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Jianzhi Education Technology Group Company Limited Reports First Half 2022 Financial Results

PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.
December 22, 2022 GMT

BEIJING, Dec. 22, 2022 (GLOBE NEWSWIRE) -- Jianzhi Education Technology Group Company Limited (the “Company” or “Jianzhi”) (NASDAQ: JZ), a leading provider of digital educational content in China, today announced its financial results for the first half of 2022.

  • Net revenues were RMB260.3 million ($38.8 million) for the first six months of 2022, compared to RMB276.4 million during the same period in 2021.

  • Gross profit was RMB40.0 million ($6.0 million) for the first six months of 2022, compared to RMB71.7 million during the same period in 2021.

  • Net loss for the first half 2022 was RMB2.9 million ($0.4 million) for the first six months of 2022, compared to net income of RMB43.8 million during the same period in 2021.

Yong Hu, CEO of the Company commented: “In the first half of 2022, our team worked relentlessly and managed to significantly scale up our business of IT related solution services via winning more projects as we continue to building our credentials in procurement and assembling of IT equipment. But our overall performance was affected by complying with local COVID-19 prevention and control policies that subjected some of our operations to on-and-off suspension, slowing down our topline growth. We dedicated and will continue to dedicate our efforts to ongoing innovations in the coming year, and focus on long-term value creation for the Company.”

First Six Months of 2022 Financial Results

Net revenues

Net revenues decreased by 5.8% from RMB276.4 million for the first half of 2021 to RMB260.3 million (US$38.8 million) for the first half of 2022. This decrease was primarily due to a decrease of RMB72.8 million, or 40.9% in net revenues from the provision of educational content services and other services, and partially offset by an increase of RMB56.7 million, or 57.6% in revenue generated from IT related solution services.

  • Educational content service and other services.     Net revenue from the educational content service and other services decreased by RMB72.8 million from RMB178.1 million for the first half of 2021 to RMB105.3 million (US$15.7 million) for the first half of 2022. The decrease was primarily due to combined effects of (i) a decrease in revenues from Light Class, because one of our VIE’s subsidiaries did not offer Light Class to mobile users through China United Network Communications Group Company Limited (“China Unicom”) or Wechat during the first half of 2022. The Company has resumed offering Light Class since August 2022, and (ii) a decrease of revenues from redemption of reward points by mobile users and from Fish Learning. The decrease was primarily because one of our major customers, Telefen, was subject to a three-month lockdown policy in Shanghai. Accordingly Telefen provided free online products including Fish Learning to public, leading to dramatic decrease in our revenues.

  • IT related solution services.     Net revenue from IT related solution services increased by RMB56.7 million, or 57.6% from RMB98.4 million for the first half of 2021 to RMB155.0 million (US$23.1 million) for the first half of 2022, primarily attributable to net effects of (i) an increase in revenue from procurement and assembling of IT equipment as a result of increase in the number of procurement and assembling projects we completed in the first half of 2022, and higher contract value of the procurement and assembling projects we completed in the first half of 2022, against (ii) a decrease in revenue from design and development of customized IT system service, resulting from the fact that the Company placed more focus on the procurement and assembling of IT equipment projects with advanced cash from customers in 2021.

The following table sets forth the Company’s revenue by business segments for the years indicated:

  For the six months ended June 30,
  2021 2022
  RMB RMB US$
  (in millions)
Revenues:      
Educational content service and other services      
– Educational content service      
– B2B2C 29.6 31.0 4.6
– B2C 141.7 71.8 10.7
– Other services 6.7 2.5 0.4
Subtotal 178.0 105.3 15.7
IT related solution services      
– Design and development of customized IT system 34.9 28.4 4.2
– Procurement and assembling of equipment 63.4 125.8 18.8
– Technological support and maintenance 0.1 0.8 0.1
Subtotal 98.4 155.0 23.1
Total revenues 276.4 260.3 38.8
       

Cost of revenues

Cost of revenue increased by 7.6% from RMB204.8 million for the first half of 2021 to RMB220.4 million (US$32.9 million) for the first half of 2022. The increase of cost of revenues was mainly caused by increase of revenues from procurement and assembling of IT equipment, which bears lower gross margin as compared with educational content services.

Gross profit

Gross profit decreased from RMB71.7 million for the first half of 2021 to RMB40.0 million (US$6.0 million) for the first half of 2022. Gross profit margin decreased from 25.9% for the first half of 2021 to 15.4% for the first half of 2022. The decrease was mainly due to the fact that (i) the gross profits margin for IT related solution services decreased for the first half of 2022, which was primarily because we completed more procurement and assembling equipment projects, for which we incurred significant equipment purchasing cost, resulting in relatively lower gross profit margin; and (ii) for the first half of 2022, revenues from educational content services decreased, while we continued to purchase new educational content to enrich current user’s experience and attract more customers with our comprehensive educational content library leading to a decrease in gross margin.

