TAL Education Group (TAL) 2023 Q1 法說會逐字稿

Ladies and gentlemen, good day, and thank you for standing by. Welcome to TAL Education Group First Quarter 2023 Earnings Conference Call. (Operator Instructions) I'd now like to hand the conference over to Mr. Jackson Ding, Investor Relations Director. Thank you. Please go ahead, sir.

女士們，先生們，美好的一天，感謝你們的支持。歡迎來到好未來教育集團 2023 年第一季度收益電話會議。 （操作員說明）我現在想將會議交給投資者關係總監Jackson Ding 先生。謝謝你。請繼續，先生。

Thank you, operator. Thank you all for joining us today for TAL Education Group's First Fiscal Quarter 2023 Earnings Conference Call. The earnings release was distributed earlier today, and you may find a copy on the company's IR website or through the newswires. During this call, you will hear from Mr. Alex Peng, President and Chief Financial Officer; and myself, Investor Relations Director. Following the prepared remarks, Mr. Peng and I will be available to answer your questions.

謝謝你，接線員。感謝大家今天參加好未來教育集團 2023 財年第一季度收益電話會議。財報發佈於今天早些時候，您可以在公司的 IR 網站或通過新聞專線找到一份副本。在本次電話會議中，您將聽到總裁兼首席財務官 Alex Peng 先生的講話；和我自己，投資者關係總監。在準備好的發言之後，我和彭先生將可以回答你的問題。

Before we continue, please note that the discussions today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in public filings with the SEC. For more information about these risks and uncertainties, please refer to our filings with the SEC. Also, our earnings release and this call include discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures.

在我們繼續之前，請注意今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款作出的前瞻性陳述。前瞻性陳述受風險和不確定性的影響，可能導致實際結果不同與我們目前的預期大相徑庭。潛在風險和不確定性包括但不限於向 SEC 提交的公開文件中概述的風險和不確定性。有關這些風險和不確定性的更多信息，請參閱我們提交給 SEC 的文件。此外，我們的收益發布和本次電話會議還包括對某些非公認會計原則財務措施的討論。請參閱我們的收益發布，其中包含非 GAAP 指標與最直接可比的 GAAP 指標的對賬。

I would like to now to turn the call over to Mr. Alex Peng. Alex, please.

我現在想把電話轉給 Alex Peng 先生。亞歷克斯，請。

Thanks, Jackson, and thank you all for joining us on today's call. I think it was exactly 3 months ago to the date on April 29, which also happened to be a Friday that we last spoke. And I really look forward to sharing with you today on some of the progress we've made in restructuring and transforming our business.

謝謝，傑克遜，感謝大家加入我們今天的電話會議。我想那是 3 個月前到 4 月 29 日的日期，這也恰好是我們最後一次談話的星期五。我非常期待今天與您分享我們在重組和轉型業務方面取得的一些進展。

Let's go first with the numbers. For the first quarter ending on May 31, 2022, we recorded $224 million in revenue for the quarter, $1.8 million in non-GAAP operating loss and $17.4 million in non-GAAP net loss attributable to TAL. As a reminder, we ceased offering K-9 after-school tutoring services on academic subjects in the mainland of China as of December 31, 2021. So all revenues for the first quarter were contributed by our current business, which also establishes a new starting point for our future developments.

讓我們先來看看數字。截至 2022 年 5 月 31 日的第一季度，我們錄得 2.24 億美元的本季度收入，180 萬美元的非公認會計準則營業虧損和 1740 萬美元的非公認會計準則淨虧損，可歸因於好未來。提醒一下，自 2021 年 12 月 31 日起，我們停止在中國大陸提供 K-9 學術科目的課後輔導服務。因此，第一季度的所有收入均由我們當前的業務貢獻，這也建立了新的起點為我們未來的發展指明方向。

Our performance this quarter, we like to note demonstrates the combined efforts of our experienced management team, innovative employees and our extensive business partners. In the process of our transformation, we are focused on developing new initiatives that match the mega trends in our industry and the broader ecosystem. I think this is really like the hockey phrase, skating to where the puck is going.

