Zhizao Technology Inc.

Company Overview

Business Model: Zhibao Technology Inc. is an InsurTech company that provides digital insurance brokerage and Managing General Underwriting ("MGU") services primarily in China. The company pioneered the 2B2C (to-business-to-customer) digital embedded insurance model in China, launching its proprietary Platform as a Service ("PaaS") in 2020. Its core business, insurance brokerage services, accounted for approximately 99% of total revenues in fiscal year 2025, generating commissions ranging from 10-35% for property & casualty/health insurance and 50-80% for life insurance. MGU services, which involve assisting insurance companies in product design, underwriting, claims, and risk control, primarily for high-end medical insurance, constituted approximately 1% of total revenues in fiscal year 2025.

Market Position: Zhibao Technology Inc. holds the number one position in the 2B2C digital insurance brokerage service market in China by revenue and market share, according to the Frost & Sullivan Report. As of the annual report date, the company has partnered with over 2,400 business channels and secured more than 24 million end customers. It collaborates with over 100 insurance companies.

Recent Strategic Developments: The company completed its initial public offering (IPO) on April 3, 2024, raising aggregate gross proceeds of $6,000,000. Strategic financing initiatives include a Securities Purchase Agreement with L1 Capital Global Opportunities Master Fund on September 23, 2024, for loans up to $8.0 million, from which Zhibao Technology Inc. received net proceeds of approximately RMB 17.5 million (US$2.4 million) as of June 30, 2025. Additionally, on June 22, 2025, Zhibao Technology Inc. entered an Equity Purchase Agreement with Hudson Global Ventures, LLC for an equity line of credit facility, committing Hudson Global Ventures, LLC to purchase up to $15,000,000 of Class A ordinary shares over two years. In terms of inorganic growth, Zhibao China acquired a 51% equity interest in Zhonglian Jinan Insurance Brokers Co., Ltd. for RMB 25.5 million (~$3.5 million) on September 30, 2025, and agreed to acquire a 51% equity interest in Shanghai Zhibao Yingshi Health Technology Co., Ltd., a healthcare services company, on September 1, 2025. The company is also pursuing global expansion, having signed a Memorandum of Understanding with a brokerage partner in Singapore and assessing opportunities in the U.S. and European markets.

Geographic Footprint: Zhibao Technology Inc. is a Cayman Islands exempted company with its principal executive offices located in Shanghai, China. Its operations are primarily conducted in China through its PRC Subsidiaries, including Zhibao China and Sunshine Insurance Brokers (Shanghai) Co., Ltd. The company maintains leased offices in Shanghai, Beijing, Guangzhou, Harbin, Nanjing, Hangzhou, Jinan, Linyi, Shenzhen, and Kunming, totaling 15 lease agreements. Zhibao Labuan Reinsurance, a wholly-owned subsidiary, was incorporated in Labuan, Malaysia, in July 2024 and received final license approval in April 2025, though it has not yet commenced operations.

Cross-Border Operations: Zhibao Technology Inc. operates as a holding company, conducting business in China through its PRC Subsidiaries. Its corporate structure includes wholly-owned holding subsidiaries in the British Virgin Islands (Zhibao Technology Holdings Limited) and Hong Kong (Zhibao Technology Limited). The company's recent incorporation of Zhibao Labuan Reinsurance in Malaysia signifies an intent for international expansion, complementing its ongoing assessment of opportunities in the U.S. and European markets. Financial statements are prepared in accordance with U.S. GAAP, and the functional currency for its operations is the Renminbi (RMB).

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 41.0% (FY2025) vs. 40.7% (FY2024)
• Operating Margin: -19.3% (FY2025) vs. 5.5% (FY2024)
• Net Margin: -22.4% (FY2025) vs. 7.2% (FY2024)

Investment in Growth:

• R&D Expenditure: RMB 10.9 million (US$1.5 million) (3.9% of revenue) in FY2025, a decrease from RMB 15.1 million in FY2024.
• Capital Expenditures: Nil for software and office equipment in FY2025, compared to RMB 0.3 million in FY2024.
• Strategic Investments: As of June 30, 2025, the company had RMB 12.5 million (US$1.7 million) in deposits for long-term investments, including RMB 6.7 million for Zhonglian Jinan Insurance Brokers Co., Ltd.

