OneSmart International Education Group Limited (ONE) 2021 Q2 法說會逐字稿

Hello, and welcome to the OneSmart Second Quarter Fiscal Year 2021 Earnings Conference Call. (Operator Instructions)

您好，歡迎來到 OneSmart 2021 財年第二季度收益電話會議。（操作員說明）

Please note, today's event is being recorded. I now would like to turn the call over to Ida Yu, Investor Relations with OneSmart. Please go ahead, ma'am.

請注意，今天的活動正在錄製中。我現在想將電話轉給 OneSmart 投資者關係部的 Ida Yu。請繼續，女士。

Thank you, operator. Good morning, good evening, everyone, and thank you for joining OneSmart International Education Group Limited Second Quarter 2021 Earnings Conference Call. The company's earnings results as well as supplementary slide presentation were released earlier today and are available on the company's IR website at ir.onesmart.org.

謝謝你，接線員。大家早上好，晚上好，感謝您參加OneSmart國際教育集團有限公司2021年第二季度收益電話會議。該公司的收益結果和補充幻燈片於今天早些時候發布，可在公司的 IR 網站 ir.onesmart.org 上查閱。

Joining me on this call are Mr. Steve Zhang, Chairman and CEO; and Mr. Greg Zuo, our CFO and CSO.

和我一起參加這次電話會議的還有董事長兼首席執行官史蒂夫·張先生；以及我們的首席財務官兼首席戰略官 Greg Zuo 先生。

I will remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1991 -- 1995. Such statements are based on management's current expectations and the current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements.

我會提醒您，此電話可能包含根據 1991 年至 1995 年《私人證券訴訟改革法案》的安全港條款作出的前瞻性陳述。此類陳述基於管理層當前的預期以及當前的市場和經營狀況，並與涉及已知或未知風險、不確定性和其他因素的事件相關，所有這些都難以預測，其中許多超出了公司的控制範圍，可能導致公司的實際結果、業績或成就與前瞻性陳述中的內容存在重大差異。

Further information regarding these and other risks, uncertainties and factors is included in the company's filings with the United States Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under law.

有關這些和其他風險、不確定性和因素的更多信息包含在公司提交給美國證券交易委員會的文件中。除非法律要求，否則公司不承擔因新信息、未來事件或其他原因更新任何前瞻性陳述的義務。

With that, I will now turn the call over to Steve. Please go ahead.

有了這個，我現在將把電話轉給史蒂夫。請繼續。

Thank you, Ida. Hello, everyone. We are pleased that we'll see the return of strong sales growth despite the challenges in offline operation due to the COVID-19 resurgence in the certain cities along the Chinese New Year in January and the start of the 2021.

謝謝你，艾達。大家好。儘管由於 1 月農曆新年和 2021 年初某些城市的 COVID-19 死灰復燃，線下運營面臨挑戰，但我們很高興看到強勁的銷售增長回歸。

Our Go Premium strategy of execution is well on track, with better enhancements made on product, learning centers, services and agreement. The upgraded and optimized product offering has started to contribute to the remarkable top line growth, which will lead to improvement in profitability in the following quarters.

我們的 Go Premium 執行戰略進展順利，對產品、學習中心、服務和協議進行了更好的改進。升級和優化的產品已開始為顯著的收入增長做出貢獻，這將導致接下來幾個季度的盈利能力有所提高。

Our continuous investment in technology benefits, both online and offline operations. We have revamped and built a strong digitalized operating platform to support standardization, efficiency and customer satisfaction.

我們對在線和離線運營的技術收益的持續投資。我們改造並構建了強大的數字化運營平台，以支持標準化、效率和客戶滿意度。

In addition, we are making great efforts for premium brand building and the local marketing to reach our public customers, more effectively.

此外，我們正在努力打造優質品牌和本地營銷，以更有效地接觸我們的公眾客戶。

With that, I will now turn the call over to Greg, who will provide you with more details of our strategic achievements and an update on the capital performance in Q2. Greg, please go ahead?

有了這個，我現在將把電話轉給格雷格，他將為您提供我們戰略成就的更多細節以及第二季度資本表現的更新。格雷格，請繼續？

Thank you, Steve. Hello, everyone. Thank you for joining us on today's earnings call. I would like to start with comments on the overall performance before I go through the individual presentation slides, which were uploaded onto our company website earlier today. In our new phase of growth, post-pandemic, we are delighted to see the return of solid topline growth, driven by strong demand for our core 1-on-1 tutoring products, our improved premium products, sales and services and our enhanced student acquisition approach. Following the 20-ish percent year-over-year growth in fiscal Q2, our company-wide cash sales growth has continued to trend up, recording more than 100% year-over-year increase in the pivotal Q3 to date.

謝謝你，史蒂夫。大家好。感謝您參加今天的財報電話會議。在我瀏覽今天早些時候上傳到我們公司網站上的個人演示幻燈片之前，我想先對整體表現進行評論。在大流行後的新增長階段，我們很高興看到穩定的收入增長回歸，這是由於對我們的核心一對一輔導產品的強勁需求、我們改進的優質產品、銷售和服務以及我們增強的學生收購方式。繼第二財季同比增長 20% 之後，我們公司範圍內的現金銷售增長繼續呈上升趨勢，迄今為止關鍵的第三季度同比增長超過 100%。

The Go Premium strategy that we launched in the beginning of fiscal 2021 has boosted our revenues for OneSmart VIP 1on1 program, the growth driven by the year-over-year increase in volume i.e. the consumed class units enterprise. In addition to tutoring, our value-added premium services of personalized school admission planning and in-person caring distinguish us from other education service providers. Encouraged by the initial success of the Go Premium strategy and a justified but increased revenue profile, we will continue to invest in our product's features, credentials, learning centers and build our premium brand.

