Q2 2023 17 Education & Technology Group Inc Earnings Call

August 29, 2023

Okay.

Speaker 1: Good evening and good morning ladies and gentlemen and thank you for standing by for 17 EdTech second quarter 2023 earnings conference call. At this time, all participants are in a listen only mode after management's prepared remarks, there will be a question and answer session as a reminder today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call miss Laura's out.

Good evening, and good morning, ladies and gentlemen, and thank you for standing by for 17, Ed Tech second quarter 2023 earnings Conference call.

This time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded.

I would now like to turn the meeting over to your host for today's call Ms. Laura.

Speaker 1: 17 EdTechs Investor Relations Manager, please proceed, Laura.

17, Ed <unk> Investor Relations manager. Please proceed.

Speaker 2: Thank you operator. Hello everyone and thank you for joining us today. Our earnings release was distributed earlier today and is available on our IR website. Joining us today are Mr. Michael Du, Director and Chief Financial Officer and myself, Investor Relations Manager. Michael will walk you through our latest business performance and strategies. I will discuss our financials in more detail.

Thank you operator, Hello, everyone and thank you for joining US today, our earnings release gives visibility are there today and is available on our IR.

Joining us today are Mr. Michael <unk>.

We're up to and Chief Financial Officer, and myself Investor Relations manager, Michael will walk you through our latest of business performance and strategies and I will discuss our financials in more details.

Speaker 2: After the prepared remarks, Michael will be available to answer your questions during the Q&A session.

After the prepared remarks, Michael well be available to answer your questions during the Q&A session.

Speaker 2: Before we begin, I'd like to remind you that this conference call contains four looking statements as defined in Transactions under 1E of the Securities Exchange Act of 1934 and the US Private Security and Engagement Reform Act of 1995.

Before we begin I'd like to remind you that today's call contains forward looking statements as defined in section in Hawaii of the Securities Exchange Act of 19 for before.

The U S Private Securities Litigation Reform Act of 90 95.

Speaker 2: These four linking statements are based upon management's current expectations and current market and operating conditions. And it relates to events that involve known and unknown risks and uncertainties and other factors.

These forward looking statements are based upon management's current expectations and current market and operating conditions and it relates to events that involve known and unknown.

Certainties and other factors all of which are difficult to predict and many of which are beyond the company's control. These risks may cause the companys.

Speaker 2: all of which are difficult to predict and many of which are beyond the company's control. These risks may cause the company's actual results, performance or achievements to deeper material release.

Actual results performance or achievements to differ.

Speaker 2: Fuller information regarding these and other facts, risks and certain tastes of factors is included in the company's filings with the USSBC. The company does not undertake any obligation to update NAFOR looking statements as result of new information, future events or otherwise accept as required and the ethical law.

Oh really.

Further information regarding these and other factors.

Those factors is included in the company's filings with the U S. S. D. C. 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 applicable law I will now turn the call over to all derived.

Speaker 2: I will now turn the call over to our director and chief financial officer to review some of our business development and strategic direction. Michael, please go ahead.

I'm Chief financial officer to reveal some of our business developed plans and strategic direction. Michael. Please go ahead.

Speaker 3: Thank you, Laura. Hello, everyone. Thank you for all joining our second quarter of the 2023.

Thank you Omar Hello, everyone. Thank you for joining our second quarter 2023 earnings call.

Speaker 3: Before we begin, I would like to note that the financial information and the gap numbers in this release are presented on a continuing basis and in RMB unless otherwise stated. Let me start with the...

Before we begin I would like to note that the financial information and the non-GAAP numbers can get relief.

Dented on a continuing basis.

Oh great.

Sure.

Let me start with our latest.

Speaker 3: During these courses, we are delighted to see steady progress in the delivery of our key teaching and learning project. And it can work.

During this quarter, we are delighted to see steady progress delivery outlook keep teaching and learning project and it can be installed in revenue recognition.

Speaker 3: We have also been expanding our distribution networks with more regional partners in adopting new models to facilitate further development.

We have also been expanding our distribution networks with more regional partner and adopting new model to facilitate further expansion.

Speaker 3: we continue to win new projects over the past...

We continue to win new projects.

The past quarter.

