17 Education & Technology Group Inc (YQ) 2022 Q4 法說會逐字稿

Good evening and good morning, ladies and gentlemen, and thank you for standing by for 17EdTech's Fourth Quarter 2022 Earnings Conference Call. (Operator Instructions) As a reminder, today's conference is being recorded. I would now like to turn the meeting over to your host for today's call, Ms. Lara Zhao, 17EdTech's Investor Relations Manager. Please proceed, Lara.

女士們先生們，晚上好，早上好，感謝你們支持 17EdTech 的 2022 年第四季度收益電話會議。 （操作員說明）提醒一下，今天的會議正在錄製中。我現在想將會議轉交給今天的主持人，17EdTech 的投資者關係經理 Lara Zhao 女士。請繼續，勞拉。

Thank you, operator. Hello, everyone, and thank you for joining us today. Our earnings release was distributed earlier today and is available on our IR website. Joining us today are Mr. Andy Liu, Founder, Chairman and Chief Executive Officer; and Mr. Michael Du, Director and Chief Financial Officer. Andy will walk you through our latest business performance and strategies followed by Michael, who will discuss our financial performance and guidance. They will be available to answer your questions during the Q&A session after their prepared remarks.

謝謝你，運營商。大家好，感謝您今天加入我們。我們的收益發佈於今天早些時候發布，可在我們的 IR 網站上獲取。今天加入我們的是創始人、董事長兼首席執行官劉德華先生；董事兼首席財務官 Michael Du 先生。 Andy 將帶您了解我們最新的業務績效和戰略，隨後 Michael 將討論我們的財務績效和指導。他們將在準備好的發言後在問答環節回答您的問題。

Before we begin, I'd like to remind you that this conference call contains forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are beyond -- are based upon management's current expectations and current market and operating conditions and relates to events that involve known, unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control. These risks may cause the company's actual results, performance or achievements to differ materially. Further information regarding these and other factors, uncertainties or factors is included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law.

在我們開始之前，我想提醒您，本次電話會議包含 1934 年證券交易法第 21E 條和 1995 年美國私人證券訴訟改革法所定義的前瞻性陳述。這些前瞻性陳述超出——基於管理層目前的預期以及當前的市場和經營狀況，並涉及涉及已知、未知風險、不確定性和其他因素的事件，所有這些都難以預測，其中許多超出了公司的控制範圍。這些風險可能導致公司的實際結果、業績或成就存在重大差異。有關這些和其他因素、不確定性或因素的更多信息包含在公司提交給美國證券交易委員會的文件中。公司不承擔因新信息、未來事件或其他原因而更新任何前瞻性陳述的任何義務，適用法律要求的除外。

I will now turn the call over to our Chairman and Chief Executive Officer to receive some of our business development and strategic direction. Andy, please go ahead.

我現在將電話轉交給我們的董事長和首席執行官，以接收我們的一些業務發展和戰略方向。安迪，請繼續。

Thank you, Lara. Hello, everyone. Thank you all for joining us on our fourth quarter 2022 earnings call. Before we begin, I would like to mention that the financial information and non-GAAP numbers in this release are presented on a continuing operation basis, and all numbers are based on RMB unless otherwise stated.

謝謝你，勞拉。大家好。感謝大家參加我們 2022 年第四季度的財報電話會議。在我們開始之前，我想提一下，本新聞稿中的財務信息和非 GAAP 數據是在持續經營的基礎上呈現的，除非另有說明，所有數據均基於人民幣。

Before we go into the details, let me provide you with the quarter's business updates and financial performance across our business lines, the COVID-19. Outbreak in China in the fourth quarter of 2022 caused significant delays in the bidding and delivery processes of our projects. which, in turn, delayed the bidding and the delivery of quite a number of projects that were previously expected to happen in the fourth quarter of 2022, thus significantly affected our revenue and financial results in the quarter. We responded quickly by accelerating the ramp-up of alternative distribution channels and creating more flexible payment structure to remain agile under this situation.

