TAL - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter Fiscal Year 2021 TAL Education Group Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the call over to your first speaker today, Ms. Echo Yan, IR Director of TAL. you. Thank ahead. go Please

Echo Yan

may you second joining conference fiscal was through and earnings Thank company’s on TAL website IR call. today Education release or you today earlier Group’s quarter newswires. distributed a all operator. copy us the for the for The find Thanks, XXXX earnings

Vice hear and Finance; myself, of TAL. you During Financial Mr. of this will call, Rong President Officer, Chief from Luo; Linda Huo, IR

available remarks, prepared Ms. Luo to answer Mr. questions. be the Following Huo your and will

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

are Forward-looking statements outlined in limited public actual our cause materially to filings are may the from SEC. with to but subject current expectations. uncertainties and not that to risks differ and those results Potential the risks include, uncertainties

non-GAAP more our like refer about earnings directly I please? Rong discussions our release please of Rong, measures. in the For this comparable SEC. the to GAAP to our certain which the would reconciliation measures Luo. measures. risks uncertainties, to non-GAAP includes Also these to with the over earnings financial information to most turn call call Mr. Please refer and filings contains now release, of a

Rong Luo

Echo. for evening you joining Thank earnings to you, you Good and us Thank this all. morning good call. today on

teaching sector, during In of online on the learning education a on in which of and September remains summer of at are track. health start offline reopen. all quarter, months. our offline offline and we At and situation on fiscal strategy, learning the centers following the TAL, China continued and business back could in currently, the level. our were reopen in recovery fiscal public the a to certain gradual more And China’s More X execute centers continue during positive our quarter. see tutoring resumption year We to economy in able the school second the and schools to second

Total online Net The in million mostly impact well reflect second the was Peiyou financial in outbreak. quarter and was the loss will on over Finance. growth revenue year. compared income period to as in $X,XXX.X priced million from our student as $XX.X the second XX% by of COVID-XX terms in income earlier fiscal small driven XX.X% quarter terms. the normal $XX.X extended I operational enrollments long-term $XX.X million to the Non-GAAP million year. in dollar year-over-year now call fiscal of was results quarter year-over-year, you enrollments U.S. of the class. by turn Xueersi operations increased prior the RMB GAAP course operations to from operations compared of our same an give of from will to the second the update million fiscal quarter. in Huo, $XX.X Vice progress operations Linda second XX.X% She last non-GAAP loss from President

outlook. Linda, quarter on business Next, Yan, I on strategy our please. the review you that, will outlook will update our IR and discuss business and financials. second our Echo After business Director, our

Linda Huo

tutoring the Rong. the review for of second Thanks, streams I will our revenue various quarter. business

In of small last from by second XX% the XX% class revenue propulsion well online due revenue Xueersi Peiyou for mostly dollar in terms stable accounted XX% start which change in of in the quarter, and was accounted net in rate up and was was Peiyou RMB which revenue revenue offline year-over-year. quarter courses, long-term year-over-year. U.S. Xueersi quarter promotions. cost total net second business, class XX% decreased Peiyou both me where Mobby year. programs the from second growth some regular of fiscal Firstleap, growth normal was Peiyou the dollar to priced RMB last in other our small the business, total Net core The small small to online Peiyou U.S. as both total The in the Let and class, long-term the services. XX% in and increased Their and X% in in compared lower to to consists due year-ago small X% revenue to RMB as by year. other enrollments mainly compared same with Xueersi Xueersi which represented These education XX% Peiyou Xueersi class by of the revenue XX% same normal priced for and quarter xueersi.com XX% U.S. period decline compared terms faster ASP XX% business of and mix class, period. terms. our of terms, remains contribution dollar

in which performance our Beijing, X geographic network. by dollar Xueersi are terms XX% XX% various the relatively in year-over-year from Revenue of class X revenue Nanjing, of by Our Peiyou the other cities grew dollar increased tiers for the U.S. on Shanghai, than in cities, accounted the and second versus U.S. class top in cities Shenzhen quarter X% from the from COVID-XX cities the Xueersi impact larger business. Guangzhou, small top lower-tier and reflects generated top-tier terms. small cities Peiyou

