TAL Education Group (TAL) 2025 Q1 法說會逐字稿

Ladies and gentlemen, good day, and thank you for standing by. Welcome to TAL Education Group's fiscal 2025 first-quarter earnings conference call. (Operator Instructions) Please be informed that today's conference is being recorded. I'd now like to hand the conference over to Ms. [Fong Liu], Investor Relations Director. Thank you. Please go ahead.

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 2025 財年第一季財報電話會議。 （操作員指示）請注意，今天的會議正在錄製中。現在我想將會議交給投資者關係總監[Fong Liu]女士。謝謝。請繼續。

Thank you all for joining us today for TAL Education Group's first quarter fiscal year 2025 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 Newswire's. During this call, you will hear from Mr. Alex Peng, President and Chief Financial Officer; and Mr. Jackson Ding, Deputy Chief Financial Officer.

感謝大家今天參加我們好未來教育集團 2025 財年第一季財報電話會議。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彭鵬先生的演講；副首席財務官丁嘉信先生。

Following the prepared remarks, Mr. Peng and Mr. Ding 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 US Private Securities Litigation Reform Act of 1995.

準備好的演講結束後，彭總和丁總將回答大家的問題。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。

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 refer to our earnings release, which contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures.

前瞻性陳述受到風險和不確定性的影響，可能導致實際結果與我們目前的預期有重大差異。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。

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

我現在想把電話轉給彭先生。亞歷克斯，請繼續。

Thank you, Fong. I'd also like to thank all of you for participating in today's conference call. During this call, we'll discuss our financial performance and business progress and review some key results for the first quarter of fiscal year 2025. Following that, I'll briefly update you on our business strategy outlook. So throughout the fiscal quarter, we remain dedicated to operating and managing our core business lines while actively exploring new initiatives and capitalizing on emerging opportunities.

謝謝你，方。我還要感謝大家參加今天的電話會議。在本次電話會議中，我們將討論我們的財務業績和業務進展，並回顧 2025 財年第一季的一些關鍵業績。因此，在整個財政季度，我們仍然致力於營運和管理我們的核心業務線，同時積極探索新措施並利用新興機會。

First, we further refined our online and offline offerings within our learning services businesses to better meet user preferences. In the fiscal quarter, we further expanded our learning center network strategically for our Peiyou enrichment learning programs at a measured pace. Our focus on product offerings and operational capabilities has resulted in sustained user value creation through our products and services. Our endeavor is reflected in feedback from our learners and their parents and is also reflected by our operating metrics such as retention rates. For our content solutions, we are committed to continuously upgrading our hardware, software and content of our learning devices to meet the needs of our users.

首先，我們進一步完善學習服務業務中的線上線下產品，以便更好地滿足使用者偏好。在本財季，我們有節奏地策略性地進一步擴大了培優強化學習計畫的學習中心網絡。我們對產品供應和營運能力的關注導致透過我們的產品和服務持續創造用戶價值。我們的努力體現在學習者及其家長的回饋中，也體現在我們的營運指標（例如保留率）中。對於我們的內容解決方案，我們致力於不斷升級學習設備的硬體、軟體和內容，以滿足使用者的需求。

During the quarter, we remain focused on developing our learning device product offerings and go-to-market capabilities to serve more learners with our high-quality learning resources. We integrated learning content, AI technology, quality hardware and software into our content solutions to deliver better learning experiences for learners. As our proprietary MathGPT large language model evolves, the AI-driven features incorporated into our learning devices provide learners with accessible and reliable learning aids. As a result of our product capabilities, we've witnessed a steady level of user engagement for our learning devices on an expanded user base. Our learning devices empower children to engage in self-directed learning, enabling their personal development.

在本季度，我們仍然專注於開發我們的學習設備產品和上市能力，以便為更多的學習者提供優質的學習資源。我們將學習內容、人工智慧技術、優質硬體和軟體整合到我們的內容解決方案中，為學習者提供更好的學習體驗。隨著我們專有的 MathGPT 大語言模型的發展，我們的學習設備中融入的人工智慧驅動功能為學習者提供了易於存取且可靠的學習輔助工具。由於我們的產品能力，我們的學習設備在擴大的用戶基礎上保持了穩定的用戶參與度。我們的學習設備使孩子們能夠進行自主學習，促進他們的個人發展。

Efforts such as the above are driving our financial growth. Our net revenues were USD414.2 million or RMB2.99 billion for the quarter representing year-over-year increases of 50.4% and 56.9% in US dollar and RMB terms, respectively. Our non-GAAP income from operations and non-GAAP net income attributable to TAL for the quarter were USD0.9 million and USD29.6 million, respectively. So with that overview, I will hand the call to Jackson for an update on some of the operational advancements we've made in our core business lines and to review our financial performance for the first fiscal quarter. Jackson, please go ahead.

