Q3 2024 Sunlands Technology Group Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to sunland's third quarter 2024 earnings conference call.
Next time, all participants are in only mode.
Today's conference call is being recorded.
Operator: Ladies and gentlemen, thank you for standing by and welcome to Sunlands third quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. Today's conference call is being recorded.
I will now turn the call over to your host today. Please go ahead.
Hello everyone and thank you for joining Salon. Third quarter 2024 earnings conference. Call the company's financial and operating results were issued in our press release value square Services earlier today and are posted online.
Yuhua Ye: I will now turn the call over to your host today, Yuhua Sunlands IRF.
You could download the earnings, press release and sign up for our distribution list by visiting our IR website.
Yuhua Ye: Hello everyone, and thank you for joining Sunlands' 3rd Quarter 2024 Earnings Conference Call. The company's financial and operating results were issued in our press release via New Square Services earlier today and are posted online. You could download the earnings press release and sign up for our distribution list by visiting our IR website.
Participants.
On today's call will be our CEO. Mr. Tong, will you and our financial director, Mr. Hu Li management will begin with the prepared remarks and the call Will conclude with the Q&A session.
Before I hand it over to the management, I'd like to remind you of 7, Safe Harbor statement in relation to today's call except for the historical information contained here in certain of the matter discussed in this conference call are forward-looking statements.
Yuhua Ye: Participants on today's call will be our CEO, Mr. Dongbo Liu, and our financial director, Mr. Hangyu Li. Management will begin with the prepared remarks, and the call will conclude with a Q&A session.
These statements are based on current trends estimates and projections, and therefore, you should now place and do Reliance on them.
Yuhua Ye: Before I hand it over to the management, I'd like to remind you of Sunland's safe harbor 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. 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 risk and uncertainty. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. For more information about potential risks and uncertainties, please refer to the conference filings with the Securities and Exchange Commission.
Forward-looking statements, involve inherent risk and uncertainty. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement.
For more information about potential risks and uncertainties please refer to the company's filings for the Security and Exchange Commission with that. I'll now turn the call over to our CEO to view.
Uh, thank you. Uh hello everyone. Welcome to Sunland, sir quarter 2024 conference call
The private commencing I would like to kindly remain or attend this that the financial information reference in this release are presented on a continuing operation basis and all fingers are denominated in R&B unless explicitly specified. Otherwise
Tongbo Liu: With that, I will now turn the call over to our CEO, Tongbo Liu.
Tongbo Liu: Thank you, Yuhua.
Tongbo Liu: Hello, everyone. Welcome to Sunlands third quarter 2024 conference. Prior to commencing, I would like to kindly remind all attendees that the financial information referenced in this release are presented on a continuing operation basis, and all fingers are denominated in RMB unless explicitly specified otherwise. As we reflect on our performance for the third quarter of 2024, we are pleased to report that our business has remained resilient amidst the challenging marketing environment. Our total revenue for the quarter stood at $491.3 million, representing a modest sequential decline of 0.2%. However, our net profit reached 89.3 million, an 8.6% increase from the previous.
As a way, reflect on our performers, for the S quarter, of of 24, we are pleased to report that our business has remains resilient amidst the challenge marketing experiment. Our total revenue for the quarter, stood at 4 9, 1. 3.
Representing a modest. Uh, sequential decline of 0.2%.
However, our net profit reached 89.3 million 8.6% increase from the previous quarter driven by our strategic, realignment towards High return areas.
This this results, not only highlights our related to maintain steady growth despite the external pressures, but also reinforced the effectiveness and sustainability of our business model.
Tongbo Liu: driven by our strategic realignment towards high return area. These results not only highlight our ability to maintain steady growth despite external pressures, but also reinforce the effectiveness and sustainability of our business model. Our ability to consistently maintain stable profitability across various periods further substantiates our strategic focus on long-term value generation and operational excellence. This approach, we believe, is foundational to our ongoing success and positions as well for future growth. While the industry remains in a period of structural change, we have proactively adapted relying our business model to better cater to involving customer needs. In the first nine months of this year, our total enrollments grew by 11.2% year over year, highlighting the effectiveness of business strategies.
Our ability to consistently maintain stable profitability, of course via various periods further, substantiates of strategic focus on long-term value, generation, and operational, X accidents,
This approach the belief is foundational to our ongoing success and positions as well for future girls.
While the industry remains in a period of structural change, we have proactively adapted relying our business model, to better cater to involving customer needs in the first 9 months of this year. Our total enrollments grow by 11.2% year-over-year. Highlighting the effectiveness of Administrators, We are continuing to invest strategically in Innovation and are confident that our efforts to optimize our performance will drive long-term growth as market conditions stabilize. We are well, positioned to this new opportunities and build on our current momentum.
