Sunlands Technology Group (STG) 2022 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Sunlands' Second Quarter 2022 Earnings Conference Call. (Operator Instructions) Today's conference call is being recorded. I will now turn the call over to your host today, Yuhua, Sunlands' IR Representative. Please go ahead.

女士們，先生們，感謝您的支持，歡迎參加 Sunlands 2022 年第二季度收益電話會議。 （操作員說明）今天的電話會議正在錄音。我現在將把電話轉給今天的主持人，Sunlands 的投資者關係代表 Yuhua。請繼續。

Hello, everyone, and thank you for joining Sunlands' Second Quarter 2022 Earnings Conference Call. The company's financial and operating results were issued in our press release via Newswire services earlier today and are posted online. You can download the earnings press release and sign up for our distribution list by visiting our IR website.

大家好，感謝您參加 Sunlands 2022 年第二季度收益電話會議。該公司的財務和經營業績今天早些時候通過新聞專線服務發佈在我們的新聞稿中，並在線發布。您可以通過訪問我們的 IR 網站下載收益新聞稿並註冊我們的分發列表。

Participants on today's call will be our CEO, Mr. Tongbo Liu; and our CFO, Selena Lu Lv. Management will begin with prepared remarks, and the call will conclude with a Q&A session.

今天電話會議的參與者將是我們的首席執行官劉彤波先生；和我們的首席財務官 Selena Lu Lv.管理層將從準備好的評論開始，電話會議將以問答環節結束。

Before I hand it over to the management, I'd like to remind you of Sunlands' safe harbor statement in relation to today's call. Except for the historical information contained herein, Certain of the matters discussed in this conference call are forward-looking statements. These statements are based on our current trends, estimates and projections, and therefore, you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission.

在我將其交給管理層之前，我想提醒您 Sunlands 與今天的電話會議有關的安全港聲明。除此處包含的歷史信息外，本次電話會議中討論的某些事項均為前瞻性陳述。這些陳述基於我們當前的趨勢、估計和預測，因此，您不應過分依賴它們。前瞻性陳述涉及固有風險和不確定性。許多重要因素可能導致實際結果與任何前瞻性陳述中包含的結果大不相同。有關潛在風險和不確定性的更多信息，請參閱公司向美國證券交易委員會提交的文件。

With that, I will now turn the call over to our CEO, Tongbo Liu.

有了這個，我現在將把電話轉給我們的首席執行官劉彤波。

Thank you, Yuhua. Hello, everyone. Welcome to Sunlands' Second Quarter 2022 Conference Call. In the pandemic's resurgence and the macroeconomic weakness in the second quarter, we achieved RMB 114.6 million of net income, representing a fourfold increase year-over-year. The increase was primarily driven by our consistent emphasis on operating efficiency and solid execution of our business strategies. And we remain steadfast while navigating the company through external uncertainties.

謝謝你，雨花。大家好。歡迎參加 Sunlands 2022 年第二季度電話會議。在疫情回暖和宏觀經濟疲軟的第二季度，我們實現淨利潤1.146億元人民幣，同比增長四倍。這一增長主要是由於我們一貫重視運營效率和業務戰略的穩健執行。在引導公司度過外部不確定性的同時，我們仍然堅定不移。

We were also pleased to see our continued efforts to optimize our product mix and expand our cost portfolio rewarded with improving operational results, reflected in a 39.4% year-over-year increase in our new student enrollments and reduced year-over-year decrease in gross billings. We accomplished this by acquiring students from a wider range of age groups with higher sales efficiency as we cut down our sales and marketing expenses by 34.8% year-over-year. These results highlight our organizational resilience and reinforce our confidence in our strategy to achieve balanced growth and profitability.

我們也很高興看到我們不斷努力優化我們的產品組合和擴大我們的成本組合，並帶來了改善的運營結果，這反映在我們的新生入學人數同比增長 39.4% 和同比下降的減少。總帳單。我們通過以更高的銷售效率吸引更廣泛年齡段的學生來實現這一目標，因為我們將銷售和營銷費用同比減少了 34.8%。這些結果凸顯了我們的組織韌性，並增強了我們對實現平衡增長和盈利能力的戰略的信心。

During the second quarter, with the massive pandemic outbreaks in several major cities, severity disruptive business operations across the area of industries. The pandemic also resulted in the consolidation of many qualification exams affecting demand for our professional certificate courses and leading us to seek other pockets of opportunity to increase profitability in the segment. Furthermore, in the complex macro environment, business took a more conservative approach in the operations and emphasis cost reduction and efficiency improvement more than ever with the goal of enhancing their risk resistance. Against this backdrop, consumers were more prudent about purchasing discretionary goods. For example, they may temporarily delay their self-improvement plans within this period to combat the lingering external uncertainties in the macro environment. We also prioritized cash flow management and focus on profitability, generating business while continuing to improve our cost efficiency.