上述努力正在推動我們的財務成長。本季我們的淨收入為 4.142 億美元或 29.9 億元人民幣，以美元和人民幣計算分別同比增長 50.4% 和 56.9%。本季我們的非 GAAP 營運收入和非 GAAP 歸屬於好未來的淨利潤分別為 90 萬美元和 2,960 萬美元。因此，在概述之後，我將致電傑克遜，以了解我們在核心業務領域取得的一些營運進展的最新情況，並審查我們第一財季的財務表現。傑克遜，請繼續。

Thank you, Alex. I'm pleased to share some details about the progress we made in the first quarter across our core business lines, including Peiyou, xueersi.com, and our learning devices. Please note that all financial data for the quarter are unaudited. I'll start with our learning services and others business, which includes a broad range of learning programs for our customers. Learning services maintained its growth momentum in the first quarter of fiscal year 2025.

謝謝你，亞歷克斯。我很高興與大家分享我們第一季在核心業務領域取得的進展的一些細節，包括培優、學而思網和我們的學習設備。請注意，本季度的所有財務數據均未經審計。我將從我們的學習服務和其他業務開始，其中包括為我們的客戶提供廣泛的學習計劃。學習服務在2025財年第一季維持成長動能。

Driven by advancements in multiple product lines, this sector's revenue grew year over year. The largest revenue contributor within learning services and others remains our Peiyou small class offerings, which is a tentative growth trajectory. Peiyou's performance was predominantly attributed to enrollment growth as we expanded our offline learning center network. In response to customer demand and in preparation for the summer vacation period, we scaled our operational capacity during the first quarter while managing our operating efficiency. Efficiency indicators, such as retention rate and utilization rate were relatively stable quarter-over-quarter.

在多個產品線進步的推動下，該部門的收入逐年成長。學習服務和其他領域最大的收入貢獻者仍然是我們的培優小班產品，這是初步的成長軌跡。培優的表現主要歸因於我們擴展線下學習中心網絡時入學人數的成長。為了回應客戶需求並為暑假​​做好準備，我們在第一季擴大了營運能力，同時管理了營運效率。保留率和利用率等效率指標較上季相對穩定。

As for online enrichment learning, we have been refining our offerings by focusing on our content, user interaction and engagement. By steadily introducing new online enrichment learning programs aimed at diverse user groups, we continue to create value for our learners, providing them with the learning efficacy and experience they desire. Going forward, we'll continue to optimize our product offerings, elevate the user experience, and refine our operational efficiency. Next is our content solutions business. Our learning devices business recorded year-over-year growth in this quarter, driven by our product development and go-to-market capabilities.

至於線上強化學習，我們一直透過專注於內容、使用者互動和參與來完善我們的產品。透過穩定推出針對不同使用者群體的新線上強化學習項目，我們持續為學習者創造價值，為他們提供他們想要的學習效能和體驗。展望未來，我們將持續優化我們的產品、提升用戶體驗並提高我們的營運效率。接下來是我們的內容解決方案業務。在我們的產品開發和上市能力的推動下，我們的學習設備業務在本季度實現了同比增長。

In particular, we have continued to enrich our content and integrate additional AI features, creating value for users. At the same time, we introduced new SKUs, bringing users a wider range of learning device products. In May this year, we launched the xPad classic model 2024, designed to offer a comprehensive and interactive learning experience. Compared with the xPad classic 2023, the upgraded classic model features a new version of hardware design, including features to protect users' vision and the hardware for overall operating performance. In the fiscal quarter, we also upgraded our classic models with software across multiple use cases to bring users personalized learning experiences.

特別是，我們不斷豐富內容並整合更多人工智慧功能，為用戶創造價值。同時，我們推出了新的SKU，為使用者帶來了更廣泛的學習設備產品。今年5月，我們推出了xPad經典型號2024，旨在提供全面的互動式學習體驗。與xPad classic 2023相比，升級後的經典型號採用了新版本的硬體設計，包括保護使用者視力的功能和整體操作效能的硬體。在本財季，我們也透過跨多個用例的軟體升級了經典模型，為使用者帶來個人化的學習體驗。

With that overview, I would like to share our key financial results for the first fiscal quarter. Our net revenues were USD414.2 million or RMB2.99 billion, an increase of 50.4% and 56.9% year-over-year in US dollar and RMB terms, respectively. The increase was attributable to the growth in both our learning services business and our content solutions business. Cost of revenue increased by 43.4% to USD200 million from USD139.5 million in the first quarter of fiscal year 2024.

