Scienjoy(SJ) - 2022 Q4 - Annual Report

Scienjoy Holding Corporation Fiscal Year 2022 Financial Results Operating and Financial Highlights For the fiscal year 2022, Scienjoy reported a 17.0% increase in total net revenues to RMB 1,953.3 million and a 14.8% rise in net income to RMB 195.2 million compared to the previous year, despite a decline in gross profit and paying users FY 2022 Key Financial Metrics (vs. FY 2021) | Metric | FY 2022 (RMB) | FY 2021 (RMB) | Change | | :--- | :--- | :--- | :--- | | Total Net Revenues | 1,953.3 million | 1,669.4 million | +17.0% | | Gross Profit | 283.2 million | 304.5 million | -7.0% | | Net Income | 195.2 million | 170.0 million | +14.8% | | Adjusted Net Income | 181.4 million | 219.0 million | -17.2% | | Total Paying Users | 702,372 | 840,640 | -16.5% | | Cash and Cash Equivalents | 175.3 million | 240.9 million | -27.2% | - The company had 320.2 million registered users by the end of December 31, 2022[2] Management Commentary The CEO emphasized the company's solid performance despite macroeconomic challenges and outlined a forward-looking strategy focused on enhancing content quality, investing in cutting-edge technologies like VR, AR, and AI, and developing a live streaming metaverse - CEO Victor He outlined key strategic objectives to sustain growth[3] - Elevate content quality and invest in technology to attract and enhance user experience[3] - Pursue a live streaming metaverse strategy by investing in VR, AR, and AI technologies[3] - Construct a robust mobile live streaming ecosystem to diversify business lines[3] - CFO Denny Tang noted that the 17.0% revenue growth and 14.8% net income growth demonstrate the success of their business scaling strategy and operational efficiency[3] Detailed Financial Analysis Fiscal year 2022 revenue grew 17.0% to RMB 1,953.3 million, primarily driven by the acquisition of the Hongren platform and a 39% increase in Average Revenue Per Paying User (ARPPU) to RMB 2,725, which offset a decline in the number of paying users - The 17.0% increase in total net revenues was driven by quality content from integrated platforms, including the newly acquired Hongren platform[4] User Metrics (FY 2022 vs. FY 2021) | Metric | FY 2022 | FY 2021 | Change | | :--- | :--- | :--- | :--- | | Paying Users | 702,372 | 840,640 | -16.5% | | Average ARPPU (RMB) | 2,725 | 1,963 | +39% | - Cost of revenues increased by 22.4% primarily due to a 29% (RMB 341.2 million) rise in revenue sharing fees and content costs, which led to a decrease in gross margin from 18% in 2021 to 14% in 2022[5] - Total operating expenses decreased by 3.7% to RMB 133.4 million, largely due to a 55.8% reduction in sales and marketing expenses and a 6.5% drop in general and administrative expenses[6] Net Income and EPS (FY 2022 vs. FY 2021) | Metric | FY 2022 (RMB) | FY 2021 (RMB) | | :--- | :--- | :--- | | Net Income | 195.2 million | 170.0 million | | Net Income Attributable to Shareholders | 193.3 million | 170.0 million | | Basic and Diluted EPS (RMB) | 4.92 | 5.51 | Business Outlook For the first quarter of 2023, Scienjoy projects its total net revenues to be in the range of RMB 280 million to RMB 330 million - The Company expects its total net revenues to be in the range of RMB 280 million to RMB 330 million in the first quarter of 2023[15] Financial Statements This section presents the company's condensed consolidated financial statements as of December 31, 2022, including the balance sheet, income statement, and a reconciliation of GAAP net income to non-GAAP adjusted net income Condensed Consolidated Balance Sheets This section provides a summary of the company's financial position, detailing assets, liabilities, and equity as of December 31, 2022 and 2021 Balance Sheet Summary (in thousands RMB) | Account | Dec 31, 2022 (thousands RMB) | Dec 31, 2021 (thousands RMB) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 175,292 | 240,947 | | Total current assets | 648,782 | 652,511 | | Total non-current assets | 853,246 | 436,844 | | TOTAL ASSETS | 1,502,028 | 1,089,355 | | Liabilities & Equity | | | | Total current liabilities | 265,533 | 221,164 | | Total non-current liabilities | 74,009 | 58,746 | | TOTAL LIABILITIES | 339,542 | 279,910 | | Total equity | 1,162,486 | 809,445 | Condensed Consolidated Statements of Income This section outlines the company's financial performance, presenting revenues, costs, and net income for the fiscal years 2022 and 2021 Income Statement Summary (in thousands RMB) | Account | FY 2022 (thousands RMB) | FY 2021 (thousands RMB) | | :--- | :--- | :--- | | Total revenue | 1,953,257 | 1,669,358 | | Cost of revenues | (1,670,068) | (1,364,902) | | Gross profit | 283,189 | 304,456 | | Income from operations | 149,780 | 165,969 | | Income before income taxes | 213,292 | 175,616 | | Net income | 195,225 | 170,012 | | Net income attributable to shareholders | 193,333 | 170,012 | Reconciliation of Non-GAAP Results This section reconciles GAAP net income to non-GAAP adjusted net income, providing insights into the company's underlying operational profitability Non-GAAP Reconciliation (in thousands RMB) | Account | FY 2022 (thousands RMB) | FY 2021 (thousands RMB) | | :--- | :--- | :--- | | Net income attributable to shareholders | 193,333 | 170,012 | | Change in fair value of contingent consideration | 13,071 | (33,584) | | Change in fair value of warrants liability | 10,776 | 16,421 | | Share based compensation | (11,954) | (31,857) | | Adjusted net income attributable to shareholders | 181,440 | 219,032 |