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founded in 2015, chongqing tesloop intelligent technology co., ltd. (hereinafter referred to as "tesloop") provides full-stack aiot (artificial intelligence internet of things) products to enterprises, cities, etc. based on 2023 revenue, it ranks among the top five public domain operating system aiot product providers in china.

on september 26, terminus submitted its prospectus to the hong kong stock exchange. its revenue from 2021 to 2023 showed a v-shaped trend, decreasing from 1.207 billion yuan to 738 million yuan and then rising to 1.006 billion yuan. its revenue in the first half of 2024 fell by 30% year-on-year. the revenue trend is uncertain, and there is no sign of narrowing the adjusted net loss. from 2021 to 2023, terminus lost a total of 2.222 billion yuan, and in the first half of 2024, it increased by 33.8% year-on-year.

in the prospectus, terminus listed the possibility of achieving profitability and attracting new customers as a risk. specifically, the ai ​​industry digitalization business, which accounts for more than half of the revenue, saw the largest revenue decline in the first half of 2024, with 58 fewer customers. as the old business shrinks and the new business cannot support the overall situation, terminus, which is going to hong kong to submit its application, is a bit anxious.

revenue declines and losses widen

"tesloop is a pioneer in china's public domain aiot industry. relying on its aiot operating system tacos, it provides a full stack of aiot products to enterprises, public managers and other public space participants," tesloop said in its prospectus.

established in 2015, terminus has gone through four stages of development. in 2016, it was aiot1.0, building intelligent infrastructure with smart hardware and edge node hardware; in 2017, it entered aiot2.0 and developed end-to-end aiot solutions; in 2020, it started the aiot3.0 stage and launched the terminus smart city operating system; in 2023, based on the aiot operating system tacos evolved from the big model and the terminus smart city operating system, it entered the aiot4.0 era of industrial digitalization.

from 1.0 to 4.0, the revenue trend of tesloop was not a linear growth curve.

according to the prospectus, terminus' revenue will first decrease and then increase from 2021 to 2023, reaching 1.207 billion yuan, 738 million yuan, and 1.006 billion yuan respectively. in 2024, the company's revenue curve will turn, from 510 million yuan in the first half of 2023 to 357 million yuan in the first half of 2024.

the trend of adjusted net loss is just the opposite, expanding first and then narrowing in 2021-2023, to 639 million yuan, 983 million yuan, and 600 million yuan respectively, and the loss increased in the first half of 2024, from 266 million yuan in the first half of 2023 to 356 million yuan.

speaking of net losses, tesloop explained in its prospectus that "it was mainly due to the fair value loss of shares with preferred rights; share-based payment expenses; and r&d expenses as we invested heavily in our r&d programs."

the prospectus shows that in the first half of 2024, terminus's share-based payment expenses were 468 million yuan, and this figure was 39.512 million yuan in the first half of 2023. "we adopted a share incentive plan in august 2018, and recognized share-based payment expenses of 113 million yuan, 92.27 million yuan, 73.39 million yuan, 39.51 million yuan and 468 million yuan in 2021, 2022, 2023 and the first half of 2023 and 2024, respectively."

less money spent on r&d

among the three reasons for the net loss disclosed, the one related to business is r&d expenses. generally speaking, this investment is one of the guarantees for the continuous upgrading of products and services and their adaptation to the market.

from 2021 to 2023, terminus's r&d expenses were rmb 287 million, rmb 329 million, and rmb 322 million, respectively. in the first half of 2024, it dropped from rmb 154 million in the first half of 2023 to rmb 145 million, a decrease of rmb 9 million. "this is mainly because we have optimized the team structure and improved operational efficiency, which has reduced employee welfare expenses, coupled with reduced material expenses, which was partially offset by the increase in professional service fees driven by the changing needs of r&d activities," terminus explained.

according to the prospectus, tesloop's r&d expenses mainly consist of four parts, including employee welfare expenses such as salaries of r&d personnel; professional service fees including outsourced development service fees; depreciation and amortization; material costs, etc.

from 2021 to the first half of 2024, employee welfare expenses were the largest part of terminus's r&d expenses, accounting for 59.1% to 71.5% of total r&d expenses. in the first half of 2024, terminus' employee welfare expenses were 85.884 million yuan, 24.139 million yuan less than the same period in 2023. professional service fees increased from 13.314 million yuan in the first half of 2023 to 41.297 million yuan in the first half of 2024.

wang peng, an associate researcher at the beijing academy of social sciences, told the business daily that the increasing professional service fees, including outsourced development service fees, have released five signals: "increased r&d demand, increased complexity, limited internal r&d resources, specialization and division of labor, cost control and efficiency improvement, and increased reliance on external professional services."

"this not only reflects the increased investment and demand of tesloop in r&d activities, but also reveals the changes in its internal r&d resources, cost control strategies and reliance on external professional services. for tesloop, how to effectively control costs and improve operational efficiency while maintaining r&d innovation will be an ongoing challenge," wang peng concluded.

the largest segment's customers decreased by 58

business performance is another angle to observe a company. based on application scenarios, terminus's revenue comes from four sectors: ai industry digitization, ai city intelligence, ai smart life, and ai smart energy.

from 2021 to the first half of 2024, ai industry digitalization has always been the main source of revenue for terminus, including smart business platforms, smart business operations, smart new retail, and smart industrial parks, with revenue accounting for more than 50%. in terms of the number of customers, the ai ​​industry digitalization sector has always had the most customers, but the number has not maintained a growth trend.

in the period of 2021-2024 disclosed in the prospectus, the number of customers for ai industry digitalization peaked in 2023, reaching 262. this year was also the year with the highest revenue and adjusted net loss for terminus. in the first half of 2024, the number of customers for ai industry digitalization fell from 148 in the same period last year to 90, a decrease of 58. the total number of the company's customers fell from 186 in the first half of 2023 to 150 in the first half of 2024.

a beijing business daily reporter interviewed tesloop via email about the reasons for the decline in the number of customers of the ai ​​industry's digital intelligence business and which types of customers will no longer cooperate, but as of press time, the other party had not responded.

among the four sectors, the number of customers of ai smart life and ai smart energy increased in the first half of 2024, with the number of ai smart life customers increasing from 18 to 30, and the number of ai smart energy customers increasing from 19 to 28.

however, an increase in customers does not completely equate to an increase in revenue. the ai ​​smart life business segment, which saw the largest increase in customer numbers within six months, saw its revenue drop from 36.994 million yuan in the first half of 2023 to 24.131 million yuan in the first half of 2024; ai smart energy revenue increased from 35.802 million yuan to 46.403 million yuan.

looking back at the gross profit margin, the ai ​​industry digitalization sector, which contributed the most to revenue in the first half of 2024, had a gross profit margin of 23.6%, which is not the most profitable sector. the ai ​​smart energy sector had the highest gross profit margin, increasing from 18.9% in the first half of 2023 to 50.7% in the first half of 2024, but only accounted for 13% of revenue.

"from a technical perspective, the underlying technologies of industries and solutions for different application scenarios are consistent. theoretically, tesloop can enter any field where there is space for aiot applications. the challenge lies in finding the pain points of different scenarios, coming up with solutions, and coordinating sales. this takes time because its path is from technology to scenarios, not from scenarios to technology." li jinqing, an analyst at bida, told the business daily reporter that this is an inevitable difficulty for tesloop.

beijing business daily reporter wei wei