Fourth Paradigm Announces Business Performance For The First Quarter Ended March 31 2024

Financial Highlights:

• For the three months ended March 31, 2024, the total revenue amounted to RMB828 million, representing a year-on-year growth of 28.5%
  • The revenue of the 4Paradigm Sage AI Platform (hereinafter referred to as “Sage AI Platform”) business grew by 84.8% year on year to RMB502 million, accounting for 60.6% of the total revenue
  • The SHIFT Intelligent Solutions business recorded revenue of RMB249 million, accounting for 30.1% of the total revenue
  • The revenue of the 4Paradigm SageGPT AIGS Services segment amounted to RMB77 million, accounting for 9.3% of the total revenue
• The gross profit amounted to RMB341 million, representing a year-on-year increase of 21.1% and a gross profit margin of 41.2%
• The total R&D expenses was RMB348 million, representing a R&D expense ratio of 42.0%

Operation Highlights:

• During the three months ended March 31, 2024, Fourth Paradigm had 124 total users and 54 lighthouse users, and the average revenue contribution from the lighthouse user group was RMB8.9 million, representing a year-on-year increase of 64.0%. From January 1, 2020 to March 31, 2024, the Company has provided services for a total of 1,058 users
• 4ParadigmSage: In March 2024, the “4Paradigm Sage AI Platform 5.0” was released, a new platform that can build industry-specific large models. Based on the “4Paradigm Sage AI Platform 5.0”, Fourth Paradigm built a number of typical industry-specific large model cases with lighthouse users and partners in fields including vehicle manufacturing, healthcare, disaster prevention and more
• 4Paradigm SHIFT: During the three months ended March 31, 2024, Fourth Paradigm released dozens of solution products for industries such as finance, retail, manufacturing, energy, construction, telecom operators, and healthcare, accelerating the expansion of the company’s business territory
• 4Paradigm AIGS: During the three months ended March 31, Fourth Paradigm continued to iterate and optimize its AIGS Code X product, a generative AI-based auxiliary programming tool. The Company has been conducting in-depth exploration with a number of leading players in industries, such as finance companies, operators, and new energy vehicle enterprises, in areas including programming development

HONG KONG, May 28, 2024 - (ACN Newswire) - A leading enterprise AI software company-Beijing Fourth Paradigm Technology Co., Ltd. (“Fourth Paradigm” or the “Company”, Stock Code: 6682.HK) today announces business performance for the three months ended March 31 2024 (the “Period”).

During the period, amidst the seasonal impact of the industry and market volatility, Fourth Paradigm’s core business performed well and achieved solid growth. During the Period, Fourth Paradigm’s total revenue amounted to RMB828 million, representing a year-on-year growth of 28.5%. Gross profit was RMB341 million, representing a year-on-year increase of 21.1% and a gross profit of 41.2%. The Company continued to diversify its customer base by actively acquiring new customers while improving digital transformation experience and increasing product stickiness for existing customers. During the Period, Fourth Paradigm had 124 total users and 54 lighthouse users, and the average revenue contribution from the lighthouse user group was RMB8.9 million, representing a year-on-year increase of 64.0%. From January 1, 2020 to March 31, 2024, Fourth Paradigm has provided services for a total of 1,058 users. The Company insisted on innovation-driven development. During the Period, its R&D expenditure was RMB348 million, representing a R&D expense rate of 42.0%.

Revenue of Core Business Surged by 84.8% YoY, Industry-specific Large Models Have Significant Scale Effect

During the Period, the revenue of the 4Paradigm Sage AI Platform business amounted to RMB502 million, representing a year-on-year increase of 84.8%. Revenue from the 4Paradigm Sage AI Platform business accounted for 60.6% of the total revenue.

At the end of March 2024, the “4Paradigm Sage AI Platform 5.0” was released. At present, most of the language-based large models can solve the problem of generating the next text/picture/video. However, for enterprises, their core demands (i.e., strategic upgrading, performance growth, competitiveness enhancement, etc.) urgently need to be addressed. There are more demands to fortify enterprise core efficiency through advancing digital and intelligent transformation. Based on the technical principle of predicting the next arbitrary modality, the “4Paradigm Sage AI Platform 5.0” can construct industry-specific large models with different modalities of data for various industry scenes, greatly expanding the application field of industry-specific large models and providing enterprises with sufficient supply of large models.

This is the fifth iteration of the product in 10 years. Over the past 10 years, Fourth Paradigm has been committed to solving the core pain points of AI applications in different stages.

