TCTM Kids IT Education Inc (TCTM) 2023 Q2 法說會逐字稿

Good day, everyone, and welcome to the Tarena Second Quarter 2023 Earnings Conference Call. (Operator Instructions). Please note, this event is being recorded. I would now like to turn the conference over to Sylvia Yang, Investor Relationship Manager. Please go ahead.

大家好，歡迎參加達內科技 2023 年第二季財報電話會議。 （操作員指令）。請注意，此事件正在被記錄。現在，我想將會議交給投資者關係經理 Sylvia Yang。請繼續。

Thank you, operator. Hello, everyone, and welcome to Tarena's earnings conference call for the second quarter of 2023. 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.

謝謝您，接線生。大家好，歡迎參加達內科技 2023 年第二季財報電話會議。 ir.tedu.cn以及新聞專線服務。

Today, you will hear from Ms. Nancy Ying Sun, our CEO; and Mr. Xiaobo Shao, our CFO, who will take you through the company's operational and financial results for the second quarter of 2023.

今天，您將聽到我們的執行長 Nancy Ying Sun 女士的發言；以及我們的財務長邵小波先生，他將帶您了解公司 2023 年第二季的營運和財務表現。

After their prepared remarks, Nancy and Mr. Shao will be available to answer your questions. 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.

在發表準備好的發言後，Nancy 和邵先生將回答大家的問題。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. Tarena does not assume any obligation to update any forward-looking statements, except as required under applicable law. 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.

這些前瞻性陳述受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。達內科技不承擔更新任何前瞻性聲明的義務，除非適用法律要求。另外，請注意，要討論的一些資訊包括規則 G 中定義的非公認會計準則財務指標。

Finally, as a reminder, this conference call is being recorded. In addition, a webcast of this conference call is available on Tarena's Investor Relations website. I will now turn the call over to Ms. Nancy Ying Sun, the CEO of Tarena.

最後，提醒一下，本次電話會議正在錄音。此外，本次電話會議的網路直播可在達內科技的投資者關係網站上找到。現在我將把電話轉給達內科技執行長孫穎女士。

(foreign language)

（外語）

[Interpreted] Thank you, Sylvia, and thanks, everyone, for joining our earnings conference call today.

[翻譯] 謝謝西爾維亞，也謝謝大家參加我們今天的收益電話會議。

(foreign language)

（外語）

[Interpreted] In the second quarter of 2023 as the impact of uncertainties in external business environment at the beginning of this year abated, we achieved a 42% quarter-over-quarter increase in revenue. Benefiting from the prudent financial and operational strategy we adopted during the post-pandemic period, we effectively alleviated the sluggish economic recoveries impact on top market supply and demand while enhancing the financial health of our IT-focused supplementary STEAM and 2C professional education services. As a result, our group second quarter operating loss narrowed substantially by 88% quarter-over-quarter. Furthermore, as part of our focused business strategy, we have cut out our college collaboration related to the business. This transaction brought up disposal gains enabling us to achieve a net profit of RMB 8.34 million in the second quarter.

【解讀】2023年第二季度，隨著今年年初外部經營環境不確定性的影響減弱，我們實現了營收季比42%的成長。受益於我們在後疫情時期採取的審慎的財務和營運策略，我們有效緩解了經濟復甦乏力對頂級市場供需的影響，同時增強了以IT為重點的補充STEAM和2C專業教育服務的財務健康狀況。結果，我們集團第二季的經營虧損較上季大幅收窄了88%。此外，作為我們重點業務策略的一部分，我們已經終止了與該業務相關的大學合作。本次交易帶來的處分收益使得公司第二季實現淨利834萬元。

(foreign language).

（外語）。

[Interpreted] Our total net revenues in the second quarter of 2023 amounted to RMB 545 million a year-over-year decline of 16% for RMB 649 million in the same period of 2022. Among them, revenue from our IT-focused supplementary STEAM education business recovered to the level of the same period last year, thanks to the improving external business environment. Meanwhile, revenue from our IT professional education business declined by 34.8% year-over-year due to a relatively longer recovery period as a result of the sluggish economic recovery impact on this market.