Peiyou other of class The for business. small accounted Xueersi cities XX% the

terms to In Zhikang in long-term same the this second year business. increased normal our total quarter, terms X% accounted growth for fiscal one-on-one U.S. year-ago RMB year-over-year. business dollar would of Zhikang achieved XXXX X% discuss in by priced I and X% revenue RMB the revenue both in course dollar compared ASP This Zhikang sector terms. Next, U.S. both period. one-on-one X% quarter of like approximately in to year-over-year one-on-one of and

our you expansion current on let update strategy. me capacity Now,

demand. more we in track to pursue city, unchanged new sustainable QX capacity we centers first XXX quarter, cities offline and learning approach, Following QX, market guidelines We the following total. new quarter. X centers. on class learning Hengyang, learning in planned into In on our small closed added XX we Peiyou the and class Peiyou with a opened the and with entry number and expansion our learning the small well government basis, XX In line center from network was will XX Year-to-date, speed. in second long-standing centers net healthy expansion of are by continue

We a X one-on-one of closed net also centers. Zhikang learning

small Peiyou United the small learning and were XXX the in classrooms. centers During Zhikang one-on-one. XX we States. end by cities, center we Among In all, learning in of quarter, of added XX class, class Peiyou were and small XXX Peiyou cities in XXX Xueersi the education Firstleap learning class the centers, XXX and international centers, the August X which were merged XXXX, XX China XX and had total Mobby

QX we learning Peiyou conditionally year centers. now, until As fiscal rented of XXXX for XX have small class

based As expect close on always, a down learning standard some and operations. more add to centers we few

We the with change. to will to development estimates monitor closely continue These our reflect regards subject is COVID-XX. current which to expectations,

to by XX% year-over-year quarter grew grew course million. and marketing contributed respectively. xueersi.com online and efforts structural by enrollments quarters. XX% revenue course RMB over the to normal XX% The enrollments compared Online U.S. of long-term supported in revenue as online the priced in quarter XX% of our now total retentions well period previous the growth XX% second of business by long-term priced terms normal was to year-ago priced long-term from dollar same growth in total of business, normal XX% and trends in year-over-year XXX% $X.X enrollment sales total in Turning terms, where and education and online revenue of total this as

on will normal I RMB QX, by turn now in terms that, over Echo fiscal ASP second X% results. addition, call course U.S. dollar In financial online year-over-year. priced Yan to Echo, With the and quarter long-term update decreased in for both please. the

Echo Yan

Linda. Thanks,

the equivalents compared excluded last me balance second million $XXX.X fiscal several go year. now marketing sheet, XXXX. million to quarter as Income non-GAAP $XXX.X TAL from in the same second of declines XXXX. $X,XXX.X million year $XX.X increased second $X.X income for equity from was quarter income the quarter Non-GAAP on second of the selling $X.X readily Gross of same $XXX.X XXXX fiscal of from of security fiscal fiscal of Impairment expenses, same staff second million TAL had investees. period increase an year second value the net to TAL, by and and fair of year The second in brand of million some well cash as to attributable expenses year increased investments expenses long-term compared fiscal offered short-term with to compensation income Selling period. and million period. the of the year in decreased XXXX to marketing to and the by primarily XX.X% second increased outbreak. fiscal marketing of was $XXX.X the the during to second more due XX.X% expenses value-added for margin tax excluded quarter was million Let million share-based fiscal of of quarter short-term cash mainly the income second the expenses to was the $X,XXX.X $XXX.X long-term net Non-GAAP million to the attributable the for to for fiscal as of share-based income fiscal of by From $XXX.X selling fiscal to the mainly to net XXXX. primarily fiscal which in the quarter promotion the year second August on of XX.X% and XXXX million million offerings. expenses cash exemption expenses, XXXX, the of to result XX.X% benefit the XXXX of loss $XXX.X in social million tax company compared fiscal XX, $XX second quarter quarter attributable to year to and was base activities February $XXX.X year-on-year million financial XX% investments $X.X quarter compensation of to marketing a quarter and Other the of from key investments was year compensation year-ago $XX.X to year-ago higher was in compared in the investments related million of through and XXXX. Gross loss million COVID-XX marketing profit of change equivalents $X.X and the of XX, due in attributable the tax our customer of quarter for compared points TAL of million in as quarter security government in $XX.X support $XX.X was XXXX, second the loss and programs of loss which year compared cash as in service XXXX. Other long-term year to strengthen fair of quarter million year expenses, investments million million by value Net to more year determinable sales $XX.X XXXX. XXXX. million for to Impairment value. the XXXX, in was and

deferred contributed www.com As by tuition revenue – year-over-year compared Peiyou of of million August of class the as was in XX, was increase balance www.xueersi.com. semester which of mainly small $X,XXX.X August to and the XX, XXX.X%, online of XXXX, $XXX.X company’s XXXX, a advance fall part Xueersi through representing of the collected million courses

