Horizon's achievements today have injected greater confidence into Chinese technology companies to some extent.

Author: Stone Jin | WeChat official account: ipozaozhidao

According to IPOZaoZhiDao, Horizon Robotics (hereinafter referred to as "Horizon") officially listed on the main board of the Hong Kong Stock Exchange under the stock code "9660" on October 24, 2024.

In this IPO, Horizon issued a total of 1.355 billion shares, raising a net amount of approximately HK$5.142 billion. Among them, Alibaba, Baidu, DSV Group, and Ningbo State-owned Assets Fund participated in this issuance as cornerstone investors, collectively subscribing for approximately US$220 million, demonstrating their confidence in Horizon's long-term value. Since its establishment, Horizon has also received investments from well-known institutions such as Hillhouse Capital, Source Code Capital, Sequoia China, Linear Venture, ZhenFund, Harvest Capital, as well as automakers and upstream and downstream enterprises in the industry chain, including Volkswagen Group, SAIC Motor, GAC Capital, Great Wall Motor, Chery Automobile, FAW Group, BYD, CATL, and many others.

As of 10:10, Horizon was trading at HK$5.01 per share, up 25.56% from the issue price, with a market value of HK$65.28 billion.

Founded in 2015, Horizon is the first and largest Chinese company to provide pre-installed mass-produced advanced driver assistance systems (ADAS) and high-level autonomous driving solutions. Its hardware-software integrated solutions have now partnered with 27 OEMs (42 OEMs), securing orders for 290 models, with a cumulative total of 152 models reaching start of production (SOP). Furthermore, all of China's top ten OEMs have chosen Horizon's solutions for mass production of their passenger vehicles.

Dr. Yu Kai, founder and CEO of Horizon, said in his speech at the listing ceremony, "After nine years of hard work, we have become the preferred partner for many automakers in their layout of intelligent technology in China and an important driving force for the intelligent transformation of the automotive industry. The completion of this Hong Kong listing marks a crucial step towards the international market for us."

Journey family shipments have exceeded 6 million. New generation of intelligent driving technology products launched in April this year

Currently, Horizon's portfolio of advanced driver assistance systems (ADAS) and high-level autonomous driving solutions includes Horizon Mono, Horizon Pilot, and Horizon SuperDrive, catering to different needs from mainstream ADAS to high-level autonomous driving and covering various scenarios such as urban driving, highway driving, and parking.

Among them, Horizon Mono is positioned as an active safety advanced driver assistance system solution aimed at enhancing safety and comfort in daily driving. It currently integrates the Horizon Journey 2 or Journey 3 chips; Horizon Pilot is a highway autonomous navigation (NOA) solution that provides a safe and efficient driving experience, incorporating the Horizon Journey 3 or Journey 5 chips; Horizon SuperDrive, as a high-level autonomous driving solution, aims to achieve smooth and human-like autonomous driving functions in all urban, highway, and parking scenarios. It is expected to integrate the latest Horizon Journey 6 chip.

To date, shipments of Horizon's Journey family of automotive intelligent computing solutions have exceeded 6 million units.

As of December 31, 2021, 2022, and 2023, as well as June 30, 2024, Horizon has secured orders for 44, 101, 210, and 275 models, respectively. In 2023 alone, Horizon secured orders for over 100 new models.

It is not difficult to observe that Horizon's orders in 2023 were more than three times those in 2021, and the installed capacity of its solutions increased fourfold from 2022 to 2023. According to Frost & Sullivan, in terms of installed capacity of advanced driver assistance systems (ADAS) and high-level autonomous driving solutions, Horizon's market share in China increased by approximately 7 percentage points from 2022 to 2023.

To date, Horizon has secured orders for 290 models, with a cumulative total of 152 models reaching SOP, and all of China's top ten OEMs have chosen Horizon's solutions for mass production of their passenger vehicles.

