TAL Education Group (TAL) 2024 Q2 法說會逐字稿

Ladies and gentlemen, good day, and thank you for standing by. Welcome to TAL Education Group's Second Quarter of Fiscal Year 2024 Earnings Conference Call. At this time, all participants are on listen-only mode. After the speaker's presentation, there will be a Q&A session. Please be informed today's conference is being recorded. I would 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，謝謝你們的支持。歡迎參加好未來教育集團 2024 財年第二季獲利電話會議。此時，所有參與者都處於僅監聽模式。演講者演講結束後，將進行問答環節。請注意今天的會議正在錄製。現在我想把會議交給投資人關係總監丁嘉良先生。謝謝。請繼續，先生。

Thank you, operator. Thank you all for joining us today for TAL Education Group's Second Quarter Fiscal Year 2024 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 Poon, President and Chief Financial Officer; and myself, Investor Relations Director. Following the prepared remarks, Mr. Poon and I will be available to answer your questions. Before we continue, please note that today's discussion 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 our 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 do refer to our earnings release, which contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures. I would like to now turn the call over to Mr. Alex Poon. Alex, please go ahead.

謝謝你，接線生。感謝大家今天參加好未來教育集團 2024 財年第二季獲利電話會議。收益報告已於今天早些時候發布，您可以在公司的投資者關係網站或新聞專線上找到副本。在本次電話會議中，您將聽到總裁兼財務長 Alex Poon 先生的演講；還有我自己，投資人關係總監。在準備好發言後，潘先生和我將回答大家的問題。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做出的前瞻性陳述。前瞻性陳述受到風險和不確定性的影響，可能導致實際結果存在重大差異從我們目前的預期來看。潛在風險和不確定性包括但不限於我們向 SEC 公開提交的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，請參閱我們向 SEC 提交的文件。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準則財務指標的討論。請務必參閱我們的收益報告，其中包含非公認會計準則衡量標準與最直接可比較的公認會計準則衡量標準的調節表。我現在想把電話轉給潘先生。亞歷克斯，請繼續。

Thank you, Jackson. I'd also like to thank all of you for participating in today's conference call. During this call, we'll review the financial performance and business progress of the second quarter of this fiscal year 2024. After that, I'll share some thoughts on the outlook for the next quarter. During this quarter, we continued to operate and manage our core business lines while exploring new initiatives and seizing new opportunities. With respect to our learning services and others business, we further optimized our online and offline offerings for very user preferences and expanded our learning center network at a measured pace. As for the Content Solutions business, our learning devices launched near the end of the last fiscal year, maintained their growth momentum and delivered solid user engagement performance. In addition to our core business, our innovative endeavors have made progress in this fiscal quarter. We have rolled out the beta version of MapGPT, and we intend to continuously improve the model's efficiency guided by the feedback we receive from selected users to whom we provided test invitations of this experimental version. In terms of our financial performance, we reported net revenues of USD 411.9 million and 2.9659 billlion RMB for the quarter, representing an increase of 40.1% and 49.5% year-over-year in U.S. dollar and RMB terms, respectively. With respect to profitability, our non-GAAP income from operations and non-GAAP net income attributable to TAL for the quarter of USD 52.7 million and USD 58.8 million, respectively. So with that overview, I'd like to hand the call over to Jackson. He'll give you an update on our core business lines operational developments and review our second quarter financial results. After that, I'll return to share more details regarding our outlook for the next quarter. And then I'm really looking forward to opening the call for questions. Jackson, please go ahead.

謝謝你，傑克遜。我還要感謝大家參加今天的電話會議。在本次電話會議中，我們將回顧2024財年第二季的財務表現和業務進度。之後，我將分享一些對下一季前景的想法。本季度，我們繼續經營和管理核心業務，同時探索新舉措、抓住新機會。在學習服務和其他業務方面，我們根據使用者喜好進一步優化線上和線下產品，並穩步擴大學習中心網路。至於內容解決方案業務，我們的學習設備在上一財年末推出，保持了成長動能並提供了穩定的用戶參與度表現。除了我們的核心業務外，我們的創新努力在本財季也取得了進展。我們已經推出了 MapGPT 的 Beta 版本，我們打算根據我們向選定用戶提供此實驗版本的測試邀請所收到的回饋來不斷提高模型的效率。財務業績方面，本季淨收入為 4.119 億美元和 29.659 億元人民幣，以美元和人民幣計算分別年增 40.1% 和 49.5%。就獲利能力而言，本季非美國通用會計準則營運收入和歸屬於好未來的非美國通用會計準則淨利潤分別為 5,270 萬美元和 5,880 萬美元。綜上所述，我想將電話轉交給傑克森。他將為您提供我們核心業務線營運發展的最新信息，並回顧我們第二季度的財務業績。之後，我將返回分享有關我們下一季展望的更多詳細資訊。然後我真的很期待開始提問。傑克遜，請繼續。

