JZ Jianzhi Education Technology Group Company Ltd

 Jianzhi Education Technology Group Company Limited (the “Company” or “Jianzhi”) (NASDAQ: JZ), a leading provider of digital educational content in China, today announced its financial results for fiscal year 2022.

Yong Hu, CEO of the Company commented: “In the fiscal year 2022, we remained committed to meeting China's demand for high-quality vocational training resources and solidified our position as a leading digital educational content provider in the country. During the year ending December 31, 2022, our company achieved a revenue growth of about 6.9%, reaching approximately RMB505.7 million, compared to about RMB473.2 million in 2021. This growth was primarily driven by a significant increase in revenue from IT related solutions and services, which saw a substantial increase of RMB192.6 million ($US27.9 million), representing a growth rate of 178.1%.”

“Though our general and administrative expenses significantly increased in the past year, affecting our overall profitability to some extent, it is important to note that these expenses were primarily due to non-cash factors, including increased impairment expenses related to licensing copyrights and goodwill, as well as changes in provisions for doubtful accounts, mainly due to payment delays from educational content customers caused by the impact of COVID-19. We expect these factors that led to the increase to cease as we consolidate our market leadership and expand content promotion and distribution with our partners, thereby not affecting the company's overall performance in the future.”

“With our expertise in vocational education and strong content development capabilities, we continued to build a comprehensive digital education content database in 2022. Our library comprises over 39,000 online videos and video courses, totaling approximately 10,080 hours, with over 75.8% of the content being self-developed. Our content covers a wide range of professional development topics, including employability skills, entrepreneurship guidance, professional skill training, skill enhancement, and professional certification exams, to meet the growing demand for online educational content.”

“In 2022, we continued to strengthen our collaboration with telecom operators. For example, the monthly subscription purchase volume via telecom operators of our own mobile video package product ‘Fish Learning launched the fourth quarter of 2017 reached approximately 31.4 million by December 31, 2022, and total monthly subscription purchases were approximately 2.8 million for the years ended December 31, 2022. We expect to continue leveraging the telecom operator’s platform to promote our content and provide subscription services through our ‘Fish Learning’ mobile application. We also collaborated with another telecom operator in China to offer educational content redemption services for their mobile users. Approximately 3.4 million times course redemptions were made in fiscal year 2022. This arrangement generated revenue for us through point rewards paid by the telecom operator's subsidiary.”

“By December 31, 2022, we received over 5.9 million monthly subscriptions from our Light Class mobile video package product which we launched with telecom operator partner since in 2019, more than 570 quarterly subscriptions, and around 0.2 million annual subscriptions obtained from WeChat users and through the partnership.”

“In addition, we also collaborate with third-party content providers to supplement our own content database. These agreements allow us to use their educational videos and we aim to expand such partnerships.”

“Looking forward we are encouraged by our revenue growth and remain focused on optimizing our operations, improving the quality of our educational content, and exploring opportunities for further growth in the IT related solution services sector. We will keep committed to enhancing our performance and delivering value to our stakeholders.”

Fiscal Year 2022 Financial Results:The following table sets forth a summary of our (including the VIEs’) consolidated results of operations for the years indicated, both in absolute amounts and as percentages of total income from us and the VIEs.

		For the Years Ended December 31,
		2021			2022
		RMB			RMB		% Change
(in RMB million, except earnings per share; differences due to rounding)
Net revenues		473.25			505.72		6.86	%
Gross profit (loss)		104.20			（5.54	）	(105.32	%)
Gross (loss) margin		22.02	%		(1.1	%)	N/A
Income (loss) from operations		50.79			(207.45	)	(508.45	%)
Net income (loss)		52.93			(196.58	)	(471.40	%)
Earnings (loss) per share – basic and diluted		0.43			(1.68	)	(490.70	%)

Net RevenuesNet revenue increased by 6.9% from RMB473.2 million for the year ended December 31, 2021 to RMB505.7 million (US$73.3 million) for the year ended December 31, 2022. This increase was primarily driven by the net effects of an increase of RMB192.6 million (US$27.9 million) in revenue generated from IT related solution services, partially net off by a decrease of RMB160.2 million (US$23.2 million) in net revenues from the provision of educational content services and other services.