In April this year, Horizon unveiled two intelligent driving technology products: the new-generation automotive intelligent computing solution Journey® 6 series and the full-scenario intelligent driving solution Horizon SuperDrive. The former is the only series of computing solutions in China that meet the mass production requirements for "full-level" intelligent driving, consisting of six versions. To a certain extent, it represents a leap forward for Horizon's product development from a single-point to a serialized approach. As for the latter, SuperDrive has already partnered with several top-tier Tier 1 suppliers and automotive brands in the second quarter of this year, and will launch its standard mass production solution in the fourth quarter of 2024, with the first mass production cooperation model scheduled for delivery in the third quarter of 2025.

It is worth noting that the Horizon Journey 6 series has been a hit since its launch, having secured mass production cooperation with 10 automakers and brands, including SAIC Motor, Volkswagen Group, BYD, Lixiang ONE, GAC Group, Shenzhen Blue Sky New Energy Automobile Technology Co., Ltd., Beijing Automotive Group, Chery Automobile, EXEED, and Voyah Automobile, among others. More than 10 models are expected to enter mass production in 2025. Meanwhile, top hardware and software ecosystem partners have gathered around Journey 6 for development, with several partners already launching mass production-ready hardware and software solutions.

According to a third-party report, in the first half of 2024, Horizon ranked first in the market with a 28.65% share based on its Journey series of computing solutions, covering low-, mid-, and high-level full-scenario intelligent driving mass production needs. Simultaneously, Horizon topped the market for front-view integrated machine computing solutions for self-owned brand passenger vehicles (L2 ADAS) with a 33% share.

Revenue in the first half increased by 151.6% year-on-year, and gross margin of 79% has put Horizon on the international stage, boosting confidence in Chinese technology companies

In addition to covering China's top ten OEMs mentioned earlier, Horizon has also established joint ventures with global industry giants such as Volkswagen Group, which to some extent demonstrates Horizon's position as a trusted partner in the field of advanced driver assistance systems and high-level autonomous driving for passenger vehicles. Apart from OEMs, Horizon has also established strategic partnerships with global Tier 1 suppliers such as Aptiv, Bosch, Continental, Denso, and ZF Friedrichshafen.

In a way, the partnership between Horizon and Volkswagen Group is not only a landmark event in the field of intelligent driving but also signifies that new-generation technology companies represented by Horizon have entered the international arena, boosting the confidence of technology companies within China's entire intelligent industry chain.

According to Frost & Sullivan, the global market for advanced driver assistance systems (ADAS) and high-level autonomous driving solutions was worth RMB 61.9 billion in 2023 and is expected to grow further to RMB 1,017.1 billion by 2030, at a compound annual growth rate (CAGR) of 49.2%.

China is the world's largest automotive market in terms of sales and also the largest market for advanced driver assistance systems and high-level autonomous driving solutions. According to Frost & Sullivan, the market for advanced driver assistance systems and high-level autonomous driving solutions in China was worth RMB 24.5 billion in 2023 and is projected to grow to RMB 407 billion by 2030, at a CAGR of 49.4%. By 2030, the penetration rate of intelligent vehicles equipped with advanced driver assistance systems or high-level autonomous driving solutions in China is expected to reach 99.7%.

This suggests that Horizon may capture an even larger market share in the largest market today and in the future. After all, over the past nine years, Horizon has accumulated a substantial research and development foundation and years of local business operations, enabling it to possess rich knowledge and practical experience in designing advanced driver assistance systems and high-level autonomous driving solutions tailored to China's unique and challenging road conditions.

In terms of financial data, Horizon's revenue for 2021, 2022, and 2023 was RMB 467 million, RMB 906 million, and RMB 1.552 billion, respectively, representing a CAGR of 82.3%. In the first half of this year, Horizon's revenue increased by 151.6% year-on-year to RMB 935 million.

From 2021 to 2023, Horizon's gross profit was RMB 331 million, RMB 628 million, and RMB 1.094 billion, respectively, with gross margins of 70.9%, 69.3%, and 70.5% for the same periods. In the first half of this year, Horizon's gross profit increased by 225.99% year-on-year to RMB 739 million, and its gross margin further improved to 79.0%.

