Xiao-I Corporation 2022 Earnings Call

April 26, 2023

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Operator 1: Good day, ladies and gentlemen. Thank you for standing by, and we warmly welcome you all to Xiao-I Full Year 2022 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I'll turn the call over to Dean Xu, Legal Director of Xiao-I. Dean, please proceed.

Operator: Good day, ladies and gentlemen. Thank you for standing by, and we warmly Welcome you all to Xiao-I Full Year 2022 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I'll turn the call over to Dean Xu, Legal Director of Xiao-I. Dean, please proceed.

Good day, ladies and gentlemen, thank you for standing by we want really welcome you all to shall I full year 2022 earnings conference call.

Sure Lee.

He says that in listen only mode.

Later, we'll conduct a question and answer session and instructions will follow at that time.

As a reminder, we are recording today's call.

If you have any objections you may disconnect at this time.

Now I'll turn the call over to Dean Chi.

We get direct jokes, yeah I E. Please proceed.

Dean Xu: Thank you, operator. Hello, everyone. Welcome to Xiao-I Full Year 2022 Earnings Conference Call. Joining us today are Mr. Hui Yuan, Chief Executive Officer, and Mrs. Wei Weng, Chief Financial Officer. We released results earlier today. The press release is available on the company's IR website at ir.xiaoi.com, as well as from newswire services. A replay of this call will also be available in a few hours on our IR website. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding this and other risks and uncertainties is included in the company's public filings with the SEC.

Dean Chu: Thank you, operator. Hello, everyone. Welcome to Xiao-I Full Year 2022 Earnings Conference Call. Joining us today are Mr. Hui Yuan, Chief Executive Officer, and Mrs. Wei Weng, Chief Financial Officer. We released results earlier today. The press release is available on the company's IR website at ir.xiaoi.com, as well as from newswire services. A replay of this call will also be available in a few hours on our IR website.

Thank you operator, and Hello, everyone read commentary shy full year 2000, and the 10-Q2 earnings conference call.

Okay Amit.

Chief Executive Officer, and Kelly Wong Chief Financial Officer.

We released the results earlier today.

It's available on the company's IR website at IR, <unk> com as well as broad.

Use of Whitestone.

A replay of this call will also be available a few hours.

Our IR website.

Dean Chu: Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding this and other risks and uncertainties is included in the company's public filings with the SEC.

Before we continue please.

That's debate discussion will contain forward looking statements made under the safe Harbor provisions of the U S Securities Litigation Reform Act of 1995.

Forward looking statements involve inherent risks and uncertainties as such the company that's true.

About may be materially different from the expedition experts debate.

Further information regarding these and other risks and uncertainties.

Included in the company's public filings with.

Dean Xu: The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in US dollars. With that, let me now turn the call over to our CEO, Hui Yuan. Please go ahead, Max.

Dean Chu: The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in US dollars. With that, let me now turn the call over to our CEO, Hui Yuan. Please go ahead, Max.

The company does not assume any obligation to update any forward looking statements.

Except as required under law.

The cable.

The applicable law.

Also please note that otherwise stated.

All finger mentioned during the conference call are in U S dollars.

With that let me.

Ill now turn the call over to our CEO next year.

Go ahead, Matt.

Hui Yuan: Thank you, Dean. Hello, everyone, and welcome to Xiao-I's inaugural earnings conference call as a US-listed company. Despite the recent capital market volatility, we successfully completed our IPO in March. A key milestone for our organization. On behalf of the entire Xiao-I team, I would like to express our gratitude to both our existing and new shareholders for your confidence in our business model and growth prospects. With total proceeds of almost $39 million from the IPO, we are well-positioned to implement our operation and growth strategies for our mission to leverage Shanghai Xiao-I's advanced core AI technology to make the world a better place. 2022 presented both challenges and opportunities for our company. During the year, we experienced strict COVID lockdowns in China and subsequent lifting of nearly all COVID restrictions in December.

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We successfully completed.

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A key milestone for our organization.

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I would like to express our gratitude to both of us.

