Cloudwalk Technology passed IPO deliberation

The Shanghai Stock Exchange has accepted the IPO application of Cloudwalk, a domestic AI enterprise.

Cloudwalk seeks to raise 3.75 billion yuan in an IPO, 813 million of which will be used for its man-machine collaborative operating system upgrade project, 831 million for a canoe system project, and 1.412 billion for an artificial intelligence project. A further 693 million yuan will be used to supplement liquidity.

Cloudwalk was founded in 2015. Zhou Xi, the founder of the firm, once studied under Professor Huang Xutao and worked in many famous research institutions such as IBM TJ Watson Research Institute, Research Institute of Microsoft Headquarters in Seattle and NEC California Research Institute.

Cloudwalk has completed five rounds of financing since its establishment. At present, the company has 57 shareholders, with 3.3 billion yuan in financing. Zhou Xi is its largest shareholder and actual boss, holding 23% of shares through Cloudwalk (Changzhou). Other four state-owned shareholders are Nansha Financial Holding, Reform Holdings, Shanghai Atlas Capital and Guangdong Venture Capital.

Cloudwalk has got several government-level projects in Guangzhou and Chongqing, and its main clients include large state-owned banks such as BOC, ABC, CCB and BCM, important airports and civil aviation enterprises such as China Eastern Airlines and Baiyun International Airport, and public security departments in provinces and cities across the country.

According to its prospectus, Cloudwalk’s revenues in 2018, 2019 and 2020 were 484 million yuan, 807 million yuan and 755 million yuan respectively. Net losses were 200 million yuan, 1.763 billion yuan and 720 million yuan over the same period of time.

The main source of spending is research and development. R&D investments of 148 million yuan, 454 million yuan and 578 million yuan were made in 2018, 2019 and 2020, accounting for 30.61%, 56.25% and 76.59% of the total investments. The proportion of total investments and R&D expenses increased year by year.

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Investor risk caused by continued losses seems to be the biggest concern of Shanghai Stock Exchange for the listing of AI enterprises. In the two rounds of inquiries before the deliberation meeting, attention was also paid to the expected continuous losses the company.