[This Week's Industry Insight] Flitto, Language Data Sales Essential for AI Advancement

Building AI Training Language Data through Proprietary Platform
Revenue Growth and Profit Turnaround Expected with AI Market Expansion
Continuous Investment to Enhance Platform

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Flitto is a company that sells language data collected through its own translation platform after verification. It also provides services for building translation data and operates various content businesses. Approximately 14 million users worldwide use the platform. The user base is high in China, North America, and North Africa.

Flitto offers various AI-based multilingual services based on its accumulated language AI business competitiveness and expertise, including ▲development and advancement of translation software for 25 languages ▲domestic and international market expansion through building AI training language data ▲development of professional translation management software ▲launch of high-performance translators integrated with generative AI ▲development of the CT engine, which enhances AI translation engines and speech-to-text conversion engines. It can also handle professional translations for corporate contracts, books, videos, and webtoons. Flitto recorded operating revenue of 12.7 billion KRW and an operating loss of 4.2 billion KRW up to the third quarter of last year. The sales composition by business segment is 69.9% from data sales and 30.1% from platform services. Among data sales, 41.9% was earned overseas.

Flitto has participated for three consecutive years in the 'Korean-foreign language parallel corpus construction project group.' Considering countries with high interest in Korean culture but relatively small amounts of language data, it is building AI training parallel corpora in eight languages, including Vietnamese, Indonesian, Thai, Indian Hindi, Russian, and Uzbek.

In-house AI Translation Engine Development... High Accuracy as a Competitive Edge

To improve accuracy in the process of recognizing speech, converting it to text, and translating, Flitto developed the 'CT engine' in-house. The existing AI translation engine and speech-to-text conversion engine were enhanced through corpus and speech data training. The more data accumulated, the higher the CT engine's accuracy becomes. Based on the CT engine, which dramatically improves AI translation and speech-to-text (STT) performance through data training, Flitto is preparing a 'Live Translation' service capable of real-time multilingual interpretation and translation. Audiences attending conferences or business meetings can check the speaker's presentation in their native language.

The digital multilingual translation service 'Flitto Menu Translation' is easily accessible in domestic department stores and traditional markets. By simply scanning the QR code inside the store, users can conveniently check multilingual menus. Menu translation is a challenging task because it involves not only food names but also ingredients and cooking methods, reflecting unique food cultures. The Flitto Menu Translation service provides the most accurate and natural multilingual menus by first translating with Flitto AI and then undergoing a review process by platform translators.

Since its establishment in August 2012, Flitto has accumulated technological expertise in language data and professional translation fields, gaining high reliability. Lee Jeong-su, CEO of Flitto, received the Presidential Citation for Software Industry Development at the '24th Software Industry Day' ceremony held on November 27 last year. The Software Industry Day ceremony is hosted by the Ministry of Science and ICT and organized by the National IT Industry Promotion Agency and the Korea Software Industry Association. Every year, contributors to the development of the software industry are selected and awarded.

CEO Lee was recognized for his contribution to the development of the domestic and international language AI industry by providing high-quality multilingual data through the development and operation of integrated translation software. He said, "Starting from a collective intelligence translation platform, the enthusiasm and efforts of all employees have led to meaningful achievements in becoming a leading company in the data field, the 'crude oil' of the language AI industry. In the era of super-large AI, the value of high-quality data with secured reliability is more important than anything else."

Since the end of last year, Flitto has been providing a 'Conversation Translation' service in collaboration with the Seoul Metropolitan Government. The conversation translation service is a simultaneous interpretation-style multilingual translation service that allows foreign tourists and staff to communicate conveniently and accurately in their respective native languages. AI converts questions and answers into text and displays the translation results in real time on a transparent screen. It can be used in places requiring foreign tourist assistance such as tourist information centers, information desks, ticket booths, subway stations, and terminals. It supports a total of 11 languages, including English, Chinese (Simplified), Japanese, Thai, Vietnamese, Malay, Indonesian, Arabic, Russian, Spanish, and French.

Lee Byung-hwa, a researcher at Shinhan Investment Corp., explained, "The AI market blossomed last year, and various AI services will be launched this year. Major domestic and international IT and internet companies are preparing AI services in collaboration with Flitto." He added, "The demand for data input and large language model (LLM) error correction will increase explosively to advance AI."

To reduce AI service errors, numerous corpora and error correction values must be continuously input. Flitto possesses diverse language data and also has price competitiveness. As exchanges with the Middle East, including Saudi Arabia, become more active, demand for Arabic corpora remains steady. High value-added Arabic corpora are supplied at five times the price compared to English and Chinese per sentence pair.

Shinhan Investment Corp. estimated that Flitto will achieve operating revenue of 28.4 billion KRW and operating profit of 4.5 billion KRW this year. Operating revenue is expected to increase by 65.1% compared to last year, and operating profit is expected to turn positive.

AI Growth: Opportunity and Crisis... Continued Investment in Function Advancement

As the AI industry develops, Flitto's growth potential has also increased. Major domestic and international IT clients have recently expanded investments related to AI. Demand for high-quality language data is rising. With the active overseas expansion of K-webtoons and web novels, it is expected to expand localization service businesses with related companies such as Ridibooks, Lezhin Comics, and Kidari Studio.

While AI development brings many opportunities, falling behind in technology development could lead to obsolescence. If a specific AI service monopolizes the market, Flitto's position could narrow significantly. This is why investment in platform advancement cannot stop. Recently, Flitto completed the advancement of its integrated crowdsourcing platform functions. Through this advancement, building data for 'Reinforcement Learning with Human Feedback (RLHF)' to improve LLM performance has become easier. RLHF is a method that uses human feedback as a reward signal to train AI models in generating language outputs. Demand for RLHF is increasing worldwide to improve performance for natural conversation generation, highly accurate information retrieval, multilingual translation, and other high-quality language generation.

Flitto has established a work environment for producing reinforcement learning data of 10 types on its own platform, including ▲evaluating chatbot answers and correcting them to accurate responses ▲describing given image content ▲building prompt-response datasets for fine-tuning in specialized fields ▲generating process sequences taken by the system to derive accurate results during information retrieval ▲tagging text, images, and voice for multimodal learning.

Beyond understanding and analyzing the context of text and images, language data is also needed in the development of 'multimodal AI' that can comprehend human language and complex video contexts. Orders for images and voice for multimodal AI training are increasing. Since Flitto uses images directly taken by platform users, it is relatively free from copyright disputes.

As AI technology advances, governments worldwide are also facing growing concerns. While they need to foster the AI industry to strengthen national competitiveness, they cannot ignore the side effects of AI development. If regulations tighten and the AI ecosystem changes rapidly, failure to adapt could lead to obsolescence. Global companies sometimes lower trust in AI by launching immature AI services to preempt the AI market. If major AI technology developers delay investments, it could also affect Flitto's performance.