Sunlands Technology Group ADR

Gentlemen, thank you for standing by, and welcome to Sunland's fourth quarter and full year 2021 earnings conference call. Today's conference call is being recorded. I would now like to turn the call over to your host today, Yuhua Yi, Sunland's IR representative. Please go ahead.

Hello, everyone, and thank you for joining Sunland's fourth quarter and full year 2021 earnings conference call. The company's financial and operating results were issued in our press release. They are news-wise surfaced 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. Tongbo Liu, and our CFO, Lena 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 statement in relation to today's call. Except for the historical information and contained hearings, 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 extra results to differ materially from those contained in any forward-looking statement. For more information about potential risks and uncertainties, please refer to the coming filing with the Securities and Exchange Commission. With that, I will now turn the call over to our CEO, Yuhua Liu.

Thank you, Yuhua. Hello, everyone. Welcome to Sunland's first quarter and full year 2021 conference call. The year 2021 was full of uncertainties on both the micro and education industry levels. Given these challenges, we strengthened our focus on healthy, steady growth to overcome obstacles that prepare to capture opportunities ahead of us. More specifically, we strive to streamline our operations with a linear organization and discipline the cost control measures. Continue to optimize our product mix to concentrate on demand-driven markets and spend efforts on improving services and acquiring students in a more efficient manner. As a result of our clear strategic plan and a steadfast execution, we are delighted to close 2021 with record high net profit of 115.8 million RMB in the fourth quarter and 212.4 million RMB for the full year, delivering on our commitment to balanced growth and profitability. Our improved profitability amidst the year-over-year moderation in growth speedings and new student enrollments well reflects the effectiveness of our strategic direction and execution excellence. Now let's turn to the performance of each of our major course programs. In terms of professional certification and skills programs, we believe there is still huge market potential. on the demand side. On one hand, we have demand from working professionals who not only seek to stay competitive through job-relevant or credential courses, but also increasingly take courses to complement their primary skills and develop new interests and hobbies. On the other hand, these programs are also attracting students from a wide range of age who are looking for interest-based learning as part of a new lifestyle. To tap this potential, we continue to focus on developing a diverse range of courses to fulfill the ongoing interest or role-based learning demand during the fourth quarter. Thanks to our extensive course resources, our net revenues and gross billings for professional certification, and skill programs in the quarter increased by 37.5% and 16.5% year-over-year, respectively. Going forward, we will continue to diversify our course catalogs and tailor our courses to a greater variety of learner groups. As the breadth and depth of our course offerings expand, we believe our professional certification and skills programs will capture the increasing share of the market and realize continued growth. With respect to our post-secondary courses, as we strive to fine-tune our product portfolios, we strategically shifted our focus toward master's degree-oriented programs to capitalize on growing demand. Most of our students for these programs are working professionals. As the job market becomes more competitive due to ongoing pandemic-related challenges, an increasing number of working-age people are realizing the importance of postgraduate education. China's 2022 international postgraduate entrance exams received another record-setting number of applicants, jumping by 21.2% year-over-year to 4.6 million. while admission became increasingly difficult, as reflected by a possibly 9% year-over-year decrease in 2021 acceptance rate. While pressure mounting on their career paths and competition for postgraduate education is intensifying, more applicants are turning to us to utilize our professional preparation courses to improve their odds of acceptance. and thereby enhance their competitiveness at work, driving increased demand of master's degree-oriented programs. Right in this tailwind, net revenue from our master's degree-oriented programs grew 5.5% and 37.6% year-over-year for the first quarter and the full year, respectively. Annual growth speedings and new student enrollment for this segment also continued their upwind trend for year 2021 despite a year-over-year decline in the fourth quarter due to the step-up of our balanced growth and profitability strategy. In 2022, we continue to leverage our highly capable In 2022, we will continue to leverage our highly capable teams experienced in MBA exam preparation to solidify our leadership position by expanding our course portfolio and optimizing our teaching and service. Regarding our ST programs, we remain committed to enriching our course offering, improving operating efficiency and the service quality during the quarter. Given our established effective teaching system and results-driven teaching methods, we continue to deliver high teaching quality and provide premium courses to our students. Meanwhile, we took further measures to control funding and enhance our student acquisition efficiency, which in turn has driven high quality growth. Thanks to our effective course control measures, our course structure improved during the first with sales and marketing expenses and general and administrative expenses down 44.2% and 7.6% year-over-year respectively. However, we continue to pump new blood into our growth strategy by maintaining our investment in new growth development as evidenced by a slight increase in product development expenses of 0.5% year-over-year. in the fourth quarter. Furthermore, we remain focused on improving student acquisition efficiency by adopting more cost-effective acquisition channels and leveraging cost-saving opportunities while customizing sales and marketing solutions for different student groups based on their unique profile and needs. We are pleased to see our strategy already bearing fruit over the past three quarters and for the full year 2021. With a successful turnaround in profitability, SunLens demonstrated both its resilience and agility when navigating challenges amid 2021's shifting industry landscape. In 2022 and beyond, we will continue to align our business operations with our strategic objectives to bring value to our students, employees, shareholders, and the broader society. With that, I will turn the call to our CFO, Selena, to run through our financials.