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Operator
Gentlemen, thank you for standing by, and welcome to Sunland's second quarter 2021 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 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, Yuhua Yi, Sunland's IR representative. Please go ahead.
Yuhua Yi
Hello, everyone, and thank you for joining Sunland's second quarter 2021 earnings conference call. The company's financial and operating results were issued in our press release via Newswire services earlier today and are posted online. You can download The earnings press will leave and sign up for our distribution list by visiting our IR website. Participants on today's call will be our CEO, Mr. Tong Bo Liu, and our CFO, Selena Lu Liu. Management will begin with prepared remarks, and the call will conclude with a Q&A session. Before I hand it over to the management, I'd like to remind you of Sunland Safe Harbor's statements 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 differ materially from those contained in any forward-looking statement. For more information about the potential risks and uncertainties, please refer to the company's filing with the Securities and Exchange Commission. With that, I would now like to turn the call over to our CEO, Tongbo Liu.
Tong Bo Liu
Thank you, Yu Hua. Hello, everyone, and thank you for joining Sunland's second quarter 2021 earnings conference call. We are pleased with our second quarter performers. Our net revenue grew 22.8% year-over-year to RMB 629.5 million. with master's degree-oriented programs and professional certification and skills programs, achieving a year-over-year increase of 91.7% and 84.6% respectively. New enrollments remained relatively stable at over 86,000, representing a 4.8% year-over-year increase. which was primarily driven by our 168.7% year-over-year increase from professional certification and skills programs. Following a strategic adjustment to optimize our product mix while seeking growth and balancing costs and profitability, our growth buildings were IMB for $13.2 million, compared with RMB 531.5 for the same period of 2020. Our strategic adjustment and ongoing cost reduction efforts delivered a regular net profit of RMB 22.1 million compared with net loss of RMB 126.1 million in the second quarter of 2020. We experienced increased demand for hydro-integration and professional certification and skills programs during the second quarter of 2021. The employment market is becoming increasingly competitive due to industrial restructuring in the wake of COVID-19 pandemic, motivating workers to enhance their career competitiveness through occupational education. While working professionals often pursue higher education through our STE or master's degree programs, many end-users also seek to improve their skills and enrich their lives with our professional skills and general interest courses. With such steady tailwinds, we increased our efforts to enrich our course offerings and improve the quality of our programs, which helped sustain the growth momentum in master's degree oriented programs. and professional certification and skills programs. Skills building for master's degree-oriented programs increased by 23.7% year-over-year. This exceptional performance was driven by our successful degree-oriented programs within China, as well as our growing cooperation with higher education institutions in other global regions. We continue to provide high-quality tailored courses to prepare working professionals in China for MBA entrance examinations. Most of the students are middle or senior level managers who are financially stable and willing to pay for further education. We stimulously enlarged our footprint by promoting overseas higher education, supported by our expanding cooperation with foreign institutions. We also diversified our overseas post-graduate degree offerings including MBA in education, psychology, and in human resource management. Meanwhile, our professional certification and skills programs also grow vigorously evidenced by a 168.7% year-over-year increase in new enrollments and a 196.2% year-over-year increase in gross billing for the quarter. This course was primarily driven by our extensive course offerings, which allow us to meet demand across a wide range of subjects, coupled with increasing demand for courses to enhance career competitiveness or cultivate soft skills and hobbies. While we strengthened our competitiveness in master's degree-oriented programs, and the professional certification and the skills programs. We also continue to provide high quality courses in ST programs to our students. Over our 18 years experience in end of occupational education, we have cultivated a high brand awareness and developed exceptional course teaching frameworks. effective teaching methods, and a wide variety of premium courses catering to students' different needs. Sunland is committed to developing more premium courses and delivering a better reading experience to the most end-usely learning targets to complement our course improvement efforts. We are also working to upgrade our online learning platform to make courses more easily accessible to our students. many of whom work full-time or have other time constraints. Additionally, we have expanded our user base by providing staff training services to companies across a wide variety of industries. We believe this will further increase our market penetration rates and reduce our customer acquisition costs. We believe that the depth and quality of our learning resources, our efficient learning platform and cost framework and our highly effective professional teaching staff set us apart from our competitors. We are excited to see that our brand is regarded highly by our students as reflected by their satisfaction rate of 98.73% in the second quarter. We will continue to strengthen our leading position in the industry by developing more refined courses in a broader area of subjects while enhancing our service quality with additional first-class teachers. Now turning to a recent circular published by the Ministry of Education pertaining to the end-of-education and training industry on 19th of July, which studies social organizations and the private entities in end-of-education business. have played a positive role in the promoting lifelong learning society. Followed by some guidelines for industry standardization, SunLens has always been committed to complying with applicable laws and regulations. And we believe these guidelines will give industry leaders such as SunLens an advantage, giving our existing strict standards and comprehensive internal review process. Going forward, We will remain committed to designing high-quality courses and creating innovative, effective, internet and platform-based learning tools in collaboration with our outstanding academic research team and teaching staff. Given Sunland's secure foothold in the end-of-education business, we are confident we can continue to offer premium courses in STE programs and solidify our market share. in the master's degree-oriented and the professional skills programs space. With that, we will be well-positioned to continue to deliver strong results in future quarters. That concludes my prepared remarks. Thank you, and I will turn the call over to our staffer, Selina, for further review of our financials. Selina, please.
