Recently, Starlink Technology (688031.SH), a leading domestic big data company, released its 2023 financial report. The report shows that in 2023, Starlink Technology's total revenue reached 490 million yuan, up 31.7% year on year; in the first quarter of 2024, the company's revenue reached 63 million yuan, and the year-on-year growth rate was as high as 46.00%.
As the company's revenue grew, the scale effect gradually became apparent. Coupled with the continuous improvement in the level of product standardization, Starlink Technology's gross margin also showed a steady upward trend. In 2023, the company's gross margin increased to 59.6%, an increase of 3.1 percentage points over the same period last year. It is particularly worth mentioning that in the first quarter of 2024, gross margin rose significantly to 69.3%, a sharp increase of 17.7 percentage points over last year.
Judging from absolute values, these numbers are unquestionably impressive. However, to fully evaluate and analyze the significance of these data, we need to conduct more in-depth quantitative analysis and comparison.
Back to a high growth trajectory
The quality of the data often requires comparison to be more clearly reflected. In financial analysis, comparisons can be vertical or horizontal.
From a horizontal comparison perspective, the company achieved a revenue growth rate of 31.7% in 2023, and this growth rate hit a new high in the past three years. Furthermore, this growth rate has reached the company's high historical growth rate. From 2018 to 2022, the company's revenue grew from 113 million yuan to 373 million yuan, and the four-year compound annual growth rate (CAGR) reached 34.8%. As a result, the Guangfa Securities Research Institute sharply assessed that the company's revenue has returned to a high growth trajectory.
Furthermore, Starlink Technology's achievements are not only good in the company's own historical development, but also remarkable even in the computer sector as a whole.
As of the morning of April 29, 2024, 329 A-share Shenwan computer sector companies had released their annual reports. According to the author's statistics, the median year-on-year revenue growth rate of these companies was only 3.39%, while Starlink Technology's growth rate was nearly ten times that median. It is worth noting that the third quartile growth rate is 17.26%; reaching a growth rate of 26.68% is enough for the company to rank in the top 10% of the industry, while Starlink Technology's 31.7% growth rate is undoubtedly at the leading level.
The first quarter earnings data will be further analyzed. Starlink Technology's revenue growth rate was 46.0%. Using 301 Shenwan computer sector companies that have published annual reports as the data pool, the third quartile's revenue growth rate is 17.26%, which means that the growth rate of Starlink Technology is more than double that of three-quarters of companies, while the 37.40% growth rate is enough for more than 90% of companies, which means that Starlink Technology's quarterly report performance is also at the top of the sector. In the A-share market, there is a common opinion that companies that are willing to voluntarily publish quarterly reports tend to perform better, because this usually indicates confidence in their performance. If this statement holds true, then Star Ring Technology can be called the best among the “good students” who take the initiative to publish a quarterly report.
Major brokerage firms are also quite optimistic about future performance expectations, and believe that this growth trend is expected to continue. In addition, Starlink Technology also launched the 2023 Restricted Stock Incentive Plan, which not only had a positive effect on the company's internal momentum, but also provided an important reference for external investors to evaluate the company's future performance. According to the stock incentive plan issued by the company, the revenue growth rate targets for 2024 to 2026 are not less than 125%, 200%, and 260%, respectively, and the corresponding revenue targets are 740 million, 990 million, and 1.19 billion yuan, respectively. These goals show the company's strong confidence in revenue growth over the next few years.
Whether it's the performance potential that has already been realized, future predictions given by brokerage analysts, or the target incentives of Star Ring Technology, these bright data references are just “tables.” If you look at the report from the table and back, behind the return of revenue to a high growth trajectory, it is Starlink Technology's continuous R&D investment in the fields of big data and cloud infrastructure, distributed relational databases, data development and intelligent analysis tools, and innovative results. The company also closely grasps industry trends, actively embraces new opportunities brought by artificial intelligence technology represented by ChatGPT, continuously launches new products, strengthens technology and product innovation, and enhances industry influence.
Actively embrace AI and big model opportunities
The company is an early domestic company focusing on the development of basic software for big data. The self-developed big data basic platform, distributed analytical database, etc. have reached the advanced level of the industry. The company's deep technical accumulation has provided it with a solid foundation for further expanding the field of AI products and services.
During the reporting period, Starlink Technology actively embraced industry changes, responded to the three major trends in AI development, launched a variety of innovative products to meet market demand, and provide a solid technological foundation for new technology in the industry.
In response to the trend of large models becoming the basic capabilities of enterprises, the company launched the Sophon LLMOps tool chain, which aims to help enterprises build and manage their own big models, thereby quickly building business applications and assisting in various aspects such as marketing and management decisions. Second, in order to meet the need to “shorten the link from data to decision making” and make AI analysis more popular, the company developed the vector database Hippo. This product can efficiently store, index and manage vector data sets, expand the time and space dimensions of large models, and allow more people to enjoy the convenience brought by AI. Furthermore, in response to the development trend of multi-modal large-scale models, the company launched innovative products such as “Infinity”, an enterprise-level vertical question-and-answer model, and “Search”, a large data analysis model derived from it.
“Lifetime” and “Quest” have both been registered through the China Internet Information Office's deep synthesis service algorithm, and “Lifetime” has been registered through the State Internet Information Office's generative artificial intelligence service. According to financial reports, “Infinity” can currently provide digital assistance to the financial industry, legal industry, etc., and is continuously expanding its field of expertise to cover more diverse industry needs; while the big model “search” in the field of big data allows non-professional users to freely search data as needed through natural language without learning and mastering database programming languages. These two major models will help more industry customers achieve digital and intelligent transformation and upgrading in the future.