Speaker 3: It is also no worthy debt. Our offerings were enlisted in the National Directory of Intelligent Education of Products and Services provided.

It is also noteworthy that our offering.

International Directory of intelligent educational products and services provided recently.

Speaker 3: It demos industry recognition of our market leading technology and solutions and our deep rooted dedication to offering specialized services in education and digital education.

Today, most industry recognition of our market leading technology solutions.

Routine dedication to offer offering specialized services.

Application, because you know digitalization.

Speaker 3: Going forward, continuous product development and evolution aim at further enhancing user experience.

Going forward continuous product development and evolution themed pretty healthy music experiences and applying the latest artificial intelligence technologies will be our continued progress.

Speaker 3: and applying the latest artificial intelligence technologies will be our continued focus. Now let me get into some details.

Now, let me get into some details.

In terms of a school teacher learning sock business.

Speaker 3: The RMB 116 million small-town and intelligent homework-based education digital transformation project in Shanghai.

The RMB 116 million.

My opinion intelligent homework based education digital transformation projects in Shanghai Hangzhou Street.

Speaker 2: warning the first quarter 2023 has started generating revenues in a second quarter 2023 as the delivery has gone

We want in the first quarter of contract suite has started generating revenue in the second quarter of 2023 delivery market.

Speaker 2: that are the 20 million Beijing Xi Chen cloud cross-rule evaluation system project. It has also started generating revenue.

But Amit <unk> Mellon Beijing XI term cloud costume evaluation system project has also started generating revenue this quarter.

Speaker 2: This signifies continued advancement in our company's business progress, providing proving our delivery capability, our large scale, and a new stage of development where I'll recognize revenue and get gradually less volatility.

This signifies continued advancement in our company's business progress, providing proving our delivered superior capabilities large scale.

And a new stage of development.

Recognize revenue.

Get some gradually less volatile.

Speaker 2: Throughout this quarter, the company has also been actively exploring additional customers.

Throughout the quarter. The company has also been actively exploring additional customer groups.

Speaker 2: in addition to education bureaus and public schools.

Christian education bureaus and public schools.

Speaker 2: We have been working with private school operators to tapping to additional market sectors.

We have been working with private school, operator to tap into additional market segments with a number of pilot projects that we signed was a number of roughly typical private schools across China.

Speaker 2: A number of pilot projects have been signed with a number of Reference-able private schools at Walls China. And I expect it to be implemented over the next few points.

In fact, it will be implemented over the next few quarters.

Speaker 2: such collaboration is still in early stage, but continuous development I expected over the next.

Such collaboration is still in early stages, but it continuous development I expected over the next few quarters.

Speaker 2: They not only utilize teaching and learning fast offerings that we have for public schools, but also have various value-added modules schools can choose from based on their specific needs. We see potentials in such collaboration as a supplement.Oh

They not only utilized teaching and learning stock offering that we have for.

For a couple of schools, but also have various value added modules schools can choose from based on their specific needs.

We see potentials in such collaboration as a subsidiary.

To our traditional public school offerings.

Speaker 2: These strategic partnerships highlight the recognition of 17 Education's contribution to the digital transformation in China's education sectors, not only in the public space.

These strategic partnerships highlight the recognition of 17 educations contribution to the digital transformation in China's education sectors, not only the public space, but also in the private space.

Speaker 2: From a product and service offering perspective, we continue to invest in our product portfolio, catering to the comprehensive and scenario-based innovation in teaching and learning, as well as our key aims of facilitating regular use in various teaching and learning scenarios from both a product and operationing.

From a product and service offering perspective, we continue to invest in our product portfolio K transferred the comprehensive scenario based innovation teaching and learning.

Our key aim of facilitating regularly used in beverage teaching and learning <unk>.

Those are product and.

Operational enhancement.

Speaker 2: by enhancing service or efficiency and improving products here.

By hospital service efficiency and improving product campuses, we have continually raise the bar on our user satisfaction.

Speaker 2: we have continually raised the bar on user satisfaction.

Speaker 2: resulting in steady growth in key products seems indicated.

Without any scotty growth and key products indicators.

Speaker 2: We are actively innovating and refining our SaaS offerings. In addition to fully utilizing the One Teacher, One Learning SaaS platform for digital application in classrooms, workshops and scholarship faster with family-friendly,

We are actively innovating and refining our SAS offerings.

