17 Education & Technology Group Inc.

Q3 2021 Earnings Conference Call

1/18/2022

spk_0: good evening and good morning ladies and gentlemen thank you for spending by for seventeen attacks took quarter two thousand and twenty one earnings conference call but the time or party's been taught in listen only mode after the minutes and prepare a month they'll be a question and answer session as a reminder to date conference call is being recorded are now attend a meeting over to your hosts for today's cool bit of raymond weil seventy at text investor relations director peter pussy raman
spk_1: then he operator hello everyone and thank you for joining us today are you really have that was it to build it earlier today and it available on our i our website on a call with me today i'm bitter and eatonville of ponder tamil and it's chief executive officer admit their my coat child there her as a chief financial officer and you will walk you through our laid his bed that a brahmin and strategies followed by michael who will get cut our financial performance they will be available to answer your questions during two una fantasia after their prepared remarks people we begin i like to remind you that the conference call content forward looking statements as defined in section twenty eat up the security act and act up nine he that thirty four and the u f private securities litigation reform act up and he might by it forward looking statements on faith or palm as been carded it back taser the and the current market and operating conditions and or relate to ubuntu that he involved know all and know rate and started his and other factors all of which are difficult to predict and the many of which are beyond the man been control this rule may cost the company the after without for from as our our achievements to differ materially for the you for me sir regarding this and other read good a third and his of factors is included in the company binding with the u at the thief the company that not undertake any obligation to update and a ball game they had been as a result of new information future us or otherwise example as required and of the global law is he now my pleasure to introduce our chairman and chief new fact the opposite andy people had
spk_2: thank you remember
spk_3: hello everyone
spk_2: and people join us while we're in court today
spk_4: i will like likely not was numb up the of the company the comedy has the offering to front of it is related to examine subject to to do with booted from kindergarten through that last year of senior high school he mainland china by the end of one to twenty one to comply with the opinions on fuller a olive eating the burden of homered and up who to front of food and he can pump compulsory education also known as the double reduction policy and app applicable rules regulations and matters at the time we how quickly form new business madrid in response to the new regulatory environment leveraging our extensive knowledge and activity accumulated through their retired education authorities who's teachers and student over the past dagger we have adapted a button and up and i beat him to focus on poopy with the area hurt who are in school business we loved our new teaching and learning
spk_5: teaching end up
spk_4: brute who are into been that we launched our new teaching and learning thoughts offering as and operate the our previous in school products and services the new offering a theme that facilitate the digital transformation an upgrade a tiny school with a focus on improving the efficiency and effectiveness of court teaching and thirty now i will not give homer simon and being school teaching second wow op is food business we have started to operate across my self directed learning product it's funny that family as a substitute for the original up is due to from diverted that we offered historically the product delighted our work modi and been happening site to provide personalized and it's learning and at the tide confident that it be that improving students learning efficiency this is not a tutor activities and it's consistent with some of the key concept of the lot of is a wonderful keep that is lifted by the ministry of education be under offered for the implementation of the opinion now let me explain in detail the logic and the program while good the transformation and how the two businesses beat the new era of either markets and you the need both in in school and up the good second on the think oocyte we are being three blink themes driving the development of the in the fridge for china's education if i'm a teeth and he got in twenty twelve while the government published the blueprint of the three accepted and to plus one under the initiative the goblin took the lead to improve into the infrastructure and butte multimedia costume phone booth by twenty in school network infrastructures for online or digital teaching were mostly in place he with a beard the government release the word clan version few point the url for at peace and beautiful different which aims to achieve three equal coverage of you improvement and one flight one he then the focus of the a decent people motivation market has shifted from education infrastructure to digital tools who teaching and management as well as digital teaching resources to buda internet cloth educated black one that is aimed at improving peachy readout and efficiency according to estimates based on numbers from national bureau of statistics china the atty budget for education bit physician restarting be three had to pull people and in twenty twenty under the backdrop of education it beautiful be cumbersome to two point zero boom would believe the growth trajectory will continue in the next few years at china's gdp big fan second educated people but eaten investment the every generally or into two categories one teaching and learning the leaders and to the other not the first category includes hardware and software which to directly using teaching alerting that including teaching alerting management that them a typical example is our homework management system that allows schools and teachers to evaluate it checks mastery of different knowledge points through humbert in a sign personal life homer accordingly with the court food hardware and software one the two categories investment in teaching and learning related at pretty informative vision of definitely picking up and been creeping sheer in the ad you budget the earlier years the purchase of none to cheat alerting hot we are worth the biggest the component third in recent years without oh to observe the did he alerted related digital products shifted away from mark classroom and pick them mucking towards homered books is teaching and learning product that's what direct result of a few key changes in the education for last week and got mine from the military of education first let it's commitment restriction argue the exam and promotion of homered at the main tool to evaluate good atomic performance second that need for of the one information based the them to achieve the personal life and death pie humbert promoted on gonna double reduction policy that i know lead it's curriculum dead dog doctors published in twenty twenty one which is it fresh every ten years put more effort side of union comprehensive academic competency in a more proactive party we should bite be during class in the form of in school in class exercise all of the would not help impossible with that historical mad you approach and greeted a third in the month for dedicated and comprehensive teaching and learning management system than turn around for murder and exercises that integrate both hardware and software homework what does become ideal scenario for you value it began learning program and accord to connect or other teaching and learning from the a roof and teaching madeline management our teaching and learning product focused on homework assignments and can generate data that enables comparison between classes as truthful a leopard car i'm pure with this may get a very powerful tool for to group it hosts to manage the teaching for with the school and to education officials to take on the teaching benjamin on his with level a also reduces the burden of both teachers and students as it is going to improve because the of homer simon at related to teaching and learning nervous