Operating expenses

The total operating expenses increased from RMB23.1 million for the first half of 2021 to RMB41.7 million (US$6.2 million) for the first half of 2022.

  • Sales and Marketing Expenses:    The sales and marketing expenses kept stable at RMB 4.1 million and RMB 4.1 million (US$0.6 million) for the first half of 2021 and 2022, respectively. This situation was mainly attributable to an increase in the service fee due to our continued efforts to further expand our user base in the first half 2022, partially net off against a decrease in payroll expenses because the Company cut 30% off on payroll expenses as affected by COVID-19 related measures, including quarantine and lockdown, reinstated by local government in the first half of 2022.

  • General and Administrative Expenses:    The general and administrative expenses decreased from RMB11.7 million for the first half of 2021 to RMB9.1 million (US$1.4 million) for the first half of 2022. This decrease was primarily due to (i) a decrease in the professional service expenses as we incurred higher audit fees during our process of IPO for the first half of 2021, and (ii) a decrease in payroll and welfare expenses because the Company cut 30% off on payroll expenses as affected by COVID-19 related measures, including quarantine and lockdown, reinstated by local government in the first half of 2022.

  • Research and Development Expenses:     The research and development expenses increased from RMB7.4 million for the first half of 2021 to RMB8.1 million (US$1.2 million) for the first half of 2022. This increase was mainly driven by an increase in the expenses incurred on outsourcing research and development projects.

  • Impairment of intangible assets and goodwill: Impairment of intangible assets and goodwill increased from RMB nil for the first half of 2021 to RMB 20.4 million (US$3.0 million). The increase was due to provision of the full impairment of RMB 12.7 million and RMB 7.7 million, respectively, against the customer relationship and goodwill acquired from the business combination with Guangzhou Xingzhiqiao Information Technology Co., Ltd. which generated RMB 0.1 million revenues from Light Class for the six months ended June 30, 2022.

Income Tax Expenses

The income tax expenses decreased from RMB8.1 million for the first half of 2021 to RMB2.6 million (US$0.4 million) for the first half of 2022. The changes in income tax expenses for the first half of 2022 was primarily due to a change from a taxable profit for the first half of 2021 to a taxable loss for the same period of 2022, and adjustment non-deductible impairment of goodwill for the first half of 2022.

Net income (loss)

As a result of the foregoing, net income decreased from RMB43.8 million for the first half of 2021 to net loss of RMB2.9 million ($0.4 million) for the first half of 2022.

Recent Development

On August 30, 2022, the Company closed its initial public offering of 5,000,000 American Depositary Shares (the “ADS”), representing 10,000,000 ordinary shares, at a public offering price of US$5.00 per ADS for the total gross proceeds of $25 million. The ADSs began trading on August 26, 2022 on the Nasdaq Stock Market under the ticker symbol “JZ”.

About Jianzhi Education Technology Group Company Limited

Headquartered in Beijing and established in 2011, Jianzhi is a leading provider of digital educational content in China and has been committed to developing educational content to fulfill the massive demand for high-quality, professional development training resources in China. Jianzhi started operations by providing educational content products and IT services to higher education institutions. Jianzhi also provides products to individual customers. Leveraging its strong capabilities in developing proprietary professional development training content and success in consolidating educational content resources within the industry, Jianzhi has successfully built up a comprehensive, multi-dimensional digital educational content database which offers a wide range of professional development products. Jianzhi embed proprietary digital education content into the self-developed online learning platforms, which are provided to a wide range of customers through its omni-channel sales system. Jianzhi is also fully committed to the digitalization and informatization of the education sector in China. For more information, please visit: www.jianzhi-jiaoyu.com

Safe Harbor Statement

This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. Statements that are not historical facts, including statements about the Company’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

Janice Wang
Wealth Financial Services LLC
Phone: +86 13811768559
+1 628 283 9214
Email: services@wealthfsllc.com

JIANZHI EDUCATION TECHNOLOGY GROUP COMPANY LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”),
except for number of shares and per share data)

   December 31,
2021
  June 30,
2022
  June 30,
2022
  RMB RMB US$
    (unaudited) (unaudited)
Assets      
Current assets:      
Cash and cash equivalents 61,266,782 4,152,252 619,915
Notes receivable - 5,000,000 746,480
Accounts receivable, net 104,775,266 53,577,350 7,998,888
Inventories 1,960,277 1,952,756 291,539
Deferred offering expenses 8,494,583 10,255,933 1,531,170
Due from a related party 2,473,750 842,920 125,845
Short-term prepayments 288,101,452 202,705,914 30,263,196
Short-term investments 11,430,000 4,080,000 609,128
Prepaid expenses and other current assets 5,123,221 7,831,392 1,169,196
Total current assets 483,625,331 290,398,517 43,355,357
       
