- Earnings call transcript Q3 2022

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Operator

Greetings, welcome to ATA Creativity Global's Third Quarter 2022 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. I will now turn the conference over to Alice Zhang of The Equity Group. ahead. go Please

Alice Zhang

is and The Sherry, ACG's Thank for at XX, you for of IR Thank Company's the release hello, announcing us. website XXXX, September ended press third or at ATA joining the the section you, www.atai.net.cn. quarter everyone. available Creativity results Global's

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

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

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

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

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

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Mr. the Company's Ruobai Q&A azhang@equityny.com strategy and floor session. the your Sima. name and to the your President, to have update ACG's Sima during to its can Chairman CFO, highlights today's over Ruobai wish of you Ma; On questions, emails the opening specify call brief a turn Mr. of Zhang, CFO, operating Jun quarter Kevin call, Sima. long-term the address that, questions. you ask Mr. and to you Company's for third whether will I'll Mr. XXXX; If before Please like growth With provide the Mr. on go ahead, send will an follow for email please financial CEO, outlook and with would read overview and the

Ruobai Sima

busy overseas begins. our Good some you, third response for on daily students impacted everyone. is education and was Thank quality periodical revenue season from contributions Alice, for the quarter appreciate and everyone's those We providing the to application cities period of time. as our resurgence. evening lockdowns welcome, portfolio a in art, XXXX, COVID-XX during in by training services the local to in Total services of We which when remain decreased focused result America. key

our However, have as application [to students unique with consistently regarding] demand period their part study expressed education important many of programs their as research-based steady for them overseas creative remained how learning personalizing package.

training the the occasional last compared enrolled portfolio students credit period key Shenzhen as programs, lockdowns XX,XXX a from to portfolio decrease year. year and delivered the such to We the Chengdu. which Our primary stable same prior period, for XXX the period, in during offering, primarily hours program is due cities training

credit program total of hours as noticeably project-based credit Although a total down, credit increased hours hours. were proportion

result did drastically shift credit credit effectively a As more their hours. program to designed more goals the [fewer] in potentially with and to in credit total project-based decline are Therefore, project-based flexibility time-based to ongoing versus allow programs. our to not students with customization students our more of time-based hours decrease programs achieve effort total to needed as comparison revenues hours, to

and them goals platform During timely for XXXX, students adjustments. staff new easier students teaching follow make aims both platform study their a help keep to and third track and manage ACG The teachers introduced and to we quarter progress.

of offline the school also overseas [procedures] During launched from are and a experience and different new lectures programs the we professors. subject of many multiple period, study areas, combination feature in which online

mind. I resurgences revenue margin was quarter. was due training portfolio during to year. the caused in portfolio XX.X% to certain noticed XXXX core revenue year loss to of prior COVID-XX to training from third offering RMBX of let's the third XXXX. recorded the contributions XXXX developing by third to With months cities available that that, year primarily attributable attributable period. the financials administrative decreased Gross was to million prior to which students impacted Net of was a during to year period the improvement for investment the to compared as to of in services in of make local new in which improved the the quarter million move services, this one-time local and due nine the a RMBXX.X RMBXX.X to expect million earlier. Total period, that impairment year lockdowns XX.X% RMBXX million RMBXX.X the resurgence programs for by result third is with primarily quarter first quarter revenue subsequent were We funding quarter loss of compared The decrease compared net the in RMBXX prior and net decreased This expenses and in from in related COVID-XX loss decreased University final general to paid prior Tsinghua as million, million ACG of period. ACG well support primarily to the

to year prior loss attributable RMBXX.X revenue million first RMBXXX.X in investment During million RMBXX.X the the Net June XX.X% RMBXXX.X The incurred compared from a expenses that G&A the as XXXX. offset support the to net net partially I XXXX. period of investment in investment the was to by of in the to impairment loss to recorded gain compared prior disposal of same decreased months million million was million was relation of RMBX to due prior compared ACG one-time in well XX.X% period. gain nine XXXX, was of million year loss the earlier. year primarily Gross business assessment related RMBXX.X Tsinghua company’s RMBXX period as in resulting in to period margin funding K-XX education noticed to University million

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

Kevin Ma

They steps to time uncertain Thank and pursuing you, students provide We of the pandemic [indiscernible] determination learning [indiscernible] did quickly and had have by and again. continue Their act harder see due forward activities during overcome real resurgence. past due light In during years. shutdown continued have our and couple rewarding students to Sima. circumstance the the of we next our center over [resume the and their our business] taking local to only exciting has some possible applications particularly teaching incredible of were study platform impacted made COVID-XX cost day-to-day training regular Due transition period, of temporarily well ACG’s this ability to creative ability study XXXX season this dedication this working had local and when large to to as by journey. our to this, lockdowns location to in delivery [indiscernible]. support with been our remote staff to by as as to a [indiscernible] effectively,

innovative Games students XXXX, quarter both are designed comprehensive different & [art of interested arts. Summer These in those for to we to Martins programs art Animation applying and of combination a [cloud various Sheridan business] programs who exclusive in-person fine formats. This online Design introduced for their group] of [indiscernible]. all a and the and Central students I third [indiscernible] animation program were which Metaverse at and Summer arts, stage games. in the themes] of delivered [art School, Art that those During exploring their help and include view & Saint our Camp, are Programs, design, studies in

hope pandemic We home monitoring their as experience return up international have also see our many left to same started of We to their standards [no to our students our and to in of situation. [indiscernible] agreed managed pursue learning to observe zone]. travel students opening have

by creative consider fourth We and way students. offering and needs development. provide a growth translation. strategy growth ahead. the on many hence providing Zhang, sure committed relevant will which it I'd supported students we be his the exciting believe over continuously arts of quarter our are [indiscernible] go strong to curriculum stay to portfolio study by hand XXXX making please our closing to initiatives. quality that now and to We Jun key reflected English address current [indiscernible] be Jun, to our is during make with will this our followed curriculum with our deadline prepare of like Mandarin, and ability remarks time. in to President, application our in for update an understand We will remain to the of our Jun ACG's to serving them on