spk_6: this had opened up the normal business opportunity costs for the technology the the inside congress and bright power we have gained through the procedure vested in hulbert at the development we have been to the bad number of regional education authorities who become a partner of to of homered to seating and learned
spk_4: him at that some the right one different decline
spk_7: he the posse years we help provide more is exhibited on la free of charge this is now have a new tg alerting such offered have paid product which integrates for software and hardware he what package and also featured the that we would recommendation and all of that he added function and peter to the neither
spk_4: an education operated crickets are mostly made by the district educational for eighty on behalf of a group of our product offering of the on either combination of a number of the light the mode use covering classrooms quotes from bank homer time and self directed learning and multi role reporting to suit to the need of different computers we are also theme in creeping acceptance of the fact that sort of through the to crutches moto by government the that a lot more prominent one time of the weird construction product which was more common be done teaching and learning related investment today we have successfully answers in depth cooperation with a number of regional education operated cross multiple discreetly china including junk i mean on district and beating he can be tricked which among the tank paid is lucky by the ministry of education general of it's for that implementation of the opinion project of different skills are already being implemented using our teaching and learning that product across more than fifty feet it hurting to have a new business model for the optical business as we all know charlie probably put you on a precise of student education before the double reduction policy such efforts it and the were mostly testified by up to put you through services which created a huge market some estimates it to be large larger or in be one really the new
spk_5: regulation out a map of they changed the supply in the nature of products
spk_4: in education industry mcnulty month in the market previous the proposed by matthew promoting campaign were in indeed discouraged by some degree but with the mean trump call you the truth remains intact and deeply on third with the heidi affected jupiter to that the good news is that such you the he had to be more with edith due to the tablet reduction policy google cases a weekend which used to beat the major battle views for the up is would you through services will for the first part that inducted become family ties in a vacuum of tutoring services during the two must break and all subsequent holiday and we can pm with chinese parents will be urgent need for high quality the directors thirty content to keep the acute and occupied to address leave me with thought it offered a person like directive learning products to find it somewhat this product is based on our premium congdon and things like into seated learning purpose and difficult it is he died with a court aim to be compliant with new regulatory environment being a nutshell it is a self directed learning calculate like product that supplement to study of robbery a bit of to and each month or were you that will repeat people mature to package consisting of a cop the mice exercises based on the up her so ecstatic profile diversified learning expand it's dirty reduce the have the education magazine the the monthly package provides the basic materials and adamant for parents to guy that you is learning program the court concluded of our self directed learning product is a personalized and targeted exercise that populated every month before last month learning progress and witness what's up with our in cooper's miss a woman over the last second we have accumulated huge educational content and the to and this with level data being such a cough trainer which he was a deep understanding about our users in the concept of local you them though that we can develop personalized a quick i spoke to beat the needs he this and we help the guy that set up effective the some the motor the to to to develop to self directed loading up in the be well we ought to allocate a personal learning butler to each of the other users a provide them with learning customize the sun and guidance of of it group a loving partner customize learning with your roof and plan for with you there are monthly basis and a lot with the implementation of the learning thing
spk_8: our self directed learning product is charged for each subject and lot of fruits the grips of be but one subject is in the range of two thousand five hundred to three thousand barbie but here we expect that it will take some time for the market to get familiar
spk_4: with the new product format but we are happy to see more than thirty thousand paid subs records in the product things we launched the product around a month ago we believe that we have a strong competitive advantage with a new business model the advantage positron the news that paid you there could trust us from the look like the teaching causes massive data rub recommendations and a reputation we have up beautiful what a pissing years providing free in school homework the it is with the decadelong long active have accumulated that on in school side we quickly launch the new teaching and learning stock offering to provide personalized fitting that isn't as the person myself directed learning product in up pool business this is our trotman it has mission studies which is based on what we believe can best the leverage our depth in love x experience and expertise
spk_9: in the incubus at the industry is on the gory tremendous patrol missions the comedies that comply with new regulation and meet the changing you their knees will emerge from now i would turn the cold or with to michael or with the able to do to our leaders for network and thank you
spk_10: think family and thank you everyone for joining the false ha and i'll walk you through our financial and operating results
spk_9: but before i begin i guess one number i like to correct
spk_10: and things in there were my from andy is that their new paid subscription to our new off school self learning products over the last month is minus three hundred thousand on you use that instead of thirty thousand units
spk_9: an our continue with our our financial performance
spk_10: so please know that or financial daytime talk about will be presenting i be times
spk_9: however our like to note that the publication and enforcement of opinion and applicable rules have significantly impacted our business posing tons of slowing down our revenue rose as well as enlarging our losses
spk_10: on but subsequently we have adopted significant chance tavis model as shared by andy earlier and the all i ask school tutoring services which generated the vast majority our revenue was seized by the end of december two thousand and twenty one therefore i would like to remind everyone that the quoting a results we presented here should be taken with great care if you like to use is a reference of potential future performance
