Lz Technology Holdings Limited's Business Segments

LZ Technology is a holding company incorporated in the Cayman Islands that operates exclusively through its subsidiaries in China, primarily Lianzhang Portal Network Technology Co., Ltd. and its subsidiaries. LZ Technology owns approximately 96.85% of Lianzhang Portal and controls all subsidiaries through direct or indirect equity ownership without employing a variable interest entity structure. The company faces legal and operational risks related to its China-based operations, including potential changes in Chinese government policies, evolving China-U.S. relations, and regulatory developments in both countries. Chinese regulatory authorities have increased oversight of overseas listings and foreign investments, focusing on areas such as cybersecurity and anti-monopoly measures. As of the report date, LZ Technology has not received any regulatory sanctions or inquiries from Chinese authorities. The company’s auditors, including its current auditor GGF CPA LTD, are registered with the Public Company Accounting Oversight Board (PCAOB) and subject to inspections, although the PCAOB has reported challenges in inspecting firms headquartered in mainland China. LZ Technology’s business and securities are subject to risks related to regulatory compliance and geopolitical factors that could materially impact its operations and market value.

The registrant operates in four reportable business segments: Out of Home Advertising, Lifestyle Services – Retail Sales, Lifestyle Services – E-Commerce Promotion services, and Other Revenues. Revenue from Lifestyle Services – E-Commerce Promotion services declined significantly following the disposal of the subsidiary Henduoka. Revenue from Other Revenues decreased primarily due to lower software and hardware sales. Overall cost of revenue increased, with higher costs in Out of Home Advertising driven by agency and subcontracting expenses, and increased costs in Lifestyle Services – Retail Sales associated with new revenue streams. Costs in Lifestyle Services – E-Commerce Promotion services and Other Revenues decreased due to reduced transaction volume and lower sales, respectively. Gross profit rose overall, supported by an improved gross margin in Out of Home Advertising attributed to enhanced brand recognition and stable subcontractor relationships. The gross margin for Lifestyle Services – Retail Sales declined due to new product introductions and competitive pricing. Lifestyle Services – E-Commerce Promotion services achieved a 100% gross margin following business transformation and minimal associated costs. The gross margin for Other Revenues increased significantly.