iFLYTEK "ran" out of an upward line, which is not easy.
Recently, iFLYTEK announced its 2021 financial report, which showed that its annual revenue exceeded 18.3 billion yuan, an increase of 40.61% year-on-year, becoming a rare listed company in A-shares with an annual revenue growth rate of more than 25% for 10 consecutive years. At the same time, its net profit attributable to the mother was 1.556 billion yuan, an increase of 14.13% year-on-year; the net profit after deduction of non-attributable to the mother was 979 million yuan, an increase of 27.54% year-on-year, and its profitability continued to increase.
More data worthy of "playfulness" in this annual report are: on the one hand, the growth rate of attributable net profit is less than revenue, and the gross profit margin of multiple business lines has declined; on the other hand, R&D personnel have increased by 30%, increased R&D investment by 22.14%, and "iFLYTEK Super Brain 2030 Plan" has added about 800 million yuan.
What happens between data crossovers?
One of them is that the future investment in the layout has increased, reducing profits, but creating more conditions for the long-term sustainable development of iFLYTEK. Short-term, medium- and long-term development strategies are thus revealed.
At the same time, in the new context of the market such as many AI companies falling into losses, the pressure of profitability and competition, and the special environment, the slowdown in the current development of the industry has more contrast meaning with the stability of enterprises. The "contrarian" behavior of iFLYTEK's continuous profitability and increased staff and investment also has more reasonable logic corresponding to each other.
Its change and invariance are the true reflection of the AI industry, and the interaction between enterprises and industries in the new cycle of industrial transformation and upgrading has also shown more performance.
Continued steady growth, two years ahead of the previous year
Let's start with revenue.
In the vertical comparison, in 2021, iFLYTEK's revenue increased by 40.61% year-on-year, compared with 27.30% and 29.23% year-on-year in 2019 and 2020, respectively.
The year-on-year increase of nearly 28% of non-profits, in the view of Liu Qingfeng, chairman of iFLYTEK, means that the company's profitability and quality have been further improved.
Comparing the multiple data in the annual report, an important detail can also be found: in 2021, the growth rate of iFLYTEK's net profit attributable to the mother is less than that of revenue.
In this regard, Liu Qingfeng said that this is mainly around the company's long-term development of the layout investment, mainly including R & D investment, base business market services and iFLYTEK super brain 2030 plan R & D reserves.
This can at least see three trends: First, iFLYTEK's business layout in the base area has been effective and is expanding, and the base business is ushering in a dividend period for the large-scale application of artificial intelligence, and the corresponding investment is increasing, which is a forward-looking response to create a better foundation support for iFLYTEK's sustained profitability; second, R&D investment is an important guarantee for iFLYTEK to achieve technological innovation leadership, products and businesses to maintain sufficient competitiveness, and new market space development; third, iFLYTEK to develop more steadily for itself. Sustaining the next phase and even more sustained increase in profitability, the enhancement of industry leadership, and the assurance of sustainable development.
iFLYTEK's data for the first quarter of this year provides some supporting evidence.
Its financial report shows that in the first quarter of this year, it achieved revenue of 3.506 billion yuan, an increase of 40.18% year-on-year; deducted non-net profit of 146 million yuan, an increase of 37.73% year-on-year, a good start.
In a more macro industry context, iFLYTEK's business logic and existing performance will have more prominent value. The current AI industry has passed a barbaric growth period, and the investment boom that once swarmed with capital has also become a thing of the past, and many AI companies are entering an increasingly severe competitive environment and an urgent context of seeking profits in the mire of losses.
Focusing on the present and seeking the future has become a more realistic language of survival.
What's behind the continued profitability?
Continuous profitability is one of the keywords of iFLYTEK.
The core factor behind this is the base business. Wu Xiaoru, president of iFLYTEK, revealed that in the past year, the revenue of its base business has accounted for more than 50% of the total revenue, and the growth rate is significantly higher than the growth rate of the overall business, which has reached 47%.
Referring to iFLYTEK's 2021 financial report, its base business took root in depth that year, and the scale of application continued to expand, forming a base business standard of "benign user dependence, long-term business ability, sustained growth potential, and industry demonstration value", and building a sustainable development advantage of "just need + generation difference".
The extended understanding is that the base business can form a benign and long-term development relationship with customers, and there is not a small market that just needs room for growth, which can provide long-term stable growth revenue for iFLYTEK. While bringing demonstration value to the industry and promoting industrial transformation and upgrading, it also brings two substantive effects to iFLYTEK: further deepening and benefiting in the subdivisions of education, medical care, consumers, smart cities, operators and automotive intelligent services, and creating conditions for the company to more calmly carry out various major innovations and forming a virtuous circle with a wider circle.
