Text|Snow. **Bowang Finance.
On February 16, Open AI released the latest large model SORA, which directly opened the door to artificial intelligence in the field of Wensheng. It can support generating 60 seconds of **, and the content can have multiple characters for specific types of movement, complex scenes. According to Open AI, the purpose of developing this large model is to allow AI to understand the physical world and help people solve problems of real-world interaction.
One of the leading domestic enterprises in the field of artificial intelligence engaged in by Wondershare Technology, affected by the concept of SORA, Wondershare Technology rose sharply after the opening of the Year of the Dragon.
In fact, Wondershare Technology has laid out the AI field very early, and the "Tianmu" large model released by Wondershare in 2023 is the first multi-** large model in China that focuses on creative applications as the core. In recent days, Wondershare Technology's AI ** creation software has also held a press conference in Tokyo. In response to the popular SORA concept, Wondershare Technology also responded positively in the stock bar, and explained to the outside world the similarities and future development potential of the "Tianmu" model and the SORA model.
Picture: Oriental Fortune
Although Wondershare Technology has a good position in the era of artificial intelligence, its revenue and profits have also grown steadily. However, it also has the impact of high sales expenses and a high proportion of goodwill in its net assets. At the same time, the emergence of the SORA model is also a double challenge for Wondershare Technology, if Wondershare Technology cannot keep up with the development of the times, its products are likely to replace it. In addition, more than 90% of Wondershare Technology's revenue comes from overseas markets, which is greatly affected by policy risks in the context of two Chinese and foreign Internet systems. Can Wondershare Technology take advantage of the east wind of the largest model in the future? Whether we can overcome the problems we are facing now is the focus of our attention.
Strength in the field of AI**
Wondershare Technology is a digital creative business for the global market, and its business mainly provides consumers with efficient digital creative software and editing software. Wondershare Technology has launched creative software such as Wondershare Meow Film, Wondershare Broadcast, Wondershare Vision, Wondershare DemoCreator, and Wondershare UniConverter, as well as drawing creative software such as Edraw Icon, Edraw Brainmap, Ink Knife, and Wondershare iPainting, as well as creative software such as document creative software such as Wondershare PDF, with more than 1.5 billion users worldwide.
Picture: The company's official website
There are similarities between its core products and SORA large models, such as Filmora Filmora is a convenient editing software, which can realize the one-click editing function. It went live in June 2017. Filmora was formerly known as Wondershare God Scissors and Meow Factory. In May 2019, Filmora launched the "100 City Story Vlog Challenge" to welcome the short ** outlet. In May 2020, Filmora joined hands with Honor to launch the tablet Filmora APP. It can realize the one-click editing function, and can also be professional and advanced creation.
Picture: The company's official website
In September 2023, Wondershare Technology released the first first-class creative application model "Tianmu" in China. The canopy model covers the most advanced images and AI formation and optimization functions on the market, which can quickly complete tasks such as editing, special effects addition and transition design. The algorithm of Tianmu large model can process data well, improve the resolution and saturation of the first class, and make the quality of the first better.
As the first application software company to deploy AIGC, Wondershare Technology uses the logic of ChatGPT with the help of the SORA model to drive the game engine with data. Generate a screen in the game engine, use ChatGPT to receive text and convert it into **, and then use ** to drive the game engine to form ** screen. In the future, it is expected to create a super application for the C-side.
There are both joys and sorrows
In the first three quarters of 2023, Wondershare Technology achieved operating income of 109.6 billion yuan, a year-on-year increase of 3069%。The net profit was more than 65 million yuan, a year-on-year increase of 167%. If you look at it for a long time, the operating income of Wondershare Technology in 2018 will increase from 56.4 billion yuan, an increase to 11. in 2022800 million, and the operating income is expected to exceed 1.4 billion yuan in 2023. The average annual growth rate of operating income is more than 25%.
From the perspective of the composition of operating income, its operating income is mainly **creative products, taking the operating income in 2022 as an example, its **creative income is 7.4.5 billion yuan, a year-on-year increase of 2782%, accounting for 63% of the annual operating income15%。Utility products were the second largest in terms of revenue**, accounting for 19 percent of the year's revenue71%。
Figure: IFND
At the same time, Wondershare Technology's operating income is mainly in overseas markets. In 2022, Wondershare Technology's overseas operating income will be 105.4 billion yuan, accounting for nearly 90% of operating income. The domestic operating income is only 12.6 billion yuan, accounting for 107%。
Figure: IFND
As for why it is not developing in the domestic market, Wu Taibing, chairman of Wondershare Technology, once said: "In the future, the company will actively promote the development of the domestic market while further digging into the overseas market of consumer software, and enhance the company's market share and influence in the domestic market." "Wondershare Technology has always been mainly engaged in overseas markets, mainly because of the rampant piracy of software in China before, and it is a last resort to seek the near and far.
