This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
Operator
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.
Yuhua Yi
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.
Tongbo 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.
Yuhua
Thank you, Tongbo. Hello, everyone. We are excited to register net income of 150.8 million RMB in the fourth quarter. compared to the net loss of 73.5 million RMB for the same period last year, marking our third consecutive quarter of profitability. This solid performance was driven by our 0.7% year-over-year top-line growth and a 40.5% year-over-year decline in operating expenses due to our strengthened expense management practices. our net profit margin expanded significantly to 25.6% in the fourth quarter, up 38.2% percentage points year over year and 10 percentage points quarter over quarter. Looking ahead, we are stressed in our commitment to offering premium course content and services to our students while adopting effective measures to further reduce costs and boosting operating efficiency, aiming to achieve long-term sustainable growth. Now let me walk you through some of our key financial results for the fourth quarter 2021. All comparisons are year-over-year, and all numbers are in RMB, unless otherwise noted. In the fourth quarter, our net revenue was $5. $88.9 million, an increase of 0.7% year-over-year. Cost of revenue decreased by 8.6% to $89.4 million in the fourth quarter from $97.8 million in the fourth quarter of 2020. The decrease was primarily due to, number one, declined compensation expenses related to our cost of revenues personnel, and number two, reduced insurance-related costs incurred for our integrated online education service package purchased by students. Growth profit increased by 2.6% to $499.5 million from $486.7 million in the fourth quarter of 2020. In the fourth quarter, operating expenses were $400.5 million representing a 40.5% decrease from $673.7 million in the fourth quarter of 2020. Sales and marketing expenses decreased by 44.2% to $339.4 million in the fourth quarter from $608.5 million in the fourth quarter of 2020. The decrease was mainly due to lower spending on branding and marketing activities and declined compensation expenses related to our sales and marketing personnel. General and administrative expenses were $50.5 million in the fourth quarter of 2021, decreased by 7.6% year-over-year, mainly due to a decrease in rental expenses and a decline in compensation expenses related to general and administrative personnel. Product development expenses increased by 0.5% to $10.7 million in the fourth quarter from $10.6 million in the fourth quarter of 2020. Product development expenses were mainly comprised of compensation expenses. Other expenses were $3.1 million in the fourth quarter, compared with other income of $109.4 million in the fourth quarter of 2020. was primarily because of the value-added tax exemption 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 fourth quarter was $150.8 million, compared with net loss of $73.5 million in the fourth quarter of 2020. Basic undiluted net income per share was $22.89 in the fourth quarter of 2021. As of December 31, 2021, the company had $676.7 million of cash, cash equivalents, and restricted cash, and $184.2 million of short-term investments. As of December 31, 2021, the company had a deferred revenue balance of $2,348.2 million, compared with $3,024.4 million as of December 31, 2020. Capital expenditures were incurred primarily in connection with IT infrastructure equipment and the leasehold improvement necessary to support the company's operations. Capital expenditures were $5.2 million in the fourth quarter, compared with $4.7 million in the fourth quarter of 2020. For more of our 2021 full-year financial results, please refer to our earnings press release for further details. And now for our outlook. For the first quarter of 2022, Sunland currently backs net revenues to be between 590 million RMB to 610 million RMB, which would represent a decrease of 15% to 12.1% year-over-year. This outlook is based on the current market conditions and reflects the company's management's current and preliminary estimate of market, operating conditions, and the customer demand, which are all subject to change. With that, I'd like to open up to the call to the questions. Operator.
Operator
Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. And for the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, Please immediately repeat your question in English. And, ladies and gentlemen, as a reminder, if you would like to ask a question, please press star then the 1 at this time. Showing 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. Yu Hua, the line is open for your closing remarks.
Yuhua Yi
Once again, thank you, everyone, for joining today's call. We look forward to seeing you again soon. Good day and good night.
Operator
Thank you. This concludes the earnings conference call. You may now disconnect your lines and have a wonderful day.
Disclaimer