我們希望指出，我們本季度的表現表明了我們經驗豐富的管理團隊、創新員工和廣泛的業務合作夥伴的共同努力。在轉型過程中，我們專注於開發符合行業大趨勢和更廣泛生態系統的新舉措。我認為這真的很像曲棍球短語，滑到冰球要去的地方。

Next, Jackson will update you on the operational developments in our current business and review the first quarter financial results. After that, I'll update you on our business strategy, and then we'll open the floor for questions. So Jackson, please go ahead.

接下來，Jackson 將向您介紹我們當前業務的運營發展情況，並審查第一季度的財務業績。之後，我將向您介紹我們的業務戰略，然後我們將開始提問。所以傑克遜，請繼續。

Thank you, Alex. Now I would like to share with you more details on the development of each of our 3 business lines, including: one, learning services and other; two, content solutions; and three, learning technology solutions during this past quarter. Please note that the financial data for each business line mentioned below is based on our unaudited data for the quarter.

謝謝你，亞歷克斯。現在我想和大家分享一下我們三個業務線的發展情況，包括：一、學習服務和其他；二、內容解決方案；第三，在上個季度學習技術解決方案。請注意，下文提及的每條業務線的財務數據均基於我們本季度未經審計的數據。

First is Learning Services and Other, which primarily includes the learning programs we provide in various class sizes, both online and offline. This includes PeiYou small class, xueersi.com, Think Academy and other learning services businesses. During the quarter, Learning Services and Other accounted for approximately 70% of our overall revenue, maintaining its position as our largest revenue contributor. Within Learning Services, I'd like to first talk about enrichment learning programs, which aimed at helping with learners all around development.

首先是學習服務和其他，主要包括我們提供的各種班級規模的學習計劃，包括在線和離線。這包括培優小班、學而思網、Think Academy等學習服務業務。在本季度，學習服務和其他占我們總收入的約 70%，保持了我們最大收入貢獻者的地位。在學習服務中，我想先談談強化學習計劃，該計劃旨在幫助學習者全面發展。

In the first quarter, we improved products and services of our existing programs, leveraging our expertise in users' learning journey as well as our knowledge in pedagogical methodologies. In addition to our current programs covering science and creativity, coding and programming and humanity and aesthetics, we also rolled out new programs such as International Chess, Rhetoric and Natural Science Learning.

在第一季度，我們改進了現有項目的產品和服務，利用我們在用戶學習過程中的專業知識以及我們在教學方法方面的知識。除了目前涵蓋科學與創意、編碼與編程、人文與美學的課程外，我們還推出了國際象棋、修辭學和自然科學學習等新課程。

In a time when COVID-19 continues to post complexities for offline operations our OMO model demonstrated its resilience. Many of our offline customers opted to take their classes online with us, mitigating the impact of the pandemic. As the pandemic normalizes, we believe that being online will be an inevitable trend for learners going forward.

在 COVID-19 繼續為離線操作發布複雜性的時候，我們的 OMO 模型展示了它的彈性。我們的許多線下客戶選擇與我們一起在線上課，以減輕大流行的影響。隨著大流行的正常化，我們相信在線將是學習者前進的必然趨勢。

I would also like to share some progress of our overseas learning services, which achieved a year-over-year triple-digit growth rate in the last quarter. We operate under the Think Academy brand outside of the Mainland of China by providing diversified programs for K-12 students. In the last quarter, in addition to learning centers we already have in Singapore, the United Kingdom and the United States we also started doing businesses in new locations such as Canada.

我還想分享我們的海外學習服務的一些進展，在上個季度實現了三位數的同比增長。我們在中國大陸以外的地區以 Think Academy 品牌運營，為 K-12 學生提供多樣化的課程。在上個季度，除了我們已經在新加坡、英國和美國擁有的學習中心外，我們還開始在加拿大等新地點開展業務。

Moving forward, we expect learning services to remain our primary revenue contributor. At the same time, we'll proactively explore new opportunities in terms of program expansion domestically and market expansion globally. Secondly, Content Solutions is one of the initiatives we have explored in depth since the beginning of our transformation into a smart learning solutions provider. With this business line, we offer academic and non-academic learning content in both print and digital formats by leveraging the broad content library we accumulated over the company's history as well as the content acquired or licensed from our domestic and global partners.

