AI Startup 4Paradigm Submits Third IPO Application to HKEx

According to an announcement by the Hong Kong Stock Exchange (HKEx) on September 5, artificial intelligence software company 4Paradigm has submitted a listing application for the third time, with Goldman Sachs and CICC as co-sponsors. The company previously submitted applications on August 13, 2021 and February 23, 2022 respectively.

4Paradigm, established in 2014, mainly provides platform-centered AI solutions, enabling enterprises to realize rapid and large-scale intelligent transformation. The firm’s solutions now cover industries such as finance, retail, manufacturing, energy and power, telecommunications, and medical care.

In this version of the prospectus, 4Paradigm also offered updates on its financial situation. From 2019 to 2021, the revenues of 4Paradigm were 460 million yuan ($66.3 million), 942 million yuan and 2.018 billion yuan respectively. Revenues in the first half of 2022 were 1.058 billion yuan, a year-on-year increase of 34.3%.

The main income sources of 4Paradigm are its “Sage” platform and application products and development. According to the prospectus, revenue growth in the first half of 2022 was due to an increase in the firm’s number of users, as well as greater revenue generated by the Sage platform and products. The proportion of this part of overall revenue increased from 47.7% in the first half of 2021 to 50.2% in the first half of 2022.

From 2019 to 2021, the gross profit margin of 4Paradigm was 43.5%, 45.6% and 47.2%, respectively, increasing to 50.0% in the first half of 2022, which was mainly due to an increase in revenue contribution by Sage software licenses.

Despite the increase in income, 4Paradigm is still facing losses. The firm’s adjusted operating losses from 2019 to 2021 were 317 million yuan, 386 million yuan and 568 million yuan respectively, and 219 million yuan in the first half of this year.

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R&D expenditure is the largest cost of 4Paradigm. From 2019 to 2021, R&D expenses were 416 million yuan, 565 million yuan and 1.249 billion yuan respectively. It reached 557 million yuan in the first half of 2022.

According to data by China Insights Consultancy, according to 2021 revenue, 4Paradigm occupies the largest market share in China’s platform-centered AI decision-making field.