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Interface News Reporter | Guo Jingjing

Mobvoi (02438.HK) released its interim results announcement on August 23, showing that in the six months ending June 30, 2024, the company achieved revenue of 163 million yuan, with revenue of 92.301 million yuan from its AIGC solutions, 10.724 million yuan from its AI enterprise solutions, and 59.645 million yuan from smart devices and other accessories.The company lost 579 million yuan during the period, compared with a loss of 218 million yuan in the same period last year.

Actively stop increasing income based on traditional project system

"As the group changes its business strategy and focuses on developing AIGC, it will proactively stop increasing revenue based on the traditional project system." On the afternoon of August 26, Mobvoi founder and CEO Li Zhifei said at an earnings briefing that excluding the impact of revenue recognition from the intellectual property arrangement with automotive subsidiary A, "the company's main sustainable businesses have all grown healthily and met expectations."

Mobvoi's revenue for the six months ended June 30, 2023 was 262 million yuan, and its revenue for the first half of 2024 fell 37.9% year-on-year. The company's revenue from AI enterprise solutions decreased in the first half of the year. Mobvoi said that if the revenue of 139 million yuan recognized from the intellectual property arrangement with automotive subsidiary A is excluded, the revenue for the six months ended June 30, 2023 will be 123 million yuan.

At the same time, after deducting the income from the intellectual property arrangement with automotive subsidiary A, the company's gross profit increased by 80.6% from RMB58.3 million in the six months ended June 30, 2023 to RMB105 million in the six months ended June 30, 2024; gross profit margin increased by 17.3% from 47.4% in the six months ended June 30, 2023 to 64.7% in the six months ended June 30, 2024; adjusted net loss (non-GAAP measurement) decreased by 32.7% from the same period last year, from RMB83 million in the six months ended June 30, 2023 to RMB55.855 million in the six months ended June 30, 2024.

Mobvoi was founded in 2012. It is an artificial intelligence company with generative AI and voice interaction as its core, providing AIGC tools for creators, AI government and enterprise services, and AI smart hardware. On April 24, 2024, the company went public on the main board of the Hong Kong Stock Exchange, becoming the first AIGC (generative artificial intelligence) stock in Hong Kong.

Before the IPO, Mobvoi completed seven rounds of financing from February 2013 to September 2019, with a total financing amount of US$250 million. The investors include Google, Sequoia Capital, SIG Haina Asia, Zhen Fund, Volkswagen and other institutions. The company raised more than HK$300 million in this round of Hong Kong stock IPO, and the cornerstone investors include Zhongguancun International, Nanjing Economic and Technological Development Zone Juzhi Science and Technology Innovation Investment and others.

The latest financial report shows that as of June 30, 2024, Mobvoi had cash and cash equivalents of approximately RMB 386 million, a year-on-year increase of approximately 167.4%; at the same time, the company's debt-to-asset ratio as of June 30, 2024 was 33.4%, far lower than the debt-to-asset ratio of 1114.5% as of December 31, 2023.

It cannot be ignored that since its listing, Mobvoi's stock price has fallen by more than 70%, and its current market value is HK$1.6 billion. When asked whether the company's value is underestimated, Li Zhifei responded that the company is one of the few companies in the market that has both technical capabilities and commercialization capabilities, and has a very low loss ratio in the field of AI companies; "Looking to the future, with the in-depth adjustment of product strategy and the acceleration of overseas market expansion, we have reason to believe that the company's overall financial performance will be even better. We firmly believe that the company's development should be based on long-term planning rather than short-term interests. Through unremitting efforts, we hope to build a research and development company with long-term business value and financial performance that exceeds industry expectations, thereby winning more support."

AIGC business revenue share doubled to 56.7%

AIGC business is the core business of Mobvoi. A person from the company told Jiemian News that the company has entered a stage of accelerated growth in terms of AIGC business development, AIGC production and model integration, and industry ecological layout.

