Q2 2024 Sunlands Technology Group Earnings Call

Speaker Change: Ladies and gentlemen, thank you for standing by. Welcome to Sunland's second quarter 2024 earnings conference call.

Operator: 24 earnings conference call. At this time, all participants are in a listen-only mode.

Operator: Today's conference call is being recorded. I will now turn the call over to your host today, Yuhua, Sunlands IR representative. Thank you, please go ahead.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: Today's conference call is being recorded. I will now turn the call over to your host today, Yuhua, Sunland IR representative. Thank you. Please go ahead.

Yuhua: Hello everyone, and thank you for joining today's Sunlands 2nd Quarter 2024 Earnings Conference Call. The company's financial and operating results were issued in our press release via newswire services earlier today and are posted online. You can download the earnings press release and sign up for our distribution list by visiting our IR website.

Speaker Change: it

Speaker Change: Hello everyone and thank you for joining today's Sunline's 2nd Quarter 2024 Earnings Conference Call. The coming financial and operating results were issued in our press release via Newswire services earlier today and are posted online. You can download the earnings press release and sign up for our distribution list by visiting our IR website.

Yuhua: Participants on today's call will be our CEO, Mr. Tongbo Liu, and our financial representative, Mr. Hangyu Li. Management 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 of Sunland Safe Harbor's statement in relation to today's call. Except for the historical information contained herein, certain of the matters discussed in this conference call are forward-looking statements.

Speaker Change: Participants on today's call will be our CEO, Mr. Chongbo Liu, and our financial representative, Mr. Hangyu Li. Management will begin with prepared remarks and the call will conclude with a Q&A session.

Yuhua: These statements are based on current trends, estimates, and projections, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement.

Speaker Change: Before I hand it over to the management, I'd like to remind you of Sunland Safe Harbor's statement in relation to today's call. Except for the historical information contained herein, certain of the matters discussed in this conference call are forward-looking statements.

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

Speaker Change: Forward-looking statements involve incurrent risks and uncertainties.

Speaker Change: A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement.

Tongbo Liu: For more information about the potential risks and uncertainties, please refer to the Communist filings with the Securities and Exchange Commission. With that, I will now turn the call over to our CEO, Tongbo Liu. Thank you, Yuhua. Hello, everyone.

Tongbo Liu: For more information about the potential risks and uncertainties, please refer to the Communist filings with the Securities and Exchange Commission. With that, I will now turn the call over to our CEO, Tongbo Liu.

Tongbo Liu: Welcome to Sunlands 7th Quarter 2024 conference. Prior to commencing, I would like to kindly remind all attendees that the financial information referenced in this release is presented on a continuing operation basis and all fingers are denominated in RMB unless explicitly specified otherwise. In the face of challenging microeconomic conditions, our company demonstrated strategic flexibility to deliver solid results in the second quarter. We achieved a net revenue of $492.2 million and a net income of $182.3 million.

Tongbo Liu: Thank you, Yuhua.

Tongbo Liu: Hello, everyone. Welcome to SoundLand's 7th Quarter 2024 Conference Call.

Speaker Change: Prior to commencing, I would like to kindly remind all attendees that the financial information referenced in this release is presented on a continuing operation basis and all fingers are denominated in RMB unless explicitly specified otherwise.

Speaker Change: In the face of challenging microeconomic conditions, our company demonstrated strategic flexibility to deliver solid results in the second quarter.

Speaker Change: We achieved a net revenue of $492.2 million and a net income of $182.3 million. This underscored our resilience and ability to adapt in the face of adversities and demonstrated our strong commitment to cost reduction and sustainable growth.

Tongbo Liu: This underscored our resilience and ability to adapt in the face of various adversities and demonstrated our strong commitment to cost reduction and sustainable growth. Our cash flow also remains solid with net cash flow from operating activities showing consistent positivity over the past four quarters. This strong financial standing not only equips us to handle unpredictable circumstances effectively but also create opportunities for pioneering business development. It is also worth noting that the diversification of interest to cost offerings has continued to bear fruit. With overall new student enrollments up by 9.1% year over year, and a corresponding 8.4% increase in gross billing.

Speaker Change: Our cash flow also remains solid with net cash flow from operating activities showing consistent positivity over the past four quarters.

Speaker Change: This strong financial standing not only equips us to handle unpredictable circumstances effectively, but also creates opportunities for pioneering business development.

Speaker Change: It is also worth noting that the diversification of interest-to-cost offerings has continued to bear fruit.

Speaker Change: With overall new student enrollments up by 9.1% year-over-year and corresponding 8.4% increase in gross billions.

Tongbo Liu: This strategy aims not only to attract a broader and more varied user base, but also to foster increased engagement, to repeat purchases and to capitalize on course selling opportunities across our extensive product portfolio. As we continue to expand our course selection and refine our offerings, we are poised to uncover even more market opportunities. Our substantial user base will provide a strong foundation for this course, enabling us to maximize the lifetime value of each customer.

Speaker Change: This strategy aims not only to attract a broader and more varied user base, but also to foster increased engagement through repeat purchases and to capitalize on cross-selling opportunities across our extensive product portfolio.

Speaker Change: as we continue to expand our course selection and refine our offerings.

Speaker Change: We are poised to uncover even more market opportunities.

Speaker Change: Our substantial user base will provide a strong foundation for these goals, enabling us to maximize the lifetime value of each customer.

Tongbo Liu: Looking ahead to the second half of the year, our top priorities are to enhance brand awareness and improve the quality of our existing products and services. We are taking a prudent but proactive approach to expanding and refining the offering. Our commitment to the key growth initiatives remains unwavering as we continue to focus on improving operational efficiency and profitability. Now let's turn to the performers of each of our major areas.

Speaker Change: Looking ahead to the second half of the year, our top priorities are to enhance brand awareness and improve the quality of our existing products and services.

Speaker Change: We are taking a prudent but proactive approach to expanding and refining the offerings.

Speaker Change: Our commitment to the Key Growth Initiatives remains unwavering as we continue to focus on improving operational efficiency and profitability.

Tongbo Liu: The sector including interest, professional skills, and professional certification preparation programs has been a pivotal driver of our growth, contributing 76.7% of our total revenue and exhibiting an 11% year-over-year increase. Distinguishing itself from traditional test oriented courses, the adult online education market is evolving, with learning objectives becoming more diverse. We believe there are significant opportunities in the interest-based education area driven by a broader educational growth. We realized early on the great potential of interest-based courses, particularly within the silver-haired demographic.

Speaker Change: Now let's turn to the performers of each of our major areas. The sector including interest, professional skills, and professional certification preparation programs has been a pivotal driver of our growth.

Speaker Change: Contributing 76.7% of our total revenue and exhibiting an 11% year-over-year increase.

Speaker Change: Distinguishing itself from traditional test-oriented courses, the adult online education market is evolving, with learning objectives becoming more diverse.

Speaker Change: We believe there are significant opportunities in the interest-based education area driven by a broader educational growth.

Speaker Change: We realized early on the great potential of interest-based courses, particularly within the silver-haired demographic. Recent market developments have validated our strategic version.

Tongbo Liu: Recent market developments have validated our strategic version. Degree, multi-oriented post-secondary courses accounted for 10.7% of our total revenue, which is consistent with our near-term goals. To enhance their competitiveness in employment, the demand for working adults to upgrade their degrees or diploma has remained steady. Online education offers convenience and flexibility. Enabling working adults to balance career development with competency enhancement.

Speaker Change: Degree and multiple-oriented post-secondary courses accounted for 10.7% of our total revenue, which is consistent with our near-term goals.

