Zhibao Technology Inc Announces Financial Results for the Fiscal Year Ended June 30, 2024

Rhea-AI Summary

Zhibao Technology (NASDAQ: ZBAO) reported financial results for fiscal year ended June 30, 2024. Revenue increased 29% to RMB 183.7M (US$25.3M), with gross profit up 28% to RMB 74.8M (US$10.3M). The company achieved income from operations of RMB 10.1M ($1.4M), compared to a loss of RMB 44.5M in 2023. Insurance brokerage revenue grew 45% to RMB 174.1M, while MGU service fees decreased 55% to RMB 10.2M. The company expanded B channels from 1,550 to 1,800 and served over 15M end customers. Investments in R&D and sales increased by 56% and 40% respectively.

Positive

• Revenue growth of 29% YoY to RMB 183.7M
• Gross profit increase of 28% to RMB 74.8M
• Turned operating loss into RMB 10.1M profit
• Insurance brokerage revenue up 45% to RMB 174.1M
• B channels expansion from 1,550 to 1,800
• Customer base growth to over 15M users

Negative

• MGU Service Fees declined 55% to RMB 10.2M
• Increased selling expenses by 40%
• R&D expenses increased by 56%
• Loss of reinsurance partner in high-end medical sector

Insights

Financial Analyst

Zhibao's fiscal year 2024 results demonstrate significant operational progress. $25.3M in revenue marks a 29% YoY growth, with digital insurance brokerage segment growing 45% to $24.0M. The company achieved profitability with $1.4M in operating income, a substantial turnaround from the previous year's $44.5M loss.

Key performance indicators show strong business momentum: B-channel partnerships increased from 1,550 to 1,800 and the user base exceeded 15 million. Strategic investments in R&D (56% increase) and sales (40% increase) position the company for continued growth. The pending Labuan reinsurance license could create additional revenue streams and strengthen market position.

However, MGU service fees declined 55% due to a reinsurance partner's exit, highlighting partnership risk. The improved cost management and reduced G&A expenses by 75% demonstrate operational efficiency, though increased investment in sales and R&D may pressure margins in the near term.

Shanghai, China--(Newsfile Corp. - October 31, 2024) - Zhibao Technology Inc. (NASDAQ: ZBAO) ("Zhibao" or the "Company"), a leading and high growth InsurTech company primarily engaged in providing digital insurance brokerage services through its operating entities in China, today announced its financial results for the fiscal year ended June 30, 2024.

Recent Developments

On April 3, 2024, the Company closed its initial public offering ("Offering") of 1,500,000 Class A ordinary shares at a public offering price of $4.00 per share for aggregate gross proceeds of $6,000,000, before deducting underwriting discounts and offering expenses. The Class A ordinary shares began trading on the Nasdaq Capital Market on April 2, 2024 under the symbol "ZBAO."

On May 15, 2024, the Company issued an additional 23,765 Class A ordinary shares pursuant to the partial exercise of the underwriters' over-allotment option in connection with the Company's Offering at $4.00 per share, resulting in additional gross proceeds of $95,060.

Financial and Operational Summary for the Fiscal Year Ended June 30, 2024

• Revenues increased by approximately RMB 41.6 million (US$5.7 million), or 29% to approximately RMB 183.7 million (US$25.3 million) for the fiscal year ended June 30, 2024 from approximately RMB 142.1 million for the fiscal year ended June 30, 2023.
• Gross profit increased by approximately RMB 16.1 million (US$2.2 million), or 28% to approximately RMB 74.8 million (US$10.3 million) for the fiscal year ended June 30, 2024 from approximately RMB 58.6 million for the fiscal year ended June 30, 2023.
• Income from operations in the fiscal year ended June 30, 2024 of approximately RMB 10.1 million ($1.4 million), compared to a loss from operations of approximately RMB 44.5 million in the same period of 2023.
• The Company increased selling expenses by approximately 40%, and research & development (R&D) by approximately 56% compared to the same period in 2023. Management expects this investment to drive returns in the form of increased revenue in the coming quarters.
• Development of B Channels showed strong growth. As of June 30, 2024, Zhibao grew the number of B channels the Company works with from approximately 1,550 to nearly 1,800. B channels are distributed amongst diverse market segments and is a key component to growing our 2B2C embedded digital insurance model.
• As of June 30, 2024, the Company reached and served in excess of 15 million end customer users, which management expects will continue to drive revenue in the coming years.

