Xiao-I Corp (AIXI) 2023 Q4 法說會逐字稿

Good day, ladies and gentlemen, thank you for standing by, and we warmly welcome you all to the Xiao-I first full year 2023 earnings conference call. (Operator Instructions) As a reminder, we are recording today's call. If you have any objections you may disconnect at this time.

女士們、先生們，大家好，感謝大家的支持，我們熱烈歡迎大家參加小艾 2023 年第一季全年收益電話會議。（操作員指示）提醒一下，我們正在錄製今天的通話。如果您有任何異議，您可以立即斷開連接。

Now, I will turn the call over to Berry Xia, IR Director of Xiao-I. Berry, please proceed.

現在，我將把電話轉給小愛的投資者關係總監 Berry Xia。貝瑞，請繼續。

Thank you, operator, and greetings to all participants. Welcome to Xiao-I's 2023 earnings conference call. Present with us today are Mr. Max Yuan, Chief Executive Officer, and Mrs. Kelly Weng, Chief Financial Officer.

謝謝操作員，並向所有參與者致以問候。歡迎參加小I 2023 年收益電話會議。今天與我們一起出席的有首席執行官 Max Yuan 先生和首席財務官 Kelly Weng 女士。

We announced our 2023 unaudited financial results earlier today. The press release is available on the company's IR website, as well as from Newswire services. A replay of this call will also be available in a few hours on our IR website.

我們今天稍早公佈了 2023 年未經審計的財務表現。新聞稿可在本公司的 IR 網站以及新聞專線服務上查閱。這次通話的重播也將在幾個小時後在我們的 IR 網站上提供。

During this call, we will discuss our business outlook and make forward-looking statements. Please note that these comments are made under the Safe Harbor provisions of the US Private Security Litigation Reform Act of 1995.

在本次電話會議中，我們將討論我們的業務前景並做出前瞻性陳述。請注意，這些評論是根據 1995 年美國私人安全訴訟改革法案的安全港條款發表的。

Also, the forward-looking statements are based on predictions and expectations as of today. Actual events or results could differ materially due to some risks and uncertainties, including those mentioned in our filings with the SEC. The company does not assume any obligation to update any forward-looking statement, except as required under applicable law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in US dollars.

此外，前瞻性陳述是基於今天的預測和預期。由於某些風險和不確定性，包括我們向美國證券交易委員會提交的文件中提到的風險和不確定性，實際事件或結果可能存在重大差異。除適用法律要求外，本公司不承擔更新任何前瞻性聲明的義務。另請注意，除非另有說明，電話會議中提到的所有數字均以美元為單位。

With that, let me now turn the call over to our CEO, Max Yuan. Please go ahead, Max.

現在，我將把電話轉給我們的執行長 Max Yuan。請繼續，馬克斯。

Thanks, Berry. Good day, everyone, and thank you for joining us today.

謝謝，貝瑞。大家好，感謝大家今天加入我們。

The year 2023 marked a turning point for the generative AI sector. With tremendous growth on the horizon, I think it is undeniable that this technology has the potential to revolutionize the entire technology sector and become an integral part of nearly every business's sphere.

2023年是生成式人工智慧領域的轉捩點。隨著未來巨大的成長，我認為不可否認的是，這項技術有可能徹底改變整個技術領域，並成為幾乎每個商業領域不可或缺的一部分。

As a game changer, AI holds immense value up for grabs. In terms of financial performance, 2023 was a year of stable growth for our company. Our total revenue reached an impressive $59.2 million, reflecting a remarkable year-on-year increase of 22.8%. This growth was primarily driven by our strategic focus on AI model services, particularly our Hua Zang LLM, which spearheaded the growth of our MaaS business by 48.5%, reaching $19.2 million. Simultaneously, our non-MaaS business also experienced the healthy growth with revenues increasing by 13.4% to reach $40 million.

作為遊戲規則的改變者，人工智慧具有巨大的價值。從財務表現來看，2023年是我們公司穩定成長的一年。我們的總收入達到了令人印象深刻的 5,920 萬美元，年增了 22.8%。這一成長主要得益於我們對人工智慧模型服務的策略重點，尤其是華藏法學碩士項目，帶動我們的 MaaS 業務成長 48.5%，達到 1,920 萬美元。同時，我們的非MaaS業務也經歷了健康成長，營收成長了13.4％，達到4,000萬美元。

I'm delighted to announce that 2023 has been a pivotal year for us, marked by groundbreaking initiatives. If you were present at our 2023 interim results call, you may recall the exciting news I shared that in July 2023, we launched our own GPT, Hua Zang Universal Large Language Model. In simple terms, it encompasses a wide range of capabilities and advances the key challenges faced by global AI models. It is designed to be controllable, customizable, and deliverable.

我很高興地宣布，2023 年對我們來說是關鍵的一年，標誌著我們邁出了開創性的一步。如果您參加了我們 2023 年中期業績電話會議，您可能還記得我分享的激動人心的消息：2023 年 7 月，我們推出了自己的 GPT，即華藏通用大語言模型。簡單來說，它涵蓋了廣泛的能力並推動了全球人工智慧模型面臨的關鍵挑戰。它被設計為可控制、可自訂和可交付。

Another highly promising initiative I want to highlight is our Hua Zang ecosystem, which was viewed upon the strong foundation of our Hua Zang LLM, and was introduced in October 2023. This ecosystem represents a revolutionary development with significant implications for the industry. Also, it is not only streamline our processes, but also empowered us to provide tailor-made solutions to our customers, enabling them to create unique and branded conversational AI experience.