展望未來，我們預計學習服務仍將是我們的主要收入來源。同時，我們將積極探索國內項目拓展和全球市場拓展的新機遇。其次，內容解決方案是我們自轉型為智能學習解決方案提供商以來深入探索的舉措之一。通過這一業務線，我們利用我們在公司歷史上積累的廣泛內容庫以及從我們的國內和全球合作夥伴處獲得或許可的內容，提供印刷和數字格式的學術和非學術學習內容。

Total revenue generated from our Content Solutions business for the quarter accounted for more than 10% of the overall net revenue driven by product expansion and sales growth. As for products, a product format that has been particularly well received by our customers is Smartbooks. SmartBook is a product format where we embed videos on to print books. These videos often offer supplemental learning materials in additional to what has been printed out on hard copies. As for our go-to-market strategy, we are building a diversified portfolio of sales channels, including live streaming, e-commence and social media.

本季度我們的內容解決方案業務產生的總收入佔產品擴張和銷售增長推動的整體淨收入的 10% 以上。在產品方面，我們的客戶特別喜歡的一種產品形式是 Smartbooks。 SmartBook 是一種產品格式，我們在其中嵌入視頻以打印書籍。除了打印在硬拷貝上的內容之外，這些視頻通常還提供補充學習材料。至於我們的上市策略，我們正在建立多元化的銷售渠道組合，包括直播、電子商務和社交媒體。

Content Solutions business is still at its early stage. We remain committed to investing in the business and developing our products and services.

內容解決方案業務仍處於早期階段。我們仍然致力於投資業務並開發我們的產品和服務。

Thirdly, learning technology solutions provides a full suite of enterprise-grade technology products and services for educational institutions. Total revenue for the quarter accounted for around 15% of our overall net revenue. Its offerings cover the entire value chain across the learning experience, including online classroom, content development, teaching support, and learning center management. It is gratifying to see in this last quarter, our products being adopted by our institutional clients and in turn, helping them improve their own user engagement and operational efficiencies. We remain committed to fundamental R&D related to our business areas, which is why in this last quarter, we were delighted to see our AI vision research team won 2 computer vision championships at the CVPR, a computer vision and patent recognition conference hosted by the Institute of Electrical and Electronic Engineers.

第三，學習技術解決方案為教育機構提供全套企業級技術產品和服務。本季度的總收入占我們總淨收入的 15% 左右。其產品涵蓋整個學習體驗的整個價值鏈，包括在線課堂、內容開發、教學支持和學習中心管理。令人欣慰的是，在上個季度，我們的產品被我們的機構客戶採用，進而幫助他們提高自己的用戶參與度和運營效率。我們仍然致力於與我們的業務領域相關的基礎研發，這就是為什麼在上個季度，我們很高興看到我們的人工智能視覺研究團隊在由研究所主辦的計算機視覺和專利識別會議 CVPR 上贏得了 2 個計算機視覺冠軍電氣和電子工程師。

Moving on to financial results for the first quarter. Our net revenue totaled $224 million, representing an 83.8% decrease from $1.3849 billion in the same period last year. The decline in revenue was primarily driven by the succession of our K-9 academic -- K-9 AST services on academic projects in the Mainland of China.

繼續第一季度的財務業績。我們的淨收入總計 2.24 億美元，比去年同期的 13.849 億美元下降 83.8%。收入下降主要是由於我們在中國大陸的學術項目中繼承了我們的 K-9 學術 - K-9 AST 服務。

Gross profit declined by 82.4% to $135.5 million from $771.8 million in the same period last year, while our gross margin increased from 56% to 60%. Selling and marketing expenses decreased by 86.1% to $60 million from $431.3 million in the same period last year. Non-GAAP selling and marketing expenses, which excluded share-based compensation, decreased by 87.2% year-over-year to $52 million from $407.4 million in the same period last year. The year-over-year decrease was primarily a result of the reduction in marketing promotion activities.

毛利潤從去年同期的 7.718 億美元下降 82.4% 至 1.355 億美元，而我們的毛利率則從 56% 上升至 60%。銷售和營銷費用從去年同期的 4.313 億美元下降 86.1% 至 6,000 萬美元。非美國通用會計準則銷售和營銷費用（不包括股票薪酬）從去年同期的 4.074 億美元同比下降 87.2% 至 5200 萬美元。同比下降主要是營銷推廣活動減少所致。

General and administrative expenses decreased by 66.3% to $111.5 million from $331.1 million in the first quarter last year. Non-GAAP general and administrative expenses, which excluded share-based compensation costs decreased year-over-year by 66.9% to $95.4 million from $288 million in the same period last year. Loss from operations for the quarter decreased by 77.7% year-over-year to $28.3 million from $126.9 million in this quarter.

