Sunlands Technology Group ADR

Yuhua Ye, Tongbo Liu, Daisy Wang, Peng Ou, Hangyu Li Sunland's IR representative. Please go ahead.

Hello, everyone, and thank you for joining Sunland's third 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 Liu, will give you an overview of our financial performance and also provide our guidance for the fourth 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 Sunland's safe harbor statement in relation to today's call. Except for the historical information and the contained hearing, 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 differ materially from those contained in any forward-looking statement. For more information about the potential risks and uncertainties, please refer to the communist filings with the Securities and Exchange Commission. With that, I will now turn the call over to our CEO, Tongbo Liu.

Thank you, Yuhua. Hello, everyone. Welcome to Sunland's third quarter, 2020 Conference Call. Despite the short-term impact on our operations of the COVID-19 pandemic in the first half of 2020, Sunland delivered steady year-over-year increases in both gross spending and net revenues in the third quarter. Our results were fueled by a combination of the recovering macroeconomic conditions in China as well as the implementation of optimization initiatives within our business. In the third quarter, our gross balance reached 654.3 million RMB, increasing by 6.6% year-over-year and 23.1% quarter-over-quarter. We attribute our strong gross balance results largely to improvements we made in sales efficiency, with new approaches to student acquisition as well as our enhancing brand awareness and continuous upgrades to our product categories. Additionally, following the solid performance in the second quarter of 2020, net revenues increased 2.7% year-over-year to 541.6 million RMB exceeding the total of our guidance by 4.2%. Our new enrollments reached over 114,000 in the third quarter, growing 14.7% year-over-year and 17.5% quarter-over-quarter. During the third quarter, we made further progress to balance our top-line growth mix, proving the efficacy of our long-term strategy in efforts to continually expand our portfolio of educational products and bring content innovation. while maintaining a leading market share in STE programs, master's degree-oriented programs, and professional certification and skills programs continue to reveal great potential to become the next pillars among the company's offerings. Let me start with master's degree-oriented programs, which contributed around 31% to growth in the third quarter. compared with approximately 17% in the same quarter last year. The girls of master's degree-oriented programs in terms of girls' buildings was phenomenal, regesting 93.3% year-over-year and 148.4% quarter-over-quarter. This growth was primarily driven by increasing need from working professionals as uncertain shifts in the labor market remain in the wake of the COVID-19 pandemic, together with the increasing demand for talent with higher educational background. In light of this, in order to enrich our program portfolio and address the increased demand for diversified and differentiated higher education, in the third quarter, we further expanded our partnership with overseas universities such as Belarusian State University, to provide joint offering programs. Taking into account our existing partners in the United States, the United Kingdom, and Australia, we have now established a joint offerings program with over ten foreign universities. In line with our balanced growth strategy, this effort is designed to further enhance our attractiveness and competitiveness and complement our master's degree-oriented offerings. Due to the current background conditions, in particular international COVID-related travel restrictions, we are seeing an uptick in demand for those international online-focused joint offering programs. And we believe this trend will continue for a foreseeable future. Based on current number of admission applications received for 2021, already announced by most universities in China, We expected the number of applicants for postgraduate entrance exams for 2021 admission to surpass the record of 3.41 million seats for 2020. Given this trend, also with feedback reports from our sales and marketing department, we have high confidence in the continually favorable demand in this area. With our proven ability to bring compelling offerings to the market that meet students' needs, with a sustainable growth pathway ahead in developing our portfolio of master's degree-oriented and joint offering programs. These programs also typically carry higher margins than our standard programs owing to their higher IASBs, especially MBA programs. To further implement our sustainable overall growth strategy, We continue to promote the rapidly growing on-demand course offerings targeting professional certification, vocational education, and . I'm very pleased that this segment also delivers significant growth in growth experience in third quarter. It generated growth experience of 139.9 million RMB, up 301.9% year over year, and 135% quarter over quarter. In the third quarter, the segment accounted for 21.4% of our total gross billings compared to 5.7% for the third quarter of 2019. The increase in the segment primarily stems from rising requirements from the labor market for workers and the candidates equipped with occupational skill sets and professional qualifications to meet highly demanding roles and responsibilities. With our course offerings presenting attractive SPs and shorter time durations than traditional post-secondary options, we see a variable growing demand in this segment in the long run. Moreover, we believe graduates from these courses are more likely to purchase services from us again when changing employment factors require enhanced competitiveness. In the third quarter, we experienced much greater utilization of our online platform to help students succeed in national ST exams in August and October, as well as post-graduate entrance exams and MBA programs candidates in the fourth quarter. Our teachers are committed to further improving the quality and efficiency of our live streaming classes, schedules, courses and the tutorial materials. With such effort and the increased enthusiasm in exam preparation, the total class participants, the number of class participants, and the number of quizzes completed all increased significantly in this quarter. 39%, 44%, and 45% respectively year over year. Furthermore, To bring a parallel user experience and drive user stickiness, we further integrated our cutting-edge AI technology into all aspects of our online platform, customizing our curriculum offerings and teaching materials to deliver innovative breakthroughs, continuing to invest in our platform upgrades and incorporating applications of AI technology. to improve teaching results and efficiency. We will always be part of our effort to sustain our long-term goals. With our foresight into the online education industry has sustained multi-pronged goals strictly, we are confident in the continued further enhancement of our brand and diversified products. Looking forward, we aim to drive top-line growth by expanding our program categories in correcting the approaches we use to acquire students and by improving our lead conversion efficiency. At the same time, we will further optimize bottleneck performance enabled by cross-setting increments and using AI technologies throughout our organizations. With that, I would like to hand over the call to our CFO, Selena, to run through our financials.