SenseTime Announces 2023 Annual Results Generative AI Business Experiences Significant Growth Capitalizing on Advancements in the AI 2.0 Era

Hong Kong, March 26, 2024 ─ SenseTime Group Inc. (“SenseTime Group” or the “Company”), a leading global artificial intelligence (AI) software company, today announced its audited results for the year ending December 31, 2023.

Following the Company’s restructuring in 2023, SenseTime has identified three core business segments: Generative AI, Traditional AI and Smart Auto. The Company has placed a strong focus on developing the Generative AI business while also ensuring that the Traditional AI and the Smart Auto business segments remain competitive.

With the Generative AI business achieving revenue of RMB 1.2 billion, this is the fastest-growing new business segment for the Company in its 10 year history, surpassing revenue of over one billion RMB. The SenseCore AI infrastructure experienced a remarkable breakthrough, reaching a computing milestone of 12,000 petaFLOPS, with 45,000 GPUs in operation. This advancement enabled a rapid iteration of the SenseNova Large Model Series to version 4.0, which achieved performance parity with GPT-4 in various scenarios.

Conventional applications from the Traditional AI business have enabled the Company to accumulate a wealth of customer insights and experience, which laid the foundation for the commercialization of generative AI technologies. In the SenseAuto business, both the SenseAuto Pilot and SenseAuto Cabin sectors achieved consistent growth, with a significant increase in the number of units delivered and improved profit margins.

Dr. Xu Li, Executive Chairman of the Board and Chief Executive Officer of SenseTime Group, said, “SenseTime’s Generative AI business achieved a significant year-on-year growth of 200%, accounting for over 35% of the total revenue. The Generative AI business has become more than just a revolutionary technological innovation, it has emerged as the core business segment of SenseTime. This growth is driven primarily by the increasing demand for large model training and inference across a wide range of industries. We are on the precipice of a new investment cycle in China's burgeoning deep technology sector. By seamlessly integrating generative AI capabilities across our various business segments, we are not only successfully attracting new customers but also making significant strides in improving overall efficiency and productivity.”

Core Business Highlights in FY2023:

Ÿ   SenseNova Large Model has experienced significant performance improvements, enabling the training of large models with tens of thousands of GPUs and trillion parameters. It has achieved a leading position in China across multiple domains, encompassing base models, multimodal capabilities, programming and tool utilization, lossless context with millions of tokens, and the development of small models for smart devices.

Ÿ   SenseNova 4.0 has achieved performance parity with GPT-4 in code writing, data analysis, and medical Q&As. Additionally, the Company has made the 7B and 20B base models available as open source, which outperformed Llama2 and Gemma.

Ÿ   The Company has built industry-leading small models for end devices that provide performance comparable to large models, thereby advancing edge computing.

Ÿ   The Company’s AI programming assistant, “Racoon” and data analysis tool, “Office Racoon” have greatly improved the programming efficiency of developers and boosted the productivity of office workers.

Ÿ   The Company has made substantial investments in utilizing thousands of computing power to train the top image generation model in China.

Ÿ   The Company introduced the innovative “Model as a Service” (MaaS) business framework, which has successfully attracted a significant number of new customers. Under this framework, customers are able to make adjustments and harness various generative AI capabilities on SenseTime’s AI infrastructure.  

Ÿ   The SenseAuto business achieved consistent growth, generating a revenue of RMB 384 million, which is a 31% year-on-year growth.

Ÿ   Overall revenue remained stable at RMB 3.4 billion, reflecting a decline of 11%. year-on-year. This decline can be attributed to the strategic reduction in reliance of the Smart City business by the Company. In 2022, Smart City revenue comprised approximately 30% of the total revenue, but it has since reduced to less than 10% in 2023. The gross profit stood at RMB 1.5 billion, with a gross profit margin of 44%.

Ÿ   The Company received payments totaling 3.9 billion, marking a 49% year-on-year increase.

Ÿ   BITDA (losses) was RMB 5.4 billion, a 2% reduction year-on-year.

In 2023, SenseTime achieved significant progress, transitioning from AI 1.0 era to the AI 2.0 era. The growth of the Company’s Generative AI business is attributable to the following key advantages:

Ÿ   Deep expertise in perception and decision intelligence gained in AI 1.0 era: SenseTime’s decade-long experience in perception and decision intelligence, coupled with a substantial repository of multimodal data, has bolstered the Company’s foundational models’ understanding of the physical world and their ability to handle multiple modalities.

Ÿ   Deep synergy between AI infrastructure and large models: Supported by ten thousand GPUs and guided by the Scaling Law, large model continues to improve upon its performance. Additionally, the profound understanding gained from large model research and development empowers the Company to design AI infrastructure with a forward-looking approach, resulting in industry-leading computational efficiency and scalability.

Ÿ   Experience in edge deployment: Since 2015, the Company has been collaborating with global Android smartphone manufacturers and leading automobile companies, and empowered over 2 billion smartphones and millions of cars while optimizing edge-side inference. The company has successfully launched edge-side small models that lead the industry in terms of performance and inference speed, unlocking new application scenarios.

Ÿ  Proven ability in AI deployment: SenseTime has a robust system and the necessary capabilities to cater to enterprise customers. This empowers the Company to promptly address their customers’ needs and to provide highly cost-effective generative AI solutions.

Strategic Outlook: Propelling revenue growth of core business

To ensure the Company maintains a leading position in the AI 2.0 era and achieves long-term leapfrog development, SenseTime is committed to adopting a steady and forward-looking strategy in 2024.