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Hui Yuan: With total proceeds of almost $39 million from the IPO, we are well-positioned to implement our operation and growth strategies for our mission to leverage Shanghai Xiao-I's advanced core AI technology to make the world a better place. 2022 presented both challenges and opportunities for our company. During the year, we experienced strict COVID lockdowns in China and subsequent lifting of nearly all COVID restrictions in December.

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Hui Yuan: Despite these macroeconomic disruptions, our commitment to executing our growth strategy never wavered. Throughout 2022, we increased our investment in AI technology R&D to a record high, enhanced our product and service capabilities, and further expanded our partnership ecosystem. Consequently, we achieved record revenue performance for the full year of 2022. Our strong momentum continued into 2023 as we continue to broaden our partnership network as we pursue our strategic growth initiatives. As recently announced, we have formed a strategic partnership with Guizhou Chinadatapay Network Technology Co., Ltd. to drive Xiao-I's growth as the global leader in cognitive intelligence by combining Xiao-I's cognitive intelligence capabilities and Chinadatapay's big data expertise.

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Hui Yuan: As recently announced, we have formed a strategic partnership with Guizhou Chinadatapay Network Technology Co., Ltd. to drive Xiao-I's growth as the global leader in cognitive intelligence by combining Xiao-I's cognitive intelligence capabilities and Chinadatapay's big data expertise.

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Hui Yuan: This partnership will demonstrate the power of integrating massive data sets with state-of-the-art algorithms and accelerate the advancement of industry-specific big data-based large-scale models through intelligent data entry, model training, and application development. Separately, we are also in discussions with a Chinese prestigious gaming company for strategic cooperation. We plan to provide our ChatGPT style technology for this company to generate more creative and inclusive gaming scenarios and empower non-player characters. This will eventually lead to game player growth and their stickiness to our partner, while broadening our user scenario and the client base. Looking ahead, we remain dedicated to our four long-term growth strategies. First, we are broadening our client base by shifting our focus to a wide range of small and medium organizations from large firms. With an extensive customer base of over 1,000 clients across diverse industries, we have accumulated invaluable knowledge and expertise.

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Hui Yuan: We plan to provide our ChatGPT style technology for this company to generate more creative and inclusive gaming scenarios and empower non-player characters. This will eventually lead to game player growth and their stickiness to our partner, while broadening our user scenario and the client base. Looking ahead, we remain dedicated to our four long-term growth strategies.

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Looking ahead, we remain dedicated to our long term growth strategy.

Hui Yuan: First, we are broadening our client base by shifting our focus to a wide range of small and medium organizations from large firms. With an extensive customer base of over 1,000 clients across diverse industries, we have accumulated invaluable knowledge and expertise.

First Rob.

Broadening our client base.

I'll focus the wider Randy I was more of a media organization from large firms with an extensive customer base of our over 1000 clients across diverse industries, we have accumulate lithia invaluable knowledge.

Hui Yuan: This enables us to effectively integrate with the varied internal systems of our small and medium-sized customers and optimize our service delivery process. We are also turning some offline software or customized products into SaaS-based cloud products, which could better address needs of small and medium companies. This move will lead to products with great standard, standardization, allowing us to carry out our service in a more convenient and efficient way and deliver more sustainable revenue. Secondly, we are expanding our global footprint by pursuing more opportunities in the international market. Our recent successful US IPO has significantly boosted our visibility abroad. We will actively seek to establish offices as well as R&D and service center outside China to effectively acquire and serve our overseas customers while making progress in Hong Kong, Macau, and Taiwan.

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Internal system, our small on the media side of the customer.

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Hui Yuan: This move will lead to products with great standard, standardization, allowing us to carry out our service in a more convenient and efficient way and deliver more sustainable revenue. Secondly, we are expanding our global footprint by pursuing more opportunities in the international market.

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Secondly, we are expanding our global footprint by pursuing more opportunities in the international.

Hui Yuan: Our recent successful US IPO has significantly boosted our visibility abroad. We will actively seek to establish offices as well as R&D and service center outside China to effectively acquire and serve our overseas customers while making progress in Hong Kong, Macau, and Taiwan.