Tongbo Liu: We are continuing to invest strategically in innovation and are confident that our efforts to optimize our portfolio will drive long-term growth. As market conditions stabilize, we are well-positioned to seize new opportunities and build on our current momentum. Looking ahead, the company will continue strengthening its brand presence, enhance the user experience, and delve deeper into the learning needs of users across different age groups. Through continuous innovation, we aim to provide learners with more diverse and high-quality educational products and services. At the same time, the company will further optimize its cost structure. focusing resources on the most promising opportunities.
Looking ahead, the company will continue strengthening its brand presence. Enhance the user experience and delve deeper into the learning needs of users, of course, different age groups.
Through continuous innovation, we aim to provide Learners with more diverse and high-quality educational products and services.
At the same time the company will further optimize its cost structure.
Focusing resources on the most promising opportunities, we believe this actions will drive sustainable profitability growth and position the company to lead the adults online education sector in the long term.
Now, let's turn to the performers of each of our major course programs.
Tongbo Liu: We believe these actions will drive sustainable profitability growth and position the company to lead the adult online education sector in the long term.
The interest, professional skills and professional certification. Preparation course sector
Including professional certifications skill development, and interest based programs has been instrument instrumental in driving our growth contributing to 13, 13, 133.66 of our total revenues notably of early investments in interest based education. For older adults have yield significant returns as a sector aligns with border economy and the demographic shifts. We we remain highly optimistic about its growth potential and will position to capitalize on the unique opportunities it presents.
Tongbo Liu: Now let's turn to the performers of each of our major course programs. The Interest, Professional Skills, and Professional Certification preparation course sector, including professional certifications, skill development, and interest-based programs, has been instrumental in driving our growth, contributing to 33.6% of our total revenues. Notably, our early investments in interest-based education for older adults have yielded significant returns. As this sector aligns with the border economy and demographic shifts, we remain highly optimistic about its growth potential and are well-positioned to capitalize on the unique opportunities it presents. To continually innovate and cater to the evolving interests of our senior learners, we have enriched our curriculum with specialized courses, particularly focusing on the arts, including themes like oil painting, vocal music, and traditional Chinese painting.
To continue in the innovate and cater to the involving interests of our senior Learners. We have enriched our Corum with specialized courses, particularly focusing on the Arts, including seems like oil, painting, vocal music, and traditional Chinese painting these courses.
As specify specifically designed to be engaging and accessible, fostering, both creativity, and the sense of accomplishments among elderly students.
Alongside this educational advancements. We have also enhanced our educational tribe. Offerings regularizing the value of experience, experience, expert learning. Uh, we have expanded our Study Tours to include the wide. Array of destinations from the cultural richness of domestic cities to the diverse, Landscapes of international locals.
Tongbo Liu: The courses are specifically designed to be engaging and accessible, fostering both creativity and a sense of accomplishment among elderly students. Alongside the educational advancements, we have also enhanced our educational trial offerings, recognizing the value of experiential learning. We have expanded our study tours to include a wide array of destinations, from the cultural richness of domestic cities to the diverse landscapes of international locals. Each itinerary is carefully researched and customized to meet the diverse needs of seniors, combining socialization, learning, and entertainment. Through this deliberate effort in course development and the iterative improvement of our educational trial programs, we have the ability to support our senior learners in their pursuit of lifelong learning, enabling them to explore new interests and passions in an engaging and supportive environment, ultimately realizing commercial value for our offerings in this growing market.
Each activity is is carefully researched and the customer to meet the diverse needs of seniors. Combining, uh, combining socialization learning and entertainment.
Through this, deliberate effort to in in cost development and the uh iterative Improvement of our educational tribal programs.
We have the ability to support our senior Learners in their pursuit of lifelong learning enabling them to explore new interests, and passions, in engaging and supportive environment.
To make a new realizing commercial value for our offerings in this growing Market.
In addition, our traditional degree of technical oriented post, secretary programs contributed 9.2% to our revenues.
Reflecting our ongoing efforts to optimize our structure structure and aligned with our strategic goals.
Tongbo Liu: In addition, our traditional degree or economic-oriented post-secondary programs contributed 9.2% to our total revenue. reflecting our ongoing efforts to optimize our structure and align with our strategic goals. There has always been strong demand for accessible, high-quality education that meets the needs of today's job market. For many young professionals, earning an additional degree or diploma not only enhances their skills but also boosts their confidence, giving them a competitive edge in their careers. We remain committed to supporting this demand, ensuring our programs continue to be relevant and impactful for our learners' professional growth. moving forward. We will continue to maintain our drive for innovation and our commitment to high quality education.
