Sunlands Technology Group ADR

Ladies and gentlemen, thank you for standing by and welcome to Sunland's third 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 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, Yue Ya. Sunland's IR representatives. Please go ahead.

Hello, everyone, and thank you for joining Sunland's third 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 release 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 Lu. 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 statement in relation to today's call. Except for the historical information contained herein, certain of the matters discussed in this conference call 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 filings with the Securities and Exchange Commission. With that, I would now like to turn the call over to our CEO, Tongbo Liu.

Thank you, Yu Hua. Hello, everyone. And thank you for joining Sunland's third quarter 2021 earnings conference call. We are pleased with our third quarter financial metrics. Our net revenues grow 9.9% year-over-year to RMB 95.1 million despite the evolving industry dynamics. We recorded net profit of RMB 93.8 million compared with net loss of RMB 165.8 million during the same period last year. And year-over-year, 13.8% and 29.3% decline in new environments and growth spilling, respectively, which are attributed to our continued efforts to execute our balanced long-term growth and profitability strategy. As COVID-19 pandemic resurgences in certain regions in China continue to create challenges for business operation and the border economic recovery, Scientists have taken steps to improve operating efficiency and reduce costs. With respect to talent acquisition, many companies have become more prudent in selecting talents and have raised their expectations for candidates and new hires. This ultimately led to a more competitive labor market in the third quarter, prompting working professionals to seek enrichment courses like ours. to increase their competitiveness through further education and rescaling and upscaling. Meanwhile, industry dynamics are also evolving rapidly, with an increasing number of companies joining the end-of-education business after the implementation of China's K-12 after-school tutoring regulations. With this landscape, we continue to execute our balanced long-term growth and profitability strategy and so to enhance our competitiveness by focusing on optimizing our product mix, improving services, reducing costs, and enhancing student acquisition efficiency. We are pursuing quality growth rather than user skill only. Our professional certificate and skills programs maintain their growth momentum during the quarter. Its revenue and growth spending increased 148.2%, and 49.3% year-over-year, respectively. Presented by our constant efforts to board the course catalog as user-friendly, career-efficient, and skill-intensive, we reflect the students' growing adoption of our platform as we refine our course offerings with more premium and diverse course content. The breadth of our course offerings also appears to more people across a wider range of age groups, which could help further expand our student base. We believe that with our endeavor to provide our students with a better learning experience, we are well positioned to fulfill the surging demand for low- or interest-based learning catering to end-users of all ages. We achieved a 20.8% year-over-year increase in net revenues in our master's degree-oriented programs, while new enrollments and growth ratings decreased by 22.2% and 10.2% year-over-year, respectively, as we prioritized quality growth. However, we continue to expand our growth global footprint during the quarter by forming additional partnerships with overseas universities and encouraging progress. At the same time, we continue to diversify our course portfolio for this segment, looking to capture the huge growth opportunities in this market. Demand for exam preparation courses remains strong and we expect further growth given the competitive employment market. Notably, a large number of our students are middle or senior level mentors who are strongly motivated to acquire more knowledge and sharpen their management skills through MBA and EMBA degree education. Helping them to achieve their learning goals will continue to be a priority as we see solid growth momentum and potential in this space. Turning now to our SDE programs, as we strive to optimize our product mix, growth feelings and enrollment for SCE moderated, which was also particularly due to the lightning regulation on advertisements for continuing education. We believe these regulations will help the industry achieve healthy and sustainable growth and contribute to China's effort to build a lifelong learning society. We have implemented strict compliance standards and will continue to monitor and comply with relevant rules and regulations while providing quality courses to our students. In addition, we adopted stringent policies and attractive incentive plans to enhance our operations and services in the third quarter. With the goal of providing students a smoother, more rewarding learning experience, We also implemented effective cost reduction measures with the emphasis on improving steel acquisition efficiency, resulting in a 35.2% year-over-year drop in operating expenses. We achieved this remarkable improvement by fully embracing technology and utilizing the natural centers across our various segments to realize meaningful growth. We leverage targeted, cost-effective new media marketing tools to acquire students and also continue to capitalize on cost-saving opportunities among different programs to increase repurchase rates and user lifetime value. We maintain the profitability for two consecutive quarters as we enrich our course offerings to address the varied students' needs to optimize the cost structure to enhance student acquisition efficiency with more cost-effective, innovative, and regulation-compliant market tools. We will continue to refine these new years to build on these successes and drive quality growth. That concludes my prepared remarks. Thank you, and I will turn the call to our staffer, Selina, for further review of our financials. Selena, please.