Bairong Inc. Announces 2023 Annual Financial Results
Bairong Inc. Announces 2023 Annual Financial Results
Total revenue increased by 31% YoY and net profit jumped by 46%
Beijing, March 25, 2024 – Bairong Inc. (the “Company”, “we” , “us” or “our” ; HKEX: 6608), a leading cloud-based AI turnkey service provider, today announced the annual audited consolidated results of the Company for the year ended December 31, 2023.
Mr. Zhang Shaofeng, our founder, chief executive officer and chairman of the Board, commented: “We have once again achieved an impressive set of annual results, characterized by robust growth and profitability. Throughout the year of 2023, we have made good progress in advancing both the technology capabilities and commercial application and monetization of our Discriminant AI and Generative AI-powered services and solutions. Looking ahead, we will continue to drive the application of our AI services for various vertical industries, to enable digital intelligent transformation and develop a broader industry ecosystem. We are steadfast in our commitment to continuous innovation, which will enrich our AI service offerings and broaden their use cases, thereby solidifying the foundation for our future growth.”
The Company also announces that the Board has resolved to repurchase class B ordinary shares (“Class B Shares”) of the Company in the open market from time to time up to HK$250 million in value, pursuant to the share repurchase mandate approved by the shareholders of the Company (the “Shareholders”) at the annual general meeting held on May 16, 2023 and, where applicable, any subsequently renewed or refreshed share repurchase mandate approved by the Shareholders from time to time.
Revenue
Committed to the application and commercialization of AI technology, we have maintained strong double-digit revenue growth and sustained profitability. For the year ended December 31, 2023, our revenue reached RMB2,680.92 million, representing an increase of 31% from RMB2,054.18 million for the year ended December 31, 2022, primarily attributable to favourable industry environment and our enhanced capabilities of providing products and services.
Our revenue from MaaS increased by 17% from RMB759.61 million for the year ended December
31, 2022 to RMB891.25 million for the year ended December 31, 2023, primarily attributable to
the increase of the number of Key Clients and average revenue per Key Client. The number of Key Client reached 213, and the retention rate of key clients maintained at a high level of 99%, as we continuously expand product portfolio and application scenarios, and deepen the value contribution for clients, strengthen our leading position in the market based on 10 years of technology capability, service ability and brand awareness.
Our revenue from BaaS rose by 38% year-over-year to RMB1,789.67 million, empowered mainly by our deepened cooperation with clients, rapid expansion of gross transaction values and our enhanced AI technology capabilities.
Our revenue from the Financial Scenario of BaaS services increased by 59% from RMB746.05 million for the year ended December 31, 2022 to RMB1,184.73 million for the year ended December 31, 2023, primarily attributable to the increase in gross transaction values and enhanced operating efficiency, and our strengthened capabilities of Generative AI. Our accumulated self-owned users in combination with Generative AI capability continue to improve our customer acquisition efficiency, and expand our presence in diversified scenarios.
Our revenue from the Insurance Scenario of BaaS services increased by 10% from RMB548.52 million for the year ended December 31, 2022 to RMB604.94 million for the year ended December 31, 2023, despite an overall fatigue across the insurance industry, primarily attributable to an increase in total insurance premiums we generated, as we invested in technology and professional training to support our brokers’ productivity. The gross written premiums increased rapidly by 56% YoY to RMB 3,330 million. The persistency rate of continued to exceed 90%, ranking among the top in the industry. The decline of pay duration due to the slowdown of macro economy, and the decrease of the insurance broker commission rate due to consistency requirement of reporting and implementation have led to the industry commission rate fall. However, the growth rate of our insurance premium scale of far exceeded the industry average, which offsets the negative impact to a certain extent.
Cost of sales
The cost of sales increased by 27% from RMB573.06 million for the year ended December 31, 2022 to RMB726.38 million for the year ended December 31, 2023, primarily attributable to an increase of RMB17.92 million in analytics service costs, and an increase of RMB109.24 million in BaaS-related insurance brokerage commission, operating and marketing expenditures, in line with the growth of our business scale.
Gross profit and gross margin
As a result of the foregoing, the Group’s gross profit increased by 32% from RMB1,481.12 million for the year ended December 31, 2022 to RMB1,954.53 million for the year ended December 31, 2023. The Group’s gross margin increased from approximately 72% for the year ended December 31, 2022 to 73% for the year ended December 31, 2023.
Research and development expenses
The Group’s research and development expenses increased by 2% from RMB369.65 million for the year ended December 31, 2022 to RMB378.79 million for the year ended December 31, 2023,
primarily attributable to the increase in the staff costs of our research and development personnel to support product offerings and technology development for various AI application technologies, algorithm-driven machine learning platforms and for improving underlying database performance. The slowdown in the growth rate of R&D expenses is mainly due to efforts to improve R&D efficiency by prioritizing AI-related personnel while shifting certain software personnel to outsourcing, and the adoption of our generative AI BR-coder, which improves programming efficiency.
