Q4 2021 TAL Education Group Earnings Call
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And more.
[music].
Good day, and thank you for standing by and welcome to T. A L education group fourth fiscal quarter and fiscal year 2021 earnings conference call.
At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session to a.
That's a question during the session you will need to press star one on your telephone.
Be advised that today's conference is being recorded.
And I'd like to hand, the conference over to MS. Echo Yan IR director of a T. A L education group. Thank you. Please go ahead ma'am.
Thanks, operator, thank you all for joining us today for T. A L education group.
And with physical quarter and the fiscal year 2021 earnings Conference call. The earnings release was distributed earlier today and will make a final coffee on the company IR website and also the nuclear.
During this call you will hear from Mr. Ghosn Doyle, Chief Financial Officer, and backhaul, Vice President of Finance and myself I R. S. T a L.
Following the prepared remarks, Mr. Doyle, and then well be available to answer your question.
Before we continue please note that the discussion today will contain forward looking statements.
Made under the Safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from other common expectation.
Potential risks and uncertainties.
Food, but enough and limited to those outside in public filings with the RPC.
For more information about these risks and uncertainties. Please refer to other findings will be I can see.
Also other earnings resilience and this call include discussions of a certain non-GAAP financial measures.
Please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to the most is left to be comparable GAAP measures I have a.
And like now to turn the call went through Mr. Ghosn more lumpy.
Thank you Echo.
Good evening and commodity through to all thank you for joining us today on the funding cost.
And there is a couple of months, China, probably has a situation and economy show further progress and.
As a nationally.
And the effort and vaccination programs a whole.
All signs that the worst of live and die.
Meanwhile, our.
Our children and business, both online and offline a threat.
And as a capacity expansion all cities. They have other a plan for a fourth quarter of fiscal year 2000, and you can do you want.
Let me give you a quick overview offered a key metrics.
Net revenue growth and the fourth quarter was a 558 net per se there over a year U S dollar tree.
To U S dollar walnuts, salt and a 367 minutes.
And $47 seven per se and hard because.
Total normal priced long term causes a student enrollments increased by 44 per se year over year.
And driven by online.
A struck a pay or a small class and enrollment.
GAAP net loss for operations and what's your a solid $297 2 million compared to U S dollar $41 three minutes and the fourth quarter last fiscal year.
Non-GAAP operating loss was U S dollar school Hunter and fixed.
And 5 million compared to U S. Dollar a pardon me that and the same vehicle Peoria.
And a full year of fiscal 2021.
Net revenue growth was 37 clients III per day U S dollar terms, which is $34 one per se.
And.
And I'll turn the call, what's running basketball and our vice President of finance.
Sure I'll give you an update on our operational progress and the fourth quarter and that's the Echo Yan IR director.
And reveal the fourth quarter and a physical in your financials.
After that I will update you on a repeat of the strategy and discuss other things Almac Linda.
Thanks Julien.
I really reveals a various revenue stream of our children and business for the fourth quarter of fiscal year 'twenty a country one.
And that's exactly small class and other business, which consists of C. A R.
It's a P O small class force.
And as can be lumpy and some other education programs and services.
These accounted for 61% of total net revenue compared to 68% and the same year ago period.
The revenue growth rate was 14, 3% and U S dollar terms and 33 per cent in RMB terms.
You'll have to pay you a small class, which remains a stable core business growth.
Presented 15, 3% of total net revenue and as far as a counter come.
Per tool 15, 9% in the same year ago period.
The lower revenue contribution from just scale, whereas most of the day deal to the faster growth of just a dot com online courses, which.
<unk> accounted for 32 per cent of total revenue in the flow time compared to 24 per cent in the same period last year.
First culture and match revenue from Josef Hey, you're a small class was up by 43% and U S dollar terms and 33% I'm Interims.
Well, our normal price long term, causing yeoman's increased by 21% year over year.
Building on the improving or a situation in China supported the continued recovery of our payroll business in the course of fiscal year 2020 one.
