Houlang Forest Research Laboratory|ivy edit |Luo Zhou co-ordinator, editorial assistant|Xu Jiawei: How about Transwarp?Do you know something about it?
Houlang Forest" reminds you that when reading the conclusions of this research, it is best to review the first two research works Houlang Forest: Discuss What is the fundamental question I have about the nineteen questions (1) of "Transwarp Technology", which is known as the Magic Quadrant, and my popularization of the principles and logic of "Transwarp Technology"?(b). It should also be noted that Houlang Forest's research on Transwarp Technology is not that it is now an excellent enterprise with flourishing technology, but based on its history and expectations, it focuses on whether it may become an excellent enterprise in the future.
oneIs it a company with excellent historical genes?It is difficult for Houlang Forest to conclude whether the company, which was founded in 2013 and is only 10 years old, has excellent historical genes, after all, it has very limited information about its earlier operations. From this, I will distill the key words or key facts to tell the history and facts.
Note that the following keywords:
1. It is a loss-making business. The net profit from 2019 to 2022 was -21.1 billion yuan, -18.4 billion yuan, -24.6 billion yuan, -27.1 billion yuan, with a loss of 1 in the first half of 20239 billion yuan. The company said, "The main reason is that the company is in a period of rapid growth, and continues to invest heavily in R&D, sales and management." Uncovered losses are expected to continue to widen in the coming period. ”
2. Its revenue volume is very small. 2019-2023H1, respectively: 73 and 13.8 billion yuan, respectively. 62% and 4138%。This growth rate does not reflect the characteristics of high growth, which proves that its high growth stage has not yet arrived.
3. It belongs to a very typical marketing-driven enterprise. 2019-2023H1 selling expenses. 1.2 billion yuan, the ratio of sales expenses to operating income was respectively. 96% and 8116%, 135, 141 sales, 159 and 196 salespeople.
4. It is an enterprise-level big data basic software developer. Focusing on the integration, storage, governance, modeling, analysis, mining and circulation of data, it provides basic software and services for the whole life cycle of data, and has formed a software product matrix of big data and cloud basic platform, distributed relational database, data development and intelligent analysis tools, focusing on the research and development of distributed technology, database technology, SQL compilation technology, and basic software of data cloud technology.
He has taken the lead in undertaking the "2020 Emerging Platform Software Project - Big Data Platform Software" of the Ministry of Industry and Information Technology of the People's Republic of China, and the "Full-stack Cloud Platform Product R&D and Ecological Construction" project of Shanghai.
In the financial, energy, manufacturing, and transportation industries, many customers have realized the domestic replacement of some key information systems in data analysis scenarios, including traditional relational databases such as Oracle, IBM DB2, and Teradata, as well as mainstream vendor products such as search engine Elasticsearch, big data platform Cloudera Data Platform, and data statistical analysis software SAS.
5. Self-proclaimed "self-developed big data basic platform and distributed analytical database have reached the advanced level in the industry." In 2018, its big data infrastructure platform product, Transwarp Data Hub ("TDH") V51Passed the official audit of TPC-DS, the benchmark test of the internationally renowned organization TPC, becoming the world's first data platform to pass this benchmark test in its entirety. In 2019, Transwarp Argodb ("ArgodB") v12.Version 1 passed the official audit of the TPC-DS benchmark, becoming the fourth database product in the world to pass.
The company has a total of more than 1,400 end users, distributed in the financial, energy, transportation, manufacturing pillar fields, has achieved a certain market share in the financial field, a number of domestic banks, brokers, financial institutions and other financial institutions have purchased the company's products and services.
6. Its big data management platform has been evaluated in the "Visionary Quadrant" and "Leader Quadrant" around the world. In 2016, it was selected into the Magic Quadrant for Data Warehousing and Data Management Analytics by Gartner, an internationally renowned analyst organization, and was placed in the Visionary QuadrantIn terms of forward-looking dimensions, it is superior to Cloudera, Hortonworks and other mainstream big data platform vendors in the United States, and is the first Chinese company to enter the Magic Quadrant since Gartner released it.
In 2017, it was again selected into Gartner's "2017 Magic Quadrant for Analytical Data Management Solutions", becoming one of the two Chinese companies selected in the Magic Quadrant that year, the other being Inspur Information. In 2017, IDC released MarketScape: China's Big Data Management Platform Market, and the company was ranked in the Leader Quadrant.
In 2018, the well-known analysis agency "Wikibon" released the "2018 Big Data and Analytics Business Report", evaluating the company as "a Chinese company whose product strategy is very instructive for Western companies".
