Producer: Sina Finance Listed Company Research Institute
Author: Kun
After the first submission failed, Mobvoi's listing ambitions remained. In December, Mobvoi submitted a prospectus to the Hong Kong Stock Exchange again, planning to be listed on the main board.
Mobvoi was founded in 2012, more than a decade ago, and in the early days, it has attracted star capital such as Volkswagen Group, SIG Haina Asia, Google, Sequoia China, Zhen Fund, etc., and the financing has ranged from Series A to Series D-2, and the valuation has also risen. According to the prospectus, after the D-2 round of financing, Mobvoi's post-investment valuation reached $757 million, and the valuation has increased more than 100 times in just a few years.
Source: Company announcement
However, after the second submission of the statement, Mobvoi's performance in the first half of 2023 has obviously "changed face", with an operating income of 262 million yuan in the first half of the year, a year-on-year decrease of 23.57%, and a loss of 218 million yuan during the realization period, an increase of 9% compared with 201 million yuan in the same period last year, and a cumulative loss of 2.784 billion yuan since 2020. The adjusted net profit in the first half of the year was 65.086 million yuan, a sharp decrease of 63.27% compared with 177 million yuan in the same period last year.
What's more, the company's business structure has changed frequently in recent years, and the company's main business of smart devices has declined significantly, with a market share of only 0.02%; Although the AIGC solution continues to grow, the scale is still small, and the AI enterprise solution business relies on the former investor Volkswagen Group, and now that Volkswagen has divested and the last batch of intellectual property rights has been delivered, will there be a big decline in the revenue scale and profitability of Mobvoi in the future?
In the first half of 2023, the performance took a sharp turn for the worse, and the business structure changed frequently
In the middle of 2023, when the statement was submitted for the first time, Mobvoi's performance and growth seemed to be remarkable, with revenue of 265 million yuan, 398 million yuan and 500 million yuan from 2020 to 2022, of which the year-on-year growth of 50.4% and 25.7% in 2021 and 2022 respectively, while the adjusted loss/profit gradually turned into a profit, from a loss of 157 million yuan in 2020 to an adjusted profit of 109 million yuan in 2022.
However, when Mobvoi submitted its second statement to the Hong Kong Stock Exchange at the end of this year, the latest performance took a sharp turn. In the first half of 2023, Mobvoi achieved an operating income of 262 million yuan, a year-on-year decrease of 23.57%, and a loss of 218 million yuan during the realization period, an increase of 9% compared with 201 million yuan in the same period last year, and a cumulative loss of 2.784 billion yuan since 2020. The adjusted net profit in the first half of this year was 65.086 million yuan, a sharp decrease of 63.27% compared with 177 million yuan in the same period last year.
Behind the "change of face" in performance before the listing, Mobvoi has changed its business structure frequently in recent years, and the performance of the company's overall revenue business is not optimistic.
According to the prospectus, Mobvoi's current business is divided into AI software solutions (also divided into AI enterprise solutions and AIGC solutions) and smart devices and other accessories.
Before 2022, the smart device business has been the main source of revenue for Mobvoi, accounting for more than 80%, and the products are mainly smart watches TicWatch. Although products have been innovating, it does not mean that Mobvoi has a place in the smart device market. In the smart watch industry, Apple and Huawei occupy the vast majority of the market share, and there are also brands such as Xiaomi and Huami amazfit, on the other hand, Mobvoi's TicWatch is not a mainstream product in the market, with a market share of only 0.02%. Since 2022, Mobvoi's business income has continued to plummet, and it will only achieve 57.86 million yuan in revenue in the first half of 2023. The TicWatch Pro 5, launched in May 2023, sold only 25,800 units in half a year.
The AI enterprise solution business is more "changeable". From 2021 to 2022, it achieved revenue of 52.7 million yuan and 263 million yuan respectively, a year-on-year increase of 18.48% and 399.14% respectively. However, the high growth in 2023 did not last, and the revenue in the first half of the year was 163 million yuan, a year-on-year decrease of 30.92%.
Only the growth of AIGC solution business in recent years has been more sustained, and in the first half of 2021-2023, the operating income will be 6.82 million yuan, 39.86 million yuan, and 41.25 million yuan, respectively, with a year-on-year growth rate of 1275.40%, 484.24%, and 173.06% respectively. However, it is not difficult to see that in addition to the relatively small scale and limited contribution to the company's overall performance, the growth rate of this business has also slowed down significantly. In the prospectus, Mobvoi took up a lot of space to give a detailed introduction to its products and technologies, and its large model "Sequence Monkey" will be launched in 2023, while other products "Magic Sound Workshop" and "Wonderful Yuan" will be released in 2022 and before, and the user side still needs more accumulation. What's more, Mobvoi's investment in R&D may not be enough. From 2020 to the first half of 2023, R&D expenditures will only be 97.09 million yuan, 91.505 million yuan, 119 million yuan and 72.62 million yuan respectively.
In fact, this year, the release of large models is not unusual, but there is no shortage of large models in the industry with empty "gimmicks" and traffic, which can hardly be said to have a substantial contribution to the company's business and performance. Whether Mobvoi's large-scale model "Sequence Monkey" can survive and develop in the current fiercely competitive battle of 100 models remains to be tested by time.
Behind the gross profit margin of Moutai: the former investors who once "helped each other" with their income have withdrawn
Despite the decline in revenue scale and continuous losses, Mobvoi's gross sales margin has continued to rise in recent years, increasing from 30.12% in 2020 to 75.28% in the first half of 2023.
Behind the rising gross profit margin, part of it is affected by the change of Mobvoi's business structure, and with the increase in revenue from AIGC solutions, its gross profit margin has gradually increased. But the main impact actually comes from AI enterprise solutions, and it can be seen that the gross profit margin of this business has soared from 29.9% in 2020 to 91.9% in the first half of 2023, and the gross profit margin is comparable to Moutai.
Source: Company announcement
And this is actually closely related to Mobvoi's former investors and major customers Volkswagen Group.
In 2017, Mobvoi received an exclusive $180 million Series D financing from Volkswagen Group, and at the same time co-established a joint venture Volkswagen Mobvoi to help Mobvoi expand into the in-vehicle market. At the same time, automotive subsidiary A has also been Mobvoi's largest customer in recent years, with sales of 213 million yuan and 138 million yuan in 2022 and the first half of 2023, accounting for 42.6% and 53.0% of revenue.
But in fact, today, the Volkswagen Group is no longer among the shareholders of Mobvoi. Mobvoi has repurchased its stake in Volkswagen and transferred its stake in Volkswagen to the Volkswagen Group.
The reason why it was able to achieve a gross profit margin of more than 90% was because Mobvoi's sales to automobile subsidiary A were the transfer of intellectual property rights, and the cost was almost negligible.
However, in the prospectus, according to the terms of the intellectual property arrangement with automotive subsidiary A, the last instalment of deliverables totalling US$21.5 million was delivered in June 2023 and the project was subsequently completed by the end of June 2023. Mobvoi cannot guarantee that it will be able to earn the same level of income through knowledge products in the future.
Judging from the top five customers as of June 30, 2023, except for the largest customer, automotive subsidiary A, Mobvoi's other customers are mostly from the smart device business, and the total revenue of the four major customers accounts for only 10%.
Now that the Volkswagen Group has divested and the last batch of intellectual property rights has been delivered, what should Mobvoi's future revenue rely on? Without the "strong help" of former investors, will Mobvoi's revenue scale and profitability decline significantly? Will the AI enterprise solution be in name only?