There has always been strong demand for accessible high-quality education, that meets the needs of state job market for many young professionals earning earning an additional degree or diploma that only enhance enhances their skills. But also boosts their confidence giving their their competitive age in their careers. We remain committed to supporting the demand ensuring our programs continue to be relevant and impactful for our Learners professional growth.
Moving forward.
We will continue to maintain our drive for Innovation and our commitment to high quality education. We will refine our services to better meet the involving Market demands and provide Learners with them. Even more exceptional learning experience.
With deeply, appreciate your attention trust and continue to support as we embark on this exciting journey together.
Tongbo Liu: We will refine our services to better meet the evolving market demands and provide learners with an even more exceptional learning experience. We deeply appreciate your trust and continued support as we embark on this exciting journey together.
With that, I will turn the call to our financial director, Hue to run through our financials.
Thank you to.
Hello everyone. I'd like to present our third quarter results which are consistent with our expectations.
Hangyu Li: With that, I will turn the call to our Financial Director, Hangyu, to run through our financial plan.
Well, net revenues decreased slightly year over year, due to changes in our product mix. We continue to maintain a study level of profitability in the quarter.
Hangyu Li: Thank you, Tongbo.
Hangyu Li: Hello everyone. I'd like to present our third-quarter results, which are consistent with our expectations. While net revenues decreased slightly year-over-year due to changes in our product mix, we continue to maintain a steady level of profitability in the quarter. Our business is full of opportunities and challenges, and our team continues to improve operational capabilities with each challenge to ensure that we are fully prepared to capitalize on every opportunity and overcome any obstacles.
Our business is full of opportunities and challenges and our team continued to improve operational capabilities with each challenge to ensure that we are fully prepared to capitalize on every opportunity and overcome any obstacle.
In addition to the earnings.
We have maintained strong cash flow from operating activities.
This has allowed us to be more flexible in making strategic, adjustments, and managing risk will improving the company's ability to navigate Market, volatility and uncertainty.
Hangyu Li: in addition to the earnings. We have maintained strong cash flow from operating activities. This has allowed us to be more flexible in making strategic adjustments and managing risk while improving the company's ability to navigate market volatility and uncertainty. Going forward, we are committed to enhancing our cost trends through a number of strategic initiatives for the continued growth and success of our business. We're continuing to create value for our stakeholders and finding new avenues for expansion.
Going forward, we are committed to enhancing our CEO strength through a number of strategic initiatives.
For the issue continues growth and success of our business.
Well, continuing to create value for our stakeholders and finding new avenues for expansion.
Now, let me walk you through some of our key financial results for the third quarter of 2024
all comparisons are year-over-year and all fingers are in R&B unless otherwise noted
For the first quarter of 2024, not revenues decreased by 6.4% to 491.3 million from 524.6 million in the third quarter of 2023.
Hangyu Li: Now let me walk you through some of our key final results for the third quarter of 2024. All comparisons are year-over-year and all fingers are in RMB unless otherwise noted. For the third quarter of 2024, net revenues decreased by 6.4% to $491.3 million from $524.6 million in the third quarter of 2023. The decrease was primarily driven by the decline in gross billings from post-secondary courses over the recent quarters, partially offset by the growth in revenues from interest-cost offerings and sales of goods such as books and learning materials. cost of revenues increased by 28% to 82.1 million in the third quarter of 2024.
The decrease was primarily driven by the decline in Gross Billings from post. Secondary causes over the recent quarters.
partially offset by the growth in revenues from interest costs offered and the sales of goods, such as books and the learning materials,
Cost of revenues increased by 28% to 82.1 million in the third quarter of 2024.
From 64.1 million in the third quarter of 2023.
The increase was primarily due to an increase in the cost of revenues, from sales of goods, such as books, and learning materials.
Hangyu Li: from 64.1 minute in the third quarter of 2023. The increase was primarily due to an increase in the cost of revenues from sales of goods such as books and learning materials. Growth profit decreased by 11.1% to 409.2 million in the third quarter of 2024, from 460.5 million in the third quarter of 2023. The decrease was due to the lower gross profit from sales of goods. In the third quarter of 2024, operating expenses were $343.4 million, representing a 1.4% increase from $338.9 million in the third quarter of 2023. Sales and marketing expenses increased by 2.7% to 303 million in the third quarter of 2024.
To 49.2 million in the third quarter of 2024.
From 460.5 million in the third quarter of 2023.
The decrease was due to the lower gross profit from sales of goods.