Thank you, Alex. I'm pleased to share some details on the progress we made during the second fiscal quarter across our core business lines. Please note that all financial data for the quarter is unaudited. Let me start with our learning services and others business, which consists of a broad range of learning programs for consumers as well as technology solutions for institutional customers. In the second quarter of fiscal year 2024, our learning services and others business contributed to our year-over-year growth momentum. Within Learning Services, our enrichment learning business achieved double-digit revenue growth year-over-year during the quarter, driven by continued increase in our offline learning center networks capacity and seasonal benefits of summer vacation, which led to a year-over-year increase in enrollments in this quarter. We continue to expand our offline learning center network to better adapt to users' needs. Our learning centers reached approximately 220 at the end of the second quarter, which increased from roughly 200 at the end of the previous quarter. Furthermore, efficiency metrics such as learning center utilization rate illustrate the overall level of business health. We believe off-line small class enrichment learning has a viable business model and a clear path for future development. In addition, our online large class enrichment learning business continued to make progress this quarter. Operational efficiency indicators such as retention rate have been consistently at a viable level. We have been expanding our learning program offerings over the last few quarters. While these new programs still constitute a small percentage of our total revenue, they have shown year-over-year growth in this fiscal quarter. Moving on, let's discuss Tinkercad, our overseas learning services business. Our overseas business also continued to expand during the second quarter. In this fiscal quarter, we have established new learning centers in the United States, Singapore and Hong Kong. We are committed to serving the overseas markets with Zinc Academy, while balancing our standard of service and our locally customized content. As we look forward to the next quarter, we expect a quarter-on-quarter decrease in revenue from our learning services and others business driven by seasonal influences. However, we remain committed to the ongoing development of our learning center network, managing our product offerings and sustaining operational efficiency. Moving on to our Content Solutions business. This business primarily consists of sales of smart books, print books, learning devices, and digital contents. In this quarter, smart and print books combined delivered year-over-year double-digit growth. As for learning devices, it is a relatively new business for us. So year-over-year growth rate will be less relevant. If we look at the growth trend for learning devices from Q1 to Q2, the business experienced quarter-over-quarter sequential growth, driven by both seasonal benefits and business progress. The learning devices business remains one of the main revenue contributors to our Content Solutions business. During this quarter, we continued to receive recognition for its functions and contelibrary. While we continue to develop our capabilities in supply chain and sales and marketing, we are also iterating new features for learning devices based on user feedback in order to meet their diverse learning needs. As an example, we have fine-tuned our product functionalities and AI-based precision learning, targeting students from a broader range of age groups, including elementary school and junior high school. Beyond improvement in software and hardware functionalities, we're also exploring possibilities in diversifying our business model and our go-to-market channels. Looking ahead to the next quarter, we intend to serve more customers with better experiences through our Content Solutions business. Our goal is to offer customers content and formats suitable to their learning needs and serve them in their self-learning journeys. We expect Content Solutions to contribute to a larger proportion of our total net revenues in the next quarter. With that overview, I would now like to share our key financial results for the quarter. We recorded net revenues of USD 411.9 million, and 2.9659 billion RMB this quarter, an increase of 40.1% and 49.5% year-over-year in USD and RMB terms. Our revenue growth is attributable to the steady increase in our learning services business and the continued growth in sales of the products in the Content Solutions business. Gross profit also increased in the second quarter of fiscal 2024, rising from USD 176.9 million for the same period last year to USD 242.5 million for this quarter. Gross margin decreased to 58.9% from 60.2% for the same period last year, mainly due to a higher revenue contribution from our Content Solutions business, which currently has a lower margin percentage. Sales and marketing expenses for the quarter were $116.3 million, an increase of $48.9 million compared to USD 78.1 million for the fiscal second quarter last year. Selling and marketing expenses as a percentage of total revenue increased to 28.2% from 26.6% for the same period last year. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 57.8% to USD 110.1 million from USD 69.8 million for the second quarter of fiscal year 2023. The year-over-year increase was primarily due to increased selling and marketing activities. General and administrative expenses for the quarter have been relatively stable, decreasing by 0.1% to USD 97.1 million from USD 97.2 million for the fiscal second quarter last year. Income from operations expanded by 113.5% to USD 31.8 million from USD 14.9 million for the second quarter of fiscal year 2023. Non-GAAP income from operations, which excludes share-based compensation expenses, was USD 52.7 million compared with USD 42.3 million in the same period of the prior fiscal year. Net income attributable to TAL was USD 37.9 million for the quarter compared with the net loss attributable to TAL of USD 0.8 million for the same period of the prior fiscal year. Non-GAAP net income attributable to TAL, which excludes share-based compensation expenses, was USD 58.8 million compared with USD 26.6 million for the same period of the prior fiscal year. Moving on to our balance sheet. As of August 31, 2023, we had USD 2.1959 billion of cash and cash equivalents, USD 767.6 million of short-term investments and USD 281.2 million in current and noncurrent restricted cash. Our deferred revenue balance was 325.4 million as of the end of the second fiscal quarter compared with 387.7 million a quarter ago. Now turning to our cash flow statement. Net cash used in operating activities for the second quarter of fiscal year 2024 was USD 42.7 million. In April 2023, the company's Board of Directors authorized to expand its share repurchase program launched in April 2021 by 12 months. Pursuant to the expenditure repurchase program, the company may spend up to approximately USD 337.4 million to repurchase its common shares through April 30, 2024. As of August 31, 2023, the company has repurchased approximately 13.4 million common shares and an aggregate consideration of approximately USD 233.6 million under the share repurchase program. That concludes the financial section. I'll now hand the call back to Alex to briefly update you on our business outlook. Alex, please go ahead.