In fact, Horizon's business model is highly flexible and scalable. On the one hand, Horizon's customers can choose any combination of solutions or components from its full-stack products ranging from algorithms to software and development tools to processing hardware. On the other hand, Horizon can typically expand the deployment of its solutions based on the increasing production volume of OEM customers' already-secured models.

Furthermore, as Horizon's customers increase production scale, Horizon's business scale also expands correspondingly as the number of vehicles equipped with its solutions continues to grow. After successfully entering a customer's model, customers tend to adopt more categories of Horizon solutions for other models, and Horizon also has the opportunity to sell more advanced solutions and components to existing customers, all of which contribute to building a stable order backlog for Horizon.

Hillhouse Capital and Source Code Capital have accompanied and invested in multiple rounds since the beginning, with Yu Kai demonstrating exceptional vision and communication skills

Among Horizon's investors, both Hillhouse Capital and Source Code Capital have invested in multiple rounds since the seed round and are currently the only two financial investors on Horizon's board of directors.

As early as September 2014, before Horizon was officially founded, Hillhouse Capital established a connection with Yu Kai and quickly made the decision to invest. Over the following nine years, Hillhouse Capital completed a total of seven rounds of investment in Horizon. At every critical juncture of Horizon's development, Hillhouse Capital stood by the company, collaborating to unlock value in areas such as future strategies, industry chain resources, and key customer connections.

Less known is that Zhang Lei also introduced his good friend and founding partner of Source Code Capital, Liu Qin, to Yu Kai. When the intelligent driving industry faced significant skepticism from the outside world, with almost no investors willing to take the plunge (2018-2019), Hillhouse Capital once again led Horizon's Series C funding round.

Li Liang, founding partner of Hillhouse Capital, believes that in addition to Yu Kai's strong research and engineering capabilities, his communication skills are equally impressive, rooted in his strong empathy. "Firstly, Yu Kai is exceptionally skilled at explaining complex matters and deep learning techniques in simple and convincing ways. This not only enables him to attract talent and assemble a team of experts to work with him but also makes him a 'preacher' of sorts when communicating with clients," Li Liang adds. "When Horizon was first founded, smart cars were still in their infancy, but traditional automakers were already feeling anxious. During this period, Yu Kai proactively engaged with the core management and R&D teams of many traditional automakers, ensuring that their solutions were always customer-problem-oriented. This strong communication skill laid a solid foundation for Horizon's commercialization five years later. Moreover, his communication skills are multifaceted. For instance, he has maintained conscious communication with overseas partners for a long time, which I believe has helped Horizon maintain a broad perspective and strengthen its technological leadership."

'Today, we are delighted to see that with its forward-looking layout, long-term investment in leading technologies, and extensive cultivation of the industrial ecosystem, Horizon has become China's largest local supplier of intelligent driving solutions, providing infrastructure for the transformation and upgrading of the traditional automotive industry towards smart cars. Through robust organizational design, lean management, and diversified market layout, Horizon has achieved high-quality development. Congratulations on Horizon's successful listing! We look forward to the continued innovation of new-generation technology companies represented by Horizon and their continued value creation for the transformation of the smart car industry,' Li Liang said. In 2015, Source Code Capital led Horizon's seed funding round and subsequently participated in its Series A, B, and C funding rounds. Liu Qin, founding partner of Source Code Capital, recalls a late-night discussion with Yu Kai at the Four Seasons Hotel in Beijing when Yu Kai decided to found Horizon in 2015. "At that time, most entrepreneurs were focused on technology and products, but Yu Kai was already thinking from the perspective of the entire technology innovation industry, aiming to build a computing platform for robots and capture the value creation enabled by software ecosystems. Yu Kai's depth of commercial thinking and technical literacy left a deep impression on me," Liu Qin said. He also revealed that Yu Kai's continuous evolution and learning ability far exceeded his expectations. "Yu Kai has never done business or sales before, but today, he is exceptional among To B industry CEOs in sales. Secondly, I personally feel that his desire for continuous evolution has not diminished at all over the years, including in international layouts, which have exceeded my expectations," Liu Qin added.