透過上述概述，我想分享我們第一財季的主要財務表現。我們的淨收入為4.142億美元或人民幣29.9億元，以美元和人民幣計算分別年增50.4%和56.9%。這一增長歸因於我們的學習服務業務和內容解決方案業務的成長。營收成本從 2024 財年第一季的 1.395 億美元增加至 2 億美元，成長 43.4%。

Non-GAAP cost of revenues, which excludes share-based compensation expenses, increased by 44.2% to USD197.6 million from USD137.1 million in the first quarter of fiscal year 2024. Gross profit increased in the first quarter of fiscal 2025, rising by 57.6% year-over-year to USD214.2 million from USD135.9 million for the same period last year. Gross margin increased to 51.7% from 49.3% for the same period last year. Selling and marketing expenses for the quarter were USD122.4 million, representing an increase of 25.4% from USD97.7 million for the same period last year. Non-GAAP selling and marketing expenses, which excludes share-based compensation expenses, increased by 30.8% to USD118.1 million from USD90.2 million for the same period last year.

非 GAAP 收入成本（不含股權激勵費用）從 2024 財年第一季的 1.371 億美元成長 44.2%，達到 1.976 億美元。 1.359 億美元增至2.142 億美元。毛利率從去年同期的49.3%增至51.7%。本季銷售和行銷費用為 1.224 億美元，較去年同期的 9,770 萬美元成長 25.4%。非 GAAP 銷售和行銷費用（不含股權激勵費用）從去年同期的 9,020 萬美元成長 30.8% 至 1.181 億美元。

Selling and marketing expenses as a percentage of total net revenues decreased from 35.5% to 29.6% year over year. General and administrative expenses increased by 4.5% to USD109.7 million from USD104.9 million in the same period of last year. Non-GAAP general and administrative expenses, which exclude share-based compensation costs increased by 10% year-over-year to USD98.2 million from USD89.2 million for the same period of last year. Non-GAAP general and administrative expenses as a percentage of total revenues decreased from 32.4% to 23.7% year over year. Total share-based compensation expense allocated to related operating costs and expenses decreased by 28.6% to USD18.2 million in the first quarter of fiscal year 2025 from USD25.5 million in the same period of last year.

銷售和行銷費用佔總淨收入的百分比從 35.5% 年減至 29.6%。一般及行政費用從去年同期的 1.049 億美元成長 4.5% 至 1.097 億美元。非公認會計準則一般及管理費用（不含股權激勵成本）年增 10%，從去年同期的 8,920 萬美元增至 9,820 萬美元。非 GAAP 一般及管理費用佔總收入的百分比年比從 32.4% 下降至 23.7%。 2025 財年第一季度，分配給相關營運成本和費用的股權激勵費用總額為 1,820 萬美元，較去年同期的 2,550 萬美元下降了 28.6%。

Loss from operations was USD17.3 million in the first quarter of fiscal year 2025 compared with a loss from operations of USD57.8 million in the same period of last year. Non-GAAP income from operations, which excludes share-based compensation expenses, was USD0.9 million compared with a non-GAAP loss from operations of USD32.3 million in the same period last year. Net income attributable to TAL was USD11.4 million in the first quarter of fiscal year 2025 compared to net loss attributable to TAL of USD45.0 million in the same period of last year. Non-GAAP net income attributable to TAL, which excludes share-based compensation expenses, was USD29.6 million compared to a non-GAAP net loss attributable to TAL of USD19.5 million in the same period of last year.

2025 財年第一季營運虧損為 1,730 萬美元，而去年同期營運虧損為 5,780 萬美元。非 GAAP 營運收入（不含股權激勵費用）為 90 萬美元，而去年同期的非 GAAP 營運虧損為 3,230 萬美元。 2025財年第一季好未來歸屬淨利為1,140萬美元，去年同期歸屬好未來淨虧損為4,500萬美元。好未來歸屬於非美國通用會計準則的淨利潤（不含股權激勵費用）為 2,960 萬美元，而去年同期歸屬於好未來的非美國通用會計準則淨虧損為 1,950 萬美元。

Moving on to our balance sheet. As of May 2024, we had USD2.222.6 million in cash and cash equivalents, USD1.196 million in short-term investments and USD355.8 million in current and noncurrent restricted cash. Our deferred revenue balance was USD641.9 million as of the end of the first fiscal quarter.

繼續我們的資產負債表。截至 2024 年 5 月，我們擁有現金及現金等價物 222.26 萬美元，短期投資 119.6 萬美元，流動和非流動限制性現金 3.558 億美元。截至第一季末，我們的遞延收入餘額為 6.419 億美元。

Now turning to our cash flow statement. Net cash provided in operating activities for the first quarter of fiscal 2025 was USD246.8 million. 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.

