megan March 21, 2024

HONG KONG, Mar 20, 2024 – (ACN Newswire via SeaPRwire.com) – A leading enterprise AI software company-Beijing Fourth Paradigm Technology Co., Ltd. (“Fourth Paradigm” or the “Company”, Stock Code: 6682.HK) today announced the consolidated annual results for the year ended December 31, 2023 (the “Reporting Period”).

Financial Highlights:

In 2023, the total revenue amounted to RMB4,204 million, representing a year-on-year growth of 36.4%

– The revenue of the 4Paradigm Sage AI Platform (the “Sage AI Platform”) business grew by 68.0% year on year to RMB2,506 million, accounting for 59.6% of the total revenue

– The SHIFT Intelligent Solutions business recorded revenue of RMB1,283 million, accounting for 30.5% of the total revenue

– The revenue of the 4Paradigm SageGPT AIGS Services segment amounted to RMB416 million, accounting for 9.9% of the total revenue

Gross profit amounted to RMB1,980 million, representing a year-on-year increase of 33.2% and a gross profit margin of 47.1%

The total R&D expenses further increased to RMB1,769.0 million, with a R&D expense ratio of more than 40%

The adjusted net loss* declined by 17.6% year-on-year. The Company reduced losses year-on-year since 2021

Operation Highlights:

In 2023, the Company maintained the leading position in China’s enterprise AI software industry, and has been ranked No. 1 by IDC in terms of the Chinese machine learning platform market share for five consecutive years since 2018.

In 2023, the Company continued to expand its customer base. The total number of users increased to 445, with 139 lighthouse users, representing a year-on-year growth of 33.7%. The average revenue from lighthouse users was RMB18.38 million, and their NDER (net dollar expansion rate)* was 115% in 2023

The Company has established three major business segments: 4Paradigm Sage AI Platform (4ParadigmSage), SHIFT Intelligent Solutions (4Paradigm SHIFT), and 4Paradigm SageGPT AIGS Services (4Paradigm AIGS):

– 4ParadigmSage: Currently, the number of models built on the Sage AI Platform exceeds 10,000. The Company is about to release version 5.0 of the Sage AI Platform to further promote the extensive use of AI technology by the end of March 2024

– 4Paradigm SHIFT: During the Reporting Period, the Company released dozens of solution products, which are widely used in key industries such as finance, energy and power, telecommunications and transportation, driving the digital transformation of enterprises and industries; Paradigm Ecology was unveiled in November 2023. The first batch of more than 40 partners joined Paradigm Ecology, with applications in dozens of industry scenarios.

– 4Paradigm AIGS: In April, the Company formally announced SageGPT 3.0. SageGPT positioned as a software development platform built upon large model capabilities, and put forward AIGS (AI-Generated Software: Refactoring enterprise software with generative AI) technical strategy. In 2023, the large model business enhanced generative related services for hundreds of enterprises and partners. The SageGPT large model has already been registered in accordance with the Provisional Administrative Measures for Generative Artificial Intelligence Services.

* Adjusted Net Loss: the Company defines adjusted net loss as loss for the year adding back share-based compensation, interest expense on redemption liabilities and listing expenses, the same below.

* NDER (net dollar expansion rate) reflects customer stickiness and willingness to pay. In this announcement, the denominator is the revenue contribution of lighthouse users in 2022, and the numerator is the revenue generated by the retained lighthouse users in 2023, the same below.

In 2023, Fourth Paradigm continued to expand its customer base and increase the average revenue of customers, recorded robust growth in total revenue and have reduced losses year-on-year since 2021. During the reporting period, the Company recorded robust growth in total revenue, up by 36.4% year on year to RMB4,204.1 million, which was mainly driven by the significant increase in revenue from Sage AI Platform. The revenue of the 4Paradigm Sage AI Platform (the “Sage AI Platform”) business grew by 68.0% year on year to RMB2,506 million, accounting for 59.6% of the total revenue. The SHIFT Intelligent Solutions business recorded revenue of RMB1,283 million, accounting for 30.5% of the total revenue. The revenue of the 4Paradigm SageGPT AIGS Services segment amounted to RMB416 million, accounting for 9.9% of the total revenue. The Company’s gross profit amounted to RMB1,980 million, representing a year-on-year increase of 33.2% and a gross profit of 47.1%. The total number of users increased to 445, with 139 lighthouse users, representing a year-on-year growth of 33.7%. The Company insists on creating value for customers. During the reporting period, the average revenue from lighthouse users was RMB18.38 million, and their NDER (net dollar expansion rate) was 115% in 2023. The Company emphasized technology investment. The total R&D expenses further increased to RMB1,769.0 million, with a R&D expense ratio of more than 40%. The Company has set a clear goal of profitability. Full-year adjusted net loss reduced by RMB88.88 million or 17.6% year-on-year. The Company reduced losses year-on-year since 2021.

