CORRECTING and REPLACING: Zhibao Technology Inc Announces Financial Results for the Fiscal Year Ended June 30, 2024

Net Income for the fiscal year ended June 30, 2024, should be changed to RMB 13.3 million. In addition, basic and diluted net income per share for the fiscal year ended June 30, 2024 , should be changed to RMB 0.44 $0.06 and RMB 0.44 $0.06, respectively.

The corrected release reads:

Zhibao Technology Inc Announces Financial Results for the Fiscal Year Ended June 30, 2024

Shanghai, China--(Newsfile Corp. - November 1, 2024) - Zhibao Technology Inc. (NASDAQ: ZBAO) ("Zhibao" or the "Company"), a leading and high growth InsurTech company primarily engaged in providing digital insurance brokerage services through its operating entities in China, today announced its financial results for the fiscal year ended June 30, 2024.

Recent Developments

On April 3, 2024, the Company closed its initial public offering ("Offering") of 1,500,000 Class A ordinary shares at a public offering price of $4.00 per share for aggregate gross proceeds of $6,000,000, before deducting underwriting discounts and offering expenses. The Class A ordinary shares began trading on the Nasdaq Capital Market on April 2, 2024 under the symbol "ZBAO."

On May 15, 2024, the Company issued an additional 23,765 Class A ordinary shares pursuant to the partial exercise of the underwriters' over-allotment option in connection with the Company's Offering at $4.00 per share, resulting in additional gross proceeds of $95,060.

Financial and Operational Summary for the Fiscal Year Ended June 30, 2024

• Revenues increased by approximately RMB 41.6 million (US$5.7 million), or 29% to approximately RMB 183.7 million (US$25.3 million) for the fiscal year ended June 30, 2024 from approximately RMB 142.1 million for the fiscal year ended June 30, 2023.
• Gross profit increased by approximately RMB 16.1 million (US$2.2 million), or 28% to approximately RMB 74.8 million (US$10.3 million) for the fiscal year ended June 30, 2024 from approximately RMB 58.6 million for the fiscal year ended June 30, 2023.
• Income from operations in the fiscal year ended June 30, 2024 of approximately RMB 10.1 million ($1.4 million), compared to a loss from operations of approximately RMB 44.5 million in the same period of 2023. Net income of approximately RMB 13.3 million for the fiscal year ended June 30, 2024 compared to net loss of approximately RMB 43.1 million for the fiscal year ended June 30, 2023.
• The Company increased selling expenses by approximately 40%, and research & development (R&D) by approximately 56% compared to the same period in 2023. Management expects this investment to drive returns in the form of increased revenue in the coming quarters.
• Development of B Channels showed strong growth. As of June 30, 2024, Zhibao grew the number of B channels the Company works with from approximately 1,550 to nearly 1,800. B channels are distributed amongst diverse market segments and is a key component to growing our 2B2C embedded digital insurance model.
• As of June 30, 2024, the Company reached and served in excess of 15 million end customer users, which management expects will continue to drive revenue in the coming years.

Management Commentary

Mr. Botao Ma, Chief Executive Officer of Zhibao, commented, "I am very pleased to report a rapid growth in our income over the past fiscal year. I am especially pleased that we were able to report a GAAP profit and produce substantial growth over fiscal year 2023 despite large investments in R&D and sales expenses.

Over the past year, our digital insurance brokerage platform has expanded to include many new business areas, for example sports. We are pleased to provide industry-leading digital insurance solutions to an ever-increasing number of B-channels and end users across more industry sectors and fields.

Throughout the last six months, our "Project Amoeba" continued to bring us strong returns, markedly increasing the ability and efficiency of our mid- and back-office teams.

The digitization of the Chinese insurance brokerage industry is accelerating. We are thrilled to have entered this market 8 years ago with our 2B2C digital insurance brokerage platform. Our first-mover advantage has allowed us to develop many digital insurance solutions across various industries.

By sustaining our organic growth and strategic investment in other companies, as well as exporting our PaaS and mature operational ability to the market, we intend to utilize our position as China's first digital insurance brokerage company to play a key role in the digitization of the Chinese insurance brokerage market.

