Liu Qingfeng delivered keynote speech in iFLYTEK 2023 Annual Conference.

Liu Qingfeng: A Solid Performance in 2022 Lays Groundwork for a New Era of High-Quality Development

iFLYTEK Chairman Liu Qingfeng delivered a keynote speech to over 10,000 company employees during the iFLYTEK 2023 Annual Conference. The following are excerpts from Chairman Liu Qingfeng’s speech:

Dear friends, greetings! Finally, here we are in 2023. It is time to bid farewell to 2022 and think about our development as we look ahead.

First, on behalf of iFLYTEK, I would like to acknowledge all our colleagues who are still working for the company’s benefit as we speak. Today, I want to delve into some of the core principles of iFLYTEK and how we look to the future as we plan our next steps.

In the first three quarters of 2022, our gross profit increased by 8.57%. iFLYTEK was the only company in the A-share market with an annual revenue growth rate exceeding 25% for ten consecutive years. Now, what does this mean? It means we have doubled every three years. External developments impacted our growth in the first three quarters of 2022, making it difficult to conduct large parts of our business. In education alone, over ten projects were postponed, with a contract amount of 1.6 billion yuan.

Why did our profit drop by 17.04% despite the slight increase in gross profit? That’s because we are talking about the net profit deducting nonrecurring gains and losses. Our gross profit rose by about 400 million yuan, compared with a 900-million-yuan increase in our expenses, of which about 70% were personnel costs. Many of our staff work on base area development and the R&D of new products. They didn’t contribute to our current yield in 2022, so personnel costs currently form the largest share of our expenses.

At the end of the third quarter of 2022, we were confident that we would take back the market share we lost during the upcoming fourth quarter, a vital period of revenue earnings. However, some major projects were delayed, yet we continued with the two core strategies of base area development and systematic innovation—as found in our company’s 14th Five-Year Plan—so that our base business would continue to grow. Despite the obstacles we faced, iFLTYEK’s base business witnessed 23% year-on-year growth. I’d note that a large part of our base business is related to education. We further benefited from the registered 13% increase in the fourth quarter, which eased the pressure caused by the delay of large projects.

In addition, through effective personnel management and improvements in efficiency, our expenses in the fourth quarter were nearly identical to last year’s.

How then should we view 2022? Although we didn’t meet our goals in terms of business performance, we have cemented the groundwork for sustainable development. We never stopped developing new products and technologies oriented toward the future and remain a leader in China for core technologies and safe and controllable R&D platforms. We have also improved our management and mechanisms for better structure and performance. Our blueprint for the future was central to our decision to continue to invest in our tested processes during 2022.

We are now poised to seize the opportunities ahead of us and are well-positioned for the development and application of multilingual technology. The sales volume of our intelligent hardware exceeded 50,000 units last year, which shows our successful endeavor in exploring the Japanese and South Korean markets. As for language learning, we have earned more than 40 million yuan of revenue in Japan alone and have become an industry leader. Our Chinese learning solutions have gone on to reach over 100 countries around the world.

The conditions for iFLYTEK in the overseas development of our multilingual technology are only improving and our competitive products are ready to break into the global market. We will begin to expand the reach of our intelligent hardware through online and offline channels in Japan, South Korea, and Southeast Asia, and continue to bring English-centered translation machines to the global market. Furthermore, more competitive products will be launched on the iFLYTEK Open Platform to build a global developer ecosystem, while our global English testing and support for domestic carmakers in their overseas efforts will go hand-in-hand.

In addition to supporting Chinese carmakers in going global, we will also explore the local market in Japan and increase our market presence in Germany. In 2023, the sales volume of intelligent hardware is expected to rise to 300,000 units, and the number of newly built teams of developers will exceed 200,000. In five years, we will become the world’s leading multilingual voice and language technology provider by utilizing our AI blueprint that covers every field, from voice to cognition.

We believe that performance can help a company grow, but what makes a company great is its dedication to principles and ever-growing aspirations for the future. As always, iFLYTEK will stay true to its core values and focus on creating value not only for our users but for all of society.

It is our goal to earn 20 billion yuan in education, but what we truly seek is for children in remote mountainous areas to have access to equitable and quality education, for 200 million students in China to be taught by their aptitude through efficient teaching environments, and for better mental health services for adolescents that will enable them to lead happy and fulfilling lives. For iFLYTEK, realizing these goals goes beyond 20 billion yuan—they are priceless.

The same is true for medical care. In addition to our 10 billion yuan target, we hope to facilitate chronic disease management and ensure follow-up visits by family doctors for 500 to 600 million users by the end of our 14th Five-Year Plan. It is also our mission to provide people in remote rural areas with high-quality medical services to reduce misdiagnoses and make healthcare more convenient and accessible.

In an aging society, our emphasis should be on ensuring the elderly can live with dignity and joy. By bringing the iFLYTEK Super Brain 2030 robots to households and further applying AI and big data, we are tackling labor shortage issues and empowering industrial manufacturing. These are all part of our original mission.

We are committed to solving the issues society continues to face and aiding generations with core technologies and systematic innovation. While the future is uncertain, keeping to this mission will never change for iFLYTEK.

I’m deeply convinced that AI can truly empower every industry and make our world a better place.

Thank you!

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