在我們詳細介紹之前，讓我向您提供本季度我們業務線 COVID-19 的業務更新和財務業績。 2022 年第四季度在中國爆發的疫情導致我們項目的招標和交付流程出現重大延誤。這反過來又推遲了之前預計在 2022 年第四季度進行的大量項目的招標和交付，從而嚴重影響了我們本季度的收入和財務業績。我們迅速做出反應，加快替代分銷渠道的發展，並創建更靈活的支付結構，以在這種情況下保持敏捷。

The delay in the process of key projects resulted in decreases in our revenue, but we did not lose them by any means. These projects are still under our purview, and we will work consistently to advance them as COVID-19 distributions phase out. Example is the RMB 116 million project we were awarded on March 23, 2023. This was a project previously with an earlier expected bidding and delivery scheduled. I will elaborate further on this project slightly later.

重點項目的延期導致我們的收入減少，但我們沒有損失任何收入。這些項目仍在我們的職權範圍內，隨著 COVID-19 分發的逐步淘汰，我們將不斷努力推進它們。示例是我們在 2023 年 3 月 23 日中標的 1.16 億元人民幣項目。這是一個先前預計投標和交付時間較早的項目。稍後我將進一步詳細說明這個項目。

In 2022, we recorded net revenues of RMB 531.1 million excluding net revenue from online K-12 tutoring services. Net revenues increased by 8.5x year-over-year. The increase were mainly attributable to the steady process of our business transformation. This was achieved after we ceased our online K-12 tutoring services at the end of 2021, which accounted for approximately 95% of our revenue before.

2022 年，我們的淨收入為人民幣 5.311 億元，不包括在線 K-12 輔導服務的淨收入。淨收入同比增長 8.5 倍。增長主要歸因於我們業務轉型的穩步推進。這是在我們於 2021 年底停止在線 K-12 輔導服務後實現的，該服務占我們之前收入的約 95%。

Net revenues for the fourth quarter of 2022 were RMB 39.6 million, representing a year-over-year increase of 138% while we exclude the impact of legacy online K-12 tutoring services.

2022 年第四季度的淨收入為人民幣 3960 萬元，同比增長 138%，同時我們排除了傳統在線 K-12 輔導服務的影響。

Looking back the year 2022, we significantly reduced our loss while navigating on a new path for our new business initiative. Our adjusted net loss in 2022 was reduced to RMB 48 million from RMB 1.25 billion in 2021, a decrease of 96%.

回顧 2022 年，我們在為新業務計劃開闢新道路的同時，大幅減少了虧損。我們 2022 年調整後的淨虧損從 2021 年的人民幣 12.5 億元減少至人民幣 4800 萬元，下降了 96%。

Now I will go into more details of our business. Let's start with our in-school teaching and learning SaaS business. We are glad to see key milestone processes in our in-school business since the last quarter.

現在我將詳細介紹我們的業務。讓我們從我們的校內教學和學習 SaaS 業務開始。我們很高興看到自上個季度以來我們校內業務的關鍵里程碑流程。

On March 23, 2023, the company was officially awarded a new smart-pen-based education digital transformation product in Shanghai Minhang District with a contract value of RMB 116 million. This is the product to move Minhang District's education digital transformation further after the precision teaching and adapted learning system project, which was delivered in the second quarter of 2022. It demonstrates our comprehensiveness and the market's recognition of our comprehensive education services. It aims to provide our solutions and services to the -- to all public schools within a district. And next, it will expand to cover all schools in Minhang District.

