Q1 2025 QuantaSing Group Ltd Earnings Call
This is a work of fiction. Any resemblance to anyone, living or dead, is coincidental and unintentional.
Speaker Change: Good morning and good evening ladies and gentlemen. Thank you for standing by and welcome to Qantas Inc's earnings conference call. At this time all participants are in a listen-only mode. We will be hosting a question-and-answer session after management's prepared remarks. Please note that today's event is being recorded. I would now like to turn the conference over to Ms. Leah Guo, Investor Relations Associate Director of the company. Please go ahead ma'am.
Thanks for watching!
Speaker Change: Thank you. Hello everyone and welcome to QuantaZine's earnings call for the first quarter of fiscal year 2025.
Speaker Change: With us today are Mr. Peng Li, our founder, chairman, and CEO, and Mr. Qin Xie, our CFO. Mr. Li will provide a business overview for the quarter.
Benqing will discuss the financials in more detail.
Speaker Change: Following their prepared remarks, Mr. Li and Ding will be available for the Q&A session. I will translate for Mr. Li.
Speaker Change: Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call. As we will be making follow-looking statements, please note that all numbers stated in the following management pre-patch remarks are in R&B terms and we will discuss non-GAPS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in our earnings release and filings with the FTC. I will now turn the call over to the CEO and founder of Quantasync, Mr. Li.
Mr. Li: Good morning, everyone. Thank you for joining us today for our first quarter fiscal year 2025. Our next call.
Mr. Li: Our journey over this past year has been purposeful and strategic. We are actively reshaping our company to serve China's rapidly growing silver economy. The numbers tell a compelling story. In Beijing alone, we now have nearly 5 million people over 50.
with that number growing by 0.3 million just last year.
Mr. Li: This is why our work is significant. We are shifting our focus from broad market reach to building lasting relationships with our zero-economy customers.
Mr. Li: You can see this in our new food and medicine products.
Mr. Li: which we are successfully promoting to our existing online learning users by leveraging our integrations with them.
Mr. Li: We are also in the early stages of exploring offline service center opportunities to further enhance our user experience.
Now let's take a look at this quarter.
Mr. Li: Importantly, we maintained healthy profitability during this period, showing our ability to navigate this transition while safeguarding shareholders' value.
Mr. Li: We are uniquely positioned to serve China's dual economy. It has expanded beyond basic elderly care to include a wide area of lifestyle, wellness, and enrichment services.
our strength lines in our established user base.
Mr. Li: This user trusts us as their learning service provider, and we are attuned to their evolving needs and preferences.
Mr. Li: Let me elaborate on the three key aspects of our business transformations.
Mr. Li: First, we are evolving our revenue model by expanding how we serve our users.
Mr. Li: Our deep understanding of our users' needs has revealed opportunities beyond online learning service courses.
Mr. Li: They are seeking integrated solutions for health, wellness, and personal enrichment.
Mr. Li: In response, we are developing products and services that create more lasting value for them.
Mr. Li: including our food and medicine product line. This product line is uniquely integrated with our online learning service platform.
Mr. Li: Our traditional Chinese medicine courses teach users about the principles behind these wellness products.
Mr. Li: While our nutrition experts provide practical guidance on incorporating them into daily health routines.
Mr. Li: This know-how foundation helps our users understand not just what products to use.
Mr. Li: but why and how to use them effectively for their personal wellness goals.
Mr. Li: Let me share a concrete example that illustrates how we are serving our users.
more comprehensively.
one of our
70-year-old users began her journey with us.
through our online courses.
Mr. Li: Today, she engaged with our platform in multiple ways, following our traditional Chinese wellness practice, including Baduan Jin.
Mr. Li: Through our contest, Xie has gained practical knowledge about the 24 solar terms.
Mr. Li: The traditional Chinese calendar that gets seasonal living patterns and applies this wisdom to her daily health routines.
Mr. Li: Now she follows a consistent schedule, practicing our signature exercises at 7 a.m. each morning and has learned to adjust her wellness practices according to her body's needs.
Mr. Li: Her experience demonstrates how our educational foundation naturally extends into broader lifestyle and wellness solutions.
Take care.
Speaker Change: We are strategically transforming our business mix to focus on the civil economy while building a comprehensive ecosystem.
Speaker Change: We are gradually reducing our non-silver economy-related businesses while expanding services that resonate with our core demographic.
Speaker Change: Our approach combines the convenience of online engagement with meaningful offline experiences.
Speaker Change: strategy in action. In October, we helped to organize the Beijing Community Elderly Home Care.
autumn family carnival in Beijing's Fengtai district.
Speaker Change: This event brought together over 50 service providers across five essential aspects of senior living, medical care, food, housing, transportation, and entertainment.
The event featured interactive demonstrations of traditional wellness practices.
calligraphy sessions.
and consultations about our study tours to culturally significant locations.
such as Qingcheng Mountain.
historic
Taoist set.
and Jingdezhen, China's prevailing capital.
Speaker Change: Users who participate in our offline activities show higher engagement with our online content.
Speaker Change: We see increased retention rates and stronger brand loyalty from these users.
Speaker Change: They also tend to explore more of our products and services.
validating our integrated approach to serving the silver economy market.
Speaker Change: Third, we maintain a clear focus on sustainable profitability throughout this transition.
Speaker Change: In our initial approach to offline expansion, we aim to start with a pilot program in Beijing's six urban districts.
We are
Speaker Change: collaborating with existing community centers to test and refine our operational model.
Speaker Change: Once we validate this approach, we plan to expand our coverage across the city, and we will evaluate various expansion models based on the learnings from our pilot program.
Speaker Change: This measured approach allows us to optimize our operational model while maintaining profitability during the transition period.
Speaker Change: As we transition from a traffic-driven business model to one that is more product-oriented.
