Ninety percent of the revenue comes from mobile advertising services "The car is coming", and the parent company broke through the Hong Kong Stock Exchange

Reporter Xia Zhibin and Quartz Jing reported from Shanghai

"This app is still quite easy to use for the elderly, open the app and you can see how long it will take for the bus you want to take to arrive at the station, they don't need to wait early, and they don't have to worry about going to the late departure." Tao Mo (pseudonym), who lives in Putuo, Shanghai, admitted to a reporter from China Business Daily, "There is no complicated operation, and the large-character version of the App is also friendly to the elderly." ”

The reporter learned that the App mentioned by Tao Mo is the domestic real-time bus information platform "The car is coming", and its parent company MetaLight Inc. (hereinafter referred to as "Yuanguang Technology") recently submitted a prospectus to the Hong Kong Stock Exchange, and the sole sponsor is CICC.

According to the prospectus, Yuanguang Technology is a data intelligence company. According to CIC, as of December 31, 2023, Chelai has become the largest real-time bus information platform in China by city coverage, with operations in 264 cities.

Behind the halo of the largest real-time bus information platform in China, Yuanguang Technology is facing many market challenges, such as the company's single revenue model, ninety percent of its revenue comes from mobile advertising, the company's total assets are significantly lower than the total liabilities, and the competition is becoming increasingly fierce.

In response to questions related to the IPO of Yuanguang Technology, on June 25 and 26, the reporter called and sent a letter to Yuanguang Technology, and the company replied: "The company is in a quiet period, and the relevant information is subject to the prospectus." ”

Advertising supports ninety percent of the company's revenue

Founded in 2010 by Shao Lingshuang, Yuanguang Technology graduated from the Department of Computer Science of Peking University with a Ph.D. degree in 2010 and entered the School of Computer Science of Wuhan University as a teacher. In 2013, Yuanguang Technology launched a car. In 2018, the number of registered users of Chelai exceeded 100 million, and the public transportation analysis platform developed by Yuanguang Technology was certified by the Ministry of Industry and Information Technology as a national big data industry pilot demonstration project.

According to the prospectus, Chelai can provide real-time bus schedules and accurate estimated vehicle arrival times by analyzing GPS data authorized by transportation agencies, user query records and search history, as well as data aggregation of buses and users. It is reported that the app enhances the travel experience by reducing the uncertainty of waiting times and reducing the likelihood of passengers missing the bus.

The reporter learned that the bus timing data focused on by the car has a very broad development prospect. According to CIC, as of December 31, 2023, there were about 700,000 buses in operation across the country, with an average daily operating time of about 15 hours.

According to the data, the buses in operation generated more than 1,000 terabytes of time-series data in 2023 through their onboard sensors, which included different information such as the real-time location of the vehicle, the time passengers boarded the bus, the length of the stop, and even unplanned detours.

There is no doubt that the massive flow of time series data requires effective analytics tools to provide an enjoyable travel experience, optimize the decision-making process of transportation agencies, and improve operational efficiency, creating ample opportunities for time series data service providers to enter the transit space.

According to CIC, the size of China's public transport time series data service market has grown from about 700 million yuan in 2019 to about 1.7 billion yuan in 2023, with a compound annual growth rate of 24.9% between 2019 and 2023. It is estimated that by 2028, the size of China's public transportation time series data service market will reach about 3.9 billion yuan, with a compound annual growth rate of 17.7% between 2023 and 2028.

In the above context, the market performance of the car is also remarkable. As of December 31, 2023, it has more than 264 million users. As of December 31, 2023, Chelai's geographical scope has expanded to nearly 450 cities and towns across China.

In the prospectus, Yuanguang Technology said that it will expand on the basis of the data insights obtained by Chelai, and the company will also provide data analysis products and services for the needs of transportation agencies. "Through real-time monitoring of bus operations, improving the accuracy of bus data, optimizing bus routes, and planning new routes, we help these organizations improve their operational and management efficiency."

According to the prospectus, Yuanguang Technology generates revenue by providing mobile advertising services and data technology services. According to the data, from 2021 to 2023, Yuanguang Technology's revenue will be 163 million yuan, 135 million yuan, and 175 million yuan respectively. Among them, the mobile advertising revenue was 156 million yuan, 115 million yuan and 168 million yuan respectively, accounting for 95.6%, 85.2% and 96.2% of the total revenue of each year.

"The revenue of our mobile advertising services is influenced by the size, loyalty, and engagement of our user base. In order to drive the growth of mobile ad services revenue, it is important for us to focus on increasing user traffic and engagement. "There is no guarantee that we will continue to retain existing users or continue to attract new users in the future." Changes in user preferences, the competitive landscape, or other market dynamics may negatively impact our ability to maintain and grow our user base, which in turn may affect our advertising revenue. ”

Yuanguang also said that factors such as technological changes, changes in the regulatory environment or unforeseen events may also affect user engagement and traffic. "Any significant decline in user traffic or engagement could adversely affect our results of operations, financial condition and prospects."

Star Capital withdrew on the eve of listing

Since its establishment in 2010, Yuanguang Technology has received multiple rounds of financing. Tianyancha shows that in 2013~2019, Yuanguang Technology has received 6 rounds of financing, and the investment team behind it is also very luxurious, including Lei Jun, Alibaba, etc.

