This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk04: Ladies and gentlemen, thank you for standing by and welcome to the first quarter of 2022 Tarina International Incorporation earnings conference call. I must advise you that this conference is being recorded today, May 17, 2022. I would now like to hand the conference over to your first speaker today, Ms. Sylvia Yang, the Investor Relationship Manager. Thank you. Please go ahead.
spk02: Thank you, operator. Hello, everyone, and welcome to Tarina's Earnings Conference Call for the first quarter of 2022. The company's earnings results were released earlier today and are available on our IR website, ir.edu.cn, as well as on Newswire Services. Today, you will hear from Ms. Nancy Ying Sun, our CEO, and Mr. Calvin Long, our CFO. who will take you through the company's operational and financial results for the first quarter of 2022, and give revenue guidance for the second quarter of 2022. After their prepared remarks, Nancy and Calvin 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 the U.S. Private Security Litigation Form 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. Carina does not assume any obligation 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 Recommendation G. The U.S. GAAP financial measures and information reconciling these non-GAAP financial measures to Terena's financial results prepared in accordance with U.S. GAAP are included in Terena's earnings release. which has been posted on the company's IR website at ir.edu.cn. Finally, as a reminder, this conference call is being recorded. In addition, a webcast of this conference call is available on Terena's investor relations website. I will now turn the call over to Ms. Nancy Ying Sun, the CEO of Terena. Thank you, Ms. Yang.
spk03: Thank you, investors, for your attention. Thank you for coming to this call today.
spk06: Thank you, Sylvia. And I want to thank the attention from all the investors. And I want to thank everyone for joining us today.
spk03: At this point, I would like to happily announce the performance of Da Mei Company in the first quarter of 2022. We ended the loss in the first quarter of 2022. This marks our business returning to a healthy operating trajectory. Our net profit reached 27.1 million yuan. The net profit is 28.6 million yuan. The net profit rate is 4.6%. At the same time, even with the impact of Chinese spring and winter season factors, our cash flow has still maintained a relatively good reserve of 4.164 billion yuan. I am delighted to announce the result of Tarana for the first quarter of 2022. In the first quarter of 2022, we ended our losses and achieved a net income. This marked the beginning of a healthy operating trajectory of our business.
spk06: Our net income reached RMB 27.1 million, operating income reached RMB 28.6 million, and operating margin reached 4.6%. Even under the impact of seasonal factors of the Chinese New Year, our cash balance remained relatively well preserved at RMB 416.4 million. Looking back at the first quarter of 2021, We had net loss of RMB 121.9 million, operating loss of RMB 129.5 million, and operating margin of minus 24.3%. We were able to accomplish this operational results mainly because we have been adopting and executing our sound continuous strategies effectively and efficiently. Both adult professional education and childhood and adolescent quality education businesses achieved revenue growth and continued cost reduction in the first quarter of 2022.
spk03: 一方面,我们在今年的第一季度总净收入为6.235亿元,高于上一季度我们给出的收入指引,较2021年同期的5.338亿元同比增长了16.8%。 其中,可喜的是,我们 的成人IT职业教育业务从实增长。 Q1 2021 Q2 2021 Q2 2021 Q2 2021
spk06: On the one hand, our net revenues in the first quarter of this year was RMB 623.5 million, which was higher than the revenue guidance we gave in the previous quarter, and was 16.8% higher than the net revenues of RMB 533.8 million in the same period of 2021. Among them, we are glad to see that the adult professional education business renewed year-on-year growth of 5.5%, The childhood and adolescent quality education business has seen positive year-over-year growth for seven consecutive quarters since the outbreak of the pandemic, with a 27.2% year-over-year increase in the first quarter of 2022. The increase in net revenues led to the increment of productivity per capita by 22.1%, from about RMB $52,000 in the same period last year to about RMB $64,000 in the first quarter of 2022.
spk03: On the other hand, our long-term adherence to the strategies of improving operational efficiency and reducing costs has enabled us to reduce our cost of revenues and operating expenses,
spk06: by 10.3% in the first quarter of 2022 compared to the same period of 2021.
spk03: In the first quarter of 2022, our gross profit reached RMB 358.9 million, an increase of 43.6% compared to RMB 249.9 million in the same period of last year.
spk06: with work margin increased by 10.8 percentage points to 57.6%.
