Recently, iFLYTEK released its 2021 annual report, in 2021, the company achieved revenue of 18.314 billion yuan, an increase of more than 40% year-on-year. As of 2021, iFLYTEK has had an annual revenue growth rate of more than 25% for 10 consecutive years.
At the performance briefing, Liu Qingfeng, chairman of iFLYTEK, said that it will continue to increase the layout investment for long-term development, develop GBC (government, enterprise, individual users) linkage, and build a base business, "In 2022, the growth rate of base business will exceed 60%. ”
iFLYTEK's revenue growth rate in the past three years (Source: iFLYTEK 2021 Annual Report)
Why is revenue growing faster than profit? The R&D investment is about 3 billion yuan
According to the data disclosed in the annual report, in 2021, iFLYTEK achieved revenue of 18.314 billion yuan, an increase of 40.61% year-on-year, net profit attributable to shareholders of the parent company of 1.556 billion yuan, an increase of 14.13% year-on-year, and net profit of 979 million yuan, an increase of 27.54% year-on-year.
Although the net profit of revenue in 2021 increased twice, it can be seen that the growth rate of iFLYTEK's revenue is significantly faster than the growth rate of profit. In this regard, Liu Qingfeng said that this is due to the layout investment made around the company's long-term development, "artificial intelligence will change the production and lifestyle of society, and the in-depth application in various fields of social life has just begun, so it is necessary for us to continue to increase investment." ”
According to the annual report data, iFLYTEK invested 2.936 billion yuan in research and development in 2021, an increase of 21.5% compared with 2.416 billion yuan in the same period in 2020. The number of R&D personnel was 8367, an increase of 29.5% compared to 6461 in the same period of 2020.
"The increase in production and research personnel is mainly compared with the research and development of learning machines, as well as the research and development of medical, maker, automobile and other research and development facing customer management platforms. R&D investment forms a series of products, which will not generate revenue and profit in 2021, but will have a very positive and important impact on 2022 and the longer term. Liu Qingfeng said.
In addition, in the fourth quarter of 2021, iFLYTEK achieved operating income of 7.446 billion yuan, an increase of 30% year-on-year, and a profit of 828 million yuan, which was basically the same as the same period last year.
In this regard, Liu Qingfeng explained that in the fourth quarter of last year, the total market investment of iFLYTEK increased, GBC linkage, and the proportion of personal products further increased, which made iFLYTEK need to seize the position in the fourth quarter, "such as short video marketing, almost all mainstream intelligent hardware manufacturers do not make money or even post money in the early stage of entering the short video platform." In the fourth quarter of 2021, we spent nearly $400 million on campaigns and advertising, an increase of $69 million over the same period last year. ”
For example, he said that in terms of English listening and speaking, the examination system, the construction of standardized examination rooms and the corresponding headphones and equipment are the G-end, and the place where the school wants to build the usual training and simulated examinations is the B-end, and after the simulated examination, the child uses the practice tools to help him learn better to do the necessary training at home is the C-end.
Wu Xiaoru further revealed that iFLYTEK's English listening, speaking and teaching test management platform has covered the middle and high school entrance examinations in 14 provinces on the G-side, and in 2021, 29 new cities will be added to the middle school entrance examination services. For the learning of English listening and speaking, iFLYTEK launched an AI listening and speaking class for schools, and launched an E-listening and speaking product for individuals, which was recognized by teachers and students in the school, and now the number of C-end users has reached 18 million. The platform's revenue exceeded 500 million yuan last year, an increase of 45% year-on-year.
In Liu Qingfeng's view, after increasing C-end products, the company's gross profit margin will decline, but government procurement, school enterprises and other customer procurement and personal procurement will form a healthy linkage, which can play a role in hedging and mutual promotion of mutual risks.
"Base business" ushered in the dividend period of artificial intelligence scale, accounting for more than 50% of revenue
Shell financial reporter found that in the context of the development prospects of AI technology, but the investment is high and the practical application is more limited, most companies with AI as the main business often face losses, and iFLYTEK has not appeared in this situation, the reason may be related to the more pragmatic development strategy of its leadership.
In the performance briefing, iFLYTEK executives repeatedly mentioned its "base business".
It is understood that iFLYTEK judges the "base business" based on the criteria of "visible and tangible application cases, large-scale promotion, and statistical data to prove the effectiveness of application". As mentioned above, the education business has already stepped out of the "base area" of the GBC model.
In addition to education, iFLYTEK has also formed a "base area" in the direction of medical care and smart city.
