TCTM Kids IT Education Inc (TCTM) 2018 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Tarena International Second Quarter 2018 Earnings Conference Call.

女士們、先生們，感謝大家的支持，歡迎參加塔瑞納國際 2018 年第二季度收益電話會議。

(Operator Instructions) Today's conference is being recorded.

（操作員指示）今天的會議正在錄製。

If you have any objections, you may disconnect at any time.

如果您有任何異議，可以隨時斷開連接。

I would now like to turn the call over to your host for today's conference, Ms. Lei Song, Tarena's Reporting Director.

現在我想將電話轉給今天會議的東道主，塔瑞納的報告總監雷松女士。

Thank you.

謝謝。

Please go ahead.

請繼續。

Thank you, operator.

謝謝你，接線員。

Hello, everyone, and welcome to Tarena's Second Quarter 2018 Earnings Conference Call.

大家好，歡迎參加Tarena 2018年第二季度收益電話會議。

The company's earnings results were released earlier today, and are available on our IR website, ir.tedu.cn as well as on newswire services.

該公司的盈利結果於今天早些時候發布，可在我們的投資者關係網站 ir.tedu.cn 以及新聞專線服務上查看。

Today, you will hear opening remarks from Tarena's Founder, Chairman and CEO, Mr. Shaoyun Han; followed by our Chief Financial Officer, Dennis Yang, who will take you through the company's operational and financial results for the second quarter 2018 and give guidance for the [third] quarter (corrected by company after the call).

今天，您將聽到Tarena創始人、董事長兼首席執行官韓少雲先生的開場致辭；接下來是我們的首席財務官 Dennis Yang，他將向您介紹公司 2018 年第二季度的運營和財務業績，並給出[第三]季度的指導（由公司在電話會議後更正）。

After their prepared remarks, Mr. Han and Mr. Yang will be available to answer your questions.

在韓總和楊總做好準備發言後，將回答大家的問題。

Before we continue, please note that the discussion today will contain certain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

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某些前瞻性陳述。

These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.

這些前瞻性陳述存在風險和不確定性，可能導致實際結果與我們當前的預期存在重大差異。

Tarena does not assume any obligation to update any forward-looking statements, except as required under applicable law.

除適用法律要求外，Tarena 不承擔更新任何前瞻性陳述的義務。

Also, please note that some of the information to be discussed includes non-GAAP financial measures as defined in Regulation G. The U.S. GAAP financial measures and information reconciling these non-GAAP financial measures to Tarena's financial results prepared in accordance with U.S. GAAP are included in Tarena's earnings release, which has been posted on the company's IR website at ir.tedu.cn.

另請注意，要討論的一些信息包括法規 G 中定義的非 GAAP 財務措施。其中包括美國 GAAP 財務措施以及將這些非 GAAP 財務措施與根據美國 GAAP 編制的 Tarena 財務業績進行協調的信息。 Tarena 的財報已發佈在該公司的IR 網站ir.tedu.cn 上。

Finally, as a reminder, this conference is being recorded.

最後，提醒一下，本次會議正在錄製中。

In addition, a webcast of this conference call is available on Tarena's Investor Relations website.

此外，Tarena 的投資者關係網站還提供本次電話會議的網絡直播。

I will now turn the call over to Mr. Shaoyun Han, Tarena's Founder, Chairman and CEO.

現在我將把電話轉給Tarena創始人、董事長兼首席執行官韓少雲先生。

Mr. Han will speak in Mandarin and Mr. Yang will translate.

韓先生將用普通話發言，楊先生將進行翻譯。

(foreign language)

（外語）

Thank you, Lei, and welcome, everyone to our second quarter 2018 earnings conference call.

謝謝雷，歡迎大家參加我們的 2018 年第二季度財報電話會議。

(foreign language)

（外語）

First of all, I'm very pleased to report that our net revenues in second quarter increased by 13.6% to reach RMB 518 million, meeting our previously issued guidance.

首先，我很高興地報告，我們第二季度的淨收入增長了 13.6%，達到人民幣 5.18 億元，達到了我們之前發布的指引。

During this quarter, the growth rate of our student enrollment in adult education business has recovered.

本季度，成人教育業務招生增速有所恢復。

Meanwhile, we focus on resources optimization and cost control, which led to improvement in many efficiency indicators.

同時，我們注重資源優化和成本控制，多項效率指標得到提升。

In addition, our kid programming education business has once more achieved rapid growth in both student enrollment and tuition cash receipts.

此外，少兒編程教育業務在招生規模和學費現金收入方面再次實現快速增長。

We enrolled 10,570 students during this quarter, achieving a year-over-year increase of more than 5x.

本季度我們招收了 10,570 名學生，同比增長超過 5 倍。

The total K-12 cash receipts of this quarter was approximately RMB 127 million and the total (inaudible) revenue of K-12 business is about 12.2% of Tarena's consolidated total contract value.

本季度K-12現金收入總額約為1.27億元人民幣，K-12業務總收入（聽不清）約為Tarena合併總合同價值的12.2%。

(foreign language)

（外語）

In adult education business, student enrollment growth is a strong factor contributing to our net revenue growth.

在成人教育業務中，學生入學率增長是推動我們淨收入增長的重要因素。

The adult education market is steadily improving and gradually recovering.

成人教育市場穩步改善並逐步復甦。

Enrollment in this quarter was 37,138, achieving a year-over-year growth of 21.6%.

本季度入學人數為37,138人，同比增長21.6%。

Enrollment through retail channel delivered 29,448 with a year-over-year growth of 12%, while enrollment through university channel reached 7,690 with year-over-year growth of 81%.

其中，零售渠道招生29,448人，同比增長12%；大學渠道招生7,690人，同比增長81%。

The main driver of the growth in university channel is through joint major partnership with the universities.

大學渠道增長的主要驅動力是通過與大學的聯合主要合作夥伴關係。

As we mentioned in previous calls, this kind of enrollment will help us to establish cooperation in depth with universities, to ensure long-term growth to enhance enrollment efficiency and reduce student acquisition cost.