一般和行政費用從去年第一季度的 3.311 億美元下降 66.3% 至 1.115 億美元。非美國通用會計準則一般和行政費用（不包括基於股份的薪酬成本）從去年同期的 2.88 億美元同比下降 66.9% 至 9540 萬美元。本季度運營虧損從本季度的 1.269 億美元降至 2830 萬美元，同比下降 77.7%。

Non-GAAP loss from operations, which excluded share-based compensation expenses, was $1.8 million compares to $59.4 million in the same period last year. The year-over-year decrease in operating loss was primarily driven by the cessation of our K-9 academic AST services in the Mainland of China. At the same time, our new initiatives are still in their nascent stages of development.

非美國通用會計準則運營虧損（不包括股權補償費用）為 180 萬美元，而去年同期為 5940 萬美元。經營虧損同比減少主要是由於我們停止在中國內地的 K-9 學術 AST 服務。與此同時，我們的新舉措仍處於起步階段。

Net loss attributable to TAL was $43.8 million in the quarter compared with $102.1 million in the same period last year. Non-GAAP net loss attributable to TAL, which excluded share-based compensation expenses, was $17.4 million compared with $34.6 million in the same period of last year.

本季度歸屬於好未來的淨虧損為 4,380 萬美元，而去年同期為 1.021 億美元。不計股權補償費用的好未來的非公認會計原則淨虧損為 1,740 萬美元，而去年同期為 3,460 萬美元。

From the balance sheet, as of May 31, 2022, the company had $1.736 billion of cash and cash equivalents, $1.156 billion of short-term investments and $781 million in current and noncurrent restricted cash. The company's deferred revenue balance was $227.4 million by the end of the first quarter compared with $187.7 million as of the end of February 28, 2022, representing an increase of 21.1%.

從資產負債表來看，截至 2022 年 5 月 31 日，該公司擁有 17.36 億美元的現金和現金等價物、11.56 億美元的短期投資以及 7.81 億美元的流動和非流動受限現金。截至第一季度末，公司遞延收入餘額為 2.274 億美元，而截至 2022 年 2 月 28 日末為 1.877 億美元，增長 21.1%。

Now I'll hand the call back over to Mr. Alex Peng to briefly update you on our business strategy and outlook. Alex, please go ahead.

現在，我將把電話轉給 Alex Peng 先生，簡要介紹我們的業務戰略和前景。亞歷克斯，請繼續。

Thanks, Jackson. Let me update you on our business and development strategy. As we continue to transform our business into a smart learning solutions provider, we're really encouraged by the trends demonstrated by our current business in the last quarter. We believe TAL's trusted brand, operational excellence, content assets and technology know-how, well positioned the company for the transformation journey we are embarked on.

謝謝，傑克遜。讓我向您介紹我們的業務和發展戰略。隨著我們繼續將我們的業務轉變為智能學習解決方案提供商，我們對上一季度當前業務所展示的趨勢感到非常鼓舞。我們相信好未來值得信賴的品牌、卓越的運營、內容資產和技術訣竅，使公司為我們開始的轉型之旅做好了準備。

As I mentioned last quarter, we look at our businesses in 3 buckets: learning services and other, content solutions and technology solution. I'll go through those one by one with you. First of all, learning services and other business continue to execute our existing programs while also launching a few new programs. We believe learning services are beginning to demonstrate a viable business model, and we'll continue to drive the business around product portfolio expansion, experience optimization and operational efficiency.

正如我上個季度提到的，我們從三個方面來看待我們的業務：學習服務和其他、內容解決方案和技術解決方案。我會和你一一道來。首先，學習服務和其他業務繼續執行我們現有的項目，同時也推出了一些新項目。我們相信學習服務開始展示出一種可行的商業模式，我們將繼續圍繞產品組合擴展、體驗優化和運營效率推動業務發展。

Secondly, for Content Solutions, we're seeing robust market demand for innovative, print and digital integrated product formats. We'll continue to expand our product offerings and invest into building our diversified sales channels. Although the business results might fluctuate in certain quarters due to seasonality. Moving ahead, we expect our Content Solutions business to contribute a more significant proportion to the overall revenues in FY 2023.