Jun Zhang

[Foreign Language]

Alice Zhang

Kevin. you, Thank

options by local impacted provide been who quarter, flexible the During have continue for third resurgences. course we our delivery to particularly those students,

new introducing programs ability In quarter to addition for our education of to needs students. our allow to a us who every evolving seamless the to our experience our believe meet provide students better commitments

We were artists format. during given in-person adds or to could from on Training setting also courses significant launched One art discussion to the artwork. letter designed which students a to will competition like a spent reference various online to students Class which in Future.’ to believe Art classes ‘One smaller International that the we students’ type program expose to and that creation with the hours portfolio committee, UWEE I'd from styles for a choose Intensive Louvre and certificates highlight Exhibition, exhibited of international Museum a highlight participating World Selected at artistic in XX students a along the artwork XXXX the be themselves schools. take of theme immersive and Participating promote is here, quarter All in

students from from. So and in an the Metaverse Tokyo two Class such workshops Master on post-pandemic York Arts Meditation diversified topics have New as the including we focused lectured choose Visual in quarter, themes with launched different for University, topics, with programs far the during professors Cabins Overseas era first by Urban more to

XXXX, In begin seeing In are overseas in, final us. them and through supporting XXXX. stages about of remain our of lies we when addition, and the study look as remainder the we opportunities for in into students coming forward ahead the optimistic application offers process the look XXXX what we to of ahead

with our benefit us give partnership, top institutional to lectures the in from long-term around allows continue programs have institutions programs our and arts globe. world-class We to joint provide teachers which quality

the believe apart of we sets outcomes from importantly, student long More ACG our driving positive competitors. history

turn experience not it always – to the to We Kevin. ACG back experiences positioned change. students I'll exploring to that, learning future of will believe continue be this diversified can in is we a and study are which With ways and mission our as over drive art reach new offering. we growth international leading of well provider strive We to

Kevin Ma

ACG Thanks, its closing, first. Jun and In Alice. to support continues students

by growth found the position mitigate the on to our presented a uncertainty to pandemic ongoing We [indiscernible] way environment have strategy.

all gradually benefit line. With opens questions. business world for it let's the up, natural believe will this across As and operator, our growth up we open that,

Operator

[Operator Thank Alice? Instructions] you.

Alice Zhang

it. Thank beginning different of you, company's number of a the to Sherry. I the the received operation. At appreciate questions we call, relating

Specifically, the management up. I to we the would one while for team ask queue to questions wait

first I are you what observed course of study That's for seeing raining? question pandemic? this. in or the question. of there still the terms art So first the it What over the received overseas counselling? is you And Is demand is trends have demand my

Ruobai Sima

early for restrictions pandemic [indiscernible] the to to most saw environment, as that and demand be we related of XXXX, tensions. question. ongoing the students. pursue to and which I option. study versus impacted And change thanks the country maybe for clear a were attributable XXXX, destination a to counselling students' the abroad abroad think in pursuing the popular implemented still result, Alice including in used difficulties XX in study their study here many U.S., with several thanks in services. [indiscernible] inevitably This students geopolitical overseas pandemic And decrease COVID-XX ACG start for demand expressing Okay. the for several a And UK performance to that studies saw factors, our the as In due is ability we their a

helping in might teachings we we observed Regardless, focus bad be. positive of support not the staff remain to number for of about application season continue to to ensure our business students went pursuing long-term our During we and past student what levels. so committed this a programs students show post-pandemic third peak they of lecturing, the signs our achieving Thank the XXXX, where and our study prospect overseas outcomes quarter areas remain that study you. drive their our recurrence, to tie which pandemic goals through is optimistic short-term to creative setbacks, however –

Alice Zhang

for that the much Sima. Thank visibility pandemic XXXX do are And periodic you, cities in you on remainder of anticipate into you and have question, and there I outlook major place. lockdowns that in further into the any financials and Mr. case, of in financial in impact still which QX do the restrictions a how the do XXXX? from have second is China travel

Ruobai Sima

situation would it to during fluid to and be ongoing remain as China occur a environment. guess not what as is us And season. will prudent it for the to Okay. when And comes in the this public flu [circumstance] pandemic health

the over reliable learning years importance has platform continue that that us quality emphasized of students, of our and allowed the provide the experience past remote the two curriculum warranted. delivery building when situation Our flexibility

computer teach is staff that monitor. or they so well are effectively able and teaching Our in-person are trained adjusted to they whether

typically in as [indiscernible] of our net for but QX. revenue guidelines We continue quarter is portfolio and keep quickly Thank budget services we QX fourth our key There the in ongoing of expect uncertainty work the many our you. strongest application they training to to from outlook topline to XXXX will environment, of from of grow the QX for remains our as students on surrounding our investment XXXX. some terms pandemic

Alice Zhang

call the live we've now Sima. Sherry, you, Mr. Thank all questions turn back I will got. questions. Q&A for you that's the Great. to

Operator

you. Thank [Operator Instructions]

Kevin Ma

Group. for reach The you us. feel directly joining us, firm, or us questions of please Investor all Relations to to again, Thanks, our has free anyone out If for to Equity

you always are you. to and XXXX look call. during available full-year Thank to investors with our to forward We speak speaking

Operator

today's Thank does you. conclude conference. This

participation. you for your at You may lines this time and your thank disconnect

ATA Creativity Global (AACG) 1 Dec 222022 Q3 Earnings call transcript