我想要強調的另一個非常有前景的舉措是我們的華藏生態系統，它建立在我們華藏法學碩士的堅實基礎之上，並於 2023 年 10 月推出。這個生態系統代表著革命性的發展，對產業有重大影響。此外，它不僅簡化了我們的流程，還使我們能夠為客戶提供量身定制的解決方案，使他們能夠創造獨特的品牌對話式 AI 體驗。

In just a few months since its launch, we have successfully implemented the Hua Zang ecosystem. Facilitating the commercialization efforts of our partners in various industries, a system is now collaborating with thousands of ecosystem partners across more than 50 industry fields, including finance, healthcare, automobile, and manufacturing. This success validates the commercialization path of the Hua Zang ecosystem. With such robust support, I eagerly anticipate unlocking significant commercial potential and generating substantial returns for the company in the near future.

華藏生態系上線僅幾個月，我們就成功落地了。協助各產業夥伴商業化落地，目前已與金融、醫療、汽車、製造業等50多個產業領域數千家生態合作夥伴建立合作關係。此次成功驗證了華藏生態系的商業化路徑。有瞭如此強有力的支持，我熱切期待在不久的將來釋放巨大的商業潛力並為公司帶來豐厚的回報。

Next, I want to emphasize the critical importance of our strong research and development capability for our ongoing success and our ability to create innovative solutions in a rapidly evolving field of AI technology. We are dedicated to meeting the needs of our customers by listening to their feedback and requests and responding with new solutions and enhanced features.

接下來，我想強調強大的研發能力對於我們持續的成功以及在快速發展的人工智慧技術領域創造創新解決方案的能力至關重要。我們致力於傾聽客戶的回饋和要求，並提供新的解決方案和增強的功能來滿足客戶的需求。

As of March 31, 2024, our research and development team consists of 158 talented individuals, making up 56.2% of our overall workforce; among them, we have 104 bachelors' degree holders, 17 masters' degree holders, and 7 individuals with doctorates. Many of our senior engineers have accumulated more than a decade of experience in the computer, Internet, and AI industries. Additionally, we collaborate with a number of experts from renowned universities and research institutes.

截至2024年3月31日，我們的研發團隊由158位優秀人才組成，占我們整體員工的56.2％；其中，學士學位104人，碩士學位17人，博士學位7人。我們的許多高級工程師在電腦、網路和人工智慧產業累積了十多年的經驗。此外，我們也與多位知名大學和研究機構的專家合作。

I'm pleased to share with you that as of December 31, 2023, we had a total of 258 patent applications, including pending, expelled, and transferred cases. Excluding granted patents, we also [abated] 318 patent grants and registered 137 software copyrights in 2023 along with filed 56 new patent applications, received 39 patent grants, and registered 7 software copyrights. Among these, there were six patent applications specifically related to large models, all filed in 2023, and three registered software copyrights in the same category.

我很高興地與大家分享，截至2023年12月31日，我們共有258項專利申請，包括正在審理、被驅逐和轉移的案件。除已授權專利外，2023 年我們還[減少]了 318 項專利授權和 137 項軟體版權註冊，同時提交了 56 項新專利申請，獲得了 39 項專利授權，並註冊了 7 項軟體版權。其中，專門涉及大模型的專利申請有6件，均於2023年提交，另有3件同類別的軟體著作權註冊。

Additionally, there were two patent applications related to OOTDiffusion, our upcoming new network architecture for realistic and controllable virtual try-on. It is worth nothing behind the popularity of OOT on GitHub and the discussions about platform X indicating significant attention from potential consumers and the promising prospects for product commercialization.

此外，還有兩項與 OOTDiffusion 相關的專利申請，OOTDiffusion 是我們即將推出的用於實現逼真且可控的虛擬試穿的新型網路架構。值得一提的是，OOT 在 GitHub 上的熱度以及平台 X 的討論，都表明其受到了潛在消費者的高度關注，產品商業化的前景十分光明。

To further strengthen our capabilities, we have established joint laboratories with esteemed institutions such as the Institute of Software Chinese Academy of Sciences, East China Normal University, and Hong Kong University of Science and Technology. Furthermore, we have fostered close partnership with Tsinghua University, Fudan University, Shanghai Jiao Tong University, Beijing University, our post and telecommunications and [impacting] university. Together through our wavering commitment to research and development, we are poised to conquer new horizons and to shape the future of AI technology.

為了進一步增強我們的能力，我們與中國科學院軟體研究所、華東師範大學和香港科技大學等知名機構建立了聯合實驗室。此外，我們也與清華大學、復旦大學、上海交通大學、北京大學、我國郵電大學等建立了密切的合作關係。透過我們對研發的不懈承諾，我們準備好征服新的領域並塑造人工智慧技術的未來。

Moving on to another key strategic focus, globalization. Our efforts towards global expansion gained momentum with the establishment of our subsidiaries in the US and in the United Arab Emirates. These strategic initiatives are integral to our vision of becoming a global leader in AI technology, enabling us to better serve our customers and to seize opportunities in new markets.

轉向另一個關鍵策略重點，全球化。隨著我們在美國和阿拉伯聯合大公國設立子公司，我們的全球擴張努力獲得了更大的動力。這些策略舉措對於我們成為人工智慧技術全球領導者的願景至關重要，使我們能夠更好地服務客戶並抓住新市場的機會。

In conclusion, 2023 was a year of unprecedented growth, innovation, and strategically expansion for Xiao-I. As we embark on the journey ahead, fueled by the successes of the past year, we are confident that we are well positioned to continue our trajectory of growth and the leadership in the AI industry.

