Scienjoy Holding Corporation Reports Fiscal Year 2022 Financial Results

Annual Revenues Increased by 17.0% Year Over Year

Net Income Increased by 14.8% Year Over Year

BEIJING,April 28,2023 -- Scienjoy Holding Corporation ("Scienjoy",the "Company",or "We") (NASDAQ: SJ),a leading live entertainment mobile streaming platform in China,today announced its financial results for the year ended December 31,2022.

Fiscal Year 2022 Operating and Financial Highlights

Total net revenues increased by 17.0% to RMB1,953.3 million (US$283.2 million) for the year ended December 31,2022 from RMB1,669.4 million for the year ended December 31,2021.

Gross profit was RMB283.2 million (US$41.1 million) for the year ended December 31,2022,compared to RMB304.5 million for the year ended December 31,2021.

Net income increased by 14.8% to RMB195.2 million (US$28.3 million) for the year ended December 31,2022 from RMB170.0 million for the year ended December 31,2021.

Net income attributable to the Company's shareholders increased by 13.7% to RMB193.3 million (US$28.0 million) for the year ended December 31,2021.

Adjusted net income attributable to the Company's shareholders was RMB181.4 million (US$26.3 million) for the year ended December 31,compared to RMB219.0 million for the year ended December 31,2021.

Total paying users were 702,372 for the year ended December 31,compared to 840,640 for the year ended December 31,2021.

The Company has 320.2 million registered users by the end of December 31,2022.

As of December 31,the Company had cash and cash equivalents of RMB175.3 million (US$25.4 million),compared to RMB240.9 million as of December 31,2021.

Mr. Victor He,Chairman and Chief Executive Officer of Scienjoy,commented,"We proudly to share our solid financial performance during fiscal year 2022. Our ability to maintain healthy growth in a challenging macroeconomic climate demonstrates our unwavering commitment to delivering engaging content on our integrated live streaming platforms while ensuring operational efficiency. To sustain this growth trajectory,we've identified key objectives and strategies. Firstly,we expect to focus on elevating the quality of content and investing in cutting-edge technology to attract more users and enhance features on our live streaming platforms. Secondly,we're dedicated to pursuing a live streaming metaverse strategy and building a comprehensive digital industry ecosystem. By investing in virtual reality,augmented reality,and artificial intelligence technologies,we aim to develop our live streaming metaverse project and set ourselves apart from competitors in the industry. Additionally,constructing a robust mobile live streaming ecosystem will enable us to expand and diversify our business lines and tap into new opportunities for growth. We're confident that these initiatives will not only generate strong results but also create value for our users and shareholders. As we forge ahead,our commitment is to scale our business and leverage our valuable assets and experienced team to enrich user experiences on our platforms,fostering long-term loyalty and satisfaction."

Mr. Denny Tang,Chief Financial Officer of Scienjoy,added,"Despite the challenging and uncertain macroeconomic environment during fiscal year 2022,we have achieved a 17.0% year-over-year increase in total net revenues and a 14.8% year-over-year increase in net income. These strong financial results are a testament to the success of our strategy to scale our business,which has led to significant growth in our key financial metrics,showcasing the resilience of our business model,our dedication to enhancing operational efficiency,and our ability to successfully execute our growth strategy. We anticipate this positive trend to persist,and we aim to make considerable progress on our key strategic initiatives,driving continued growth and innovation. We believe our talented team will maintain its ability to execute our strategic initiatives cost-effectively with greater insight,ensuring that Scienjoy stays competitive in the industry. Our focus remains on refining our platforms,offering unparalleled experiences to our users,and staying at the cutting edge of industry innovation. We expect to reap the benefits of our efforts thus far,and we are confident in our ability to achieve our long-term revenue and growth targets,ultimately delivering value to our shareholders and users alike."

Fiscal Year 2022 Financial Results

Total net revenuesincreased by 17.0% to RMB1,2021. This increase was driven by more quality content provided through our integrated multiple live streaming platforms including Hongren platform we acquired in January 2022. For the year ended December 31,the number of paying user was 702,372,decreased from 840,640 paying user for the year ended December 31,2021. Our average ARPPU increased by 39%,from RMB1,963 for the year ended December 31,2021 to RMB 2,725 for the for the year ended December 31,2022.

