At the end of March, Horizon submitted an IPO prospectus on the Hong Kong Stock Exchange, which is also another domestic intelligent driving company seeking to be listed on the Hong Kong Stock Exchange after Black Sesame.
Thanks to rapid technological development and rising consumer demand in recent years, advanced driver assistance features are becoming more and more common in today's cars.
However, the current fierce competition in the intelligent driving industry has also made manufacturers still in the "burning money" stage of losses in order to compete for market share faster, and listing and replenishment has become a must for industry companies in 2024.
1. The combination of soft and hard is the "killer feature" of the horizon
Founded in June 2015, Horizon Robotics is a provider of advanced driver assistance and advanced autonomous driving solutions for passenger cars.
The founding team came from software algorithms and then cut into the hardware field, so Horizon has become an intelligent driving company featuring a combination of software and hardware, and its solutions integrate algorithms, specialized software and advanced processing hardware.
However, the company's current main source of revenue is the software algorithm side.
Especially since 2022, the revenue of Horizon's software-based licensing and service business has surpassed that of the hardware-based product solution business.
Specifically, Horizon's solution portfolio includes Horizon Mono, a high-speed autonomous navigation solution, Horizon Pilot, and Horizon SuperDrive, an advanced autonomous driving solution, which can meet the diverse needs of customers from mainstream advanced driver assistance to advanced autonomous driving.
As of last year, Horizon Robotics has ranked second in the domestic market for intelligent driving with its high-growth product shipments and continuously expanding customer base, and its main competitors are NVIDIA's Orin and Mobileye's EyeQ series chips.
In 2023, Horizon will have a market share of 21.3% in the domestic advanced driver assistance solutions market, second only to Mobileye, and the market share gap is only 5.3%, making it the only Chinese company in the top five.
As of 2023, the total shipment of Horizon's journey series products will reach 5 million pieces, and at the same time, star car companies such as Li Auto, BAIC Motor, GAC Group and BYD, as well as Tier 1 suppliers such as NavInfo, Xingyu and Keboda, have also chosen to cooperate with Horizon in depth. Horizon's hardware and software solutions have been adopted by 31 OEM brands and have been installed on more than 230 models.
In terms of shareholding structure, Horizon adopts a different voting rights structure, and the founder Yu Kai has ultimate control over the company.
其中，最大单一股权1,733,612,127股A类普通股都由Everest Robotics Limited持有，而Everest Robotics Limited由Bigsur Robotics Limited持有99%和Horizon Robotics, Inc.持有1%。 前者由余凯设立的家族信托全资拥有，后者由创始人余凯全资拥有。
2. Analysis of main business
From 2021 to 2023, Horizon's operating income will be 466 million yuan, 905 million yuan and 1.551 billion yuan. Its main business consists of three parts: product solutions, licensing, services and non-vehicle solutions.
(1) Product solutions
Horizon's product solutions business combines processing hardware with proprietary algorithms and software to maximize the compatibility with customer-specific vehicle platforms and configurations, including advanced driver assistance systems such as automatic cruise control, automatic emergency braking and traffic jam assist, and high-speed autonomous navigation systems such as automatic parking assistance. Automatic memory parking function.
Horizon's software and hardware integrated solution has successfully passed the verification, achieved commercialization, and has been mass-produced and deployed by customers such as Changan and Ideal. From 2021 to 2023, the operating income of the product solution business will reach 200 million yuan, 320 million yuan and 510 million yuan respectively.
(2) Authorization and Services
In the licensing and services business, Horizon Robotics has commercialized algorithms, allowing customers to purchase algorithms as stand-alone modules or in conjunction with other components in the technology stack. Due to the low marginal cost of software sales, the gross margin of this business is much higher than that of the hardware business.
Specifically, the cost of sales of licensing and services accounted for only 23.3%, which is much lower than the 61.3% of product solutions, so licensing and service revenue usually have a higher gross margin than product solution revenue.
In addition, the proportion of licensing and service revenue has also continued to increase in the past few years, and in 2023, the revenue proportion of licensing and service business has reached 62%, and it has now become the core business of Horizon.
(3) Non-vehicle solutions
The company's non-vehicle solutions are primarily designed for equipment manufacturers to design and manufacture equipment and appliances with a higher level of intelligence, such as lawn mowers, but this business is not a strategic focus of the company, and the proportion of revenue has decreased from 12.1% in 2021 to 5.2% in 2023.
3. The short term has not yet ushered in breakeven, but there is no financial pressure in the short term
Since its inception in 2015, Horizon has received more than 10 rounds of financing, with a cumulative financing of about US$2.3 billion, including industry chain giants such as SAIC, Volkswagen Group, CATL and BYD, as well as well-known capital such as Hillhouse Ventures, Sequoia China and Wuyuan Capital.
At present, the horizon is still far from breakeven, mainly due to the continuous investment in R&D. However, compared to 2022, Horizon's net loss margin has converged in 2023. From 2021 to 2023, Horizon's adjusted net profit will be -1.1 billion yuan, -1.89 billion yuan and -1.64 billion yuan, respectively.
However, considering the increasingly fierce pattern of the intelligent driving industry in the future, in order to maintain the leading position and technological innovation in the industry, R&D has become a rigid expenditure for intelligent driving manufacturers. From 2021 to 2023, Horizon's R&D expenditure increased from 1.14 billion yuan to 2.37 billion yuan.
Significant R&D spending has also continued to iterate on new products with excellent product capabilities, which is reflected in the latest generation of Horizon Journey6 and the upcoming high-end intelligent driving model room. Although it has not yet been officially mass-produced and marketed, it has been recognized and used by downstream customers.
It is worth noting that so far, Horizon's cash flow from operating activities has still failed to turn positive, with -1.1 billion yuan, -1.6 billion yuan and -1.7 billion yuan from 2021 to 2023, respectively, which has been negative for three consecutive years and expanding year by year.
In addition, Horizon's top five customers accounted for 60.7%, 53.2% and 68.8% of revenue, respectively. It can be seen that although the number of customers of Horizon is expanding, Horizon's current dependence on large customers is still high, and Horizon still derives most of its revenue from a small number of customers.
Although the automotive industry itself is dominated by the big B model, Horizon has decided to invest in large customers in an all-round way, and the input-output ratio in the early stage must be stronger than that of decentralized operation. However, as the subsequent market size expands, Horizon needs more customers to reduce concentration risk.
As of the end of 2023, Horizon's cash and cash equivalents balance is still 11.36 billion yuan, much higher than the 1.2 billion yuan of competitor Black Sesame Intelligence, and the overall cash flow reserve is quite healthy. At the current rate of cash burning, in the context of no external financing, with the current adjusted net loss rate of 1.64 billion yuan a year, Horizon can also maintain operations for about 7 years.
The intelligent transformation of automobiles is a major trend, and as a representative enterprise of intelligent driving in China, Horizon will not be absent.
This article is from Wall Street News, welcome to download the APP to see more