Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, good day and thank you for standing by. Welcome to TAL Education Group First Quarter of Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be informed that today's conference is being recorded. Instructions] [Operator

like Investor conference Please Relations sir. now Mr. over go hand Ding, Jackson Director. to would call the to ahead, I Thank you.

Jackson Ding

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

and President Financial hear from Mr. myself, During Relations Officer; this call, Investor Peng, and you will Alex Chief Director.

Following the Peng and be will your I answer questions. prepared remarks, Mr. available to

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

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

about risks to more For please with the refer filings our these SEC. information and uncertainties,

our contains earnings refer release, GAAP most and earnings comparable of discussions the our to measures. include which non-GAAP directly call financial reconciliation measures certain to Please of measures. non-GAAP the Also, a this release

turn please like the to would Peng. over Alex, to I Alex go Mr. ahead. call

Alex Peng

like Thank in today’s you you, conference Jackson. of also all to call. I'd thank for participating

some of we the review on quarter XXXX. call, fiscal the business next will thoughts first the the will the year share this that, progress During financial performance outlook of and quarter. After for I

we progress we've some initiatives, example towards smart rollout performance at our tune we [ph], core quarter, as has in device Furthermore, newer offerings products this positive the of are past working in fine achieved our the taking to strategy received feedback and and first sales market optimize really quarter. in learning, satisfactory such a enrichment future. XPATH few of over unless the operations our our launched months. making artificial the has intelligence our been progress and ongoing to effort which the of as So end customer That demonstrated in last the also AI

revenues is XX.X% terms performance, billion which RMB of In financial US$XXX.X XX.X% an quarter RMBXXX.X recorded million in RMBX increase for terms million of U.S. dollar the and we and year-on-year respectively. and of net

In terms net and $USXX.X loss quarter were TAU attributable million the our profitability, of and non-GAAP from non-GAAP operations for loss million US$XX.X to respectively.

Jackson. core that After return quarter first on financial overview operational to our regarding like go next to I'll He'll open then our to review Jackson, more update call and with for So that, and the results. you business quarter ahead. hand questions. share our for I'd an the over call please lines give developments the outlook details

Jackson Ding

across note you, is in unaudited. we've quarter Please share on all Thank some progress this the core pleased financial lines. made for data that business Alex. details I'm to our this quarter

First, at institutional our and take well solutions as of look learning range for which technology customers. as consumers a consists others of let's broad business, for a programs learning services

for accounted attributed year class digit double In small revenues learning services, our growth. revenues. learning from services net XX% offerings. net the progress progress year-over-year to XXXX, material continued was The Within of enrollment offline achieving business learning others less just first our fiscal make quarter than our growth predominantly with and of enrichment to

learning expansion, quarter, XXX customers, our the roughly from total expanded we of offline a net indicators Efficiency network learning level In learning small the response retention north of to efficiency. our operating business we increasing rate this our number stable notable network relatively center XXX. demand have from to Through our centers class has business efficiency, such managed as services enrichment model. operating of quarter-over-quarter. current At viable been our conscientiously the

existing level efficiency our enrichment class large array while offerings on the a new introducing learning we're of online of market. for operating As business, sustaining to focused

science calls, such eloquence customer as few some last natural fraction traction quarters. training and last programs, programs I garnered total our couple When in although new These of the only learning. learning, incremental of our On business. look offerings, revenues, couple operational at discussed contributing our quarters and we to efficiency further next both come, the to for for online continue we'll differentiated and suitable to and develop enrichment experience, user optimize product offline strategies a

Moving overseas learning services on, discuss business. Think Academy, our let's

delivering quarter, of added another apply digit quarter plan network continue overseas year-over-year the our triple to growth. quarter center to market and during the our we'll learning for next We overseas industry another manage know-how further Academy expansion in this this We consecutive Think quarter.

exhibit content Now result material and let's books, The net growth print development more were and more market which the was combined Solutions a quarter. doubled Content of year-over-year. to which continued revenue revenues of for year-over-year. our year, key This revenue effects by Smartbooks product generated for XX% business, talk capabilities. total the well solutions growth account our than drivers fiscal go-to has about of last than the

and driven last an contributor learning has launched significant for powered XPATH to learners attractive its proven learning quarter. quality of was virtue share XPATH growth library. A experiences, towards end of content the by we AI device intelligent the expansive personalized solutions by [ph], of content functions the

months a XPATHs, we all only growth, fiscal a we shipment In for QX. witnessed did not month-to-month considerable but ship of three in volume number also QX,

user forward, accordingly. monitoring to XPATHs our feedback pay Moving the manage as close and product of of average meet and we'll behaviors time demand attention key to updates indicators, closely and hardware and for We're better upgrade such customer spent learners. several usage our functions software understand to frequency

our content endeavor XX to solutions and revenue expanding diverse for and that we device our innovative consumers, houses content. have from through solutions partnerships. to In aim year-over-year. continued build quarter development strategic high learners derived to we the units publishing more established next also our content collaborations shipping through join both content supply we continue quality learning grow In Other internal Additionally, experience a learners. we with external this the will we Together promote to to industry. and than our to provide quarter anticipate of create content content have products holistic and business with exploration