【解讀】2023年第二季度，我們總淨收入為人民幣5.45億元，較2022年同期的人民幣6.49億元下降16%。同時，IT專業教育業務受市場經濟復甦乏力影響，恢復期相對較長，營收年減34.8%。

(foreign language).

（外語）。

[Interpreted] In the second quarter of 2023, our costs and expenses decreased by 8.2% year-over-year, mainly due to reduced expenditures on rent, depreciation and other aspects as we adjusted our management structure and optimized our stock mix on learning centers, (inaudible) and cost reduction and efficiency enhancement strategy. Meanwhile, the year-over-year decrease in the G&A expenses was also attributable to the one-time plus action charge last year.

[翻譯] 2023 年第二季度，我們的成本和費用年減 8.2%，主要由於我們調整管理結構、優化學習中心的庫存組合、（聽不清楚）以及降本增效策略，減少了租金、折舊等方面的支出。同時，一般及行政費用的年減也歸因於去年的一次性附加行動費用。

(foreign language).

（外語）。

[Interpreted] Now let me walk you through our IT-focused supplementary STEAM education business?

[口譯]現在我來向您介紹我們以IT為重點的補充STEAM教育業務？

(foreign language).

（外語）。

[Interpreted] In the second quarter of 2023, net revenues from our IT-focused supplementary STEAM education business was [RMB 545 million], in line with the second quarter of 2022. Despite a slight 1.7% year-over-year increase in cost and expenses, we achieved an operating profit of RMB 25.3 million, marking our second consecutive quarter of operating profitability, as we gradually shook off the ongoing impact of the first quarter's external business environment limitations [operational] efficiency enhancement led to the improvement of our financial health.

[解讀]2023年第二季度，我們以IT為重點的補充STEAM教育業務的淨收入為[人民幣5.45億元]，與2022年第二季度持平。

(foreign language)

（外語）

[Interpreted] From the customer acquisition front, environment increased since the beginning of the first quarter, benefiting from our premium courses and delivery quality as well as our very excellent word of mouth referral. This facilitated our recovery from the ongoing impact of the challenging general business environment. In the second quarter of 2023, enrollment reached 177,000, a slight decrease from one year ago. Among them, renewable students and students enrolled through word of mouth referrals accounted for 76.3% of new fee-paying students.

[解釋] 從客戶獲取方面來看，自第一季初以來，環境有所改善，這得益於我們的優質課程和交付品質以及非常出色的口碑推薦。這有助於我們從充滿挑戰的整體商業環境的持續影響中恢復過來。 2023年第二季度，入學人數達17.7萬人，較一年前略為下降。其中，續讀生和透過口耳相傳入學的學生佔新生自費生的76.3%。

(foreign language).

（外語）。

[Interpreted] Regarding the operation of our centers, the total number of centers providing IT-focused supplementary STEAM education services declined to 215 as of the end of the second quarter of 2023 from 227 at the end of the second quarter of 2022. At the same time, the number of students enrolled at the center increased from 767 the second quarter of the last year to 822 in the same period of 2023, what revenue percent increased to RMB 1.61 million in the second quarter of 2023 from RMB 1.51 million last year.

[解讀] 就我們中心的運作而言，提供以IT為重點的補充STEAM教育服務的中心總數從2022年第二季度末的227家減少到2023年第二季度末的215家。

(foreign language).

（外語）。

[Interpreted] Next, moving to our IT professional education business.

[口譯]接下來談談我們的IT專業教育業務。

(foreign language).

（外語）。

[Interpreted] As the business environment improved, the net revenue of our IT professional education business increased by 47% quarter-over-quarter. This business experiencing a relatively longer recovery period. As a sluggish overall post-epidemic economic recovery continues to affect top market supply and demand to a certain extent, impacted by weak market demand and reduced the cash received in the past quarters. Net revenue for our IT professional education business decreased by 34.8% year-over-year.