In 2020, IDC released the "MarketScape: China Big Data Management Platform Vendor Evaluation, 2020", and the company ranked fourth in the market in terms of comprehensive capabilities in key strategies and key capabilities.
In 2022, a number of products or sub-products were selected into the "China Database Management System Vendor Identification Guide" released by Gartner, and among the 8 categories of database management system products identified, the selected products covered 7 of them, and were one of the four vendors covering more than 7 categories of products, and one of the four vendors covering multi-model databases.
7. Its core technology is mainly embodied in six aspects: distributed technology, SQL compilation technology, database technology, unified processing technology of multi-model data, container-based data cloud technology, and big data development and intelligent analysis technology.
Distributed technology has good computing performance in data processing from GB to petabyte, and supports multiple data models such as tables, graphs, and documents.
The compilation technology automatically translates SQL statements into distributed computing tasks, and at the same time realizes the operation of data of different models (such as tables, documents, graphs, etc.) in a unified SQL language, which adheres to most ANSI SQL standards, is compatible with traditional relational database dialects, such as Oracle, IBM DB2, Teradata, and supports stored procedures.
ArgoDB, a self-developed distributed flash memory database, supports high-concurrency data writing (write speed of millions of record seconds) and high-speed data processingTranswarp Kundb ("KunDB"), a distributed transactional database, supports linear scaling and supports MySQL and Oracle PL SQL. In addition, the hybrid solution created by combining Kundb and Argodb can support hybrid business scenarios for both trading and analytics.
A new big data technology architecture has been created, including a unified SQL interface, a unified computing engine, a heterogeneous data storage model, a unified data management system, and a unified resource management system. To date, nine storage engines have been implemented and ten data models have been supported.
Transwarp Cloud Operating System ("TCOS"), a container-based resource scheduling product, and Transwarp Data Cloud ("TDC"), a data cloud platform, provide container-based unified resource management technology, multi-tenant isolation technology and unified workload management technology earlier, and support the hybrid deployment mode of domestic CPU and x86 architecture.
Transwarp Data Studio ("TDS"), a big data development tool, provides data management tools covering the entire data lifecycle, including integration, governance, asset management, tagging and services, and sharing and circulation.
8. Zhongjin Xinghuan No. 1 and Zhongjin Xinghuan No. 2 are platform companies for Transwarp's senior executives and core employees to participate in the strategic placement and collective asset management plan of the Science and Technology Innovation Board. The managers and actual controlling entities of Zhongjinxing Ring No. 1 and Zhongjinxing Ring No. 2 are all CICC, and Zhongjinxing Ring No. 1 holds 05375%, and the Venus Ring 2 is 01874%。
(b).
History, origins, and complex interest structures1. Transwarp is a company co-founded by Sun Yuanhao, Yunyou Investment, and Fan Jing in 2013, accounting for % and 30% respectively, and the three co-founders are all technical experts. Fan Jingshi was held by his brother Fan Lei, who was still working at Intel at that time. Behind Yunyou Investment is Wang Ji, chairman and CEO of "Century Huatong" and chairman of Shanda Games. Yuanhao Sun has worked for Intel for the past 10 years and served as CTO of the Data Center Software Group in Asia Pacific.
2. Transwarp's shareholding structure is scattered and complex, and the company, which has a market value of only 8.3 billion yuan, was composed of 44 ** when it was listed, including Sun Haoyuan, Fan Lei, Lv Cheng and She Hui 4 natural persons, and 40 institutional shareholders. If further split, the 40 institutional shareholders include a considerable number of China's top institutions, including Tencent-controlled Linzhi Lichuang, and the leading corporate financial capital company that brings together PetroChina Capital, Chinese Life, Beijing Life and Great Wall Life.
Zanxing Investment Center is Transwarp's employee investment in Zhongping Company, which is composed of seven small shareholding platforms of "Jiaxing Star X" and Shanghai Yexing, which represents 132 shareholders. Praise Star holds Star Ring 62376% shares.
It should be paid attention to the fact that in addition to Sun Haoyuan, Lv Cheng, Fan Lei, She Hui, Zanxing Investment Center, Qingdao Xinding, Xiamen Xinding, Jingkai Yiying, Langma No. 25, Langma No. 31, and Entrepreneurship Relay.
1. Entrepreneurship relay.
2. In addition to Yangpu Menghang, Guoke Zhengdao holding shares for 36 months and CICC Wealth Holding shares for 24 months, a large number of institutions have a lifting period of 12 months, and the lifting ratio is 45 of the total share capital1774%, October 28, 2023, is a huge test.
