TAL - Earnings call 2 2024 | TAL Education Group

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Operator

Ladies and gentlemen, good day, and thank you for standing by. Welcome to TAL Education Group's Second Quarter of Fiscal Year 2024 Earnings Conference Call. At this time, all participants are on listen-only mode. After the speaker's presentation, there will be a Q&A session. Please be informed today's conference is being recorded. to conference like to now would hand over the Mr. I Investor Relations Ding, Director. Jackson Thank you. ahead, Please sir. go

Jackson Ding

you, Thank Year the you earlier on Education Call. Thank the operator. earnings today, Group's for us The website find Second TAL and today company's you Quarter a was IR newswires. Fiscal release XXXX may Conference all Earnings distributed for copy joining through or

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

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

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

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

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

Alex Poon

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

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

learning our services for and network our initiatives exploring at measured further we With core continued and business our this opportunities. others a center very and manage online while learning and business, to new seizing we our expanded preferences offerings quarter, During respect and pace. user offline new to operate optimized lines

engagement launched last growth performance. fiscal and delivered learning end year, Solutions user the near our solid momentum devices for As their maintained Content the business, of the

In addition this endeavors quarter. have to business, progress our innovative made our core in fiscal

MapGPT, and have from to by improve this We the test model's the selected rolled efficiency receive we out continuously provided we version. to intend of beta invitations whom we of experimental version guided users the feedback

reported XXX.X profitability, X.XXXX of for increase of our USD of financial million RMB quarter, million, revenues and to in and our operations USD respectively. non-GAAP net and of attributable from representing USD million non-GAAP the billlion TAL U.S. and performance, net and respectively. With for In XX.X we the terms, XX.X% RMB income XX.X% to year-over-year dollar income quarter respect terms XX.X an

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

Jackson Ding

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

others business, during solutions technology to services increase of year-over-year well which learning capacity as the year second for me continued of and led driven enrichment business our the institutional growth by in and with for In in programs double-digit center Services, vacation, Learning Within momentum. which year-over-year contributed seasonal summer our and a networks quarter learning offline learning quarter, in achieved enrollments this increase our business our learning to a consumers benefits others revenue growth quarter. year-over-year XXXX, Let of range as services of learning start customers. broad consists fiscal our

continue to better users' needs. adapt to center network to our expand We offline learning

XXX model of of business and of business at the for development. centers efficiency level rate XXX learning a the approximately overall quarter. metrics the future off-line learning from such health. previous the end believe a utilization learning roughly the as illustrate clear reached quarter, center viable end path increased We at Our small second has Furthermore, enrichment which class

online make enrichment such class have learning efficiency In rate addition, been at business large progress our quarter. this to viable level. consistently continued a retention as Operational indicators

have quarters. offerings over expanding been few We our last learning the program

constitute this revenue, total of While year-over-year fiscal these in quarter. a our new programs growth have shown still percentage they small

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

to continued established learning this In also quarter, business Kong. quarter. overseas and second centers Hong fiscal new we the States, the Singapore expand have Our in during United

with content. overseas to standard our are our of We markets the service committed and Zinc balancing while Academy, customized serving locally

forward services and look revenue learning next seasonal by we a our expect we to in others quarter, from the decrease As driven influences. business quarter-on-quarter

However, we network, to our efficiency. of committed the sustaining our development offerings remain learning ongoing product center managing operational and

this year-over-year delivered consists quarter, books This Moving print digital smart primarily and learning our books, business on books, combined to sales double-digit Solutions of devices, and Content business. of In print contents. growth. smart

is As learning it us. for a new business relatively for devices,

main So quarter-over-quarter be QX devices driven Solutions year-over-year learning business. the remains rate seasonal benefits both The by to sequential contributors trend from Content business will growth, growth our for business growth the progress. relevant. QX, and at If look of we revenue learning devices one less business to the experienced

recognition During we for to functions this its receive and quarter, contelibrary. continued

we capabilities learning to needs. order our learning chain sales in their meet also are on to feedback features based and develop devices marketing, in and continue diverse new we iterating user While for supply

high school product precision students As school. functionalities and age our a of an from targeting we have learning, including broader range example, and fine-tuned junior AI-based groups, elementary

and Beyond hardware channels. improvement our go-to-market software our diversifying and functionalities, business in model possibilities exploring we're also in

Solutions the with intend customers better through to Content next serve we our business. more experiences quarter, ahead to Looking

self-learning is goal Our and content offer their to serve to and formats journeys. suitable needs their customers them in learning

results net billion USD RMB our Content million, quarter, the XX.X% contribute proportion RMB revenues quarter. of to expect financial for I and total terms. of Solutions We like a larger the an X.XXXX key in and We overview, recorded this next With increase our to now XXX.X XX.X% in net year-over-year of to USD quarter. that would and share revenues

