Scienjoy Holding Corporation Reports Second Quarter 2020 Unaudited Financial Results

BEIJING,Aug. 20,2020 -- Scienjoy Holding Corporation ("Scienjoy",the "Company",or "We") (NASDAQ: SJ),a leading live entertainment mobile streaming platform in China,today announced its unaudited financial results for the second quarter and first six months ended June 30,2020.

Second Quarter 2020 Operating and Financial Highlights

Total net revenues increased by 8.9% to RMB235.2 million (US$33.3 million) from RMB215.9 million in the same period of 2019.

Gross profit increased by 45.8% to RMB58.8 million (US$8.3 million) from RMB40.3 million in the same period of 2019. Gross margin expanded to 25.0% from 18.7% in the same period of 2019.

Net income increased by 282.2% to RMB121.7 million (US$17.2 million) from RMB31.8 million in the same period of 2019. Net margin expanded to 51.7% from 14.7% in the same period of 2019.

Adjusted net income[1] increased by 37.6% to RMB43.8 million (US$6.2 million) from RMB31.8 million in the same period of 2019. Adjusted net margin expanded to 18.6% from 14.7% in the same period of 2019.

Total paying users increased by 41.2% to 277,604 from 196,592 in the same period of 2019.

Total number of broadcasters increased by 41.7% to 19,601 from 13,836 in the same period of 2019.

Mr. Victor He,Chairman and Chief Executive Officer of Scienjoy,commented,"Our strong performances in the second quarter of 2020 and first half of 2020 continue to underscore the positive reception of users and broadcasters to our vibrant talent show live streaming ecosystem. Through our continuous efforts to work with more professional broadcasters,we have not only heightened the diversity and quality of our live streaming content offerings,but also augmented our number of paying users in turn. Most recently,we announced our plans to acquire the global live streaming platform BeeLive. BeeLive has a strong presence in both domestic and international markets and will thus help to fuel the expansion of our geographic footprint going forward. Looking ahead,we will remain focused on refining our user experience,upgrading our technology,and enhancing our live streaming capabilities to delight more users both in China and around the world."

Mr. Denny Tang,Chief Financial Officer of Scienjoy,added,"Despite the ongoing presence of COVID-19,we delivered solid financial results in the second quarter of 2020 as a result of our overarching growth strategy. During the quarter,for example,we grew total net revenues by 8.9% year over year while also ramping up our net income by 282.2% year over year. These expected increases in revenue growth and profitability serve as further reassurance that we are headed in the right direction,both in terms of business development and geographic expansion. Going forward,we remain confident that our healthy financial growth,abundant cash reserves,and prudent cost control measures will continue to deliver lasting shareholder value over the long term."

Second Quarter 2020 Financial Results

Total net revenuesin the second quarter of 2020 increased by 8.9% to RMB235.2 million (US$33.3 million) from RMB215.9 million in the same period of 2019. This increase was driven by our increasing ability to attract and retain paying users and broadcasters on our platform.

Cost of revenuesin the second quarter of 2020 increased by 0.5% to RMB176.4 million (US$25.0 million) from RMB175.6 million in the same period of 2019. The slight increase was primarily attributable to a 5.2% year-over-year increase in our revenue sharing fees and content costs,which was in line with the growth of our live streaming operations in the second quarter of 2020.

Gross profit in the second quarter of 2020 increased by 45.8% to RMB58.8 million (US$8.3 million) from RMB40.3 million in the same period of 2019. Gross margin in the second quarter of 2020 expanded to 25.0% from 18.7% in the same period of 2019. Additionally,as we continued to expand our brand influence and enhance the quality of our content offerings,we achieved a 40.0% year-over-year reduction in our user acquisition costs during the second quarter of 2020,which helped to improve our gross margin in turn.

Total operating expensesin the second quarter of 2020 increased by 29.6% to RMB9.4 million (US$1.3 million) from RMB7.3 million in the same period of 2019.

Sales and marketing expenses in the second quarter of 2020 increased by 54.5% to RMB1.1 million (US$0.2 million) from RMB0.7 million in the same period of 2019. This increase was mainly due to the additional promotional activities that we executed in the second quarter of 2020 following an uptick in online user traffic as more online users spent an increased amount of time at home watching our live streaming content during the COVID-19 outbreak.

General and administrative expenses in the second quarter of 2020 increased by 162.0% to RMB5.2 million (US$0.7 million) from RMB2.0 million in the same period of 2019. This increase was caused by higher employee benefits,increased headcounts,as well as additional consulting and professional fees that we incurred as a result of our listing as a public company.