第二季度，隨著幾個主要城市的大規模流行病爆發，嚴重破壞了整個行業的業務運營。大流行還導致許多資格考試的合併，影響了對我們專業證書課程的需求，並導致我們尋求其他機會來提高該領域的盈利能力。此外，在復雜的宏觀環境下，企業在經營上更加保守，比以往任何時候都更加重視降本增效，以增強自身的抗風險能力。在此背景下，消費者在購買非必需品時更加謹慎。例如，他們可能會在此期間暫時推遲自我提升計劃，以應對宏觀環境中揮之不去的外部不確定性。我們還優先考慮現金流管理並專注於盈利能力，在創造業務的同時繼續提高我們的成本效率。

Despite that, many people remained enthusiastic about holding their skills, hoping to elevate their overall competence within the highly competitive job market. Others also sought ways to shake off pandemic inertia, such as [attending] online courses, resulting in surging demand for our skill courses. As such, we assist this opportunity to deliver an enhanced learning experience to our students and develop new skill training courses to address a broader range of students' needs, helping our students improve their career flexibility and the competitiveness in the job market or turn a skill into a [site household] to see them through tough times. As a result, our growth buildings for professional certification and skills programs in the second quarter grew by 82.9% year-over-year, driven by a [94.9%] year-over-year increase in new student enrollments. Revenues generated by these programs also increased by 13.3% year-over-year.

儘管如此，許多人仍然熱衷於保持自己的技能，希望在競爭激烈的就業市場中提升自己的整體能力。其他人也想方設法擺脫大流行的惰性，例如[參加]在線課程，導致對我們的技能課程的需求激增。因此，我們協助這個機會為我們的學生提供增強的學習體驗，並開發新的技能培訓課程以滿足更廣泛的學生需求，幫助我們的學生提高他們的職業靈活性和就業市場的競爭力或轉變技能進入[現場家庭]，幫助他們度過艱難時期。因此，在新生入學人數同比增長 [94.9%] 的推動下，我們第二季度的專業認證和技能計劃增長大樓同比增長 82.9%。這些項目產生的收入也同比增長了 13.3%。

Furthermore, our extensive course resources, high teaching quality and efficient online learning platform have contributed to improved student satisfaction and stickiness as well as a higher referral rate. As we continue to optimize our product mix, we will keep developing premium courses covering in-demand skills and general interest as well as industry recognized credentials. With our established brand awareness in this field, diverse cost choices and quality cost content, we are confident that we can continue to attract new students and capture additional growth opportunity presented by students rising demand.

此外，我們豐富的課程資源、優質的教學質量和高效的在線學習平台有助於提高學生的滿意度和粘性以及更高的推薦率。隨著我們繼續優化我們的產品組合，我們將繼續開發涵蓋需求技能和一般興趣以及行業認可證書的高級課程。憑藉我們在該領域建立的品牌知名度、多樣化的成本選擇和優質的成本內容，我們有信心繼續吸引新學生並抓住學生不斷增長的需求帶來的額外增長機會。

For master's degree oriented programs. New student enrollments and gross billings decreased on the back of our strategic reduction of marketing activities and growing market competition as new players try to capitalize on this segment's enormous potential. Highly rated teaching staff which is difficult to replicate for latecomers to the segment is considered to the main differentiating -- differentiated factor among industry players. Thus, we believe that our 19 years' experience in exam preparation, experienced and well reserved teaching staff and extensive learning resources will position us, and we're tenaciously compared to our competitors in the long run. Despite the intense competition and the complex macro environment, we are proud of the critical role that we have played in helping our students achieve individual success in the face of huge economic uncertainty. And we remained committed to doing the right thing to maintain our influence in this field.

對於面向碩士學位的課程。由於我們戰略性地減少營銷活動和市場競爭加劇，因為新參與者試圖利用這一細分市場的巨大潛力，因此新生入學人數和總收入有所下降。高評價的師資隊伍難以為後來者復制，被認為是行業參與者之間的主要差異 - 差異化因素。因此，我們相信我們 19 年的備考經驗、經驗豐富且儲備充足的師資隊伍和廣泛的學習資源將使我們處於有利地位，並且從長遠來看，我們與競爭對手相比是頑強的。儘管競爭激烈，宏觀環境複雜，但面對巨大的經濟不確定性，我們為幫助學生取得個人成功所發揮的關鍵作用感到自豪。我們仍然致力於做正確的事情來保持我們在這一領域的影響力。

For example, on June 18, we held our first MBA education promotion event with many top universities in China, joining us to share their MBA admissions and information. The event was a great success and attracted a huge number of students to participate. In terms of government policies, we are encouraged by the Chinese government's support of the diverse forms of education as evidenced by the revised vocational education adopted during the meeting of the standing committee of the 19th National People's Congress on April 20. This was the first major reform in 25 years since the law was enacted in 1996. It upgrades the status of vocation education in China to be equally important as general education and encourages collaboration between schools and enterprises, while also supporting social participation in vocational education.