Management Commentary

Mr. Botao Ma, Chief Executive Officer of Zhibao, commented, "I am very pleased to report a rapid growth in our income over the past fiscal year. I am especially pleased that we were able to report a GAAP profit and produce substantial growth over fiscal year 2023 despite large investments in R&D and sales expenses.

Over the past year, our digital insurance brokerage platform has expanded to include many new business areas, for example sports. We are pleased to provide industry-leading digital insurance solutions to an ever-increasing number of B-channels and end users across more industry sectors and fields.

Throughout the last six months, our "Project Amoeba" continued to bring us strong returns, markedly increasing the ability and efficiency of our mid- and back-office teams.

The digitization of the Chinese insurance brokerage industry is accelerating. We are thrilled to have entered this market 8 years ago with our 2B2C digital insurance brokerage platform. Our first-mover advantage has allowed us to develop many digital insurance solutions across various industries.

By sustaining our organic growth and strategic investment in other companies, as well as exporting our PaaS and mature operational ability to the market, we intend to utilize our position as China's first digital insurance brokerage company to play a key role in the digitization of the Chinese insurance brokerage market.

We have received conditional approval and are in the process of obtaining final license approval for our reinsurance company in Labuan, Malaysia. By providing selective reinsurance support to business generated by our brokerage and MGU business lines, I believe we can showcase our confidence in the business we provide to the insurance market and accelerate our business growth.

I have every confidence in our business model, growth strategies, and our continued ability to drive growth and profitability in the coming years."

Business and Financial Outlook

The Company expects growth patterns to continue to demonstrate strong growth. By executing on the growth strategies, specifically, by focusing on organic growth, continued strategic investment, and upgrade of the digital insurance brokerage platform, management is optimistic that Zhibao has a long runway ahead, allowing the Company to stay ahead of the competition in the 2B2C digital embedded insurance market space in China.

Over the course of fiscal year 2024, the Company made large investments in developing its own sales ability. This includes investment into the sales staff, and attracting more independent sales partners, which will accelerate the identification and development of more B-channels across different industry sectors.

Complementing the organic growth plan, the Company intends to accelerate its strategic investment in fiscal year 2025. The strategic investment targets remain boutique players with similar business models and deep connections within a specific niche. Zhibao intends to integrate an acquired company's B-channels, sales teams, and operational abilities allowing the Company rapid access to potential new markets and end customers.

Finally, by continually optimizing the digital insurance solutions, the Company intends to improve conversion ratios, leading to more end users across more industry segments.

Through the execution of the aforementioned growth strategies, the Company is confident that its first-mover advantage and industry leading PaaS and digital insurance solutions will continue to deliver strong results in the future.

Financial Results for the Fiscal Year Ended June 30, 2024

Revenues

Revenues increased by approximately RMB 41.6 million (US$5.7 million), or 29% to approximately RMB 183.7 million (US$25.3 million) for the fiscal year ended June 30, 2024 from approximately RMB 142.1 million for the fiscal year ended June 30, 2023. The increase was primarily driven by higher insurance brokerage revenue of approximately RMB54.3 million from the digital insurance brokerage, partially offset against a decrease of approximately RMB 12.6 million in MGU service fees.

• Insurance Brokerage. Revenues from the digital insurance brokerage segment increased by approximately RMB 54.3 million, or 45%, to approximately RMB 174.1 million (US$24.0 million) for the fiscal year ended June 30, 2024 from approximately RMB 119.8 million for the fiscal year ended June 30, 2023. The increase in the insurance brokerage commissions as a percentage of total revenues for such periods was mainly due to the increase in volume of transactions on our platform, primarily contributed by larger customer base and more selection of production.

