Bairong Inc. Announces Unaudited 2022 Interim Financial Results

Net profit margin was as high as 10%;
Smart analytics and operation services achieved 46% revenue growth

BEIJING, Aug. 24, 2022 /PRNewswire/ -- Bairong Inc. ("Bairong" or the "Company"; HKEX:6608), a leading artificial intelligence ("AI") and cloud-based software-as-a-service("SaaS") technology firm in China serving the financial services industry, today announced its unaudited consolidated results for the six months ended June 30, 2022.

Highlights

Mr. Shaofeng Zhang, founder, Chairman and Chief Executive Officer of Bairong, commented, "As a leader in the facilitation of the Chinese financial service industry's smart digital transformation, we are committed to develop advanced information security technologies and explore innovative solutions to assist the success of our clients. As of now, we have served more than 6,000 financial service providers in China. We are proud to announce that we ranked as the highest-scored financial SaaS enterprise among the 'Top 100 Enterprises Driving Digital Transformation in 2022' by the Internet Weekly of Chinese Academy of Sciences. Going forward, we will stick to our 'client-centric' belief, expand our client base and maintain our high key client retention. We will also follow our 'land and expand' business model, explore more growth curves and enhance our business penetration amongst individual clients to further raise average revenue per client."

Mr. Hongqiang Zhao, Executive Director and Chief Financial Officer of Bairong, added, "During the COVID-19 outbreak, digital industries such as the Internet, cloud computing, big data and AI have demonstrated strong resilience and potential. We not only supported the industry recovery, but also managed to achieve a double-digit revenue growth. For the six months ended June 30, 2022, our revenue increased 19% year-on-year to RMB945.18 million, in particular, our smart analytics and operation business maintained rapid growth, with its revenue increasing by 46% year-on-year to RMB443.52 million. Our gross profit margin maintained at a high level of 72% and our net profit margin reached 10%. Owing to our deep understanding of client needs and growing client trust, the retention rate of our key clients further increased to 94%."

Financial Results Review

Revenue

Our total revenue increased by 19% from RMB791.47 million for the six months ended June 30, 2021 to RMB945.18 million for the six months ended June 30, 2022, primarily attributable due to industry growth and our enhanced capabilities of providing products and services.

Our revenue from smart analytics and operation services increased by 46% from RMB302.79 million for the six months ended June 30, 2021 to RMB443.52 million for the six months ended June 30, 2022, primarily attributable to improvement of our comprehensive product ecosystem and growing demand from our financial service provider("FSP") clients.

Our revenue from precision marketing services decreased by 10% from RMB245.69 million for the six months ended June 30, 2021 to RMB220.33 million for the six months ended June 30, 2022, primarily attributable to the growth rate increased strongly due to the market rebound in the first half year of 2021 and return to the normal level for the first half year of 2022.

Our revenue from insurance distribution services increased by 16% from RMB242.99 million for the six months ended June 30, 2021 to RMB281.33 million for the six months ended June 30, 2022, primarily attributable to our broker team's improved productivity.

Cost of sales

The cost of sales increased by 25% from RMB214.20 million for the six months ended June 30, 2021 to RMB267.60 million for the six months ended June 30, 2022, primarily attributable to an increase of RMB46.26 million in data service costs driven by significant increase in revenues.

Gross profit and gross margin

As a result of the foregoing, the Group's gross profit increased by 17% from RMB577.27 million for the six months ended June 30, 2021 to RMB677.58 million for the six months ended June 30, 2022. The Group's gross margin was 72% for the six months ended June 30, 2022 and 73% for the six months ended June 30, 2021.

Research and development expenses

The Group's research and development expenses increased by 40% from RMB114.07 million for the six months ended June 30, 2021 to RMB159.95 million for the six months ended June 30, 2022, primarily attributable to increases in the staff costs of our research and development personnel to support product offerings and technology development.

General and administrative expenses

The Group's general and administrative expenses increased by 7% from RMB124.16 million for the six months ended June 30, 2021 to RMB132.53 million for the six months ended June 30, 2022, primarily attributable to an increase of daily office expense.

Sales and marketing expenses

Our sales and marketing expenses increased by 63% from RMB237.75 million for the six months ended June 30, 2021 to RMB388.44 million for the six months ended June 30, 2022, primarily due to an increase of RMB51.01 million of advertising and information technology services expenses, an increase of RMB28.75 million in staff costs and RMB62.29 million increase in outsourced sales service fees to grow our customer base and to establish a professional sales force. The increase in advertising and information technology services expenses were mainly due to our continuous promotional efforts to obtain high-quality traffic and improve conversion efficiency. The increase of staff costs was due to expansion of the selling and marketing teams to support our business development.