• Net revenue from the educational content service and other services decreased by RMB160.2 million (US$23.2 million) from RMB365.1 million for the year ended December 31, 2021 to RMB204.9 million (US$29.7 million) for the year ended December 31, 2022. Because there is constant need for updating and developing educational content, the Company faced the risk of content becoming outdated before generating profits. Therefore In 2022, Jianzhi adopted conservative strategies, resulting in a significant decline in revenues and lost subscriptions. The decrease was primarily due to the absence of new courses and attractive content, leading to decreased subscriptions from end customers.
• Net revenue from IT related solution services increased by RMB192.6 million (US$27.9 million), or 178.1% from RMB108.2 million for the year ended December 31, 2021 to RMB300.8 million (US$43.6 million) for the year ended December 31, 2022. The increase was primarily attributable to acquisition of a cloud-based customer in the year of 2022 which contributed revenues of RMB 197.5 million (US$28.6 million) in IT procurement and assembling of equipment.

Cost of RevenuesCost of revenue increased by 38.5% from RMB369.1 million for the year ended December 31, 2021 to RMB511.3million (US$74.1 million) for the year ended December 31, 2022. The increase of cost of revenues was primarily in line with the increase of revenues in IT related solution services. Compared with the revenue growth, the higher percentage of increase in cost of revenues was mainly attributable to the high equipment purchase cost we incurred for IT procurement and assembling projects during the year ended December 31, 2022.

Gross profit (loss)Due to the aforementioned factors, gross profit declined from RMB104.2 million in 2021 to a gross loss of RMB5.5 million (US$0.8 million) in 2022. The decrease was mainly due to the decrease in the gross profits margin for IT related solution services for the year ended December 31, 2022, because we completed procurement and assembling equipment projects with contract value of RMB10.8 million (US$1.7 million) for the new customer, in which we incurred significant equipment purchasing cost, resulting in relatively lower gross profit margin.

Operating ExpensesTotal operating expenses rose from RMB53.4 million in 2021 to RMB202.6million (US$29.4 million) in 2022.

• Sales and marketing expenses decreased from RMB7.6 million in 2021 to RMB7.1 million (US$1.0 million) in 2022. This decrease was mainly driven by a decrease of RMB1.3 million (US$0.2 million) in salary and welfare expenses because we laid off certain salespersons and reduced marketing and promotion for educational content services, and there was a decrease of $0.7 million in travel and entertainment expenses as a result of decrease in salespersons, partially net off by an increase of RMB1.3 million (US$0.2 million) in the service fee which were used in tendering for IT solution service customers.
• General and administrative expenses increased from RMB19.5 million in 2021 to RMB179.2 million (US$26.0 million) in 2022. This increase was caused by several factors, including an impairment of licensed copyrights due to outdated educational content, impairments of goodwill and customer relationships related to an acquisition, and changes in allowance of doubtful accounts due to delayed payments from educational content customers affected by COVID-19.
• Research and development expenses decreased from RMB26.4 million in 2021 to RMB15.6 million (US$2.3 million) in 2022. This decrease was primarily due to reductions in salary and welfare expenses and outsourced labor costs as the VIEs reduced expenditures on the development of new educational content.

Income Tax ExpensesIncome tax expenses changed from RMB4.3 million for the year ended December 31, 2021 to income tax benefits of RMB11.0 million (US$1.6 million) for the year ended December 31, 2022, because the Company incurred net operating losses during the year ended December 31, 2022 which could be carried forward for the next five years.

Net Income (Loss)As a result of the foregoing, the Company reported net loss of RMB196.6 million (US$28.5 million) for the year ended December 31, 2022 compared to net income of RMB52.9 million for the year ended December 31, 2021.

Recent Development

On November 28, 2022, the Company announced its subsidiary Shanghai Ang’you Internet Technology Co., Ltd. has entered into strategic cooperation agreement with Jinqiao Management Bureau of Shanghai Pilot Free Trade Zone on its vocational training online platform.

