17 Education & Technology Group Inc.

Good evening and good morning, ladies and gentlemen, and thank you for standing by for 17 EdTech's first quarter 2022 earnings conference call. At this time, all participants are in 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'll now turn the meeting over to your host for today's call, Ms. Laura Chow, 17 EdTech Existence Relations Manager. Please proceed, Laura.

Thank you, operator. Hello, everyone, and thank you for joining us today. Our earnings release was distributed earlier today and is available on our IR website. Joining us today are Mr. Andy Liu, founder, chairman, and chief executive officer, and Mr. Michael Du, director and chief financial officer. Andy will walk you through our latest business performance and strategies, followed by Michael, who will discuss our financial performance and guidance. They 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 conference call contained four looking statements as defined in Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Security Litigation Reform Act of 1995. These four looking statements are based upon management's current expectations and current market and operating conditions, and relates 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. This risk may cause the company's actual results, performance, or achievements to differ materially. Further information regarding these and other risks and certainties or factors is included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statements as a result of new information, further events, or otherwise except as required under applicable law. I will now turn the call over to our Chairman and Chief Executive, to review some of our business developments and strategic direction. Andy, please go ahead.

Thank you, Lara. Hello, everyone. Thank you all for joining us on our second quarter 2022 earning call. 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 RMB unless otherwise stated. We are glad to report a solid performance in the second quarter. Before we go into the details, let me update you with some quick highlights. Firstly, we recorded RMB 133.5 million of net revenues in the second quarter of 2022. 11.2% higher than the top end of our estimates provided earlier in June. This was achieved through high revenue contribution from our teaching and learning SaaS business. Secondly, our operational efficiency continues to improve, and we recorded a substantially narrowed gap basis net loss compared with the same period in 2021, allowing us to achieve net profitability on a non-GAAP basis for the last three consecutive quarters. Thirdly, our new teaching and learning SaaS offerings have gained further momentum and won strong recognition and demand from the government and relevant authorities, contributing an increasing proportion of the company's net revenues in this quarter. Now let me go into some more details. Let's start with our in-school teaching and learning SaaS business. During the period, our teaching and learning offerings have witnessed major milestones. We successfully delivered a district-wide precision teaching and adaptive learning system project based on intelligence homework in Shanghai Minghang District in the second quarter of 2022. The system has been regularly used throughout the teaching process and is well recognized by teachers, students, and education authorities. This is a clear example satisfying the standard for active use set by education authorities. There are a total of 156 schools in Minghang District using our precision teaching and adaptive learning system. During the waves of COVID outbreaks in the second quarter of 2022, our precision teaching and adaptive learning system have played a significant role in helping Minghang authorities form a high-quality online teaching environment for qualified content delivery, collect study information, and provide interactive communication between schools and authorities. In the four months after the implementation, around 120,000 students used our system and completed a total of 11 million copies of homework assignments, cumulatively. The value of our system is well recognized by its various users It is a clear illustration of STEMTE's pioneering capability in the digital transformation of China's education industry. We continue to see greater market potential and opportunities as we make further progress in our teaching and learning business. Chinese government's continuous endeavor in the digital transformation of China's education system to implement enhanced levels of personalization during the teaching and learning process has been the backdrop providing a focused demand for our One Smart teaching and learning staff offerings. It is also to be noted that throughout the entire loop of education progress, homework is the most ideal scenario for steady data collection. The ability to collect homework data effectively and efficiently is a key to materialize data-driven, differentiated, and individualized teaching. Only with the support of the big data and intelligent technology, that requirement of improving homework efficiency can be truly achieved. The Precision Teaching and Adaptive Learning System project based on intelligent homework in Minghang is a flagship case we have successfully delivered, not only its Minghang district, a national smart education demonstration district designed by MOE, which has substantial illustrate value and influence over cities and districts across China. Our solution has become a clear flagship example of how such a system enables individualized homework and precise teaching while meeting normalized application required by the relevant authorities, while reducing the burdens of students and schools and improving learning and teaching efficiencies required by double reduction policies. As we expanded our sales channels into a broader range, we have signed partnership agreements with over 50 local distribution agents to enlarge our distribution network. We are confident that the increasing market needs will lead us to a deeper market penetration. In the meanwhile, the company is also actively exploring a various forms of Recovering starts billing model for our teaching and learning SaaS offerings with our current and potential customers. This includes one-stop overall solution, combining software, hardware, and service. Although currently not a prevalent billing model, the recurring SaaS billing model is expected to gain popularity among local authorities and schools versus the traditional one-off procurement model because of the upfront cost reduction and the promotion of normalized application-based procurement by the Ministry of Education. Higher proportion of revenue from such recurring sub-spilling model also means a healthier financial profile given the steady and predictable ongoing revenue stream. We have already seen a recent product expected to be operated under this model and obtained positive feedback from the local education bureau on such recurring STARS building model. In terms of Earth Campus businesses, we will continue to explore and improve our self-directed learning product based on student and parent feedback to fulfill the diverse and multidimensional learning demands of students and provide with targeted, customized learning content. in line with the government's regulation. Q2 marks a few key milestones in our new business model after the double deduction policy. We are glad to see these positive momentums are being turned into projects with reputation earned and revenue recognized. As we explore our SaaS business opportunities and expand our sales network nationwide, we grew even more determined in our new strategies and saw an increasing amount of business opportunities arising. Looking ahead, we expect our Teaching and Learning Starts business to continue a significant proportion to the overall revenues in the coming quarters. We are confident that the synergistic linkage between in-school and off-campus business will enable us to build a high-quality education platform driven by science and technology with ingenuity helping the digital transformation and upgrading of China's education industry, reducing the burdens of students and schools, improving education efficiency, and making contributions to the promotion of China's education reform. Now, I will turn the call over to Michael, our CFO, to walk you through our latest financial performance. Thank you.