SenseTime has been approved to go public in Hong Kong, planning to raise more than US$1 billion

Yuyang from Aofei Temple
Quantum Bit Report | Public Account QbitAI

According to IFR, a media outlet under Reuters, SenseTime's IPO has been approved by the Hong Kong Stock Exchange.

The report said that people familiar with the matter revealed that the IPO will raise at least US$1 billion, and SenseTime plans to start assessing investor interest in the stock issuance as early as next week.

At present, SenseTime has not responded to this matter.

This super AI unicorn submitted its prospectus to the Hong Kong Stock Exchange on August 28 this year.

The prospectus shows that SenseTime is the company with the highest revenue in Asia in the AI ​​industry .

Revenue in the first half of 2021 was 1.652 billion yuan, a year-on-year increase of 91.87%. The main revenue came from the smart city and smart business sectors.

In terms of profitability, the net loss in the first half of 2021 was 726 million yuan, compared with a loss of 1.1 billion yuan in the same period last year, a year-on-year decrease.

The prospectus also disclosed that SenseTime has completed 12 rounds of financing, with a total financing amount of US$5.2 billion (approximately RMB 33.658 billion).

Key Financial Data

To elaborate, during the reporting period from 2018 to 2020, SenseTime's revenue was RMB 1.8534 billion, RMB 3.0266 billion, and RMB 3.4462 billion, respectively.

The revenues in the first half of 2020 and the first half of 2021 were RMB 861.2 million and RMB 1.6518 billion, respectively, a year-on-year increase of 91.87%.

In terms of profitability, during the reporting period, SenseTime's adjusted net losses were RMB 220.5 million, RMB 1,037.1 million, RMB 878.4 million and RMB 726.2 million respectively.

It can be seen that its net loss is narrowing as revenue continues to increase.

In addition, SenseTime's revenue growth rates in 2019 and 2020 were 63.3% and 13.9%, respectively.

It is worth mentioning that the prospectus shows that SenseTime’s indicators for R&D investment are quite outstanding.

During the corresponding reporting period, SenseTime's R&D expenses were RMB 849 million, RMB 1.92 billion, RMB 2.45 billion and RMB 1.77 billion respectively.

In other words, the proportion of SenseTime's R&D to revenue has increased year by year, and even exceeded the company's revenue in the first half of 2021.

Among the specific R&D investment, employee salaries account for the largest share.

In 2018, the expenditure on salary and benefits for R&D staff was 512.7 million yuan. In the first half of this year, the expenditure reached 1.2853 billion yuan in just half a year, accounting for 72.5% of the company's R&D investment and 77.8% of its revenue.

The founding team takes control

The prospectus also disclosed that in terms of shareholders, SenseTime’s largest shareholder is still its founder, Professor Tang Xiaoou, who holds 21.73% of the shares; among the executive team, CEO Xu Li holds 0.9% of the shares, chief scientist Wang Xiaogang holds 0.73% of the shares, and strategic investment director Xu Bing holds 0.33% of the shares. SenseTalent (Class B shares held by Xu Li, Wang Xiaogang, and Xu Bing) holds 12.17% of the shares.

Among external shareholders, SoftBank holds 14.88%, Alibaba holds 7.59% through Taobao China, Primavera Capital holds 3.08%, Silver Lake Capital holds 3.05%, and IDG Capital holds 1.42%.

SenseTime will be listed on the Hong Kong Stock Exchange using the AB share mechanism, with equal shares but different voting rights. A shares will have 10 votes, and the founding team will still firmly control the company.

In addition, SenseTime has currently invested in 22 companies covering multiple fields.

Although SenseTime has not yet made a further response, based on the information in the previous prospectus, its next plan after fundraising is relatively clear.

First, 60% will be used for R&D investment to enhance R&D capabilities.

The majority of the funds will be invested in AI infrastructure SenseCore, 10% will be used for supercomputing centers, 10% will be used for AI chips, and 15% will be used to improve model capabilities. The remaining 25% will be invested in technical models, products, and industry-university-research cooperation.

Secondly, 15% is used for business expansion, mainly emerging business opportunities and domestic and foreign market expansion and penetration.

Finally, 15% is used for investment and mergers and acquisitions.

SenseTime said it will seek external strategic investment and M&A opportunities to expand the AI ​​ecosystem and its influence in various industries.