We closely more services continent user will and device. observe our through provide behaviors

growth RMB new others business. and The U.S. release that services results overview, RMB XX.X% We for million now of driven for the products and growth content would With share of key XXX.X revenue and respectively. year-over-year billion, dollar steady business learning solutions the to our quarter, and by net quarter. increase of million an I in the RMBX the was financial revenues recorded within XX.X% like US$XXX.X and of this terms

quarter decreased also first XXXX, rising same this solutions Gross contribution slightly content from business, the last XX.X% in XX.X% of for the fiscal year, US$XXX.X gross lower which currently a due Gross the our margin has higher revenue period for to margin year US$XXX.X percentage. period from last quarter. from to in increased year to million million profit same mainly

Sales period and marketing by as last total US$XX.X expenses the US$XX.X from for XX.X% year. first for of compared last in XX.X% a percentage increased to were Selling fiscal the the year. revenue quarter million, XX.X% million and same increased quarter to marketing expenses

quarter US$XX.X selling and expenses, excluded the share-based The by increase XXXX. primarily million activities. Non-GAAP of first was year-over-year which compensation in marketing fiscal to selling increased the marketing from XX.X% year increased due US$XX million and expenses to

period million the same general by from decreased first year. last administrative costs expenses million the General in X.X% of in quarter decreased year XXXX. from for excludes US$XXX.X US$XX.X to administrative fiscal million the expenses, to quarter share-based and by million X.X% and which year-over-year compensation US$XXX.X Non-GAAP US$XX.X fiscal

in first US$X.X period Loss compensation expenses by the from year XXX% from million year. same XXXX. quarter excludes operations, of the prior with from compared fiscal of was in million the which fiscal million operations million expanded to Non-GAAP US$XX.X US$XX.X loss US$XX.X share-based

Net prior period the to US$XX.X compared million the attributable TAU compared year. a million in year. fiscal the of expenses with share-based same loss US$XX.X net loss of was attributable to prior compensation same TAU, Non-GAAP excludes in in quarter the US$XX.X million period with which was fiscal million US$XX

and non-current US$X,XXX,X million equivalence, short-term million of cash. as US$XXX.X cash current XXXX, Moving to restricted of XX, May our investments, balance US$XXX.X we in on sheet, cash and million had and of

Our as XXXX. with was US$XXX.X XX, of US$XXX.X million as deferred end February quarter the fiscal first the of compared of million revenue balance

operating In April, to million. to to statement, XX, Directors cash purchase may the to shares turning flow extend the cash US$XXX.X its year of authorized million April Pursuant the the to XX share Board months. extended repurchase net by for first program, by through activities company's program quarter provided US$XXX.X Now XXXX, spend approximately was XXXX. of XXXX up repurchase share company fiscal

from under for the an of May aggregate of the approximately repurchase program. share XX, US$XXX.X company the XX.X approximately repurchased market open million XXXX, million ADS As

outlook. I'll briefly the section. you Alex update ahead. please Alex, financial go now our on the That concludes to back business call to hand

Jackson Ding

Jackson. Thanks,

As some are of a start we introduced before, this just quarter achievements this the to fiscal in year.

would I for e-commerce to as continue vacation like next next outlook we will the on shopping upcoming share some festivals. cover the our outlook for momentum the will thoughts About that the summer expect the quarter. development Next, QX, quarter and

our with expect a season revenues. We QX positive to impact high seasonality on be having

in basis an On anticipate to profit improvement non-GAAP quarter. operating we compared a this

learning on technology the you like apply are progress the number innovate the speak intelligence. the in As also endeavor this about intelligence in products our of the to our bit the technologies We'll area future. business. generative in is cusp update redefining AI I'd artificial on a in AI to artificial more industry, We'll to launched. of We'll learning continue after invest in launch subjects products near and our

customers the industry through enable the potential accessibility interesting to quality look providing a for the redefine We AI to last believe business customers years, industry. decades TAL's has I track to affordable to very innovations. technology record to high back at model a more provide When in of at pattern come. or see We us really paradigm time our sit our and services XX and in really I

questions. And my to for remarks. that now the concludes ready open call Operator, prepared we're

Operator

first the question [Operator Renaissance. Ivan comes [ph] line from of from Jung Certainly. And Instructions] China our

Your question, please.