【解讀】隨著經營環境改善，我們IT專業教育業務淨收入較上季成長47%。該業務經歷相對較長的恢復期。由於疫情後整體經濟復甦乏力，持續對頭部市場供需產生一定影響，受市場需求疲軟影響，前幾季現金回籠減少。 IT專業教育業務淨收入年減34.8%。

(foreign language).

（外語）。

[Interpreted] We strictly adhered to our operating strategy of cost reductions and efficiency enhancements during this quarter, driving a decrease in our IT professional education business total cost of 15.5% year-over-year. Its gross margin decreased due to the revenue decline. On the operation front, our total number of centers providing IT professional education services declined to 52 at the end of the second quarter of 2023 from 98 in the second quarter of 2022. Excluding the impact of our carve-out of the college collaboration-related business, of a net reduction in the number of centers, providing To-C IT for professional education services was 23 compared with 75 centers one year ago.

[解讀]本季我們嚴格遵循降本增效的經營策略，推動IT專業教育業務總成本年減15.5%。由於收入下降，其毛利率也下降。在營運方面，我們提供IT專業教育服務的中心總數從2022年第二季度的98個減少到2023年第二季度末的52個。

Our long-term disciplined control of central operations as well as the decreased number of centers enabled us to effectively control of operating expenses. Meanwhile, as we continued to optimize the staff mix enhanced operating efficiency and comprehensively upgrade our organization's refined management, we significantly narrowed our operating loss in our overall IT professional education business by 85.4% quarter-over-quarter.

我們長期嚴格控制中央運營以及減少中心數量使我們能夠有效地控制營運費用。同時，隨著我們持續優化人員架構、提升營運效率以及全面升級組織精細化管理，整體IT專業教育業務的經營虧損較上季大幅收窄85.4%。

(foreign language).

（外語）。

[Interpreted] In addition, in order to focus on our core competence, that is providing To-C IT professional and STEAM education services. The company carved out the college collaboration-related business the second quarter of 2023 and retained our minority interest. As we mentioned before, the carve-out of our college collaboration-related business will improve our financial health, while allowing us to focus on enhancing our operational capability and the profitability of our two core businesses.

[解讀]另外，為了聚​​焦我們的核心競爭力，即提供To-C的IT專業及STEAM教育服務。公司於 2023 年第二季剝離了大學合作相關業務，並保留了少數股權。正如我們之前提到的，剝離大學合作相關業務將改善我們的財務狀況，同時使我們能夠專注於提高我們的營運能力和兩項核心業務的獲利能力。

(foreign language).

（外語）。

[Interpreted] That concludes my review of the company's operations for the second quarter of 2023.

[口譯] 這是我對公司 2023 年第二季營運的回顧。

(foreign language).

（外語）。

[Interpreted] The impact of the uncertainties in the external business environment spanning the end of 2022 through the beginning of 2023 has almost faded away, although the IT professional education business will take some time to recover due to the sluggish economic recover impact on the stock market demand, our IT-focused supplementary STEAM education business is benefiting from the relatively strong market demand in the supplementary STEAM education field, demonstrating our business resilience.

【解讀】2022年底至2023年初外部商業環境不確定性的影響已基本消退，雖然受經濟復甦乏力影響股市需求，IT專業教育業務仍需一段時間才能恢復，但我們以IT為重點的STEAM補習教育業務正受益於STEAM補習教育領域相對強勁的市場需求，彰顯出我們業務的韌性。

(foreign language).

（外語）。

[Interpreted] During this period, we will continue to enhance our operating capability and management efficiency with a more focused operational strategy while adapting to the evolving market demand across digital transformation and artificial intelligence by adjusting our course catalog according to -- accordingly to empower students development, we believe this will prepare the company's long-term growth and drive our profitability improvement.

[解讀]在此期間，我們將繼續以更專注的營運策略提升我們的營運能力和管理效率，同時適應數位轉型和人工智慧不斷變化的市場需求，根據需求調整我們的課程目錄，以增強學生的發展，我們相信這將為公司的長期增長做好準備，並推動我們的盈利能力提高。

(foreign language).