spk_9: and the the quarter results are subject to significant impacts from one off event due to the series of regulation and introducing a third quarter top twenty one and a corresponding adjustments talbot model our organization and our workforce and he has share that we have form of three a new business strategy for future growth and have made prop adjustment organization to accommodate a strategy the vast majority of adjustment that's needed to our operation and workforce and the dust so shaken one off expenses have taken place in the third quarter of and twenty one will be operating with a korea aim of quickly tiny profitable in the near term
spk_4: and of september thirties top twenty one our cash and cash equivalents
spk_9: for i'm be one point four billion or equivalent to two hundred and twenty one million us dollars we believe we have to be sufficient capital to support the transformation of of business and to grow our new businesses
spk_10: for the results of the third quarter top twenty one or we achieve a continuous topline gross despite the regulator impact now revenue increased by sixty two percent year over year to on before hundred ninety seven million of their quota top twenty one and increase by hundred zero three percent year over year to army
spk_9: he once had one thousand six hundred and forty two million in a first name of of top twenty one
spk_0: now revenues from are likely to talk to trace so this is increased by sixty six percent year over year to rb four hundred seventy eight million the third quarter of town twenty one and increase by a hundred and thirteen percent year over year
spk_9: to around i be one point six billion in the first nine months of the grass bill and i'm online key to talk to three services which is and and gap measure decreed by thirty five percent year over year to i be three hundred and two million of they put out on twenty one and increased by fifty six percent year over year to on be one point six seventy five billion in a first name us of top twenty one the slow down was probably due to the impact of double reduction policies during the summer vacations are doing a third quarter
spk_11: pay crossing romans decrease by forty two percent year over year to two hundred twenty six thousand a month third quarter of town twenty one and increase by sixty seven percent year over year to them or to one thousand nine hundred and fifty two thousand in the first nine months of top twenty one that decreasing a bra spelling and pay coughing romans in their quota was probably as a result of the adverse impact of a double reduction policy introducing july
spk_9: a new student acquisition average am a use of in school applications for students increased by thirty percent year over year to eleven point seven million the third quarter town twenty one and a decrease by ninety percent to fifteen point seven million in a first name of uptime twenty one
spk_10: the year over year decreasing the a you was actually go to the publication enforcement of the regulations
spk_9: in addition to our revenue growth operational efficiency continue to improve in a third quarter and a first name out of town twenty one men gap adjusted net loss which ex cuse share based compensation expensive was on before hundred fifty seven million if they're caught up to twenty one compare with the just an adjusted net loss of i'm be five hundred twenty one million of they put out on twenty anyways i'll be one one point two six billion of first nine months of time to one compare with on be a hundred forty nine million a first name on some time twenty men gap adjust now loss as a percentage of rapid net revenue was inactive ninety one point nine percent in their quota top twenty one
spk_11: yeah narrow from active while hundred sixty nine point six percent the first a third quarter of time twenty all was inactive seventy seven percent for the first nine months of town twenty one campaign was negative one hundred a while hunch
spk_10: five and point two percent in the first time on some time twenty
spk_9: next hour go to out there quarterfinals in greater detail now revenues why me four hundred ninety seven million which represented the year over year increase of sixty percent from on be three hundred and seven million a their quarter top twenty the increase was primary driven by an increasing a now revenues from all like a to talk to them services
spk_0: net revenues from a like a to talk to drink services i be four hundred seventy eight million up sixty six percent year over year from on be two hundred and eighty eight million in the quarter of town twenty and accounted for ninety six point one percent of our total net revenues
spk_9: they increase were primarily driven by an increasing pay causing romancing a second quarter of thousand twenty one as the curse spalding revenues were recognized in the third quarter of top twenty one pay causing romans were two hundred and twenty six thousand representing a decrease of forty two percent yale we're from approximately three hundred ninety three thousand games they caught up on twenty casa revenue was i'm be two hundred fifty one million which include a separate costs for instructor then to walk workforce
spk_10: due to the impact of the new regulations and representing an increase of seventy seven percent year over year from on be one hundred forty two million if they're caught up on twenty thing korea was primarily due to the increasing conversation cause for instructors tutors as well as
spk_11: which was largely in line with the girls how net revenues
spk_9: from allocate like a to talk to them services provided services to more students
spk_0: groth profit was i be two hundred forty five million were presenting a year over year increase of forty nine percent from a hundred sixty five million that their quota top twenty the increase was probably driven by increasing now ravaged cross father was forty nine point four percent compared with fifty three point eight percent of their quota time country
spk_11: the decrees would attribute to the severance costs a reduction staffing which was recognizing that they're caught on time twenty one as a result of being packed up the new regulations
spk_0: moving over to the expense side killed operating expenses windy seven hundred and forty four million including on be such a three million of share based composition expensive
spk_11: this are present a year over year increase of zero point eight percent from be seven hundred and thirty eight million of the quote on twenty
spk_9: code operating expenses a percentage of revenue was a hundred fifty percent significantly decreased from the two hundred forty percent in the third quarter of top twenty sales and marketing expenses while these three hundred and eighty nine million including seven million of champagne composition class this are present a year over year decreased of twenty two percent from on be four hundred ninety six million at they're caught out on twenty
spk_0: that decrees was primarily due to the decrease in granted of ties month and a promotional cause expensive
spk_11: which or partially offset by an increasing a salary and a welfare for sales and marketing personnel including severance costs for production of such personnel and if they're caught on to and twenty one
spk_9: due to the impact of a new regulation on the expenses for two hundred and one windy two hundred one million for presenting a year over year increase of such a one percent from on be one hundred fifty formulating if they caught up on twenty the increase was probably due to an increase aimed done several costs for reductions research and development personnel in the third quarter ton of twenty one due to the impact on the regulation the expenses also included tall building of share based company spacex that our jan a expenses while be one hundred twenty three million which includes i'll be forty mil ever champagne competition expensive it's are present a year over year increase of thirty eight percent from ninety eighty nine knowing that they could have have twenty again the increase was primarily driven by the severance costs for reduction of general and administrative person now in the stock lot of hunter was due to the impact on the new regulations his additional lining the been in a report eighty thinking that report that