• The 4Paradigm Sage AI Platform Version 1.0 dramatically scales up model parameters through a high-dimensional, real-time, self-learning framework, replacing the enterprise’s traditional expert-rule-based decision engine.
• The 4Paradigm Sage AI Platform Version 2.0 launched the HyperCycle low-threshold development tool based on automated machine learning, dramatically reducing the model development threshold and enabling customers to construct industry-specific large models on their own.
• The 4Paradigm Sage AI Platform Version 3.0 defines the full-process standard for accelerating AI application scenarios, reducing 95% of the time for data governance in enterprises, significantly improving the efficiency of AI application, and realizing efficient application of industry-specific large models.
• The 4Paradigm Sage AI Platform Version 4.0 sets up the “North Star Metric”(1) to identify high-value business scenarios of the enterprise, so that the industry-specific large models can serve the core competitiveness of enterprises.

(1) The North Star Metric, a business indicator highly related to a company’s core values, helps companies focus on the most important growth drivers, such as revenue growth, profit enhancement, market share expansion, etc., and guides their decision-making and resource allocation.

During the period, with the large-scale development of the core business, Fourth Paradigm’s other two businesses, SHIFT intelligent solutions and 4Paradigm SageGPT AIGS services segment, have steadily expanded, and the company’s business territory and technology development efficiency have been effectively improved.

During the Period, the SHIFT Intelligent Solutions business recorded revenue of RMB249 million, representing 30.1% of the total revenue. During the Period, Fourth Paradigm released dozens of solution products for key industries such as finance, energy, construction, telecom operators and transportation, accelerating the expansion of the company’s business territory.

During the Period, the revenue of the 4Paradigm SageGPT AIGS Services segment amounted to RMB77 million, accounting for 9.3% of the total revenue. During the Period, Fourth Paradigm iterated and optimized its AIGS Code X product, a generative AI-based auxiliary programming tool. The product is oriented to the whole process of enterprise R&D, providing one-stop services including code rewriting, annotation generation, code correction, code reconstruction, and generation of unit testing, etc. It constructs a standardized “application production line”, and thus comprehensively improves organizational efficiency. As of March 31, 2024, Fourth Paradigm has been conducting in-depth exploration with a number of leading players in industries, such as finance companies, operators, and new energy vehicle enterprises, in areas including programming development.

Large Model Business Application Progress: Industry-specific Large Models Effectively Enhance the Production and Operation Efficiency of Multiple Industries

During the Period, based on the “4Paradigm Sage AI Platform 5.0”, Fourth Paradigm has built a number of typical industry-specific large model cases with its lighthouse users and partners in fields including vehicle manufacturing, healthcare, disaster prevention and more. The Company continued to promote the commercialization of generative AI technology and large model products, which can not only greatly improve the efficiency of the core business of the Company, but also contribute to the sustainable development of the social economy.

During the period, Fourth Paradigm partnered with a domestic smart manufacturing enterprise to realize full integration of factory operation data through artificial intelligence. With this intelligent platform, the factory’s production efficiency has increased by 11.4%. In the healthcare industry, Fourth Paradigm improves the quality and efficiency of healthcare services and reduces the burden of disease through artificial intelligence technology and industry-specific large model capabilities, thereby enhancing the health of consumers. In collaboration with a standardized metabolic disease management center, Fourth Paradigm has developed a large model for chronic disease management, which is capable of assessing the risk of five common and highly prevalent chronic diseases, including cardiovascular, cardiovascular system, stroke, diabetes, and hypertension, over a three-year period, with a three-fold increase in accuracy.

Flood control large model can deploy flood control work in advance to cope with the summer flood season: During the period, Fourth Paradigm united with a water conservancy unit to build a large model of intelligent flood control to cope with the summer flood season. This flood control large model can optimize emergency response and resource deployment through real-time monitoring and prediction of flood risks, provide early warning and reduce disaster losses, thereby protecting residents’ lives and properties and enhancing the overall disaster-resistant capability of the society.

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 artificial intelligence, we are committed to using artificial intelligence to improve the core business of enterprises and help them enhance their core competitiveness. As of March 31, 2024, we unveiled the ‘4Paradigm Sage AI Platform 5.0’, using the ability of generative AI to build customer-specific fundamental large models, further reducing the barriers to entry for enterprises to develop large models. We are pleased to witness that the application of industry-specific large models is playing a role in the core business of more and more industries.”