Starlink Technology's rich AI Infra basic software product matrix and more convenient and efficient AI solutions are being recognized by the market. Although many products have been launched for less than three quarters by the end of 2023, they have begun to realize their performance potential. According to the annual report, by the end of the reporting period, AI Infra-related products provided by the company had achieved successful commercial implementation in various industries such as finance, government, energy, telecommunications, construction and real estate, and manufacturing; market feedback was positive, and related orders exceeded 54 million yuan. The Guangfa Securities Research Institute said in a research report that it is optimistic that the launch of products related to the Al model will bring upward elasticity to the company's revenue in 2024.
Continue to consolidate core competitiveness
In addition to making significant progress in the field of artificial intelligence, the company also continued to consolidate its advantages in big data and cloud-based platforms, distributed relational databases, data development and intelligent analysis tools during the reporting period. Through a series of technological breakthroughs and product upgrades, the company continues to lead the technological development of the industry.
The company released TDH9.3, a new version of TDH, a basic platform for big data, and introduced a new generation of integrated storage formats for data lakes, data warehouses, and data marts. The TDH9.3 version is iteratively upgraded on a multi-model unified architecture and supports 11 models of unified data storage and management, which not only improves data processing efficiency, but also provides users with more flexible data management methods. At the same time, the data cloud platform TDC also launched a new version, which realized resource pooling, improved the flexibility and utilization rate of resource scheduling, and met the needs of multiple tenants. It is worth mentioning that in December 2023, the company's big data infrastructure platform TDHv9.1 also passed the official audit of the TPCX-BBSF3,000 benchmark, ranking first in the world in performance.
In the field of distributed relational databases, Starlink Technology has also made breakthrough progress. The new version of the distributed analytical database ArgoDB enhances real-time analysis capabilities, making ArgoDB capable of replacing similar foreign products such as Oracle, DB2, Teradata, and SAPHANA in batch processing, OLAP, and Ad hoc analysis scenarios. Another distributed transactional database, KunDB, has also been upgraded to improve high availability and cross-data center disaster recovery capabilities based on the Paxos consensus algorithm, enhance compatibility with Oracle, and make it more competitive in the market.
The innovation of data development and intelligent analysis tools is another major highlight of Starlink Technology. In 2023, the company launched and iterated on a variety of products, including Navier, a data element circulation product, and Defensor, a data security protection tool.
In addition to “cultivating internal skills” and enhancing core competitiveness, Starlink Technology is also actively strengthening market development and ecological construction externally.The company has detailed a partner architecture system and formulated differentiated cooperation strategies and methods for different types of partners (such as industry ISVs, CPU vendors, hardware vendors, operating system/cloud and general software vendors, regional distributors, etc.). Through this strategy, the company has successfully developed dozens of ISVs and regional distributors in finance, education, transportation, healthcare, energy, government and other industries. At the same time, Starlink Technology has carried out in-depth product level adaptations with major software and hardware manufacturers such as Huawei Kunpeng, Feiteng, Longxin, Tongxin, Kirin, Shuguang, and Lanqi, further strengthening ecological construction and establishing better external conditions and ecosystems for the company's development.
Better products and better ecology naturally attract more and better incremental customers, as well as more persistent customers. According to the annual report, the number of customers that confirmed revenue in 2023 was 578, up 12.5% year on year; revenue from repurchases from the company's old customers accounted for about 71.12% of the company's main business revenue, compared to 68.1% in 2022; the number of high-value customers with confirmed revenue greater than 1 million yuan increased 32.67% year on year. This fully proves that Starlink Technology's products and services are more widely recognized and trusted in the market.
epilogue
Looking forward to the future, the Zhongtai Securities Research Institute believes that Xinchuang needs to be launched urgently, and that Starlink Technology is on the database track and is expected to benefit.
Looking at it from the top, the “Digital China Development Report (2022)”, the “14th Five-Year Plan”, the “14th Five-Year Plan”, the “14th Five-Year Plan”, the “Interim Provisions on Accounting Processing Related to Enterprise Data Resources”... From top-level design to implementation rules, a series of policies have been introduced to encourage and support the development of the digital economy, the data factor market, and domestic software and hardware.
Looking from the bottom up, as domestic governments and enterprises pay more attention to data and information security, domestic software products are being replaced in key areas. Among them, databases are a key link in the field of basic software and are expected to usher in a golden period of development.
The company is one of the scarce domestic big data representative enterprises. It has a high level of technical self-research capabilities, which meets China's current “domestic autonomous and controllable” needs. Taking the core product TDH, the basic platform for big data, as an example, core technologies such as distributed SQL compilers, computing engines, storage engines, distributed data management systems, and resource schedulers have been independently developed. Starlink Technology's big data infrastructure platform has developed core components from the bottom up, gradually breaking free from the constraints of foreign open source big data frameworks.
This advantage enables the company to fully benefit from the policy trend. For example, in March 2021, in a highest-level project in the field of government procurement, Starlink Technology passed high-level assessment standards, and KundB and ArgoDB were selected as transactional and analytical database management system vendors respectively. Furthermore, the company's distributed transactional database KundB became the only domestic database product in the first batch of “software self-development and innovation capabilities” special evaluations by the Chinese Academy of Information and Communications Technology to pass this special evaluation.
At the beginning of the listing, if the company were compared to Oracle in China, it might be thought that it was blindly advocated and trusteed. However, as of today, according to information disclosed by the company, this analogy is not entirely empty talk. Simply put, with its self-developed core technology and products, and advantages such as meeting domestic autonomous and controllable requirements, the company is expected to usher in new development opportunities in the wave of the credit innovation industry. In the future, companies like Xinghuan Technology will continue to shine on the data industry circuit and make greater contributions to the development of China's Xinchuang industry.