ATA Creativity Global (AACG) 2024 Q2 法說會逐字稿

Greetings. Welcome to ATA Creativity Global's second quarter 2024 financial results call. (Operator Instructions)

問候。歡迎參加 ATA Creativity Global 2024 年第二季財務業績電話會議。（操作員說明）

I will now turn the conference over to Alice Zhang, The Equity Group. Thank you. You may begin.

我現在將會議交給 Equity Group 的 Alice 張。謝謝。你可以開始了。

Thank you, Alfredo, and hello, everyone. Thank you for joining us. A press release announcing ATA Creativity Global's or ACG's results for the second quarter and six months ended June 30, 2024, 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.

謝謝你，阿爾弗雷多，大家好。感謝您加入我們。ATA Creativity Global 或 ACG 截至 2024 年 6 月 30 日的第二季和六個月業績的新聞稿可在該公司網站 www.atai.net.cn 的投資者關係部分取得。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 any 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.

在開始之前，我想提醒大家，本次電話會議以及此處討論的任何附帶資訊均包含 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, intent, look forward to, outlook, guidance plan should will and similar terms 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, ACG's 2024 forward guidance, 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預期、相信、可能估計、預期預測、未來、意圖、期待、前景、指導計劃應該和類似術語等術語來識別，其中包括有關 ACG 未來的陳述增長和運營業績、ACG 的併購計劃、一般情況、ACG 的成長策略、預期成長前景和後續業務活動、ACG 的2024 年前瞻性指導、市場需求和市場接受度以及ACG 投資組合培訓計劃和其他教育服務的競爭力。

Although the company believes that the expectations reflected in its forward-looking statements are reasonable as of today. Those statements are subject to risks and uncertainties that could cause the 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 filings with the Securities and Exchange Commission, which we encourage you to review before making an investment decision. 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.

儘管該公司認為截至目前其前瞻性陳述中所反映的預期是合理的。這些陳述存在風險和不確定性，可能導致實際結果與預測結果有巨大差異。無法保證這些期望將被證明是正確的。有關投資 ACG 相關風險的資訊包含在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。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 further information. All US dollar amounts in this conference call relating to financial results for the second quarter and six months ended June 30, 2024, often temporarily from RMB using an exchange rate of RMB7.2672 to USD1.00. The noon buying rate as of as of June 30, 2024. Our historical conversions are accurate as of the time reported, unless otherwise noted. The company reports the 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 以了解更多資訊。本次電話會議中與截至 2024 年 6 月 30 日的第二季和六個月財務業績相關的所有美元金額通常暫時以人民幣計算，匯率為人民幣 7.2672 兌 1.00 美元。截至 2024 年 6 月 30 日的午間買入價。除非另有說明，我們的歷史換算截至報告時間是準確的。本公司根據美國公認會計原則以人民幣報告財務業績，除非另有說明，簡報中計算的所有百分比均以人民幣為基礎。

For those of you following along with the company PowerPoint presentation, there is an overview of the company on slide 3. In addition, we're more than happy to take investor questions in today's Q&A session or via e-mail to the company. And you wish to ask questions, you can send your questions to emerge as Azhang@equityny.com and please specify whether you would like to have your name read during the Q&A session.

對於那些關注公司 PowerPoint 簡報的人來說，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透過電子郵件向公司回答投資者的問題。如果您想提問，可以將您的問題發送至 Azhang@equityny.com，並請註明您是否希望在問答環節中讀出您的名字。

On today's call, the company's CFO. Mr. Ruobai Sima will provide a brief overview of operating and financial highlights for the second quarter of 2024. Chairman and CEO, Kevin Kevin Ma, and President, Mr. Jun Zhang performance. Any 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，該公司財務長。司馬若柏先生將簡要概述 2024 年第二季的營運和財務亮點。董事長兼執行長馬凱文先生和總裁張軍先生致詞。在開始提問之前，請先介紹有關公司前景及其長期成長策略的任何最新情況。

And with that, I'll turn the call over to ACG's CFO. Mr. Ruobai Sima. Please go ahead, Mr. Sima.