Speaker Change: To enhance their competitiveness in employment, the demand for working adults to upgrade their degrees or diploma has remained steady.

Speaker Change: Online education offers convenience and flexibility.

Speaker Change: Enabling working adults to balance career development with competency enhancement. We are optimistic about the future of this area and will dynamically adjust our business arrangements as necessary.

Tongbo Liu: We are optimistic about the future of this area and will dynamically adjust our business arrangements as necessary. In addition, we are enhancing our online course offerings with ongoing user research to meet diverse needs. Beyond maintaining our leading position in senior arts education, we are venturing into new areas, leveraging over two decades of expertise and insight.

Speaker Change: In addition, we are enhancing our online course offerings with ongoing user research to meet diverse needs. Beyond maintaining our leading position in senior arts education, we are venturing into new areas, leveraging over two decades of expertise and insights.

Tongbo Liu: We are, poised to gain a competitive edge by aligning our courses with market demand. Furthermore, we have expanded into products and services around the cost offerings for this demographic, such as the new materials and educational travel. For the former, we tend to work with top tier supply chains to ensure the highest standards of product delivery. In terms of educational travel, we have already achieved a remarkable success, with revenue six times that of the same period last year.

Speaker Change: We are poised to gain a competitive edge by aligning our courses with market demands.

Speaker Change: Furthermore, we have expanded into products and services around the cost offerings for this demographic, such as the new materials and educational travel. For the former, we tend to work with top-tier supply chains to ensure the highest standards of product delivery.

Speaker Change: In terms of educational travel, we have already achieved remarkable success, with revenue six times that of the same period last year.

Tongbo Liu: In June, we introduced the echoes of the Yellow River expedition trip, a collaborative project with Beijing Radio and Television Station. This trip consisted of visiting several cities along the Yellow River to sketch famous landmarks under the guidance of a distinguished artist, with a TV crew documenting the entire process.

Speaker Change: In June, we introduced the echoes of the Yellow River expedition trip.

Speaker Change: a collaborative project with Beijing Radio and Television Station. This trip consisted of visiting several cities along the Yellow River to sketch famous landmarks under the guidance of distinguished artists.

Tongbo Liu: During the trip, participants gained a comprehensive learning experience both on the road and in the field. Feedback from participants indicated that they appreciated the range of activities, including lectures, unique field trips, and ongoing in-depth Q&A sessions with the artists. This activity is not only enriches our offerings but also greatly enhances the visibility and the reputation of our brand. These updates provide a snapshot of our business progress, now let's delve into some industry insights.

Speaker Change: with the TV crew documenting the entire process.

Speaker Change: During the trip, participants gained a comprehensive learning experience both on the road and in the field.

Speaker Change: Feedback from participants indicated that they appreciated the range of activities, including lectures, unique field trips, and ongoing in-depth Q&A sessions with the artists.

Speaker Change: These activities not only enrich our offerings, but also greatly enhances the visibility and reputation of our brand.

Speaker Change: These updates provide a snapshot of our business progress. Now let's delve into some industry insights.

Tongbo Liu: As a company firmly believing in technology as a key driver for innovation, we are proactively participating in the AIGC Wave. Our platform now integrates AI to synthesize the voices of distinguished educators, providing timely and personalized learning support to address students' queries. Additionally, we have incorrupted AI-driven assessment grading, which offers rapid and objective evaluations, enhancing assessment accuracy and efficiency, while reducing the administrative burden on our educators. For instance, the AI-simulated teacher now provides calligraphy evaluations for students, saving approximately two hours of teacher time per day.

Speaker Change: As a company firmly believing in technology as a key driver for innovation, we are proactively participating in the AIGC Wave.

Speaker Change: Our platform now integrates AI to synthesize the voices of distinguished educators, providing timely and personalized learning support to address students' queries.

Operator: 24 earnings conference call.

Operator: 24 earnings conference call. At this time, all participants are in a listen-on-neem vote. Today's conference call is being recorded.

Operator: At this time, all participants are in a listen-on-neem vote.

Operator: Atthistime,allparticipantsareinalisten-onlymode.

Operator: Today's conference call is being recorded.

Operator: Today'sconferencecallisbeingrecorded.

Tongbo Liu: Theseupdatesprovideasnapshotofourbusinessprogress,nowlet'sdelveintosomeindustryinsights.

Yuhua Ye: Gooddayandgoodnight.

Yuhua: So now, tell the call over to your host today, Yuhua, Sunland IR representative.

Operator: So now, tell the call over to your host today, Yuhua, Sunland IR representative. Thank you, please go ahead.

Yuhua Ye: Iwillnowturnthecallovertoyourhosttoday,Yuhua,SunlandsIRrepresentative.

Speaker Change: Additionally, we have incorrupted AI-driven assessment grading, which offers rapid and objective evaluations, enhancing assessment accuracy and efficiency, while reducing the administrative burden on our educators.

Yuhua: Thank you, please go ahead.

Yuhua Ye: Hello, everyone, and thank you for joining today's 2nd-second quarter, 2024 earnings conference call. The communist financial and operating results were issued in our press list. They are news-wide softwares, earlier today and now posted online. You have downloaded the earnings press list and signed up for our distribution list by visiting our IR website.

Yuhua Ye: Thankyou.

Tongbo Liu: Asacompanyfirmlybelievingintechnologyasakeydriverforinnovation,weareproactivelyparticipatingintheAIGCWave.

Operator: Ladiesandgentlemen,that'sallfortoday'sconferencecall.

Yuhua: Hello, everyone, and thank you for joining today's 2nd-second quarter, 2024 earnings conference call.

Speaker Change: For instance, the AI-simulated teacher now provides calligraphy evaluations for students, saving approximately two hours of teacher time per day. This allows them to focus more on teaching and interaction.

Yuhua Ye: Participants are today's call where we are being our CEO, Mr. Tongbo Liu, and our financial representative, Mr. Hangyu Li. Management 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 of Sunland Safe Harbor Statement in relation to today's call. Except for the historical information contained carrying, certain of the matters discussed in this conference call are forward-looking statements.

Tongbo Liu: This allows them to focus more on teaching and interaction, on the microeconomic policy front. We continue to receive encouraging news about the government's strong support for the industry in which we operate. In August, the State Council introduced a policy aimed at promoting the high quality development of service consumption. The policy supports the integration of the accommodation industry with tourism, recreation and educational travel, and also emphasizes the importance of senior consumption and educational consumption, guided by this policy directive.

Speaker Change: on the microeconomic policy front.

Speaker Change: We continue to receive encouraging news about the government's strong support for the industry in which we operate.

Yuhua Ye: These statements are based on current trends, estimates and projections, and therefore, you should not place on your lines on them. Forward-looking statements involving current risks and uncertainties. A number of important factors could cause actual results to give a material from those contained in hanging forward-looking statements.

Speaker Change: in August.

Speaker Change: The State Council introduced a policy aimed at promoting the high-quality development of service consumption.

Speaker Change: The policy supports the integration of the accommodation industry with tourism, recreation, and educational travel, and also emphasizes the importance of senior consumption and educational consumption.

Tongbo Liu: We are committed to developing quality products and services to better serve our students and users. The adult education market presents both opportunities and challenges. On the way forward, we will continue to focus on providing high quality courses, experimenting with education and peripheral products and services, and maximizing shareholder value. Thank you for your interest and support today. I will turn the poll over to our financial corner, Hangyu, to round through our financials. Thank you, Tunbo.

Speaker Change: guided by the policy directives.

Yuhua Ye: For more information about the potential risks and uncertainties, please refer to the communist filings with the Securities and Exchange Commission.

