Sunlands Technology Group ADR

Ladies and gentlemen, thank you for standing by and welcome to the Sunland's first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I will now turn the conference over to you all. You are Sunland's AR representatives. Please go ahead.

Hello everyone and thank you for joining Sunland's first quarter 2023 earnings conference call. The coming 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 financial controller, Mr. Hang Yu Li. 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 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 Communist Filings with the Securities and Exchange Commission. With that, I will now turn the call over to our CEO, Tongbo Liu.

Thank you, Yu Hua. Hello, everyone. Welcome to Sunland's first quarter 2023 conference call. Prior to commencing, I would like to kindly remind all attendees that the financial information referenced in this release are presentated on a continuing operation basis and all figures are denominated in RMB unless explicitly specified otherwise. As we reflect on the first quarter of 2003, We have witnessed a steadfast and consistent performance in the challenge operating environment. Our first quarter net revenue remained steady, reaching RMB 566.9 million, exceeding the high end of our guidance range. Our net income also experienced a slight year-over-year increase, reaching RMB 118.1 million. marking the eighth consecutive quarter of sustained profitability for our company and setting a remarkable net income margin of 31.8%. We remain optimistic about our future prospects based on this encouraging start to the year. During this quarter, we also achieved a year-over-year increase of 3.8 percentage points in our gross profit margin. setting a new record high of 88%. Meanwhile, we have maintained a sharp focus on diversifying our course content, elevating the quality of our offerings, and optimizing student acquisition process. These concerted efforts have yielded remarkable results, as evidenced by a substantial year-over-year increase of 22.2% in new student enrollments. Moving forward, we are committed to maintaining this positive trajectory and continuing our success employing our cost-saving and efficiency-enhancing business strategies to support long-term sustainable growth. Now, let's turn to the performance of each of our major cost programs. For post-secondary programs, our strategic reduction of marketing activities coupled with increasing market competition from the new entrants aiming to tap into the immense potential of the segment led to a decline in both new student enrollments and course buildings. Despite facing intense competition and operating with a complex macro environment, we maintain our optimistic outlook for the future of our academic programs. This optimizing is particularly bolstered by the rising demand for continuing education, especially driven by the heightened employment pressures. Moving forward, we remain committed to delivering more precisely targeted, high-quality post-secondary courses to our students. We believe that our 20 years of experience in exam preparation, along with our experienced and well-received teaching staff and extensive learning resources, will position us and advantageously compared to other competitors in the long run. The sector comprising professional certification preparation, professional skills, and interest courses has demonstrated outstanding performance with the year-over-year revenue increase exceeding 15.9%. Additionally, our relentless pursuit of developing novel interest programs has constantly borne fruit, propelling the revenue generated by the sector to an impressive growth rate of 105.7%. This substantial increase has cemented it as a significant and reliable source of income for our organization. Building upon this remarkable success, our steadfast commitment drives us to continuously refine our products and services. meeting the involving learning needs of a broader universe of potential customers, ensuring that we remain at the forefront of industry. The domestic economy continues to recover, leading to overall improvement in the employment situation. However, according to the data from the National Bureau of Statistics, since the start of 2023, the youth unemployment rate for the individuals aged 16 to 24 has persistently remained at an elevated level, reaching 20.4% in April. The first job market competition will continue to drive to growth of online education as job seekers utilize it as a means to enhancing their skill sets and improve their chances of securing desirable employment opportunities. Additionally, we have observed that contemporary young individuals demonstrated a general inclination towards interest-based education. They recognize the dual benefits it offers, the opportunity to explore and develop personal interests for personal enrichment and self-fulfillment, as well as the potential for supplemental income or career advancement. Furthermore, there are other notable trends that continue to gain momentum, such as the increasing focus on lifelong learning and the shift from offline to online education. As we move forward, we remain committed to adapting our educational offerings to meet the involving demands of learners and leveraging these trends to facilitate accessible, effective, and lifelong educational experiences. While we have made significant accomplishments, it is important to acknowledge that we are also confronted with challenges in other aspects of our business. The persistent macro uncertainties and involving market dynamics have influenced customer behavior for several of our products offerings. leading to a year-over-year decrease in net revenues. We have been proactive in addressing these challenges by refining our operations and closely managing our expenses. Looking ahead, we will continue to explore our potential revenue streams, diversifying our products and services offerings to enhance our resilience in the face of various challenges. In conclusion, our performance in the first quarter of 2023 reflects our commitment to balance growth and profitability. We remain focused on delivering high-quality education and expanding our market presence. We extend our gratitude for your presence today and the continued support you provide. Thank you, and we look forward to your valuable engagement. I will turn the call to our financial controller, Hang Yu, to run through our financials.