（外語）。

[Interpreted] Looking ahead, as the business environment stabilizes, company's rising need for digital transformation and the rapid development of artificial intelligence will drive the continuous growth of market demand for IT talent, although the normalization of the market supply and demand while lag behind the economic recovery in the short term. We are confident that supported by favorable professional education policies, we can help our students adapt to social development and promote employment by creating courses that cater to their needs as well as the professional needs of the market. As always, we will continue to fully leverage our own competitive advantages to create additional shareholder value.

[解讀]展望未來，隨著商業環境趨於穩定，企業數位轉型需求上升以及人工智慧的快速發展，將推動市場對IT人才需求持續成長，儘管短期內市場供需正常化程度落後於經濟復甦速度。我們相信，在職業教育政策的支持下，我們一定能夠開設符合學生自身特質、滿足市場職業需求的課程，幫助學生適應社會發展、促進就業。我們將一如既往地持續充分利用自身的競爭優勢，創造更多的股東價值。

(foreign language).

（外語）。

[Interpreted] As announced previously in our public filings, the Board of Directors has appointed Mr. Xiaobo Shao, as the company's Chief Financial Officer. On behalf of Tarena, I would like to send a warm welcome to Mr. Shao. We believe that with his abundant experience in the education and Internet field and his professional expertise, he will help us achieve new breakthroughs in operational efficiency and profitability enhancement through a combination of the financial and operational management activities. Meanwhile, I would like to thank Ms. Ping Wei for her contributions during her tenure as our CFO over the past year.

[解讀] 正如我們之前在公開文件中宣布的那樣，董事會已任命邵小波先生為公司首席財務官。我謹代表達內科技向邵先生的來訪表示熱烈的歡迎。我們相信憑藉其在教育及互聯網領域的豐富經驗和專業知識，將幫助我們透過財務與營運管理相結合，在營運效率和盈利能力提升方面實現新的突破。同時，我要感謝魏萍女士在過去一年擔任我們財務長期間所做的貢獻。

(foreign language).

（外語）。

[Interpreted] Next, I will turn the call over to Mr. Xiaobo Shao to walk you through our financials for the second quarter of 2023.

[口譯] 接下來，我會把電話交給邵小波先生，向大家介紹我們 2023 年第二季的財務狀況。

Thank you, Nancy, and hello, everyone. Now let me walk you through some of our second quarter financial highlights. Please also refer to the press release for more information. For the second quarter of 2023, the company measured its operating loss to RMB 6.8 million compared to an operating loss of RMB 58.8 million in the first quarter. While we experienced a tough and challenging transition period in the first quarter, our business have gradually recovered in the second quarter and recorded a sequential growth of 42% in revenue, representing a relatively resilient recovery and an improved operating environment.

謝謝你，南希，大家好。現在讓我向您介紹我們第二季的一些財務亮點。另請參閱新聞稿以了解更多資訊。 2023年第二季度，公司營運虧損為人民幣680萬元，而第一季營運虧損為人民幣5,880萬元。雖然我們在第一季經歷了一段艱難而充滿挑戰的過渡期，但我們的業務在第二季度已逐步復甦，收入環比增長42％，這表明復甦相對有韌性，經營環境有所改善。

The uncertainty of sustained economic recovery in the post-pandemic phase has an impact on employment supply and demand, which has led to a relatively longer recovery period for the [adult] professional education business. Although we matured the decline of cash collection in the adult business year-over-year, recognized revenues will decrease due to lower [category] sales. Meanwhile, thanks to restored social mobility, our IT-focused STEAM education has emerged from the temporary closures of our learning centers with stable and continuous demand for STEAM education, we witnessed a relatively healthy year-over-year growth in cash reserves. Contributing to the return of STEAM education net revenue to the same level as in the same period of 2022.

