Jianzhi Education Technology Group Company Limited Reports Fiscal Year 2023 Financial Results
BEIJING, April 09, 2024 (GLOBE NEWSWIRE) -- Jianzhi Education Technology Group Company Limited (the "Company" or "Jianzhi") $(JZ)$, 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.
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