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Hui Yuan: Our strategies involve starting with Southeast Asia and the Middle East before eventually exploring European countries through partnerships with local firms in those regions. Currently, the algorithm of our products is said to meet the demands for over 50 languages across 200 countries. Third, we are evolved from a software-only provider to one that also empowers hardware with AI. We are partnering with OEMs and potentially developing hardware in-house for specific product verticals. Specifically, we launched and commercialized the Alban all-in-one call machine for community services since 2022. Lastly, we are focused on exploring infinite possibilities through AI in the Metaverse to connect reality with virtual use cases. Gartner predicts that by 2027, over 40% of large organizations worldwide will be using a combination of Web3, spatial computing, and digital twins in Metaverse-based projects to grow their business.

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Hui Yuan: We are partnering with OEMs and potentially developing hardware in-house for specific product verticals. Specifically, we launched and commercialized the Alban all-in-one call machine for community services since 2022. Lastly, we are focused on exploring infinite possibilities through AI in the Metaverse to connect reality with virtual use cases.

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Hui Yuan: Gartner predicts that by 2027, over 40% of large organizations worldwide will be using a combination of Web3, spatial computing, and digital twins in Metaverse-based projects to grow their business.

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Hui Yuan: AI, particularly cognitive intelligence, is the core of the Metaverse and our key advantage in developing Metaverse-based projects. Our self-developed digital human has started generating revenue by meeting diverse needs such as bridging gaps, providing video services, and doing live streaming. Meanwhile, we will continue our R&D in the virtual and Metaverse economy. Although our Metaverse initiatives are still in the early stage, we are confident in their future prospects and look forward to updating everyone on our progress in the coming years. As we end 2023, we are seeing tailwinds from increased demand for our products and services due to recovery following the end of China's zero COVID policy and stronger recognition and interest in robotics and AI technology. We will continue investing in AI technology to reinforce our technology model and platform capabilities while strengthening our robust partner ecosystem and industry-leading position.

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Hui Yuan: Although our Metaverse initiatives are still in the early stage, we are confident in their future prospects and look forward to updating everyone on our progress in the coming years. As we end 2023, we are seeing tailwinds from increased demand for our products and services due to recovery following the end of China's zero COVID policy and stronger recognition and interest in robotics and AI technology.

Although our network initiatives.

The early stage, we are confident in their future growth prospects and look forward that you're updating everyone. Our.

Our progress in the coming year.

As we enter 2023, we are seeing headwinds from the increase in demand for our products and the ability due to recovery.

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Hui Yuan: We will continue investing in AI technology to reinforce our technology model and platform capabilities while strengthening our robust partner ecosystem and industry-leading position.

We will continue.

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Capability.

Strengthening our robust ecosystem.

And the industry leading position.

Hui Yuan: We are optimistic that we have the right team and the strategies and the capital in place to invest and capture vast growth opportunities in the AI market while creating long-term value for our customers and shareholders alike. Now, let me turn the call over to our CFO, Wei Weng, to go over our financials.

We are obviously.

Optimistic.

We have the right team.

And the capital in place to invest.

Capture back the growth of our boutiques.

In the AD market, well, creating long term value for our customers and shareholders alike.

Now, let me turn the call over to our CFO to go over our financials. Thank.

Wei Weng: Thank you, Max, and welcome to everyone on the call. Before I go into details, please note that all numbers presented are in US dollars and all comparisons are on a year-over-year basis, unless otherwise stated. Detailed analysis are contained in our earnings press release, which is available on our IR website. I will now highlight some of the key points here. Our record high revenue demonstrated the value of our ongoing investment into advanced AI technology and our efforts to enhance our product and service offerings to address demand from diverse industries. In addition to our strong 48% year-over-year revenue growth, we made record R&D investments in 2022 for technological innovation that align with our growth strategies.

Thank you Max.

Welcome to everyone on the call.

Got.

Please note that all numbers presented.

Thanks, Alex.

Okay.

Yes.

Thanks, everyone.

Thank you.

In our earnings.

Which is available on our IR website.

Alan I'll highlight some of the key points here.

Wei Weng: Our record high revenue demonstrated the value of our ongoing investment into advanced AI technology and our efforts to enhance our product and service offerings to address demand from diverse industries. In addition to our strong 48% year-over-year revenue growth, we made record R&D investments in 2022 for technological innovation that align with our growth strategies.