3. Co-founder Fan Lei resigned from Transwarp in May 2021, and we cannot assess what disagreements have arisen between Fan Lei and Sun Haoyuan. Fan Lei is quite critical to Transwarp, and he held 606 before going public860,000 shares, accounting for 6% of the total share capital7% and holds directorships. In November 2020, Fan Lei suddenly ceased to serve as a director, and then resigned half a year later. The destination is the CEO of Yixun Technology, which was founded in 2012, and 7 employees including Transwarp Technology's senior training engineers and pre-sales are "poached" to his command.
According to the disclosure of its employee stock ownership platform, it can be found that the partners of Shanghai Yexing and Jiaxing Xingrong are Sun Yuanhao and the employees who have left the company, and the company has granted more than 70 employees who have failed to obtain shares due to resignation, and the total number of incentive shares involved is 130330,000 shares.
Three
Why the lack of money?1. Transwarp launched a new round of refinancing plan half a year after its listing, which is still in progress. It plans to raise 1.5 billion yuan, saying that "external financing is needed to support the construction of the investment project and the future development of the company through external financing." ”
Technology knows no bounds. All technology companies are exempt, including Transwarp.
The projects to be built this time include a large data analysis model, an integrated platform for intelligent quantitative investment and research, a platform for data element security and circulation, and an AI knowledge assistant. Artificial intelligence and data models are a race to invest, and as long as companies lag behind the frontier, all their efforts will be lost.
And, more importantly, the conclusion of this investment is not yet known, and it is not a definitive result of "input must be output".
Therefore, the previously known "Magic Quadrant" and "Leader Quadrant" are only the basic capabilities of the enterprise before. We have seen that more than 10 listed companies such as Obi Zhongguang and Wanxing Technology have made a lot of investment in big data models to varying degrees, adding up to more than 10 billion yuan.
2. From a historical point of view, Transwarp cannot solve billions of capital through endogenous development. Because the enterprise does not yet have an outstanding scale effect, although the revenue scale has developed rapidly, the profitability is insufficient. It maintains a high gross profit, all R&D expenditures are expensed, the R&D expense rate and sales expense rate are higher than those of the same industry, and the gross profit margin is lower than that of the same industry.
Founded in June 2013, the company spent five years and its revenue reached hundreds of millions. Since then, the compound annual growth rate of revenue has reached 35%, and the IPO was completed in October 2022.
There is a certain seasonality in the company's revenue, and the revenue in the fourth quarter is higher than the other three quarters, and the company's revenue in the fourth quarter of 2022 accounts for 54%.
This is because the company's end customers are mainly concentrated in finance, telecommunications, energy and petrochemical, manufacturing and other industries or units, such customers usually implement a strict budget management system, usually start the project in the first half of each year and accept it in the fourth quarter.
At the same time, because the company's revenue is mainly concentrated in the fourth quarter, and the expenses are relatively evenly incurred during the year, there is usually a large difference between the profitability of the first three quarters and the profitability of the whole year.
However, the company has continued to lose money since 18 years of disclosing its earnings status, and the loss amount has increased from 13.9 billion deepened to 27.1 billion. The prospectus indicates that the reason for the loss is that the scale effect has not yet appeared: "the company is in a stage of rapid development, with high R&D investment, small revenue scale and large operating investment".
Let's go back to the roots, what exactly does the economic term "economies of scale" mean?To put it simply: within a certain range, the expansion of the scale of the enterprise can reduce production costs, improve production efficiency, and then increase corporate profits.
From the perspective of cost accounting: under the condition that the fixed cost remains unchanged, every time a set of products is produced and sold, the smaller the fixed cost of a single product is apportioned, the lower the total cost of a single product, and the higher the profit of the enterprise.
For software companies such as Transwarp, each series of software development requires a lot of manpower, material and financial resources, and a considerable part of these investments, according to the Accounting Standard for Business Enterprises No. 6 - Intangible Assets, can be capitalized and amortized on a monthly basis in the future.
In this way, we can roughly understand the early R&D investment as the "fixed cost" of the enterprise, that is, no matter how many sets of software in this series of products the customer subscribes to, the monthly amortization, that is, the "fixed cost", does not change.
If the enterprise chooses to expense R&D investment, then the company's R&D expenses are included in the period expenses and will not be amortized on a monthly basis (in many cases, the amortization adopts the straight-line method, that is, the same amount is the same every month), so it is still flexible.
Of course, such an aggregation difference will theoretically only change the position of R&D investment in the income statement: whether it is put into the cost or the period of expense, and will not affect the profit of the enterprise.