謝謝你，亞歷克斯。我很高興與大家分享我們在第二財季在核心業務領域的進展的一些細節。請注意，本季度的所有財務數據均未經審計。讓我從我們的學習服務和其他業務開始，其中包括面向消費者的廣泛學習計劃以及面向機構客戶的技術解決方案。 2024財年第二季度，我們的學習服務和其他業務為我們的同比增長勢頭做出了貢獻。在學習服務方面，由於線下學習中心網路容量的持續增長以及暑假的季節性利好，我們的強化學習業務在本季度實現了兩位數的收入同比增長，從而導致了同比增長。本季度入學人數增加。我們不斷擴大線下學習中心網絡，以便更好地適應用戶的需求。我們的學習中心在第二季末達到約 220 個，較上季末的約 200 個增加。此外，學習中心利用率等效率指標說明了業務健康的整體水準。我們相信線下小班強化學習具有可行的商業模式和清晰的未來發展路徑。此外，我們的線上大班強化學習業務本季持續取得進展。保留率等營運效率指標一直保持在可行的水平。在過去的幾個季度中，我們一直在擴大我們的學習計劃。雖然這些新計劃仍占我們總收入的一小部分，但它們在本財季顯示出同比增長。接下來，我們來討論一下我們的海外學習服務業務Tinkercad。第二季我們的海外業務也持續擴大。在本財季，我們在美國、新加坡和香港建立了新的學習中心。我們致力於透過鋅學院服務海外市場，同時平衡我們的服務標準和本地客製化的內容。展望下個季度，我們預計受季節性影響，學習服務和其他業務的收入將季減。然而，我們仍然致力於學習中心網路的持續發展、管理我們的產品並維持營運效率。繼續我們的內容解決方案業務。該業務主要包括智慧圖書、紙本圖書、學習設備和數位內容的銷售。本季度，智慧圖書和紙質圖書合計實現年比兩位數成長。至於學習設備，對我們來說是一個相對較新的業務。因此，同比增長率的相關性將會降低。如果我們觀察第一季到第二季學習設備的成長趨勢，在季節性效益和業務進展的推動下，該業務經歷了季度環比增長。學習設備業務仍然是我們內容解決方案業務的主要收入來源之一。在本季度，我們繼續因其功能和內容而受到認可。在我們不斷發展供應鏈和銷售行銷能力的同時，我們也根據使用者的回饋迭代學習設備的新功能，以滿足他們多樣化的學習需求。例如，我們對產品功能和基於人工智慧的精準學習進行了微調，針對更廣泛年齡層的學生，包括小學和初中。除了軟體和硬體功能的改進之外，我們還在探索業務模式和上市管道多元化的可能性。展望下個季度，我們打算透過內容解決方案業務為更多客戶提供更好的體驗。我們的目標是為客戶提供適合他們學習需求的內容和格式，並為他們的自學之旅提供服務。我們預計內容解決方案將在下個季度占我們總淨收入的更大比例。有了上述概述，我現在想分享我們本季的主要財務業績。本季我們的淨收入為 4.119 億美元和 29.659 億元人民幣，以美元和人民幣計算，年增 40.1% 和 49.5%。我們的收入成長得益於學習服務業務的穩定成長以及內容解決方案業務產品銷售的持續成長。 2024財年第二季毛利也有所成長，從去年同期的1.769億美元增至本季的2.425億美元。毛利率從去年同期的60.2%下降至58.9%，主要是由於目前利潤率較低的內容解決方案業務的收入貢獻較高。該季度的銷售和行銷費用為 1.163 億美元，比去年第二財季的 7,810 萬美元增加了 4,890 萬美元。銷售及行銷費用佔總收入的比例從去年同期的26.6%增至28.2%。非公認會計準則銷售和行銷費用（不包括股權激勵費用）從 2023 財年第二季的 6,980 萬美元增長 57.8% 至 1.101 億美元。年成長主要是由於銷售增加和行銷活動。本季的一般和管理費用相對穩定，從去年第二財季的 9,720 萬美元下降 0.1% 至 9,710 萬美元。營運收入從 2023 財年第二季的 1,490 萬美元成長 113.5%，達到 3,180 萬美元。非 GAAP 營運收入（不含股權激勵費用）為 5,270 萬美元，而 2023 年第二季為 4,230 萬美元。一財年同期。該季度歸屬於好未來的淨利潤為 3,790 萬美元，而上一財年同期歸屬於好未來的淨虧損為 80 萬美元。非美國通用會計準則歸屬於好未來的淨利潤（不含股權激勵費用）為 5,880 萬美元，而上一財年同期為 2,660 萬美元。繼續我們的資產負債表。截至2023年8月31日，我們擁有現金及現金等價物21.959億美元，短期投資7.676億美元，流動及非流動限制性現金2.812億美元。截至第二財季末，我們的遞延收入餘額為 3.254 億美元，而上一季為 3.877 億美元。現在轉向我們的現金流量表。 2024財年第二季經營活動所使用的現金淨額為4,270萬美元。 2023年4月，公司董事會授權將2021年4月啟動的股票回購計畫延長12個月。根據支出回購計劃，公司可能在 2024 年 4 月 30 日之前花費最多約 3.374 億美元回購普通股。截至 2023 年 8 月 31 日，公司已回購約 1,340 萬股普通股，總對價約為股票回購計畫下的資金為2.336 億美元。財務部分到此結束。現在我將把電話轉給亞歷克斯，向您簡要介紹我們的業務前景。亞歷克斯，請繼續。

