(Yicai) April 23 -- Shares in iFlytek tumbled today after the Chinese artificial intelligence developer reported that its losses in the first three months expanded five times from a year earlier mainly due to increased spending on large language model development and other technologies.

iFlytek’s share price [SHE:002230] closed down 5.2 percent at CNY41.97 (USD5.80). Earlier in the day it sank 7.79 percent to CNY40.83.

iFlytek racked up losses of CNY300 million (USD41.3 million) in the three months ended March 31, but revenue soared 26.2 percent to CNY3.6 billion (USD496.7 million), the Shanghai-based company said in its latest earnings report.

The increased losses are largely the result of increased spending on LLM research and development, core technology and other areas, as well as declines in the returns from financial assets it holds, it said.

This is a big change in fortune from 2023 when iFlytek logged a 17.1 percent jump in net profit to CNY660 million (USD91.1 million) from the year before, with revenue climbing 4.4 percent to CNY19.7 billion (USD2.7 billion), according to the 2023 earnings report published yesterday.

Most of iFlytek’s revenue last year was generated by its open platform and consumer business, and was boosted by the release of its LLM SparkDesk in May 2023. Earnings from this sector soared 33.4 percent year on year to CNY6.2 billion (USD855.7 million).

Since the launch of SparkDesk, the number of developers on its open platform more than tripled to 1.7 million and over 350,000 of these are LLM developers, iFlytek said. SparkDesk will be able to compete with US AI firm Open AI’s GPT-4 turbo in the first half, it added.

2023 revenue from smart cars jumped 52.2 percent to CNY700 million (USD96.5 million), that from smart healthcare climbed 14.9 percent to CNY540 million and that from smart finance soared 26.1 percent to CNY290 million.

iFlytek’s spending on R&D increased 14.3 percent last year from the year before to CNY3.8 billion (USD524 million), equivalent to 19.5 percent of total revenue, a gain of 1.7 percentage point from 2022, according to the annual report.

Editor: Kim Taylor