Speaker Change: We expect to see a gradual improvement in our sales and marketing costs.
This shift allows us to better allocate our results.
Speaker Change: We are concentrating our efforts on initiatives that directly support the zero economy.
Speaker Change: At the same time, we are gradually scaling back investments in areas that we are not central to our mission.
Speaker Change: This disciplined approach to cost management combined with our focus on building partnerships enables to maintain healthy profit margins.
Speaker Change: It also positions us well to invest in growth initiatives that align with our long-term vision.
Thanks for watching!
Speaker Change: This focus on efficiency and profitability is reflected in our strong financial position as of September 30.
Speaker Change: Our business continues to generate positive cash flow from operations during this transition period.
Speaker Change: This solid cash position has allowed us to share our success with shareholders through a special dividend.
announced in October.
Speaker Change: It demonstrates not only our robust financial health, but also our commitment to investing in our silver economy strategy while rewarding our shareholders.
Looking ahead.
Speaker Change: We remain focused on realizing the significant opportunity in China's silver economy.
Speaker Change: More importantly, we are building sustainable competitive advantages by creating comprehensive solutions for the civil economy market.
According to our 2024 Senior Investor-Based Learning Industry Development Report,
Speaker Change: Over 80% of the civil population is already engaged in invest-based learning, with an additional 66.
Speaker Change: expressing interest in joining such activities. This validates our strategy of building upon our educational foundation to provide broader lifestyle and wellness solutions.
Speaker Change: The silver economy in China represents more than a business opportunity, it's a chance to create a meaningful impact as China's population ages.
Speaker Change: Our existing relationships with users, combined with our understanding of their needs, position us uniquely to serve this growing market.
including...
Well, the strategic transition may impact near-term revenue.
Speaker Change: We are confident that our focus on the silver economy, supported by our user relationships and operational capabilities, positions us well for long-term value creation.
Speaker Change: We are building not just a business, but a comprehensive ecosystem that enriches the lives of China's fewer population.
Speaker Change: Now I will hand over to Tim, our CFO, who will provide more details on our financial performance. Tim, please go ahead.
Thank you.
Thank you.
Speaker Change: Before I go into the details of our financial results, please know that all amounts are in RMB terms, that the reporting period is the first quarter of fiscal year 2025, ending on September 30, 2024, and that in addition to GAAP measures, we will also be discussing non-GAAP measures to provide greater clarity on the trends in our actual operations.
Speaker Change: 4 million, representing a 6.8% decrease year-over-year. This decline primarily reflects our strategic repositioning towards the civil economy market, a transition we believe will create sustainable long-term value for our shareholders.
Speaker Change: Among our revenues, individual online learning services generated revenues of 709 million accounting for 8 billion yuan.
Speaker Change: 87.5% of total revenues. Going forward, we will continue to invest in developing our courses for the silver population.
Speaker Change: As we expand and refine our elderly-focused course offerings across both categories, we expect this business to become an increasingly important revenue contributor.
Thanks for watching!
the specific needs and preferences of the civil economy market.
Speaker Change: Our gross billing from individual online learning services was $713.7 million, showing a modest decline of 6.3% year-over-year.
Speaker Change: which we view as a natural progression during this transient transformation of our product mix.
Speaker Change: Revenues from enterprise services were $47.8 million, a change of 30.2% from a year ago, and representing 5.9% of total revenues.
This shift reflects our evolving business mix.
between related parties and external entity transactions.
Speaker Change: Gross profit for the quarter was $676 million with a gross margin of 83.4% compared to 86.4% in the same period last year.
Speaker Change: which naturally carry a different core structure compared to our traditional learning services.
Speaker Change: We believe that shifting our business mix while impacting our margin profile better positions us to capture the diverse needs of our target demographic.
Speaker Change: On the operational front, we maintain disciplined cost management while investing in our strategic initiatives.
Speaker Change: Total operating expenses were $573.7 million, a decrease of 18.8% from $706.7 million in the same year, in the same period last year.
Speaker Change: To break this down, sales and marketing expenses decreased by 17% to $550 million, primarily due to optimized marketing span and improved operational efficiency.
Speaker Change: As a percentage of total revenue, long gap sales and marketing expenses, which exclude share-based compensation, decreased to 63.5% from 17.8% a year ago.
Thanks for watching!
Speaker Change: General and administrative expenses decreased by 28.4% to $30.6 million, mainly due to a decline in share-based compensation expenses.
Speaker Change: As a percentage of total revenue, non-GAAP G&A expenses, which exclude share-based compensation, remained stable at 3.4 percent from a year ago.
Speaker Change: We achieved a net income of $88.7 million, representing a net margin of 10% despite the decline in revenues.
Our adjusted net income, which excludes...
Speaker Change: Share base compensation was 88 million, representing a healthy adjusted net margin of 10.9 percent.
Speaker Change: Basic and diluted net income per share were 0.52 and 0.50 respectively.
Speaker Change: During the quarter, adjusted basic and diluted net income per share were 0.56 and 0.55 respectively during the quarter.
Speaker Change: Regarding our balance sheet position, as of September 30, 2024, we strengthened our cash position to $1,193.7 million in cash, cash equivalents, restricted cash, and short-term investments.
Speaker Change: representing an increase of 167.4 million from 1026.3 million as of June 30, 2024.
Speaker Change: This enhanced liquidity position demonstrates our ability to generate cash by executing our strategic transition, providing us with sustainable liquidity.
Speaker Change: flexibility to invest in growth opportunities within the civil economy market.
Speaker Change: Looking ahead, our strengthened cash position of $1,193.7 million enhanced operational efficiency and healthy adjusting net margin of 10.9% provide us with a solid foundation during this transition period.
Thanks for watching!