Thanks, Jackson. As I mentioned earlier, I think we made encouraging progress during the quarter. Now I would like to share some thoughts on our strategic plans for the next quarter of this fiscal year. So looking ahead to the third quarter, as previously noted by Jackson, we anticipate a quarter-over-quarter decrease in revenue due to the seasonal nature of our business. In terms of our learning services, our focus remains on developing our learning center network in a balanced way and persistently introducing appropriate products across both online and offline platforms. As for our Content Services, our focus will be on enhancing product functionalities, enriching the breadth of learning content, and exploring opportunities for developing new products. As we move ahead, we intend to continue to invest in AI. We will continue to optimize our model to improve its response, speed and accuracy. Recently, we've collaborated with a number of technology companies and academic institutions, leveraging the national new generation artificial intelligence open innovation platform for smart education to cohost the AAAI-2024 Global Large Model Mathematical Reasoning Competition. This competition invites AI experts, developers and math enthusiasts worldwide to use large language models to automatically solve challenging math problems for primary and secondary school students. In addition, we continue to explore the application of artificial intelligence technology in specific use cases. In the near future, we really intend to launch applications based on MapGPT. This represents our ongoing endeavors to leverage advanced technology to enhance learning experiences. So to sum it up, in this quarter, our major business lines delivered material development, both in terms of product offerings and operational capabilities. Our posted financial results are a manifestation of such developments. We've been observing customers' evolving needs in their learning journeys and intend to serve them through a variety of products in our learning services and content solutions portfolios. So that concludes my prepared remarks. Operator, we're now ready to open the call for questions