Our record high revenue demonstrated the value of our almost exactly.

AI knowledge.

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Our product and service offering.

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In addition to.

48% year over year revenue growth.

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The investment in 2022.

On this call.

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Wei Weng: Additionally, we successfully completed our IPO in March, giving us added flexibility to continue technology investments and expand our partnership network, which will support higher revenue levels and profitability. In 2022, net revenue grew to $48.2 million from $32.5 million in 2021. The increase was mainly due to the increased sales of SaaS model-based cloud platform products and technology development service. Driven by stronger demand, revenue from sales of platform products surged 364% to $25.7 million. Revenue from technology development service grew 78% to $15.4 million in 2022, offsetting decreases in other business.

Jim.

Additionally, we successfully completed our IPO in March.

Amit.

And continued technology investments.

Our next Gen network.

Higher revenue levels.

Thank you.

In 2022, net revenues rose to $48 2 million from $42 5 million.

Tom you want to increase it.

Wei Weng: The increase was mainly due to the increased sales of SaaS model-based cloud platform products and technology development service. Driven by stronger demand, revenue from sales of platform products surged 364% to $25.7 million. Revenue from technology development service grew 78% to $15.4 million in 2022, offsetting decreases in other business.

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Wei Weng: We had a one-time purchase of AI-empowered drawing review software worth about $10 million from a construction company in 2021, which accounted for a majority of the software revenue last year. Excluding this purchase, the decrease in software products was because of the change in subscription models. We saw more acceptance from non-finance customers for technology service such as SaaS model, which is on quarterly subscription, shifting from one-time purchase of software products. This transition is benefiting us as it brings more stable revenue and capital flow with customer growth. Gross profit was $13.8 million in 2022, up 46% from $21.6 million in 2021. Gross margin was 63.9% compared to 66.5% in 2021.

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Wei Weng: We saw more acceptance from non-finance customers for technology service such as SaaS model, which is on quarterly subscription, shifting from one-time purchase of software products. This transition is benefiting us as it brings more stable revenue and capital flow with customer growth. Gross profit was $13.8 million in 2022, up 46% from $21.6 million in 2021. Gross margin was 63.9% compared to 66.5% in 2021.

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Wei Weng: The decrease in gross margin was mainly due to our expansion of product application into certain new industries that initially had relatively low margins. Still, we expect margin expansion from this industry application when products become more mature. Turning now to operating expenses. In 2022, total operating expenses were $33.9 million, an increase of 104% from $16.6 million in 2021. The increase was primarily due to a 340% surge in research and development expenses, offsetting the reduction in sales and marketing, as well as general and administrative expenses made by our cost management and efficiency enhancement.

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Wei Weng: The increase was primarily due to a 340% surge in research and development expenses, offsetting the reduction in sales and marketing, as well as general and administrative expenses made by our cost management and efficiency enhancement.

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Wei Weng: R&D expenses were $24 million in 2022, accounting for almost half of our revenue as we focused on investment in digital humans, robotic process automation, and large language models related to ChatGPT style technology. We believe such technological investments will be necessary and beneficial for our long-term growth. Operating loss in 2022 was $3.1 million, compared to an operating income of $5 million in 2021. Net loss in 2022 was $6 million, compared to a net income of $3.4 million in 2021. If excluding our incremental R&D expenses, we would be profitable and even achieve significant growth. Moving to our balance sheet. Accounts receivable at the end of 2022 totaled $41.4 million, an increase of 33% from 2021.

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Wei Weng: Net loss in 2022 was $6 million, compared to a net income of $3.4 million in 2021. If excluding our incremental R&D expenses, we would be profitable and even achieve significant growth. Moving to our balance sheet. Accounts receivable at the end of 2022 totaled $41.4 million, an increase of 33% from 2021.

Two 6 million and our net income.

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Excluding our incremental.

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We achieved significant growth.

Moving to our balance sheet accounts receivable at the end of 2000 totaled $41 4 million.

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2021.

Wei Weng: Our business reflects seasonality, in which we often realize revenue in Q4 while receiving payments within the following quarter. The important takeaway is we've seen faster payments from customers during Q1 of 2023.

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And in which we operate revenue in the fourth quarter, while receiving payments within the quarter.

