- Total Net Revenue (Q3 2024): RMB67.3 million, up 13.1% from RMB59.5 million in Q3 2023.
- Gross Profit (Q3 2024): RMB30 million, up 2.6% from RMB29.2 million in Q3 2023.
- Gross Margin (Q3 2024): 44.6%, down from 49.2% in Q3 2023.
- Total Operating Expenses (Q3 2024): RMB47.7 million, up 28.4% from RMB37.1 million in Q3 2023.
- Net Loss (Q3 2024): RMB14.7 million, compared to RMB7.3 million in Q3 2023.
- Total Net Revenue (9 months 2024): RMB167.1 million, up 21.1% from RMB138 million in 9 months 2023.
- Gross Profit (9 months 2024): RMB77.6 million, up 24.6% from RMB52.3 million in 9 months 2023.
- Gross Margin (9 months 2024): 46.4%, up from 45.1% in 9 months 2023.
- Total Operating Expenses (9 months 2024): RMB137.7 million, up 22% from RMB112.9 million in 9 months 2023.
- Net Loss (9 months 2024): RMB49.4 million, compared to RMB42.2 million in 9 months 2023.
- Cash and Cash Equivalents (as of September 30, 2024): RMB39.4 million.
- Total Assets (as of September 30, 2024): RMB459.4 million.
- Total Liabilities (as of September 30, 2024): RMB393.2 million.
- Total Shareholders' Equity (as of September 30, 2024): RMB66.2 million.
- Student Enrollment Increase (9 months 2024): 20% compared to 9 months 2023.
- Portfolio Training Student Enrollment (9 months 2024): Increased by 20.7% to 2,220.
- Other Program Student Enrollment (9 months 2024): Increased by 19.1% to 1,523.
- Credit Hours Delivered Increase (9 months 2024): 28.5%.
- Full-Year 2024 Revenue Guidance: RMB233 million to RMB255 million, representing a 5% to 15% increase from full year 2023.
Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ATA Creativity Global (AACG, Financial) reported double-digit growth in net revenues and overall student enrollment for the third quarter of 2024.
- Portfolio training services remain the main revenue source, contributing over 70% of total revenues.
- Student enrollments for research-based learning and overseas study counseling increased by more than 20% compared to the third quarter of 2023.
- The company expanded its partnership network, including new strategic partnerships with Leeds Conservatoire and Star Educational Technology.
- AACG's high-end projects, such as the United Nations Sustainable Development Goals Arts Boot Camp and various international camps, have been well-received, enhancing the company's service offerings.
Negative Points
- Gross margin decreased to 44.6% in the third quarter of 2024 from 49.2% in the prior year period due to higher costs related to increased teaching staff and outsourcing.
- Total operating expenses increased by 28.4% in the third quarter of 2024, driven by higher sales and administrative costs.
- The company reported a net loss of RMB 14.7 million for the third quarter of 2024, compared to RMB 7.3 million in the prior year period.
- Loss from operations increased to RMB 17.6 million in the third quarter of 2024 from RMB 7.9 million in the third quarter of 2023.
- Despite revenue growth, the company continues to face challenges in achieving profitability, with a net loss of RMB 49.4 million for the nine months of 2024.
Q & A Highlights
Q: Can you provide an overview of the financial performance for the third quarter of 2024?
A: Ruobai Sima, CFO, reported that total net revenue for the third quarter of 2024 was RMB67.3 million, marking a 13.1% increase from the previous year. Gross profit was RMB30 million, a 2.6% increase, with a gross margin of 44.6%. However, operating expenses rose by 28.4% to RMB47.7 million, leading to a net loss of RMB14.7 million for the quarter.
Q: What are the main drivers behind the revenue growth in the third quarter?
A: Kevin Xiaofeng Ma, CEO, highlighted that the growth was primarily driven by increased student enrollment in portfolio training programs and research-based learning services. These segments contributed significantly to the double-digit growth in net revenues and overall student enrollment rates.
Q: How did student enrollment trends impact the company's performance in the first nine months of 2024?
A: Ruobai Sima, CFO, noted that total student enrollment increased by 20% year-over-year, with portfolio training student enrollment rising by 20.7% and other programs by 19.1%. This strong enrollment trend supported the company's revenue growth and is expected to continue driving performance.
Q: What strategic partnerships did ACG establish during the third quarter?
A: Jun Zhang, President, mentioned that ACG expanded its partnership network by forming strategic alliances with Leeds Conservatoire in the UK and Star Educational Technology. These partnerships aim to enhance ACG's service offerings and integrate art with artificial intelligence.
Q: What is the company's guidance for the full year 2024?
A: Ruobai Sima, CFO, stated that ACG is on track to achieve its full-year revenue guidance of RMB233 million to RMB255 million, representing a 5% to 15% increase from 2023. The company expects portfolio training services to remain the primary growth driver.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