spk_11: a impairments for property and act equipment right for to use the assets and rental deposits for the quarter of top twenty one in be thirty point eight million
spk_9: compare was new in the third quarter on twenty as a result of a change in regulating bombers in all education industry combined with financial performance
spk_11: we perform name's pam and assessment on the long term asset and recognizing pam and office in these items in the third quarter of top twenty one as a result that we have the
spk_9: they take some of the like tennessee lot of our operations why me four hundred ninety eight million compare was on the five hundred and seventy three million of so caught up on twenty loss from operations in a percentage of net revenues was inactive a hundred and three percent compared with negative a hundred eighty six point five percent of their quota on the this significant improvement on narrowing of losses was due to the improve many older operational efficiency is despite the regulation change now loss with i be four hundred ninety million narrow you from i be five hundred eighty one million of the corner top twenty men gap adjust the now last was on the four hundred fifty nine million compared was potty five hundred twenty one million their quota last year then get adjusted net loss as a percentage of net revenues was an active ninety one point nine percent narrowed from an active one hundred sixty nine one six the saying they're caught on top twenty
spk_11: as of september thirty a top twenty one cash and cache of cologne why be one thousand four hundred twenty two mullen compare was on be two thousand and eight hundred and thirty five million as of december thirty first song twenty we believe we have sufficient capital to support the transformational a business
spk_9: and to grow a new business and finally if fair revenue was five hundred forty three million as of september thirtieth top twenty one for presenting a decrease of night once truth from ninety five hundred ninety state million as of december thirty first some funny that decrees was primal actually go to the enforcement of double reduction policies affecting the news seen acquisition with that it can quote i'll prepared remarks or thank you
spk_12: operator we are now ready to begin a kenny session thanks
spk_0: i a pretty much ladies and gentlemen we would now be kinda question and answer session you feel like to ask questions on the phone kindly press dar one on your telephone and wait for a name to be in that if you like to cancel request please press the power or has key once again to ask question press dar one the obvious of silence while questions are being collected thank you for your patience as a reminder if you like to ask questions kylie press r one on the telephone away friend named vienna if you like to conceal request please press to paul or has key
spk_13: we have a questions from july of anthony reroute from we are holdings please ask your question
spk_14: would project with a subscription zero day
spk_0: up up up excuse me quit with your mind trip repeat your initial question you mean what subscription yet eight
spk_13: yes what are the projected subscriptions year to date with the new software that implemented you mentioned you had three hundred thousand nice subscriptions due to the
spk_4: new software that was launched
spk_15: yeah we have three hundred thousand and michael police the of the cotton and a the i will explain it ended up
spk_10: yeah i'm a
spk_4: as we a few in a process of actually
spk_10: car additional new users
spk_11: we don't actually at this stage or would we want his face provide ah accurate and you for cause for the total number of subscribers or we do have a coffee can that ah you know that this three hundred thousand actually came only through our one month period during the winter the case
spk_16: npr fashion or we do see the additional fashion show during the summer vacation probably will always have a council a crime you a student so we do have a confident that this number will continue to increase hiring a mining it difficult for us to provide an actor me ask me what whole yet i specially his business shooting at all
spk_17: the stage and but we do see
spk_13: cuddly hi
spk_10: excellent are those are month to month or they'll subscriptions with a year contract the three hundred thousand
spk_18: dad three hundred thousand as actually a combination of subsection of different land some of them are the shot his other quarter of a some a half years and now a small percentage of them are a new one
spk_0: excellent thank you thank you for the questions at a remind like you asked question please press star one on a telephone with friend named vienna and
spk_19: we have a new questions from the wild berry playing of to hitch dhabi company please go ahead thank you
spk_20: i had several questions first question is
spk_19: when the price of the stock dropped precipitously low last time you do the reverse split second play by changing the number of eighty hours stock is approaching that level again and i was wondering a planning to do that again because it was very detrimental to the price of the stock
spk_21: we currently have no plan to do further our reverse thoughtfully
spk_19: k my next question is with the
spk_22: transferring of a lot of chinese equities hong kong
spk_9: do you believe it shall be able to keep the equity listed in the united states have you believe it will be transferred only time
spk_10: their future
spk_9: we have been keeping i'm very close eye on the policy and also the regularly thing comments a relating to fcc as well as us live feed environments
spk_19: it is our current plan to continue to remain listen and be complying was relevant rules and regulations are from se si at this stage we don't have any plans to migrate are less these from us to hong kong or have dual lesson plans my next question is do you plan on doing
spk_23: i guess they call roadshows yemeni any coming to the united states
spk_9: into investors
spk_10: meeting with them
spk_11: we're trying our best time to me it's in bath and or through web cards or online or be huge or video conferences
spk_19: physical traveling might be difficult given the calvi see scenarios around the world apologies for that
spk_9: yeah my last question is
spk_4: are you planning to have to sell any additional equity cash that will hold you for the foreseeable future
spk_9: yeah i'm as we should only by be as of september thirty thousand twenty one our cash and cash equivalents were on what around on be one point four billion or around us all of two hundred and twenty million and as we've also shed ali and that are we have
spk_10: try to a we have complete the vast majority of our just to our business model our nation our workforce and including a large chunk of one off expenses in the third quarter which is this quarter the did financial results on any we do have a plan to ah
spk_9: typically increase the house financial house and profitability of a business aiming to quickly turning profitable all breaking even in the near future so with that amount of cash and ah more ah hire a more stringent
spk_11: control our manager house we do have confidence that ah
spk_0: the existing cash balance will be sufficient flout a transformational a business therefore at this stage we don't have any plans to raise addition equity
