Scienjoy(SJ) - 2024 Q4 - Annual Report

Fiscal Year 2024 Operating and Financial Summaries This section provides an overview of Scienjoy's strong financial performance in fiscal year 2024, highlighting significant profitability growth and strategic global expansion initiatives Management Commentary Management highlighted strong 2024 performance with significant profit growth, strategic global expansion in MENA, and future focus on AIGC technologies - The company achieved significant growth in profitability, with gross profit rising by 27.4% and income from operations by 78.5% year-over-year, demonstrating effective conversion of paying users into profit[4] - Scienjoy is actively pursuing a global expansion strategy, using Dubai as a strategic hub to launch promotional initiatives in the high-potential Middle East and North Africa (MENA) region[4][13] - Future strategic priorities include expanding the company's global presence and increasing investment in cutting-edge Artificial Intelligence Generated Content (AIGC) technologies across its product ecosystem[5] - The company reported a significant financial turnaround, achieving a net income of RMB 26.7 million in 2024, an improvement of approximately RMB 60 million from the net loss in 2023[5] Key Financial & Operating Metrics Summary Scienjoy's 2024 financial summary shows decreased revenues but substantial profitability improvements, including a shift to net income and strengthened cash position Fiscal Year 2024 Key Financial Highlights (vs. 2023) | Metric | FY 2024 (RMB million) | FY 2023 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | 1,363.4 | 1,464.9 | -6.9% | | Gross Profit | 245.4 | 192.7 | +27.4% | | Income from Operations | 40.7 | 22.8 | +78.5% | | Net (Loss) Income | 26.7 | (35.0) | +RMB 61.7M | | Net (Loss) Income Attributable to Shareholders | 39.7 | (30.8) | +RMB 70.5M | | Adjusted Net (Loss) Income Attributable to Shareholders | 50.3 | (11.7) | +RMB 62.0M | - As of December 31, 2024, cash and cash equivalents increased to RMB 252.5 million (US$34.6 million), up RMB 47.1 million from RMB 205.5 million at the end of 2023[6] Fiscal Year 2024 Financial Results This section details Scienjoy's 2024 financial performance, covering revenue, cost of revenues, operating expenses, and net income drivers Revenues Total revenues for fiscal year 2024 decreased to RMB 1,363.4 million, primarily due to a decline in paying users amidst a competitive market Revenue and Paying User Comparison (FY 2024 vs. FY 2023) | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues (RMB million) | 1,363.4 | 1,464.9 | -6.9% | | Total Paying Users | 494,652 | 557,692 | -11.3% | Cost of Revenues and Gross Profit Reduced cost of revenues, driven by lower sharing fees and user acquisition costs, significantly increased gross profit by 27.4% and gross margin to 18.0% - Cost of revenues decreased to RMB 1,117.9 million from RMB 1,272.1 million in 2023, mainly due to a RMB 123.7 million decrease in revenue sharing fees and a RMB 26.5 million decrease in user acquisition costs[8] Gross Profit and Margin (FY 2024 vs. FY 2023) | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Gross Profit (RMB million) | 245.4 | 192.7 | +27.4% | | Gross Margin | 18.0% | 13.2% | +4.8 p.p. | Operating Expenses Total operating expenses increased by 20.5% to RMB 204.7 million, driven by a significant surge in sales and marketing for global expansion, and higher R&D and credit loss provisions Operating Expenses Breakdown (FY 2024 vs. FY 2023) | Expense Category (RMB million) | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Sales and Marketing | 7.0 | 1.4 | +420.2% | | General and Administrative | 76.6 | 75.6 | +1.4% | | Research and Development | 90.5 | 75.1 | +20.4% | | Provision for Credit Losses | 30.6 | 17.9 | +71.2% | | Total Operating Expenses | 204.7 | 169.9 | +20.5% | - The significant increase in sales and marketing expenses was primarily due to activities related to new subsidiaries in Dubai as part of the company's global expansion initiative[13] Income from Operations and Other Items Income from operations increased by 