接下來，我會將電話轉給 ACG 的財務長。司馬若柏先生。請司馬先生繼續。

Thank you, Alice. Welcome, everyone, and good evening to those of the America. We appreciate everyone's time. We were pleased to see student demand for portfolio training Services continue to expand in second quarter 2024. This is our core business and primary driver of growth contributing RMB40.2 million in revenue during the period, up 41.9% year over year. As a result, we achieved significant top line growth of 42.8% increase in total net revenue to RMB41.8 million.

謝謝你，愛麗絲。歡迎大家，美國人民晚上好。我們感謝每個人的時間。我們很高興看到學生對作品集培訓服務的需求在 2024 年第二季持續擴大。這是我們的核心業務和主要成長動力，期內貢獻收入人民幣4,020萬元，較去年同期成長41.9%。結果，我們實現了收入顯著增長，總淨收入增長了 42.8%，達到 4,180 萬元人民幣。

During second quarter 2024, building new enrollment was 1,084, an increase of 16.8% from the prior year period. Of those students, 612 were enrolled in ACG’s portfolio training programs compared to 540 in the second quarter of last year. 42,841 portfolio training credit hours were delivered during the period, up 49.3% year over year.

2024 年第二季度，新增入學人數為 1,084 人，比去年同期成長 16.8%。在這些學生中，有 612 人報名參加了 ACG 的作品集培訓項目，而去年第二季度這一數字為 540 人。期內完成投資組合培訓學分42,841學時，年增49.3%。

We are excited to see continued expansion across all of our businesses, including research-based learning and overseas study counselling services. We strongly believe in the value our comprehensive offerings provide to students and expect that the enrollment growth we have seen thus far in the year will support strong performance in the second half of 2024. Our investments in expanding the teaching and sales staff have contributed to those results and will serve as the foundation for future growth.

我們很高興看到我們所有業務的持續擴張，包括研究性學習和海外學習諮詢服務。我們堅信我們的綜合服務為學生提供的價值，並預計今年迄今為止的入學人數增長將為 2024 年下半年的強勁表現提供支持。我們在擴大教學和銷售人員方面的投資促成了這些成果，並將成為未來成長的基礎。

With that, let’s move to financials for second quarter 2024.

接下來，讓我們來看看 2024 年第二季的財務狀況。

Total net revenues for second quarter 2024 was RMB41.8 million (sic – see slide 6, "RMB51.8 million"), an increase of 42.8% from RMB36.2 million in the second quarter of 2023. Gross margin improved to 49.6% during second quarter 2024, from 39.5% in the prior-year period, primarily as a result of significantly increased revenues.

2024 年第二季的淨收入總額為人民幣 4,180 萬元（原文如此 — 請參閱投影片 6，「人民幣 5,180 萬元」），較 2023 年第二季的 3,620 萬元成長 42.8%。2024 年第二季毛利率從去年同期的 39.5% 提高至 49.6%，主要是由於收入大幅增加。

Net loss attributable to ACG was RMB16.8 million during the second quarter 2024, compared to RMB17.2 million in the prior-year period. Bottom-line results were impacted by a 30.2% increase in operating expenses related to increased G&A expenses for higher professional fees and support for business expansion and increased sales expenses due to performance bonuses in line with increased sales and the hiring of additional sales personnel.

2024年第二季ACG應佔淨虧損1,680萬元，而上年同期為人民幣1,720萬元。淨利潤受到營運費用增加 30.2% 的影響，這些費用與更高的專業費用和支援業務擴展的一般管理費用增加有關，以及由於銷售額增加和僱用額外銷售人員而獲得的績效獎金導致銷售費用增加。

During the first half of 2024, total net revenues increased 27.2% to RMB99.9 million, compared to RMB78.6 million in the prior-year period. Gross margin improved to 47.7% from 42.1% in the prior-year period. Net loss attributable to ACG was RMB34.7 million, compared to RMB35.0 million. Moving to the balance sheet, we reported USD5.5 million in cash and cash equivalents at the end of second quarter 2024. Working capital deficit was USD40.7 million, and total shareholders’ equity was USD11.0 million at June 30, 2024, compared to working capital deficit of USD34.4 million and shareholders’ equity of USD15.9 million, respectively, at December 31, 2023.