The field of education is a typical example, and smart education products are regarded as the first track of iFLYTEK.
Among them, the GBC linkage model is opening up more breakthroughs in iFLYTEK's education business. From the perspective of business logic, taking the English listening and speaking business as an example, the examination system and standardized examination room construction provided by iFLYTEK are for the G-end; each school builds the usual training and simulated examination environment for the B-end; after the school mock examination, the child does the necessary training at home, providing the child with a practice tool to help him learn better within the syllabus, for the C-end, which constitutes a typical GBC linkage.
Its model effect is also reflected in the fact that B-end procurement such as government procurement and school enterprises form a benign linkage with individual procurement, which can hedge risks with each other and promote each other, making the entire business "plate" bigger.
iFLYTEK also revealed that the State Language Commission and iFLYTEK have a joint special project, and the GBC linkage model is copied from English learning to Mandarin learning, and it is expected to have a sustained and stable income source of 5 billion yuan by the end of the "14th Five-Year Plan".
It is in line with policies and needs, and the model can be copied, which extends the GBC linkage model to more feasible space. At present, iFLYTEK has implemented this model to business tracks such as medical care and smart city.
Liu Qingfeng once revealed that iFLYTEK will increase from 10 to 13 base cities in 2021, and it is expected to increase to 25 by 2022. At present, iFLYTEK's base business has constituted a sustainable development model of "just need + generation difference", and it is expected that the business revenue growth rate will exceed 60% in 2022, entering the development harvest period.
This will continue to promote the achievement of iFLYTEK's two goals: total revenue of 100 billion yuan, of which about 50 billion yuan of revenue comes from the base business. When the goal is achieved, it will also bring a new transformation of iFLYTEK.
The ecological effect of open platforms
To have a more three-dimensional and complete understanding of iFLYTEK and the AI industry, it is inseparable from two words: open platform and ecology.
According to iFLYTEK's 2021 financial report, its open platform business has achieved great progress during the reporting period, with the number of developers increasing by 66.5% and revenue increasing by 55.6% year-on-year.
As early as October 2021, iFLYTEK officially released the "Open Platform 2.0 Strategy", which upgraded from the "two-dimensional" ecology of AI leaders + developers to the "three-dimensional" ecology of AI leaders + industry leaders + developers. The essence of this is that iFLYTEK and industry leaders build the baseline base of the industry, open the scene to gather developers' creativity, and further improve the landing efficiency with the help of low code and zero code, so that the various co-builders of the artificial intelligence industry can gather, build a new upgradable ecology in a healthy and orderly manner.
Based on a deeper understanding of the social application of artificial intelligence and even more "penetration", iFLYTEK believes that the solution of major social propositions such as education, medical care and pensions requires systematic innovation, and on the basis of business development in 2021, from the core technology research and development platform to the technology center of application development, it is systematically prepared for systematic innovation.
According to public information, in 2021, iFLYTEK's intellectual property layout further hit a record high, with 2683 invention patents, an increase of 74% year-on-year. There are 1135 patent layouts, and inventions account for 63%.
On the one hand, as one of the core subjects in the ecosystem, iFLYTEK's innovation ability and achievements are important influencing factors, providing a lot of help for the creation of practical value of this organism. By the end of 2021, iFLYTEK Open Platform has opened 449 AI products and capabilities, gathered more than 2.93 million developer teams, and has a total application number of more than 1.37 million, focusing on empowering 18 industries such as finance, agriculture, and energy, providing the industry with a wealth of intelligent voice and artificial intelligence capabilities and solutions.
Among them, iFLYTEK Open Platform relies on artificial intelligence technology breakthroughs and big data operation capabilities in speech recognition, speech synthesis, translation and natural language understanding, etc., to provide developers and upstream and downstream resource partners in the industry with full-link service capabilities such as technology empowerment, market empowerment and business model empowerment.
On the other hand, the ecological effect of the open platform has also laid more foundation for the "other round" of iFLYTEK's two-wheel drive strategy, systematic innovation, helping it to achieve its own endogenous and epitaxial sustained growth.
This is just part of the contours of an open platform and its ecology. In the context of the "14th Five-Year Plan" construction of digital China, industrial digitalization and intelligence, digital new infrastructure, and the medium- and long-term impact of the epidemic, the development space of artificial intelligence, the trend of transformation and upgrading are more intuitive, and the existing business layout and strategic layout of iFLYTEK will also form a more promising circular mutual benefit and prosperity effect at both ends of the enterprise and industry.