2023年3月23日，公司在上海閔行區正式中標智能筆教育數字化轉型新產品，合同金額1.16億元。這是繼2022年二季度交付的精準教學與適應性學習系統項目後，進一步推動閔行區教育數字化轉型的產品，體現了我們的綜合能力和市場對我們綜合教育服務的認可。它旨在為一個地區內的所有公立學校提供我們的解決方案和服務。下一步，還將擴大到閔行區所有學校。

The product utilizes our accumulated data insights, recommendation algorithm and AI technology to provide high-quality education digital transformation solutions in homework, daily teaching and classroom interaction. It creates a closed loop from class preparation, teaching exercises, correction, evaluation, research and management during a whole teaching and learning process. It promotes balanced and high-quality development of regional education, scalable and normalized application of smart education services and helps more students achieve personalized development. It also pays an exemplary and leading role in the digital transformation of regional education in other provinces and cities in the future.

該產品利用我們積累的數據洞察力、推薦算法和人工智能技術，在作業、日常教學和課堂互動方面提供優質的教育數字化轉型解決方案。形成了從備課、教學練習、批改、評價、研究到管理的全教學過程閉環。促進區域教育均衡高質量發展，推動智慧教育服務規模化、常態化應用，幫助更多學生實現個性化發展。也對未來其他省市區域教育數字化轉型起到了示範引領作用。

This project clearly illustrates the industry recognition for our teaching and learning SaaS offering in terms of its outstanding ability of facilitating daily teachers and students use on a mass scale, which are rooted from our data insights and AI technology deep outstanding of classroom and homework scenario and deep integration of technology into teaching and learning from online to offline.

這個項目清楚地說明了我們的教學和學習 SaaS 產品在促進日常師生大規模使用方面的卓越能力，這源於我們的數據洞察力和 AI 技術深度突出的課堂和家庭作業場景和從線上到線下，將技術深度融入教學和學習。

From a product and service offering perspective, the company continues to optimize and iterate our product offering and services to meet the needs of our clients to further enhance user experience. As the government, enterprises and schools collaborate to promote the development of digital education, we have produced a reproducible and replicable overall teaching and learning solutions after year of practices.

從產品和服務的角度來看，公司不斷優化和迭代我們的產品和服務以滿足客戶的需求，進一步提升用戶體驗。政、企、校三方協同推進數字教育發展，經過多年實踐，我們已經形成了一套可複制、可複制的教與學整體解決方案。

Our flagship case, Minhang homework has achieved full coverage of public schools in Minhang District as of now. More than 150 schools use our precision teaching and adaptive learning system with 120,000 students using the tool to do homework.

截至目前，我們的旗艦案例閔行作業已經實現了閔行區公立學校的全覆蓋。超過 150 所學校使用我們的精準教學和自適應學習系統，120,000 名學生使用該工具做作業。

The accumulated number of students using the tool for homework has exceeded 16 million as of now. The frequency it's used and the monthly retention rate of teachers in the pilot schools continue to increase, and our normalized application of smart-pen practice is advancing steadily.

截至目前，該作業工具累計使用人數已超過1600萬。試點學校教師使用頻次和月留任率不斷提高，智能筆實踐常態化應用穩步推進。

During the period, the World Digital Education Conference was held in Beijing with the theme of digital transformation and the future of education, focusing on the opportunities and the challenges brought by digital transformation in education. 17EdTech is one of the only 2 corporate presenters were invited to attend the conference. I was honored to deliver a speech and share our experiences and practice as our projects in digital transformation of education.

期間，以數字化轉型與教育的未來為主題的世界數字教育大會在京召開，聚焦教育數字化轉型帶來的機遇與挑戰。 17EdTech 是僅有的 2 家受邀參加會議的企業演講者之一。很榮幸能發表演講，分享我們在教育數字化轉型項目中的經驗和實踐。

With hundreds of regional education bureaus being invited to listen to and received the enthusiastic response and the rewarding exchange with industry peers and educational authorities, our teaching and learning solution has also been obligated in Beijing Xicheng, Shanghai, Chongming and Songjiang Districts for mass scale and normal application as part of digital transformation initiative, which received broad recognition from local educational authorities.