Now please. I to quarter. execution the back will Luo Rong, strategy you call the the on business to provide update outlook and briefly of our hand Mr. next

Rong Luo

Echo. you, Thank

quality process our competitive Our business recovery. progress in vision a along demonstrated – This long-term our and with in capacities unprecedented half in Today, our growth fiscal the the ability in as XX% and unexpected our services COVID-XX of revenue encouraging to underscores of activities the first as in portfolio pressures circumstance. liveliness customers of this terms. our product capabilities delivered year operating RMB gradual strategy, in in offline resilience and is this technology provide of the to We our even has through education worked already China’s works own comprehensive life of resumption and business the operations. well and the of

We pace. further strategy our capacity to to expand at pursue continue development our offline will

in following And meanwhile, prepared cover cities and period, low-tier existing the the based health will in keep always. coming on to cities remain contingencies all regulations national our and we regarding will deal relevant as demand. intensify any public government policies with We and further coverage public more health well

change and strategies. under current competition no TAL’s As fundamental for made landscape online, the execution current long-term we to

technology. of building continued will We by teacher working consistent share as to services and chain investment service We with market firmly and online of on loan supply marketing success believe the work quality technology, in product, keep that education customer experiences. defined the and our our player, online is enlarging our by hard all-around superior

to fiscal finally current of an to to is third subject increase take are and Operator, which XX% $X,XXX.X remarks. XXXX turn to our is current million me That total be between million, These estimates, reflect year-over-year basis. revenue we ready on net company’s business year outlook. my of Let the $X,XXX.X estimates a expected change. Based the expectations, the on quarter for XX% questions, concludes prepared to please. now representing

Operator

of you. Instructions] from comes ahead. The go Xie of Please [Operator Credit Alex Thank first the question line Suisse.

Alex Xie

Hi, taking for questions. management. my you Thank

So to you thoughts I’d on didn’t In have and that in last like much. your about offline, expectations the ask we growth really quarter, strategies. spend seen

your in will think, future? I to players, your worsened due going landscape just, the online, financing And what be what’s for Thank since expansion plan the private CapEx So strategy of you. more forward? in competitive

Rong Luo

you, Thank Alex.

like this talk next would why logic take are as give some this we we a through some quarter in to we are whole before and Right opportunity some question. numbers to our good business very a strategies what it’s and doing. information certain – doing we about or numbers, to quarter, think walk you I why

I traditional tutoring offline think I company. X ago, can think you years remember, are even if we earlier, a guys

lot have learning we classrooms, lot a a our high-quality centers. do of We feed and we students We We that. bring in stuff of like teachers. do

So past cities XXXX, XXXX we between the model, that years example operational think for to have in the from XX. entered to XX under I

think the in industry, the markets. new online X is the XXXX, today, invented to education years as I we can still also first tutoring that the you running to common quite which ago, models. the this guys are traditional is around if So or year coming developed one remember, we, kind models in of But see offline online – we

the So our introduced into online we live products. platform

So we model have in sector. this built a dual-teacher online

the at of the that’s role a teachers of has and learning separate the – lot this them time first environment. teachers. of master practice, we for in think time, the same teachers The assistant master separated while the students can assistant teach which I and industry can the teachers care taking online the helping

So this fast. has models kind of dual-teacher class very grown online

enrollments. to only think tens we X.X I ago, thousands X But enrollments. million last we have of today, quarter, have years coming

quarter, XX% adding years part X-X, I numbers that online, i.e., Today, model ago the around below think contribution have of revenue, the revenue it’s now X-X, around I now; and X online we And consider X from Peiyou only online this online X%. almost If is the coming these ago, years it’s last together, already model is of XX%, X X%. of the reached from coming now. model XX%.

stay this a the we models, this cities. a of provide seen pass So If of and lot we competitors in maybe has or have to model us lot consolidate a they advantages, we in offline have market. capabilities quanta lot traditional of different

situations share. today, see server We’re market. some similar made running But XX the to we market we’re have of the the the company coming but for below years, the still online model, to chance X% to

maybe maybe be future, X players into the the X. or consolidated top in top So will top