Listen to fully utilizing the one teacher learning crosswalk.

Digital application and classrooms homework.

Examinations education management.

Speaker 2: We've brought in our schools to encompass students self-study environments, bridging a gap between classroom instructions and independent learning. We've provided more precise personalized recommendations.

Broaden our scope two and Comcast students self study.

Bridging the gap between classroom instruction.

Larry will provide a more precise personalized recommendation services for.

Speaker 2: for student self-learning, delivering high quality learning.

Steven self learning delivering high quality loans.

Speaker 2: It is not worth it that our product was successfully included in the National Directorate of the Intelligent Education of Products and a Service Provide.

It is noteworthy that our product was successfully including international directory of intellect, intelligent education, a product and a service provider.

Speaker 2: which was announced at the Smart Education Forum hosted by the China Academy of Information and Communications Technology on July 18th.

Which was announced at the Smart Education Forum hosted by the China Academy of information and Communications technology.

July 18th.

Strong vote of confidence.

Speaker 2: acknowledging our dedication to offering specialized services and educational digitalization and consistently providing high quality market competitive products.

I cannot.

Knowledge and dedication to offer specialized services education or digitalization.

It's the only providing high quality market competitive products and solutions.

Speaker 2: Today, the director include a total of 131 domestic well-known companies and their smarts of education.

The directors include a total of 131 domestic well known companies and master of education for Moshe.

Speaker 2: Looking ahead, we will continue to enhance our product services, utilize AI technologies to improve user experiences and promote sustainable growth.

Looking ahead, we will continue to enhance our product services utilize AI technologies to improve the user experience.

For most sustainable growth.

Speaker 2: In terms of art or educational services...

Yes.

In terms of order educational services businesses.

Speaker 2: The company shifts its strategic focus towards teaching and learning class operations.

The company shipped its strategic focus.

We're teaching and learning SaaS offerings here.

Speaker 2: This surface is seeing a diminishing trend in their contribution to our...

The surface is seeing.

Diminishing traffic contribution to our revenue.

Speaker 2: The demand for these products is highly dependent on the regulatory environment and provision of competing service.

The demand for these products is highly dependent on the regulatory environment and the provision of competing services.

Speaker 2: Moving ahead, we will remain committed to exploring other education those products and services that combined with regulatory environment, while keeping the call focus on our teaching and learning staff operations.

Moving ahead.

We remain committed to exploring an education those products and services that comply with regulatory environment, while keeping our call focused on our <unk> operations.

Speaker 2: Now I will turn the call over to Laura to walk you through of our financial performance.

Now I will turn the call over to Laura to walk you through our financial performance. Thank you Ross.

Speaker 4: Thanks, Michael. Thank you everyone for joining the call. I will now work you through our financial and operating results. Please note that all financial data I talk about will be presented in R&B terms.

Thanks, Michael 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 presented in RMB terms I would like to remind you that the.

Speaker 4: I would like to remind you that the quarterly results we present here should be taken with care and reference to our potential future performance are subject to potential impacts from seasonality and one-off events. As a result of the series of regulations introduced in 2021 and corresponding adjustments to our business model, organization and workforce.

Quarterly results, we present here should be taken with cats and reference to our potential future performance are subject to potential impact from seasonality and the one off events as a result of the series of regulations introduced in <unk>, 'twenty, 'twenty, one and corresponding adjustments to our business model organization and workforce.

Speaker 4: In the second quarter, the company proactively tackled challenges and seized new opportunities to maintain our growth momentum and secure our competitive edge in the market.

In the second quarter, the company proactively tackle the challenges and the new opportunities to maintain our growth momentum and secure a competitive edge in the market.

Speaker 4: The consistent progress made by our new businesses is clearly reflected in our financial performance. Our revenue rapidly rebounding over the past quarter. We recorded net revenue of 69.2 million RMB for the second quarter of 2023 compared with 9.27 million in the first quarter of 2023, representing a 6.5 times of increase.

The consistent progress made by our new businesses is clearly reflected in our financial performance.

