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Jianzhi Education Technology Group Company Limited Reports Half Year 2024 Financial Results

BEIJING, Sept. 27, 2024 (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 six months ended June 30, 2024.

  • Revenue decreased by 25.4% from RMB280.6 million for the six months ended June 30, 2023 to RMB 209.3 million (US$28.8 million) for the six months ended June 30, 2024.
  • Gross profit was RMB 41.7 million (US$5.7 million) and RMB 23.9 million for the six months ended June 30, 2024 and 2023.
    • Gross profit margin rose to 19.9% for the six months ended June 30, 2024 from 8.5% for the six months ended June 30, 2023.
  • Net income was RMB27.6 million (US$3.8 million) for the six months ended June 30, 2024, a turnaround from net loss of RMB93.6 million for the same period in 2023.
  • The following table sets forth a summary of the consolidated results of operations for the years indicated:

  For the Six Months Ended June 30, 
  2023   2024  
  RMB  RMB  % Change 
  (in million, except for percentages) 
Revenue 280.6   209.3   (25.4%) 
Gross profit  23.9    41.7    74.5% 
Gross margin  8.5%   19.9%   11.4
percentage
points
  
Total operating expenses  (115.3   (16.1)   (86.0%) 
(Loss) income from operations  (91.3)   25.6    128.0% 
(loss) income before income tax  (91.3)   25.3    127.7% 
Net (loss) income  (93.6)   27.6    129.5% 


Mr. Yong Hu, CEO of the Company, commented: “In the first half of 2024, we faced a 25.4% decline in net revenues, which was primarily driven by lower demand for IT-related solutions and educational content services. However, we view this as a strategic opportunity for improvement.”

“Notably, we successfully reduced our cost of revenue by 34.7%, bringing it down to RMB167.6 million (US$23.1 million). This cost management initiative allowed us to achieve a gross profit of RMB41.7 million (US$5.7 million), resulting in a positive gross profit margin of 19.9%, a significant growth from 8.5% of the previous year.”

“Our focus on operational efficiency is reflected in the reduction of operating expenses, which has contributed to our impressive transition from a net loss of RMB93.6 million in first half of 2023 to a net income of RMB27.6 million (US$3.8 million) during same period in 2024. This shift underscores our commitment to enhancing profitability and positioning the Company for sustainable growth moving forward.”

“Looking ahead, we are rolling out several key initiatives including a partnership with China’s top telecom operator to boost our B2B operations across multiple provinces, as we target to acquire massive paying users within the next three years. The partnership will offer various subscription plans, which we believe projects strong revenue and profit margins. Moreover, we are also expanding the partnership into AI applications that will initially target the education sector before expanding to other applications such as research institutions, public libraries to further enhance user engagement with our services.”

“We remain optimistic about our future strategies and are dedicated to leveraging our strengths to navigate the challenges ahead.”

Half Year 2024 Financial Results:

Net revenues

Revenues decreased by 25.4% from RMB280.6 million for the six months ended June 30, 2023 to RMB 209.3 million (US$28.8 million) for the six months ended June 30, 2024. This decrease was primarily driven by the net effects of a decrease of RMB53.4 million in net revenues from the provision of IT related solution services, and a decrease of RMB17.9 million in revenue generated from educational content services and other services.

  • Net revenue from the educational content service and other services decreased by RMB17.9 million from RMB28.5 million for the six months ended June 30, 2023 to RMB10.6 million (US$1.5 million) for the six months ended June 30, 2024 primarily caused by a decrease of revenue by RMB16.5 million (US$2.3 million) in Fish Learning. Such decrease in revenues were primarily because we did not provide new and attractive contents on the platform leading to decreased subscriptions from end customers.
  • Net revenue from IT related solution services decreased by RMB53.4 million (US$7.3 million), or 21.2% from RMB 252.1 million for the six months ended June 30, 2023 to RMB 198.7 million (US$27.3 million) for the six months ended June 30, 2024. The decrease was primarily caused by a decrease in customer orders for design and development of customized IT system, and procurement and assembling of equipment.

Cost of Revenues

Cost of revenue decreased by 34.7% from RMB256.7 million for the six months ended June 30, 2023, to RMB 167.6 million (US$23.1 million) for the six months ended June 30, 2024. The decrease was primarily attributable to the decrease of RMB27.4 million in amortization of educational and decrease of RMB57.7 million in purchase of IT equipment for IT related solution services, partially offset by an increase of RMB14.7 million in material costs used for educational content service and other services with decreased subscriptions from end customers and decreased orders from high schools.

Compared with the decrease in revenues growth, the higher percentage of decrease in cost of revenues was mainly attributable to the higher gross profit we earned from IT solution services in the first half of 2024 as compared with the same period of 2023.