We have received conditional approval and are in the process of obtaining final license approval for our reinsurance company in Labuan, Malaysia. By providing selective reinsurance support to business generated by our brokerage and MGU business lines, I believe we can showcase our confidence in the business we provide to the insurance market and accelerate our business growth.

I have every confidence in our business model, growth strategies, and our continued ability to drive growth and profitability in the coming years."

Business and Financial Outlook

The Company expects growth patterns to continue to demonstrate strong growth. By executing on the growth strategies, specifically, by focusing on organic growth, continued strategic investment, and upgrade of the digital insurance brokerage platform, management is optimistic that Zhibao has a long runway ahead, allowing the Company to stay ahead of the competition in the 2B2C digital embedded insurance market space in China.

Over the course of fiscal year 2024, the Company made large investments in developing its own sales ability. This includes investment into the sales staff, and attracting more independent sales partners, which will accelerate the identification and development of more B-channels across different industry sectors.

Complementing the organic growth plan, the Company intends to accelerate its strategic investment in fiscal year 2025. The strategic investment targets remain boutique players with similar business models and deep connections within a specific niche. Zhibao intends to integrate an acquired company's B-channels, sales teams, and operational abilities allowing the Company rapid access to potential new markets and end customers.

Finally, by continually optimizing the digital insurance solutions, the Company intends to improve conversion ratios, leading to more end users across more industry segments.

Through the execution of the aforementioned growth strategies, the Company is confident that its first-mover advantage and industry leading PaaS and digital insurance solutions will continue to deliver strong results in the future.

Financial Results for the Fiscal Year Ended June 30, 2024

Revenues

Revenues increased by approximately RMB 41.6 million (US$5.7 million), or 29% to approximately RMB 183.7 million (US$25.3 million) for the fiscal year ended June 30, 2024 from approximately RMB 142.1 million for the fiscal year ended June 30, 2023. The increase was primarily driven by higher insurance brokerage revenue of approximately RMB54.3 million from the digital insurance brokerage, partially offset against a decrease of approximately RMB 12.6 million in MGU service fees.

• Insurance Brokerage. Revenues from the digital insurance brokerage segment increased by approximately RMB 54.3 million, or 45%, to approximately RMB 174.1 million (US$24.0 million) for the fiscal year ended June 30, 2024 from approximately RMB 119.8 million for the fiscal year ended June 30, 2023. The increase in the insurance brokerage commissions as a percentage of total revenues for such periods was mainly due to the increase in volume of transactions on our platform, primarily contributed by larger customer base and more selection of production.

• MGU Service Fees. MGU Service Fees decreased by approximately RMB 12.6 million, or 55% to approximately RMB 10.2 million (US$1.4 million) for the fiscal year ended June 30, 2024 from approximately RMB 22.8 million for the fiscal year ended June 30, 2023. The decrease was mainly attributable to the abrupt closure of business by a reinsurance partner in the high-end medical sector.

Cost of Revenues

Cost of revenue for the fiscal year ending June 20, 2024 increased by approximately 30% from RMB 83.5 million for the fiscal year ended June 30, 2023 to approximately RMB 108.9 million (US$15.0 million) for the fiscal year ended June 30, 2024. The increase in the cost of revenues was in line with the increase of revenues.

Operating Expenses

• Selling expenses for the fiscal year ended June 20, 2024 increased by approximately RMB 9.1 million, or 40% from approximately RMB 22.5 million for the fiscal year ended June 30, 2023 to approximately RMB 31.6 million (US$4.3 million) for the fiscal year ended June 30, 2024. The increase was mainly due to an increase of approximately RMB 5.2 million in salary and welfare expenses for our sales team as a result of employment of more salespeople with anticipation to increase the GWP for both of our digital brokerage services and MGU services, and an increase in other expenses of approximately RMB 2.3 million incurred by our sales teams with the increase of headcount.

