Xiao-I (AIXI) - 2024 Q4 - Annual Report

Revenue Growth - In 2024, the company's total revenue increased to US $70.31 million, driven by a 167.4% year-over-year growth in the Model-as-a-Service (MaaS) business, which contributed 73.0% of total revenue[405]. - The Hua Zang LLM generated US$ 28.99 million in revenue, reflecting a 257.9% year-over-year increase, underscoring its significance in enterprise applications[412]. - Revenue from the MaaS segment surged to USD 51.32 million in 2024, accounting for 73.0% of total net revenue, compared to 32.4% in 2023[443]. - The company generated USD 40.88 million from the sale of cloud platform products in 2024, which is 58.1% of total revenue[444]. - Revenue from technology development services increased by 207.5% from US $7.84 million in 2023 to US$ 24.11 million in 2024, driven by US $10.4 million from MaaS contracts[457]. - Revenue from sales of hardware products increased significantly from US$ 0.08 million in 2023 to US $1.40 million in 2024, attributed to the successful launch of AI-powered smart glasses[460]. - Revenue from cloud platform products decreased by 13.0% from US$ 47.01 million in 2023 to US $40.88 million in 2024, attributed to timing-related factors in contract renewals[456]. Financial Performance - The company's net losses narrowed to US$ 14.55 million in 2024, a significant improvement from the US $27.01 million net loss reported in 2023[412]. - The gross profit margin improved to 68.3% in 2024, up from 66.6% in 2023, with gross profit amounting to USD 48.05 million[441]. - Selling expenses decreased to USD 3.32 million in 2024, representing 4.7% of total revenue, compared to 7.7% in 2023[441]. - General and Administrative Expenses (G&A) increased by 25.2% year-over-year to US$ 22.94 million in 2024, driven by one-time charges including bad debt provisions and workforce restructuring costs[421]. - Research and Development (R&D) investment decreased by 33.8% year-over-year to US $34.66 million in 2024, primarily due to the completion of the Hua Zang LLM's pre-training phase[414]. - The company reported net revenue of USD 70.31 million for the year ended December 31, 2024, representing a 18.5% increase from USD 59.17 million in 2023[441]. Cost Management - The cost of revenues for 2024 was USD 22.26 million, which is 31.7% of total net revenue, down from 33.4% in 2023[441]. - Cost of revenues increased by 12.8% from US$ 19.74 million in 2023 to US $22.26 million in 2024, driven by higher cloud hosting service fees and material costs[461]. - General and administrative expenses increased by 420.5% from US$ 4.41 million in 2023 to US $22.94 million in 2024, primarily due to increased allowance for credit losses[464]. - Selling expenses decreased by 27.0% from US$ 4.55 million in 2023 to US $3.32 million in 2024, due to reduced staff costs and marketing expenses[463]. Future Outlook - The company aims to deliver over 10,000 units of AI-powered smart glasses in 2025, focusing on the North American market[417]. - The tAIkbox AI customer service solution is set to launch in Q1 2025, designed to enhance operational efficiency across various industries[418]. - The company anticipates bringing the G&A-to-revenue ratio below 15% in 2025 through sustainable cost controls[421]. - The company plans to explore B2C market potential and expand into overseas markets to enhance growth opportunities[432]. Cash Flow and Financing - The company raised approximately US$ 10 million through registered offerings to support general corporate purposes and strategic initiatives[408]. - Net cash used in operating activities was US $15.14 million in 2024, compared to a net loss of US$ 14.55 million, with significant adjustments including US $13.45 million in non-cash items[501]. - Net cash provided by financing activities amounted to US$ 15.84 million in 2024, mainly from US $34.05 million in short-term bank borrowings[506]. - In 2023, net cash provided by financing activities was US$ 36.47 million, driven by US$34.40 million from the issuance of ordinary shares upon IPO[507]. Market and Economic Factors - Foreign exchange fluctuations may impact profit margins as the company derives revenue in RMB, with potential adverse effects from RMB appreciation against USD[439]. - The company does not hedge against currency risk, which may affect financial results reported in U.S. dollar terms[758]. - Inflation has not had a material effect on the company's business, but significant inflationary pressures could harm financial condition and operating results[765]. - The company is not currently exposed to interest rate risk as it does not own interest-bearing instruments[761]. - Seasonality does not materially affect the company's business or operational results[763]. Customer and Supplier Concentration - The largest customer accounted for 20.4%, 29.3%, and 22.4% of total revenue for the years ended December 31, 2022, 2023, and 2024, respectively[756]. - The top five customers contributed 58.4%, 69.7%, and 49.9% of total revenue for the years ended December 31, 2022, 2023, and 2024, respectively[756]. - Purchases from the top three suppliers represented 66.8%, 73.2%, and 39.6% of total purchases for the years ended December 31, 2022, 2023, and 2024, respectively[757].