Speaker Change: We are committed to developing quality products and services to better serve our students and users.

Tongbo Liu: With that, I will now turn the call over to our CEO, Mr. Tongbo Liu. Thank you, Yuhua. Hello, everyone. Welcome to Sunland. The 7th quarter, 2024 conference call. Prior to commencing, I would like to kindly remind all attendees that the financial information, reference in this release, is presented on a continual operation basis and all fingers at the momentum in R&B unless it is specified otherwise. In the face of challenging micro-economic conditions, our company demonstrated strategic flexibility to deliver solid results in the 2nd quarter.

Speaker Change: The adult education market presents both opportunities and challenges.

Speaker Change: On the way forward, we will continue to focus on providing high quality courses.

Yuhua Ye: Pleasegoahead.

Operator: Thankyouforyourparticipation.

Yuhua: The communist financial and operating results were issued in our press list.

Speaker Change: experimenting with education and peripheral products and services and maximizing shareholder value. Thank you for your interest and support today. With that,

Yuhua Ye: Helloeveryone,andthankyouforjoiningtoday'sSunlands2ndQuarter2024EarningsConferenceCall. Thecompany'sfinancialandoperatingresultswereissuedinourpressreleasevianewswireservicesearliertodayandarepostedonline. YoucandownloadtheearningspressreleaseandsignupforourdistributionlistbyvisitingourIRwebsite.

Operator: Youmaynowdisconnectyourlines.

Yuhua: They are news-wide softwares, earlier today and now posted online.

Yuhua Ye: Participantsontoday'scallwillbeourCEO,Mr.

Hangyu Li: I will turn the call over to our financial partner, Hangyu, to run through our financials.

Hangyu Li: Hello, everyone. I'd like to present our second quarter results, which are in line with our expectations. We have been profitable since the second quarter of 2021. Our business continues to dramatically adjust to market conditions, while prudently pursuing new opportunities. Our growth margin was 84.4% and net margin was 16.7%, making us profitable for the 13th consecutive quarter. Growth in sales revenues from interest cost offerings compensated for the decline in the post-secondary courses, maintaining a stable profitability.

Hangyu Li: Hangyu, please.

Yuhua: You have downloaded the earnings press list and signed up for our distribution list by visiting our IR website.

Hangyu Li: Thank you, Tongbo. Hello, everyone. I'd like to present our second quarter results, which are in line with our expectations.

Tongbo Liu: TongboLiu,andourfinancialrepresentative,Mr.

Tongbo Liu: We achieved the net revenue of 4.9.2.2 million and net income of 8.2.3 million. This underscored our resilience and ability to adapt in the face of risk entities and demonstrated our strong commitment to cost reduction and sustainable growth. Our cash flow also remains solid with net cash flow from operating activities showing consistent positively over the past 4 quarters. This strong financial standing not only equips us to handle unpredictable circumstances effectively, but also creates opportunities for pioneering business development.

Speaker Change: We have been profitable since the second quarter of 2021. Our business continues to dramatically adjust to market conditions while prudently pursuing new opportunities.

Hangyu Li: HangyuLi.

Yuhua Ye: ManagementwillbeginwithpreparedremarksandthecallwillconcludewithaQ&Asession.

Hangyu Li: Our gross margin was 84.4% and net margin was 16.7%, making us profitable for the 13th consecutive quarter.

Yuhua Ye: BeforeIhanditovertothemanagement,I'dliketoremindyouofSunlandSafeHarborstatementinrelationtotoday'scall.

Hangyu Li: Growth in sales revenues from interest cost offerings compensated for the decline in the post-secondary courses, maintaining a stable profitability.

Yuhua Ye: Exceptforthehistoricalinformationcontainedherein,certainofthemattersdiscussedinthisconferencecallareforward-lookingstatements. Thesestatementsarebasedoncurrenttrends,estimates,andprojections,andthereforeyoushouldnotplaceunduerelianceonthem. Forward-lookingstatementsinvolveinherentrisksanduncertainties. Anumberofimportantfactorscouldcauseactualresultstodiffermateriallyfromthosecontainedinanyforward-lookingstatement. Formoreinformationaboutthepotentialrisksanduncertainties,pleaserefertothecommentsfilingswiththeSecuritiesandExchangeCommission.

Hangyu Li: In addition, we have healthy cash flows, with four consecutive quarters of positive net cash from operating activities. Our solid cash position not only enhances our ability to cope with an uncertain environment, but also provides opportunities for innovative business expansion, continues from education peripheral products and services accounted for 11.5% of the total in the quarter, and our efforts to diversify the offerings are working well. We are optimistic about the long-term prospects. Looking ahead, we'll continue to optimize our cost offerings while maintaining efficient operations.

Hangyu Li: in addition

Hangyu Li: We had healthy cash flows.

Hangyu Li: with four consecutive quarters of positive net cash.

Tongbo Liu: It is also worth noting that the diversification of interest of course, interest of course offerings has continued to bear fruit. With overall new student enrollments are by 9.1% This strategy aims not only to attract a border and a more varied user base but also to foster increased engagement to repeat purchases and to capitalize on course setting opportunities across our extensive product portfolio. As we continue to expand our course selection and refine our offerings, we are poised related to uncover even more market opportunities.

Speaker Change: Nascar from Operating Activities.

Speaker Change: Our solid cash position not only enhances our ability to cope with an uncertain environment, but also provides opportunities for innovative business expansion.

Speaker Change: continues from education peripheral products and services accounted for 11.5% of the total in the quarter and our efforts to diversify the offerings are working well

Speaker Change: We are optimistic about the long-term prospects.

Speaker Change: Looking ahead, we'll continue to optimize our cost offerings while maintaining efficient operation.

Hangyu Li: These strategic initiatives will enable us to capitalize on emerging opportunities, strengthen our leadership position in the industry, and continue to create value for our shareholders. Now, let me walk you through some of our key final results for the second quarter of 2024. All comparisons are year over year, and all fingers are in RMB unless otherwise noted.

Speaker Change: These strategic initiatives will enable us to capitalize on emerging opportunities, strengthen our leadership position in the industry, and continue to create value for our shareholders.

Tongbo Liu: Our substantial user base will provide strong foundation for this course, in labeling us to maximise the lifetime value of each customer. Looking ahead to a six and a half of the year, our top priorities are to enhance brand awareness and improve the quality of the of existing products and services. We are taking a prudent but proactive approach to expanding and refining the offerings. Our commitment to the key growth initiatives remains on varying as we continue to focus on improving operational efficiency and profitability.

Hangyu Li: For the second quarter of 2024, net revenues decreased by 6.5%, to $492.2 million from $592.2 million. 26.4 million in the second quarter of 2023. The decrease was primarily driven by the decline in gross billing from post-secondary courses over the recent quarters, partially offset by the growth in revenues from interest-cost offerings. Cost of revenues increased by 28.8% to 76.6 million in the second quarter of 2024, from 59.5 minutes in the second quarter of 2023. The increase was primarily due to an increase in the cost of revenues from sales and goods such as books and learning materials.

Speaker Change: Now, let me walk you through some of our key financial results for the second quarter of 2024. All comparisons are year-over-year, and all figures are in RMB, unless otherwise noted.