• MGU Service Fees. MGU Service Fees decreased by approximately RMB 12.6 million, or 55% to approximately RMB 10.2 million (US$1.4 million) for the fiscal year ended June 30, 2024 from approximately RMB 22.8 million for the fiscal year ended June 30, 2023. The decrease was mainly attributable to the abrupt closure of business by a reinsurance partner in the high-end medical sector.

Cost of Revenues

Cost of revenue for the fiscal year ending June 20, 2024 increased by approximately 30% from RMB 83.5 million for the fiscal year ended June 30, 2023 to approximately RMB 108.9 million (US$15.0 million) for the fiscal year ended June 30, 2024. The increase in the cost of revenues was in line with the increase of revenues.

Operating Expenses

• Selling expenses for the fiscal year ended June 20, 2024 increased by approximately RMB 9.1 million, or 40% from approximately RMB 22.5 million for the fiscal year ended June 30, 2023 to approximately RMB 31.6 million (US$4.3 million) for the fiscal year ended June 30, 2024. The increase was mainly due to an increase of approximately RMB 5.2 million in salary and welfare expenses for our sales team as a result of employment of more salespeople with anticipation to increase the GWP for both of our digital brokerage services and MGU services, and an increase in other expenses of approximately RMB 2.3 million incurred by our sales teams with the increase of headcount.

• General and administrative expenses decreased by approximately RMB 53.0 million, or 75% from approximately RMB 71.0 million for the fiscal year ended June 30, 2023 to approximately RMB 18.0 million (US$2.5 million) for the fiscal year ended June 30, 2024. The decrease was mainly due to a decrease in share-based compensation expenses of approximately RMB 54.7 million as we issued ordinary shares to a related party which is wholly controlled by Mr. Ma, our Chairman of the Board and Chief Executive Officer. The difference of RMB 54.7 million between the consideration we received from the related party and fair value of ordinary shares were deemed as share-based compensation expenses, and a decrease of other expenses of approximately RMB 1.5 million as we adopted cost-saving policy in the Company. This was partially offset by an increase of approximately RMB 2.3 million in provision for credit losses since our adoption of ASU 2016-13 on July 1, 2023, and an increase of approximately RMB 0.9 million in payroll and welfare expenses as a result of employment of more administrative headcount to support our increasing GWP.
• Research and development expenses increased by approximately RMB 5.4 million, or 56% from approximately RMB 9.7 million for the fiscal year ended June 30, 2023 to approximately RMB 15.1 million (US$2.1 million) for the fiscal year ended June 30, 2024. The increase was mainly due to an increase of labor cost from our research and development department because we increased headcounts for the development of our platform.

Income (Loss) from Operations

As a result of the foregoing, the Company reported income from operations in the fiscal year ended June 30, 2024 of approximately RMB 10.1 million ($1.4 million), compared to a loss from operations of approximately RMB 44.5 million in the same period of 2023.

Net Income (Loss)

The Company reported a net loss of approximately RMB 43.1 million for the fiscal year ended June 30, 2023, and a net income of approximately RMB 4.3 million for the fiscal year ended June 30, 2024.

Profit per Share

Basic and diluted net income per share for the fiscal year ended June 30, 2024 were RMB 0.14 $0.02 and RMB 0.14 $0.04, respectively.

Conference Call

The Company will host a conference call on Monday, November 4, 2024, at 11:00 AM ET to discuss the fiscal year ended June 30, 2024 results. To participate in the conference call, please dial:

US toll free: 1-877-423-9813
International: 1-201-689-8573
Conference ID: ZHIBAO TECHNOLOGY

Please dial five to ten minutes prior to the scheduled time

For those unable to participate during the live call, a replay of this call will be available on November 4, 2024 at 2:00 p.m. ET for 7 days. To access the replay, please dial:

US toll free: 1- 844-512-2921
International: 1-412-317-6671
Access ID: 13750000

About Zhibao Technology Inc.