正如我們在之前的電話中提到的，這種招生方式將有助於我們與大學建立深度合作，確保長期增長，從而提高招生效率，降低生源成本。

However, with the 2- to 3-year education period, the revenue recognition period is also lessened accordingly.

但隨著教育年限的2至3年，收入確認年限也相應縮短。

Certain tuition with signed contract has deferred to later years due to that the education service will be delivered in the later years.

由於教育服務將在以後幾年提供，某些已簽訂合同的學費已推遲到以後幾年。

This results in a gap between the growth of student enrollment and the growth of net revenue.

這導致學生入學人數增長與淨收入增長之間存在差距。

For example, during the first half of 2018, the student enrollment through university channel contributed 18% of total student enrollment and was 17% of total signed contract.

例如，2018年上半年，大學渠道招生佔招生總數的18%，佔簽約總數的17%。

While the net revenue contribution from -- the revenue from university students were about 8%.

而來自大學生的淨收入貢獻約為 8%。

Despite the temporary short-term impact on our net revenues with the business model of the student enrollment through university channel, the long-term partnership with universities will bring us rapid growth in student enrollment, which will lay a solid foundation for the company's adult education business in the future.

儘管大學渠道招生的業務模式對我們的淨收入造成暫時的短期影響，但與大學的長期合作關係將為我們帶來招生規模的快速增長，這將為公司的成人教育奠定堅實的基礎未來的生意。

(foreign language)

（外語）

Among Tarena's adult student Python course, Big Data course and Linux cloud computing course become more and more popular, contributing a total of 6,130 students in this quarter, which was 16.5% of total student enrollment, which also improved from last quarter.

塔瑞納的成人學生中Python課程、大數據課程和Linux雲計算課程越來越受歡迎，本季度共貢獻了6,130名學生，佔學生總數的16.5%，也較上季度有所提高。

We expect artificial intelligence-related courses will continue their rapid growth in the future.

我們預計未來人工智能相關課程將繼續快速增長。

Since last year, we promoted the advanced course modules and have successfully introduced to the market.

去年以來，我們推出高級課程模塊並成功推向市場。

We are going to continue the effort in promoting the advanced course modules.

我們將繼續努力推廣高級課程模塊。

The percentage of the students taking advanced modules increased to more than 20% this quarter, which helpes the company to accomplish a better service quality and to realize an increasing tuition revenue.

本季度參加高級模塊的學生比例增加至20%以上，這有助於公司實現更好的服務質量並實現學費收入的增長。

Tarena persists in the development of those IT courses and non-IT courses.

泰瑞納堅持IT課程和非IT課程的開發。

There are quite a few non-IT courses in our course development stage.

我們的課程開發階段有相當多的非IT課程。

Diversifying with more non-IT courses to be launched, Tarena's overall course structure will be better prepared to cope with the periodic fluctuation in education business brought by the IT industry business cycle.

隨著更多非IT課程的多元化推出，Tarena的整體課程結構將更好地應對IT行業景氣週期帶來的教育業務週期性波動。

In this way, Tarena is able to achieve steady growth in its adult education business with its competitive edge in the professional education area.

如此一來，塔瑞納憑藉其在職業教育領域的競爭優勢，成人教育業務得以穩步增長。

(foreign language)

（外語）

During this quarter, the company paid more attention to the distribution of resources, efficiently building new learning centers, adding more classrooms and seats.

本季度，公司更加註重資源分配，高效建設新的學習中心，增加教室和座位。

At the same time, efforts were put into optimizing human resources structures to improve operational efficiency.

同時，著力優化人力資源結構，提高運營效率。

The company have evaluated nonperforming centers one by one and closed or merged total of 16 centers.

公司對錶現不佳的中心一一進行了評估，關閉或合併了16個中心。

Since we take very positive view on IT professional education market in Tier-3 cities, we also aim to extend our presence and build up more seat capacity in Tier-3 cities.

由於我們對三線城市的IT專業教育市場非常看好，因此我們也致力於擴大我們在三線城市的業務並建立更多的席位容量。

Tarena opened 14 new centers, entering 6 new cities this quarter.

Tarena 本季度開設了 14 個新中心，進入了 6 個新城市。

At the end of second quarter, there were 198 adult learning centers, covering 67 cities with 52,153 seats, which represented 9% year-over-year growth.

截至二季度末，成人學習中心共有198個，覆蓋67個城市，擁有52,153個座位，同比增長9%。

By optimizing seat layout and usage, the seat utilization rate indicated an huge improvement from last quarter to 73.2%, narrowing the year-over-year gap, when comparing the same quarter last year of 73.6%.

通過優化座位佈局和使用，座位利用率較上季度大幅提升至73.2%，同比差距縮小，較去年同期的73.6%有所縮小。

Meanwhile, the company is adjusting its human resources structure step-by-step to aim to improve business operation efficiency, while ensuring to support new business growth.

同時，公司正在逐步調整人力資源結構，以提高業務運營效率，同時確保支持新業務增長。

During this quarter, we saw improvement in total selling and marketing expenses per student, which reduced from an average of 3 quarters, although the advertising spending per student was slightly higher than the last quarter.

在本季度，我們看到每個學生的總銷售和營銷費用有所改善，儘管每個學生的廣告支出略高於上一季度，但與前三個季度的平均水平相比有所下降。

The improvements in seat utilization rate and per capita productivity prove the effectiveness of centers' resource optimization strategy.

座位利用率和人均生產率的提高證明了中心資源優化策略的有效性。

We believe that this strategy will have positive impact in the future.

我們相信這一戰略將在未來產生積極影響。

(foreign language)

（外語）

Next, I would like to report the exciting progress in our kid education business during this quarter.

接下來我向大家匯報一下本季度我們少兒教育業務取得的令人振奮的進展。

As I mentioned previously, the student enrollment of kid education business continued a rapid growth, achieving more than 500% year-over-year increase, reaching 10,570.