Yu Hua
Thank you, Tomo. Hello, everyone, and thank you for attending SELINA's second quarter conference call. We are excited to report solid second quarter results with profit coming in at RMB 22.1 million compared with net loss of RMB 126.1 million for the same period last year. And with our master's degree and professional skills programs consistently performing well. During the quarter, we took multiple measures to reasonably lower costs and improve operating efficiency, with G&A and sales expenses decreasing 8% and 7.9% year-over-year, respectively. We also continued our efforts to expand course categories as we strive to deliver better learning experiences to our users. Looking ahead, we will persist in cost-efficient marketing and operation optimization. With our existing advantage in the business of occupational education for adults, better cultivated courses, and highly efficient management, we believe we are on track to grow further and incrementally increasing profitability. Now, I would like to share our financial results for the second quarter of 2021 in detail. In the second quarter of 2021, net revenues increased by 22.8 percent to RMB 629.5 million from RMB 512.5 million in the second quarter of 2020. The increase was mainly driven by year-over-year growth in gross billions since the second half of 2020 through the first quarter of 2021. Cost of revenues decreased by 2.3% to RMB 97.3 million in the second quarter of 2021, from RMB 99.6 million in the second quarter of 2020. The decrease was primarily due to reduced insurance-related costs incurred for our integrated online education service package purchased by students. Gross profit increased by 28.9% to RMB 532.2 million in the second quarter of 2021, from RMB 412.9 million in the second quarter of 2020. In the second quarter of 2021, operating expenses were RMB 519.6 million, representing a 7.2% decrease from RMB 560 million in the second quarter of 2020. Sales and marketing expenses decreased by 7.9% to RMB 449.1 million in the second quarter of 2021. from RMB 487.9 million in the second quarter of 2020. The decrease was mainly due to lower spending on branding and marketing activities and declined composition expenses related to our sales and marketing personnel. General and administrative expenses decreased by 8%. to $51.6 million in the second quarter of 2021. From $56.1 million in the second quarter of 2020, the decrease was mainly due to decreasing compensation expenses. Product development expenses increased by 17.6% to RMB $18.8 million in the second quarter of 2021. from RMB 16 million in the second quarter of 2020. The increase was primarily because the social security expenses exemption offered by the relevant authorities during the COVID-19 outbreak came to an end in 2021. Other income was RMB 8.2 million in the second quarter of 2021, compared RMB 17.5 million in the second quarter of 2020. The decrease was primarily because value-added tax exemptions offered by the relevant authorities as part of the national COVID-19 relief effort came to an end in April 2021. Net income for the second quarter of 2021 was RMB 22.1 million, compared with net loss of RMB 126.1 million in the second quarter of 2020. As of June 30, 2021, the company had RMB 835.4 million of cash and cash equivalents, and RMB 49.9 million of short-term investments, As of June 30, 2021, the company had a deferred revenue balance of RMB 2,690.2 million. Capital expenditures were incurred primarily in connection with IT infrastructure, equipment, and the leasehold improvements necessary to support the company's operations. Capital expenditures were RMB 7.8 million in the second quarter of 2021, compared with RMB 1 million in the second quarter of 2020. For more of our 2021 first half financial results, please refer to our earnings press release for further details. And now for our outlook. For the third quarter of 2021, Sunland currently expects net revenue to be between RMB 570 million and RMB 590 million, which would represent an increase of 5.2% to 8.9% year over year. This outlook is based on current market conditions and reflects the company's management's current and the preliminary estimates of the market. Operating conditions in the customer demand, all of which are subject to change. With that, I'd like to open the call to questions. Operator?
Operator
Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star and 1 on your touch-tone phone. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To answer your question, please press star and 2. If you wish to ask your question to management in Chinese, please immediately repeat your question in English. We'll pause momentarily to assemble our roster. And once more, ladies and gentlemen, if you'd like to ask a question, please press star then one. Knowing no further questions, this will conclude our question and answer session. At this time, I'd like to turn the conference back over to Yuhua Yi, IR representative, for any closing remarks.
Yuhua Yi
Once again, thank you, everyone, for joining today's call. We look forward to speaking with you again soon. Good day and good night.
Operator
This concludes the earnings conference call. You may now disconnect your line. Thank you very much and have a great day.
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