Q4 2021 Sunlands Technology Group Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to some labs fourth quarter and full year 2021 earnings conference call.

Today's conference call is being recorded.

I would now like to turn the call over to your host today, you'll have you'll want to eat sometimes I. Our representative. Please go ahead.

Oh absolutely.

Thank you for joining from the fourth quarter and full year. When do you can do one on his conference call the company's financial and operating results will ensure our path to meet you on.

Why.

Great and are posted online you can download the onion recipes and sign up for all of it is the ocean lifted by visiting all I I'll, let Scott that's right.

On today's call will be our CEO , Mr. Twinborn, you and all the C. F O, they're not Moody's management, well be English Koukiadis remarks ended up call we are comfortable with.

Q&A session.

I'll hand, it over to the management I'd like to remind you all.

Safe Harbor statement in relation to today's call except for the historical information contained herein.

The matters discussed the elite Congress called forward looking statements.

These statements are based on current trends estimates and projections and therefore, you should not place undue reliance on them.

Looking states.

Well, thank you everyone to risks and uncertainties a number of important factors could cause actual.

Results could give up materially from those contained in any forward looking statement as well.

For more information about potential risks and uncertainties. Please refer to the company's filings with the Securities and Exchange Commission with that I will now turn the call over to our CEO .

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So essentially you'll fall holiday, what we'll come to some men's sports culture and the full year, a 10 teams and your one conference call.

A yieldco 91 with the school.

Consultant fees on both the macro and and Cushing industry levels, given the challenges with choice and our focus on healthy steady growth to overcome obstacles or obstacles that are prepared to capture opportunities still ahead of us.

More specifically withdrawal of accused stream now all of our operations with a leaner organization and a disciplined cost control many years.

Continue to optimize all of our products being too concentrated on demand credit market.

And it's been airports improving services and acquire a car you still don't see a more efficient manner.

As a result of our clear.

The strategic plan in the state of faster execution.

We are delighted to close claims looking one was really the high near porphyry at 115.

115 closed the eighth meaning RMB in the fourth in the fourth quarter and to tell them, putting a full meaning RMB or for the full year delivering.

Our commitment to balance the girls and the profitability.

Our improve our improve with appropriate liquidity amidst the year over year, a moderation in gross billings and the Neal student enrollment well respected reflects the effectiveness of our strategic direction and execution excellence.

Now, let's turn to the pro forma of each of our major cost program.

In terms of professional certification and our skills program.

He believes there is still a huge market potential on the demand side.

And we have demand from working professionals, who not only sick to stay competitive through Joe Joe relevant or doesn't show courses, but also increasingly take of course is to complete them into their prime on a primary with skills and developing new interests and hobbies.

On the other hand is the programs are also attracting students from a wider range of age groups, who are looking for interesting learning as part of a new lifestyle.

To tap this potential.

We continue to focus on developing a diverse range of course is to fulfill the ongoing interest interest all of robust lending demand during the fourth quarter. Thanks to our extensive course, the resources of a nanogram Nielsen nickel springs, where appropriate for professional certification and scale programs.

In the culture increased by 37, 5% and 16 pulling the five person your year over year, respectively going forward, we will continue to diversify albacores catalogs and the theater although of course, there's two a greater variety of lindner groups.

The breadth and depth of our course offerings and expand we believe of appropriation no certification on our skills programs, you'll capture the increasing share of the market and continue the growth.

With respect to our postal secondary courses.

As always strove to fine tune all of our protect portfolios with strategically shifted our focus toward a masters degree programs to capitalize on growing demand.

Most of our students for their programs are working professionals.

It drove market becomes more competitive go to you I'm going to relate to the challenges.

The increasing number of working age people are realizing the importance of post Glen into education channels 20, including two in Nashville opposed to postal Glenn do at the entrance exams, which saved another record setting number of empty couldn't jump.

Jumping by 'twenty, one person to person into year over year to four Plymouth meeting, while admission became increasingly difficult.

Does it reflect your fine possibly than the nine person that year over year decrease in Kentucky.

Pip sense right.

Well well pressure mounting on their career paths and competition for a post graduate education is intensified and more applicants are turning to us to.

Utilize our professional pick a ratio of course is to improve their odds of Samsung.

And thereby and thereby enhance their competitiveness work driving inquiries banned all four master's degree onto the programs.

Writing this tailwind net of revenue from our Masters degree oriented programs thorough five 5%.

And certainly with seven 6% year over year for.

For the first quarter and a full the full.

Full year, respectively.

And then of course bidding and Neil student enrolment for this segment also continued their upward trend in full year 2021 despite a year over year decline in therefore force culture due to the step up of our balanced the girls and the profitability Australia.

Turning to wait continue to leverage our high highly capable terms oh well in till beginning to live will continue to leverage our highly capable teams experienced E. M. B. A example, Caribbean to starting to fire all of our leadership position by expanding our portfolio and the opt.

And our teaching and those surveys.

Regarding our S. T programs, we remain committed to reaching our course offering improving operating efficiency and the survey says the service quality during the quarter given all of our established effective teaching system and the results driving teaching methods, we're continuing to deliver a high.

Teaching quality and provide the premium courses to our students.

I mean, one way to further minjarez two controls, but being in the enhanced our skills in acquisition efficiency, which in turn has to drive them high quality gross.