Ÿ  Maintaining leading edge in technology: The Company will continue to capitalize on the huge collaboration advantages offered by “AI Infrastructure + Large Models,” expand the computing power resources, and strengthen the service capabilities of AI Infrastructure and large models. The Company will also continue to iterate the capability of SenseNova Large Models to maintain its leading position in the industry. Additionally, the Company will upgrade the inferencing efficiency of large models based on “Moore’s Law” to reduce the model inferencing costs, thereby broadening the scope of future applications.

Ÿ    Driving business growth: The Company will accelerate the commercialization and market penetration of generative AI, and provide customers with generative AI solutions at the best value. At the same time, the Company will maintain the steady growth of the Traditional AI business to improve cash flow.

Ÿ   Profitability for the core business:  The Company will continue to optimize the overall operating efficiency by allocating resources on the Generative AI business to improve cash flow and reduce losses.

Summary for Business Reviews

The Generative AI business achieved a revenue of RMB 1.2 billion, further solidifying the Company’s leading position in large model technical capabilities and commercialization.

The Generative AI business is the fastest-growing new business for the Company since its establishment a decade ago, surpassing revenue volume of over one billion RMB. The SenseNova Large Model was among the first of eight large models in China to be registered under the Interim Measures for the Management of Generative Artificial Intelligence Services. This allowed the Company to make the model available to both public and corporate customers. In the past 12 months, over 70% of these users are new customer acquisitions. The order amounts from dozens of customers exceed tens of millions of RMB, and the C-end usage of large models has witnessed nearly 120-fold growth in the past 6 months. Key customers include the three major telecom operators in China, financial institutions such as China Merchants Bank and Haitong Securities, leading internet companies such as JD.com, Xiaomi, and China Literature, startups like HiDream.ai and LanZhou Technology, and academic institutions such as Tsinghua University and Shanghai Jiao Tong University.

SenseCore AI Infrastructure stands at the forefront of training large models in China. In 2023, it achieved production support for trillion-parameter large models and maintains a leading position in terms of scale, acceleration efficiency, stability, and optimized inference services.

SenseNova Large Model capabilities upgrade: The SenseNova Large Model undergoes major upgrades every three months. SenseNova 4.0 was released in February 2024, achieving performance parity with GPT-4 in code writing, data analysis, and medical Q&As. SenseNova 5.0, set to be unveiled in April 2024, will further enhance its performance to reach parity with GPT4-Turbo. The Company has built industry-leading small models for end devices – including language models and text-to-image models –  to run on laptops and mobile devices. The Company’s AI programming assistant, “Racoon” and data analysis tool, “Office Racoon”, are leading the industry in terms of capabilities and have been widely adopted by prominent clients. "SenseMirage 4.0" has since established itself as the most user-friendly image generation product in China.

Commercial application of SenseNova Large Model Series: SenseNova Large Model Series has established a leading position in key industries through its proven tracked record, including finance, healthcare, Copilot assistant, anthropomorphic interaction, and smart devices. Its key customers include financial industry giants such as Bank of China, China Merchants Bank and Industrial and Commercial Bank of China. SenseNova’s “SenseChat-DaYi” model is equipped with strong multi-modal capabilities and empowers medical institutions such as Xinhua Hospital, Ruijin Hospital and First Affiliated Hospital of Zhengzhou University, significantly improving the quality and efficiency of healthcare services. In the field of the enterprise Copilot assistant, the Company’s solution has also been adopted by Kingsoft Office. Leveraging years of experience in smart devices, SenseTime has developed industry-leading small models of various specifications and established partnerships with smartphone brands such as Xiaomi and Honor.

The cumulative customer resources and experience in efficiency enhancement of the Traditional AI business are projected to strengthen the foundation for the commercialization of Generative AI business.  Smart City’s share of the Group revenue retreated to within 10% in 2023, reflecting a drop in the Group’s reliance on the contribution from this business segment. For the Smart Device business, the cumulative number of mobile phones empowered by the Company’s technologies have surpassed two billion sets, providing a tremendous growth trajectory for the Company’s on-device Generative AI business.

In the SenseAuto business, both SenseAuto Pilot and SenseAuto Cabin sectors realized continuous growth in 2023, contributing to gains in the number of delivered product and profit margins. The number of units delivered increased by 1.29 million, up 163% year-on-year. The Company delivered a cumulative of 1.95 million Smart Cabin units which encompasses over 90 car models, further solidifying the Company’s leading position in the commercialization of volume production. In addition, the Company received new orders of more than 16 million units and expanded to 41 new car models.

Environmental, Social and Governance

SenseTime is dedicated to providing responsible products and services to customers by offering AI technology that is compliant to ethical standards. During the reporting period, the Company launched “Sense Trust”, an AI Governance Infrastructure that aims to promote the reliability and trustworthiness of large model development, training and its applications. Moreover, the Company partnered with China Academy of Information and Communications Technology in releasing the “Research Report on Large Models Trustworthiness”, which provided strategic direction on the reliability of AI large models and a framework for the for systematic management of AI-related risk controls.

Meanwhile, SenseTime continues to strive for carbon neutrality goals of achieving carbon peak by 2025, striving for operational carbon neutrality by 2030, and achieving net-zero emissions by 2050. During the reporting period, SenseTime’s Artificial Intelligence Data Centre (AIDC), located at Lingang, Shanghai, successfully achieved an annual average power usage efficiency (PUE) of less than 1.3, surpassing the industry average.