spk03: 接下来和大家介绍一下成人IT职业教育业务的情况。 Next, I want to introduce the performance of our adult professional education business. Improving the business structure, lowering costs, and improving operation efficiency and productivity are always the management strategies of our adult IT professional education business. In the first quarter of 2002, our number of returnees was 2.93 million. In the first quarter of 2021, the number of returnees decreased by 5.5%. Although the number of returnees has decreased, the net income of the business is 2.696 billion yuan. It is always our business strategy for adult professional education business to optimize business structure, reduce costs,
spk06: and uplift operational efficiency and capacity. The number of students enrollments in the first quarter of 2022 was 29,300, down 5.5% from 31,000 in the same period of 2021. Despite of the decrease in the number of student enrollments, net revenue reached RMB 269.6 million in the first quarter of 2022. up 5.5% from RMB 255.5 million in the same period of 2021. This was mainly attributable to the adoption of our product strategy of exploring the whole life cycle of users and adding more short-term courses, which attracted students to make repeated enrollments in different courses and thus increase our revenue.
spk03: We have developed a new approach
spk06: We continue to make great progress in managing and controlling the cost of revenues and operating expenses, which were 15.0% lower than that in the same period in 2021. 二零二年的第一季度成人职业教育的业务毛利为1.842亿元。
spk03: Compared to the first quarter of 2021, 1.525 billion yuan has risen by 20.8%, and the interest rate has reached 68.3%. Compared to the same period of 2021, 59.7% has risen by 8.6%. At the same time, adult businesses have achieved operating profits for four consecutive quarters.
spk06: The gross profit of adult professional education business in the fourth quarter of 2022 was RMB 184.2 million up 20.8% from RMB 152.5 million in the same period of 2021. The gross margin was 68.3% up 8.6 percentage point from 59.7% in the same period of 2021. Meanwhile, the adult professional education business has achieved operating income for four consecutive quarters. 2022年第一季度末,成人职业教育业务的中心数量相对于2021年第一季度末净增加了三个,同时中心的单产也得到了提高。
spk03: At the end of the first quarter of 2022, the number of learning centers for adult professional education business increased by a net of three compared to that at the end of the first quarter of 2021, while the net revenue per learning center also improved effectively.
spk06: with the average revenue per learning center increasing by 5.5% from approximately RMB 2.56 million in the first quarter of 2021 to approximately RMB 2.70 million in the first quarter of 2022. In the first quarter of 2022, the six-month postgraduate job placement rate remained at over 90%. Our long-term stable tutoring quality and good job placement results have provided strong evidences to demonstrate that our adult professional education business has the ability to deliver high-quality products and services in the market.
spk03: 接下来,我和大家介绍一下我们青少年科技素质教育业务的情况。 Next, I would like to introduce our childhood and adolescent quality education business. 二零二年的第一季度 The net income of the youth quality education industry is 3.539 billion yuan, which is 27.2% higher than the 2.783 billion yuan in the first quarter of 2002. The number of returnees has increased from 13.55 million in the first quarter of 2021 to 17.31 million in the same period of 2002, which is 27.7% higher. The number of newly enrolled and postgraduate students increased by 4.26 million from 2.98 million in the first quarter of 2021 to 43%. The ratio of postgraduate and postgraduate students has continued to increase from 64.7% in the first quarter of 2021 to 74.4% in the first quarter of 2022. In the first quarter of 2022, the net revenue from childhood and adolescent quality education business was RMB 353.9 million, up 27.2% compared to RMB 278.3 million in the same period of 2021.
spk06: The number of student enrollments increased from 135,500 in the first quarter of 2021 to 173,100 in the first quarter of 2022, up 27.7%. The number of new contracted students, including new registered students and renewal students, was 42,600 in the first quarter of 2022. up 43% from 29,800 in the same period of 2021. Among them, the proportion came from student renewal and word of mouth promotional activities continued to increase up 9.7 percentage points from 64.7% in the first quarter of 2021 to 74.4% in the first quarter of 2022. the good student satisfaction rate ensure that in the first quarter of 2022, the renewal rates of students who have enrolled for more than one year was over 83.4%.
spk03: The number of students studying in single-center schools increased from 574 in the US center last year to 737 in the US center in the first quarter of 2022. The average income of the first quarter of single-center schools rose from about 1.18 million yuan last year to about 1.51 million yuan in the same period in 2022.
