Written by | Zhang Yu edited | Yang Bocheng inscription figure | IC Photo
The boots finally landed on the ground. On May 27, Yuncong Technology, which is known as the "AI Four Little Dragons" with Megvii Technology, Yitu Technology and SenseTime Technology, officially landed on the Science and Technology Innovation Board with an issue price of 15.37 yuan per share, an intraday increase of up to 56.95%, as of the close of the A-share market on the same day, the stock price of Yuncong Technology was finally 21.4 yuan per share, and the total market value on the first day of listing reached 15.85 billion yuan.
According to public information, Yuncong Technology was founded in 2015, is an artificial intelligence enterprise that provides efficient human-machine collaborative operating system and industry solutions, and has gradually achieved mature application in the four major fields of smart finance, smart governance, smart travel and smart business.
In the list of the "FOUR LITTLE DRAGONS OF AI", although Yuncong Technology is the second listed company after SenseTime, the aura is shiny enough, but in fact, the road to the listing of Cloud From Technology is very tortuous and bumpy.
In August 2020, Yuncong Technology registered for counseling with the Guangdong Securities Regulatory Bureau, and in December of the same year, it submitted a prospectus to the Listing Committee of the Science and Technology Innovation Board and was accepted. In July 2021, the Listing Committee of the Science and Technology Innovation Board announced that it had passed the review of Yuncong Technology, and after several rounds of inquiries, it was not until April 2022 that the CSRC agreed to yuncong technology's registration application for listing on the Science and Technology Innovation Board.
In fact, it is not only the twists and turns of the road to the listing of Cloud From Technology, Yitu Technology was terminated twice during the application for listing on the Science and Technology Innovation Board, and finally declared the listing failure; although Megvii Technology successfully passed the review of the Listing Committee and submitted a registration application, its registration application is currently in a suspended state.
An AI industry insider told DoNews (ID: ilovedonews) that "AI companies generally have a situation of 'high valuation, high research and development, and high loss', and they are also facing the dilemma of less commercialization than expected." Reasons such as these are important reasons why AI companies cannot go public smoothly. ”
Now, seven years after its establishment, the cloud from technology that has undergone several twists and turns has finally knocked on the door of the capital market, but for cloud from technology, it is far from the time when you can sit back and relax.
Mired in losses
The "money" road is worrying and long-term losses have always been a dark cloud hanging over the heads of AI companies such as cloud technology.
According to the prospectus, from 2019 to 2021, the total revenue of Yuncong Technology was 807 million yuan, 755 million yuan and 1.076 billion yuan, respectively, and the net profit attributable to the mother in the same period was -640 million yuan, -813 million yuan and -632 million yuan, respectively, with a cumulative loss of 2.085 billion yuan in three years.
Two days before the cloud went public from technology, it disclosed its first quarter 2022 financial report. According to the financial report, Yuncong Technology's revenue was 213 million yuan, an increase of 67.02% year-on-year; the net loss was 116 million yuan, a decrease of 45.52% year-on-year.
Specifically, the main business of cloud technology is divided into two major sectors: human-machine collaborative operating system business and artificial intelligence solution business, of which the artificial intelligence solution business is the income-generating business of cloud technology.
From 2019 to 2021, the revenue of the ARTIFICIAL intelligence solution business was 597 million yuan, 515 million yuan and 934 million yuan, accounting for 76.52%, 68.50% and 87.28% of the total revenue, respectively. Although the proportion is relatively high, but the gross profit margin of the artificial intelligence solution business is at a low level, in the same period, the gross profit margin of the business is 23.43%, 28.19% and 31.34%, as a comparison, yitu technology, Cambrian, Megvii technology and other AI companies artificial intelligence solution related business gross margin is generally more than 50%.
The low gross margin of the revenue-generating business is a major reason why the cloud has fallen into a long-term loss from technology, and the huge R&D expenses are also an important factor.
According to the prospectus, from 2019 to 2021, the research and development expenses of Yuncong Technology were 454 million yuan, 578 million yuan and 534 million yuan, accounting for 56.26%, 76.56% and 49.63% of the total revenue, showing a trend of continuous high.
It is worth noting that not all research and development expenses can eventually drive performance growth, cloud from the technology mentioned in the prospectus, in 2020, due to chip design results did not meet expectations, and EDA software and production tape-outs encountered restrictions, and finally terminated the "artificial intelligence SOC chip development and industrialization application combined with high-accuracy face recognition technology" project.
According to SenseTime's 2021 financial report, its total revenue was 4.7 billion yuan, an increase of 36.4% year-on-year, and in the same period, the adjusted net loss was 1.42 billion yuan, an increase of 61.5% year-on-year. In addition, SenseTime's R&D investment was 3.06 billion yuan, accounting for 65.1% of the total revenue, even far higher than that of Yuncong Technology.
In the case of insufficient self-hematopoietic ability and the need to "burn money" research and development and expansion, financing has become a life-saving straw for AI companies. Since its establishment in 2015, Cloud has completed 11 rounds of financing from Technology, with a total financing amount of more than 4 billion yuan, of which the last round of financing was fixed in May 2020.
In the AI industry, long-term losses have become the norm. According to public data, SenseTime lost 34.303 billion yuan in 2019-2021, Megvii technology lost 12.766 billion yuan in 2018-2020, and YITU technology lost 6.1 billion yuan in the first half of 2018-2020.