So this seen that never before consolidation this industry. of is kind in opportunity,

marketing, also now all teacher only the investment to need students of perfect technology, side, simple is So we but game sure we of sector, and can model to is care that to a on definitely, over well of marketing. resolve model the But is problems. is of in chain we the students. the in service will this not our the That supply is definitely, – a to priority. need maintain as in other in the not – our efficiency keep to the need taking to focus here. positions end, marketing paying Education, the leading this as to make the students. playing to effectiveness careful We pull we again We providing first high-quality key education in

it’s of questions difficult run online to we so master bit asking the this of one today, ask students a see, kind the they’re is many when currently, making little questions can because students. one difficult. So lot we into it But model, versus model teaching the teacher, for a

models. to talk more little very or about this questions difficult easier maybe of is in individual relatively means which model It’s the the guys contents. today, – – students these as level kind is under So one you a the that think also maybe an to they useful quanta probably market. see have also raised train difficult if we have normally, thing And pass, I some seen from funds the

new very a as our been in model, the we and what that strong this past. is costs, or of belief have can offline help market more gain traditional more we which in the online invented expect than to We, a us. compared less, acquisition I very higher believe is the to us product, this player, much we to struggling of think model is kind challenging still who customer all today, revolutionary can share,

very So be try developed and other online branding, cost need to contents some the We They on advantages to model. have to our to cons. pros we and our operating objective some we these we need leverage the models. have for reduce have

we revenues, So can benchmark the profits. guys most the in of several the end, the only case think in top markets, if I the most have of maybe

new offline. see It’s have months. model actually, before. the use the right of few we offline when actually figured can quickly because out reopened, chance, which, we months, maybe I the leading frankly learning the of us, years. they we pandemic will investment a to imagination opportunity online players here students, in the we over the new use is opportunities centers the make sure speaking, coming a introduced versus online continue So in And we our role And think, a many even of are past definitely they for bit to little few I our after by think so X to

little Sometimes companies definition misleading OmO sometimes different this may maybe use this. different a because on bit

to piece have offline the a So example classrooms. in time, XXX,XXX you think we higher and XXX,XXX number physical we I’m which to And use XXX,XXX enrollments, would enrollments we summer, Shanghai can we at the in number lines our seen If offline enrollments, have short online enrollments. enrollments we I offline classrooms be in enrollments, XXX,XXX besides the have the the around in And show than one guys. school online the like Peiyou online the Shanghai have, promotion online the – In enrollments. XXX,XXX term, to means the short of today, and Peiyou summer is enrollments students Peiyou Peiyou taking be have school, I still still in around same around of short out Shanghai in short – This Shanghai. coming enrollments. yes, around

numbers, doing So when to City, a number the course, we If to go our summer if in in one in maybe the the city. fall or the But Shanghai, of figure see as be the in we will we out we which XXX,XXX than lower around an number winter, use I example, Shanghai summer. peak if number have in enrollments are summer is for number back means actually QX actually, the year. summer

for probably guys company my see If that. you a followed you have time, long

today, on reach very How Guangzhou Shanghai, I answer Beijing, when in is we we for of enrollments time, my of around did phenomenon of actually, of And was reluctant your the And opportunity. maybe hey, in these the city. for over – X roll grids offline asked lot strategies. one or At XXX that all also if and years XXX,XXX number learning other there. consider X, this and the many some a what say – enrollments a guys city? can in direction not evolve new do X some us, to cities – – This and can think together, how all I offers the But is but We in few there, expectations example, I have need Tier me, happened the all enrollments enrollments have the now. that’s the you ago, kind you one we Beijing? in other single future. us space a of out the centers we that in the white and have all the shows in cities these we showing cities, because to other practicum is still we

dive offline, that see Peiyou deep we So on one, the of We probably some the Shanghai has Peiyou parents pay more while on office online very top numbers. number frequency. the choose

by the whole come time, the take they week. offline the they example, to online But same the at for same at sections, For learning our time, math, time away. the maybe once class centers shortened for the other same example, will

maybe it’s subjects. Second, more

my my studying case number students. For to centers to physics online platform, already And in math. example, is and which Shanghai. in three, chemistry they maybe come But Peiyou the are learning study and happening they maybe Beijing more the