其次，對於內容解決方案，我們看到對創新、印刷和數字集成產品格式的強勁市場需求。我們將繼續擴大我們的產品供應，並投資建立我們多元化的銷售渠道。儘管由於季節性因素，業務結果可能會在某些季度出現波動。展望未來，我們預計我們的內容解決方案業務將在 2023 財年為總收入貢獻更大的比例。

Then thirdly, regarding Learning Technology, I think I mentioned last time, we're really looking at an opportunity on digital transformation for our whole industry and our extended ecosystem. We believe our Learning Technology solutions will help our institutional customers with their user experience and operational efficiency. In the quarters to come, we aim to develop new customers and creating more value for our existing customers.

第三，關於學習技術，我想我上次提到過，我們真的在為整個行業和擴展的生態系統尋找數字化轉型的機會。我們相信我們的學習技術解決方案將幫助我們的機構客戶提高用戶體驗和運營效率。在未來幾個季度，我們的目標是開發新客戶並為現有客戶創造更多價值。

Last time, I mention four words, which we believe really underline the megatrend of the education industry globally. Those are "Online", "Digital", "Intelligence" and "Open". And I think we have just begun this long and for sure, arduous transformation journey toward that future. We are seeing not only new opportunities but also new challenges. Our focus at this current stage is really building a solid foundation for the business in the years to come. We'll remain patient and positive in this transformation journey.

上次，我提到了四個字，我們認為這確實突顯了全球教育行業的大趨勢。它們是“在線”、“數字”、“智能”和“開放”。而且我認為我們才剛剛開始這一漫長而肯定的艱鉅轉型之旅，朝著那個未來邁進。我們不僅看到了新的機遇，也看到了新的挑戰。我們當前階段的重點是為未來幾年的業務打下堅實的基礎。在這一轉型之旅中，我們將保持耐心和積極。

As I come to the end of my prepared remarks, I would like to really paraphrase our mission statement. We're ever more committed to love and technology, creating a better future and better life. That concludes my prepared remarks. Operator, we're now ready to open the questions.

在我準備好的發言結束時，我想真正解釋一下我們的使命宣言。我們更加致力於愛和科技，創造更美好的未來和更美好的生活。我準備好的發言到此結束。接線員，我們現在可以開始提問了。

(Operator Instructions) Our first question comes from the line of Duan Lian from Huatai Securities.

（操作員須知）我們的第一個問題來自華泰證券的段連。

My question is about how has the pandemic and lockdown situation of this quarter impacted TAL's business? And how do you evaluate the impact in the future?

我的問題是，本季度的大流行和封鎖情況如何影響好未來的業務？您如何評估未來的影響？

Thank you for that question. This is Alex. Let me take that one. So first of all, I think during this entire period, as we look at how instances of COVID spring off in different parts of China, our first thoughts to all those who are affected by this and to our customers, to the students and parents. We have actually had the opportunity to talk with students and parents and guided them to continue with their learning online. We've also made efforts to ensure that the learning quality and experience remain high as students switch across different formats.

謝謝你的問題。這是亞歷克斯。讓我拿那個。因此，首先，我認為在整個期間，當我們看到 COVID 病例如何在中國不同地區湧現時，我們首先想到的是所有受此影響的人以及我們的客戶、學生和家長。實際上，我們有機會與學生和家長交談，並指導他們繼續在線學習。我們還努力確保在學生切換不同格式時保持較高的學習質量和體驗。

We've also made upgrades to our technology systems and curriculum design to accommodate the situation. In places where the conditions have improved, some of our off-line learning centers have gradually reopened. Therefore, I think although the pandemic does have impact on our overall learning services, it does not change the viability of the business.

我們還對我們的技術系統和課程設計進行了升級以適應這種情況。在條件有所改善的地方，我們的一些線下學習中心已經逐步重新開放。因此，我認為雖然大流行確實對我們的整體學習服務產生了影響，但它並沒有改變企業的生存能力。

I would also like to mention that this -- the past few months, we've also seen disruptions to supply chains across many industries. I mentioned for learning for content solutions, we are in printed books, which also rely on supply chain for production and delivery. I think we'll also come through this period with more experience and operational know-how to manage a distributed network of logistics for that business going forward.

