology artificial intelligence solution business was 452 million yuan, 597 million yuan and 515 million yuan respectively, accounting for 93.3%, 74.0% and 68.2% of the total revenue, respectively.
Here is a brief explanation of the two main businesses of cloud technology.
The first is the human-machine collaborative operating system, which refers to the company providing customers with self-developed basic operating systems, application products and core components based on human-machine collaborative operating systems, and technical services. At present, the human-machine collaborative operating system independently developed by Cloud From Technology includes four components: kernel, algorithm library, runtime and application framework, which has formed a complete operating system architecture, with a system foundation for down-docking AIoT devices and upward-carrying applications.
Simply put, it is AI software licensing and technical services, similar to Arcsoft Technology's licensing of algorithms and applications in the image field to chip manufacturers and smart phone terminal manufacturers. Cloud also licenses the self-developed human-machine collaborative operating system to relevant customers.
Source: Prospectus
The second is artificial intelligence solutions, which refers to the intelligent upgrading solutions that cloud provide intelligent upgrading solutions to solve customer business problems in specific industries through strong technical barriers in the field of face recognition and speech recognition.
Specifically, Yuncong Technology is mainly based on the self-developed human-machine collaborative operating system and its application products and AIoT hardware devices, providing comprehensive solutions for the four fields of smart finance, smart governance, smart travel, and smart business.
Among them, smart governance scenarios are currently the most widely used. According to the prospectus, from 2018 to 2020, the revenue of corporate smart governance accounted for 75.3%, 58.1% and 57.5% respectively. As of December 31, 2020, the company's smart governance products and solutions have been put into practical police operations in 30 provincial-level administrative regions across the country.
In addition, the smart finance scenario has grown rapidly and gradually grown into the second core application scenario. From 2018 to 2020, the revenue of the company's smart finance accounted for 10.9%, 18.9% and 23.9% respectively.
In addition to splitting the company's revenue structure and comparing business revenue trends, it is more important to compare the "making money" quality of various businesses.
First of all, from the perspective of the gross profit margin of the human-machine collaborative operating system, due to the high degree of standardization of this business, mainly to provide the company's self-developed software, so the gross profit margin of the business is relatively high. According to the prospectus, from 2018 to 2020, the gross profit margin of the company's human-machine collaborative operating system business was 75.6%, 89.3% and 75.9%.
In terms of artificial intelligence solutions, due to the overall solution mainly for customers in various industries, a large number of third-party software and hardware need to be purchased, and the hardware will also pull down the company's gross profit margin, so the overall gross profit margin of the business is relatively low. From 2018 to 2020, the gross profit margin of the company's artificial intelligence solutions business was 17.8%, 23.4% and 28.2%.
From 2018 to 2020, the overall gross profit margin of cloud technology was 21.7%, 40.9% and 43.5%, respectively, showing a stable and progressive trend.
(ii)
Expenditure side: Continuous losses, where is the money spent?
According to the prospectus, from 2018 to 2020, the net loss of Yuncong Technology was 200 million yuan, 1.763 billion yuan and 721 million yuan, respectively; in the first half of 2021, the company's net loss attributable to the owners of the parent company was 324 million yuan.
In the past three and a half years, Cloud has lost a total of 3.008 billion yuan from technology.
For the huge loss in 2019, Yuncong Technology said that this was due to the implementation of equity incentives for the company's executives and core employees in September 2019, and there were no restrictive clauses such as service periods or performance indicators.
In accordance with the provisions of accounting standards, the company will include the services obtained in accordance with the fair value of the equity instrument in the current period expense on the grant date, and the share payment fee recognized by the parent company of the equity incentive is 1.275 billion yuan. According to the financial report data, the cloud has increased significantly from the technology management expense ratio in 2019 to 181.7%.
In addition to the huge management expenses, the sales expenses of Cloud From Technology are also on the overall high side, and the sales expense rate shows an upward trend year by year. From 2018 to 2020, the company's sales expense ratio was 26.6%, 28.3%, and 36.3%, respectively, which is also one of the main reasons for the loss of cloud from technology.
As a technology-based enterprise, huge R&D investment is also one of the important reasons for the loss of cloud from technology.
According to the prospectus, from 2018 to 2020, Yun's research and development expenses from science and technology were 150 million yuan, 450 million yuan and 580 million yuan, accounting for 30.6%, 56.3% and 76.6% of the revenue in each period, respectively.