我們在 2021 財年初推出的 Go Premium 戰略提高了 OneSmart VIP 1on1 計劃的收入，這一增長是由銷量同比增長推動的，即消費類單位企業。除輔導外，我們的個性化入學計劃和親自關懷的增值優質服務使我們有別於其他教育服務提供商。受到 Go Premium 戰略的初步成功和合理但增加的收入狀況的鼓舞，我們將繼續投資於我們產品的功能、證書、學習中心並建立我們的優質品牌。

In the recent months, we have completed the upgrade of our nationwide learning centers, improved our teachers' profiles, launched the premium brand campaigns and build the digital operations platform. These efforts largely enhance customer satisfaction, leading to the growth in new student growth sequentially.

近幾個月來，我們完成了全國學習中心的升級改造，完善了教師隊伍，開展了優質品牌活動，搭建了數字化運營平台。這些努力在很大程度上提高了客戶滿意度，從而導致新生增長順序增長。

I will now turn to our earnings presentation slides. I first start with our operational achievements related to Go Premium strategy as illustrated on Page 7 of the presentation. First, we have upgraded teachers profile learning centers with value-added premium offerings in personalized school admission planning and in-person caring services.

我現在將轉向我們的收益演示幻燈片。我首先從我們與 Go Premium 戰略相關的運營成就開始，如演示文稿的第 7 頁所示。首先，我們升級了教師檔案學習中心，在個性化入學規劃和麵對面關懷服務方面提供增值優質服務。

Consequently, as of April 2021, our nationwide year-over-year growth in average price per class unit consumed is 23%, 7% and 11% for OneSmart VIP, HappyMath and FasTrack English product, respectively. Our conversion rate of new customers from these doubled from 11% to 23% during April 2021, after the launch of digitalized customer service platform.

因此，截至 2021 年 4 月，我們在全國范圍內消費的 OneSmart VIP、HappyMath 和 FasTrack 英語產品的每類單位平均價格分別同比增長 23%、7% 和 11%。在推出數字化客戶服務平台後，我們的新客戶轉化率在 2021 年 4 月翻了一番，從 11% 提高到 23%。

Second, by the end of April 2021, we newly opened and upgraded 14 flagship VIP learning centers to provide a premium learning center experience.

二是截至2021年4月，新開升級14家旗艦VIP學習中心，提供優質學習中心體驗。

Third, since December 2020, we have conducted a series of premium branding campaigns and local marketing in the key cities, which largely enhanced OneSmart's premium brand awareness among target families in these cities and boosted the number of new students enrolled.

第三，自2020年12月以來，我們在重點城市開展了一系列優質品牌推廣和本地營銷，極大地提升了OneSmart在這些城市目標家庭中的優質品牌知名度，增加了新生入學人數。

In the fiscal Q2, the number of new students enrolled from local marketing channels increased by 19% from the fiscal Q1. We have strictly followed the necessary and appropriate guidance continuously to protect the safety and health of all of our students and employees.

第二財季，本地營銷渠道招收新生比第一財季增長19%。我們一直嚴格遵循必要和適當的指導，以保護我們所有學生和員工的安全和健康。

In the fiscal Q2, we introduced contactless tutoring services to set up an industry-leading, high standard of safety and cleanliness in offline learning centers, thus to further protect our teachers and students in response to the COVID-19 resurgence in certain cities.

在第二財季，我們推出了非接觸式輔導服務，在線下學習中心建立了行業領先、高標準的安全和清潔中心，從而進一步保護我們的教師和學生，以應對某些城市的 COVID-19 死灰復燃。

Please turn to Page 8 for our latest performance trend. We focus on the key data of capital as it provides latest status of our business, which gives visibility of future growth. In the fiscal Q2, December to February, despite COVID resurgence impact in certain cities along the Chinese New Year, capital still achieved a double-digit year-over-year growth. The key drivers for such accelerated growth include: first, students are back to normal study schedules to boost the post-pandemic recovery to offline centers; second, Go Premium strategy is building our customer satisfaction and the brand -- premium brand perceptions; and third, the successful launch of VIP premium products.

請轉到第 8 頁了解我們最新的性能趨勢。我們專注於資本的關鍵數據，因為它提供了我們業務的最新狀態，從而提供了未來增長的可見性。在 12 月至 2 月的第二財季，儘管春節期間部分城市出現了新冠疫情回潮的影響，但資本仍實現了兩位數的同比增長。這種加速增長的關鍵驅動因素包括：首先，學生恢復正常的學習時間表，以促進大流行後線下中心的恢復；其次，Go Premium 戰略是建立我們的客戶滿意度和品牌——優質品牌認知；三是成功推出VIP精品。

Heading into fiscal Q3, our company-wide cash sales year-over-year growth has continued to trend up, recording 119% and 102% in March and in April 2021, respectively. Q3, to date, cash sales has grown more than 100% year-over-year, mainly attributable to a strong demand for our 1-on-1 services and the success of our Go Premium strategy. We are optimistic about the continuous growth trends in the future.

進入第三財季，我們全公司的現金銷售額同比增長繼續呈上升趨勢，在 2021 年 3 月和 2021 年 4 月分別錄得 119% 和 102%。第三季度，迄今為止，現金銷售額同比增長超過 100%，這主要歸功於對我們一對一服務的強勁需求以及我們的 Go Premium 戰略的成功。我們對未來的持續增長趨勢持樂觀態度。

In fiscal Q2, our net revenue grew by 5.2% year-over-year to RMB 932 million. On Page 9, by breaking down, we achieved net revenues of RMB 735 million from OneSmart VIP business, accounting for 78.9% of total net revenues, increasing 7.4% year-over-year and 51% sequentially.

在第二財季，我們的淨收入同比增長 5.2% 至人民幣 9.32 億元。在第9頁，通過細分，我們實現了OneSmart貴賓業務的淨收入人民幣7.35億元，佔總淨收入的78.9%，同比增長7.4%，環比增長51%。

Net revenues from Young Children Education business were RMB 155 million, accounting for 16.6% of total net revenues. Net revenues from OneSmart Online were RMB 32 million, accounting for 3.5% of total net revenues.