• General and administrative expenses decreased by approximately RMB 53.0 million, or 75% from approximately RMB 71.0 million for the fiscal year ended June 30, 2023 to approximately RMB 18.0 million (US$2.5 million) for the fiscal year ended June 30, 2024. The decrease was mainly due to a decrease in share-based compensation expenses of approximately RMB 54.7 million as we issued ordinary shares to a related party which is wholly controlled by Mr. Ma, our Chairman of the Board and Chief Executive Officer. The difference of RMB 54.7 million between the consideration we received from the related party and fair value of ordinary shares were deemed as share-based compensation expenses, and a decrease of other expenses of approximately RMB 1.5 million as we adopted cost-saving policy in the Company. This was partially offset by an increase of approximately RMB 2.3 million in provision for credit losses since our adoption of ASU 2016-13 on July 1, 2023, and an increase of approximately RMB 0.9 million in payroll and welfare expenses as a result of employment of more administrative headcount to support our increasing GWP.

• Research and development expenses increased by approximately RMB 5.4 million, or 56% from approximately RMB 9.7 million for the fiscal year ended June 30, 2023 to approximately RMB 15.1 million (US$2.1 million) for the fiscal year ended June 30, 2024. The increase was mainly due to an increase of labor cost from our research and development department because we increased headcounts for the development of our platform.

Income (Loss) from Operations

As a result of the foregoing, the Company reported income from operations in the fiscal year ended June 30, 2024 of approximately RMB 10.1 million ($1.4 million), compared to a loss from operations of approximately RMB 44.5 million in the same period of 2023.

Net Income (Loss)

The Company reported a net loss of approximately RMB 43.1 million for the fiscal year ended June 30, 2023, and a net income of approximately RMB 13.3 million for the fiscal year ended June 30, 2024.

Profit per Share

Basic and diluted net income per share for the fiscal year ended June 30, 2024 were RMB 0.44 $0.06 and RMB 0.44 $0.06, respectively.

Conference Call

The Company will host a conference call on Monday, November 4, 2024, at 11:00 AM ET to discuss the fiscal year ended June 30, 2024 results. To participate in the conference call, please dial:

US toll free: 1-877-423-9813
International: 1-201-689-8573
Conference ID: ZHIBAO TECHNOLOGY

Please dial five to ten minutes prior to the scheduled time

For those unable to participate during the live call, a replay of this call will be available on November 4, 2024 at 2:00 p.m. ET for 7 days. To access the replay, please dial:

US toll free: 1- 844-512-2921
International: 1-412-317-6671
Access ID: 13750000

About Zhibao Technology Inc.

Zhibao Technology Inc. is a leading and high growth InsurTech company primarily engaging in providing digital insurance brokerage services through its operating entities ("Zhibao China Group") in China. 2B2C ("to-business-to-customer") digital embedded insurance is the Company's innovative business model, which Zhibao China Group pioneered in China. Zhibao China Group launched the first digital insurance brokerage platform in China in 2020, which is powered by their proprietary PaaS ("Platform as a Service").

Zhibao has developed more than 40 proprietary and innovative digital insurance solutions addressing different scenarios in a wide range of industries, including but not limited to travel, sports, logistics, utilities, and e-commerce. Zhibao China Group acquire and analyze customer data, utilize big data and artificial intelligence technology to continually iterate and enhance its digital insurance solutions. This iterative process, in addition to continually improving its digital insurance solutions, will keep the Company abreast of the new trends and customer preferences in the market.

For more information, please visit the Company's website at ir.zhibao-tech.com.

Forward-Looking Statements

Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "is/are likely to," "potential," "predict," "project," "should," "target," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations that arise after the date hereof, except as may be required by law. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions, and other factors discussed in the "Risk Factors" section of the registration statement filed with the SEC. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the SEC. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov.

Balance Sheet

ZHIBAO TECHNOLOGY INC.
CONSOLIDATED BALANCE SHEETS

(Amounts in Renminbi ("RMB") and U.S. dollars ("US$"), except for share and per share data)

Statement of Operations

ZHIBAO TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Amounts in Renminbi ("RMB") and U.S. dollars ("US$"), except for share and per share data)

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