後疫情時代經濟持續復甦的不確定性對就業供需產生影響，導致職業教育業務的復甦週期相對較長。雖然我們已經克服了成人業務現金收款年減的現象，但由於（品類）銷售量下降，確認收入也會減少。同時，隨著社會流動性的恢復，我們以IT為重點的STEAM教育擺脫了學習中心的暫時關閉，對STEAM教育的需求穩定且持續，我們的現金儲備同比相對健康地增長。有助於STEAM教育淨收入恢復至2022年同期水準。

Overall, our total net revenues in the second quarter of this year was RMB 545 million, a 16% decrease from the same quarter of last year. The decrease in revenue was primarily attributable to IT professional education given its lower student enrollment number resulting from the closure of lower profitability teaching centers as well as the impact of the college collaboration-related business divestiture with only two methods of revenue recognized in the second quarter of this year.

整體來看，今年第二季我們的總淨收入為人民幣5.45億元，較去年同期下降16%。收入下降主要由於IT專業教育業務因盈利能力較低的教學中心關閉導致招生數量減少，以及受到高校協作相關業務剝離的影響，今年第二季度僅確認兩種收入方式。

Average cost of revenues decreased by 2.2% to RMB 266.3 million in the second quarter of this year from RMB 272.3 million in the same period of last year. The decrease was mainly due to a decrease in personnel cost attributable to head count reduction and the decrease in rental fees and the depreciation costs attributable to the closure of some teaching centers during this period.

今年第二季平均營業成本為人民幣2.663億元，較去年同期的人民幣2.723億元下降2.2%。減少的主要原因是本期間員工人數減少導致人員成本減少以及部分教學中心關閉導致租金和折舊費用減少。

The decrease was partially offset by the increase in cost of camps and the competition activities in this quarter and made a high demand for extracurricular courses. Although the decline in revenues exceeded the reduction in the cost of revenues, resulting in a decrease in gross profit to RMB 278.7 million and the [narrowed] gross margin at 51.1%. Our effective operational measures partially offset the impact in the post-pandemic phase.

本季度營隊和比賽活動成本的增加以及對課外課程的需求增加部分抵消了這一下降。雖然收入降幅超過收入成本的降幅，導致毛利減少至人民幣2.787億元，毛利率收窄至51.1%。我們有效的營運措施在後疫情時期部分抵消了影響。

Total operating expenses decreased by 13.1% to RMB 285.5 million in the second quarter of this year from RMB 328.5 million in the same period of 2022. Total non-GAAP operating expenses, which excluded share-based compensation expenses, decreased by 13% to RMB 284.6 million in the second quarter of this year from RMB 327.4 million in the same period of 2022.

今年第二季度總營運費用為人民幣 2.855 億元，較 2022 年同期的人民幣 3.285 億元下降 13.1%。

Total share-based compensation expenses allocated to the related operating expenses decreased by 23.5% to RMB 0.9 million in the second quarter of this year from RMB 1.5 million in the same period of last year. Selling and marketing expenses decreased by 3.7% to RMB 151 million in the second quarter of 2023 from RMB 156.9 million in the same period of last year. The decrease was mainly due to a decrease in the personnel-related costs resulting from a decrease in the number of sales staff in the second quarter of 2023, partially offsetting the increased advertising costs during the recurring phase. Benefiting from the effective control of marketing spending as well as a decrease in personnel-related costs, selling and marketing expenses decreased by 19.8% to RMB 264.2 million in the first half of this year from RMB 329.3 million in the same period of last year. General administrative expenses decreased by 25.1% to RMB 118.8 million in the second quarter of this year from RMB 158.7 million in the same period of last year. The decrease was mainly due to headcount reduction as well as a onetime provision related to a class action also in the previous period. There was no such expense accrual for the second quarter of this year.

分配至相關營業費用的股權激勵費用總額由去年同期的人民幣150萬元減少23.5%至今年第二季度的人民幣90萬元。 2023年第二季銷售和行銷費用為人民幣1.51億元，較去年同期的人民幣1.569億元下降3.7%。下降主要由於2023年第二季銷售人員數量減少導致人員相關成本減少，部分抵銷了經常性階段廣告費用的增加。受惠於行銷開支的有效控制以及人員相關成本的減少，今年上半年銷售及行銷費用為人民幣2.642億元，較去年同期的人民幣3.293億元下降19.8%。今年第二季一般管理費用為人民幣1.188億元，較去年同期的人民幣1.587億元下降25.1%。下降的主要原因是員工人數減少以及上一期間與集體訴訟相關的一次性撥備。今年第二季沒有此類費用提列。

Research and development expenses increased by 21.9% to RMB 15.7 million in the second quarter of 2023 from RMB 12.9 million in the same period of 2022. The increase was mainly due to an increase in spending on operating systems improvements to enhance operating efficiency. As a result of foregoing, operating loss was RMB 6.8 million in the second quarter of 2023 compared to operating income of RMB 48 million in the same period of last year.