現在轉向我們的現金流量表。 2025 財年第一季經營活動提供的現金淨額為 2.468 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. So now I'd like to share some thoughts on our outlook for the next quarter. Q2 traditionally represents a peak season for us with seasonal factors in our benefit. As we look ahead to the next quarter, we anticipate that our growth momentum will continue, driven by the summer vacation and increased e-commerce activities during the 618 festivals. For learning services, our core focus remains on delivering high-quality products and managing our online and offline operations efficiently to serve learners effectively.

謝謝，傑克遜。現在我想分享我們對下一季前景的一些想法。傳統上，第二季度對我們來說是一個旺季，季節性因素對我們有利。展望下一季度，我們預計在暑假和618節慶期間電商活動增加的推動下，我們的成長動能將持續。對於學習服務，我們的核心重點仍然是提供高品質的產品並有效管理我們的線上和線下運營，以有效地為學習者提供服務。

We're committed to ongoing investments in learning services to provide our users with quality learning experiences, both online and in person. So looking forward, we'll expand our services to reach more customers with our product offerings while leveraging our robust online and offline capabilities. Our business model, combined with our brand and operational efficiency positions us to capitalize on market opportunities and deliver long-term value to our customers and shareholders alike. We believe that enrichment learning not only aligns with user demand and societal trends but also enables learner's long-term development. The path we have chosen in this regard has been consistently validated in recent quarters.

我們致力於對學習服務進行持續投資，為我們的用戶提供優質的線上和麵對面的學習體驗。因此，展望未來，我們將擴大服務範圍，利用我們強大的線上和線下能力，透過我們的產品覆蓋更多客戶。我們的商業模式與我們的品牌和營運效率相結合，使我們能夠利用市場機會，為我們的客戶和股東提供長期價值。我們相信，強化學習不僅符合使用者需求和社會趨勢，也有利於學習者的長遠發展。我們在這方面選擇的道路在最近幾季得到了持續的驗證。

We remain dedicated to refining our approach moving forward. And beyond learning services, we're also focused on providing learning content solutions. We believe integrating technologies, such as artificial intelligence, will enhance our content solutions offerings. We will continue to improve our learning devices and their functionality while expanding our learning content library and exploring new product developments. At the same time, we'll continue optimizing our go-to-market strategies to better serve our customers.

我們將繼續致力於改進我們的方法並繼續前進。除了學習服務之外，我們還專注於提供學習內容解決方案。我們相信人工智慧等整合技術將增強我們的內容解決方案產品。我們將繼續改進我們的學習設備及其功能，同時擴大我們的學習內容庫並探索新產品開發。同時，我們將繼續優化市場策略，更好地服務客戶。

So with our expanded product matrix and go-to-market capabilities, we really aim to reach more users and empower them with self-directed learning in their discretionary time. So that concludes my prepared remarks. Operator, I think we are now ready to open the call for questions.

因此，透過擴大產品矩陣和進入市場的能力，我們真正的目標是接觸更多用戶，並讓他們在自由支配的時間內進行自主學習。我準備好的發言就到此結束。接線員，我想我們現在可以開始提問了。

(Operator Instructions) Felix Liu, UBS.

（操作員指令）Felix Liu，UBS。

Good evening, Alex and Jackson. Congratulations on the strong quarter. My question is on your Peiyou enrichment learning program. Could you share any color regarding the recent operating metrics and demand for the upcoming summer peak season? Thank you.

晚上好，亞歷克斯和傑克遜。恭喜季度表現強勁。我的問題是關於培優強化學習計畫。您能否分享一下近期的營運指標以及即將到來的夏季旺季的需求？謝謝。

Thanks for the question. This is Jackson. I'll take this one. You asked about user demand and user preference. That's something we spend a lot of time focused on as we develop products and services as well as when we operate our business. Maybe sort of just commenting on demand and operating metrics for the summer, which we will say for next quarter, let me provide you with more color on what we are seeing for user demand and operating metrics for the last few quarters and the trends we're seeing.

謝謝你的提問。這是傑克遜。我要這個。您詢問了用戶需求和用戶偏好。這是我們在開發產品和服務以及經營業務時花費大量時間關注的事情。也許只是評論夏季的需求和營運指標，我們將在下個季度說，讓我為您提供更多關於我們在過去幾個季度看到的用戶需求和營運指標以及我們的趨勢的資訊。

When we talk to this generation of learners and their parents, we really see this set of multidimensional developmental needs they're presenting, right? This generation of learners and their parents not only focus on in-school performance, but also focus on well-rounded development and overall kind of core competencies of the learners. They also focus on underlying skills such as critical thinking, such as cultural appreciation. And that's the trend we're seeing happening real-time, and it's in process. And that's what enrichment learning -- our enrichment learning programs are trying to address.

