Q4 2019 Earnings Call
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Hello, ladies and gentlemen, welcome to unlimited earnings conference call for the fourth quarter and fiscal year of 2019 and 2019 was a very inspiring year for the education in life online. Children Market has experienced rapid growth and leaders in your offer Market has also achieved outstanding progress in the past year following the online merge of factors called you with her and Market pushing a significant efforts in both online and offline Market in the office space. We have not only re-engagement and off but we have also leather Christian person system capabilities or 12:30. Our online business has also been growing quickly.
That's what that's what our previous result the fourth quarter earnings continue to be very encouraging.
Not rather a nuisance quarter R&B 859.3 million and increase of 61.7% year-over-year specifically student enrollment in our primary growth engine. How does using enrollment to 873000 in the fourth quarter of 2019 which is an increase of 67.5% compared to $521,000 in the same period of 2018 correct price increase by 74.5% year-over-year and gross margin the fourth quarter remains above 45% in this earnings report. We have to avoid using that Revenue breakdown of our three men businesses pay $12 a month online for business for the first time. This will allow everyone to see a clear picture of our performance and to have a better understanding of our operating condition.
In the fourth quarter net revenues of Kato business grew 95.3% study abroad Services increased by 18.8% year-over-year for the fiscal year of 2019. The Consolidated net revenues reached R&B 3.14 billion with a very noteworthy increase of 59.3% year-over-year pushing always call our strategic product of online K-12 group class courses in November 2018 has achieved substantial development in 2019. We have also attend and and enrollment total of over two point seven million forty years and increase of 55.6% showing strong organic growth in addition to manage to review the operating loss by 44%
As we are all aware.
The coronavirus situation has put us in almost all Industries. The spread of the coronavirus is especially challenging for our offline business which puts pressure on our results for the month and 20 20 Christian online tutoring service is achieved success as we brought forward appointment of our online merchants of strategy Thursday. We have also implemented the Necessary Technology as well as student, excellent teaching and execution of which enabled the 93% off online conversion rate overall optimistic, as you continue to evolve the Corona virus outbreaks will become history one day all of the silver promising. If we pick the necessary steps to manage our business with that I will know like you turn the call over to Paul who will go over the financial
Thank you. Mr. Sean. Hello. Today is gentleman. Good morning. Please be reminded then all amount quoted here will be R&B and rap increases will be on a year-over-year business unless otherwise stated, please also refer to our earnings release for detailed information of a comparative and performance on a year-over-year basis.
starting with a fan
results for the fourth quarter of 2019
Revenues, well 859.3 million an increase of 61.7% from the fourth quarter of a 2018 month. This increase was primarily driven by increases in student enrollment month.
Student enrollment increased by 67.5% to $873,000 from $551,000 in the same period of 2018. Can you please tell children study abroad services and pushing online school each contributed six six hundred Seventy-Six thousand sixteen thousand and one hundred thousand in terms of student enrollment in the fourth quarter of 2019.
Revenues of paper topics between Services 581.9 million and increase of 95.3% from the fourth quarter of 2018 group Claus personalized tutoring and full-time tutoring course has contributed net revenues of 302.4 million.
Wow.
And 14.8 million and 164.7 million in fourth quarter of 2019, respectively.
Internal organic growth and an enemy is contributed to the solid Revenue achievement in the fourth quarter and full-year 2019.
Revenues of study abroad tutoring Services were two hundred seventy seven point four million an increase of 18.8% from the fourth quarter of 2018.
Revenue of nine School providing services for 4.4 million in the fourth quarter of 2019.
Cost revenues was 460 and 66.4 and increase 52.3% from the fourth quarter 2018 primarily due to an increase in teaching staff conversations.
News excluding share-based compensation expenses this 465.6 million increase of 52.6% from the fourth quarter of 2018 Rock topic was 392.9 million and increase of 74.5% from the fourth quarter of a 2018 dead.
Gross margin was 45% 45.7% compared to 42.4% for the same period in 2018.
Total operating expenses were 486.79 and increased 24.4% from the fourth quarter of a 2018.
My name is pounces where three hundred fourteen point six million an increase of 33.2% from the fourth quarter of a 2018 spelling marketing practices screen share basic common-sense expenses plus 310.1 million and increase 36.3% from the fourth quarter of 2018. This is what prime rib, you can increase monthly expenses Market in stock compensation.
General
My son was mistreated expands were 172 Point 1 million an increase of 11% from the same. 2018 Voltz General and administrative expenses, excluding share-based compensation expenses were 167.8 million and increase of 40.6% off from the fourth quarter of a 2018. The increase is primarily due to an increase in stock conversation and daily operating
Todashev. I used to come visit expenses allocated related operating costs and expenses decreased by 78.6% to 9 plus plan that you respect to shares granted in the fourth quarter of 2018 while they were there were no new restricts chairs or object hitting. I have a 2019
while cranking Rose was ninety three point eight million a decrease of 43.4% from the fourth quarter of a 2018 operating margin was negative 6.9% compared to the negative 31.2% for the same. 2018.
offering the most of typhoon children services
Increase by 36.4% to 28.2 million while operating margin prove the negative 4.9% from -14 month 9%
I'll take a loss of study abroad Services you created by 46% to 65.6 while operating the operating margin improved two- 23.7% -52 percent.
