Q3 2020 Sunlands Technology Group Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to so suddenly from third quarter of 22 of the earnings conference call. The.

At this time of participants hours of listen only mode. After prepared remarks by the management team they'll be of question and answer session of today's conference call is being recorded.

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I would now like to turn the call over to our host today every day.

I am I on representative please go ahead.

Hello, everyone and thank you for joining on on the continent Clunky Twinkie on this conference call the company's financial and operating results was issued a press release the on news wise from says Oh, Yes day and posted on line.

Most of the earnings press release, and the sign up for all the distribution lists the by the King I on a web site.

On the call I was the old kind of on you will provide an update on the operational woman as well as all the strategic initiatives.

Oh, the C of O seasonality, we I'll give you an overview of all the financial performance and also provide our guidance for the fourth quarter of 2020.

The I prepared remarks, we will move into the Q on a session.

Before I hand, it over to the management I'd like to remind you of on Safe Harbor statement in relation to today's call except for the historical information on the container Irene.

The matters discussed the in live conference call on forward Lookingstatements. These didn't lens on based on current trends estimates and the projections and therefore, you should not place on your line on the <unk>.

The <unk> looking statements involve inherent risk of an accident. It a number of the all important the factors could cause actual the love to do vary materially from goes contain the in any forward looking statement.

Information about the potential risks and on southern kids.

Please refer to the Congress filings with the doesn't George just on the exchange of commission with that I will now turn the call all of which will I was the old two volume.

Okay, Hello, Hello, everyone.

On to sell non sort of Coulter took the putting conference call.

Despite the short term impact on all of our operations of the called the non peak the dynamic for.

First half of dependent on he still needs to be worried of steady year over year increases in both gross opinions on the net revenue in the start of cultures.

From a result for appeal with the by a combination of the recovery macroeconomic conditions in China, that's the way.

The impact on the implementation of optimization initiatives, where the corporate business.

On the third quarter of goes for the answer which sits for 15 for putting the sort of me RMB increasing by six points. That's the person you over your on the Canadian sort of putting the one person for the quarter over quarter. The wheel attribute all of her strong goes the biddings the results largely to implement the moving self-sufficiency, where the news of poetry is the skill.

The Oh position as well as already has in brand awareness and the come from those upgrade of the 12 of product categories.

That's definitely for.

The sort of the performers in they stick on the quarter of the new printing net revenue yields increased two point the system per cent Youre you over the year to five looking one pulling to six moving RMB exceeding the top end all of our guidance by 4.2% lower all the new enrollment switched over one.

For the installed in the in the sort of Coulter Goading 14 stay of importantly, the person you over Europe and the 17 pull on the fly person on the quarter over quarter.

The they sort of quarter one day the for the purpose is to balance all the top line goes from mix for being the right. So the fix the OPEB of long tons tragedy airports to kind of thing, though to expand the all the portfolio of application know per thoughts on the putting come to the innovation.

While not totally items, they the market's sharing S.P. programs master's degree on to the programs and the professional took an occasion and the skills programs continue to reveal good for potential to be kind of the next the pillars the amount of day accommodates offerings.

[noise], let me start with most of the girl into the programs, which contributed a around the of the 31 person to of course things seem to sort of sort of quarter compared to what is a upon some of the mean the 17% in the second quarter loves the year. The goal of self monsters Orange is the degree on pay the programs in terms of both.

Moving us well the for nominal good testing and on.

So reported because sort of person the you all the you're on the looking at the point of full person quarter over quarter. This goes the was primarily driven by increased the neither for on working professionals.

I'll start on the shifts in the labor market remains the way it called the cold for the 19, but then make together with the increasing demand for kind of on where the high the on the criminal background of.

Not all of this in order to you rich on the program portfolio and of the true. It's the increased demand the flow of diversify the on the deflation at the at the height on the kitchen in the sort of alter the for the expanded the all of our partnership with Overstates the University of such as.

The pit of Roshan stay of the University. The provide the joint operating programs took into account over existing partners in the United States The <unk>.

Many of the Kingdom and that's true now we have knowledge of somebody's the join the all for its program.

The overtime for universities in line with all of our balance the go straight to the the airport is designed to further enhance the all were tripping the is and the competitiveness and the complement to all the masters degree or into the offering.

