Scienjoy Holding Corporation Reports Nine Months ended September 30, 2024 Unaudited Financial Results

PR Newswire

BEIJING, Nov. 25, 2024

Income from Operations up 313.7% Year Over Year

Net Income Increased by Approximately US$10 million Year Over Year

BEIJING, Nov. 25, 2024 /PRNewswire/ -- Scienjoy Holding Corporation ("Scienjoy", the "Company", or "we") $(SJ)$, an interactive entertainment leader in the Chinese market, today announced its unaudited financial results for the nine months ended September 30, 2024.

Nine Months 2024 Operating and Financial Summaries

   -- Total revenues decreased to RMB1,012.5 million (US$144.3 million) for the 
      nine months ended September 30, 2024 from RMB1,036.6 million in the same 
      period of 2023. 
   -- Gross profit increased by 29.6% to RMB179.6 million (US$25.6 million) for 
      the nine months ended September 30, 2024 from RMB138.6 million in the 
      same period of 2023. 
   -- Income from operations increased by 313.7% to RMB35.3 million (US$5.0 
      million) for the nine months ended September 30, 2024 from RMB8.5 million 
      in the same period of 2023. 
   -- Net income was RMB34.2 million (US$4.9 million) for the nine months ended 
      September 30, 2024, increased by RMB71.5 million as compared to a net 
      loss of RMB37.3 million in the same period of 2023. 
   -- Net income attributable to the Company's shareholders was RMB42.7 million 
      (US$6.1 million) for the nine months ended September 30, 2024, as 
      compared to a net loss attributable to the Company's shareholders of 
      RMB34.7 million in the same period of 2023. 
   -- Adjusted net income attributable to the Company's shareholders was 
      RMB50.8 million (US$7.2 million) for the nine months ended September 30, 
      2024, increased by RMB72.8 million as compared to an adjusted net loss 
      attributable to the Company's shareholders of RMB22.0 million in the same 
      period of 2023. 
   -- As of September 30, 2024, the Company had RMB217.3 million (US$31.0 
      million) in cash and cash equivalents, which represented an increase of 
      RMB11.8 million from RMB205.5 million as of December 31, 2023. 

Mr. Victor He, Chairman and Chief Executive Officer of Scienjoy, commented, "We are proud to announce positive results for the nine months ended September 30, 2024, highlighted by a 29.6% surge in gross profit. This growth underscores our success in converting high-quality paying users into consistent profit, despite the tapering impact of promotional campaigns on users' base and consequently on revenue. The increase in average revenue per paying user further reflects our strong profitability, even in a highly competitive market. In line with our global expansion plan, we continue to make strategic moves in the Dubai market, with a keen focus on the dynamic Middle East and North Africa region. In addition to our geographical expansion, we are increasing our investment in cutting-edge AI-Generated Content technologies, which play a critical role in enhancing user experiences across all our platforms. These advancements in AI allow us to deliver highly personalized, immersive, and engaging content that resonates with our global user base. With clear goals and well-executed plans, we believe our business strategy is on the track for further growth. Looking ahead to the fourth quarter of 2024, we are poised for maintaining this momentum of our business and expecting about delivering even more value for our shareholders."

Mr. Denny Tang, Chief Financial Officer of Scienjoy, added, "We are pleased to report such strong financial performance for the nine months ended September 30, 2024. These results reflect our well-thought-out, yet ambitious, growth strategy, as well as our team efforts to execute. During this period, our gross profit grew by 29.6%, reflecting our ability to optimize revenue from our user base, while income from operations saw a significant 313.7% increase. This substantial rise in income from operations demonstrates improved cost management and scalability across our operations, even as we invest in growth initiatives. Moreover, we achieved a net income of $4.9 million, a notable turnaround from the loss reported in the same period last year. These results highlight the resilience of our financial foundation, further strengthened by $6.1 million in net income attributable to our shareholders and reinforced our confidence and commitment to executing our strategic initiatives with precision and focus. Moving forward, we will remain focused on thoughtfully exploring growth opportunities within our business, steadily increasing our presence in the Metaverse, and expanding our global reach. We believe these initiatives will deliver meaningful, long-term value to our shareholders and sustain our performance as we navigate a dynamic digital economy."