數百個地區教育局受邀聽取了熱烈反響，與業界同行和教育主管部門進行了有益的交流，我們的教與學解決方案也已在北京西城、上海、崇明、松江等地區大規模、作為數字化轉型舉措的一部分，得到了當地教育部門的廣泛認可。

The COVID-19 outbreak in China in the fourth quarter of 2022 has affected the bidding and delivery of quite a number of government procurement projects, including a number of our key projects. This has directly impacted our product delivery and the revenue recognition and thus, the financial performance of the company in the fourth quarter of 2022. We believe this will be absorbed gradually over the next few quarters. Example was that our recent awarded product was previously expected to be awarded and partially delivered in the [fourth] quarter.

2022 年第四季度在中國爆發的 COVID-19 疫情影響了相當多的政府採購項目的招標和交付，包括我們的一些重點項目。這直接影響了我們的產品交付和收入確認，從而影響了公司 2022 年第四季度的財務業績。我們相信這將在未來幾個季度逐漸被吸收。例如，我們最近授予的產品之前預計將在 [第四] 季度授予並部分交付。

In the aspect of our self-directed learning products, we continue to develop educational products and services that meet regulatory requirements, including self-directed learning products, learning devices and other digital products and learning contents for students.

在我們的自主學習產品方面，我們繼續開發符合監管要求的教育產品和服務，包括自主學習產品、學習設備和其他面向學生的數字產品和學習內容。

We continue to optimize and iterate our product offerings according to changes in markets and customer needs. Meanwhile, we carry out in-depth cooperation and educational institutions with a strong [development] phase and traditional content to provide smart teaching products and services for primary and secondary school students.

我們根據市場和客戶需求的變化不斷優化和迭代我們的產品。同時，我們與具有強[開發]階段和傳統內容的教育機構開展深度合作，為中小學生提供智慧教學產品和服務。

Now I will turn the call over to Michael, our CFO, to walk you through our latest financial performance. Thank you.

現在我將把電話轉給我們的首席財務官邁克爾，向您介紹我們最新的財務業績。謝謝。

Thanks, Andy, and thank you, everyone, for joining the call. I will now walk you through our financial and operating results. Please note that all financial data I talk about will be presented in RMB terms.

謝謝安迪，也謝謝大家加入電話會議。我現在將向您介紹我們的財務和經營業績。請注意，我所說的所有財務數據都是以人民幣為單位的。

I would like to remind you that the quarterly results we present here should be taken with care and reference to our potential future performance are subject to potential impacts from seasonality and the one-off events as a result of the series of regulations introduced in 2021 and a corresponding adjustment to our business model, organization and workforce.

我想提醒您，我們在此呈現的季度業績應謹慎對待，參考我們未來的潛在業績會受到季節性和 2021 年出台的一系列法規導致的一次性事件的潛在影響，以及對我們的商業模式、組織和員工隊伍進行相應的調整。

The delay in the bidding and the delivery process of several of our projects has significantly affected revenue recognized in the fourth quarter and thus, our overall financial performance. However, such fluctuations in revenues are inevitable during the early stage of a business development, especially given the external environment. Nevertheless, we are pleased to report that our continuous cost and expenses reduction measures have allowed us to significantly reduce our net loss in 2022 despite the termination of our legacy K-12 after-school online tutoring operation, which accounted approximately 95% of our revenue in the past.

我們幾個項目的投標和交付過程的延遲嚴重影響了第四季度確認的收入，從而影響了我們的整體財務業績。然而，收入的這種波動在業務發展的早期階段是不可避免的，特別是考慮到外部環境。儘管如此，我們很高興地報告，儘管我們終止了傳統的 K-12 課後在線輔導業務，但我們持續的成本和開支削減措施使我們能夠顯著減少 2022 年的淨虧損，該業務約占我們收入的 95%在過去。

With China's economy recovering from the COVID-19 pandemic, we're confident that the latest awarded project is another important milestone in the company's continuous transformation into the new business strategies.

隨著中國經濟從 COVID-19 大流行中復蘇，我們相信最新的中標項目是公司不斷向新業務戰略轉型的另一個重要里程碑。

Next, please allow me to go through our fourth quarter financials in greater detail.