幼兒教育業務淨收入1.55億元，佔總淨收入的16.6%。OneSmart Online的淨收入為人民幣3200萬元，佔總淨收入的3.5%。

I will elaborate more on our operational progress on OneSmart VIP business in the next few pages. Please turn to Page 10. On a like-for-like basis, for our 1-on-1 program, in the fiscal Q2, cash sales increased by 23% year-over-year and the net revenue grew by 22% year-over-year, driven by a 12% increase in class units consumed and a 9% increase in average price per class unit consumed.

在接下來的幾頁中，我將詳細介紹我們在 OneSmart VIP 業務上的運營進展。請翻到第 10 頁。在類似的基礎上，對於我們的 1 對 1 計劃，在第二財季，現金銷售額同比增長 23%，淨收入同比增長 22%，主要由消耗的班級單位增加 12%，消耗的班級單位平均價格增加 9%。

In March and April 2021, our cash sales improved by 119% year-over-year for OneSmart VIP 1-on-1 program. These are combined result of robust demand, but highly effective 1-on-1 tutoring products as exam schedules have normalized, and two, improved customer experience of our upgraded products, centers and services, and three, our proactive marketing campaigns to build brands to attract new customers, and four, the relatively low comparison base due to COVID outbreak in the same period last year.

在 2021 年 3 月和 4 月，我們的 OneSmart VIP 1 對 1 計劃的現金銷售額同比增長 119%。這些是需求旺盛的結果，但隨著考試時間表的正常化，一對一輔導產品非常有效，二是我們升級產品、中心和服務的客戶體驗得到了改善，三是我們積極開展營銷活動，以建立品牌吸引新客戶，四是去年同期因新冠疫情爆發，比較基數相對較低。

Please turn to Page 11. On top of our scope improving 1-on-1 tutoring, our value-added premium services or personalized school admission planning and in-person caring are highly appreciated by customers. Under the personalized school admission planning, we'll provide the timely and in-depth analysis on school admission policy, the system in searching reasonable academic goals agreed by students and parents. The full cycle is a standardized quality control process, including constantly tracking the progress, providing feedback reports and making proper adjustments to achieve the goals. Furthermore, our in-person caring service is designed to bring out Power Learning of each student. Power Learning includes Learning Motivation, Learning Attitude and Learning Perseverance.

請翻到第 11 頁。除了改善一對一輔導外，我們的增值優質服務或個性化的入學計劃和麵對面的關懷受到客戶的高度讚賞。在個性化的招生規劃下，及時、深入地分析招生政策，系統尋找學生和家長同意的合理學業目標。整個週期是一個標準化的質量控製過程，包括不斷跟踪進度、提供反饋報告和進行適當調整以實現目標。此外，我們的面對面關懷服務旨在激發每個學生的力量學習。動力學習包括學習動機、學習態度和學習毅力。

As Steve mentioned earlier, OneSmart is committed to put Power Learning first. We train our students, teachers and advisers to inspire students to realize their full potentials. This is essence of education that we believe in.

正如史蒂夫之前提到的，OneSmart 致力於將 Power Learning 放在首位。我們培訓我們的學生、教師和顧問，以激發學生充分發揮潛力。這是我們堅信的教育本質。

For the past few years, we have continuously invested in technology to revamp and build a strong digitalized operating platform, which is highly customized to our unique 1-on-1 business model, both for front-end and back end. Today, I'm also pleased to provide an update how the technology supports Go Premium strategy, as shown on Page 12.

在過去的幾年裡，我們不斷投資於技術改造和構建強大的數字化運營平台，該平台針對我們獨特的一對一業務模式進行高度定制，無論是前端還是後端。今天，我也很高興提供該技術如何支持 Go Premium 策略的更新，如第 12 頁所示。

First, the platform delivers high-efficiency in customer acquisition and full cycle management, second, the platform enhances professional premium tutoring and other value-added services, which contribute to improve customer satisfaction; third, the platform simplifies class-scheduling management to generate synergy across learning centers and improve transparency. We believe the constantly evolving technology applications will further support our service standardization, operational efficiency and in return to enhance customer satisfaction.

一是平台高效獲客和全週期管理；二是平台提升專業優質輔導等增值服務，提升客戶滿意度；第三，該平台簡化了課程安排管理，以產生跨學習中心的協同作用並提高透明度。我們相信，不斷發展的技術應用將進一步支持我們的服務標準化、運營效率，並反過來提高客戶滿意度。

As shown on Page 13, by the end of April 2021, we opened and upgraded 14 flagship VIP learning centers, provide a premium learning center experience. Students' performance aside from teaching quality relies on a variety of factors such as environment, attendance and concentration. Our unique high tech-enabled flagship learning center offers a spacious, safe and friendly environment to help students learn more effectively. Our upgrades include facial recognition and fingerprint system for security, enhanced lighting and ventilation, and expenditures for better safety and health and innovative, comfortable facilities for more holistic learning experience.

如第 13 頁所示，截至 2021 年 4 月，我們開設併升級了 14 家旗艦 VIP 學習中心，提供優質的學習中心體驗。學生的表現除了教學質量外，還取決於環境、出勤率和注意力等多種因素。我們獨特的高科技旗艦學習中心提供寬敞、安全和友好的環境，幫助學生更有效地學習。我們的升級包括用於安全的面部識別和指紋系統、增強的照明和通風，以及為更好的安全和健康以及創新、舒適的設施提供更全面的學習體驗的支出。

In the first 6 months of fiscal 2021, Elite VIP program accounted for 11% of the cash sales from OneSmart VIP business.

2021財年前6個月，精英VIP計劃佔OneSmart VIP業務現金銷售額的11%。

In the fiscal Q2, we also further enhanced our local marketing approach. Just before the peak season, which are Q3 and Q4, as we have shared with our investors previously, we leverage our offline center network to effectively reach target families to improve our brand awareness.

