- Total Revenues: RMB151 million, a decrease of 6.7% from RMB161.9 million in the first half of 2023.
- Revenues from Customers: RMB151.1 million, an increase of 8.2% from RMB139.6 million in the first half of 2023.
- Revenues from Government Cooperative Agreements: Zero, compared to RMB22.3 million in the first half of 2023.
- Cost of Revenues: RMB98.9 million, stable compared to RMB98.7 million in the first half of 2023.
- Gross Profit: RMB52.3 million, a decrease of 17.3% from RMB63.2 million in the first half of 2023.
- Gross Margin: 34.6%, compared to 39% in the first half of 2023.
- Total Operating Expenses: RMB49.2 million, an increase from RMB23.6 million in the first half of 2023.
- Selling and Marketing Expenses: RMB1.6 million, an increase of 71.6% from RMB0.9 million in the first half of 2023.
- General and Administrative Expenses: RMB47.7 million, an increase from RMB22.7 million in the first half of 2023.
- Income from Operations: RMB3 million, a decrease of 92.4% from RMB39.6 million in the first half of 2023.
- Net Income from Continuing Operations: RMB4.2 million, a decrease of 88.9% from RMB37.6 million in the first half of 2023.
- Net Income from Discontinued Operations: RMB7 million, compared to a net loss of RMB0.9 million in the first half of 2023.
- Net Income: RMB11.2 million, a decrease of 69.4% from RMB36.7 million in the first half of 2023.
- Adjusted Net Income: RMB10.1 million, a decrease of 72% from RMB36.7 million in the first half of 2023.
- Total Number of Students Enrolled: 35,151 students as of September 1, 2024.
- Total Number of School Programs: 23 as of September 1, 2024.
Release Date: September 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Increased student enrollment, reflecting strong brand and effective recruitment efforts.
- Revenue from customers increased by 8.2%, driven by higher student enrollment.
- Investment in human resources, including new HR system development, to improve employee management.
- Upgrading IT capabilities to incorporate digitalization into the education process.
- Net income from discontinued operations improved to RMB7 million compared to a net loss of RMB0.9 million in the first half of 2023.
Negative Points
- Total revenues decreased by 6.7% due to no revenue from government cooperative agreements.
- Gross profit decreased by 17.3%, primarily due to increased staff compensation and operational inefficiencies.
- Total operating expenses increased significantly by 108.5%, driven by higher general and administrative expenses.
- Income from operations decreased by 92.4%, reflecting lower gross profit and higher operating expenses.
- Net income from continuing operations decreased by 88.9%, indicating significant financial challenges.
Q & A Highlights
Q: Can you elaborate on the reasons behind the decline in revenue and net income for the first half of 2024 compared to the same period in 2023?
A: The decline in revenue and net income was primarily due to two factors: no revenue generated from government cooperative contracts and increased general and administrative expenses. The local governments have had tight budgets, making it difficult for them to meet their payment obligations to us. Additionally, we have increased staffing and professional services, which has raised our general and administrative expenses. (Tommy Zhou, CFO)
Q: What steps is the company taking to address the issue of non-payment from government cooperative agreements?
A: We are currently renegotiating with local governments to reduce or dismiss the number of publicly sponsored students we must service each year. This would help us reduce costs if we are not receiving any revenue from these students. These renegotiations are ongoing and have not yet reached a conclusion. (Tommy Zhou, CFO)
Q: How has the student enrollment changed, and what impact has it had on the company's revenue?
A: As of September 1, 2024, the total number of students enrolled at our school programs and public schools we manage was 35,151, an increase from last year. This increase in student enrollment has led to an 8.2% rise in revenue from customers. (Tommy Zhou, CFO)
Q: What investments has the company made to improve its operations and management?
A: We have invested heavily in our human resources department, increasing personnel for hiring, performance evaluation, and supervision roles. We are also developing and deploying a new HR system to make HR-related tasks easier for employees. Additionally, we are upgrading our IT department to incorporate digitalization into our education process. (Tommy Zhou, CFO)
Q: Can you provide more details on the financial performance for the first half of 2024?
A: Total revenues were RMB151 million, a decrease of 6.7% from RMB161.9 million in the first half of 2023. Revenues from customers increased by 8.2% to RMB151.1 million, while revenues from government cooperative agreements were zero. Gross profit was RMB52.3 million, a decrease of 17.3%, and net income was RMB11.2 million, a decrease of 69.4%. (Tommy Zhou, CFO)
Q: What were the main drivers behind the increase in operating expenses?
A: Total operating expenses increased significantly to RMB49.2 million from RMB23.6 million in the first half of 2023. This was primarily due to increased expenses in brand promotion, marketing activities, staffing, and professional services used in management duties. (Tommy Zhou, CFO)
Q: How is the company planning to stay competitive in the education industry?
A: We are actively refining our business to ensure high-quality education services with solid academic performances. We are also exploring new opportunities and innovating to stay competitive in the industry. (Tommy Zhou, CFO)
Q: What is the company's outlook for the rest of the year?
A: We will continue to focus on improving our operations and management, addressing the issue of non-payment from government cooperative agreements, and exploring new opportunities to stay competitive. We look forward to reporting our progress in the next quarter or next year. (Tommy Zhou, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
