WIMI Hologram Cloud Inc. (WIMI)

WIMI Hologram Cloud Inc. – 2024 Annual Review

Report Date: 2025-04-30
Period Covered: Full Year 2024

1. Overview & Financial Highlights

• Form Type: 20-F (annual report)
• Revenue: RMB 541.9 M (USD 75.4 M), down 7.5% YoY from RMB 585.4 M
• Gross Profit: RMB 154.0 M (USD 21.4 M), gross margin 28.4%
• Net Income: RMB 1,033 M (USD 144 M), vs. a RMB 510 M loss in 2023
• Debt: Bank loan RMB 15 M + convertible note RMB 15.18 M (~USD 4.20 M total)

2. Profit & Debt Analysis

• Profit Improvement: The return to profit in 2024 was driven by cost control (selling & R&D expenses down 44% and 35% respectively) and a one-time gain on debt and equity investments.
• Debt Profile: The company drew a new USD 2.11 M convertible note in 2024 and maintained a RMB 15 M bank loan.

3. Key Drivers of 2024 Performance

• Advertising Segment: AR-based holographic advertising remained core, contributing 99.8% of revenue, though ad spending in China softened.
• Cost Savings: R&D expense fell by RMB 593 M YoY as efficiencies improved.
• One-time Gains: Recognition of investment and debt-related gains totaling approx. RMB 547 M.

4. Risks & Opportunities

Pros:

• Market leader in nascent AR/holographic ad tech
• Scalable cloud-based delivery platform
• Returned to profitability with net income margin of 19.1%

Cons:

• Highly concentrated revenue (one advertiser is >20% of sales)
• Regulatory uncertainty in China over VIE structures and data security
• Early-stage semiconductor segment remains one-digit percent of revenue

5. Outlook

• Focus Areas: Expand client base outside China, deepen semiconductor chip offerings, pursue strategic acquisitions in holographic IP.
• Liquidity: Adequate cash (RMB 1.07 B) and operating cash inflow expected to fund working capital and debt service
• Watchpoints: Maintain margins amid rising competition; manage VIE‐structure risks under evolving PRC foreign investment rules

In 2024:

• Holographic Advertising: RMB 541.9 M (≈99.8% of total revenue)
• Entertainment Services: negligible (<0.1% of revenue)
• Semiconductor Products & Services: negligible (≈0.2% of revenue)

In 2023:

• Advertising was 97.7% of revenue, semiconductors 2.2%, entertainment <0.1%.

WIMI has successfully pivoted back to profitability by streamlining R&D and selling expenses and capitalizing on one-time gains. The core holographic ad business remains robust but subject to China’s ad-market cyclicality. Liquidity is strong with RMB 1.07 B in cash+short-term investments, comfortably covering the ~USD 4.2 M debt load and enabling targeted investments in next-gen AR services and chip solutions. Key challenges include regulatory scrutiny of VIE arrangements, heavy customer concentration, and building scale in the semiconductor line. The company’s growth trajectory will hinge on further international client wins, margin recovery in a softer ad environment, and execution of strategic M&A to bolster its technology moat.