spk06: The number of learning centers for the childhood and adolescent quality education business decreased by a net of four from 236 at the end of the first quarter of 2021 to 232 at the end of the first quarter of 2022. However, the number of student enrollments per single learning center increased from 574 in the first quarter of 2021 to 737 in the first quarter of 2022. The average net revenue per single learning center increased by 27.7%, from about RMB 1.18 million in the first quarter of last year to about RMB 1.51 million in the first quarter of 2022. 伴随着收入的增长,2022年第一季度,
spk03: In the first quarter of 2022,
spk06: With the growth of net revenue by 27.2% year-over-year and the reduction of cost of revenues by 0.9% year-over-year, gross profit of childhood and adolescent quality education increased by 79.3% year-over-year, and gross margin reached 49.4%, up 14.4% year-over-year.
spk03: Finally, in review of our operations in the first quarter of 2022
spk06: Our core competitive advantages are backed by the constant optimization and upgrading of our business procedures and processes, which include our online-merge-offline customer acquisition model and omni-channel service delivery capability. This ability was tested in the first quarter. When we kept the business running smoothly, even with a resurgence of COVID-19 cases emerged in certain areas in China,
spk03: Looking ahead, we will continue to focus on the core advantages of adapting
spk06: or adaptation of the online-merge-offline model to develop and deliver our comprehensive products, offline learning center operation capability, and customer acquisition capability to continually improve operational efficiency and maintain positive and healthy development. 借此機會再次感謝大家一直以來的關注和支持, I want to take this opportunity to thank you all again for your continued attention and support.
spk03: So I'd like to turn the call to Kelvin, our CFO, who will share with you the first quarter of 2022 financial highlights. Thanks. Thank you, Lindsey.
spk05: Now, I would like to take you through the first quarter of 2022 financial highlights. Total net revenues increased by 16.8% to RMB 623.5 million in the first quarter of 2022, from RMB 533.8 million in the same period of 2021. Net revenue from childhood and adolescent quality education business increased by 27.2%, to RMB 353.9 million in the first quarter of 2022, from RMB 278.3 million in the same period of 2021. The increase was primarily due to increase in student enrollments from 135,500 in the first quarter of 2021 to 173,100 in the same period of 2022. Net revenue from ADDO professional education business increased by 5.5% to RMB 269.6 million in the first quarter of 2022, from RMB 255.5 million in the same period of 2021. The increase was mainly attributable to the increase in certificate revenue, partially offset by drop in student enrollments from 31,000 in the first quarter of 2021 to 29,300 in the same period of 2022. Cost of revenue decreased by 6.8% to RMB 264.6 million in the first quarter of 2022, from RMB 283.8 million in the same period of 2021. The decrease was primarily due to decline in personnel related costs resulting from decrease in the accrual performance-based performance, and decrease in depreciation expenses. Gross profit increased by 43.6% to RMB358.9 million in the first quarter of 2022, from RMB249.9 million in the same period of 2021. Gross margin, which is equal to gross profit divided by net revenues, was 57.6% in the first quarter of 2022, compared to 46.8% in the same period of 2021. The increase in gross margin was primarily attributable to the increase in net revenues and decrease in cost of revenues in both travel and adolescent quality education and adult professional education businesses. Total operating expenses decreased by 12.9% to RMB330.3 million in the first quarter of 2022, from RMB379.4 million in the same period of 2021. Total non-GAAP operating expenses, which excluded share-based commercial expenses, decreased by 11.8% to RMB328.9 million in the first quarter of 2022, from RMB372.7 million in the same period of 2021. Total share-based compensation expenses allocated to operating expenses decreased by 79.1% to RMB1.4 million in the first quarter of 2022, from RMB6.7 million in the same period of 2021. Selling and marketing expenses decreased by 19.3% to RMB 172.4 million in the first quarter of 2022, from RMB 213.8 million in the same period of 2021. The decrease was mainly due to decrease in personnel-related costs resulting from the drop in the number of sales staff and decline in advertising expenses in the first quarter of 2022 as compared to the same period of 2021. General and administrative expenses decreased slightly by 1.1% to RMB 141.6 million in the first quarter of 2022, from RMB 143.2 million in the same period of 2021. Research and development expenses decreased by 27.3% to RMB 16.3% in the first quarter of 2022, from RMB22.5 million in the same period of 2021. The decrease was mainly due to decrease in personnel related expenses in the first quarter of 2022. Operating income was RMB28.6 million in the first quarter of 2022, compared to operating loss of RMB129.5 million in the same period of 2021. Non-GAAP operating income, which excluded share-based compensation expenses, was RMB 30 million in the first quarter of 2022, compared to the non-GAAP operating loss of RMB 