Speaker Change: Our disciplined cost management and improved operational metrics give us confidence in our execution capability.
Speaker Change: While we have discontinued providing specific guidance during this transition period, we remain committed to transparent communication with our shareholders as we progress in our strategic journey.
Speaker Change: That concludes my prepared remarks. Operator, let's open up the call for questions. Thank you.
Speaker Change: Thank you. We will now begin the question and answer session.
Speaker Change: To ask a question, you may press star then 1 on your touchtone phone.
Speaker Change: If you're using a speakerphone, please pick up your handset before pressing the keys.
Thanks for watching!
Speaker Change: Great, good morning or good evening everyone. Thanks for taking my questions. First, just curious to maybe get your perspectives on how the macroeconomic backdrop in China as well as
Speaker Change: The various more recent government stimulus initiatives may impact your businesses, or would you expect more limited impacts just given sort of stronger balance sheets for senior citizens on average? Thanks.
Speaker Change: Thank you for your question. I will answer in Chinese and Leah will translate for me.
Speaker Change: Thank you very much for your question. We have noticed that these factors are both challenges and opportunities for us. Our strategic positioning is to be able to effectively control these factors.
Speaker Change: Thank you for your question. We recognize that these factors present both challenges and opportunities, and we are strategically positioned to have the capability to navigate them effectively.
Thanks for watching!
Speaker Change: We noticed that domestic consumers' consumption behavior is constantly changing. This affects the consumption model and demand. Despite these challenges, we have a diversified product combination and attention to value-driven products so that we can adapt to these changes and continue to effectively meet consumer needs.
We see evolving changes in consumer behavior.
Speaker Change: which are influencing spending patterns and demand. Despite these challenges, our diversified portfolio and focus on essential value-driven products allow us to adapt to these shifts and continue to effectively meet consumer needs.
而且我们最近注意到,已经推出了很多提振消费的措施,这些增强了国内消费者的信心和消费的能力,这些会支持对我们的产品和服务的需求。
Speaker Change: We are closely monitoring these developments and aligning our strategies to capitalize on emerging opportunities.
Thanks for watching!
Speaker Change: And I think more importantly, we expect the government to pay more attention to the welfare of the elderly and the elderly, which will have a more positive impact. The policy for this group of people is only to improve their purchasing power and quality of life. In order to meet their needs, these companies have opened up new important opportunities.
Speaker Change: Importantly, we anticipate more positive impacts from the government's increased focus on the silver economy and welfare for its senior citizens.
Speaker Change: policies targeting this demographic aim to boost their purchasing power and improve their quality of life, opening up significant opportunities for businesses catering to their needs.
Speaker Change: We know that the elderly usually have a more stable consumption model and a stronger asset-to-asset ratio. Therefore, the products and services that we customize for the elderly will give us a better ability to benefit from this change.
Speaker Change: As senior citizens typically have more stable consumption patterns and stronger balance sheets, our tailored offerings for the senior consumers position us well to benefit from this focus.
Okay, that's all for Q.
I'm going to make a video about the new video.
Great, that's super helpful.
Speaker Change: Maybe just one other question, if I may. Just curious how you're thinking about
Speaker Change: Customer Acquisition Costs to Lifetime Value as you continue to transition to business would would seem like
Speaker Change: CAC trends would benefit as you increasingly leverage the existing user base and focus on e-commerce channels. And then LTVs seem like they're set to rise just given sort of the repeat purchase nature of consumer products more broadly.
Thanks for watching!
Speaker Change: Thank you for your question. I'll take this one. I think these metrics are indeed essential to our strategy planning and we are actively optimizing them to ensure sustained growth and profitability.
Speaker Change: As we transition our business and focus more heavily on our private label products and services, including the existing online courses, wellness products, and so on, we anticipate favorable trends in CSA. This improvement is driven by our ability to more effectively leverage our existing user base.
which reduces our reliance on more expensive customer acquisition methods.
Additionally, as we deepen engagement with our current users,
through targeted marketing and
Speaker Change: personalized experiences, especially with our strategy of combining online with offline operation, which we are now cooperating with the local community. We expect to improve the efficiency of our acquisition strategies and lower the cost per new customer.
to extend the lifetime value of our users.
Speaker Change: On the lifetime value side, we see significant potential for growth. Our shift and expansion of the private label offerings create strong opportunities to drive repeat purchases.
Speaker Change: And we expect to see rising LTVs across our customer segments.
Thank you. Bye-bye.
Thanks for watching!
Speaker Change: The interplay between these trends position, I think the ZVU both position us well to achieve a favorable LTV to CEC ratio over time by leveraging the scale of our existing user base, increasing repeat purchases and optimizing marketing efficiency, the aim to maximize the return on our customer acquisition investments.
And furthermore, as we refine our product mix.
and develop offerings that...
resonate deeply with the consumer needs.
Speaker Change: We expect to unlock further upside in the customer lifetime value.
Thank you. Thank you.
Speaker Change: because in the past quarters we have made profits. So that means we have proved only the many courses, the online courses can generate the positive activity to CAC. So what we are doing now is just to expand and to...
Speaker Change: in large, the LTV to CC ratio over time. So that is a civil economy focus strategy we ban with us in the future. Thank you.
Got it. Thanks for taking my questions.
Steve Silver: The next question will come from Steve Silver with Argus Research. Please go ahead.
Steve Silver: Thank you operator and thanks for taking my questions as well. This morning the prepared remarks spoke to the strengthening balance sheet and scaling back of some of the non-core investments. I was hoping you could provide an update on the strategy to balance the healthy balance sheet between growth investments as well as share of purchases and just how the company continues to view the balance sheet in terms of really driving shareholder value.
Thanks for watching!
Okay, thank you Steve.
