China’s Z.ai raises revenue target 25% after US$5 billion cash injection
Chinese artificial intelligence developer Z.ai has raised its year-end annual recurring revenue (ARR) outlook by 25 per cent to US$3 billion, as the firm indicated its fresh US$5 billion war chest had helped clear its computing capacity bottlenecks for the time being. The updated ARR projection, up from a previous estimate of about US$2.4 billion, was disclosed during an investor call on…
Chinese AI firm Z.ai has boosted its annual recurring revenue (ARR) forecast by 25% to US$3 billion, following a US$5 billion investment. The revised ARR estimate, up from an initial projection of around US$2.4 billion, was revealed during an investor conference call. This comes after the company raised capital through a share placement and convertible bond sale.
The additional funds will be used to bolster computing capabilities to meet growing demand for Z.ai's AI services. Z.ai's ARR, which tracks monthly subscription income over a year, reached US$1.8 billion so far this year. Executives noted that securing computing power no longer hinders the company's revenue growth. Z.ai's shares surged 5.9% to HK$720 in Hong Kong on Wednesday, helping to offset a 14.3% decline in shares over the previous two days due to a global AI stock slump.
The firm is currently trading at more than six times its January listing price. The resolution of computing constraints follows earlier this year when Z.ai temporarily halted sales of its Coding Plan due to a shortage of computing resources following the release of its GLM-5 model in February. Since then, the company's user base for coding services has surged by over 1 million within two weeks of the GLM-5 model's debut.
Z.ai plans to invest 30 billion yuan (US$4.5 billion) in infrastructure, which could add up to 100,000 petaflops of computing power, with 40% dedicated to model training and research and the remaining 60% for inference. This could potentially generate up to 40 billion yuan in annual revenue. Beyond coding tools, Z.ai's co-working solutions have gained traction, with industry orders surpassing 1 billion yuan since the release of GLM-5.3 in August.
The company has signed revenue-sharing agreements with several major cloud service providers, with related earnings expected to begin in October. In August, Z.ai reported a 400% revenue increase to 953.89 million yuan, narrowing its total loss for the period by 12.1% to 2.07 billion yuan, despite increased R&D spending.
Written by urgent.news from South China Morning Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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