Just an operating loss with 84.2 million a decrease of 30.3% from the fourth quarter of 2018.
Adjusted operating margin was negative 9.8% compared to the negative 22.7% for the same period of the prior year.
Net loss attributable to press and limited with 108.8 million a decrease of 54% 54.6% off the fall quarter of a 2018. Are you soon as I lose never lost radius attributes push limited were 1.26 compared 22.92 during the same. Since 18 adjusted net loss unlimited was 92.5 million a decrease of 41.8% off from the fourth quarter of 2018.
but
And I lose in that loss previous attributable to push a limited with 1.06 compared to 1.9 for during the same period between the 18-month ebitda was -68.1 Million compared to -100 and 676.2 in the forequarter of 2018 - cultural Services was -11.1 Million compared to -49 / 2080 option was -7.9 percent in the fourth quarter of 2019 compared to -36 month.
33.2% in the same period in 2018 adjusted it was -51.8 Million comparison -95.4 million in the fourth quarter 2018
Adjusted ebitda margin was negative 6% compared to negative 18% in the same period in 2018.
No, it's fully Financial results for the physical year 2019.
Revenues were 3104 million an increase of 39.3% from 2018, increase timer driven by increased enrollment student enrollment increased by 55.6% to 2.87 million from 1.5 in 2018 paper towel tutoring study abroad services and put in online school each contributed to 2676 and 193,000 in terms of stealing enrollments in 2019.
Yep.
Revenues of case of job security services with one thousand nine hundred forty three point nine million an increase of 64.4% from 2018. E-class personalized teacher in full-time choosing courses contributing the revenues of one thousand one hundred three point six million 553.7 million M 286.6 million in 2019, respectively.
Revenues of study abroad Children Service, this is 1161 an increase of 10.9% from 2018.
The revenues of pushing online school providing Services 16.5 million in 2019 course revenues were 1629 point four million an increase of 31.1% from 2018 costs revenues excluding share-based compensation expenses increase by 31.4% to 1625.1 million.
Profit was $1,400 54.5 million an increase of 49.7% from 2018. Margin was 47.5% compared with 44.2% in 2018.
Total operating expenses were 1832 Point 1 million an increase of 12.8% 2018 start expenses were 6080 3.8 million an increase of 27.8% from 2018.
Expenses screen share the expenses increased by 29.6% to 1061.9 million.
General and administrative expenses decreased by 3.6% to spend $148 and 3 million.
General and administrative expenses excluding share-based compensation expenses increased by 24.7% to 544 million months total share-based compensation expenses allocated relate to the operating costs and expenses decreased by 30% per cent to 230.4 million.
Personals increased by 44% to 357.5 million operating margin was negative 11.5% in 2019 compared to 28.7% in 2018.
Operating loss of pay for services include by 48.3% to 119.9 million while operating margin improved to 6.2% from neck to 20%
Operating loss of study abroad Services you created by 40.9% to 237.6 minutes while the margin two- wage type process from negative 38.5%
Just keep operating margin was -4.5 4.1% compared to negative 11.8% in 2018.
Close to people to push and limited increased by 37.8% to 518.5 million compared to 833.4 million in 2018 download net loss per areas attributable to push unlimited were 6.06 compared to suck on 5/16 2018.
Just in that loss attributable to push and limited with 183.5 million compared to 325.8 million in 2018 adjusted diluted net loss for a test and limited with 2.14 compared to 4.52% in 2018 bought a few dollars and -349.3 million compared to -680.9 million in 2018. It was -114.2 Million compared to 256.8 million in 2018.
Unlocking was 11.3% in 2019 compared to negative 30.6% in 2018 adjusted. Ebitda was -14.3 month. I'm happy to -173.3 million in 2018.
Adjusted ebitda margin was negative 0.5% compared to negative 7.8% in 2018.
That's we'll move on to the balance sheet of December 2019. The company have to talk half cash equivalents in the card portion of the cash or six hundred and the 6.3 million compared to $778 as of December Thirty One 2018 the current phone number we speak to cash consists primarily of of the partners with Chinese commercial Banks as collateral form a band Warren's within one year term.
finally
for guidance
Total sales for 2020 we expect revenues between 108 million and 738.8 million which represents an increase of 15% to 20% year-over-year this forecast reflect. The company's current and preliminary views on market and operational conditions, which I checked to chant. This concludes of the prepared remarks. I will not turn the call over to the operator and open the call up for Q&A operator. We're ready to take questions Thursday. We will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone. If you were using a speaker phone, please pick up the handset before pressing the keys to withdraw your question, please press * then two at this time. We will pause momentarily to assemble our roster.
The first question will come from Mark Lee was City.
