WiMi Hologram Cloud Inc. — FY2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. This annual filing reports full-year results; it does not provide a separate Q4 income statement or cash-flow summary. Figures are in RMB unless otherwise stated; USD amounts are the filing’s convenience translations.
Business context
WiMi is a Cayman Islands holding company operating primarily in China through subsidiaries and contractual VIE arrangements. Its businesses comprise holographic AR advertising and entertainment, and semiconductor products and related algorithm/software services. It completed the business combination that resulted in MicroAlgo Inc. becoming a separately listed company in December 2022; WiMi reported a 65.92% interest in MicroAlgo at year-end.
Key financial results
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | RMB 682.3m (US$98.0m) | RMB 933.8m | Down 26.9% |
| Gross profit / margin | RMB 143.0m / 21.0% | RMB 249.6m / 26.7% | Margin down 5.7 percentage points |
| Operating loss | RMB 308.7m | RMB 263.7m | Loss widened |
| Net loss | RMB 376.8m (US$54.1m) | RMB 254.4m | Loss widened 48.1% |
| Net loss attributable to WiMi | RMB 357.7m (US$51.4m) | RMB 236.0m | Loss widened |
| Operating cash flow | RMB (238.2)m | RMB 58.2m | Turned negative |
| Cash and cash equivalents | RMB 572.8m | RMB 751.9m | Down RMB 179.1m |
| Short-term investments | RMB 38.4m | RMB 33.5m | Up RMB 4.9m |
| Working capital | RMB 561.0m | Not clearly stated here | |
| Total liabilities | RMB 111.0m | RMB 165.6m | Down RMB 54.6m |
Cash plus short-term investments totaled approximately RMB 611.2m. Current related-party loans were RMB 42.4m at year-end, principally owed to Shanghai Junei Internet Co., an entity under common control with the chairman, and reported as due in 2023. Operating lease liabilities were also outstanding. Management said working capital was sufficient for the following 12 months; it may seek additional equity or debt financing if needs change.
Revenue mix and material changes
- AR advertising revenue rose about 10.2% to RMB 480.3m; customers declined from 312 to 298, while average revenue per customer rose from about RMB 1.4m to RMB 1.6m. One customer generated 15.9% of total revenue.
- Semiconductor revenue fell about 58.5% to RMB 200.6m, attributed to weaker customer demand and budget constraints, including in consumer electronics and communications. Segment gross margin fell from 12.0% to negative 0.3%.
- AR entertainment revenue declined about 90.3% to RMB 1.4m, with management citing reduced mobile-game activity amid tighter regulatory oversight.
- AR advertising gross margin fell from 41.7% to 29.7%, as channel costs rose faster than revenue. Overall gross margin declined to 21.0%.
- Research and development expense more than doubled to RMB 341.6m, mainly due to increased outsourced technical development services. Selling and general and administrative expenses declined.
- FY2022 included RMB 88.3m of investment losses, including a RMB 67.3m loss on a Hong Kong private-equity fund investment whose underlying assets were liquidated without net assets. Goodwill impairment was RMB 35.5m and long-lived asset impairment was RMB 13.7m.
Cash, liquidity and unusual items
Investing activities used RMB 90.3m net; financing activities provided RMB 108.9m, including approximately RMB 139.0m from the MicroAlgo recapitalization, partly offset by related-party loan repayments. The company recorded RMB 376.8m of net loss and remained loss-making for a second consecutive year. Its supplemental non-GAAP measure showed a net loss attributable to WiMi of RMB 302.1m, excluding stock compensation and specified impairment charges; this measure is not a substitute for GAAP results.
Capital expenditures were approximately RMB 1.1m. The company reported no off-balance-sheet arrangements. It had RMB 142.5m of property purchase prepayments carried forward from 2021, with completion expected in 2023–2024. No cash dividends were planned in the near term.
Outlook, risks and controls
- The filing provides no quantified revenue, earnings or cash-flow guidance. Management expects continued technology and R&D investment and says future results depend on market demand, customer retention, monetization and successful product development.
- COVID-19 disruptions, weaker semiconductor demand, gaming regulation, competition, customer collections and reliance on a concentrated customer and vendor base remain risks. Three customers represented 67.6% of year-end receivables.
- WiMi relies on VIE contracts for certain China operations. Investors hold shares in the Cayman Islands parent, not direct equity in the VIEs; enforceability and regulatory treatment remain uncertain. VIEs contributed 4.7% of 2022 revenue, down from 21.7% in 2021.
- Management concluded that disclosure controls and internal control over financial reporting were ineffective at December 31, 2022, citing insufficient U.S. GAAP and SEC-reporting expertise and IT-control weaknesses in backup/disaster recovery, user access and segregation of duties, and risk assessment. The auditor did not attest to internal control effectiveness.
- The 2022 financial statements received an unqualified audit opinion. The filing also highlights PRC regulatory and cross-border listing risks, currency and cash-transfer restrictions, and possible HFCAA-related trading or delisting risks if future audit inspection requirements are not met.
Most important facts for investors to verify
- Whether FY2022’s sharp decline in semiconductor sales and negative segment gross margin persisted after year-end, and whether advertising growth can offset it.
- The recoverability and valuation of the RMB 170.6m cost-method investments, the remaining RMB 243.3m goodwill, and the substantial R&D spending.
- The status and collectability of receivables: allowances were RMB 117.1m against gross receivables of RMB 137.4m.
- The terms, repayment and related-party governance for the RMB 42.4m loan due in 2023, alongside cash availability across jurisdictions and PRC transfer restrictions.
- Progress remediating material control weaknesses, and the continued effectiveness of VIE arrangements and compliance with evolving PRC rules.
- MicroAlgo’s post-merger performance and WiMi’s ability to realize value from its interest; verify share ownership, dilution and any subsequent financing disclosures.