Hangyu Li: Gross profit decreased by 11% to $415.6 million in the second quarter of 2024, from 466.9 million in the second quarter of 2023. In the second quarter of 2024, operating expenses were $338.9 million, representing a 9% increase from 311 million in the second quarter of 2023. Those are the marketing expenses increased by 10.2%, to 297.4 million in the second quarter of 2024, from 270 million in the second quarter of 2023. The increase was mainly due to the growth in spending on sales activities, including enhanced compensation for sales personnel, as well as increased spending on branding and marketing activities focusing on interest cost offerings, general and administrative expenses increased by 2.2 percent, to 33.8 million in the second quarter of 2024, from 33.1 minute in the second quarter of 2023, product development expenses decreased by 4.2% to 7.7 million in the second quarter of 2024, from 8 million in the second quarter of 2023.

Speaker Change: For the second quarter of 2024, net revenues decreased by 6.5 percent.

Speaker Change: to 492.2 million from 526.4 million in the second quarter of 2023.

Tongbo Liu: Now let's turn to the performers of each of our major areas. The sector including interest, professional skills and professional certification preparation programs, has been a pivotal driver of our growth. Contributing 176.7% of our total revenue and anticipating that 11% year-over-year increase. This decrease in itself from traditional test-oriented courses, the doubts online education market is evolving, with learning objectives becoming more diverse. We believe there are significant opportunities in the interest-based education area driven by a broader educational growth.

Speaker Change: The decrease was primarily driven by the decline in gross billing from post-secondary courses over the recent quarters, partially offset by the growth in revenues from interest-cost offerings.

Tongbo Liu: Withthat,IwillnowturnthecallovertoourCEO,TongboLiu.

Tongbo Liu: Thankyou,Yuhua.

Speaker Change: Cost of revenues increased by 28.8% to $76.6 million in the second quarter of 2024, from $59.5 million in the second quarter of 2023.

Tongbo Liu: Hello,everyone.

Speaker Change: The increase was primarily due to an increase in the cost of revenues from sales and goods such as books and learning materials.

Tongbo Liu: WelcometoSunland's7thQuarter2024ConferenceCall.

Speaker Change: Gross profit decreased by 11% to $415.6 million in the second quarter of 2024, from $466.9 million in the second quarter of 2023.

Tongbo Liu: We realized early on the great potential of interest-based courses, particularly within the silver-haired demographic. Recent market developments have validated our strategic version. Degree, multi-ponoriented post-sectorial courses accounted for 10.7% of our over-to-the-revenue, which is consistent with other near-term goals. To enhance their competitiveness in employment, the demand for working adults to upgrade their degrees of diploma has remained steady. Online education offers convenience and flexibility. In neighboring working adults to balance career development with competency enhancements, we are optimistic about the future of this area and will dynamically adjust our apprentice arrangements as necessary.

Speaker Change: In the second quarter of 2024, operating expenses were $338.9 million.

Speaker Change: representing a 9% increase from 311 million in the second quarter of 2023.

Speaker Change: Those are the marketing expenses increased by 10.2% to 297.4 million in the second quarter of 2024.

Speaker Change: from 270 million in the second quarter of 2023.

Speaker Change: The increase was mainly due to the growth in spending on sales activities, including enhanced compensation for sales personnel, as well as increased spending on branding and marketing activities focusing on interest-cost offerings.

Tongbo Liu: In addition, we are enhancing our online course offerings with ongoing user research to meet diverse needs. Beyond maintaining our leading position in senior arts education, we are venturing into new areas, leverage over two decades of expertise and insights. We are poisoned to gain competitive age by allowing our courses with marked demands. Furthermore, we have expanded into products and services around course offerings for this demographic, such as the new materials and educational travel.

Speaker Change: General and administrative expenses increased by 2.2 percent.

Speaker Change: to 33.8 million in the second quarter of 2024.

Speaker Change: from 33.1 minute in the second quarter of 2023.

Speaker Change: Product development expenses decreased by 4.2% to 7.7 million in the second quarter of 2024, from 8 million in the second quarter of 2023.

Tongbo Liu: For the former, we tend to work with top tiers of light chains to ensure the hadn't standards of product delivery. In terms of educational travel, we have already achieved the remarkable success with the revenue six times that of the same period or last year. In June, we introduced the echoes of the Yelder-Raver expedition trip, collaborative project with Beijing Radio and television station. This trip was consisted of visiting several cities along the Yelder-Raver, to sketch famous landmarks under the guidance of distinguished artists, with the TV crew documenting the entire person.

Speaker Change: The decrease was mainly due to declined compensation expenses related to high-count reduction of our product development personnel.

Hangyu Li: The decrease was mainly due to decline compensation expenses related to high count reduction of our product development personnel, night income for the second quarter of 2024, was 82.3 million as compared to 173.9 million in the second quarter of 2023. Basic and diluted night income per share was 12 in the second quarter of 2024.

Speaker Change: Net income for the second quarter of 2024 was $82.3 million as compared to $173.9 million in the second quarter of 2023.

Speaker Change: Basic and diluted net income per share was 12 in the second quarter of 2024.

Hangyu Li: As of June 30, 2024, the company had $758.6 million of cash, cash equivalents and restricted, and 243.9 million of short-term investment, as compared to $766.4 million of cash equivalents and restricted cash, and $142.1 million of short-term investment, as of December 31, 2023, as of June 30, 2024. The company had a deferred revenue balance of 986.9 million, as compared to 1,113.9 million as of December 31, 2023. Now for our outlook for the third quarter of 2024, we currently expect net revenues to be between $490 million to $510 million, a decrease of 2.8% to 6.6%, year over year. This outlook is based on the current market conditions and reflects the company's management current and preliminary estimate of market operating conditions of customer demand, which are all subject to change.

Speaker Change: As of June 30, 2024, the company had $758.6 million of cash equivalents under restricted cash.

Speaker Change: and 243.9 million of short-term investments.

Tongbo Liu: During the trip participants gained a comprehensive learning experience both on the road and in the field. Feedback from participants indicated that they appreciated the range of activities, including lectures, unique field trips, and ongoing in-depth Q&A sections with artists. This activity is that only enriches of offerings, but also greatly enhances the visibility and the reputation of our brand.

Speaker Change: As compared to $766.4 million of cash equivalents and restricted cash, and $142.1 million of short-term investments,

Speaker Change: as of December 31, 2023.

Speaker Change: As of June 30, 2024, the company had a deferred revenue balance of $986.9 million.

Speaker Change: as compared to 1,113.9 million as of December 31, 2023.

Tongbo Liu: These updates provide a snapshot of our business progress, now it's built into some industry insights. As a company from the believing in technology as a king driver for innovation, we are proactively participating in the AIGC with. Our platform now integrates AI to synthesize the voices of these distinguished researchers providing timely and personalized learning support to the three students' queries. Additionally, we have incorporated AI-driven assessment grading, which offers rapid and objective immeasurations, enhancing assessment of currency and efficiency.

Speaker Change: Now for our outlook for the third quarter of 2024, we currently expect net revenues to be between 490 million to 510 million.

Tongbo Liu: OurplatformnowintegratesAItosynthesizethevoicesofdistinguishededucators,providingtimelyandpersonalizedlearningsupporttoaddressstudents'queries. Additionally,wehaveincorruptedAI-drivenassessmentgrading,whichoffersrapidandobjectiveevaluations,enhancingassessmentaccuracyandefficiency,whilereducingtheadministrativeburdenonoureducators. Forinstance,theAI-simulatedteachernowprovidescalligraphyevaluationsforstudents,savingapproximatelytwohoursofteachertimeperday. Thisallowsthemtofocusmoreonteachingandinteraction.

Speaker Change: a decrease of 2.8% to 6.6% year-over-year.

Speaker Change: This outlook is based on the current market conditions and reflects the company's management current and preliminary estimate of market operating conditions of customer demand, which are all subject to change.

