Q1 2023 17 Education & Technology Group Inc Earnings Call

Good evening, and good morning, ladies and gentlemen, and thank you for standing by for 17 at Teck's first quarter 2023 earnings Conference call.

At this time all participants are in listen only night.

After management's prepared remarks, there'll be question and answer session.

As a reminder, today's conference call is being recorded.

I'll now turn the meeting over to your host for today's call Ms. Laura gel 17 at tax Investor Relations manager. Please proceed Laura.

Thank you operator, Hello, everyone and thank you for joining us today, our earnings release, what it gets rebuilt it earlier today and is available on our IR website. Joining us today are Mr. M. D <unk> founder Chairman and Chief Executive Officer, and Mr. Michael do director and Chief financial.

Andrew will walk you through our latest the business performance and strategies, followed by Michael who will discuss our financial performance and guidance. They will be available to answer your questions. During the Q&A session. After their prepared remarks before we begin I'd like to remind you that this conference call contains forward looking.

Lynn as defined in section 21 E of the Securities Exchange Act of liking for people and the U S. Private Securities Litigation Reform Act of 1995. These forward looking statements are based upon management's current expectations and current market and operating conditions and relate to events that.

Evolve knowing I know risks uncertainties and other factors all of which are difficult to predict and many of which are beyond the company's control. This race may cause the company's actual results performance or achievements to differ materially.

Further information regarding these and other risks uncertainties or factors is included in the Companys filings with the U S. SEC The company does not undertake any obligation to update any forward looking statements as a result of new information future events or otherwise, except as required under I think.

Couple law I will now turn the call over to our chairman and Chief Executive Officer to review some of our business development and strategic direction and be please go ahead.

Thank you we'll thereof, Hello, everyone. Thank you all for joining us on our first quarter 2023 earnings call before we begin I would like to mention that the financial information and non-GAAP numbers in the release are presented on a continuing operations basis.

And all numbers are based on RMB unless otherwise stated.

Before we go into the details let me provide you with the quarters pertinent updates and financial performance across all business lines. The Covid operating in China in the fourth quarter of 2022 caused delays in the funding and.

The rig crew sizes of our major products, which adversely affected our financial performance in the last two quarters. However, our ink schools hospitals continue beyond the financial results might indicate.

During the quarter, we continue to explore various business models for growth constantly developing and refining our offerings to meet the demand of regional regular use and promoting the timing of delivery of each project at the same time, we actually extended our distribution networks and enhance our operational efficiency.

We responded to challenges in the new environment through diversified distribution channels and flexible financial arrangements as a result, our business maintained its momentum on earned recognition from other customers beyond that the financial statements might indicate.

Beyond the financial statements might indicate.

The pop off the quarter the impact of various pandemic containment measures measures well lifted across China, we saw business activities and projects rather than just a returning to normal.

Demand for our teaching and learning stock offerings as guided Bob's comments long term policies and founded by a dedicated government budgets. We believe this creates a real opportunity for us to grow in this uncertain environment. We have made steady progress in our in school teaching and learning sauce business. During the first part of 2012.

Right.

Despite the fact that the bidding and delivery of some of our major products were delayed in our financial results were correspondingly affected.

Put one in school teaching and learning the business.

Several of our key product original scheduled for the first quarter of 'twenty to 'twenty two.

What delayed due to the Kuwait.

However through the joint efforts of our dedicated team significant progress was made all of these key projects in the first quarter of 2023.

Notably we wanted to RMB 116.

16, milling smart pen and indeed, intelligent homebrew based education digital transformation project in Shanghai had been called district, we have complemented the signing of the contract and delivery has already started as of today. This represents a milestone in our company's development and showcases of our showcases.

Our ability to provide industry, leading total solutions to one for one of the most demanding regions in China. We have received significant inbound inquiries about this product in all four offerings from whereas education bureaus and original history beautifully.

She comes this rates clouds classroom bid won and signed it.