當我們與這一代學習者及其父母交談時，我們確實看到了他們所呈現的這套多維發展需求，對嗎？這一代的學習者及其家長不僅關注在校表現，也關注學習者的全面發展和整體核心能力。他們也注重基礎技能，例如批判性思維，例如文化欣賞。這就是我們實時看到的趨勢，而且它正在發生。這就是豐富學習——我們的豐富學習計畫試圖解決的問題。

We offer comprehensive learning programs to aid learners with their overall development. And doing so, we hope to capture some of the market opportunities presented by this broader trend. You also asked about operating metrics. We see operating metrics more as a result of both market demand and our own operating capabilities. So when we manage our business, our priorities have always been on, one, delivering products and services that create user value and address market demand; and two, delivering our services through an operational efficient way. So when you're looking at -- when you combine those two factors and look at our operating metrics such as retention rate, such as utilization rate that they all have been fairly stable over the last few quarters. I hope that answers your question, Felix.

我們提供全面的學習計劃，幫助學習者全面發展。這樣做，我們希望抓住這一更廣泛趨勢帶來的一些市場機會。您也詢問了營運指標。我們更將營運指標視為市場需求和我們自身營運能力的結果。因此，當我們管理業務時，我們的首要任務始終是：一是提供能夠創造使用者價值、滿足市場需求的產品和服務；二是提供能夠創造使用者價值、滿足市場需求的產品和服務。第二，透過高效率運作的方式提供我們的服務。因此，當您結合這兩個因素並查看我們的營運指標（例如保留率）時，例如利用率，它們在過去幾季中都相當穩定。我希望這能回答你的問題，菲利克斯。

That's clear. Thank you very much.

很清楚。非常感謝。

Yiwen Zhang, China Renaissance.

張藝文，中國文藝復興。

Hi, good evening, management. Thanks for taking my question. So my question is regarding our learning center. So how many centers we added during the quarter and how should we think about pace of the remaining of the quarters? And also, over the longer term, what sort of expansion rate are we looking at? Thank you.

嗨，晚上好，管理層。感謝您提出我的問題。我的問題是關於我們的學習中心的。那麼，我們在本季度增加了多少個中心，我們應該如何考慮剩餘季度的進度？而且，從長遠來看，我們正在考慮什麼樣的擴張速度？謝謝。

Yiwen, thanks for the question. This is Jackson. I'll take this one. First, I'd just like to say an offline learning center network, we think is critical to our overall user experience, right? When we think about how to manage our learning center network, as we've discussed on the -- during the last few quarters, we take a measured approach where we take into consideration market demand from certain areas that we're considering opening up new learning centers and also balancing that with our own operating capabilities, right? So as you see in the last couple of quarters, it's a dynamic and measured approach when we think about our offline footprint.

伊文，謝謝你的提問。這是傑克遜。我要這個。首先，我想說一個線下學習中心網絡，我們認為對我們整體的用戶體驗至關重要，對嗎？當我們考慮如何管理我們的學習中心網絡時，正如我們在過去幾個季度中討論的那樣，我們採取了一種審慎的方法，考慮到我們正在考慮開闢新的某些領域的市場需求。並平衡我們自己的營運能力，對吧？因此，正如您在過去幾個季度中看到的那樣，當我們考慮我們的離線足跡時，這是一種動態且經過衡量的方法。

In this quarter, the number of our learning centers expanded, and that's partially in preparation for the upcoming summer vacation. So we don't expect the same level of growth for offline learning center in the future for every single quarter. I hope that answers your question, Yiwen.

本季度，我們的學習中心數量有所增加，部分原因是為即將到來的暑假做準備。因此，我們預期線下學習中心未來每季都不會出現同樣水準的成長。我希望這能回答你的問題，伊文。

That's helpful. Thank you.

這很有幫助。謝謝。

Timothy Zhao, Goldman Sachs.

提摩西·趙，高盛。

Great. Good evening, Alex, Jackson, and Fong. Thank you for taking my question and congrats on the very strong set of results. My question is regarding the artificial intelligence. Just wondering if management can provide us with an overview on whether -- how the AI technology has changed your business operation strategy. And I do notice that you -- as you put in the prepared remarks, you are integrating more AI features into the content solutions. And the company also released some AI driven apps over the past quarter. Just wondering if the company can share more specific product plans in the future in terms of the AI-powered products. Thank you.