Zhibao Technology Inc. is a leading and high growth InsurTech company primarily engaging in providing digital insurance brokerage services through its operating entities ("Zhibao China Group") in China. 2B2C ("to-business-to-customer") digital embedded insurance is the Company's innovative business model, which Zhibao China Group pioneered in China. Zhibao China Group launched the first digital insurance brokerage platform in China in 2020, which is powered by their proprietary PaaS ("Platform as a Service").

Zhibao has developed more than 40 proprietary and innovative digital insurance solutions addressing different scenarios in a wide range of industries, including but not limited to travel, sports, logistics, utilities, and e-commerce. Zhibao China Group acquire and analyze customer data, utilize big data and artificial intelligence technology to continually iterate and enhance its digital insurance solutions. This iterative process, in addition to continually improving its digital insurance solutions, will keep the Company abreast of the new trends and customer preferences in the market.

For more information, please visit the Company's website at ir.zhibao-tech.com.

Forward-Looking Statements

Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "is/are likely to," "potential," "predict," "project," "should," "target," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations that arise after the date hereof, except as may be required by law. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions, and other factors discussed in the "Risk Factors" section of the registration statement filed with the SEC. 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 other factors that may affect its future results in the Company's registration statement and other filings with the SEC. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov.

Contact Information:

For Media and Investor Relations
Zhibao Technology Inc.
Investor Relations Office
ir@zhibao-tech.com

Skyline Corporate Communications Group, LLC
Scott Powell, President
Avenues Tower
1177 Avenue of the Americas, 5th floor
New York, NY 10036
Office: (646) 893-5835
Email: info@skylineccg.com

Balance Sheet

ZHIBAO TECHNOLOGY INC.
CONSOLIDATED BALANCE SHEETS

(Amounts in Renminbi ("RMB") and U.S. dollars ("US$"), except for share and per share data)

			As of June 30,
			2023				2024				2024
			RMB				RMB				USD (Note 2)
ASSETS
Current Assets
Cash and cash equivalents			9,873,678				2,401,495				330,457
Restricted cash			4,999,974				38,743,831				5,331,329
Accounts receivable, net			77,750,249				130,354,429				17,937,366
Due from related parties			8,526,012				16,566,524				2,279,630
Deferred offering cost			4,223,769				-				-
Prepaid expenses and other current assets, net			8,332,330				9,485,464				1,305,243
Total Current Assets			113,706,012				197,551,743				27,184,025
Property and equipment, net			2,516				233,375				32,113
Intangible assets, net			2,183,677				2,581,046				355,164
Operating lease right of use assets			4,327,705				3,313,215				455,914
Restricted cash, noncurrent			5,000,000				5,000,000				688,023
Deferred tax assets			1,604,757				57,257				7,879
Other non-current assets			1,211,500				51,004				7,018
Total Non-Current Assets			14,330,155				11,235,897				1,546,111
Total Assets			128,036,167				208,787,640				28,730,136
LIABILITIES, AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings			27,267,797				26,814,237				3,689,762
Accounts payable			31,436,527				51,252,954				7,052,641
Insurance premium payable			3,553,377				38,376,850				5,280,830
Income tax payable			28,343				42,747				5,882
Due to related parties			290,200				6,166,067				848,479
Operating lease liabilities, current			2,009,034				2,425,135				333,710
Accrued expenses and other liabilities			14,714,898				15,990,970				2,200,431
Subscription fees advanced from one investor			15,000,000				-				-
Total Current Liabilities			94,300,176				141,068,960				19,411,735
Operating lease liabilities, noncurrent			2,273,154				1,044,068				143,669
Deferred tax liabilities			7,698				2,683,818				369,306
Total Non-Current Liabilities			2,280,852				3,727,886				512,975
Total Liabilities			96,581,028				144,796,846				19,924,710
Commitments and contingencies
Shareholders' Equity
Class A ordinary shares (par value $0.0001 per share, 450,000,000 shares authorized, 13,183,308 and 14,707,073 shares issued and outstanding as of June 30, 2023 and 2024, respectively)*			8,820				9,922				1,470
Class B ordinary shares (par value $0.0001 per share, 50,000,000 shares authorized, 16,816,692 and 16,816,692 shares issued and outstanding as of June 30, 2023 and 2024, respectively)*			12,204				12,204				1,682
Additional paid-in capital			168,973,780				196,038,784				26,975,834
Accumulated deficit			(137,544,783)				(131,841,244)				(18,142,067)
Accumulated other comprehensive income (loss)			5,118				(228,872)				(31,493)
Total Shareholders' Equity			31,455,139				63,990,794				8,805,426
Total Liabilities and Shareholders' Equity			128,036,167				208,787,640				28,730,136

