SenseTime, one of China's artificial intelligence (AI) pioneers, aims to turn a profit within the next two years after revenue from its generative AI business tripled last year, hopeful it will become a new revenue stream for the company, said CEO and co-founder Xu Li.
Hong Kong-listed SenseTime said in its latest annual financial report that revenue from its generative AI-related business in 2023 will reach 1.184 billion yuan (US$163.4 million), up 199.9% from the previous year.
Amid an explosion of LLM projects in China since Microsoft-backed OpenAI introduced innovative generative AI tools such as ChatGPT and more recently text-to-video conversion service Sora, SenseTime unveiled its homegrown large-scale language model (LLM) SenseNova in April last year.
“We have set a target of 100 percent growth in our generative AI business this year,” Xu told the South China Morning Post in an exclusive interview on Tuesday.
“But our generative AI business is a fast-growing field, so I think the actual growth could be even higher,” Xu said, adding that the company was exploring potential business models as many consumer-facing generative AI applications were still in the investment stage last year.
SenseTime's stock price soared more than 30% on April 24th when the company released its latest version, SenseNova 5.0. The company said the model is comparable to OpenAI's GPT-Turbo model. The company's generative AI business has become one of its core businesses, accounting for 34.8% of its total revenue.
The company's generative AI business performed well last year but is not yet profitable.
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SenseTime CEO predicts Hong Kong-listed company will be profitable within two years with generative AI business
SenseTime CEO predicts Hong Kong-listed company will be profitable within two years with generative AI business
The 10-year-old AI company, founded in Hong Kong, reported a 10.6% drop in total revenue to 3.4 billion yuan last year and posted a loss of 6.49 billion yuan for 2023, its third consecutive year of losses since it listed in Hong Kong in 2021.
“This is an inevitable stage in the cycle,” Xu said, noting that many tech startups have experienced long periods of losses due to heavy investments in research and development and are trying to figure out how to commercialize and mass-produce their products.
He predicted the generative AI business would be profitable within a year or two.SenseTime's shares rose 5 percent to HK$1.37 on Wednesday, trading well below its IPO price of HK$5.50 (US$0.70), even as the Hang Seng Index fell 1.8 percent.
“The stock price may not reflect the public's perception of SenseTime as there are many factors that affect the stock price,” Xu said.
The company, known for its advanced facial recognition technology, was placed on Washington's Entity List in 2019 and subjected to a U.S. investment ban in 2021 as part of broader sanctions targeting Chinese tech companies over national security and human rights concerns. The Entity List sanctions limited SenseTime's access to advanced U.S. technology, and a U.S. investment ban on the company initially delayed plans for an IPO.
Amid ongoing restrictions, SenseTime has been exploring opportunities outside of its traditional AI business, such as smart city and smart business solutions. In the consumer sector, it has developed a chess-playing robot for family entertainment.
Xu said the company has developed a Model-as-a-Service (MaaS) business model to provide enterprise customers with generative AI applications without the need to build and manage the underlying infrastructure.
According to Xu, the MaaS business focuses on customizing the company's LLM for vertical industries, serving small and medium-sized business owners who want to adopt cost-effective AI applications.
SenseTime's generative AI services have been deployed in a variety of sectors, from telecommunications to financial institutions, with clients including China Merchants Bank, Haitong Securities and China Telecom.
“We see an opportunity in terms of SenseTime’s LLM infrastructure capabilities and industry customization. [in future years] “Our goal is to become an AI infrastructure platform and find one or two profitable verticals,” Xu said.
Tang served as a member of the Hong Kong Chief Executive Advisory Committee (CECA), which was established in March 2023. At the time of his death, he was praised by the government for providing “valuable advice in the areas of innovation and entrepreneurship”.