On November 14, 2022, the Company announced it entered into a “Ten Schools and 100 Enterprises Action Plan” strategic cooperation agreement with Modern Industry-Education Integration Promotion Center of Shanghai Pudong New Area (the “Center”), to jointly develop initiatives to strengthen collaboration between local governments, schools and enterprises in order to cultivate cross-border e-commerce talents and create a platform ecosystem for modern vocational education (the “Cooperation”).

About Jianzhi Education Technology Group Company Limited

Headquartered in Beijing and established in 2011, Jianzhi is a leading provider of digital educational content in China and has been committed to developing educational content to fulfill the massive demand for high-quality, professional development training resources in China. Jianzhi started operations by providing educational content products and IT services to higher education institutions. Jianzhi also provides products to individual customers. Leveraging its strong capabilities in developing proprietary professional development training content and success in consolidating educational content resources within the industry, Jianzhi has successfully built up a comprehensive, multi-dimensional digital educational content database which offers a wide range of professional development products. Jianzhi embed proprietary digital education content into the self-developed online learning platforms, which are provided to a wide range of customers through its omni-channel sales system. Jianzhi is also fully committed to the digitalization and informatization of the education sector in China. For more information, please visit: www.jianzhi-jiaoyu.com.

Safe Harbor Statement

This press release (the “Press Release”) contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. Statements that are not historical facts, including statements about the Company’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this Press Release is as of the date of this Press Release, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

Janice WangWFS Investor Relations Inc.Phone: +86 13811768559+1 628 283 9214Email: services@wealthfsllc.com

JIANZHI EDUCATION TECHNOLOGY GROUP COMPANY LIMITEDCONSOLIDATED BALANCE SHEETS(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”),except for number of shares and per share data)

		December 31,2021				December 31,2022				December 31,2022
		RMB				RMB				US$
Assets
Current assets:
Cash and cash equivalents			61,266,782				65,055,278				9,432,129
Accounts receivable, net			104,775,266				17,173,021				2,489,854
Inventories			1,960,277				399,439				57,913
Deferred offering expenses			8,494,583				—				—
Due from a related party			2,473,750				1,051,869				152,507
Short-term prepayments			288,101,452				254,493,399				36,898,074
Short-term investments			11,430,000				4,080,000				591,544
Prepaid expenses and other current assets			5,123,221				9,518,326				1,380,029
Total current assets			483,625,331				351,771,332				51,002,050
Non-current assets:
Right-of-use assets, net			300,024				—				—
Deferred tax assets, net			388,321				9,176,875				1,330,522
Property and equipment, net			214,717				153,880				22,310
Educational contents, net			206,695,356				214,441,814				31,091,140
Intangible assets, net			17,187,208				—				—
Goodwill			7,712,011				—				—
Long-term prepayments			143,494,187				151,779,105				22,005,902
Total non-current assets			375,991,824				375,551,674				54,449,874
Total assets			859,617,155				727,323,006				105,451,924
Liabilities
Current liabilities:
Accounts payable			24,286,309				8,037,004				1,165,256
Contract liabilities			327,299,227				290,028,010				42,050,109
Salary and welfare payable			3,411,486				2,302,646				333,852
Income taxes payable			3,743,247				1,170,795				169,749
Value added tax (“VAT”) and other tax payable			2,669,408				4,063,389				589,136
Other payables			5,276,472				2,658,243				385,409
Lease liabilities, current			295,367				—				—
Amount due to related parties			71,707,642				52,711,457				7,642,443
Total current liabilities			438,689,158				360,971,544				52,335,954
Non-current liabilities:
Deferred tax liabilities			2,191,500				—				—
Total non-current liabilities			2,191,500				—				—
Total liabilities			440,880,658				360,971,544				52,335,954

