Four Seasons Education (Cayman) Inc. American Depositary Shares, each ADS representing 10 ordinary shares

Hello, ladies and gentlemen. Thank you for standing by for the Four Seas in Education's second quarter of fiscal year 2021 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared marks, there will be a question and answer session. Today's conference call is being recorded. I will turn the call over to your host, Ms. Olivia Lee, Investor Relations Manager for the company. Please go ahead, Olivia.

Hello everyone and welcome to the second quarter of Fiscal Year 2021 Earnings Conference Core of Four Seasons Education. The company's results were issued via NewsWise services earlier today and are posted online. You can download the earnings press release and sign up for the company's email distribution list by visiting the IR section of our website at ir.sijiedu.com. Ms. Zhou Anzuo, our Chief Executive Officer will start the call by providing an overview of the company performance highlights for the quarter. Ms. Xun Wang, the company's vice president of finance, will provide details on the company's financial results and business outlook before opening the call for your questions. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. private securities Litigation Reform Act of 1995, overlooking statements involving higher risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's prospectus as filed with the U.S. Credit and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that Four Seasons Education's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Four Seasons Education's press release contains a reconciliation of the unaudited non-GAAP measures to the unordinated, most directly comparable gap measures. I will now turn the call over to our CEO, Ms. Suo. Please go ahead.

Thank you, Olivia, and hello, everyone. Thank you for joining our call today. In the second quarter of fiscal 2021, we continued to focus on operational improvement on multiple fronts to further optimize the learning experience of our students. I'm happy to report that all of our learning centers across the country have reopened and are fully operational during this quarter, delivering high-quality educational products to our students. We're operating in a rapidly evolving environment that brings with it both significant challenges as well as new opportunities. Those challenges include the increasingly fierce competition from online peers in the aftermath of COVID-19 and the Shanghai Municipal Education Commission has adopted a fully randomized admission policy for private elementary and secondary schools since this year. Both of these changes impacted the customer demand. Given market uncertainty, we broadened our primary school courses to better serve and address the evolving customer demand due to the new policy. Also, we are pleased to see the growth of our middle school tutoring classes, primarily driven by our designated curriculum adapted for the new customer demand. In our diligent efforts to improve educational products, we remain dedicated to continuously enhancing our service quality by expanding our pre- and post-class education service package with more available subjects. Last but not least, I'd like to update you on other strategic initiatives as we continue to leverage our core capabilities to drive our growth in the long run. Firstly, our nationwide expansion initiative remained intact, and we are making progress in consolidating and upgrading nationwide applicable educational materials to prepare for our market expansion. Second, we are making encouraging strides in collaboration with full-time schools, highlighted by 11 new school partnerships where we jointly offered in-school tutorial courses and service for students. In addition, our Math Lab project continued to gain industry's recognition. were pleased to be selected to participate in the ninth Guangxi Education Equipment Exhibition and the 78th China Educational Equipment Exhibition separately in October, both prestigious industry events. Speaking of expansion of our industry, of our interest-oriented cost offerings, we entered into a strategic cooperation agreement with Shanghai STEM Cloud, we will jointly develop a STEM curriculum and organize activities to better address the increasing demand of the market. Our pilot STEM camp was launched this October and has been well received by the market. Looking ahead, we are excited about opportunities that will come from our enhanced and deep portfolio of programs for academic subject tutoring, interest nurturing, and intellectual development. As our online-merge-offline model further matures, we will continue to drive student enrollment and engagement avenues while simultaneously working to improve learning center network optimization and the strategically growing course offerings. We believe our focus on our core strengths and fundamentals will set the foundation for sustainable operations. We remain confident about the recovery and robust long-term prospects. With that, I will now turn the call over to our Vice President of Finance, Ms. Trinh Wong, who will discuss our key financial results.

Thank you, Joanne, and hello, everyone. Now, I'd like to walk you through further details of our second quarter fiscal year 2021 financial results. Revenue was RMB $83.8 million for the second quarter of fiscal year 2021, compared with RMB $128.8 million in the same period of last year, primarily due to latest regulatory policy and the extended impact of COVID-19. Cost of revenue decreased by 16.7% to RMB for the second quarter of fiscal year 2021 from RMB 57.9 million in the same period of last year. Plus profit was RMB 35.6 million for the second quarter of fiscal year 2021 compared with RMB 71.0 million in the same period of last year. General and administrative expenses decreased by 7.0% to RMB 30.3 million for the second quarter of fiscal year 2021 from RMB 32.6 million in the same period of last year. Sales and marketing expenses decreased by 20.6% to RMB 8.0 million for the second quarter of fiscal year 2021 from RMB 10.0 million in the same period of last year. Operating loss was RMB 2.7 million for the second quarter of fiscal year 2021, compared with operating income of RMB 28.3 million in the same period of last year. Adjusted operating income was RMB 4.5 million for the second quarter of fiscal year 2021, compared with RMB 35.7 million in the same period of last year. Income tax expenses was RMB 1.8 million for the second quarter of fiscal year 2021 compared with RMB 9.2 million in the same period of last year. Net income was RMB 4.0 million during the second quarter of fiscal year 2021 compared with RMB 20.3 million in the same period of last year. Adjusted net income was RMB 6.8 million for the second quarter of fiscal year 2021 compared with RMB 26.9 million in the same period of last year. Basic and diluted net income per ADS attributable to ordinary shareholders for the second quarter of fiscal year 2021 were both RMB 7 cents compared with RMB 40 cents and RMB 39 cents respectively for the same period of last year. Adjusted basics and diluted net income per ADS attributable to ordinary shareholders were both RMB 13 cents for the second quarter of fiscal year 2021 compared with RMB 53 cents and RMB 52 cents respectively for the same period of last year. Cash and cash equivalents As of August 31, 2020, the company had cash and cash equivalents of RMB 423.0 million, compared with RMB 404.7 million as of February 29, 2020. To be mindful of the length of our earnings call, for the first six months of fiscal year 2020 financial results, I would encourage listeners to refer to our earnings press release for further details. Looking forward, for the third quarter of fiscal 2020, the company expects to generate revenue in the range of RMB 62.1 million to RMB 67.2 million. The above outlook is based on the current market conditions and reflects the company's preliminary estimates of market and operating conditions. and customer demand, which are all subject to change. This concludes my portion of prepared remarks. We will now open the call to questions. Operator, please go ahead.

Yes, thank you. We will now begin the Q&A session. If you would like to ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. At this time, we will pause momentarily to assemble the roster. And once again, pressing star and then one will allow you to ask a question. All right, as there is nothing at the present time, I would like to return the call to the company for any closing comments.

Thank you once again for joining us today. If you have further questions, please feel free to contact Four Seasons Investor Relations through the contact information provided on our website or the Pearson Group Investor Relations.

Thank you. That concludes today's conference call. Thank you for attending today's presentation. May now disconnect your line.