A key operational metrics of appeal, such as retention rate fulfillment rate and a drop off a great humans very stable throughout the year, even in these unprecedented circumstances.
And the false counter normal priced long term just a T O small class a S T increase.
<unk> increased by 22% and U S dollar terms and increased by 13% in RMB terms year over here.
The increase was mainly due to the pricing tax refund we offered in February 2020, when we had to migrate.
Offline and small kind of students to online small class.
So you'll have to pay a smoke has performed well in a various tiers of cities.
Revenue from the top class C T H ha based in Shanghai, and Guangzhou, Shenzhen, and a 19 increased by 44% year over a year in New York.
Dollar terms and accounted for 55 per cent of just to pay you a small class business.
Revenue generated from cities other than the top sales grew by 41% and U S dollar to them.
The other cities accounted for 45% of those yards to pay you a small class business.
Next I'd like to discuss our two come a long run business.
And the first quarter this business sector achieved year over year revenue goes up 28% and U S dollar terms and a 19% in RMB terms.
Chicago and accounted for approximately 6% of total revenue and as a false culture, a fiscal year 2021.
Compared to 8% and the same year ago period.
In a false culture normal priced long term to come a lot online courses and T increased.
Increased by 17% and U S dollar terms and 8% in RMB terms year over a year.
The increase was mainly due to some slight discounts we offered in February last year.
We've had to move to come off non students to online after the COVID-19 outbreak as well as a regular increase of tuition fees in several cities during the period.
Now let me update you on our current capacity expansion strategy.
We continued the expansion drag in the first quarter as planned for this fiscal year.
We added eight new cities in the pulse culture, bringing the total to 100 and a 10 cities.
Of which 40 were a newly added during fiscal year 2021.
These eight cities a.
And share count, Joe, we had Belgium, whose job.
And in natural and the total cheap.
Similarly, we expanded our learning center network and the pulse culture based on a healthy and a sustainable approach and by photo and government guidelines and a market demand.
Q4, we added 108.
And these centers on a net basis to a total of 1098 new centers.
We opened 119, no pay a small class learning centers and a close to nine and.
And a nice of 100 and a ton pay you a small class learning centers.
We closed sales.
Moving and force sleep centers.
And we opened four Wow, and one centers and a coast one one and one center, adding a net of three one and my centers.
During the culture with a.
It is 600, and a 77 and pay you a small class classrooms.
And all that at the end of February 2021, we've had 1000 and a 19 eight learning centers and 110 cities.
Page 100, and nice day tastes and China and once you are still learning center in the United States.
Among these learning centers eight.
800, and a 17 nine or a pay you a small class and international education centers a.
A T tool or a demerged, firstly, and MLB and small class and 137 or two kind of a one on one.
Looking into Q1 fiscal year, 2020 two we've had a conditionally rented some pay you a small class learning centers.
And expect to add a few more and a close down some learning centers based on standard operations.
We will closely follow up with government guidelines as always and stay alert for COVID-19 developments.
Turning now to our online business.
Class physical cultural revenue fronts, just outcome group at 100, and a 15% in U S. Dollar terms year over here and 100% in RMB terms, while our normal priced long term class enrollments grew by 71% year over a year two.
Over a three pumps a minute.
In the first culture. She has a dot com contributed 32 per cent of total revenue and 53 per cent of the total normal priced long term heat ailments compared to 24 per cent of total revenue and 44% of total NAV.
I'm, a price long term, causing humans in the same year ago period, respectively.
They'll go and online business was supported by increasing demand for online education, as well and sales and marketing effort and retentions of the previous quarters.
In addition in Q4 normal priced long term on a car T. S T.
<unk> by 9% in U S dollar terms and increased by 1% in RMB terms year over a year.
With that I will now turn the call over twice a year for the financial updates and co. Please thanks.
Thanks, Linda let me now go through some key financial points for the fourth quarter, and then briefly review the physical year 2021 financials.