偉大的。晚上好，亞歷克斯、傑克森和方。感謝您提出我的問題，並祝賀您取得如此強勁的成績。我的問題是關於人工智慧的。只是想知道管理層是否可以向我們提供人工智慧技術是否如何改變您的業務營運策略的概述。我確實注意到，當您發表準備好的評論時，您正在將更多人工智慧功能整合到內容解決方案中。該公司在過去的季度也發布了一些人工智慧驅動的應用程式。只是想知道該公司未來是否可以在人工智慧產品方面分享更具體的產品計劃。謝謝。

Hey, Timothy, this is Alex. Let me take this one on. And I think for all the friends on the call, as you can recall in the last 1.5 years, we've been discussing the topic of artificial intelligence in education. So it's a topic that's very near and dear to our heart. And let me try to unpack those questions at a few different levels.

嘿，蒂莫西，這是亞歷克斯。讓我來接這個。我想各位參加電話會議的朋友們，你們還記得在過去的 1.5 年裡，我們一直在討論人工智慧在教育領域的話題。所以這是一個我們非常關心的話題。讓我試著從幾個不同的層面來解答這些問題。

So first of all, I think we really -- and we've been really looking forward to the power unleashed by the large language model in this next generation of artificial intelligence to really help us reimagine the future of education. And I think at the broadest level and at a societal level beyond ourselves as a company in our industry is really to think about redefining the goals of education and how do we help the next generation of youth children to grow up with artificial intelligence and develop into whole persons for the future. And that's an effort that we've really been working with a broad array of stakeholders across many different sectors of society.

首先，我認為我們真的——而且我們一直非常期待下一代人工智慧中的大型語言模型所釋放的力量，以真正幫助我們重新構想教育的未來。我認為，在最廣泛的層面和社會層面上，作為我們這個行業的一家公司，我們真正要思考的是重新定義教育的目標，以及我們如何幫助下一代青少年在人工智慧的幫助下成長並發展成為整個人的未來。這是我們一直在與社會許多不同部門的廣泛利益相關者合作的努力。

As a second level, I think it's really already reshaping how we develop product and services. And I think I discussed this in the previous call, we really think there is a huge opportunity to now make it possible to have high-quality teaching, individualized learning and affordable cost all together in our product and services. And the third level, it's been very effective in terms of helping us improving operational efficiency in terms of how we develop education content and in terms of how we provide human-to-human services aided by AI as well as internal coding and development.

作為第二個層面，我認為它確實已經重塑了我們開發產品和服務的方式。我想我在之前的電話會議中討論過這一點，我們確實認為現在有一個巨大的機會，可以在我們的產品和服務中實現高品質的教學、個人化學習和負擔得起的成本。第三個層面，它非常有效地幫助我們提高營運效率，包括如何開發教育內容、如何提供人工智慧輔助的人對人服務以及內部編碼和開發。

As we look forward, I think we'll continue to embrace large language models and with our own efforts on fine-tuning and enhance data quality, in terms of model training to really make these models, I would say, appropriate in three regards. The first thing is they need to be age appropriate. If you think about the K-12 period, really one or two years would define a major developmental milestone. So what's the right age-appropriate way to align the model with a 5-year-old versus a 10-year-old versus a 15-year-old. So that's the first age-appropriate alignment for the model.

展望未來，我認為我們將繼續擁抱大型語言模型，並透過我們自己的努力在模型訓練方面進行微調和提高資料質量，以真正使這些模型在三個方面適用。首先，他們需要適合年齡。如果你考慮 K-12 時期，實際上一兩年就可以定義一個重要的發展里程碑。那麼，將模型與 5 歲、10 歲和 15 歲的孩子進行匹配的正確的適合年齡的方法是什麼？這是模型的第一個適合年齡的對齊方式。

The second thing is really subject and content appropriate. We've already had this experience in the last 1.5 year that for the model to tackle a mathematical problem versus for the model to answer a question about the humanities. These require very different approach, right? So this is a subject and content appropriate.

第二件事是主題和內容確實合適。我們在過去 1.5 年裡已經有了這樣的經驗：模型解決數學問題與模型回答人文問題。這些需要非常不同的方法，對吧？所以這是一個合適的主題和內容。

And the third one, I would say, it's scenario appropriate. If it's a scenario while the student is consuming content on our learning devices versus the student has an active question that is putting to the AI versus some of the other scenarios, we're looking at along the learning journey, that also need the model to be very situational and scenario aware. So in the end, we really hope to bring a truly personalized experience to the students along the entirety of their learning journey.

