“Investors Network” Ding Wanping
On June 29, Qiniu Intelligent Technology Co., Ltd. (hereinafter referred to as “Qiniuyun”) submitted a prospectus to the Hong Kong Stock Exchange to be listed on the Hong Kong Main Board. Shen Wan Hongyuan Hong Kong and BOC International are co-sponsors.
It is worth mentioning that this is not the first time the company is seeking to go public. In 2021, Qiniuyun submitted a prospectus to the SEC and plans to go public in the US. However, in September 2022, the company withdrew its application to go public in the US and moved to Hong Kong stocks.
According to the data, Qiniuyun's income has fluctuated over the past three years, and “the more you lose, the more you lose.”
Behind the transition to H-shares
According to the official website, Qiniuyun was founded in 2011 and is a one-stop scenario-based intelligent audio and video service provider. Its main products and services are currently divided into two categories: MPaaS products and APaaS solutions. It is committed to creating a one-stop scenario-based intelligent audio and video service. It is headquartered in Shanghai, and also has branches in Beijing, Shenzhen, Guangzhou, Chengdu, Hangzhou, Wuhan and other places.
On June 29, Qiniuyun submitted a prospectus to the Hong Kong Stock Exchange to be listed on the Hong Kong Main Board. Compared to most IPO companies going public in Hong Kong, Qiniuyun's investor lineup attracted a lot of attention after submitting the report.
According to the prospectus, before the IPO, Alibaba held 17.69% of Qiniuyun's shares, making it the largest external investor; Yunfeng Fund, Jingwei Venture Capital, National Research Fund, and Qiming Venture Capital held 12.44%, 7.97%, 7.32%, and 6.83% of the shares respectively, and were also major institutional investors. According to the listing rules, Qiniuyun does not have a controlling shareholder.
According to the prospectus, the funds raised in this IPO will be used for the following purposes: infiltrating and consolidating the share of application scenarios in the APaaS business and developing and expanding the customer base; expanding overseas business; enhancing R&D capabilities and improving technical infrastructure; selecting mergers, acquisitions and strategic investments; working capital and general corporate purposes.
It is worth mentioning that this is not the first time the company has sought to go public. Qiniuyun secretly submitted a prospectus to the US Securities Regulatory Commission (SEC) in February 2021 and publicly disclosed the prospectus on April 30 of that year. It intended to be listed on the US NASDAQ, then voluntarily withdrew the US listing application in September 2022, stating that it was due to unfavorable conditions in the US capital market at the time. After a lapse of 2 years, Qiniuyun once again sprinted into the IPO.
In response, Qiniuyun emphasized in its prospectus that the decision not to try listing in the US was due to unfavorable capital market conditions, not because of any difficulties in handling the opinions of the US Securities and Exchange.
Losses for the past three years in a row
Qiniuyun's position is to build a one-stop data management cloud platform. The prospectus shows that as one of the earliest platforms to provide audio and video cloud services in China, Qiniuyun is one of the few companies that have the technical ability to develop comprehensive and high-performance MPaaS products, integrate and cover all aspects of audio and video business - Qiniuyun's mPaaS products use a series of audio and video technologies and a series of AI technologies to provide a comprehensive content distribution network (“QCDN”), an object storage platform (“Kodo”), an interactive live streaming product, and an intelligent data analysis platform (”” A series of audio and video solutions, such as “Dora”), mainly serve customers with strong development capabilities and strong flexibility requirements.
According to the prospectus, up to now, Qiniuyun has completed a total of 6 rounds of 9 financing and has received investment from well-known institutions such as Jingwei Venture Capital, Qiming Venture Capital, Alibaba, Yunfeng Fund, and BOC International. According to the official website, the company's cumulative financing exceeds 3 billion yuan. Shareholders also include institutions such as Qiming Venture Capital, Zhangjiang Hi-Tech, and the China State-owned Enterprise Structural Adjustment Fund.
Although it was once favored by capital, Qiniuyun's earnings in the past two years have not been as good as expected.
