For enterprises, in order to maintain the long-term growth of performance, in addition to maintaining the stability of existing business, it is also necessary to explore a second curve to provide new impetus for future growth.
This sentence must be more touching for Three-Six-Zero. On April 21, 2022, 360 Group released its 2021 annual report, and growth is still the main theme of the annual report. During the reporting period, 360 achieved revenue of about 10.886 billion yuan, and the net profit attributable to shareholders of listed companies was about 902 million yuan; the overall gross profit margin was 67.26%, maintaining a high gross profit margin level.
It is worth noting that as a benchmark enterprise in the domestic network security track, under the new pattern of China's accelerated entry into the digital era, we can see from this annual report that in the context of the wave of digital economy, 360 has found a new value anchor.
Continuous high R&D, high sales investment, laying the foundation for transformation?
From the perspective of revenue data performance, 360's performance in 2021 is stable, and it still maintains a high gross profit margin level.
In terms of specific disassembly, the gross profit margin of Internet and advertising services reached 70.16%, the gross profit margin of smart hardware was 23.26%, the Internet value-added services were 82.95%, and the security and others were 67.26%. According to the annual report, the Gross Profit Margin of the Internet growth business is the highest, and it is mainly contributed by the game business, reaching 81.97%.
If you benchmark other head game companies, the gross profit margin of the 360 game business is also not lagging behind. The gross profit margin of Tencent's value-added service business in 2021 is only 52.5%, and the gross profit margin of NetEase's game business is about 65%.
However, although the gross profit margin level remains at a high level, the cost expenditure of 360 last year showed an increasing trend.
On the cost side, in 2021, 360 R&D expenses were 3.129 billion yuan, an increase of about 8.97% year-on-year; sales expenses increased significantly to 2.222 billion yuan, an increase of about 35%. Among them, there may be two reasons.
On the one hand, for a company, technical barriers are undoubtedly an important basis for maintaining its stable growth. Especially in the network security track where 360 is located, the strength of scientific research technology determines how far the enterprise can go in the future.
In this annual report, it can be seen that the R&D investment of 360 remains at a high level, accounting for 28.74% of the total revenue; the scale of R&D personnel has reached 4081 people, accounting for about 55% of the total number of employees.
Looking back at the historical R&D investment data of 360, it can also be seen that since the restructuring and listing, its R&D investment has reached more than 2.5 billion yuan in the past years, and such a high level of R&D investment is particularly important for enterprises with technology as their core competitiveness.
On the other hand, the growth of sales expenses is closely related to the increase in marketing promotion efforts and the increase in the salaries of security business personnel in 2021. This is mainly due to the continuous increase of investment in security business in 2021, of which the acceleration of government and enterprise security business and the technical reserve of digital security have led to the growth of sales personnel and related research and development expenses.
Nowadays, the government and enterprise security business has become the most promising growth point for 360 in the future. Since 2020, 360 has created a new security capability framework system built with the "security brain" as the core, covering a security product matrix in many fields, including security infrastructure, xinchuang products, cloud security, internet of vehicle security, industrial Internet security and so on.
In summary, while the security business as the second curve is still growing steadily, the continuous investment in research and development and sales expenses will help accelerate the growth of related businesses and build a more stable foundation for the second curve of 360.
With "transformation" as the hand, can we hold the anchor of value growth?
In recent years, the recurrence of the epidemic has made remote work the norm and accelerated the trend of industrial Internetization. At present, China is in a critical period of digital transformation, and the complex and turbulent international situation has made domestic network security issues more prominent.
In response to the increasingly dangerous cybersecurity threats, on July 12, 2021, the Ministry of Industry and Information Technology issued the "Three-year Action Plan for the High-quality Development of the Cyber Security Industry (2021-2023) (Draft for Comment)", pointing out that to promote the release of network security demand, it is expected that by 2023, the scale of the mainland's network security industry will exceed 250 billion yuan, with an annual compound growth rate of more than 15%.
At present, digitalization has become a basic route that cannot be bypassed in China, so it is more necessary for domestic network security enterprises represented by 360 to exert their social value. Previously, Zhou Hongyi, founder and chairman of 360 Group, publicly stated: "On the road to building a digital China, the biggest feature of network security challenges is "organized", "high level" and "invisible", which brings new difficulties and challenges to maintaining network security. ”
According to the "2021 China Government and Enterprise Digital Network Security Research Report" released by Yiou Think Tank, the current emerging security market is entering an accelerator and driving the growth of the overall network security market. Yiou Think Tank believes that it is expected that by 2021, the size of China's network security market will reach 201.73 billion yuan, with a compound growth rate of 19.3% from 2021 to 2023.
Under this urgent need, 360, as the head security enterprise in China, should bear its own ability in this "invisible war".
At the national strategic level, in March 360 this year, a report entitled "Prelude to CyberWarried: The NSA (APT-C-40) Launched a Non-Discriminatory Attack on the World for More Than a Decade" was released, which detailed the NSA's cyberattacks on domestic targets. This also shows the strength of 360 in the field of network security technology and the social value of the enterprise.
On the government and enterprise side, since returning to the A-share market through restructuring in February 2018, 360 has begun to target the government and enterprise security market. By 2021, government and corporate affairs will further realize their growth potential. According to the annual report, in 2021, 360 completed new contracts with nearly 2,000 customers, covering more than 90% of the central ministries and commissions, 80% of central enterprises, 95% of large financial institutions, and carried out network security cooperation with millions of small and medium-sized enterprises.
It is worth noting that in the first quarter of 2022, 360 has completed the collection of about 547 million yuan of urban safety orders, and safety-related revenue has reached 39.6% in 2021.
In the view of Songguo Finance, the above figures show the valuation growth potential of the security business of 360 government and enterprises. Especially in the current critical period when the market is in urgent need of building a new network security system integrated with digital business, related businesses are expected to bring higher valuations.
This also means that in this 100 billion-scale market, there is still redundancy left for the market space that 360 can tap. Through the rise of the domestic digital economy of the card slot, for 360, a two-wheel drive of "Internet + government and enterprise security" has been formed, which will also help 360 to hold the anchor of long-term value growth.