On April 3rd we won the bid for the Cogs classroom evaluation system product in Beijing, She took district with a contract value of RMB 20 point 22 months.

It's a remarkable achievements closely follows our successful bid before that smart and intelligent homework project in Shanghai and being held this week in <unk>.

March of this year.

It further reinforces.

Reinforces the widespread recognition of the high quality and diverse application of our teaching and learning thus offerings for China's educational digital transformation.

The cloud classroom irrigation system product has to be implemented across 41 schools and she trunk of strict leveraging Albert.

One teaching one nerdy intelligence education platform as smart pen technology enables the collection and analysis of interaction data between teachers and students during the upturn during and after classes. This allows for comprehensive improvement of the overall quality of classroom instruction.

Ongoing enhancement of the original curriculum evaluation system, and the refinement of educational content and approaches.

Product and service portfolio iteration.

From a product and service offerings perspective, the company is committed to continually refining and enhancing our product and service portfolio to cater to the needs for a solution that can achieve correctly, you see major teaching and learning scenarios. As a result, we hope wouldn't ask a constant recruitment in the overall product.

Parents.

Our multi faced a soft products have undergo a series of continuous automation and iterations propelling done to the forefront half lift truck market.

These offerings, how got gathered but spreads reclamation and high praise from our customers as the top solution.

Throughout the reporting periods, we made efforts to optimize and fits with our product and service portfolio.

With a particular emphasis on developing starch based <unk> system, and construction and CRO tiring that user experience, we implemented updates to the core phone functionalities of our starts operations, resulting in noticeable improvements in our product experience indicators. Consequently, we observed.

A significant increase in user activity and retention rates, reflecting the growing satisfaction and engagement of our customer base.

We are also implementing measures to ensure a more constant delivery and service experience as well as managing associated expenses.

Ongoing hardware optimization. Meanwhile, we are continuously enhancing the core functionality of our per proud piece Mark has to achieve a better user experience and additional application cases, providing an unparalleled user experience in our comprehensive and turnover.

Isn't this past the regular right team performance of our in house developed adult mix expanded has complemented the testing period and expect this to enter mass production in the fourth quarter of 2023 to further enhance the hardware performance of our total solutions.

Additionally, the company is actively exploring whereas use cases with AI plus execution in all businesses with the great potential from integrating AI.

AI technology with what we have are converting the space, creating novel applications and improving.

Improving operational efficiency.

Do you want to call it or the Ministry of Education, how the World Digital Education Conference in Beijing Representatives from over 130 countries and originals regions worked well registered to attend the meeting with hundreds of regional Chinese education of your risks you might have to listen and exchange with industry peers and attrition.

No author ages separately.

<unk> was honored to be modest at one of the only two small two smart education no technology.

Technology service providers to present this prestige.

You bet.

We showcased our industry, leading teaching and learning starts offerings with application because it's in multiple leading cities in the education space, such as Beijing, and Shanghai visitors were captivated by the professionalism and efficiency of our products and technical services.

In color than teaching and learning solutions left a lasting impression on attentive and the received broad recognition from local educational arthritis.

But two other educational service business in terms of other applications just because this will offer personalized self learning products membership services and a range of digital products and services designed especially for our.

Our in house developed personalized self directed learning product address the unique challenges associated with personalized learning in school.

The empower students who pay their learning stack strategy its based on their unique interest abilities learning styles and goes by per watt, providing a curated selection of learning content and styles that align with their progress.

You can choose the most fitting in resources to support their educational journey. Our portfolio includes digital tools such as direction. The books personalized experience spoke which have proven instrumental in enabling students to XL in personal life threatening the demand for these products is highly dependent on the rent.

The rate environment and the proficient.

Complete team services moving forward we remained.

<unk>, two exploring educational products and services that comply with regulatory requirements, we still consistently optimized and iterate our offerings in response to evolving market trends and the changing needs of our valued customers, but other educational service business now I will turn the call over to Michael.

Our CFO to walk you through our latest financial performance. Thank you.

