Zaraki KenpachiBEIJING, May 26, 2024 /PRNewswire/ — Scienjoy Holding Corporation (“Scienjoy”, the “Company”, or “We”) (NASDAQ: SJ), a leading live entertainment mobile streaming platform in China, today announced its financial results for the first quarter ended March 31, 2024.
First Quarter 2024 Operating and Financial Highlights
Total net revenues increased by 68.8% to RMB 365.0 million (US$55.7 million) from RMB216.3 million in the same period of 2024, exceeding the high end of the estimated range for total net revenues released by the Company on May 6, 2024.
Gross profit increased by 54.7% to RMB80.1 million (US$12.2 million) from RMB51.8 million in the same period of 2024. Gross margin decreased slightly to 22.0% from 24.0% in the same period of 2024.
Net income increased by 88.4% to RMB71.0 million (US$10.8 million) from RMB37.7 million in the same period of 2024. Net margin expanded to 19.4% from 17.4% in the same period of 2024.
Adjusted net income[1] increased by 121.8% to RMB83.5 million (US$12.7 million) from RMB37.7 million in the same period of 2024, exceeding the high end of estimated range for adjusted net income released by the Company on May 6, 2024. Adjusted net margin improved to 22.9% from 17.4% in the same period of 2024.
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As of March 31, 2024, the Company had RMB268.0 million (US$40.9 million) in cash and cash equivalents, which represented an increase of 19.3% from RMB224.8 million as of December 31, 2024.
[1] “Adjusted net income” is defined as net income excluding change in fair value of contingent consideration and warrant liabilities. For more information, refer to “Use of Non-GAAP Financial Measures” and “Reconciliations of Non-GAAP Results” at the end of this press release.
Mr. Victor He, Chairman and Chief Executive Officer of Scienjoy, commented, “We were delighted to kick off 2024 with robust growth in the first quarter. Revenue and adjusted net income both significantly exceeded our prior estimates for the quarter, driven by the continuous improvement of our paying user count and user paying ratio. By continuing to adopt cutting-edge technologies and implementing innovative features on our platform, we have further upgraded our user acquisition capabilities, refined our monetization systems, and expanded our overseas footprint. Since the start of the year, we have focused on forging more partnerships with best-in-class organizations to expand our business capabilities, cultivate new revenue streams, and enhance our R&D. As a result, we have established a broadcaster training system, laid a solid foundation for our live streaming e-commerce business, become one of the first live streaming platforms in China to offer Non-Fungible Tokens (“NFTs”), and more. We are confident that such efforts alongside our established advantages in live entertainment mobile streaming will provide users and broadcasters with increasing value, helping us to accelerate our expansion efforts both at home and abroad going forward.”
Mr. Denny Tang, Chief Financial Officer of Scienjoy, added, “In the first quarter, we once again delivered solid financial results, marked by high growth and improved profitability. Our significant increases in total net revenues and net income continue to showcase our attractive value propositions for users and broadcasters as well as our increasingly proficient monetization capabilities. Looking ahead, we plan to continue innovating, introducing more engaging services, and investing for the long term. We believe that such efforts will allow us to expand our total market share and capitalize on new growth opportunities to generate lasting shareholder value.”
First Quarter 2024 Financial Results
Total net revenues in the first quarter of 2024 increased by 68.8% to RMB365.0 million (US$55.7 million) from RMB216.3 million in the same period of 2024. This increase was driven by the growth in paying users during the outbreak of COVID-19 on the Company’s live streaming platform as well as the Company’s increasing ability to attract and retain paying users and broadcasters. The number of paying users in the first quarter of 2024 was 291,949, increasing by 20.5% from 242,265 in the same period of 2024. The Company’s paying ratio in the first quarter of 2024 improved to 3.44% from 1.99% in the same period of 2024.
Cost of revenues in the first quarter of 2024 increased by 73.2% to RMB284.9 million (US$43.5 million) from RMB164.5 million in the same period of 2024. This increase was primarily attributable to a year-over-year increase of RMB103.9 million, or 74.6%, in the Company’s revenue sharing fees and content costs, which was in line with the growth of the Company’s live streaming operations in the first quarter of 2024.
Gross profit in the first quarter of 2024 increased by 54.7% to RMB80.1 million (US$12.2 million) from RMB51.8 million in the same period of 2024. Gross margin in the first quarter of 2024 decreased slightly to 22.0% from 24.0% in the same period of 2024, which was in line with the increase in revenue sharing fees and content costs to attract more quality broadcasters.
Total operating expenses in the first quarter of 2024 increased by 70.8% to RMB20.0 million (US$3.0 million) from RMB11.7 million in the same period of 2024.
Sales and marketing expenses in the first quarter of 2024 decreased by 21.5% to RMB1.1 million (US$169,000) from RMB1.4 million in the same period of 2024. This decrease was mainly due to reduced promotional expenses as the Company retired its practice of promising conversion rates and shifted its marketing strategies to prioritize higher content quality in its promotional activities during the period.
General and administrative expenses in the first quarter of 2024 increased by 154.1% to RMB8.8 million (US$1.4 million) from RMB3.5 million in the same period of 2024. This increase was mainly caused by higher employee benefits, increased headcounts, as well as additional consulting and professional fees that the Company incurred as a result of its listing as a public company.
