By Greg Gao

(JW Insights) Apr 26 -- iFlytek(科大讯飞), China’s leading listed AI company, announced its 2023 first-quarter results recently with a loss. Meanwhile, the company predicted an optimistic outlook and expected positive growth in the second quarter.

During the first quarter, iFlytek generated RMB2.888 billion($417.2 million) in revenue and posted a net loss of RMB58 million($8.38 million), which represents a shift from profit to loss on a year-over-year basis.

The company attributed the drop of Q1 revenue and profits to the unusual social and economic environment between December 2022 and January 2023. The company was placed on the “entity list” by the US Commerce Department in October 2019 with restricted access to American products and technology. It suffered another blow last October when the Biden administration placed it on export control list, affecting iFlytek's operations and supply chain stability.

iFlytek was forced to hold off on project progress and new contract signings. Many of its large projects experienced delays in Q1. These unexpected conditions led to revenue drop. However, iFlytek considers the impact temporary, and its long-term business fundamentals unaffected.

ChatGPT sets off a wave of global interest in generative AI technologies. Many Chinese companies rush to develop homegrown rivals to the OpenAI-developed chatbot. iFlytek announced last December that it had prioritized developing a generative AI pre-training large-scale model. It said it will use ChatGPT-related technology to build its AI learning devices and is scheduled to launch a large language model on May 6.

The new project’s incremental investment, to some extent, affected the current profit, but it will significantly improve the competitiveness of iFlytek’s existing products, the company said.

Despite its revenue decline in Q1, iFlytek has made headways in its product developments and expects revenue and gross profit growth from Q2. It remains optimistic about targeting high-quality growth throughout the year.

Established in 1999 and listed on the Shenzhen Stock Exchange in 2008, iFlytek has pioneered speech recognition and AI in China. It offers voice recognition and automatic translation services.