Other income/(loss)

Our net other income was RMB95.36 million for the six months ended June 30, 2022, compared with net other loss of RMB32.24 million for the six months ended June 30, 2021. This is due to an increase of RMB85.88 million in favourable foreign exchange variance due to the appreciation of USD against RMB, an increase of RMB24.51 million in the interest income from time deposits and an increase of RMB14.09 million in fair value change and gains from our investments.

Changes in fair value of redeemable convertible preferred shares

Upon the completion of the Listing, our redeemable convertible preferred shares were converted into our ordinary shares. Therefore, no change in fair value of the redeemable convertible preferred shares was recorded for the six months ended June 30, 2022.

Profit/(loss) for the period

As a result of the foregoing, the Group's profit for the six months ended June 30, 2022 was RMB93.37 million, compared with a loss of RMB 3,638.88 million for the six months ended June 30, 2021.

Cash, cash equivalents and time deposits

The Group had cash and cash equivalents and time deposits of RMB2,862.52 million and RMB2,781.36 million as of June 30, 2022 and December 31, 2021. To manage the liquidity risk, we monitor and maintain a level of cash and cash equivalents as deemed adequate by our senior management to finance our operations.

Conference Call

Our management will hold a conference call at 10:00 a.m. Beijing/Hong Kong Time on Thursday, August 25, 2022 (10:00 p.m. U.S. Eastern Time on August 24, 2022) to discuss the financial results and answer questions from investors and analysts.

For participants who wish to join the call, please complete online registration using the link provided below prior to the scheduled call start time.

Participant Online Registration:

https://webcast.roadshowchina.cn/cmeet/UUNXSVIxTW1nV3VuZDE4Ti9jS0UvUT09

To join the conference call, please use the dial-in details as below.

Dial-in details for the earnings conference call are as follow:

China: 023-63623333/4008-063-263

Hong Kong, China: +852-30183602 /+852-30186949/800931018/800961505

International: +86-23-62737100

Dial-in Password: 567203244

Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.brgroup.com.

About Bairong Inc.

Bairong Inc. is a leader in the facilitation of the Chinese financial service industry's smart digital transformation. We developed a proprietary AI and cloud-based SaaS platform, which leverages AI, cloud computing, blockchain and machine learning technologies to provide financial service providers with highly adaptable, secured and reliable products and solutions. Built upon our long-term industry understanding and user insights, we provide a comprehensive product and solution matrix covering the entire business process spanning smart user acquisition, smart analysis, smart decision-making, smart operations, and smart wealth management, etc. Recently, we ranked as the highest-scored financial SaaS enterprise among the "Top 100 Enterprises Driving Digital Transformation in 2022" by the Internet Weekly of Chinese Academy of Sciences, joining other industry leaders in facilitating the digital transformation of the economy.

For more information, please visit: http://ir.brgroup.com.

Safe Harbor Statement

This press release contains statements that may constitute "forward-looking" statements. These forward- looking statements can be identified by terminologies such as "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "likely to," and the negative of these words and other similar expressions or statements. Bairong may also make written or oral forward-looking statements in its periodic reports to the HKEx, in its annual and interim reports to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties.

Statements that are not historical facts, including statements about Bairong's beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements, including but not limited to the following: Bairong's strategies, future business development, and financial condition and results of operations; Bairong's limited operating history; risks associated with the financial service industry, Bairong's ability to develop and deliver services of high quality and appeal to clients; Bairong's ability to generate positive cash flow and profits; Bairong's ability to compete successfully; Bairong's ability to build its brand and withstand negative publicity; and changes in client demand and government incentives, subsidies, or other favorable government policies. Further information regarding these and other risks is included in Bairong's filings with the HKEX. All information provided in this press release is as of the date of this press release, and Bairong does not undertake any obligation to update any forward-looking statements, except as required under applicable laws.

For investor inquiries, please contact:
Bairong Inc.
Ms. Sandy Qin, CFA, CMA
Email: ir@brgroup.com

For media inquiries, please contact:
Bairong Inc. Ms. Shuo Nie
Email: brmarketing@brgroup.com