Revenue rapidly rebounding over the past quarter, we recorded net revenue of $69 2 million RMB for the second quarter of 2023, compared with 927 million in the first quarter of 2023, representing a six five times of increase.

Speaker 4: The net loss for the second quarter of 2023 was 47.9 million RMB, significantly narrowing from the net loss of 92.5 million in the first quarter of 2023. And the adjusted net losses have considerably narrowed, moving from a loss of 64 million RMB in the first quarter of 2023 to 28.6 million on a non-gap basis.

The net loss for the second quarter of 2020, as Ray was $47 9 million RMB.

And they've gone to the narrowing from the net loss of $92 5 million in this quarter of 2023, and adjusted net losses have considerably narrowed moving from a loss of 64 million.

R&D in the first quarter of 'twenty is when it's right to $28 6 million non-GAAP basis.

Speaker 4: This indicates effective cost control measures and an enhancement in operating efficiency.

This indicates effective cost control measures and enhancement in operating efficiency.

Speaker 4: Furthermore, our gross margin has further improved to forty-

Please proceed.

Furthermore, our gross margin has further improved to 42 a 48.

Speaker 4: 48.3%, recovering to a normalized level. This demonstrates the profitability and resilience of our business model. As of June 30, 2023, we have cash reserves of 586 million RMB on our balance sheet, providing sufficient funds for future development.

48, 3% recovering to a normalized level. This demonstrates the trucker profitability and resilience of our business model as a Virgin staircase 2023 we have tested with cash reserves of 588 6 million RMB or balance.

Sheet, providing sufficient funds for future development.

Speaker 4: Next, I will go through our second part of financials in greater detail.

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

Speaker 4: Our net revenues for the second quarter of 2020 is raised.

<unk> already met our net revenues for the second quarter of 'twenty one is rate.

Speaker 4: were 69.2 million RMB, representing a year-over-year decrease of 48.1% from 133.5 million in the second quarter of 2022.

Were $69 2 million RMB, representing an year over year decrease of 48, 1% from 133 5 million in the second quarter of 2022, and a six five times have increased on a quarter on quarter basis, compared with nine point 27 million in the first.

Speaker 4: and a 6.5 times of increase on a quarter-on-quarter basis, compared with 9.27 million in the first quarter of 2023.

Culture of 2023. This is mainly due to the reduction in net revenues from other either patient services as we focus our resources to our core teaching and learning SaaS business.

Speaker 4: This is mainly due to the reduction in net revenues from other educational services as we focus our resources to our core teaching and learning SaaS business.

Speaker 4: Our cost of revenues for the second quarter of 2023 was 35.8 million RMB, representing a year-over-year decrease of 43.9% from 63.8 million in the second quarter of 2022, which is largely in line with the decrease in the net revenue.

Our cost of revenues for the second quarter of 2023 was $35 8 million RMB, representing a year over year decrease of 43, 9% from $63 8 million in the second quarter of 2022, which is largely in line with the decrease in the net revenues.

Speaker 4: Gross profit for the second quarter of 2023 was $33.5 million, representing a year-over-year decrease of 52.0% from $69.7 million in the second quarter of 2022. Gross margin for the second quarter of 2023 was 48.3%, compared with 52.2% in the second quarter.

Gross profit for the second quarter of 'twenty, two and as Ray was $33 5 million, representing a year over year decrease of 52.0% from $69 7 million in the second quarter of 2022.

Gross margin for the second quarter of 2023 was 48, 3% compared with 52, 2% in the second quarter.

Speaker 4: Total operating expenses for the second quarter of 2023 was 91.3 million, including 19.4 million of share-based compensation expenses, representing a yield-real decrease of 12.1% from 103.8 million in the second quarter of 2022.

Total operating expenses for the second quarter of 2000, Twenty's rate was 91.3 million, including a 19 point for mailing of share based compensation expenses, representing a year over year decrease of 12.1% from 101 and $3 8 million in the second quarter.

Speaker 4: Lost from operations for the second quarter of 2023 was 57.8 million compared with 34.1 million in the second quarter of 2022. Lost of operations as a percentage of match revenues for the second quarter was negative 83.5%. Compared with negative 25.5% in the second quarter of 2222.

2022.

Loss from operations for the second quarter of 2023 was $57 8 million compared with $34 1 million in the second quarter of tornado need to lots of operations as a percentage of net revenues for the second quarter was negative 83, 5%.