Operator: With that, I'd like to open up the call to the questions, operator. Thank you. There will now be a question and answer session. To ask a question on the phone, please press star 11 and wait for a name to be announced. For the benefit of all participants in today's call, if you wish to ask your questions to management in Chinese, please immediately repeat your questions in English. Please stand by while questions are being collected.

Operator: As a reminder, if you'd like to ask a question, please press star 11 and wait for a name. At this time we are showing no further questions so this will conclude our question and answer session. At this time I would like to turn the conference back over to Yuhua for any closing. Once again, thank you everyone for joining today's call. We look forward to speaking with you again soon. Good day and good night. Ladies and gentlemen, that's all for today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: With that, I'd like to open up the call to the questions of Peter.

Tongbo Liu: While reducing the administrative burden on our educators. For instance, the AI-seminated teacher now provides categorically evaluations for students saving approximately two hours of teacher time per day. This allows them to focus more on teaching and interaction.

Peter: Thank you.

Speaker Change: Thank you. There will now be a question and answer session. To ask a question on the phone, please press star 11 and wait for a name to be announced.

Speaker Change: For the benefit of all participants in today's call, if you wish to ask your questions to management in Chinese, please immediately repeat your questions in English.

Tongbo Liu: On the microeconomic policy front, we continue to receive encouraging news about the government's support for the industry, in which we operate. In August, the City Council introduced the policy to M9 promoting the high-quality development of service consumption. The policy supports the integration of the accommodation industry with tourism, recreation and educational travel. And also emphasizes the importance of senior consumption and educational consumption. Guided by the policy directives, we are committed to developing quality products and services to better serve our students and the users. The doubt education market presents both opportunities and challenges. On the way forward, we will continue to focus on providing high-quality courses, experimenting with education and peripheral products and services.

Tongbo Liu: Onthemicroeconomicpolicyfront,wecontinuetoreceiveencouragingnewsaboutthegovernment'sstrongsupportfortheindustryinwhichweoperate.

Speaker Change: Please stand by while questions are being collected.

Speaker Change: Thank you for watching!

Tongbo Liu: InAugust,thestatecouncilintroducedapolicyaimedatpromotingthehigh-qualitydevelopmentofserviceconsumption. Thepolicysupportstheintegrationoftheaccommodationindustrywithtourism,recreation,andeducationaltravel,andalsoemphasizestheimportanceofseniorconsumptionandeducationalconsumption.

Speaker Change: Thank you for watching!

Speaker Change: Join the crew

Speaker Change: As a reminder, if you would like to ask a question, please press star 11 and wait for a name to be announced.

Speaker Change: Thank you very much.

Speaker Change: Subs by www.zeoranger.co.uk

Speaker Change: Thank you for watching.

Tongbo Liu: Guidedbythesepolicydirectives,wearecommittedtodevelopingqualityproductsandservicestobetterserveourstudentsandusers.

Speaker Change: At this time, we are showing no further questions. So this will conclude our question and answer session. At this time, I would like to turn the conference back over to Yuhua for any closing remarks.

Tongbo Liu: Theadulteducationmarketpresentsbothopportunitiesandchallenges.

Yuhua: Once again, thank you everyone for joining today's call. We look forward to speaking with you again soon. Good day and good night.

Tongbo Liu: Onthewayforward,wewillcontinuetofocusonprovidinghigh-qualitycourses,experimentingwitheducationandperipheralproductsandservices,andmaximizingshareholdervalue.

Yuhua: Ladies and gentlemen, deck off. Today's conference call. Thank you for your participation. You may now disconnect your lines.

Tongbo Liu: The maximizing shareholder value, thank you for your interest and support today.

Yuhua: Participants are today's call where we are being our CEO, Mr. Tongbo Liu, and our financial representative, Mr. Hangyu Li.

Yuhua Ye: With that, I will turn the poll over to our financial owner, Han Yu, to run through our financials. Hong, please. Thank you, Tung Bo.

Tongbo Liu: Thankyouforyourinterestandsupporttoday.

Hangyu Li: Withthat,Iwillturnthecallovertoourfinancialpartner,HangYu,torunthroughourfinancials.

Hangyu Li: HangYu,please.

Hangyu Li: Thankyou,Tongbo.

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

Hangyu Li: Hello, everyone. I'd like to present our second quarter results, which are in line with our expectations. We have been profitable since the second quarter of 2021. Our business continues to dramatically adapt to market conditions, where we are currently pursuing new opportunities. Our growth margin was 84.4%, and the night margin was 16.67%, making us profitable for the 13th consecutive quarter. Growth in sales revenues from interest cost offerings compensated for the decline in the post-secondary causes, maintaining a stable profitability.

Yuhua: Before I hand it over to the management, I'd like to remind you of Sunland Safe Harbor Statement in relation to today's call.

Hangyu Li: Hello,everyone.

Hangyu Li: I'dliketopresentoursecondquarterresults,whichareinlinewithourexpectations. Wehavebeenprofitablesincethesecondquarterof2021.

Yuhua: Except for the historical information contained carrying, certain of the matters discussed in this conference call are forward-looking statements.

Yuhua: These statements are based on current trends, estimates and projections, and therefore, you should not place on your lines on them. Forward-looking statements involving current risks and uncertainties. A number of important factors could cause actual results to give a material from those contained in hanging forward-looking statements.

Hangyu Li: Ourbusinesscontinuestodramaticallyadjusttomarketconditions.

Hangyu Li: Weareprudentlypursuingnewopportunities. Inaddition,wehadhealthycashflowswithfourconsecutivequartersofpositivenetcashfromoperatingactivities. Oursolidcashpositionnotonlyenhancesourabilitytocopewithanuncertainenvironment,butalsoprovidesopportunitiesforinnovativebusinessexpansion.

Yuhua: For more information about the potential risks and uncertainties, please refer to the communist filings with the Securities and Exchange Commission.

Yuhua: With that, I will now turn the call over to our CEO, Mr. Tongbo Liu.

Hangyu Li: In addition, we had healthy cash flows with four consecutive quarters of positive net cash from operating activities. Our solid cash position not only enhances our ability to cope with an uncertain environment, but also provides opportunities for innovative business expansion. Continues from education-produced products and services accounted for 11.5% of the total in the quarter, and our efforts to diversify the offerings are working well. We are optimistic about the long-term prospects. Looking ahead, we'll continue to optimize our cost offerings with maintaining efficient operation. This strategic initiatives will enable us to capitalize on emerging opportunities, strengthen our leadership position in the industry, and continue to create value for our shareholders.

Hangyu Li: Continuousfromeducationperipheralproductsandservicesaccountedfor11.5%ofthetotalinthequarter,andoureffortstodiversifytheofferingsareworkingwell. Weareoptimisticaboutthelong-termprospects. Lookingahead,wewillcontinuetooptimizeourcourseofferingswhilemaintainingefficientoperations.

Hangyu Li: Thesestrategicinitiativeswillenableustocapitalizeonemergingopportunities,strengthenourleadershippositionintheindustry,andcontinuetocreatevalueforourshareholders.

Tongbo Liu: Thank you, Yuhua.

Hangyu Li: Now, let me work through some of our key financial results for the second quarter of 2024. All comparisons are year-over-year, and all fingers are in R&B unless otherwise noted. For the second quarter of 2024, net revenues decreased by 6.5% to 492.2 million from 590. 26.4 million in the second quarter of 2023. The decrease was primarily driven by the decline in growth billings from post-secondary causes over the recent quarters, partially off-site by the growth in revenues from interest cost offerings.

