(Article/Observer Network Yin Zhe Editor/Zhou Yuanfang) The wave of AI companies going to the sci-tech board for listing continues.
On October 28, Shanghai Hehe Information Technology Co., Ltd. (hereinafter referred to as "Hehe Information") applied for the review status of the IPO of the Science and Technology Innovation Board to be changed to "Inquired".
In 2020, due to its scanning king, business card king has been "banned" by the United States, India and other countries, Hehe Information has been pushed to the cusp of the storm. It was also in this year that Hehe Information achieved a turnaround.
In this IPO, Hehe Information Plans to raise 1.49 billion yuan, focusing on investment in artificial intelligence, business big data products and R & D and upgrading projects.
The three apps contribute 85% of revenue
According to the prospectus, Hehe Information is an artificial intelligence and big data technology enterprise, based on the leading intelligent text recognition and business big data core technology independently developed by itself, providing digital and intelligent products and services for global C-end users and B-end customers in multiple industries.
Among them, the C-end business is mainly app products for global individual users, including three core products: Cam Scan, CamCard, and Qixinbao.
As of the end of March 2021, the cumulative first downloads of the three apps of CamScanner, CamCard and Qixinbao in the App Store and Google Play app markets totaled more than 600 million, and the total monthly active month was about 120 million.
The prospectus pointed out that as of the end of the same period, CamScanner had ranked first in the list of free application downloads in the efficiency category in 120 countries on the App Store, and CamBone had ranked first in the list of free business application downloads in 46 countries (including China) on the App Store.
In terms of profit model, The Scan King, Business Card King, and Qixinbao APP mainly pay through various types of VIP members such as monthly and annual, and generate income through other pay-per-view services.
According to the disclosure, the two APPS of Cam Scan and Cam Cam belong to the intelligent text recognition business, contributing 68.8307 million yuan, 164.0406 million yuan and 350.1101 million yuan in the three years from 2018 to 2020, accounting for 35.11%, 48.19% and 60.55% of the total revenue, respectively.
The Qixinbao APP, which is attributed to the commercial big data business, contributed 23.0758 million yuan, 48.9654 million yuan and 67.588 million yuan in the same period, accounting for 11.77%, 14.39% and 11.69% of the revenue respectively.
In the first quarter of this year, the revenue proportion of Scan Cam and Cam Reaper further increased, reaching 64.59%; the proportion of Qixinbao APP fell slightly to 10.98%.
From the perspective of channels, in 2020, 43.11% of the revenue of hehe information C-end APP came from Apple's App Store, and Google's application market contributed nearly 15% of revenue.
According to the disclosure, the company's C-end paid products are mainly single-paid products such as VIP members and paid reports that are charged by the period, and the former is the main source of income, accounting for more than 80% of the C-end revenue.
In addition, with app as the carrier, Hehe Information provides advertising and marketing services for all kinds of advertisers, and settles with advertisers according to billing methods such as display duration, impression volume or click volume.
From 2018 to 2020, the company's Internet advertising promotion contribution revenue was 15.5942 million yuan, 25.4096 million yuan and 41.5571 million yuan, respectively. In the first quarter of this year, the business achieved revenue of 14.9355 million yuan, and the proportion of the total income of the station reached 8.73%.
Observer network calculation found that in the first quarter of this year, nearly 84% of the revenue of Hehe Information came from three C-end APP.
In contrast, the company's B-side business provides enterprise customers with intelligent text recognition and business big data as the core of services.
Among them, the downstream of the B-end business of intelligent text recognition is a customer who has digital transformation needs for the classification, entry, proofreading, analysis and other manual processes of various documents such as licenses, contracts, bills, and reports.
Such services have been commercialized in nearly 30 industries such as banking, securities, insurance, auto finance, funds, trusts, financial leasing, government, logistics, medical care, manufacturing, real estate, and retail.
Although the revenue growth rate of the B-end business of intelligent text recognition is not as fast as that of the C-end business, it also generated revenue of 54.124 million yuan in 2020, accounting for 9.36%. In the first quarter of this year, the revenue was 12.7114 million yuan, accounting for 7.43%.
In addition, the company's business big data B-end business can be divided into basic data services (Qixinbao data API, data packet service), standardized services (Qixinbao enterprise saaS software services), and scenario-based solutions.
In the past three years, the revenue of the business was 15.6759 million yuan, 34.005 million yuan and 50.2877 million yuan, accounting for 8%, 9.99% and 8.7% respectively. In the first quarter of this year, the revenue of commercial big data B forging house was 12.4153 million yuan, accounting for 7.26%.
Finally, Hehe Information also authorized the technology to Huawei, Samsung, OPPO and other mobile phone manufacturers, and pre-installed text recognition technology modules.
However, the revenue of this business decreased year by year, and during the same period, the revenue was 28.0926 million yuan, 14.9357 million yuan, 8.0332 million yuan and 1.5954 million yuan, accounting for 14.33%, 4.39%, 1.39% and 0.93% respectively.
As of the first quarter of this year, the main B-end customers of Hehe Information in the past three years include Google Pay, ByteDance, Haitong Securities, Huawei, Kingsoft Japan subsidiary, Samsung, Oriental Wealth and so on. From January to March this year, the total sales from the top five customers accounted for only 8.16% of the current revenue.
It is worth mentioning that due to the procurement advertising, Baidu has always ranked among the top five suppliers of Hehe Information since 2019.
From 2019 to 2020, the purchase amount reached 11.4314 million yuan and 21.5777 million yuan respectively; in the first quarter of this year, Hehe Information paid 7.8327 million yuan to Baidu for advertising.
Another important expense of the company includes server expenses, such as Wangsu Technology, Ningxia Xiyun Data, Alibaba Cloud, Youkede, and Sinnet, which often appear among the top five suppliers of Hehe Information.