Taking the "base business" of medical services as an example, iFLYTEK has used G-end government procurement for grass-roots medical institutions, which have been used in the prevention and control of infectious diseases in cities, family doctor follow-up in cities, community management, etc., to improve the health and grass-roots diagnosis and treatment capabilities of urban residents, and form a more scientific prevention and control of the entire epidemic in the context of the current epidemic.
The B-side provides products for county-level hospitals, and this year will begin to promote the product application of top three hospitals such as Anhui Provincial Hospital. The C-end is family-oriented, has been applied in chronic disease management and family doctor follow-up, and promotes health insurance for families, and will launch intelligent hardware for families in the future. iFLYTEK said that the diagnosis and treatment ability of backstage general practitioners far exceeds that of grass-roots doctors, and constantly extends the specialized capabilities, so that general practitioner assistants can truly become the intelligent diagnosis and treatment assistants of each doctor in the future and become the health assistants of each resident, which are promoted in the entire system of iFLYTEK.
In addition to education and medical care, the GBC linkage business model is also applied to other business tracks such as smart cities. At present, the Anhui Shitong APP has 60 to 70 million active users. In the context of the epidemic, Anhui's Ankang code application is the most efficient, especially the rapid use of the elderly and children, which also has the opportunity for benign operation in the family in the future.
Wu Xiaoru, President of iFLYTEK, said that in the past year, iFLYTEK has signed strategic cooperation agreements with 9 prefectures and cities in 3 provinces, and conducted high-level communication and application deepening with more than 100 provincial and ministerial leaders, which has laid an increasingly strong foundation for the company's next sustainable and stable base construction.
iFLYTEK said in its annual report that among all A-share listed companies, iFLYTEK is the only listed company with an annual revenue growth rate of more than 25% in the past 10 consecutive years. In order to achieve rapid landing and more stable development of the business, the company laid out operations and resident personnel in advance according to a clear human resources model, and the scale of personnel increased by 3301 in 2021.
After the layout of the past year, iFLYTEK has also continuously upgraded its construction of base areas, further dividing them into the GBC fusion base areas mentioned above, as well as market coverage bases, just need future-driven bases, value customer bases and C-end base areas, and the sustainable development business advantages of "just need + generation difference" have been continuously strengthened.
Wu Xiaoru said that in the past year, the revenue of iFLYTEK's base business accounted for more than 50%, and the growth rate of the base business was significantly higher than the overall business growth rate, which has reached 47%. Liu Qingfeng said that the growth rate of base business in 2022 will exceed 60%.
Education and medical smart city multi-service "go hand in hand"
Specific to the industry, iFLYTEK's current business areas include education, open platform, medical care, smart city, etc.
IFLYTEK's Operating Income Composition (Source: iFLYTEK 2021 Annual Report)
In terms of education, data show that the gross profit margin of iFLYTEK Education dropped from 52.7% in the previous reporting period to 50.3%, Liu Qingfeng said that this is because in the education business, the proportion of hardware products such as learning machines in education products has increased, and the gross profit margin of hardware products is lower than that of pure software products, in addition, the education business itself has both operating attributes and social welfare attributes, "In 2021, our products in poor areas have made corresponding concessions and discounts, and some products have been pushed to remote areas in the case of small profits or donations." ”
In terms of medical business, the data shows that iFLYTEK assists governments and medical institutions at all levels to carry out epidemic prevention and control and basic public health follow-up services, with a total of more than 600 million person-times; iFLYTEK general practitioner assistants have covered 28 provinces and 284 districts and counties across the country, serving more than 50,000 grassroots doctors and 100 million residents, assisting grassroots doctors to provide more than 340 million AI auxiliary diagnosis suggestions, and more than 170,000 annual value correction and diagnosis, effectively alleviating the uneven distribution of grassroots high-quality medical resources. Liu Qingfeng expects the revenue growth of iFLYTEK's medical business to double in 2022.
In terms of smart cities, Liu Qingfeng revealed that the total revenue of iFLYTEK in 2020 is about 1.4 billion yuan, and in 2021 it is 1.613 billion yuan, which has also achieved benign growth, "Once iFLYTEK forms a total integrated service provider for software and hardware integration, more revenue will come from software and services in the future." ”
iFLYTEK said that in the future, the company will further consolidate the international leading edge of core technology, strengthen and consolidate product advantages and market advantages, and lead the artificial intelligence industry to accelerate growth; through "base business" + "systematic innovation", use artificial intelligence to provide strong support for the development of major national strategic needs such as education and medical care, serve the people's lives with innovative technology product applications, and build a better world with artificial intelligence.
Text/Luo Yidan
Edited by Song Yuting
Proofreading By Chen Diyan