Rapid revenue growth while taking into account long-termism is the basis for iFLYTEK's high growth.
Wen 丨 BT Finance and Profit
The world economy has entered an era of instability and uncertainty.
A new crown epidemic that has swept the world has accelerated the speed of organizational change under the superposition of the digital age, and often in one or two years, the evolution of enterprises has exceeded the sum of the previous ten years.
The continuous development of the epidemic in a certain period of time has profoundly changed the existing economic format, so that new models such as online entertainment, online education, online office, telemedicine, and fresh e-commerce have continued to emerge and rapidly take off. After the gradual lifting of the epidemic and the return of social production to normal, the huge online market demand such as education, medical care, and enterprise offices has continued to be activated, which is expected to give birth to "super applications" and bring new opportunities for digital technology innovation in related fields.
The market reaction also confirms this.
From the rise of Tencent's conference to the explosion of Byte's office platform Feishu, entrepreneurs suddenly found that online office and remote work are an acceptable option under the epidemic, but they began to pay attention to whether the increase or decrease of employee efficiency brought about by remote work is reasonable.
In this context, iFLYTEK, as the first batch of AI artificial intelligence technology companies in China, has also attracted increasing market and media attention.
On April 22, the high-profile star company announced its 2021 annual report and the first quarterly report of 2022, and the facts behind the data showed that the company was ready for stable development in the coming period.
According to the financial report, in 2021, the revenue was 18.314 billion yuan, an increase of 40.61% year-on-year, the net profit attributable to the mother was 1.556 billion yuan, an increase of 14.13% year-on-year, and the net profit of non-attributable to the mother was 979 million yuan, an increase of 27.54% year-on-year, and the quality of operation was further improved.
However, since the beginning of the month, iFLYTEK's stock price has taken a "roller coaster", as of the close of trading on April 24, iFLYTEK's stock price closed at 38.4 yuan, a decline of more than 20% compared with the peak of more than 51 yuan during this period. At the opening of the market on April 26, iFLYTEK's share price rose slightly by 1.05% to 35.49 yuan, with a total market value of 82.490 billion yuan.
Therefore, some media began to question the business and development trend of iFLYTEK, especially the increase in net profit reported by HKUST was lower than that of revenue, believing that this was the reason why the secondary market was not optimistic about iFLYTEK.
But is this really the case?
A report card that's actually good
These media voiced this voice because the data in the April 22 financial report showed that although iFLYTEK's revenue increased by 40% in 2021, the increase in net profit was only 14.13%, far lower than the growth rate of revenue.
Some media even listed the headline "whether iFLYTEK can do it or not".
In fact, we can't just look at the surface data of an enterprise, and the analysis from the fundamentals is the key to the secondary market investment bank to judge the enterprise. Whether in China or abroad, all the research reports of analysts under institutional investors are based on fundamentals, and rarely judge individual data. Among them, for the potential of enterprises, analysts mainly start from long-term growth, and will not just look at the temporary fluctuations of stock prices.
For example, CICC Securities, a well-known securities company, said after the release of the financial report of iFLYTEK that the AI boom is upward and it is optimistic about the high growth of iFLYTEK in 2022.
Another example is the research report released by Orient Securities on April 24, saying that it gave iFLYTEK an overweight rating. The main reasons include that the company's performance is in line with expectations; in terms of smart education, the company's regional "teaching according to aptitude" solution has been further copied on a large scale; and the company's "base business" has taken root in depth, and the scale of application has continued to expand.
In fact, the reason why these institutional investors disagree with many media and are optimistic about iFLYTEK is that the business revenue structure of iFLYTEK is very reasonable, and the quarterly data shows that it has found a development path after the business run-in.
Especially after the revenue exceeded 10 billion yuan in 2019, iFLYTEK made great strides forward, with a compound annual growth rate of 37.8% in net profit in the past two years, and a profit of 1.556 billion yuan in 2021, setting a new high since its listing.