Speaker Change: I think our capital allocation strategy is just built on the discipline approach that aims to drive sustainable growth and deliver long-term shareholder value. We remain committed to strategic growth investments.
Speaker Change: with a focus to exploring high-potential markets. And these initiatives are vital for reinforcing our competitive edge and ensuring future scalability.
Speaker Change: At the same time, we recognize the importance of returning capital to shareholders through share repurchase, especially during the periods when our stock is undervalued or when our cash flow is very strong.
Speaker Change: It is important to highlight that we have consistently generated positive operating cash flows in the past few years.
They fund our growth, investment, and share repurchase programs.
Speaker Change: We are also safeguarding our balance sheet, and our robust financial position provides us with the flexibility to adapt to market conditions, seize strategic opportunities, and manage risk effectively.
enables us to balance investing for growth.
Speaker Change: returning capital to shareholders, and maintaining a healthy balance sheet. This approach positions us for sustainable long-term value creation.
Speaker Change: So, we will both consider the new opportunities, that is our focus on the strategic transition, focus on the fewer people business model, and also, we will also consider and we executed the strategy to reward the shareholders, for example, the recent.
Thank you.
Thank you.
Thanks for watching!
Speaker Change: That's helpful. Thank you. And so the e-commerce business remains in the early stages and growth so far has been steady.
Speaker Change: Do you expect this pace of growth to continue in a steady fashion, or do you envision a period of more rapid expansion of the private label strategy moving forward?
Thanks for watching!
and Barney's products.
Speaker Change: business. That is one of our planned channels for this kind of product. That's just because this business is started based on our large customer base, so that we can test and we can scale.
Speaker Change: And while we see steady growth, growth potential in e-commerce as a whole, we view our private label based on online and offline operations strategy as a more significant opportunity.
for long-term expansion and value creation.
Speaker Change: We recognize that any business faces challenges in attempting to extend the lifetime value of the customers.
Speaker Change: As a result, we anticipate that the growth rate of our private label business may not be as rapid as it was in the early stages.
Speaker Change: However, I think we have built a solid foundation, including 134 million graduate users.
Speaker Change: over 30 courses as key use, and 98.5% customer satisfaction rate, which all provide strong support for further expansion and deepening our private-label business.
Speaker Change: This quarter, we have already achieved R&B 15 million GMV milestone in a private label strategy. And moving forward, we will focus on enhancing product quality and market alignment.
Speaker Change: All proprietary channels, we are committed to continuing to offer high-quality private labor products that meet the customer demands, ensuring the long-term and sustainable growth in the future.
Thank you.
Okay, thank you very much.
Thanks for watching!
Speaker Change: As there are no further questions, I'd like to hand the conference back over to management for any closing remarks. Please go ahead.
Speaker Change: Thank you again for joining our call today. If you have any further questions, please feel free to contact us or submit a request through our IR website. We look forward to speaking with everyone in our next call. Have a good day.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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Speaker Change: [inaudible] Dr. Thomas Johnson,
Dr. Paret, Hunter Diamond, Steven Silver, Patrick McCann [inaudible]
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Speaker Change: [music].
Speaker Change: Good morning, and good evening, ladies and gentlemen, thank you for standing by and welcome to Quanta things earnings Conference call.
Speaker Change: At this time all participants are in a listen only mode. We will be hosting a question and answer session. After management's prepared remarks. Please.
Speaker Change: Please note that today's event is being reported I would now like to turn the conference over to necessarily Aglow Investor Relations Associate director of the company. Please go ahead ma'am.
Speaker Change: Thank you Hello, everyone and welcome to conquer things earnings call for the first quarter of physical year, telling you 25 with US today in so Paulo, <unk>, our founder Chairman and CEO and Mr. Chen Our CFO, Mr. Lee will provide a business overview for the quarter maintain will discuss the financial.
Speaker Change: You'll see more detail following their prepared remarks, Mr. Li and team will be available for the Q&A session I will translate for Mr. Li you can refer to our quarterly financial results on our IR website at IR <unk> Com you can also access a replay of this call on our IR website when it becomes available.
Speaker Change: A few hours after its conclusion.
Speaker Change: While we will continue I would like to refer you to our safe Harbor statement in our earnings press release, which also applies to this call as we will be making forward looking statements. Please note that all numbers stated in a following management's prepared remarks are in RMB terms, and we will discuss non-GAAP measures today, which are most of them.
Speaker Change: Blaine and reconciled to the most comparable measures reported in our earnings release and filings with the SEC I will now turn the call over to the CEO and founder of Qantas, Inc. Mr. Li.
Speaker Change: Okay.
Mr. Li: Good morning, everyone.
Mr. Li: Thank you for joining us today for our first quarter.
Mr. Li: <unk> fiscal year 2025.
Mr. Li: Paul.
Speaker Change: Our journey over this past year has been a proposal on the stretch Jake.
Speaker Change: We are actively reshaping our company to serve China's rapidly growing you can still our economy.
Speaker Change: <unk> tells a compelling story in Beijing, along way Knowhow, nearly 5 million people or 50.
Is that number growing by 0.3 meeting just last year.
This is why our work here is significant we are shifting our focus from broad market reach to beauty.
Speaker Change: <unk> relationships with let's see already economy customers.
Speaker Change: We'll see this in our new food as medicine product, which.
Speaker Change: We are successfully promoting to our existing online learning users by leveraging our integration is done well.
Speaker Change: We are also in the already.
Speaker Change: Status of explorer exploring offline service center opportunities to further enhance our user experience.
Now, let's take a look at this quarter.
Speaker Change: Revenue this quarter reflects our plan to step to take position, which he pools and anticipated the class as we are powered to us opportunities in the silver economy.
Speaker Change: Importantly, we maintained healthy profitability during this period.