謝謝，傑克遜。正如我之前提到的，我認為我們在本季度取得了令人鼓舞的進展。現在我想分享一些關於我們本財年下一季策略計畫的想法。因此，展望第三季度，正如傑克遜之前指出的那樣，由於我們業務的季節性，我們預計收入將環比下降。在學習服務方面，我們的重點仍然是均衡發展學習中心網絡，並持續在線上和線下平台推出合適的產品。至於我們的內容服務，我們的重點將是增強產品功能、豐富學習內容的廣度以及探索開發新產品的機會。隨著我們的前進，我們打算繼續投資人工智慧。我們將繼續優化我們的模型，以提高其響應、速度和準確性。近期，我們聯合多家科技公司與學術機構，依托國家新一代人工智慧智慧教育開放創新平台，共同舉辦AAAI-2024全球大模型數學推理競賽。本次比賽邀請全球人工智慧專家、開發者和數學愛好者，利用大型語言模型自動解決中小學生具有挑戰性的數學問題。此外，我們不斷探索人工智慧技術在具體用例中的應用。在不久的將來，我們真的打算推出基於MapGPT的應用程式。這代表了我們不斷努力利用先進技術來增強學習體驗。綜上所述，本季我們的主要業務線無論是在產品供應還是營運能力方面都實現了材料開發。我們發布的財務表現就是這種發展的體現。我們一直在觀察客戶在學習過程中不斷變化的需求，並打算透過我們的學習服務和內容解決方案組合中的各種產品為他們提供服務。我準備好的發言就到此結束。接線員，我們現在準備開始提問

Now first question coming from the line of Felix Liu with UBS.

現在第一個問題來自瑞銀集團的 Felix Liu。

So in the most recent quarterly results, especially the strong performance of Learning Service and under the context of good non-academic tutoring market demand, how do you see your long-term strategic priority? If you would rank these businesses in terms of future resource allocations, how would you rank them, namely domestic learning service business, hardware AI and overseas? How would you think of these in terms of future resource allocations?

那麼在最近的季度業績，尤其是學習服務的強勁表現以及非學業輔導市場需求良好的背景下，您如何看待您的長期策略重點？如果按照未來的資源配置對這些業務進行排名，國內的學習服務業務、硬體AI業務和海外業務，您會如何排序？您如何看待這些未來的資源分配？

So let me try to unpack this question. To start with, our company strategy, I think it will really revolve around providing world-class learning products for our users. These products are going to come in various form factors. So they're going to include, but not limited to, for example, learning services, learning devices, smart and printed books, and other learning content in various form factors. We believe that collection that portfolio of products really give the parents and learners a set of choices that fit with their needs and fit what the stages they're on their own learning journeys. So under that context, I would say it's not necessarily an issue of priority but more so that these different business models and business lines are in different phases in their development path. So if we take these 3 that you named, I would say learning services business, it's really demonstrated the fact that it has some viable business models. It's got a clear development path going forward. We really anticipate that it will continue to show growth momentum in the future. We'll obviously continue to invest resources in our learning centers network and in our factoring staff teams. This is an area where we've had and we've built up strong operational capabilities that will actually continue to hone in every evolving environment. And so with that, we really expect this business to be profitable. So that's the first one. If I look at the second that you brought up, content solutions, it's really addressing a different use case. It's self-learning at home, it's self-learning at the time that's oftentimes somewhat fragmented times that's available to the learners. So beyond the growth in sales volume for our hardware business, we really fundamentally aim to leverage our understanding of learning content, hardware and artificial intelligence to provide unique value to our users and we continue to look out both engagement and learning impact from this new set of solutions to address these different use cases. So the final set is really artificial intelligence and overseas. I would say, look, they are really still in the exploration phase. We look forward to the long-term trends that these businesses are operating within and we'll look forward to keeping you guys updated on our progress.

