CloudWalk Technology‘s special focus on commercialization and clear direction of business plan might drive the company to a higher level of success.
On May 27, 2022, CloudWalk Technology, also known as Yuncong Technology (云从科技), was listed on the Shanghai Stock Exchange. The stock number is 688327. And CloudWalk Technology belongs to the Science and Technology Innovation Board section. The opening price for this stock was CNY 24 per share, up 56.1% compared with CNY 15.37 of its issue price. Till the close of the day, the stock price increased by 39.2% to CNY 21.4. The highest increase during the first day was up to 56.86%. The total market value of CloudWalk Technology on the first day was CNY 15.85 billion. As the first one of the "AI Four Little Dragons" to enter the A-share stock market, CloudWalk Technology’s IPO has brought people’s attention.
AI company aiming at governments and banks
CloudWalk Technology, from our point of view, is an artificial intelligence company with its unique technology and unique taste in business. It was founded in 2015. The company aims to provide customers with operating systems that combine humans and machines to collaborate, and artificial intelligence solutions to benefit human life. CloudWalk Technology finally raised more than CNY 1.73 billion in this listing, despite its fund-raising plan being CNY 3.75 billion. CloudWalk Technology has completed 11 funding rounds so far. In April 2015, CloudWalk Technology raised nearly CNY 50 million from an Angel Round. After five years starting from that, CloudWalk Technology has completed its Series A funding round, Series B funding round, Series B+ funding round, Series C funding round, and many other unpublished funding rounds. With the illustrious investors such as ICBC, Shunwei Capital, Puhua Capital, China Interest Investment Fund, and others, CloudWalk Technology’s high potentials were disclosed by the public. With the help of these investors in the funding perspective, CloudWalk Technology has a bright future with advanced techniques and sufficient funds.
We noticed that CloudWalk Technology’s businesses leak into every detail of our lives, with the most advanced technology and accurate fulfillment of everyone’s needs. Its artificial intelligence products have covered the finance field, the governmental field, the commercial field, and the travel field. For the finance field, its smart finance has established financial institutions of more than 100 branches, and covered over 6 companies. CloudWalk Technology cooperated with big banks in China, such as Bank of China, China Construction Bank, China CITIC Bank, China Everbright Bank, Agricultural Bank of China, and others. This section accounted for 12.64% of revenue in 2021. For the governmental field, its smart governance has applied to schools, governments, and recreational facilities in more than 30 provinces in China. This section accounted for 80.78% of revenue in 2021. For the travel field, its smart travel has built civil hubs in more than hundreds of airports, especially including the top 10 airports in China. CloudWalk Technology has cooperated with airlines and airports, such as China Eastern, Shanghai Airport Authority, Baiyunport, Shenzhen International Airport, Wuhan Tianhe International Airport, Capital Airport Holding Company, and others. This section accounted for 2.91% of revenue in 2021. For the commercial field, CloudWalk Technology used its techniques to provide a safer and easier way to pay in shopping malls, dealerships, supermarkets, real estate stores, and others. Its digital-based projects have located in Guangzhou, Sichuan, Hunan, and others. This section accounted for 1.57% of revenue in 2021. We believe that, as CloudWalk Technology has covered the majorities of banking in China, the business in this field is relatively secure. CloudWalk Technology can bring the China’s banking system into a new higher level. Cooperating with the government could be invisible help, support, and protection for CloudWalk Technology. This also means that CloudWalk Technology’s products are well-recognized.
CloudWalk Technology has more than 100 key core technologies of artificial intelligence, which turned itself into one of the "AI Four Little Dragons" in China. The Research and Development related section accounts for more than 50% of the company. As of December 31, 2021, CloudWalk Technology had 316 patents. From these data, we can notice that the company has been paying much effort and money into the development of its product. By looking at the company’s focus, we can also preview its success in the future. With the coverage of businesses into nearly everywhere of people’s life, CloudWalk Technology has been given high expectations by the whole public.
Improving financials with turnround potentials
From CloudWalk Technology’s 2022 Q1 Financial Report, which is the latest version, the company gained an operating revenue of CNY 213 million, up 67.02% year over year. The net loss in this quarter was CNY 116 million, a decrease of 45.52% from the same period last year. From this set of data, we can analyze that CloudWalk Technology has worked well, with a high increase in its operating revenue and a high decrease in its net loss. It is super likely that CloudWalk can turn its losses into profits soon.