在第二財季，我們還進一步加強了本地營銷方式。正如我們之前與投資者分享的那樣，就在第三季度和第四季度的旺季之前，我們利用我們的線下中心網絡有效地接觸目標家庭，以提高我們的品牌知名度。

Page 14 summarizes how our marketing campaign works to acquire new customers through local marketing activities, by enhancing professional brand influence, through public seminars, and our increasing brand awareness and expanding customer reach around learning centers.

第 14 頁總結了我們的營銷活動如何通過本地營銷活動、通過提高專業品牌影響力、通過公共研討會以及我們提高品牌知名度和擴大學習中心周圍的客戶範圍來獲得新客戶。

In fiscal Q2, new students enrolled from local marketing channels increased by 19% from the prior quarter. Cash sales from new customers and referrals contributed 55% of total cash sales, up from 47% in the same period last year, primarily due to the effective customer acquisition approach from local marketing channels, the enhanced customer satisfaction.

在第二財季，從本地營銷渠道註冊的新生比上一季度增長了 19%。來自新客戶和推薦人的現金銷售額佔總現金銷售額的 55%，高於去年同期的 47%，主要是由於有效地從當地營銷渠道獲取客戶，提高了客戶滿意度。

Now move on to profitability snapshot of OneSmart VIP business on Page 15. We are pleased to see Q2 fiscal year 2021's revenue and the profit margin improved with quarterly gross margin of 45% and the BU level operating margin of 6% during the quarter. This is encouraging recovery in -- is primarily attributable to strong demand for premium 1-on-1 tutoring to support business model, our strong localized teaching R&D capabilities to adapt in evolving operational environment, and three, strategic expense plans to focus on scale-up of top 20 cities to drive profitable growth.

現在轉到第 15 頁的 OneSmart VIP 業務的盈利能力快照。我們很高興看到 2021 財年第二季度的收入和利潤率有所改善，季度毛利率為 45%，BU 級營業利潤率為 6%。這是令人鼓舞的複蘇——主要是由於對支持商業模式的優質一對一輔導的強烈需求、我們強大的本地化教學研發能力以適應不斷變化的運營環境，以及三、專注於規模的戰略費用計劃——排名前 20 的城市以推動盈利增長。

We are pleased to see the start of gross margin recovery during the quarter, driven by strong topline growth. However, our fiscal Q2 P&L results have not yet reflected recent strong cash sales momentum, that it typically takes a couple of quarters for sales to translate into cloud consumptions, i.e., revenue recognition in our business.

在強勁的收入增長的推動下，我們很高興看到本季度毛利率開始復蘇。但是，我們的第二財季損益表結果尚未反映近期強勁的現金銷售勢頭，銷售通常需要幾個季度才能轉化為雲消費，即我們業務的收入確認。

Our peak season for revenue recognition is typically Q3, which is March to May, and Q4, which is June to August due to intensive study and exam schedule in China. In the meantime, we need to invest in our brands in advance to support our Go Premium strategy. As a result, we observed temporary operating margin pressure in fiscal Q2. With a strong cash sales trends and significantly higher new sales in average price per class units consumed. We are optimistic about our future performance.

由於中國的密集學習和考試安排，我們的收入確認旺季通常是第三季度（3 月至 5 月）和第四季度（6 月至 8 月）。與此同時，我們需要提前對我們的品牌進行投資，以支持我們的 Go Premium 戰略。因此，我們在第二財季觀察到暫時的營業利潤率壓力。憑藉強勁的現金銷售趨勢和消費的每類單位平均價格顯著提高的新銷售額。我們對未來的表現持樂觀態度。

Lastly, we are aware of and closely following the regulatory developments. We have continued to promote high standards in providing better learning environment, quality and services for our students. However, we have limited exposure in Beijing, which contributed about 5% of our net revenue in fiscal 2020.

最後，我們了解並密切關注監管的發展。我們繼續推行高標準，為學生提供更好的學習環境、質量和服務。然而，我們在北京的敞口有限，這為我們 2020 財年的淨收入貢獻了約 5%。

With that, let me turn the call over to Ida. Ida, please go ahead.

有了這個，讓我把電話轉給 Ida。艾達，請繼續。

Thank you, Greg. In the second quarter of fiscal 2021, cash sales totaled RMB 939 million, increasing 44.2% and 18.9% from the same period of fiscal 2019 and fiscal 2020, respectively. Excluding the impact of 1on3 program, cash sales increased 66.8% and 17% from the same period of fiscal 2019 and fiscal 2020, respectively.

謝謝你，格雷格。2021財年第二季度，現金銷售總額為人民幣9.39億元，分別比2019財年和2020財年同期增長44.2%和18.9%。排除 1on3 計劃的影響，現金銷售額分別比 2019 財年和 2020 財年同期增長 66.8% 和 17%。

Net revenues were RMB 932 million, an increase of 5.2% from RMB 886 million during the same period last year. Excluding 1on3 program, the net revenue showed an increase of 11.4% from fiscal Q2 of 2019. The year-over-year increase was mainly attributable to the growth in average price per class unit consumed, driven by a strong recovery in fiscal Q2 and our Go Premium strategy post pandemic.

淨收入為人民幣9.32億元，比去年同期的人民幣8.86億元增長5.2%。不包括 1on3 計劃，淨收入較 2019 財年第二季度增長 11.4%。同比增長主要是由於第二季度的強勁復甦和我們在大流行後的 Go Premium 戰略的推動下，單位消費的平均價格有所增長。

Cost of revenues increased by 2.5% year-over-year to RMB 543 million. The year-over-year increase was mainly attributable to higher cost -- stock costs relating to an increase in class units consumed and enhanced teacher profiles and additional costs for learning center upgrade and online teaching operations to support our Go Premium strategy.