Research and development expenses in the second quarter of 2020 increased by 50.4% to RMB6.7 million (US$0.9 million) from RMB4.4 million in the same period of 2019 due to increased R&D headcounts and benefits to relevant employees as we continued to strengthen our technological capabilities.

Provision for doubtful accounts in the second quarter of 2019 was RMB0.1 million. The Company recorded a recovery of bad debt expense of RMB3.6 million in the second quarter of 2020 as a result of its increased collection efforts. The Company expects its provision for doubtful accounts to decline going forward as it has committed more resources to the collection of account receivables.

Income from operationsin the second quarter of 2020 increased by 49.3% to RMB49.4 million (US$7.0 million) from RMB33.1 million in the same period of 2019. Operating margin in the second quarter of 2020 expanded to 21.0% from 15.3% in the same period of 2019.

Change in fair value of contingent consideration in the second quarter of 2020 was RMB77.9 million (US$11.0 million). The Company's reverse recapitalization with Wealthbridge Acquisition Limited ("Wealthbridge") on May 7,2020,involved payments of future contingent consideration upon the achievement of certain financial performance targets and specific market price levels. A liability is recorded for the estimated fair value of the contingent consideration on the merge date. The fair value of the contingent consideration is re-measured at each reporting period,and the change in fair value is recognized as either income or expense.

Net incomein the second quarter of 2020 increased by 282.2% to RMB121.7 million (US$17.2 million)from RMB31.8 million in the same period of 2019. Net margin in the second quarter of 2020 expanded to 51.7% from 14.7% in the same period of 2019.

Adjusted net incomein the second quarter of 2020,which excludes changes in fair value of contingent consideration,increased by 37.6% to RMB43.8 million (US$6.2 million) from RMB31.8 million in the same period of 2019. Adjusted net margin in the second quarter of 2020 expanded to 18.6% from 14.7% in the same period of 2019.

Basic and diluted net income per ordinary share in the second quarter of 2020 were both RMB5.6 (US$0.79). In comparison,basic and diluted net income per ordinary share in the second quarter of 2019 were RMB1.64 and RMB1.59,respectively.

Adjusted basic and diluted net income per ordinary sharein the second quarter of 2020 were both RMB2.01 (US$0.29). In comparison,adjusted basic and diluted net income per ordinary share in the second quarter of 2019 were RMB1.64 and RMB1.59,respectively.

As of June 30,the Company had cash and cash equivalents of RMB190.9 million (US$27.0 million) compared to RMB137.4 million as of December 31,2019.

Business Outlook

The Company expects its total net revenues to be in the range of RMB293.0 million to RMB303.0 million in the third quarter of 2020. This forecast reflects the Company's current and preliminary views on the market and operational conditions,which are subject to change,particularly in respect to the potential impact of COVID-19 on the economy in China and other markets around the world.

Recent Developments

On May 7,the Company,formerly known as Wealthbridge,consummated the transactions (the "Transaction") contemplated by the Share Exchange Agreement (the "Share Exchange Agreement") dated as of October 28,2019,pursuant to which the Company acquired 100% of the issued and outstanding equity interests of Scienjoy Inc. and changed its name to Scienjoy Holding Corporation. Upon the closing of the Transaction,the Company acquired 100% of the issued and outstanding equity interests of Scienjoy Inc. in exchange for approximately 16.4 million ordinary shares and 3 million shares as part of earn-out consideration that was issued to the previous owners of Scienjoy Inc. Scienjoy Inc. was determined to be the accounting acquirer given that the original shareholders of Scienjoy Inc. effectively controlled the combined entity after the Transaction. The Transaction is not a business combination because Wealthbridge was not a business. The transaction is accounted for as a reverse recapitalization,which is equivalent to the issuance of shares by Scienjoy Inc. for the net monetary assets of Wealthbridge,accompanied by a recapitalization. Scienjoy Inc. is determined as the predecessor,and the historical financial statements of Scienjoy Inc. became the Company's historical financial statements,with retrospective adjustments to give effect of the reverse recapitalization. The share and per share data is retrospectively restated to give effect to the reverse recapitalization.

On June 30,the Company determined that,as of June 30,2020 (the last business day of the Company's most recently completed second fiscal quarter),the Company qualified as a "foreign private issuer" as defined in Rule 405 under the Securities Act of 1933,as amended,and Rule 3b-4 of the Securities Exchange Act of 1934,as amended (the "Exchange Act"). Accordingly,effective immediately after the filing of the Form 8-K announcing this determination on July 1,the Company has begun reporting under the Exchange Act as a foreign private issuer,including the filing of annual reports on Form 20-F and current reports on Form 6-K. In addition,the Company is no longer subject to certain reporting obligations that are only applicable to domestic registrants,which include,but are not limited to,the federal proxy rules under the Exchange Act.