122.6 million in the same period of 2021. The company recorded an income tax expenses of RMB 5.4 million in the first quarter of 2022, compared to the income tax benefit of RMB 7.4 million in the same period of 2021. The increase in tax expenses was mainly because the company has made profits in the first quarter of 2022. As a result of the foreclosings, net income was RMB 27.1 million in the first quarter of 2022, compared to net loss of RMB 121.9 million in the same period of 2021. Non-GAAP net income which excluded share-based commissioning expenses was RMB28.5 million in the first quarter of 2022, compared to the non-GAAP net loss of RMB115 million in the same period of 2021. Basic income per ordinary shares was RMB0.48 in the first quarter of 2022, compared to the loss per ordinary shares of RMB 2.17 in the first quarter of 2021. Diluted income per ordinary shares was RMB 0.47 in the first quarter of 2022, compared to loss per ordinary shares of RMB 2.17 in the first quarter of 2021. Non-GET basic income per ordinary shares, which excludes share-based compensation expenses, was RMB 0.5. in the first quarter of 2022, compared to non-GAAP loss per ordinal shares of RMB 2.05 in the first quarter of 2021. Non-GAAP diluted income per ordinal shares, which exclude the share based on compensation expenses, was currently 0.49 in the first quarter of 2022, compared to data to non-GAAP loss per ordinal shares of RMB 2.05 in the first quarter of 2021. Net cash outflow from operating activities in the first quarter of 2022 was RMB 18.9 million. Capital expenditures in the first quarter of 2022 was RMB 10.6 million. In terms of financial guidance, based on our current estimates, total net revenues for the second quarter of 2022 are expected to be in the range of RMB 600 million and RMB 630 million, which represents an increase of 3.1% to 8.2% as compared to the net revenues in the second quarter of 2021. After taking into consideration the seasonal population factors and the likely continuous impact of the COVID-19, this guidance is based on the current market conditions and reflects the company's current and preliminary estimate of market and operating conditions, which are subject to change, particularly as to the potential impact of COVID-19 on the economy in China and elsewhere in the world. This concludes my financial highlights section. Operator, we are ready for questions.
spk04: Thank you, management. So, ladies and gentlemen, if you'd like to ask a question to the management, please press 01 on the telephone keypad. To cancel, please press 02. Once again, to ask a question, please press 01. To cancel, please press 02. Once again, please press 01 on your telephone keypad if you want to ask questions. Our first question comes from Dave. Please go ahead.
spk01: Thank you for your question.
spk03: Yes, it is. Indeed, the new season has an impact on the education industry due to the impact of the Lunar New Year month. So it is indeed the beginning of the education industry. But this year, we have made a significant breakthrough in our management. Even in the beginning, we also gained profit. So this profit is mainly due to two aspects.
spk06: Right. So there's a question from a gentleman. First of all, congratulations to Terena's outstanding performance in the first quarter, making net gains. And as we all know that normally the first quarter in China's market would always be a off season for the education industry. So what are the breakthroughs, but what were the breakthroughs made by Terena in this respect? And Nancy's answer is that first, thank you very much indeed. The first quarter in China's market is always an off-season for education business because we have the Lunar China New Year happened in January. However, we did make a lot of breakthroughs in terms of business operations, which can be divided into two categories. 那么我们的盈利主要得益于两方面。
spk03: And the first thing is that our gain comes from the decreasing, or shall we say the continuous decreasing of the cost as well as the expenses all the way since last year.
spk06: investors as a solid foundation for us to achieve gains. To our delight, since Q1 of this year, we have seen a positive growth rate for our adult professional education business, as well as our childhood and adolescent quality education business. And by the way, our childhood and adolescent quality education business has been increasing for seven consecutive quarters. 另外非常可喜的是,我們的成人業務在今年的第一季度也實現了收入的增長。
spk03: By the way, our adult professional education started to increase its income as well as its profit
spk06: since Q1 of this year. So let me break it down. What would be the reason for the positive growth for our childhood and adolescent quality education business as well as our adult professional education business? First of all, let's talk about childhood and adolescence. Actually, the increase and the positive growth rates for our childhood and adolescent quality education business is attributable to our high quality product as well as services. which resulted in high renewal and retention rates. For our adult professional education business, it is also attributable to our long-term digging for the lifetime value of our users, which leads to more repurchase rate and better satisfaction. And that serves as the foundation for so many breakthroughs that have been made for our adult professional education.