收入成本同比增長2.5%至人民幣5.43億元。同比增長主要歸因於成本增加——庫存成本與消耗的班級單位的增加和增強的教師檔案以及學習中心升級和在線教學運營以支持我們的 Go Premium 戰略的額外成本有關。

In the fiscal Q2, gross profit was RMB 389 million, a year-over-year increase of 9.2%. The gross margin was 41.8%, up from 40.2% in the same period last year. Non-GAAP, selling and marketing expenses, which excludes share-based compensation expenses, were RMB 289 million, accounting for 31% of net revenues or 30.7% of cash sales, an increase of 46.9% from RMB 197 million, accounting for 22.2% of net revenues or 24.9% of cash sales during the same period last year.

第二財季實現毛利3.89億元，同比增長9.2%。毛利率為41.8%，高於去年同期的40.2%。Non-GAAP 銷售及營銷費用（不含股權激勵費用）為人民幣 2.89 億元，占淨收入的 31% 或現金銷售額的 30.7%，比人民幣 1.97 億元增長 46.9%，佔比 22.2%去年同期淨收入或現金銷售額的 24.9%。

The year-over-year increase was primarily due to the strategic branding and offline marketing activities to reach target families in the execution of Go Premium strategy as well as the requirements of running major marketing campaigns in a timeline ahead of the Q3 and Q4 peak tutoring season, and the relatively low spending due to limited offline marketing activities during COVID-19 outbreak in fiscal Q2 last year.

同比增長主要是由於在執行 Go Premium 戰略時針對目標家庭的戰略品牌和線下營銷活動，以及在 Q3 和 Q4 高峰輔導之前的時間線上開展重大營銷活動的要求季節，以及由於去年第二季度 COVID-19 爆發期間線下營銷活動有限而導致的支出相對較低。

General and administrative expenses decreased by 1.8% year-over-year to RMB 211 million. The decrease was primarily due to our expense control policy to keep a healthy financial condition during the post-pandemic recovery. Non-GAAP G&A expenses, which excludes share-based compensation, were RMB 185 million, accounting for 19.8% of net revenue compared with 20.1% of net revenue during the same period last year.

管理費用為人民幣2.11億元，同比下降1.8%。減少的主要原因是我們的費用控制政策在大流行後恢復期間保持健康的財務狀況。不包括股權激勵的非美國通用會計準則 G&A 費用為人民幣 1.85 億元，占淨收入的 19.8%，而去年同期占淨收入的 20.1%。

Operating loss for the quarter was RMB 110 million compared with operating loss of RMB 50 million in the same period of last year. Non-GAAP operating loss, which excludes share-based compensation, was RMB 85 million compared with non-GAAP operating loss of RMB 18 million during the same period of prior fiscal year.

本季度經營虧損為人民幣1.1億元，而去年同期經營虧損為人民幣5,000萬元。不計股權補償的非美國通用會計準則經營虧損為人民幣 8500 萬元，而上一財年同期的非美國通用會計準則經營虧損為人民幣 1800 萬元。

Operating margin for the quarter was negative 11.8% compared with negative 6.2% in the same period of the prior fiscal year. Non-GAAP operating margin was negative 9.1% compared with negative 2% during the same period last year. The decrease of the margin was mainly due to the revenue improvement, offset by the increased investments in teacher profiles, learning centers and increased sales and marketing activities to support the Go Premium strategy.

本季度營業利潤率為負 11.8%，而上一財年同期為負 6.2%。非美國通用會計準則營業利潤率為負 9.1%，而去年同期為負 2%。利潤率的下降主要是由於收入的提高，但被教師檔案、學習中心的投資增加以及為支持 Go Premium 戰略而增加的銷售和營銷活動所抵消。

Now let me move on to cover some other key financial points for the second fiscal quarter of 2021. Capital expenditures for Q2 were RMB 69 million, a year-over-year increase of 1.2% from RMB 68 million in the same period last year. Capital expenditures accounted for 7.4% of net revenues in Q2, representing a year-over-year decrease of 30 basis points from 7.7% in the same period last year. The slight increase in capital expenditures was mainly due to learning center upgrade and new opening of OneSmart VIP flagship centers.

現在讓我繼續介紹 2021 財年第二季度的其他一些關鍵財務點。第二季度資本性支出為人民幣6,900萬元，比去年同期的人民幣6,800萬元，同比增長1.2%。資本支出佔第二季度淨收入的 7.4%，較去年同期的 7.7% 同比下降 30 個基點。資本支出的小幅增長主要是由於學習中心升級和OneSmart VIP旗艦中心的新開業。

OneSmart's prepayments from customers balance, which represents cash collected from enrolled students for courses and recognized proportionately as the training sessions are delivered, reached RMB 2.73 billion at the end of fiscal Q2 2021, representing a year-over-year increase of 14.5% from the end of fiscal Q2 last year. As of February 28, 2021, the company had cash and cash equivalents, restricted cash and short-term investments of RMB 1.02 billion. The decrease from cash balance as of November 30, 2020, was mainly due to management's decision to repay some of company debt, which was strategically built up during the pandemic period last year.

截至 2021 財年第二季度末，OneSmart 的客戶預付款餘額為 27.3 億元人民幣，即從註冊學生收取的課程現金，並按培訓課程的交付比例確認，較上年同期增長 14.5%。去年第二季度末。截至2021年2月28日，公司持有現金及現金等價物、受限現金及短期投資人民幣10.2億元。截至 2020 年 11 月 30 日的現金餘額減少，主要是由於管理層決定償還部分公司債務，這些債務是在去年大流行期間戰略性地建立起來的。

The continued strong cash sales helped further reduce the requirements of large cash balances. The total balance of debt decreased by RMB 419 million during fiscal Q2.

持續強勁的現金銷售有助於進一步減少對大額現金餘額的需求。第二財季債務總額減少人民幣 4.19 億元。

Revenue guidance, on the latest estimate, we expect to generate net revenues of RMB 950 million to RMB 1 billion for the fiscal Q3 of 2021, equivalent to 27.5% to 34.2% increase year-over-year. We expect our full year revenue to reach above fiscal '19 level. However, this outlook represents OneSmart's current view, which is subject to change.

