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Beijing Fourth Paradigm Technology Co., Ltd.

北京第四颗式智能技术股份有限公司
(A joint stock company incorporated in the People's Republic of China with limited liability)
(Stock Code: 6682)

BUSINESS PERFORMANCE

FOR THE FIRST QUARTER ENDED MARCH 31, 2025

This announcement is made by Beijing Fourth Paradigm Technology Co., Ltd. (the "Company", together with its subsidiaries, the "Group") on a voluntary basis.

BUSINESS REVIEW

Since the beginning of the first quarter of 2025, against the backdrop of China's accelerated development of artificial intelligence (AI) and cross-industry embrace of AI transformation, the Company's core business has delivered strong performance with rapid revenue growth. During the first quarter ended March 31, 2025 (the "Period"), the Company's total revenue amounted to RMB1,077 million, representing a year-on-year growth of 30.1%. Gross profit was RMB444 million, marking a 30.1% year-on-year increase. The Company's gross profit margin remained stable as compared to the same period last year and stood at 41.2% during the Period.

As a pioneering AI company with over a decade of deep industry expertise, the Company remained committed to serve clients through diverse and comprehensive AI technologies and products, driving industry advancement through sustained technological innovation. During the Period, our R&D expenditure amounted to RMB368 million, representing a 5.7% year-on-year increase. Meanwhile, in the course of our continuous development and growth, we maintain our unwavering commitment to maximizing the interests of all shareholders while enforcing stringent efficiency standards for resource allocation. During the Period, the Company's R&D expense ratio was 34.2%, representing a year-on-year decrease of 8 percentage points, demonstrating strong scale effects while maintaining R&D and innovation investments.

During the Period, benefiting from our continuous efforts to diversify the customer base, the number of the Company's lighthouse users reached 59. While expanding the number of customers, the Company focused on deepening penetration of high-value customer scenarios to enhance product stickiness. During the Period, the average revenue contribution from the Company's lighthouse users amounted to RMB11.67 million, representing a year-on-year increase of 31.3%.

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CORE BUSINESS PROGRESS: DRIVEN BY AI AGENT + WORLD MODEL, WE HAVE HELPED CUSTOMERS ACHIEVE HIGH-VALUE APPLICATIONS

The AI agent domain has been our key R&D focus as AI enters the big model era. AI agents excel at complex task decomposition and planning, demonstrating enhanced understanding of human instructions and intentions. Leveraging large language models' reasoning capabilities, they can decompose complex objectives and dynamically adjust strategies to adapt to environmental changes. Through the integration of multimodal data, AI agents can realize dynamic environmental perception and interaction, and support the world model in continuously learning and updating physical principles. In addition, combined with underlying toolkits, AI agents actively utilise external resources to complete tasks while facilitating optimization of the underlying vertical world model.

DeepSeek made its ground-breaking debut during the 2025 Spring Festival. As a trailblazer among domestic large models, it features high performance, low cost and complete open-source accessibility, shattering the constraints of traditional AI development paradigms. This breakthrough has propelled the AI industry, particularly in the domain of large language models, to transition from a training-focused era to an inference-driven phase. Such transformative shift has moved language models out of research labs and into real-world enterprise production and service environments, accelerating the deployment of AI agents across countless industries. At the same time, by leveraging core AI technologies including automated machine learning, reinforcement learning and migration learning, the Company continued to help enterprise customers in more than 14 industries to train massive vertical world models using high-value scenario data, which covers the five major business operating segments: research and development, production, supply, sales and services. We believe that in enterprise scenarios, the synergistic integration of AI agent + vertical world model can truly help corporate clients create an organic closed loop system that seamlessly connects human operators, intelligent agents and business data, and build up a next-generation AI system structure for enterprises, so as to continuously accumulate data flywheel advantages for them, and ultimately unleash the potential for performance growth.

During the Period, we continued to promote the training of vertical world models and the application of AI agent in various industries. Simultaneously, we put continuous focus on key industries including finance, energy and power, transportation and telecom operators while further enhancing our penetration in strategic sectors such as manufacturing, healthcare and retail. We worked closely with our customers to explore the high-value AI agent applications in enterprise services. Leveraging our core decision-making engine, we deployed solutions including bank account manager agent, retail store management agent, aircraft 3D design agent, water and electricity equipment management agent, port supply chain management agent, automotive parts manufacturing agent, etc.. These applications cover the core operational aspects of various industries, enabling corporate clients to achieve substantial efficiency improvements in production scheduling, process management, precision decision-making and others. Driven by booming demand for high-value AI applications, the Company's core business segment "4ParadigmSage AI Platform" sustained its robust growth.