78.5% to RMB 40.7 million, bolstered by a RMB 6.1 million gain on marketable securities and significantly reduced investment losses - Income from operations grew to RMB 40.7 million (US$5.6 million), an increase of 78.5% from RMB 22.8 million in 2023[11] - The company recorded a gain of RMB 6.1 million on marketable securities, a reversal from a RMB 9.0 million loss in the prior year[15] - Investment loss decreased substantially to RMB 5.7 million in 2024 from RMB 31.3 million in 2023[16] Net Income and Earnings Per Share Scienjoy achieved a significant turnaround with a net income of RMB 26.7 million in 2024, resulting in a basic EPS of RMB 0.96 and adjusted basic EPS of RMB 1.22 Net Income and EPS (FY 2024 vs. FY 2023) | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net (Loss) Income (RMB million) | 26.7 | (35.0) | | Net (Loss) Income Attributable to Shareholders (RMB million) | 39.7 | (30.8) | | Basic (Loss) Earnings Per Share (RMB) | 0.96 | (0.76) | | Adjusted Basic (Loss) Earnings Per Share (RMB) | 1.22 | (0.29) | - Adjusted net income attributable to the Company's shareholders was RMB 50.3 million, an increase of RMB 62.0 million from an adjusted net loss of RMB 11.7 million in 2023[18] Financial Statements This section presents Scienjoy's consolidated financial statements, including balance sheets and statements of operations, detailing the company's financial position and performance Consolidated Balance Sheets As of December 31, 2024, Scienjoy's balance sheet shows total assets of RMB 1,405.2 million, increased cash, reduced liabilities, and total shareholders' equity of RMB 1,199.1 million Selected Balance Sheet Items (As of Dec 31, 2024 vs. 2023) | Item (RMB thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | 252,540 | 205,465 | | Total current assets | 544,644 | 576,977 | | Total Assets | 1,405,185 | 1,448,464 | | Total current liabilities | 160,769 | 234,121 | | Total Liabilities | 219,869 | 298,737 | | Total Shareholders' Equity | 1,199,094 | 1,150,564 | Consolidated Statements of Operations The consolidated statement of operations for 2024 confirms RMB 1,363.4 million in revenue, RMB 245.4 million gross profit, and a net income of RMB 26.7 million Consolidated Statement of Operations Highlights (FY 2024 vs. FY 2023) | Item (RMB thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Total revenue | 1,363,384 | 1,464,871 | | Gross profit | 245,442 | 192,726 | | Income from operations | 40,719 | 22,808 | | Net (loss) income | 26,683 | (34,976) | | Net (loss) income attributable to the Company's shareholders | 39,685 | (30,788) | Non-GAAP Financial Measures and Reconciliations This section explains the company's use of non-GAAP financial measures and provides detailed reconciliations to their U.S. GAAP equivalents Use of Non-GAAP Financial Measures The company uses non-GAAP measures, such as adjusted net income, to supplement U.S. GAAP results, providing enhanced insight into core financial performance by excluding specific items - Adjusted net income is defined as net income adjusted for change in fair value of contingent consideration, change in fair value of warrant liability, and share-based compensation[22] - The company presents non-GAAP measures to enhance understanding of its financial performance, but they should not be considered superior to or a substitute for financial information prepared in accordance with U.S. GAAP[22] Reconciliations of Non-GAAP Results This section provides a reconciliation from GAAP net income to non-GAAP adjusted net income, showing a RMB 39.7 million GAAP net income adjusted to RMB 50.3 million non-GAAP net income for 2024 Reconciliation of GAAP to Non-GAAP Net Income (RMB thousands) | Description | 2024 | 2023 | | :--- | :--- | :--- | | Net (loss) income attributable to the Company's shareholders (GAAP) | 39,685 | (30,788) | | Change in fair value of contingent consideration | - | (5,624) | | Change in fair value of warrants liability | - | 170 | | Share based compensation | (10,579) | (13,637) | | Adjusted net (loss) income attributable to the Company's shareholders (Non-GAAP) | 50,264 | (11,697) |