spk_24: thank you for the questions
spk_0: yeah no more questions on the line on my to conclude today's meeting thankyou management and thank you all participants to tommy you may now disconnect your lines him the
spk_1: good evening and good morning ladies and gentlemen thank you for standing by for seventeen attacks took quarter two thousand and twenty one earnings conference call at the time or party's been taught in this only mode after the minute and prepare a month they'll be a question and answer session as a reminder to date conference call is being recorded are now attend a meeting over to your hosts for today's cold bitter raymond weil seventy at text it better relations director peter but he bremen then he operator hello everyone can thank you for joining us today are already have really have that was it to build it earlier today and it available on our i wear tight on a call with me today i'm bitter and eatonville of ponder tamil and it's chief executive officer admit their my coat child to there her as chief financial officer and you will walk you through our laid his bed with a brahmin and strategies followed by michael who will get caught our financial performance they will be available to answer your questions during the two and they have sir after their prepared remarks people we begin i like to remind you that the conference call content forward looking statements as defined in section one he he up the security act and act up and i'm here that thirty four and the u f private securities litigation reform act up and he might have by it forward looking statements on faith a palm as been carded it back taser the and the current market and operating conditions and or relate to ubuntu that the involve know all and unknown rate and started his and other factors all of which are difficult to predict and the many of which are beyond the man been control this with may cost the company that after without for from as our our achievements to differ materially bother you for me sir
spk_2: regarding this and other rid of a third in his of factors is included in the company binding with the us as the thief
spk_3: the company that not undertake any obligation to update and a ball against they had been as a result of new information future you or otherwise except as required andor of the global law is he now my pleasure to introduce our chairman and chief in fact the opposite andy
spk_4: people had thank you remember hello everyone and people join us while or in court today i will likely not was numb up the of the company the comedy has the offering to front of it is related to a sammich subject to the do it with booted from kindergarten through that last year of senior high school he mainland china by the end of one to twenty one to comply with the opinions on fuller a oliver eating the burden of homered and ups who to bring both and you can pump compulsory education also known as the double reduction policy and app applicable rules regulations and matters at the time we how quickly form new business bedroom in respond to the new regulatory environment
spk_5: lowering our extensive knowledge and expertise accumulated through the retired education authorities who's teachers and students over the past dagger
spk_4: we have adapted a button and up and i beat him to focus on poopy the area hurt who are in school business we lucked out new teaching and learning teaching end up brute who are into been that we launched our new teaching and learning thoughts offering as them operate the our previous things school products and services the new offering a theme that facilitate from the digital transformation an upgrade of tiny school with a focus on improving the efficiency and effectiveness of court teaching and thirty now i will not give homework simon and beings school teaching second wow op is food business we have started to offer a proof my self directed learning product the chinese family as a substitute for the original up is due to from diverted that we offered historically the product utilizes our acknowledge the and been her insight to provide personalized and good it's learning and at the thought confident that it be that improving students learning efficiency little not a tutor activities and it consistent with some of the key concept of be lot of of a wonderful tank that is left is by the ministry of education be under offered for the implementation of the opinion now let me explain in detail the logic and the program while good the transformation and how the to businesses beat the new era of tie the market and you the deep both been in school and up the good government on the thing brucite we are being three link themes driving the development of the in the fridge for china's education if i'm a teeth and he got in twenty twelve while the government published the blueprint of the three thousand and two plus one under the initiative the government took the lead to improve the internet infrastructure and butte multimedia costume phone booth by twenty eight in school network infrastructures for online or digital teaching were mostly in place the with a beard the government release the word clan version few point the url for at peace and beautiful ideation which aims to achieve three equal coverage of you improvement and one flight one he then the focus of the a decent people motivation market has shifted from education infrastructure to digital tools who teaching and the management as well as digital teaching resources to buda internet cloth educated black one that it's aimed at improving peachy without and efficiency according to estimates based on numbers from national bureau of statistics china the you budget for education pittsburgh decent restarting be three had to put a bullet in twenty twenty under the backdrop of accretion it could be cumbersome to two point zero the boom would believe the growth trajectory will continue in the next few years at china's gdp big fan second educated people but eaten investment gallery generally for into two categories one teaching and learning the leaders and to the other not the first category includes hardware and software which to recruit using teaching alerting protested including teaching alerting management that than a typical example is our homework management system that allows schools and teachers to evaluate it checks mastery of different knowledge points through humbert in a sign personal life homer accordingly with the court approved hardware and software wonderful two categories investment in teaching and learning related at informant edition of definitely picking up and increasing share in the annual budget the earlier years the purchase of none to cheat alerting hot we are worth the biggest the component third in recent years without oh to observe the did he alerted related digital products shifted away from mark classroom and pick them mucking towards homered book is teaching and learning product that's what direct result of a few key changes in the education for last week and got mine from the military of education first let discouragement restriction of you the exam and promotion of homered at the main tool to evaluate good damage upon it second the need for of the one information beat the system to achieve the personal life and death pie humbert promoted i'm going double reduction policy that i know lead it's curriculum dundalk tenders published in twenty twenty one which is fresh every ten years put more effort side of union comprehensive academic competency and a more per active participation by and during class in the form of in school in cloth exercise all of the would not help impossible with that historical mad you approach and greeted a third in the month for dedicated and comprehensive teaching and learning management system center around for murder and exercises that integrates both hardware and software homer's what does become ideal scenario what you value it didn't learn program and accord to connect or other teaching and learning from the a roof and teaching madeline management our teaching and learning products focused on homework assignments and been generous data that enables comparison between classes as do with for leopard car