Due to the current bank or conditions in particular, the national cold and relative to the travel restrictions we are seeing the opt to the uptake.

The <unk>, Inc. The ban of for those the international on non focus the dog going to operating programs and we believe the trend will continue full for suitable for future [noise].

Based on current the lumber of submission of potential sort of stay of the flow of <unk> and put into the one I really do loans by most of the universities in China like spectators. The lumber of applicants for the post of grant of interest exams for because of the do well on the mission to surpass the record of story, Poland looking for men and say the follow up on its one thing.

Given this trend also whereas the fate of Black reports for all of the still it's on the marketing Department I have high confidence the being the accounting on if they worry about the many the this area.

With all of the proven ability to bring compelling offerings to the amount of that doesn't mean, it still does need with the sustainable goes past the way the head in developing on the portfolio of musters bigger oriented and the joint the operating programs since.

Since the programs also typically Perry hi, the margins for the all the standard programs or into the high rise the fees.

Especially India programs.

The further you blame on saw versus 10, the ball over over all girls the sorts of.

I see the come to know to promote the rest of the recording of the band of course offerings.

In professional certification.

Location on the patients and the focus on [noise].

[noise] on worth putting aside the signal in the also to the worse than the other clinicals in gross things seem sort of Coulter [laughter] generated through the close of being self one sort of not putting on mini RMB.

Sort of home to it on the other one pulled the non person the year over year on the line starting on file person. The put all of of course her in the third quarter. The settlement of accounted for putting the one point of full force until of of Oh, If all of our total gross billings compared to five point of seven person the for the start of quarter of Cook the nothing the.

On credit seem to stick them and the primarily the is the spends from on the rise in rising requirements from the laid them out there for my pay the for walkers and the kind of day its equipped with the Oh. The tests you know skill sets and the professional qualifications for me the height of demanding Roes on those are supposed to but it is was the.

Of course offerings presenting the attractive as the previous then the shorter term durations than traditional pause because that's all of the options with the variable going demand the in the segment in the long around.

Moreover, we believe when the way it's from the of course is more likely to purchase services from us of being were well on trending would checking employment the factors the acquired enhance competitiveness.

The third quarter.

The other list the much greater utilization of our online pencil to help students succeed in national its peak of them in August and the October or the way.

As opposed to go on to the unfolds exams and M.B. of programs the pending day peers in the fourth quarter on the teachers are committed to for the improving the quality of the efficiency of our live streaming cloud the if get deals of courses and the two therell tutor on matures what of such airport and of the.

Inquiries things just south of the examine the operation the total cost type and the number of caused the participants of the number of of course the company company completed all in cost of some of that they've kind of the in the if the in the in this quarter.

The 39% for the full force and then a 45% respectively Youre you over the year.

For the mall couple of.

During the parallel to the user experience and the trial of user stickiness with further integrate the Oliver of cocky age the had because non large into all aspects of all of our online platform.

That's where my thing over a cooking on offerings and the teaching matures so to the Diever innovate to for example is continuing to investing all the plentiful I agree its and the incorporating the implications of yeah, no large putting pool. The teaching results on the efficiency, we will always be part of all of our airport for the system over the long term the girls.

With over for citing true.

That's because the industry has sort of turn the mall multi pronged gross.

Well the Broncos strictly well covered on the in the accounting of the further enhancement of our brand on the diversified the per box looking forward. The M to drive top line goes by expanding all the program categories, increasing the approaches were used to acquire students and by improving over the lead.

Worsening of question seems [laughter].

On the same time, we will further optimize the button on per performers enabled the by of course, the hitting including the increments on the using A. I took the note on just sort of the all of our organizations.

I would like to hand over the call. The Taurus there for sitting now to rest of the rubber financials.

Thank you for more.

Hello, everyone.

Our third quarter financial.

Like our balance expansion for that matter.

Net revenues increased by 2.7%.

Yes.

Sales in our expectation.

He's actually the team Roxanne.

Across our organization.

In particular.

Our revenue contributions Jacek.

Other high line in the quarter that includes the can you.

Okay great.

The higher proportion of revenue coming from non eat for <unk>.

Hey accomplishment came from.

Improved efficiency in the are you.

Yes acquisition and the commercial.

Recognition on ARPU.

Diversity of content rich.

In terms of cash costs.