我還想提一下，在過去的幾個月裡，我們還看到許多行業的供應鏈中斷。我提到學習內容解決方案，我們在印刷書籍，也依賴供應鏈進行生產和交付。我認為我們也將在這段時期擁有更多的經驗和運營知識，以管理該業務未來的分佈式物流網絡。

Lastly, I would just like to add. I think as the situation stabilizes or normalizes, really, we focus on how the attitude and behaviors of students, how they change and really on building the infrastructure to deliver high-quality services online. And I think that really has become the consensus for the industry. In fact, in the last quarter, online programs contributed to the majority of our overall revenue in enrichment learning programs. I hope that answers your question.

最後，我想補充一下。我認為隨著情況的穩定或正常化，我們真的會關注學生的態度和行為，他們如何變化，並真正關注建立基礎設施以提供高質量的在線服務。我認為這確實已經成為業界的共識。事實上，在上個季度，在線課程貢獻了我們豐富學習課程總收入的大部分。我希望這能回答你的問題。

Our next question comes from the line of Candis Chan.

我們的下一個問題來自 Candis Chan。

And I see that this quarter, the gross margin actually has kept up at over 60%. And even though the revenue actually was down sequentially, which is very impressive. So may I know how many learning centers that TAL has now? And also what is your plan -- expansion plan for this year and also next year? And finally, a follow-up is that - would the capacity become a constraint for us to grow the learning services?

我看到本季度的毛利率實際上保持在 60% 以上。即使收入實際上是連續下降的，這也令人印象深刻。請問好未來現在有多少個學習中心？還有你的計劃是什麼——今年和明年的擴張計劃？最後，後續行動是——容量是否會成為我們發展學習服務的製約因素？

Thanks for the question. Following the business restructuring last year, we have undertaken a balanced approach to adjust an offline presence. And in doing so, we wanted to ensure our offline learning centers offer sufficient geographic coverage and can also operate with efficiency. The way we look at learning centers is that they're not only an indispensable place for us to communicate and engage with our parents and learners, but also an effective channel to establish and enhance our brand awareness.

謝謝你的問題。繼去年業務重組後，我們採取了平衡的方式來調整線下業務。在此過程中，我們希望確保我們的線下學習中心提供足夠的地理覆蓋範圍，並且還可以高效運作。我們看待學習中心的方式是，它們不僅是我們與父母和學習者交流和互動的不可或缺的場所，而且還是建立和提升品牌知名度的有效渠道。

At the end of this last quarter, we had somewhere between 100 and 150 learning centers in more than 30 cities and regions. Also, as Alex mentioned earlier, we have spent a good number of students moving online, and we believe online will continue to be the industry trend. So you asked about expansion plan earlier as we are proactively developing our online programs and diversifying our products and business models, we believe that offline learning center is just one of the many ways we can grow our business. I hope that answers your question.

在上個季度末，我們在 30 多個城市和地區擁有 100 到 150 個學習中心。此外，正如 Alex 之前提到的，我們已經花費了大量的學生在線移動，我們相信在線將繼續成為行業趨勢。因此，您之前詢問了擴張計劃，因為我們正在積極開發在線課程並多樣化我們的產品和業務模式，我們相信線下學習中心只是我們發展業務的眾多方式之一。我希望這能回答你的問題。

Our next question will come from Mark Li from Citi.

我們的下一個問題將來自花旗的 Mark Li。

This is Mark Li from Citi. May I ask a question on the enrichment learning program? Could you share a bit more on the operating metrics such as retention rate and ASP? And any more subjects or classes you may expand down the road?

我是花旗的 Mark Li。我可以問一個關於充實學習計劃的問題嗎？您能否分享更多關於保留率和 ASP 等運營指標的信息？還有更多的科目或課程你可以擴展嗎？

Yes, Mark, thanks for the question. I would say our enrichment learning team and business have been primarily focused on 2 things. One is product and service standardization across various enrichment programs; and two, finding the right learning properties and user journeys for our learners and improving in satisfaction.