In the third quarter of 2024 operating expenses were 30043.4 million, representing a 1.4% increase from 300 under 38.9 million in the third quarter of 2023.
sales at the marketing expenses increased by 2.7%
To 300 and 3 million in the third quarter of 2024.
From 20095 million in the third quarter of 2023.
The increase was mainly due to a growth in the hard count of our sales and marketing personnel.
General and the administrative expenses decreased by 1.8% to 34.5 million in the third quarter of 2024.
Hangyu Li: from 295 million in the third quarter of 2023. The increase was mainly due to a growth in the headcount of our sales and marketing personnel. General and administrative expenses decreased by 1.8% to $34.5 million in Q3 2024. from 35.1 million in the third quarter of 2023. Product development expenses decreased by 30.5% to 5.8 million in the third quarter of 2024 from 8.4 million in the third quarter of 2023. The decrease was mainly due to decline in common expenses related to high cost reduction of our product development process. Net increase for the third quarter of 2024 was $89.3 million as compared to $131.6 million in the third quarter of 2023.
From 35.1 million in the third quarter of 2023.
Product development expenses decreased by 30.5% to 5.8 million in the third quarter of 2024.
From 8.4 million in the third quarter of 2023.
The decrease was mainly due to declined competences related to high count reduction of our product development personnel.
Night increase for the third quarter of 2024 was 89.3 million as compared to 131.6 million in the South Quarter of 2023.
basic under the diluted night income per share was 13.08 in the third quarter of 2024
As of September, the 30th 2024.
The company had 535.9 million of cash, cash equivalents and restricted, cash and 20057.9 million of short-term Investments, as compared to 700 760.
Hangyu Li: Basic and the diluted night income per share was 13.08 in the third quarter of 2024. As of September 30, 2024, the company had $535.9 million of cash, cash equivalents, and restricted cash, and $257.9 million of short-term investment.
766.4 million of cash.
And restricted cash on the 142.1 million of short-term Investments, as of December, the 31st 2023.
Hangyu Li: as compared to 760,000. 766.4 million of cash cash equivalents and restricted cash and 142.1 million of short-term investments as of December the 31st, 2023. As of September 30, 2024, the company had a deferred revenue balance of $920.6 million, as compared to $1,113.9 million as of December 31, 2023.
As of September, the 30th 2024, the company had a different revenue balance of 900 920.6 million as compared to 1,100 and 113.9 million as of December the 31st 2023.
now, for our outlook for the first quarter of 2024,
Sunlight contracts in the expects night revenues, to be between 400 and 150 million to 40070 million.
A decrease of 13.2% to 16.9% year-over-year.
Hangyu Li: Now for our Loud Look, for the first quarter of 2024, Sunlands currently expects net revenues to be between $450 million to $470 million, a decrease of 13.2% to 16.9% year-over-year. This outlook is based on the current market condition. and reflects the company's management's current and preliminary estimates of market operating conditions and customer demand. which are all subject to change.
Is based on the current market conditions.
And reflects the compat companies Management's, current and preliminary estimates of Market are pretty conditions and customer demands.
Which are all subject to change.
With that. I'd like to open call up to questions for Peter.
Thank you.
Begin the question and answer session to ask a question. Please press star 1 1 on your telephone.
Message advising and Trace to withdraw your question. Please. Press star 1 1 again.
Operator: With that, I'd like to open the call up for questions.
Operator: Operator. Thank you.
For the benefit of all participants on today's call. If you wish your question Management in Chinese,
Operator: We're going to end the question and answer session. To ask a question, please press star 1 1 on your telephone. to advance the message of advising and its race. To withdraw your question, please press star 11 again.
repeat your question in English.
Please stand by while we get a part new roster.
Operator: For the benefit of all participants on today's call, if you wish to ask a question in Chinese, immediately repeat your question in English. Please stand by while we go to partner roster. As a reminder, to ask a question, please press star 1 1 on your telephone keypad. Once again, it's dial 1-1 for questions.
As a reminder to ask a question. Please press star 1, 1 1 on your telephone keypad,
Once again, that's d11 for questions.
At this time, we're sharing no questions. So this will conclude our question and answer session. At this time, I'll turn the conference back to yua for any closing remarks.
Once again, thank you everyone for joining today's call. We look forward to speaking with you again, soon. Good day and good night.
Operator: At this time, we're showing no questions, so this will conclude our question and answer session.
This concludes this conference call. You may now disconnect your line. Thank you.
Yuhua Ye: At this time, I'll turn the conference back to Yuhua for any closing remarks. Once again, thank you everyone for joining today's call. We look forward to speaking with you again soon.
Operator: Good day and good night. This concludes this conference call. You may now disconnect your line. Thank you.
Operator: Thank you for watching!