Q3 2019 Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to Sundance Third quarter 2018 earnings Conference call. At this time all participants are in listen only mode. After prepared remarks by the management team. There will be question answer session. Today's conference call is being recorded.

You have any objections you may disconnect at this time.

I would now like to turn the call over to your hosts today, you know Sundance IR Director. Please go ahead.

Hello, everyone and thanks for joining sometimes.

29, paying eight earnings conference call.

All the coal Oh, let's see how comfortable you will provide an update a wash operational excellence as well as strategic initiatives.

Let's see outside the them equally well keep you I love you off our financial Comfortableness.

So provide.

Our guidance for the fourth quarter of something like 10.

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We will move into big <unk> session.

Oh, I hand over to use the management.

Like to remind you sound like Safe Harbor statement.

Relation kick todays call, except for the historical information come kind caring.

That's all the matters discussed in this conference call for.

Forward looking statements.

These statements all based on current cotton.

Tonight I projections.

That's cool you should not place on good reliance on them.

<unk> looking statements involve inherent risks.

Oh certainty.

A number of importance back to us.

Could cause actual results to differ materially from those come tank Inc. any forward looking statements.

For more information about the potential risks and uncertainties.

Please refer to the Companys filings with the Securities and Exchange Commission.

With that I'll now turn the coal Oh, the two I'll say Oh, it's Tom will do.

Sorry, Hello, everyone welcome to sound on sort of quota.

Do you 19 conference call they'll either so called are we talking to folks on the diversified to say, it's all still does not condition vessels to try to most students clobber I'm plentiful.

Driven by the initiatives. However, circled her topline bridged I M. B U 527.3, many which was in line with all the guidance and those represented a 2% increase year over year.

We also narrowed all when there's no margin to 24.6%.

They sort of cold Turkey worse. This fourteens 3.8 person you know they have seven pure done after Europe as we continue to manage costs and expenses.

Well, there there's sort of quarter, we continue to evolve solve our strategic initiatives and Newport Dr. features in the effort to promote all the brands I mean proves the quota carrying costs. They said the services, but bring 12 are still done.

Although strategic initiatives also include their relentless pursuit of cotton age technologies, particularly ways that emphasis on applying the eye to indication I've always tried to further differentiate caliber offerings.

They haven't mining over lost a database so let me break horrible.

And the leverage how were integrated <unk> knowledge.

Well to I don't know individual doesn't mean happy and that the led a personal lives. The study plans for our students. So that doesn't mean can be a more efficient kinda talk too.

Well, so you add because the owner to I don't know solve a massive data base all historical examination questions in order to predicts the most frequent the past most important and optimize our test the progression materials more artificial intelligence place nice sudden showed rolling so nothing.

Turned on management to improve quoted fuel services for still don't yet and pushing on the training as well as a protect still does rights. For example, often course 12 are still does what it's hard to buy Oliver Yeah system, which can depicts sensitive works out in the port coal Validations.

And they need it or do you sense that large full corrective action.

That's how I don't I say it is also the foundation clobber recouping the horses.

Do you tell that they had record for kinda data profiling in Kerviel results kind of training. The first then pay its acumen and the internal stuff promotions next let me provide style specifics oh several several key highlights this quarter [noise].

First as we mentioned in previous earnings call or we are strengthening our strategy strategic emphasis on not only as to your products with the must are sold into the perclot, scoring Rhapsody was that in questioning diversified portfolio of nutritional products. We are enjoying a more balanced the revenue mix our must personal.

It into the paradox continue to attract the interest from students increasing to 50 important I'm person to of course balance how does it until they're sort of cold huh.

<unk> approximately a 5.9% out at the end of quarter, sorry, It Tonight to me asking.

Saudi the girls was attributable to favorable supply and demand that dynamics for master's degree programs in China. That's the way I did Brady the buildings they last quarter spending school.

And also to all airports in developing paradox design does best difficulty to match the needs of prospective students in this segment.

And it's a war submission mentioning that way and the when will fall within international a partnership universities Jose if they are well first of graduation ceremony, all celebrates a national and be a program minuscule didn't fall away from the venue also tended to the ceremony and the showed how much they had enjoyed the they of course.

<unk>, which symbolize is our first the milestone and approves the effectiveness of our river motion already Oh P.M. model.

Well more than ever are convinced of that continuing to expand over masters oriented approach. That's helped more people bidding for the flow learning and help eliminates the information on the combination cat, resulting from historical Joel Joel Joel glossy cultural and economic effect.

