- Net Revenues: USD414.2 million or RMB2.99 billion, representing year-over-year increases of 50.4% and 56.9% in US dollar and RMB terms, respectively.
- Non-GAAP Income from Operations: USD0.9 million.
- Non-GAAP Net Income Attributable to TAL: USD29.6 million.
- Cost of Revenue: USD200 million, a 43.4% increase from USD139.5 million in the first quarter of fiscal year 2024.
- Gross Profit: USD214.2 million, a 57.6% increase from USD135.9 million for the same period last year.
- Gross Margin: Increased to 51.7% from 49.3% for the same period last year.
- Selling and Marketing Expenses: USD122.4 million, a 25.4% increase from USD97.7 million for the same period last year.
- Non-GAAP Selling and Marketing Expenses: USD118.1 million, a 30.8% increase from USD90.2 million for the same period last year.
- General and Administrative Expenses: USD109.7 million, a 4.5% increase from USD104.9 million in the same period of last year.
- Non-GAAP General and Administrative Expenses: USD98.2 million, a 10% increase from USD89.2 million for the same period last year.
- Share-Based Compensation Expense: Decreased by 28.6% to USD18.2 million from USD25.5 million in the same period of last year.
- Loss from Operations: USD17.3 million compared with a loss from operations of USD57.8 million in the same period of last year.
- Net Income Attributable to TAL: USD11.4 million compared to a net loss of USD45.0 million in the same period of last year.
- Cash and Cash Equivalents: USD2.222.6 million as of May 2024.
- Short-Term Investments: USD1.196 million.
- Current and Noncurrent Restricted Cash: USD355.8 million.
- Deferred Revenue: USD641.9 million as of the end of the first fiscal quarter.
- Net Cash Provided by Operating Activities: USD246.8 million.
Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TAL Education Group (TAL, Financial) reported a significant year-over-year increase in net revenues, reaching USD414.2 million, a 50.4% increase in US dollar terms.
- The company saw a substantial improvement in gross profit, which rose by 57.6% year-over-year to USD214.2 million.
- Non-GAAP net income attributable to TAL was USD29.6 million, compared to a non-GAAP net loss of USD19.5 million in the same period last year.
- TAL's learning devices business recorded year-over-year growth, driven by product development and enhanced go-to-market capabilities.
- The company successfully integrated AI technology into its learning devices, enhancing user engagement and providing reliable learning aids.
Negative Points
- Cost of revenue increased by 43.4% to USD200 million, impacting overall profitability.
- Selling and marketing expenses rose by 25.4% year-over-year to USD122.4 million, which could affect future margins.
- General and administrative expenses increased by 4.5% to USD109.7 million, indicating higher operational costs.
- Despite improvements, TAL still reported a loss from operations of USD17.3 million for the first quarter of fiscal year 2025.
- The company faces challenges in maintaining stable operating metrics such as retention and utilization rates amidst expansion efforts.
Q & A Highlights
Q: Could you share any color regarding the recent operating metrics and demand for the upcoming summer peak season for your Peiyou enrichment learning program?
A: This is Jackson Ding, Deputy CFO. We see a multidimensional set of developmental needs from learners and their parents, focusing on well-rounded development and core competencies. Our enrichment learning programs aim to address these needs. Operating metrics such as retention and utilization rates have been stable over the last few quarters.
Q: How many learning centers were added during the quarter, and what is the expected pace of expansion for the remaining quarters?
A: This is Jackson Ding, Deputy CFO. We expanded our learning centers in preparation for the summer vacation. However, we do not expect the same level of growth in every quarter. Our approach to expanding our offline footprint is dynamic and measured, balancing market demand and our operating capabilities.
Q: Can you provide an overview of how AI technology has changed your business operation strategy and future product plans?
A: This is Alex Zhuangzhuang, President and CFO. AI is reshaping our product development and operational efficiency. We aim to make high-quality teaching and individualized learning affordable. We are focusing on making AI models age-appropriate, subject-appropriate, and scenario-appropriate. We recently launched a mathematical search and Q&A tool and plan to enhance AI productization to reach a broader user base.
Q: Could you give us some color on your future investment strategy and shareholder return schemes?
A: This is Jackson Ding, Deputy CFO. We had USD3.8 billion in cash and equivalents as of May 31, 2024. We aim to invest in areas that improve our existing products, supplement our capabilities, and adopt new technologies. We will continue to seek opportunities to generate returns for our shareholders through a balanced and prudent approach.
Q: Can you provide an update on the xPad's current strategy and outlook for the business?
A: This is Alex Zhuangzhuang, President and CFO. The xPad provides a self-directed learning experience, integrating hardware, software, content, and AI features. We continue to improve its functionality and expand our learning content library. We introduced new SKUs, including the xPad classic model 2024, which features enhanced hardware and AI capabilities. User engagement and learning outcomes have been steady, validating the product's value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
