SenseTime: the game between ideals and capital

The blood transfusion is endless, the profit is difficult to solve, and the market is not solved, and the pain is still there.

In 2016, Ren Zhengfei put forward “requirements” to the Huawei artificial intelligence team-the ultimate goal of artificial intelligence research is commercial realization.

In the past five years, the domestic artificial intelligence (hereinafter referred to as AI) industry has developed rapidly. Cambrian, which once provided NPU to Huawei Kirin, was successfully listed on the A-share market in July last year. The “AI Four Dragons” have also submitted prospectuses to go public. SenseTime Technology , known as the top of the “AI Four Dragons”, November 23 Japan has passed the listing hearing on the Hong Kong Stock Exchange.

When various AI companies are struggling to hit the market, revenue data has increased year by year. The commercial realization of AI technology seems to have successfully achieved the goal set by Ren Zhengfei in the field of artificial intelligence. However, when AI companies are actively expanding their business realization methods and expanding revenue, the profitability problem has always been one of the biggest dilemmas for AI companies.

This point seems to be even more obvious to SenseTime, which is vying for the “first share of the AI ​​Four Little Dragons”.

01 Meta universe and AI, the thunder and the rain are small

AI was once regarded as the biggest outlet in the Internet industry in the first five years, but now the owner of this laurel is undoubtedly the “meta universe.” Public information shows that since September 1, 2021, nearly 3,000 related trademarks have been applied for “Meta Universe”, and more than 400 domestic Meta Universe trademark application companies have been involved.

Facebook changed its name to Meta, and Zuckerberg also admitted that “meta universe truly contributes to the company’s performance, and it will take at least another ten years.”

SenseTime: the game between ideals and capital

SenseTime, which has made achievements with the help of AI, did not let go of this “opportunity” and began to bet on Yuan Universe.

According to the prospectus of Shangtang Technology, “Shangtang Technology has built a multi-layer infrastructure for empowering IoT devices and driving Metaverse to enhance the end user experience. As of June 30, 2021, SenseME and SenseMARS has cumulatively empowered more than 450 million mobile phones and more than 200 mobile applications.”

At the same time, Shangtang Technology said that 60% of the funds raised from the listing will be used to enhance R&D capabilities. Among them, the investment related to the meta universe concept accounts for 40%: 25% is used to enhance other artificial intelligence research and development capabilities, especially to enhance the functions of the meta universe platform SenseMARS and SenseAuto; 15.0% is invested in emerging business opportunities and improving products and services The adoption rate and penetration rate of various vertical industries and scenarios at home and abroad, such as the meta-universe platform SenseMARS.

However, when countless related companies and units are catching up with the “Meta Universe” trend, we must not forget the artificial intelligence track that was once regarded as the trend. The current situation is far less than the ideals expected by investors and the market a few years ago.

SenseTime: the game between ideals and capital

The “AI Four Little Dragons” that have hit the market have long relied on capital blood transfusions for a long time. The problem of losses has always been criticized. When it will make a profit is still unknown.

Among them, Yuncong Technology lost 2.6 billion yuan in the past three years, and Yitu lost more than 6 billion yuan in two and a half years. Megvii, which passed the meeting in September this year, lost more than 12.7 billion yuan in three years. SenseTime, which has the largest revenue among the “AI Four Little Dragons”, also has the largest loss among the four companies.

The Frost & Sullivan report shows that SenseTime ranks first in the market share of domestic computer vision software providers, with a total revenue of over 8 billion in the past three years. However, the price of high revenue is more serious business losses. From 2018 to the first half of 2021, SenseTime’s accumulated losses totaled approximately 24.3 billion, which is close to the sum of the losses of the remaining three “AI Four Little Dragons”.

At present, the biggest problem facing the domestic AI industry is still the contradiction between the difficulty of technology landing and the inability to form a large-scale response and the high R&D investment in the development of the industry. The long profit cycle has caused many capitals and investors to lose enough patience and trust in AI companies. This is also one of the core reasons why AI companies are vying for listing. With the title of “first share”, let’s talk about it. “Good story”.

Perhaps AI and Metaverse are both unstoppable development trends in the future. SenseTime, which has already boarded the AI ​​Express, will naturally not miss the outlet of “Metaverse.” However, whether it is Metaverse or AI, it will be an endless “long-distance race” to meet SenseTime. Whether it can take care of it is not yet known. Another “development problem-like expansion and diversification” is also SenseTime’s current Faced.

02 Difficult points and aspects

On the road of “frequent business expansion”, SenseTime seems to go further and further.

One week before the hearing through the Hong Kong Stock Exchange, SenseTime had publicly stated that it had reached a cooperation with FAW Nanjing. Data shows that as of June 30, 2021, SenseTime has cooperated with more than 30 automobile companies and will supply corresponding products to more than 20 million vehicles in the future.

