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 fiscal year ended December 31, 2023.
- Net revenues were 440.5 million
(US$62.0 million) for fiscal year 2023, compared to RMB505.7
million during the same period in 2022.
- Gross profit was RMB16.2 million
(US$2.3 million) for fiscal year 2023, and a gross loss of RMB5.5
million for the same period in 2022.
- Net loss for 2023 was RMB382.8
million (US$53.9 million), compared to net loss of RMB196.6 million
during the same period in 2022.
The following table sets forth a summary of the
consolidated results of operations for the years indicated:
|
|
For the Years Ended December 31, |
|
|
|
|
2022 |
2023 |
|
|
|
|
RMB |
RMB |
US$ |
|
%
Change |
|
|
(in million, except for percentages) |
|
|
Net revenues |
|
505.7 |
|
440.5 |
|
62.0 |
|
|
(12.9%) |
Gross (loss) profit |
|
(5.5 |
) |
16.2 |
|
2.3 |
|
|
394.5% |
Loss from operations |
|
(207.4 |
) |
(382.8 |
) |
(53.9 |
) |
|
84.6% |
Net loss |
|
(196.6 |
) |
(382.8 |
) |
(53.9 |
) |
|
94.7% |
|
|
|
|
|
|
|
|
|
|
Mr. Yong Hu, CEO of the Company, commented: “In
2023, the Company faced a challenging year marked by policy
headwinds and the evolving landscape of the vocational education
industry following the Covid pandemic. To effectively respond to
these changes, the Company proactively adjusted its strategy. It
pursued a two-pronged approach by reducing investment in the
educational content services segment while cementing efforts to
expand its highly profitable customized IT system design and
development services.”
“As a result of these strategic actions, the
Company recorded a top line of RMB440.5 million, with a gross
profit of RMB16.2 million for the fiscal year 2023. This represents
a significant improvement compared to the previous year’s
corresponding period, which recorded a gross loss of RMB5.5
million. It is important to note that the Company’s overall
profitability was temporarily affected by the impairment of assets
resulting from the reduced procurement of courses and subscriptions
to course content in the educational content services division.
However, it is our firm belief that this impairment of customized
courseware assets is non-recurring and we anticipate this will not
have a sustained impact on the Company’s future profitability.”
“Looking ahead to 2024, the Company has
undertaken a comprehensive reassessment of its business strategy
with the primary objective of restoring and enhancing its
profitability. To achieve this, the Company will vigorously expand
its operations in critical business areas that align with national
policies, such as 5G messaging, digital workforce solutions, and
the education industry. Furthermore, the Company will establish
strategic partnerships with telecom operators in China, across
multiple provinces to facilitate the successful implementation of
these strategic plans.”
“In addition to these initiatives, the Company
remains dedicated to collaborating with vocational institutions to
design and develop cutting-edge courses. Through comprehensive
teaching and training, our ultimate goal is to provide students
with a distinguished 1+X certification. Here, the ‘1’ signifies
specialized proficiency in a specific field or industry, while ‘X’
represents a series of certificates within the same professional
domain.”
Fiscal Year 2023 Financial
Results:
Net revenues
For the year ended December 31, 2023, our
revenue decreased by 12.9% from RMB505.7 million for the year ended
December 31, 2022 to RMB440.5 million (US$62 million). This
decrease was primarily driven by the net effects of a decrease of
RMB133.2 million (US$18.8 million) in revenue generated from
educational content services and other services, partially offset
by an increase of RMB68.0 million in net revenues from the
provision of IT related solution services.
- Educational content service and other services. Net revenue
from the educational content service and other services decreased
by RMB133.2 million (US$18.8 million) to RMB71.7 million (US$10.1
million) for the year ended December 31, 2023, from RMB204.9
million for the year ended December 31, 2022.
- The decrease was primarily due to: (i) a decrease of RMB112.3
million (US$15.8 million), or 100% in revenue from offering
selected mobile video package to end mobile users under a B2C model
through our cooperation with a subsidiary of China Telecom,
primarily because the Company terminated corporation with China
Telecom, and (ii) a decrease of revenues by RMB23.3 million (US$3.3
million) in “Fish Learning” platform. Such decrease in revenues
were primarily because we did not provide new and attractive
contents on the platform leading to decreased subscriptions form
end customers.
- IT related solution services. Net revenue from IT related
solution services increased by RMB68.0 million (US$9.6 million), or
22.6% to RMB368.8 million (US$51.9 million) for the year ended
December 31, 2023 from RMB300.8 million for the year ended December
31, 2022. The increase was primarily attributable to acquisition of
new cloud-based customers in the year of 2023 in design and
development of customized IT system.
The following table sets forth a breakdown
of the revenue by business segments for the years indicated:
|
|
|
|
|
|
|
|
|
|
2022 |
|
2023 |
|
|
|
RMB |
|
RMB |
|
US$ |
|
|
|
(in million) |
Educational content service
and other services |
|
|
|
|
|
|
|
– Educational content service |
|
|
|
|
|
|
|
– B2B2C |
|
51.5 |
|
28.6 |
|
4.0 |
|
– B2C |
|
149.7 |
|
4.5 |
|
0.6 |
|
– Other services |
|
3.7 |
|
38.7 |
|
5.4 |
|
Subtotal |
|
204.9 |
|
71.7 |
|
10.1 |
|
IT related solution
services |
|
|
|
|
|
|
|
– Design and development of customized IT system |
|
71.4 |
|
243.3 |
|
34.3 |
|
– Procurement and assembling of equipment |
|
228.4 |
|
125.4 |
|
17.7 |
|
– Technological support and maintenance |
|
1.0 |
|
- |
|
- |
|
Subtotal |
|
300.8 |
|
368.8 |
|
51.9 |
|
Total
revenues |
|
505.7 |
|
440.5 |
|
62.0 |
|
|
|
|
|
|
|
|
|
Cost of revenues
Cost of revenues decreased by 17.0% to RMB424.3
million (US$59.8 million) for the year ended December 31, 2023,
from RMB511.3 million for the year ended December 31, 2022. The
decrease of cost of revenues was primarily attributable to the
decrease of RMB32.0 million (US$4.5 million) in amortization of
educational contents as we impaired educational contents in the
year of 2023 and 2022, and decrease of RMB132.9 million (US$18.7
million) in material costs used for educational content service and
other services with decreased subscriptions from end customers and
decreased orders from high schools, partially offset by an increase
of RMB65.4 million (US$9.2 million) in purchase of IT equipment for
IT related solution services.