Unidentified Analyst

question. Thanks Hey for taking good evening, my management.

learning So my question made progress device. we say considerable to have Glad is iPad. regarding a the

So competitive how you and you. the company's advantage do Thank expect? is view market our what you dynamics that current

Alex Peng

This Thanks Alex. Ivan is [ph].

question. me this Let take

journey we companion growth. meet to think daily striving their really learners of their first our be young and trusted needs on of I all, of are the So learning

think of I across journey a terms goes to need that what multiple It's intense learners years. the is young this learn. in

a support along need they the quite there's way. of So bit

up-to-date very found across so their that really journey are across we've learning groups, age is of learning students different on. and What types needs personal their diversified different

way that really and scenarios kind lots I So in effective addition think to to really self-learning in attending of of can hardware different be needs products classes, meet an personal needs.

So that's thought. first the

there's ensures is and devices. One of set advantages a of a competitive has in I for only think content, and two for to experience serves content of types learning. that developed in of So fragmented learning also This research tailored our things. to what quality utilizing but accustomed years through terms of consistently high students they're decades of company there XX the pedagogical I the are time few experience, think different education terms not

So I think foundation. that's an really important

and really top mentioned as for secular across I be we of learning the for before, their personalized support that artificial powerful over the seize especially this, around learning students, on developed that that journey. trend years that, Now, we've with can our strive needs We think AI combined content we've, a continue intelligence. to

our, us our devices have content both pretty the So, and bring further our realized user artificial space. content think these just our this early this positive as products, and the still feedback and continued product in for the guidance take fairly and the lastly, And given is and feedback learning regarding I endeavor into future. endeavor intelligence additional to experience polish further We personalized users experience. encouragement we in the

answers hopefully your So Ivan question. that [ph]

Unidentified Analyst

sure. That's you. Thank clear. very Yes,

Operator

moment the Thank you. our And for comes from Candis next Chan One line next Daiwa. from of our question. question

Candis Chan

good Hi, evening, Alex and Jackson.

for question you thank is plan to for My related this our expansion question. year. taking So my

centers you. learning just would quarters So Thank that, actually of and the you remaining and quarter, this expansion that longer rate roughly XX added the know that Jackson expect? how we I what be sort for the term, pace new we mentioned in should

Jackson Ding

then. up it with efficiencies Candis, share our be I of about as specific I about gradually think is centers that This and center thumb I'll think thanks of this kind the center and how think calls one. centers new to we the of before that there's pattern we thoughts we want are of couple I behind have is So we when we open network, our our into capabilities. Jackson. I've this demand right? operating see the managing you learning take have this a for go plan, our operating you last question. general maintain learning would manage rule quarters learning adding helpful on Maybe existing I manage In market centers to to how we these the quarter. new continue extent and talked can All

to Now, this quarter, learning of centers the grow. did number continue

learning for the in north end at that of summer. of learning this preparation -- you centers of in of roughly learning I partially quarter of peak QX. centers the XXX the number is total during caution Our the to increased season has number XXX of though previous at end would the growth the from quarter

every pace now expect don't single the necessarily see on. increase from quarter we same So level this of at to

our to expand we a Candis. smooth at learning balanced growth. your a As ensure that question, will to answers and steady I pace the centers future, hope

Candis Chan

Great. Jackson. Thank you,

Operator

moment One Liu you. our our And next from for of question question. UBS. from line Thank the next comes Felix

Your question please.

Felix Liu

thank and hardware Congratulations where question and evening management that's of is. my for Good growth taking the you the fast my on question.

to Thank of the And of on question your the more our at? -- bit currently, addressable the second Could where the popular part learning you. student arrive or on more our commencement, about the expect our potential hardware color target margin the share you a hardware thought on market margin I'd hardware among? and are demographics provide population like to, the a first, are profile margin of do business. So of what part which learning you eventually get is