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PERFORMANCE BY BUSINESS SEGMENTS

4ParadigmSage AI Platform (4ParadigmSage)

During the Period, the 4ParadigmSage AI Platform business (the “4ParadigmSage AI Platform”) generated revenue of RMB805 million, representing a 60.5% year-on-year increase. Revenue from the 4ParadigmSage AI Platform business accounted for 74.8% of the Group’s total revenue.

During the Period, the 4ParadigmSage AI Platform welcomed a brand-new upgrade, further launching the end-to-end AI agent development platform to complement its existing comprehensive AI model development toolkit. Enterprise customers can now seamlessly integrate 150+ mainstream large models through Model Hub, the built-in big model application platform on the 4ParadigmSage Platform. They can also utilize dozens of built-in agent intelligence frameworks to build a complete LLM Ops system and manage the entire AI agent development lifecycle. The 4ParadigmSage Platform is also newly equipped with a rich and out-of-the-box AI application matrix. Through the pre-installed intelligent application suite, it covers the core enterprise scenarios, including AIGC, smart office, digital workforce, smart Q&A, AI local search, analytics decision making, large model development tools, model warehouse and DevOps.

In addition to continuously iterating its core platform capabilities, 4Paradigm has also made horizontal inroads into high-frequency enterprise software products. Partnering with other leading enterprise software companies in the industry, it continues to empower Chinese enterprises in innovating their intelligent operational paradigms. 4Paradigm has recently forged a strategic partnership with a leading domestic provider of enterprise OA system solutions. The two parties will carry out in-depth collaboration around the “intelligent upgrade of collaborative operation platforms” and the “implementation of enterprise-level AI applications”. Through this partnership, they will leverage the AI-COP next-generation collaborative operation platform, integrate 4Paradigm’s AI capabilities and jointly launch an integrated enterprise AI application solution. This solution supports the private deployment of large models, ensures enterprise data security, and promotes the digital and intelligent transformation and high-quality development of enterprises and institutions. Through the construction of our ecosystem partnership system, we are also able to further focus on providing base model capabilities. By centering on the core methodology of North Star Metric, we enable our partners to jointly drive the enhancement of the core business value of enterprises alongside us. Simultaneously, by leveraging the end-to-end capabilities, industry insights and client resources of our ecosystem partners, we are able to extend our reach into more segments more efficiently, and further promote the expansion of product boundaries and the integration of resource efficiency. In the future, the Company will work with more enterprise application partners to create various enterprise process and business software driven by AI agents, so as to enhance the business operation efficiency of corporate clients.

In terms of software-defined computing power, the Company also achieved a number of capability breakthroughs in the first quarter. During the Period, the Company launched SageOne IA, a newly upgraded all-in-one computing solution. On the basis of supporting mainstream large models such as DeepSeek V3/R1, Qwen 2.5 and LLama3.3, this solution introduces dynamic scheduling functions for intelligent computing resources at the software level based on 4Paradigm's original vGPU resource pooling technology. This breaks through the computing power constraints of traditional physical architectures and achieves significant improvements in computing power utilization efficiency, including a GPU utilization rate of over 30%, a 3-fold increase in multi-task processing efficiency per machine, and a 5-10 times improvement in inference performance. Currently, the 4ParadigmSage Platform supports thousand-card-level cluster management and seamless computing power expansion for enterprises.

To address the surge in large model traffic load resulting from the deployment of various agent applications by enterprise clients, the 4ParadigmSage Platform has introduced "model autoscaling" technology, ensuring seamless performance during traffic fluctuations. Currently, companies typically use traditional scaling solutions, where when the load increases, manual intervention or system expansion of computing nodes based on predefined rules ensures the availability of services. When the load decreases, excess computing nodes are released, which to some extent increases computing costs and IT operational complexity. The "model autoscaling" technology enables the system to automatically and dynamically switch between models of different parameter sizes within the same series based on real-time load conditions, eliminating the need for additional expansion of computing nodes, reducing computing costs, enhancing the efficiency of resource utilization and significantly lowering operational workloads. For instance, in large model reasoning scenarios, the full-capacity model provides high-precision inference services under light loads. During peak hours, the system automatically switches the full-capacity version to one or more distilled/quantized model instances to handle high volumes of concurrent requests. By leveraging model preloading and other technologies, it ensures smooth switching without service interruptions or output quality fluctuations, delivering a seamless user experience. In the meantime, the system can preset a variety of load-based triggering conditions, such as GPU utilization, request queue length, response delay and other resource health metrics, to establish dynamic switching strategies and task routing mechanism, making the elastic solution more aligned with actual business needs.

4Paradigm's deep integration in a series of software-defined computing power initiatives marks a new phase for enterprise AI infrastructure – entering an era of “hardware-software co-design and driven” development. We will continue to deepen the integrated innovation of the 4ParadigmSage Platform's software with industry-specific scenarios and hardware computing power, enabling enterprises to achieve exponential gains in AI value realization.