總而言之，2023 年對小我來說是前所未有的成長、創新和策略擴張的一年。當我們踏上未來的旅程時，在過去一年的成功推動下，我們有信心繼續保持成長軌跡並在人工智慧產業中保持領先。

Looking ahead into 2024, we expect that the Hua Zang LLM is set to further strengthen its commercialization efforts. Delving deeper into understanding and meeting customer needs, we expanded our B2B operations to continue to exhibit a robust and consistent growth trajectory with around 20% of growth rate on a yearly basis. At the same time, the event of LLM has significantly expanded the potential for AI in consumer applications. We believe the integration of AI models and consumer applications has become a more seamless and impactful driven. Innovation and meeting consumer demand more effectively, hence, will further expand our business into the B2C market. And then under our R&D, we will continue to make endeavors and investments to strengthen our product capabilities, collaborative efforts with our partners and customers to integrate our larger language model will be the central part of our approach.

展望2024年，我們預期華藏法學碩士課程將進一步加強其商業化努力。透過深入了解並滿足客戶需求，我們擴大了 B2B 業務，並持續呈現強勁且持續的成長軌跡，每年的成長率約為 20%。同時，法學碩士課程的發展也大大拓展了人工智慧在消費應用領域的潛力。我們相信人工智慧模型和消費者應用的融合將變得更加無縫和有影響力。創新並更有效地滿足消費者需求，從而將我們的業務進一步擴展到B2C市場。然後，在我們的研發下，我們將繼續努力和投資以加強我們的產品能力，與我們的合作夥伴和客戶的協作努力來整合我們更大的語言模型將是我們方法的核心部分。

As you may have noticed, we have recently announced a very exciting progress regarding several new products, including OOTDiffusion. As I mentioned earlier, it's a new network architecture for realistic and controllable virtual try-on.

您可能已經注意到，我們最近宣布了幾款新產品的令人振奮的進展，其中包括 OOTDiffusion。正如我之前提到的，這是一個用於實現逼真且可控的虛擬試穿的新型網路架構。

And the DIF, Daily Invest Focus platform that utilizes advanced AI technology to provide capital market analysis and insights on par with professional investors supporting the investment decision-making. Our commitment to pushing boundaries and revolutionizing industries will propel us towards a future where AI has a profound impact on people's lives. Together with our partners and the customers, we will continue to embrace new challenges and seize opportunities to shape the world through cutting-edge AI solutions.

DIF每日投資焦點平台利用先進的人工智慧技術，提供與專業投資者同等級的資本市場分析與洞察，支持投資決策。我們致力於突破界限和革新產業，這將推動我們走向人工智慧對人們生活產生深遠影響的未來。我們將與合作夥伴和客戶一起，繼續迎接新的挑戰，抓住機遇，透過尖端的人工智慧解決方案塑造世界。

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

現在，讓我將電話轉給我們的財務長凱利，來討論一下我們的財務狀況。

Thank you, Max, and welcome to everyone on the call. Before I go into numbers, please note that all numbers presented are US dollars and all comprehensions are on a year-over-year basis, unless otherwise stated. For a more comprehensive breakdown, please refer to our earnings press release.

謝謝你，馬克斯，歡迎大家參加電話會議。在介紹數字之前，請注意，除非另有說明，所有數字均為美元，所有理解均為同比數據。如需更全面的細分，請參閱我們的收益新聞稿。

Driven by strong digital transformation in enterprises, we have hit our top line goal for the year. We are talking about our 22.8% growth from the previous year. Not just that robust performance also translated into a 270 basis point expansion, bringing our gross margin to an expensive 66.6%. And here's the cherry on top, as pioneers at the frontier of cognitive AI, we've unveiled our large language model. This innovative model has propelled our R&D investments to unprecedented hits, underscoring our unwavering dedication to harness and spearhead the transformative power of core AI technology. With that, we expect to capitalize on vast opportunities in the AI ring.

在企業強勁數位轉型的推動下，我們實現了今年的營收目標。我們談論的是較上年同期22.8%的成長率。不僅如此，強勁的業績還轉化為 270 個基點的擴張，使我們的毛利率達到了昂貴的 66.6%。最棒的是，身為認知人工智慧領域的先驅，我們推出了大型語言模式。這項創新模式推動了我們的研發投資達到前所未有的水平，凸顯了我們堅定不移地致力於駕馭和引領核心人工智慧技術的變革力量。我們希望藉此抓住人工智慧領域的巨大機會。

Breaking it down further, the increase in the net revenue was primarily due to the increased sales of cloud platform products. These numbers help offset the declines in other areas, led by our continued shift towards subscription-based cloud platform products from one-time software purchases. Keep in mind that some of our revenue channels like tech development services and software purchases are typically shown in the last quarter of the year.

進一步細分，淨收入的成長主要得益於雲端平台產品銷售的增加。這些數字有助於抵消其他領域的下滑，主要原因是我們繼續從一次性軟體購買轉向基於訂閱的雲端平台產品。請記住，我們的一些收入管道（例如技術開發服務和軟體購買）通常出現在一年最後一個季度。

I'd also like to bring to your attention that the rise in the cloud platform product is actually driven by the development of our MaaS business. As by nature, our MaaS business is mostly delivered through cloud platform products. In 2023, our MaaS business grew by 48.5%, reaching USD19.2 million with the primary contributions attributed to our Hua Zang Large Language Model. At the same time, the MaaS business accounted for over 30% of the total revenue for the first time.

我還想提請大家注意，雲端平台產品的崛起其實是由我們的MaaS業務的發展所推動的。從本質上講，我們的MaaS業務主要透過雲端平台產品來交付。2023年，我們的MaaS業務成長48.5%，達到1,920萬美元，主要貢獻來自華藏大語言模型。同時，MaaS業務收入佔比首次超過30%。

On the profit front, we hit $39.4 million in gross profit, making up 28% increase from $30.8 million a year earlier. Moreover, our gross margin expansion floated as planet standing at 66.6%, up from 63.9% in the previous year. The increase was primarily attributed to the significant increase in the proportion of revenues from sales of cloud platform products with a higher profit margin of 74.8%. Once again, I need to point it out that it was mainly driven by the strong growth of MaaS business. Embodying the core concept of providing AI models as a service to users rather than directly sharing the models themselves, our MaaS business model effectively reduces the barriers to using AI technology in gaining a broader range of businesses and developers to conveniently assess the leverage of AI models.