Speaker Change: Showing our ability to navigate this transition.
Well safeguarding our shareholder value.
Speaker Change: Well uniquely.
Speaker Change: Positions to serve China's steel where economy it has expanded.
Beyond basic elderly care to include a wide a high rate of lifestyle well.
Speaker Change: And enrichment services.
Our strengths lie in our established user base.
Speaker Change: These are individuals who are either in this demographic or approaching age.
Speaker Change: Does he will just trust us as their lending and service provider.
Speaker Change: We are attuned to there.
Speaker Change: Involving.
Speaker Change: Enrolling this under performance.
Speaker Change: Preferences.
Speaker Change: Let me elaborate on the three key aspects of our business trying to transformations.
Speaker Change: Plus.
Speaker Change: We are evolving our revenue model by spending hallways serve our users.
Speaker Change: Our deep understanding of our users' needs has revealed opportunities be it beyond the online learning service Cortes.
Speaker Change: They are seeking integrity solutions fall health wellness and personal enrichment.
Speaker Change: In response, we are developing products and services that create more lasting value for them.
Speaker Change: Including our food as medicine.
Speaker Change: Protect lap this product line is uniquely our integrity with our online learning service platform.
Speaker Change: Traditional Chinese medicine, Cortes teach users about the prudent principle.
Speaker Change: Behind this wellness products, while our nutrition experts provide.
Speaker Change: The practical guidance.
All incorporating them into daily health routines.
Speaker Change: There's no hall foundations us just.
Speaker Change: Just know how foundation how are our user understand not just what products to use but why on hall to use them effectively.
Speaker Change: Call it their personal wellness goals.
Speaker Change: Let me share a Ah Kang concrete examples that illustrates how we are serving our users.
Speaker Change: More comprehensively.
One of our a 70 year old users began her journey with us through our online courses.
Speaker Change: They are engaged with our platform in multiple ways.
Speaker Change: Following our traditional Chinese values Cortes.
Speaker Change: Including pathogen.
Speaker Change: Serious of dental exercise its roots in traditional Chinese medicine and are using our house production daily.
Speaker Change: Through our cortex.
Speaker Change: She has gained practical knowledge about the default dollar terms.
The traditional Chinese calendar, that's cats didn't know, leaving patents and the applied this wisdom to her daily routines.
Speaker Change: Now, let's say follows a consistent shedding.
Speaker Change: Prep teaching our second nature exercises.
Speaker Change: Yeah.
Speaker Change: Morning.
Speaker Change: And has learned to adopt her well his press practices.
Speaker Change: According to our bodies news.
Her experience.
Speaker Change: <unk> demonstrates how our educational foundation.
Really extents into brought a lifestyle and a wellness solutions.
Speaker Change: Second we are stressed particularly are transforming our business mix to a.
Speaker Change: Focus on them, so as to why economy, while building a comprehensive ecosystem.
Speaker Change: Well a gradual.
Reducing our non steel world economy, it really <unk> related businesses.
Speaker Change: Spending and somebody says that resonate with our core demographic.
Speaker Change: Our approach combines the convenience of all our engagements with meaningful outlier experiences.
Speaker Change: Our recent initiatives in Beijing showcase.
Speaker Change: This strategy in action.
Speaker Change: We help to organize the Beijing community elderly home care.
Speaker Change: All of them are.
<unk> 70.
Speaker Change: Currently Vale in Beijing, Shanghai District.
Speaker Change: This event brought together over a 50 service providers across five essential aspects of senior living medical care, our food policy transportation and entertainment.
Speaker Change: So he lynch.
Speaker Change: Or are intolerant to interrupt.
Speaker Change: Interrupt too.
Speaker Change: It demonstrates to all traditional wellness practices.
Telegraph face sessions and the cause all calculations about our study of tourists to culturally secondly, if they kept the locations such as a change the amount at a historic toys, such and the candidate tightness.
Speaker Change: Oh selling.
Speaker Change: Capital.
Speaker Change: This committee engagements has strengthened the hour.
Speaker Change: Customer relationships significantly.
Speaker Change: User users who participated in our offline activities show higher engagement with our online Cortez.
Speaker Change: With the increase to our retention rate and the stronger brand loyalty from these users.
Speaker Change: They also tend to weeks explore.
Speaker Change: More of our products and services.
Speaker Change: Validating our integrated approach to serving the silver economy and market.
Speaker Change: Sure.
<unk> maintained a clear focus.
Speaker Change: Long sustainable profitability throughout this transition.
Our initial approach to offline expansion, we aim to start with a pilot program in Beijing six urban districts.
Speaker Change: Collab.
Speaker Change: Collaborating with because it gets to the existing community centers to past time to refine our operational model.
Speaker Change: Lastly, validates this approach with <unk>.
Speaker Change: <unk> two is dependent our coverage across the city.
Speaker Change: We will evaluate our.
Speaker Change: Whereas <unk> pension models based on the learnings from our pilot program.
Speaker Change: This measured approach.
Speaker Change: To optimize our operational model well maintaining profitability during the transition period.
Speaker Change: As we transition.
Speaker Change: From a capex driven business model to one that is small product oriented.
Speaker Change: We expect to see a gradual improvement.
Speaker Change: The improvement in our sell side and the marketing costs.
Speaker Change: This shift allow us to better allocate our result as well.
Speaker Change: We are concentrating our efforts on initiatives that directly support the economy.
Speaker Change: At the same time.
Speaker Change: Ah gradually scaling back investments in areas that we are not central.
Speaker Change: To our mission.
Speaker Change: Our disciplined.
Speaker Change: Our approach to cost management combined with our focus on building policy. Our partnership enables to maintain healthy profit margins. It also positions us to Ah well too.
