New Stocks Preview | Qiniu Intelligent Three Deliveries: Leading Video and Audio PaaS Service Provider with the Second Growth Curve Emerging

With the recent launches of two Chinese generative video applications, "Ke Ling" and "Ji Meng AI", the curtain has been raised for the reshaping of the processes for video and audio production for ordinary users, semi-professionals, and even professional levels. The imagination brought by "AI+ audio and video" has also added new perspectives to the "second half" of China's audio and video cloud services. Taking advantage of the momentum in the industry, the audio and video cloud service provider Qiniu Intelligent Technology Co., Ltd. (hereinafter referred to as "Qiniu Intelligent") has made multiple attempts to launch an IPO on the Hong Kong Stock Exchange. According to the Hong Kong Stock Exchange disclosure on September 22, Qiniu Intelligent has submitted its listing application to the Main Board of the Hong Kong Stock Exchange, with Shenwan Hongyuan Group Hong Kong and BOCOM INTL as its joint sponsors. The company previously submitted applications to the Hong Kong Stock Exchange on June 29, 2023, and March 18, 2024. The prospectus shows that Qiniu Intelligent provides audio and video cloud services in China. According to iResearch Consulting, in 2023, the company's revenue accounted for 1.5% of the entire audio and video cloud services market. Based on revenue for 2023, the company is the third-largest audio and video PaaS service provider in China, with a market share of 5.8%. Based on revenue from APaaS in 2023, the company is also the second-largest audio and video APaaS service provider in China, with a market share of 14.1%. The growth of the leading company cannot be achieved without the support of capital. According to reports, from 2011 to 2020, Qiniu Intelligent has received over 3 billion yuan in funding through 6 rounds of financing, including investments from well-known institutions and companies such as Sequoia Capital, Matrix Partners, Yunfeng Fund, and Alibaba. Before the IPO, Alibaba held 17.69% of Qiniu Intelligent's shares, making it the largest institutional investor; Yunfeng Fund, Matrix Partners, China Structural Reforms Fund, and Sequoia Capital held 12.44%, 7.97%, 7.32%, and 6.83% of the company's shares respectively. Nearly 100,000 paid users in 2023 Stable gross profit margin According to the prospectus, Qiniu Intelligent is one of the earliest platforms to provide audio and video cloud services in China, as well as one of the few companies in China with comprehensive and high-performance MPaaS products, and integrated technical capabilities covering all aspects of the audio and video business. Specifically, the MPaaS products include a range of audio and video solutions such as QCDN, Kodo, and Dora; APaaS solutions are scenario-based audio and video solutions. APaaS is a computing service model that provides users with an integrated platform for developing, running, and managing applications. Qiniu Intelligent's APaaS solutions currently cover five main application scenarios: social entertainment, video marketing, visual network, smart new media, and metaverse. In terms of market competition, according to iResearch Consulting's data, in 2023, the top five service providers in China's audio and video PaaS market accounted for 39.2% of the market share in terms of revenue. Among them, Qiniu Intelligent ranked third with a revenue of 1.33 billion yuan. In the same year, in terms of revenue in China's audio and video APaaS market, the top five service providers accounted for 48.2% of the market share, with Qiniu Intelligent ranking second with a revenue of 280 million yuan. As of March 31, 2024, Qiniu Intelligent had over 1.5 million registered users, most of whom are developers or developer teams from various enterprises. In 2023 and the three months ended March 31, 2024, the company had 95,848 and 65,080 paying customers respectively. With the expansion of the customer base reflected in its performance, Qiniu Intelligent's revenue and gross profit remain stable. In the period from 2021 to the first three months of 2024 (hereinafter referred to as the "reporting period"), the company's revenue was 1.47 billion yuan, 1.15 billion yuan, 1.33 billion yuan, and 342 million yuan; while gross profit was approximately 291 million yuan, 229 million yuan, 280 million yuan, and 70.54 million yuan respectively. It is worth noting that from 2021 to 2023, Qiniu Intelligent's gross profit margin was approximately 19.8%, 19.9%, and 21.0%, showing a stable increase. In terms of business segments, MPaaS is the revenue pillar of Qiniu Intelligent, accounting for approximately 13.7 billion yuan, 8.75 billion yuan, 9.75 billion yuan, and 2.49 billion yuan in the reporting period, representing about 93.1%, 76.3%, 73.1%, and 72.9% of total revenue; while the revenue from APaaS was approximately 24.9 million yuan, 194 million yuan, 281 million yuan, and 83.23 million yuan, accounting for about 1.7%, 16.9%, 21.1%, and 24.3% of total revenue. This business has shown a growth trend in both revenue scale and proportion. Other revenues were approximately 76.468 million yuan, 78.28 million yuan, 78.125 million yuan, and 9.693 million yuan, accounting for about 5.2%, 6.8%, 5.8%, and 2.8% of total revenue. In short, the business structure of Qiniu Intelligent is gradually optimized, with APaaS becoming the new revenue growth engine for the company. Moreover, as of December 31, 2023, Qiniu Intelligent did not rely heavily on any single customer. The revenue from the largest customer accounted for 11.3%, 8.1%, 11.8%, and 16.1% of the total revenue for the three years ending December 31, 2023. During the same period, revenue from