Recently, Qiniu Intelligent Technology Co., Ltd. Qiniu Limited (Qiniu Yun for short) submitted a listing application to the Hong Kong Stock Exchange. The company plans to enter the main board. Shen Wan Hongyuan Hong Kong and BOC International are co-sponsors.

Qiniuyun submitted F-1 registration documents to the US Securities Regulatory Commission in April 2021 to be listed on the NASDAQ. In September 2022, the company announced the withdrawal of its US stock listing prospectus.

In this Hong Kong stock IPO, the company plans to use the funds raised to “infiltrate and consolidate the share of application scenarios and develop and expand the customer base in the company's APaaS business”, “expand overseas business in the next 36 to 60 months”, “enhance the company's R&D capabilities and improve technical infrastructure”, “selected mergers, acquisitions and strategic investments”, and “working capital and general use”.

1. Taobao and Jingweichuang invest in shares

The history of Qiniuyun can be traced back to 2011. The company started audio and video cloud services in China through Qiniu Information. It was one of the earliest service providers mainly engaged in providing services in China.

From 2012 to 2020, the company received multiple rounds of investment, cumulativelyThe amount of financing is approximately US$166 millionInvestors include star capital institutions such as Jingwei Venture Capital, Yunfeng Fund, and Qiming Venture Capital.

In addition, the company was also favored by Ali. In December 2017, Taobao China invested 85 million US dollars in Qiniuyun.

(Qiniuyun's investor situation, image source: prospectus)

According to the prospectus, Qiniuyun currently has no controlling shareholder. Among them, founder Xu Shiwei holds 17.96% of the company's shares through Dream Galaxy; Taobao China holds 17.69% of the company's shares, making it the largest external investor; Yunfeng Fund, Jingwei Venture Capital, Yonglu, and Qiming Fund hold 12.44%, 7.97%, 7.32%, and 6.83% of the shares, respectively.

(Shareholding structure, image source: prospectus)

It is worth noting that,Taobao China has a triple status and is not only a shareholder of the company, but also a major supplier and customer.

From 2020 to 2022, the company's top five suppliers accounted for 75.6%, 63.5%, and 52.4% of the total purchase amount for each year, which is a relatively high proportion.There is dependency on major suppliersThe risk.

(The situation of the company's top five suppliers in 2022, image source: prospectus)

Among them, customer-supplier group D is Taobao China, one of the company's shareholders. It was the company's fourth and fifth largest customer in 2020 and 2021, respectively. The company mainly provides it with MPaaS (including Dora, QCDN, and Kodo products). At the same time, the company also buys cloud services and electronic equipment from them.

Losses exceeded 300 million in 23 years

Qiniuyun's main products and services includeMPaaS products(That is, a series of audio and video solutions, including the proprietary content distribution network QCDN, the object storage platform Kodo, the interactive live streaming product, and the intelligent media data analysis platform Dora, mainly serve customers with strong R&D capabilities and strong flexibility);APaaS Solution(Scenario-based audio and video solutions based on the company's MPaaS capabilities and using a low-code platform are designed to enable customers to quickly call up different functions and achieve business goals with only simple deployment).

(Breakdown of the company's revenue from 2020 to 2022, image source: prospectus)

As of December 31, 2022, the company had more than 1,350,000 registered users, mostly developers or developer teams from various companies. In 2022, the company had over 80,000 paying customers.

Among them, the number of the company's MPaaS paying customers increased from 61,502 in 2020 to 8,3970 in 2022, and the customer retention rate was over 70%.

The APaaS program is a new business launched in 2019. The number of paying customers increased from 1,319 in 2021 to 1967 in 2022, with a retention rate of 88.8%.

(Photo Credit: Prospectus)

According to iResearch, in 2022, the Chinese audio and video APaaS market is RMB 1.6 billion, and is expected to reach RMB 16.2 billion by 2027, with a compound annual growth rate of 58.3%.

In terms of revenue in 2022, Qiniuyun is the third largest audio and video PaaS service provider in China, with a market share of 5.7%; in terms of 2022 APaaS revenue, the company is also the second largest audio and video APaaS service provider in China, with a market share of 11.9%.

In terms of business performance, during the reporting period, Qiniuyun's earnings were RMB 1,089 million (same below), RMB 1,471 million, and RMB 1,147 million, respectively. The corresponding annual profits were 994.06 million yuan, -220 million yuan, and -213 million yuan respectively. The company'sRevenue fluctuated to a certain extent, with a cumulative loss of about 333 million yuan over the past three years.

(Summary of consolidated profit and loss statement, image source: prospectus)

From 2020 to 2022, the company was adjusted (including the effects of changes in the fair value of convertible and redeemable preferred shares, fair value income from financial assets that include profit and loss at fair value, and share-based payments)Net losses (unaudited) were -20264 million yuan, -143 million yuan, and -150 million yuan, respectively.

The company's large losses are inseparable from the large expenses of various expenses. In the reporting period, the company's sales and marketing expenses accounted for 9.7%, 13.1% and 12.9% of revenue respectively; administrative expenses accounted for 7.0%, 8.1% and 9.7% of revenue respectively; and R&D costs accounted for 8.8%, 9.7% and 11.2% of revenue, respectively.

Regarding the current situation of continued losses, Qiniuyun said that since China's audio and video cloud service market is still in the early stages of development, it is strategically prioritizedExpanding and increasing market share rather than short-term profits.

The company expects adjusted losses to gradually decrease in 2023 and 2024, andIt is expected to be profitable in 2025. Specifically, the company plans to passFocus on APaaS businessIt also deepens user participation, effectively manages costs and expenses, and expands the customer base to improve the company's financial performance.

During the reporting period, the companyOverall gross margins were 21.7%, 19.8% and 19.9%, respectivelyThe decline was significant in 2021, mainly due to the increase in MPaaS demand in 2020 due to the pandemic, which increased the company's bargaining power accordingly. In 2021, when more audio and video cloud service providers entered the market, the gross margin of the company's mPaaS decreased from 21.1% to 17.9%.

(The company's gross margin during the reporting period, image source: prospectus)

3. Conclusion

Overall, the audio and video cloud industry is in a stage of rapid development, and market competition is becoming increasingly fierce. For Qiniuyun, the company faces competition from giants and the rise of latecomers. How to find a balance between open source and savings to turn losses into profits or achieve sustainable development is the key.