iFLYTEK: Understand technology, but also know more about cars

With the development of information technologies such as big data, cloud computing, the Internet, and the Internet of Things, artificial intelligence technologies represented by deep neural networks have been rapidly upgraded, and artificial intelligence technologies such as image classification, speech recognition, knowledge quiz, and man-machine game have gradually become " Civilization".

Artificial intelligence has stepped down from the altar, but then it will face the dilemma that it is difficult to commercialize it on a large scale.

In the face of the large amount of R&D investment required in the early stage, AI technologies that are difficult to apply are like passive water, and the lack of profitability has always been a cloud around most AI companies, gradually lowering market expectations.

In the end, only the few who can find their own business models and technology application scenarios can survive.

iFlytek may be one of them.

At the beginning of the 21st century, technologies such as speech recognition and image recognition were rapidly developed and industrialized.In 1999, iFLYTEK was officially established. This technology company that grew up with technology companies such as BAT has chosen another development path.

In 2001, iFLYTEK's "Half Soup Conference" officially determined the development direction of focusing on the voice industry.In 2008, iFLYTEK was successfully listed, becoming the only listed company in China's voice industry at that time, and began to extend to the field of artificial intelligence.

Revenue has grown rapidly for 10 consecutive years, and the goal of 100 billion is not a dream

On April 21, iFLYTEK released its 2021 annual report and its first quarter financial report for 2022.

According to the financial report data, in 2021, the operating income of iFLYTEK will be 18.31 billion yuan, a year-on-year increase of 40.6%.

Among them, the three major businesses of iFLYTEK’s educational products and services, open platform and information engineering achieved year-on-year growth of 49.5%, 55.6% and 60.7% respectively.

Among all A-share listed companies, iFLYTEK is the only listed company with an annual revenue growth rate of over 25% for 10 consecutive years in the past 10 years.

iFLYTEK’s net profit performance was not as impressive as its revenue performance.

In 2021, iFLYTEK will achieve a net profit of 1.56 billion yuan, a year-on-year increase of 14.1%, but compared with the 66.5% increase in net profit in 2020, its net profit growth rate has slowed down significantly.iFLYTEK stated that the main reason is the increase in expenses caused by the increase in personnel.

In 2021, iFLYTEK will invest 2.94 billion yuan in research and development, a year-on-year increase of 21.5%. At the same time, it will increase its personnel reserve by 3,301 people, and its management expenses and sales expenses are also increasing.

However, in the first quarter of 2022, iFLYTEK’s net profit fell by 20.57% year-on-year to 110 million yuan.

According to the financial report information, in the first quarter, the stocks of companies such as Cambrian and Sanxing held by iFLYTEK suffered a loss of 154 million yuan due to changes in fair value due to stock price fluctuations, which was also the main reason for the decline in net profit in the first quarter.

iFLYTEK’s reliance on government subsidies is also often criticized by the market.From 2019 to 2021, the government subsidies included in the current profit and loss of iFLYTEK are 410 million yuan, 430 million yuan and 440 million yuan respectively, accounting for 50.2%, 31.2% and 28.2% of the total profit respectively.

In the past three years, the government subsidies included in the current profit and loss have increased slightly year by year, and the proportion of the total profit has decreased year by year.

This means that iFLYTEK’s business profitability is improving.Although the increase in R&D and other costs has an impact on the current net profit performance, it is also a necessary expense for its long-term development.

In 2021, iFLYTEK won 10 championships in important international competitions in the field of artificial intelligence, which also benefited from its persistence in R&D investment.

Overall, iFLYTEK will have a good 2021.In the fourth quarter of 2021, its single-quarter revenue and net profit were 7.45 billion yuan and 890 million yuan respectively, both the best levels in a single quarter since its listing.Take Shangtang, another leading AI listed company, for example, its revenue in 2021 will be 4.7 billion yuan, and its net loss will be as high as 17.14 billion yuan.

In March 2021, iFLYTEK established the development goal of "one billion users, one hundred billion income, and one trillion ecology" during the "14th Five-Year Plan" period.

The revenue performance in 2021 will undoubtedly give iFLYTEK the confidence to realize its "five-year plan".

The business model of iFLYTEK is undergoing transformation, and base business and systematic innovation are the two core strategic plans.

At the iFLYTEK Cloud Annual Conference in January this year, Liu Qingfeng, chairman of iFLYTEK, said: "2021 is the year when the base business takes root, and the base business accounts for more than 50% of the revenue, and the growth rate is expected to exceed 60% in 2022. %."

