17 Education & Technology Group Inc.

Good evening and good morning, ladies and gentlemen, and thank you for standing by for 17 EdTech's fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I will now turn the meeting over to your host for today's call, Mr. Michael Dew. CFO of Seventeen EdTech. Please proceed, Michael.

Thank you, operator. Hello, everyone, and thank you for joining us today. Our earnings release was distributed earlier today and are available on our IR website. On the call with me today is Ms. Andy Chang Liu, Founder, Chairman, and Chief Executive Officer. And I'm Michael Du, Director and Chief Financial Officer of the company. Andy will walk you through our latest business performance and strategies, followed by me, who will discuss our financial performance. We will be available to answer your questions during the Q&A session after the prepared remarks. Before we begin, I'd like to remind you that this is the conference call contains forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations in the current market and operating conditions, and they relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control. These risks may cause the company's actual results, performance, or achievements to differ materially. Further information regarding this and other risks, uncertainties, or factors is included in the company's filing with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statement as a result of new information, threatening events, or otherwise except as required under the applicable law. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Andy. Please go ahead.

Thank you, Michael. Hello, everyone. Thank you for joining us for our earnings call today. Before we begin, I would like to mention that the financial information and non-GAAP numbers in this release are presented on a continuing operation basis, and all numbers are based on the renminbi unless otherwise stated. We finished the fourth quarter of 2021 with strong business performance. Let me provide some quick highlights before we get into the details. First, we continue to drive revenue growth despite the regulatory changes. Second, we managed to significantly narrow our net loss on a gap basis and achieved profitability on an adjusted basis after excluding share-based compensation. Third, we rapidly formed new business strategies and adjusted our organization accordingly. Fourth, our new businesses are gaining momentum we are particularly pleased to see strong recognition from the government on our in-school offerings and advances from our customers. Fourth, fifth, the fact that we turned profitable on an adjusted basis allowed us to maintain a healthy cash balance for our business transition and growth. Now let me go into more details with you. We finished the fourth quarter and the full year of 2021 with strong business and financial results despite the adverse impact of regulatory changes. We achieved a 17.5% year-over-year revenue growth in the fourth quarter of 2021 and a 68.8% revenue growth for the 2021 compared with 2020. What's more important is that we significantly improved our profitability narrowing our net loss to RMB $25.6 million in the fourth quarter of 2021 from RMB $365.1 million in the fourth quarter of 2020, and recording an adjusted net income non-GAAP of RMB $17 million, excluding share-based composition in the fourth quarter of 2021 from an adjusted net loss non-GAAP of RMB $134.6 million in the fourth quarter of 2020. This positive adjusted net income was probably a result of determined and rapid formation of the new business strategy, the corresponding execution to streamline and restructure of our organization, as well as an improvement in our operational efficiency and reduction of the promotional activities associated with the legacy online K-12 tutoring services. Again, this is the first time our company turned profitable on a non-GAAP basis since the public listing and is a key milestone as we strive to turn our company into a sustainably profitable company as soon as possible. On top of encouraging financial results, we also see continued progress in our new business strategies. The company has ceased to offer online K-12 tutoring services by the end of 2021 to comply with the double reduction policy and applicable rules, regulations, and measures. At the same time, we have quickly formed new business strategies in response to the new regulatory environment, leveraging our extensive knowledge and expertise accumulated through serving China's education-authorized schools, teachers, and students over the past decade. we have adapted our business and organization to focus on two key business areas. First, for our in-school business, we launched our new teaching and learning starts offerings as an upgrade to our previous in-school products and services. The new offerings are aimed at facilitating the digital transformation and upgrade of Chinese schools with a focus on improving the efficiency and effectiveness of core teaching and learning scenarios such as homework assignments and in-school teaching. Second, For our after-school business, we have started to explore personalized self-directed learning products as a substitute for the original after-school tutoring services. The products utilize our technology and data insights to provide personalized and targeted learning while exercising content that is aimed at improving students' learning efficiency. Please be reminded, this is not a tutoring service. The double reduction policy together with the latest philosophy and guidelines from China's Ministry of Education has marked a new area for China's education informatization process. China's education informatization process started around 10 years ago and created a market with annual budgets of RMB 340 billion in 2020. According to estimates based on statistics from the National Bureau of Statistics of China. This is a huge market. Moreover, its focus has shifted from education infrastructure during the early years to digital