ATA Creativity Global (AACG) 2023 Q3 法說會逐字稿

Greetings. Welcome to ATA Creativity Global's third quarter 2023 financial results call. At this time, all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) Please note this conference is being recorded. I will now turn the conference over to Alice Zhang of The Equity Group. Thank you. You may begin.

問候。歡迎參加 ATA Creativity Global 2023 年第三季財務業績電話會議。此時，所有參與者都處於只聽模式。正式演講後將舉行問答環節。 （操作員說明）請注意，本次會議正在錄製中。我現在將會議交給 Equity Group 的 Alice 張。謝謝。你可以開始了。

Thank you, operator, and hello, everyone. Thank you for joining us. The press release announcing ATA Creativity Global's or ACG's results for the third quarter and nine months ended September 30, 2023, is available at the IR section of the company's website at www.atai.net.cn. As part of this conference call, the company has an accompanying slide presentation available on its website. A replay of this broadcast will also be made available at ACG's website for the next 90 days.

謝謝接線員，大家好。感謝您加入我們。 ATA Creativity Global 或 ACG 截至 2023 年 9 月 30 日的第三季和九個月業績的新聞稿可在該公司網站 www.atai.net.cn 的投資者關係部分查閱。作為本次電話會議的一部分，該公司在其網站上提供了隨附的幻燈片演示。未來 90 天內，ACG 網站也將提供該廣播的重播。

Before we get started, I would like to remind everyone that this conference call and accompanying information discussed herein contain, certain forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.

在我們開始之前，我想提醒大家，本次電話會議和本文討論的隨附資訊包含 1995 年《私人證券訴訟改革法案》安全港條款含義內的某些前瞻性陳述。

These forward-looking statements can be identified by terms such as anticipate believe, could, estimate, expect, forecast, future intend before to, outlook plan, should, will and similar trends and include, among other things, statements regarding ACG's future growth and results of operations; ACG's plans for mergers and acquisitions generally; ACG's growth strategy, anticipated growth prospects and subsequent business activities, including initiatives and adjustments by ACG and China is COVID-19 pandemic related restrictions, market demand for and market acceptance and competitiveness of ACG's portfolio training programs, and other education services.

這些前瞻性陳述可以透過諸如預期相信、可能、估計、期望、預測、未來打算、展望計劃、應該、將會和類似趨勢等術語來識別，其中包括有關 ACG 未來成長和營運結果； ACG整體併購計畫； ACG 的成長策略、預期成長前景和後續業務活動，包括 ACG 和中國針對 COVID-19 大流行相關限制的舉措和調整、ACG 投資組合培訓項目和其他教育服務的市場需求、市場接受度和競爭力。

Although the company believes that the expectations reflected in the forward-looking statements are reasonable as of today, those statements are subject to risks and uncertainties that could cause actual results to differ dramatically from those projected. There can be no assurance that those expectations will prove to be correct information about the risks associated with investing in ACG is included in its filings with the Securities and Exchange Commission, which we encourage you to review before making an investment decision.

儘管該公司認為前瞻性陳述中反映的預期截至目前為止是合理的，但這些陳述存在風險和不確定性，可能導致實際結果與預測有巨大差異。無法保證這些預期將被證明是正確的，有關與投資 ACG 相關的風險的資訊包含在其向美國證券交易委員會提交的文件中，我們鼓勵您在做出投資決定之前先進行審查。

The company does not assume any obligation to update any forward-looking statements as a result of new information, future events, changes in market conditions or otherwise, except as required by law.

除法律要求外，本公司不承擔因新資訊、未來事件、市場條件變化或其他原因而更新任何前瞻性聲明的義務。

Regarding the disclaimer language. I would also like to refer you to slide 2 of the conference call presentation for future and for further information. All USD amounts in this conference call relating to financial results for the third quarter and nine months ended September 30, 2023. Our converted from RMB using an exchange rate of RMB7.2960 to USD1, the noon buying rate as of September 30, 2023. All historical conversions are accurate as of the time reported unless otherwise noted, the company reports its financial results under US GAAP in RMB and all percentages calculated in the presentation are based on RMB unless otherwise noted.

關於免責聲明語言。我還想請您參閱電話會議簡報的幻燈片 2，以供將來使用和了解更多資訊。本次電話會議中涉及截至2023 年9 月30 日的第三季和九個月財務業績的所有美元金額。我們使用人民幣7.2960 兌1 美元的匯率（截至2023 年9 月30 日的中午買入匯率）將人民幣換算成美元。除非另有說明，截至報告時所有歷史換算均準確無誤，公司根據美國公認會計原則以人民幣報告其財務業績，除非另有說明，演示文稿中計算的所有百分比均以人民幣為基礎。

For those of you following along the accompanying powerpoint presentation, there is an overview of the company on slide 3. In addition, we're more than happy to take investor questions during today's Q&A session or via e-mail to the company. If you wish to ask questions. You can send your questions to the email address azhang@equityny.com and please specify whether you would like to have them read during the Q&A session.