Interestingly, from 2019 to 2022, the company has hundreds of millions of yuan in revenue, that is, R&D products can create revenue, and all R&D expenditures are expensed, and the expense ratios are respectively. 11% and 4246%, and the average R&D expense ratio of comparable listed companies in the same industry is about 32% in the same period.
At the same time, the average gross profit margin of enterprises is about 59%, and the gross profit margin of comparable listed companies in the same industry is about 73%, which is significantly higher than Transwarp.
The logic here is that when a company capitalizes more profitable R&D investment in software products, the amortization expense of intangible assets incurred will be included in the cost, which in turn will lower the gross profit margin and reduce the R&D expense ratio.
At present, under the circumstance that the company has expensed all R&D investment, not only has R&D expenses become flexible variable costs, but also the R&D expense ratio is much higher, and the gross profit margin is still lower than the average of comparable enterprises in the same industry. If the company chooses to capitalize on R&D investment, the company's gross profit margin will be lower, and the R&D expense rate will be close to that of the same industry.
The explanation given by the company for this phenomenon is that it is caused by the early stage of enterprise development.
(1) Revenue recognition:
Since the profitability of the business is not good, we might as well take a closer look at his income.
From the perspective of accounting, revenue recognition is an art, and the key to it is to not only meet the strict requirements of accounting standards for enterprise accounting measurement methods, but also to enable the company's revenue and profit to give stakeholders a positive imagination. In my view, earnings management is a neutral and slightly optimistic word.
When it comes to revenue recognition, there are two small points worth noting.
1. Project pricing and person-month valuation.
The company's external procurement services are divided into two ways: person-month pricing and project pricing according to different pricing models. To put it simply, project pricing is the recognition of revenue and cost when the project is carried out to a certain extent and "stepped" on the "point" of revenue and cost recognition.
The person-month valuation is a more flexible processing method, which refers to the number of staff with corresponding skills according to the number of days (months), and the corresponding income and cost are recognized every month.
In its reply to the first round of review inquiry letters, the sponsor said:
There is no significant difference between the company's project pricing and man-month pricing contracts in the actual technical content of the delivered work, and there are only differences in accounting due to the different delivery of contractual rights and obligations. ”
At the same time, it is guaranteed that "none of the projects in the person-month pricing model has stipulated acceptance terms, and the relevant revenue recognition complies with the provisions of the Accounting Standards for Business Enterprises, and there is no early recognition of revenue." ”
Since the criteria were met, the Issuance Review Committee did not follow up on this. The curiosity lies in the fact that under what circumstances the revenue will be recognized according to the project price and divided into "blocks", and when will the revenue be recognized on a person-month basis, smoothly on a monthly basis. Is there an art rather than a technical component?
2. Signing and implementation sequence.
This question also originated from the inquiry of the Issuance Examination Committee, and the regulator wanted to clarify the proportion of revenue in the three situations of "signing the contract before implementation, implementing it first and then signing the contract, and not signing the contract after implementation".
The sponsor also gave a response based on the facts.
At the same time, the termination of the sales expenses of the project implemented in the field without signing the contract in each period of the reporting period is given:
It was also disclosed that as of the end of December 2021, the company had a total of 62 uncompleted pre-implementation projects, corresponding to an inventory amount of 1,481700,000 yuan. As of the end of April 2022, the follow-up contracts in the above projects have been signed as follows:
The sponsor believes that the company will only implement and then sign contracts for customers who have a high probability of signing contracts in the future, have close relationships or are of strategic significance, and are in line with the industry characteristics of software enterprises, and give a similar situation to listed companies in the same industry. (2) Related party transactions and third-party collectionLet's take a look at the more sensitive "related party transactions" and "third-party collections" of listed companies. First of all, the definition of related party transaction: refers to the transaction between the company or its subsidiaries and related parties who have an interest in the company directly or indirectly. The stake here can be either an equity relationship or an employment relationship. 