Non-current assets:      
Right-of-use assets, net 300,024 138,050 20,611
Deferred tax assets, net 388,321 1,017,221 151,867
Property and equipment, net 214,717 176,377 26,332
Educational contents, net 206,695,356 354,732,044 52,960,100
Intangible assets, net 17,187,208 2,032,293 303,413
Goodwill 7,712,011 - -
Long-term prepayments 143,494,187 47,762,313 7,130,726
Total non-current assets 375,991,824 405,858,298 60,593,049
Total assets 859,617,155 696,256,815 103,948,406
       
Liabilities      
Current liabilities:      
Accounts payable 24,286,309 17,926,594 2,676,370
Contract liabilities 327,299,227 214,133,232 31,969,250
Salary and welfare payable 3,411,486 870,318 129,935
Income taxes payable 3,743,247 8,127,988 1,213,476
Value added tax (“VAT”) and other tax payable 2,669,408 -  - 
Other payables 5,276,472 6,234,539 930,792
Lease liabilities, current 295,367 242,757 36,243
Amount due to related parties 71,707,642 31,833,132 4,752,561
Total current liabilities 438,689,158 279,368,560 41,708,627
       
Deferred tax liabilities 2,191,500 - -
Total liabilities 440,880,658 279,368,560 41,708,627

JIANZHI EDUCATION TECHNOLOGY GROUP COMPANY LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”),
except for number of shares and per share data)

   December 31,
2021
  June 30,
2022
  June 30,
2022
  RMB RMB US$
    (unaudited) (unaudited)
Commitments and contingencies      
       
Mezzanine equity:      
Redeemable ordinary shares (US$0.0001 par value; 11,110,000 shares issued and outstanding as of December 31, 2021 and June 30, 2022)* 45,984,876 45,984,876 6,865,361
       
Shareholders’ equity      
Ordinary shares (US$0.0001 par value; 500,000,000 shares authorized, 100,000,000 shares issued and outstanding as of December 31, 2021 and June 30, 2022)* 63,291 63,291 10,000
Additional paid-in capital 54,045,908 54,045,908 8,068,291
Statutory reserves 23,599,304 23,599,304 3,523,283
Retained earnings 280,983,836 276,149,094 41,227,973
Accumulated other comprehensive income 400,233 1,448,132 216,203
Total Jianzhi Education Technology Group Company Limited’s shareholders’ equity 359,092,572 355,305,729 53,045,750
Noncontrolling interests 13,659,049 15,597,650 2,328,668
Total shareholders’ equity 372,751,621 370,903,379 55,374,418
Total liabilities, mezzanine equity and shareholders’ equity 859,617,155 696,256,815 103,948,406
       
*  Retrospectively restated for effect of stock split.      

JIANZHI EDUCATION TECHNOLOGY GROUP COMPANY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”),
except for number of shares and per share data)

  For the six months ended June 30, 
  2021  2022  2022 
  RMB  RMB  US$ 
Net revenues 276,453,921  260,353,542  38,869,760 
Cost of revenues (204,799,427) (220,373,446) (32,900,889)
Gross profit 71,654,494  39,980,096  5,968,871 
          
Operating expenses:         
Sales and marketing expenses 4,061,771  4,134,088  617,203 
General and administrative expenses 11,681,849  9,093,274  1,357,590 
Research and development expenses 7,361,472  8,118,990  1,212,133 
Impairment of intangible assets -  12,662,000  1,890,387 
Impairment of goodwill -  7,712,011  1,151,373 
Total operating expenses 23,105,092  41,720,363  6,228,686 
Income (loss) from operations 48,549,402  (1,740,267) (259,815)
          
Other (expenses) income:         
Investment income 105,415  589,424  87,999 
Interest income (expenses), net 20,090  (523,388) (78,140)
Other expenses -  (7,997) (1,194)
Government grants 3,207,090  1,430,551  213,576 
Total other income (expenses), net 3,332,595  1,488,590  222,241 
          
Income (loss) before income tax 51,881,997  (251,677) (37,574)
          
Income tax expense 8,061,996  2,644,464  394,808 
Net income (loss) 43,820,001  (2,896,141) (432,382)
Net income attributable to noncontrolling interests 5,140,095  1,938,601  289,426 
Net income (loss) attributable to the Jianzhi Education Technology Group Company Limited’s shareholders 38,679,906  (4,834,742) (721,808)
          
Net income (loss) 43,820,001  (2,896,141) (432,382)
Other comprehensive income:         
Foreign currency translation adjustments 59,146  1,047,899  156,447 
Total comprehensive income (loss) 43,879,147  (1,848,242) (275,935)
Net comprehensive income attributable to noncontrolling interests 5,140,095  1,938,601  289,426 
Comprehensive income (loss) attributable to the Jianzhi Education Technology Group Company Limited’s shareholders 38,739,052  (3,786,843) (565,361)
          
Earnings (loss) per share         
Basic and diluted* 0.35  (0.04) (0.01)
          
Weighted average number of shares         
Basic and diluted* 111,110,000  111,110,000  111,110,000 
          
* Retrospectively restated for effect of stock split