Lucas GC(LGCL) - 2023 Q4 - Annual Report

Press Release Overview Headline Lucas GC Limited announced its fiscal year 2023 results, with revenue increasing by 92.3% to $208 million - Lucas GC Limited announced its fiscal year 2023 results, with revenue reaching $208 million, a 92.3% year-over-year increase[10] Date and Company Information The press release was issued on April 29, 2024, in New York by AI-powered PaaS company Lucas GC Limited (Nasdaq: LGCL) - The press release was issued on April 29, 2024, by Lucas GC Limited (Nasdaq: LGCL) announcing its fiscal year 2023 financial results[6] - Lucas GC Limited is an AI-powered PaaS company currently focused on providing human capital management services[6] About Lucas GC Limited Company Profile Lucas GC Limited is an AI-powered PaaS company specializing in human capital management services, recognized as China's largest AI-driven online agency center PaaS provider for professionals, leveraging AI, data analytics, and blockchain for digital and intelligent HCM processes, offering recruitment, outsourcing, and other services - Lucas GC Limited is an AI-powered PaaS company focused on providing human capital management services[2] - As of June 30, 2022, Lucas was China's largest AI-powered online agency center human capital management service provider for professionals, based on active users in the HR industry and total net revenue in 2021[2] - The company leverages AI, data analytics, and blockchain technologies to digitize and intellectualize human capital management processes, offering recruitment, outsourcing, IT services, and training services[2] Fiscal Year 2023 Highlights Operational Highlights In 2023, Lucas GC Limited saw active registered users grow by 48% to 638,020 and enterprise clients increase to 582, pioneered generative AI content in recruitment by integrating LLMs with proprietary data, secured multiple AI-related patents, and successfully completed its IPO on Nasdaq in March 2024 - Active registered users increased by 48% year-over-year to 638,020 in 2023[11] - Enterprise clients increased to 582 in 2023 from 391 in 2022[11] - Pioneered a transformative approach to generative AI content in recruitment services by combining Large Language Models (LLMs) with proprietary data[11] - Secured two additional AI-related patents in 2023 and one in 2024, bringing the total granted patents to 17[11] - Successfully completed a $6 million IPO in March 2024 and commenced trading on Nasdaq[11] Financial Highlights For fiscal year 2023, the company reported revenue of RMB 1.474 billion ($208 million), a 92.3% year-over-year increase; gross profit margin of 28.4%, up 32 basis points; and net income of RMB 78 million ($11 million), up 115% Key Financial Data for Fiscal Year 2023 | Metric | FY 2023 | FY 2022 | YoY Growth | |---|---|---|---| | Revenue | RMB 1.474 billion ($208 million) | - | 92.3% | | Gross Profit Margin | 28.4% | - | 32 bps | | Net Income | RMB 78 million ($11 million) | - | 115% | Management Commentary CEO Statement CEO Howard Lee highlighted the company's journey as a public entity post-IPO, its position as China's largest AI-driven human capital management provider, strong revenue growth of 92.3% in 2023 with an 86% CAGR since 2020, four consecutive years of profitability, 48% growth in active registered users, and plans for further expansion through organic growth and overseas acquisitions - CEO Howard Lee stated that the company has embarked on its journey as a public company following its successful IPO[12] - Lucas is China's largest AI-powered online agency center human capital management provider for professionals based on PaaS[12] - Total revenue increased by 92.3% in 2023, primarily driven by growth in enterprise clients and active registered users, alongside China's post-pandemic recovery[13] - The company's revenue has achieved a Compound Annual Growth Rate (CAGR) of approximately 86% since 2020, and it has been profitable for the past four consecutive years[13] - Active registered users grew by 48% in 2023, laying a foundation for strong future revenue growth in human resource services, IT outsourcing, and information services[13] - The company anticipates further growth expansion through organic growth and value-added acquisitions outside of China, aiming to create shareholder value[13] Full Year 2023 Financial Results Total Revenue For the fiscal year ended December 31, 2023, total revenue was RMB 1.474 billion ($208 million), a 92.3% increase from RMB 767 million in fiscal year 2022 Total Revenue | Metric | FY 2023 (RMB) | FY 2023 (USD) | FY 2022 (RMB) | YoY Growth | |---|---|---|---|---| | Total Revenue | 1.474 billion | 208 million | 767 million | 92.3% | Revenue by Service Type In fiscal year 2023, recruitment service revenue increased by 59.6% to RMB 659 million ($92.8 million), outsourcing service revenue grew by 136.5% to RMB 714 million ($100.6 million), and other service revenue rose by 95.5% to RMB 101 million ($14.2 million) Revenue by Service Type for Fiscal Year 2023 | Service Type | FY 2023 (RMB) | FY 2023 (USD) | YoY Growth | |---|---|---|---| | Recruitment Services | 659 million | 92.8 million | 59.6% | | Outsourcing Services | 714 million | 100.6 million | 136.5% | | Other Services | 101 million | 14.2 million | 95.5% | Gross Profit Margin The gross profit margin for fiscal year 2023 was 28.4%, up from 28.1% in fiscal year 2022, primarily driven by improved productivity and a more favorable product mix Gross Profit Margin | Metric | FY 2023 | FY 2022 | Change | |---|---|---|---| | Gross Profit Margin | 28.4% | 28.1% | Increased by 0.3 percentage points | - The increase in gross profit margin is attributed to improved productivity and a more favorable product mix[16] Operating Expenses Total operating expenses for fiscal year 2023 were RMB 351 million ($49.4 million), a 91.1% increase from RMB 184 million in 2022, with selling and marketing expenses up 51.7%, general and administrative expenses up 127.1%, and R&D expenses up 97.3% Total Operating Expenses | Metric | FY 2023 (RMB) | FY 2023 (USD) | FY 2022 (RMB) | YoY Growth | |---|---|---|---|---| | Total Operating Expenses | 351 million | 49.4 million | 184 million | 91.1% | Selling and Marketing Expenses - Selling and marketing expenses increased by 51.7% from 2022, primarily due to continued investment in branding activities for proprietary platforms Star Career and Columbus to drive new user growth and customer lead generation[17] General and Administrative Expenses - General and administrative expenses increased by 127.1% from 2022, mainly due to increased user support operational costs from a larger user base, higher expenses for inviting industry experts to maintain user engagement, and increased professional service fees related to IPO activities[18] Research and Development Expenses - Research and development expenses increased by 97.3% from 2022, primarily due to continuous investment in AI-powered technologies, including generative pre-trained Transformers and related AI-generated content technologies, as well as investments in proprietary platforms Star Career and Columbus, which provide advantages in business expansion and market competition[19] Net Income and EPS Net income for fiscal year 2023 was RMB 78.2 million ($11 million), a 115% increase from RMB 36.4 million in 2022, with earnings per share at $0.14, up 133.7% Net Income | Metric | FY 2023 (RMB) | FY 2023 (USD) | FY 2022 (RMB) | YoY Growth | |---|---|---|---|---| | Net Income | 78.2 million | 11 million | 36.4 million | 115% | Earnings Per Share | Metric | FY 2023 (USD) | FY 2022 (USD) | YoY Growth | |---|---|---|---| | EPS | 0.14 | - | 133.7% | Non-GAAP Financial Measures Adjusted EBITDA The company provides Adjusted EBITDA as a non-GAAP financial measure for internal period-over-period comparison and analysis of operational performance and liquidity, considering it supplementary for investors to analyze, trend, and benchmark business performance and value, while noting it is not a substitute for GAAP metrics and may differ from non-GAAP measures used by other companies - The company provides Adjusted EBITDA as a non-GAAP financial measure[1] - This metric is used internally to facilitate period-over-period comparisons and analysis of operational performance and liquidity, and is considered useful for investors to analyze, trend, and benchmark business performance and value[1] - This measure is not intended to be a substitute for GAAP-reported metrics and may differ from non-GAAP measures used by other companies[1] Conference Call Details Call Information The conference call was held on April 29, 2024, at 4:30 PM ET, offering both dial-in and webcast participation, with a replay available until May 6, 2024 - The conference call was held on Monday, April 29, 2024, at 4:30 PM Eastern Time[22] - Participants could access the conference call by dialing (844) 836-8745 or (412) 317-6797[22] - A live webcast was available on the company's investor relations website at https://ir.lucasgc.com/ or **https://app.webinar.net/mDz45GVdeZl**[23](index=23&type=chunk) - A replay of the conference call will be available until May 6, 2024, with replay access code 9832113[24] Forward-Looking Statements Disclaimer Statements in the press release regarding future expectations, plans, and prospects constitute "forward-looking statements," where actual results may differ materially due to various important factors, including market uncertainties, and the company disclaims any obligation to update such statements - Statements in the press release regarding future expectations, plans, and prospects may constitute "forward-looking statements"[3] - Actual results may differ materially from those indicated by forward-looking statements due to various important factors, including market uncertainties[3] - The company explicitly disclaims any obligation to update any forward-looking statements[3] Investor Contact Contact Information Investors can contact Ben Shamsian, Vice President at Lytham Partners, LLC, for further information - Investors may contact Ben Shamsian, Vice President at Lytham Partners, LLC[4]