對於那些關注隨附的幻燈片演示的人，幻燈片 3 上提供了該公司的概述。此外，我們非常樂意在今天的問答環節或通過電子郵件向該公司回答投資者的問題。如果您想提問。您可以將您的問題發送至電子郵件地址 azhang@equityny.com，並請註明您是否希望在問答環節中閱讀這些問題。

On today's call, the company's CFO, Mr. Ruobai Sima, will provide a brief overview of operating and financial highlights for the third quarter of 2023 as Chairman and CEO, Mr. Kevin Ma, is unable to be here today due to personal reasons. This has now withdrawn President, Mr. Jun Zhang, in providing an update on the company's outlook and its long-term growth strategy before opening the floor for questions.

在今天的電話會議上，公司財務長司馬若白先生將簡要概述 2023 年第三季的營運和財務亮點，因為董事長兼執行長馬雲先生因個人原因無法出席今天的會議。現在，總裁張軍先生不再在提問前介紹公司前景及其長期成長策略的最新情況。

With that, I'll turn the call over to ACG's CFO, Mr. Ruobai Sima, please go ahead, Mr. Sima.

下面我就把電話轉給ACG的CFO司馬若白先生，請司馬先生說。

Thank you, Alice, and welcome, everyone, and good evening for those in Americas, and we appreciate everyone's time. We are pleased with our solid financial performance for Q3 2023, reporting a 14.1% increase in net revenue, primarily a result of both increased contribution from Portfolio Training and research-based learning services as we were able to resume in-person overseas summer camps this summer for the first time since the COVID-19 pandemic began in 2020.

謝謝你，愛麗絲，歡迎大家，美洲的人們晚上好，我們感謝大家的寶貴時間。我們對 2023 年第三季穩健的財務表現感到滿意，淨收入增長了 14.1%，這主要是由於投資組合培訓和基於研究的學習服務的貢獻增加，因為我們今年能夠恢復現場海外夏令營這是自2020年COVID-19 大流行開始以來的首次夏季。

Revenue revenues from research-based learning service earned more than doubled on the prior year period, we have been thrilled with the news, the enthusiasm and public to student loans build and feedback received thus far increasing in revenues, coupled with decreased operating expenses enabled them to significantly narrow losses during the quarter.

基於研究的學習服務的收入比上年同期增長了一倍多，我們對這個消息感到興奮，公眾對學生貸款的熱情和反饋以及迄今為止收到的收入增加，加上運營費用的減少使他們能夠本季虧損大幅收窄。

Total student enrollment for third quarter 2023 towards 1,093 compared to 1,106 sites in the prior year period. However, we did see a slight increase in enrollments in our core portfolio training programs during the period. Portfolio Training credit hours delivered increases 24.1% to 44,723, with credit hours delivered for project-based programs increasing nearly 35% year over year.

2023 年第三季的學生註冊總數為 1,093 人，去年同期為 1,106 人。然而，在此期間，我們確實看到核心組合培訓課程的入學人數略有增加。組合培訓提供的學分增加了 24.1%，達到 44,723 個學分，其中基於專案的課程提供的學分同比增加了近 35%。

We believe this demonstrates that our students have been leveraging ACG's teaching resources more efficiently. Our product-based credit hours account for 69.5% of our portfolio training by the hour delivered during the summer. The hosted six overseas programs, bringing students to countries such as the UK and Japan, where they had the opportunity to explore a variety of our generals prestigious university campuses and engaging in real world applications.

我們相信這表明我們的學生已經更有效地利用了ACG的教學資源。以夏季提供的小時數計算，我們基於產品的學分占我們投資組合培訓的 69.5%。我們舉辦了六個海外項目，將學生帶到英國和日本等國家，在那裡他們有機會探索我們各種著名的大學校園並參與現實世界的應用。

The successful delivery of these programs have enforced our belief that it is fulfilling our growth in demand for overseas learning programs, and we are excited to continue presenting these opportunities to our students in the future.

這些計畫的成功實施讓我們堅信，它正在滿足我們對海外學習計畫的需求成長，我們很高興將來繼續向我們的學生提供這些機會。

With that, I will quickly review financials. Total net revenues for third quarter 2023, it increased 14.1% to RMB59.9 million compared to an RMB52.1 million in the third quarter of 2022. This was primarily driven by an increase in revenues from portfolio training and research-based learning services portfolio training services represented 77.5% of total net revenues during the period.