According to the prospectus, SenseTime’s business has covered more than ten fields such as smart business, smart city, smart life, smart cars, transportation, manufacturing, infrastructure, mobile equipment and applications, medical care, and automobiles.

In terms of industrial layout, SenseTime stated that “based on the proprietary artificial intelligence infrastructure SenseCore SenseTime, SenseTime focuses on mass production of artificial intelligence models, and realizes rapid deployment and commercialization of AI models through software platforms.”

There is no denying that in the early stage of AI industry development, due to technological breakthroughs in industrial demand at the time, AI companies are not clear about their future development direction. Multi-industry and multi-directional attempts are undoubtedly one of the best means for companies to quickly determine a suitable development direction.

With the development of the industry, due to the particularity of the artificial intelligence industry, especially the reason why AI companies are mainly engaged in B-end customers, many projects of AI companies cannot meet the needs of multiple users at the same time, and the compatibility is poor. The strategy needs to bear higher economic cost pressure.

Especially when involved in multiple industries, you need to face many established companies and other strong competitors. As the field of security faced with Hikvision, Arima -line confrontation, the automotive industry need to face the Tesla , “Wei small truth” and even millet Huawei and other companies.

The most important thing is that changes in the policy level will inevitably have a greater impact on the development of SenseTime’s core technologies.

Since the second half of this year, a number of policies and regulations for personal privacy have been issued, clarifying the nature and responsibility of the abuse of facial recognition technology to contribute to facial information, and stated that the installation of image collection and personal identification equipment in public places should be prominent The prompt identification.

The regulation of privacy data, especially facial recognition technology, has become more stringent. This is not good news for SenseTime, which relied on visual algorithms in the early years and the Internet visual business is its most extensive business.

With the tightening of policies year by year, the sooner the market starts, the more optimistic about the future of SenseTime.

In addition, due to the shift of industry windows, the primary market’s attention to artificial intelligence companies has declined in the past two years. There are only a handful of AI industry financing events in 2021. SenseTime has chosen to go public in advance to reserve funds for future development and take precautions. Not possible.

03 The entanglement of “learning and capital”

Public information shows that SenseTime’s founding team originated from the Multimedia Laboratory of CUHK established in 2001. Many founding team members are well-known in academia.

As of June 30, 2021, SenseTime has 40 professors leading the R&D work and 3,593 R&D members, of which about two-thirds hold or are studying for a master’s or doctoral degree, including more than 250 PhDs and PhDs Degree candidates. In 2018, 2019, 2020 and the first half of 2021, SenseTime’s R&D expenditures were RMB 848.7 million, RMB 1,916.0 million, RMB 2,453.9 million and RMB 1,771.7 million, respectively.

SenseTime: the game between ideals and capital

With high R&D investment, SenseTime has made great achievements in the academic field. According to Sullivan data, SenseTime ranked first in the number of papers published on CVPR, ICCV and ECCV from January 1, 2015 to June 30, 2021.

All of the above have also made “academic school” one of the fixed labels determined by SenseTime.

“Finance New Knowledge” consulted SenseTime on enterprise-related issues. SenseTime stated that “in order to continue this academic advantage, the company has all the top scientists in the field under its command, and it also reserves a large number of talents in the field of deep learning. , Built a talent echelon from fresh graduates to technical experts”.

The data shows that in 2018-2020 and the first half of 2021, the total amount of government subsidies received by SenseTime will be close to 1 billion, and the specific amounts are 207 million yuan, 253 million yuan, 353 million yuan and 1.26 million yuan respectively. 100 million yuan.

SenseTime reveals a kind of “idealism” peculiar to academic staff. The infinite research in technology has brought about the progress of products, and there is no doubt about the strength at the technical level.

However, the capital market is far less pure and ideal than the academic field.

As of the end of 2018, the end of 2019, the end of 2020 and June 30, 2021, the balance of SenseTime’s trade receivables was 1.332 billion yuan, 2.625 billion yuan, 3.748 billion yuan and 3.926 billion yuan, increasing year by year. The same is true for the provision for bad debts, with corresponding amounts of 102 million yuan, 211 million yuan, 610 million yuan and 785 million yuan respectively.

At the same time, the period of accounts payable has gradually increased, from 92 days in 2018 to 228 days in 2020. Although this number has dropped to 172 days in the first half of 2021, this is also due to the B-end public sector as the main customer. Disadvantages, the corporate voice is weak.

For enterprises, “although public grain is fragrant, it does not last long”.

04 Written at the end

The road to listing will inevitably provide SenseTime with sufficient funds to expand its own advantages, but increasingly tightened policy changes and the future confusing Metaverse will also add a lot of uncertainty to this “stock market journey”.

Similarly, after listing, SenseTime may face multiple pressures from capital and investors. If it continues to “increasing revenue but not profit” for a long time in the future, it will be difficult to submit a satisfactory “financial report data answer sheet.” This idealism may eventually fade away over time.

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