Currently, the company develops AIGC products such as Magic Sound Workshop, DupDub, Qimiaoyuan and Qimiaowen. Among them, the number of registered users of Magic Sound Workshop increased by nearly 42% in the first half of 2024 compared with the same period in 2023. In the first half of this year, the company launched a new AIGC video tool product Yuanchuangdao.

Li Zhifei pointed out at the earnings briefing that due to the reduced reliance on large customer enterprise services, the revenue and gross profit of this segment will drop significantly; but on the other hand, the rapid growth of AIGC business will effectively make up for this gap, and its revenue is expected to increase significantly and account for a larger proportion of the company's overall revenue. At the same time, the high gross profit characteristics of AIGC business will significantly enhance the company's profitability. In addition, the revenue of smart hardware is mainly concentrated in the second half of the year. Affected by Christmas and other holiday promotions, the revenue in the second half of the year will far exceed that in the first half of the year. "Combining these three categories, the company's total revenue may be the same as last year, but profitability will increase significantly, mainly due to the significant increase in the proportion of AIGC business."

The financial report shows that in 2022, 2023 and the six months ending June 30, 2024, the revenue of AIGC solutions accounted for 8%, 23.2% and 56.7% of Mobvoi's total revenue respectively. Among them, in the first half of this year, the revenue of Mobvoi's AIGC solutions increased by 123.8% from RMB 41.2 million in the six months ending June 30, 2023 to RMB 92.301 million in the six months ending June 30, 2024, mainly due to the increase in the number of paying users and the average selling price.

In addition, Mobvoi's sales and marketing expenses increased from RMB59.9 million in the six months ended June 30, 2023 to RMB91.3 million in the six months ended June 30, 2024, due to the increase in revenue from AIGC solutions, which led to a corresponding increase in promotional expenses.

In the first half of the year, Mobvoi focused on exploring multimodality and agents, emphasizing the combination of large language models and multimodality. The company released technologies such as 2.5D digital human WetaAvatar4.0, photo digital human engine WetaAvatar4.0TalkingPhoto, and real-life walking digital human.

The development of the artificial intelligence industry will experience a cooling trend in 2024. Computing power is no longer the focus of large model companies. Scenario implementation and commercial application have become important issues of concern to the entire industry. Faced with the competition for large models, Li Zhifei pointed out that at the current stage, it has become extremely difficult for startups or small companies to simply pursue the expansion of the scale of language models and the widespread application of them. This usually requires giant companies to undertake. "Therefore, the company will shift the focus of competition from the full language model to language model-based applications and multimodal innovation in order to find new growth points and competitive advantages."

"Chumenwenwen is different from many companies in the market that make large-scale model applications." In Li Zhifei's view, there are some companies that only make models (the main purpose is to make models and sell them to third parties), and some only make applications (they do not have the ability to make models, and are more likely to purchase and call models to make applications). Chumenwenwen has always emphasized the product-driven production and model integration model.

Li Zhifei emphasized to Jiemian News that Mobvoi adheres to the principle of "using production to support the model" and "using production to feed the model", using its own hematopoietic ability to feed back R&D and achieve a self-circulation of profits and funds. This is the key strategy for the company to maintain sustainable growth. "We remain optimistic about the AIGC business and expect the AIGC business to generate larger-scale user growth and revenue growth in the future."

"We are one of the few companies in the industry that can empower three major scenarios at the same time." Li Zhifei pointed out at the performance briefing that by building the AIGC CoPilot product matrix, a one-stop content creation platform is created; the company also provides C-end consumer user experience for corporate customers. In addition, for consumer scenarios, the company has launched consumer-grade smart devices such as the AI ​​smartwatch TicWatch series, creating a multi-scenario smart hardware circulation ecosystem based on virtual personal assistants; "Consumer-grade smart devices have stable hematopoietic capabilities and achieve self-circulation of profits and funds, which is also a key strategy for the company to maintain sustainable growth."