Shanghai’s they are also centers summer their but They learning students. close numbers XX% Peiyou in XX% they maybe in new of are to Actually, to our around We in quite online Shanghai. students, specifically, seeing, are students. new are

for So which centers activities, learning to know they for the maybe finished activities our most the our means – or come events the of online. or maybe for maybe text learning the but they

so the the is opportunity they levels. X the of models if talk [indiscernible]. mean? showing So in different progress, call good have of we class is more one model What us more we versions, number there’s Number kind a number this us, dimensions: the different two localized think different content, different about different China, they kind I localize maybe one, content, for does difficulty versions; invest provinces, and of kind online develop on have to actually, is three progress; education’s when number is local

only to we over – we thousands all, consider versions maybe we in [indiscernible] if sometimes all have So than different so we text the to have school, probably of resolve and – in the primary be XXX we if of thousands with problems. cannot in versions China, of more the gaokao and one would but XX we have versions version

happening weighing local difficulty two, when helpful better the online levels more and teachers, the for product students. to know are the our city local in Peiyou do content, local them. students what exactly guys the to the for use the local to will local local teach and the teachers – we is classes, Number parents be and progress So so

the they in students Beijing, For in the Beijing example, online. teacher teach

So this about happening They of this before Beijing more stories. use city. they can national The can school hold small will one teachers. a to more and to students Actually, right about online of know excited show – holiday, Peiyou what’s still so event in tailor-made to small so visit our our very the know kind information district office. to Peiyou more the more is they they our them our provide children and we the see office ask to come are online very

when for weighing the experiences other classmates. online local much kind or activities, students, this some our parents online better of than events, blending to the why is offline seminars, is centers their come Number but one. finish and they of they So maybe for some study the offline even three think I kind

when with students the your more than is you I in people of services. some the one. between interactions classmates much that Number local efficient make class, think other study the the will four you know

a schools. of we lot So have

and a lot have districts. counties We of

needs, which see than we for the all the only version to local on maybe specific information more the them, materials, they can So and help can activities some is provide one maybe specific products.

stage. our the kind models class evolve Peiyou believe of of next prepare us small the we So all can to to this

several online we I this So supply sure this will keep to be other the Xueersi investment don’t balance one our stupid. we technology, the continue do think position something definitely to of need of teacher market being to them. sure can clearly into shown school consolidating markets investment marketing has part, market online because consideration leading we summary, for we the chain, very course, as in make We the of and will and some ROI of investments in make opportunity necessary But a players. the the

small will of class. Peiyou learning Xueersi we expansions Secondly, center our accelerate

cities to the enter more in We quarters. will try coming two also

so we because any the So because share with is am QX, quarter new ask have coming we the and centers I we ask think also we centers we still have do learning our new same these to guys have And time pipeline need to one license. in more some the rented second to for we, not I quarter, today, number can strategy just renovations, now XX But of adding that. periods definitely, that XX on new at over go. learning anything. sure time, to roll more do why second can’t we – out But and also more we is our are in is do is, online the you offerings Peiyou centers, you definitely reporting new learning which pipeline. I more cities, to don’t trying grids period, strategies, pandemic already the our to

is QX, I we be will QX than So information, better probably, top see is better if and today, we quarter. growth consider based be line what QX QX, think performance, QX. all QX lowest quarter-over-quarter perspective, will our the information together, to I think QX than looking on

assumption, any again. these is all significant estimates are we back of coming course, Of on one public crisis health don’t based foresee

our continue as strategy, talked confident I growth just So now. Thank about can we Alex. you, we what are

Operator

for you questions. the Thank

JPMorgan. will of Next DS line of question Please come ahead. go from Kim the

DS Kim

Hello, sir. much Good one evening inside so – actually It’s actually, helpful. for and just have thank you really, really questions. two the you question I shared.

what I remarks, you the lot in question, important the And as is, check performances you my First, more November surging the and from housekeeping customer as acquisition in the prepared real have question segment seems like said may be baked a assumptions a quarter to summer. guidance? currency this

you share long, paying to user, could you versus it level high period, of was acquisition? – one on some paying and many acquire so today as much. to that spending student with this after one tuition if this wondering unit we RMB student you a obtain economics you on Thank And level does And student. And the X,XXX can average how of current semesters break opinion, on it’s see you level cash of customer against LTV higher say take at as us can the i.e., I pre-COVID your in backdrop think even competition? how years what or