In the context of today's consumption upgrading and the rise of knowledge payment, as the content side, platform side and users of the market have gradually established a sense of genuine use, consumer software will also be another type of popular product for mass consumption, so Wondershare Technology has gradually turned its attention back to China. But for Wondershare Technology, there is still a lot of work to be done if it wants to really cross a series of first-class giants such as Meitu and Jianying.
Because Wondershare Technology products have Internet attributes, they have always maintained a very high gross profit margin. From 2018 to 2022, Wondershare has maintained a high gross profit margin of about 94% for a long time, and the gross profit margin will remain at 95 in 2021 and 2022About 5%. The company's net profit margin decreased in 2021-2022, and decreased slightly in the first three quarters of 2023, but it was still higher than 95%.
Corresponding to the higher gross profit margin is the high sales expenses and R&D expenses of Wondershare Technology. Due to the continuous product iteration and new technology research and development of software products to ensure technological leadership, the company's R&D expense ratio increased from 1785% to 2947%, and the company's R&D personnel account for nearly 60% of the company's total number, which is also in a relatively high position among software companies.
Figure: The company's annual report
At the same time, Wondershare Technology's sales expense ratio has increased, from 2100 million rose to 5800 million yuan, accounting for nearly 50% of operating income. In other words, Wondershare Technology spends half of its revenue to promote the market, and such high sales expenses are also the main reason for the low net profit margin.
In response to the high sales expenses, the company explained that it was mainly due to the intensification of market competition and the increase in traffic costs. Advertising expenses also account for a high proportion of sales expenses, of which advertising expenses account for 75% of sales expenses in 20222%。
Figure: The company's annual report
Multiple mergers and acquisitions, high goodwill
In 2019 and 2020, the company strategically controlled Edraw Software and Modao Carved Stone, which enhanced the competitive advantage of drawing and creative products. In 2021, the company will strategically hold Gexiang Technology, strengthen the mobile ** layout, and promote the coordinated development of "PC + mobile + cloud". The result is a complete business product matrix.
Although the acquisition can expand the company's business line, it also tests the company's management integration ability. The first test is Wondershare Technology's goodwill processing capabilities. In the 2023 semi-annual report, the goodwill formed by Wondershare Technology is 31.6 billion yuan, accounting for 23.3 percent of net assets99%, which is generally at a high level, and at the same time, this part of the goodwill is facing a high risk of impairment.
Chart: Goodwill structure of financial reports
The main components of goodwill are Hangzhou Gexiang Technology and Shenzhen Edraw Software, of which Gexiang Technology uses 2$7.4 billion for the acquisition44% of the shares, but the corresponding fair value of the net assets is only 4572360,000 yuan, with a premium rate of 36737%, forming a goodwill of up to 16.8 billion yuan. Hangzhou Gexiang Technology is mainly engaged in the development of mobile software. Judging from its business situation, it will take time to recover its investment, which tests the company's management ability even more.
Hangzhou Gexiang Technology's revenue.
At the time of the acquisition, Shenzhen Edraw Software Company promised to achieve a cumulative performance of no less than 63 million yuan from 2019 to 2021. The actual performance generated at the end of 2019-2021 was 200 million yuan and 3510760,000 yuan, 3871810,000 yuan, a total of 27.4 billion yuan, to fulfill the commitment.
Although the acquired companies have fulfilled their performance commitments in a specific period, there are certain fluctuations in the performance thereafter, especially from the current financial statements, the acquired business has not had a significant impact on the company's revenue for the time being. In the past two years, it may face a greater risk of asset impairment.
At present, the popularity of the SORA large model concept has formed a short-term support for the stock price of Wondershare Technology. However, in the long run, the emergence of this form of artificial intelligence is a double-edged sword for Wondershare Technology, if Wondershare Technology can face technological progress and use its own "Tianmu" large model to achieve a similar product effect to SORA, it will give Wondershare Technology wings to fly in the future. But before that, Wondershare Technology still needs to further increase investment in scientific research, and open the domestic market as soon as possible to make the operating income to a higher level, in order to be qualified to survive in the era of artificial intelligence.