Sunlands Technology Group ADR

Ladies and gentlemen, thank you for standing by and welcome to Sunland's first quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After prepared remarks by the management team, there will be a question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to your host today, Daisy Wang, Head of Investor Relations of the company. Please go ahead.

Hello, everyone, and thank you for joining Sunland's first quarter 2020 earnings conference call. The company's financial and operating results were issued in a press release via Newswire services earlier today and are posted online. You can download the earnings press release and sign up for our distribution list by visiting our IR website. On the call, our CEO, Tongbo Liu, will provide an update on our operational performance as well as our strategic initiatives. Our CFO, Selena Lu Lu, will give you an overview of our financial performance and also provide our guidance for the second quarter of 2020. Following their prepared remarks, we will move into the Q&A session. Before I hand it over to the management, I'd like to remind you of Sunline Safe Harbor statement in relation to today's call. except for the historical information contained herein, certain of the matters discussed in this conference call are forward-looking statements. These statements are based on current trends, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to deform materially from those contained in any forward-looking statement. For more information about the potential risks and uncertainties, please refer to the company's filings with the ICC. With that, I will now turn the call over to our CEO. Please go ahead, Tongbo.

Thank you, Daisy. Hello, everyone. Welcome to Sunland's first quarter 2020 conference call. Sunland's believers saw the first quarter results. Despite significant challenges stemming from the COVID-19 pandemic, specifically the lockdown of our Wuhan campus, which affected almost half of our sales force, and the postponement of national ST exams from April to August that has delayed student enrollment for our preparation classes. Our capacity utilization was significantly limited due to the pandemic, and gradually improved to about 18% during the quarter. Thanks to the extraordinary efforts of our employees and our robust online infrastructure, we achieved a gross billing of RMB 500 and 16.8 million in the first quarter, in addition to profitability improvement with net loss margin narrowed by 8.4 percentage points to 11.6%. resulting from our produtently managed costs and expenses. While the COVID-19 pandemic has posed challenges for both individuals and the business, they have also presented emerging opportunities. The pandemic has forced the schools, universities, and companies to turn to remote working and teaching, creating a boom in online learning. Although the STE exam has been postponed, are actually spending more time to prepare for tests and showing a higher level of loyalty and enthusiasm for learning. In the first quarter, total time spent on live streaming classes and the number of quizzes taken per active user increased 19% and 21% respectively year over year. We expect the increasing engagement to lead to improve the examination results and help promote our courses in the future. Inspired by people's changing behavior patterns during the lockdown period, in the first quarter of 2020, we began experimenting with new approaches to student acquisition, aiming to increase sales efficiencies and student conversions. In addition to our students and student acquisition strategy, We continue to diversify our online course offerings to include more master-oriented professional certificates and non-degree programs. Banding new courses to satisfy the needs of our students to develop their interested knowledge areas and professional skills. Leveraging our online education expertise and online infrastructure, this will help us drive new goals by catering to a wider student base, Thank you very much. with a strong market growth potential for our products in this segment. Our master's degree-oriented programs accounted for 22.5% of total growth speedings in the first quarter of 2020, significantly higher compared with 12.1% and 3.7% in 2019 and 2018, respectively. Our MBA programs, in particular, attracting strong interest from our students as we offer joint programs with leading institutions domestically and abroad at an affordable price range. In addition to our efforts to drive the development and innovations of our core business, we have expanded our offerings by establishing a new business vertical designed specifically to provide online employee training service to corporations. Our B2B training services offered mobile-based learning infrastructure, numerous professional skill training courses, and other related services designed for corporations. Since its initial launch, our B2B training services have received positive feedback, with 300 and 16 corporate clients signed up. Despite its current relatively small scale, I'm confident that our B2B training services will well complement our core business in the future. Turning to the pandemic, as an issue of support during this time, we donated approximately 5 million RMB in cash in addition to offering free online courses to Wuhan. As conditions relating to the COVID-19 outbreak continue to gradually improve, We are confident to enhance our financial and operating results for the remainder of the year. For the long run, we will further focus on student acquisition strategies, diversification of our cost offerings, upgrade of our offerings and investment in IT infrastructure, all in an effort to better satisfy our students' needs and strengthen our brand value. I'm glad that starting from April 13, Ms. Li will serve as the CFO of the company. Ms. Li has served as Sunland's Chief Strategy Officer since joining the company in 2015 and has been an instrumental part of the senior management team leading three rounds of private financing and the company's IPO. With that, I would like to hand over the call to our CFO, Selena, to run through our financials.