spk_2: on pure period this may get a very powerful tool for food group it toast to manage the teaching for with the school and to education a to take on the teaching benjamin on his with level a also reduce the burden of both teachers and students as it is going to improve because the of homer simon at related to teaching and learning
spk_4: nervous this had opened up the normal business applauded for for the technology the the inside congress and bright power we have gained through the party years vested in homework at the bottom and we have been to the bad number of regional education authorities who become a partner of tweets of homered cooker seating and learning by the at that some the right one different decline in the past three years we help provide mob is exhibited on lock free of charge this is now have a new tg alerting such offered have paid product which integrates both software and hardware he what package and also featured the that we would recommend and all of that he added function and peter to the be you the school and education operated crickets are mostly made by the district education authority on behalf of a group of our product offering of the on either combination of a number of the light the most use covering classrooms quotes from bank homer time and self directed learning and multi role reporting to suit and the need of different computers we are also seeing increasing acceptance of the thoughts of sorts of through the crocker modo by government is that a lot more prominent one time self aware construction project which was more common the done teaching and learning related investment today we have successfully answers in death cooperation with a number of regional education operated across multiple is in china including junk i mean on district and beating he can be tricked which i'm on the tank eight days left his by the military of a pittance general of it for the implementation of the peanut product of different skills are already being implemented using our teaching and learning that product across more than fifty feet it
spk_25: hurting to have a new business model for the optical business
spk_4: as we all know charlie probably put you on a precise of get an education before the double reduction policy such efforts it and the were mostly certified by up to put you through services which created a huge market some estimates it to be as large of or in be one trillion the newer relations out a massively change the supplies in the nature of products in education industry of the month in the market previous the provoked by matthew promoting campaign were indeed discouraged by some degree but with the mean you can't call you the truth remains intact and deeply under third with the heidi affected jupiter to visit the good news is that that you the leave and to be more we beat you to the tablet reduction policy google and a weekend which used to beat the major battle views for the up his who you through services will for the first part inducted become family time of back you have of tutoring services during the two must break and all subsequent holiday and the we can pm with charlie's parents will beat the urgent need for high quality of directors thirty content to keep their children occupied to address leave me with that it offers a person the directive learning product to find it somewhat this product is based on our premium congdon and things like into students learning purpose and difficult it is he died with a court aim to be compliant with new regulatory environment being a nutshell it if a self directed learning calculate like product that supplement to study of robbery admitted to the and each month or a you that will repeat of the to repackage consisting of a the mice exercise feet on the upper so ecstatic profile diversified learning to expand it's dirty reduce the have the education magazine the monthly package provides the basic material and adamant for parents to guy that you and learning program the court concluded up our self directed learning product is a personalized and targeted advertising populated every month before last month learning progress and witness what's up with our incubus miss a woman
spk_6: over the last second we have accumulated huge educational company and the to and district level data being such a cough china which he was a deep understanding about our users in the comfort of local you them though that we can develop personalized exec i spoke to beat needs
spk_4: he this and we helped the the setup effective the some the motor the to to to develop to self directed let it happen in the be well we ought to allocate a personal learning partner to each of the other you there's a provide them with learning customize a son and guidance of of it personal loving partners customize learning what your roof and plan for with you there are both basis and a lot with the implementation of the learning thing our self directed learning product is charged for each subject and lot of fruits the groups and be built one subject is in the range of two thousand five hundred to three thousand barbie but here we expect that it will take some time for the market to get familiar with that new product format but we are happy to be more than thirty thousand paid subs records in the product things we launch the product around the of months ago we believe that we have a strong competitor for the ones it with have a new business model the advantage positron from the news that paid you there could trust us from the look like the teaching compass massive data rub recommendations and the reputation we have viewed up for what a pissing years providing free in school homework
spk_9: it is with the decadelong i could have accumulated that on in school side we quickly launched the new teaching and learning stock offering to provide personalized fitting that isn't as the person myself directed learning product in up who business this is our truck more that patrol missions studies which is based on what we believe can best the leverage our debt in love axis experience and expertise in the incubus at the industry is undergoing tremendous patrol missions the cobbler's that comply with new regulations and meet the changing you their knees will emerge wrong now i would turn the call or with michael or with the apple to do to our leaders financial and thank you
spk_10: a family and thank you everyone for joining the for
spk_9: i and i'll walk you through our financial and operating results of before i begin i guess one number i like to correct and things in the remarks from andy is that go new paid subscription to our new off school self learning products over the last month is minus three hundred thousand on you use these kind of thirty thousand use
spk_10: in our continue with our our financial problem with so please know that order financial daytime talk about will be presenting i be times
spk_9: however our like to note that the publication and enforcement of the opinion and applicable rules have significantly impacted our business posing in of slowing down our revenue rose as well as enlarging our losses but subsequently we have adopted significant chance toby's model as shared by and earlier and the all i school tutoring services which generated the vast majority our revenue was seized by the end of december two thousand twenty one therefore i would like to remind everyone that the quoting a results we presented here