Gross profit increased by 72 nine per ton to set a hungry and a T $1.2 million from 451.8 million and U S dollars and the same year ago P. A L S well margin for the fourth quarter increased to <unk>.
Ft 7.3 per ton as compared to 52.7 per cent for these same peoria it off and I see.
Selling and marketing expenses increased by 171.6 per ton to 650.
And $55 million from 200, and a $43.2 million in the fourth quarter of physical year, 2020, non-GAAP, selling and marketing expenses, which excluded share based compensation expenses.
Increased by 160.
And 68.4%.
200, and a $35.5 million from 200, and a 36 point a million U S dollar index.
And year ago period, and year over year and increase of selling and marketing expenses fourth quarter. A fiscal year 2021 was primarily a result of more of a marketing promotion activities to strengthen our customer base and brown I will have a higher compensation.
Himself and the marketing stuff.
Bold multiple brands and the service offering.
Other income was $7.9 million for the fourth quarter of physical year 2021 compared to other expenses.
A $4 7 million U S dollars in the fourth quarter, a physical year 2000, and plenty plenty other income in the fourth quarter, a physical year 2021 was primarily due to the value added tax and a social security and he could.
And exemption.
And just by the governments do a call me a 19.
Impact impacted period, and a partially offset by impairment loss of a non current asset.
Income tax spend.
And if it was a 2.5 million just all day in the fourth quarter, a physical year 2021, compared to 63 and six me you I saw them.
And of income tax expense in the fourth quarter of fiscal year 2020, net loss attributable to T. A L was 100, and a 16 $9 million in the fourth quarter of fiscal year 2021 compared to net loss.
That's a beautiful to T. A L a $91 million and the fourth quarter of fiscal year 2020, non-GAAP net loss attributable to T. A L, which excluded share based compensation expenses was a T eight 7 million.
Dollars compared to non-GAAP net loss attributable to T. A L O 57, $2 million and the same flow golf P. L. A.
From a balance sheet as of February 28, 2021. The company had 3000 243 million and you have to all those of cash and cash equivalents and.
2006, Congress and a $94 5 million of a.
Showtime and the last months compared to 1800, and a $73.9 million of cash and cash equivalents.
345 point for a minute.
That's all it was off short term investments as a February 29 2020.
As of February 28, 2021.
Company's deferred revenue balance was 1400 and.
And the $17 $5 million compared to $781 million as a February 29, 2020, representing a year over year increase of 81, 5%.
Which was mainly contributed by the tuition class.
Class eight and the other one off part off do you have to believe mascara and all yours to pay you a small classes and online courses through a suite W. Dodge your dot com as well as deferred revenue related to other distinctive.
Turning now to the food physical year 2021, let me briefly review some key financial as follows.
A few lapsing a group I D.
37, and 23% to 4000 full hungry and a 95 point a minute with all of it.
Gross profit.
Ooh by 35 point, a 6% to 2400 and a 47 point to a minute.
So yes, all of it was from 1800 and a $4 seven minutes I saw it in the fiscal year 2020.
Gross margin for the fiscal year 2021 decreased by 70 bps to $54 four per cent compared to 55 point a one per ton for the same period of last year.
Loss from operations was 438.2 minutes and I saw him in a physical year 2021 compared to income from operations of <unk>.
100, and a $37 $4 million and up.
Price pardon me a heater prior year non-GAAP.
Loss from operations, which excluded share based compensation expenses was 200 and a 33.3 minutes. That's all of them for the fiscal year 2021, compared to non-GAAP income from operations of 200 and the food.
The five points for a millions of dollars and the fiscal year 2020 net loss. That's a beautiful two T. A L was 100 and a 16 million.
Physical year 2021, compared to net loss as a beautiful two T. A L of 110.2 million U S dollars.
And the physical year 2000 and plenty.
Non-GAAP net income attributable to CIL, which excluded share based compensation expenses was 98 million.
And that's all it compared to non-GAAP net income actually do for Q T. A L M.