這樣，我將快速回顧財務狀況。 2023 年第三季的總淨收入成長 14.1%，達到 5,990 萬元，而 2022 年第三季為 5,210 萬元。這主要是由於組合培訓和研究型學習服務組合收入的成長培訓服務佔該收入的成長培訓服務佔該收入的成長培訓服務佔該收入期間總淨收入的77.5%。

Gross margin improved to 49.2% during Q3 2020, compared to 45.1% in the prior year period. The increase in gross margin was primarily due to increased net revenues compared to the prior year period. As a result of increased gross profit and decreased operating expenses. Net loss attributable to ACG narrowed to RMB7.3 million during the third quarter 2023 compared to RMB12 million in the prior year period.

2020 年第三季毛利率提高至 49.2%，去年同期為 45.1%。毛利率的增加主要是由於淨收入較上年同期增加。由於毛利增加和營業費用減少。 2023 年第三季度，ACG 淨虧損收窄至 730 萬元，而上年同期為 1,200 萬元。

Turning to year-to-today result for the nine months ended September 30, 2020, sorry, net revenue increased 7.6% RMB138 million from RMB28.3 million in the prior year period. Gross margin improved to 45.1% from 42.8% in the prior year period. Net loss attributed to ACG narrowed to RMB42.2 million compared to RMB49.9 million, primarily due to increased revenues and decreased operating expenses.

轉向截至 2020 年 9 月 30 日止九個月的年初至今業績，抱歉，淨收入較上年同期的人民幣 2830 萬元增長 7.6% 人民幣 1.38 億元。毛利率從去年同期的 42.8% 提高至 45.1%。 ACG 的淨虧損從人民幣 4,990 萬元收窄至 4,220 萬元，主要是由於收入增加和營運費用減少。

Moving to the balance sheet, we continue to be a solid financial position with USD9 million in cash and cash equivalents, working capital deficit for was USD36 million, and the total shareholders' equity was USD14.2 million at September 30, 2023, compared to a working capital deficit of USD33 million and shareholders' equity of USD13.8 million, respectively at December 31, 2022.

從資產負債表來看，截至 2023 年 9 月 30 日，我們的財務狀況依然穩健，現金及現金等價物為 900 萬美元，營運資本赤字為 3,600 萬美元，股東權益總額為 1,420 萬美元。截至2022年12月31日，營運資金赤字為3,300萬美元，股東權益為1,380萬美元。

Now turning our attention to ACG's outlook and growth strategy. We were pleased to see a positive momentum from the first half of the year continued into the second half, really encouraging operating results coming from our core portfolio trading services business. As a result, ACT achieved a solid 14.1% increase in total net revenues, improved gross margin and significantly narrowed losses during the third quarter of 2023. Our sales results during the period indicates that student remain interested and initiating and continuing their arts education and we have chosen ACG their trusted institution to guide and support them as they make their way along their creative journey.

現在我們將注意力轉向 ACG 的前景和成長策略。我們很高興看到上半年的正面動能持續到下半年，我們的核心投資組合交易服務業務的營運表現確實令人鼓舞。結果，ACT 在2023 年第三季的總淨收入實現了14.1% 的穩健增長，毛利率提高，虧損大幅收窄。我們在此期間的銷售業績表明，學生仍然感興趣，開始並繼續接受藝術教育，我們選擇 ACG 作為他們值得信賴的機構，在他們的創意之旅中為他們提供指導和支持。

During this quarter, ACG also reported positive cash flow from operations, which includes our cash and cash equivalents by 19.1% to RMB65.5 million. Total portfolio training credit hours delivered increased by 24.1% in third quarter 2023. With the number of students enrolled increasing from 616 to 651 year over year. We continue to your portfolio training as our primary line of business, which serves as the main channel. through which currently enrolled students can take part in value added services to further enrich their creative education experience.

本季度，ACG 也公佈了來自營運的正現金流，其中包括現金和現金等價物，成長 19.1% 至 6,550 萬元。 2023 年第三季度，組合培訓總學分增加了 24.1%。註冊學生人數較去年同期從 616 人增加到 651 人。我們繼續把您的投資組合培訓作為我們的首要業務，作為主通路。在校學生可以透過它參與增值服務，進一步豐富他們的創意教育體驗。

This includes our experiential learning offerings and our research-based learning services overseas study company and so on. All these services together offer a comprehensive expense for students who are working toward completing the personal portfolios and planning to apply to other art institutions.