spk_4: should be taken with great care if you like to use is a reference of potential future performance
spk_9: and the the quoted a results are subject to significant impacts from one off event due to the series of regulation and introducing a third quarter top twenty one and a corresponding adjustments talbot model our organization and i'll workforce
spk_10: and he has share that we have form of three a new business strategy for future growth and have made prop adjustment organization to accommodate a strategy
spk_9: the vast majority of adjustment that's needed to our operation and workforce and the does so she one of expenses have taken place in the third quarter of talent and twenty one will be operating with the korea aim of quickly tiny profitable in the near term
spk_11: as of september thirtieth top twenty one our cash and cash equivalents were i'm be one point four billion or equivalent to two hundred and twenty one million us dollars we believe we have to be sufficient capital to support the transformation of a business and to grow our new businesses
spk_9: for the result of the third quarter top twenty one or we achieved continuous topline gross despite the regulator impact now revenue increased by sixty two percent year over year to on be four hundred ninety seven million their quota thought anyone and increase by hugger zero three percent year over year to rb one had one thousand six hundred and forty two million in a first name of a top twenty one now revenues from all like a to talk to trace of as is increased by sixty six percent year over year to rb four hundred seventy eight million the third quarter of town twenty one and increase by a hundred and thirteen percent year over year
spk_11: you around i be one point six billion in the first name of the grass billion i'm online key to talk to tree services which is and gap measure decreed by thirty five percent year over year to i be three hundred and two million they put out on twenty one and increased by fifty six percent year over year to on the one point six seventy five billion in a first name us of top twenty one the slow down was probably due to the impact of double reduction policies doing a summer vacations are doing a third quarter a coughing roman decrease by forty two percent year over year to two hundred twenty six thousand a month or quarter of turned twenty one and increase by
spk_9: sixty seven percent year over year to them two one thousand nine hundred and fifty two thousand in the first nine months of top twenty one that decreasing a bra spelling and pay crossing romans in their quota was probably as a result of the adverse impact of a double reduction policy introducing july the new student acquisition everyday i may use of things go applications for students increased by thirty percent year over year to eleven point seven million the third quarter town twenty one and a decrease by ninety percent to fifteen point seven million in a first name of of turned twenty one the year over year decreasing i'm a you was actually go to the publication enforcement of the regulations in addition to our revenue growth operational efficiency continue to improve in a third quarter and a first name out of town twenty one men gap adjusted net loss which ex cuse share based compensation expensive
spk_10: with on before hundred fifty seven million if they're caught up to twenty one compare with a just an adjusted net loss of i'm be five hundred twenty one million if they point out on twenty
spk_11: anyways i be one one point two six billion of first nine months of time to one compare with on be a hundred twenty nine million a first name on some time twenty
spk_10: men gap adjust the now lot as a percentage of rapid net revenue was inactive night you want one nine percent in their quota top twenty one
spk_9: yeah narrow from active one hundred sixty nine point six percent the fuss their quota of time twenty all was an active seventy seven percent for the first nine months of town twenty one campaign was negative one hundred and one hundred
spk_0: five and point two percent in first time on time twenty
spk_9: next i will go to out quarter quarterfinals in greater detail
spk_11: now revenues why four hundred ninety seven million which prevented the year over year increase of sixty percent from on the three hundred and seven million of their quota on twenty they increase was primary driven by an increasing a now revenues from all like a to talk to them services
spk_9: net revenues from a like a to talk to him services while audi four hundred seventy eight million up sixty six percent year over year from on be two hundred eighty eight million in a third quarter of top twenty and accounted for ninety six point one percent of our total net revenues the increase would primarily driven by an increasing pay causing romancing a second quarter of thousand twenty one as the corresponding revenues were recognized in the third quarter of top twenty one pay causing romans what two hundred and twenty six thousand represent a decrease of forty two percent yale we're from approximately three hundred ninety three thousand games they point out on twenty
spk_11: casa revenue was i'm be two hundred fifty one million
spk_9: which include separate costs for instructor that tutor walk for us
spk_10: due to the impact of the new regulations and representing an increase of seventy seven percent year over year from on be one hundred forty two million if they're caught up on twenty thing create was primarily due to the increasing conversation cause for instructors tutors as well as
spk_0: which was largely in line with the girls have net revenues from allocate unlikely to talk to them services provided services to more students groth profit was oddly two hundred forty five million were presenting a year over year increase of forty nine percent from one hundred sixty five million that their quota top twenty the increase was probably driven by increasing now ravaged cross modern was forty nine point four percent
spk_9: compared with fifty three point a pressing the quote on twenty that decrees was actually flew to the severance cause a reduction staffing which was recognizing if they're caught on time twenty one as a result of being packed up the new regulations moving over to the expense side to operating expenses windy seven hundred and forty four million including army thirty three million of share based conversation expensive this are present a year over year increase of zero point eight percent from ninety seven hundred and thirty eight million of the quote on twenty
spk_0: total operating expenses a percentage of revenue
spk_11: was a hundred fifty percent significantly decreased from the two hundred forty percent in the third quarter of top twenty sales and marketing expenses while these three hundred and eighty nine million including seven million of champagne composition class this this are present a year over year decrease of twenty two percent from on be four hundred ninety six million if they're caught out on twenty
spk_9: that decrees was family due to the decrease in at a five month and a promotional cause expensive which were partially offset by an increasing a salary and a welfare for sales and marketing now including the severance costs for production off such as now and if they're caught on to and twenty one due to the impact of a new regulation on the expenses for two hundred and one windy two hundred one million for presenting a year over year increase of thirty one percent from on be one hundred fifty formulating if they caught up on twenty the increase was probably due to an increase aim does several costs for reductions research and development personality the third quarter ton twenty one due to the impact on the regulation doggy expenses also a tall building of champagne companies they think smith
