On January 12, 2023, a significant development unfolded in the world of technology and finance as Beyond Holdings Ltd, better known as TDT, announced its intention to list on the Hong Kong Stock Exchange by submitting a prospectus. This move follows the December 20, 2022 announcement from TechStar Acquisition Corporation, a special purpose acquisition company, regarding a merger agreement with TDT and its wholly-owned subsidiary. This type of merger is becoming increasingly popular, allowing companies to go public through established entities rather than traditional IPOs, which can be time-consuming and complex.

TDT operates in the competitive and fast-evolving field of LiDAR (Light Detection and Ranging) technology, which is pivotal in the autonomous driving sector. Since its inception, TDT has secured significant investments from prominent venture capitalists, including NIO Capital and Temasek, among others. Notably, NIO has played multiple roles in TDT's journey: as a valued customer, as a shareholder, and previously as a supplier. This deep integration has provided TDT with a strong backing, enabling it to push towards capital market access with a valuation set at HK$11.7 billion.

Despite experiencing growth in revenue linked to its LiDAR business, primarily due to the rising adoption of autonomous driving technology, TDT’s financials tell a concerning story. The company has reported total losses of $355 million over the past two years, with its flagship product, the Falcon series, witnessing significant price declines.

Looking back, TDT was founded in the United States in 2016 by Baoi Junwei and Li Yimin, both of whom brought valuable experience from their time at Baidu. Baoi, prior to founding TDT, held multiple key positions, including head of the autonomous driving hardware and sensor teams. The dual expertise of the founding team in tech and business development laid a solid groundwork for TDT, and the firm pivoted towards the Chinese market in 2018, setting up supply chains and manufacturing bases there.

In essence, TDT specializes in designing and producing automotive-grade LiDAR solutions for advanced driver-assistance systems (ADAS) and various automotive and non-automotive applications. Their client portfolio includes notable names like NIO, DeepWay, and Zhengzhou Yutong. According to market research, TDT delivered over 147,000 units of automotive-grade LiDAR in 2023, securing the top position in global ADAS LiDAR sales with an 18.6% market share.

The company’s product lineup includes the Falcon, Lingque, and Jaguar series, catering to diverse applications. Dominating their revenue stream, the Falcon series saw sales numbers rise sharply in recent years. For instance, the units sold reached 74,000 in 2022, escalating to 147,700 in 2023. However, the average price of these units has been steadily decreasing, a matter of concern for investors and stakeholders.

TDT has established a global sales team, but revenue from China remains overwhelmingly significant, comprising over 97% of total sales in recent years. This phenomenon raises questions about geographic diversification and inherent risks tied to heavy reliance on a single market. For instance, in August 2023, TDT received a notification for external issuance to go public in the U.S. after previously delayed plans, reflecting a shift in strategy to achieve investor confidence and growth.

Since its establishment, TDT has attracted robust investments, garnering approximately $459 million in financing through various rounds with investors like GGV Capital, further solidifying its financial foundation. As the global LiDAR market expands, projected to reach $65.2 billion by 2030 at a compound annual growth rate of 59.5%, TDT appears strategically positioned yet faces significant hurdles.

Despite revenue growth, TDT has endured losses, with cumulative losses accumulating to about $355 million. The figures illustrate a troubling trend: revenues for 2022 reached $66.3 million, climbing to $121 million in 2023, yet the adjusted net losses were significant at $142 million and $137 million respectively. The decline in gross loss percentage suggests some recovery in operational efficiency; however, the company is still far from profitability.

TDT attributes its losses to continual R&D investments and the costs involved in penetrating new markets. The 2023 report highlighted R&D expenses of $63.8 million, accounting for 52.7% of revenues, emphasizing the company's commitment to innovation. This heavy investment in research will be crucial as TDT seeks to differentiate itself amidst fierce competition.

Moreover, TDT's cost structure is increasingly problematic, with sales costs reaching $163 million in 2023, which was 135% of the revenue for that year. This points towards a very strained financial model that could require recalibration as TDT moves forward.

Throughout its journey, the relationship with NIO has been instrumental for TDT, serving as a major customer and a supportive partner. Beginning in 2022, TDT started supplying mass-produced LiDAR products to NIO, cementing its position as a key technology provider. Revenue from NIO in 2022 was $58.8 million and dramatically increased to $109 million in 2023. This relationship, while beneficial, also raises red flags over dependency, with TDT accounting for over 90% of its total revenue from a single client.

Looking ahead, TDT cautions that if NIO were to reduce or terminate collaboration, it could have dire implications for its business plan. Notably, TDT has recognized the necessity of maintaining a sustainable business model despite its concentration in client and product lines. Yet, the financial health of the company remains a critical concern, with net liabilities increasing and cash reserves dwindling.

As TDT prepares for its initial public offering via the backdoor listing, the proceeds from this merger are earmarked for strategic initiatives. An estimated net amount of approximately HK$473 million is expected to be raised from this deal, with allocations towards R&D advancements, infrastructure improvements, and global expansion strategies. As TDT faces the challenges that come with high ambitions and their current operational landscape, the journey ahead remains both promising and fraught with unpredictability.