Xiao-I Corp

Recent Developments . 73 Major Factors Affecting Our Results of Operations Our results of operations are affected by general factors influencing the AI software industry, including the pace of technological change, the availability and cost of computing infrastructure, enterprise IT spending levels, and the competitive intensity of integrated cloud service providers. We believe that, during the period covered by this report, our results of operations have been affected most directly by the following factors: Competitive Environment The market for AI-based customer-service and language-model solutions in the PRC is highly competitive, and competition intensified during 2025 as a result of expanded offerings from large integrated cloud platforms. During 2025, we implemented a strategic realignment to focus on vertical applications and deployment models in which we believe our domain expertise, customization capabilities and edge-deployment options provide a basis for differentiation. Enterprise Customer Spending Patterns The timing of our revenue recognition is sensitive to the duration of customer evaluation cycles and to enterprise IT spending patterns. Lengthened proof-of-concept periods and increased contractual focus on outcome-based deliverables observed during 2025 affected the timing of revenue recognition during the year, and also contributed to the increase in deferred revenue at period-end as compared to the prior year.