From its prospectus, CloudWalk Technology gained revenue of CNY 807 million in 2019, revenue of CNY 755 million in 2020, and revenue of 1.08 billion in 2021. The revenue of CloudWalk Technology had a huge increase in 2021. From the revenue data for the past three years, the compound annual growth rate was 17.11%. The total assets were CNY 2.36 billion in 2019, CNY 2.49 billion in 2020, and CNY 2.31 billion in 2021. We believe that the total asset of CloudWalk Technology was in a steady stage. As COVID-19 has caused influenced towards the globe, the macro environment caused CloudWalk Technology’s business hard to do. Therefore, the decrease in 2020 could mostly be due to the COVID-19. As the effect of COVID-19 on the economy has become smaller and smaller, CloudWalk Technology is on its track to improve.
Its net losses were CNY 692 million in 2019, CNY 844 million in 2020, and CNY 664 million in 2021. Its net losses attributable to the parent company were CNY 640 million, CNY 813 million, and CNY 632 million respectively. After deduction of extradentary gains and losses, its net losses attributable to the parent company were CNY 700 million in 2019, CNY 867 million in 2020, and CNY 753 million in 2021. The gearing ratio was 20.63%, 18.12%, and 22.76% respectively. As of 2021, CloudWalk Technology has unrecovered losses of more than CNY 2.22 billion. This is due to the macro environment of the artificial intelligence market in China, which we will go into detailly later. We think that even though the company has not gained any profits, CloudWalk Technology’s financial data has indicated its high potential to succeed and start earning soon.
Dark horse of competitive landscape
Talking about the threats that CloudWalk Technology might face, we conclude them are the macro environment of the AI market in China, and the competitions from similar companies and new entering firms. As mentioned in the Financials, CloudWalk Technology has not gained any profits. Not only is CloudWalk Technology facing the problem of achieving profitability, but the artificial intelligence companies in China have generally faced this problem. Even though the businesses have landed, the macro environment of the artificial intelligence market in China is not optimistic. There might need more time for CloudWalk Technology to gain profits from its products and businesses, because the front-ends research and realizations have taken an enormous amount of time and money. CloudWalk Technology works hard to compete with artificial intelligence companies in China, such as SenseTime, Megvii Technology, and Yitu Technology. In addition, CloudWalk Technology is also facing the challenges of several visual equipment manufacturers’ transformations into this field, such as Hikision. CloudWalk Technology also faced competition from voice recognition technology companies, such as iFlytek.
However, as for the opportunities of CloudWalk Technology, we think its uniqueness and clear business plan can bring the company into a much higher level. Even though CloudWalk Technology is influenced by the macro environment and competed by other companies in this or similar fields, its uniqueness in commercialization has made the company stand out. As influenced by Professor Xutao Huang, an expert in computational vision, the founder of CloudWalk Technology, Mr. Xi Zhou, directed the company into the field of facial recognition. Its product differentiation in facial recognition helps the company stand out compared with other companies in this field. CloudWalk has applied this uniqueness into the four major parts CloudWalk Technology’s businesses - the finance field, the governmental field, the commercial field, and the travel field. In each field, facial recognition technology is applied in different ways, and provides a safer and easier way for people, governments, and companies.
In addition, CloudWalk Technology has a clear development plan in focusing on artificial intelligence brain. It plans to turn losses into profits by 2025. CloudWalk Technology defined its advantages as independent and controllable, international standards, authoritative verification, and commercial landing. With clear identification and focus, we truly believe that CloudWalk Technology has a high potential to grow in the future.
We think that CloudWalk Technology can achieve higher success, if it can maintain its uniqueness in the market and focus on the development of facial recognition. CloudWalk Technology can also promote more applications in the commercial field, and spread its products into people’s everyday life. As more and more people are using the products of CloudWalk Technology, the reputation of CloudWalk Technology will increase. And this could also potentially bring more customers in other fields and open new fields of business. With the firm focus on facial recognition and its advantages, CloudWalk Technology could be a future trend in digital payment. Besides, the Chinese government policies regarding promoting artificial intelligence and digital payment could also boost CloudWalk Technology to a new stage of business.