According to the information disclosed by Hehe, the company's overseas income is mainly concentrated in Asian countries such as Japan and South Korea, and North America such as the United States.
In the prospectus, the company warned of risk: although it has not been punished by the source of income since engaging in overseas operations, with the further expansion of the scale of business, the legal and regulatory environment involved in overseas business will become more complicated.
From 2018 to 2020, the company's overseas and Hong Kong, Macao and Taiwan revenues were 70.7343 million yuan, 93.0811 million yuan and 183.1191 million yuan, accounting for 36.08%, 27.35% and 31.67% respectively.
In the first quarter of this year, the revenue of the above-mentioned regions was 65.3516 million yuan, accounting for 38.21%.
During the same period, the revenue of CamScanner and CamCard in India was 1.4316 million yuan, 3.8926 million yuan, 7.1658 million yuan and 932,000 yuan, accounting for 0.73%, 1.14%, 1.24% and 0.54% of the company's total revenue in each period, respectively.
During the same period, the revenue generated by CamScanner through the collection of domestic and foreign App Stores and Google Play application markets and the total revenue of Internet advertising promotion service business in the United States were 51.9389 million yuan, 98.4501 million yuan, 226.5080 million yuan and 81.3714 million yuan, accounting for 26.50%, 28.92%, 39.17% and 47.58% of the company's total revenue in each period, respectively.
On June 11, 2021, the administrative ban signed by former US President Trump was revoked by the new US President Joe Biden.
Turn a profit in 2020
In the prospectus, Hehe Information introduced that intelligent text recognition is an important branch in the field of AI, which integrates intelligent image processing, complex scene text recognition (OCR) based on deep learning, natural language processing (NLP) and other AI technologies.
"From 2006 to 2009, it was mainly to precipitate the core technology of text recognition and create a period of barriers to text recognition technology." Founded in 2006, Hehe Information has successively launched two apps, CamCard and CamScanner, in 2009-2010, and launched the Qixinbao APP in 2015.
"Through more than 10 years of continuous independent research and development and technology accumulation, the company is in a leading position in the core technology fields such as complex scene text recognition, intelligent image processing, NLP, knowledge graph, and big data mining." Combined information indication.
According to the disclosure, as of the end of March 2021, the company and its holding subsidiaries have obtained a total of 111 invention patents, including 73 domestic invention patents and 38 overseas invention patents.
Hehe Information describes the "three uniquenesses" of its business as:
There are few science and technology enterprises in the industry that have industry-leading core independent research and development technologies in both artificial intelligence and big data;
There are few enterprises in the industry that have a perfect layout matrix in both C-end products and B-end services;
There are few enterprises in the industry that have simultaneously laid out in the domestic and international markets and have achieved large-scale users and output value.
From the perspective of market size, according to the Grand View Research report, the global intelligent text recognition service market size will reach 7.5 billion US dollars in 2020, and the compound annual growth rate is expected to be about 18% from 2020 to 2025.
In China, in 2020, the market size of intelligent text recognition services will be 3 billion yuan, and it is expected that the market size will reach 12.96 billion yuan in 2025, with a compound annual growth rate of 34.0%, exceeding the global market growth rate.
For the industry 'moat', Hehe Information believes that the intelligent text recognition industry has the characteristics of technology-intensive, and it is difficult for new technology companies to catch up with the technology of new technology companies in this field, and it is also difficult to cultivate a cutting-edge R & D talent team in the short term.
From the perspective of customer resources, the intelligent text recognition APP that entered the market first has accumulated a large number of users by using the first-mover advantage, forming a brand effect.
In 2020, Hehe Information turned losses into profits, achieving a net profit attributable to the mother of 129.5293 million yuan and a non-net profit of 96.5571 million yuan for the whole year. The growth of C-end revenue is one of the important reasons for turning losses into profits.
In terms of equity structure, Dr. Zhen Lixin directly holds 32.2504% of the equity of Hehe Information, and indirectly controls the equity of Hehe Information held by Shanghai Duanlin, Shanghai Dingluo, Shanghai Rongliran and Shanghai Muyiran through the Shanghai Shi roar controlled by him, and controls a total of 39.9331% of the equity of Hehe Information, which is the controlling shareholder and actual controller of Hehe Information.
As of the date of signing of the prospectus, Luo Xiping and Chen Qingshan, who worked with him in Motorola (China) Electronics Co., Ltd., held 6.8360% and 6.2619% of the shares respectively. At present, he serves as a senior algorithm research and development engineer of Hehe Information, the chairman of the board of supervisors, as well as the deputy general manager, director and head of big data technology.
According to the plan of Hehe Information, the IPO intends to raise 1.49 billion yuan for 2 industrialization upgrading projects and 2 technology research and development projects:
"Project 1" is the R&D upgrade and optimization of smart text recognition C-end products and B-end services in the current main business, and strengthens the support for the development of intelligent text recognition business from the aspects of technology research and development upgrade and marketing network construction;
"Project 2" is the R&D upgrade and optimization of C-end Qixinbao APP and B-end commercial big data services in the current main business, and strengthens the support for the development of commercial big data business from the aspects of technology research and development upgrade and marketing network construction;
"Project 3" is a further deepening, upgrading and integration of the current core technology in intelligent text recognition, and supports the company's business development such as C-end products and B-end services through more model-based and platform-based technology development.
On the one hand, "Project 4" further deepens, upgrades and integrates the current core technologies such as knowledge graph and big data mining, and on the other hand, it expands the data sources and optimizes the functions of basic data, knowledge data and intelligent data modules, further strengthens the company's data middle office construction, and improves the breadth and richness of data coverage.
This article is an exclusive manuscript of the Observer Network and may not be reproduced without authorization.