2024 年上半年，總淨收入成長 27.2% 至 9,990 萬元，而上年同期為 7,860 萬元。毛利率從去年同期的 42.1% 提高至 47.7%。ACG 歸屬的淨虧損為 3,470 萬元，去年同期為 3,500 萬元。轉向資產負債表，截至 2024 年第二季末，我們的現金和現金等價物為 550 萬美元。截至 2024 年 6 月 30 日，營運資本赤字為 4,070 萬美元，股東權益總額為 1,100 萬美元，而 2024 年 6 月 30 日，營運資本赤字為 3,440 萬美元，股東權益為 1,590 萬美元。月31 日。

With that, I’d like to turn it over to Kevin who will expand upon our outlook and growth strategy. Kevin?

說到這裡，我想把它交給凱文，他將詳細闡述我們的前景和成長策略。凱文？

Thank you, Sima. We were pleased to see ACG’s portfolio of offerings continue to resonate with students, translating into meaningful financial results. As our portfolio training services business grows, we believe the demand for overseas study counselling and research-based learning services will also expand.

謝謝你，司馬。我們很高興看到 ACG 的產品組合繼續引起學生的共鳴，並轉化為有意義的財務成果。隨著我們的組合培訓服務業務的成長，我們相信對海外留學諮詢和研究性學習服務的需求也將擴大。

During the first half of 2024, we made mindful investments to add resources to help drive student enrollment and support a growing student population, which is imperative to enabling positive student outcomes and our ability to achieve long-term success. We reported RMB99.9 million in net revenues in first half 2024. As the second half of the year has historically been stronger than the first, a trend we anticipate will continue in 2024. We are reiterating our revenue expectations for the year ending December 31, 2024.

2024 年上半年，我們進行了謹慎的投資，增加資源，以幫助提高學生入學率並支持不斷增長的學生人數，這對於實現積極的學生成果和我們實現長期成功的能力至關重要。我們報告 2024 年上半年淨收入為 9,990 萬元。從歷史上看，下半年的表現強於上半年，我們預計這一趨勢將在 2024 年持續下去。我們重申截至 2024 年 12 月 31 日的年度收入預期。

We expect total revenues will be in the range of RMB233 million to RMB255 million, which represents a 5% to 15% increase from fiscal year 2023. ACG remains focused on growing our student base and expanding our current business while exploring potential acquisition opportunities. And as any material developments arise, we will be sure to update the markets and re-evaluate guidance as appreciated.

我們預計總收入將在人民幣2.33億元至人民幣2.55億元之間，較2023財年增長5%至15%。ACG 仍然專注於擴大我們的學生基礎並擴大我們目前的業務，同時探索潛在的收購機會。隨著任何重大進展的出現，我們一定會更新市場並重新評估指導意見。

ACG is proud of its ability to identify and fulfill students’ needs in an evolving social and creative environment. This is the cornerstone of our product design and execution, especially as our students have increasingly come from diverse academic and creative backgrounds.

ACG 為其在不斷變化的社會和創意環境中識別和滿足學生需求的能力而感到自豪。這是我們產品設計和執行的基石，特別是當我們的學生越來越多地來自不同的學術和創意背景時。

To that end, we have not only continued to engage teaching staff in the sales and course design process, but we also hosted the ACG Arts Education Exhibition in April across five major cities in China, including Beijing, Shanghai, Shenzhen. At the exhibition, we invited former and current admission committee office from prestigious overseas universities such as MIT and Stanford University, to join us in sharing their insights on overseas study applications and career planning.

為此，我們不僅繼續讓教學人員參與銷售和課程設計過程，還在四月在北京、上海、深圳等中國五個主要城市舉辦了ACG藝術教育展。在展會上，我們邀請了麻省理工學院、史丹佛大學等海外知名大學的前任和現任招生委員會辦公室與我們一起分享他們對留​​學申請和職業規劃的見解。

The exhibition was met with extraordinary interest across all of our service offerings. Through a series of marketing efforts, we continue to increase our market exposure and engage with students who are interested in potentially exploring creative arts education in the future.