在利潤方面，我們的毛利達到 3,940 萬美元，比去年同期的 3,080 萬美元成長了 28%。此外，我們的毛利率也從去年的63.9%上升至66.6%。成長主要由於利潤率較高的雲端平台產品銷售收入佔比大幅提升，達到74.8%。我需要再次指出，這主要是受到MaaS業務強勁成長的推動。我們的MaaS商業模式體現了將AI模型作為服務提供給用戶而不是直接分享模型本身的核心理念，有效降低了使用AI技術的門檻，讓更廣泛的企業和開發者能夠便捷地評估AI模型的利用價值。

Now, moving to our operating expenses. Our total operating expenses were $61.3 million, up 18.7% from $33.9 million in the same period last year. Still, the majority of our printing expense increase was driven by a 118.3% surge in R&D expenses, which reached $52.4 million. This reflects our focused investment in the advance to latch than remodel. We accept our latest release, Hua Zang, will play a pivoting role in our long-term growth as our co-creation model matures only days subject to this foregoing as well as the pipeline of announced projects under development and all other continuing infrastructure groups.

現在，談談我們的營運費用。我們的總營運費用為 6,130 萬美元，比去年同期的 3,390 萬美元成長 18.7%。不過，我們的印刷費用增加主要是因為研發費用激增 118.3%，達到 5,240 萬美元。這反映了我們專注於提前鎖定而不是改造的投資。我們承認，隨著我們的共同創造模式日益成熟，我們最新推出的華藏將在我們的長期成長中發揮關鍵作用，而這要取決於上述情況以及正在開發的已宣布項目和所有其他持續的基礎設施組。

We currently accept our R&D investment to mainly at around 50% of our total revenue. As a result, our operating loss for 2023 was $21.9 million compared with an operating loss of $3.1 million a year earlier. Net loss was $27 million compared to a net loss of $6 million in 2022.

我們目前接受的研發投入主要佔總收入的50％左右。因此，我們 2023 年的營業虧損為 2,190 萬美元，而去年同期的營業虧損為 310 萬美元。淨虧損為 2,700 萬美元，而 2022 年的淨虧損為 600 萬美元。

Looking ahead, we remain committed to managing costs and enhancing efficiency as we focus on allocating resources strategically, particularly in the priority area of AI technology and R&D. We believe this approach will position us well for continued growth and success.

展望未來，我們將繼續致力於管理成本和提高效率，同時專注於策略性地配置資源，特別是在人工智慧技術和研發的優先領域。我們相信這種方法將使我們為持續成長和成功做好準備。

Thank you for your attention. We will now open the floor for questions. Operator, please go ahead.

感謝您的關注。我們現在開始回答問題。接線員，請繼續。

(Operator Instructions) Brian Lantier, Zacks Small-Cap Research.

（操作員指示）Brian Lantier，Zacks Small-Cap Research。

Good evening and good morning to those joining from the East Coast. I just wanted to touch base on the OOTDiffusion project, get a little bit more color maybe about when you see that becoming a commercial product? And what do you think the eventual pricing model will look like? Will it be principally a cloud service? Or do you think that could be and a new model that you'd be looking at?

各位來自東海岸的朋友們，晚上好，早安。我只是想了解一下 OOTDiffusion 項目，也許可以更詳細地了解它何時會成為商業產品？您認為最終的定價模式會是什麼樣的？它主要是一種雲端服務嗎？或者您認為這可能是您正在關注的一個新模型？

Thank you for your question, Brian. I'll need to translate a little bit here for our management team for better communication efficiency.

謝謝你的提問，布萊恩。為了提高溝通效率，我需要在這裡為我們的管理團隊翻譯一點內容。

(spoken in Mandarin)

(國語)

(interpreted) I'll translate the answer from Max. So first, as for the product or OOTD, it is actually a very new product. So we go into introducing new business models. First of all, the product is going to be launched in May, very soon. And for a new product, it's targeting a consumer that is our audience.

（譯）我將翻譯 Ma​​x 的回答。首先，就產品或 OOTD 而言，它實際上是一個非常新的產品。因此我們開始引入新的商業模式。首先，該產品即將在五月上市。對新產品來說，它的目標消費者就是我們的受眾。

So the business model will be similar to that of the GPT. It will be conducted based on the subscription as for the first edition of becoming from other subscription. But later, there will be one of generative business model as well. Based on the picture that is generated, and the service they get, they get additional payment as well.

因此其商業模式將與GPT類似。從其他訂閱產生的第一版將以訂閱為基礎進行。但以後也會有生成性商業模式。根據生成的圖片和他們獲得的服務，他們還可以獲得額外的報酬。

So that is the information for your understanding. We hope we answered your question. Thank you, Brian.

這就是供您理解的訊息。我們希望我們回答了您的問題。謝謝你，布萊恩。

Great. Thank you. And if I could just follow up with one other question regarding, I think you called it the DIF, the Daily Invest Focus. I haven't seen too much information on that. Will that be a consumer product for everyday investors? Or would that be a product you would be marketing to some of your banking clients?

偉大的。謝謝。如果我可以繼續問另一個問題，我想您稱之為 DIF，即每日投資焦點。我還沒有看到太多關於此的資訊。這會成為日常投資者的消費性產品嗎？還是這是您要向部分銀行客戶推銷的產品？

All right, thank you.