Speaker Change: Investing in growth initiatives that align with our long term vision.
Speaker Change: This focus on efficiency and the profitability.
Speaker Change: Profitability is reflected in our strong financial position as of September 30.
Speaker Change: <unk> 20th of default, we have cash on the cash.
Speaker Change: Pre validus restricted cash and short term investments totaling RMB 1193, part to 7 million.
Speaker Change: From RMB 1000, and a 26 partners III meeting at the end of June.
Speaker Change: Our business continues to generate.
Speaker Change: Positive cash flow.
Speaker Change: Our operations during this transition period.
Speaker Change: Is solid our cash position has allowed us to share our success with shareholders through a special dividend.
Uh huh.
Speaker Change: Announced in October.
Speaker Change: It demonstrates not only our robust financial health, but also our commitment to investing in our steel like automated stretch deep well of rewarding our shareholders.
Speaker Change: Looking ahead.
Speaker Change: We remain focused on realizing the significant opportunity in China's CRA economy.
More importantly, we are building a sustainable.
Compared to two advantages by agree aging comprehensive solutions for those silver economy market.
Speaker Change: According to our 'twenty to 'twenty, four senior Investor base faced a learning industry developments to report.
Speaker Change: Oh.
Speaker Change: The 80% of the Seaway.
Alicia is already engaged in investor base to learning with an additional 56 expressing our interest in doing.
Such activities.
Speaker Change: This validates our strategy of building upon our educational foundation to provide broader lifestyle on the wellness.
Solutions.
Speaker Change: The silver economy, China represents more than a business opportunity. It's a toss tool creates a meaningful impact at China's population ages.
Speaker Change: <unk> relationships with users.
Speaker Change: Vanda with our understanding of their needs.
Positions us uniquely to serve this growing market.
Speaker Change: Well this strategic transition may impact near term revenue.
Speaker Change: We are confident that our focus on the economy, the policy or the power user relationship aside the operational capabilities.
Speaker Change: It positions us well for long term value creation.
Speaker Change: Building, not just our business, but a comprehensive ecosystem that enriches the lives of China's fewer population.
Tim: Now I will hand over to our CFO, who will provide more details on how our financial performance. Tim. Please go ahead.
Tim: Thank you.
Speaker Change: Before I go into the details of our financial results. Please note that all amounts are in RMB terms that the reporting period, the first quarter of fiscal year 'twenty to 'twenty five ending on September 32024, and that in addition to get measures will also be discussing non-GAAP measures to provide greater.
Speaker Change: Clarity on the change in our actual operations.
Speaker Change: For the fourth quarter of fiscal year 'twenty to 'twenty five our total revenues were 810.4 million.
Speaker Change: Presenting a six 8% decrease year over year. This decline primarily reflects our strategic repositioning towards the silver economy market the transition with blue will create sustainable long term value for our shareholders.
While our revenues and we do own other new services generated revenues of 709 meeting accounting for it.
Speaker Change: Seven 5% of total revenues going forward.
Speaker Change: Continue to invest in developing our courses for the silver population.
Speaker Change: As we expand and refine our elderly focused course offerings across both categories. We expect this business to become.
Speaker Change: Increasingly important revenue contributor.
Speaker Change: This realignment of our course offerings demonstrates our commitment to meeting.
Speaker Change: The specific needs and preferences of the theory economy market, our gross billings from individuals on our learning services was 713.7 million should we have a modest decline of six 3% year over year.
Speaker Change: Which we view as a natural progression.
Speaker Change: During this trying to do the transformation of our product mix.
Speaker Change: News from Enterprise services.
Speaker Change: 47, eight meeting, but change of 32% from a year ago.
Speaker Change: Presenting five 9% of total revenues this shift reflects our evolving business mix.
Speaker Change: The two related party and external undertake transactions.
Speaker Change: Gross profit for the quarter was 676 million with a gross margin of 83, 4% compared to 86, 4% in the same period last year.
This margin change reflects our strategic shifts towards more product focused offerings using the steuben economy market, which naturally carries a different cost structure compared to our traditional learning services.
But we believe this shifting our business mix.
Speaker Change: <unk>, our margin profile better positions us to capture the diverse needs of our target demographic.
Speaker Change: On the operational front, we maintained disciplined cost management, while investing.
Investing in our strategic initiatives.
Speaker Change: Total operating expenses were $573 7 million a decrease of 18, 8% from $706 7 million and assumed you know there's some material last year.
Speaker Change: To break this down sales and marketing expenses decreased by 17% to $515 million, primarily due to optimize the marketing spend and improved operational efficiency.
Speaker Change: As a percentage of total revenue.
Speaker Change: non-GAAP sales and marketing expenses, which excludes share based compensation decreased to 63.
5% from 17.8% a year ago.
Speaker Change: Research and development expenses declined by 35, 9% to 10 to $8 1 million, reflecting our focused approach to product development as a percentage of total revenue non-GAAP R&D.
Speaker Change: Expenses, which excludes share based compensation decreased to three 2% from four 4% a year ago.
Speaker Change: General and administrative expenses decreased by 28, 4% to 36 million, mainly due to a decline in share based compensation expenses.
As a percentage of total revenue non-GAAP, G&A expenses, which excludes share based compensation.
Speaker Change: Remained stable at 3.4% from a year ago.
Speaker Change: We achieved a net income of 87.
7 million, representing a net margin of 10% despite the declining revenues.
Speaker Change: Our adjusted net income which exclude.
Speaker Change: Share based compensation was eight 8 million representing a healthy adjusted net margin of 10, 9%.
Speaker Change: Basic and diluted net income per share was there a point 52 and five.
Speaker Change: 515th respectively.
They were in the quarter adjusted basic and diluted net income per share was <unk> 56 zero point 55, respectively.