那麼讓我試著解開這個問題。首先，我們公司的策略，我認為它將真正圍繞著為我們的用戶提供世界一流的學習產品。這些產品將有各種不同的外形尺寸。因此，它們將包括但不限於學習服務、學習設備、智慧和印刷書籍以及各種形式的其他學習內容。我們相信，該產品組合確實為家長和學習者提供了一系列適合他們的需求並適合他們自己的學習旅程階段的選擇。所以在這個背景下，我想說這不一定是優先順序的問題，更多的是這些不同的商業模式和業務線處於不同的發展階段。因此，如果我們採用您提到的這三個業務，我會說學習服務業務，它確實證明了它擁有一些可行的業務模式。它有一個清晰的未來發展道路。我們確實預計它將在未來繼續呈現成長勢頭。顯然，我們將繼續在我們的學習中心網路和保理員工團隊中投入資源。這是我們已經擁有並建立了強大營運能力的領域，這些能力實際上將在每個不斷變化的環境中繼續磨練。因此，我們確實希望這項業務能夠獲利。這是第一個。如果我看一下您提出的第二個內容解決方案，它確實解決了不同的用例。這是在家自學，也是在時間上自學，通常是學習者可以利用的碎片化時間。因此，除了硬體業務銷售的成長之外，我們真正的根本目標是利用我們對學習內容、硬體和人工智慧的理解，為我們的用戶提供獨特的價值，我們將繼續關注這套新產品對參與度和學習的影響解決這些不同用例的解決方案。所以最終的設定是真正的人工智慧和海外。我想說，看，他們確實還處於探索階段。我們期待這些企業營運的長期趨勢，並期待向你們通報我們的最新進展。

Our next question coming from the line of Linda Huang with Macquarie.

我們的下一個問題來自麥格理的 Linda Huang。

So can management share the self-performance of the hardware product during the quarter and then any change in the user engagement data?

那麼管理階層能否分享該季度硬體產品的自我表現以及用戶參與度數據的變化？

So to start with the sales of our hardware in this quarter have increased compared to the first quarter. So there's quarter-on-quarter growth in the sales volume. And we really believe this is largely due to the overlapping factors of the shopping festival in June and the summer vacation. I would say on the engagement side, we're seeing some pretty encouraging user activity data and user feedback. Our users continue to spend a significant amount of time learning on our devices. And additionally, we've noticed that the users are exploring multiple features that we're bringing to the devices, and they're making use of both first-party and third-party learning content in all kinds of manners that really they feel that's more suitable to their learning style. And, Linda, I would just emphasize the second point, I think, for us, the engagement is really paramount. We want to make sure the learning devices are used, and they're helpful and they may come in in a way that's most suitable for the individual learning journey. And I think as I mentioned in a call, a number of quarters ago, and we're also really looking forward to working with a number of world-class content players to continue to build up third-party content that's valuable and that's engaging for our learners.

首先，我們這個季度的硬體銷售量比第一季有所成長。因此銷量較上月成長。我們確實認為這很大程度上是由於六月購物節和暑假的重疊因素造成的。我想說，在參與度方面，我們看到了一些非常令人鼓舞的用戶活動數據和用戶回饋。我們的用戶繼續花費大量時間在我們的設備上學習。此外，我們注意到用戶正在探索我們為設備提供的多種功能，他們正在以他們認為真正的各種方式使用第一方和第三方學習內容更適合他們的學習方式。琳達，我只想強調第二點，我認為，對我們來說，參與確實至關重要。我們希望確保學習設備得到使用，它們是有幫助的，它們可能以最適合個人學習旅程的方式出現。我認為，正如我在幾個季度前的一次電話會議中提到的那樣，我們也非常期待與許多世界級的內容參與者合作，繼續構建有價值且有吸引力的第三方內容我們的學習者。

And our next question coming from the line of Candis Chan with Daiwa.

我們的下一個問題來自 Candis Chan 和 Daiwa 的線路。

Can you share with us the progress of MapGPT commercialization and also how this will be applied to our services?