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We are more than ever determine to expand offer online from national must have programs to bring high called it he and I don't Christian resource from Europe , and the United States to still didn't seem China and the share China indication resource with other people at a point countries.

I'm confident well they'll continue to capture the market opportunity for higher education as a way provide programs in response to ever evolving market the means.

Second our mobile App, so nine speed edition, which we announced in January continues to gain popularity among students due to its easy accessibility fostering inter Archie speed and the minimal memory storage requirements by the until they sort of quarter users users of this AD for rich.

So it's important stirring, meaning increasing further from the only where many users how does it until the second the culture and a 250 assault and at the end of the first quarter.

Also company knows me upgraded and diversified outdoor we tried to BT programs, which are designed to allow students to maximize their study is high on the on mobile devices. So there's a fish in the use of time fragments was sold in the increasing the number off exam preparation Quechuas company <unk> a company either by all of our student.

Which we believe we'll need to heighten or pass rates are going forward not study, while we are optimistic about today in long term girls. So if all goes fittings and you'll still doing <unk> enrollment will also continue to six patents to top line and a button nonperformers in the sort of coulter over net loss narrowed by.

Looking to faulting, 2.6% year over year, so and be a 129.8, meaning as lippert density mentioned over expenses.

With all were leading to come on large high quality and occasional content on the Watson mannequins model, well I'm confident in over a bit into girl and be the mckesson, neither in China and out the I'm not into fishing industry.

Is that I would love to handover the call it 12 or simple Steven Raso upper financials.

[laughter], how comfortable and Hello, everyone. Thanks for joining us for the third quarter. Our net revenues were RMB 500 on 27.3 million you law was our guidance.

This brings our new student enrollment declined by 18.8% and 20.8% respectively year over year asked me continued to a Johnston <unk> Murphy expenses didn't view our fault I was sort of twos is doing an acquisition costs a macroeconomic trends. However, it's already so far do crazy moderator.

From the second quarter, which shows our student acquisition I first are gaining traction. In addition, I was talking about just mentioned.

Following the improvement in that loss in the second quarter in the so called her are not lost no again year over year to RMB 129.8 million compared with a loss of RMB 226.3 million in third quarter alternating.

Primarily as a resolved oh reduced or the media Street property expenses on the sales and marketing expenses.

Going forward, we will continue was steady execution of our five product expansion on the retention strategies to bring long term returns for both our customers and shareholders.

Now, let me walk you through some of the key financial results for sort of water.

In the third quarter of 29 team no revenues increased by 2% to RMB 527 point Threemillion from RMB 517, mainly in the third quarter I'm trying to 18.

The increase was mainly driven by the grows in the number of students in the third quarter and plenty 19, compared with the third quarter alternating formally Neil student enrollments increased over the past years.

Cost of revenues increased by 20% to 22.7% to RMB 113.7 million. The so called her up 29 <unk> from RMB 92.7 me only in the third quarter I'm trying to 18, which was primarily due to the insurance premiums related to online.

I did patient services risk insurance coverage since late in 2018.

Gross profit decreased by 2.5% to RMB 413.6 million. It from RMB 400 on 24.4 million in the third quarter of 22.

Yes, the so called <unk> and plenty lighting.

Operating expenses were RMB 546.9 million, representing a 25.5, 21.5% decrease from RMB 696, probably streaming when he left third quarter of 2018.

So sunmarke expenses decreased by 20.8% to RMB 429.2 million, that's third quarter of 29 thing from RMB 542 million in the third quarter I'm trying to 18. The decrease was mainly due to reduced marketing spending reflective of.

This is a client prudent cost management.

You, Chris <unk> expense of sales on the marketing personnel.

General and administrative expenses decreased by 31, 4% to RMB 91.3 million in the third quarter I'm 20 lighting from RMB 131.1 million <unk> third quarter of 2018.

Paradox, the vitamin C. expenses increased by 14% to RMB 26.4, mainly the third quarter of 20, Nike Some RMB 23.2 million in the third quarter, we're trying to 18.

The increase was primarily due to a you increase the number of employees and the composition page two satellites paradox on technology DRAM as personnel during the quarter.

Net loss for the third quarter over time, the lighting was RMB 100 on 29.8 million compared with RMB 226.3 million in the third quarter of 22.

Basic and diluted net loss per share was 19, RMB, there's a third quarter of 20 lighting.

So September Thirtyth plenty lighting, the company had RMB 1516, I, probably familiar of cash cash equivalents and RMB 200.

8.8, familial short term investments compared with RMB 1240, 8.8 million off cash on cash equivalence.

RMB 1020 8.6 million of short term your last month as of December 31st 2018.