Cost of revenuesincreased by 22.4%,to RMB1,670.1 million (US$242.2 million) for the year ended December 31,364.9 million for the year ended December 31,2021. The increase was primarily attributable to a 29%,or RMB341.2 million,year-over-year increase in the Company's revenue sharing fees and content costs. We have to increase sharing fee ratio in the growth and competitive landscape of China's mobile live streaming market.

Gross profitdecreased by 7.0% to RMB283.2 million (US$41.1million) for the year ended December 31,2022 from RMB304.5 million for the year ended December 31,2021. Gross margin for the years ended December 31,2022 and 2021 was 14% and 18%. As we continued to increase the revenue sharing fee ratio,it decreased the gross margin in short run but will attract more high-quality broadcasters and enhance the quality of our content offerings.

Total operating expensesdecreased by 3.7% to RMB133.4 million (US$19.3million) for the year ended December 31,2022 from RMB138.5 million for the year ended December 31,2021.

Sales and marketing expenses significantly decreased by 55.8%,to RMB2.1 million (US$0.3 million) for the year ended December 31,2022 from RMB4.8 million for the year ended December 31,2021. This decrease was mainly due to fewer promotional activities.

General and administrative expenses decreased by 6.5%,to RMB61.0 million (US$8.8 million) for the year ended December 31,2022 from RMB65.2 million for the year ended December 31,2021. The decrease was primarily due to a decrease of RMB9.5 million in share base compensations,partially offset by more consulting and professional fees due to the expansion of the Company and amortization of intangible asset.

Research and development expenses decreased by 3.6% to RMB67.5 million (US$9.8 million) for the year ended December 31,2022 from RMB70.0 million for the year ended December 31,2021 due to a decrease of RMB13.9 million in share base compensations,partially offset by higher employee salary and welfare as a result of increased R&D headcounts.

Provision for doubtful accounts was RMB2.7 million (US$9.8 million) for the year ended December 31 2022 as compared to a recovery of doubtful accounts of RMB1.6 million for the year ended December 30,2021,due to slow collection.

Change in fair value of contingent considerationdecreased to RMB13.1 million (US$1.9 million) for the year ended December 31 2022 from RMB33.6 million for the year ended December 31 2021. Change in fair value of contingent consideration is derived from the Company's reverse recapitalization with Wealthbridge Acquisition Limited on May 7,2020,acquisition of BeeLive on August 10,2020 and acquisition of Hongren on January 1,which involved payments of future contingent consideration upon the achievement of certain financial performance targets and specific market price levels. Earn out liabilities are recorded for the estimated fair value of the contingent consideration on the merger 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.

Change in fair value of warrants liabilitydecreased to RMB10.8 million (US$1.6 million) for the year ended December 31 2022 from RMB16.4 million in fiscal year 2021. The Company's warrants assumed from SPAC acquisition that have complex terms,such as a clause in which the warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash upon a fundamental transaction that is considered outside of the control of management are considered to be a derivative that are recorded as a liability at fair value. The warrant derivative liability is adjusted to its fair value at the end of each reporting period,with the change being recorded as other expense or gain.

Change in fair value of investment in marketable security decreased to RMB1.8 million (US$0.3 million) for the year ended December 31 2022 from RMB25.8 million for the year ended December 31 2021. In January 2021,the Company,through its wholly owned subsidiary,Scienjoy Inc.,purchased from Cross Wealth Investment Holding Limited,an entity related to one directors of the Company,606,061 ordinary shares of Goldenbridge Acquisition Limited ("Goldenbridge") for an aggregated consideration of US$2 million. Goldenbridge was formed as a special purpose acquisition company. The investment was classified as investment in marketable security,which is adjusted to its fair value at the end of each reporting period,with the change being recorded as other expense or gain.