Currency Impact Analysis: The company's operating activities, assets, and liabilities are substantially denominated in RMB. The RMB is not freely convertible. Foreign currency translation adjustments resulted in a loss of RMB 0.7 million (US$0.1 million) in FY2025. The functional currency for the company's operations is RMB.

Business Segment Analysis

Digital Insurance Brokerage and MGU Services

Financial Performance:

• Revenue: RMB 276.9 million (US$38.7 million) (+51% YoY)
• Operating Margin: -19.3% (swing from 5.5% in FY2024)
• Key Growth Drivers: The 51% year-over-year revenue growth in FY2025 was primarily driven by a 57.3% increase in insurance brokerage service fees, reaching RMB 273.8 million. This growth reflects the expansion of the 2B2C digital embedded insurance model and increased engagement with business channels and end customers. Conversely, MGU service fees decreased significantly in FY2025, mainly due to the abrupt closure of business by a reinsurance partner in the high-end medical sector.

Product Portfolio: The segment offers a comprehensive suite of insurance brokerage services covering property & casualty, health, and life insurance products. Its MGU services are specialized, focusing on high-end medical insurance, where Zhibao Technology Inc. assists insurance companies with product design, underwriting, claims, and risk control.

Market Dynamics: Zhibao Technology Inc. is recognized as the market leader in China's 2B2C digital insurance brokerage service market by revenue and market share. The company leverages its proprietary PaaS to partner with over 100 insurance companies and serve more than 2,400 business channels, reaching over 24 million end customers. The regulatory environment in China, primarily overseen by the National Financial Regulatory Administration (NFRA), significantly influences market dynamics.

Geographic Revenue Distribution:

• PRC: Substantially all revenues are generated from the PRC.
• Growth Markets: Zhibao Technology Inc. is actively assessing opportunities in the U.S. and European markets and has signed a Memorandum of Understanding with a brokerage partner in Singapore, indicating a strategic intent for future international revenue diversification.

International Operations & Geographic Analysis

Revenue by Geography:

International Business Structure:

• Subsidiaries: Zhibao Technology Inc. operates through Zhibao Technology Holdings Limited (British Virgin Islands) and Zhibao Technology Limited (Hong Kong) as wholly-owned holding subsidiaries. Zhibao Labuan Reinsurance, a wholly-owned subsidiary, was incorporated in Labuan, Malaysia, in July 2024 and received final license approval in April 2025, though it is not yet operational.
• Joint Ventures: Zhibao China agreed to acquire a 51% equity interest in Shanghai Zhibao Yingshi Health Technology Co., Ltd. (China) via a joint venture agreement dated September 1, 2025.
• Licensing Agreements: The company's business model involves extensive partnerships with over 100 insurance companies for brokerage and MGU services, which can be viewed as a form of licensing or cooperation agreement for product distribution.

Cross-Border Trade:

• Export Markets: While not explicitly detailed, Zhibao Technology Inc.'s global expansion initiatives, including an MOU in Singapore and assessment of U.S. and European markets, suggest a future focus on exporting its digital insurance services.
• Import Dependencies: Not explicitly detailed in the filing.
• Transfer Pricing: Transfer pricing is identified as a risk in the context of international tax planning and compliance.

Capital Allocation Strategy

Shareholder Returns: No information regarding share repurchases, dividend payments, or future capital return commitments was disclosed in the filing.

Balance Sheet Position (as of June 30, 2025):

• Cash and Equivalents: RMB 10.3 million (US$1.4 million)
• Total Debt: RMB 23.5 million (US$3.2 million), comprising RMB 21.8 million (US$3.0 million) in short-term borrowings and RMB 1.7 million (US$0.2 million) in convertible notes.
• Net Cash Position: RMB (13.2) million (US$(1.8) million)
• Credit Rating: Not disclosed.
• Debt Maturity Profile: The company's short-term borrowings and convertible notes are classified as current liabilities. The L1 Second Tranche Note, a convertible note, matures on February 13, 2026.

Cash Flow Generation (FY2025):

• Operating Cash Flow: RMB (20.7) million (US$(2.9) million) (Net cash used in operating activities).
• Free Cash Flow: RMB (20.7) million (US$(2.9) million), assuming nil capital expenditures for the period.
• Cash Conversion Metrics: Accounts receivable turnover days were approximately 188 days in FY2025.

