Scienjoy Holding Corporation Reports Third Quarter 2020 Unaudited Financial Results

BEIJING,Nov. 23,2020 -- 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 third quarter and first nine months ended September 30,2020.

Third Quarter 2020 Operating and Financial Highlights

Total net revenues increased by 29.1% to RMB316.4 million (US$46.6 million) from RMB245.0 million in the same period of 2019.

Gross profit increased by 32.3% to RMB71.8 million (US$10.6 million) from RMB54.3 million in the same period of 2019. Gross margin expanded to 22.7% from 22.2% in the same period of 2019.

Net income increased by 59.1% to RMB61.1 million (US$9.0 million) from RMB38.4 million in the same period of 2019. Net income margin expanded to 19.3% from 15.7% in the same period of 2019.

Adjusted net income[1] increased by 33.7% to RMB51.4 million (US$7.6 million) from RMB38.4 million in the same period of 2019. Adjusted net income margin expanded to 16.2% from 15.7% in the same period of 2019.

Total paying users increased by 28.0% to 322,841 from 252,299 in the same period of 2019.

Total number of broadcasters increased by 635.4% to 97,038 from 13,196 in the same period of 2019.

Mr. Victor He,Chairman and Chief Executive Officer of Scienjoy,commented,"Our robust performances in the third quarter and first nine months of 2020 continued to showcase the strength of our platform's value proposition for both users and broadcasters. In addition,by continuously refining our platform's features and technology,we have also continued to fuel its growth,attracting more broadcasters,augmenting our brand influence,and cultivating a richer and more diverse ecosystem of quality content offerings. In August,we entered into an agreement to acquire the global live streaming platform,BeeLive. We believe that this acquisition will help us to not only enhance our overall industry leadership,but also generate increasing shareholder value over the long term. Going forward,we expect to continue driving the expansion of ourbusiness both in China and around the world by providing our users with an increasingly vibrant and interactive social experience."

Mr. Denny Tang,Chief Financial Officer of Scienjoy,added,"In addition to achieving meaningful user growth,we were also able to significantly improve our financial performance in the third quarter of 2020 despite a myriad of macroeconomic uncertainties. As a result,during the period,total net revenues grew by 29.1% year over year,gross profit grew by 32.3% year over year,and net income grew by 59.1% year over year. Looking ahead,we remain confident that our healthy financial growth,improved operating leverage,and sufficient liquidity position will continue to deliver lasting value for our shareholders over the long term."

Third Quarter 2020 Financial Results

Total net revenuesin the third quarter of 2020 increased by 29.1% to RMB316.4 million (US$46.6 million) from RMB245.0 million in the same period of 2019. This increase was in line with the 28.0% year-over-year increase in total paying users during the quarter.

Cost of revenuesin the third quarter of 2020 increased by 28.2% to RMB244.5 million (US$36.0 million) from RMB190.7 million in the same period of 2019. The increase was primarily attributable to a 35.0%,or RMB55.3 million,year-over-year increase in the Company's revenue sharing fees and content costs,which was consistent with the 635.4% year-over-year increase in the total number of broadcasters as well as the growth of the Company's overall live streaming operations in the third quarter of 2020.

Gross profitin the third quarter of 2020 increased by 32.3% to RMB71.8 million (US$10.6 million) from RMB54.3 million in the same period of 2019. Gross margin in the third quarter of 2020 increased slightly to 22.7% from 22.2% in the same period of 2019.

Total operating expensesin the third quarter of 2020 increased by 22.8% to RMB20.4 million (US$3.0 million) from RMB16.6 million in the same period of 2019.

Sales and marketing expenses in the third quarter of 2020 increased by 40.7% to RMB1.2 million (US$0.2 million) from RMB0.9 million in the same period of 2019,due to the additional promotional activities that the Company organized during the third quarter of 2020 to attract and retain paying users.