收入指引，根據最新估計，我們預計 2021 財年第三季度的淨收入為 9.5 億元至 10 億元人民幣，相當於同比增長 27.5% 至 34.2%。我們預計我們的全年收入將達到 19 財年以上的水平。然而，這一展望代表了 OneSmart 目前的觀點，該觀點可能會發生變化。

This concludes our prepared remarks. I will now turn the call over to the operator and open for Q&A. Operator, we are ready to take questions.

我們準備好的評論到此結束。我現在將把電話轉給接線員並開始問答。接線員，我們準備回答問題。

(Operator Instructions)

（操作員說明）

And the first question comes from Sheng Zhong with Morgan Stanley.

第一個問題來自盛忠和摩根士丹利。

I have 2 questions here. The first one is -- glad to see the Go Premium strategy going on well. And would you mind to give us more color about the 1-on-1 -- Elite 1-on-1 programs margin now? And what do you expect it to ramp up?

我這裡有 2 個問題。第一個是——很高興看到 Go Premium 戰略進展順利。您是否願意為我們提供更多關於 1-on-1 -- Elite 1-on-1 計劃保證金的信息？你預計它會增加什麼？

And secondly is on -- you have a very strong cash revenue growth. But in the meantime, we also see the sales marketing is also a little bit higher than the cash sales revenue growth. So can you share some observation on the customer acquisitions cost trend now from the market?

其次是 - 你的現金收入增長非常強勁。但與此同時，我們也看到銷售營銷也略高於現金銷售收入的增長。那麼，您能否分享一些關於目前市場上獲客成本趨勢的觀察？

The last question is, you pay -- you repay some bank loans, so your cash balance now is lower. So -- and there are a lot of concerns on the regulation, especially on the tuition fee supervision. So can you share your view about how this regulation could impact your balance sheet and operations?

最後一個問題是，你支付——你償還了一些銀行貸款，所以你現在的現金餘額較低。所以 - 有很多關於監管的擔憂，特別是在學費監管方面。那麼，您能否分享一下您對這項法規如何影響您的資產負債表和運營的看法？

Thank you, Zhong Sheng. So the first question regarding the Go Premium strategy, what is the latest update on the Elite VIP product? So as you noticed, we have provided a lot of details in today's earnings call regarding the Well Progress program that we launched. In essence, this program address better the customer needs by providing value-added services. The improved satisfaction rates helped us to generate pretty robust results, evidence not only the cash sales growth, the ASP growth and additional purchase side of the growth rates, which we provided consistently in the last few quarters. So we'll continue to be very confident about the future of this strategy.

謝謝你，鐘聲。那麼關於Go Premium策略的第一個問題，Elite VIP產品的最新更新是什麼？正如你所注意到的，我們在今天的財報電話會議中提供了很多關於我們推出的 Well Progress 計劃的細節。從本質上講，該計劃通過提供增值服務更好地滿足了客戶的需求。提高的滿意度幫助我們產生了相當強勁的結果，不僅證明了現金銷售增長、平均售價增長和增長率的額外購買方面，我們在過去幾個季度一直提供這些。因此，我們將繼續對這一戰略的未來充滿信心。

Secondly, the Elite 1-on-1 product ramp up on margin. As we explained before, there is a time lag between capital and revenue generation. So in the beginning of this year, we started to sell this Elite VIP product. The sales was robust. However, it will take time for the new students under this program to continue the cross unit and then later on and then accumulate and reflect in the P&L, especially revenue. So in the coming quarters, Q3 and Q4, those are the peak seasons in terms of class unit consumption. We expect the cash sales will fully reflect in the revenue and then will lead to margin, which will provide a better view in the next couple of quarters.

其次，Elite 1 對 1 產品利潤率上升。正如我們之前解釋的那樣，資本和創收之間存在時間差。所以今年年初，我們開始銷售這款精英VIP產品。銷售強勁。但是，這個項目下的新生需要時間繼續跨單元，然後再積累和反映在損益表中，尤其是收入中。因此，在接下來的第三季度和第四季度，這些是班級單位消費的旺季。我們預計現金銷售將充分反映在收入中，然後將帶來利潤率，這將為未來幾個季度提供更好的前景。

Your second question is regarding the sales and marketing percentage of revenue. Indeed, we mentioned with a breakdown of this, cash sales revenue of 31%. For that number, I just want to elaborate and specialize. Only 14% is spent on marketing dollar percentage revenue. So that's -- whether it will be higher than previous quarter in terms of about 6%, as we explained, that's, one, because we have to spend to build the brand to support the Go Premium strategy. Secondly, we need to spend ahead of the peak season, which is Q3 and Q4. And three, just so you know, this additional 6% incremental growth of marketing dollars only represent about RMB 58 million. So it's a pretty modest increase to support a strategic growth. We expect, on full year basis, again, as we said before, marketing percentage of -- we use cash sales revenue. So marketing dollar as a percentage of cash sales remain to be 8% to 12% range. That's the number we mentioned before. So we expect the full year basis, we'll hit the goal in this range.

您的第二個問題是關於收入的銷售和營銷百分比。事實上，我們提到了這一細分，現金銷售收入為 31%。對於這個數字，我只想詳細說明和專門化。只有 14% 用於營銷美元百分比收入。所以這就是——正如我們解釋的那樣，它是否會比上一季度高出約 6%，因為我們必須花錢建立品牌來支持 Go Premium 戰略。其次，我們需要提前消費旺季，也就是 Q3 和 Q4。第三，正如你所知，這額外 6% 的營銷費用增量增長僅代表約 5800 萬元人民幣。因此，支持戰略增長是一個相當適度的增長。正如我們之前所說，我們預計全年的營銷百分比 - 我們使用現金銷售收入。因此，營銷美元占現金銷售額的百分比仍然保持在 8% 到 12% 的範圍內。這就是我們之前提到的數字。所以我們預計全年的基礎上，我們將達到這個範圍內的目標。

Your third question is regarding cash balance, which has dropped some portions, as we explained, to repay the debt, we borrowed strategically, to prepare for the COVID situations. So it was -- we communicated last quarter's earnings call that we will repay. So these reductions reflect that. So we will pay back about RMB 490 million for the total debt reduction.