applications and resources to improve teaching and learning effectiveness and efficiency, especially after the double reduction policy was announced, which refers to alleviating the burden of homework while not sacrificing the teaching and learning results. Our teaching and learning staff offering cover various teaching and learning scenarios with a key focus on homework. It's a comprehensive data-driven system, not only enabling more customized and targeted homework diagnosis and assignments that help improve teaching and learning effectiveness and efficiency, but also offering data-driven management tools based on a comparison between classes and schools for a selected period. This is very powerful for school principals to manage the teaching progress at school and for education officials to check on the teaching management on the district level. This has opened up enormous business opportunities for us with the technology, data insights, content, and breadth power we have gained through the past 10 years of investing in homework development. We have been chosen by several regional education authorities to become the partner of choice for homework-focused teaching and learning management systems. This is one difference this time. In the past 10 years, we have provided basic services on a free-of-charge basis. Now, our new teaching and learning sites offering are paid products that integrate both software and hardware in one package and feature data-driven recommendations and other value-added functions that cater to the needs of schools and education authorities. Purchases are mostly made by the district education authority on behalf of a group of schools. We have continued to see supportive policies and guidelines coming out of the Ministry of Education, positive responses from district education bureaus, and continuous progress of our various projects and pilot programs. A recent speech by Tenet Minister of Education, Mr. Huai-Hing Hong, has iterated the emphasis of digital education strategy with a need pool, application folks, and a service-prioritized principle. Our in-school service offering clearly feeds this principle, where our comprehensive service-packed software, content, and data solutions together help schools achieve better teaching and learning results to meet the application and service keywords. And it satisfies the needs of both regulators, school principals, and teachers at the same time to ensure regular use after implementations to meet the daily needs of all key stakeholders. To date, we have successfully entered into in-depth collaborations with several regional education authorities across multiple districts in China, including Shanghai Minkang District, Beijing Sicheng District, which are among the 10 case studies selected by the Ministry of Education General Office for the implementations of the opinion. Projects of different skills are already being implemented using our teaching and learning products across more than 50 cities. Continuous progress was seen over the past few months in these cities and districts with which we are operating strategically. In the fourth quarter of 2021, our company won the bid for the Intelligence, Homework, and Accurate Teaching Project of Shanghai Minghang Education Bureau, worth RMB 27 million. This project is expected to be fully delivered in 2022. There are also in-depth dialogues with several other cities and districts across China. about our in-school teaching and learning staff offerings. Another recent example was the first classroom launched by Shanghai Minghao District Education Bureau. This is a series of courses offering an immersive teaching experience covering various topics around history, the latest social news, social role models, and moral standards based on our technology solution and content inputs from People's Education Press and China Central Television. both of which are our strategic partners. This pioneering course format compiling the latest technology in the context was reported by CCTV Channel One, China Daily, and People's Daily. And the other major media has gained interest and inquiries from various district education bureaus and schools on the potential rule-out of similar courses of Thelmax. At the same time, we are also exploring a personalized and self-directed learning product for Chinese families. This product is in response to the Chinese government's promotion of applying technology to advance education digitalization and improve learning efficiency. It leverages our high-quality educational content, understanding of homework and examples, school and district-level data insights into students' learning progress, and the common problems accumulated over the past last decade with our merge of teachers and student users. It is designed with a core aim to be compliant with the new regulatory environment. In a nutshell, it is a self-directed learning product that supplements the in-school studies of primary and middle school students. We are continuously adapting our products based on the latest regulatory requirements policy guidance, and the customer feedback. As a result of the previous dimension, new business initiatives and development, the balance of our preferred revenue and the customer advances of December 31st, 2021 raised RMB 243.6 million. This balance was entirely composed of ongoing business after our business transformation and was expected to be recognized in the next few quarters. as we deliver our products and services. Lastly, I would like to re-emphasize our confidence and determination in turning our business into a profitable growing one. This will be a key philosophy in guiding our decisions and business operations going forward. Similar for the first quarter of 2022, although we cannot be certain we will record gap net income, the company is expected to achieve positive adjusted net income excluding share-based compensation. Now, I will turn the call over to Michael, our CFO, to walk you through our latest financial performance. Thank you.