After going public in the US to no avail, Qiniuyun turned back into the “arms” of the Hong Kong Stock Exchange.

The Zhitong Finance App learned that Qiniuyun submitted a prospectus to the US SEC on April 30, 2021, applying for listing on the NASDAQ, but it ultimately came to an end with the US SEC agreeing to withdraw the F-1 registration documents and all revisions. Recently, Qiniuyun went public hoping to switch to the Hong Kong Stock Exchange. According to the Hong Kong Stock Exchange's disclosure on June 29, Qiniu Intelligent Technology Co., Ltd. (hereinafter referred to as “Qiniuyun”) submitted a listing application to the main board of the Hong Kong Stock Exchange. Shen Wan Hongyuan Hong Kong and BOC International are its co-sponsors.

According to the prospectus, Qiniuyun was founded in 2011 and is a one-stop scenario-based intelligent audio and video service provider. According to iResearch, in terms of revenue in 2022, the company is the third largest audio and video PaaS service provider in China, second only to the audio and video PaaS business of the two largest Internet companies in China, with a market share of 5.7%. Based on revenue from APaaS in 2022, the company is also the second largest audio and video APaaS service provider in China, second only to the audio and video APaaS business of one of the largest Internet companies in China, with a market share of 11.9%.

As one of the earliest platforms to provide audio and video cloud services in China, although Qiniuyun ranks among the top in the industry, its path to listing is still rocky. What are the highlights of Qiniuyun's submission to the Hong Kong Stock Exchange this time?

The main business revenue fluctuates, and the second growth curve is expected to open

According to the Zhitong Finance App, Qiniuyun's main products and services include MPaaS products and APaaS solutions.

In terms of segments, MPaaS products are a series of audio and video solutions, including proprietary content distribution networks (QCDN), object storage platforms (Kodo), interactive live streaming products, and intelligent media data analysis platforms (Dora). They mainly serve customers with strong development capabilities and strong flexibility requirements. In 2022, Qiniuyun's MPaaS platform provided an average of over 1.4 billion minutes of audio and video broadcasts per day, processing more than 11.8 million minutes of audio and video content per day. As of December 31, 2022, Qiniuyun's MPaaS platform has an EB-level (1EB~1 billion GB) data storage scale.

The APaaS solution is a scenario-based audio and video solution based on the company's MPaaS capabilities and utilizing its low-code platform. Revenue comes from five application scenarios: social entertainment, video marketing, video networking, intelligent new media, and the metaverse. As a new business launched by the company in 2021, the APaaS business developed rapidly. The number of customers in this business increased by 49.1% from 1,319 in 2021 to 1967 in 2022. The one-year increase is the second ranking in the Chinese audio and video APaaS market.

In addition, as a supplement to the MPaaS and APaaS business, the company also provides customers with other trusted cloud services, mainly including DPaaS, QVM, and Internet data center hosting services.

Among these, the MPaaS business is a major contributor to the company's revenue. However, the Zhitong Finance App noticed that in recent years, the performance of this business has fluctuated quite a bit. In 2020, 2021 and 2022, revenue from this business was $1,028 million (RMB, same below), $1.37 billion and $875 million respectively. The proportion of the company's total revenue during the period was 94.3%, 93.1% and 76.3% respectively, declining year after year.

Regarding the segment's revenue decline in 2022, the company explained that it was mainly due to the decline in revenue from Kodo, QCDN, interactive live streaming products, and Dora. Among them, revenue from Kodo products declined the most. Revenue from this product fell more than 50% to only 320 million yuan in 2022. This is mainly due to serious supply chain disruptions in hardware-related businesses due to geopolitical risks and repeated epidemics, so the company strategically reduced the scale of the hardware-related business.

Thankfully, however, sales in the company's remaining two major businesses both grew to varying degrees during the reporting period.

Although aPaaS is a new business that was only launched in 2021, the business is growing rapidly. Less than two years after launch, business revenue has increased from only 24.901 million yuan in 2021 to 194 million yuan in 2022, and the share of revenue has also increased from 1.7% to 16.9%, making it the company's second largest revenue source.