正如我之前提到的，少教業務的招生規模持續快速增長，同比增長超過500%，達到10,570人。

The company will accelerate its investment in kid education business.

公司將加快對少兒教育業務的投資。

We built 15 centers for kid education.

我們建立了15個兒童教育中心。

By the end of this quarter, kid education business reached 99 learning centers.

截至本季度末，少兒教育業務達到99個學習中心。

There are also 21 shared learning sites with adult education business, which provides classrooms.

還有21個與成人教育企業合作的共享學習點，提供教室。

Our kid education business covers 39 cities by the end of this quarter.

截至本季度末，我們的少兒教育業務已覆蓋39個城市。

(foreign language)

（外語）

We believe that IT technology education will become more and more widely known in China, forming a phenomenal market with significant potential.

我們相信，IT技術教育將在中國越來越深入人心，形成一個具有巨大潛力的現象級市場。

Our core competitiveness to rapid expansion of K-12 education business in a short period our strong IT courses development ability uniquely originated from our adult education business.

我們的核心競爭力是K-12教育業務在短時間內迅速擴張，我們強大的IT課程開發能力獨特地源於我們的成人教育業務。

Our dual teacher teaching ability, our exceptional skills to recruit and train IT teaching faculties as well as our operating management teams in 67 cities.

我們的雙師教學能力，我們出色的IT師資招聘和培訓能力，以及我們遍布67個城市的運營管理團隊。

Tarena will continue to invest in course development, targeting to build a complete kid programming course system covering kids of age from 4 to 18 years old, maintaining our leading position in kid programming education market.

塔瑞納將持續投入課程開發，致力於打造覆蓋4-18歲少兒的完整少兒編程課程體系，保持在少兒編程教育市場的領先地位。

(foreign language)

（外語）

We noticed that recent change in government regulations related to kid education industry and believe that this will have positive impact on quality-oriented courses, including children programming education.

我們注意到近期政府對少兒教育行業相關法規的變化，相信這將對包括少兒編程教育在內的精品課程產生積極影響。

With the increasing importance of information technology and artificial intelligence skills, programming courses become more and more important.

隨著信息技術和人工智能技能的重要性日益增加，編程課程變得越來越重要。

Tarena will continue to invest in K-12 area in 2018 and in next 2 to 3 years in terms of new course research and development, network expansion as well as talent recruitment.

2018年及未來2至3年，Tarena將繼續在K-12領域進行新課程研發、網絡拓展以及人才招募等方面的投入。

We plan to open a total of 70 to 80 K-12 new centers in 2018 as well as adding another 20 to 30 centers by acquisition.

我們計劃在 2018 年開設總計 70 至 80 個 K-12 新中心，並通過收購再增加 20 至 30 個中心。

Total number of learning centers reach around 140 by the end of this year.

到今年年底，學習中心總數達到140個左右。

These initiatives require for more investment and may affect the margin level in short term as we -- as the new learning centers are still in the ramp-up period before it could breakeven.

這些舉措需要更多的投資，並且可能會在短期內影響利潤水平，因為新的學習中心仍處於盈虧平衡之前的準備階段。

However, given the broad market prospect and rapid business growth, K-12 business will provide a strong foundation for the company to grow in the coming years.

然而，鑑於廣闊的市場前景和快速的業務增長，K-12業務將為公司未來幾年的增長提供堅實的基礎。

(foreign language)

（外語）

Our non-GAAP operating loss in this quarter was RMB 128 million, lower than non-GAAP operating profit of RMB 55 million in the same period last year.

本季度我們的非 GAAP 運營虧損為人民幣 1.28 億元，低於去年同期的非 GAAP 運營利潤人民幣 5500 萬元。

On one hand, with the past year's rapid expansion of the kid education business, 70% of the K-12 centers are less than 1-year-old and they are in the financial loss position, which led to a non-GAAP operating loss of RMB 77 million.

一方面，隨著過去一年少兒教育業務的快速擴張，70%的K-12中心成立時間不到1年，處於財務虧損狀態，導致出現非GAAP運營虧損7700萬元人民幣。

We believe that with more and more students in class, more and more k-12 education centers will start to make profit.

我們相信，隨著越來越多的學生上課，越來越多的k-12教育中心將開始盈利。

On the other hand, there were non-GAAP operating loss of RMB 51 million from adult education business.

另一方面，成人教育業務的非公認會計準則經營虧損為人民幣5100萬元。

The reason for year-over-year decrease of profit was due to the significant portion of revenue which was deferred to later periods caused by the student enrollment in joint major program model as well as the positive impact from resources integration from adult learning centers and human resources have not been fully realized in this quarter.

利潤同比下降的原因是聯合專業模式招生導致很大一部分收入遞延至後期，以及成人學習中心和人力資源整合的積極影響。本季度資源尚未完全發揮。

Our CFO, Dennis, will elaborate on this further in his later remarks.

我們的首席財務官丹尼斯將在稍後的講話中進一步闡述這一點。

(foreign language)

（外語）

To sum up, I'm very pleased to see the gradual recovery of student enrollment in adult education business during the second quarter of 2018; the smooth progress in joint major program with partner universities as well as the positive effect from improvement of enrollment efficiency.

綜上所述，我很高興看到2018年第二季度成人教育業務的招生規模逐漸恢復；與合作院校聯合辦學的順利推進以及招生效率提升的積極效果。

We believe that the main drivers for the growth of adult education business will continue to exist.

我們認為成人教育業務增長的主要動力將繼續存在。

For example, the number of annual university graduates and the fact of low job replacement rate of university graduates.

例如，每年大學畢業生的數量以及大學畢業生就業替代率較低的事實。

We are confident in the long-term growth in adult education business.

我們對成人教育業務的長期增長充滿信心。

We will continuously upgrade our course content and the business model according to the change in the market to maintain Tarena's leading position in the industry.

我們將根據市場的變化不斷升級我們的課程內容和商業模式，以保持Tarena在行業中的領先地位。

In addition, Tarena delivered higher-than-expected student enrollment and growth of cash receipts in our K-12 business.

