TIAN RUIXIANG Holdings Ltd Reports Financial Results for the Half Year Ended April 30, 2024

Rhea-AI Summary

TIAN RUIXIANG Holdings (Nasdaq: TIRX), a China-based insurance broker, reported financial results for the half year ended April 30, 2024. The company faced a net loss of $2.6 million, primarily due to a significant revenue decline of 75.4% to $0.2 million. This decrease was mainly attributed to the loss of key insurance company partners. Despite challenges, the company saw an increase in commissions from liability insurance. Total operating expenses rose by 18.4% to $3.1 million. The company is pursuing strategies to mitigate losses, including expanding into the Hong Kong insurance brokerage market and diversifying its client base.

Positive

• Increase in commissions from liability insurance by approximately $24,000 compared to the same period in 2023
• Reduction in selling and marketing expenses by 26.5% to $1.2 million

Negative

• Net loss increased by 75.3% to $2.6 million
• Revenue decreased by 75.4% to $0.2 million
• Loss from operations increased by 53.7% to $3.0 million
• General and administrative expenses increased by 83.0% to $2.0 million
• Loss of key insurance company partners

Insights

Financial Analyst

TIAN RUIXIANG's financial results reveal significant challenges. The 75.4% revenue decline to $0.2 million is alarming, primarily due to lost partnerships. The net loss widening by 75.3% to $2.6 million underscores operational difficulties. While liability insurance commissions grew by $24,000, it's insufficient to offset overall losses. The 18.4% increase in operating expenses, despite revenue contraction, raises concerns about cost management. The company's strategy to expand into Hong Kong and diversify its client base seems reactive rather than proactive. Without a clear turnaround plan, TIRX faces an uphill battle to regain profitability and investor confidence.

Market Research Analyst

The Chinese insurance brokerage market is highly competitive and TIAN RUIXIANG's loss of key partners highlights the importance of relationship management in this industry. The company's focus on liability insurance shows promise, but it's a drop in the ocean compared to overall losses. The planned expansion into Hong Kong could be a double-edged sword - while it offers new opportunities, it also brings additional regulatory challenges and competition. The company's ability to adapt to market changes and rebuild partnerships will be crucial. Investors should watch for concrete steps in client acquisition and retention strategies, as well as any regulatory developments in both mainland China and Hong Kong that could impact TIRX's operations.

BEIJING, Aug. 16, 2024 (GLOBE NEWSWIRE) -- TIAN RUIXIANG Holdings Ltd (Nasdaq: TIRX) (the "Company"), a China-based insurance broker conducting business through its variable interest entity in China, today announced its financial results for the half year ended April 30, 2024.

Ms. Sheng Xu, the Chief Executive Officer of the Company, commented, "The Company reported a net loss of approximately $2.6 million for the six months ended April 30, 2024, primarily due to a significant decline in revenue caused by the loss of a few key insurance company partners. However, we are encouraged by the increase in the commissions from liability insurance of approximately $24,000 compared to the same period in 2023, indicating our success in expanding our liability insurance business.”

“We are actively pursuing strategies, such as expanding into the Hong Kong insurance brokerage market and diversifying our client base, to mitigate the impact of the lost partnerships and improve the Company’s financial performance in the future.”

Selected Half Year 2024 Financial Metrics

			Six Months Ended April 30,														Changes in
($ in millions, except per share data, differences due to rounding.)			2024							2023							Percentage
Revenues			$		0.2					$		0.7					(75.4)		%
Total operating expenses					3.1							2.7					18.4		%
Loss from operations					(3.0)							(1.9)					53.7		%
Net loss					(2.6)							(1.5)					75.3		%

Revenue

Revenue for the six months ended April 30, 2024 totaled $0.2 million, a decrease of $0.5 million, or 75.4%, compared with $0.7 million for the six months ended April 30, 2023. This significant decrease was primarily attributable to the loss of certain insurance company partners.

Operating Expenses

During the six months ended April 30, 2024 and 2023, operating expenses included selling and marketing expenses and general and administrative expenses.

• Selling and marketing expenses amounted to $1.2 million for the six months ended April 30, 2024, as compared to $1.6 million for the six months ended April 30, 2023, a decrease of $0.4 million, or 26.5%. The decrease was mainly attributable to a decrease in advertising costs and other miscellaneous items.
• General and administrative expenses amounted to $2.0 million for the six months ended April 30, 2024, as compared to $1.1 million for the six months ended April 30, 2023, an increase of $0.9 million, or 83.0%.

Loss from Operations

As a result of the foregoing, for the six months ended April 30, 2024, loss from operations amounted to $3.0 million, as compared to $1.9 million for the six months ended April 30, 2023.