Gross Profit

Gross profit was RMB 23.9 million and RMB 41.7 million (US$5.7 million) for the six months ended June 30, 2023 and 2024, respectively. The Company’s gross profit margin changed from 8.5% for the six months ended June 30, 2023 to 19.9% for the six months ended June 30, 2024.

The change was mainly due to an increase in the gross profits margin for IT related solution services for the first half 2024, because the Company was primarily engaged in IT design and development services for customers in the first half of 2024, as compared with procurement and assembling equipment projects in the same period of 2023. The profit margin was higher in IT design and development services than procurement and assembling equipment projects.

Operating expenses

The Company’s total operating expenses changed from RMB115.3 million for the six months ended June 30, 2023 to RMB16.1 million (US$2.2 million) for the six months ended June 30, 2024.

  • Sales and marketing expenses decreased from RMB3.9 million for the six months ended June 30, 2023 to RMB2.5 million (US$0.3 million) for the six months ended June 30, 2024.
  • General and administrative expenses increased from RMB9.6 million for the six months ended June 30, 2023 to RMB10.5 million (US$1.4 million) for the six months ended June 30, 2024.
  • Research and development expenses decreased from RMB4.4 million for the six months ended June 30, 2023 to RMB3.1 million (US$0.4 million) for the six months ended June 30, 2024.
  • The Company provided impairment of educational contents of RMB97.3 million for the six months ended June 2023, and nil during the same period in 2024.

Net income (loss)

As a result of the foregoing, the Company reported net loss of RMB93.6 million and net income of RMB27.6 million (US$3.8 million) for the six months ended June 30, 2023 and 2024, respectively.

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 embeds 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
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”),
except for number of shares and per share data)
 
  
  December 31,
2023
  June 30,
2024
  June 30,
2024
 
  RMB  RMB  US$ 
     (unaudited)  (unaudited) 
Assets         
Current assets:         
Cash  18,175,959   13,115,287   1,804,724 
Accounts receivable, net  4,912,020   76,240,194   10,491,000 
Amount due from related parties  2,172,565   1,115,565   153,507 
Short-term prepayments  77,950,037   1,965,969   270,526 
Short-term investments  4,223,894   7,648,722   1,052,499 
Prepaid expenses and other current assets  14,914,484   10,534,089   1,449,538 
Total current assets  122,348,959   110,619,826   15,221,794 
             
Non-current assets:            
Right-of-use assets, net  7,604,933   5,903,758   812,384 
Deferred tax assets, net  11,226,164   13,518,156   1,860,160 
Property and equipment, net  213,369   183,032   25,186 
Intangible assets, net  1,257,860   1,106,916   152,317 
Other non-current assets  219,416   176,949   24,349 
Long-term prepayments  8,815,919   18,059,668   2,485,093 
Total non-current assets  29,337,661   38,948,479   5,359,489 
Total assets  151,686,620   149,568,305   20,581,283 
             
Liabilities            
Current liabilities:            
Accounts payable  11,524,904   66,456,088   9,144,662 
Contract liabilities  86,731,977   13,108,638   1,803,809 
Salary and welfare payable  3,170,255   1,962,572   270,059 
Income taxes payable  4,474,575   2,603,097   358,198 
Value added tax (“VAT”) and other tax payable  2,198,217   4,315,792   593,873 
Other payables  3,506,282   1,873,102   257,747 
Lease liabilities, current  3,482,876   3,027,011   416,531 
Amount due to related parties  47,505,624   480,902   66,174 
Total current liabilities  162,594,710   93,827,202   12,911,053 
             
Non-current liabilities:            
Deferred tax liabilities  2,274,256   2,336,341   321,491 
Lease liabilities, non-current  4,035,598   2,790,522   383,989 
Total non-current liabilities  6,309,854   5,126,863   705,480 
Total liabilities  168,904,564   98,954,065   13,616,533 


JIANZHI EDUCATION TECHNOLOGY GROUP COMPANY LIMITED
UNAUDITED 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,
2023
  June 30,
2024
  June 30,
2024
 
  RMB  RMB  US$ 
     (unaudited)  (unaudited) 
Commitments and contingencies         
          
Shareholders’ (deficit) equity         
Ordinary shares (US$0.0001 par value; 500,000,000 shares authorized, 121,110,000 and 121,110,000 issued and outstanding as of December 31, 2023 and June 30, 2024)  77,747   77,747   12,111 
Additional paid-in capital  238,567,906   278,748,454   39,129,453 
Statutory reserves  23,557,710   23,557,710   3,318,034 
Accumulated deficit  (291,805,140)   (264,741,760)   (37,375,863) 
Accumulated other comprehensive income  6,096,465   6,124,383   938,739 
Total Jianzhi Education Technology Group Company Limited’s shareholders’ (deficit) equity  (23,505,312)   43,766,534   6,022,474 
Noncontrolling interests  6,287,368   6,847,706   942,276 
Total shareholders’ (deficit) equity  (17,217,944)   50,614,240   6,964,750 
Total liabilities and shareholders’ (deficit) equity  151,686,620   149,568,305   20,581,283 