Speaker Change: During the quarter.
Speaker Change: Regarding our balance sheet position as of September 32007, before we strengthened our cash position to $1193 7 million in cash cash equivalents restricted cash and short term investments.
Speaker Change: Representing an increase of 167 4 million from 1000.
Speaker Change: 26, 3 million as of June 30, it kinds of times before.
Speaker Change: This enhanced liquidity position demonstrates our ability to generate cash.
Speaker Change: Executing our strategy, it's transfusion, providing us with sustainable.
Speaker Change: Flexibility to invest in growth opportunities within the silver economy market looking ahead, our strengthened cash position of $1193 7 million and enhanced operational efficiency and healthy attracting that margin of 10.
Speaker Change: 9%, providing us with a solid foundation during this transition period.
Our disciplined cost management and improved operational metrics give us confidence in our execution capability.
Well, we are we have discontinued providing specific guidance. During this transition period, we remain committed to transparent communication with our shareholders as they progress our strategy journey.
Speaker Change: That concludes my prepared remarks, operator, let's open up the call for questions. Thank you.
Thank you.
Speaker Change: We'll now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you're using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: Anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two one.
Speaker Change: When asking a question in Chinese please translate your question in English for the convenience of everyone on the call and at this time, we'll pause momentarily to assemble our roster.
Speaker Change: And the first question will come from Michael Kim with Zacks small cap research. Please go ahead.
Michael Kim: Great Good morning, or good evening, everyone. Thanks for taking my questions.
Michael Kim: First just curious to maybe get your perspectives on how the macroeconomic backdrop.
Michael Kim: In China as well as.
Michael Kim: The various more recent government stimulus initiatives may impact your businesses.
Michael Kim: Or would you expect more when you eliminate impacts just given sort of stronger balance sheets.
Michael Kim: Our senior citizens on average thanks.
Speaker Change: Oh, Okay, Sankyo Crutzen I will answer in Chinese on the liver transplant for me.
Speaker Change: So if they don't get hit in Valencia to assure a woman to urologist you used to have two of them and I just Wanna T shirts right.
Speaker Change: Yes.
Speaker Change: Well I mean, the Chinese Humana sure Nishu.
Jimmy Choo, you'll show job Utica, yes. Thank you for your question, we recognize that these factors present, both challenges and opportunities and we are strategically positioned to have the capability to navigate them effectively.
Speaker Change: Oh, well inventories at a Canadian shelf edge with Oh, there's obviously only issues because I pay a lot of attention.
Speaker Change: Not all English on the shelf, where the moisture cause an official quinoa to hit show that special woman Youll Toyota Honda chime into hook.
Speaker Change: Charter that you don't the time, they know they're going to show up and I'm going to just say on the shipyard Hertfordshire tissue are shoulder months, which obviously should we see evolving changes in consumer behaviors, which are influencing spending patterns and demand. Despite these challenges with our diversified portfolio and focus on essential value.
Speaker Change: Driven products allow us to adapt to these ships and continue to effectively meet consumer needs.
So again to me at all.
Chris will open door, she doesn't shelter the swisher.
Speaker Change: Hello.
Speaker Change: Yeah, Joe This is Sheila shelve it underneath.
Speaker Change: Well, you just sure Ah well do them and the timing of hopeful with the Shaw well much of that do you mean, the window to ship Bill Hoffmann father, Archie of children with the Italian <unk>.
Speaker Change: T shirts.
Speaker Change: I'll still have seen measures to booster the domestic consumption, which in house consumer confidence and spending power. This will support demand for our products and services. We are closely monitoring these developments and aligning our strategy to capitalize on emerging opportunities.
Speaker Change: Okay, which I couldn't do it all the shirt, Oh, well, maybe Gina hopefully going to.
Speaker Change: Non agency <unk>.
Speaker Change: They are in the fleet downtime, so I'm going to let you do the Union shop.
Speaker Change: We had a good engine that until after that she got Harman the commodity question what sort of.
Speaker Change: Minimal through Thomas useful that it hits you in two.
Speaker Change: Calculation.
Speaker Change: Yeah.
Speaker Change: Unfortunately, we anticipate more positive impacts from the governments increase their focus understand very economy and welfare for senior citizens.
Telus is targeting this demographic aim to boosted their purchasing power and improve their quality of life, often you have significant opportunities for businesses catering to their needs.
Speaker Change: They all mature long you're in hometown.
Speaker Change: Julia you consolidated the moisture hook on the desire for Ibs C.
Speaker Change: So it wasn't very long into the answer to that is your timing of who she always show up money or go harder and can take a bit hard to show either the leak.
Speaker Change: As senior citizens, particularly have more stable consumption patterns and stronger balance sheets.
Speaker Change: With tailored offerings for the senior consumers position us well to benefit from this focus.
Speaker Change: Okay. That's all so too.
Speaker Change: Great.
Speaker Change: Super helpful.
Speaker Change: Maybe maybe just one one other question if.
Speaker Change: If I may just curious how youre thinking about that.
Speaker Change: Customer acquisition cost to lifetime value as you continue to transition the business.
We'd see Mike.
Speaker Change: <unk> trends, we benefit as you increasingly leverage the.
Speaker Change: The existing user base and focus on.
Speaker Change: E Commerce channels.
Speaker Change: And then Ltvs seemed like they're set to rise just given the repeat purchase nature of consumer products more broadly.
Well. Thank you for your question I'll take this one.
Speaker Change: I think this matrix.
Speaker Change: It is central to our strategy planning.
Speaker Change: And we are actively optimizing them to ensure sustained growth and profitability.
Speaker Change: So as we transition our business and focus more heavily on our private label products and services, including the existing online courses remedies projects. So are we.
Speaker Change: We anticipate the favorable trends seem to say.