Investment incomeamounted to RMB25.4 million (US$3.7 million) for the year ended December 31,compared to an investment loss of RMB3.0 million for the year ended December 31,2021. On October 9,the Company signed an investment agreement to invest up to RMB 150 million into Qingdao Sixiang Zhuohong Private Equity LP ("Qingdao LP"),which further invests in broadcaster,IT,Big Data,Artificial Intelligence and logistic industry. The Qingdao LLP is managed by two unrelated general partners (GPs). The Company,as a Limited partner,neither participate in the daily operation of Qingdao LP,nor has the exclusive rights to control the partnership meeting and investment decisions. As a result,the Company considers it has significant influence on this investment based on its voting power.

Net incomeincreased by 14.8%,to RMB195.2 million (US$28.3 million) for the year ended December 31,2021

Net income attributable to the Company's shareholdersincreased by13.7% to RMB193.3 million (US$28.0 million) for the year ended December 31,2021.

Adjusted net income attributable to the Company's shareholders decreased to RMB 181.4 million (US$26.3 million) for the year ended December 31,2022 from RMB219.0 million for the year ended December 31,2021.

Basic and diluted net income attributable to the Company's shareholders per ordinary share were both RMB4.92 (US$0.71) for the year ended December 31,2022. In comparison,basic and diluted net income attributable to the Company's shareholders per ordinary share were both RMB5.51 for the year ended December 31,respectively.

Adjusted basic and diluted net income attributable to the Company's shareholders per ordinary share were both RMB4.62 (US$0.67) for the year ended December 31,adjusted basic and diluted net income attributable to the Company's shareholders per ordinary share were both RMB7.10 for the year ended December 31,respectively.

As of December 31,the Company hadcash and cash equivalentsof RMB175.3 million (US$25.4 million) compared to RMB240.9 million as of December 31,2021.

Business Outlook

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. 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.

About Scienjoy HoldingCorporation Limited

Founded in 2011,Scienjoy is a leading mobile livestreaming platform in China,and its core mission is to build a livestreamingservice ecosystem to delight and entertain users. With over 300 million registered users,Scienjoy currently operates fivelivestreaming platform brands,including Showself,Lehai,Haixiu,and BeeLive,which features both the Mifeng Chinese versionand BeeLive International version,and Hongle.tv. Scienjoy uniquely combines a gamified business approach to livestreaming,in-depth knowledge of the livestreaming industry,and cutting-edge technologies such as blockchain,augmented reality (AR),virtual reality (VR),and big data,to create a unique user experience. Scienjoy is devoted to building a livestreaming Metaverseto provide users with the ultimate immersive experience,a social media network that transcends time and space,a digital community that spans virtual and physical reality,and a content-rich ecosystem.For more information,please visit http://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,change in fair value of warrant liability and share based compensation. 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 RMB6.8972 to US$1.00,the noon buying rate in effect on December 31,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 December 31,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