According to the prospectus, from March 2013 to May 2015, Yuanguang Technology carried out seed round financing, A round financing and A1 round financing. It is understood that after the completion of the A1 round of financing, the equity of Beijing Shunwei Venture Capital Co., Ltd. (hereinafter referred to as "Beijing Shunwei") is 11.97%. Wuhan Optics Valley Coffee Venture Capital Co., Ltd. (hereinafter referred to as "Optics Valley Venture Capital") has a 3% stake.

Tianyancha shows that Beijing Shunwei was established in May 2011, and Lei Jun holds 51% of the shares. Optics Valley Venture Capital was established in January 2013, with Beijing Shunwei, Li Ruxiong and Sichuan Langjiu Group Co., Ltd. holding 47.5%, 47.5% and 5% of the shares respectively.

In addition to Beijing Shunwei and Optics Valley Venture Capital, Alibaba (China) Network Technology Co., Ltd. also appeared in the list of shareholders after the A1 round of financing, and its controlling shareholder is Taobao (China) Software Co., Ltd.

After the Series B financing, Beijing Shunwei's overseas affiliate, Power Sailor Limited (hereinafter referred to as "Power Sailor"), holds a 14% stake in Yuanguang Technology. Alibaba Investments Co., Ltd. (hereinafter referred to as "Alibaba Investment") holds 13.70% of Series A preferred shares, 6.23% of Series A-1 preferred shares, and 4.33% of Series B preferred shares, and holds a total of 24.26% of the shares of Yuanguang Technology.

After the B1 round of financing, Power Sailor only holds 1.97% of the shares of Yuanguang Technology. Alibaba invested 10.99%, 5% and 3.48% in Series A, Series A-1 and Series B preferred shares, respectively, holding a total of 19.47% of the shares of Yuanguang Technology.

In May 2024, Yuanguang Technology completed the Series C financing of Silver Snake and Duan Sirui by way of subscription of new shares and transfer of shares of existing shareholders. It is reported that Power Sailor entered into an agreement with Garaitz Capital Pte. on April 29, 2024. Ltd. entered into an equity transfer agreement whereby Power Sailor transferred Series B seed preferred shares to Garaitz Capital for a consideration of US$1.721 million.

The transfer of Power Sailor's shares also means that Lei Jun completely withdrew from the ranks of shareholders on the eve of Yuanguang Technology's IPO. In fact, in addition to Lei Jun's exit, Alibaba Investment and Cheering Venture have also reduced some of their stakes in Yuanguang Technology.

Alibaba Investment and Cheering Venture entered into share repurchase agreements with Yuanguang Technology on December 4, 2023 and December 27, 2023, respectively. According to the relevant agreement, Yuanguang Technology repurchased 7,737,800 Series A preferred shares from Alibaba Investment for 15 million yuan, and repurchased 1,967,000 B1-4 round preferred shares from Cheering Venture for $1.67 million.

Real money buys back the shares held by Star Capital, which will undoubtedly exacerbate the cash flow pressure faced by Yuanguang Technology. According to the prospectus, as of March 31, 2024, Yuanguang Technology's cash and cash equivalents were 23.498 million yuan, and the total current assets were 152 million yuan. However, interest-bearing bank borrowings and other borrowings in the same period amounted to RMB40 million, and net current liabilities amounted to RMB358 million.

Regarding the company's future profitability, Yuanguang Technology said in the prospectus: "As we continue to grow our business in the face of increased competition, we cannot guarantee that we will be able to continue to achieve profitability in the future." Our ability to achieve profitability and maintain financial performance will depend on general factors affecting the public transport industry in China, as well as specific factors such as our ability to expand our user base and increase user engagement, our ability to expand our geographic reach, our ability to provide effective advertising services, our ability to diversify our monetization channels, our effective investment in technology infrastructure, and our ability to improve operational efficiency. ”

It is worth noting that in addition to the withdrawal of star capital, Shao Lingshuang, the founder of Yuanguang Technology, also withdrew from the company's management.

According to the prospectus, from February 2010 to December 2016, Shao Lingshuang served as the company's chief executive officer, director and legal representative. Shao Lingshuang and several employees of the company at the time (collectively referred to as the "defendants") were involved in criminal proceedings and were prosecuted for the crime of illegally obtaining computer information system data. The court held that the defendant used data scraping software to obtain the original data set containing information about the operation of the bus and the estimated time of arrival from a third-party server to improve the accuracy of the information displayed by the bus and sentenced the defendant to a suspended sentence. After the suspension was completed, the court announced that the original sentence of imprisonment would not be carried out against the defendant.

It is reported that Shao Lingshuang resigned as the company's chief executive officer and director and the chief executive officer and director of all major entities of the group after the case. On April 18, 2017, Shao Lingshuang signed a voting agreement to grant Sun Xi the voting rights of the entire 58.63% equity interest in WeBus Ltd., so Shao Lingshuang was unable to exercise her voting rights in Yuanguang Technology through WeBus Ltd.

In addition, in the prospectus, Yuanguang Technology also said that the company has been operating under the leadership of the board of directors and supported by the management team, and the company has a diversified shareholder base, in which shareholders holding preferred shares have been granted a series of protection clauses under the relevant investment agreement. According to the relevant agreements, the majority approval of such shareholders is required for major matters such as the election of directors, the appointment of chief executive officers, and the issuance or repurchase of shares. Taking into account the above circumstances, Yuanguang Technology believes that the Company operates independently of Shao Lingshuang and the case will not affect the Company's eligibility to the Stock Exchange.