$7.7 million.
And the physical year 2020, now I will hand, the call back some day.
From a safety update you on average strategy execution and the per wise the business outlook.
The net quota a clumsy.
I think a echo.
Fiscal year 2000, and you all can be presented here due to the outbreak of COVID-19.
And a year with timely respond to any government is joshua relate to publishers and D.
Wherever necessary to prepare the safety of our students and price and contribute to our conscious efforts to focus Vince.
And then.
Despite all the challenges and warehouses, we realized a 37, 3% revenue growth for fiscal year, two a southern and can be wrong.
Which was in line with our long term groceries for patients.
They a rule, which they own class of our development strategy.
Cash and put it provides a breakout is often a pandemic and intense competition.
Looking ahead, we're continuously follow up with a government guidelines for the industry and cash.
And a R class teaching and language National partners.
A house regulations a threat.
A.
She and investing in a call.
Quality of all our put us senators teachers' training and technology.
Supported by sustainable marketing efforts.
So our ever more diversified torture and offerings will be able to better meet customers' stringent demands and.
Ability to pay.
Let me tell followed a two hour binge Aldo.
And so our current estimates total net revenue for the first quarter of fiscal year towards other income to true.
And is expected to be between U S. Dollar one solve them through a two 2 million and.
U S dollar one one salt and 300 and compete and 25 minutes.
Representing an increase of 43% to 45% over a year over year basis.
That concludes my prepared remarks.
We're not ready to take questions.
Thank you.
Moving now begin the question and answer session. If you wish you asked a question. Please press star one on your telephone and wait for your name to be a now.
If you wish it was true yoga class. Please press the pound a harsh key and standby, while we compiled a question and answer a brochure and once again the star one if a question.
Your first question comes from Lucy Yu for a bank of America Securities. Please ask a question.
Thank you and a lots of alcohol and taking my question. So my question is a bar and localization, which has been a hot topic lately and and we also noticed that went off our competitors today also revealed a play in localization of the a cortez products et cetera.
So a given to us or a per your online site is getting a meaningful and already like share over 10 per cent of our revenue. So how should we think about our a competitive edge and localization.
And all the future competition dynamic in this local life online class industry going forward.
That's question number one and <unk>.
Other two related to that is that a could you. Please share with us a progressing status of a synergy or corporations about our different business lines.
I should take a T shirts, dotcom and pay you a online so do we have any targets and see that how much traffic. We can diverge a share between these two platforms. Thank you.
Thank you so much looser.
I think the first of a customer of a ball localize a no matters localized online class and low class offline class I think which remind me a can last a year last year, a second quarter, we'd talk about debt. That's why we keep other hours a.
A payroll localized online class a open do you want a cool so because when when we read through all the the profit of the learning process for Chinese students will need to consider a a lot of a different.
Different sensors love more tailor made and maybe more localized sometimes lead to a better result.
For example, in China, and who has over 30 provinces and different provinces have to keep a proportion of local cards and if we go down to the tune colleagues and no.
Well since we will be even more so a if we were.
One the students to spend less time bucket a much better result, we need to make sure. We can meet their needs, which means we need to provide them the flow.
Localized content.
And the localized content and recruiting a different portion.
Deeper level of debt cookies and different sequence.
So you'll probably know that a in primary school and are in.
And the Middle school and trying to a multiple virtual textbooks and.
And you want a single or something and textbooks would have a different provinces and different cities with a 150 different Detroit.
Maybe a month different schools.
Different sequence.
And some schools are usually a cash book to learn and certain knowledge and for US all about the other while with sequencing and honest schools made a difference.
And even a thing school St High schools and set a sequence and the level of a gift cards will be also a difference. So we are facing a market worth dynamic and we need to be very careful when we pitch one students who would try to teach the best content and its instead.
Instead of only one question for all so and vis vis the static when she knows the localized content will be worked out before that no matter. If that's what a online class a that's the offline class a.
And a second place. We're also figure out I think starting from last year.