Denny Tang

Chief Financial Officer

Scienjoy Holding Corporation

+86-10-64428188

ir@scienjoy.com

Tina Xiao

Ascent Investor Relations

+1 (917) 609-0333

tina.xiao@ascent-ir.com

CONDENSED CONSOLIDATED BALANCE SHEETS

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

As of December31,

2021

2022

2022

RMB

RMB

USD

ASSETS

Current assets

Cash and cash equivalents

240,947

175,292

25,415

Accounts receivable,net

206,307

316,657

45,911

Prepaid expenses and other current assets

165,409

115,170

16,699

Amounts due from related parties

1,059

1,115

162

Investment in marketable security

38,789

40,548

5,879

Total current assets

652,511

648,782

94,066

Property and equipment,net

1,674

2,735

397

Intangible assets,net

235,870

419,055

60,757

Goodwill

92,069

172,781

25,051

Long term investment

101,727

234,176

33,952

Long term deposits and other assets

1,152

953

138

Right-of-use assets

-

19,209

2,785

Deferred tax assets

4,352

4,337

629

Total non-current assets

436,844

853,246

123,709

TOTAL ASSETS

1,089,355

1,502,028

217,775

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Bank loan

-

5,000

725

Accounts payable

85,801

116,251

16,855

Accrued salary and employee benefits

24,533

12,428

1,802

Accrued expenses and other current liabilities

16,181

13,264

1,923

Current portion of contingent consideration – earn-out liability

10,638

4,336

629

Warrant liabilities

10,324

166

24

Income tax payable

8,282

13,531

1,962

Lease liabilities-current

-

7,174

1,040

Deferred revenue

65,405

93,383

13,539

Total current liabilities

221,164

265,533

38,499

Non-current liabilities

Deferred tax liabilities

58,746

61,236

8,878

Lease liabilities-non-current

-

12,773

1,852

Total non-current liabilities

58,746

74,009

10,730

TOTAL LIABILITIES

279,910

339,542

49,229

Commitments and contingencies Shareholders' equity*

Ordinary share,no par value,unlimited Class A ordinary shares

and 6Class B ordinary shares authorized,28,219,583 Class A

ordinary shares and 2,625,058 Class B ordinary shares issued

and outstanding as of December 31,respectively.

36,684,668 Class A ordinary shares and 2,925,058 Class B

ordinary shares issued and outstanding as of December 31,

2022,respectively

Class A ordinary shares

140,196

396,880

57,542

Class B ordinary shares

13,041

23,896

3,465

Shares to be issued

128,119

33,923

4,918

Treasury stocks

-

(16,482)

(2,390)

Statutory reserves

31,775

39,208

5,685

Retained earnings

479,199

665,099

96,430

Accumulated other comprehensive income

17,115

18,070

2,622

Total shareholders' equity

809,445

1,160,594

168,272

Noncontrolling interest

-

1,892

274

Total equity

809,162,486

168,546

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

1,775

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE

INCOME

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

For the years ended December 31,

2021

2022

2022

RMB

RMB

USD

Live streaming - consumable virtual items

revenue

1,617,056

1,886,179

273,470

Live streaming - time based virtual item revenue

32,905

27,683

4,014

Technical services and others

19,397

39,395

5,712

Total revenue

1,669,358

1,953,257

283,196

Cost of revenues

(1,364,902)

(1,670,068)

(242,137)

Gross profit

304,456

283,189

41,059

Sales and marketing expenses

(4,807)

(2,127)

(308)

General and administrative expenses

(65,233)

(61,005)

(8,845)

Research and development expenses

(70,039)

(67,538)

(9,792)

(Provision for) recovery of doubtful accounts

1,592

(2,739)

(397)

Income from operations

165,969

149,780

21,717

Interest income,net

3,962

2,506

363

Other income (loss),net

(90)

11,443

1,659

Foreign exchange gain (loss),net

105

(1,493)

(216)

Change in fair value of investment

25,831

1,760

255

Change in fair value of warrant liabilities

16,421

10,776

1,562

Investments income (loss)

(2,998)

25,449

3,690

Change in fair value of contingent consideration

(33,584)

13,071

1,895

Income before income taxes

175,616

213,292

30,925

Income tax expense

(5,604)

(18,067)

(2,619)

Net income

170,012

195,225

28,306

Less: net income attributable to

noncontrolling interest

-

1,892

274

Net income attributable to the Company's

shareholders

170,012

193,333

28,032

Other comprehensive income:

Other comprehensive income - foreign

currency translation adjustment

2,313

955

138

Comprehensive income

172,325

196,180

28,444

Less: comprehensive income attributable to

non-controlling interests

-

1,892

274

Comprehensive income attributable to the

Company's shareholders

172,325

194,288

28,170

Weighted average number of shares *

Basic

30,842,183

39,263,147

39,147

Diluted

30,147

Earnings per share

Basic

5.51

4.92

0.71

Diluted

5.51

4.92

0.71

Reconciliations of Non-GAAP Results

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

For the years ended

December31,

December31,

2021

2022

2022

RMB

RMB

US$

Net income attributable to the Company's

shareholders

170,012

193,333

28,032

Less:

Change in fair value of contingent consideration

(33,895

Change in fair value of warrants liability

16,562

Share based compensation

(31,857)

(11,954)

(1,733)

Adjusted net income attributable to the

Company's shareholders*

219,032

181,440

26,308

Adjusted net incomeper ordinary share

Basic

7.10

4.62

0.67

Diluted

7.10

4.62

0.67

"Adjusted net income attributable to the Company's shareholders" is defined as net income attributable to the Company's shareholders excluding change in fair value of contingent consideration,change in fair value of warrant liability and share based compensation. For more information,refer to "Use of Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP Results" at the end of this press release.