好的，謝謝。

(spoken in Mandarin)

(國語)

(interpreted) Brian, for your question as regarding to this Daily Invest Focus, this product is actually a new platform dedicated to deliver as an agent, or co-pilot for our potential investors, potential customers. The first application scenario will be located in the financial industries. But of course, as a platform, it will be further expanded into different scenarios. For example, not only for the finance industry, like the analysis and investment analysis, but rather than, we will be further expanded into the research report writing, the asset writing, or even the market analysis reports, et cetera. All of the vertical industry applications, the scenarios that might rely on the report writing scenarios we cannot further penetrate into.

（翻譯）布萊恩，關於您關於每日投資焦點的問題，這個產品實際上是一個新平台，致力於作為代理或副駕駛為我們的潛在投資者和潛在客戶提供服務。第一個應用場景將定位在金融業。但當然，作為一個平台，它也會進一步擴展到不同的場景。例如說不只針對金融業，像是分析、投資分析，而是會進一步擴展到研究報告的撰寫、資產的撰寫，甚至是市場分析報告等等。所有垂直行業應用，那些可能依賴報告寫作場景的場景我們都無法進一步深入。

So as for the first scenario of the financial industry, we will be introducing the very first product-based on this platform in May. So this product is more like a daily report first, because you can see the product name itself is called Daily Invest Focus. So, this first product will be firmly rely on the target audience, or the potential consumers from the retail investor side.

那麼對於金融業的第一個場景，我們基於這個平台的第一個產品會在五月推出。所以這個產品首先更像是一份每日報告，因為你可以看到產品名稱本身就叫做每日投資焦點。所以，這個第一款產品將牢牢地依靠目標受眾，或是散戶投資者方面的潛在消費者。

We help them to collect market information, market sentiment, or even sometimes per incident alert from the capital market side. To give our retail investors a fully data support on their investment. Make them more confident, make them resourceful upon the data side, as well as the information side. So these platform is developed based on our large language model together with the multi-agent workflow, the agent workflow, and also the multi-agent system.

我們幫助他們收集市場資訊、市場情緒，甚至有時是來自資本市場方面的事件警報。為我們的散戶投資者提供全面的投資數據支援。讓他們更有自信，讓他們在數據方面以及資訊方面更加足智多謀。因此，這些平台是基於我們的大型語言模型以及多代理工作流程、代理工作流程以及多代理系統開發的。

One of these agents is using the RPAs, and also the others are utilizing the data analysis, data mining, and the different agents being in the queue to handling the process, based on our consumers' request. So it's going to be a very new business model as well as a platform that we're going to introduce to our investors, sorry, our consumers.

其中一個代理商正在使用 RPA，其他代理商也在利用資料分析、資料挖掘，並且不同的代理商正在排隊處理流程，這取決於我們消費者的請求。因此，這將會是一個非常新的商業模式，也是一個我們將向我們的投資者，也就是我們的消費者介紹的平台。

And then we were hoping the AI is really making their life much better, making their investment much easier, to give them more rights, and access to this information in the market. So that would be an answer to your question. Thank you.

然後我們希望人工智慧真的能讓他們的生活變得更好，讓他們的投資變得更容易，賦予他們更多的權利，並讓他們獲得市場上的資訊。這就是你問題的回答。謝謝。

Great. Thank you so much for that.

偉大的。非常感謝。

[Wilson Lou, Foration Investment]

[Wilson Lou，Foration Investment]

Yeah, this is Wilson. It sounds very attracting and interesting. So I have a question for you. I would like to ask how do you view the future development trend of the fixed data model industry? Thank you.

是的，這是威爾遜。聽起來非常吸引人而且有趣。我有一個問題想問你。請問您如何看待固定資料模型產業未來的發展趨勢？謝謝。

All right. Thank you, Wilson. I'll translate for Max as well.

好的。謝謝你，威爾遜。我也會為馬克斯翻譯。

(spoken in Mandarin)

(國語)

(interpreted) Yes, I will do the translation right now. So here's the conclusion first, Wilson. Is that it is a time point for the commercialization of large language model and AI technologies. The general thinking in the industry is that we need to create AGI. One must stack up scale and computation of power and with a notion that the larger the model, the better its performance, which is the scaling law, the bigger the better.

（翻譯）是的，我現在就進行翻譯。所以首先得出的結論是這樣的，威爾遜。是大型語言模型和人工智慧技術商業化的時間點。業界普遍的想法是我們需要創造AGI。必須把規模和運算能力疊加起來，而且模型越大，效能越好，這就是縮放定律，越大越好。

The idea is that the bigger the model, the better it works. But to be honest, we are not totally stowed on the idea. There is a catch, although, but it's expensive. The bigger the model, the more it costs to train it. So you need a lot of computing power and data, and there's no easy way around it. So it's like trying to turn lead into gold, it takes a lot of trial and error, and that means a lot of computing power. So, because of this, we are considering the most important thing to do right now is to deliver based on the architecture, the technology framework we have, the large language model, and we delivered the model that can be customized, can be delivered with cost-effective, and also can be commercialized.

這個想法是，模型越大，效果越好。但說實話，我們並不完全認同這個想法。雖然有一個陷阱，但它很昂貴。模型越大，訓練成本越高。因此，你需要大量的運算能力和數據，而且沒有簡單的方法。所以這就像試圖把鉛變成金子一樣，需要大量的反覆試驗，這意味著需要大量的運算能力。因此，正因為如此，我們認為現在最重要的事情就是基於我們現有的架構、技術框架，交付大型語言模型，我們交付的模型是可以客製化的，可以以成本效益的方式交付，也可以商業化的。

So what we do right now, is we were considering, like for example, for business-to-business scenarios, the M-to-price level large language models, we do not require such high performance. You don't need a cannon to shut its barrel. So as the current capability of large language models is already sufficient, to significantly enhance the corporate operation efficiency. So what matters more is whether it makes economic sense, and if the experience is good. So the key to large language model is always to tie them into business needs and processed in a way that makes sense.