2023 年第二季研發費用較 2022 年同期的 1,290 萬元增加 21.9% 至 1,570 萬元。受上述影響，2023年第二季營業虧損為人民幣680萬元，而去年同期營業收入為人民幣4,800萬元。

Non-GAAP operating loss, which excludes the share-based compensation expenses, was RMB [9.2] million in the second quarter of 2023 compared to a non-GAAP operating income of RMB 49.2 million (sic) RMB 49.1 million in the same period of 2022. As we mentioned in the last quarter, we [stay off] the college collaboration related business in the second quarter, which brought a gain on disposal of RMB 26.8 million. This contributed to net income of RMB 8.3 million in the second quarter of 2023 compared to a net income of RMB 47.9 million in the same period of last year.

2023 年第二季度，不包括股權激勵費用的非公認會計準則營業虧損為人民幣 [920] 萬元，而 2022 年同期的非公認會計準則營業收入為人民幣 4,920 萬元（原文如此）人民幣 4,910 萬元。這貢獻了2023年第二季淨收入人民幣830萬元，而去年同期淨收入為人民幣4,790萬元。

Non-GAAP net income, which excluded share-based compensation expenses, was RMB 9.2 million in the second quarter of this year compared to non-GAAP net income of RMB 49.1 million in the same period of 2022. Also with the gaining of disposal, we narrowed our(inaudible) net loss to RMB 41.6 million and non-GAAP net loss to RMB 39.6 million for the first 6 months of 2023.

今年第二季度，扣除股權激勵費用的非公認會計準則淨收入為人民幣 920 萬元，而 2022 年同期的非公認會計準則淨收入為人民幣 4,910 萬元。而 2022 年同期的非公認會計準則淨收入為人民幣 4,910 萬元。

Now on the EPS side. Basic income per ADS was RMB 0.7 in the second quarter of 2023. Diluted income per ADS was RMB 0.67 in the second quarter of this year. Non-GAAP basic income per ADS, which excluded share-based compensation expenses, was RMB 0.78 in the second quarter of this year. Non-GAAP diluted income per ADS, which excluded share-based compensation expenses, was RMB 0.75 in the second quarter of 2023.

現在談談 EPS 方面。 2023年第二季每股ADS基本收益為人民幣0.7元。今年第二季度，不計入股權激勵費用的非美國通用會計準則每股美國存託憑證基本收益為0.78元。 2023年第二季非公認會計準則每股美國存託憑證攤薄收益（不含股權激勵費用）為人民幣0.75元。

Net cash outflow from operating activities in the second quarter of this year was RMB 20 million. During the second quarter, we received RMB 76.6 million in payments for the disposition of the two buildings we own, the remaining final payment was already settled in the third quarter.

今年第二季經營活動現金淨流出為2,000萬元。第二季度，我們收到了處置所擁有的兩棟大樓的款項7660萬元人民幣，剩餘的尾款已在第三季度結清。

Capital expenditures in the second quarter of 2023 were RMB 11.6 million. As mentioned earlier, we experienced a challenging quarter with a relatively lucky recovery of the adult business. As of June 30 of 2023, the total balance of cash, cash equivalents and restricted cash was RMB 368.1 million, a decrease of RMB 5.9 million from December 31, 2022. That concludes my financial highlights section. Thank you again for your attention and support. Now I'd like to open the floor for questions.