Three Major Business Segments Develop Cooperatively, SageGPT Industrial Large Model Makes Breakthroughs in Commercialization in Multiple Domains

Currently, the Company has established three major business segments: 4Paradigm Sage AI Platform (4ParadigmSage), SHIFT Intelligent Solutions (4Paradigm SHIFT), and 4Paradigm SageGPT AIGS Services (4Paradigm AIGS).

The Sage AI Platform is Fourth Paradigm’s platform for developing AI models. As the core of all 4Paradigm businesses, the Sage AI Platform greatly reduces the threshold of AI model building, produces standardized models and efficiently reuses them via powerful AI infrastructure, which reduces the average model building cycle from half a year to days, and facilitates the extensive AI applications. Currently, the number of models built on the Sage AI Platform exceeds 10,000.

The SHIFT Intelligent Solutions are a series of intelligent solutions for various industries developed based on the underlying AI capabilities of 4Paradigm and the industry practice experience of 4Paradigm and its partners. It aims to empower the digital and intelligent transformation of many industries with leading AI capabilities to enhance the core competitiveness of enterprises. During the Reporting Period, the Company released dozens of solution products, which are widely used in key industries such as finance, energy and power, telecommunications and transportation, driving the digital transformation of enterprises and industries. Paradigm Ecology was unveiled in November 2023. Paradigm Ecology is committed to providing end-to-end solutions for various industries based on the Company’s definition of the future direction of the industry (the “North Star System”) and the Company’s core technical capabilities, in partnership with the Company’s ecological partners. The first batch of more than 40 partners joined Paradigm Ecology, with applications in dozens of industry scenarios.

In February 2023, the Company was the first to release “SageGPT” 1.0, a self-developed platform product for developing industrial large model, which was among the first commercialized large model products in China. SageGPT large model is in the global leading position in terms of technical indicators like understanding, reasoning and generative capability. In 2023, it was selected as one of the first 7 model partners in Beijing, and then selected as one of the first “2023 Trusted AI Cases – Excellent Cases of Large Model R&D Application and Tool Platform” by the China Academy of Information and Communications Technology. The SageGPT large model has already been registered in accordance with the Provisional Administrative Measures for Generative Artificial Intelligence Services in China. In addition to building first-class large model products, the Company has also injected considerable R&D resources to make large models more “intelligent” in multimodality, copilot and Chain-of-Thought (CoT).

In April 2023, along with the release of SageGPT 3.0, the Company first proposed its AIGS (AI-Generated Software) strategy to refactor enterprise software with generative AI and positioned the Company’s products as a new development platform based on multi-modal large models to enhance the experience and development efficiency of enterprise software.

In 2023, the Company’s large model business was widely expanded to such fields as finance, manufacturing, healthcare, retail, real estate brokerage, education and energy, enhancing generative related services for hundreds of enterprises and partners. In the past year, “SageGPT” built a network operation platform intelligent assistant for a telecommunication client to empower its frontline employees, co-built a large model of real estate brokerage together with a leading real estate brokerage firm, refactored the industrial designing software of a transportation manufacturer, enabling the search and automated assembly for 3D parts through a large model. Such case was listed in the MIT Technology Review as an “Advanced Application Case of China’s Large AI Model”.

Implementing Forward-looking R&D Investments and Talent Strategies

Fourth Paradigm recognizes that talent and innovation are the core drivers of sustainable growth, so the Company is committed to implementing forward-looking R&D investments and talent strategies. The Company reinvest a significant percentage of the annual revenue in R&D areas that drive long-term strategic value. In 2023, the Company’s R&D spending exceeded RMB1.7 billion, with a R&D expense ratio of more than 40%. These investments are made not only in research and development of new technologies, but also in the continuous enhancement of existing products and solutions to ensure that the Company remains at the forefront of the industry and maintain competitive advantages.

In 2023, Fourth Paradigm made significant breakthroughs in many cutting-edge technologies, received numerous recognitions from academia and industry, and had 25 papers accepted by top-class AI conferences and journals. The Company’s biocomputing technology was featured in a sub-journal of Nature.

In terms of Strategic Outlooks, Dr. Dai Wenyuan, Chairman of the Board, Executive Director, Chief Executive Officer and General Manager of Beijing Fourth Paradigm Technology Co., Ltd. said, “In the era of AI, enterprises need to be empowered by new technologies, and thus need AI software companies. This is Fourth Paradigm’s opportunity in the era: AI technology will breed a new generation of new forces and new giants in enterprise software. What does Fourth Paradigm want to become? We want to become an enterprise software company that can empower thousands of industries in the era of AI. Over the past nearly 10 years, we have been insisted on innovation-driven development and have achieved breakthroughs in key technologies. Since 2018, we have been ranked No. 1 in terms of the Chinese machine learning platform market share for five consecutive years. With competitiveness and brand power, our AI products have won a stronger integration force of ecological resources. In the next decade, for Fourth Paradigm, challenges and opportunities coexist. We will always adhere to technology investment, from large models, automatic machine learning, Agent, to robots, etc., leading the development trend of ‘AI +’. We will also take advantage of our industry influence to work with ecological partners to empower the intelligent transformation of industries with AI technology.”

 

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