此外，Tarena 的 K-12 業務的學生入學率和現金收入增長均高於預期。

With broad market, Tarena's inherent competitiveness and the favorable government regulations, we have every confidence in this business segment.

廣闊的市場、Tarena固有的競爭力以及有利的政府法規，我們對這一業務領域充滿信心。

We'll further expand our center network, recruit talents and improve course structures, ensuring rapid improvement of business indicators.

我們將進一步拓展中心網絡、招募人才、完善課程結構，確保業務指標快速提升。

The solid performance and growth in both adult and kid education business ensures the company to meet its business target in 2018 and will lay a strong foundation for the long-term growth.

成人及少兒教育業務的穩健業績和增長保證了公司完成2018年的經營目標，並為公司的長期增長奠定了堅實的基礎。

(foreign language)

（外語）

With that, I will turn the call over to our CFO, Dennis Yang, to discuss the quarter financial results and outlook for the third quarter.

接下來，我將把電話轉給我們的首席財務官 Dennis Yang，討論本季度的財務業績和第三季度的前景。

Thank you, Shaoyun, and hello, everyone, on the call.

謝謝少雲，大家好。

We're very pleased to see the professional education business student enrollment growth recovered and exciting results from our K-12 education segment in second quarter.

我們很高興看到第二季度專業教育商科學生入學人數恢復增長以及我們的 K-12 教育部門取得了令人興奮的成果。

Since you already have the detailed numbers in press release, I will review financial results for this quarter briefly by focusing some important areas.

由於您已經在新聞稿中獲得了詳細數據，因此我將重點關註一些重要領域，簡要回顧本季度的財務業績。

Let's start with net revenues.

讓我們從淨收入開始。

For the second quarter of 2018, our net revenues increased by [13.6%] (corrected by company after the call) year-over-year to RMB 518 million, which consisted of RMB 488 million from adult education business and RMB 29 million from kids training programs.

2018年第二季度，我們的淨收入同比增長[13.6%]（電話後公司修正）至人民幣5.18億元，其中人民幣4.88億元來自成人教育業務，人民幣2900萬元來自少兒業務培訓計劃。

One major driver for adult business net revenue growth is the enrollment growth.

成人業務淨收入增長的主要驅動力之一是入學人數的增長。

The total course enrollment in this quarter increased by 5% year-over-year to 29,355, which was the main contributor to the net revenue growth this quarter.

本季度課程總註冊人數同比增長 5% 至 29,355 人，是本季度淨收入增長的主要貢獻者。

We observed professional training market gradual recovery in this quarter and our total student enrollments reached at 37,138, which represented a 21.6% year-over-year growth.

本季度我們看到專業培訓市場逐漸復蘇，在校生總數達到37,138人，同比增長21.6%。

Accelerated student enrollment growth will be a lead indicator of fast revenue growth in the future quarters.

學生入學率的加速增長將成為未來幾個季度收入快速增長的先行指標。

Besides enrollment growth, ASP increase is another driver for adult business net revenue growth.

除了入學人數增長之外，平均售價的增長是成人業務淨收入增長的另一個驅動力。

In this quarter, average revenue per course enrollment was RMB 16,638 which was 3% higher than the same period a year ago.

本季度，每門課程平均招生收入為人民幣16,638元，比去年同期增長3%。

Higher ASP resulted from the increase of our standard tuition fees for selected courses and roll-out of advanced course modules since 2017.

自 2017 年以來，我們提高了部分課程的標準學費以及推出了高級課程模塊，從而導致平均售價上升。

In the second quarter, the company slowed down adding new seats and optimized center resources by closing down or merging 16 nonperforming learning centers.

第二季度，公司放慢了新增席位的速度，並通過關閉或合併16個表現不佳的學習中心來優化中心資源。

By the end of this quarter, our adult business seat capacity was 62,153, which represented a 9% year-over-year increase.

截至本季度末，成人商務艙座位數為62,153個，同比增長9%。

We also saw better seat utilization rate, which was 73.2% in this quarter, narrowing the year-over-year gap when comparing the same quarter last year of 73.6%.

我們還看到了更好的座位利用率，本季度為 73.2%，與去年同期的 73.6% 相比縮小了同比差距。

Despite the seat utilization rate improvement, gross margin declined by 790 basis points year-over-year to 60.7%.

儘管座位利用率有所改善，但毛利率同比下降 790 個基點至 60.7%。

Such a decline in gross margin was mainly due to the following couple of reasons: First, K-12 business gross margin drag by approximately 500 bps.

毛利率下降主要是由於以下幾個原因：首先，K-12業務毛利率拖累約500個基點。

The company has built up 57 K-12 learning centers in the past 12 months.

該公司在過去 12 個月內建立了 57 個 K-12 學習中心。

And by the end of this quarter, we have 99 learning centers.

截至本季度末，我們擁有 99 個學習中心。

As most of K-12 learning centers have not yet reached an ideal utilization level, current gross margin of K-12 business is significantly lower than the margins of our traditional adult training business.

由於大部分K-12學習中心尚未達到理想的利用率水平，目前K-12業務的毛利率明顯低於我們傳統成人培訓業務的毛利率。

Second, deferral of revenue from joint major program students.

其次，推遲聯合專業學生的收入。

As we communicated in previous quarters, Tarena started to partner with universities to promote joint major programs from 2017.

正如我們在前幾個季度所溝通的，Tarena 從 2017 年開始與大學合作推廣聯合專業項目。

Joint major program normally lasts 2 to 3 years and majority of training is delivered in the students' third year on campus.

聯合專業課程通常持續 2 至 3 年，大部分培訓在學生在校的第三年進行。

In 2017, we recruited more than 5,000 students under such multi-year programs and most of the revenue of these 2017 joint major program students will defer into 2019, which is the third year of 2017 students.

2017年，我們在此類多年項目下招收了5,000多名學生，這些2017年聯合專業項目學生的大部分收入將推遲到2019年，即2017年學生的第三年。

Overall speaking, the key reason for the decline of gross profit margin was ramp up of 2 new businesses, K-12 STEAM courses and on-campus multi-year joint major programs.

