summary
iFLYTEK's AI technology has been accumulated for some time, and it also has genetic advantages in education, healthcare, smart city and other industries. Looking forward to the future, with the blessing of forward-looking layout and the advantages formed by the accumulation of AI large models, iFLYTEK's achievements will be implemented one by one.
Author/Fang Hua
In April this year, at the presentation of iFLYTEK's 2023 first quarter performance report, one of the leading AI sectors in the A-share market, Wu Xiaoru, president of the company, said in his "outlook" that iFLYTEK is confident that it will achieve positive revenue gross profit growth in the second quarter.
Confidence is more expensive than paper. On July 10, iFLYTEK released a performance forecast. In the second quarter of 2023, iFLYTEK expects to achieve operating income of approximately RMB4.9 billion, a year-on-year increase of 10% and a sequential increase of approximately 70%. Gross profit is expected to be approximately RMB1.9 billion, an increase of approximately 7% year-on-year and approximately 60% sequentially; It is expected to achieve a net profit attributable to the parent of 1.13-128 million yuan, a year-on-year increase of about 1.90-24.47%.
01
There are not many highlights, but the confidence is still there
The second quarter performance forecast obviously did not hit iFLYTEK's face, however, if the second quarter is looked at together in the first half of 2023, it is not so conspicuous.
According to the 2023 half-year performance forecast released by iFLYTEK, in the first half of 2023, iFLYTEK's net profit attributable to the parent decreased by 71-80% year-on-year. In addition to the sharp decline in net profit, the non-net profit reflecting the main business of iFLYTEK is also "dismal", with an estimated loss of 2.7-330 million yuan. According to the performance forecast, iFLYTEK is expected to achieve operating income of 7.8 billion yuan in the first half of this year, compared with 8.023 billion yuan in the same period last year, which also experienced a slight decline year-on-year. Surprisingly, the company's gross profit is positive – it is expected to achieve a gross profit of 3.1 billion yuan.
This result in the first half of 2023 will be the first half-year report of iFLYTEK to experience a decline in revenue since its listing. In the past few years, especially from 2008 to 2022, except for the first half of 2008 and the first half of 2020, iFLYTEK's half-year reports have always maintained substantial growth, and the growth rate of iFLYTEK's operating income has also been above "ten figures". However, in the first quarter of this year, iFLYTEK's operating income fell by 17.64% year-on-year to 2.888 billion yuan, continuing the trend of declining revenue in the fourth quarter of last year.
Looking at the performance reports of the past few years, iFLYTEK's performance growth rate is not so optimistic. In 2022, iFLYTEK achieved operating income of 18.820 billion yuan, which can be described as a new high in the past five years, but the year-on-year growth rate was only 2.77%, which was the slowest growth rate in the past five years, and the revenue growth rates in the previous four years were 45.41%, 27.30%, 29.23% and 40.61% respectively.
For this result, iFLYTEK explained that on the one hand, due to the special social and economic environment, the progress of the implementation, delivery, acceptance and other related work of the company's related projects has been greatly delayed, thus affecting the progress of revenue realization. In particular, more than 20 projects and 3 billion yuan of contracts were extended in the fourth quarter (but related projects were not canceled); On the other hand, after iFLYTEK was included in the US Entity List in 2019, it was again under extreme pressure on October 7, 2022, and the process of adjusting from the supply chain to the relevant contract signing also affected the rhythm of current order signing.
This means that the reason for the slowdown in iFLYTEK's revenue growth is due to pressure from the United States and the impact of the general environment. At present, neither the general environment nor the pressure of the United States can be solved immediately. This also means that the impact of these two factors on iFLYTEK may continue to appear.
02
The "plan" behind the rise in stock prices
On the night of the release of iFLYTEK's first-half performance forecast, a large research group of about 900 people participated in iFLYTEK's online cloud conference.
This has undoubtedly restored the confidence of many investors in the not-so-good-looking half-year earnings forecast. We also saw the confidence of investors from the share price of iFLYTEK the next day. As of the close of trading on July 11, iFLYTEK's share price was 69.17 yuan, up 4.98% on the day.
Since the beginning of this year, iFLYTEK's stock price has risen by more than 100%, and the largest increase during the period once exceeded 145%. Such a sharp rise in the stock price, in the eyes of some insiders and investors, is more or less related to the company's previous "plans".
In June this year, iFLYTEK revealed a specific timetable for three rounds of upgrades this year. As a result, from June 1 to 20, in just 14 trading days, iFLYTEK's stock price rose by more than 35%; In March this year, iFLYTEK announced that it would cooperate with banks for "AI + Finance" joint research and development, so in early April, iFLYTEK's stock price rose to the limit; In October last year, iFLYTEK's share price fell to less than 30 yuan, and then rebounded, which is also related to its announcement of the launch of the "iFLYTEK Super Brain 2030 Plan".
And this time, in the case of the performance forecast is less than expected, the next day still reaped a lot of gains, which is also related to a question. In the interactive question-and-answer session of the online survey, when some investors asked questions about the Spark model, iFLYTEK responded, "We are currently improving the competitiveness of existing products based on the Spark model, and more than half of the R&D investment is strongly related to the Spark model. In the second half of the year, the company will 'all in' the big model, while continuing to increase R&D investment, accelerate the commercial landing of the Spark big model. ”
However, one detail worth paying attention to is that when asked when it is expected to officially open for commercial use, iFLYTEK gave the answer: "Full commercial opening time can be expected".
03
iFLYTEK and domestic AI companies have many problems
On January 12, 2022, the State Council issued the 14th Five-Year Plan for the Development of the Digital Economy. According to the plan, by 2025, the added value of the core industries of the mainland's digital economy will account for 10% of GDP.
The core of the development of the digital economy is artificial intelligence, so artificial intelligence has also become the starting point for many companies to promote the development of smart education, smart cities, smart medical care and other businesses. If we carefully analyze the revenue composition of iFLYTEK, we will find that although the business structure of iFLYTEK is somewhat complex, including education products and services, open platforms, information engineering, operator-related businesses, as well as intelligent hardware, medical care, smart finance, etc., it has basically not deviated from the general direction of artificial intelligence.
Domestic artificial intelligence is classified according to the direction of application, which can be roughly divided into four directions: decision-making, vision, speech and artificial intelligence robots. Among them, the visual class accounts for the largest proportion of current applications. In 2020, visual applications accounted for 43.4% of the total AI applications, and by the end of 2020, the voice applications involved in iFLYTEK accounted for 18.2% of the total number of applications in the market, and the market share is not low.
The basic layer of AI also involves chips, sensors, data, and services; The most critical aspects of the technology layer are machine vision, speech recognition and deep learning; The application layer is flexibly applied in specific scenarios. At present, 80% of domestic artificial intelligence is concentrated in the application layer, and the main applications are in finance, medical care, security, automatic driving and other fields. iFLYTEK is also an important player in the application layer.
Of course, for most domestic artificial intelligence companies, it is not easy to achieve technological transcendence. The United States has almost monopolized the upstream core technology market. If you want to have more pricing power and R&D autonomy, in addition to increasing R&D efforts, you also need to move upstream of the industrial chain composed of core infrastructure such as chips.
The "New Generation Artificial Intelligence Development Plan" promulgated by the State Council proposes that by 2030, the theory, technology and application of Chinese intelligence will generally reach the world's leading level, and become the world's major artificial intelligence innovation center.
Now, the time has come to 2023, and there are still many problems that iFLYTEK's domestic AI companies need to face and solve together.