		December 31,2021				December 31,2022				December 31,2022
		RMB				RMB				US$
Commitments and contingencies
Mezzanine equity:
Redeemable ordinary shares (US$0.0001 par value; 11,110,000 and nil shares issued and outstanding as of December 31, 2021 and 2022, respectively)*			45,984,876				—				—
Shareholders’ equity
Ordinary shares (US$0.0001 par value; 500,000,000 shares authorized, 100,000,000 shares and 121,110,000 issued and outstanding as of December 31, 2021 and 2022)*			63,291				77,747				12,111
Additional paid-in capital			54,045,908				242,093,942				35,099,483
Statutory reserves			23,599,304				23,599,304				3,421,577
Retained earnings			280,983,836				81,822,029				11,863,081
Accumulated other comprehensive income			400,233				2,520,630				365,457
Total Jianzhi Education Technology Group Company Limited’s shareholders’ equity			359,092,572				350,113,652				50,761,709
Noncontrolling interests			13,659,049				16,237,810				2,354,261
Total shareholders’ equity			372,751,621				366,351,462				53,115,970
Total liabilities, mezzanine equity and shareholders’ equity			859,617,155				727,323,006				105,451,924

JIANZHI EDUCATION TECHNOLOGY GROUP COMPANY LIMITEDCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”),except for number of shares and per share data)

		For the Years Ended December 31,
		2020				2021				2022				2022
		RMB				RMB				RMB				US$
Net revenues			404,931,954				473,247,283				505,724,311				73,323,133
Cost of revenues			(275,790,112	)			(369,052,134	)			(511,265,334	)			(74,126,506	)
Gross profit (loss)			129,141,842				104,195,149				(5,541,023	)			(803,373	)
Operating expenses:
Sales and marketing expenses			5,031,526				7,576,963				7,087,625				1,027,609
General and administrative expenses			26,054,063				19,476,375				179,249,830				25,988,783
Research and development expenses			15,584,738				26,355,055				15,568,768				2,257,259
Total operating expenses			46,670,327				53,408,393				201,906,223				29,273,651
Income (loss) from operations			82,471,515				50,786,756				(207,447,246	)			(30,077,024	)
Other income (expenses):
Investment income			407,827				569,737				603,058				87,435
Interest income (expenses), net			53,596				(892,906	)			(2,088,467	)			(302,799	)
Other expenses			(19,614	)			(12,563	)			(286,522	)			(41,539	)
Government grants			4,482,816				6,753,388				1,656,077				240,109
Total other income, net			4,924,625				6,417,656				(115,854	)			(16,794	)
Income (loss) before income tax			87,396,140				57,204,412				(207,563,100	)			(30,093,818	)
Income tax (expense) benefits			(485,749	)			(4,273,788	)			10,980,054				1,591,958
Net income (loss)			86,910,391				52,930,624				(196,583,046	)			(28,501,860	)
Net income attributable to noncontrolling interests			4,586,492				4,672,355				2,578,761				373,885
Net income (loss) attributable to the Jianzhi Education Technology Group Company Limited’s shareholders			82,323,899				48,258,269				(199,161,807	)			(28,875,745	)
Net income (loss)			86,910,391				52,930,624				(196,583,046	)			(28,501,860	)
Other comprehensive (loss) income:
Foreign currency translation adjustments			(35,391	)			211,494				2,120,397				307,429
Total other comprehensive (loss) income			(35,391	)			211,494				2,120,397				307,429
Total comprehensive income (loss)			86,875,000				53,142,118				(194,462,649	)			(28,194,431	)
Net comprehensive income attributable to noncontrolling interests			4,586,492				4,672,355				2,578,761				373,885
Comprehensive income (loss) attributable to the Jianzhi Education Technology Group Company Limited’s shareholders			82,288,508				48,469,763				(197,041,410	)			(28,568,316	)
Earnings (loss) per share
Basic and diluted*			0.74				0.43				(1.68	)			(0.24	)
Weighted average number of shares
Basic and diluted*			111,110,000				111,110,000				118,512,959				118,512,959

JIANZHI EDUCATION TECHNOLOGY GROUP COMPANY LIMITEDCONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in Renminbi (“RMB”) and U.S. dollars (“US$”)