SHIFT Intelligent Solutions (4Paradigm SHIFT)

During the Period, the SHIFT Intelligent Solutions business recorded revenue of RMB212 million, representing a year-on-year decrease of 14.9% and accounted for 19.7% of the Group's total revenue. This business is an extension of the "4ParadigmSage AI Platform" business in the solution side, and its expansion and development are fundamentally aimed at supporting the growth of the "4ParadigmSage AI Platform" as its core objective. It will continue to lead in implementing the industry's most cutting-edge application scenarios, and serve as a bellwether for the Company's extensive ecosystem partners.

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Building upon our underlying AI capabilities and robust large-scale model resources, we have developed standardized AI solutions for different business segments to address diverse pain points and meet the evolving needs of clients. During the Period, we continued to enhance dozens of exemplary use cases for industries such as finance, energy, healthcare and pharmaceuticals, retail, manufacturing, and telecommunications operators, further expanding both the depth and breath of our solution portfolio.

For example, in the construction industry, our intelligent 3D scanning and modeling terminal product provides capabilities including data acquisition, intelligent recognition, automatic modeling and other capabilities, enabling construction enterprises achieve efficient, convenient and accurate data processing and modeling across various application scenarios. This lays the foundation for construction enterprises' digital management and development. In the manufacturing sector, our AI products integrate industrial AI, optics, and large-scale modes to enable rapid, lightweight, and flexible deployment, delivering a standardized yet lightweight quality inspection system that ensures high efficiency and strong adaptive capability for manufacturers.

Based on above solutions, we can further penetrate into a wider range of industries and scenarios to address critical business challenges faced by traditional enterprises, thereby accelerating their digital and intelligent transformation.

4Paradigm SageGPT AIGS Services (4Paradigm AIGS)

During the Period, the revenue of the 4Paradigm SageGPT AIGS Services segment amounted to RMB60 million, accounting for 5.6% of the Group's total revenue. This business provides efficient development tools and services for the core "4ParadigmSage AI Platform" business. Revenue from the 4Paradigm SageGPT AIGS Services declined by 22.0% year-on-year, amidst the Company's strategic expansion pace for its core "4ParadigmSage AI Platform" business.

To further improve enterprise development efficiency, we have been continuously iterating on and optimizing our AIGS CodeX product, a generative AI-based auxiliary programming tool. The product covers the entire enterprise R&D process, providing one-stop services including code autocompletion, comment generation, code error correction, code refactoring, and unit test generation. It essentially provides each developer with a business-savvy "senior coding assistant", lowering the programming barrier and boosting R&D efficiency, while establishing a standardized "application production line", and thus comprehensively improves organizational efficiency.

BUSINESS OUTLOOK: GROUP BRAND REFRESH, AI EMPOWERING NEW FRONTIERS

Guided by the core concept of "AI agent + world model", the Company completed its corporate restructuring and brand upgrade during the Period. The existing enterprise services business (4Paradigm) will become a core sub-business of the Paradigm Group when it is established. The Paradigm Group upholds the vision for artificial general intelligence (AGI). Through the technology path of "AI agent + world model", the Paradigm Group aims to achieve AGI through continuously enhancing AI agents' communication capabilities while expanding the world model's understanding of various vertical segments, thereby strengthening AI's problem-solving capacities across specialized domains.

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Meanwhile, the Paradigm Group established a new consumer electronics business segment called Phancy, positioned as an AI agent-powered hardware-software integrated solution provider, delivering AI agent capabilities at the edge through intelligent agent modules. With an open collaboration mindset, we are dedicated to enabling diverse AI device manufacturers to effortlessly develop AI-powered end products. Moving forward, by leveraging the Paradigm Group's edge AI modules, we aim to empower consumer electronics brands to rapidly incorporate AI capabilities and launch user-favorite AI devices with lower barriers to entry and reduced costs.

In the face of the new ten-year journey, the Paradigm Group will leverage its decade-long expertise in vertical world models to extend AI capabilities beyond the niche market of enterprise software transformation into the broader software market, pursuing our vision of "AI for everyone".

The board of directors would like to remind investors that the data and the information contained in this announcement are based on the management accounts of the Group, which have not been reviewed or audited by the auditors of the Company and are for investors' reference only. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

By order of the Board

Beijing Fourth Paradigm Technology Co., Ltd.

北京第四颗式智能技術股份有限公司

Dr. Dai Wenyuan

Chairman and Executive Director

Hong Kong, May 15, 2025

As at the date of this announcement, the executive Directors are Dr. Dai Wenyuan, Mr. Chen Yuqiang and Mr. Yu Zhonghao; the non-executive Directors are Dr. Yang Qiang, Mr. Dou Shuai and Mr. Zhang Jing; and the independent non-executive Directors are Mr. Li Jianbin, Mr. Liu Chijin and Ms. Ke Yele.

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