Scienjoy(SJ) - 2025 Q2 - Quarterly Report

Financial Reporting Standards - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and do not include all information required for complete financial statements[2]. - The Company accounts for business combinations under the purchase method, with goodwill recorded as the excess of acquisition cost over the fair value of identifiable net assets[15]. - The Company adopted ASU No. 2016-13 for measuring expected credit losses effective January 1, 2023, impacting the allowance for credit losses[22]. - The Company adopted Credit Losses (Topic 326) effective January 1, 2023, to make specific bad debt provisions based on management's estimates[67]. - The Company is currently evaluating the impact of several new accounting standards, including ASU 2025-04 and ASU 2025-05, on its financial statements[63][64]. Financial Performance - Total revenue for the six months ended June 30, 2025, was RMB 656,367 (approximately US$ 91,625), a decrease of 5% compared to RMB 691,139 in the same period of 2024[45]. - Revenue from live streaming consumable virtual items was RMB 630,084 for the six months ended June 30, 2025, down 6% from RMB 671,308 in 2024[45]. - Revenue from technical services and others increased significantly to RMB 17,025 in the six months ended June 30, 2025, compared to RMB 7,315 in 2024, representing a growth of 133%[43]. - The company operates five brands of live streaming platforms, with Showself generating RMB 165,985 in revenue for the six months ended June 30, 2025, an increase of 19% from RMB 139,571 in 2024[45]. - Government subsidies received amounted to RMB 7,962 (approximately US$ 1,111) for the six months ended June 30, 2025, compared to RMB 703 in 2024[47]. - Sales and marketing expenses increased to RMB 3,285 (approximately US$ 459) for the six months ended June 30, 2025, from RMB 2,045 in 2024[49]. - The company recorded total tax savings of RMB 6,255 for the six months ended June 30, 2025, impacting basic EPS by RMB 0.5[99]. - For the six months ended June 30, 2025, the total income tax expenses were RMB 2,608 (US$ 364), a decrease of 66.0% compared to RMB 7,673 for the same period in 2024[102]. - The effective income tax rate increased from 17.5% in 2024 to 21.1% in 2025, primarily due to the effect of tax-preferential entities and non-deductible expenses[102]. Asset Valuation and Impairment - The Company evaluates long-lived assets for impairment whenever events indicate that the carrying amount may not be recoverable, with no impairment recognized for the six months ended June 30, 2024 and 2025[26]. - The Company performs annual impairment tests on goodwill, determining that the fair value exceeds carrying value for the periods ended June 30, 2024 and 2025[27]. - The total intangible assets, net as of June 30, 2025, were RMB 401,786 (US$ 56,087), with accumulated amortization of RMB 30,210 (US$ 4,217)[75]. - The estimated annual amortization expense for the fiscal year ending June 30, 2026, is projected to be RMB 5,818 (US$ 812)[76]. - The deferred tax liabilities related to intangible assets acquired through acquisition were RMB 57,691 (US$ 8,053) as of June 30, 2025, down from RMB 58,400 as of December 31, 2024[104]. Investments and Equity - As of June 30, 2025, the fair value of investment in marketable equity securities is recorded at RMB 6,537,000, down from RMB 37,629,000 as of December 31, 2024[34]. - The company invested RMB 37,500 to acquire an additional 11.5385% equity interest in Banyou, bringing its total ownership to 19.2308%[81]. - The company recorded a share of loss of RMB 971 from equity method investees for the six months ended June 30, 2025[86]. - As of June 30, 2025, total long-term investments amounted to RMB 262,214, an increase from RMB 257,387 as of December 31, 2024[77]. Cash and Liquidity - As of June 30, 2025, cash and cash equivalents deposited with major financial institutions in the PRC amounted to RMB 288,174 (US$ 40,228)[66]. - The Company believes that deposits in Chinese banks are secure due to state policies protecting depositors' interests[66]. Liabilities and Commitments - The total operating lease liabilities as of June 30, 2025, were RMB 16,568, up from RMB 4,798 as of December 31, 2024[90]. - The right-of-use assets increased to RMB 17,795 as of June 30, 2025, compared to RMB 4,845 as of December 31, 2024[90]. - The Company did not have significant capital and other commitments as of June 30, 2025[116]. Shareholder Information - As of June 30, 2025, the Company had 39,412,710 Class A ordinary shares and 2,925,058 Class B ordinary shares issued and outstanding[109]. - The Company had 1,048,178 treasury shares held in escrow as of June 30, 2025[110]. - As of June 30, 2025, the Company had statutory reserves of RMB 51,195 (US$ 7,147), up from RMB 50,705 as of December 31, 2024[114]. - The restricted net assets of the Company's PRC subsidiaries and VIE were RMB 429,573 (US$ 59,966) as of June 30, 2025[115]. Risk and Concentration - As of June 30, 2025, four unrelated distributors accounted for 38.7%, 25.0%, and 15.8% of the Company's accounts receivable, indicating a concentration in customer credit risk[74]. - For the six months ended June 30, 2025, no vendor accounted for greater than 10% of the Company's total purchases, indicating a diversified supplier base[70]. Subsequent Events - No subsequent events occurred that would require recognition or disclosure in the financial statements after June 30, 2025[118].