Thanks, Andy and thank you everyone for joining the call I will now walk you through our financial and operating results.

Please note that all financial data I talked about will be basing RMB tons.

I would like to remind you that the quarterly results. We presented here should be taken with care and referenced around potential future performance are subject to potential impacts from seasonality and the one off events errors as a result of the series of regulation introduced in 2021 and corresponding adjustment to our business model organization that works.

For us.

Our revenue and gross profit in the first quarter of 2023 were impacted due to the delay in the bidding and delivery, although lasalle several projects.

However, the recent waning of major projects have marked a key milestone with the company's new business strategy.

These projects are expected to be delivered gradually over the upcoming quarters and reflected in our financial statements.

As of March 31st tranche on the three we have cash reserves of RMB 639 million on our balance sheet, providing us with sufficient funds for future development.

Next I will go through our partners first quarter financials in greater detail.

Our net revenues, what first quarter up 223, RMB $9 3 million.

Representing a year over year decrease of 96% from RMB $233 4 million the first quarter optometry.

Our revenues are recognized based on delivery and service provided of our projects.

And they were they were delayed.

By the significant delay in the bidding and deliberative process of our major projects, which were affected by the Covid outbreaks in the fourth quarter Tom 22.

Our cost of revenues for the first quarters of <unk> three was RMB 7 million, representing a year over year decrease over 92, 4% from RMB $91 8 million in the first quarter of <unk> 22, which was largely in line with the decrease in our revenues.

Gross profit for the first quarter I'm, sorry, Antonio Street was RMB, $2 3 million, representing a year over year decrease of 98%.

98, 4% from RMB 141.

In the first quarter, all the time 22.

Gross margin for the first quarter of <unk> 23 was 24, 4% compared with 67% in the first quarter of 222.

Total operating expenses for the first quarter of 2023, well RMB $196 3 million, representing a year over year decrease of 37, 8% from RMB $117 8 million in the first quarter of 2022.

Loss from operations for the first quarters of <unk> 23 was RMB 104 million compared with RMB $29 1 million for the first quarter of 2022.

Loss from operations as a percentage of net revenues for the first quarter was going to the three was inactive.

1121, 8% compared with negative 12, 5% in the first quarter I'm talking 'twenty two.

Net loss for the first quarter of 2023 was RMB $92 5 million compared with net loss of RMB $24 8 million for the first quarter of 'twenty to narrow loss as a percentage of net revenues was negative.

997, 9% in the first quarter oxo on JD Street compare was negative 10, 6% in the first quarter was one to nishu.

Net loss adjusted net loss on a GAAP basis for the first quarter of 223 was RMB $646 4 million compared with adjusted net income of RMB nine 9 million in the first quarter.

222.

Please refer to the table, capturing our reconciliations of non-GAAP measures.

With the most comparable GAAP measures are at the end of the press release for a reconciliation of net loss under U S GAAP to adjusted.

Net income or loss on that.

GAAP basis.

Looking ahead, we are optimistic about English your opportunities and the competitiveness of our teaching a runny SaaS offerings.

We are confident in our financial performance will recover as our major wins.

<unk> delivered to our clients.

With that that concludes our prepared remarks.

Yeah.

Operator, we are now ready to begin the Q&A session.

<unk>.

Thank you.

We will now begin the question and answer session to ask a question. Please press star one one on your telephone.

And here now the Meda message advising Yohan is raised to withdraw your question. Please press star one again, please standby, while we compile the Q&A roster once again Thats star one one for questions.

Okay.

As a reminder to ask a question. Please press star one one on your telephone keypad.

Again, Please press star one.

Four questions.

Okay.

Thank you we have no questions I will now turn the conference back to MS. Laura gel also closing remarks.

Thank you operator in closing on behalf of 17, <unk> management team, we'd like to thank you for your participation on today's call. If you require any further any further information please feel free to reach out to us directly. Thank you for joining US today. This concludes the call.

Thank you that concludes today's conference call. Thank you for participating you may now disconnect.

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