The important takeaway.

In fact, the payments from customers.

Okay.

So.

Wei Weng: Our cash balance at the end of 2022 was $1 million, as compared to $1.3 million as of December 31, 2021. On top of this, we strengthened our balance sheet with $39 million in proceeds from our IPO. As we move forward, we will persist in our cost reduction and efficiency improvement efforts, which will enable us to allocate resources to key strategic areas such as AI technology R&D. That concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead.

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One 3 million as of December 31st.

Please go ahead.

Q1.

We strengthened our balance sheet.

$39 million in 2008.

Keith.

Okay.

As we move forward we will.

Our cost reduction and efficiency improvement.

This will enable us to elevate the orbit.

Jason.

And with such as.

That concludes the call.

Good luck.

Let's now OLED.

Questions Operator, please go ahead.

Operator 2: Thank you. We will now begin the question and answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Andy Zhang from Prime Number Capital. Please ask your question, Andy.

Operator: Thank you. We will now begin the question and answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Andy Zhang from Prime Number Capital. Please ask your question, Andy.

Thank you we will now begin the question and answer session.

To ask a question. Please press star one on your telephone and wait for your name to be announced.

Which all your question. Please press star one again.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of Andy Zhang from Prime number capital. Please ask your question Andy.

Andy Zhang: Hi, can you hear me?

Alright, Thanks, Jimmy.

Operator 2: Yes, we can.

Operator: Yes, we can.

Yes, we can.

Andy Zhang: All right, I'll ask the question in Chinese first and then in English.

Alright, I'll ask the question in Chinese first and.

And then in English.

Andy Zhang: 贵司自三月初在纳斯达克成功上市以来，人工智能的市场格局在过去两个月内发生了巨大的变化。我们看到OpenAI发布了它的API，开始允许外部软件对接ChatGPT的数据处理能力。自此，市场中开始出现各种功能强大的软件。曾经我们对人工智能的想象在逐渐变为现实，能为工作和生活创造巨大的价值。可以说我们已经进入了咆哮的二十年代。数据成为了二十一世纪的石油，AI成为了二十一世纪的内燃机。面对这样一个潜力无限的未来，贵司对自己的上升空间有哪些思考？

Andy Zhang: [Foreign language]

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Andy Zhang: Since your successful listing on Nasdaq in early March, the landscape of artificial intelligence has significantly evolved within the past two months. We had OpenAI releasing its API, which basically allowed external softwares to utilize ChatGPT's capabilities. Since then, we see very powerful softwares arriving at the scene, and we really start to see AI's previously speculated potential now turn into the immediate, actualized, tangible results. Those are results that create tremendous value for both professional and personal lives. I think by this point, it is fair to say that it's no longer opaque, that we now have the roaring twenties in the twenty-first century, where data is oil and AI is the internal combustion engine. Given this exciting future, what have you imagined for your upside? Thank you.

Since youre successful listing on NASDAQ in early March the landscape with artificial intelligence has significantly evoked within the past two months.

We have open AI, reducing its API, which basically allow the external software to utilize <unk> capabilities.

And since then we see very powerful software arriving at the scene and we really start to see AI previously speculated potential now turning to be immediate.

Tangible results.

Andy Zhang: Those are results that create tremendous value for both professional and personal lives. I think by this point, it is fair to say that it's no longer opaque, that we now have the roaring twenties in the twenty-first century, where data is oil and AI is the internal combustion engine. Given this exciting future, what have you imagined for your upside? Thank you.

Those are results that create tremendous value for both professional and personal lives.

I think by this point it is fair to say that it's no longer opaque.

We now have the Roaring twenty's in the 21st century.

Data is oil and AI at the internal combustion engine.

Given this exciting future.

Have you imagined for your upside.

Thank you.

Okay.

Hui Yuan: ChatGPT is not the future of singularity, nor the finish line of AI. AI is evolving in generations, and we believe AI will usher in a golden decade in the future. The potential market for AI is enormous and incalculable. Xiao-I is committed to developing the core brain of AI, namely cognitive intelligence technology. We have all the crucial technologies related to cognitive intelligence, led by NLP. We aim to empower all industries with this technology to drive the progress of AI and ultimately the world. We are highly confident in our prospects for development.