Compared with negative 25, 5% in the second quarter of 2220 22.

Speaker 4: Net loss for the second quarter of 2023 was $47.9 million compared with net loss of $26.4 million in the second quarter of 2022. Net loss as a percentage of net revenues was negative.

Net loss for the second quarter of 2023, it was $47 9 million compared with net loss of $26 6 million twenties, $26 4 million in the second quarter up to 2022 net loss as a percentage of net revenues was negative.

Speaker 4: 69.2% in the second quarter of 23, compared with negative 19.8% in the second quarter. Adjust it, adjust it.

69, 2% in the second quarter of carnitas rates compared with net negative 19, 8% in the second quarter.

Adjusted <unk> adjusted net loss.

Speaker 4: Nung Gap, for the second quarter of 2023, was 28.6 million, compared with adjusted net income of 3.6 million in the second quarter of 2022. Adjusted net loss.

non-GAAP for the second quarter of 2012. This rate was $28 6 million compared with adjusted net income of $3 6 million effect in the second quarter of 2022.

Adjusted net loss non-GAAP as a percentage of net revenues was negative 41, 2% in the second quarter compared with two 7% of adjusted net income as it as a percentage of net revenues in the second quarter of 2022.

Speaker 4: Nongat as a percentage of net revenues was negative 41.2% in the second quarter compared with 2.7% of adjusted net income as a percentage of net revenues in the second quarter of 2022.

Speaker 4: Please refer to the table captioned reconciliation of non-GAAP measures to the most comparable GAAP measures at the end of this press release for reconciliation of net loss and the U.S. GAAP to adjust its net income and loss non-GAAP .

Please refer to the table captioned reconciliation of non-GAAP measures to the most comparable GAAP measures at the end of this press release.

A reconciliation of net loss and the U S GAAP to adjusted net income or loss non-GAAP .

Speaker 4: Cash and cash equivalents restricted cash, short-term investments and term deposits were

Cash and cash equivalents restricted cash and short term investment and time deposits was.

Speaker 4: 585.7 million RMB as of June 30, 2023, compared with 639.5 million as of March 31, 2023.

$585 7 million RMB as of June 32000, Twenty's rate compared with 601 is $39 5 million as of March 31st 2023.

Speaker 4: As we look to the future, the drive towards educational digitization continues to search. There is a widespread consensus that deeply integrating information technology into our teaching systems will fundamentally revolutionize traditional educational philosophies, models, content and methodology. Going forward, 70 education technology will persist in leveraging a

As we look to the future the drive towards educational Digitization continues to search there is a widespread consensus that deeply integrating information technology into our teaching system, well fundamentally revolutionize traditional educational philosophy models content methodology.

Geez.

Going forward 70 education technology will position in leveraging its central strength through a decade of accumulated the big data and AI technologies aiming to empower classroom on a large scale and a regular use basis through digital means by integrating diverse learn.

Speaker 4: through a decade of accumulated big data and AI technologies, aiming to empower classroom on a large scale and a regular use basis through digital means.

Speaker 4: By integrating diverse learning situation data from a variety of scenarios, we aspire to comprehensively establish academic data profiles for students.

[noise] situation day to draw from a variety of us now.

We aspire to comprehensively establish academic data profile school students supporting the digital transformation and high quality development development of regional and school education.

Speaker 4: supporting the digital transformation and high quality development of regional and school education. With that, that concludes our prepared remarks. Thank you. operator, we are now ready to begin the Q&A session. Thank you.

That concludes our prepared remarks. Thank you operator, we are now ready to begin the Q&A session.

Speaker 1: Thank you. If you would like to ask a question at this time, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Again, if you have a question at this time, please press star 1 1. Please wait while we compile.

Thank you if you would like to ask a question at this time. Please press star one on your telephone and wait for your name to be announced until a J. Your question. Please press star one again again, if you have a question at this time. Please press star one one.

Please wait while we compile our Q&A roster.

Yeah.

Speaker 1: And I'm showing no questions at this time and I'd like to hand the conference back to Laura Zhao for any further remark.

And I'm showing no questions at this time and I'd like to hand, the conference back to Laura Xiao for any further remarks.