總體而言，毛利率下降的主要原因是K-12 STEAM課程和校內多年聯合專業項目兩項新業務的增加。

We expect gross margin will improve along with the maturity of such businesses.

我們預計毛利率將隨著此類業務的成熟而改善。

Meanwhile, the company continues to improve center resources utilization of our traditional business by aligning seat capacity increase with enrollment growth and by optimizing our current learning center resources.

同時，公司通過將座位容量的增加與入學人數的增長相結合，並優化我們現有的學習中心資源，不斷提高我們傳統業務的中心資源利用率。

We believe that improved seat utilization can also drive future gross margin expansion.

我們相信，座位利用率的提高也可以推動未來毛利率的擴張。

And now, let's move on to operating expenditures.

現在，讓我們繼續討論運營支出。

First, let's talk about student acquisition cost.

首先，我們來談談生源成本。

As Han Zong mentioned, the professional training market continued recovering in the second quarter and at the same time, the company also attempted to adjust acquisition channel mix and to improve sales team productivity.

韓總提到，第二季度專業培訓市場持續復甦，同時公司也嘗試調整收購渠道結構，提高銷售團隊生產力。

Although average advertising spending per students were pretty much flattish in second quarter as compared with the prior quarter, total student acquisition cost per student, which is defined as total selling and marketing expenses divided by total student enrollment, of adult business was RMB 6,134 in the second quarter as compared to RMB 5,083 in the same quarter in 2017 and to RMB 6,789 in the first quarter of 2018.

儘管第二季度每個學生的平均廣告支出與上一季度相比基本持平，但成人業務的每個學生的總學生獲取成本（定義為總銷售和營銷費用除以總入學人數）為人民幣6,134 元。相比之下，2017 年同期為 5,083 元，2018 年第一季度為 6,789 元。

We noted approximately 21% year-over-year increase of average student acquisition cost.

我們注意到平均生源成本同比增長約 21%。

However, we also observed a 10% quarter-over-quarter improvement.

然而，我們還觀察到季度環比改善了 10%。

We believe that our center resource optimization strategy start to bear fruits in the quarter and we plan to further improve sales efficiency by adherence to our current acquisition optimization strategies and continued sales team skill development.

我們相信我們的中心資源優化策略將在本季度開始取得成果，我們計劃通過堅持當前的收購優化策略和持續的銷售團隊技能發展來進一步提高銷售效率。

Second, in G&A expenses, we recorded bad debt allowances for doubtful account receivables of RMB 33 million this quarter to reflect the difficulties in collection of account receivables from 2017 students.

其次，在管理費用中，本季度我們計提了呆賬應收賬款壞賬準備人民幣3300萬元，以反映2017屆學生應收賬款催收的困難。

Company extended credits to some of 2017 students who failed in securing loans from third-party loan providers, due to capricious credit policy of loan companies in the second half of 2017.

由於2017年下半年貸款公司的信貸政策反复無常，公司向部分未能從第三方貸款提供商獲得貸款的2017級學生提供了信貸。

As the company has established the partnership with a group of loan providers since late 2017, in our view, relatively high risk of account receivable from 2017 students is an isolated case and won't change the long-term outlook of bad debt provision levels in our adult business.

由於公司自 2017 年底以來已與一批貸款提供商建立了合作夥伴關係，我們認為 2017 屆學生應收賬款風險相對較高的情況屬於個案，不會改變公司壞賬準備水平的長期前景。我們的成人事業。

Third, let's discuss about R&D expenses.

第三，我們來討論一下研發費用。

Non-GAAP R&D expenses increased by RMB 17 million year-over-year to RMB 35 million this quarter, the incremental R&D spending were our research investments of multiple new courses in both adult and K-12 business sectors.

本季度非 GAAP 研發費用同比增加 1700 萬元人民幣至 3500 萬元人民幣，增量研發費用是我們對成人和 K-12 業務領域多個新課程的研究投資。

We believe these investments are crucial to make our courses abreast of the industry changes and continuously attractive to our students.

我們相信這些投資對於使我們的課程跟上行業變化並持續吸引學生至關重要。

For K-12 business, we enrolled 10,570 students this quarter.

對於 K-12 業務，本季度我們招收了 10,570 名學生。

The total tuition cash receipts were RMB 127 million and net revenue recorded was RMB 29 million.

學費現金收入總額為人民幣1.27億元，淨收入為人民幣2900萬元。

Despite broader business growth, our typical K-12 course lasts for about 1 year and during this the k-12 business ramp-up period, an operating loss for the business segment comes from K-12 student acquisition costs occurred ahead of revenue recognition.

儘管業務增長更廣泛，但我們典型的 K-12 課程持續約 1 年，在 k-12 業務加速期內，該業務部門的運營虧損來自於收入確認之前發生的 K-12 學生獲取成本。

By the end of the second quarter, about 70% of our K-12 learning centers have been in operation less than 1 year and those learning centers are still loss-making.

截至第二季度末，我們約70%的K-12學習中心運營時間不足1年，且仍處於虧損狀態。

Non-GAAP operating losses from kids business was about RMB 77 million for this quarter.

本季度兒童業務的非公認會計原則運營虧損約為人民幣 7700 萬元。

Although K-12 segment operating losses recently, we're confident that the K-12 business will be profitable in couple of years.

儘管 K-12 業務最近出現運營虧損，但我們有信心 K-12 業務將在幾年內實現盈利。

Our non-GAAP operating losses for this quarter was RMB 128 million as compared to an operating profit of RMB 55 million in the same quarter in 2017.

本季度我們的非 GAAP 運營虧損為人民幣 1.28 億元，而 2017 年同一季度的運營利潤為人民幣 5500 萬元。

Such a decline in non-GAAP operating profitability in the quarter were a combination of an increase of losses from K-12 business and an increase of losses from adult business due to deferral of revenues from joint major program students of 2017 to later years, higher student acquisition cost and incremental cost for some one-time issue.