		For the Years Ended December 31,
		2020				2021				2022				2022
		RMB				RMB				RMB				US$
Cash flows from operating activities:
Net income (loss)			86,910,391				52,930,624				(196,583,046	)			(28,501,860	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment			538,303				78,000				60,837				8,821
Amortization of educational contents			24,375,147				45,296,565				91,542,454				13,272,408
Impairment of educational contents											106,182,780				15,395,056
Amortization of intangible assets			7,805,096				6,656,298				16,840,435				2,441,634
Impairment of intangible assets											12,139,226				1,760,022
Impairment of goodwill											7,712,011				1,118,136
Amortization of operating lease right-of-use assets			3,592,290				2,362,967				300,024				43,499
Provision (Reversal of provision) for doubtful accounts			210,433				(119,539	)			34,901,498				5,060,242
Deferred tax benefit			(45,415	)			(649,078	)			(10,980,054	)			(1,591,958	)
Changes in operating assets and liabilities:
Accounts receivable			(31,439,946	)			10,148,705				52,700,747				7,640,890
Inventories			1,877,720				15,655				1,560,838				226,300
Prepaid expenses and other current assets			357,319				(2,197,407	)			3,127,291				453,415
Short-term prepayments			12,940,022				(285,437,271	)			33,608,121				4,872,720
Accounts payable			7,921,537				1,059,057				(16,249,305	)			(2,355,928	)
Salary and welfare payable			415,648				9,831				(1,108,840	)			(160,767	)
Contract liabilities			(9,365,507	)			319,904,579				(37,271,217	)			(5,403,819	)
Income taxes payable			(903,026	)			2,822,268				(2,572,452	)			(372,970	)
Value added tax (“VAT”) and other tax payable			(4,325,138	)			(1,122,235	)			1,393,981				202,108
Other payables			455,342				(1,964,796	)			(2,787,853	)			(404,202	)
Lease liabilities			(3,566,734	)			(2,020,636	)			(295,367	)			(42,824	)
Net cash provided by operating activities			97,753,482				147,773,587				94,222,109				13,660,923
Cash flows from investing activities:
Purchase of short-term investments			(140,145,000	)			(24,405,127	)			(3,850,000	)			(558,198	)
Proceeds from redemption of short-term investment			90,305,000				83,655,127				11,200,000				1,623,847
Purchase of property and equipment			(39,980	)			(76,280	)			—				—
Purchase of educational contents			(98,899,372	)			(64,811,320	)			(176,597,637	)			(25,604,251	)
Purchase of intangible assets			(3,669,811	)			—				—				—
Prepayment for educational contents			(12,407,962	)			(139,002,868	)			(46,223,984	)			(6,701,848	)
Lonas made to a third party			—				—				(3,015,018	)			(437,137	)
Net cash used in investing activities			(164,857,125	)			(144,640,468	)			(218,486,639	)			(31,677,587	)
Cash flows from financing activities:
Repayment to related parties			(26,697	)			—				(17,064,116	)			(2,474,064	)
Borrowing from related parties			75,604				48,808,057				—				—
Net proceeds raised in connection with initial public offering			—				—				146,982,044				21,310,393
Payments of issuance cost in relation with initial public offering			—				(8,621,261	)			(481,408	)			(69,798	)
Advance to a related party for issuance costs in relation with initial public offering			—				(2,512,809	)			—				—
Refund from a related party for issuance costs in relation with initial public offering			—				—				1,421,881				206,153
Deposits made to a redeemable ordinary shareholder			—				—				(4,296,606	)			(622,949	)
Net cash provided by financing activities			48,907				37,673,987				126,561,795				18,349,735
Effect of exchange rate changes on cash and cash equivalents and restricted cash held in foreign currencies			(264,826	)			(489,011	)			1,491,231				216,210
Net increase (decrease) in cash and cash equivalents and restricted cash			(67,319,562	)			40,318,095				3,788,496				549,281
Cash and cash equivalents and restricted cash at beginning of the year			88,268,249				20,948,687				61,266,782				8,882,848
Cash and cash equivalents and restricted cash at end of the year			20,948,687				61,266,782				65,055,278				9,432,129
Supplemental disclosures of cash flows information:
Cash paid for income taxes			1,436,662				2,617,807				1,177,693				170,749
Cash paid for interest expenses			—				—				—				—
Non-cash Investing and Financing activities:
Transfer of prepaid issuance cost to additional paid-in capital			—				—				8,943,892				1,296,742