51Talk Online Education Group (COE) 2023 Q4 法說會逐字稿

Hello, ladies and gentlemen, thank you for standing by for 51Talk Online Education Group's fourth-quarter 2023 earnings conference call. At this time, all participants are in a listen only mode. Today's conference call is being recorded. I will now turn the call over to your host, Mr. David Chung, Investor Relations for the company. Please go ahead, David.

Thank you. Hello, everyone, and welcome to the fourth quarter 2023 earnings conference call of 51Talk. Company's results were issued via newswire services earlier today and are posted online. You can download the earnings press release and sign up for the company's distribution list by visiting ir.51talk.com.

Mr. Jack Huang, our CEO, and Ms. Cindy Tang, our CFO, will begin with some prepared remarks. Following the prepared remarks, there will be a Q&A session. Before we continue, please note that the discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties as such the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's Form 20-F and other public filings as filed with the US Securities and Exchange Commission.

The company does not assume any obligation to update any forward-looking statements except as required under the applicable law. Please also note that earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. 51Talk press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

I'll now turn the call over to our CEO, Jack Huang. Jack, please go ahead, Kate.

Thank you, David, and hello, everyone. Thank you for joining our conference call. While financial year 2023 presents the sophomore year of our global expansion. It is the first full year where we entirely dedicate ourselves to bring our global business on a solid footing to penetrate into selected markets.

Financially, financial year 2023 is the first year of four full quarters of 100% revenues derived from international markets. Financial year 2023 marks a landmark year for us since we have proven that our business model can be successfully applied in different geographies across different continents.

By now we are fully equipped to execute our vision of empowering each child to be able to speak to the world one student at a time. Clearly in financial year 2023, we had just over 50,000 active students. We've attempted to lessen consumptions in the gross billings of USD40 million, a long way from two years ago where we had booked less than USD1 million.

Looking ahead to 2024, we will continue to intensify our localization efforts, elected markets where we see large sales potential and benefit from early mover advantage. Our guidance for the first quarter reflects our confidence in our growth trajectory. In terms of technology, our broad-based efforts to deploy AI enabled tools to elevate the effectiveness of our human pictures is starting to [bear fruit].

Our teachers and their learning consultants have 10 more comprehensive and accurate quantitative student assessments to customize that customers learning tasks. In addition, we equip teachers with tools to engage with students more effectively and provide elevated learning experience.

As a consequence, our students we will have more personalized exercises exposed to more immersive interaction and a benefit from more accurate assessments.

With that are now and they'll call over to Cindy, our CFO.

Thank you, Jack. Fourth quarter net revenues were USD7.7 million, a 2.2% sequential decrease driven by full year to up. Gross margin for the fourth quarter was 75.6%. Gross billings grew by 1.1% quarter-over-quarter to USD11.1 million.

Q4 operating expenses were USD10.4 million, an increase of 5.7% compared to the last quarter. Specifically, this has been driven by Q4, sales and marketing expenses of USD7.6 million, a 10.7% sequential increase from Q3 due to further increases in marketing and branding spend.

Q4 product development expenses were USD0.9 million, flattish on a sequential basis. Finally, Q4 general and administrative expenses were USD1.9 million, and 8.8% sequential decrease from Q3. Overall, Q4 operating loss was USD4.6 million, while net loss was USD4.6 million in 19.1%, a 19.4% sequential increase from Q3, respectively.

Q4 GAAP and non-GAAP earnings per ADS were negative USD0.81 and USD0.76, respectively. The company's total cash, cash equivalents and time deposits was USD23.4 million at the end of the fourth quarter. Advances from students were USD27.4 million at the end of the fourth quarter. For more of our 2023 full year financial results, please refer to our earnings press release for further details.

Looking forward to the first quarter of 2024, we currently expect the net gross billing to be between USD11.5 million and USD12.0 million. The above outlook is based on our current market conditions and reflect the company's current and preliminary estimates of the market and operating conditions and customer demands, which are all subject to change.

That concludes our prepared remarks. We will now open the line for questions. Operator, please go ahead.

We will now begin the question-and-answer session. (Operator Instructions)

As we have no questions at this time, I'd like to turn the call back over to the company for closing remarks.

Thank you once again for joining us today. If you have further questions, please contact 51Talk, Investor Relations through the contact information provided on our website.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.