Speaker Change: This improvement is driven by our ability to more effectively leverage our existing user base, which reduces our reliance on more expensive customer acquisition matters.
Speaker Change: Additionally, as we deepen engagement with our current users through targeted marketing and personalized experiences, especially with our strategy of combining online with offline operation, which we are.
Speaker Change: Now.
It's called routine with the with the local community.
Speaker Change: We expect to improve the efficiency of our acquisition strategies and lower the cost per new customer.
Extend the lifetime value of our users.
Speaker Change: On the lifetime value side, we see significant potential for growth are received on the expansion of the.
Speaker Change: Private label offerings create strong opportunities to drive repeat purchases and we expect to see rising ltvs across our customer segments.
Speaker Change: Uh huh.
Speaker Change: The interplay between these trends position I think the view both position us well to achieve a favorable <unk> LTV to CPA ratio overtime.
Speaker Change: By leveraging the scale of our existing user base increasing.
Speaker Change: Repeat purchases on optimizing marketing efficiency the aim to maximize the return on our customer acquisition investments.
Speaker Change: Furthermore, as we refine our product mix and develop offerings that resonate.
Speaker Change: Rather than a deeply with the consumer needs.
Back to unlock further upside in the customer lifetime value and also.
Speaker Change: Because we in the past quarters, we always making we have made profits. So that means we have a prude only the mini the causes for the all in cost is kind of January it's the positive of TV too crazy so both of them.
Speaker Change: Doing now is just to expand on two <unk>.
But I have a T V to seafood ratio overtime. So that is a silver economy focus strategy bandwidth.
Speaker Change: Sure.
Speaker Change: Do you.
Speaker Change: Got it thanks for taking my questions.
Speaker Change: The next question will come from Steve Silver with Argus Research. Please go ahead.
Steve Silver: Thank you operator, and thanks for taking my questions as well.
Steve Silver: This morning, the prepared remarks spoke to the strengthening balance sheet and scaling back of some of the noncore investments.
Steve Silver: And you could provide an update on the strategy.
Speaker Change: To balance the healthy balance sheet between growth investments as well as share repurchases and just how the company continues to view the balance sheet in terms of really driving shareholder value.
Speaker Change: Okay sounds good.
Speaker Change: I think our capital allocation strategy is just built on the disciplined approach that aims to drive sustainable growth and deliver long term shareholder value.
Speaker Change: We remain committed to targeted growth investments.
Speaker Change: Our focus to exploring high potential markets and these initiatives are vital for reinforcing our our competitive edge and ensuring future scalability.
Speaker Change: The same time, we recognize the importance of returning capital to shareholders through share repurchase, especially during the during the periods. When our stock is undervalued with all our cash flow is very strong.
Speaker Change: It's important to highlight that we have consistently generated positive operating cash flow cash flows in the past two years.
Speaker Change: These phones, our growth investments and share repurchase programs.
Also safeguarding our balance sheet.
Speaker Change: Our robust financial position provides us with the flexibility to adapt to market conditions, <unk> trying to take opportunities and manage risk because it effectively.
So in summary, our ability to generate strong operating cash flows enables us to balance investing for growth returning capital to shareholders and maintaining a healthy balance sheet. This approach positions us for sustainable long term value creation. So we do both.
Speaker Change: Consider the new opportunities that is our focus on those tragic transition focus on those who were peoples.
Speaker Change: Our business model and also we will also consider and we executed the strategy to reward the shareholders. For example, the recent.
Speaker Change: Dividend.
Speaker Change: On sprint and deliver.
Speaker Change: Thank you.
Speaker Change: That's helpful. Thank you and so the e-commerce business remains in the early stages in growth. So far has been steady do you expect this pace of growth to continue in a steady fashion or do you envision a period of more rapid expansion of the private label strategy moving forward.
Speaker Change: Yes. Thank you I think first RVO clarified that I think the live streaming E. Commerce is just the start of our private label.
Speaker Change: Uh huh.
Speaker Change: <unk> products are.
Speaker Change: Business that is one of our Clos.
Speaker Change: Lance.
Speaker Change: For these kind of products that just because these are this business is it started on previous call. Our large customer base. So that we can test and we can scale.
Speaker Change: That would be we see steady growth and growth potential in e-commerce as a whole we view our private label based on online and offline operations strategy has a more significant opportunity for long term expansion and value creation.
Speaker Change: We recognize that Fannie business faces challenges attempting to extend the lifetime value.
Speaker Change: Of the customers.
Speaker Change: As a result.
We anticipate that the growth rate of our private label business and may not be as rapid as it was in the early stages.
Speaker Change: However, I think we have built a solid foundation, including 104 million registered users or Saudi clauses on Skus and 98.
Speaker Change: 5% customer satisfaction rate.
Speaker Change: Which all provide.
Support for the expansion and deepening our private label business.
Speaker Change: This quarter, we have already achieved RMB 15 meeting Jim me milestone.
Private label strategy and moving forward, we will focus on enhancing product quality and our market alignment.
Speaker Change: Through the.
The improved operational capabilities across both the online and offline.
Speaker Change: Sure.
Speaker Change: Prior to re channels, we are committed to continuing to offer high quality private label products that meet the customer demands ensuring the long term and sustained.
Speaker Change: Sustainable growth in the future.
Speaker Change: Thank you.
Speaker Change: Okay. Thank you very much.
Speaker Change: As there are no further questions.
Speaker Change: To hand, the conference back over to management for any closing remarks. Please go ahead.
Speaker Change: Thank you again for joining our call today. If you have any further questions. Please feel free to contact us or submit a request through our IR website. We look forward to speaking with everyone next call have a good day.
Speaker Change: The conference has now concluded.
Speaker Change: You for attending today's presentation you may now disconnect.