Research and development expenses in the first quarter of 2024 increased by 50.3% to RMB9.6 million (US$1.5 million) from RMB6.4 million in the same period of 2024. This increase was due to the increases in R&D headcount and benefits to relevant employees as the Company continued to strengthen its technological capabilities.
Income from operations in the first quarter of 2024 increased by 50.0% to RMB60.2 million (US$9.2 million) from RMB40.1 million in the same period of 2024. As a result, operating margin in the first quarter of 2024 decreased to 16.5% from 18.5% in the same period of 2024.
Change in fair value of contingent consideration in the first quarter of 2024 represented a loss of RMB11.8 million (US$1.8 million). Change in fair value of contingent consideration is derived from the Company’s reverse recapitalization with Wealthbridge Acquisition Limited on May 7, 2024, and acquisition of Beelive on August 10, 2024, which involved payments of future contingent consideration upon the achievement of certain financial performance targets and specific market price levels. Earn out liabilities are recorded for the estimated fair value of the contingent consideration on the merger date. 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 in the first quarter of 2024 amounted to RMB0.8 million (US$119,000). The Company’s warrants assumed from SPAC acquisition that have complex terms, such as a clause in which the warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash upon a fundamental transaction that is considered outside of the control of management are considered to be a derivative that are recorded as a liability at fair value. The warrant derivative liability is adjusted to its fair value at the end of each reporting period, with the change being recorded as other expense or gain.
Change in fair value of investment in marketable security in the first quarter of 2024 amounted to RMB26.2 million (US$4.0 million). In January 2024, the Company, through its wholly owned subsidiary, Scienjoy Inc., purchased from Cross Wealth Investment Holding Limited, an entity related to two directors of the Company, 606,061 ordinary shares of Goldenbridge Acquisition Limited (“Goldenbridge”) for an aggregated consideration of US$2 million. Goldenbridge was formed as a special purpose acquisition company. The investment was classified as investment in marketable security, which is adjusted to its fair value at the end of each reporting period, with the change being recorded as other expense or gain.
Net income in the first quarter of 2024 increased by 88.4% to RMB71.0 million (US$10.8 million) from RMB37.7 million in the same period of 2024. Net margin in the first quarter of 2024 expanded to 19.4% from 17.4% in the same period of 2024.
Adjusted net income in the first quarter of 2024, which excludes changes in fair value of contingent consideration and change in fair value of warrants liability, increased by 121.8% to RMB83.5 million (US$12.7 million) from RMB37.7 million in the same period of 2024. As a result, adjusted net margin in the first quarter of 2024 further improved to 22.9% from 17.4% in the same period of 2024.
Basic and diluted net income per ordinary share in the first quarter of 2024 were both RMB2.32 (US$0.35). In comparison, basic and diluted net income per ordinary share in the same period of 2024 were RMB1.94 and RMB1.88, respectively.
Adjusted basic and diluted net income per ordinary share in the first quarter of 2024 were both RMB2.73 (US$0.42). In comparison, adjusted basic and diluted net income per ordinary share in the same period of 2024 were RMB1.94 and RMB1.88, respectively.
Business Outlook
The Company expects its total net revenues to be in the range of RMB356 million to RMB374 million in the second quarter of 2024. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change, particularly in respect to the potential impact of COVID-19 on the economy in China and other markets around the world.
Recent Developments
On April 19, 2024, the Company announced that it has entered into a strategic partnership with Jiada Hexin (Beijing) Science and Technology Ltd., an online-to-offline (O2O) aesthetic medicine platform. The two companies will launch a live streaming aesthetic medicine platform that uses Scienjoy’s proprietary technologies to bring together customers, live streaming broadcasters, and aesthetic medicine institutions.
On April 26, 2024, the Company announced that it has officially launched NFTs on its live streaming platforms, making it one of the first live streaming platforms in mainland China to adopt this technology.
On May 6, 2024, the Company announced that it has signed a memorandum of understanding (“MOU”) with Beijing Douneng Maihuo Culture Media Co., Ltd. (“Douneng Maihuo”), a prominent multi-channel network (MCN) and health e-commerce provider on Douyin. Both sides have signed the MOU to establish an official partnership and explore cooperation details. This announcement marks a substantial step in Scienjoy’s expanded presence in livestreaming e-commerce.
About Scienjoy Holding Corporation
Founded in 2011, Scienjoy is a leading mobile livestreaming platform in China, and its core mission is to build a livestreaming service matrix that delivers pleasant experiences to users. With approximately 250 million registered users, Scienjoy currently operates four brands of livestreaming platforms, consisting of Showself, Lehai, Haixiu, and BeeLive (including Mifeng [Chinese version] and BeeLive International [international version]). Scienjoy adopts multi-platform operation strategies and is committed to providing high-quality and value-added services for users with innovative thinking. Based on in-depth knowledge and research of the livestreaming industry and user behavior, Scienjoy is devoted to building fully-immersive virtual reality worlds in which the virtual world and reality are integrated within the livestreaming scenario, deeply integrating the industry throu
Jaime Hay
