Net profit jumped by 121% period-over-period and net profit margin  expanded to 17%

Revenue delivered by generative AI achieved 55% growth

BEIJING, Aug. 22, 2023 /PRNewswire/ — Bairong Inc. (“Bairong” or the “Company“; HKEX:6608), a leading cloud-based AI turnkey service provider, today announced its unaudited consolidated results for the six months ended June 30, 2023.

Highlights

Financial Summary

For the six months ended June 30, 2023, our revenue reached RMB1,243.03 million, representing an increase of 32% from RMB945.18 million for the six months ended June 30, 2022. The growth sped up compared to the previous year, mainly driven by our BaaS business, the revenue of which rose by 36% period-over-period to RMB811.90 million, empowered mainly by our Generative AI (Artificial Intelligence) technology. Within the BaaS business, our Financial Scenario （金融行業雲） contributed a revenue of RMB492.10 million, representing an increase of 55% period-overperiod, while our Insurance Scenario (保險行業雲) contributed a revenue of RMB319.80 million, representing an increase of 14% period-over-period. Our MaaS business, our cornerstone business, grew by 24% period-over-period to RMB431.13 million. Our gross profit reached RMB896.03 million with our gross profit margin remaining at a higher profitability level of 72%, as our business model continued to prove its scalability. Our operating profit surged by 130% periodover-period to RMB211.73 million and our operating profit margin further expanded to 17%. Our profit for the period jumped by 121% period-over-period to RMB206.81 million and our net profit margin further expanded to 17%, mainly as we maximized the synergies brought by our industryleading position amid a high threshold regulatory environment. Our non-IFRS profit reached RMB226.85 million and our non-IFRS net profit margin was as high as 18%.

Financial Results Review

Revenue

Our total revenue increased by 32% from RMB945.18 million for the six months ended June 30, 2022 to RMB1,243.03 million for the six months ended June 30, 2023, primarily attributable to industry growth and our enhanced capabilities of providing products and services.

Our MaaS business reported revenue growth of 24% period-over-period to approximately RMB431.13 million for the six months ended June 30, 2023. During the Reporting Period, the number of Key Clients reached 146, representing an increase of 14 from 132 period-over-period, while average revenue per Key Client grew by 11% period-over-period to RMB2.43 million from RMB2.19 million in the corresponding period of the previous year. The Key Client retention rate of our MaaS business has further increased to 98%.

Note: “Key Clients” are defined as paying clients that each contribute more than RMB300,000 total revenue to the Company year-to-date.

Our BaaS –Financial Scenario business reported revenue growth of 55% period-over-period to RMB492.10 million for the six months ended June 30, 2023. As a result of a rapid growing gross transaction values, which grew by 72% period-over-period to RMB21.26 billion for the first half year. During the Reporting Period, we deepened our cooperation with clients by jointly developing various marketing activities to contribute to the rapid expansion of gross transaction values. In addition, the operational efficiency continued to improve due to the effective role of our accumulated self-owned users in combination with our technical advantages powered by Generative AI, thereby generating a higher level of ROI.

Our revenue from insurance scenario increased by 14% to RMB319.80 million for the six months ended June 30, 2023. Total premiums increased by 59% period-over-period to RMB1,597.40 million. In the first half of 2023, first year premiums increased by 76% periodover-period to RMB939.75 million. Renewal premiums increased by 40% period-over-period to RMB657.65 million. The persistency rate of life insurance premiums continued to exceed 90%, ranking among the top in the industry.

Cost of sales

The cost of sales increased by 30% from RMB267.60 million for the six months ended June 30, 2022 to RMB347.00 million for the six months ended June 30, 2023, primarily attributable to an increase of RMB11.11 million in analytics service costs, and an increase of RMB49.13 million in insurance brokerage commission costs, 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 RMB677.58 million for the six months ended June 30, 2022 to RMB896.03 million for the six months ended June 30, 2023. The Group’s gross margin was 72% for both the six months ended June 30, 2023 and 2022.

Research and development expenses

The Group’s research and development expenses increased by 26% from RMB159.95 million for the six months ended June 30, 2022 to RMB202.07 million for the six months ended June 30, 2023, primarily attributable to the increase in the staff costs of our research and development personnel to support product offerings and technology development about various AI application technology, algorithm-driven machine learning platform and underlying database performance.

General and administrative expenses

The Group’s general and administrative expenses decreased by 6% from RMB132.53 million for the six months ended June 30, 2022 to RMB123.98 million for the six months ended June 30, 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 19% from RMB388.44 million for the six months ended June 30, 2022 to RMB460.68 million for the six months ended June 30, 2023, primarily due to an increase of RMB82.57 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 promotional efforts to obtain high-quality traffic to improve conversion efficiency.

Other income

Our net other income increased by 10% from RMB95.36 million for the six months ended June 30, 2022 to RMB105.01 million for the six months ended June 30, 2023. This is primarily due to (1) an increase of RMB30.71 million of government grants; (2) an increase of RMB14.18 million in the interest income from time deposits and fair value change and gains from our other investments which were mainly include certain low-risk wealth management products; (3) the foreign exchange loss of RMB1.65 million for the six months ended June 30, 2023 compared with the foreign exchange gains of RMB30.60 million for the six months ended June 30, 2022, which was due to the variance from the appreciation of USD against RMB affected by macro environment.

Profit for the period

As a result of the foregoing, the Group’s profit for the period increased from RMB93.37 million for the six months ended June 30, 2022 to RMB206.81 million for the six months ended June 30, 2023.

Cash, cash equivalents and time deposits

The Group had cash and cash equivalents and time deposits of RMB2,756.67 million and RMB3,010.86 million as at June 30, 2023 and December 31, 2022, respectively. 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  Wednesday, August 23, 2023 (10:00 p.m. U.S. Eastern Time on August 24, 2023) 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/meet/sign/MlRDMjk1VTl1ejZZaUMrNWViRlpGSzJsRFdqbGlpNDg4bjZYWjk4Tk1Edz0=

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

International: +86-23-62737100

Mainland China: 023-63623333/4008-063-263

HK China: +852-30183602/+852-30186949

English Dial-in Password: 926830039

Chinese Dial-in Password: 833103943

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

About Bairong Inc.

Bairong Inc (Stock Code: 6608.HK) is a leading cloud-based AI turnkey service provider. The company is dedicated to frontier technologies such as NLP, privacy computing, machine learning and cloud computing, built complementary AI technology solutions combining discriminant AI and generative AI, and proposed MaaS (Model as a service) + BaaS (Business as a service), to promote the inclusive development of AI in vertical industry. Bairong is committed to deeply embedding discriminant AI and generative AI into the whole process of vertical industry, connecting different scenarios and customers, with cloud deployment, it helps clients to improve the decision-making capability and provides turnkey service at business level for customer interactions, extending AI capability from the intermediate operation to the final result delivery, making AI applicable, visible, and perceptible in vertical industries, and facilitating the digital intelligence development. Bairong offers professional services for more than 7,000 institutions including 6 state-owned banks, 12 national joint-stock banks,  more than a thousand regional banks, as well as major consumer finance companies, insurance companies, wealth management companies, and numerous internet technology companies.

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.

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SOURCE Bairong Inc.