Q2 2021 Sunlands Technology Group Earnings Call

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Yes.

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Ladies and gentlemen, thank you for standing by and welcome to somewhere in the second quarter 2021 earnings Conference call.

At this time all participants are in a listen only mode.

After prepared remarks by the management team there will be a question and answer session.

Today's conference is being recorded.

Do you have any objections you may disconnect at this time.

I would now like to turn the call over to your host today you Augie.

Some of them are representative please go ahead.

Hello, everyone and thank you for joining <unk> second quarter or can you get from day. One on this conference call the company's financial and operating results is shortening our press release.

Here's why services earlier today and not posted online you.

You have to download the earnings press release and sign up school I want it to be or can this by visiting our IR website.

On today's call will be our CEO, Mr Guardiola, and our CFO with me Matt Mooney.

Lynn will begin with prepared remarks, and the call will conclude with a Q&A session.

Before I hand, it over to the management I'd like to remind you all saw that safe Harbor statement in relation to today's call, except Florida historical information.

Contango carry some of the matters discussed in this conference call are forward looking statements.

These statements are based on current trends estimates and projections and therefore, you should not place undue reliance on the forward looking statements involve inherent risks and uncertainties.

Important factors could cause actual results to differ materially from those contained in any forward looking statement.

More information about the potential risks and uncertainties. Please refer to the company's filings with the.

Jordan and Exchange Commission.

With that I would like I would now like to turn the call over to our C O two volume.

Sounds good.

Hello, everyone and thank you for joining Sundance film culture.

Earnings Conference call.

We're pleased with all of our citizens culture performers when there's a revenue girl Quintin coupons at a person your year over year to RMB 629.5, meaning with a masters degree onto the programs and the professional certification on our skills programs, but shipping a year over year increase of 19, 1% a seven person.

And five it's in full upon a six person respectively.

Doing Norman remained relatively stable at over 6000, representing a full 0.8 persons that year over year increase which was primarily driven by all of our one suggesting a seven person you over your inquiries from professional certification on our skills programs.

Following our strategic adjustments to optimize all of our products mix what else they can girls and balancing cost and the profitability. Although of course spitting swore I M. B a full 13 point few many competitive ways RMB 531.5 for the same carrier to carrier Daltonian hunting.

Our strategy is the adjustments and ongoing cost reduction efforts.

It is a near perfect of RMB 22, upon the widening compared with a net loss of RMB, one six points of why I'm beginning in the second quarter up 22.

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We experienced increased demand for identification and professional certification and our skills programs during the second quarter or else couldn't come to one.

Employment market is becoming increasingly competitive.

They'll get you in industrial restructuring in the wake of.

In a COVID-19 pandemic.

Motivating Walker enhance their career competitiveness.

Competitive dance, so occupational education, while working professionals also in pursuit of higher education through our S. T E or master's degree programs.

Our associates to improve their skills and enrich their lives with all of our professional skills and a generally interest of courses.

With such steady tailwind.

Chris or air force to enrich our course offerings and improve the quality of all of our programs, which helped so its tender which helped certainly gross momentum in masters degree oriented programs and professional certification and our skills programs.

So sitting for Masters degree programs increased by continuing to report on the state of in person to year over year.

This exceptional performance was driven by our successful peak oil into the programs within China as well as all recurring Corporation was the hydro education institutions.

Other global regions will continue to provide the high quality standard of courses to prepare working professionals in China for N P interests examinations.

Most of the students needle or senior level managers, who are financially stable and are willing to pay a full further education lease demand largely enlarging our footprint by promoting overstates identification.

Bolted up by our expanding corporation ways for many institutions. We're also diversified although overseas as opposed to going to a degree offerings, including M. B a.

Nation psychology, and the human resource management.

Meanwhile, our professional certification on the skills programs or so girl literally evidenced by a wide and assisting and pulling the seven person yogurt. Your inquiries in New Orleans, and a 119.6.2 person you over your inquiries English bidding for the quarter.

This growth was primarily driven by our extensive.

Of course offerings, which allow us to meet the band of course, a wider range of subjects, coupled with increasing and of course any demand for of course is to enhance career outcome computed competency of dance, well cultivate soft skills and hobbies, well strengthen oh, well they strengthened over come.

Competitiveness in Masters degree onto the programs and the professional certification on our skills programs. While also continuing to provide the high quality of course, there's an S. T progress caliber students.

So we're all over it.

In your experience in <unk>.

I'll keep it Oh, okay.

Okay personal education, we have cultivated a high brand awareness and the debate uptake reception and of course cause teaching frameworks.

Kim teaching methods and a wider variety of premium of course this pathway to students.

For an elite.

<unk> is committed to developing more premium courses and delivering a better living experience to put the most and ultimately lending targets to complement our cost improvement efforts were also working to upgrade our online lending plentiful to make of course, it's more easily accessible to all of our students.

Many of whom worked full tie all have other time colorants and Additionally, we have expanded our user base.

Riding stopped training services to companies of course, a wide variety of industries. We believe this will further increase our market penetration rates and a reduced customer acquisition cost.

We believe that the steps and the quality of earnings resources are in place.

And learning platform and of course with Glenmark and all of our highly effective professional kitchen staff set us apart from our competitors.

Excited to say that our brand is regarded highly well where students as reflected by their satisfaction rate.

98 point, a 17, 3% in the second the culture, we have.

We will continue to strengthen our leading position in the industry, but developing more refine of course is in in a boarder array of subjects, while enhancing all of our services. Our service quality waves are additional first class teachers.