In terms of quarters, iFLYTEK's performance climbed quarter by quarter, of which the single-quarter revenue and net profit in the fourth quarter were 7.446 billion yuan and 828 million yuan, respectively, which were the best single-quarter levels since the listing.
In addition, according to the first quarter report of 2022, iFLYTEK's revenue was 3.506 billion yuan, an increase of 40.17% year-on-year; net profit was 111 million yuan, and non-net profit was 146 million yuan, an increase of 37.73% year-on-year. This actually shows that the growth rate of iFLYTEK in deducting non-net profit has gradually approached the growth rate of revenue, indicating that there may be more room for the development of iFLYTEK in the future.
Wu Xiaoru, President of iFLYTEK, said: "The company's business start in the first quarter of 2022 has laid a good foundation for the whole year. ”
This is a manifestation of iFLYTEK's long-term competitiveness.
The core advantage of iFLYTEK is mainly that it is a company with strong market potential for both the B-end and the G-end, and the current artificial intelligence is already a very strong industry in the market, which can be described as the outlet of the market. At the same time, we see that iFLYTEK has a good market value both from the perspective of business expectations and the landing of the entire product, and from the current overall market, iFLYTEK's own products have strong market competitiveness.
What should businesses do in the Uka era
In 2019, Robert McDonald, P&G's chief operating officer, borrowed a military term to describe the new business world landscape: "This is a VUCA world. ”
"VUCA" is mainly a patchwork of four English word initials, namely volatilevole, uncertainty Uncertain, complexity Complex, and fuzzy Ambiguous. The Chinese transliteration of the word is Uka. After the outbreak of the epidemic in 2020, complex and uncertain events appeared frequently, and the "Uka era" became a high-frequency vocabulary.
In the era of Uka, there was no theoretical deduction, no logical analysis, no data proof, or even no empirical summary, but everything was in the real-time unknown.
But in this context, companies that adapt to change tend to take the lead.
Therefore, the current Chinese enterprises are experiencing a change of innovation from soft to hard, and the future of China's digital economy is unlimited, bringing an unprecedented window of development to the industry.
The fourth industrial revolution is actually in solidarity with everyone. "There is only the enterprise of the times, and there is no era of the enterprise." As Li Daokui said at the 36Kr Annual Meeting at the end of last year: "Today is more than any other era that needs breakthroughs in hard-core science and technology, and we all need the improvement of hard-core strength." ”
In the field of hardcore technology, there are now three directions that everyone cares about: chip technology, AI and industrial Internet. Among them, AI technology has connected industrial Internet and chips, and is a cornerstone technology of software and hardware integration. This technology has undergone iteration, and now it has reached the development period of industrialization, and has been applied to intelligent quality inspection, voice services, automatic dubbing, animation, video and other aspects.
As an industry leader, iFLYTEK is naturally not far behind.
At the beginning of 2021, iFLYTEK established the development goal of "one billion users, 100 billion revenue, and trillion ecology" at the end of the 14th Five-Year Plan, and regarded base business and systematic innovation as the two core strategies. Among them, "base business" is the foundation of development and the embodiment of the industrialization of iFLYTEK's core AI technology.
The financial report data proves that iFLYTEK has successfully completed the development goals set. According to the financial report, in 2021, the revenue of smart education business was 6.007 billion yuan, an increase of 49.47% year-on-year; the revenue of open platform and consumer business was 4.687 billion yuan, an increase of 52.19% year-on-year.
The sum of these two "base businesses" has exceeded 55% of revenue, becoming the killer of iFLYTEK's rapid development in the field of AI. Especially in the smart education business, under the "double reduction" policy, iFLYTEK's smart education business has ushered in strong growth.
On the one hand, the application results of the regional "teaching according to aptitude" solution have been further copied on a large scale, and have landed in nearly 20 cities and districts (counties) such as Jinshui District of Zhengzhou City, Wuhan Economic Development Zone, Qingdao West Coast New Area, and Yijiang District of Wuhu City, which have reduced the burden and increased efficiency for teachers and students, and have produced results that can be proved by statistical data.