您能否跟我們分享一下MapGPT商業化的進展以及如何將其應用到我們的服務中？

So thanks for that question, MapGPT and let me just share some thoughts on that. So to start with, we really think that the product design of generative AI is a crucial part of its ability to create value for users. I think we started mentioning this topic and discussing this topic from a number of calls in the past quarters. And as we continue to engage in conversations with developers, experts and industry players in China and across the world, I think globally, we see that application is really receiving more and more attention across all the domains in industries, right? I think this is really critical as we think about artificial intelligence for the future and the generative AI for the future. So there are really a lot of opportunities worth exploring for the implementation of generative AI in the learning field, especially for K-12 learners. And we think that the collaboration of AI with human faculty and staff can really improve the efficiency of supply and accessibility of high-quality learning content. As I mentioned earlier, we're still, and I think really for that matter, across so many industries, we're still in the early stages of this, and we're working on the product design and we'll have some user test in the very near future

感謝 MapGPT 提出這個問題，讓我分享一些對此的想法。首先，我們確實認為生成式人工智慧的產品設計是其為使用者創造價值的能力的關鍵部分。我認為我們在過去幾個季度的多次通話中開始提到這個主題並討論這個主題。隨著我們繼續與中國和世界各地的開發人員、專家和行業參與者進行對話，我認為在全球範圍內，我們看到應用程式確實在行業的所有領域受到越來越多的關注，對嗎？我認為當我們思考未來的人工智慧和未來的生成式人工智慧時，這一點非常重要。因此，在學習領域，特別是對於 K-12 學習者來說，生成式人工智慧的實作確實有許多值得探索的機會。我們認為人工智慧與人類教職員工的合作可以真正提高高品質學習內容的供應效率和可及性。正如我之前提到的，我們仍然，我認為實際上，在許多行業中，我們仍處於早期階段，我們正在致力於產品設計，我們將有一些用戶在不久的將來進行測試

And our next question coming from the line of Caini Wang with CICC.

我們的下一個問題來自中金公司王彩妮的專線。

So you have consistently mentioned that extending our learning centers would be a balanced approachs so my question is like what kind of factors would you consider before deciding to increase the number of learning centers?

因此，您一直提到擴大我們的學習中心將是一種平衡的方法，所以我的問題是，在決定增加學習中心的數量之前，您會考慮哪些因素？

I think there are two broader sets of factors that we consider when we think about managing our learning center network, one on the demand side and the other more on the operating side or supply side, if you will. So on demand side, first, I think at this stage of a business, if you look at the size of the business and you look at the population for the corresponding age group, it is not the potential size of the market mostly that we mostly consider, but it's more so to what extent can we have a suitable product market fit between our products and our users in certain markets, be it in certain cities, be it in China, be it outside of China. So that's kind of the demand side factor we are considering. In the last few quarters, we have been seeing development of the product itself and development on product market fit. Now moving on to the operating side on the supply side, when we speak to a balanced approach, what we mean is that we're not only focused on building out capacity for future business development but we also want to make sure that as we expand our learning centers, we can still provide a sustainable level of quality of service and a sustainable level of operational efficiency as we manage our own learning center network. So these are the few factors we tend to consider when it comes on to making decisions on learning center expansion.

我認為，當我們考慮管理我們的學習中心網路時，我們會考慮兩組更廣泛的因素，一個是需求方，另一個是營運方或供應方（如果你願意的話）。所以在需求方面，首先，我認為在企業的這個階段，如果你看企業的規模，你看相應年齡層的人口，我們主要不是市場的潛在規模。考慮一下，但更重要的是我們的產品和我們的用戶在某些市場上能有多大程度的契合，無論是在某些城市，無論是在中國，還是在國外。這就是我們正在考慮的需求方因素。在過去的幾個季度中，我們看到了產品本身的發展以及產品市場契合度的發展。現在轉向供應方面的營運方面，當我們談到平衡方法時，我們的意思是我們不僅專注於為未來業務發展建立能力，而且我們還希望確保隨著我們的擴張我們的學習中心，在管理我們自己的學習中心網絡時，我們仍然可以提供可持續水準的服務品質和可持續水準的營運效率。因此，這些是我們在做出學習中心擴建決策時傾向於考慮的幾個因素。

Our next question coming from the line of Lucy Yu with Bank of America.

