Twelve years after its establishment, after two submissions, Mobvoi finally ushered in the listing.
The company, founded by former well-known Google researcher Li Zhifei, which focuses on providing artificial intelligence services and smart devices, officially debuted on the Hong Kong Stock Exchange today under the stock code "2438", becoming the "first AIGC stock".
As of 10:40 on April 24, Mobvoi's share price was HK$3.1, with a market capitalization of HK$4.609 billion.
Previously, Beijing-based Mobvoi has completed five rounds of financing, raising a total of $75 million and reaching a valuation of $750 million. Sequoia China, Zhen Fund, SIG, Perfect Optics Co., Ltd., Goertek, Volkswagen and Google participated in the investment.
In this IPO, two state-owned enterprises, Zhongguancun International Co., Ltd. and Nanjing Jingkai Juzhi Science and Technology Innovation Investment Partnership, as cornerstone investors, jointly subscribed for HK$95 million.
44.3% of the proceeds from the global offering will be used to expand the scale of the multi-modal large model "Sequential Monkey" over the next three years, and 35.7% will be used for solution development and market expansion over the next three years.
From smart device companies to AI solution providers
Mobvoi's core team includes former Google employees, AI experts, former Nokia employees, and engineers and researchers from renowned institutions such as Johns Hopkins University, Harvard University, Massachusetts Institute of Technology, Cambridge University, and Tsinghua University.
The company's founder, Li Zhifei, is a well-known figure in the technology industry and is known for his contributions to the field of AI.
After receiving his Ph.D. from Johns Hopkins in 2010, Zhifei Li joined Google headquarters as a researcher, mainly engaged in the research and development of machine translation, and participated in the development of the open source machine translation software "Joshua", which is widely used by the academic community.
In 2012, with the vision of creating a Chinese version of Google Now, Li Zhifei left Google and returned to China to found Mobvoi. Google Now is an intelligent personal assistant service launched by Google in the same year, which was initially integrated into the Google search mobile app, and has since been integrated into more programs.
(Li Zhifei, picture from the Internet)
Mobvoi is committed to promoting the innovation of mobile voice search technology, and all its products, including smart watches, smart speakers and headphones, are equipped with the company's self-developed AI technology.
According to the company's latest prospectus filed with the Hong Kong Stock Exchange, as of 2023, Mobvoi's flagship product, TicWatch, has made significant achievements in the global market, with cumulative sales of more than 1 million units in more than 100 countries since 2020.
（TicWatch Pro 5）
Despite its impressive sales, its smart hardware business has faced high financial pressures in the process of expansion in the face of fierce competition from tech giants such as Xiaomi, Baidu and Huawei. In 2019, Li Zhifei realized that this "more expansion, more losses" state was unsustainable, so he made drastic efforts to streamline operations and save expenses, reducing the company's headcount from 1,000 to 500.
Fortunately, in recent years, the AI technology boom led by OpenAI's ChatGPT and other innovations has given Mobvoi, which has in-depth accumulation in the fields of natural language processing and human-computer voice interaction, an opportunity for business transformation.
With the shift in business focus to AI solutions, the proportion of revenue contributed by Mobvoi's smart devices and other accessories has dropped from 85% in 2021 to 32.3% in 2023, while the proportion of revenue of the entire AI business (including AI solutions for individual users and AI solutions for enterprises) has increased from 15% in 2021 to 67.7% in 2023.
Enterprise AI solutions, the largest source of revenue
In the latest prospectus submitted by Mobvoi to the Hong Kong Stock Exchange, the revenue of AI solutions increased from RMB 59.519 million in 2021 to RMB 303 million in 2022 and RMB 343 million in 2023.
Correspondingly, its share of total revenue has also increased significantly, jumping from 15% in 2021 to 60.6% in 2022 and further to 67.7% in 2023.
This growth is primarily driven by enterprise-grade AI solutions, spanning multiple industries such as automotive, finance, technology, media, telecommunications, healthcare, and retail. Revenue increased from RMB52.697 million in 2021 to RMB263 million in 2022, but declined slightly to RMB226 million in 2023.
In its latest prospectus to the Hong Kong Stock Exchange, Mobvoi pointed out that the decline in the company's revenue was mainly due to a decrease in revenue from intellectual property (IP) agreements with "Automotive Subsidiary A".
The specific name of "Automobile Subsidiary A" is not clearly indicated in the prospectus, but according to the analysis of public information, it should be a subsidiary of Volkswagen. Volkswagen invested in Mobvoi through its subsidiary in 2017 and formed a joint venture with it. This strategic partnership has brought many benefits to Mobvoi, with data showing that as of 2021, 20% of Volkswagen's vehicles have adopted Mobvoi's intelligent car system.
However, the joint venture relationship did not last long. In 2022, the two parties made a share swap, with Mobvoi transferring its stake in the joint venture to Volkswagen and buying back its own shares from the German automaker, making the joint venture eventually a wholly owned subsidiary of Volkswagen.