本季度非 GAAP 營業利潤的下降是 K-12 業務虧損增加和成人業務虧損增加的綜合原因，原因是 2017 年聯合專業學生的收入推遲到以後年份，成人業務虧損增加。某些一次性問題的學生獲取成本和增量成本。

Income tax expenditure for this quarter included an withholding tax of RMB 24.7 million paid to Mainland China, which was risen from the payment of cash dividend made from our onshore entities to offshore parent company during this quarter.

本季度的所得稅支出包括向中國大陸繳納的預扣稅人民幣2,470萬元，該稅款是由於本季度境內實體向境外母公司支付的現金股息而增加的。

Finally, let me talk a little about operating cash flows.

最後，我想談談經營現金流。

Net cash inflows from operating activities for the second quarter of 2018 was RMB [80.5] million, (corrected by company after the call) which was the highest quarterly amount in the past 1 year.

2018年第二季度經營活動現金流入淨額為人民幣[8,05]百萬元（電話會議後公司修正），為近一年來最高季度金額。

This increase resulted from our accelerated tuition collection of our adult business in 2018 and our K-12 business enrollment growth, both of which brought us more significant deferred revenues in the balance sheet.

這一增長是由於我們2018年成人業務學費收繳的加速以及K-12業務入學人數的增長，這兩者都給我們的資產負債錶帶來了更顯著的遞延收入。

In the quarter, the company also used the cash balance in stock repurchases and the cash dividend payment with the total amount of USD 16.9 million.

本季度，公司還將現金餘額用於股票回購和現金股利支付，總額為1690萬美元。

Looking forward to the third quarter of 2018, we expect the total net revenues are between RMB 675 million and RMB 705 million, representing an increase of 18.8% to 24.1% on a year-over-year basis.

展望2018年第三季度，我們預計淨收入總額在人民幣6.75億元至人民幣7.05億元之間，同比增長18.8%至24.1%。

So now operator, we are open to take questions.

現在接線員，我們願意回答問題。

(Operator Instructions) Your first question comes from the line of Mariana Kou from CLSA.

（操作員說明） 您的第一個問題來自里昂證券的Mariana Kou。

I actually have 2 questions.

我實際上有兩個問題。

One is on the gross profit margin for the adult business.

一是成人業務的毛利率。

I understand, I think, just now on explanation, Yuduo Yang was explaining that it's always due to the joint major program.

我明白了，我想，剛才的解釋，楊玉朵是在解釋，總是因為聯合重大項目的原因。

But just wondering, in terms of the mix of the adult business in revenue terms or student terms, when do we expect that, that sales mix to kind of stabilize?

但只是想知道，就成人業務的收入組合或學生組合而言，我們預計銷售組合何時會穩定下來？

And then also on the GP margin to stabilize?

然後毛利率也趨於穩定？

And the second question, I guess, more high level at the operating profit margin level.

我想第二個問題是營業利潤率水平更高。

Understand that this year is an investment year for K-12, so how should we think about the next few years?

了解今年是K-12的投資年，那麼我們應該如何思考未來幾年呢？

I think we're kind of planning to expand into K-12 and kind of invest a lot.

我認為我們計劃擴展到 K-12 並進行大量投資。

If management could give us a little bit color of when we should expect [this level of investments] to level of?

如果管理層可以告訴我們什麼時候我們應該預期[這一水平的投資]達到的水平？

Thank you, Mariana.

謝謝你，瑪麗安娜。

Let me address 2 of your questions.

讓我回答您的 2 個問題。

The first question, your question about the gross profit margin.

第一個問題，關於毛利率的問題。

Yes, it's true that joint major program revenue deferral has adverse impact on our GP margin in 2018 as well as we also mentioned there's an adverse impact in 2017.

是的，聯合重大項目收入延期確實對我們 2018 年的毛利率產生了不利影響，我們也提到過 2017 年也會產生不利影響。

I also talk about this in our -- in the call that most of the revenue for the joint major program of 27 students will be recognized in 2019, which is the next year.

我也在我們的電話會議中談到了這一點，即 27 名學生的聯合專業項目的大部分收入將在 2019 年（即明年）得到確認。

So my view is our gross profit margin we're getting stabilized starting from 2019.

所以我的觀點是我們的毛利率從 2019 年開始趨於穩定。

And for -- maybe it spans a couple of years that GP margin impact will be phased out.

或許，毛利率的影響將在幾年內逐步消失。

That will be a gradual change in the future couple of years.

這將是未來幾年逐漸發生的變化。

Your second question about the OP margin.

你的第二個問題是關於OP利潤的。

The K-12 that's definitely a huge drag on OP margin on 2018.

K-12 無疑對 2018 年的運營利潤率造成了巨大拖累。

And we believe that K-12 with more and more learning centers, K-12 learning centers getting mature in the future couple of years.

我們相信K-12學習中心會越來越多，K-12學習中心將在未來幾年內變得成熟。

And we also are about to open 80 to 100 learning centers each of the future 2 years for our kids business.

我們還計劃在未來兩年每年為我們的兒童業務開設 80 到 100 個學習中心。

That means percentage of matured learning centers is getting greater over the years.

這意味著成熟學習中心的比例逐年增加。

So our projection shows that in 2020, the K-12 business we're at close to breakeven.

因此，我們的預測表明，到 2020 年，我們的 K-12 業務將接近收支平衡。

This is the OP margin for K-12.

這是 K-12 的 OP 利潤。

And for the adult business OP margin, still you will see then a gradual recovery over the years in 2019, 2020.

對於成人業務 OP 利潤率，您仍然會在 2019 年、2020 年看到逐漸恢復。

Again, the joint major program, this model has sort of adverse impact in 2018, 2019 because more students recruited under such multiyear program in 2018.

同樣，聯合專業項目，這種模式在 2018 年、2019 年產生了一些不利影響，因為 2018 年在這種多年期項目下招收了更多的學生。

With those -- the huge increase of students sign up for the multiple-year program and those revenue will be recognized in later years, as you have sort of adverse impact there, yes.

