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

By: Jianzhi Education Technology Group Company Limited via GlobeNewswire

September 27, 2024 at 07:00 AM EDT

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

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

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