是的，馬克，謝謝你的問題。我想說我們的充實學習團隊和業務主要集中在兩件事上。一是跨各種充實計劃的產品和服務標準化；第二，為我們的學習者找到正確的學習屬性和用戶旅程並提高滿意度。

We believe operating metrics are end results of such operational focuses. At this point, enrichment learning business is still at its early stage. We're still in process of optimizing various operational metrics, but we also see some early trends of this business. ASP for the quarter remained relatively stable compared to that before our business restructure. You also asked about retention. For certain subjects, retention rates are very close to that of academic tutoring in the last few years. While for other subjects, retention rates are still significantly below pre-restructure level.

我們認為運營指標是此類運營重點的最終結果。此時，充實學習業務仍處於起步階段。我們仍在優化各種運營指標，但我們也看到了這項業務的一些早期趨勢。與我們業務重組前相比，本季度的平均售價保持相對穩定。您還詢問了保留率。對於某些科目，保留率非常接近過去幾年的學術輔導。而對於其他科目，保留率仍大大低於重組前的水平。

In terms of subject expansion, we did roll out Rhetoric, International Chess and Natural Science Learning in the last few months and we'll continue to look for program expansion opportunities. We'll share more details as the business reaches its next development phases. I hope that answers your question for me.

在學科擴展方面，我們在過去幾個月確實推出了修辭學、國際象棋和自然科學學習，我們將繼續尋找項目擴展機會。隨著業務進入下一個發展階段，我們將分享更多細節。我希望這能為我回答你的問題。

Our next question comes from Liping Zhao from CICC.

我們的下一個問題來自中金公司的趙麗萍。

I'm wondering whether you could talk a little bit more on the development strategy of your Content Solutions business.

我想知道您是否可以多談談您的內容解決方案業務的發展戰略。

Thanks, Liping. This is Alex. Let me take that one on. I've actually had the opportunity to spend quite a bit of time with our Content Solutions teams. So let me talk about this across a few dimensions.

謝謝，麗萍。這是亞歷克斯。讓我拿那個。實際上，我有機會與我們的內容解決方案團隊一起度過了相當多的時間。所以讓我從幾個維度來談談這個。

First, I think from a strategic perspective, we look at it -- as one of the key leading edge for our transformation toward a smart learning solutions provider. When we look at the customer demand, from the beginning of the pandemic to the last couple of years, we've really seen an accelerated change the learning habit. We've also seen very strong demand for high-quality digitized content and content across an ever more diversified number of areas. So I think this is really a long-term and broad trend going forward. As families look at the kind of help they need (inaudible) 0:33:26 and digital content. We also believe that educational content needs to be matched with the appropriate interactive design, services process and technology to really ensure learning efficacy.

首先，我認為從戰略角度來看，我們將其視為我們向智能學習解決方案提供商轉型的關鍵領先優勢之一。當我們查看客戶需求時，從大流行開始到最近幾年，我們確實看到了學習習慣的加速改變。我們還看到對高質量數字化內容和越來越多樣化領域內容的強烈需求。所以我認為這確實是一個長期和廣泛的趨勢。當家庭查看他們需要的幫助類型（聽不清）0:33:26 和數字內容時。我們還認為，教育內容需要與適當的交互設計、服務流程和技術相匹配，才能真正確保學習效果。

Looking forward, I think I mentioned this last time. We really strive to provide an integrated experience with world-class first-party content and third-party contents across the entire learning journey. And lastly, I would just also like to mention that as we look at content solutions business , we're really experimenting with new ways of sales channel growth for this business. We've been providing our products on e-commerce platforms. We've also started to roll out our products on new type of digital platforms such as Douyin, we are somewhat new to doing this. But I think it's really showing us a lot more opportunities and ways to create additional values and also to be much more responsive to customer demand in our products. So I hope that answers your question.

展望未來，我想我上次提到了這一點。我們真的努力在整個學習過程中提供世界一流的第一方內容和第三方內容的集成體驗。最後，我還想提一下，當我們關注內容解決方案業務時，我們確實在嘗試新的銷售渠道增長方式。我們一直在電子商務平台上提供我們的產品。我們也開始在抖音等新型數字平台上推出我們的產品，我們對此有些陌生。但我認為這確實向我們展示了更多創造附加價值的機會和方法，並且對我們產品的客戶需求做出了更好的響應。所以我希望這能回答你的問題。

Our next question comes from the line of Elsie Sheng.