您的第三個問題是關於現金餘額，正如我們解釋的那樣，現金餘額已經下降了一些，以償還我們戰略性借來的債務，為應對 COVID 情況做準備。所以它是 - 我們傳達了上個季度的收益電話，我們將償還。所以這些減少反映了這一點。因此，我們將償還約 4.9 億元人民幣的減債總額。

Under the regulatory environment, we would definitely take a very prudent approach in working our cash and liquidity situation. However, I want to elaborate, our cash sales momentum is quite strong even as of right now. As we disclosed to you, our cash sales in the last 2 months, March and April, were more than 100% year-over-year. So we continue to see pretty strong robust cash profile. As you noticed, for Q2, our net operating cash was RMB 125 million for fiscal single quarter compared to a total of RMB 241 million for the full year last year. So we are having a pretty robust net operating cash position here. So again, we will wait -- and the exact written regulatory requirements to be announced. But in the meantime, we're optimistic about our business demand and performance in the future.

在監管環境下，我們肯定會非常謹慎地處理我們的現金和流動資金狀況。但是，我想詳細說明一下，即使到目前為止，我們的現金銷售勢頭也相當強勁。正如我們向您披露的那樣，我們在過去 2 個月（3 月和 4 月）的現金銷售額同比增長超過 100%。因此，我們繼續看到相當強勁的強勁現金狀況。如您所見，在第二季度，我們的單財季淨營業現金為人民幣 1.25 億元，而去年全年為人民幣 2.41 億元。因此，我們在這裡擁有相當強勁的淨營運現金頭寸。因此，我們將再次等待 - 以及將公佈確切的書面監管要求。但與此同時，我們對未來的業務需求和表現持樂觀態度。

And the next question comes from Felix Liu with UBS.

下一個問題來自瑞銀的 Felix Liu。

Glad to see the return to the positive growth on the revenue and the good guidance. My question is -- first question is on your margin outlook for the second half. You commented that you expect year-on-year margin expansion for the second half. I understand the base was low due to COVID-19. So may I know, could you give a little bit more color on the degree of margin expansion? Do we expect to see positive margin in the second half or the second half still be loss making?

很高興看到收入恢復正增長和良好的指導。我的問題是——第一個問題是關於下半年的利潤前景。您評論說您預計下半年利潤率將同比增長。我知道由於 COVID-19，基數很低。那麼我可以知道，您能否就利潤率擴張的程度多說一點？我們預計下半年利潤率為正還是下半年仍處於虧損狀態？

My second question is on regulation. I understand this time, the government is doing a lot more strict on the enforcement side. So could you share any color on the percentage of teachers that have license as well as the percentage of learning centers that are properly licensed?

我的第二個問題是關於監管。我明白這一次，政府在執法方面做得更加嚴格。那麼，您能否就擁有執照的教師百分比以及獲得適當執照的學習中心的百分比分享任何顏色？

My third question on the -- is on our tuition. Again, this ties to the regulation. I think the government is enforcing quite strictly the 3 months through, in terms of tuition prepayment. So may I know how long typically does the tuition prepayment you cover? I know your business is 1-on-1, is a little bit special, but I just want to know how much on average the parent paid for in their core package? And my last question is on the short-term borrowing. I noticed that the current balance of short-term borrowing on your balance sheet is slightly bigger than your cash balance. So may I know the due date of the short-term borrowings and any refinancing plan?

我的第三個問題是關於我們的學費。同樣，這與法規有關。我認為政府在預付學費方面非常嚴格地執行了 3 個月。那麼我可以知道您的學費預付款通常需要多長時間？我知道您的業務是一對一的，有點特別，但我只想知道父母在他們的核心套餐中平均支付了多少？我的最後一個問題是關於短期借款。我注意到你的資產負債表上當前的短期借款餘額略大於你的現金餘額。那麼我可以知道短期借款的到期日和任何再融資計劃嗎？

Yes. Thank you, Felix. You've got 4 questions here. Let me try to answer one by one. So first one is regarding margin expansion. You mentioned that we may have a low base. But as you know, up until Q2 last year, we do have -- we did have a strong quarter. So for this current fiscal year Q2, we achieved such expansions quite a good performance, driven by the topline growth.

是的。謝謝你，菲利克斯。您在這裡有 4 個問題。讓我試著一一回答。所以第一個是關於利潤率擴張。你提到我們的基數可能很低。但如您所知，直到去年第二季度，我們確實有 - 我們確實有一個強勁的季度。因此，在本財年第二季度，在收入增長的推動下，我們實現了相當不錯的擴張。

Moving on to second half, we'll continue to see such a topline growth, we evidenced by the cash sales, which we said it provides good visibility for future revenue recognitions. So as we are showing you, the last few months, our cash sales trends continue to trending up, which is a pretty good sign.

進入下半年，我們將繼續看到這樣的收入增長，我們通過現金銷售證明了這一點，我們說這為未來的收入確認提供了良好的可見性。因此，正如我們向您展示的那樣，過去幾個月，我們的現金銷售趨勢繼續呈上升趨勢，這是一個非常好的跡象。

You mentioned we may see a loss-making for the second half. Currently -- but it's hard to comment on the profitability, but we don't think with such a strong topline growth, we will continue to have much losses -- operating losses going forward.

你提到下半年我們可能會看到虧損。目前——但很難對盈利能力發表評論，但我們認為在收入增長如此強勁的情況下，我們將繼續虧損——未來的經營虧損。

Second question regarding regulations. Yes, as I mentioned earlier, it's hard to comment regulation without knowing the exact written requirements to be announced by the government. But in the meantime, as you guys know, we hold very high standards on our learning environment, quality and services for our students. We are one of the highest standard in the industry. So we are pretty comfortable with the regulatory requirements. We'll continue to follow and complying with government's regulatory requirements.