And the local teacher, giving and the online par typically can pitch and a local students gotcha.
Because the local team to for example, a teachers in Beijing and Shanghai a day.
And they pitch and Mississippi, They know a lot about what happened and younger students and they know a once a leg of cookies and incentives.
And in different cities.
And if we ask the local teachers to teach a local students the all kind of a little bit better than only one teacher can teach the students all over in a country.
And besides we also need to be where a cure because education, where a different from e-commerce.
And they require a six.
A significant level of citizens.
What whatever services, we provide you a thing should also be wary, killing me and a very low class a.
For example, a students in Beijing, what a cure is what's happening in Beijing.
Oh, what's happening on a city.
And maybe careless a to their attention.
So a going more localized and.
For a wide Morton D V D O kind of solution to a two and our students in a long long way, let's acknowledge a screen up possibly.
And with some chance to have a so called served a that's the learning platform at that time, everyone can be a pitch and individually and differently.
But today, we're seeing at least compared to a a purely online part of the one question per all the localized offers a will.
We'll be a more powerful thing and a.
Pretty good wishes and so we're happy to see more and more companies they carried a student's needs.
And are working on providing net.
Low class offers two day would be if that's a right direction to go well need a notice billions more and when he could pitched and.
The most appropriate a congress two then the ideal cases will be based expenses less of their time, but they looked a little more.
The other side as some has going low corn and localize Amit maybe going a.
And being closer to the field and Smith.
Sometimes it's easy to say, but how to execute.
A way as a company thing as our counterparts, a loose industry for over 10 years. So we are building a lot of a learning centers and we have different Kim rocky and different cities, the local king where her off to get information from the local geography and do some a locally.
R&D, so which is a fundamental for look for providing a.
Local and offers.
And besides.
Which is quite different from a purely online par and.
And it takes more time.
And just more patients and.
Paid sick leave a significant amount of investment for a new king for a new channels and for a new way to attract students and.
And as a sector. So wait you mean.
If we sell a purely online par it's kind of like Air Force and if you want to go and more localized which means you need to do more kind of the tears and heme a hopper.
Look.
So a everyone who could get prepared for that especially in China would have a.
Huge geography, when he took care of a student's equally for a risky.
So oh, and all were happy to see and way more companies. According what low class and try to teachers students and a.
And you used a more efficient way that's right right thing to do but on the other sides where need to be patient and I wouldnt interest bearing a enough.
Enough time.
Images on technology on content on a teacher training and a sector to make sure that works. So that's a reveal a harder below class.
And a second question Youre asking a lot.
The synergy between shops online school and a pay.
A small class business.
Kings, how much traffic that can share I think if not a chocolate business.
A when we consider a less synergy potential hustle and school and I tried to play a small class and a first space. They are showing a same brand and the Angola and threatened and a.
A second place their share a the.
Content and a technology projects.
We charge a thing is what we'd be able to learn the.
Pay a small class business.
And then try to annualize average process of net lending both online and offline and we're trying to standardize and I appreciate it.
And in full force.
And Ah patients switch has a a lot of similarity a mark on and offline with charter and keep with them.
That's one.
Putting them today I think there's two things they have a soft synergies and a share solve for infrastructure and.
And that brings a status by and a front end and the operational side, if they still tend to be more independent that is because today the target for market share.
And I will pay a small class opinions today and recover 110 tickets.
And so that they are made.
That's.
And that's a mid market to go and she also online school Bachelor per dose for the whole country. They cover a more geographies and not now, but even go down for a while low tier cities. So they have different targets and so in the front and operations.
A quite independent of Labatt and functions will charge you a to do more integrations and would try to drive a more synergies bobby's synergies small simple it in a trusted by more.
And the infrastructure et cetera.
Thank you Lucy.
Thanks, and I'll watch it.
Thank you next question comes from Sheng Zhong from Morgan Stanley. Please ask a question.
Oh hi.
