Metaverse Startup Flowing Cloud Lists in Hong Kong, Flat R&D Investment Raises Concern - Pandaily

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AR and VR services supplier Flowing Cloud was officially listed connected the Hong Kong Stock Exchange connected October 18 arsenic its archetypal metaverse-related stock, with an opening terms of HK$2.21 ($0.28) per share, adjacent to the contented price. However, shares past saw a 2.36% autumn to HK$2.07 connected October 19, resulting successful a full marketplace worth of astir HK$3.747 billion.

Flowing Cloud’s prospectus is alternatively striking, arsenic it mentions “metaverse” much than 300 times. Founded successful 2008, Zhangzhong Feitian Technology, the predecessor of Flowing Cloud, was listed connected the National Equities Exchange and Quotation (NEEQ) successful 2017. It was aimed astatine the mobile crippled market, past gradually turned to AR and VR, withdrawing from the NEEQ successful 2019. In 2021, erstwhile the metaverse conception abruptly became a hit, the institution built a caller level and successful November changed its sanction to Flowing Cloud, announcing its strategical layout successful the metaverse field.

AR and VR devices, arsenic front-end entrances to the metaverse, are afloat of imaginable again. Flowing Cloud stated successful its prospectus that AR and VR are the cardinal applications to execute and empower the immersive acquisition of the metaverse, and that they are the prerequisites and introduction thresholds for its improvement stage.

Therefore, AR and VR selling services person present go the astir important root of income for Flowing Cloud. According to information from iiMedia Research, Flowing Cloud ranks archetypal successful the AR/VR contented and services marketplace successful presumption of revenue, accounting for a 2.6% full marketplace stock successful 2021.

From 2019 to 2021, its AR/VR selling services concern achieved revenues of 137 cardinal yuan ($18.9 million), 142 cardinal yuan and 376 cardinal yuan respectively, accounting for 54.6%, 41.9% and 63.2% of its existent revenue. In addition, AR/VR contented concern achieved revenues of 45 cardinal yuan, 115 cardinal yuan and 161 cardinal yuan, accounting for 18.1%, 33.9% and 27.1% of the existent revenue. In summation to the supra business, the institution besides provides AR/VR SaaS and IP business.

Financial information amusement that from 2019 to 2021, Flowing Cloud’s gross was 250 cardinal yuan, 339 cardinal yuan and 595 cardinal yuan respectively, and its nett net accrued year-on-year. In the archetypal 4th of 2022, the company’s nett net was 40.2 cardinal yuan, up 316% year-on-year, of which the gross nett borderline of AR/VR contented accumulation concern reached 55.3%.
Its awesome show has attracted respective cardinal investors for Flowing Cloud. Through its caller listing, Flowing Cloud introduced cornerstone investors specified arsenic Anji State-Owned Assets Management, Qicai Lingfeng and SenseTime. The 3 parties subscribed to the offering shares of Flowing Cloud of astir 167 cardinal yuan successful total.

However, stagnant R&D concern that does not lucifer income maturation has caused Flowing Cloud to beryllium called into question. In 2019, 2020, 2021 and the archetypal 4th this year, the R&D expenditure of Flowing Cloud was 11.425 cardinal yuan, 15.046 cardinal yuan, 21.703 cardinal yuan and 8.152 cardinal yuan respectively, accounting for lone 4.6%, 4.4%, 3.6% and 3.6% of the full gross successful the aforesaid period, showing a decreased trend.

In its prospectus, the institution stated that the underlying exertion is its halfway competence, and successful the past, the institution subcontracted non-core exertion improvement and interactive contented modules to 3rd parties. Its R&D squad has 59 full-time employees, including 28 engineers and 21 designers, accounting for astir 43.1% of each employees.

Although Flowing Cloud seems to beryllium oriented squarely wrong the metaverse tract aft a sanction change, galore person doubted the grade to which metaverse represents its halfway business. Investors noticed galore expectations and goals alternatively than existent achievements successful the firm’s prospectus. Thus, determination is inactive a agelong mode to spell from conception to application.

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