 

 

Statement of Operations

ZHIBAO TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Amounts in Renminbi ("RMB") and U.S. dollars ("US$"), except for share and per share data)

			For the Year Ended June 30,
			2022			2023			2024			2024
			RMB			RMB			RMB			USD (Note 2)
Revenues			108,224,804			142,102,834			183,669,326			25,273,740
Cost of revenues			(61,051,878)			(83,485,203)			(108,908,547)			(14,986,315)
Gross profit			47,172,926			58,617,631			74,760,779			10,287,425
Operating expenses
Selling and marketing expenses			(12,728,488)			(22,495,891)			(31,606,719)			(4,349,229)
General and administrative expenses			(14,059,968)			(70,991,876)			(17,954,289)			(2,470,592)
Research and development expenses			(7,743,121)			(9,682,605)			(15,092,620)			(2,076,814)
Total operating expenses			(34,531,577)			(103,170,372)			(64,653,628)			(8,896,635)
Income (loss) from operations			12,641,349			(44,552,741)			10,107,151			1,390,790
Interest expense, net			(1,165,915)			(912,397)			(848,575)			(116,768)
Other income, net			673,337			2,907,818			507,609			69,849
Gain on extinguishment of liability (Note 9)			-			-			8,996,341			1,237,938
Income (Loss) Before Income Taxes			12,148,771			(42,557,320)			18,762,526			2,581,809
Income tax benefits (expenses)			2,110,635			(541,460)			(5,510,773)			(758,308)
Net Income (Loss)			14,259,406			(43,098,780)			13,251,753			1,823,501
Other comprehensive income (loss)
Foreign currency translation adjustments			-			5,118			(233,990)			(32,198)
Comprehensive income (loss)			14,259,406			(43,093,662)			13,017,763			1,791,303
Weighted average number of ordinary share outstanding
Basic*			26,338,878			26,710,005			30,367,806			30,367,806
Diluted*			26,338,878			26,710,005			30,367,806			30,367,806
Earnings (loss) per share
Basic*			0.54			(1.61)			0.44			0.06
Diluted*			0.54			(1.61)			0.44			0.06

 

 

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FAQ

What was Zhibao Technology's (ZBAO) revenue growth in fiscal year 2024?

Zhibao Technology's revenue grew 29% to RMB 183.7 million (US$25.3 million) in fiscal year 2024.

How much did ZBAO's insurance brokerage revenue increase in FY 2024?

Insurance brokerage revenue increased by 45% to RMB 174.1 million (US$24.0 million) in fiscal year 2024.

What was Zhibao Technology's (ZBAO) operating income in FY 2024?

Zhibao Technology reported operating income of RMB 10.1 million ($1.4 million) in fiscal year 2024, compared to a loss of RMB 44.5 million in 2023.

How many B channels did ZBAO have as of June 30, 2024?

Zhibao Technology grew its B channels from approximately 1,550 to nearly 1,800 as of June 30, 2024.