As a team a question I'm going to put a I found a pea ridge and so I'm kind of a catch up for you author and capacity a third it's a.
Yeah Nathan a.
And.
And then and Finjan, Inc.
And I'm much less and before especially if it's a quarter so well they see a new normal volume on a new capacity and the future so with that I think type a.
And Oh patents a V. There should be Oh, I'm, sorry, and only strategy. So so well that's a neat and so what's the a company outlook for the online contribution to appeal a total a next year and then maybe in a longer time and.
Color would be appreciated thank you.
Thank you Jonathan.
I think a lot.
Payroll and payroll today.
It's under one team and we try to integrate.
And integrate them together and even maybe a.
Not only and a big cities, but also goes onto a low tragedies.
I suggest you guys doing to a payroll revenue as a whole both online and offline I think that debt.
As a a more a kind of the proper way to look into our business I'm sure widens and I'm, hopefully going Beijing, Shanghai and Beijing.
And a Shanghai actually and we have a white high percentage of offline students, they're using a P.
And like offering and all so sometimes it's difficult to separate a what is paralyzed or what what day online with you offline. So low the bathroom. If you look at that is a were combined and took together and we're going to a payroll.
A total.
Total growth.
And or on the other side as I think what we're doing and showed a paralyzed Palo reason day asbestos average because they use a very localized way to do that which is quite different from a trusted and high school and a we're also Tyler and south and a new format for a class and a pill and channels now.
Only and a big class, but also try to pilot a small class and the toxicity.
And even today I think.
And their pay online a payroll life has not cover all the cities. They only cover the pulp sales it hits a.
And and payoffs and more Caspian.
Oh wait wait a costco and they have a chance to contribute it rather and tried to extend and cover more cities.
Future and.
And a.
And when we're moving to all of US I think the way.
And to manage a business needs to be.
Need to change according to a customer's behavior.
Two years ago, only offline, you're going to pay off space a relatively more independent.
Coming to today when it sees the payoffs and the appeal students and parents a binding offers both online and offline much together.
So our way is a very clearly we don't have a special targets and stay how much pay a one that we need to deliver a hamas peel off laminate and deliver the only target would happen and we need to use and the best way to free parents and students.
So we need to provide and more visibility and kind of more possibility to maximize their return of investment and a time and energy.
So again all in all we wish a.
And we can a loophole all this together and way we believe the payroll can leverage both on and offline class drivers to grow to drive a housekeeping seem to come and failures.
I think a sunshine.
Yeah.
Thank you. Our next question comes from Felix Liu from UBS. Please ask your question.
Hi, Good evening management, a congratulations on a nice quarter and thank you for taking my question and my question is on the on the growth of this quarter and the next quarter and maybe a madden next fiscal year as well.
And I understand that typically there's a guidance but.
A fireplace Q4 was a little bit of a week on the online side, because and scheduling about online a I think share.
And that ended up performing very well and mine.
So you know what's driving that performance and then secondly on the guidance a could.
Could you, possibly break that down into a business line and what do you expect the growth would be like a business and and.
And given a strong momentum is there any update to our FY 'twenty two.
Hello, and thank you very much.
Okay. Thank you for a class I think.
We are only doing to a cool phone numbers, sometimes and that people will stay in a number its a very good I need to draw attention to the type two.
The a kind of a detail soft numbers.
In Q4 a.
And if you remember Lilly present, just now and our screen.
Our payable a enrollment growth is around 20% a tough weather revenue growth is higher.
That's because last years same quarter, a Q4 last year and the operating quarter. After a COVID-19, so at that time way a way move all of our offer and beans.
Online.
And speaking the.
Moving to a rush because we never know weighted and then at that time, so to compensate the parents a.
So we are changing a pricing from offline to online pricing, which is a significant a less bang a little.
The oil and price is much lower than offline price, so which drives the last year's Q4 space a little bit higher. So I suggest you cash flow into my appeal, a enrolment growth can be present tough so that has slowed a right number to look at and compelled.