第二個關於法規的問題。是的，正如我之前提到的，在不知道政府要宣布的確切書面要求的情況下，很難對監管發表評論。但與此同時，正如你們所知，我們對學生的學習環境、質量和服務有著非常高的標準。我們是業內最高標準的公司之一。因此，我們對監管要求非常滿意。我們將繼續遵循並遵守政府的監管要求。

The second -- the third question regarding tuition prepayment. Yes, we comply with the local government variance requirements when it comes to reinforcement. So we are not concerned, at this point, any changes on such practice.

第二個——關於學費預付的第三個問題。是的，我們在加固方面遵守當地政府的差異要求。因此，在這一點上，我們並不擔心這種做法會發生任何變化。

The last question regarding short-term borrowings. This short-term borrowings are 2 balances. One is our traditional revolving local banks borrowings. These banks have been with us for years. They stayed with us throughout the COVID situations. So we have pretty stable and robust relationship with such bank relationships. As you know, in China, typically, the local banks only lend on year-over-year basis. As a result, we have to qualify this as a short-term borrowing rather than long term. But in reality, majority -- vast majority of these vendors have been working with us over the last few years. So we are pretty comfortable on the liquidity situation. Again, with our pretty strong operating cash flow we're generating. So we are comfortable on such a position we have.

最後一個關於短期借款的問題。本次短期借款餘額為2。一是我們傳統的循環本地銀行借款。這些銀行已經陪伴我們多年。在整個 COVID 情況下，他們都和我們在一起。因此，我們與此類銀行關係具有相當穩定和穩健的關係。如您所知，在中國，當地銀行通常僅按年放貸。因此，我們必須將其定性為短期借款而不是長期借款。但實際上，大多數——這些供應商中的絕大多數在過去幾年裡一直在與我們合作。因此，我們對流動性狀況感到非常滿意。同樣，憑藉我們非常強勁的運營現金流，我們正在產生。所以我們在這樣的位置上很舒服。

(Operator Instructions)

（操作員說明）

And the next question comes from Natalie Wu with Haitong International.

下一個問題來自海通國際的 Natalie Wu。

Hello, this is on (inaudible) behalf of Natalie Wu. Congratulations on the strong quarter. My first question is about your learning center expansion plan. Could you help us understand your learning center expansion plan over the next 1 to 2 years? That's number one. Number two is regarding the competitive landscape. Yes, could the management share with us some colors on the competitive landscape and share with us your thoughts?

您好，我代表 Natalie Wu（聽不清）。祝賀強勁的季度。我的第一個問題是關於您的學習中心擴展計劃。您能否幫助我們了解您在未來 1 到 2 年內的學習中心擴張計劃？那是第一名。第二是關於競爭格局。是的，管理層能否與我們分享競爭格局的一些色彩並與我們分享您的想法？

Thank you for your questions. So the first question regarding learning center expansion plan for the next 1 to 2 years? We will have a consistent learning center expansion which we already explained on our slide, on Page 9. So we will -- basically, we will continue to expand our 1-on-1 VIP center this year, about 10% annualized expansion rate. We said in the earnings material that we opened already about 20 learning centers, of which some of them are our flagship VIP learning centers. So we will continue to set trend throughout the year. For next year or 2, we probably will continue such a expansion plan, maybe a little bit higher rate when the COVID situation normalized. But again, let's wait and see the regulatory requirements and how would that impact our plan.

謝謝你的提問。那麼第一個問題是關於未來1到2年的學習中心擴建計劃？我們將有一個一致的學習中心擴展，我們已經在第 9 頁的幻燈片中解釋過。所以我們將 - 基本上，今年我們將繼續擴展我們的 1 對 1 VIP 中心，年化擴展率約為 10%。我們在財報中說，我們已經開設了大約 20 個學習中心，其中一些是我們的旗艦 VIP 學習中心。因此，我們將在全年繼續引領潮流。明年或 2 年，我們可能會繼續這樣的擴張計劃，當 COVID 情況正常化時，可能會提高一點。但同樣，讓我們拭目以待監管要求以及這將如何影響我們的計劃。

On the second question regarding competitive landscape. Yes, we are -- as you see, our very strong operational results for this quarter. We expect our performance continue to be very strong, which is really a prove that our product and services is at the edge of competitive advantages over our competitors. We're very comfortable that we'll continue to generate such a advance in the future performance. Given the post-pandemic and the new environment of the regulations, we feel -- in the mid to long term, we feel more positive in terms of the opportunity ahead, especially those market consolidation opportunities. With our strong performance, we expect to continue to consolidate the market shares, especially for the 1-on-1, personalized learning education market segment. Thank you for your questions.

關於競爭格局的第二個問題。是的，正如您所見，我們本季度的運營業績非常強勁。我們預計我們的業績將繼續保持強勁勢頭，這確實證明了我們的產品和服務相對於我們的競爭對手處於競爭優勢的邊緣。我們很高興我們將繼續在未來的表現中取得這樣的進步。鑑於大流行後和法規的新環境，我們認為 - 從中長期來看，我們對未來的機會感到更加積極，尤其是那些市場整合機會。憑藉我們的強勁表現，我們預計將繼續鞏固市場份額，尤其是一對一的個性化學習教育市場。謝謝你的提問。

And as there are no more questions at the present time, I would like to return the floor to management for any closing comments.

由於目前沒有更多問題，我想將發言權返回給管理層，以徵求任何結束意見。

Thank you, operator. In closing, on behalf of the entire management team, we would like to thank you again for your participation in today's call. If you have any further inquiries in the future, please feel free to contact us. Thank you.

謝謝你，接線員。最後，我們代表整個管理團隊再次感謝您參加今天的電話會議。如果您將來有任何進一步的疑問，請隨時與我們聯繫。謝謝你。

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

謝謝你。會議現已結束。感謝您參加今天的演講。您現在可以斷開線路。