Megvii Financials and Growth Examined

By Charles Rollet, Published Aug 30, 2019, 07:14am EDT (Info+)

Megvii has already received more than a billion dollars in investment. Now, the company, a top China facial recognition provider, has filed for an IPO this week on the Hong Kong Stock Exchange.

IPVM Image

This 500+ page IPO document reveals significant details into the size, growth, and usage of AI inside of China.

In this post, we look at the firm's financials, growth, City IoT focus, and the possible competitive threat to Hikvision & Dahua, including:

  • Megvii Background
  • Deeply Unprofitable, Growing Fast
  • Principal Verticals
  • Main Customers Mostly Security/Surveillance SIs
  • Low International Presence
  • City IoT Largest Segment By Far
  • Covered Cities, Revenue Per Customer Booming
  • Capitalizing on AI Camera Switch
  • Threat to Hikvision and Dahua?
  • Alibaba Ownership Stake Impact
  • US Sanctions Risk
  • Conclusion

********

****** *** * **** ******** ** PRC **** ************ ******** (**** ~*/**** of ***** *******), *********** *********** ********* and *****'* ****** ********. *** ******* Megvii *** ********* ***** *****' ****** success ******* ** ** ****, **** 95% ** ******'* ******** ********* ** China.

Megvii **********

******, ****-***** *** *******++********, ******** ****** *********** *** ** solutions ** *** *********** *** ********** sectors (***********, ******, *********** ***********, ***.) Megvii ** *** ** *****'* **** face *** ******** - ******** ****** over $* ******* - ***** ********,*********, ************. *** ****, **'* ** *******, has *,*** ********* ** ** **** its *** ******.

IPVM Image

Fast *******, **** *** $***+ ******* ******* **** ****

**** ******** *******, *** **** *** **** ******* of ~$*** *******, **** ** **** revenue ********, ******* *** **** ** pace ** ******** $***+ ******* ******* in ****.

** ******* ***** ************ ** ******* has ******** **** **** ***** ** revenue *** ******, **** **** ****-***** specialists **** ******** ***** **** **** of ******** ** ******* *** **** (*** ***** ******** ********).

************

**** **** ******** ****** ** ************, losing ****** **** * ******* ******* last ****, ******** *********** **** ** a ***-*** ****** ** *****-***** ************ and *&* ********.

IPVM Image

** *** ***** ****, ***** **** high ****** **** (******** ******** *********) and ******* ******** ******* **** ** attractive ** ********* ** *** ******* scales **.

Low ************* ********

****** ***** **% ** *** ******* inside *****, *** *** ******:

****** *** ***** ****** ******, ** generated *.*%, *.*%, *.*% *** *.*% of *** ******** **** ******* ******* of *** *** ** ****, ****, 2018 *** *** *** ****** ***** June **, ****, ************."

**** ** *** ** * *********** of ******* - *** ***'* ***** internal ******, *** *******'* ******* *** deploying ** / ****** *********** (******** ****** ***** ************ *****: **** Skynet ** ***** ****), ****** ***'* ******* ** ************** ** foreign *****.

Main *********

****** ******* *** ******** **** * main *********:

  • "******** ***" (*.*. ****** *********** ** unlock ***********)
  • "**** ***" (***** ******/****** ************ *****, residential *********)
  • "****** ***** ***" (***** ********* *** retail)

***** ** ***** ********* ** ****:

IPVM Image

City *** ****** */*** ** *******

**** ****** ****** **** ** ******** face *** ************** ** "**** **% of *******-***** ***********" ** ***** **** year, **** *** ** ** *** its **** ********* *******, ****** ** 73% ** *** ******* *** *** first *** ****** ** **** (~$*** million). **** *** ******* **** **** quadrupled ****-**-****, ************* ****** ****** **** the ***** *****:

IPVM Image

Clients ****** ********/************ ***********

**** ** ******'* ******* *** ******* integrators ** *** **** ************ *** smart ********* *****:

** ****, *** *** **** ********* included (*) * ****** ********** ** China *** ***** **** ********** *********, (ii) * ****** ********** ** ***** for ***** **** ********** *********, (***) a ****** ********** ** ***** *** smart ********* *********, (**) * ******** of ****************** ******* ** ***** *** (v) * ****** ********** ** ***** for ***** ********* *********"

***** ******* *** **** ******* ********* for **% ** ******'* ******* ** 2019.

Covered ****** & ******* *** ******** *******

** **** ***, ****** **** ** now ****** *** ***** ******, ****** twice ** **** ** * **** ago:

IPVM Image

***** ***** ******** ********* ******** **** 430 ** *** ***** ** *** year ** *** *****, ******* ******* per ******** ******** *** **** **** doubled ** ~$***,***.

*** *** ********* *** *** ***** / **** ***** ***** ****** *** Megvii.

City *** ******* *******

**** *** ** * ******* ******, with ***** ******** ** ***** ****** and "********* **********" (***** ********, *.*. face-based ****** ******* ** *********-*** ************) expected ** **** **** ********* **** over $* ******* **** **** ** over $** ******* ** ****:

IPVM Image

AI ******* ******** ** ***** ******* ******

****** ******* ** ********** ** *** switch ** ** ******* ** *****'* smart ******, ***** ** ********* **** a **% ******** **** ****, ********** to **** **% ** ****:

IPVM Image

********** ** ******* *** ***** ********,******* ** *** *** *** "****-*****" (i.e. ***-**-***) ******** ** "**-********* *** devices":

IPVM Image

****** ******* *** *** ****** ******, which *** **** ****** *** "************** extract **** ***** ** ********, ****** human *******, *****, ******** *** ******* plates, ** *** ***** ***":

IPVM Image

**** *** **** ******** ************ ***** cameras *** *** *** ******** ***** source *** ** ****** **** **** the *********** ** **** *********.