As of September Thirtyth was 29 thing the company had a deferred revenue balance up RMB 3000 onto 214.6 million compared with RMB 3000, 286 million as of December 31st 2018.

Capital expenditures were incurred primarily in collection of as purchase those buildings and the IP infrastructure equipment necessary to support a satellites operations capital expansion I think expenditures were RMB 11.8 million, that's sort of quarter up funny lighting couldn't parvez RMB 10 per month.

<unk> in the third quarter up 2018.

And in terms of the key financial results for the first nine months off 20 lighting, Let me walk you know details true.

In the first line mine sometime they liking not revenues increased by 17% to RMB 1640, 4.2 million from RMB 1400 on the 5.2 million in the first nine months alternating.

Cost of revenues increased by 17.1% to RMB 294.8 million in the first nine months were 29 team from RMB 251.9, many in the first nine months of 28.

Gross profit increased by 17% to RMB 1340, 9.4 million from RMB 1000.

853.3 million in the first nine months of 2018.

In the first nine months or 20 lighting operating expenses were RMB 1000, 658.3 million, representing a 15.9% decrease from RMB 1970 2.9, many in the first nine months of 28 here.

Sales on the marketing expenses decreased by 18 quantum 9% to RMB 1300 on a 16.2 million in the first nine months I'm trying to Nike from RMB 1600 on 22.7 million in the first nine months of trying to 18.

General and administrative expenses decreased by 12.1% to RMB 200 under 64.7 million in the first nine months from 20 lighting from RMB 301.1 million in the first nine months of 20 aging.

Product development expenses increased by 57.8% to RMB 77.4 me only in the first nine months I'm trying to unite here from RMB 49.1 million in the first night myself trying to anything.

Net loss for the first nine months of 29, King was RMB 255.6, Mooney compared with RMB 743.3 million in the first nine months I'm trying to 18.

Basic and diluted the night loss per share was RMB 37 points to 36 in the first nine months. So tiny lighting can power was RMB 100 on 21 point.

Nice phase three in the first nine months of 2018.

Capital expenditures were you incurred primarily in connection with purchase those feelings on IP infrastructure equipment necessary to support a salons operations.

Capital expenditures were RMB 15, Kwan Wami only in the first nine months of 20 lighting compared with RMB 255.3 million in the first time buyers will try to 18 [noise].

For the fourth quarter plenty lighting satellites currently expects net revenue was to be between RMB 520 million to RMB 540 million, which would represent a decrease of 5.1% to 8.6% year over year.

Well above all okay space all the current market conditions and reflects the accompany management's current and preliminary estimates of markets operating conditions and the customer demand, which are all subject to change with that I'd like to open the call to classrooms operator. Please.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using these speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then too.

Benefit of all participants on today's call. If you wish to ask your question the management in Chinese. Please immediately you repeat your question in English.

This time, we will pause momentarily to assemble our roster.

The first question today comes from Alex.

Please please go ahead.

Heightened engines. Thank you for taking my question Oh, My observation is that a in Q3 compared with Q2.

We we have Q on Q grows in terms of gross billings and a new student enrollments.

Hi, this in time.

Net loss also increased Q on Q, So when management show your thoughts on what will be a priority.

Sure.

Steel, which to boost oh spirits grows or.

Two continued.

To a narrow the loss thank you.

[noise] a a factor for the question the slight like Oh Lucky you all your missions the gross billings for a third quarter, a we oh see a ukraine as compared to other second quarter I know sold the losses are bigger than quarter and that's a primary.

Due to a the addition, though a spending all the sales and marketing expenses are assuming all the a this is most of the sales I'm running expenses are recorded a as wise or right. After the a the worst bidding but most of the girls business will be deferred onto be recognized as revenue in the future pure.

It is.

So that's the a the reason why the or the last first quarter is bigger than the allows for a second quarter, but as we've mentioned are doing the call or the ER. We are the company for the past up a few quarters, we continue to.

Ah two trial different ways to out to control cost control or the a general and administrative expenses can for the sales and marketing spend says and we have see some resolves a from our actions. So in the future I think our number one priority is due to ought to get more market share.

To a that that's our number one goal by the same time we.

Believe where you can yeah weekend, the us do Oh controller or a a cost and all the expenses and dogs continue to out to two tonight our loss.

Thank you.

Again, if you have a question. Please press Star then one.

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 beginning really Investor Relations director for any closing remarks.

Thank you once again, thank you everyone for joining today's call. We look forward to trust speaking.

Again, good day and good night.

This concludes the earnings conference call you May now disconnect your lines. Thank you.

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