Net Loss

As a result of the factors described above, net loss was $2.6 million for the six months ended April 30, 2024, as compared to $1.5 million for the six months ended April 30, 2023, a change of $1.1 million, or 75.3%.

About TIAN RUIXIANG Holdings Ltd

TIAN RUIXIANG Holdings Ltd, headquartered in Beijing, China, is an insurance broker operating in China through its China-based variable interest entity. It distributes a wide range of insurance products, which are categorized into two major groups: (1) property and casualty insurance, such as commercial property insurance, liability insurance, accidental insurance, and automobile insurance; and (2) other types of insurance, such as health insurance, life insurance, and other miscellaneous insurance. For more information, visit the company's website at http://ir.tianrx.com/.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review risk factors that may affect its future results in the Company's registration statement and in its other filings with the U.S. Securities and Exchange Commission.

For investor and media enquiries, please contact:

TIAN RUIXIANG Holdings Ltd
Investor Relations Department
Email: ir@tianrx.com

Wealth Financial Services LLC
Connie Kang
Partner
Email: ckang@wealthfsllc.com
Tel: +86 1381 185 7742 (CN)

TIAN RUIXIANG HOLDINGS LTD AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN U.S. DOLLARS)
		As of
		April 30, 2024					October 31, 2023
			(Unaudited)
ASSETS
CURRENT ASSETS:
Cash		$		27,456,502			$	2,383
Restricted cash				700,530				692,692
Short-term investments				—				26,797,081
Accounts receivable				7,844				18,960
Other current assets				90,333				107,508
Total Current Assets				28,255,209				27,618,624
NON-CURRENT ASSETS:
Right-of-use assets, operating leases, net				61,518				54,870
Note receivable				7,800,000				7,800,000
Interest receivable				78,000				—
Property and equipment, net				5,605				6,280
Intangible assets, net				1,766,961				—
Total Non-current Assets				9,712,084				7,861,150
Total Assets		$		37,967,293			$	35,479,774
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Acquisition payable		$		1,875,002			$	—
Operating lease liabilities				24,892				57,402
Taxes payable				626,150				623,825
Salary payable				815,449				726,330
Accrued liabilities and other payables				932,295				481,801
Due to related parties				1,310,545				1,173,510
Total Current Liabilities				5,584,333				3,062,868
NON-CURRENT LIABILITIES:
Operating lease liabilities - noncurrent portion				39,872				—
Total Non-current Liabilities				39,872				—
Total Liabilities				5,624,205				3,062,868
EQUITY:
TIAN RUIXIANG Holdings Ltd Shareholders' Equity:
Ordinary shares: $0.025 par value; 40,000,000 shares authorized;
Class A ordinary shares: $0.025 par value; 36,000,000 shares authorized; 1,372,949 and 674,949 shares issued and outstanding at April 30, 2024 and October 31, 2023, respectively				34,324				16,874
Class B ordinary shares: $0.025 par value; 4,000,000 shares authorized; 50,000 shares issued and outstanding at April 30, 2024 and October 31, 2023				1,250				1,250
Additional paid-in capital				46,361,339				44,108,774
Accumulated deficit				(10,909,039	)			(8,303,691	)
Statutory reserve				275,150				275,150
Accumulated other comprehensive loss				(3,420,333	)			(3,681,845	)
Total TIAN RUIXIANG Holdings Ltd shareholders' equity				32,342,691				32,416,512
Non-controlling interest				397				394
Total Equity				32,343,088				32,416,906
Total Liabilities and Equity		$		37,967,293			$	35,479,774

TIAN RUIXIANG HOLDINGS LTD AND SUBSIDIARIES UNAUDITED CONDESNSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (IN U.S. DOLLARS)
(IN U.S. DOLLARS)
		For the Six Months Ended April 30,
		2024				2023
REVENUES		$	178,345			$	724,859
OPERATING EXPENSES
Selling and marketing			1,149,083				1,564,353
General and administrative - professional fees			390,503				735,314
General and administrative - compensation and related benefits			1,521,846				290,810
General and administrative - other			79,743				62,368
Total Operating Expenses			3,141,175				2,652,845
LOSS FROM OPERATIONS			(2,962,830	)			(1,927,986	)
OTHER INCOME (EXPENSE)
Interest income			348,639				468,200
Other income (expense)			22,940				(6,464	)
Total Other Income, net			371,579				461,736
LOSS BEFORE INCOME TAXES			(2,591,251	)			(1,466,250	)
INCOME TAXES			14,098				20,003
NET LOSS		$	(2,605,349	)		$	(1,486,253	)
LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST			(1	)			—
NET LOSS ATTRIBUTABLE TO TIAN RUIXIANG HOLDINGS LTD ORDINARY SHAREHOLDERS		$	(2,605,348	)		$	(1,486,253	)
NET LOSS PER ORDINARY SHARE ATTRIBUTABLE TO TIAN RUIXIANG HOLDINGS LTD ORDINARY SHAREHOLDERS:
Basic and diluted		$	(2.68	)		$	(2.50	)
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:
Basic and diluted			970,721				594,901
COMPREHENSIVE LOSS:
NET LOSS		$	(2,605,349	)		$	(1,486,253	)
OTHER COMPREHENSIVE INCOME
Unrealized foreign currency translation gain			261,516				1,485,978
COMPREHENSIVE LOSS			(2,343,833	)			(275	)
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST			3				23
COMPREHENSIVE LOSS ATTRIBUTABLE TO TIAN RUIXIANG HOLDINGS LTD ORDINARY SHAREHOLDERS		$	(2,343,836	)		$	(298	)

