Horizon Robotics IPO is imminent: Former Baidu executives' startup with a valuation of 60 billion RMB after seven years, with a loss of 6.7 billion RMB in 2023

In the current booming development of autonomous driving technology, a company founded by former Baidu executives is attracting high attention from the capital market. Recently, the China Securities Regulatory Commission announced the overseas issuance and listing filing notice of Horizon Robotics, with plans to issue no more than 1.154 billion shares of overseas listed common stock and list on the Hong Kong Stock Exchange. This means that this company, founded only seven years ago with a valuation of over 60 billion yuan, is about to ring the bell for its listing on the Hong Kong Stock Exchange. However, behind the dazzling halo, Horizon Robotics also faces the challenge of huge losses. Baidu lineage blessing, the rise of Horizon Robotics The founding team of Horizon Robotics can be described as luxurious. In 2015, at the beginning of the artificial intelligence wave, Yu Kaimin keenly sensed the business opportunity of autonomous driving. He resolutely resigned from his position as Vice President of Baidu Research Institute, and together with Huang Chang, Tao Feiwen, and other former Baidu executives, founded Horizon Robotics, embarking on a "dream of making cars." Yu Kai has 25 years of experience in computer engineering, having held key R&D positions in Germany and the United States, and serving as a part-time teacher in the Computer Science Department at Stanford University. Huang Chang is a top researcher in the field of computer engineering, having served as Chief R&D Architect at Baidu. Tao Feiwen has rich experience in operations and management, having worked at Google and BaiduUSA LLC. This golden team targeted the field of edge AI chips and launched the first generation of intelligent computing architecture, BPU (Brain Processing Unit), in 2016. Subsequently, the continuous iteration of the Journey series of chips has continuously refreshed performance records, winning market reputation. Today, Horizon Robotics' Advanced Driver Assistance Systems (ADAS) and Autonomous Driving (AD) solutions have become the common choice of mainstream domestic automakers, widely used in over 230 models. According to the prospectus data, Horizon Robotics' market share in installed capacity in 2023 reached 21.3%, with an annual growth rate of up to 17.6%. This leap not only makes it the largest ADAS solution provider in China, but also places it among the top five suppliers globally. It is worth mentioning that Horizon Robotics is the only Chinese company to enter the top five global suppliers of ADAS and AD solutions. Capital favor, luxurious shareholder lineup supporting development Since its inception, Horizon Robotics has attracted the attention of many well-known investment institutions. In this capital feast, top investment institutions such as Hillhouse Capital, CICC, and Sequoia Capital have entered the game, while automotive industry giants such as China FAW Group, GAC Capital, Great Wall Motors, Dongfeng Asset, and BYD have also provided capital support. Horizon Robotics has completed multiple rounds of financing, with a total financing amount of 2.363 billion US dollars. The post-investment valuation of the latest round of financing is as high as 8.7 billion US dollars, equivalent to 62.3 billion yuan. This valuation not only places Horizon Robotics among the largest autonomous driving companies in China, but also highlights its leading position in the industry and the high expectations the market has for its future development. The reason why Horizon Robotics is able to attract many well-known investment institutions is multifaceted. Firstly, the Baidu background of founder Yu Kai and other executives has earned the trust of investment institutions Next, Horizon Robotics' research and innovation capabilities in the field of intelligent driving chips are key factors attracting investment. In addition, the huge potential of the autonomous driving market is also an important reason why investment institutions are optimistic about Horizon Robotics. Coexistence of Revenue and Loss, the Cost Behind Technological Innovation Horizon Robotics has seen rapid revenue growth, but the losses are equally staggering. According to the prospectus data, Horizon Robotics' revenue has experienced significant growth over the past few years. From 2021 to 2023, the revenue was 467 million yuan, 906 million yuan, and 1.552 billion yuan respectively, with a compound annual growth rate as high as 82.3%. Behind this growth is Horizon Robotics' continuous deepening in automotive solutions, including chips, software algorithms, and the rapid rise of licensing services. Especially in 2023, the revenue from licensing services has accounted for the majority of total revenue, exceeding 60% at 964 million yuan. This shift not only marks the company's transformation from hardware to providing comprehensive solutions but also demonstrates that software revenue is beginning to surpass hardware. However, the growth in revenue has not translated into profit growth. On the contrary, Horizon Robotics' losses have been expanding. From 2021 to 2023, the net losses were 2.064 billion yuan, 8.72 billion yuan, and 6.739 billion yuan respectively; even after adjusting for losses, the total accumulated losses over three years exceeded 4.6 billion yuan. Horizon Robotics explained that the reasons for the losses are due to significant early-stage investments, economies of scale not yet materializing, and persistently high R&D costs. In these years, R&D expenses accounted for 245%, 207.6%, and 152.5% of revenue respectively, with the total R&D investment over three years being more than double the revenue. The coexistence of revenue growth and losses at Horizon Robotics is actually a microcosm of the rapid development of the autonomous driving industry. This field is highly competitive, with rapid technological advancements and high market demand, but it also requires massive capital investment to support research and market promotion. As Horizon Robotics' IPO approaches, the market is full of expectations for its performance. However, how to achieve profitability while maintaining technological innovation and market expansion will be the biggest challenge facing Horizon Robotics in the future