所以我們現在所做的是，我們正在考慮，例如，對於 B2B 場景，M 到價格級別的大型語言模型，我們不需要這麼高的性能。你不需要用大砲來關掉它的砲管。所以現在的大型語言模型的能力已經足夠了，可以顯著提升企業的營運效率。因此更重要的是它是否具有經濟意義，以及體驗是否良好。因此，大型語言模型的關鍵始終是將其與業務需求結合起來，並以合理的方式進行處理。

And for the consumer side, with the development of large language model, the applicable scenarios of the AI products are rapidly increasing. We're seeing more and more uses of AI. So it's like a blue ocean. So this year, we might just see more really popular apps that develop based on the large language model. For example, like the previous product we've been introduced, the Daily Invest Focus, and also the OOTDiffusion. All of these are the seaside the company is trying to explore on.

而在消費端，隨著大型語言模型的發展，AI產品的適用場景正快速增加。我們看到人工智慧的用途越來越多。所以它就像一片藍色的海洋。因此今年我們可能會看到更多基於大型語言模型開發的真正流行的應用程式。例如，像我們之前推出的產品《每日投資焦點》和《OOTDiffusion》。這些都是該公司正在努力探索的領域。

So we hope we answered your question. Thank you.

所以我們希望我們回答了您的問題。謝謝。

[Anthony Chang, BE Investment]

[Anthony Chang，BE Investment]

Hi. Dear management, thank you for the answers. I would like to follow-up your previous answer that there are indeed are many different applications, scenarios for your business model. I can hear that you have clients in financial institutions, telecom, pharmaceutical manufacturing, local government. But which client base are you going to focus more and what are your strategies for those client bases? Thank you.

你好。尊敬的管理層，感謝您的回答。我想跟進您先前的回答，您的商業模式確實有很多不同的應用和場景。我聽說您的客戶遍布金融機構、電信、製藥和地方政府。但是您將更加關注哪些客戶群以及您針對這些客戶群的策略是什麼？謝謝。

Yeah. Thank you. I'll translate here.

是的。謝謝。我在這裡翻譯一下。

(spoken in Mandarin)

(國語)

(interpreted) Anthony, thank you for your question. Here is a conclusion first. Your question is actually a very good one, because it is a very important question, which customer we are going to focus on. So, first we want to answer that there are two dimensions. The first one is actually business-to-business. The second one is actually business-to-consumers.

（翻譯）安東尼，謝謝你的提問。這裡先給出一個結論。您的問題其實非常好，因為這是一個非常重要的問題，我們將專注於哪位客戶。因此，首先我們要回答的是，有兩個維度。第一個其實是企業對企業。第二個其實是企業對消費者。

So like you've been previously talked about, we have a very large customer base. We covered the industry from manufacturing to finance and also to the couriers. Maybe all of these clients are within our customer base. For these customer bases, we are going to dig deeper into their customer needs, and we will rely on their business development process, their strategies to see whether or not they are strong enough to carry more AI technology applications. And we will focus on their pain point to deliver customized large-function models combined and integrated AI solutions.

正如您之前談到的，我們擁有非常龐大的客戶群。我們的行業涵蓋了製造業、金融業、快遞業等。也許所有這些客戶都在我們的客戶群內。對於這些客戶群，我們會深入挖掘他們的客戶需求，並且根據他們的業務發展進程、他們的策略，看看他們是否有足夠的實力去承載更多的AI技術應用。並針對他們的痛點，提供客製化的大功能模型組合整合AI解決方案。

For the business-to-business scenario, we will further rely on 1,000 delivery cases, which we acquired within this 20 years, more than 20 years' journey in its commercialization experience. And we will be further dig on to deliver better application and solutions to them. However, based on the new technology development process, we believe the large language model would be a great turning point for the application in the business to consumer's scenario.

對於B2B場景，我們進一步依賴我們這20年累積的1000個交付案例，以及20多年的商業化經驗。而我們會進一步深入研究，為他們提供更好的應用和解決方案。但基於新技術的發展過程，我們相信大語言模型將成為B2C場景應用的重大轉折點。

So, we will further focus on the 2C side. For example, the previous product, we have been mentioning about, the OOTDiffusion, it's actually the technology name is not the product name itself. The OOTDiffusion is the algorithm we are going to introduce to our consumers. We will deliver a product based on their algorithm. Also, the DIF, we have been previously talked about, the Daily Invest Focus. We are going to deliver -- to the market very soon in May as well.

所以，我們會進一步關注2C方面。例如我們之前提到的產品，OOTDiffusion，其實它是技術名稱，而不是產品名稱本身。OOTDiffusion 是我們要向消費者介紹的演算法。我們將根據他們的演算法提供產品。此外，我們之前已經討論過 DIF，即每日投資焦點。我們也將很快在五月向市場推出該產品。

Other than that, we also have the hardware that is focusing on the ESG side. Our company's vision is always to improve everyone's lives with AI technologies. So we wanted to deliver the hardware product, but really hope the pain point as well as the issues and disabled or the underserved market demand. So, we are going to introduce this product very soon, as well as in May. We are going to press release for this ESG product. And we think that we are going to constantly introduce new products in the 2C side to explore the application and the market on that part.

除此之外，我們還有專注於ESG方面的硬體。我們公司的願景始終是利用人工智慧技術改善每個人的生活。因此，我們希望提供硬體產品，但真正希望解決痛點以及問題和禁用或未充分滿足的市場需求。所以，我們很快就會推出這款產品，五月也是。我們將針對該款 ESG 產品發布新聞稿。我們認為我們將在2C領域持續推出新產品，以探索該領域的應用和市場。

So here is a nutshell, that for, 2B side, we will dig deeper into our customer base and to give them better customized, better experienced products, based on large language model and the other related AI technologies. And for the 2C side, we are going to further explore into the consumers' scenarios and focus on the different underserved business segment or the MaaS consumption business segment. We will make sure that all of our products are entered into the right commercialization process.