這次展覽引起了我們所有服務產品的極大興趣。透過一系列的行銷工作，我們不斷增加市場曝光度，並與有興趣在未來探索創意藝術教育的學生接觸。

During second quarter 2024, we successfully hosted the first session of the United Nations Sustainable Development Goals Arts Boot Camp to 70 students. Participating students ranged from high school to college age, and they came together to create group projects on sustainability topics with a variety of applications, such as climate change, re-generative energy, and environmental protection.

2024年第二季度，我們成功為70位學生舉辦了第一期聯合國永續發展目標藝術訓練營。參與的學生年齡從高中到大學，他們齊聚一堂，圍繞永續發展主題創建小組項目，並具有各種應用，例如氣候變遷、再生能源和環境保護。

Our master classes have also gathered small groups of students in their respective areas of interest, allowing them to walk away with individual artworks in visual communication, photograph, as well as interior design, and we hope will strengthen their portfolios for overseas school application.

我們的大師班也聚集了各自感興趣領域的學生小組，讓他們帶著視覺傳達、攝影以及室內設計方面的個人作品離開，我們希望能夠加強他們在海外學校申請時的作品集。

We are very excited for many of our graduating students who will embark on the next phase of their creative arts education at overseas institutions this fall. For Fall 2024 admission, we have seen significant growth in the number of offers received by ACG students. Those offers have come from schools all over the world, including top institutions such as Harvard, Oxford, and University of Pennsylvania, as well as top arts institutions such as School of Visual Arts, the Pratt Institute and Parsons School of Design.

我們對許多即將畢業的學生感到非常興奮，他們將於今年秋天在海外機構開始下一階段的創意藝術教育。對於 2024 年秋季入學，我們發現 ACG 學生收到的錄取通知書數量顯著增加。這些錄取通知書來自世界各地的學校，包括哈佛大學、牛津大學和賓州大學等頂尖學院，以及視覺藝術學院、普拉特學院和帕森設計學院等頂尖藝術學院。

We believe this positive trend in received offers is a positive indicator of increased student demand for overseas student opportunities, which bodes well for our overseas study counselling services business. We believe those trends will continue into the coming application period.

我們相信，收到的錄取通知書的正面趨勢是學生對海外學生機會需求增加的正面指標，這對我們的海外學習諮商服務業務來說是個好兆頭。我們相信這些趨勢將持續到即將到來的應用期。

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 an English translation.

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，隨後將有英文翻譯。

Jun, please go ahead.

俊，請繼續。

(spoken in Mandarin)

（以國語發言）

(interpreted)

（解釋）

Thank you, Kevin. As we have invested in the expansion of ACG’s business, the quality of our products and services have stayed top of mind. At the end of the day, our well-rounded offerings and the ability to support students in this journey are what really make all the difference. We have been pleased to host a variety of research-based learning experiences this summer, covering a wide range of arts topics and immersive hands-on cultural experiences.

謝謝你，凱文。當我們投資擴大 ACG 業務時，我們的產品和服務品質始終是首要考慮因素。歸根結底，我們全面的產品和在這段旅程中支持學生的能力才是真正讓一切變得不同的原因。今年夏天，我們很高興舉辦各種基於研究的學習體驗，涵蓋廣泛的藝術主題和身臨其境的實踐文化體驗。

In July, we hosted a second session of the United Nations Sustainable Development Goals Arts Boot Camp inspired by the success of our May session, which was once again highly rated by participating students. In addition to online Master Classes taught by prestigious arts institution lecturers, we also hosted two Intangible Cultural Heritage-themed camps in Dunhuang, Gansu Province and west Sichuan Province, which were led by instructors from Rhode Island School of Design and Yale University, to explore the beauty of China’s traditional arts.