As part of the deal, Mobvoi transferred some of the IP rights related to the in-car voice dialogue system to Volkswagen. According to the prospectus, these IP agreements brought significant revenue to Mobvoi between 2021 and 2023, which amounted to RMB3.2 million, RMB213 million and RMB139 million, respectively, accounting for 0.8%, 42.6% and 27.4% of the company's total revenue.
Although the disconnection of the deep relationship with Volkswagen has had a certain impact on revenue, it has also created an opportunity for Mobvoi to forge new partnerships with other top global and domestic automakers. The company disclosed in the prospectus that it has established technical cooperation agreements with a number of automobile manufacturers.
The self-developed large language model "Sequence Monkey" drives consumer-facing AI solutions
Mobvoi's AIGC solution, that is, consumer-facing AI services, does not account for a large proportion of total revenue, but the growth rate is quite significant.
In 2021, AIGC business revenue accounted for 1.7% of total revenue, increased to 8% in 2022, and reached 23.2% in 2023, corresponding to revenue of 6.822 million yuan, 39.857 million yuan and 118 million yuan, respectively.
The AIGC solution offers a range of tools for content creators. These include the AI dubbing assistant "Magic Sound Workshop" and its overseas version "DupDub", the AI writing assistants "Magic Writing" and "Wonderful Text", and the AI digital human "Wonderful Yuan".
According to Mobvoi, as of 2023, the AIGC solution matrix has accumulated more than 10 million registered users worldwide, including more than 800,000 cumulative paying users.
Behind these AIGC solutions is Mobvoi's self-developed large language model "Sequence Monkey" launched in 2023.
This interesting name comes from the "infinite monkey theorem" proposed by mathematician Emil Borrell in the early 20th century. The theorem states that a monkey who randomly taps on the keyboard on a typewriter for an infinite amount of time will theoretically eventually be able to type any text, such as Shakespeare's Hamlet.
The reason why "Sequence Monkey" was chosen as the name of its language model is intended to express a similar idea: that is, by inputting a large amount of text data into the "robot monkey" and conducting large-scale computing training, it will become an intelligent "sequence monkey".
"Sequence Monkey" is a multimodal large model generated by Mobvoi based on its text processing algorithm UCLAI, which was launched in 2021. Compared with UCLAI, Sequence Monkey supports a variety of functions such as image generation, 3D content, speech generation, and speech recognition, and has the ability to use more training data and handle more complex tasks.
Before the launch of the unified multi-modal large model "Sequence Monkey", Mobvoi's AIGC solution used a number of dedicated models, such as the speech recognition synthesis model used by "Moyin Workshop", the text understanding generation model used by "Moshuo", and the digital human generation model used by "Wonder Yuan". Each modality is independent, which leads to potential information loss and inefficiencies when dealing with cross-modal tasks.
Through "Sequence Monkey", Mobvoi integrates multi-modal tasks such as voice, image, and text into a single large model for training and deployment, which fundamentally reduces cross-modal information loss and significantly improves R&D efficiency.
Compared with OpenAI GPT-3, which sits on 175 billion parameters, the "sequence monkey" with only tens of billions of parameters is not "powerful" enough, but it is enough to support the needs of multiple application scenarios in the Mobvoi product line.
Inspired by Microsoft's Copilot project, which integrates AI capabilities into Microsoft's 365 series of products, such as email, Excel, PowerPoint, and Word, Mobvoi has also launched its own AI CoPilot.
This is an AI assistant that blends software and hardware functions, powered by "Sequence Monkey". AI CoPilot focuses on voice interaction and content generation technology, aiming to provide customized intelligent services for global content creators, enterprises and ordinary consumers to meet their needs in daily work and creation.
AI CoPilot will play a key role in Mobvoi's three commercial scenarios for artificial general intelligence planning:
1. AGI software services that empower enterprises, professional content creators and ordinary users;
2. AGI-enabled hardware with strong end-to-end connectivity and significantly improved user experience;
3. AGI model services, which enable different applications to generate new revenue streams by providing application programming interfaces (APIs).
Smart devices and accessories remain a practical path to AI commercialization
Smart devices and accessories are not retiring from the stage as AI solutions surpass revenue. On the contrary, they remain one of the most practical channels for AI commercialization. Commercialization is the challenge that most AI companies are facing at this stage.
In the past few years, although the revenue of smart devices and accessories has shown a downward trend, it will still create revenue of 338 million yuan, 197 million yuan, and 164 million yuan in 2021, 2022, and 2023, respectively.
Smart devices and accessories are performing well in the international market. Germany and the United States are the company's two largest markets, with revenue of 32.357 million yuan and 24.035 million yuan in 2023, respectively, compared to only 7.44 million yuan in Chinese mainland market.