這包括我們的體驗式學習產品和我們的研究型學習服務海外留學公司等等。所有這些服務共同為正在努力完成個人作品集併計劃申請其他藝術機構的學生提供全面的費用。

We successfully hosted a total of lower imports and summer programs during third quarter 2023, six overseas and five domestic. We're very excited to bring these offerings back in this year. And giving us a tremendously positive reception, we look forward to plan and execute more oversee research-based learning programs in the future, providing attractive and rebate learning programs, our variety of our topics.

2023 年第三季度，我們成功舉辦了總共 6 個海外項目和 5 個國內項目，其中包括 6 個海外項目和 5 個國內項目。我們很高興今年能重新推出這些產品。並給予我們非常積極的接待，我們期待在未來計劃和執行更多基於研究的學習計劃，提供有吸引力的和回扣的學習計劃，我們的各種主題。

As we enter the 2023 to 2024 academic year end and start to prepare for the upcoming application season. We are thrilled to announce preliminary admission results for students that submitted applications in 2023. Thus far, ACG students have received offers from prestigious institutions worldwide. From both our focus and now are focused on the awards in 2023, including MIT, Harvard University of Oxford, as well as Parsons, Rhode Island School of Design and the Royal College of Art.

隨著我們進入2023至2024學年末，開始為即將到來的申請季做準備。我們很高興地宣布 2023 年提交申請的學生的初步錄取結果。到目前為止，ACG 學生已收到來自全球知名院校的錄取通知。無論是我們的焦點或現在都集中在2023年的獎項上，包括麻省理工學院、哈佛大學、牛津大學，以及帕森設計學院、羅德島設計學院和皇家藝術學院。

We are incredibly proud of all the hard work our students have put in to yield impressive results, and we are grateful to have been a part of their journey. We remain committed to serving students and enable these types of policies, education and career outcomes for those wishing to pursue our studies.

我們為我們的學生為取得令人印象深刻的成績而付出的所有努力感到無比自豪，我們很高興成為他們旅程的一部分。我們仍然致力於為學生服務，並為希望繼續學習的人提供這些類型的政策、教育和職業成果。

I'd now like to hand the floor over to Jun Zhang, ACG's President, to provide an update on our current growth initiatives. Jun will make his remarks in Mandarin, which will be followed by English translation. Jun, please go ahead.

現在我想請 ACG 總裁張軍介紹我們目前成長計畫的最新情況。 Jun將以國語發表講話，隨後將進行英文翻譯。俊，請繼續。

Thank you, Mr. Sima. 2023 has been an important year for ACG. We have been able to build some positive momentum in our business as China and the rest of the world continue to operate in a post-pandemic near normal type of environment, which enabled us to fully resume in-person instruction at our network of training centers and offer our overseas summer programs for the first time since 2020, bringing more than 100 students to various countries of interest and allowing them to receive an immersive experience in creative art study and application.

謝謝司馬先生。 2023年對ACG來說是重要的一年。隨著中國和世界其他地區繼續在大流行後接近正常的環境中運營，我們的業務已經建立了一些積極的勢頭，這使我們能夠在我們的培訓中心網絡中全面恢復現場教學並自2020年起首次開設海外暑期項目，並帶領100多位學生前往各個有興趣的國家，讓他們獲得沉浸式的創意藝術學習和應用體驗。

ACG prides itself not only on the quality of its academic programming, but also on the support it provides from professional development perspective. We continue to explore ways in which we can cooperate with more institution firms that can help provide students with various opportunities to harness skills and utilize them in real-world scenarios.

ACG 不僅以其學術課程的品質而自豪，還以其從專業發展角度提供的支援而自豪。我們繼續探索與更多機構公司合作的方式，幫助為學生提供各種在現實場景中利用技能和利用技能的機會。

In the remainder of 2023, we have a regular online master class programs lined up, along with other experiential offerings. For students looking to gain some professional experience, we are introducing a part-time assisted PTA program -- work with global well-established brands on real-world projects in an engaging environment.

在 2023 年剩餘的時間裡，我們將定期舉辦線上大師班課程以及其他體驗式課程。對於希望獲得專業經驗的學生，我們推出了兼職輔助 PTA 計劃——在引人入勝的環境中與全球知名品牌合作進行實際專案。

Participating students will have the opportunity to work and support various positions, covering architecture design, -- interaction design, fashion design and so on. Students will walk away with world-class company working experience as well as reference letter that will improve their college application competency. We believe programs like this are critical in providing students with hands-on experience by being part of a real-world professional team at reputable companies.