Hangyu Li: Now,letmewalkyouthroughsomeofourkeyfinancialresultsforthesecondquarterof2024. Allcomparisonsareyearoveryear,andallfingersareinRMBunlessotherwisenoted.

Tongbo Liu: Hello, everyone.

Tongbo Liu: Priortocommencing,Iwouldliketokindlyremindallattendeesthatthefinancialinformationreferencedinthisreleaseispresentedonacontinuingoperationbasis,andallfingersaredenominatedinRMBunlessexplicitlyspecifiedotherwise.

Tongbo Liu: Welcome to Sunland.

Tongbo Liu: Inthefaceofchallengingmacroeconomicconditions,ourcompanydemonstratedstrategicflexibilitytodeliversolidresultsinthesecondquarter. Weachievedanetrevenueof$492.2millionandanetincomeof$182.3million. Thisunderscoredourresilienceandabilitytoadaptinthefaceofadversitiesanddemonstratedourstrongcommitmenttocostreductionandsustainablegrowth.

Hangyu Li: Forthesecondquarterof2024,netrevenuesdecreasedby6.5%to492.2millionfrom526.4millioninthesecondquarterof2023. Thedecreasewasprimarilydrivenbythedeclineingrossbillingsfrompost-secondarycoursesovertherecentquarters,partiallyoffsetbythegrowthinrevenuesfrominterestcourseofferings. Costofrevenuesincreasedby28.8%to76.6millioninthesecondquarterof2024,from59.5millioninthesecondquarterof2023. Theincreasewasprimarilyduetoanincreaseinthecostofrevenuesfromsalesandgoods,suchasbooksandlearningmaterials.

Tongbo Liu: The 7th quarter, 2024 conference call.

Tongbo Liu: Prior to commencing, I would like to kindly remind all attendees that the financial information, reference in this release, is presented on a continual operation basis and all fingers at the momentum in R&B unless it is specified otherwise.

Tongbo Liu: In the face of challenging micro-economic conditions, our company demonstrated strategic flexibility to deliver solid results in the 2nd quarter. We achieved the net revenue of 4.9.2.2 million and net income of 8.2.3 million.

Hangyu Li: Cost of revenues increased by 28.8% to 76.6 million in the second quarter of 2024, from 59.5 million in the second quarter of 2023. The increase was primarily due to an increase in the cost of revenues from sales and goods such as books and the learning materials. Growth profit decreased by 11% to 415.6 million in the second quarter of 2024, from 466.9 million in the second quarter of 2023. In the second quarter of 2024, operating expenses were 338.9 million, representing a 9% increase from 311 million in the second quarter of 2023.

Tongbo Liu: This underscored our resilience and ability to adapt in the face of risk entities and demonstrated our strong commitment to cost reduction and sustainable growth.

Tongbo Liu: Our cash flow also remains solid with net cash flow from operating activities showing consistent positively over the past 4 quarters.

Hangyu Li: Grossprofitdecreasedby11%to415.6millioninthesecondquarterof2024,from466.9millioninthesecondquarterof2023. Inthesecondquarterof2024,operatingexpenseswere338.9million,representinga9%increasefrom311millioninthesecondquarterof2023.

Tongbo Liu: This strong financial standing not only equips us to handle unpredictable circumstances effectively, but also creates opportunities for pioneering business development.

Hangyu Li: Those at the marketing expenses increased by 10.2% to 297.4 million in the second quarter of 2024, from 270 million in the second quarter of 2023. The increase was mainly due to the growth in spending on sales activities, including enhanced compensation for sales personnel as well as increased spending on branding and marketing activities, focusing on interest cost offerings. General and administrative expenses increased by 2.2% to 33.8 million in the second quarter of 2024, from 33.1 million in the second quarter of 2023.

Hangyu Li: Salesandmarketingexpensesincreasedby10.2%to297.4millioninthesecondquarterof2024, from270millioninthesecondquarterof2023. Theincreasewasmainlyduetothegrowthinspendingonsalesactivities,includingenhancedcompensationforsalespersonnel,aswellasincreasedspendingonbrandingandmarketingactivities,focusingoninterest-costofferings.

Tongbo Liu: It is also worth noting that the diversification of interest of course, interest of course offerings has continued to bear fruit.

Tongbo Liu: With overall new student enrollments are by 9.1% This strategy aims not only to attract a border and a more varied user base but also to foster increased engagement to repeat purchases and to capitalize on course setting opportunities across our extensive product portfolio.

Hangyu Li: Generalandadministrativeexpensesincreasedby2.2percentto33.8millioninthesecondquarterof2024,from33.1millioninthesecondquarterof2023. Productdevelopmentexpensesdecreasedby4.2percentto7.7millioninthesecondquarterof2024,from8millioninthesecondquarterof2023. Thedecreasewasmainlyduetodeclinedcompensationexpensesrelatedtohigh-countreductionofourproductdevelopmentpersonnel.

Tongbo Liu: As we continue to expand our course selection and refine our offerings, we are poised related to uncover even more market opportunities.

Hangyu Li: Product development expenses decreased by 4.2% to 7.7 million in the second quarter of 2024, from 8 million in the second quarter of 2023. The decrease was mainly due to declined compensation expenses related to high-con reduction of our product development personnel. Night income for the second quarter of 2024 was 82.3 million and compared to 173.9 million in the second quarter of 2023. Basic and diluted night income per share was 12 in the second quarter of 2024.

Tongbo Liu: Our substantial user base will provide strong foundation for this course, in labeling us to maximise the lifetime value of each customer.

Tongbo Liu: Looking ahead to a six and a half of the year, our top priorities are to enhance brand awareness and improve the quality of the of existing products and services. We are taking a prudent but proactive approach to expanding and refining the offerings.

Hangyu Li: Netincomeforthesecondquarterof2024was82.3millionascomparedto173.9millioninthesecondquarterof2023.

Tongbo Liu: Our commitment to the key growth initiatives remains on varying as we continue to focus on improving operational efficiency and profitability.

Hangyu Li: Basicanddilutednetincomepersharewas12inthesecondquarterof2024.

Tongbo Liu: Now let's turn to the performers of each of our major areas.

Hangyu Li: As of June the 30th, 2024, the company had 758.6 million of cash, cash equivalents and restricted cash and 243.9 million of short-term investments. As compared to 766.4 million of cash, cash equivalents and restricted cash and 142.1 million of short-term investments as of December balance of 900 and 86.9 million as compared to 1100 and 13.9 million as of December 31, 2023.

Tongbo Liu: Ourcashflowalsoremainedsolidwithnetcashflowfromoperatingactivitiesshowingconsistentandpositivelyoverthepastfourquarters. Thisstrongfinancialstandingnotonlyequipsustohandleunpredictablecircumstanceseffectively,butalsocreatesopportunitiesforpioneeringbusinessdevelopment.

Hangyu Li: AsofJune30,2024,thecompanyhad758.6millionofcashequivalentsandrestrictedcashand243.9millionofshort-terminvestmentsascomparedto766.4millionofcashequivalentsandrestrictedcashand142.1millionofshort-terminvestmentsasofDecember31,2023.

Tongbo Liu: The sector including interest, professional skills and professional certification preparation programs, has been a pivotal driver of our growth. Contributing 176.7% of our total revenue and anticipating that 11% year-over-year increase.

Tongbo Liu: This decrease in itself from traditional test-oriented courses, the doubts online education market is evolving, with learning objectives becoming more diverse.

Tongbo Liu: We believe there are significant opportunities in the interest-based education area driven by a broader educational growth.