In addition, Liu Qin added that Yu Kai has a sense of "contrast", which often means that an entrepreneur is transforming into a "hexagonal talent", a person with a strong technological aura and at the same time has a very strong business literacy.

"Many times, strategic vision preachers often lack the killer instinct and don't know how to execute, but I think Yu Kai has the potential to become a 'hexagonal warrior,'" said Liu Qin. "If the era of technological innovation 2.0 requires a new generation of entrepreneurs, Yu Kai fits perfectly into this new paradigm. He has an international perspective and global business, as well as exceptional evolution and learning abilities. I believe that the listing of Horizon Robotics is a new starting point, and Yu Kai and Horizon Robotics will continue to rely on their vision, execution, and continuous evolution to drive breakthroughs and upgrades in intelligent driving technology, realizing the vision of 'empowering intelligent driving and making human life safer and better.' Congratulations to Horizon Robotics!"

Sequoia, Linear Venture, ZhenFund have also witnessed Horizon Robotics' growth, iteration, perseverance, and composure for nearly a decade. Sequoia China has been accompanying Horizon Robotics since its seed round funding, which is also nearly a decade ago. Zhou Kui, a partner at Sequoia China, recalled that Sequoia met Yu Kai, the Executive Deputy Director of Baidu Deep Learning Institute, as early as 2014. At that time, Yu Kai was still a visionary "scientist" with dreams. Subsequently, in major directions such as artificial intelligence, e-commerce, and chips, Sequoia discussed entrepreneurial opportunities with Yu Kai and immediately agreed, actively investing in Horizon Robotics' seed round.

Zhou Kui further emphasized that behind Horizon Robotics' achievements today lies the continuous growth, self-iteration, perseverance, and composure of the founding team in the face of difficulties and challenges. Yu Kai has gradually grown from a "scientist" who gazed at the stars to a down-to-earth entrepreneur. On the one hand, he continues to maintain his sensitivity to cutting-edge technology and focus on product power; on the other hand, he can pragmatically establish a broad customer base, carry out in-depth cooperation and services, and gradually build Horizon Robotics into a leading provider of intelligent driving software and hardware services both domestically and internationally. "We believe that the milestone of the listing is a new starting point for Horizon Robotics' future development. Especially at a time when artificial intelligence is ushering in a new stage of development, Horizon Robotics will leverage its combined hardware and software technology advantages and build on its close cooperation with many domestic and foreign automakers in the past to grow into a leading enterprise in the field of intelligent driving chips and software," said Zhou Kui.

Linear Venture is also one of the earliest investors in Horizon Robotics. Wang Huai, founder and CEO of Linear Venture, said, "We knew Yu Kai when he was still working at Baidu, and we felt his enthusiasm and ideals for technological entrepreneurship in our usual exchanges. After Yu Kai founded Horizon Robotics, whether as the earliest investor or as a good friend of Yu Kai, we have continued to participate in and witness the growth of Horizon Robotics, as well as Yu Kai's perseverance, maturity, and transformation as a technology entrepreneur. I have always believed that going public is a new starting point for a technology company. Technology investment and technology entrepreneurship are a long and arduous path. In addition to congratulating Horizon Robotics on its impressive achievements, Linear Venture particularly hopes that the growth story of Horizon Robotics can inspire and motivate more technology entrepreneurs. We believe that Horizon Robotics has set a good example, and a new generation of Chinese hard technology entrepreneurs will definitely bring the best technology products to the world, drive the progress of many industries, and make the world a better place."