簡而言之，對於 2B 端，我們將更深入地挖掘我們的客戶群，並基於大型語言模型和其他相關的 AI 技術為他們提供更好的客製化、體驗更好的產品。對於2C方面，我們將進一步探索消費者的場景，並專注於不同的服務不足的業務領域或MaaS消費業務領域。我們將確保我們所有的產品都進入正確的商業化流程。

So here is the answer to your question. Thank you.

這就是你的問題的答案。謝謝。

[Isaac Chan, HandGrant Holding Group Limited]

[Isaac Chan，HandGrant 控股集團股份有限公司]

Thank you for taking my questions. We have noticed that the company has disclosed its plans to enter overseas expansion and expand into the consumer market. Could you provide information regarding the company's B2C strategy and overseas expansion strategy for this year? Thank you.

感謝您回答我的問題。我們注意到該公司已經揭露了進軍海外擴張、拓展消費市場的計畫。能否介紹一下公司今年的B2C策略和海外擴張策略？謝謝。

Thank you, Isaac.

謝謝你，艾薩克。

(spoken in Mandarin)

(國語)

(interpreted) Thank you, Isaac, for your questions. So first of all, we wanted to answer your question number one. First of all, regarding to the overseas business expansion strategy, that first of all -- our topic today is always centered with the commercialization. So based on the B2B market, we will be still dig deeper to make sure that we have a robust and steady growth upon our original customer base.

（翻譯）艾薩克，謝謝你的提問。首先，我們想回答您的第一個問題。首先，關於海外業務擴張策略，首先——我們今天的主題始終圍繞著商業化。因此，基於B2B市場，我們仍將深入挖掘，以確保我們在原有客戶群上實現強勁而穩定的成長。

But for the overseas one, and it is that we've already adjusted our strategies. We've been conducting a lot of market analysis and research upon the global AI-application scenarios, including the MENA area, Southeast Asia, as well as the United States and Europe. There is a very interesting phenomenon that, the one that we are more developed in R&D standard, R&D level or R&D performance that the AI application is however, not so satisfying.

但對於海外市場，我們已經調整了策略。我們對全球人工智慧應用場景做了大量的市場分析和研究，包括中東和北非地區、東南亞以及美國和歐洲。有一個很有意思的現象，就是我們在研發水準、研發水準或研發業績比較發達，但是人工智慧的應用卻不太令人滿意。

So there is a blank area between the technology, and the actual application. So we think our company, is actually quite good to deliver. We are quite experienced. So we are going to bring more mature and better experienced products to the overseas market. So our corporate structure has adjusted accordingly for our overseas expansion. So at the end of the second half of this year, we are going to see more and more product we are going to bring to the overseas market to further enhance and expand our product matrix and product lines.

因此，該技術與實際應用之間存在空白區域。所以我們認為我們公司的表現其實相當不錯。我們很有經驗。所以我們將把更成熟、體驗更好的產品帶到海外市場。因此，我們的公司結構也根據海外擴張進行了相應調整。因此，在今年下半年末，我們將看到越來越多的產品被推向海外市場，以進一步增強和擴展我們的產品矩陣和產品線。

So the second point is about the consumer side. This year we are thinking the AI capabilities is now at a specific time point that can enable these consumer side products to be more satisfying and better experienced. So based on the more applications, based on our LLM technology framework as well as RPAs and also deep learning. All of these technologies, we are going to utilize those and to deliver better products to our consumers.

第二點是關於消費者方面。今年我們認為AI能力已經到了特定的時間點，可以讓這些消費端產品更令人滿意，體驗也更好。因此基於更多的應用，基於我們的 LLM 技術框架以及 RPA 和深度學習。我們將利用所有這些技術為消費者提供更好的產品。

So regarding to the product we have introduced previously, like DIF and OOTD, that will be the first two applications we introduce to the market and then there will be more.

因此，就我們之前推出的產品而言，例如 DIF 和 OOTD，這將是我們向市場推出的前兩個應用程序，之後還會有更多。

So in a nutshell the B2C and international expansion that we've been firmly believing that we will leverage on the robust capabilities of AI technologies, and we will witness a significant expansion in B2C market as well as the consumer market. Especially we wanted to further highlight on the angle of the company that is really deliver the products of the AI for good.

總而言之，我們堅信，在 B2C 和國際擴張方面，我們將利用強大的人工智慧技術，見證 B2C 市場和消費者市場的顯著擴張。特別是，我們希望進一步強調公司真正提供 AI 產品的視角。

And our mission is to ensure the AI technology, is not only transformative, but also inclusive to real creating the solutions not just technologically advanced, but also empathetic and accessible. So by doing so, we are we aim to make a real difference in people's lives bringing AI technologies to those who need it the most and improving their quality of life across the board globally from B2B to B2C.

我們的使命是確保人工智慧技術不僅具有變革性，而且具有包容性，真正創造出不僅技術先進，而且富有同情心且易於理解的解決方案。因此，透過這樣做，我們的目標是真正改變人們的生活，將人工智慧技術帶給最需要的人，並在全球範圍內從 B2B 到 B2C 全面改善他們的生活品質。

So that is our strategy and answers to your question. Thank you.

這就是我們的策略和對您的問題的答案。謝謝。

[Zheng Yang, BE Investment]

[鄭陽，必益投資]

Hi, first is thanks for your presentation, and I have some question regarding IMD investment. So as we know the IMD is very important for the high-tech company like Xiao-I. Well, I'm just curious about how much is your IMD investment? And after the investment, when are you expecting to turn the profit? Well, in the meantime would there have the liquid gap? Thanks.