the top five customers accounted for 22.7%, 25.5%, 34.3%, and 38.5% of the total revenue. During the historical period, the company's customers generally settled payments through bank transfers. During the historical period each year, Qiniu Cloud has established and maintained stable and good relationships with the top five customers, most of which have been maintained for 5 years or more. The steady and continuous growth of the customer base reflects Qiniu Intelligent's solid business capabilities. A one-stop scenario-based audio and video solution + rich application scenarios Building a solid moat It is understood that the one-stop scenario-based audio and video solution showcases Qiniu Intelligent's comprehensive capabilities and strong expansion capabilities, building a solid moat for its business growth. On the product side, MPaaS has outstanding comprehensive capabilities. With over ten years of experience in the audio and video industry, Qiniu Intelligent has developed a comprehensive and high-performance MPaaS product portfolio, including QCDN, Kodo, and Dora. APaaS solutions, on the other hand, offer scenario-based audio and video solutions. APaaS is a computing service model that provides developers with a platform for developing, running, and managing applications. Qiniu Intelligent's APaaS solutions currently cover five main application scenarios: social entertainment, video marketing, visual network, smart new media, and metaverse.By March 31, 2024, Qiniu Intelligent has accumulated 1303 APIs and a large customer base. In terms of audio and video basic capabilities, the company has achieved full functionality in multiple scenarios, complete capabilities, and end-to-end services.Operationally, the continuous realization of scale expansion is being achieved. When exploring a new scenario, companies usually first cooperate with representative companies in the industry or scene to develop new scenario-based audio and video solutions. Subsequently, the new solutions are rapidly replicated and expanded to serve other potential customers, thus achieving scale. Among the top 20 audio and video application downloads in China in 2023, 15 of them are operated by customers of Qiniu Intelligent, which proves its market-leading position. On the platform side, open connection is to achieve commercial value revenue. During the period, the company lowered the access threshold for the low-code platform scenario, enabling customers not only to create code in a short time but also to provide customers with a simple and efficient way to independently expand existing scenarios in order to build and develop their own business. In addition to the one-stop scenario-based audio and video solutions, a rich variety of application scenarios help to foster diverse commercial potential, contributing to the growth of Qiniu Intelligent. Since the official launch of APaaS business by Qiniu Intelligent in September 2021, its APaaS solutions have been applied to various scenarios, creating a '1+N' business layout of one platform and multiple scenarios. Currently, strategically, the company is focusing on five major scenarios, with social entertainment and video marketing scenarios achieving considerable revenue, proving its strong product commercialization capability. The company is also rapidly developing in the fields of visual Internet of Things, intelligent new media, and metaverse scenarios. Through the accumulation of scenario-based experience, the company expects to further drive technological innovation, maintain product and service advantages, and enhance customer loyalty. By the end of March 31, 2024, the retention rates of paying customers for the company's APaaS reached 87.9% and 93.7% respectively, demonstrating the efficiency and success of its solutions. With the continuous consolidation of its business moat, the company is expected to continue converting registered users into paid users, thereby enjoying the economies of scale brought by the expansion of its customer base, ultimately helping to improve its profitability. From a more macro perspective, one can more intuitively understand the huge growth potential of Qiniu Intelligent. With the development of network technology and the popularity of audio and video, the Chinese audio and video market continues to expand, giving rise to many segmented markets, including long videos, short videos, live streaming, RTC, and related services, such as content production and audio and video cloud services. In 2023, the audio and video cloud service market reached 91.5 billion yuan, accounting for 17.8% of the total cloud service market in China. With the development of audio and video applications in various industries, it is expected that the market share of PaaS in the audio and video cloud service market will increase from 24.9% in 2023 to 32.3% in 2028. With low-code solutions for audio and video APaaS applications meeting the different needs of the market, significant growth is expected, with the market size reaching 14.4 billion yuan in 2028, and a compound annual growth rate of 48.6%. Qiniu Intelligent, with its product matrix barriers, customer resource barriers, technological barriers, etc., is well positioned to enjoy the growth dividend of the industry. In conclusion, as a leading domestic audio and video PaaS service provider, Qiniu Intelligent's APaaS business has become a new growth engine, with ample revenue growth potential in the future. The continuous solidification of competitive barriers constructed by one-stop scenario-based audio and video solutions and a rich variety of application scenarios may enable the company to achieve continuous conversion of paying users and enjoy the dividend of high industry growth.