Tarena International, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter and full year of 2020 Tarina International Incorporation Earnings Conference Call. At this time, all participants are in listen-only mode. After speaker's presentation, there will be a question and answer session. To ask questions during the session, you will need to press star one on your telephone. I must advise you that this conference has been recorded today, March the 19th, 2021. I would now like to hand the conference over to our first speaker today, Ms. Amanda Wong, the Investor Relationship Director. Thank you. Please go ahead now.

Thank you, Operator. Hello, everyone, and welcome to Tarina's Earnings Conference Call for the fourth quarter and the fourth year of 2020. The company's earnings results were released earlier today and are available on our website, ir.tedu.cn, as well as on newswire services. Today you will hear from Mr. Yongji Sun, our CEO, Ms. Nancy Sun, our Senior VP, and Mr. Kevin Lo, our CFO, who will take you through the company's operational and financial results for the fourth quarter and the fall year of 2020, and give revenue guidance for the first quarter of 2021. After their prepared remarks, Mr. Sun, Nancy, and Kevin will be available to answer your questions. Before we continue, Please note that the discussion today will contain certain forward-looking statements made under the safe harbor provisions of U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Tarina does not assume any obligations to update any forward-looking statements. except as required under applicable law. Also, please note that some of the information to be discussed includes non-GAAP financial measures as defined in Regulation G. The U.S. GAAP financial measures and the information reconciling these non-GAAP financial measures to Tarina's financial results prepared in accordance with U.S. GAAP are included in Tarina's earnings release, which has been posted on the company's R website. Finally, As a reminder, this conference call is being recorded. In addition, a webcast of this conference call is available on Tarina's air website. I will now turn the call over to Mr. Calvin Low, CFO of Tarina.

Hi, everybody. I'm Calvin. First of all, I got to apologize first. Our CEO, Mr. Sun, is out for a meeting and he's on the way back to the office now. So I will present Mr. Sun's script on his behalf. Thank you, Amanda, and thank you, everybody, for joining us today. We are delighted to announce our result for the fourth quarter and full year of 2020. Our net revenue in the fourth quarter of 2020 was RMB $650.3 million, which was higher than the guidance range of RMB $540 million to RMB $570 million we gave. Compared to the net revenue of RMB509.6 million in the fourth quarter of 2019, the net revenues in the fourth quarter of 2020 increased by RMB140.7 million, or 27.6%. The net revenue for the year end December 31, 2020 was RMB1,897.9 million, decreased by RMB 153.5 million, or 7.5%, as compared to the net revenue of RMB 2,051.4 million for the year ended December 31, 2019. Net revenue from K-12 education business increased by 64.7% from RMB 180.9 million. In the fourth quarter of 2019, to RMB 297.9 million in the same period of 2020. The number of student enrollments for K-12 education increased by 47% from 87,300 in the fourth quarter of 2019 to 128,300 in the same period of 2020. The number of new students equipped for K-12 education increased by 6.7% from 19,400 in the fourth quarter of 2019 to 20,700 in the same period of 2020. Net revenue from adult professional education business increased by 7.2% from RMB $328.7 million in the fourth quarter of 2019 to RMB $352.4 million in the same period of 2020. Despite the number of student enrollments for adult professional education business decreased by 21.3% from 44,600 in the fourth quarter of 2019 to 35,100 in the same period of 2020. And the number of new students recruited for adult professional education business decreased by 20.1% from 20,900 in the fourth quarter of 2019 to 16,700 in the same period of 2020. In 2020, we have adopted a series of policies and actions to minimize the impact of COVID-19 pandemic on our businesses. We have achieved remarkable results on the optimization of organizational structure, improvement of operational efficiency, and effective controls on costs and expenses. The total cost of The total cost of revenues and operating expenses decreased by 12.6% from RMB 841.4 million in the fourth quarter of 2019 to RMB 735.4 million in the same period of 2020. The net loss decreased by 68.8% from RMB 303.8 million in the fourth quarter of 2019 to RMB 94.7 million in the same quarter of 2020. The net loss decreased by 25.8% from RMB 1,038.9 million for the full year of 2019 to RMB 771.2 million for the full year of 2020. Our total headcounts decreased by 14.3% from an average of 11,713 in the fourth quarter of 2019 to 10,043 in the same period of 2020. Productivity per capita increased by about 49% from RMB 43,500 in the fourth quarter of 2019 to RMB 64,800 in the same period of 2020. Improving the operational efficiency of our adult learning centers is one of our key strategies in 2020. We have taken active steps to close or merge those underperforming learning centres. The number of adult learning centres decreased from 130 in the fourth quarter of 2019 to 104 in the same period of 2020. The net revenue per adult learning centre increased by about 34% from RMB 2.53 million in the fourth quarter of 2019 to RMB 3.39 million in the fourth quarter of 2020. The net revenue per student enrollment increased by about 35.1% from RMB 7,400 in the fourth quarter of 2019 to RMB 10,000 in the same period of 2020. The number of K-12 education learning centers increased from 217 in the fourth quarter of 2019 to 236 in the same period of 2020. The net revenue per K-12 Learning Center increased by about 51.4% from RMB 0.83 million in the fourth quarter of 2019 to RMB 1.26 million in the fourth quarter of this year. We are pleased with the progress and result of our K-12 business development we have achieved. In 2020, The company has developed more resources to our K-12 education online courses and encouraged more strategic migration to the online operation and business. The net revenue contributed by our K-12 online education business increased by 215.8% from RMB $34.2 million in 2019 to RMB $108 million in 2020. K-12 online education business contributed 14.2% and 6.5% of the K-12 education net revenue for the fiscal year of 2020 and 2019 respectively. Going into 2021, we will continuously stick to and implement our strategies we adopted in 2020, which are streamlining our products and services and uplifting the operational and organizational structure efficiency. For adult education business, we will further explore deeper and more well-added cooperation with educational institutions to strengthen our existing leading positions in the market. For K-12 education business, we will further devote more resources to product research and development and enlarge our K-12 services capacity On top of the K-12 programming and robotic training programs, we will organize and launch more IT-related competitions and relevant training campaigns. We will continuously build and strengthen our national brand, both for the adult professional training and K-12 IT education. With that, I will turn the call to our Operation SVP, Nancy Sun, who will present to you some details of our operation performance in the fourth quarter and full year of 2020.