Currency Management: The company's cash holdings are substantially denominated in RMB. The filing does not detail specific natural hedging or financial hedging instruments used for currency management.

Operational Excellence

Production & Service Model: Zhibao Technology Inc. operates as a digital InsurTech company, delivering services through its proprietary, cloud-based Platform as a Service (PaaS). This platform, launched in 2020, underpins its 2B2C digital embedded insurance model. The PaaS integrates Business SaaS Systems, Biz Components & Tools (including an integrated payment center, unified messaging, and an AI Q&A Tool), and a Data Center for analytics. Its technical infrastructure utilizes cloud services and holds ISO 27001 and local equivalent data security certifications.

Global Supply Chain Architecture: Key Suppliers & Partners:

• Insurance Companies: Zhibao Technology Inc. partners with over 100 insurance companies to offer a diverse portfolio of insurance products.
• B Channels: The company collaborates with more than 2,400 business entities, embedding customized insurance solutions into their digital channels to reach end customers.
• Reinsurance Partners: The company previously held MGU agreements with seven insurance companies, including two international reinsurers, though a significant reinsurance partner in the high-end medical sector ceased operations in FY2025.
• Technology Partners: While specific names are not provided, the company leverages cloud infrastructure and adheres to international data security standards.
• Research Collaborations: From May 2017 to December 2020, Zhibao Technology Inc. jointly established China’s first Insurtech Lab with Fudan University.

Facility Network:

• Manufacturing: Not applicable, as the company provides services.
• Research & Development: R&D efforts are concentrated on platform and solution development, supported by a dedicated team of 18 employees, all holding Bachelor's degrees or higher with an average of approximately nine years of experience.
• Distribution: The company maintains a network of 15 leased offices across China, including its principal executive offices in Shanghai, and branches in major cities such as Beijing, Guangzhou, and Shenzhen.

Operational Metrics: As of June 30, 2025, Zhibao Technology Inc. had 137 full-time employees, with 65 in sales and marketing, 18 in technology and R&D, 44 in customer AARRR operations, and 10 in back office functions. The company serves over 24 million end customers through more than 2,400 B channels.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• 2B2C Digital Embedded Insurance Model: Zhibao Technology Inc.'s primary strategy involves embedding customized insurance solutions directly into the digital channels of its business partners ("B channels") to reach their end customers.
• Digital Platforms: The company's proprietary Platform as a Service (PaaS) serves as the core digital channel, enabling efficient delivery of insurance products and services.
• Direct Sales: A sales and marketing team of 65 employees suggests direct engagement and relationship management with B channels and insurance partners.

Customer Portfolio: Enterprise Customers:

• B Channels: The company's customer base includes over 2,400 business entities that integrate Zhibao Technology Inc.'s insurance solutions into their offerings.
• Strategic Partnerships: Zhibao Technology Inc. maintains partnerships with over 100 insurance companies, which are crucial for its product portfolio.
• Customer Concentration: In FY2025, two key insurance companies collectively contributed approximately RMB 101 million (~36%) of total revenues, with three insurance companies accounting for approximately 55% of total revenues. As of June 30, 2025, one customer represented 11% of accounts receivable.

Regional Market Penetration:

• China: Zhibao Technology Inc. holds a leading position in the 2B2C digital insurance brokerage service market in China by revenue and market share.
• Growth Markets: The company is actively pursuing international market penetration, evidenced by an MOU with a brokerage partner in Singapore and ongoing assessments of opportunities in the U.S. and European markets.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: Zhibao Technology Inc. operates within the InsurTech sector in China, specifically focusing on the 2B2C digital embedded insurance market. This market is characterized by rapid digital transformation, the integration of insurance products into broader business ecosystems, and a dynamic regulatory environment primarily governed by the National Financial Regulatory Administration (NFRA) in China.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The filing does not explicitly name direct competitors. Regional Competitive Dynamics: Zhibao Technology Inc. has established itself as the market leader in the 2B2C digital insurance brokerage service market in China.