參與的學生將有機會工作和支持各種職位，涵蓋建築設計、互動設計、時裝設計等。學生將獲得世界一流的公司工作經驗以及推薦信，以提高他們的大學申請能力。我們相信，這樣的計畫對於為學生提供實務經驗至關重要，讓他們成為知名公司真實專業團隊的一部分。

This October, we also held our annual Shanghai Fashion Week program, providing students with Fashion Week VIP tickets and an opportunity to intern at Fashion Week with Chinese artist brands. Selected students were able to experience the runway backstage and order placement meetings as well as working with marketing and branding teams.

今年10月，我們也舉辦了一年一度的上海時裝週項目，為學生提供時裝週VIP門票以及在時裝週與中國藝術家品牌實習的機會。選定的學生能夠體驗時裝秀後台和下訂單會議，以及與行銷和品牌團隊合作。

We believe this kind of experience is crucial for students interested in a career in fashion design and fashion brand operations. And we are pleased that participating students received positive feedback from the brands they work with. -- entering a business side of application submission for many schools. At ACG, we strive to provide our students with the best-in-class support in the respective art field as well as during the admission process.

我們相信這種經驗對於有興趣從事時裝設計和時裝品牌運營的學生來說至關重要。我們很高興參與的學生從他們合作的品牌那裡得到了積極的回饋。 ——為許多學校提供申請提交的業務方面。在ACG，我們努力為學生在各自的藝術領域以及入學過程中提供一流的支援。

It is a critical time for many of our students and watching our teaching staff working closely with them to finalize and perfect their portfolios have been truly exciting. As Mr. Sima mentioned, our students have received tremendous success with offers for a number of renowned schools worldwide, and we look forward to helping this next class of students garner similar success in 2024.

對於我們的許多學生來說，這是一個關鍵時刻，看著我們的教學人員與他們密切合作，最終確定和完善他們的作品集，真的令人興奮。正如司馬先生所提到的，我們的學生取得了巨大的成功，並被全球許多知名學校錄取，我們期待著幫助下一屆學生在 2024 年取得類似的成功。

For years, we have worked to become a leading player in China's creative arts education industry. Our competency stems from a deep understanding and constant monitoring of the market and academic trends, and experienced teaching teams with a proven track record and our continuous efforts in forming and maintaining our institutional partner network.

多年來，我們致力於成為中國創意藝術教育產業的領導者。我們的能力源於對市場和學術趨勢的深刻理解和持續監控，以及擁有良好記錄的經驗豐富的教學團隊，以及我們在形成和維護我們的機構合作夥伴網絡方面的持續努力。

On top of these capabilities, we are focused on providing relevant, high-quality offerings that are substantial in content, which we believe lies at the center of our business growth. We remain committed to offering products that cultivate and nurtured appreciation and entitlement of arts of the younger generation and continue to explore ways to serve a growing base of students with diverse needs in creative arts study.

除了這些能力之外，我們還專注於提供內容豐富的相關、高品質產品，我們相信這是我們業務成長的核心。我們仍然致力於提供培養和培育年輕一代藝術鑑賞力和權利的產品，並繼續探索如何服務於不斷增長的、對創意藝術學習有不同需求的學生群體。

With that, I'll turn it back over to Mr. Sima.

這樣，我就將事情轉回司馬先生了。

Thanks, Jun, and Alice. We look forward to concluding 2023 on a strong note. We remain focused on providing our students with carefully curated class offerings and believe we are in a position where we can execute our growth strategy by leveraging our advantage.

謝謝君和愛麗絲。我們期待 2023 年以強勁的勢頭結束。我們仍然專注於為學生提供精心策劃的課程，並相信我們能夠利用我們的優勢來執行我們的成長策略。

With that, operator, let's open it up for questions.

那麼，操作員，讓我們開始提問吧。

Thank you. (Operator Instructions) There are no questions at this time. I would like to turn the call back over to Mr. Sima for closing remarks.

謝謝。 （操作員說明） 目前沒有任何問題。我想把電話轉回司馬先生做總結發言。

Okay. Thank you, operator, and thanks again to all of you for joining us. If anyone has questions for us, please feel free to reach out directly to us or our Investor Relations firm, The Equity Group. We are always available to speak to investors and look forward to speaking with you all during the fiscal 2023 earnings call. Thank you.

好的。謝謝運營商，再次感謝大家加入我們。如果有人對我們有疑問，請隨時直接聯繫我們或我們的投資者關係公司 The Equity Group。我們隨時可以與投資者交談，並期待在 2023 財年財報電話會議期間與大家交談。謝謝。

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

謝謝。今天的會議到此結束。此時您可以斷開線路，感謝您的參與。