Shulou(Shulou.com)06/03 Report--

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On April 18, iFLYTEK released its annual report for 2018 and its results for the first quarter of 2019. According to the annual report, iFLYTEK's operating income in 2018 was 7.917 billion yuan, up 45.41 percent from the same period last year; the net profit belonging to shareholders of listed companies was 542 million yuan, up 24.71 percent from the same period last year; and the net profit belonging to shareholders of listed companies after deducting non-recurring gains and losses was 266 million yuan, down 25.83 percent from the same period last year.

According to the annual report, iFLYTEK received a government subsidy of 276 million yuan in 2018, an increase of about 200 million yuan over 2017.

In addition, according to the first financial report in 2019, iFLYTEK achieved an operating income of 1.958 billion, a simultaneous increase of 40.11 percent, and the net profit belonging to shareholders of listed companies was 102 million yuan, up 24.26 percent from the same period last year. Net profit belonging to shareholders of listed companies after deducting non-recurring gains and losses was 33.03 million yuan, up 10.73 percent over the same period last year. Of this, 84.21 million yuan was subsidized by the government in the first quarter, accounting for more than 82 percent of the net profit.

To sum up, iFLYTEK's main business income in 2018 was 266 million yuan, accounting for only 49.25% of the annual net profit. By the first quarter of 2019, the share of net profit from its main business had fallen again to 32.38%. For the whole of 2018 and the first quarter of this year, however, the government subsidy for iFLYTEK remained unchanged, at 270 million yuan and 84.21 million yuan respectively.

The profit question has not been dispelled.

There have been comments that although iFLYTEK is known as the first unit of artificial intelligence in China, its profitability is not enough to support such a name. And in the past ten years, the government subsidy has exceeded 1 billion, the profit performance of the main business is not satisfactory, and the prospect of commercialization is worrying. According to its recently released annual report and first-quarter results, doubts are not groundless.

For 2018 shareholders withholding non-net profit fell 25.83%, iFLYTEK financial report gave two points: 1. From 2015 to 2018, the company continued to increase its R & D investment in artificial intelligence related fields, ecosystem construction, as well as market layout investment in education, politics, law, health care and other important tracks. two。 The reason for the increase of 200 million yuan by the government is that the application prospect of artificial intelligence technology is broad, and the national competent departments at all levels attach great importance to it. In addition, iFLYTEK has also produced preliminary returns on its investment in the upstream and downstream of the artificial intelligence health system.

According to the annual report, iFLYTEK's R & D investment in 2018 increased by 57.58% over 2017 to 939 million yuan, but at the same time, sales expenses also increased by 55.30% year-on-year to 1.725 billion yuan.

In addition to government subsidies, there have been media reports that iFLYTEK's revenue also depends on government procurement, mainly reflected in iFLYTEK Zhiyuan Information Technology Co., Ltd. (hereinafter referred to as Xunfei Zhiyuan), a wholly-owned subsidiary of iFLYTEK. " IFLYTEK Zhiyuan has won 27 purchase orders from the government, procuratorates, schools and other local institutions as of September 2018, according to SkyEye survey information. According to relevant sources, iFLYTEK has almost formed a monopoly in the market for oral English tests and Mandarin tests involving speech recognition, based on its product base and good interaction with the government. But its products do not have much advantage in the industry. "

Xue Yunkui, a tenured professor at Cheung Kong Business School, has previously written to analyze the investment value of HKUST. He believes that iFLYTEK has completed the concept and technology, but has performed poorly in business and performance. As of press time, iFLYTEK's share price is Rmb35.00 per share, down nearly half from last year's high of Rmb67.40.

He was caught in the storm of "counterfeiting" and "AI land exchange".

In September last year, iFLYTEK was exposed by the media that the "intelligent translation" it used at a large conference was suspected of fraud, and it was revealed that the AI simultaneous interpretation used by iFLYTEK at the conference was backstage manual simultaneous interpretation and real-time translation. Subsequently, iFLYTEK clarified several times on the claim of "fraud", saying that at the request of the organizers, it only needed to provide speech recognition technology, directly rewrote the translation results of the translators and presented them on the big screen of the venue, and at the same time, it should be invited by the organizers to synthesize the recognition results in the live broadcast to demonstrate iFLYTEK speech synthesis technology. This direct translation of simultaneous interpretation as a way of "man-machine coupling" can reduce the work intensity of simultaneous interpreters, empower translators, and emphasize in the statement that human-computer coupling is the future.

The technical term of "man-machine" coupling makes many skeptics temporarily aphasia, but can it reduce brand damage? Prove that the AI translation of iFLYTEK is competent in the business environment? Perhaps users still have doubts in their hearts.

Less than a month later, CCTV news revealed that iFLYTEK had illegally occupied Anhui Yangzi Alligator National Nature Reserve and developed real estate in the name of building a training base. "artificial Intelligence Unit 1" once again fell into the question of "AI land exchange". IFLYTEK official blog responded that iFLYTEK Guantang base is an IT industrial R & D center, not a real estate project. IFLYTEK did not know that the development zone was located in Yangzi Alligator National Nature Reserve before iFLYTEK settled in, and has now stopped operating the center. According to time Finance, the second phase of the Jingxian training Center, suspected of encroaching on land in the Yangzi Alligator Nature Reserve, was listed as a project under construction in the iFLYTEK semi-annual report, with a book value of 4.2962 million yuan.

The danger of BAT encirclement and suppression is everywhere.

Government subsidies account for more than half of the net profit, and most of the profit comes from non-market operating income. IFLYTEK's explanation for the decline in its net profit may not increase market confidence in its profitability. BAT enterprises have now made great efforts to lay out the artificial intelligence industry, and iFLYTEK, which has weak revenue, is in danger in the face of various encirclement and suppression.

According to public reports, in November 2017, Baidu announced the permanent free opening of a full range of voice technology interfaces, providing voice recognition, speech synthesis and voice wake-up multi-platform SDK (software development kit) to fully support developers and partners. This may be the core technology of Daxunfei. Subsequently, Huawei, an important "partner" of iFLYTEK, also announced that it would carry out all-round and in-depth cooperation with Baidu on the AI platform and technology. In addition, Tencent, Taobao, Alipay and so on have also developed their own voice technology.

In the face of competition from Internet giants, what are the odds of iFLYTEK winning? Ma Jihua, chief analyst at Darby Consulting, told Caijing that the biggest threat to iFLYTEK will mainly come from the capital and user base. BAT has a lot of money, and once it finds an opportunity, it may all in, a huge investment, and will quickly ripen the industry. IFLYTEK is obviously a beggar and a dragon king. In addition, BAT users find that the ability is strong, user use will accelerate the upgrading of capabilities, forming an accelerated catch-up situation, greatly weakening the first-mover advantage of iFLYTEK.

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