On the other hand, the value of AI self-learning C-end products continues to be verified. In 2021, the sales of iFLYTEK AI learning machines increased by 150%, and the GMV and sales of JD Tmall increased by 200% year-on-year. Users recommend NPS value to rank first in the industry with a score of nearly 40%. At the same time, the number of schools operating personalized learning manuals increased by 50%, the scale of users increased by 40% year-on-year, and the renewal rate increased from 75% to 90%.
Of course, in addition to the core basic business, the consumer business has been further improved, and the intelligent hardware of the AI+ office scene has continued to iterate. In 2021, the sales volume of AI office intelligent hardware increased by 140% year-on-year, the GMV increased by 152%, the GMV growth rate of the Jingdong Tmall dual platform exceeded 80%, and emerging channels such as Douyin also grew rapidly to form a large-scale operation, becoming an important support for C-end sales.
It is worth noting that the iFLYTEK open platform has shown rapid growth in the number of developers and revenue. In 2021, the revenue of iFLYTEK Open Platform reached 2.988 billion yuan, an increase of 55.6% year-on-year. The number of developer teams increased by 66% to 2.93 million. The open platform has opened 449 AI capabilities and programs to the outside world, and focuses on empowering 18 industry sectors such as finance, agriculture, and energy.
Even the smart healthcare business, which is limited by the speed of investment, has achieved unimaginable development in 2021. iFLYTEK General Practitioner Assistant has 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 complete more than 130 million standardized electronic medical records, providing more than 340 million AI-assisted diagnosis suggestions, and revising diagnosis with annual value (doctors refer to the general practitioner assistant diagnosis prompts, modifying the original diagnosis, and the final diagnosis is consistent with the medical record information) more than 170,000 times, effectively alleviating the uneven distribution of high-quality medical resources at the grassroots level.
……
In this regard, Liu Qingfeng, chairman of iFLYTEK, believes that in the current situation of uncertainty, iFLYTEK must not only ensure rapid business growth, but also maintain sustainable, benign and steady business growth. "At the end of 2020, we propose to build a 'base business'. Regardless of whether the economic environment is good or bad, the 'base business' is an effective guarantee to help us through the economic cycle. ”
Historical experience proves that if an enterprise really wants to do a good job, it must consider where it is, what role it plays, and what contribution it can make to this society.
This is actually long-termism. Many times the long-termists have a different view of development than others, and they generally think that it is faster to take it slowly.
In times of uncertainty, laying a solid foundation is the first priority
The Uka era is both a challenge and an opportunity for businesses. The original market form and competitive advantage have been broken, and the new systematic competitiveness of various enterprises has not yet been shown. The key is that China is moving from simple model innovation to a new economic era of scientific and technological innovation and technological innovation.
In this regard, all visionary enterprises have launched their own hard-core breakthrough plans, laying a solid foundation, looking for technological advantages and future moats, which is the first choice these enterprises will make in the era of Uka.
These large technology-driven companies at the top of the industry are making such decisions. For example, Alibaba Cloud is developing its own server chips, operating systems, and data, trying to occupy the technical highland of cloud computing; for example, Tencent, is using its advantages in the social field to combine AI technology to create a four-dimensional Internet technology platform to help real economic enterprises find a way out from Internet marketing; and Huawei, starting from basic communication technology, using software and hardware capabilities to break through and achieve the moat of its own technology...
These companies realize that even if the high investment in technology slows down the realization of corporate profitability indicators, or makes the report card less beautiful, it is worth doing to lay the foundation for long-term development.
The same is true of iFLYTEK. Strategic advance layout is necessary for growing enterprises. According to the financial report, the total amount of related research and development expenses in 2021 reached 2.830 billion yuan, an increase of 27.99% over the same period of the previous year, and the new research and development expenses exceeded 600 million yuan compared with the previous year.
As a technology enterprise, R & D investment is to pave the way for future development, which is good, especially the company's strategy of "leading one step to leading the way" on key tracks has dug deep into the moat. The key is that in such a precipitation period, the company has found the direction of future development, and the breakthrough of the next stage has laid a solid foundation.