On August 10,the Company entered into an Equity Acquisition Framework Agreement (the "Agreement") to acquire 100% of the equity interest in BeeLive from its two controlling companies. Pursuant to the Agreement,the Company is required to pay (i) a cash consideration of RMB50.0 million and (ii) RMB250.0 million in ordinary shares to be issued by the Company. The share consideration payments are subject to certain performance conditions and requirements over the following three years. The Company believes the acquisition will generate powerful synergies and significantly bolster the Company's competitive advantages in the industry going forward.

About Scienjoy HoldingCorporation Limited

Founded in 2011,Scienjoy is a leading show live streaming video entertainment social platform in China. With more than 200 million registered users,Scienjoy currently operates three primary online live streaming brands with their respective websites and mobile apps: Showself,Lehai,and Haixiu,each using Scienjoy's own mobile applications. Through this collection of online live streaming brands,Scienjoy has created a vibrant,interactive,and close community. Scienjoy operates a mobile live streaming business through which it provides live streaming entertainment from professional "broadcasters" to end-users,allowing for the operation of live social video communities. Using Scienjoy's mobile applications,users can select broadcasters and enter real time video rooms to interact with them. In addition to real-time interactions,users can also view photos posted by broadcasters on their personal pages,leave comments,and engage in private chats with broadcasters when they are not streaming. In addition,users can also play fun and simple games by using virtual currencies within the video rooms while watching the live streaming of a broadcaster. For more information,please seehttp://ir.Scienjoy.com/.

Use of Non-GAAP Financial Measures

Adjusted net income is calculated as net income adjusted for change in fair value of contingent consideration. Adjusted basic and diluted net income per ordinary share is non-GAAP net income (loss) attributable to ordinary shareholders divided by weighted average number of ordinary shares used in the calculation of non-GAAP basic and diluted net income per ordinary share. The non-GAAP financial measures are presented to enhance investors' overall understanding of the Company's financial performance and should not be considered a substitute for,or superior to,the financial information prepared and presented in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measures to its most directly comparable GAAP financial measures. As non-GAAP financial measures have material limitations as analytical metrics and may not be calculated in the same manner by all companies,they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations,you should not consider non-GAAP financial measures as a substitute for,such metrics in accordance with US GAAP.

For more information on these non-GAAP financial measures,please see the table captioned "Reconciliations of Non-GAAP Results" near the end of this release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted,all translations from RMB to U.S. dollars are made at a rate of RMB7.0651 to US$1.00,the noon buying rate in effect on June30,in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB amounts could have been,or could be,converted,realized or settled in U.S. dollars at that rate on June30,or at any other rate.

Safe Harbor Statement

Certain statements made in this release are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release,the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance,conditions or results,and involve a number of known and unknown risks,uncertainties,assumptions and other important factors,many of which are outside the Company's control,that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors,among others,are: the ability to manage growth; ability to identify and integrate other future acquisitions; ability to obtain additional financing in the future to fund capital expenditures; fluctuations in general economic and business conditions; costs or other factors adversely affecting our profitability; litigation involving patents,intellectual property,and other matters; potential changes in the legislative and regulatory environment; a pandemic or epidemic. The forward-looking statements contained in this release are also subject to other risks and uncertainties,including those more fully described in the Company's filings with the Securities and Exchange Commission ("SEC") from time to time. The Company undertakes no obligation to update or revise any forward-looking statements,whether as a result of new information,future events or otherwise,except as required by applicable law. Such information speaks only as of the date of this release.

Investor Relations Contact

Ray Chen

VP,Investor relations

Scienjoy Inc.

+86-010-64428188

ray.chen@scienjoy.com

Jack Wang

ICR Inc.

+1 (212) 537-9254

scienjoy.ir@icrinc.com

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands,except share and per share data or otherwise stated)

AsofDecember 31

AsofJune30

2019

2020

2020

RMB

RMB

US$

ASSETS

Current assets

Cash and cash equivalents

137,351

190,928

27,024

Accounts receivable,net

120,110

114,873

16,259

Prepaid expenses and other current assets

11,557

57,059

8,076

Amounts due from related parties

7

7

1

Loan receivables - related parties

500

-

-

Interest receivable

-

528

75

Total current assets

269,525

363,395

51,435

Property and equipment,net

736

658

93

Intangible assets,net

195

434

61

Long term investment

5,000

5,000

708

Long term deposits and other assets

2,761

1,239

175

Deferred IPO costs

1,307

-

-

Deferred tax assets

474

114

16

Total non-current assets

10,473

7,445

1,053

TOTAL ASSETS

279,998

370,840

52,488

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Current liabilities:

Accounts payable

27,163

34,404

4,869

Accrued salary and employee benefits

8,727

6,335

897

Accrued expenses and other current liabilities

6,852

7,912

1,120

Current portion of contingent consideration – earn-out liability

-

105,977

15,000

Income tax payable

8,435

9,064

1,283

Loan payables - related parties

5,525

-

-

Amounts due to related parties

8,482

-

-

Deferred revenue

40,288

34,458

4,877

Total current liabilities

105,472

198,150

28,046

Non-current liabilities

Contingent consideration – earn-out liability

-

84,781

12,000

Total non-current liabilities

-

84,781

12,000

TOTAL LIABILITIES

105,472

282,931

40,046

Commitments and contingencies

Shareholders' equity*

Ordinary share,no par value,unlimited shares authorized,19,400,000 and 23,250,583 shares issued and outstanding as of December 31,2019 and June 30,2020*,respectively

9,664

(235,229)

(33,295)

Statutory reserves

12,059

17,289

2,447

Retained earnings

152,803

306,928

43,443

Accumulated other comprehensive loss

-

(1,079)

(153)

Total shareholder's equity

174,526

87,909

12,442

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

279,488

* Ordinary shares,additional paid-in capital and share data have been retroactively restated to give effect to the reverse recapitalization

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(All amounts in thousands,except share and per share data or otherwise stated)

For three months ended

For six months ended

June30,

June30,

2019

2020

2020

2019

2020

2020

RMB

RMB

US$

RMB

RMB

US$

Live streaming - consumable virtual items revenue

207,610

227,402

32,187

389,630

437,023

61,856

Live streaming - time based virtual items revenue

7,239

6,600

934

13,798

12,269

1,737

Technical services

1,050

1,167

165

1,050

2,152

305

Total revenues

215,899

235,169

33,286

404,478

451,444

63,898

Cost of revenues

(175,569)

(176,388)

(24,966)

(328,790)

(340,858)

(48,245)

Gross profit

40,330

58,781

8,320

75,688

110,586

15,653

Operating expenses

Sales and marketing expenses

(715)

(1,105)

(156)

(1,525)

(2,512)

(356)

General and administrative expenses

(1,991)

(5,217)

(739)

(3,401)

(8,699)

(1,232)

Recovery (provision) for doubtful accounts

(126)

3,577

506

(808)

3,143

445

Research and development expenses

(4,441)

(6,679)

(945)

(8,353)

(13,043)

(1,846)

Total operating expenses

(7,273)

(9,424)

(1,334)

(14,087)

(21,111)

(2,989)

Income from operations

33,057

49,357

6,986

61,601

89,475

12,664

Interest income

157

815

115

295

1,349

191

Other expenses,net

(14)

(4,258)

(603)

(358)

(5,255)

(744)

Foreign exchange (loss) gain,net

6

(173)

(24)

(3)

(168)

(24)

Change in fair value of contingent consideration

-

77,898

11,026

-

77,026

Income before income taxes

33,206

123,639

17,500

61,535

163,299

23,113

Income tax expenses

(1,367)

(1,944)

(275)

(2,748)

(3,944)

(558)

Net income

31,839

121,695

17,225

58,787

159,355

22,555

Other comprehensive loss - foreign currency translation adjustment

-

(1,079)

(153)

-

(1,079)

(153)

Comprehensive income attributable to the Company's shareholders

31,839

120,616

17,072

58,787

158,276

22,402

Weighted average number of shares*

Basic

19,000

21,739,833

21,833

19,000

20,563,860

20,860

Diluted*

20,002,833

20,860

Earnings per share

Basic

1.64

5.60

0.79

3.03

7.75

1.10

Diluted

1.59

5.60

0.79

2.94

7.75

1.10

* Ordinary shares,additional paid-in capital and share data have been retroactively restated to give effect to the reverse recapitalization

Reconciliations of Non-GAAP Results

(All amounts in thousands,except share and per share data or otherwise stated)

For the three months ended

For the six months ended

June30,

2019

2020

2020

2019

2020

2020

RMB

RMB

US$

RMB

RMB

US$

Net income

31,555

Less:

Change in fair value of contingent consideration

-

77,026

Adjusted net income

31,839

43,797

6,199

58,787

81,457

11,529

Adjusted net income per ordinary share*

Basic

1.64

2.01

0.29

3.03

3.96

0.56

Diluted

1.59

2.01

0.29

2.94

3.96

0.56

* Ordinary shares,additional paid-in capital and share data have been retroactively restated to give effect to the reverse recapitalization

[1] (1) "Adjusted net income" is defined as net income excluding change in fair value of contingent consideration. For more information,refer to "Use of Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP Results" at the end of this press release.

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