有了這些——報名參加多年計劃的學生大幅增加，這些收入將在以後幾年得到確認，因為你在那裡產生了某種不利影響，是的。

It is very likely that 2020, the joint major program OP margin we're getting stabilized.

到 2020 年，我們的聯合主要項目運營利潤率很可能會趨於穩定。

Your next question comes from the line of Fiona Chan from Buena Vista Fund.

您的下一個問題來自 Buena Vista Fund 的 Fiona Chan。

My first question is on the university channel.

我的第一個問題是在大學頻道上的。

I wanted to ask about the volatility in university enrollments.

我想問一下大學入學率的波動情況。

Is this seasonality or is this due to new university partners that we've made?

這是季節性因素還是由於我們建立了新的大學合作夥伴？

And how many university partners do we now have?

我們現在有多少大學合作夥伴？

The fluctuation were significant growth for the student enrollment in university channel this year, I think the core reason is the joint major program started in 2017 with a low base last year.

波動是今年大學渠道​​招生大幅增長，我認為核心原因是2017年開始的聯合專業，去年基數較低。

We [signed up] in more universities and colleges this year that showed very good growth, 81% year-over-year growth.

今年我們[簽約]了更多的大學和學院，這些大學和學院的增長非常好，同比增長了 81%。

Currently, we signed up about 50 -- I'm sorry, 123 universities for joint major program with specialty classes, most of which are the partnership model between Tarena and universities.

目前，我們簽約了大約50所——對不起，123所大學聯合專業班，其中大部分是Tarena和大學之間的合作模式。

Going forward, we still believe the enrollment growth from joint major program will be very fast in the growth rate for the future couple of years.

展望未來，我們仍然相信未來幾年聯合專業招生的增速將會非常快。

Sorry, so just to clarify, the students enroll quarterly for the joint major program, so it's not an annual enrollment?

抱歉，請澄清一下，學生每季度招生一次聯合專業課程，所以這不是每年招生？

Majority of the students enter joint major program again enroll in fall, in the third quarter.

大部分學生在秋季、第三季度再次進入聯合專業課程。

By the end of first 2 quarters or the fourth quarters -- sorry, in the fourth quarter, they still have -- it is not in their freshman year, they can enroll in our (inaudible).

到前兩個季度或第四季度結束時——抱歉，在第四季度，他們仍然有——這不是他們的大一，他們可以註冊我們的（聽不清）。

So they still have new addition in enrollment for joint major program in the quarters other than Q3.

因此，除了第三季度外，他們在其他季度的聯合專業招生中仍然有新的增加。

Got it.

知道了。

My second question is on your increase in staff.

我的第二個問題是關於你們增加人員的問題。

I noticed that you attribute a lot of the increase in expenses to headcount.

我注意到您將支出的增加大部分歸因於員工人數。

What is your total number of instructors now?

現在你們的導師總數是多少？

We can reach the number.

我們可以達到這個數字。

The total instructors is 391.

教師總數為391人。

391 instructors by the end of Q2.

截至第二季度末，共有 391 名講師。

Your next question comes from the line of Alex Xie from Crédit Suisse.

您的下一個問題來自瑞士信貸銀行的 Alex Xie。

I have 2 questions.

我有 2 個問題。

One is that I noticed that G&A expenses -- the non-GAAP G&A expenses increased by 81% year-over-year in this quarter.

一是我注意到本季度的 G&A 費用——非 GAAP G&A 費用同比增長 81%。

I wonder what is the main driver of increasing G&A expenses and what's the trend going forward?

我想知道一般管理費用增加的主要驅動因素是什麼以及未來的趨勢是什麼？

And the second question is about our K-12 education business.

第二個問題是關於我們的K-12教育業務。

Management has mentioned their plan to increase learning centers to 140 in -- by the end of this year.

管理層提到他們計劃在今年年底前將學習中心增加到 140 個。

And I think it seems that this is higher than our previous expectations.

而且我認為這似乎高於我們之前的預期。

And I'm wondering whether management also expects higher student enrollments from the kid education business with a new target for enrollment this year.

我想知道管理層是否也期望兒童教育業務的學生入學率更高，並製定今年的新入學目標。

And I also noticed, we launched online K-12 programming courses in Q2.

我還注意到，我們在第二季度推出了在線 K-12 編程課程。

And I'm wondering what's the rationale behind it and how much are we going to invest in online education model of the kid education business?

我想知道這背後的原理是什麼，我們要在少兒教育業務的在線教育模式上投入多少？

Yes, Alex, your first question about the G&A expenses.

是的，亞歷克斯，你的第一個問題是關於一般行政費用的。

In this quarter, a part of the bad expenses, the G&A increased by about 50% year-over-year.

本季度，作為不良支出的一部分，G&A 同比增長約 50%。

The main driver are the additions in headcount and related leased areas and the depreciation.

主要驅動因素是員工數量和相關租賃面積的增加以及折舊。

This is the main driver.

這是主要驅動力。

So the key driver in our G&A is the headcount.

因此，我們的一般管理費用的關鍵驅動因素是員工人數。

So on the long term, the G&A, we believe the growth rate will be year-over-year 30%.

因此，從長期來看，我們認為 G&A 同比增長率將達到 30%。

This is our forecast right now.

這是我們現在的預測。

Those are my comments to your first question.

這是我對你的第一個問題的評論。

Your second question on the K-12 enrollment expectation for 2018.

您關於 2018 年 K-12 入學預期的第二個問題。

Yes, we recorded very strong enrollment in the second quarter.

是的，我們第二季度的入學人數非常強勁。

And the first half of 2018, the total student enrollment of our K-12 business already reached at 14,000.

2018年上半年，我們K-12業務的學生總數已達到14,000人。

So we expect about -- around 30,000 student enrollment in total for the K-12 business in 2018.

