AACG - Earnings call transcript Q4 2021

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Operator

Greetings. Welcome to ATA Creativity Global's Fourth Quarter and Year End 2021 Financial Results. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. the Equity to Group. turn Zhang host now The of will conference your over Alice I Thank you.

begin. may You

Alice Zhang

Thank you, section or operator, us. and available year hello everyone. Thank XXXX XX, company’s release the quarter is ATA website ended for www.atai.net.cn. December The the you announcing Creativity the results Global's, IR ACG's at fourth and of press for joining at

also available of call, of company has XX will presentation this this slide replay A conference next the made ACG’s on part at website. As accompanying its the available website be broadcast an for days.

pandemic. acceptance would market Before of regarding for Private Act and be programs things, These prospects results plans ACG's benefits we and contain services, forward operations, the anticipated include, get to as ACG terms the COVID-XX acquisitions Reform forecast, measures and growth of business growth mergers in future Securities of of the and that and started, subsequent activities, other pandemic any meaning other ACG's anticipated the of implemented for such portfolio terms estimate, to discussed will, the on I this can plan and generally, market ACG's its training education conference look growth herein among impact accompanying safe future, and COVID-XX the and of and within information ACG's believe, ACG's and statements operations, like competitiveness intend, strategy, demand response and by call should, harbor similar statements the everyone anticipate, plan, forward-looking of identified could, statements to, forward-looking and certain remind outlook, expect, provision XXXX. Litigation

that be Information forward-looking reasonable assurance There that from associated cause prove be those to reflected could expectations those dramatically that in of about statements uncertainties projected. the correct. to subject Although the risks today, the risks results which in obligations actual with those differ you expectations The and will company to investing are review believes statements are with can a as the changes making its filings future Commission, forward-looking before to we encourage in information, market any and or Exchange not new in otherwise, decision. conditions any of except as update included is as to statements assume investment ACG result by its events, company does law. the required Securities no an

information. under I would RMBX.XXXX you results language, disclaimer as conference in the to conference presentation like noted. converted to the are of based December this financial amounts of fourth otherwise quarter noon dollar financial historical The the using refer time conversions year for XX, company relating GAAP XX, of the percentages accurate RMB in call exchange Regarding in RMB, ended further December RMB noted. XXXX, reports on the U.S. Slide of results rate and all the to All also are reported, call and buying presentation as unless otherwise All rate are X unless U.S. calculated XXXX. for US$X, to the an from

the X. company's is of on with company PowerPoint the following an those For Slide presentation, along of you there overview

the operating Amy floor opening Amy. Tung. ahead, Ms. addition, happy update call, than Chairman that, to Jun Kevin outlook year-end Mr. fourth Q&A company's go today's will XXXX; Amy the CEO, and to strategy ACG's of I'll Ma; turn company. the for Please questions call its the long-term CFO, before In an follow we financial the and growth President, Zhang, or the With via questions. and a with over and session Mr. highlights On and will are on Ms. to quarter provide take company's more investor overview brief e-mail during today's CFO, Tung, for

Amy Tung

time. everyone's evening Good everyone. We appreciate welcome and Alice, you, those America. Thank to in

significantly increase primarily supported was training our half more with are operations full growth scale primarily in during from the the reducing provided the were XXXX able company's year losses second subsided, more by portfolio solid prior gradually from revenue revenues as This XXXX. we as the gross during to the the we year. the effectively, achieved We services services was contributions XX.X% pandemic by the COVID-XX driven growth substantial effects the in increased of of margin and pleased as in we improvement delivered year. during particularly the year

learning received learning demand. these and were well to to contributed top-line services response students many pandemic. continue as developed also programs be opportunities experimental growth Our based by of been our research have high the These in to in

within portfolio core a the in the the XXXX future hours during an XXX tend Enrollments students compared to and training indicator fourth program students prior the is reflection XXX of of credit the are from be enrolled period we seeing prior Our period. fierce delivered market. the to competition decrease increasingly year year quarter of

particularly developing a XXXX in rate in the platforms of competition, These the similar for conversion XXXX of in lead platforms China the media then our We and private marketing sales. with is resonate TikTok by Douyin, social potential increased to enhancing U.S., young newer portion monitoring generating have We more strategies. popular of to larger to the resources during is to of Zhihu to proactive U.S. been plan half to marketing the similar allocate proven have which a promotional closely addressing such our and as higher which lists that second and pool with brand. people Dianping have our goal Quora in