Due to the large number of related parties of enterprises, we will not list them all here, but focus on the affiliated enterprises that will have related party transactions in 2022. Among them, New Tianlu Technology and Sematic Software are the two companies with large quotas. Xintianlu Technology is an enterprise actually controlled by Ding Dandan, a former employee of the company. Ding Dandan resigned from the company in July 2021 and has been absent for more than one year, and from 2023, the company will no longer list him as a related party. Nuoqi Technology, an enterprise controlled and directed by Zhang Yuepeng, a former director of the company, also has a similar situation of no longer disclosed. The question here is whether the termination of the employment relationship is consistent with the severance of the actual interpersonal relationship, although the above disclosure standards comply with the relevant regulationsSematic Software is an enterprise in which Hui Chengfeng, a supervisor of the company, serves as its director. According to the annual report, Hui Chengfeng, with a master's degree, graduated from Nanjing University. Since 2013, he has served as investment director, managing director and other positions in Fangguang Capital, and is currently a supervisor of the company. It is indeed not uncommon for investors to help enterprises graft resources. Let's take a look at the third-party payment: that is, the payer of the sales payment received by the enterprise is inconsistent with the corresponding customer who signed the economic contract. This situation is often seen in industries such as food and beverage, agriculture, etc., because the company's customers are scattered in these industries, and there are many small distributors and self-employed individuals, which are inconvenient to require their banks to make corporate payments. The Issuance Examination Committee noted that the company signed the "China Mobile Zhejiang 2020-2022 Big Data Model and Product Optimization Technical Support Service Framework Contract" with Tianjin Lanmo Yunchuang Data Interconnection Technology Co., Ltd., and inquired about the 1,880Whether the payment of 190,000 yuan belongs to a third party. The sponsor disclosed that Lanmo Yunchuang is a subsidiary of Zhejiang Land Zongheng Network Technology Co., Ltd., an associate of Beijing Huasheng Tiancheng Technology Co., Ltd., and Huasheng Tiancheng has a large number of successful cases in the operator industry. Lanmo Cloud Creation is the general integrator of related projects, and the company cooperates with Lanmo Cloud to provide big data model and product optimization technical support services for end users Zhejiang Mobile, which is not a third-party payment. Here is a small chestnut, and I want you to establish a basic concept of "third-party collection", which is the focus of the review of the Issuance Examination Committee. Because this situation involves the key issue of "three streams" of product flow, invoice flow and capital flow, it is easy to become a "hidden corner" of extracorporeal circulation of funds. (3) Turnover rate and talent gapAfter that, let's talk about the company's talent problem.
The establishment of the company is also quite an interesting story: in 2013, Sun Yuanhao, Fan Jing and Yunyou Investment Firm jointly established the company's predecessor, Transwarp Co., Ltd., in which Fan Jing's shares are actually held by his brother Fan Lei. At the time of establishment, Fan Jing paid 30% of the registered capital with 3 million yuan. These three founders have a lot of backgrounds. Among them, Yunyou Investment comes from Wang Ji, chairman and CEO of the listed company Century Huatong and chairman of Shanda Games (now renamed Shengqu Games), Sun Yuanhao has worked for Intel for the past ten years and served as the CTO of the data center software department in the Asia-Pacific region, and Fan Lei also worked for Intel at this time. In addition, the company's current directors and vice presidents Lv Cheng and Zhu Junchen, supervisors and vice presidents Liu Wanggen and others have worked in Intel. At that time, because Intel's reporting procedures for employees' foreign investment and part-time jobs were too cumbersome, in order to establish the company as soon as possible to carry out business operations, Fan Lei appointed Fan Jing to contribute capital and hold the company's equity on his behalf. In 2015, the above-mentioned shareholding relationship was terminated. According to the disclosure, Fan Lei held 606. before the issuance in 2022860,000 shares, accounting for 6 of the company's total share capital7%。As one of the two co-founders of the company, Fan Lei has served as an employee and director of the company. According to the disclosure of its employee stock ownership platform, it can be found that the partners of Shanghai Yexing and Jiaxing Xingrong are Sun Yuanhao and the employees who have left the company, and the company has granted more than 70 employees who have failed to obtain shares due to resignation, and the total number of incentive shares involved is 130330,000 shares. In the prospectus, the company also listed the talent gap as one of the issues that need to be focused on in the development of the enterprise. (4) Equity incentivesFinally, let's take a look at equity incentives, which are closely related to talent development. According to the equity incentive plan established by the company in 2023, the total number of incentive recipients granted by the plan is 200, accounting for about 18 of the company's total number of employees of 1,088 as of December 31, 202238%。The equity incentive** is 4506, which is about 60% of the previous period of trading**. In order to better motivate and retain talents, the implementation of equity incentives is distributed over 4 vesting periods of 5 years after the grant date. It will operate according to the results of each individual performance appraisal, the company's revenue appraisal and the willingness of individuals to execute, so to speak, taking into account the goals of employees, the goals of the enterprise and the interests of employees.
The total amortization expense is expected to be as high as more than 38 million, which will continue to have an impact on corporate earnings. At present, the company is issuing ** to specific objects, and the issuance share does not exceed 20% of the total share capital before the issuance, and the issuance ** is not less than 80% of the average price of the previous transaction. After the issuance, Sun Yuanhao himself directly held 7 shares70%, and the proportion of voting rights controlled through the Concerted Action Agreement is 1103%。