After the release of Chat GPT, a battle of AI large models was set off around the world. As an A-share listed company that has laid out the AI track earlier, iFLYTEK has also launched the iFLYTEK Spark model, which has become a key force in China's competition for the large model market.
A year has passed, in the battlefield of the extremely money-burning large model, what kind of results has the iFLYTEK Spark large model "burned"? On April 23, iFLYTEK released its 2023 annual report and 2024 first quarter report. In 2023, revenue will increase by 4.41% year-on-year, and non-net profit will decrease by 71.74% year-on-year. In the first quarter of 2024, the net profit loss is expected to exceed 300 million yuan, which is larger than the loss in the same period last year.
iFLYTEK, which is fully betting on large models, when will it get out of the profit dilemma?
Record single-quarter losses
On the road of domestic large models catching up with GPT, iFLYTEK's performance is remarkable. Since the release of Xinghuo V1.0 in May last year, the iFLYTEK Xinghuo large model has been anchored to GPT4, and a total of 5 iterations have been achieved. According to reports, the Xinghuo V3.5 update version to be released on April 26 will bring new attempts to scenarios such as long text, long graphics and text, and long voice and the agent platform;
Although iFLYTEK has maintained the momentum of not falling behind on the road to large models, its operating performance is not satisfactory to investors. According to the latest performance report, in 2023, iFLYTEK will achieve revenue of 19.650 billion yuan, a year-on-year increase of 4.41%, a net profit of 657 million yuan, a year-on-year increase of 17.12%, and a non-net profit of 118 million yuan, a year-on-year decrease of 71.74%.
In the first quarter of 2024, iFLYTEK achieved revenue of 3.646 billion yuan, a year-on-year increase of 26.27%, and a net profit loss of more than 300 million yuan. According to statistics, since its listing in 2008, iFLYTEK has only suffered losses three times in a single quarter, and the amount of more than 300 million yuan has also set a record loss.
As for the decrease in net profit, iFLYTEK revealed in its financial report that the main reason was the investment in general artificial intelligence cognitive models. Expanding investment eventually thinned profits. According to the data, in 2023, iFLYTEK's R&D investment will increase by 14.36% year-on-year to 3.84 billion yuan. Among them, the direct R&D investment related to iFLYTEK Xinghuo exceeded 2 billion yuan.
In the first quarter of 2024, iFLYTEK will invest about 300 million yuan in the research and development of large models, the independent and controllable core technologies and industrial chains, and the landing and expansion of the large model industry. Among them, R&D expenses were 842 million yuan, an increase of 126 million yuan over the same period last year.
Purely in terms of net profit and other indicators, iFLYTEK, which has grasped the "life-saving straw" of the large model, has not brought much improvement in profitability. The iteration of large models continues, and if you want to maintain a competitive advantage, you can't afford to reduce investment. This may lead to continued pressure on iFLYTEK's profitability.
Ge Weidong's position remained unchanged
In the secondary market, investors also seem to have little confidence in iFLYTEK. As of April 24, iFLYTEK's share price closed at 43.42 yuan per share, down 46.98% from 81.9 yuan per share at the highest point last year. However, among the top ten circulating shareholders, Ge Weidong still has a soft spot for Xunfei, and his position has remained unchanged for three consecutive quarters.
In fact, after the large model landed, it still brought some new changes. According to Liu Qingfeng, chairman of iFLYTEK, there are three commercialization paths for the Xinghuo model in 2024: the first is to empower iFLYTEK's C-end hardware to maintain rapid growth, the second is to land in the promising education, healthcare, automobile, finance, energy and operator tracks, and the third is to empower external developers and obtain income through the iFLYTEK open platform.
As the third largest business segment of iFLYTEK, the open platform and consumer business will achieve revenue of 6.184 billion yuan in 2023, a year-on-year increase of 33.28%, accounting for 31.47% of revenue, becoming the largest business segment of iFLYTEK. The business segment is divided into three segments: open platform, intelligent hardware and mobile Internet products and services. Among them, the revenue of open platform business increased by 41.61% year-on-year, which was the fastest growing business of iFLYTEK, the revenue of intelligent hardware business increased by 22.35% year-on-year, and the revenue of mobile Internet products and services increased by 17.08% year-on-year.
The open platform has become the most active business segment of iFLYTEK at present, but it also has a great responsibility, not only to gather developers and enterprise users, but also to rely on large models to revitalize or empower old businesses. In particular, in 2023, the revenue of some smart city businesses, which used to account for the top proportion, will decline by 28.75% year-on-year.
How iFLYTEK can use the large model to break the old and create the new with the help of the big model while benchmarking GPT 4 is a topic that investors pay more attention to. After all, the liberation of productivity and the release of imagination need to be implemented at the performance level.