Now turning to our recent circular pop them published.

Published by the Ministry of Education pertaining to the end of the education and training industry, 19th Jeannine, which stereo social organizations and private annuities and then Chris you've been as I've played a positive role in the promoting lifelong learning society.

Goodbye song guidelines for industry standardization sometimes.

Sundance has always been committed to complying with applicable laws and regulations and we believe these guidelines will give industry leaders such as Sundance now advanced you're giving all of our existing strict standards and a comprehensive internal review process.

Forward, we will remain committed to designing high quality courses and creating innovative effective internet and the plans for best learning tools in collaboration with our Outstanding Academy Research team and the teaching stuff give us on and secure.

Our foothold in the end of the kitchen business. We are confident we can continue to offer premium courses in S. T programs and so sort of your plan our market share in the master's degree onto it and professional skills programs space, which is that we are well positioned to continue to deliver strong results in future.

Earth.

Concludes my prepared remarks, Cynthia and I will turn the call to co over 12 or staying close any novel for further review of our financials.

Thank you.

Hello, everyone and thank you for attending.

Our second quarter Conference call. We are excited to report a solid second quarter results.

With profit coming in at RMB, $22.1 million compared with net loss of RMB $126.1 million for the same period last year.

With a master's degree in the professional skills for wet cough is definitely performing well.

During the quarter, we took a mouthful measures to reasonably lower costs and improve operating efficiency.

With G M. A M a C or expenses, you're crazy, 848% and seven 9% year over year, respectively.

We also continued our efforts to expand chorus category as we strive to deliver better living experience to our users.

Cause you had we will persist in cost efficient marketing and operations optimization.

With our existing advantage in the business yourself occupational education will add house better how can they take two courses and highly efficient management. We believe we are on track to grow further and the incrementally increasing profitability.

Now I would like to share our financial results for the second quarter of 2021 in detail.

In the second quarter of 'twenty or 'twenty, one and that's where revenues increased by 22 point to 8% to RMB $629.5 million.

From RMB five.

$12.5 million in the second quarter of 2020, they increase what's been driven by year over year growth in gross billings.

Half of 'twenty or 'twenty through the first two quarters of 2021.

Cost of revenues decreased by two 3% to RMB $97.3 million.

The second quarter of 2021.

From RMB 99, 6 million in the second quarter of 'twenty 'twenty.

Decrease was primarily due to reduced insurance related costs incurred for our integrated online education service package parts used by students.

Gross profit increased by 28, 9% to RMB 532.2 million in the second quarter of 2021 from RMB 412, 9 million in the second quarter of 2020.

In the second quarter of 2021 operating expenses were RMB 519.6 million, representing a seven 2% decrease.

From the $5.16 million in the second quarter of 2020.

Sales and marketing expenses decreased by seven 9% to RMB.

For $49.1 million in the second quarter of 2021.

RMB 487, 9 million in the second quarter of 2020.

The decrease was mainly due to lower spending on branding and marketing activities and decline of compensation expenses related to our sales and marketing personnel.

General and administrative expenses decreased by 8% to 51.6 million in the second quarter of 2800 Watt from $56.1 million in the second quarter of 2020. The decrease was mainly due to decrease in compensation expenses.

Product development expenses increased by 17, 6% to RMB $18.8 million in the second quarter of 2021.

From RMB 16 million in the second quarter of 2020, the increase was primarily because the social security expenses exemption offered to buy the relative relevant authorities. During the COVID-19 outbreak came to an end in 2021.

Other income was RMB eight 2 million in the second quarter of 2020, one compared RMB $17.5 million in the second quarter of 2020.

Decrease was primarily because value added tax exemption offered by the relevant authorities as part of the National COVID-19 relief effort came to an end in April.

2021.

Net income for the second quarter of 2021 was RMB 22, 1 million compared to a net loss of RMB $126.1 million in the second quarter of 2020.

As of June 30 is 22, one to one the company had RMB $835.4 million.

Of cash and cash equivalents and RMB 49, 9 million of short term investments.

As of June 30, 2021 the company had a deferred revenue balance of RMB $2619.2 million.

Capital expenditures were incurred primarily in connection with I T infrastructure equipment, and the leasehold improvements necessary to support the company's operation.

Capital expenditure were RMB, seven 8 million of second quarter of 2021 compared with RMB 1 million in the second quarter of 2020.

More of our 2021 first half financial results. Please refer to our earnings press release for further details.

And now for our outlook for the third quarter of 'twenty 'twenty. One so I'll ask current flakes back natural revenue to be between RMB 517 million and RMB 519 media.

Which would represent an increase of five 2% to eight 9% year over year.

This outlook is based on current market conditions and reflects the company's management's current and preliminary estimates of the market.

Breaking conditions and the customer demand all of which are subject to change.

I'd like to open the call to questions operator.

Thank you we will now begin the question and answer session.

If you'd like to ask a question. Please press Star then one on your Touchtone phone.

If you use English speaker phone please.

Please forgive me your handset before pressing the <unk>.

Genes to.

To withdraw your question when you're supposed to close them too.

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Question about Chinese players immediately repeat your question in English will pause momentarily to assemble our roster.

And what's more ladies and gentlemen.

Please press Star then one.

No further questions. This will conclude our question and answer session.

I'd like to turn the conference back over to you. What you all are representative for any closing remarks.

Yeah. Thank you everyone for joining today's call and we look forward to speaking with you again soon well then for Knight.

This concludes the earnings conference call you May now disconnect. Your Hong Thank you very much and have a great day.