Risk Assessment Framework

Strategic & Market Risks

Global Market Dynamics:

• Technology Disruption: The company faces ongoing risks from rapid technological advancements and the need for continuous innovation to maintain its competitive edge in the InsurTech sector.
• Customer Concentration: A significant portion of the company's revenue is concentrated among a few key insurance partners, with three insurance companies accounting for approximately 55% of total revenues in FY2025, posing a concentration risk.
• Regulatory Changes: Changes in PRC government policies, evolving U.S.-China relations, and uncertainties in PRC laws and regulations could impact operations. There is also a potential for intervention or influence by the PRC government over the company's business.

Operational & Execution Risks

Global Supply Chain Vulnerabilities:

• Supplier Dependency: The company relies on its partnerships with insurance companies for product offerings, making it susceptible to changes in these relationships or the operational stability of its partners.
• Regional Disruptions: As operations are primarily concentrated in China, the company is exposed to political, economic, and legal environment risks specific to the PRC.
• Trade Restrictions: Broader U.S.-China relations and potential trade restrictions could indirectly impact the company's ability to operate or expand internationally.

Financial & Regulatory Risks

Currency & Financial Risks:

• Foreign Exchange: The company's substantial denomination of operating activities, assets, and liabilities in RMB, which is not freely convertible, exposes it to foreign exchange rate fluctuations.
• Interest Rate Risk: The company's exposure to interest rate risk is primarily related to interest income from excess cash, with no material risks from interest rate changes or the use of derivative financial instruments for this purpose.
• Credit & Liquidity: Zhibao Technology Inc. faces substantial doubt about its ability to continue as a going concern, evidenced by working capital of RMB 0.4 million (US$51,600), accumulated deficits of RMB 193.9 million (US$27.1 million), and operating cash outflows of RMB 20.7 million (US$2.9 million) as of June 30, 2025. The company's liquidity is also reliant on dividends from PRC Subsidiaries, which are subject to PRC regulations and restrictions.

Regulatory & Compliance Risks:

• Multi-Jurisdictional Compliance: The company operates under a complex PRC legal regime, including regulations from the National Financial Regulatory Administration (NFRA), Cybersecurity Review Measures, New Overseas Listing Rules (CSRC), and the Personal Information Protection Law (PIPL).
• Trade Regulations: Zhibao Technology Inc. is subject to delisting risk under the Holding Foreign Companies Accountable Act (HFCA Act) if it fails to comply with PCAOB inspection requirements for two consecutive years.
• Tax Regulations: There is a risk of being classified as a PRC "resident enterprise" for tax purposes, which would subject it to a 25% Enterprise Income Tax (EIT) on worldwide income and a 10% withholding tax on dividends to non-PRC enterprise shareholders.

Geopolitical & External Risks

Country-Specific Risks:

• Political Risk: The company's operations in China are influenced by the PRC's political, economic, and legal environments, including potential government intervention or influence.
• Economic Risk: Uncertainties in PRC laws and regulations, as well as broader economic instability, could impact the company's performance.
• Regulatory Changes: Evolving cybersecurity and data protection laws (e.g., PIPL, Cybersecurity Law, Data Security Law) and the risk of security breaches pose significant compliance and operational challenges.
• Legal Proceedings: Zhibao Technology Inc. is involved in several legal proceedings, including a significant case where Sunshine Insurance Brokers agreed to pay RMB 13.3 million plus fees, which could impact financial performance and reputation.

Innovation & Technology Leadership

Research & Development Focus: Global R&D Network: Zhibao Technology Inc.'s R&D efforts are primarily concentrated in Shanghai, China, where a dedicated team of 18 employees focuses on platform and solution development. This team comprises individuals with Bachelor's degrees or higher and an average of approximately nine years of experience. Innovation Pipeline: The company's innovation pipeline centers on its proprietary Platform as a Service (PaaS), digital insurance solutions, and a sophisticated delivery system. Key components include Business SaaS Systems, Biz Components & Tools (such as an integrated payment center, unified messaging, and an AI Q&A Tool), and a Data Center for advanced analytics. Research Collaborations: From May 2017 to December 2020, Zhibao Technology Inc. collaborated with Fudan University to establish China’s first Insurtech Lab, demonstrating a commitment to academic and industry research partnerships.