Nine Months 2024 Financial Results

Total revenues decreased to RMB1,012.5 million (US$144.3 million) for the nine months ended September 30, 2024, from RMB1,036.6 million in the same period of 2023, primarily caused by a decrease in paying users as a result of reduced promotions on paying user acquisition in China.

Cost of revenues decreased to RMB832.9 million (US$118.7 million) for the nine months ended September 30, 2024 from RMB898.0 million in the same period of 2023. The decrease was primarily attributable to a decrease of RMB34.4 million in the Company's revenue sharing fees and content costs which was in line with the decrease of revenue, and a decrease of RMB26.8 million in user acquisition costs.

Gross profit increased by 29.6% to RMB179.6 million (US$25.6 million) for the nine months ended September 30, 2024 from RMB138.6 million in the same period of 2023 and the gross margin increased to 17.7% for the nine months ended September 30, 2024 from 13.4% in the same period of last year due to higher average live streaming revenue per paying user ("ARPPU") during the nine months ended September 30, 2024, showing the Company's effectiveness in converting high-quality paying user to its profit growth.

Total operating expenses increased by 11.0% to RMB144.3 million (US$20.6 million) for the nine months ended September 30, 2024 from RMB130.0 million in the same period of 2023.

   -- Sales and marketing expenses increased by 525.6% to RMB3.4 million 
      (US$0.5 million) for the nine months ended September 30, 2024 from RMB0.5 
      million in the same period of 2023, primarily attributable to sales and 
      marketing activities in our new subsidiaries in Dubai. The Company is 
      taking initiative in Dubai market, aiming at global expansion starting 
      from the dynamic Middle East and North Africa ("MENA") region. 
   -- General and administrative expenses decreased to RMB52.5 million (US$7.5 
      million) for the nine months ended September 30, 2024 from RMB54.8 
      million in the same period of 2023. The decrease was primarily due to a 
      decrease of RMB3.8 million in professional consulting fee, a decrease of 
      $2.5 million in office renovation expenses and a decrease of RMB2.4 
      million in share-based compensation, partially offset by an increase of 
      RMB5.2 million in employee salary and welfare and an increase of RMB1.5 
      million in office rental fee. 
   -- Research and development expenses increased by 0.2% to RMB57.8 million 
      (US$8.2 million) for the nine months ended September 30, 2024 from 
      RMB57.7 million in the same period of 2023. The increase was primarily 
      due to an increase of RMB5.3 million in technical services fees, 
      partially offset by a decrease of RMB4.7 million in employee salary and 
      welfare, a decrease of RMB0.3 million in share-based compensation and a 
      decrease of RMB0.2 million in office expenses. 
   -- Provision for credit losses increased by 80.3% to RMB30.6 million (US$4.4 
      million) for the nine months ended September 30, 2024 from RMB17.0 
      million in the same period of 2023. The provision for credit losses in 
      current period is primarily caused by a one-time write-off of a RMB30.0 
      million investment buyback receivable. 

Income from operations increased by 313.7% to RMB35.3 million (US$5.0 million) for the nine months ended September 30, 2024 from RMB8.5 million in the same period of 2023.

Change in fair value of contingent consideration was Nil for the nine months ended September 30, 2024, as compared to a loss of RMB1.8 million in the same period of 2023. Change in fair value of contingent consideration is derived from earn out liabilities resulted from historical acquisitions. The fair value of the contingent consideration is re-measured at each reporting period, and the change in fair value is recognized as either income or expense.

Change in fair value of warrant liabilities was Nil for the nine months ended September 30, 2024, as compared to a gain of RMB0.2 million in the same period of 2023. The fair value of the Company's warrants derivative liability assumed from the SPAC acquisition is re-measured to its fair value at the end of each reporting period, with the change being recorded as other expense or gain. In February 2024, the Company's warrants expired according to the terms of the warrant agreement. As of February 6, 2024, the Company had no warrants issued and outstanding.

Change in fair value of investment in marketable security increased by 984.6% to a gain of RMB12.1 million (US$1.7 million) for the nine months ended September 30, 2024 from RMB1.1 million in the same period of 2023. The change was primarily attributable to the fair value changes in investments in a publicly traded company. The share price of the publicly traded company experienced a significant increase during the nine months ending September 30, 2024, compared to a moderate increase during the same period of 2023.

(MORE TO FOLLOW) Dow Jones Newswires

November 25, 2024 08:30 ET (13:30 GMT)