Threat ** ********* *** *****?

******'* **** *** ***** ***** ********* Dahua *** *********'* ********* *****. *** firms ********* *** **** *** ********** surveillance *****, *********** $*.* ******* ** ******** *****.

****** ****** *** *** ******* *** companies ** *** *** ******, ****** is **** ** **** *** ****** as "*** *********-*********** *** ******** ********" [******** *****]:

****** **** *****, ** **** ****** a *********** ****** ******** ** *****’* City *** ********, *****used ** ** ********* ** *********** ******** *************

****** *** ** ******** ** *********/***** in **** ***** ********** "*** **-******* players" (****** *** *** ******* ** our ******* ** ******* ****):

IPVM Image

**** *****'* ****** ************ ********* ** AI *******, ** ****** ******* ** capture **** ******, ** ***** **** a ****** ****** ** * *** part ** *********/*****'* ********. ***** ** no ********* ** ****, *******, *** it's ***** ****** **** ******** *********** *** **** *************** *** ********* **** ***** ************ on ********* '** *******' ** ***** cities ** ***** *** *** *****.

Alibaba ********* ****** ** ************

******* ** * '********* ********' **** Megvii, **** * **.**% ***** ** the *******. **** '***********', ** **** describe, ***** **** ** ****** ** their ********* **** ***** ************ *** competition **** ************ **********. ******* ** a **** ***** *******, **** ** larger **** *********, **** ********* ** expand **** ***** **** / **** surveillance. ********, ********,******* **** * *********** ********** **** Uniview, *****'* **** ******* ****** ******** competitor.

*** *********** ** *******, ******, *** Uniview *** *** ********* ** ** a *********** ****** ** *** ***** surveillance.

One *** ******'* ****** ********* ***** ** ********

************* *** *****, ****** *** ******** ************* *** ***** ** ******* ******* * '********* ******* ****' ** the ******** ****** ******** ***** **********. The **** **** ********* ********* ********* that ***** *** ****** ** ************* identify ******* ** ********* ****** ********,*** *** ********.

******* ** **** ****** *********** ********** *** ** *********, ***** **** ********* *** ***** and ***** ***** ************ *****. ********* on *** **** ** ********, ****** could ** ****** **** ***** **** US ********** (** ** ** ***** to *** '****** ****') ** ** ******* ****** **** the ** *** *** ** ****** frozen (** *** **** *********** *********). ** ******* ****** *** **** its **** ****"*** ** *** *****"******** **************** ****** ********* *****:

IPVM Image

** *** *** ******, ****** *** not ******* ********, *** *** ******** that ********* ** ********* *****:

***** ** ****** *** *********** ** our **********, ******** *** *********, ****** the ********* ** *** ****** *****, and *** ****** ** ******** *********, require *********** ********** **** *** ********* and ******* ** ** *****, ********* or ****** **** ** ***** ** modify *** ******** ******** *********, *** of ***** *** **** * ******** and ******* ****** ** *** ********, financial ********* *** ******* ** **********.

****** **** ********* *** ******** ** an "** ****** *********" *****, *********, includes *** ***** ********** ******* ** Schneider **************** ************ *** **** ***-*** ******. ********** has ** ****** ********** ** ************* *********-**********.

**********

****** ***** ********* ********* *** *****'* global ******* *****, ****** ** * protected **** ****** *** ****** ******. Whether **** ** ******** ** *** current *** ** **-***** ******** *** unprecedented *** ************ ******** ******* ** be ****. ************, ******, ** ******** on **** ***, ****** ***** * long-term ****** ** ********* *** *****.

Comments (5)

Great Post Charles! Provided great insight into the market in China.

Agree
Disagree
Informative
Unhelpful
Funny

Megvii's largest competitor SenseTime is reportedly going to do $750 million revenue in 2019, per Reuters:

expects its 2019 revenue to increase by more than 200% year-on-year to around $750 million, two sources familiar with the matter said.

The two combined are therefore going to do $1+ billion in revenue this year, which might literally be 5x the amount that every non-China facial recognition / video surveillance AI provider combined will do this year.

Agree
Disagree
Informative
Unhelpful
Funny

Update: Bloomberg reports a stunning drop in growth, "according to unaudited numbers for investors" they saw that:

grew revenue a mere 2.7% in 2019’s second half after more than tripling sales in the first six months of the year...

Megvii fell short of its target for 2.9 billion yuan ($409 million) in sales by almost 28%, a person familiar with the matter said, asking not to be identified discussing internal targets.

Bloomberg added that, unironically, that coronavirus fever cameras are one new revenue stream for the company.

Agree
Disagree
Informative
Unhelpful
Funny

Megvii is gearing up for a new IPO after failing to follow through with the process when it released its first prospectus back in August 2019. It is currently unclear when Megvii will list.

In September 2020, Megvii signed a listing counseling agreement with CITIC Securities and plans to list on the STAR Board through China Depository Receipts (CDR), according to a document from the Beijing Securities Regulatory Bureau posted on January 12, 2020. CDRs are used to trade non-China-based companies within China. Megvii is officially registered in the Cayman Islands.

This announcement was not updated with any more recent financial info. IPVM will update accordingly as we track Megvii's IPO.

Agree
Disagree
Informative
Unhelpful
Funny

I am so envious of CCP VC$$$ injection. Perhaps the western world should reset metronome logic of wealth trajectories.

Agree
Disagree
Informative
Unhelpful
Funny
Login to read this IPVM report.
Why do I need to log in?
IPVM conducts reporting, tutorials and software funded by subscriber's payments enabling us to offer the most independent, accurate and in-depth information.
Loading Related Reports