我們的下一個問題來自Elsie Sheng。

My question is related to your future investment. You mentioned that you plan to continue to invest. And could you give us more color about this plan and the direction and estimated size of the investment to support your new business?

我的問題與你未來的投資有關。您提到您計劃繼續投資。您能否就該計劃以及支持您的新業務的投資方向和估計規模向我們提供更多信息？

Thank you for the question. This is Jackson. I'll take this. As of the end of last quarter, the company has more than $1.7 billion of cash and cash equivalents, more than $1.1 billion in short-term investments and $781 million in current and noncurrent restricted cash. We believe this cash position provides us a solid foundation for both our business transformation and any future development.

感謝你的提問。這是傑克遜。我要這個。截至上季度末，該公司擁有超過 17 億美元的現金和現金等價物、超過 11 億美元的短期投資以及 7.81 億美元的流動和非流動受限現金。我們相信這種現金狀況為我們的業務轉型和任何未來發展提供了堅實的基礎。

In terms of investments, we're interested in investment areas that could further improve our existing products and services, supplement our capabilities or advance our business expansions. At the same time, we are always looking for ways to create value for our long-term shareholders. We have taken diversifying measures in the past to generate return for our shareholders, and we'll continue to do so in accordance with the market conditions. I hope that answers your question.

在投資方面，我們感興趣的投資領域可以進一步改善我們現有的產品和服務，補充我們的能力或促進我們的業務擴張。同時，我們一直在尋找為我們的長期股東創造價值的方法。我們過去採取了多元化措施為股東創造回報，我們將繼續根據市場情況這樣做。我希望這能回答你的問題。

Our next question comes from the line of Felix Liu from UBS.

我們的下一個問題來自瑞銀的 Felix Liu。

And congratulations on the good GP margin despite the restructuring. Could you share more color on your expectations on the margin trend going forward, as well as what was your expectation on the matured unit economics of the new learning services and other business. Will that be comparable to the pre-regulation academic after school tutoring?

並祝賀重組後的良好 GP 利潤率。您能否分享更多關於您對未來利潤率趨勢的期望，以及您對新學習服務和其他業務的成熟單位經濟學的期望。這可以與課後輔導的預監管學術相媲美嗎？

Thanks for your question, Felix. I would say it's probably a bit too early to predict margin trends at this point. But I definitely can share some thoughts on our views of how our margin will be impacted by various factors.

謝謝你的問題，菲利克斯。我想說現在預測利潤率趨勢可能還為時過早。但我絕對可以就我們對利潤率將如何受到各種因素影響的看法分享一些想法。

First, gross margin. Gross margin mostly depends on 2 things. One is our overall revenue structure and two is gross margin profile for each business line. And we expect our overall revenue mix to continue to develop. As Alex mentioned earlier, we expect content to contribute -- to gradually contribute to a large portion of our overall revenue. As for gross margin on each business, that will continue to adjust according to market conditions and operating status.

第一，毛利率。毛利率主要取決於兩件事。一是我們的整體收入結構，二是每個業務線的毛利率。我們預計我們的整體收入組合將繼續發展。正如亞歷克斯之前提到的，我們希望內容能夠做出貢獻——逐漸為我們整體收入的很大一部分做出貢獻。至於各項業務的毛利率，將根據市場情況和經營狀況繼續調整。

As for operating margin, given our recent business restructuring and transformation, we will remain focused on building our business assets through continuous investments to create value in the long run. I hope that answers your question for us.

至於營業利潤率，鑑於我們最近的業務重組和轉型，我們將繼續專注於通過持續投資來建立我們的業務資產，以創造長期價值。我希望這能為我們回答你的問題。

Thank you very much for your questions. We have reached the end of the question and answer session. I'll now turn the call back to the management team for closing remarks.

非常感謝您的提問。我們已經到了問答環節的結尾。我現在將電話轉回給管理團隊以結束髮言。

Thanks, operator, and thanks for everybody on the line. And thanks for the great set of questions. As we conclude today's conference call. Again, thank you all for joining, and we look forward to seeing you next quarter.

謝謝，接線員，謝謝在線上的每一個人。並感謝您提出的一系列問題。當我們結束今天的電話會議時。再次感謝大家的加入，我們期待下個季度再見。

Great. Thank you. So this concludes today's conference call. Thank you for participating. You may now disconnect.

偉大的。謝謝你。今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。