SenseTime Group’s Revenue Growth Accelerates in 2021

Investment in R&D continued to lead the industry with comprehensive upgrade of commercialization capability

[Hong Kong, 25 March 2022] – SenseTime Group Inc. ("SenseTime", or the "Company", stock code: 0020) today announced its audited results for the year ending 31 December 2021 (“2021” and “the reporting period”).

In 2021, SenseTime continued to make cumulative investments in R&D and served a wide range of industries with its advanced and affordable AI technology. Fueled by China’s national mandate to accelerate AI infrastructure, and through our technology breakthroughs in making AI applications more accessible to all, the Company achieved satisfying results during the reporting period.

Business highlights in FY2021:

·         The growth of the Company’s revenue accelerated, increasing by 36.4% year-on-year to RMB4.70 billion.

·         Gross profit margin stood at 69.7%.

·         SenseTime continued to lead the industry in its R&D investment. R&D expense amounted to RMB3.06 billion[1], accounting for 65.1% of the revenue. The number of research personnel increased by 1,500 to 4,200 in 2021, representing 70% of the total number of the Company’s staff. As of the end of 2021, SenseTime had 11,494 global patent assets, an 96% increase compared to 2020, of which 78% were invention patents.

·         The Company’s financial position remained solid. The Company has ample cash reserves with a total balance of net cash[2] of RMB21.45 billion as at the end of 2021. The adjusted net loss for 2021 was RMB1.42 billion.

·         According to IDC and Frost & Sullivan reports, SenseTime ranks first in the market share of computer vision applications in China, a position which it has held for three consecutive years.

Dr. Xu Li, Co-Founder, Executive Chairman of the Board and Chief Executive Officer of SenseTime, said, “2021 was a major milestone for SenseTime. Our businesses recorded accelerated growth, with a series of breakthroughs in R&D to set a solid foundation for our future development. We believe that more world-class technology companies will emerge in China with the country's push for technological innovations. Through our mission to create a better AI-empowered future through innovation, we will continue to make AI technology more affordable to all industries and more accessible to people of all walks of life.”

Business Review

Proprietary universal AI infrastructure SenseCore to further strengthen economies of scale

·         With SenseCore, SenseTime has made the mass production, deployment and commercialization of algorithm models feasible, significantly reducing the production cost of AI. Its computing capacity is leading the world; by the end of 2021, the total computing power of the Company’s 23 supercomputing clusters was 1.17 exaflops.

·         By the end of 2021, SenseTime produced over 34,000 commercial models, an increase of 152% from the end of 2020.

·         SenseCore also enhanced the productivity of our R&D team, with the average number of AI models produced by R&D team members increasing by 72% compared to 2020 and by 13-fold compared to 2019.

Accelerate AI technology commercialization, maintain leading market position in four business segments

·         Stronger market penetration in Smart City: In 2021, in view of the development of urban governance modernization, the Company further increased its market penetration by facilitating the digitalization and innovation within cities. SenseFoundry has become the preferred platform for digital upgrading in many cities. As of the end of 2021, SenseFoundry was deployed in 140 cities, an increase of 49% compared to the end of 2020, including 15 mega cities with populations of over ten million such as Shanghai and Shenzhen. SenseTime ranks first by market share of computer vision software for smart cities in China. [3]

·         Robust growth in Smart Business: Our SenseFoundry-Enterprise platform is a key enabler of digital transformation, which has become a key strategy among many enterprises.  Its client portfolio has grown to a total number of 922 enterprises, including over 200 Fortune 500 and other publicly listed companies. Revenue per customer also increased by 21.3%. SenseTime ranked first by market share of computer vision software for enterprise applications in China.[3]

·         Smart Auto seizes the opportunity of change: Capitalizing on the broad market prospects arising from the development in the Smart Auto industry, the Company launched SenseAuto as our Smart Auto Platform to push forward full suite product commercialization in Advanced Driver Assistance Systems (ADAS), smart cabin, vehicle-to-road connect, L4-level autonomous driving and Robobus. During 2021, we signed contracts with over 30 automobile companies, including leading domestic and overseas brands. The Company has been selected as the supplier to pre-install ADAS and smart cabin products for more than 23 million automobiles across over 60 vehicle models in the next five years, which will bring us scalable business growth.

·         Strategic upgrade for Smart Life: SenseTime continued to transform its business model and convert to an “AI software embedded hardware” strategy in 2021. The Company, together with a leading global semiconductor company, successfully delivered four AI sensors in 2021, leading the way in AI image quality enhancement, lower power consumption, as well as stronger privacy protection when processing images and videos taken by smart phones. Our first core IP was adopted by a leading mobile phone manufacturer. Over 200 mobile applications and mobile games have adopted our SenseMARS platform to build Metaverse applications, and more than 60 shopping malls, museums and airports have developed AR interactive applications based on SenseMARS.

Strategic Outlook

SenseTime adheres to a constant strategy of leveraging our SenseCore AI infrastructure as the foundation to aggregate R&D investment, and support balanced development between smart business, smart city, smart life and smart auto. This has continuously improved the flywheel efficiency from data, AI models production, application scenarios to commercialization. In 2022, the Company will continue to increase our investment into SenseCore, building the most advanced AI modules in the industries we serve, by converting data power, optimizing production efficiency, reducing operating cost and increasing commercialization efficiency. Currently, AI is still in the early stages of adoption, and there are a large number of IoT devices deployed by cities, enterprises, and vehicles that are unconnected to AI. As the development of the digital economy infrastructure accelerates in China, AI technology is expected to penetrate at an increasing rate and create enormous growth opportunities.

In 2022, we plan to further open our SenseCore capabilities to the market. We expect significant market demand for AI computing services, as the digitalization of cities and enterprises expands, as well as the acceleration of Metaverse and autonomous driving applications.  In January 2022, our next generation AI Data Centre (AIDC) in Lingang, Shanghai was officially launched. With a designed computing capacity of 3.74 exaFLOPS, this computing infrastructure is expected to become one of Asia’s largest AIDCs. The AIDC was awarded the title of “Shanghai AI Integration and Empowerment Center” by the Shanghai Municipal Commission of Economy and Information Technology. It will provide AI-as-a-Service to a wide range of industries, scientific research institutions and city managers, and as a result improve AI productivity and penetration rate, thus accelerating the digital transformation of all industries.

In the first quarter of 2022, we upgraded our organizational structure, setting up the Intelligent Automotive Group. We will step up our efforts in the development of our Smart Auto business, stay committed to building SenseAuto as the most influential AI-empowering platform and leading the intelligent transformation of the automobile industry. We have also established the Digital World Group to fully integrate our advantages in AI perception, Augmented Reality (AR) and Mixed Reality (MR) technologies, computing power and customer ecology, aiming to build an industry-leading Metaverse-enabling platform. We will provide a number of key technological engines for the Digital World.

SenseTime strongly believes in the added value that AI development can bring to promoting a digital age defined by inclusiveness and equality. As a leading AI company in China, SenseTime strives to pioneer the development of AI and fulfill the mission of “to create a better AI-empowered future through innovation”.

[1] Excluding share-based compensation expenses.

[2] Net Cash = Cash and cash equivalents + Term deposits + Structured deposits + Restricted cash - Total borrowings

[3] According to Frost & Sullivan’s report listed in the Group’s public offering documents