Tongbo Liu: Itisalsoworthnotingthatthediversificationofinterest-to-costofferingshascontinuedtobearfruitwithoverallnewstudentenrollmentsupby9.1%year-over-yearandacorresponding8.4%increaseincostperunit.

Hangyu Li: AsofJune30,2024,thecompanyhadadeferredrevenuebalanceof986.9millionascomparedto1,113.9millionasofDecember31,2023.

Tongbo Liu: We realized early on the great potential of interest-based courses, particularly within the silver-haired demographic.

Hangyu Li: Now for our outlook for the third quarter of 2024, we currently expect 9 revenues to be between 400 and 19 million to 500 and 10 million, a decrease of 2.8% to 6.6% year over year. This outlook is based on the current market conditions and reflects the company's management current and the preliminary estimate of market or pricing conditions of customer demand, which are all subject to change.

Tongbo Liu: Thisstrategyaimsnotonlytoattractabroaderandmorevarieduserbase,butalsotofosterincreasedengagementthroughrepeatpurchasesandtocapitalizeoncoursesellingopportunitiesacrossourextensiveproductportfolio.

Hangyu Li: Nowforouroutlookforthethirdquarterof2024,wecurrentlyexpectnetrevenuestobebetween490millionto510million,adecreaseof2.8percentto6.6percentyear-over-year. Thisoutlookisbasedonthecurrentmarketconditionsandreflectsthecompany'smanagementcurrentandthepreliminaryestimateofmarketoperatingconditionsofcustomerdemand,whichareallsubjecttochange.

Tongbo Liu: Recent market developments have validated our strategic version.

Tongbo Liu: Degree, multi-ponoriented post-sectorial courses accounted for 10.7% of our over-to-the-revenue, which is consistent with other near-term goals.

Tongbo Liu: Aswecontinuetoexpandourcourseselectionandrefineourofferings,wearepoisedtouncoverevenmoremarketopportunities. Oursubstantialuserbasewillprovideastrongfoundationforthiscourse,enablingustomaximizethelifetimevalueofeachcustomer.

Tongbo Liu: To enhance their competitiveness in employment, the demand for working adults to upgrade their degrees of diploma has remained steady. Online education offers convenience and flexibility.

Yuhua Ye: With that, I'd like to open up the call to the questions of Peter. Thank you. We'll now be questioning on the session to ask a question on the phone. Please press star 11 and wait for a name to be announced. For the benefit of all participants in the vehicle, if you wish to ask your questions to management in Chinese, please immediately repeat your questions in English. Please and by while questions are being collected. As a reminder, if you'd like to ask questions, please press star 11 and wait for a name to be announced.

Tongbo Liu: Lookingaheadtothesecondhalfoftheyear,ourtopprioritiesaretoenhancebrandawarenessandimprovethequalityofexistingproductsandservices.

Hangyu Li: Withthat,I'dliketoopenupthecalltothequestions.

Tongbo Liu: Wearetakingaprudentbutproactiveapproachtoexpandingandrefiningtheofferings.

Operator: Operator?

Tongbo Liu: In neighboring working adults to balance career development with competency enhancements, we are optimistic about the future of this area and will dynamically adjust our apprentice arrangements as necessary.

Tongbo Liu: In addition, we are enhancing our online course offerings with ongoing user research to meet diverse needs.

Tongbo Liu: Ourcommitmenttothekeygrowthinitiativesremainsunwaveringaswecontinuetofocusonimprovingoperationalefficiencyandprofitability.

Operator: Thankyou.

Tongbo Liu: Nowlet'sturntotheperformanceofeachofourmajorareas. Thesector,includinginterest,professionalskills,andprofessionalcertificationpreparationprograms,hasbeenapivotaldriverofourgrowth,contributing76.7%ofourtotalrevenueandexhibitingan11%year-over-yearincrease.

Operator: Therewillnowbeaquestionandanswersession.

Tongbo Liu: Distinguishingitselffromtraditionaltest-orientedcourses,theadultonlineeducationmarketisevolving,withlearningobjectivesbecomingmorediverse.

Tongbo Liu: Webelievetherearesignificantopportunitiesintheinterest-basededucationareadrivenbybroadereducationalgrowth.

Tongbo Liu: Werealizedearlyonthegreatpotentialofinterest-basedcourses,particularlywithinthesilver-haireddemographic.

Tongbo Liu: Recentmarketdevelopmentshavevalidatedourstrategicversion.

Operator: Toaskaquestiononthephone,pleasepressstar11andwaitforanametobeannounced.

Tongbo Liu: Degree-orientedpost-secondarycoursesaccountedfor10.7%ofourtotalrevenue,whichisconsistentwithournear-termgoals. Toenhancetheircompetitivenessinemployment,thedemandforworkingadultstoupgradetheirdegreesordiplomahasremainedsteady. Onlineeducationoffersconvenienceandflexibility,enablingworkingadultstobalancecareerdevelopmentwithcompetencyenhancement.

Tongbo Liu: Weareoptimisticaboutthefutureofthisareaandwilldynamicallyadjustourbusinessarrangementsasnecessary.

Operator: Forthebenefitofallparticipantsintoday'scall,ifyouwishtoaskyourquestionstomanagementinChinese,pleaseimmediatelyrepeatyourquestionsinEnglish.

Operator: At this time, we are showing no further questions, so this will conclude our question and answer session.

Yuhua Ye: At this time, I would like to turn the conference back over to Yuhua for any closing remarks. Once again, thank you everyone for joining this call. We look forward to speaking with you again soon.

Tongbo Liu: Inaddition,weareenhancingouronlinecourseofferingswithongoinguserresearchtomeetdiverseneeds.

Operator: Pleasestandbywhilequestionsarebeingcollected.

Tongbo Liu: Beyondmaintainingourleadingpositioninseniorartseducation,weareventuringintonewareas,leveragingovertwodecadesofexpertiseandinsights.

Operator: Asareminder,ifyou'dliketoaskaquestion,pleasepressstar11andwaitforanametobeannounced.

Tongbo Liu: Beyond maintaining our leading position in senior arts education, we are venturing into new areas, leverage over two decades of expertise and insights.

Operator: Good night. Ladies and gentlemen, that call to this conference call. Thank you for your participation.

Tongbo Liu: Wearepoisedtogainacompetitiveedgebyaligningourcourseswithmarketdemands.

Operator: Atthistime,weareshowingnofurtherquestions,sothiswillconcludeourquestionandanswersession.

Tongbo Liu: Furthermore,wehaveexpandedintoproductsandservicesaroundcourseofferingsforthisdemographic,suchasthenewmaterialsandeducationaltravel.

Yuhua Ye: Atthistime,IwouldliketoturntheconferencebackovertoYuhuaforanyclosingremarks.

Tongbo Liu: Fortheformer,wetendtoworkwithtop-tiersupplychainstoensurethehigheststandardsofproductdelivery.

Tongbo Liu: Intermsofeducationaltravel,wehavealreadyachievedaremarkablesuccess,withrevenuesixtimesthatofthesameperiodlastyear. InJune,weintroducedtheEchoesoftheYellowRiverExpeditionTrip,acollaborativeprojectwithBeijingRadioandTelevisionStation. ThistripconsistedofvisitingseveralcitiesalongtheYellowRivertosketchfamouslandmarksundertheguidanceofdistinguishedartists,withaTVcrewdocumentingtheentireprocess. Duringthetrip,participantsgainedacomprehensivelearningexperiencebothontheroadandinthefield. Feedbackfromparticipantsindicatedthattheyappreciatedarangeofactivitiesincludinglectures,uniquefieldtrips,andongoingin-depthQ&Asessionswiththeartists. Theseactivitiesnotonlyenrichourofferingsbutalsogreatlyenhancesthevisibilityandreputationofourbrand.