quarter our in XX,XXX time-based Credit hours project-based credit XX.X% and programs. of quarter fourth XXXX, programs both delivered a programs, portfolio in increase of from resulted training the During increases notable the delivered for hours fourth XXXX. we

due period, margins to improved programs in While programs. it efficiencies. in our project-based is translated less shift of effort portfolio training operational shift to time-based greater was conscious revenues to mix make continued reporting this apparent favor we increased versus This have into a and

in RMBXX.X driven needs the serve network to quarter XXXX from from training nationwide increased nearly of XXXX. the from of contributed the year may students year million and offerings fourth traditional Beijing and or margin efficiencies loss population which fourth total decides to through have up mix that of an that from the cost financials the loss doors of can in online We result increased ACG's portfolio Shuren-ACG ongoing We do for With driven to the Program direct contributions are XX% prior notable in fourth September students Center, net as primary optimization either of to shift expenses. delivered through and revenues million the programs XX.X% XX.X% and platform, which different to to both and not RMBXX from improved reduced million process million revenues fourth gross fulfill. year quarter, attributable project-based net accredited well opened operating revenues by explore ACG The during net greater during to to improved significantly was of to primarily services of qualifications recently as Net and XXXX. represented primarily period. RMBXX.X Foundation revenues a also RMBXX.X attributable increased our move Arts let's full include authorized for margin international training person XXXX that, our in programs of programs. was like XX.X% Gross This improvement of decreased This the operating the continued the by RMBX.X opening the of increase expecting center XXXX ACG's by period. quarter period. ACG efforts. primarily related compared in have cost was to the to Center million ways quarter in announced and better Total ACG in which portfolio in programs improvement Arts improved training a

the While expenses other RMBX.X loan in R&D, reduce we impairment, G&A we million. decrease RMBX.X and continued RMBX.X loss of decrease expenses result approximately assets and other was invest an million to intangible The and in receivables. noncurrent were to a receivable in able also our of million operating provision by

portfolio to revenue XX.X% an improved investment RMBXXX.X in from net RMBXX.X Net the up year loss by in to primarily net the driven learning of period. assessment Turning million ACG attributable operations. services. business gain XXXX half XXXX. growth from then XX.X% loss million was improved million XX.X% research-based in compared of to loss million increase as improvement as margin to the from was This primarily driven RMBXX.X was prior improvement disposal training, by RMBXX.X second million RMBXXX.X during year full from of to This K-XX in and Gross RMBXX.X results, education million. XXXX, well the ACG's of

working of deficits US$XX.X US$XX.X that I capital strategy. it December position respectively financial outlook growth to will at Kevin? at in Moving equivalents. to over million to compared to would equity XX, be Working the upon to and deficit turn cash total like capital XX, solid million of US$XX.X and who US$XX.X sheet, in was balance shareholders’ equity Kevin million cash December expand continued XXXXX, XXXX. shareholders’ our now we US$XX.X million, and With and with a was million

Kevin Ma

Thank you, Amy.

along pandemic. We are ability scale pleased to order the efficient less travel for narrow to with to in restrictions In of a our to to to business XXXX, challenge company ongoing loss growth increasing year year. line global our our significantly compared in abroad XXXX, due continued prior study the lead to fiscal be and the for top related which certain deliver solid students

increased their off-school to business, quarter the to There doors see late industry. our involved half and China differently by Due but market business opinion by from during in in was some remained of creative July, the our competitors. led not we ACG fourth to directly to for enrollments released or the despite changing also changes in second has companies was in did needed regulatory either closing Our of companies, related impacted competition stable The tutoring the new their focus. uncertainty XXXX. academies the the nature ACG education arts government opinion, the continue many education

provide increased which our hands-on programs learning research-based earlier, learning noted As to experience. seeing project we demand base Amy tend for short be services, are that the

portfolio time, current recall learning grow our different our service the to within we that ways are to are and the to [indiscernible]. explore believe our needs. pleased and mindful business remain to of to business their extend existing same of of may this in sales on program students positioned evolving well the see research-based are continue we with competition We response focused the we for we We addressing developed while offerings lines growth. You offerings. potential At serving future pandemic our