spk03: So to sum up, all of our breakthroughs and gains
spk06: are indispensable with the satisfaction rate of our customers and users. So here on behalf of the management, I would like to send our heartfelt appreciation to the continued focus and attention paid by our investors. We know that you guys want us to make more breakthroughs and achieve more gains. And we also hope that we can continue stepping up our efforts to live up to your expectations.
spk03: So thank you very much, David, for your question.
spk06: I hope I answered your question.
spk04: Thank you. There are no questions on the line at the moment. So ladies and gentlemen, if you'd like to ask a question, please press 01 on the telephone keypad. question is from Sam. Please go ahead.
spk00: Hey, good morning. Good evening over there in China. Thank you for your presentation. My question is regarding the offer that was made by the founder maybe a year and a half ago, two years ago. At that point, you know, the coronavirus and the education space in China being uncertain and It seemed like a good deal. It seemed like something the company was interested in. Now that, you know, with the hard work of the Tarina team, there's actually a profit being turned. Is that something, you know, you can disclose anything regarding if there's still interest in selling the company, taking it private, or now that there's actually profit and things are moving in the right direction, does the team prefer to just continue to build So I guess just to summarize, my question is, now that there is a profit, what are the plans for the future with regards to that? Thank you.
spk06: Okay, Sam just asked a question. First of all, good morning or good evening. First of all, thank you for the introduction. I remember two years ago, when the COVID-19 outbreak just broke out, China's education industry is also full of uncertainty. At that time, we heard that Terena's team wanted to privatize or sell the company. But now we see that the company's business is starting to profit. I would like to ask if we still have this idea, or do we continue to move forward with the current business steps and business steps? And now that we have started to profit, what are our future plans?
spk03: All right, this is Nancy. And first of all, let me say thank you for that question. Actually, we think this is a two-part question.
spk06: And let me first share with you our long-term continued strategy for our businesses. And then I will hand over to Kelvin, our CFO, to take the question on the financial side.
spk03: We found that First of all, regarding our two businesses, they are turning profits. They are very profitable, and they are moving in a very healthy manner.
spk06: And we have already figured out the rationale and the logic of how to maintain this momentum. And we know how to improve the income for our adult professional education, as well as our childhood and adolescent quality education business going forward. So we have every confidence to continue the business in the future.
spk03: We are at a stage where professional education is being strongly encouraged. Our adult business will have many new opportunities in the field of professional education. Under the encouragement of policies, our adult business development will also have better confidence. At the same time, our children's business advanced technology courses are also included in Chinese elementary and high school students. So as we all know that the Chinese government has really stepped up their efforts to promote vocational education development in China.
spk06: So we believe there will be more opportunities for our adult professional education, and we are very confident because there are policy support in the future. Regarding our childhood and adolescent quality education business, actually some of this business's products have been included in the curriculum for some middle school and primary schools in China. So I believe that this will gain more positive feedback for us in the future.
spk03: And for the time being, indeed, COVID really has some impact on our businesses in some regions and areas in China, but those impacts are quite marginal. Meanwhile, we have our business scattered around all over China, so
spk06: a small portion of impact will not impact the whole picture of our businesses. And meanwhile, we have this online-merge-offline model to develop and deliver comprehensive products, so there's no issue for us. So hope you're happy with my answer regarding the business strategy side. And now over to Kelvin, our CFO, to share with you the financial side.
spk05: Hi Sam, this is Kelvin. Thanks for the question regarding the prioritization. What I can say right now is we do not receive any offer regarding prioritization at this moment. So, of course, I think later, if we receive any prioritization offers, we will make an immediate announcement, according to all those rules of recognition issued by SEC or NASDAQ. So, I can confirm there's no offer at this moment. Thank you.
spk06: Once again, if you'd like to ask any questions, please press 01 on the telephone keypad.
spk04: There are no questions on the line. If you'd like to ask any questions, please press 01 on the telephone keypad. Since there are no questions on the line at the moment, I will pass it back to the management.
spk02: Thank you, operator. If there are no further questions at present, we would like to conclude by thanking everyone for joining our conference call. We welcome you to reach out to us directly by emailing at irittdu.cn. If you have any questions or request for additional information, we encourage you to visit our investor relations site at ir.edu.cn. Thank you.
spk04: Ladies and gentlemen, that does conclude our call for today. Thank you for your participating. You may all disconnect.
Disclaimer