Chinese tech firm iFlyTek is expecting to report a net loss for its first-quarter earnings this year. One of the world's leading developers of artificial intelligence technologies attributed the disruptions in its operations due to the coronavirus pandemic as the main reason for its grim forecast.
According to the company's stock exchange filing submitted on Monday, it is projecting a potential net loss of between 125 million yuan to 135 million yuan for its March quarter. The figure is a stark contrast to the profits reported by the company of 101.9 million yuan over the same period last year.
In its filing, the company stated that the coronavirus pandemic has all but halted its project operations, deliveries, and inspections, which have in turn affected its revenue realization. The Shenzhen-listed firm did mention that the health and economic crisis is unlikely to severely hurt its business over the long-term.
iFlyTek assured stakeholders that the prospects for its business are still "increasingly favorable" and that gains made from its AI-based products are likely still going to see major growth. The company revealed that it was able to secure bids with contract sales amounting to about 920 million yuan. The contracts it had secured during the previous quarter should result in substantial revenue growth for its second quarter once the deals are completed.
The Chinese firm reasoned that it had to spend around 35 million yuan during its first quarter to develop different AI-based technologies to help in China's efforts to fight the pandemic. These technologies include smart medical consultation software, automated robot callers, and an AI-enable online education platform.
The company's founder, Liu Qingfeng, had previously stated that its efforts to develop new AI technologies are starting to pay off and different markets are quickly adopting its products.
Despite its claims, analysts still believe that the company will still be facing major hurdles in the coming quarters given the current geopolitical situation. Back in October last year, the company was placed under the US' trade blacklist, joining other Chinese tech firms such as Huawei Technologies and Hangzhou Hikvision Digital Technology. This effectively removes iFlyTek's access to US-made high-tech components such as advanced software and semiconductors.
A report from Forrester Research forecast that the coronavirus pandemic could result in a 2 percent contraction in China's broader tech industry for the first quarter. The report predicts that purchases should slightly recover during the second half of the year with overall annual growth reaching a low 4.5 percent.