spk_11: our can a expenses why be one hundred twenty three million which includes i'll be forty mil over champagne compensation classes it's are present a year over year increase of thirty eight percent from ninety eighty nine knowing that their quarter of twenty
spk_9: again the increase was primarily driven by the severance costs for reduction of genuine a nice treat him personality the stock lot of hunter was due to the impact on the new regulations his additional lining the been in a report that eighty a that report that
spk_11: a impairments for property and act equipment right for to use the assets and a rental deposits for the quarter of top twenty one flaw be thirty point eight million
spk_10: compare with new in the third quarter on twenty
spk_9: as a result of a change in regulating balance in all education industry combined with financial performance we performing pam and assessment on the long term asset and recognizing pam and of is in these items in the quarter of top twenty one as a result that we have the they take some of the like tennessee
spk_26: lot of our operations windy four hundred ninety eight million compare was on the five hundred and seventy three million of though caught up on twenty loss from operations in the percentage of net revenues was inactive a hundred and three percent compared with negative a hundred eighty six point five percent of their quota saw twenty
spk_0: this significant improvement on narrowing of losses was due to the improve many older operational efficiency is despite the regulation change
spk_9: now loss would i ib four hundred ninety million narrow you from i'd be five hundred and eighty one million of the call of top twenty men gap a jesse now lost was on the four hundred fifty nine million compared was potty five hundred twenty one million their quota last year then get adjusted net loss as a percentage of net revenue use was inactive ninety one point nine percent narrowed from an active one hundred sixty nine one six the saying that they're caught on top twenty as of september thirty top twenty one cash and cash equivalents fly be one thousand four hundred twenty two mullen compare was on be two thousand and eight hundred and thirty five million as of december thirty first saw twenty we believe we have sufficient capital to support the transformational a business and to grow a new business
spk_0: and finally be fair babbling you was five hundred forty three million as of september thirtieth top twenty one for presenting a decrease of night wants to for them from ninety five hundred ninety state million as of december thirty first sound funny that decrees was primal actually to the enforcement of double reduction policies affecting dog new seen acquisition with that it can quote i'll prepare remarks on thank you operator we are now ready to begin a kenny session thanks for much ladies and gentlemen we would now be kinda question and answer session you feel like to ask questions on the phone kindly press dar one on your telephone and wait for an to the amount if you'd like to cancel request please press the power or has key once again to ask questions please press dar one
spk_13: they'll be a slut silence while questions are being collected thank you for your patience
spk_14: as a reminder a few like to ask questions kylie press r one on your telephone and with brand name to be an hour
spk_0: if you like to conceal request please press the power or has key
spk_13: we have a questions from july of anthony reroute from we are holdings please ask your question would have rejected a subscription zero day
spk_4: up up up excuse me quit would you mind trip repeat your initial question you mean what subscription yet eight
spk_15: yes what are the projected subscriptions year to date with the new software like implemented
spk_10: you mentioned you had three hundred thousand nice descriptions due to the
spk_4: new software that was launched
spk_10: yeah we have three hundred thousand and michael bluth the of the coffin and eight the i will explain it ended up
spk_11: yeah i'm a
spk_16: as we a few in a process of actually ah
spk_17: a car additional new users ah
spk_13: we don't actually at this stage or would we want his face provide ah accurate and you forecast for the total number of subscribers or we do have a confidence that ah you know that this three hundred thousand actually came only through our one month period during a winter vacation
spk_10: pr fashion or we do see the additional fashion show during the summer vacation probably will always have a council a crime you a student so we do have a confident that this number will continue to increase hi were in mining it difficult for us to provide an actor me ask me what whole yet i specially does business doing at all
spk_18: stage and but we do see
spk_0: i'm terribly high excellent are those are my to month or they'll subscriptions with a year contract the three hundred thousand
spk_19: dad three hundred thousand as actually a combination of subsection of different land some of them are the shot is odd the quarter of a thumb a half years and now a small percentage of them are a new one actual thank you
spk_20: thank you for the questions at every my like you asked question please press style one on a telephone with friend named vienna and
spk_19: we have a new questions when the why a berry playing of to hitch dhabi company please go ahead
spk_21: thank you gentlemen i had several questions first question is
spk_19: when the price of the stock dropped precipitously low last time you do the reverse split sect of lay by changing the number of eighty hours stock is approaching that level again and i was wondering a planning to do that again because it was very detrimental to the price of the stock we currently have no plan to do further reverse thoughtfully
spk_22: kate my next question is
spk_10: with the
spk_9: transferring of a lot of chinese equities hung do you believe that you'll be able to keep the equity listed in the united states and you believe it will be transferred only time
spk_19: your future we have been keeping on very close eye on a policy and also the regularly think promise a relating to as easy as well as us my feet environments if our current plan to continue to remain listen and be complying with relevant rules and regulations are from se si
spk_9: at this stage we don't have any plans to migrate are less these from us to hong kong or have dual lesson plans my next question is
spk_11: do you plan on doing any
spk_19: i guess they call load shows actually any coming to the united states talking to investors and meeting with them we're trying our best time to meet in bath and through web cards or online or be huge or video conferences
spk_9: physical traveling might be difficult given the calvi see scenarios
spk_10: around the world apologies for an hour yeah my last question is
spk_11: are you planning to have to sell any additional equity cash that will hold you for the foreseeable future
spk_9: yeah i'm as we should only abide be as of september thirty thousand twenty one our cash and cash equivalents were i will around on be one point four billion or around us all of two hundred twenty million
spk_0: and as we've also shed ali and that are we have time to a we have complete the vast majority of our adjustment to our business know i'll organization our workforce and including a large chunk of one off expenses in the third quarter which is this quarter the did financial results on and we do have a plan to significantly increase the house financial health and profitability of a business aiming to quickly turning profitable are breaking even in a near future so with that amount of cash and ah more ah hire more stringent control
Disclaimer

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.

-

-