In terms of revenue, the prospectus shows that from 2020 to 2022, Qiniuyun achieved revenue of 1,089 billion yuan, 1,471 billion yuan, and 1,147 billion yuan respectively. Revenue increased 35.1% from 1,089 million yuan in 2020 to 1,471 billion yuan in 2021, but in 2022 this figure changed to 1,147 billion yuan, down 22% from the previous year.
In response, Qiniuyun explained that the decline in revenue in 2022 was mainly due to a decrease in revenue from MPaaS products, partly offset by an increase in revenue from APaaS solutions (due to the continuous expansion of APaaS business in response to industry development and market demand).
According to the prospectus, in 2020-2022, Qiniuyun's share of revenue from MPaaS products continued to decline, amounting to 1,027.5 million yuan, 1,369.6 million yuan and 875 million yuan respectively, accounting for 94.3%, 93.1% and 76.3% respectively. The share of revenue from APaaS solutions continued to increase, amounting to $024.9 million and $194 million, respectively, equivalent to 0, 1.7% and 16.9% of total revenue over the same period (see table below).
In terms of profit, during the reporting period, Qiniuyun remained in a state of loss. Adjusted net losses were RMB 20.064 million, RMB 143 million, and RMB 150 million respectively, showing a “more loss” trend (see table below).
In response, Qiniuyun explained that since China's audio and video cloud service market is still in the early stages of development, it strategically prioritizes expanding and increasing market share rather than short-term profits.
In recent years, Qiniuyun has continued to increase R&D investment. In 2020-2022, its R&D costs were about 96 million yuan, 143.4 million yuan and 129 million yuan respectively, accounting for about 34.6%, 31.4% and 33.2% of various operating expenses (including sales and distribution expenses, administrative expenses, and R&D costs) during the same period, respectively.
Industry insiders said that cloud computing is a low-profit industry; only reaching a certain number of users will reduce costs and profits. Currently, most cloud computing companies are in a state of loss. Today, the cloud computing market is fiercely competitive. Qiniuyun faces competition not only from giants, but also from innovative and entrepreneurial enterprises. If R&D is not stepped up, it is likely to be surpassed by rising stars.
However, Qiniuyun stated in the prospectus, “We plan to focus on profit in the future, and expect to start reducing losses in 2023 and achieve profit in 2025.”
“Low profit, more sales” of cloud computing
According to public information, the growth of global cloud computing services as a whole will slow in 2022. According to statistics from the Chinese Academy of Information and Communications Technology, China's cloud computing market in 2022 will be 468.2 billion yuan, a growth rate of about 45%. Although the cloud computing market continues to grow, overall market growth is leveling off, gradually moving from a period of rapid growth to a period of steady development.
Zhang Zhouping, director of the B2B and Cross-border E-Commerce Department and senior analyst at the Network Economic and Social E-Commerce Research Center, said that in the past few years, under the dual impetus of enterprises and governments, the scale of the domestic cloud computing industry has continued to grow. Currently, China's cloud computing industry is growing rapidly, and there are many participants in market competition. Currently, competition is becoming fierce.
In this context, domestic cloud vendors are all relying on their own advantages to find a place to land. Many cloud vendors have made comprehensive industry cloud solutions for highly digitized scenarios such as finance, education, and retail to better help customers solve business problems, Zhang Zhouping said.
Industry insiders believe that with the intense market competition in the audio and video cloud industry, Qiniuyun is under pressure in all major aspects of the business, and new technologies and enhanced technologies may further intensify competition in the industry.
Additionally, cloud computing giants have begun cutting the prices of their cloud products. After Alibaba Cloud announced price cuts for core products across the board, Tencent Cloud and Mobile Cloud also initiated product price cuts.
In response, Zhang Xiaorong, director of the Deep Science and Technology Research Institute, once said that price cuts in the cloud computing industry have become the norm. “First, the cost of cloud computing continues to decline due to scale effects and technical improvements; secondly, due to serious product homogenization, manufacturers need to increase their market share through price cuts.”
Faced with “downsizing” competition from major domestic cloud computing giants, such as declining scenarios and price cuts, whether Qiniuyun can find a differentiated path, “break through” in future market competition, and achieve profit still needs to be further verified by the market. (Produced by Thinking Finance) ■