例如，6月18日，我們與國內多所頂尖大學舉辦了首屆MBA教育推廣活動，與我們一起分享他們的MBA招生和信息。本次活動取得圓滿成功，吸引了大批學生參與。在政府政策方面，4月20日十九屆全國人民代表大會常務委員會會議通過的職業教育修訂案證明了中國政府對多種形式教育的支持，這讓我們感到鼓舞。這是第一個專業該法自1996年頒布以來，歷經25年的改革，將中國職業教育的地位提升至與普通教育同等重要，鼓勵校企合作，同時支持社會參與職業教育。

The government is planning to adopt various [means] to organize diverse forms of occupational education, such as training prior to employment, on the job training, reemployment training for the unemployed and other special groups of people, which significantly enhanced our confidence in the industry. We will closely follow the government's policies and will remain steadfast in our contributions to China's efforts to improve its workforce skills and employment rates through occupational education.

政府正計劃採取多種方式，組織開展多種形式的職業教育，如就業前培訓、在職培訓、失業人員再就業培訓等特殊群體，顯著增強了我們對行業的信心.我們將緊跟國家政策，堅定不移地為中國通過職業教育提高勞動力技能和就業率作出貢獻。

Finally, I'm pleased to state that in June, we declared a special cash dividend to share our success with shareholders following 4 consecutive quarters of profitability. Going forward, we will strive to create additional shareholder value by continuously improving our profitability and cash flow. At the same time, we remain focused on developing diverse skill and interested courses and enhancing our teaching and service quality to attract new students, with a target of bringing life-changing and fulfilling learning experience to our students.

最後，我很高興地宣布，我們在 6 月宣布了特別現金股息，以與股東分享我們在連續四個季度盈利後的成功。展望未來，我們將努力通過不斷提高盈利能力和現金流來創造額外的股東價值。同時，我們仍然專注於開發多樣化的技能和感興趣的課程，並提高我們的教學和服務質量以吸引新學生，旨在為我們的學生帶來改變生活和充實的學習體驗。

With that, I will turn the call to our CFO Selena to run through our financials.

有了這個，我將把電話轉給我們的首席財務官 Selena 來檢查我們的財務狀況。

Thank you, Tongbo. Hello, everyone. Our second quarter results were in line with our expectations. We sustained water line strength despite the 11.8% year-over-year decrease in net revenues as we strived for healthy and sustainable growth.

謝謝你，通博。大家好。我們的第二季度業績符合我們的預期。儘管我們努力實現健康和可持續的增長，但淨收入同比下降 11.8%，但我們保持了水線實力。

During the quarter, we continued executing various initiatives to build a highly efficient and lean organization while optimizing our expense management, leading to a 32.4% year-over-year decrease in our operating expenses. Our cost efficiency improvement resulted in notable net income growth from RMB 22.1 million for the second quarter of 2021 to RMB 114.6 million for this quarter. Going forward, we are optimistic that our continued efforts to broaden our online course offerings, streamline our cost structure and dedicate ourselves to providing enhanced services to our students will ultimately enable us to realize long-term growth.

本季度，我們繼續實施各項舉措，打造高效精益的組織，同時優化費用管理，運營費用同比下降 32.4%。我們的成本效率提升導致淨利潤顯著增長，從 2021 年第二季度的人民幣 2,210 萬元增長至本季度的人民幣 1.146 億元。展望未來，我們樂觀地認為，我們繼續努力擴大在線課程，精簡成本結構，致力於為學生提供更好的服務，最終將使我們實現長期增長。

Now let me walk you through some of our key financial results for the second quarter of 2022. All comparisons are year-over-year and all numbers are in RMB unless otherwise noted. In the second quarter of 2022, net revenues were RMB 555 million, a decrease of 11.8% year-over-year. Cost of revenue decreased by 6.2% to RMB 91.2 million in the second quarter of 2022 from RMB 97.3 million in the second quarter of 2021. The decrease was primarily due to the decline in employee compensation expenses related to the cost of revenues.