Yuhua Ye: Onceagain,thankyoueveryoneforjoiningtoday'scall.

Yuhua Ye: Welookforwardtospeakingwithyouagainsoon.

Tongbo Liu: We are poisoned to gain competitive age by allowing our courses with marked demands.

Tongbo Liu: Furthermore, we have expanded into products and services around course offerings for this demographic, such as the new materials and educational travel.

Tongbo Liu: For the former, we tend to work with top tiers of light chains to ensure the hadn't standards of product delivery.

Tongbo Liu: In terms of educational travel, we have already achieved the remarkable success with the revenue six times that of the same period or last year.

Tongbo Liu: In June, we introduced the echoes of the Yelder-Raver expedition trip, collaborative project with Beijing Radio and television station. This trip was consisted of visiting several cities along the Yelder-Raver, to sketch famous landmarks under the guidance of distinguished artists, with the TV crew documenting the entire person. During the trip participants gained a comprehensive learning experience both on the road and in the field. Feedback from participants indicated that they appreciated the range of activities, including lectures, unique field trips, and ongoing in-depth Q&A sections with artists.

Tongbo Liu: This activity is that only enriches of offerings, but also greatly enhances the visibility and the reputation of our brand.

Tongbo Liu: These updates provide a snapshot of our business progress, now it's built into some industry insights.

Tongbo Liu: As a company from the believing in technology as a king driver for innovation, we are proactively participating in the AIGC with.

Tongbo Liu: Our platform now integrates AI to synthesize the voices of these distinguished researchers providing timely and personalized learning support to the three students' queries.

Tongbo Liu: Additionally, we have incorporated AI-driven assessment grading, which offers rapid and objective immeasurations, enhancing assessment of currency and efficiency. While reducing the administrative burden on our educators.

Tongbo Liu: For instance, the AI-seminated teacher now provides categorically evaluations for students saving approximately two hours of teacher time per day. This allows them to focus more on teaching and interaction.

Tongbo Liu: On the microeconomic policy front, we continue to receive encouraging news about the government's support for the industry, in which we operate.

Tongbo Liu: In August, the City Council introduced the policy to M9 promoting the high-quality development of service consumption. The policy supports the integration of the accommodation industry with tourism, recreation and educational travel. And also emphasizes the importance of senior consumption and educational consumption.

Tongbo Liu: Guided by the policy directives, we are committed to developing quality products and services to better serve our students and the users.

Tongbo Liu: The doubt education market presents both opportunities and challenges.

Tongbo Liu: On the way forward, we will continue to focus on providing high-quality courses, experimenting with education and peripheral products and services.

Tongbo Liu: The maximizing shareholder value, thank you for your interest and support today.

Tongbo Liu: With that, I will turn the poll over to our financial owner, Han Yu, to run through our financials.

Hangyu Li: Hong, please.

Hangyu Li: Thank you, Tung Bo.

Hangyu Li: Hello, everyone.

Hangyu Li: I'd like to present our second quarter results, which are in line with our expectations. We have been profitable since the second quarter of 2021.

Hangyu Li: Our business continues to dramatically adapt to market conditions, where we are currently pursuing new opportunities. Our growth margin was 84.4%, and the night margin was 16.67%, making us profitable for the 13th consecutive quarter.

Hangyu Li: Growth in sales revenues from interest cost offerings compensated for the decline in the post-secondary causes, maintaining a stable profitability.

Hangyu Li: In addition, we had healthy cash flows with four consecutive quarters of positive net cash from operating activities. Our solid cash position not only enhances our ability to cope with an uncertain environment, but also provides opportunities for innovative business expansion.

Hangyu Li: Continues from education-produced products and services accounted for 11.5% of the total in the quarter, and our efforts to diversify the offerings are working well.

Hangyu Li: We are optimistic about the long-term prospects.

Hangyu Li: Looking ahead, we'll continue to optimize our cost offerings with maintaining efficient operation.

Hangyu Li: This strategic initiatives will enable us to capitalize on emerging opportunities, strengthen our leadership position in the industry, and continue to create value for our shareholders.

Hangyu Li: Now, let me work through some of our key financial results for the second quarter of 2024. All comparisons are year-over-year, and all fingers are in R&B unless otherwise noted. For the second quarter of 2024, net revenues decreased by 6.5% to 492.2 million from 590.

Hangyu Li: 26.4 million in the second quarter of 2023.

Hangyu Li: The decrease was primarily driven by the decline in growth billings from post-secondary causes over the recent quarters, partially off-site by the growth in revenues from interest cost offerings. Cost of revenues increased by 28.8% to 76.6 million in the second quarter of 2024, from 59.5 million in the second quarter of 2023.

Hangyu Li: The increase was primarily due to an increase in the cost of revenues from sales and goods such as books and the learning materials.

Hangyu Li: Growth profit decreased by 11% to 415.6 million in the second quarter of 2024, from 466.9 million in the second quarter of 2023. In the second quarter of 2024, operating expenses were 338.9 million, representing a 9% increase from 311 million in the second quarter of 2023.

Hangyu Li: Those at the marketing expenses increased by 10.2% to 297.4 million in the second quarter of 2024, from 270 million in the second quarter of 2023. The increase was mainly due to the growth in spending on sales activities, including enhanced compensation for sales personnel as well as increased spending on branding and marketing activities, focusing on interest cost offerings.

Hangyu Li: General and administrative expenses increased by 2.2% to 33.8 million in the second quarter of 2024, from 33.1 million in the second quarter of 2023. Product development expenses decreased by 4.2% to 7.7 million in the second quarter of 2024, from 8 million in the second quarter of 2023.

Hangyu Li: The decrease was mainly due to declined compensation expenses related to high-con reduction of our product development personnel.

Hangyu Li: Night income for the second quarter of 2024 was 82.3 million and compared to 173.9 million in the second quarter of 2023.

Hangyu Li: Basic and diluted night income per share was 12 in the second quarter of 2024. As of June the 30th, 2024, the company had 758.6 million of cash, cash equivalents and restricted cash and 243.9 million of short-term investments.

Hangyu Li: As compared to 766.4 million of cash, cash equivalents and restricted cash and 142.1 million of short-term investments as of December balance of 900 and 86.9 million as compared to 1100 and 13.9 million as of December 31, 2023.

Hangyu Li: Now for our outlook for the third quarter of 2024, we currently expect 9 revenues to be between 400 and 19 million to 500 and 10 million, a decrease of 2.8% to 6.6% year over year. This outlook is based on the current market conditions and reflects the company's management current and the preliminary estimate of market or pricing conditions of customer demand, which are all subject to change.

Hangyu Li: With that, I'd like to open up the call to the questions of Peter.

Hangyu Li: Thank you.

Operator: We'll now be questioning on the session to ask a question on the phone.

Operator: Please press star 11 and wait for a name to be announced.

Operator: For the benefit of all participants in the vehicle, if you wish to ask your questions to management in Chinese, please immediately repeat your questions in English.

Operator: Please and by while questions are being collected.

Operator: As a reminder, if you'd like to ask questions, please press star 11 and wait for a name to be announced.

Operator: At this time, we are showing no further questions, so this will conclude our question and answer session.

Yuhua: At this time, I would like to turn the conference back over to Yuhua for any closing remarks.

Yuhua: Once again, thank you everyone for joining this call.

Yuhua: We look forward to speaking with you again soon.

Yuhua: Good night.

Operator: Ladies and gentlemen, that call to this conference call.

Operator: Thank you for your participation.