That's two hour if parity of course, it comes from and yours.

Cost structure improve the building their first culture with sales and marketing expenses.

And general and administrative expenses down 14, 4.2 person and the southern pulling those six person your over year respectively.

Or will you continue to pump when they open adding 12 or it goes go strictly by maintaining all of our investment in new course development as evidenced by a slight increase in paradox.

Development expenses of one 5% of the yogurt in the floor of course in the fourth quarter.

Furthermore, we remain focused on improving still do not build in acquisition efficiency by adopting more cost effective acquisition channels and leveraging core sitting opportunities, while customizing sales and marketing solutions for different and still don't school, despite their unique profile and needs.

We are pleased to see our stretch the already bearing fruit over the past three quarters and for the full year of the new one.

It was a successful turnaround in profitability Sundance, demonstrating both the resilience and agility when navigating challenges a man who needs to be once shifting industry and then escape.

Including selling two and beyond we will continue to align our business operations with all of our strategic objectives to bring valuable 12 or students employees shareholders and the broader society.

With that I will turn the call of 12 are still close enough to runs through all of the financials.

Thank you.

Hello, everyone.

We're excited to be a registered net income of 158 million RMB in the fourth quarter.

Compared to the net loss of $73 5 million RMB for the same period last year.

Okay.

Third consecutive quarter of profitability.

This solid performance was driven by our 0.7% year over year top line growth and a 45% year over year decline in operating expenses due to our strengthened expense management practices.

Net profit margin expanded.

It significantly to 25, 6% in the fourth quarter up.

38, 2%.

Firsthand point percentage point year over year, and 10 percentage points quarter over quarter.

Looking ahead, we are stressed how fast in our commitment.

She offering premium course content and services to our students while adopting effective measures to further reduce costs.

Hosting operating efficiency.

Aiming to achieve long term sustainable growth.

Now, let me walk you through some of our key financial results for the fourth quarter 2021 .

All come Harry says Ah you year over year, and all numbers are in RMB unless otherwise noted.

In the fourth quarter.

<unk> revenue was $588 9 million, an increase of 0.7% year over year.

Cost of revenues decreased by eight 6% to $89 4 million in the fourth quarter from 97 8 million in the fourth quarter of 'twenty 'twenty.

The decrease was primarily due to number one declined compelling compensation expenses related to our cost of revenues personnel and number two reduced insurance related costs incurred for our integrated online education service package purchased by students.

Well gross profit.

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Or $86 7 million in the fourth quarter of 2020 in the first quarter operating expenses were 405 million, representing a 45% equally well.

$93 7 million in the fourth quarter of 2020.

We will send the marketing expenses decreased by 44, 2% to $339 4 million in the fourth quarter from 608 5 million in the fourth quarter of 2020 the.

The decrease was cry was mainly due to lower spending on branding and marketing activities and the declines compensation expenses related to our skills and our marketing personnel.

General and administrative expenses.

We're a 50.5 million in the fourth quarter of 2021 decreased by seven 6% year over year, many due to a decrease in your rental.

And a decline in compensation expenses related to general and administrative personnel.

<unk> expenses increased by 0.5% to $10 7 million in the fourth quarter from $10 6 million in the fourth quarter of 2020 product development expenses were many income comprised of compensation expenses.

Other expenses were $3 1 million in the fourth quarter compared with other income of $109 4 million in the fourth quarter of 2020. The decrease was primarily because of the value added tax exemption offered by the relevant authorities as part of the National COVID-19 relief.

Efforts came to an end in April 2021.

Net income for the fourth quarter was $158 million compared with net loss of $73 5 million in the fourth quarter of country.

Basic and diluted net income per share.

R 22.8 to nine in the fourth quarter of 2021.

As of December 31st 2021 the company had $676 7 million of cash cash equivalents and there we go.

<unk> cash and $184 2 million of short term investments.

As of December 31st 2021, the company had a deferred revenue balance.

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2348, 2 million compared with $3024 4 million as of December 31st 2020.

Capital expenditures were incurred primarily in connection with Ikea infrastructure equipment, and the leasehold improvement improvement necessary to support the company's operations.

Capital expenditures were $5 2 million in the fourth quarter compared with $4 7 million in the fourth quarter of 2020.

Well more our 2021 full year financial results. Please refer to our earnings press release.

For further detail.

And so now for our outlook for the first quarter of 'twenty 'twenty plunger.

<unk> hundred 22 currently back not to revenues to be between 519 million RMB, two 610 million RMB, which would represent a decrease of 15% to 12, 1% of.

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

In light of market.

The conversations and the customer demand, which are all subject to change with that I'd like to open it up to the call to questions operator.

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

Ask a question you May press Star then one on your Touchtone phone.

Speaker phone, we ask that you please pickup your handset before pressing the keys.

So what's wrong a question. Please press Star then two.

And from the benefit of all participants on today's call. If you wish to ask a question to management in Chinese players immediately repeat your question in English.

Well gentlemen, I was reminded of I wanted to ask a question. Please press Star then one at this time.

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 you.

I remember some of them for any closing remarks.

Yeah.

The line is open for you for any closing remarks.

Yeah.

Well again, thank you Abu Longboard, joining today's call. We look forward to speaking with you again and good night.

This includes learnings conference call.

I liked your lines and have a wonderful day.

Yeah.