– Net revenues grew 106% year over year to a record high of US$26.5 million
– Gross margin rose 620 basis points year over year to 77.3%
– Cash and cash equivalents more than quadrupled to US$4.7 million, compared with end-2022
SHANGHAI, China, Sept. 25, 2023 (GLOBE NEWSWIRE) — Xiao-I Corporation (Nasdaq: AIXI) (“Xiao-I” or the “Company”), a leading cognitive artificial intelligence (“AI”) enterprise in China, today announced its unaudited and unreviewed financial results for the six months ended June 30, 2023.
First Half 2023 Financial Highlights
Net revenues increased 106% year over year to a record high of US$26.5 million.Sale of cloud platform products increased 523% year over year to US$22.7 million.Gross profit increased 124% year over year to US$20.5 million.Gross margin was 77.3%, up 620 basis points year over year.
Mr. Hui Yuan, Chairman and Chief Executive Officer of Xiao-I, commented, “Amidst our industry’s dynamic and ever-evolving landscape, we remained steadfast in our dedication to innovation and growth. Our results speak volumes, as we achieved an outstanding 106% increase in net revenues during the first half of this year, reaching a record-breaking $26.5 million. This remarkable performance underscores the value of our continuous investments in cutting-edge AI technology that are effectively aligned with the growing digital transformation demands of various businesses.”
“Our commitment to innovation is exemplified by our unparalleled R&D investment in the first half of 2023, which surpasses our entire investment for the previous year. More importantly, we have significantly expanded our product and service portfolio with the introduction of our distinguished large language model, Hua Zang. This innovative offering is expected to be seamlessly applied across a wide array of industries swiftly with cost-efficiency, opening up new horizons for our clients. In addition to our product innovations, we have also made substantial strides in our global expansion. This includes the establishment of a U.S. subsidiary and active participation in a local exhibition. These concerted efforts place us in a good position to lead the global AI industry into a future full of immense opportunities and transformative solutions to drive our continued growth.”
Recent Developments and Strategic Highlights:
Secured Contract for AI Contact Center Project with Leading Chinese Aviation Group: In June 2023, Xiao-I secured a contract for an intelligent contact center project with a leading Chinese aviation group. This partnership aims to enhance the aviation group’s service provision capabilities and drive its digital transformation.Introduced Pioneering Hua Zang Generative AI Model: In June 2023, Xiao-I launched Hua Zang, its advanced large language model. The model, analogous to an operating system, is built on Xiao-I’s robust platform capabilities and designed to empower various industries.Establishment of U.S. Subsidiary as Part of Going Global Strategy: In June 2023, Xiao-I established an U.S. subsidiary, Xiao-I Plus Inc., marking another significant milestone for its global expansion strategy.Launched IDP Solution for Future-Ready Enterprise Document Management: In May 2023, Xiao-I launched its state-of-the-art Intelligent Document Processing (“IDP”) product. This innovative solution is delivered by a smart and efficient platform that streamlines and automates the document management process, empowering businesses towards an era of intelligent operations.Recognition as Outstanding Supplier by China Merchants Bank Credit Card Center: In May 2023, Xiao-I announced that the Credit Card Center of China Merchants Bank Co. recognized it as an outstanding supplier. This prestigious acknowledgement follows the Bank’s annual supplier assessment evaluation for 2022, during which Xiao-I demonstrated exemplary performance in business collaboration, product implementation, and service quality.
First Half 2023 Financial Results
Net Revenues
Net revenues were US$26.5 million for the first half of 2023, up 106% year over year from US$12.9 million for the same period of 2022. The increase was primarily due to the increased sales of cloud platform products and hardware products.
By Revenue Type 1H 2023
1H 2022 % Change
YoYSale of cloud platform products $22,719,659 $3,648,339 523 Technology development service 1,763,797 6,296,844 (72)Sale of software products 535,004 1,397,996 (62)Maintenance & support service 1,426,784 1,497,871 (5)Sale of hardware products 30,175 18,431 64 Total $26,475,419 $12,859,481 106
Cost of Revenues
Cost of revenues was US$6.0 million for the first half of 2023, up 61% year over year from US$3.7 million for the same period of 2022. With a smaller increase compared to net revenues, cost efficiency has improved due to economies of scale.