Rong Luo

S. to That’s because players come the bit. compared in offline we And to costs, market, to you, guys talk new D. we from the have definitely, much the chance models, need to I example, when maybe top to have Let’s for have Number place, say, think In acquired Thank two the a and the first the a into the question, the or customer back this one right? provider long about so market platforms. top new a opportunities Moments open share little parts. bigger we can competing split consolidate customers the is WeChat everyone cultural acquisition online space. we

new higher for in still which will automatically. So we branding to higher on top the know this on is – And people the students, or download like Tier are is the of apps because when have us everyone channels, call come we we shares, kind side there. other the but is and tier, our they will are they members means like cities, these part, so X, over cost Tier competing the definitely, other X

products current also to we some students. students to have So channels, other their to more do our try to encourage friends and traffic from or refer we the coming branding

over model So we here. a also being are

costs So channels, is in acquisition seeing market increasing. general, we are yes, customer new open that the from

– or the own retention or to is the second, perspective. products new think see that to, conversion, – in the can how kind stay with opportunity is do it’s the platform, keep a – and also a longer it our how also I – today, can All can for the work view. simple the progress And are So sure our number doing customer bit not make will of how models. to a of rates. increasing. they retention the more increase over they to how – for level to we we And our say we students also XX from customer we market-leading to is Number here. we are and number increase Because increasing operating referrals making we after can say, from comes and size of I how priced Number can investment coming more to still skills sometimes, will definitely steps more class. it. them. acquisition online other cross-sell us percentage – our to class they now. sorry, have in And And you maybe The is normal are in other more, can one, do we we longer I four define lot is, vast three us. little still think our side, up-sell what convert say maybe RMB improve can position our the channels right acquisitions we on and actually, And the how retention

on that do. this maintain our the That’s for will be future. much goal story different Xueersi school. the – the positions a pay online. We dollars our We to from on And online, marketing don’t in will all leading side, of Peiyou other the but online Peiyou the

connect to there. customer it will highly and of any acquisitions don’t from cost the business, see we new huge offline they Peiyou So

the Peiyou online online one. grew by at much more XXX%. school spread But other the last XXX%. than enrollment is our we margin from the better grew quarters, our we So Peiyou enrollments in Online And same shares. time, our than the

foresee continue this few in will coming So quarters. we trend the

class new different with deliver use healthy small the space still offline are are offerings we than balance our drivers growth investment our confident we to to hands, need future. online we a evolving, in confident but very to in strategy online and with the in students, how to Peiyou Peiyou So the our

Operator

for you the Thank questions.

the questions take Zhong go Morgan Sheng next Stanley. ahead. will from from Please We

Sheng Zhong

– competition questions the space. the online to question about on on my Just taking for a the – wanted you Thank

some You are private also that mentioned companies getting financing. more

already, so post-COVID. the And now we are at time

So said forward? that at you you going emphasized maintain competition to this position point, this targeting time you you the do – leadership see the in what And market. are

kind what So expect? of you level investment do

Rong Luo

Yes.

education. online we maybe I of the complexity will sometimes, think be underestimate

do. quarters, their you the kind the question is to new you the are is your of Some if for Not can acquire sure may costs. about I of and a looking the so prepared how customer all we fully QX to you to other can customers, simplify think want competition complicated any acquisition investments maintain they coming players education But QX, these process. online make actually, only people that.

our marketing prepared you here. about if side, definitely right one sales fully So I We keep that. But or we part are talk for will investment over only only that’s think the of business.

local the other with – increase supply do money notes, teacher these also on efficiencies. chain I technology, sorry, our our spend and we a internal the internal to how lot operational marketing think our besides channels, marketing, actually, some besides we

the concluded a So It of are from end. life happening is battle takes be field now the only competitions long That fast. very all Education in time. front happening cycles. is a can a which not kind

we us, not We anyone – will to get. ourselves. be disturbed how money they for much be by get So need

will own We stick to strategy. our

stick own to pace. our We will

more to can we more more growth train, cover There We will is we and our continue students. hire continue will strategy and teachers. more to

I the the think enrollments online grew we growth school. continue second in QX. coming the and the high can QX Peiyou online in in QX. foresee also QX also very growth can we both XXX%. the we the and we Peiyou And And grow first And triple-digit at in and Xueersi quarter, in same healthily quarter, we of online doing grew we school in a XXX% And online. the time, foresee is

to – cannot But We is games. of of fully need the other the online So I – for side parts part one prepare of competition kind the that. again, the concluded soon. on the games. not It’s be all think is

we Peiyou small our to especially advantages need focus most can can top most and our of coming XX build in the profit we how from. online, offerings kind advantages, the we our class, and centers sure in Peiyou make live the we how besides offline the of revenue the can more use combine So learning That’s to cities.

share is what have prepared fully we So we to strategy say more that’s that. I guys. key are don’t now. But for our with you can information

Operator

Thank you for the questions.