接下來，請允許我更詳細地介紹我們第四季度的財務狀況。

Our net revenues. The revenues for the fourth quarter of 2022 were RMB 39.6 million, representing a year-over-year decrease of 92.7% from RMB 542.5 million in the fourth quarter of 2021. This was mainly due to the cessation of online K-12 tutoring services by the end of 2021 due to regulation reasons.

我們的淨收入。 2022 年第四季度收入為人民幣 3960 萬元，較 2021 年第四季度的人民幣 5.425 億元同比下降 92.7%。這主要是由於 K-12 在線輔導服務停止由於監管原因，2021 年底。

If compared excluding the net revenues from online K-12 tutoring services, our net revenues increased significantly from RMB 16.6 million to RMB 39.6 million during the same period, representing a year-over-year increase of 137.7%.

如果剔除在線 K-12 輔導服務的淨收入，同期我們的淨收入從人民幣 1660 萬元大幅增長至人民幣 3960 萬元，同比增長 137.7%。

The net revenue decreased by 68.2% on a quarter-to-quarter basis due to delays in the project delivery and revenue recognition as a result from the COVID-19 pandemic outbreak during reporting period.

由於報告期內 COVID-19 大流行導致項目交付和收入確認延遲，淨收入環比下降 68.2%。

Cost of revenue for the fourth quarter of 2022 was RMB 18.9 million, representing a year-over-year decrease of 90.1% from RMB 191.2 million in the fourth quarter of 2021, which was largely in line with a decrease in net revenue due to the cessation of the company's online K-12 tutoring services under the new regulatory and business environment.

2022 年第四季度的收入成本為人民幣 1890 萬元，較 2021 年第四季度的人民幣 1.912 億元同比下降 90.1%，這與淨收入的下降基本一致，原因是在新的監管和商業環境下停止公司的在線 K-12 輔導服務。

Gross profit for the fourth quarter of 2022 was RMB 20.6 million, representing a year-over-year decrease of 94.1% from RMB 351.4 million in the fourth quarter of 2021.

2022 年第四季度的毛利為人民幣 2060 萬元，較 2021 年第四季度的人民幣 351.4 百萬元同比下降 94.1%。

Gross margin in the fourth quarter of 2022 was 52.1%, representing a year-over-year decrease of 12.7% or compared with 64.8% in the fourth quarter of 2021. This represents primarily the major change of our major business.

2022 年第四季度毛利率為 52.1%，與 2021 年第四季度的 64.8% 相比，同比下降 12.7%。這主要是我們主營業務的重大變化。

Total operating expenses for the fourth quarter of 2022 was RMB 141 million, representing a year-over-year decrease of 62.9% in from RMB 380.3 million in the fourth quarter of 2021.

2022 年第四季度的總運營費用為人民幣 1.41 億元，較 2021 年第四季度的人民幣 3.803 億元同比下降 62.9%。

Loss from operations for the fourth quarter of 2022 was RMB 120.3 million compared with RMB 28.9 million in the fourth quarter of 2021.

2022 年第四季度的運營虧損為人民幣 1.203 億元，而 2021 年第四季度為人民幣 2890 萬元。

Loss from operation as a percentage of net revenues for the fourth quarter was negative 304.2% compared with negative 5.3% in the first quarter of 2021.

第四季度運營虧損占淨收入的百分比為負 304.2%，而 2021 年第一季度為負 5.3%。

Net loss for the fourth quarter of 2022 was RMB 103.1 million compared with a net loss of RMB 25.6 million in the fourth quarter of 2021. Net loss as a percentage of net revenues were negative 260.7% in the fourth quarter of 2022 compared with a negative 4.7% in the fourth quarter 2021.