Hi, thanks for time. So, may I ask if you could share more color on the matches you have taken off for the coronavirus incident and how much impact on the financials besides the revenue. Maybe also the margin you can share with us off, and I also want to know what is our Target and the strategy for our online education Revenue this year. Thank you.
Thank you, Mark. Ask your first question. I will break down into the the forces in the winter vacation primary job in January and February and also the impact the the novel the virus on the on the March which is the the starting off the starting a month for the spring semester. So as for the winter courses the winter vacation courses offered. Luckily, we with the help of the o m o strategy with the practices the trainings, uh, we obtained from the from the initiative. We took starting from the from November 2018. We successfully yep.
card over ninety-three
Person of a student's those offline students to other online group classes. Um, and we have a round only off 2% roughly about 2% of students who refunded their courses. So the the the virus is impact on the other winter courses with relatively small and uh of a performance is quite satisfactory to the management, but it's Thursday is impact on the on the spring semester. Say, for example, this Marge up till now I could not quantify is dead impact, but I can say that it it did have impact quite significant impact on the recruitment. Yep.
student for the
Brings master, so I'm sorry. I could not quantify it impact but I I do think I would like to shed some light on the retention rate of over spring semester. I mean from the winter courses, it's bound 80% So the retention rate is you'll is. I suspect that factory, but we need maybe one two or three weeks off to say the the you know, the body fight impact the virus on the spring semester until the those days who's boarding schools. The students go back to to Thursday.
And the second question we with the with our own strategy. We have research strategies long as we have our CEO. Mr. Sean mentioned last earnings released. We our strategies to cover those lower-wage choose. I mean four five six with online programs mainly from pushing online school. And with the boss has a higher tier cities till 1 to 3. We would like to leverage some of our students offline to online a blended learning process. And we also have a the third strategy to explain
Is it called a what?
How mean meaning we will expand into the you know, the relatively Suburban areas of the Cities we currently offer us except for the Press was those dual teacher programs. So that's basically the the three-step strategies of omu strategy. Thanks Mark.
Thank you.
The next question will come from the T of c i c c.
I don't have I don't have no choice dogi quite a long time since I Lose Yourself Hi Sushi. May I send you mail to Home Depot a lost dog?
Chico who? How did she
Jeep I have three questions for the management. The first one is regarding pushing online school. What's the strategy in terms of the fierce competition in the market and my second question is related to the summer because due to the outbreak of the coronavirus in China right now. There is saying that this summer might have very short short in the time. So, what's the impact on that Financial? It's Dimension management can provide detailed explanation and the third question is regarding to the teaching staff as we may know that there are a lot of online players right now. And we also pushing have these o m o strategy game.
So is there any problem or any pressure from the hiring kitchen staff? Thank you.
Okay, thank you would have been for your questions for a first question as to the strategy of pushing the online school. Our strategy is quite someone clears. We folks on the lower-tier cities. We cover the other students clients there with the online large group classes with this business model has been proven by the you know, the top leaders top players in the field like GSX. So I I won't explain the strategy, you know into details so there to take away, um, uh elements first lower-tier cities second a large group classes.
Yeah, cuz again is like the question raised by Mark just now for the for the Tier 1 2 3. We will see you folks on the the strategy with the help of a current of Learning Centers or your second question as to the boss potential cutting of the you know, the summer vacation and the delayed opening of those days schools. Yes. It does suck have impact. Um
probably
Impact on the on the performance of potion and and and I think also on the other players in the field because we may we have to spend more time with our students with the online programs and we are still not sure whether we can restart off-line programs. So yes for one thing it will have in it is impacting and it will have impact on life out of a performance in the of the spring semester, but unfortunately right now I couldn't quantify cannot quantify off either is impact on the on the financials, uh of the spring semester or uh those financials in in the club.
because by
It's right at this moment. There is only one there is only one Province across China who has just confirmed this reopening only for the month ninth and Twelfth graders. Let alone the other, you know Grays so sorry, I could not quantify it but it won't take long to two weeks of three weeks. We can maybe catch up with this, uh, Quantified impact. The third question is to the supply team of teachers with other all the most strategy. Um, we we have several tactics to deal with it first with the higher the higher-tier cities like 1 to 3. We already have you know, 5,000 full-time teachers wage.
across 34
They are they are well-trained and they have practiced oml strategy in during the dead of winter vacation. So we we already have over five thousand teachers by hand and as 2 a.m. Recruit new teachers, we we have launched our campaign spring Campaign together with em talk players not only in our industry but also, uh across Industries with the the top the top came across China indeed will cover the uh, 211 the 98.5 universities colleges dead.
so
Yes, we have a launch of a campaign and we we already have you know, five thousand teachers by a dozen people questions again.
All right. Thank you.
Again, if you have a question, please press * then 1 at this time.
This concludes our question-and-answer session. I would like to turn the conference back over to Claire young for any closing remarks.
Thank you. I'll praise her and closing on behalf of the entire management team would like to thank you again for your participation in today's call any further inquiries in the future, please feel free to contact. Thank you.
Thank you. The conference is now concluded. Thank you all for attending today's presentation. You may now disconnect your lines. Have a great day.
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