Speaker 4: Thank you, operator. In closing, on behalf of 17 AirTech's management team, we'd like to thank you for your participation on today's call. If you require any further information, please feel free to reach out to us directly. Thank you for joining us today. This concludes the call.

Thank you operator.

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

Okay.

Operator: Good evening and good morning ladies and gentlemen and thank you for standing by for 17 Edu & Tech's second quarter, 2023 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded.

Yeah.

Okay.

[music].

Operator: As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Ms. Lara Zhao.

Operator: I would now like to turn the meeting over to your host for today's call, Ms. Lara Zhao.

Okay.

[music].

Operator: 17 Edu & Tech's Investor Relations Manager, please proceed Lara. Thank you operator.

Lara Zhao: 17 Edu & Tech's Investor Relations Manager, please proceed Lara. Thank you operator.

Lara Zhao: Hello everyone and thank you for joining us today. Our earnings release was distributed earlier today and is available on our IR website. Joining us today are Mr. Michael Du, Director and Chief Financial Officer and myself, Investor Relations Manager. Michael will work you through our latest business performance and strategies and I will discuss our financials in more details. After the prepared remarks, Michael will be available to answer your questions during the Q&A session.

Lara Zhao: Before we begin, I'd like to remind you that this conference call contains four looking statements as defined in sections under one year of the Securities Exchange Act of 1934 and the US Private Security Negation Reform Act of 1995. These four looking statements are based upon management's current expectations and current market and operating conditions and it relates to events that involve known and known risks and certainties and other factors, all of which are difficult to predict and many of which are beyond the company's control.

Lara Zhao: These rates may cause the company's actual results, performance or achievements to differ material way. Fuller information regarding these and other facts risks and certainties of factors is included in the company's filings with the US SEC. The company does not undertake any obligation to update any four looking statements as results of new information, future events or otherwise accept as required and the ethical law.

Lara Zhao: I will now turn a call over to our director and Chief Financial Officer to review some of our business development and strategic direction. Michael, please go ahead. Thank you, Laura.

Michael Du: Hello, everyone. Thank you for all joining our second quarter of 2023 earnings call. Before we begin, I would like to know that the financial information and then the gap numbers in this release are presented on a continuing basis and in R&B unless otherwise dated. Let me start with our latest business update. During this call, we are delighted to see static progress in the delivery of our key teaching and learning projects and it can restore revenue recognition.

Michael Du: We have also been expanding our distribution networks with more regional partners in adopting new model to facilitate further news expansion. We continue to win new projects over the past quarter. It is also not worthy that our offerings were in less trading and national directory of intelligent educational products and services provided recently. It demos in this recognition of our Machia leading technology and solution and our rooted dedication to offering specialized service, in education digitalization.

Michael Du: Going forward, continuous product development and evolution aimed at further enhancing user experiences and applying the latest artificial intelligence technologies will be our continuous focus. Now let me get into some details. In terms of a school teach and learning soft first business, the education digital transformation project in Shanghai, Meihang District. We want in the first quarter on 23 has started generating revenues in the second quarter of 2023 as the delivery has started.

Michael Du: That on the 20 million Beijing Xi Chen cloud classroom evaluation system project has also started generating revenues this quarter. This signifies continued advancement in our company's business progress, providing proving our delivery capability, our large scale, and a new stage of development where our recognized revenue at getting gradually less volatile. Throughout this quarter the company has also been actively exploring additional customer groups in addition to education bureaus and public school. We have been working with private school operators to tapping to additional market segments.

Michael Du: A number of higher-level projects have been signed with a number of repensable private schools that foster China and are expected to be implemented over the next few courses. Such collaboration is still in early space but continuous development I expected over the next few quarters. They not only utilize teaching and learning fast offering that we have for public schools but also have various value added modules schools can choose from based on their specific needs.

Michael Du: We see potential in such collaboration as a supplement to our traditional public school offering. These strategic partnerships highlight the recognition of stemmed education contribution to the digital transformation in China's education sectors not only in a public space but also in a private space. From a product and a service offering perspective we continue to invest in our product of value catering to the comprehensive and the scenario-based innovation in teaching and learning as well as our key aims of facilitating regular use in various teaching and learning scenarios from both our product and operation enhancement.