您好，首先感謝您的演講，我對 IMD 投資有一些疑問。我們知道，IMD對於小我這樣的高科技公司來說非常重要。嗯，我只是好奇您的 IMD 投資是多少？投資之後，您預計什麼時候能獲利？那麼，同時，是否存在液體間隙？謝謝。

Thank you, Zheng. This question goes to Kelly.

謝謝你，鄭。這個問題是問凱利的。

(spoken in Mandarin)

(國語)

(interpreted) So actually here's the answer to your question. First of all, we will be utilizing on our large customer base that we will anticipate a continued growth and estimation upon the 2B side. However, our revenue from this segment has been robust and we expect it to sustain a solid growth again on the next year's basis around 20%. So this projection will reflect on our confidence and strength, our current business operation, and the potential of the Chinese market.

（解釋）其實這就是你的問題的答案。首先，我們將利用我們龐大的客戶群，預計 2B 端將持續成長和估值。然而，我們來自該部門的收入一直很強勁，我們預計明年它將在20%左右的基礎上再次保持穩健成長。所以這個預測會反映出我們的信心和實力，我們目前的業務運營，以及中國市場的潛力。

And also, that it is not only for the 2B side, like the 2C site we've previously talked about, there will be more products introduced to the market. We're utilizing this wolf pack strategy, to introduce one application then another. There will be a lot of application going to be introduced to the market. There will be anticipate a revenue for incremental revenue will be generated from the 2C side as well.

而且它不只是針對2B端，就像我們之前談到的2C網站一樣，將會有更多的產品推向市場。我們正在利用這種狼群策略，推出一個又一個應用程式。將會有大量的應用程式被推向市場。預計 2C 端也將產生增量收入。

So in terms of the R&D investment that you previously asked about, current speaking there's around 50%. Estimation 50% of our revenue will go into the investment of our R&D. It's going to be remain at a significant level, but going to be lesser in terms of the ratio of the R&D fees, compared to last year. So our primary focus on R&D investment will be still in two areas. One must, the model as a service product and the development of Hua Zang LLM. So these initiatives are the forefront of our technology offerings and are crucial for maintaining our competitive batch in the AI industry.

因此，就您先前詢問的研發投資而言，目前約為 50%。預計我們的收入的 50% 將用於研發投資。它將保持在一個相當高的水平，但與去年相比，研發費用的比例將會降低。因此，我們的研發投入主要仍將集中在兩個領域。必須把模式當作服務產品，發展華藏法學碩士。因此，這些舉措是我們技術產品的前沿，對於維持我們在人工智慧產業的競爭力至關重要。

As well as for the projection and estimation for the profitability, first of all the revenue scale like we've been previously talked about there's going to be a 20% of revenue growth from B2B side and also domestic market side, but there will be extra additional upside from our 2C side as well as overseas market.

對於獲利能力的預測和估計，首先是收入規模，就像我們之前談到的，B2B 方面和國內市場方面的收入將增長 20%，但我們的 2C 方面以及海外市場還會有額外的上升空間。

As for the operation expenses in 2023, our SG&A expense rate was already being reduced to 15%. So with the expansion of our revenue scale, we expect the operational efficiency will be further continued and there might be further improvement in 2024 as well.

至於2023年的營運費用，我們的SG&A費用率已降低到15％。因此，隨著收入規模的擴大，我們預計營運效率將進一步持續，並且到2024年也可能會進一步改善。

And for the R&D investment, we still are currently talking about there will be around 50% of the revenue goes into research and development to maintain technological edge. So based on that we anticipate the company could significantly reduce losses in 2024 and may even turn a profit.

對於研發投入，我們目前仍在討論將約 50% 的收入投入到研發中，以保持技術優勢。因此，基於此，我們預期該公司可以在 2024 年大幅減少虧損，甚至可能獲利。

So in terms of cash flow with increased revenue and optimized cost, we expect operating cash flow to become positive. So we will continue to leverage on our long-term technological accumulation aligned with the market demand to commercialize our technology, by continuously launching new products, expanding our product lines, and perfecting our product matrix. We aim to create a sustainable growth curve for our business.

因此，就現金流而言，隨著收入增加和成本優化，我們預期經營現金流將變為正數。因此，我們將繼續利用長期的技術積累，結合市場需求，不斷推出新產品，拓展產品線，完善產品矩陣，推動技術商業化。我們的目標是為我們的業務創造可持續的成長曲線。

In a nutshell, our financial forecast and strategic plans reflect our commitment to a balanced approach. Sustaining our core business, while pursuing new business opportunities and investing in innovation with a keen focus on our commercial vulnerabilities. So we believe that this strategy will enable us to continue our growth journey to deliver value to our stakeholders and to make a positive impact in the field of AI technologies.

簡而言之，我們的財務預測和策略計劃反映了我們對平衡方法的承諾。維持我們的核心業務，同時尋求新的商業機會並投資創新，並專注於我們的商業弱點。因此，我們相信這項策略將使我們能夠繼續我們的成長之旅，為我們的利害關係人創造價值，並對人工智慧技術領域產生積極影響。

Thank you for your question.

感謝您的提問。

Thank you. Seeing no more questions in the queue. Let me turn the call back to Mr. Yuan for closing remarks.

謝謝。隊列中沒有其他問題。請容許我把電話轉回給袁先生，請他作最後發言。

Thank you operator and thank you all for participating on today's call and for your support.

謝謝接線員，也感謝大家參加今天的電話會議並給予支持。

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

再次感謝大家。通話到此結束。您現在可以斷開連線。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

本記錄中標記（翻譯）的部分是由現場通話中的翻譯人員說的。翻譯由贊助此活動的公司提供。