我想說，第三個是適合場景的。如果這是一個場景，即學生在我們的學習設備上消費內容，而學生有一個主動向人工智慧提出的問題，而與其他一些場景相比，我們正在研究整個學習過程，這也需要模型來非常注重情境和場景。所以最後，我們真的希望在學生的整個學習過程中為他們帶來真正個人化的體驗。

So in terms of examples on products, in this fiscal quarter, we launched a new mathematical search and Q&A tool, which helps students solve difficult math problems through guided inquiry. The artificial intelligence-driven features incorporated into our learning devices are also providing learners with accessible and reliable learning aids.

所以在產品範例方面，在本財季，我們推出了新的數學搜尋和問答工具，透過引導式探究幫助學生解決數學難題。我們的學習設備中融入的人工智慧驅動功能也為學習者提供了方便且可靠的學習輔助工具。

In the future, we really look forward to enhancing the productization of AI and leveraging different sorts of -- different forms of products to reach a broader user base. Well, as I mentioned before, we'll continue to train models to be age, subject, content, and scenario appropriate by utilizing larger and more diverse and higher-quality data sets. So this comprehensive approach, we think will really help our artificial intelligence solutions to be more reliable and capable of addressing a wider range of user needs across different scenarios. So Timothy, I hope that answers your question.

未來，我們非常期待加強人工智慧的產品化，利用不同種類、不同形式的產品來覆蓋更廣泛的用戶群。嗯，正如我之前提到的，我們將繼續利用更大、更多樣化、更高品質的資料集來訓練適合年齡、主題、內容和場景的模型。因此，我們認為這種綜合方法將真正幫助我們的人工智慧解決方案更加可靠，並能夠滿足不同場景下更廣泛的使用者需求。蒂莫西，我希望這能回答你的問題。

Yeah. Thank you.

是的。謝謝。

Xiaodan Zhang, CICC.

張曉丹，中金公司。

Hi, thanks, Alex, Jackson, and Fong for taking my question and congrats on the solid quarter. So my question is regarding your cash usage plan. Could you give us some color on your future investment strategy as well as the shareholder return schemes? Thank you.

你好，謝謝 Alex、Jackson 和 Fong 提出我的問題，並祝賀這個季度的穩定表現。所以我的問題是關於您的現金使用計劃。您能為我們介紹一下您未來的投資策略以及股東回報計畫嗎？謝謝。

Xiaodan, thanks for the question. This is Jackson. I'll take this one. Just to recap, as of May 31, 2024, the company had USD3.8 billion in cash and cash equivalents, short-term investments and restricted cash, both current and non-current combined. When we think about areas of investments, we're interested in investment areas that could further improve our existing product services that could supplement our capabilities or advance our business expansions. Meanwhile, as our industry is evolving and as new technologies are developing, we'll seek opportunities to make strategic investments into adopting new technologies in our business.

小丹，謝謝你的提問。這是傑克遜。我要這個。回顧一下，截至 2024 年 5 月 31 日，該公司擁有 38 億美元的現金和現金等價物、短期投資和限制性現金（包括流動和非流動現金）。當我們考慮投資領域時，我們感興趣的是能夠進一步改善我們現有產品服務的投資領域，這些領域可以補充我們的能力或促進我們的業務擴張。同時，隨著我們行業的發展和新技術的發展，我們將尋求機會進行策略性投資，在我們的業務中採用新技術。

When we think about our investment strategy, we will aim to adopt a balanced and prudent approach. Xiaodan, you asked about shareholder return. We're always looking for ways to create value for our long-term shareholders. In the past, we have taken diversifying measures to generate shareholder returns, and we'll continue to seek opportunities to generate return for our shareholders. I hope that answers your question, Xiaodan.

當我們思考我們的投資策略時，我們會採取平衡、審慎的態度。小丹，你問的是股東回報。我們一直在尋找為長期股東創造價值的方法。過去，我們採取了多元化的措施來為股東創造回報，我們將繼續尋找為股東創造回報的機會。我希望這能回答你的問題，小丹。

Thank you. That's helpful.

謝謝。這很有幫助。

Alice Cai, Citi.

愛麗絲蔡，花旗銀行。

Good evening, management team. I'm Alice from Citi. And I have a question. First of all, congratulations on your strong result. I have a question. I'm wondering if you could provide an update on the xPad's current strategy and your outlook for the business. What are the key opportunities and challenges you foresee? Thank you so much.