2022年第四季度淨虧損1.031億元人民幣，2021年第四季度淨虧損2560萬元人民幣。2022年第四季度淨虧損占淨營收的比例為負260.7%，而2022年第四季度為負2021 年第四季度為 4.7%。

Adjusted net loss on a GAAP basis for fourth quarter of 2022 was RMB 70.1 million compared with adjusted net income of RMB 17 million in the fourth quarter of 2021.

2022 年第四季度按 GAAP 調整後的淨虧損為人民幣 7010 萬元，而 2021 年第四季度的調整後淨利潤為人民幣 1700 萬元。

The related increase in losses was primarily related to the projects that we previously expected to be delivered in the fourth quarter of 2022 that got delayed due to the external COVID-19 outbreaks in China in the fourth quarter.

相關的虧損增加主要與我們之前預計在 2022 年第四季度交付的項目因第四季度在中國爆發的外部 COVID-19 而延遲。

Please refer to the table caption reconciliation of non-GAAP measures to the most comparable GAAP measures at the end of this press release for a reconciliation of net loss under U.S. GAAP to adjusted net income.

請參閱本新聞稿末尾的非 GAAP 措施與最可比的 GAAP 措施的表格標題調節，以了解美國 GAAP 下的淨虧損與調整後淨收入的調節。

Despite the short-term disturbance caused by COVID-19, we believe it has also presented us with new opportunities for growth. We are committed to seeking progress with abilities to achieve high-quality growth.

儘管 COVID-19 造成了短期干擾，但我們相信它也為我們提供了新的增長機會。我們致力於以能力求進步，實現高質量發展。

We continue to explore multiple business opportunities to improve the value we provide to our customers while keeping our momentum going. Additionally, we will further optimize our operational efficiencies to strengthen our competitiveness and drive sustainable long-term growth for our businesses.

我們繼續探索多種商機，以提高我們為客戶提供的價值，同時保持我們的發展勢頭。此外，我們將進一步優化我們的運營效率，以增強我們的競爭力並推動我們業務的可持續長期增長。

Looking ahead, we are cautiously optimistic and confident about the future of 17EdTech. We are committed to creating better value for our shareholders in the years ahead and beyond.

展望未來，我們對 17EdTech 的未來持謹慎樂觀和充滿信心的態度。我們致力於在未來幾年及以後為我們的股東創造更好的價值。

With that, that concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session. Thank you.

我們準備好的發言到此結束。謝謝。接線員，我們現在準備開始問答環節。謝謝。

(Operator Instructions) Our first is question from Tim Zhao.

（操作員說明）我們首先是 Tim Zhao 的問題。

I would like to know what is the status of the share buyback program that you announced last year, given where net cash is trading per share right now?

考慮到目前每股淨現金交易情況，我想知道您去年宣布的股票回購計劃的狀況如何？

Hi, Tim, thanks for your questions. Yes, the company's share buyback program has always -- has continued to be operating since the announcement. We have clear instructions in terms of the way we want to buy back in terms of amount and the price. The details of the share buyback purchase program will be fully disclosed in the annual report, which we expect to be coming out over the next month or so.

嗨，蒂姆，謝謝你的提問。是的，公司的股票回購計劃自宣布以來一直在繼續運作。我們在數量和價格方面對我們想要回購的方式有明確的指示。股票回購購買計劃的細節將在年度報告中全面披露，我們預計該年度報告將在下個月左右發布。

(Operator Instructions) I'm showing no further questions at this time. I'd like to turn the conference back over to Lara Zhao for any further remarks.

（操作員說明）我現在沒有進一步的問題。我想將會議轉回給 Lara Zhao 進行進一步的評論。

Thank you, operator. In closing, on behalf of 17EdTech's management team, we'd like to thank your participation on today's call. If you require any further information, feel free to reach out to us directly. Thank you for joining us today. This concludes the call.

謝謝你，運營商。最後，我們代表 17EdTech 的管理團隊感謝您參與今天的電話會議。如果您需要任何進一步的信息，請隨時直接與我們聯繫。感謝您今天加入我們。通話到此結束。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。