For the next step of development planning, iFLYTEK said at the financial report conference that it will continue to build the advantage of "just need + generation difference" and develop a high-growth cash cow business in key areas such as consumers, education, and medical care, through the support of artificial intelligence core technology + application data + field support. Therefore, at the beginning of 2022, iFLYTEK officially released the "iFLYTEK Super Brain 2030 Plan", hoping to establish a complex intelligent system based on human-machine collaboration and self-evolution based on cognitive intelligence.
According to the plan, in the next two years, three major products such as professional virtual human family, pet toys that can be raised, and adolescent depression screening platform will be launched soon. In order to support the above-mentioned plan, iFLYTEK has launched the "Wild Goose Array Plan" to recruit ten leading talents, 100 leading talents and 1,000 backbone talents around the world.
At the same time, iFLYTEK's team is also growing, with more than 3,300 new personnel reserves in 2021. Liu Qingfeng, chairman of iFLYTEK, said that based on the grasp of strategic opportunities in artificial intelligence, the company has increased its investment in the future. While expanding the personnel team, iFLYTEK's product line is shrinking.
R&D investment and talent reserves cannot be amortized in the current quarter, but must be placed in the future growth cycle. For example, when iFLYTEK achieves revenue of 100 billion yuan, the revenue of "base business" will exceed 50 billion yuan, and it is necessary to invest in research and development and talent reserves for the base business in advance.
In fact, long-termists generally prefer to be slower, and the development of the foundation will be faster. As a sample of technology enterprises, iFLYTEK adheres to the principle of "base business" to meet the needs of society and return to the fundamentals of value creation, which is actually the optimal solution to the current economic environment, because it is necessary to grasp the needs of users in order to get rid of external influences.
Drucker, a well-known business management scientist, proposed the relationship between organization and society when studying the business theory of enterprises, and he actually looked at organizations from a sociological point of view. In his eyes, "no organization can exist independently and for the purpose of its own existence, and every organization is an organ of society, and it also exists for the sake of society." ”
Therefore, if enterprises want to maintain long-term development capabilities, they must coexist with society, symbiosis with the industry, symbiosis with employees, and symbiosis with the entire scientific and technological progress.
And such enterprises will generally be paid attention to by institutional investors for a long time. And that's exactly what happened.
Minsheng Securities released a research report on April 23, saying that it gave iFLYTEK a recommended rating. When talking about the reasons for making this decision, analysts at Minsheng Securities said that iFLYTEK's increased strategic investment and accelerated construction of base areas are the cornerstones for achieving deep G-B-C integration. For enterprises with this ability, Minsheng Securities is optimistic about its prospects.
Similarly, Ping An Securities also gave iFLYTEK a recommended rating in its research report released on April 22. Ping An Securities analysts believe that iFLYTEK's revenue will grow rapidly in 2021 and the net profit attributable to the mother will grow steadily; and the company's gross profit margin and expense ratio during the period in 2021 will decline year-on-year, and R&D investment will continue to increase; coupled with the company's artificial intelligence source core technology continuing to lead the world and the effectiveness of artificial intelligence applications, the company's stock is worth holding for institutional investors for a long time.
In fact, after statistics, it can be seen that iFLYTEK has received 13 securities research reports in the past month, of which 11 have clearly expressed support for buying, with an average target price of 62.72 yuan, compared with the latest price of 38.40 yuan, 24.32 yuan higher, and the target average price increased by 62.67%.
This indicates that the capital market is optimistic about iFLYTEK, and the reason is that long-termism is a must for excellent enterprises in this era.
After all, in the era of Uca, the core of all sustainability was the competition for "hardcore" capabilities. The new generation of entrepreneurs and entrepreneurs not only need the strength and courage of commercial warfare, but also have the hard-core responsibility and responsibility to enter the game.
It is no exaggeration to say that in the era of rapid digital development, enterprises need a long-term concept of development.
Welcome to pay attention to [BT Finance] to read more exciting content.
All rights reserved, unauthorized reproduction is prohibited! If infringement is involved, please contact to delete it.