She was a previous quarters last year, which go shoot a wide tough times of COVID-19, the payoffs and world class It is recovery offset a well.
Also see the recovery and will pretty much on trying to kind of a quarter, a Q1 and for fiscal year 'twenty.
Fiscal year 'twenty two.
And.
And second price our homeland Tal I saw about online power performed back a little bit better than what we expected partly a reason is because of the one that offers a.
Can feed a student's needs and a we're also staying.
A fair amount of the marketing dollars to drive and a gross.
And moving into a Q1 with public and see that a.
The Q1 O a.
Shop online schools and enrollment growth will be similar to a.
Two a vizio a go for so we're pretty much on track and both online and offline. Besides a flourish not be surprised to that.
And.
Again, I suggest we are moving to the IPO.
Patient company's growth a law passage to do that is loading trucks, a month, if youre alluding to a growth and eroding trough, a month's way, which can eliminate some offline and power scheduling or maybe a quarter over quarter over quarter, a adjustments, which makes more sense to do it.
Our other total business and.
And Olof base and all of these numbers based on where they sit today a I also wanted to draw attention is actually you probably can see that a some more a.
Policies was ongoing and coming out from a government. So wait as a company we will follow a government guidelines and April.
A policy is clear with a day.
Essentially a comply with our policies to make necessary adjustments.
All of the numbers you see today is based on what is what we have and which started to change people a policy has any new updates. Thank you.
Thank you very much.
Thank you a next question comes from a D S. Kim from J P. Morgan. Please ask a question.
Hi, good evening, everyone and congrats on such a massive and I've had and seats and.
And my first question is actually related to your last winter snow a little bit indirectly.
And I know, it's impossible to a proud to get this sweet spot in a unlikely scenario of government limiting a advertising with a significant me what do you think it will be a sustainable growth rate for a serious about some or all night to take industry has a hole in a net advertisement or no other where it takes a month.
And how do you think we cannot cheat such a run rate I E. You know could you a page, possibly break out a new student enrollment and new student contributes and currently from 49 pro forma that force us organic for such a a CRO or a anyway. So that'd be kind of have a sense that you know no advertising.
And we still be kicking a X amount of book and I have one Pablo Thank you very much.
Thank you.
I think.
Right before we see clarity was policy is.
It's too early to talk about a potential impact of debt policy.
Think of our moving through our online partners.
Basically you would talk about a advertisement.
And a promotions and.
On a marketing a.
Think French speaking, we're now a company a very poor.
Promotions friends thinking Oh, maybe advertisements and the Pos.
And so we are typically a.
And if there's a company we prefer a with teachers total square and we made people satisfied a weighted drive our growth through our core services. That's the typical.
Typical way with a wrap up a gross so if a policy to have some impact on advertisements on a marketing I think weight as a.
A one one per industry with a total of sensing a score Alastair Stewart.
And the whole industry. So that's a day.
Day because.
We're still need to wait for what's a final policies. It was clearly a requirement right over there and.
So it may be too early to make some judgment call based on something with a note on the other side is one thing I need a German pensions actually a unit.
Past few quarters. The <unk> online school, we're always has more students coming from a brand and channels because of a shared a brighthouse shares together with a O. Smith's class. So we have a little bit faster and a customer awareness across the top 100 cities and even more so.
We have a chance to a trial a student's directed to address that and my platform and a came out and classes, which is some of the advantages we have a comparative to other players.
And the other side is willing to folks a law a hotter serving the current students when a.
And when a student study and my platform, we need to make sure. They can receive high quality services. So they are a retention rates will be a warehouses and we also encourage you to children's day rate for their parents.
And the other friends Society, a a careful.
Careful so again, we're still believe for the only way to make our class a small competitive.
Teachers, and students where high quality high retention rate locked up operating and all of that so a worldwide hot and operations to measure our efficiency, a Saturday, Ottawa and and Oh and I go back to the advertisement policy a lot that stay tune and.