TIAN RUIXIANG HOLDINGS LTD AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN U.S. DOLLARS)
		For the Six Months Ended April 30,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(2,605,349	)		$	(1,486,253	)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation expense and amortization of intangible assets			30,896				1,017
Amortization of right-of-use assets			36,835				55,334
Stock-based compensation and service expense			2,270,015				1,068,000
Bad debt provision			18,073				25
Loss on disposal of property and equipment			—				735
Changes in operating assets and liabilities:
Accounts receivable			11,423				(60,321	)
Security deposit			—				4,402
Interest receivable			(78,000	)			262,192
Due from related party			—				1,444
Other assets			397				55,340
Taxes payable			(4,086	)			24,428
Salary payable			91,969				204,189
Accrued liabilities and other payables			518,567				(8,959	)
Due to related parties			3,611				683,003
Operating lease liabilities			(36,141	)			(42,993	)
NET CASH PROVIDED BY OPERATING ACTIVITIES			258,210				761,583
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from note receivable			—				7,500,000
Cash acquired on acquisition			77,893				—
Proceeds from sale of short-term investments			27,336,938				27,615,075
NET CASH PROVIDED BY INVESTING ACTIVITIES			27,414,831				35,115,075
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related parties' borrowings			93,794				—
Repayments of related parties' borrowings			(35,807	)			—
NET CASH PROVIDED BY FINANCING ACTIVITIES			57,987				—
EFFECT OF EXCHANGE RATE ON CASH AND RESTRICTED CASH			(269,071	)			84,307
NET INCREASE IN CASH AND RESTRICTED CASH			27,461,957				35,960,965
CASH AND RESTRICTED CASH - beginning of period			695,075				695,242
CASH AND RESTRICTED CASH - end of period		$	28,157,032			$	36,656,207
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest		$	—			$	—
Income taxes		$	1,423			$	—
NON-CASH INVESTING AND FINANCING ACTIVITIES
Reissuance of treasury stock		$	—			$	25,000
Payments made by related parties on the Company's behalf		$	75,333			$	—
Accrued purchase price related to acquisition		$	1,875,002			$	—
RECONCILIATION OF CASH AND RESTRICTED CASH
Cash at beginning of period		$	2,383			$	2,508
Restricted cash at beginning of period			692,692				692,734
Total cash and restricted cash at beginning of period		$	695,075			$	695,242
Cash at end of period		$	27,456,502			$	35,923,605
Restricted cash at end of period			700,530				732,602
Total cash and restricted cash at end of period		$	28,157,032			$	36,656,207

FAQ

What was TIAN RUIXIANG Holdings 's (TIRX) revenue for the half year ended April 30, 2024?

TIAN RUIXIANG Holdings (TIRX) reported revenue of $0.2 million for the half year ended April 30, 2024, representing a 75.4% decrease from the same period in 2023.

How much net loss did TIAN RUIXIANG Holdings (TIRX) report for the half year ended April 30, 2024?

TIAN RUIXIANG Holdings (TIRX) reported a net loss of $2.6 million for the half year ended April 30, 2024, which is a 75.3% increase from the $1.5 million loss in the same period of 2023.

What strategies is TIAN RUIXIANG Holdings (TIRX) pursuing to improve its financial performance?

TIAN RUIXIANG Holdings (TIRX) is pursuing strategies such as expanding into the Hong Kong insurance brokerage market and diversifying its client base to mitigate the impact of lost partnerships and improve financial performance.

How did TIAN RUIXIANG Holdings 's (TIRX) operating expenses change in the half year ended April 30, 2024?

TIAN RUIXIANG Holdings 's (TIRX) total operating expenses increased by 18.4% to $3.1 million for the half year ended April 30, 2024, compared to the same period in 2023.