Gross Profit
Gross profit was US$20.5 million for the first half of 2023, representing an increase of 124% year over year from US$9.1 million for the same period of 2022. Gross margin was 77.3% for the first half of 2023, up 620 basis points from 71.1% for the same period of 2022. The increase in gross margin was mainly due to a shift in product mix towards subscription for cloud platform products from one-time software sales.
Operating Expenses
Total operating expenses were US$34.1 million in the first half of 2023, representing an increase of 355% year over year from US$7.5 million for the same period of 2022. While the selling, general and administrative expenses demonstrated improved efficiency with larger business scales, they couldn’t offset the increase in research and development expenses, which grew by 708% year over year.
Income (Loss) from Operations
Loss from operations was US$13.6 million for the first half of 2023, compared to an income of US$1.6 million from operations for the same period of 2022.
Total Other Loss
Total other loss was US$1.3 million for the first half of 2023, generally on par with the same period of 2022.
Net Income (Loss)
Net loss was US$18.8 million for the first half of 2023, compared to a net income of US$0.6 million for the same period of 2022.
The financial statements for the first half year ended June 30, 2023 herein have not been audited or reviewed by the Company’s independent registered accounting firm. The financial statements for the six months ended June 30, 2023 to be disclosed in the Company’s Form 6-K may differ from the above-mentioned unaudited and unreviewed financial statements.
Conference Call Information
The Company will conduct a corresponding conference call at 8:00 a.m. U.S. Eastern Time (8:00 p.m. China Time) to discuss the results.
What: Xiao-I First Half 2023 (ended June 30, 2023) Earnings CallWhen:8:00 a.m. U.S. Eastern Time on Monday, September 25, 2023Webcast: ir.xiaoi.com/events
To join the conference call via telephone, participants must use the following link to complete an online registration process. Upon registering, each participant will receive email instructions to access the conference call, including dial-in information and a PIN number allowing access to the conference call. This pre-registration process is designed by the operator to reduce delays due to operator congestion when accessing the live call.
Online Registration: https://register.vevent.com/register/BI10db54de77c5448db98e85f4efbfed41
Participants who have not pre-registered may join the webcast by accessing the link at ir.xiaoi.com/events.
A live and archived webcast of the conference call will be available on the Investors section of Xiao-I’s website at www.xiaoi.com.
About Xiao-I Corporation
Xiao-I Corporation is a leading cognitive intelligence enterprise in China that offers a diverse range of business solutions and services in artificial intelligence, covering natural language processing, voice and image recognition, machine learning and affective computing. Since its inception in 2001, the Company has developed an extensive portfolio of cognitive intelligence technologies that are highly suitable and have been applied to a wide variety of business cases. Xiao-I powers its cognitive intelligence products and services with its cutting-edge, proprietary AI technologies to enable and promote industrial digitization, intelligent upgrading, and transformation.
Forward-Looking Statements
Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “approximates,” “assesses,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the SEC.