Mobvoi's competitive advantage lies in the seamless integration of self-developed AI technology with smart devices, which is also one of the company's core strategies. At present, smart wearable devices, such as TicWatch, and smart homes, such as treadmills, have integrated the latest AI technology.
Going forward, the company is committed to advancing its AI technology and continuing to integrate it into its device product line, ensuring that its hardware products continue to innovate and appeal.
Fierce competition and potential liquidity risk
In May last year, Mobvoi submitted its first listing application to the Hong Kong Stock Exchange. With the expiration of the six-month expiration period, the company quickly updated its financial data and submitted its application documents again in December.
With the title of the first stock of the "AIGC" of the Hong Kong Stock Exchange, Mobvoi attracted attention before the listing, and successfully used this AI boom to attract financial support: the first day of the sale was oversubscribed by 8 times.
However, it is worth noting that not only is it facing stiff competition, but also potential liquidity risks.
In China's AI race, large and small tech companies are racing to launch their own large models. According to incomplete statistics, there are currently more than 100 models on the market vying for attention, among which the models developed by tech giants such as Baidu, Alibaba and Huawei occupy a leading position with their strong resources and technical strength.
For example, Baidu's self-developed model Ernie not only improves the intelligence level of search engines, but also penetrates into content creation, intelligent driving and even intelligent hardware, Alibaba's Tongyi Qianwen model integrates into its wide range of cloud services, e-commerce and smart speaker products, and Huawei's Pangu model has been integrated into its smartphones and laptops and other hardware.
Although Mobvoi has accumulated certain advantages in the voice interaction market segment, this advantage is not enough to build a solid line of defense in the competition with industry giants.
In layman's terms, in the race for large models, the core competitiveness often comes down to "big" - that is, a larger model parameter scale, a large amount of data, and enough GPUs - and these are inseparable from a large amount of financial investment.
In the prospectus, Mobvoi also acknowledges that the current fierce competition in the AI industry and the financial pressure brought about by continuous R&D investment are the main risks faced by the company's operations.
R&D expenditure increased from 915 million yuan in 2021 to 1.187 billion yuan in 2022 and then to 1.548 billion yuan in 2023. This surge is largely due to the expansion of R&D teams and the rising costs associated with the development of large language models. As of March 26, 2024, the R&D team accounted for 55.0% of Mobvoi's total employees.
Corresponding to this is the business situation that is not optimistic. After suffering operating losses of RMB135 million and RMB618 million in 2020 and 2021, respectively, Mobvoi briefly rebounded in 2022 to achieve an operating profit of RMB716 million, but slipped into a loss of RMB478 million in 2023.
By the end of 2023, its cash and cash equivalents were only $144 million, and it faced current liabilities of up to $4.517 billion, resulting in net current liabilities of up to $4.121 billion, showing serious liquidity risks.
In the prospectus, Mobvoi pointed out that its current liabilities are mainly composed of contingent redemption of preferred shares and ordinary shares. According to the agreement, once the company is successfully listed, these contingently redeemable preferred shares and common shares derived from previous rounds of financing activities will be automatically converted into common shares and will no longer be included in liabilities.
While this nominally reduces debt, Mobvoi still faces multiple liquidity risks. Cash flow pressures, dividend payment obligations, and market uncertainty may affect the implementation and effectiveness of the share conversion. In addition, continued funding needs and the response of capital markets could further squeeze liquidity.
"The current high level of current debt may lead to liquidity risk, and there is no guarantee that the current debt level will improve in the future. Mobvoi added in the prospectus.
In the predicament of continuous losses and shortage of funds, Mobvoi, which has not received new investment in the past five years, has no choice but to turn its attention to the Hong Kong capital market in order to hoard enough "grain and grass" to continue fighting.
In addition, Mobvoi also mentioned in the prospectus that geopolitical uncertainty, China's complex and volatile regulatory environment, and potential intellectual property disputes will also pose potential risks to the company's operations.
According to data from CIC cited in the Mobvoi prospectus, in 2022, it accounted for only 0.3% of China's overall AI market, and in the voice and NLP software fields, it ranked third with a market share of 1.4%.
CIC predicts that China's AI market will grow to RMB 644.8 billion by 2027, with a compound annual growth rate of 27.1%. Mobvoi may be expected to take advantage of this shareholder wind to increase market share and industry influence.
Mobvoi leveraged the capital market to use the current AI boom to obtain higher valuation and pricing power, and became the first AIGC company to be listed in Hong Kong in one fell swoop. But the bigger challenge may lie after the listing, when its operating ability and profitability will be strictly scrutinized and tested by the capital market.
Despite the high demand for funding in the field of AI, large models are still difficult to overcome the "illusion" and are still far from truly revolutionizing workflows. Even for tech giants like OpenAI, Microsoft, and Google, making AI widely available and monetized is no easy task. For Mobvoi, the story of "AIGC's first share" is not easy to tell.