General and administrative expenses in the third quarter of 2020 increased by 71.2% to RMB11.0 million (US$1.6 million) from RMB6.5 million in the same period of 2019. This increase was caused by higher employee benefits,an increased headcount,as well as additional consulting and professional fees incurred as a result of the Company's listing on the Nasdaq Stock Market.

Research and development expenses in the third quarter of 2020 increased slightly by 7.3% to RMB7.7 million (US$1.1 million) from RMB7.2 million in the same period of 2019 due to a higher R&D headcount and the related expenses incurred.

Provision for doubtful accounts in the third quarter of 2020 decreased by 81.0% to RMB0.4 million (US$0.1 million) from RMB2.1 million in the same period of 2019 as a result of the Company's 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 its account receivables.

Income from operationsin the third quarter of 2020 increased by 36.5% to RMB51.4 million (US$7.6 million) from RMB37.7 million in the same period of 2019. Operating margin in the third quarter of 2020 expanded to 16.3% from 15.4% in the same period of 2019.

Change in fair value of contingent considerationin the third quarter of 2020 was RMB9.8 million (US$1.4 million). The Company's reverse recapitalization with Wealthbridge Acquisition Limited ("Wealthbridge") on May 7,2020,and acquisition of BeeLive on August 21,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. For the third quarter 2020,the change in fair value of contingent condition included approximately RMB6.9 million and RMB2.9 million of changes in fair value of contingent consideration in Wealthbridge and Beelive acquisitions,respectively.

Net incomein the third quarter of 2020 increased by 59.1% to RMB61.1 million (US$9.0 million)from RMB38.4 million in the same period of 2019.Net margin in the third quarter of 2020 expanded to 19.3% from 15.7% in the same period of 2019.

Adjusted net incomein the third quarter of 2020,which excludes changes in fair value of contingent consideration,increased by 33.7% to RMB51.4 million (US$7.6 million) from RMB38.4 million in the same period of 2019. Adjusted net margin in the third quarter of 2020 expanded to 16.2% from 15.7% in the same period of 2019.

Basic and diluted net income per ordinary sharein the third quarter of 2020 were both RMB2.54 (US$0.37). In comparison,basic and diluted net income per ordinary share in the third quarter of 2019 were RMB1.98 and RMB1.92,respectively.

Adjusted basic and diluted net income per ordinary sharein the third quarter of 2020 were both RMB2.13 (US$0.31). In comparison,adjusted basic and diluted net income per ordinary share in the third quarter of 2019 were RMB1.98 and RMB1.92,respectively.

As of September 30,the Company hadcash and cash equivalentsof RMB166.9 million (US$24.6 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 RMB389.0 million to RMB405.0 million in the fourth 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 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. The transaction was closed on August 10,2020. The information related to acquisition of BeeLive with its historical and pro-forma financial results is included in the Company's Form F-1/A filed with SEC on October 16,2020.

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 four primary online live streaming brands on five mobile apps: Showself,Lehai,Haixiu,and Beelive International and BeeLive Chinese (Mifeng),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 RMB6.7896 to US$1.00,the noon buying rate in effect on September 30,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 September30,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

AsofSeptember 30

2019

2020

2020

RMB

RMB

US$

ASSETS

Current assets

Cash and cash equivalents

137,351

166,865

24,577

Accounts receivable,net

120,110

178,036

26,222

Prepaid expenses and other current assets

11,557

12,419

1,829

Amounts due from related parties

7

7

1

Loan receivables - related parties

500

-

-

Total current assets

269,525

357,327

52,629

Property and equipment,net

736

1,178

174

Intangible assets,net

195

240,502

35,422

Goodwill

-

92,056

13,558

Long term investment

5,000

5,000

736

Long term deposits and other assets

2,761

1,321

195

Deferred IPO costs

1,307

-

-

Deferred tax assets

474

6,306

929

Total non-current assets

10,473

346,363

51,014

TOTAL ASSETS

279,998

703,690

103,643

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Current liabilities:

Accounts payable

27,163

24,927

3,672

Accrued salary and employee benefits

8,727

10,763

1,585

Accrued expenses and other current liabilities

6,852

6,478

954

Current portion of contingent consideration – earn-out liability

-

110,596

16,289

Income tax payable

8,435

8,849

1,303

Loan payables - related parties

5,525

-

-

Amounts due to related parties

8,482

-

-

Deferred revenue

40,288

48,353

7,122

Interest payable

-

393

58

Total current liabilities

105,472

210,359

30,983

Non-current liabilities

Deferred tax liabilities - non current

-

60,142

8,858

Contingent consideration – earn-out liability

-

102,809

15,142

Total non-current liabilities

-

162,951

24,000

TOTAL LIABILITIES

105,472

373,310

54,983

Commitments and contingencies

Shareholders' equity

Ordinary share,no par value,unlimited shares authorized,19,400,000 and

27,037,302 shares issued and outstanding as of December 31,2019 and

September 30,2020*,respectively

9,664

(60,229)

(8,871)

Statutory reserves

12,059

18,392

2,709

Retained earnings

152,803

366,935

54,044

Accumulated other comprehensive loss

-

5,282

778

Total shareholder's equity

174,526

330,380

48,660

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

279,643

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 nine months ended

September 30,

September 30,

2019

2020

2020

2019

2020

2020

RMB

RMB

US$

RMB

RMB

US$

Live streaming - consumable

virtual items revenue

237,350

306,859

45,195

626,980

743,882

109,562

Live streaming - time based

virtual items revenue

6,523

8,162

1,202

20,321

20,431

3,009

Technical services

1,339

197

2,212

3,491

514

Total revenues

245,035

316,360

46,594

649,513

767,804

113,085

Cost of revenues

(190,721)

(244,521)

(36,014)

(519,511)

(585,379)

(86,217)

Gross profit

54,314

71,839

10,580

130,002

182,425

26,868

Operating expenses

Sales and marketing expenses

(872)

(1,227)

(181)

(2,397)

(3,739)

(551)

General and administrative

expenses

(6,450)

(11,040)

(1,626)

(9,851)

(19,739)

(2,907)

Provision (recovery) for

doubtful accounts

(2,088)

(397)

(58)

(2,896)

2,746

404

Research and development

expenses

(7,201)

(7,727)

(1,138)

(15,554)

(20,770)

(3,059)

Total operating expenses

(16,611)

(20,391)

(3,003)

(30,698)

(41,502)

(6,113)

Income from operations

37,703

51,448

7,577

99,304

140,923

20,755

Interest income

314

805

119

609

2,154

317

Other expenses,net

3

477

70

(355)

(4,778)

(704)

Foreign exchange (loss) gain,

net

-

1,151

170

(3)

983

145

Change in fair value of

contingent consideration

-

9,750

1,436

-

87,648

12,909

Income before income taxes

38,020

63,631

9,372

99,555

226,930

33,422

Income tax expenses

399

(2,521)

(371)

(2,349)

(6,465)

(952)

Net income

38,419

61,110

9,001

97,206

220,465

32,470

Other comprehensive

income - foreign currency

translation adjustment

-

6,361

937

-

5,282

778

Comprehensive income

attributable to the

Company's shareholders

38,419

67,471

9,938

97,206

225,747

33,248

Weighted average number of

shares

Basic

19,000

24,082,829

24,829

19,000

21,746,691

21,691

Diluted

20,002,829

20,691

Earnings per share

Basic

1.98

2.54

0.37

5.01

10.14

1.49

Diluted

1.92

2.54

0.37

4.86

10.14

1.49

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 nine months ended

September 30,

2019

2020

2020

2019

2020

2020

RMB

RMB

US$

RMB

RMB

US$

Net income

38,470

Less:

Change in fair value

of contingent consideration

-

9,909

Adjusted net income

38,419

51,360

7,565

97,206

132,817

19,561

Adjusted net

incomeper

ordinary share*

Basic

1.98

2.13

0.31

5.01

6.11

0.90

Diluted

1.92

2.13

0.31

4.86

6.11

0.90

[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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