It is worth mentioning that as an emerging industry segment, the audio and video APaaS market has relatively few market participants compared to the MPaaS market, and currently the company enjoys strong bargaining power. In the future, the company will continue to penetrate and consolidate the share of application scenarios in its APaaS business and develop and expand the customer base, which is expected to open up the company's second growth curve.

Meanwhile, revenue from other businesses also continued to grow. The reporting period was 61.702 million yuan, 76.468 million yuan, and 78.28 million yuan respectively. Revenue accounted for 5.7%, 5.2%, and 6.8%, showing a fluctuating upward trend.

Although revenue from APaaS and other businesses continues to grow, it is still difficult to withstand the decline in revenue from the main business, the mPaaS business. During the reporting period, Qiniuyun achieved revenue of 1,089 million yuan, 1,471 million yuan and 1,147 million yuan respectively, and revenue performance continued to fluctuate.

At the same time, the company's profit performance also continued to fluctuate. The company's gross profit increased from 237 million yuan in 2020 to 291 million yuan in 2021, but fell sharply to 229 million yuan in 2022. The company's gross margin showed a downward trend. The company's gross margins during the reporting period were 21.7%, 19.8%, and 19.9%, respectively.

The industry is developing rapidly, and the loss dilemma is still difficult to solve

In addition to revenue fluctuations, continued losses are also a problem to be solved by Qiniuyun at present.

The Zhitong Finance App noticed that Qiniuyun has continued to lose money in recent years. During the reporting period, Qiniuyun's net profit for the year was 994.06 million yuan, -2197 million yuan, and -2128 million yuan respectively. The cumulative loss over the past two years exceeded 430 million yuan. In addition, the company's adjusted net losses were $20264 million, $142.9 million, and $149.6 million, respectively.

In response, the company explained that this is mainly because China's audio and video cloud service market is still in the early stages of development. In particular, the APaaS market is growing rapidly, so the company strategically prioritizes expanding and increasing market share rather than short-term profits in order to seize market opportunities in the growing market.

From the perspective of industry development, with the expansion of the audio and video industry, the upgrading of network infrastructure, and the iteration of audio and video transmission technology, the application of audio and video cloud services in various industries continues to deepen and achieve rapid growth. According to iResearch, in 2022, China's audio and video cloud service market is 81.3 billion yuan, and is expected to reach 241.8 billion yuan in 2027, with a compound annual growth rate of 24.4%.

With the development of audio and video applications in various industries, the PaaS market share, which has potential for further development, is expected to increase rapidly. The market share of PaaS in the audio and video cloud service market is expected to increase from 24.6% in 2022 to 33.0% in 2027. And as audio and video APaaS uses low-code solutions to meet the different needs of the market, the growth rate of the APaaS market, which Qiniuyun has actively developed in recent years, continues to exceed the growth rate of the MPaaS market. According to iResearch, in 2022, China's audio and video MPaaS service market is 18.4 billion yuan, and is expected to reach 63.7 billion yuan in 2027, with a compound annual growth rate of 28.1%. However, the size of China's audio and video APaaS service market in 2022 is only 1.6 billion yuan, and is expected to reach 16.2 billion yuan in 2027, with a compound annual growth rate of 58.3%.

While the market continues to expand, the PaaS market is also facing more intense market competition. According to information, IaaS and SaaS providers have begun to compete in the PaaS market, and competition between non-independent audio and video cloud service providers and independent audio and video cloud service providers is becoming increasingly intense.

In order to strengthen market competitiveness, the company continues to increase investment in R&D. During the reporting period, Qiniuyun's R&D expenses were 96.048 million yuan, 143.4 million yuan, and 128.7 million yuan respectively. According to Qiniuyun, technical ability is critical to its future success. Furthermore, according to iResearch, “AIGC+ audio and video APaaS” is expected to become a new form of audio and video APaaS in the future. To improve the competitiveness of products and keep up with the pace of industry development, companies need to invest huge resources, including capital and manpower investment. As a result, the company expects that its R&D expenses may continue to increase. In this context, the term profit seems a bit far off for a seven-year cloud in the short term.

Taken together, Qiniuyun is developing in an emerging and highly promising industry. Judging from its position in the industry, Qiniuyun may be an investment target worth focusing on after listing, but if you look at fundamental performance such as profitability, Qiniuyun's future development may still require further attention from investors.