General and administrative expenses
The Group’s general and administrative expenses decreased by 4% from RMB269.98 million for the year ended December 31, 2022 to RMB259.28 million for the year ended December 31, 2023, primarily attributable to the effective management and control of the general and administrative expenses.
Sales and marketing expenses
Our sales and marketing expenses increased by 37% from RMB784.64 million for the year ended December 31, 2022 to RMB1,072.99 million for the year ended December 31, 2023, primarily due to an increase of RMB270.45 million of promotion, advertising, information technology services and other related expenses, which was mainly due to the increased branding and business promotion to enhance our brand recognition and our continuous efforts to obtain high-quality traffic to improve conversion efficiency.
Other income
Our other income increased by 3% from RMB177.98 million for the year ended December 31,
2022 to RMB182.89 million for the year ended December 31, 2023. This is primarily due to (1)
an increase of RMB44.16 million of government grants; and (2) the foreign exchange loss of RMB3.74 million for the year of 2023 compared with the foreign exchange gains of RMB24.50 million for the year 2022, which was due to the variance from the appreciation of USD against RMB affected by macro environment.
Impairment of goodwill
We recorded an RMB60.55 million impairment of goodwill for the year ended December 31, 2023
(2022: nil), which represents the amount by which the carrying amount of the cash generation unit (CGU) related to an acquisition of “All Union” in 2021, exceeded its recoverable amount based on an annual goodwill impairment assessment conducted by the management, taking into consideration market uncertainties and the overall economic and operating environment at the end of the current financial year. The recoverable amount of goodwill and intangible assets is determined on the value-in-use calculations using the discounted cash flow method. The Group forecasted an average annual revenue growth rate of 7.30% (2022: 17.77%) for the next six-year period, and the cash flows beyond the six-year period were extrapolated using an estimated annual growth rate of 3.00% (2022: 3.00%). Pre-tax discount rate of 18.30% (2022: 18.30%) was used to reflect market assessment of time value and the specific risks relating to the CGU. The Group believes that it is appropriate to cover six years in its cash flow projection, because it captures the development stage of the Group’s business during which the Group expects to experience a high growth rate.
Profit for the year
As a result of the foregoing, the Group’s profit for the year increased by 46% from RMB229.31 million for the year ended December 31, 2022 to RMB335.26 million for the year ended December 31, 2023.
Cash, cash equivalents and time deposits
The Group had cash and cash equivalents and time deposits of RMB3,301.84 million and RMB3,010.86 million as at December 31, 2023 and December 31, 2022, respectively. During Reporting Period, we repurchased class B shares from the open market for a total of HK$219.63 million including expenses.
Conference Call
Our management will hold a conference call at 9:00a.m. Beijing/Hong Kong Time on Tuesday, March 26, 2024 (9:00 p.m. U.S. Eastern Time) 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/RFFJRDdyendiZmZPcDNWdDBiWWhjUT09
Dial-in details for the earnings conference call are as follows:
International: +86-23-62737100
Mainland China: 023-63623333/4008-063-263
HK China: +852-30183602/+800-961505
English Dial-in Password: 742152754
Chinese Dial-in Password: 851267564
Please scan the QR code in the poster below to register for the conference:
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/earnings
About Bairong Inc.
Bairong Inc. is a leading artificial intelligence (AI) technology services company. The Company applies natural language processing (NLP), privacy computing, machine learning, cloud computing and other technologies to provide services to enterprises through model-as-a-service (MaaS) and business-as-a-service (BaaS). The MaaS services leverage discriminant AI to digitalize the know-your-customer (KYC) and know-your-product (KYP) process for enterprises, by analyzing users’ risk, willingness, and capability. The BaaS services use discriminant AI to analyze and stratify users into groups and develops generative AI-powered chatbots using human natural languages to in Bairong Inc. is a leading artificial intelligence (AI) technology services company. The Company applies natural language processing (NLP), privacy computing, machine learning, cloud computing and other technologies to provide services to enterprises through model-as-a-service (MaaS) and business-as-a-service (BaaS). The MaaS services leverage discriminant AI to digitalize the know-your-customer (KYC) and know-your-product (KYP) process for enterprises, by analyzing users’ risk, willingness, and capability. The BaaS services use discriminant AI to analyze and stratify users into groups and develops generative AI-powered chatbots using human natural languages to interact with users. The Company’s products and services are widely used by enterprise customers in banking, consumer finance, insurance, e-commerce, automobiles, logistics, ticketing, energy, construction and other industries.
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.
Email: brmarketing@brgroup.com
SOURCE Bairong Inc.