Michael Du: By enhancing service efficiency and improving product experiences we have continually raised a bar on user satisfaction resulting steady growth in key product students indicators. We are actively innovating and refining our staff offerings in addition to fully utilizing the one teacher one learning staff's platform for digital application in classrooms, homeworks, examinations, education management. We've brought in our school to encompass student self-study environment by bridging a gap between classroom instruction and independent learning.

Michael Du: We've provided more precise personalized recommendations. Services for student self-learning, delivering high quality learning solutions. It is noteworthy that our product was successfully included in the National Director of the Intellecting Collegiate and Education of Products and a service provider, which was announced at the Small Education Forum, hosted by the China Academy of Information and Communications Technology on July 18. This is a strong vote of confidence, acknowledging our dedication to offering specialized services and educational digitalization, and it consists only of providing high quality, market competitive products and solutions. Today, the directors include a total of 131 domestic well-known companies and their small self-education solutions.

Michael Du: Looking ahead, we will continue to enhance our product services, utilize AI technologies to improve user experiences and promote sustainable growth.

Michael Du: In terms of auto-educational services, the company shifts its strategic focus towards teaching and learning-size operations. This focus is seeing a diminishing trend in their contribution to our revenue. The demand for these products is highly dependent on the regulatory environment and provision of competing services.

Michael Du: In terms of auto-educational services, the company shifts its strategic focus towards teaching and learning-size operations.

Michael Du: This focus is seeing a diminishing trend in their contribution to our revenue. The demand for these products is highly dependent on the regulatory environment and provision of competing services. Moving ahead, we will remain committed to exploring other educational products and services that combine with regulatory environment while keeping the core focus on our teaching and learning-size operations.

Michael Du: Moving ahead, we will remain committed to exploring other educational products and services that combine with regulatory environment while keeping the core focus on our teaching and learning-size operations.

Lara Zhao: Now I will turn the call over to Lara to walk you through our financial performance. Thank you, Lara. Thanks, Michael.

Michael Du: Now I will turn the call over to Lara to walk you through our financial performance. Thank you, Lara. Thanks, Michael.

Lara Zhao: 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 talk about will be presented in R&B terms. I would like to remind you that the quarterly results we presented here should be taken with care and reference to our potential future performance are subject to potential impacts from seasonality and one of events. As a result of the series of regulations introducing 2021 and responding adjustments to our business model, organization and workforce.

Lara Zhao: In the second quarter, the company proactively tackled challenges and ceased the new opportunities to maintain our growth momentum and secure our competitive edge in the market. The consistent progress made by our new businesses is clearly reflected in our financial performance. Our revenue rapidly rebounding over the past quarter. We recorded net revenue of 69.2 million R&B for the second quarter of 2023. Compared with 9.27 million in the first quarter of 2023, representing a 6.5 times of the increase.

Lara Zhao: The net loss for the second quarter of 2023 was 47.9 million R&B, significantly narrowing from the net loss of 92.5 million in the first quarter of 2023. And the adjusted net losses have considerably narrowed. Moving from a loss of 64 million R&B in the first quarter of 2020 to 28.6 million on a non-gap basis. This indicates effective cost control measures and an enhancement in operating efficient efficiency. For the more, our growth margin has further improved to 48.3%, recovering to a normalized level. This demonstrates the profitability and resilience of our business model. As of June 30th, 2020's rate, we have cash reserves of 586 million RMB on our balance sheet, providing sufficient funds for future development.

Lara Zhao: Next, I will go through our second quarter financials in greater detail. Our net revenues for the second quarter of 2023 were 69.2 million RMB, representing a year-over-year decrease of 48.1% from 133.5 million in the second quarter of 2022. And a 6.5 times of the increase on a quarter on quarter basis, compared with 9.27 million in the first quarter of 2023. This is mainly due to the reduction in net revenues from other educational services as we focus our resources to our core teaching and learning staff business.

Lara Zhao: Our course of revenues for the second quarter of 2023 was 35.8 million RMB, representing a year-over-year decrease of 43.9% from 63.8 million in the second quarter of 2022, which is largely in line with the decrease in the net revenues. Gross profit for the second quarter of 2023 was 33.5 million, representing a year-over-year decrease of 62.0% from 69.7 million in the second quarter of 2022. Gross margin for the second quarter of 2023 was 48.3%, compared with 52.2% in the second quarter.