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In other words.

The impact of liver <unk> is committed to developing the culprit.

The M&A community, we can hedge into technology, we have all of the crusher technologies related to cognitive intelligence led by AARP.

Hui Yuan: We have all the crucial technologies related to cognitive intelligence, led by NLP. We aim to empower all industries with this technology to drive the progress of AI and ultimately the world. We are highly confident in our prospects for development.

In Q empower all industries.

This technology provides the progress.

Admittedly the work we are highly confident in our <unk>.

Baxter for development.

Andy Zhang: Thank you very much. My second question. 我们在招股书中看到，在语言……自然语言处理方面，小爱在中国具有先发优势。我们知道中国的科技公司所处的商业环境与西方相比有很大的不同，这意味着在中国存在特有的风险和机会。鉴于该先发优势，请问贵司在中国能够捕获哪些特有的机会？We saw in your offering letter that Xiao-I has the first mover advantage in terms of natural language processing in China.

Andy Zhang: Thank you very much. My second question. [Foreign language] We saw in your offering letter that Xiao-I has the first mover advantage in terms of natural language processing in China.

Thank you very much and my second question.

Yes.

Women's health drug, which we don't handle that yen.

Thankfully, so what Joseph Osha.

Women should all come with a critical vote for Australia, and Germany. She comes from Peel Hunt out of Baton Rouge.

Does that draw works and Thats really what the function.

Jay you guys, Jim Barr Youll shirt.

One question that cohort number one nausea Toyota.

We saw and you're offering that said that <unk> has the first mover advantage in terms of natural language processing in China.

Andy Zhang: As we are all aware, business environment for tech companies in China is very much different from the West. This implies that there are risks and opportunities unique to this country. Given this first mover advantage, can you tell us about the unique opportunities in China that you could capture? Thank you.

We are all aware business environment for tech companies in China, very much different from the west.

This implies that there are risks and opportunities unique to this country.

Given this first mover advantage can you tell us about the unique opportunities in China that you could capture thank you.

Hui Yuan: The AI products are mainly used for commercial purpose, and the technology and application scenarios are chosen to meet the needs of commercialization. In China, there is great demand and vast market potential for AI commercialization. As AI technology continues to advance, Xiao-I will further develop its commercial potential by integrating ChatGPT style technologies to expand its services to more AI plus industry application scenarios. The goal is to continue empowering the manufacturing, agriculture, gaming, and other fields.

Yes products, mainly used the bulk of Medicare coverage.

Technology and application scenarios at Giddings can meet their needs our global commercialization.

Commercialization in China, there is a greater demand and what's the market potential for <unk>.

Hui Yuan: As AI technology continues to advance, Xiao-I will further develop its commercial potential by integrating ChatGPT style technologies to expand its services to more AI plus industry application scenarios. The goal is to continue empowering the manufacturing, agriculture, gaming, and other fields.

Virtualization.

The AI analogic adhered to advance Jive.

<unk> will further develop our mercury potential by integrating <unk> technology agnostic Judy expanded.

Can you give more AI bots industry application scenarios.

The goal is to continue empowering manufacturing.

Agriculture gaming and other peers.

Andy Zhang: Thank you very much.

Thank you very much.

Operator 2: Right. Thank you. Our next question comes from the line of Cici Xiang from Prime Number Capital. Please ask your question, Cici.

Operator: Right. Thank you. Our next question comes from the line of Cici Xiang from Prime Number Capital. Please ask your question, Cici.

Great. Thank you.

Next question comes from the line.

Sheng from crime number capital. Please ask your question Sir.

Cici Xiang: Okay. Thank you. I have two questions. We have seen a significant increase in revenue this year. Please analyze the main reasons for the growth. We have also noticed that R&D expenses have increased significantly. What is the main reason for this? Thank you.

Cici Xiang: Okay. Thank you. I have two questions. [Foreign language] We have seen a significant increase in revenue this year. Please analyze the main reasons for the growth. We have also noticed that R&D expenses have increased significantly. What is the main reason for this? Thank you.

Okay. Thank you I'll have two questions.

Neil the showroom here in the states, where that turns out to places that you don't turn that material.