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 year of 2023 as compared with that in the year of
2022.
Gross profit
As a result of the foregoing, the Company
reported a gross profit of RMB16.2 million (US$2.3 million) for the
year ended December 31, 2023, and a gross loss of RMB5.5 million
for the year ended December 31, 2022. The Company’s gross profit
margin improved to 3.7% for the year ended December 31, 2023 from
negative 1.1% for the year ended December 31, 2022. The improvement
was mainly due to an increase in the gross profits margin for IT
related solution services for the year ended December 31, 2023,
because we were primarily engaged in IT design and development
services for customers in the year of 2023, as compared with
procurement and assembling equipment projects in the year of 2022.
The profit margin was higher in IT design and development services
than procurement and assembling equipment projects.
Operating expenses
The total operating expenses increased to RMB399.0 million
(US$56.2 million) for the year ended December 31, 2023, from
RMB202.6 million for the year ended December 31, 2022.
- Sales and Marketing
Expenses: The sales and marketing expenses was RMB7.6 million
(US$1.1 million) and RMB7.1 million for the fiscal years 2023 and
2022, respectively. This increase was mainly driven by an increase
of RMB0.3 million in salary and welfare expenses because we
incurred compensation expense, and an increase of $0.3 million in
travel and entertainment expenses.
- General and Administrative
Expenses: The general and administrative expenses decreased to
RMB22.2 million (US$3.1 million) for the fiscal year 2023 from
RMB53.2 million for the fiscal year 2022. This decrease was
primarily due to a decrease of RMB34.5 million in allowance of
doubtful accounts from a provision of doubtful allowance of RMB36.0
million for the year of 2022 to a provision of RMB1.5 million for
the same period of 2023, partially offset by an increase of RMB2.1
million in professional expenses associated with our IPO in August
2022.
- Research and Development
Expenses: The research and development expenses decreased to
RMB11.8 million (US$1.7 million) for 2023 from
RMB15.6 million for 2022. This decrease was mainly driven by a
decrease of RMB3.2 million in outsourced labor costs, because the
Company further reduced its expenditures on development of new
educational contents.
- Impairment of goodwill: The Company
did not provide impairment of goodwill for the year ended December
31, 2023. It provided full impairment of RMB7.7 million against
goodwill for the year ended December 31, 2022, which was caused by
termination of business partnership with a major customer and it
was assessed that the fair value of the reporting unit would exceed
its carrying amount.
- Impairment of other non-current assets: For the year ended
December 31, 2023 and 2022, the Company provided impairment of
non-current assets, including long-term prepayment, educational
contents and intangible assets. The details were as the following:
- Impairment of long-term
prepayments: As of December 31, 2023, the Company reviewed the
long-term prepayments for educational content. It expected that
these educational contents would be outdated when they are
delivered to the Company. The cash flows generated from
subscription for these educational contents may not cover the
purchase price. Accordingly, the Company charged impairment of
RMB155.3 million (US$21.9 million) against long-term prepayments
for the year ended December 31, 2023.
- Impairment of intangible assets:
For the year ended December 31, 2023 and 2022, the Company assessed
that its current software and technology would not support newly
purchased educational contents. The Company charged impairment of
RMB4.6 million (US$0.6 million) and RMB12.1 million against
software and technology, respectively.
- Impairment of educational contents:
For the year ended December 31, 2023 and 2022, because certain
contents were obsolete, the Company assessed that it is not likely
that end customers would subscribe for related educational
contents. The Company charged impairment of RMB197.5 million
(US$27.8 million) and RMB106.1 million against purchased
educational contents, respectively.
Income Tax benefit (expenses)
The Company reported income tax expenses of
RMB0.2 million for the year ended December 31, 2023, compared with
income tax benefits of RMB11.0 million for the year ended December
31, 2022, this was because the Company utilized net operating
loss carried forwards in the year of 2023.
Net loss
As a result of the foregoing, the Company
reported net loss of RMB382.8 million (US$53.9 million), compared
with RMB196.6 million for the years ended December 31, 2023 and
2022, respectively.
Recent Event:
On February 20, 2024, the Company changed the
ratio of its American Depositary Shares (“ADSs”) from current one
(1) ADS representing two (2) ordinary shares to one (1) ADS
representing six (6) ordinary shares (the “ADS Ratio Change”). For
Jianzhi’s ADS holders, the ADS Ratio Change had the same effect as
a one-for-three reverse ADS split. Each ADS holder of record at the
close of business on February 20, 2024 was to surrender and
exchange every three (3) existing ADSs then held for one (1) new
ADS.
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 WangWealth Financial Services LLCPhone:
+86 13811768559+1 628 283 9214Email: services@wealthfsllc.com
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