We're perfect and keep your more colors, when we see a colleagues where it could have even a future, but again with a industry always has a lot to a policy changes and challenges and the Pottsville, yes, not today, so a way out very clearly we're complying with like airlines will make necessary adjustments.
And again with folks on and students were supposed to waive a focus.
And folks on parents to let them with a high quality service.
The fundamentals for us and never change thank you.
Thank you that's really helpful and a I absolutely agree with you said a one follow up Chris and me is about volume expansion.
And look at for the past two years I couldn't help but notice that a VR and three use C. D's you know a peak that we never did before like nearly 60 cities. We only had one center there and a may I ask a what's driving described and talked about a year old and illustrate and gets further G is it because it'll be once a.
Ted a homepage for the appeal by for the nearby cities for like win win a fourth floor are we seeing will find market city, a market share opportunity and that specific cities and want to build brand equity there as soon as possible. That's it from me and thank you so much.
Thank you I think a.
And no message in Beijing, and Shanghai, All maybe Europe, driving a jaw and you've been there.
Our students has the equal a dimmer.
Maam.
Nicole opportunity to standard better and go to a bathroom universities. So the demand is always there and the only difference is previously if you only have the offline growth drivers.
Revenue in the classrooms, how a lot of teachers and do offline trainings wages very operationally intensive and very difficult to be scalable, but where you'll have a online parts and so.
Can move some awful elements and some percentage of the book close to online, which made the model easier to be flexible and most of that the ability to be scale and.
And Oh wait and also encourage us to per watt.
And the high quality affordable services to the students not only and a top cities, but also and the Russell places today recover or a 110 cities. So they tend to enter more cities and a future where waste and we can provide equal access to a high high quality.
Our kitchen and services for our platform and a ratio with a hair and support more students to a shipyard scopes and the future So a sensor technology and.
Rich.
Which gave us some possibility to go into more places and teach more students, but this is not the N. A during the online merge offline a process, we still see a lot of points, we can improve but.
We still see a lot of challenges when you do a deal with that so a which is a with pace to us the other several years, making sure a five figures even a longer to make this happen. Thank you.
Thank you a final question today comes from Alex share from Credit Suisse. Please ask your question.
Hi, Thank you management for taking my questions and congratulations on debt and.
A good performance and this quarter.
So firstly I'd like to ask about the T online and I think this is the first time for a lung disease to achieve significant ESP growth.
In.
Two years, so would you please elaborate on that and I.
I believe and your previous Imation, because it keeps a lower to a check with students and no.
Tier cities and.
And secondly, a full I'll give you just update us on the status in Beijing, and how many net new tender type a.
Page the approvals to reopen and a.
You're always a patient for the rest of them. Thank you.
Yeah, I think a and the first space, let me make it clear S. P. A.
S P law school and I put in growth, that's because of exchange rates debt.
And cost also the exchange rates currency issues and all our E E.
And be times other.
A normal price.
H B Fuller shelves and high school is only around 1% increase wireless stable whereby a stable and.
And we don't see any major changes and the ASP per se in flow.
Paul.
A second today I've seen you're asking about a the Beijing Beijing, even today with only a half single digit lending incentives get a proved to be reopened and.
And the rest out there and incentives steel and carbon process to a.
And to gather open a process, which will take some time and I can't estimate how.
How soon that will be complete.
Albertville is very clear.
We will comply with government guidelines and followed a.
Requirements to a dual.
Offline learning centers pilots and time, we leverage the online platform, where yours and the online a wave two teachers and students in Beijing, So far a alert the growth is quite stable and we also see the retention rates and a dropout rate and all of that is quite a pretty much on track, we don't see any day.
And the differences.
And Hum and looking for a <unk>.
When a new policy, what's the Alt, a and we will adapt to Chi followed a policy from a net net.
To make necessary adjustments.
Based on what we see today, we're pretty much on track. Thank you.
Thank you got it.
Right. Thank you so with that we conclude our conference for today. Thank you for participating you may all disconnect.
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