現在讓我向您介紹我們 2022 年第二季度的一些主要財務業績。所有比較均為同比，所有數字均以人民幣為單位，除非另有說明。 2022年第二季度，淨收入為人民幣5.55億元，同比下降11.8%。收入成本從 2021 年第二季度的人民幣 9,730 萬元下降至 2022 年第二季度的人民幣 9,120 萬元，下降 6.2%。下降的主要原因是與收入成本相關的員工薪酬費用下降。

Gross profit decreased by 12.9% to RMB 463.8 million from RMB 532.2 million in the second quarter of 2021. In the second quarter of 2022, operating expenses were RMB 351.2 million, representing a 32.4% decrease from RMB 519.6 million in the second quarter of 2021. Sales and marketing expenses decreased by 34.8% to RMB 293 million in the second quarter of 2022 from RMB 449.1 million in the second quarter of 2021. The decrease was mainly due to; number one, lower spending on branding and marketing activities; and number two, declined compensation expenses related to our sourcing marketing personnel.

毛利潤從 2021 年第二季度的人民幣 5.322 億元下降 12.9% 至人民幣 4.638 億元。2022 年第二季度的營業費用為人民幣 3.512 億元，較 2021 年第二季度的人民幣 5.196 億元下降 32.4% . 銷售及營銷費用從2021年第二季度的人民幣4.491億元下降至2022年第二季度的人民幣2.93億元，下降34.8%，主要是由於；第一，降低品牌和營銷活動的支出；第二，拒絕與我們採購營銷人員相關的補償費用。

General and administrative expenses decreased by 9.7% to RMB 46.6 million in the second quarter of 2022 from RMB 51.6 million in the second quarter of 2021. Product development expenses decreased by 38.3% to RMB 11.6 million in the second quarter of 2022 from RMB 18.8 million in the second quarter of 2021. Product development expenses were mainly comprised of compensation expenses. Other income decreased by 41.8% to RMB 4.8 million in the second quarter of 2022 from RMB 8.2 million in the second quarter of 2021.

2022 年第二季度的一般和管理費用從 2021 年第二季度的 5,160 萬元人民幣下降 9.7% 至 4,660 萬元人民幣。產品開發費用從 2022 年第二季度的 1,160 萬元人民幣下降 38.3% 至 1,880 萬元人民幣2021年第二季度。產品開發費用主要包括補償費用。其他收入從 2021 年第二季度的 820 萬元下降至 2022 年第二季度的 480 萬元，下降 41.8%。

Net income for the second quarter of 2022 was RMB 114.6 million compared with RMB 22.1 million in the second quarter of 2021. Basic and diluted net income per share was RMB 16.89 in the second quarter of 2022. As of June 30, 2022, the company has RMB 727.5 million of cash and cash equivalents and RMB 138.7 million of short-term investments. As of June 30, 2022, the company had a deferred revenue balance of RMB 1,998.1 million compared with RMB 2,348.2 million as of December 31, 2021. Capital expenditures were incurred primarily in connection with IT infrastructure equipment and leasehold improvement necessary to support the company's operations. Capital expenditures were RMB 0.3 million in the second quarter compared with RMB 7.8 million in the second quarter of 2021.

2022年第二季度淨利潤為人民幣1.146億元，而2021年第二季度為人民幣2210萬元。2022年第二季度基本及攤薄每股淨收益為人民幣16.89元。截至2022年6月30日，公司擁有現金及現金等價物7.275億元，短期投資1.387億元。截至 2022 年 6 月 30 日，公司的遞延收入餘額為人民幣 19.981 億元，而截至 2021 年 12 月 31 日為人民幣 23.482 億元。資本支出主要用於支持公司運營所需的 IT 基礎設施設備和租賃權改善.第二季度資本支出為人民幣 30 萬元，而 2021 年第二季度為人民幣 780 萬元。

And now for our outlook. For the third quarter of 2022, Sunlands currently expects net revenue to be between RMB 520 million to RMB 540 million, which would represent a decrease of 9.3% to 12.6% year-over-year. This outlook is based on the current market conditions and reflects the company's management's current and preliminary estimate of the market, operating conditions and customer demand, which are all subject to change.

現在是我們的展望。對於2022年第三季度，桑蘭目前預計淨收入在5.2億元至5.4億元之間，同比下降9.3%至12.6%。該展望基於當前的市場狀況，反映了公司管理層對市場、經營狀況和客戶需求的當前和初步估計，這些都可能發生變化。

With that, I'd like to open up the call to the questions. Operator?

有了這個，我想打開問題的電話。操作員？

(Operator Instructions) Showing no questions at this time. This will conclude our question session. Now I'd like to turn the conference back over to Yuhua Ye, IR representative for any closing remarks.

（操作員說明）此時沒有顯示任何問題。我們的提問環節到此結束。現在我想把會議轉回給 IR 代表 Yuhua Ye 來做任何閉幕詞。

Once again, thank you, everyone, for joining today's call. We look forward to speaking with you again soon. Good day and good night.

再次感謝大家加入今天的電話會議。我們期待很快再次與您交談。早安晚安。

This concludes the earnings conference call. You may now disconnect your line. Thank you.

財報電話會議到此結束。您現在可以斷開您的線路。謝謝你。