It is precisely because ai companies have long-term losses, resulting in investment institutions' enthusiasm for them has obviously faded. Southwest Securities pointed out in the research report that investment and financing in the AI field reached its peak in 2018, and the number of investment and financing has decreased significantly since 2019. After entering 2021, only Yitu Technology completed a round of financing in February 2022 in the "AI Four Little Dragons".
The road of financing is not feasible, and the pressure of funds through the listing process has become an inevitable choice for AI companies. In the prospectus submitted by Yuncong Technology to the Shanghai Stock Exchange, it elaborated on the main purposes of the funds raised: it intends to raise 3.75 billion yuan, plans to invest 810 million yuan in the human-machine collaborative operating system upgrade project, 830 million yuan in the qingzhou system ecological construction project, 1.41 billion yuan in the artificial intelligence solution integrated service ecological project, and 690 million yuan in supplementary working capital.
Perhaps in order to boost investor confidence, in the prospectus, Yuncong Technology also optimistically predicts: from 2022 to 2025, the revenue scale is expected to be 1.682 billion yuan, 2.501 billion yuan, 3.227 billion yuan and 4.011 billion yuan, with an annual compound growth rate of 33.60%. Yuncong Technology also said that with the continuous expansion of business scale and the improvement of gross profit margin, it is expected to achieve profitability in 2025.
"Cloud from the technology in the short term may be difficult to change the status quo of losses, listing can only temporarily alleviate the pressure of funds, but in the end it is a symptom rather than a cure." In order to achieve profitability in 2025, Yuncong Technology still needs to achieve commercialization as soon as possible and improve its self-hematopoietic ability. The above-mentioned AI industry insiders said.
The road ahead is still foggy
For cloud technology, listing is not the end. Taking gelling deep pupil, an AI company also listed on the science and technology innovation board, as an example, on March 17, green deep pupil was officially listed for trading, and its issue price was 39.49 yuan per share, but as of the close of A-shares on the first day of its listing, the stock price of green deep pupil finally fell by 5.14% to 37.46 yuan, with a total market value of 6.929 billion yuan, and it suffered a break on the first day of listing.
As of the close of A-shares on May 31, the stock price of Geling Deep Pupil was 27.02 yuan, with a total market value of 4.998 billion yuan, down 27.87% from the total market value on the first day of listing.
The reason why the total market value of The Deep Pupil of The Grove has been declining all the way is inseparable from its deep loss quagmire. According to the prospectus, from 2018 to 2021 and the first half of 2021, the total revenue of Geling Deep Pupil was 51.96 million yuan, 71.21 million yuan, 243 million yuan and 72.19 million yuan, respectively, and in the same period, the net loss was 92.3 million yuan, 189 million yuan, 102 million yuan and 54.74 million yuan, respectively.
At the same time, Glenn Deep Pupil's dependence on the top five customers is very high. According to the prospectus, from January to June 2021, the revenue contributed by the top five customers of Gerin Deep Pupil accounted for 74.54% of the total revenue, compared with 67.55% in 2019.
In addition to the three-year cumulative loss of 2.085 billion yuan, in 2021, the revenue contributed by the cloud from the top five customers of technology accounted for 69.58% of the total revenue, an increase of 41 percentage points from 27.92% in 2020, and the high dependence on the top five customers means that there are greater operational risks in cloud technology.
In addition, the point that cannot be ignored is that the homogenization competition in the AI industry is very serious, and in the landing scenarios listed by the "FOUR LITTLE DRAGONs of AI", words such as "smart business", "smart management" and "smart city" appear many times, and the advantages of cloud from technology are not obvious.
The dilemma does not stop there, Yuncong Technology said in the prospectus that in the future, in the face of fierce competition in the market, the price of major products has declined, the R&D investment has continued to increase and the R&D results have not been converted in time, the artificial intelligence industry policy has adversely affected, and the demand for downstream industries has slowed down significantly, and the company will face short-term unprofitable profits, and there is a risk of continuous expansion of losses, and it is imperative how to reverse the financial data of continuous losses. This means that the cloud will continue to invest huge research and development costs from the follow-up of science and technology, and it will still be difficult to get rid of the loss swamp in the future.
However, the AI industry also ushers in huge development opportunities, such as the "14th Five-Year Plan" informatization and industrialization deep integration development plan, which clearly requires promoting the deepening application of advanced process control systems in enterprises, accelerating the cloud deployment and optimization and upgrading of manufacturing execution systems, deepening the integration and application of artificial intelligence, and improving production efficiency, product quality and safety levels through comprehensive perception, real-time analysis, scientific decision-making and accurate execution, reducing production costs and energy resource consumption.
With the gradual deepening and advancement of relevant policies in the AI industry, AI companies may be expected to take advantage of the trend. According to the prediction of market research agency IDC, the size of the AI market will reach 16.3 billion US dollars in 2025, at which time, the entire AI-oriented infrastructure construction and intelligent solutions for AI enterprises will enter the stage of large-scale application.
"In the capital market, profit is still the most important investment criterion for investors. At this stage, investors still have confidence in cloud technology, but if commercialization cannot be landed, no one will pay for long-term loss-making AI companies. Going public is just the beginning, and the cloud still has a long way to go from technology. The aforementioned AI industry insiders analyzed.
This article originated from iDoNews