ZhenFund has continuously invested in Horizon Robotics' seed round and Series A funding. Fang Aizhi, the founding partner and CEO of ZhenFund, revealed that investing in Horizon Robotics was the most amazing story of finding people in ZhenFund's history, stemming entirely from a chance encounter.

"Mr. Xu Xiaoping is a donor to the Future Science Prize, and at the time, the organizing committee invited Mr. Xu to visit the office, and I went with him. It turned out that Yu Kai was also there. Yu Kai is a top scientist and also a top entrepreneur. From the serendipitous encounter in 2015 to his resignation from Baidu to found Horizon Robotics, we have witnessed his building of a strong team, promoting the application of deep learning in China, and achieving remarkable achievements through two rounds of continuous investment. We sincerely congratulate Horizon Robotics on its achievements in the field of intelligent driving!" said Fang Aizhi.

SummitView Capital, Yunfeng Capital, Hexuan Capital, Zhongwei Capital, and Legend Capital are also shareholders and look forward to Horizon Robotics continuing to contribute to industrial upgrading. Xia Zhijin, managing partner of SummitView Capital, said, "Since investing in Horizon Robotics' Series A funding in 2016, SummitView Capital has accompanied the company for nearly nine years and witnessed its growth into a global leader in the field of intelligent driving. SummitView Capital believes that Horizon Robotics' success stems first and foremost from the vision and strong execution of the founding team, as well as the rapid growth of China's intelligent driving industry. It is the best practice of Chinese innovation leading the world and the best proof of SummitView Capital's confidence and patience in Chinese technology."

Yunfeng Capital said, "Congratulations to Horizon Robotics on its official listing on the Hong Kong Stock Exchange! In the future, under the leadership of Dr. Yu Kai, we believe that Horizon Robotics will develop more competitive technology products for the era of automotive intelligence and even machine intelligence, build a more diverse and collaborative ecosystem, expand more application scenarios and regional markets, and develop into an intelligent technology enterprise with global benchmark influence, creating more value for users, industries, and society. Yunfeng Capital will continue to work closely with Horizon Robotics to jointly explore and create new opportunities for industrial innovation and contribute positively to the upgrading and transformation of China's traditional industries."

Zhang Menghan, president and managing partner of Hexuan Capital, said, "Hexuan Capital continues to be optimistic about the thriving automotive industry ecosystem and efficient mass production delivery capabilities created by Horizon Robotics, and has increased its holdings multiple times since its first investment in 2020. Today, Horizon Robotics' customers cover the top 10 OEMs in China as well as global automotive leaders and Tier 1 suppliers, including Volkswagen. With the gradual large-scale commercialization of high-level intelligent driving, the future of Horizon Robotics is promising! We look forward to continuing our journey with Horizon Robotics in the future! Journey together!"

Yu Xiaolu, partner of Zhongwei Capital, said, "Congratulations to Horizon Robotics on its successful listing on the Hong Kong Stock Exchange. We are honored to have witnessed another milestone in the company's development. The nine years since Horizon Robotics' establishment have been nine years of continuous popularization of intelligent driving; Horizon Robotics has consistently adhered to innovation-driven development and has grown into an indispensable pillar enterprise in the industry. As a 'hexagonal warrior' that combines intelligent driving hardware and software, Horizon Robotics insists on continuously optimizing and iterating its hardware and algorithms to provide large-scale deployment and pre-installed mass production solutions for automakers. We also look forward to Horizon Robotics continuously surpassing itself in future development and continuing to contribute to industrial upgrading."

Legend Capital said, "Many of Legend Capital's technology investments over the past 20+ years were completed before a consensus was reached on the technical route in the market, and Horizon Robotics is a typical example of this. At the same time, intelligent driving technology is also a typical representative of new productivity. The team led by Dr. Yu Kai has a broad vision and foresight, strong commercial implementation capabilities, and rich enterprise management experience. With the continuous growth of China's smart auto industry, we are optimistic about Horizon Robotics' continued expansion into broader markets and business chains in the field of intelligent driving after going public."

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