JIANZHI EDUCATION TECHNOLOGY GROUP COMPANY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(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, 
  2023  2024  2024 
  RMB  RMB  US$ 
Net revenues  280,606,379   209,303,030   28,801,055 
Cost of revenues  (256,660,584)   (167,646,023)   (23,068,861) 
Gross profit  23,945,795   41,657,007   5,732,194 
             
Operating expenses:            
Sales and marketing expenses  (3,943,550)   (2,459,869)   (338,489) 
General and administrative expenses  (9,581,756)   (10,513,568)   (1,446,722) 
Research and development expenses  (4,412,218)   (3,121,624)   (429,550) 
Impairment of intangible assets  (97,332,087)       
Total operating expenses  (115,269,611)   (16,095,061)   (2,214,761) 
(Loss) income from operations  (91,323,816)   25,561,946   3,517,433 
             
Other income (expenses):            
Investment income  60,649   13,739   1,891 
Interest expenses, net  (701,899)   (467,320)   (64,305) 
Other (expenses) income, net  (16,781)   22,641   3,116 
Government grants  643,646   139,236   19,160 
Total other expenses, net  (14,385)   (291,704)   (40,138) 
             
(Loss) income before income tax  (91,338,201)   25,270,242   3,477,295 
             
Income tax (expense) benefits  (2,238,882)   2,353,476   323,849 
Net (loss) income  (93,577,083)   27,623,718   3,801,144 
Net (loss) income attributable to noncontrolling interests  (2,885,241)   560,338   77,105 
Net (loss) income attributable to the Jianzhi Education Technology Group Company Limited’s shareholders  (90,691,842)   27,063,380   3,724,039 
             
Net (loss) income  (93,577,083)   27,623,718   3,801,144 
Other comprehensive (loss) income:            
Foreign currency translation adjustments  830,133   27,918   3,842 
Total comprehensive (loss) income  (92,746,950)   27,651,636   3,804,986 
Net comprehensive (loss) income attributable to noncontrolling interests  (2,885,241)   560,338   77,105 
Comprehensive (loss) income attributable to the Jianzhi Education Technology Group Company Limited’s shareholders  (89,861,709)   27,091,298   3,727,881 
             
(Loss) earnings per share – Basic and diluted  (0.75)   0.22   0.03 
             
Weighted average number of shares - Basic and diluted  121,100,000   121,110,000   121,110,000 


JIANZHI EDUCATION TECHNOLOGY GROUP COMPANY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”)
 
  
  For the Six Months Ended June 30, 
  2023  2024  2024 
  RMB  RMB  US$ 
Net cash (used in) provided by operating activities  (7,630,383)   10,944,793   1,506,046 
             
Cash flows from investing activities:            
Purchase of short-term investments  (20,000,000)   (5,800,000)   (798,107) 
Proceeds from redemption of short-term investment  20,000,000   2,375,172   326,835 
Purchase of property and equipment  (319,309)       
Return of deposits for property and equipment     1,803,140   248,120 
Repayment of loans from a related party          
Purchase of educational contents  (19,184,980)   (13,445,345)   (1,493,918) 
Loans made to a third party  (13,851,828)       
Repayment of loans from a third party  3,100,833       
Repayment of loans from a related party  137,814   200,998   27,658 
Net cash used in investing activities  (30,117,470)   (14,866,035)   (2,045,635) 
             
Cash flows from financing activities:            
Repayment to related parties  (13,257)   (499,842)   (68,781) 
Net cash used in financing activities  (13,257)   (499,842)   (68,781) 
             
Effect of exchange rate changes on cash held in foreign currencies  1,332,362   (639,588)   (88,001) 
             
Net decrease in cash  (36,428,748)   (5,060,672)   (696,371) 
Cash at beginning of the period  65,055,278   18,175,959   2,501,095 
Cash at end of the period  28,626,530   13,115,287   1,804,724 
             
Supplemental disclosures of cash flows information:            
Cash paid for income taxes     130,244   17,922 
Cash paid for interest expenses         
             
Non-cash Investing and Financing activities:            
Waive of liabilities due by shareholders     40,180,548   5,529,027 
Right-of-use assets obtained in exchange for operating lease liabilities  8,943,892   5,817,299   800,487 

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