因此，我們預計 2018 年 K-12 業務的註冊學生總數約為 30,000 名左右。

Yes, this is also, once again, we put in a higher target for our K-12 business enrollment.

是的，這也是我們再一次為K-12企業招生提出了更高的目標。

Your third question about online coding -- K-12 coding business, actually, we -- that online business right now is still in the pilot operating stage.

你的第三個問題關於在線打碼——K-12打碼業務，實際上我們——這個在線業務目前還處於試點運營階段。

We just put it online in mid of July and a few of -- with hundreds of students online to run pilot process.

我們剛剛在七月中旬將其上線，並有數百名學生在線運行試點流程。

The rationale behind we want to step into online K-12 coding business is that our off-line learning centers currently cannot fully satisfy the demand in the market.

我們想要進軍在線K-12編碼業務的原因是我們的線下學習中心目前還不能完全滿足市場的需求。

Some of our students and parents come to local learning centers have a trial (inaudible) of a program that they very like.

我們的一些學生和家長來到當地的學習中心嘗試（聽不清）他們非常喜歡的課程。

They want to participate, but our learning center may not be that close to their location, their desired locations, or some of the students in cities other than we already have our K-12 presence want to have a chance to participate in our courses.

他們想要參與，但我們的學習中心可能離他們所在的位置、他們想要的位置不太近，或者我們已經擁有 K-12 業務的其他城市的一些學生希望有機會參加我們的課程。

So we deliver an option to those group of customer in the market to have them a chance to have our courses.

因此，我們為市場上的這些客戶群體提供了一個選擇，讓他們有機會學習我們的課程。

So in the longer-term, we may consider the online plus off-line business, we do the both.

所以從長遠來看，我們可能會考慮線上加線下的業務，我們兩者都做。

But again, the online business is just in the pilot stage.

但同樣，在線業務還處於試點階段。

Your next question comes from the line of Johnny Wong of Jefferies.

您的下一個問題來自 Jefferies 的 Johnny Wong。

My question is actually quite similar to the ones asked previously.

我的問題實際上與之前提出的問題非常相似。

But I just want to ask about our sales staff, that is -- I think that is one of the main reasons why our selling expenses have been going up.

但我只想問一下我們的銷售人員，我認為這是我們銷售費用上漲的主要原因之一。

Can maybe management give us more color on the level of sales staff that we would be happy with?

也許管理層可以給我們更多關於我們滿意的銷售人員水平的信息嗎？

And whether or not this will increase.

以及這是否會增加。

And yes, where do we see a suitable level going forward?

是的，我們認為未來合適的水平在哪裡？

Johnny, can you speak in Mandarin for the benefit of Han?

約翰尼，你能為漢說點普通話嗎？

I think this question is better for Mr. Han to address.

我覺得這個問題最好由韓先生來解答。

Okay.

好的。

(foreign language)

（外語）

(foreign language)

（外語）

Let me translate Mr. Han's comment on the sales staff outlook.

我來翻譯一下韓先生對銷售人員前景的評論。

In the second half 2017, the company started to use aggressive marketing strategy to hire more sales staff and the team to improve the sales lead conversion rate.

2017年下半年，公司開始採用積極的營銷策略，聘請更多的銷售人員和團隊，以提高銷售線索轉化率。

So this is why in the past couple of quarters, you observed that increase in sales accounts.

這就是為什麼在過去幾個季度中，您觀察到銷售帳戶有所增加。

We put the rationale behind that each sales staff if they -- if the sales staff can acquire 1 new incremental student, that would be good to drive higher probability at the mature level -- mature adult learning center, because the tuition from that incremental student could cover incremental cost for that additional sales staff.

我們的理由是，如果每個銷售人員能夠獲得 1 名新的增量學生，那麼這將有利於在成熟成人學習中心的成熟水平上推動更高的概率，因為該增量學生的學費可以彌補額外銷售人員的增量成本。

So this is the rationale we used for -- behind this strategy.

這就是我們在該策略背後所使用的基本原理。

And in the most recent quarter, you already seen that the improvement in the overall acquisition for students, even that the sales lead cost, I mean, now they're significantly improved.

在最近一個季度，您已經看到學生整體獲取的改善，甚至銷售線索成本，我的意思是，現在它們有了顯著改善。

This is because we improved the sales team efficiency that we -- to evaluate the capability of each sales team member and to have the better or more talented sales staff stay and that the -- and the poor performing staff to leave the company.

這是因為我們提高了銷售團隊的效率，我們評估每個銷售團隊成員的能力，讓更好或更有才華的銷售人員留下來，而讓表現不佳的員工離開公司。

This is the kind of adjustment where optimization of the sales team going -- continue to fulfill in the future quarters.

這種調整將在未來幾個季度繼續實現銷售團隊的優化。

(foreign language)

（外語）

(foreign language)

（外語）

In the second quarter of 2018, the number of the headcount still -- headcount of sales team there's still gradual increasing, but not that much.

2018年第二季度，銷售團隊的人數仍在逐漸增加，但幅度不大。

And there are no questions at this time.

目前沒有任何問題。

I will now revert the call to Ms. Lei Song, Tarena's Reporting Director.

我現在將電話轉接給塔瑞納報告總監雷松女士。

Thank you, operator.

謝謝你，接線員。

If there are no further questions at present, we would like to conclude by thanking everyone for joining our conference call.

如果目前沒有其他問題，最後我們要感謝大家參加我們的電話會議。

We welcome you to reach out to us directly by e-mailing at ir@tedu.cn.

我們歡迎您直接發送電子郵件至 ir@tedu.cn 與我們聯繫。

Should you have any questions or requests for additional information, we encourage you to visit our Investor Relations site at ir.tedu.cn.

如果您有任何疑問或需要更多信息，我們建議您訪問我們的投資者關係網站 ir.tedu.cn。

Thank you.

謝謝。

Ladies and gentlemen, that does conclude our conference for today.

女士們、先生們，今天的會議到此結束。

Thank you for participating.

感謝您的參與。

You may all disconnect.

你們都可以斷開連接。