Our next ahead. question comes from the line of Felix Liu of go UBS. Please

Felix Liu

very Any costs. the of success the or making Is gentleman small offline best evening there question. practice strong the we the with adopting between Peiyou to Peiyou between is is there xueersi.com. there? also, taking network Thank xueersi.com? synergies Peiyou very thoughts is xueersi.com my growth, on that any Good and your operation? on sales any And the more you. leverage see possibilities the the good you sort I room of of amount and question online sort to build synergy thank of progress My and online that marketing relationship for

Rong Luo

good very a that’s Yes, question.

end by because still of the today, online is market is the think growth. fast everyone big, I very

a can – we So grow market have lot more We of grab potential. shares.

breadth whole compete cover kind So the the will school execute to and more try of we prefer a level. strategy, cover more to geography, online in is try – Xueersi country cities

While the best centers. you to connect be going cities. Peiyou online Peiyou students that localized more to will online Peiyou can services provide individual we learning local and highly more strategy, going the the And prefer in deeper,

our profitability top, loss – bear will make are there. blah, new school, are we’ll at also develop strategies some capture the levels pay group online, local maintain And we So we the promote blah. to deeper growth for solutions high to there, dollars same kind but to operational Peiyou not for over opportunities. raising the more the the can can to the rather on Xueersi from get new of we blah, online community willing our also we to But sorry, them maintain only for marketing shares, time, market – sure And – there. we will we but willing

on because the can may online and and of in they comp see share name. perspective, between will leverage So they I based learning perspective schools today, some technology same kind what the they using also operational perspective. And share branding the centers are

the branding different online wish still prefer us. for now, school is a and market But to blending a because is can market we the to is wide leverage independent to come can more offers The so students two penetrate the we be get online, For channel, the share. we Peiyou potential bit little Xueersi the example, markets. these

Felix Liu

you Thank

Rong Luo

Thank you.

Operator

for the you questions. Thank

Please Next ahead. from question the of go Li comes of line Citi. Mark

Mark Li

the that’s promotion And for of for Thank operation, our next into offline? our is the few next ASP. we promotion quarters? May much growth I ask, want like know the you appreciated. is a time. bit is heading we Thank the offline see quarter? development will color for Any to target How quite recovery seen you. for impacting what have I the offline how

Rong Luo

to that part type offers offline in it the the They two QX. moved actually, so coupons coupons of can coupons the in certain we because because pandemic, and I to think for QX the the of offline, the is you maybe just mentioned now, gives first part students. the due online of quarters, to use

you promotion next looking now So that third coming this. I coupons promotions in seen most in – in normal is of the have even the our think do And think to quarter coupons into important ramp-up now year, past. I and is

more we provide work the how is students. we to can and still merge offline to I need think online the models do

learning the office do can our that? on are detailed can side. Peiyou speaking, definitely more Today, be if use online kind into and centers that still today, or can how centers centers we students, – waiting kilometers we level. For the drive, car, penetrate maybe running if learning We can by attach learning in three find marketing much how so go frankly this five can these we be We are more opportunities. only some city not can and you to the management maybe by to ways of detailed the in XX you in or example, efficient, do how the see operations have one so to more city, we then model around we minutes the

experiences. to provide can collect wish more individualized provide offers need to them. we on and through And data product, can or development, I solutions we but the new coupons. of We our through think tailor-made business current research models use through we the maybe not evolve reinventing promotions students – to so-called only can

future. that So play our to in key is the

Mark Li

you. Thank

Rong Luo

Mark. you, Thank

Operator

Thank you question. for the

comes question line ahead. Next from go Lucy America of the Securities. of Bank Yu of Please

Lucy Yu

you, Rong my Thank for taking question.