"Platform + Track", two carriages of iFLYTEK

In promoting the large-scale application of artificial intelligence-related technologies, iFLYTEK adopts the strategy of "platform + track".

iFLYTEK released the first AI open platform in China in 2010, and it is also the first batch of "National New Generation AI Open Innovation Platform". Industry upstream and downstream resource partners provide full-chain services, and on this basis, further build capability platforms such as iFlytek AI marketing platform and iFLYTEK intelligent industrial platform.

In 2021, the iFLYTEK artificial intelligence open platform has opened 449 AI capabilities and solutions to the outside world, bringing together 2.93 million developers, focusing on 18 industries such as finance, agriculture, and energy.In October last year, the "Open Platform 2.0 Strategy" was also officially launched.

In terms of "track", iFLYTEK takes "base business" as the core of its next development.

According to iFLYTEK's explanation, "base business" refers to businesses that can really create long-term value in various industry tracks. The four evaluation criteria are: benign user dependence, long-term operating ability, sustainable growth potential, and industry demonstration value.

Among the main revenue businesses of iFLYTEK, education business, consumer business, medical business, automobile business and operator business, etc., have proposed specific base business categories.

In 2021, iFLYTEK's smart education revenue will be 6.01 billion yuan, a year-on-year increase of 49.5%, accounting for 32.8% of total revenue.The performance of the smart medical business, which is highly expected by iFLYTEK, did not meet its expectations. In 2021, its smart medical business revenue will be 340 million yuan, a year-on-year increase of 8.1%.

Its consumer revenue in 2021 will be 4.69 billion yuan, a year-on-year increase of 52.2%.The smart city and smart car businesses achieved revenue of 2.85 billion yuan and 449 million yuan respectively, a year-on-year increase of 60.7% and 38.9% respectively.

Except for the smart medical business, the other major businesses have maintained a relatively high growth rate.

According to iFLYTEK’s plan, to achieve its 100 billion revenue target in 2025, the education business will contribute 30 billion yuan, medical care, consumer smart hardware and open platforms will each contribute 20 billion yuan, and the automotive business, operators, and smart cities will contribute 30 billion yuan. 10 billion yuan in each field.At present, the distance from the target is not small.

From education and teaching to smart city, iFLYTEK includes 2C, 2G, 2B and other business modules. The complicated business brings diversified revenue channels to iFLYTEK, but also brings a lot of R&D and labor costs. .

iFLYTEK is still exploring its business model, but if large-scale commercialization of AI technology cannot be achieved, the revenue of 100 billion yuan will only be a big pie.

At present, intelligent voice is still the cornerstone of iFLYTEK. If iFLYTEK can further explore the application prospects of intelligent voice, it may bring benefits to iFLYTEK's profitability.

Smart cars are a direction that iFLYTEK values.

iFLYTEK's smart car ambitions

The road to automobile intelligence has already started, and users' requirements for the "scientific and technological sense" of automobile products are rising, which has gradually increased the penetration rate of intelligent technologies such as voice interaction in automobiles.

Various human-computer interaction methods have also become the key development direction of smart cars, which not only brings more interesting driving experiences to users, but also helps drivers "free their hands".

Especially today, when the autonomous driving technology is still immature, the driver cannot completely abandon the steering wheel during the driving process. At present, voice interaction is still one of the most direct and safest interaction methods in the car.

According to the data of "2022 China Automotive Intelligent Function Module Series Research - Voice Interaction" released by Yiou Think Tank, among the newly released passenger cars in China in 2021, the penetration rate of voice interaction function in the cockpit is as high as 86%.

In 2021, the market size of China's voice interactive vehicle applications will be 2.22 billion yuan. Yiou think tankpredictsthat the market size will reach 2.61 billion yuan in 2022.

Based on voice technology, iFLYTEK accelerates the application of voice interaction in driving scenarios and moves towards a more complete intelligent cockpit.

In 2021, iFLYTEK's smart car business will achieve technological breakthroughs such as multi-mode voice enhancement and multi-mode integrated interaction, and release the Feiyu smart car audio management system.

iFLYTEK’s smart car business has achieved pre-installation of 7 million units, more than 200 newly delivered models, reached more than 40 cooperative car companies, and fixed-point reserves increased by 90%.By the end of 2021, iFLYTEK has delivered more than 1,200 models in total, and the cumulative installed capacity of pre-installed vehicles has exceeded 39 million.

iFLYTEK’s auto business will achieve revenue of 450 million yuan in 2021.iFLYTEK stated at the performance briefing that the market size of its smart car business is expected to exceed 1 billion per year in the next three years.