Sunlands Technology Group ADR

Ladies and gentlemen, thank you for standing by. And welcome to Sunland's fourth quarter and full year 2022 earnings conference call. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I would now like to turn the call over to your host today, Yuha, Sunland's IR representative. Please go ahead. Yuhao, your line is open.

Hello, everyone, and thank you for joining Sunland's fourth quarter and fourth year 2022 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. Tongbo Liu, our CFO, Selena, Lu Lu, and our financial controller, Hangyu Lu. Selena will provide an update on our operational performance on behalf of our CEO, Mr. Liu, and then Hangyu will give you an overview of our financial performance on behalf of Selena. 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 a 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 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 potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission. With that, I will now turn the call over to our CFO, Selena Lu Lu. Thank you, Yu Hua.

Hello, everyone. Welcome to Sunline's fourth quarter and full-year 2022 Early Score Conference Course. Thanks to our unwavering execution of our balanced growth and profitability strategy, we concluded 2022 with sustained growth in both new student enrollments and our bottom line in the fourth quarter. We maintained our disciplined cost management practices and streamlined operations to boost our efficiency and profitability. driving our quarterly net income to RMB 181 million in the fourth quarter, and our full year net income to RMB 643 million, more than triple that of 2021. During the quarter, we also sharpened our strategic focus on diversifying our course content, enhancing our course and service quality, and improving student acquisition efficiency. leading to a 48.2% year-over-year increase and a 19.5% quarter-over-quarter increase in the new student enrollments. As we strive to expand our margins while keeping long-term healthy growth in mind, we continuously optimized our product mix in 2022. Given the structural shift in industry, we focused largely on refining our master's degree-oriented and professional skills programs. Over the past several quarters, consumers have become more conservative with their discretionary spending due to the uncertain impact of the macro environment on their work and life. This consumer sentiment has created challenges in the market demand for constantly continuing education programs. However, despite the difficult market conditions, we also see the new opportunities as they arose in response to the national policy of building a lifelong learning society and enriching adults' lives through education. We gradually adjusted our course content offerings to reflect the market dynamics Accordingly, we directed more of our resources to those trending programs. For example, we further pursued the opportunities fueling the ongoing market demand for skill and interest courses by expanding our professional certification and skills programs, which yielded encouraging results. In addition to exam preparation courses for certifications, We added a diverse range of skill, interest, and hobby courses that cater to a wider student age group. These targeted courses frequently attract students who belong to highly specific interest communities, making it easy to generate word of mouth publicity among them. This also creates more cross-selling opportunities and allows us to expand user lifetime value, thereby enhancing our user acquisition efficiency. In the meantime, the job market remains competitive amid an uncertain macro environment, prompting working professionals to continue to adopt our convenient and efficient platform for the ongoing education and professional exam preparation. They need to stay relevant. Driven by sustained demand for our certification programs and the rising popularity of our skill and interest courses, new student enrollments for our professional certification preparation, professional skills, and interest programs in the fourth quarter grew 82.7% year-over-year and 22.4% quarter-over-quarter. For the full year of 2022, New student enrollments for these programs increased by 59.8%. Alongside our continued product mix optimization, we have been prudently exploring new monetization opportunities to drive our future growth. As we mentioned last quarter, we innovatively combined the sales of merchandise with courses. to create additional value for our students. Going forward, we will continue to delve into the research of other potential revenue streams to diversify our product and service offerings, enhancing our resilience against the various challenges. Last but not least, in the fourth quarter, we remained focused on cost efficiency and refined operations to help us navigate the persistent micro uncertainties, despite the lifting of the pandemic restrictions. We'll continue to streamline our organization to boost efficiency and agility. Meanwhile, we have kept a close eye on our operating expenses to ensure every penny is well spent. The disciplined expense control led to a year-over-year decrease of 10% 0.5 percentage points in sales and marketing expenses as a percentage of net revenues in the fourth quarter. However, such decrease did not result in a decline in new student enrollment, which speaks to the effectiveness of our student acquisition and expense management strategies. Given this, we believe our key focus of cost control And cost control and efficiency enhancement will prepare us to emerge stronger when new opportunities arrive. As we progress into 2023, we remain committed to refining our product and services to fulfill a wider age group's learning needs while amplifying our operational efficiency improvement efforts to support our long-term sustainable growth. That concludes Tong Bo's prepared remarks. With that, I will turn the call over to our financial control, Hang Yu, to run through our financials on behalf of me.