From the perspective of the number and proportion of R&D, from 2018 to 2020, the number of R&D personnel of Yuncong Technology was 465, 824 and 997 respectively; the company has set up artificial intelligence R&D teams in core cities such as Guangzhou, Chongqing, Shanghai, Suzhou, and Chengdu, with R&D personnel accounting for 51.1%, 49.6% and 55.4% respectively.
In summary, under the three mountains of sales, management and research and development, Cloud has not achieved profitability from technology for a long time. In addition, according to the latest financial data, the revenue of Cloud From Technology in the first half of 2021 was 455 million yuan, and the net profit attributable to the owners of the parent company was -324 million yuan, which was compared with the net profit of -286 million yuan in the same period of the previous year, directly increasing the loss surface by 13.1% again.
However, in this regard, cloud from technology does not seem to be "panicked". Yuncong Technology said that by measuring profitability, the current business plan, the order situation in hand and related conditions are the conditions for achieving a turnaround, and the time node of its own turnaround into profit is preset in 2025 in the report.
(iii)
Soon to be listed, the cloud from the worries and difficulties of technology
In terms of the general environment, the current life of artificial intelligence companies in China and even in the world is not very good.
According to the Yiou report, in 2018, nearly 90% of artificial intelligence companies were in a state of loss, and the other 10% were assisting traditional industry giants, playing the role of technology providers and barely maintaining food and clothing.
Objectively speaking, compared with the other two companies of the "AI Four Little Dragons", the cloud has lost less from technology.
According to SenseTime's financial report, the company lost 17.17 billion yuan in 2021, an increase of 41.3% compared with a loss of 12.15 billion yuan in 2020. The company's adjusted loss was 1.418 billion yuan, an increase of 61.5% compared with the loss of 878 million yuan in 2020.
According to megvii technology prospectus, from 2018 to 2020, the net loss of Megvii technology was 2.800 billion yuan, 6.643 billion yuan and 3.326 billion yuan, and the net loss after deducting non-deduction was 565 million yuan, 1.249 billion yuan and 1.547 billion yuan, respectively. In the first half of 2021, Megvii Technology had a net loss of 1.858 billion yuan, and a net loss after deducting non-profit also reached 929 million yuan.
Of course, compared with the company's revenue scale and R & D investment, Cloud From Technology currently has a certain gap with the above two companies.
For artificial intelligence companies, on the one hand, there is a bottomless R & D investment, on the other hand, there is a need to compete in research and development results, which seems to be like two ends of the scale, pulling these AI companies.
This is not a small pressure for today's cloud from technology. On the one hand, CloudCong Technology needs to face the competition of native AI companies, such as Giants such as SenseTime, Megvii and Yitu Technology, which includes both the competition of core algorithm technology strength, as well as the competition of artificial intelligence applications and industry solutions. However, at present, the cloud is in a "not high, not low" position from the technology as a whole, and does not show a unique advantage.
On the other hand, Cloudcong Technology also faces competitive risks such as Internet giants competing in the FIELD of AI and traditional industry manufacturers transforming AI.
The layout of Huawei, Alibaba, Tencent, Baidu and other internet giants has refreshed the competitive landscape of the AI industry. They not only have hard power in terms of traffic and finance, but also have rich experience in enterprise management. Once the Internet giants gradually rise and gain a foothold, the pressure on the four dragons such as cloud technology will be even greater.
In addition, Hikvision (002415. SZ), Dahua (002236. SZ) and other manufacturers have a deep accumulation in hardware, supply chain and other aspects, and their addition continues to increase the fierce competition.
Therefore, whether it is for cloud technology or for the entire AI industry, there are still too many uncertainties in the future, and the industry will continue to shuffle.
brief summary
In general, at this stage of the AI industry, the real spring has not yet arrived. Nowadays, the scattered scenarios of actual combat landing, the low degree of product standardization, and the high labor cost have led to the failure of these AI giants to find a sustainable profit path.
However, capital pays attention to profit first, and the market's doubts about the valuation and profitability of the "AI Four Tigers" have never stopped. Listing is only the first step from the cloud from technology, and there are still many hard battles that must be fought.
Red Star News reporter Yu Yao Liu Mi
Responsible editor Ren Zhijiang
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