report our of positive drive that number and College to Design, of on University, creative outcomes in have and are Design, incurred optimistic to maintaining of Island that of XXXX School We who the of University, programs And ACG has us admission note, School participated XXXX. programs about such submitted Pratt look all And New we of applications of Institute School as arts well Design. in for of opportunities in forward students a students. prestigious colleges continue school of training in the the a the Rhode as XXXX. scholarship I’m This overseas consulting Chicago, the Carnegie arts position of received leading York ahead to related education Art Mellon pleased and our the study offers Center as likes of as Parsons Institute portfolio Art

for strength to President, will initiatives. please English and his foundation to Jun translation. proud our the the our continue Jun, update go now will Jun in growth business as ACG's followed like partnerships in growth. remarks on extremely hand which current investing make I'd serve which floor will an to be our within our by Mandarin, provide ahead. of future are industry, establishing a over and We to intend Zhang,

Jun Zhang

Language] you, Thank Kevin. [Foreign

make Our and during ACGs pandemic. decisions and post has quickly critical following been ability to success the to evolve

continue the travel, based throughout of research pandemic bootcamps, continue linger and short-term programs. us some and As in themed learning internships, mind. teachers XXXX, health we additional the to to certain domestic effects our develop students programs with of online Including

School program. The example, Grammar the the handmade from on we Heritage student. prestigious beautiful silver students Guildford School crafting Nanjing one well Intangible received products, partnered and by is school XX. where gold British, Guildford This they international extremely RGS grades to program of program which are with the Nanjing Guildford, first was Chinese Nanjing For students RGS School educate Cultural introduces delicate. Royal and This and participating to designing

for have expand had Shuren-ACG students the high ACGs that. to In addition, we otherwise International to to school on not have relevant International year be of international pursue arts to programs curriculum to to apply art developed the offerings Foundation study abroad serve experiences with students new The the Program colleges. full-time We're Foundation opening credit planning who may at the population Arts art Arts introductory Center pace to way Arts one Program and and proud at ACG student opportunity overseas Center of ACG graduate providing the Center. for overseas recent the

serving art with children whose high our working Pearson, provide serving also pursuing Arts and pursuits. attend time and Beijing, the as whether art are international additional are a need through qualification Level programs We for growing to not at interested with have public of we X high diverse the in design and in arts wish education professional and BTEC education Level X colleges in forward Shuren-ACG students pursue to are decide received providers, creative abroad. our but and families closely eligible for approval including population which we to bridge those International By look Center. Level The for school as from schools, more A and qualifications, qualifications, they the may such flexibility who international universities, needs students studies to academic a

business to an program. expand learning enrollment strong pent-up based and a demands the see opportunity current also to continuously research this due We in our services

We to continue to the offering, offer are expanding preparing way programs in our not our flexibility meet we which more needs. only their structure students course to but

of XX companies renowned account, the our our model ability to of providing turn We navigate supported by with experienced locations foundation, as doors and the have highest close well ACG forced been all others competitors. uncertainties strengths dreams, students believe which a partners. have remain able teachers relationships to into and Although market. XXXX, than of from further to up records study operational to to more realizing upon some campus this forced over I'll helping to our change strong that, With their quality their the confident stand proven with education was their nationwide, reflection track is as completely business back deep built ACGs our is in we ACG’s Kevin. Taking in been our students it in a

Kevin Ma

of In we're us and closing, XXXX in about maintaining to Allis. and arts Jun Thanks leading ahead seeing our look optimistic position the opportunities creative forward education.

for to all our students. As drive we outcomes continue positive

students education. the that becoming by look China, continue look arts We provider new enhance to to our We first massive international questions. that it the in up setting experience operator, and of students to bring they forward opportunities. creative strive leading let's their education and putting open With our for new opportunities learning to

Kevin Ma

Thanks please to for to anyone during out directly Equity are our quarterly forward all investor Thank you reach available free joining us. Group, always has call. to look If we for you investors our all or us, firm. relations us to for feel you. speak and with next questions to speaking again The to

Operator

conference. today's concludes This

for participation you great day. this You Thank and your time. may disconnect at a lines your have

ATA Creativity Global (AACG) 18 Mar 222021 Q4 Earnings call transcript