For investor and media inquiries, please contact:
Ms. Berry Xia
Phone: +86 186 8158 5169
Email: ir@xiaoi.com
XIAO-I CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(In U.S. dollars, except for share and per share data, or otherwise noted) As of December 31,
2022 June 30,
2023 （Unaudited) Assets Current assets: Cash and cash equivalents $1,026,245 $4,746,836 Accounts receivable, net 41,362,705 16,025,831 Amounts due from related parties 346,517 – Inventories 768,216 701,119 Contract costs 2,012,309 1,936,073 Advance to suppliers 1,115,672 1,586,618 Deferred offering costs 1,330,902 – Prepaid expenses and other current assets, net 460,854 6,656,705 Total current assets 48,423,420 31,653,182 Non-current assets: Property and equipment, net 219,470 313,953 Intangible assets, net 637,114 557,995 Long-term investment 2,852,492 3,187,416 Right of use assets 865,399 969,400 Deferred tax assets, net 3,888,574 – Prepaid expenses and other, non-current assets 3,697,675 3,616,218 Amount due from related parties-non current – 11,018,714 Total non-current assets 12,160,724 19,663,696 TOTAL ASSETS $60,584,144 $51,316,878 Commitments and Contingencies Liabilities Current liabilities: Short-term borrowings $18,784,459 $16,548,757 Accounts payable 9,180,532 7,222,235 Amount due to related parties-current 896,431 742,714 Deferred revenue 2,553,808 3,444,636 Convertible loans 3,754,269 – Accrued expenses and other current liabilities 17,006,713 9,214,618 Lease liabilities, current 435,462 458,018 Total current liabilities 52,611,674 37,630,978 Non-current liabilities: Amount due to related parties-non current 8,581,743 7,573,563 Accrued liabilities, non-current 8,073,912 5,194,843 Lease liabilities, non-current 300,974 392,436 Total non-current liabilities 16,956,629 13,160,842 TOTAL LIABILITIES 69,568,303 50,791,820 Shareholders’ (deficit)/equity Ordinary shares (par value of $0.00005 per share; 1,000,000,000 shares authorized as of December 31, 2022 and June 30, 2023, respectively; 22,115,592 and 24,015,592 shares issued and outstanding as of December 31,2022 and June 30, 2023, respectively) $1,106 $1,201 Additional paid-in capital 75,621,294 108,762,797 Statutory reserve 237,486 237,486 Accumulated deficit (78,483,156) (102,449,177) Accumulated other comprehensive loss (3,262,666) (2,852,695) XIAO-I CORPORATION shareholders’ (deficit)/equity (5,885,936) 3,699,612 Non-controlling interests (3,098,223) (3,174,554) Total shareholders’ (deficit)/equity (8,984,159) 525,058 TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT)/EQUITY $60,584,144 $51,316,878
XIAO-I CORPORATIONUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)(In U.S. dollars, except for share and per share data, or otherwise noted) For the six months ended June
30, 2022 2023 Sale of software products $1,397,996 $535,004 Sale of hardware products 18,431 30,175 Technology development service 6,296,844 1,763,797 M&S service 1,497,871 1,426,784 Sale of cloud platform products 3,648,339 22,719,659 Net revenues 12,859,481 26,475,419 Cost of sale of software products (170,377) (368,021) Cost of sale of hardware products (12,545) (26,118) Cost of technology development service (2,661,707) (1,286,290) Cost of M&S service (339,213) (805,948) Cost of sale of cloud platform products (536,863) (3,519,521) Cost of revenues (3,720,705) (6,005,898) Gross profit 9,138,776 20,469,521 Operating expenses: Selling expenses (2,094,124) (2,377,409) General and administrative expenses (1,725,928) (2,070,052) Research and development expenses (3,669,196) (29,649,703) Total operating expenses (7,489,248) (34,097,164) Income/(Loss) from operations 1,649,528 (13,627,643) Other loss: Investment losses (121,618) (225,351) Interest expenses (1,202,391) (1,570,847) Other income, net 44,160 525,431 Total other loss (1,279,849) (1,270,767) Income/(Loss) before income tax expense 369,679 (14,898,410) Income tax benefits/(expenses) 220,820 (3,871,118) Net income/(loss) $590,499 $(18,769,528) Net loss attributable to non-controlling interests (2,674) (173,782) Net income/(loss) attributable to XIAO-I CORPORATION shareholders 593,173 (18,595,746) Other comprehensive income/(loss) Foreign currency translation change, net of nil income taxes 145,129 507,422 Total other comprehensive income 145,129 507,422 Total comprehensive income/(loss) $735,628 $(18,262,106) Total comprehensive income/(loss) attributable to non-controlling interests 124,849 (76,331) Total comprehensive income/(loss) attributable to XIAO-I CORPORATION shareholders 610,779 (18,185,775) Earnings/(Loss) per ordinary share attributable to XIAO-I CORPORATION shareholders Basic 0.03 (0.80) Diluted 0.03 (0.80) Weighted average number of ordinary shares outstanding Basic 22,115,592 23,308,370 Diluted 22,362,552 23,308,370