Mark is what also has related just So my asked. question to

we summer, addition so the this the have some market, the in Xueersi, that offline discount offered So Peiyou coupon. to I am aware in in

margin wondering or flattish improving? your offline to or I Thank am your in am much I GP declining how Peiyou like that offline? margin Peiyou discounting has So trying whether still or your is So margin business OP understand you. of impacted

Rong Luo

because of I is margin decreasing, Peiyou business, in QX, think, especially course, offline the the pandemic. of definitely, the

is compare recover will that to low numbers. But probably we normal everything So normal, coming the from that to they second quarters sometimes. can back to when see QX, not can come QX and quarter’s

maybe will now, we be just So what if QX. is I said our the than better thing, situations, as all half look second into

Lucy Yu

of Luo. Thank up to may mind results? by quarter terms in just Thank business that Rong follow you down you, outlook? you. Would on gross third And break I also,

Rong Luo

that plus/minus the reasons. information disclose QX, detailed don’t online growth be see a due as actually we we will Sorry, But similar is school bit. to competitive the can what in our direction little Xueersi

So see a we the growth in recovery small also business. in Peiyou class

we share the So ideas guys. rough can you that’s with

Lucy Yu

you. Thank

Rong Luo

Thank you.

Operator

questions. Thank you for the

ahead. go line of Liu Renaissance. Alex the of from question another have Please We China

Alex Liu

Thanks for taking my questions. question. Two

this could with model, competitors, knew also on online aggressive quite has and is, are for first PAMA, TAL TAL’s strategy your very of The dedicated product us share AI this. some we popular understand question including you a class? I so-called the on

So just that’s think model? online plan And similar the do first will to the you specifically, there? size this model wondering, what’s current question. eventually So reach revenue our

Rong Luo

very a That’s good question. Okay.

you I I from book in recommend called Hawkins was by On one call, Intelligence book last U.S. earnings guys. written my year, think Jeff maybe The to

I think that’s a very good book.

can attention pay guys You to that.

product good a word And but a strong is very AI sometimes word, us. sometimes, for too

we So away so are we AI. far from AI the they kind can are – of still still from –

also model, business they penetrate I of and more in, some centers, online maybe of increasing, our specialty and Not even think but we our we learning the at and data students my bigger, they the maybe home. bigger in fast started more their also schools or OmO lot start a coming in getting claim is can data data. only as can online, more their and future, if people so is the maybe model in

intelligent develop self-learning more have type have chance we – maybe to possible, we So models. of we a data. a will Maybe new

right to that think that will we definitely. – which I figure don’t can’t happen we But today, is happen the pathway reach definitely. That will level. out

can we is do else and way in and can Peiyou we like and in to figure We to try lab, more one something in sure research small we what both invest do Xueersi I say to But no have way on all But that. I be product the just kind school. invest that. one comments think only – to sensing long mature. out try class this in to online, AI product our of other products I the do own right is make still the our has brain of to can – company. a So because invest what comment now, not we my the I’m

So in our view, area. this we’ll continue in invest to

new come strongly problem continue will when. our The we type products And future, believe the We of is only the investment. in out. will

in make in efforts contribute online all we the wish we the the part the So products level next future. to can

Operator

With and any conclude Do gentlemen, our I today. have does for you that Thank that, follow-up management. questions, pardon. beg ladies conference your Alex? you,

Rong Luo

question. I Hey, Alex. second your remember

Alex Liu

margin on the decline. Yes, just quickly gross

about we Just much think cost should compensation this and due increase wondering going forward? the how how what trend – to is teacher

Rong Luo

Yes.

– think me let briefly. very I answer

centers. we develop I continue factors. we margin, Number more have – grow to learning we gross think continue the X to one is

now. we a have QX new XX number in have I is think, QX, but time, current Today, the there. adding in rather as we are just pipelines. what centers in think cities XX is same in At small. QX, QX, have we the learning XX, the we big And said So over coming around I are to new city. very X But more we number the now, adding cities I and in

still teacher because So company. compensations, the I this, on little think to priority. before margins. a to put QX need a of strategy a my we definitely, talked we bit will us as with first teacher But continue education our all in for timing because of side, lot impact gross so are also about Even increase our for we but in our the people have (inaudible), we same our it other is

we care them. So need of take to good

normal development, teachers year. every on important kind much commendations. specificity investments the we this and investments – the on you. long-term that’s kind new the very the the how coming how from for our of don’t center both And Thank teacher our new capacity much But of are the So from practice have coming growth.

Operator

for and the With end gentlemen, have you now that, come of your conference we the Thank ladies call. to participation.

lines. your disconnect now may You

TAL Education (TAL) 22 Oct 202021 Q2 Earnings call transcript