受五月課程成功的啟發，我們在七月舉辦了第二期聯合國永續發展目標藝術訓練營，再次受到參與學生的高度評價。除了由著名藝術院校講師授課的線上大師班外，我們還在甘肅敦煌和川西舉辦了兩場非物質文化遺產主題營，由羅德島設計學院和耶魯大學的導師帶領，共同探索中國傳統藝術之美。

In Dunhuang, students visited Mogao Caves and Yulin Caves to study Dunhuang-styled colored sculptures and mineral paintings. In west Sichuan, students were exposed to ethnic music and cultural traditions, and experience Tibetan culture.

在敦煌，學生們參觀了莫高窟、榆林窟，學習敦煌風格的彩塑和礦物畫。在川西，學生們接觸了民族音樂和文化傳統，體驗了西藏文化。

We believe these types of experiences provide students with a unique learning opportunity and perspective, allowing them to go beyond the world they know and are familiar with. The ability to adapt and be open-minded is particularly valuable for those who plan to study overseas and must create a solid application portfolio that demonstrates an understanding of and love for different cultures and traditions. We are also bringing students overseas this summer, to Japan, the United States and to the United Kingdom through summer schools and campus visits.

我們相信這些類型的經驗為學生提供了獨特的學習機會和視角，使他們能夠超越他們所知道和熟悉的世界。適應能力和開放的心態對於那些計劃出國留學的人來說尤其有價值，他們必須創建紮實的申請材料，以表現出對不同文化和傳統的理解和熱愛。今年夏天，我們也將透過暑期學校和校園參觀的方式將學生帶到海外，前往日本、美國和英國。

Understanding that education is the cornerstone of a student’s lifetime success both academically and professionally, ACG has prided itself on our ability to establish and maintain highly collaborative relationships with world renowned institutions, and we look forward to growing our partnership network to access more world-class education resources for our students.

ACG 深知教育是學生一生在學術和職業上取得成功的基石，因此我們以能夠與世界知名機構建立和維持高度合作關係而感到自豪，我們期待擴大我們的合作夥伴網絡，以獲取更多信息為我們的學生提供世界一流的教育資源。

We expect to enter the overseas study application season soon and are prepared to serve as a trusted guide and supporter to our students during this stressful but exciting time. We remain fully committed to our mission of enabling positive student outcomes and look forward to a busy and productive remainder of the summer as we head into the fall.

我們預計很快就會進入海外留學申請季，並準備在這個充滿壓力但令人興奮的時刻成為學生值得信賴的指導和支持者。我們仍然完全致力於實現學生取得積極成果的使命，並期待在進入秋季時度過一個忙碌而富有成效的夏季剩餘時間。

In the balance of 2024, we are focused on growing our current business, which includes portfolio training services, overseas study counselling and research-based learning services. We remain very confident in ACG’s superior competency in the market while continuing to invest in the operational infrastructure to ensure that we are able to provide students with the exceptional education and support system they have come to expect

到 2024 年，我們將專注於發展現有業務，包括作品集培訓服務、海外留學諮詢和研究性學習服務。我們對 ACG 在市場上的卓越能力仍然充滿信心，同時繼續投資於營運基礎設施，以確保我們能夠為學生提供他們所期望的卓越教育和支援系統

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

這樣，我會將其轉回給凱文。

Thanks, Jun. We were pleased our progress in the first half of 2024 and are optimistic that the positive momentum we have established thus far will enable us to finish the year on a strong note. As a leading player in China’s creative arts education market, we are proud to say that we always strive to find ways to improve ourselves and help our students to achieve their full potential. We believe we are on the track to carry out our growth initiatives and drive success for our students, and for ACG’s shareholders.

謝謝 Jun。作為中國創意藝術教育市場的領導者，我們很自豪地說，我們始終努力尋找提高自我的方法，幫助我們的學生充分發揮潛力。我們相信，我們正走在實施成長計畫並推動學生和 ACG 股東成功的軌道上。

Thank you. (Operator Instructions)

謝謝。（操作員說明）

I would like to hand it back over for closing comments was do you have any closing comment.

我想將其交回以供結束評論，您有什麼結束評論嗎？

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 our next earnings call. Thank you

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，並期待在下一次財報電話會議上與大家交談。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。