Jackson Ding

thanks the This one. question. Jackson. take Felix, this for is I'll

shipments only, the serve the I size. to the first not our products, I this an speaking, on the we market question at the tablets existing and So of see only was basis, also tackle of annual part I if we industry. an limit TAM. existing we related year units of million that's to if kind we, terms When at have but XX of the market China we not to every look we opportunity conversation And -- in when think we look market, broadly believe of learning TAM learning

this served more offering they as use tablet personalized as learning at look how want really much high on a should of content. on learning case and We scenarios as on, customers supplemental could and use how spend general, in and learning, well be through much functionalities it, quality by that intelligent

the on the the, So answer it short TAM the questions at, per units TAM million to current probably that is, depending what you year. XX look is

broadly at a could potentially learning look you a If be wallet for higher the the it speaking number. much much, higher, industry, much it's

of part profile. related was question margin second The to the

that bit. Let down a me break little for you

helpful to be top may it works. understand we, how First, how line

all over as the and be cost recognized the noting worth business that meaningful be revenue upfront. substantially will I year portion think and hardware from would Where of depending deferred be it's will recognized a a on two product. the revenue deferred or next expenses

profile on the That's negative business growing. accounting this would impact a technicality while margin number have is one. So

at, in at well fixed device. Two made upfront we we've look a content who fixed our of as the form as for and look predominantly is this costs the in when for business we when building costs we team have, manage develop producing product investments

is that cost there. of fixed So part the

of stage Now in business our its development. early still is hardware

of So this potential Felix. will answers as sale the be business. question increases, that we your upside believe to there hope profitability I

Felix Liu

Okay, you. thank

Operator

for [indiscernible] line our Thank question of you. from from CICC. next One question. next moment our comes And the

please? question Your

Unidentified Analyst

an the taking Alex buyback share team for future one. the so Could program? you. provide plans my Jackson. the for Thank and overview of quick Hi plans specific Thank management question, and a you just

Jackson Ding

is question. million Board take from always time consideration the returns one now dial generate previous If from thanks that condition year. the ADS for repurchased of Jackson. aggregate is what we've repurchase company's look for [Indiscernible] April million. buyback to share ways April, share the fiscal I'll extended to We of close this. This of in an a time shareholder In Directors deploy XXXX, this approximately we year, when we and to fits. back year tools program XXXX, year ago XX US$XX in at the those

will aggregate to program the buy up XXXX, answers XX, through April subject program. I the share XX, an repurchases hope company under and approximately that at consideration quarter, spent we'll next authorized the May proceeds the US$XXX question. of of US$XX.X market amount million US$XXX.X business your this spend repurchase In and to in million to The continue approximately the share as to In be back current fiscal repurchased in conditions. company has XXXX. ADS million year

Unidentified Analyst

Yes, very much. thank you

Operator

moment today [indiscernible] line of question. next And comes Thank Howard Macquarie. from from our for One question for our you. final the

Your phone please? question on mute. your have you Howard, might

Unidentified Analyst

me? Can hear you Hi. Hello.

Alex Peng

we Yes, you hear now. can

Unidentified Analyst

Okay, okay, sure.

could have if of do a products. like on the plan wondering question the to I'm and R&D So when what's details I product there share you current, status the AI management is if current launch our on AI and product? more

Alex Peng

Howard, Alex. Hey, is this

take that we actually just point me the R&D specific let map. product but Let to before add me one one launch progress road get and on,

I long-term think a trend. truly secular really this is

discussing mentioned in You discourse, with I know, we've the ecosystem broken dedicated AI with public companies, large you, tons has really technology language the model call spent to leading time seven months into as of the the entire last researchers. generative since all about players from of developers in startups, across time

few China trips as time that United taken spent to States a both and the We've in have well.

education. of I consensus the really unleashed of the forward us and think model would there's power by looking language large redefine the future that much pretty a reimagine this help

for think team embraced company have will exciting as whole already and embrace where it's absolutely years management to the and I the continue the come. to a many and it's So area

with that's decade intelligence. journey, as of and all a right, grow build learn long how develop us as I So think again world long that's and to a a journey artificial

we customers we that set in products limited and of the very internal for and the future are testing performance the have preparation phase a the for now start of very, and just is obviously user very employees the improving of optimizing them So the launch. experience testing our in are It's product continuously it. the

So of with plan things. to few capabilities moving language extend a models the we these forward large

our over accumulated we I proprietary think obviously service. large data is customer a through of set there experience have years the and that pedagogical

invaluable more suitable language the journey. think various the learning terms become for large across model I in of to helping that's scenarios the

I would model think types the to type of to continue need on alignment for for with we of subjects. the work students on better interactions various

in content And of lastly, devices learning and of needs our models just functionalities terms the features diversified meet business business our learning type well across as of to I as think and our it's models, services, customers. learning

Howard I question. So that answers hope your

Unidentified Analyst

you update. thank Yes, for the

Operator

session question-and-answer Thank today's This hand conclude back the remarks. you. of management any for I'd to program. to does the further like program

Jackson Ding

Great. today now. you quarter. Again thanks to next talking we everybody look bye for Bye, to forward and joining us to

Operator

Thank program. the and you, today's does participation This for conclude in your ladies gentlemen conference.

day. may disconnect. now You Good

TAL Education (TAL) 27 Jul 232024 Q1 Earnings call transcript