(Yicai) Oct. 20 -- IFlytek's stock price fell after the Chinese developer of artificial intelligence technologies said profit tumbled 82 percent in the third quarter from a year ago because of increased investment in AI and large language models.

IFlytek [SHE: 002230] closed down 5.1 percent at CNY51.08 (USD7.08) a share in Shenzhen today. The stock has soared 56 percent this year to date, after touching a record high of CNY81.88 on June 20.

Net profit was CNY25.8 million (USD3.5 million) in the three months ended Sept. 30, the firm said in an earnings report released yesterday. Operating revenue rose 2.9 percent to CNY4.8 billion (USD655.9 million), gross profit climbed 3.6 percent to CNY1.9 billion, and net operating cash flow was CNY357 million (USD48.8 million).

IFlytek kept up a good development pace in the third quarter, the Hefei-based company noted. Although investment in AI and large language models affects profit, that has laid a technical foundation and first-mover advantage for long-term development, according to the firm.

Set up in 1999, iFlytek is best known for its advanced speech recognition technology and invests a significant share of revenue in research and development to advance its technology and maintain the firm’s position as a leading Chinese AI developer.

IFlytek spent CNY981 million (USD134 million) on R&D in the September quarter, a 10 percent increase from a year earlier and up 23 percent on the second quarter. Sales expenses jumped 9.9 percent to CNY834 million from a year ago.

The company will release the third version of its Spark Cognitive Model, a general AI tool benchmarked against OpenAI’s ChatGPT, it said. IFlytek will also launch medical LLMs, AI learning machine applications, and AI psychological counseling, as well as jointly release LLMs with 12 industry leaders related to their sectors, it noted.

In the first nine months of the year, operating income was CNY12.6 billion (USD1.7 billion), down 0.3 percent from a year ago, the report showed. Net profit shrank 76 percent to CNY99.4 million.

IFlytek's credit impairment losses totaled CNY282 million as of Sept. 30, versus CNY15.7 million (USD2.2 million) in the same period of last year. It did not explain the more than 17-fold jump.

Editor: Martin Kadiev