Cost to kind of told magic on wafer skewed on strike funding policy.

Actually we thought she and eight.

Well you were skewed by 16.7 per se lever year on year.

Looking ahead, we will continue to focus on Florida, and the service upgrade by deploying our AI and they hold on.

On the further refinements of our income operation.

Thank you for phones as well.

Well bring the long term value to our users on the share holders.

The stand level and the balance approach simple.

Now, let me walk you through some of the pay for national without all of the third quarter. The 20 Twond.

Oh from Paris here over here on on lot of Hearst timing on.

Oh, the otherwise going on.

In the third quarter natural revenue were five.

41.6 million on.

Increase of 2.7 year on year.

Cost of revenue decreased by 18.2% he bought from 2.2 non me in the third quarter from.

Well I'm going to 37 meeting on certain costs until the 119 the.

Decrease was primarily due to the used insurance related costs.

Hard for our integrated online.

Yes, I mean package for cheap.

I see.

Well profit increased the by 85%.

Q4 hundred 48.7 on me.

From.

In the 13.6 million in the third quarter sales force.

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In the third quarter of.

Breaking spoken for cash.

64.1 meeting the presenting on 21 important for fans inquiry from.

546 line.

The line.

Well the I'm talking about.

They all kind of marketing expense is.

Right I was 32.7% too.

560 line for meeting in the second quarter.

From 420 line for the two meeting the sort of quantum talking on.

Thank you Craig what's the money due to the increase.

On the while our station page two hours, the all kind of marketing.

And number two the funding.

Randy on the marketing it.

Excluding the more marketing promotion.

To diversify your debt definitions channel.

And number three share based compensation expense.

Hi, I'm from the second quarter of one he's one.

General and administrative expense.

60, 76.1 media interest there.

Well it sounds like it's on.

The praised the by 16.7 year over year, mainly due to the need for it in compensation.

I've got the developed markets for us.

Decreased by 29.7 debt.

To 18.6 million in the third quarter.

The hockey stick one more on unit in the certain cost on the Funky line.

The decrease was primarily due to a decrease from the compensation income was related to our for about 10 seconds.

Technology, you got from the.

During the call.

Other income increased to 47.3 million in the third quarter from.

Well I'd point to why meeting the sort of course I was wondering on the team.

The increase was primarily due to the value add.

The tax exemption of.

The 44.1 million offered by the relevant on foreign cash flow.

All of the National called me 19th the.

Relief efforts.

Yes for the third quarter of was well ahead of the 65 point I mean it on.

It was 120 line for me to certain funds the 19th.

Basic and diluted net loss per share for them.

Wonderful one it's too on the sort of hotel fund the 20.

As of September working on you're talking.

We had 1.1 gigawatts of cash.

Cash and cash equivalents on.

230 for 34 point for media offshore in terms of that.

As of September 31 of these like the.

The company had net deferred revenue balance all resolved and 9.3 million on.

Here to was 3200 on 28.8 convenient.

As of December 31st.

Once the line.

Yes, that's true for incurred five on eight in connection with our infrastructure.

On the leasehold came from net.

Necessary to support the salt life operation.

Capital expenditures for 14.3 net certain quota of hedge was 11.8 meeting the third quarter of 20 line.

[laughter].

And now all of that well.

For the fourth quarter of talking funky follow on on coming back.

Net revenue to be between 514 media true.

Okay.

Yeah.

Which would represent a decrease of 1.8%.

Well I think right on 1.9% year on year.

It's also the.

Based on the current market conditions and the.

The reflect the company's management already and the for living in the area.

Marquee operating conditions and the customer in the back which I always subject to change.

One of that I'd like to open up the core to the question.

Sure.

We will now begin the question and answer session to ask the question you May Press Star then one on your Touchtone phone. If you use in the speakerphone. Please pick up your handset before pressing the key to withdraw your question just press Star then two for the benefit of <unk> per.

Disciplined on today's call. If you wish to ask the question two of the management in Chinese place immediately repeat your question in English.

At this time for we'll pause momentarily to assemble our roster.

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So this will conclude our question and answer session. At this time I would like to turn the conference back over to Eva <unk> IR representative for any closing remarks.

Well the again thinking that the uncle join for this call. We look forward to speaking with you again from what they are not.

This concludes the earnings conference call you may disconnect. Your line now thank you.

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