Yes, Akshay Youll yoga.

<unk> got Sheila Ganesh.

We have seen a significant increase in revenue this year. Please.

Please Adam <unk> with <unk>.

I have also noticed that R&D expenses have increased significantly our discipline.

Thank you.

Wei Weng: The increase in revenue in 2022 was mainly due to the increase in sales of SaaS-based cloud platform products and technology development service. This is also one of our company's strategic shifts. Our R&D investments were mainly on large language models related to ChatGPT sales technologies, digital human, and RPA. We believe that these R&D investments will support the company in its development in the future. Thank you.

The increase in revenue in 2022.

Thank you.

Yeah.

Therefore.

And now lets begin.

This is also one of our companies.

And our R&D investments, while mandate last night and the risk model.

TVT.

This procurement and Akshay.

Of that R&D investment.

In the investment in the future.

Cici Xiang: Thank you. My second question. What is current development strategy of the company? We understand that the company has coverage in various industries. Regarding AI plus industry, which industries will the company mainly focus this year?

Cici Xiang: Thank you. My second question. [Foreign language] What is current development strategy of the company? We understand that the company has coverage in various industries. Regarding AI plus industry, which industries will the company mainly focus this year?

Alright, thank you.

Second question, Boston with Kinder project John Scheurer.

You may ask to close the year with regard yes.

AI, Jeff J.

GE CLARCOR switching and Jones from day, one from that shaft.

What is current bottom strategy of the company.

Scott.

The company has coverage in various industries regarding AI plus industry.

Industry, where the company mainly focus this year.

Hui Yuan: As I mentioned, we have four core strategies for future development, including the first is expanding client base by shifting our focus to small and medium organizations from large firms. The second is expanding global footprint by exploring more opportunities in the international market. The third is transforming from software only to also empowering hardware with AI. The last is from reality to virtual, such as the breakthrough we just mentioned in the field of digital human to apply digital virtual technology into realistic scenarios. We have made meaningful progress across these fronts, and we'll continue to make efforts along with the strategies. This year we will try to empower the manufacturing, agriculture, game, and other industries with our advanced AI technologies.

The information that we have both.

For future development acreage.

Because development groups.

The Berkeley embedded client base by shifting our focus.

And the media organizations from large firms.

Secondly, expanding global Green day by exploring more opportunities in the international market with 30 <unk>.

Bobbi Brown software always you also empowering.

Hui Yuan: The last is from reality to virtual, such as the breakthrough we just mentioned in the field of digital human to apply digital virtual technology into realistic scenarios. We have made meaningful progress across these fronts, and we'll continue to make efforts along with the strategies. This year we will try to empower the manufacturing, agriculture, game, and other industries with our advanced AI technologies.

AI Alaska.

Alaska Robert of attitude your merger.

Breakthrough with Deca, maintaining the best album demand drove largely developed virtual.

<unk>.

That's the scenario.

We have made meaningful progress on our path.

<unk> continue to make efforts along with the strategy.

We are pricing our manufacturing.

I'd say again at <unk>.

The other thing.

With our roster at NRG.

Hui Yuan: AI plus industry is an industry that refers to those industries in which the core technology of cognitive intelligence could be carried out. Thank you.

That industry.

Rapid you'll note in that is in that.

Our technology, our M&A tuck ins could it be Harry.

Yes.

Okay.

Operator 2: Great. Thank you. We have reached the end of the question and answer session. Please allow me to turn the call back to Mr. Yuan for closing remarks.

Operator: Great. Thank you. We have reached the end of the question and answer session. Please allow me to turn the call back to Mr. Yuan for closing remarks.

Great. Thank you.

We have reached the end of the question and answer session. Please allow me to turn the call back to Mr. Yuan for closing remarks.

Hui Yuan: Thank you, operator. Thank you all, participating on today's call and for your support.

Thank you operator, and thank you all.

Participating on today's call on the first of all.

Operator 2: Thank you all again. This concludes the call. You may now disconnect.

Operator: Thank you all again. This concludes the call. You may now disconnect.

You all again this concludes the call you may now disconnect.

Okay.

[music].

Okay.

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Sure.

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Yes.

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Yes.

Okay.

[music].

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