晚上好，管理團隊。我是花旗銀行的愛麗絲。我有一個問題。首先，恭喜你們取得了優異的成績。我有一個問題。我想知道您是否可以提供有關 xPad 當前策略的最新資訊以及您對業務的展望。您預見到的主要機會和挑戰是什麼？太感謝了。

This is Alex. Let me take this question about xPad. So I mentioned in the earlier part of this call, is the fundamental value our learning devices provide is this ability for students to have a self-directed learning experience at home in their discretionary time in their own pace. So I think that is the really -- the grounding I'd like to start with.

這是亞歷克斯。我來回答一下關於xPad的問題。因此，我在本次電話會議的前面部分提到，我們的學習設備提供的基本價值是讓學生在家中按照自己的步調自由支配時間獲得自主學習體驗。所以我認為這才是我真正想要開始的基礎。

What we also see is that with a device that integrates hardware, software, content, and artificial intelligence features, we're really providing a much more personalized experience, focused on the personal development of the children and also, it really fits much more seamlessly with the learning journey. With this integrated approach, the device is much more aware of the situation of where the student is on the learning journey, what types of challenges and issues we need to help solve at that moment on demand from the students. So we really think that's a huge opportunity. And I think we are just starting to scratch the surface of the future potential of this.

我們還看到，透過整合硬體、軟體、內容和人工智慧功能的設備，我們確實提供了更個人化的體驗，專注於孩子們的個人發展，而且它確實更加無縫地貼合隨著學習之旅。透過這種整合方法，設備可以更了解學生在學習過程中所處的情況，以及我們當時需要根據學生的需求來幫助解決哪些類型的挑戰和問題。所以我們真的認為這是一個巨大的機會。我認為我們才剛開始觸及其未來潛力的表面。

So in terms of how we look at the business strategy going forward, we really -- we continue to improve our -- the functionality of our devices. And this is an ongoing effort. We provide those updates regularly to all the installed base, to all the users who are currently using xPad. We're increasing the learning content library, and we've been doing that in the last six quarters. We'll also expand our go-to-market capabilities, and we really aim to reach more users and empower them with the self-directed learning scenario.

因此，就我們如何看待未來的業務策略而言，我們確實——我們繼續改進——我們設備的功能。這是一項持續的努力。我們定期向所有安裝基礎以及目前使用 xPad 的所有用戶提供這些更新。我們正在增加學習內容庫，過去六個季度我們一直在做這件事。我們還將擴大我們的市場推廣能力，我們的真正目標是接觸更多用戶並為他們提供自主學習場景。

So in May -- I think Jackson mentioned earlier, in May, we introduced new SKUs. And so now we have a number of different SKUs on the market. We think this is really bringing users a wider range of options and choices in terms of learning device products. The xPad classic model 2024, which we've rolled out a couple of months ago, it really features a new version of hardware design, the vision protection, powerful processor for overall performance and especially AI features.

所以在 5 月——我想 Jackson 之前提到過，我們在 5 月推出了新的 SKU。因此，現在我們在市場上有許多不同的 SKU。我們認為這確實為用戶在學習設備產品方面帶來了更廣泛的選擇和選擇。我們幾個月前推出的 xPad 經典型號 2024，它確實具有新版本的硬體設計、視力保護、強大的處理器整體性能，尤其是 AI 功能。

So when you look at where things are in the key metrics that we always look at is really user engagement and learning outcome. And since we've been on the market for 1.5 year, our user base has really been expanding. This is an installed base perspective. It's really been expanding. And even with the expanded user base, I think we've witnessed a steady level of user engagement. And I think that's a validation that the product is providing the value to the customers, and we're really looking forward to continue to work on this user experience in the future. So I hope that answers your question.

因此，當您查看關鍵指標中的位置時，我們始終關注的實際上是用戶參與和學習成果。自從我們進入市場 1.5 年以來，我們的用戶群確實在不斷擴大。這是安裝基礎的角度。確實一直在擴大。即使用戶群不斷擴大，我認為我們也見證了用戶參與度的穩定水準。我認為這證明了該產品正在為客戶提供價值，我們非常期待未來繼續致力於這種用戶體驗。所以我希望這能回答你的問題。

Thank you so much for all the detailed sharing. Thanks.

非常感謝大家的詳細分享。謝謝。

All right. We have reached the end of the question-and-answer session. Thank you all very much for your questions. I'll now turn the conference back to the management team for closing comments.

好的。我們的問答環節已經結束。非常感謝大家提出的問題。現在我將把會議轉回給管理團隊以徵求結束意見。

So again, thank you all for joining the call today, and we'll look forward to seeing you next quarter. Thank you. Bye-bye.

再次感謝大家參加今天的電話會議，我們期待下個季度見到您。謝謝。再見。

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

感謝您參加今天的會議。這確實結束了該程式。您現在可以斷開連線。