Lara Zhao: Total operating expenses for the second quarter of 2023 was 91.3 million, including an 19.4 million of share-based conversation expenses, representing a year-over-year decrease of 12.1% from 103.8 million in the second quarter of 2022. Loss from operations for the second quarter of 2023 was 57.8 million, compared with 34.1 million in the second quarter of 2022. Loss of operations as a percentage of match revenues for the second quarter was negative 83.5%, compared with negative 25.5% in the second quarter of 2022.

Lara Zhao: Net Loss for the second quarter of 2023 was 47.9 million, compared with net Loss of 26.4 million in the second quarter of 2022. Net Loss as a percentage of match revenues was negative 69.2% in the second quarter of 2023, compared with net negative 19.8% in the second quarter. Adjusted Mad, Adjusted Mad Laws Nungap for the second quarter of 2023 was 28.6 million compared with Adjusted Mad's income of 3.6 million in the second quarter of 2022. Adjusted Mad Laws Nungap as a percentage of Mad revenues was negative 41.2% in the second quarter compared with 2.7% of Adjusted Mad's income as a percentage of Mad revenues in the second quarter of 2022.

Lara Zhao: Adjusted Mad Laws Nungap as a percentage of Mad revenues was negative 41.2% in the second quarter compared with 2.7% of Adjusted Mad's income as a percentage of Mad revenues in the second quarter of 2022. Please refer to the table captions Reconciliation of Nungap measures to the most comparable gap measures at the end of this press release for Reconciliation of Mad Laws and the US gap to Adjusted Mad income of lots Nungap. Cash and cash equivalence, restricted cash, short term investment and term deposits was 585.7 million RMB as of June 30, 2023 compared with 639.5 million as of March 31, 2023.

Lara Zhao: Please refer to the table captions Reconciliation of Nungap measures to the most comparable gap measures at the end of this press release for Reconciliation of Mad Laws and the US gap to Adjusted Mad income of lots Nungap. Cash and cash equivalence, restricted cash, short term investment and term deposits was 585.7 million RMB as of June 30, 2023 compared with 639.5 million as of March 31, 2023. As we look to the future, the drives towards educational digitization continues to search.

Lara Zhao: As we look to the future, the drives towards educational digitization continues to search. There is a widespread consensus that deeply integrating information technology into our teaching systems will fundamentally revolutionize traditional educational philosophies, models, content and methodology. Going forward, 70 education technology will persist in leveraging its central strength through a decade of accumulated big data and AI technologies aiming to empower classroom on large scale and a regular use basis through digital links. By integrating diverse learning situation data, drawing form a variety of scenarios, we aspire to comprehensively establish academic data profiles for students supporting the digital transformation and high quality development of regional and school education.

Lara Zhao: There is a widespread consensus that deeply integrating information technology into our teaching systems will fundamentally revolutionize traditional educational philosophies, models, content and methodology. Going forward, 70 education technology will persist in leveraging its central strength through a decade of accumulated big data and AI technologies aiming to empower classroom on large scale and a regular use basis through digital links. By integrating diverse learning situation data, drawing form a variety of scenarios, we aspire to comprehensively establish academic data profiles for students supporting the digital transformation and high quality development of regional and school education.

Lara Zhao: That concludes our prepared remarks. Thank you.

Lara Zhao: Afreeca, we are now ready to begin the Q&A session. Thanks. Thank you.

Operator: If you would like to ask a question at this time, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Again, if you have a question at this time, please press star 11. Please wait while we compile our Q&A roster.

Lara Zhao: And I'm showing no questions at this time and I'd like to hand the conference back to Laura Jow for any further remarks. Thank you, operator. Including on behalf of 17 Atex Management Team, we'd like to thank you for your participation on today's call. If you require any further information, please feel free to reach out to us directly. Thank you for joining us today.

Operator: This concludes the call.

Lara Zhao: This concludes the call.

Operator: Thank you for watching this video, see you in the next video, bye bye!

Speaker: Thank you for watching this video, see you in the next video, bye bye!

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