Intellectual Property Portfolio:

• Patent Strategy: As of June 30, 2025, the company holds 37 registered copyrights in China, including 32 for computer software and 5 for artwork, along with 20 registered trademarks and 9 domain names in China. The focus appears to be on protecting its software and brand assets.
• Licensing Programs: Not explicitly detailed in the filing.
• IP Litigation: Not explicitly detailed in the filing.

Technology Partnerships:

• Strategic Alliances: While specific technology partners are not named, the company utilizes cloud infrastructure and adheres to international data security certifications (ISO 27001 and local equivalents), indicating reliance on external technology providers.
• Research Collaborations: The past collaboration with Fudan University highlights a strategy of engaging with academic institutions for research and development.

Leadership & Governance

Executive Leadership Team

International Management Structure: The executive leadership team brings diverse experience, with key officers having extensive backgrounds in the insurance, finance, and technology sectors within China. The company's structure includes holding companies in the British Virgin Islands and Hong Kong, and a newly incorporated subsidiary in Malaysia, indicating a multi-jurisdictional management oversight.

Board Composition: The Board of Directors consists of five directors, including three independent directors: Stephen Bernardez (appointed April 1, 2025), Armando Luis Baez (appointed June 2024), and Jeffrey Rong Cai (appointed April 2025). Armando Baez serves as the chairman of the Audit Committee and is designated an "audit committee financial expert." Stephen Bernardez chairs the Compensation Committee, and Jeffrey Cai chairs the Nominating and Corporate Governance Committee. Zhibao Technology Inc. is classified as a "controlled company" under Nasdaq rules, as Mr. Botao Ma, the Chairman and CEO, beneficially owns approximately 94.0% of the total voting power through a dual-class share structure (Class B shares carry 20 votes per share). This status provides exemptions from certain Nasdaq corporate governance requirements, such as having a majority independent board, a compensation committee, and a director nominations committee.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: Primary Regulatory Environments:

• PRC: Zhibao Technology Inc.'s PRC Subsidiaries operate under the comprehensive PRC legal regime. The National Financial Regulatory Administration (NFRA) became the primary regulator for the insurance industry on May 18, 2023. The company has complied with the Cybersecurity Review Measures (2021) for its IPO and completed filing procedures with the China Securities Regulatory Commission (CSRC) under the New Overseas Listing Rules (effective March 31, 2023). Compliance with the Personal Information Protection Law (PIPL, effective November 1, 2021) is also critical, as PRC Subsidiaries are "personal information processors." PRC subsidiaries are subject to VAT at 6% on services.
• Cayman Islands and British Virgin Islands: Zhibao Technology Inc. and Zhibao Technology Holdings Limited are not subject to income or capital gains tax in these jurisdictions.
• Hong Kong: Zhibao Technology Limited was not subject to Hong Kong profit tax for FY2025, with a two-tiered profits tax rate structure.
• Malaysia: Zhibao Labuan Reinsurance is subject to Malaysia Corporate Income Tax at a standard rate of 24%, with reduced rates for SMEs.

Cross-Border Compliance:

• Export Controls: Not explicitly detailed in the filing.
• Sanctions Compliance: Not explicitly detailed in the filing.
• Anti-Corruption: Not explicitly detailed in the filing.

International Tax Strategy:

• Transfer Pricing: Transfer pricing is identified as a risk in international tax planning.
• Tax Treaties: Dividends to non-PRC resident enterprises are generally subject to a 10% withholding tax, which may be reduced to 5% for Hong Kong resident enterprises holding over 25% equity, subject to PRC local tax authority approval and specific conditions.
• BEPS Compliance: Not explicitly detailed in the filing.
• PRC Resident Enterprise Status: There is a risk that Zhibao Technology Inc. could be classified as a PRC "resident enterprise" for tax purposes, which would subject it to a 25% Enterprise Income Tax (EIT) on its worldwide income.

Currency Management & Financial Strategy

Multi-Currency Operations: Currency Exposure:

Hedging Strategies: The company's operating activities, assets, and liabilities are substantially denominated in RMB, which is not freely convertible. The filing does not explicitly detail specific transaction, translation, or economic hedging strategies employed to mitigate foreign currency exchange rate risk. It notes that no derivative financial instruments are used for interest rate risk management.