2023年第二季資本支出為人民幣1,160萬元。如前所述，我們經歷了一個充滿挑戰的季度，成人業務的復甦相對幸運。截至 2023 年 6 月 30 日，現金、現金等價物及受限現金的總餘額為人民幣 3.681 億元，較 2022 年 12 月 31 日減少人民幣 590 萬元。再次感謝您的關注與支持。現在我想開始回答大家的提問。

(Operator Instructions) Our first question comes from (inaudible) with [Everbloom].

(操作員指示) 我們的第一個問題來自 [Everbloom] (聽不清楚)。

(foreign language).

（外語）。

[Interpreted] Thank you for having me here. I have a question to you (inaudible) to the statistics, the company registered improvement quarter-to-quarter. I'm wondering what are the major driving factors behind except for the improvement on the operating environment. Thank you.

[翻譯] 感謝你們邀請我來這裡。我有一個問題想問您（聽不清楚），關於統計數據，該公司的業績逐季有所改善。請問，除了經營環境的改善以外，背後還有什麼主要的驅動因素？謝謝。

(foreign language).

（外語）。

[Interpreted] Thank you for having -- thank you for posing questions. I'm going to offer you three major factors as far as I could understand. First of all, as the general business environment is on the improvement we are seeing a boost up of the social liquidity as a natural result, we are seeing the cost of the custom acquisition as well as the delivery of the courses on the improvement as well. That is the first reason.

[口譯] 謝謝您提出問題。我將根據我的理解向您提供三個主要因素。首先，隨著整體商業環境的改善，我們看到社會流動性的自然提升，我們也看到客製化取得成本以及課程交付也在改善。這是第一個原因。

And secondly, we are also conducting a wide range of social events such as the challenges, competitions and camps for the youth and youngsters. They are also getting good experiences which would eventually win the word of mouth among the general users and potential customers. For the third reason, we are also seeing friendly policies as well. Currently, we are seeing the good policy to promoting the growth of the programming abilities as well as the STEAM education services. The parents are developing new awareness which is leading us to have a deeper market penetration. So the good news is we are in the market is getting stabilized with a good growing momentum. Thank you.

其次，我們也舉辦各種社會活動，例如青少年的挑戰賽、比賽和訓練營。他們也獲得了良好的體驗，最終贏得了普通用戶和潛在客戶的口碑。第三個原因，我們也看到了友善的政策。目前，我們看到了促進程式設計能力成長以及STEAM教育服務的良好政策。家長的認識正在不斷形成，這將推動我們更深入地滲透市場。因此，好消息是，我們所在的市場正在逐漸穩定，並呈現良好的成長動能。謝謝。

(foreign language).

（外語）。

[Interpreted] So thank you for staying with us in the previous years as well as in the upcoming years, and thank you for your support to Tarena again.

[翻譯] 所以感謝大家在過去的幾年以及未來的幾年裡一直陪伴著我們，也再次感謝大家對達內科技的支持。

Operator, could you ask it again?

接線員，可以再問一次嗎？

(Operator Instructions) As I see no further questions, I would like to turn the conference back over to Sylvia Yang for any closing remarks.

（操作員指示）由於沒有其他問題，我想將會議交還給 Sylvia Yang 做結束語。

Thank you, operator. If there are no further questions at present, we would like to conclude by thanking everyone for joining our conference call. We welcome you to reach out to us directly by e-mailing at ir@tedu.cn. Should you have any questions or requests for additional information, we encourage you to visit our Investor Relations site at ir.tedu.cn. Thank you.

謝謝您，接線生。如果目前沒有其他問題，我們想最後感謝大家參加我們的電話會議。歡迎您透過電子郵件ir@tedu.cn直接與我們聯繫。如果您有任何疑問或需要更多信息，我們鼓勵您訪問我們的投資者關係網站ir.tedu.cn。謝謝。

The conference has now concluded. Thank you for attending today's presentation. You may all now disconnect.

會議現已結束。感謝您參加今天的演講。你們現在都可以斷開連結了。

[Portions of this transcript that are marked

[本記錄中標有

[Interpreted] were spoken by an interpreter present on the live call.]

[翻譯]是由現場翻譯說出來的。 ]