我們的下一個問題來自美國銀行的 Lucy Yu。

I have a question on margins. So I noticed that our GP margin and OP margin has been quite volatile. You already explained that this quarter, the GP margin contraction is largely due to the business mix change. But how should we think about the GP margin in the future? And if we're looking at SIM business on a like-for-like basis, how is the margin trends at the moment?

我有一個關於利潤的問題。所以我注意到我們的 GP 利潤率和 OP 利潤率波動很大。您已經解釋過，本季毛利率收縮主要是由於業務結構的變化。但未來我們該如何看待毛利率呢？如果我們比較 SIM 業務，那麼目前的利潤率趨勢如何？

When we talk about gross margin trend, I think it would be mostly helpful if we dial back a couple of quarters and look at the trend over time. So just to set the stage, I think if we look at last fiscal year, for most quarters, our gross margin bounced between 50% to 60% range, and in fiscal Q1, so a quarter ago, our gross margin was 49.3% and in this quarter, our gross margin was 58.9%, which was down year-over-year but up quite a bit quarter-over-quarter. And when I look at gross margin of the overall company, two factors, I would say, have the most influence on gross margin eventually. One is the overall business mix of various business lines. And two is the intrinsic gross margin, if you will, of the underlying businesses. So maybe let me explain to you first what happened in Q1, and that will probably help us understand what happened in Q2. So in Q1, what we saw was a gross margin dip to just below 50%. And that was primarily a result of shift in underlying business mix, with some of our lower-margin business constituting a larger portion of our total revenue. Now from Q1 to Q2, the mix stayed relatively stable. So it was a factor of the underlying business picking up on the gross margin. I will caution you though, Q2 is given the summer vacation and seasonal influences, Q2 tends to be a quarter where our offline learning centers are at a fairly high utilization at has resulting in a relatively high gross margin if you look across the quarters. So in the next quarter, I do expect a decrease in gross margin in general.

當我們談論毛利率趨勢時，我認為如果我們回撥幾個季度並觀察一段時間內的趨勢，那將會很有幫助。因此，為了奠定基礎，我認為如果我們看看上一財年，在大多數季度，我們的毛利率在50% 到60% 的範圍內反彈，而在第一財季，所以一個季度前，我們的毛利率為49.3%，本季，我們的毛利率為58.9%，較去年同期下降，但較上季上升不少。當我審視整個公司的毛利率時，我想說有兩個因素最終對毛利率影響最大。一是各業務線的整體業務結構。第二個是基礎業務的內在毛利率（如果你願意的話）。因此，也許讓我先向您解釋第一季度發生的情況，這可能會幫助我們理解第二季度發生的情況。因此，在第一季度，我們看到毛利率下降至略低於 50%。這主要是基礎業務組合轉變的結果，我們的一些利潤率較低的業務占我們總收入的很大一部分。現在從第一季到第二季度，該組合保持相對穩定。因此，這是基礎業務毛利率上升的因素。不過我要提醒大家的是，第二季度考慮到暑假和季節的影響，第二季度往往是我們的離線學習中心利用率相當高的季度，如果你從各個季度來看，毛利率相對較高。因此，在下個季度，我確實預計毛利率總體會下降。

When you mentioned decrease, I assume you mean Q-on-Q decrease but if we're looking on a Y-o-Y basis, how should we think about the margin in the third quarter?

當您提到下降時，我假設您的意思是環比下降，但如果我們以同比為基礎，我們應該如何看待第三季的利潤率？

Yes. I'll just leave it as we do see a quarter-over-quarter decrease. Honestly, when we manage the business, I'd say less focus on Y-o-Y gross margin change because the underlying business shape is just less comparable Y-o-Y at this point.

是的。我將保留它，因為我們確實看到了季度環比的下降。老實說，當我們管理業務時，我想說較少關注同比毛利率變化，因為此時基本業務形狀的可比性較差。

And I will now turn the call back over to management for any closing remarks.

現在，我將把電話轉回給管理階層，讓他們發表結束語。

Thanks, operator. And again, thanks, everybody, for joining today, and thanks for your questions. And we look forward to speaking with everybody next quarter.

謝謝，接線生。再次感謝大家今天的加入，也感謝大家提出的問題。我們期待下個季度與大家交談。

Ladies and gentlemen, does conference for today. Thank you for your participation. You may now disconnect.

女士們、先生們，今天開會。感謝您的參與。您現在可以斷開連線。