with learning XX.X% lower million for to XX.X million was last for XXX.X% compared USD XX.X period net and the products of the attributable quarter Content TAL steady increase also expenses, USD quarter in last XXX.X were prior Selling million year. the year, million increase fiscal of expenses, to an compared TAL, and for $XX.X due the second expanded million higher for the for is for second excludes Non-GAAP to in X.X% fiscal the million million to from USD period XX.X the increase USD the to million the the XX.X the growth income fiscal XX.X XX.X compared of USD the marketing year. has attributable Sales continued last USD fiscal selling second from to quarter to revenue and growth attributable second income services USD USD The stable, Non-GAAP activities. was year. of the quarter to a percentage fiscal XX.X% quarter same increased prior quarter with for X.X million, million contribution for from Income million and XX.X same of year-over-year million XX.X% from to of Solutions compared a the marketing for expenses year same the profit increased USD decreasing by million fiscal and TAL period XXXX, the have of in million year. Gross attributable million USD General from same USD the Net Gross excludes fiscal to due year. relatively quarter in selling expenses, primarily currently million from USD same was rising excluded which increased year in administrative from fiscal loss Non-GAAP income our XXXX. business. year by our a net increased last period XX.X total from business, for year. margin Our Content XX.X operations, percentage. period compensation the to XXX.X been was which decreased and second as XX.X the of revenue expenses, compensation to Solutions expenses same USD XX.X% operations quarter. mainly share-based USD the expenses of margin which the $XXX.X which share-based with quarter USD marketing sales million XX.X% this period XXXX. for revenue by of prior last marketing XXX.X the to from business XX.X share-based for for compensation

on our to balance Moving sheet.

XX, cash. current and of billion X.XXXX of USD and and USD we equivalents, August of restricted investments As XXX.X had cash USD million XXX.X million in XXXX, short-term noncurrent cash

quarter fiscal million Our as deferred end million the compared quarter XXX.X of second XXX.X ago. a was of with revenue the balance

in statement. second April XX.X of operating to Net turning for million. activities USD Board cash our was to used company's Now year expand XXXX, flow the authorized of the Directors quarter XXXX cash repurchase its In XX, up spend USD by program, to XXXX million approximately in the share may shares April repurchase repurchase common XX April Pursuant company months. launched through its the program to XXX.X XXXX. expenditure to fiscal

briefly business consideration million Alex, XX, hand on an concludes call common August outlook. the program. approximately share the to now repurchased USD aggregate XXX.X of XXXX, ahead. financial company Alex and the back of As repurchase under go section. has shares million you our I'll XX.X the That please approximately to update

Alex Poon

Jackson. Thanks,

earlier, think made we the progress mentioned I quarter. encouraging I As during

would of like year. the I our quarter some strategic on plans to this Now for fiscal next share thoughts

nature third business. a in looking as by So seasonal Jackson, we quarter, the decrease quarter-over-quarter our ahead to previously of noted anticipate revenue to due the

of way introducing developing network terms learning a our products both platforms. In across appropriate our offline remains focus and balanced center persistently in online our learning services, and on

our opportunities Services, the of enhancing developing our focus and learning for for functionalities, be enriching breadth content, exploring As will on new Content product products.

in ahead, move invest AI. continue intend to we we As to

AAAI-XXXX to academic our improve enthusiasts collaborated a and and worldwide to We technology of Reasoning solve math institutions, automatically This accuracy. secondary Recently, generation Model artificial for to language experts, education speed Global will school open platform to optimize the AI Mathematical continue new Large invites problems with and Competition. and challenging primary models its cohost large students. the for we've developers model use intelligence competition math smart number companies national response, innovation leveraging to

near applications future, to In explore to to learning addition, really in application the we leverage on we endeavors intend In technology our enhance represents launch ongoing cases. the of MapGPT. advanced based specific continue experiences. This intelligence use artificial technology to

business it in in to major our delivered up, this both development, So product capabilities. offerings material sum of quarter, operational and lines terms

are of content serve customers' our learning in them and financial evolving through manifestation a portfolios. products services needs of We've intend variety such their and in learning posted developments. results journeys been Our to observing a solutions

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

Operator

the UBS. from coming question of line first with Felix Now Liu

Felix Liu

terms So in your priority? especially these service the context of in If demand, market these most rank you you would would them, strategic future Service how resource terms recent you in business, non-academic overseas? tutoring future allocations? would allocations, learning of strong of under businesses and the Learning performance hardware good AI of results, domestic and see resource you the how think quarterly How namely of do long-term rank

Alex Poon

our So with, strategy, around world-class try users. start These products for let factors. me really providing revolve will in think going various to are learning To products to I it come question. our unpack this form company

We not set limited factors. on to the journeys. believe that their of and example, and portfolio devices, various of printed services, a with collection So really own needs choices the learning fit they're their learning that in content for stages but give books, learning and fit include, that going what other learners learning parents and form smart they're products to,

would business their an these context, priority that necessarily I models it's path. issue lines not are different but so development business phases under more and So in say that of different in

every say you network really centers continue we've would future. It's had business will show the invest built that going a it to staff anticipate we area capabilities demonstrated it's really learning models. services where will growth up it in forward. in environment. and to business, has learning continue if obviously factoring momentum in fact in X these actually that an resources teams. our some clear We and that we've This strong viable is got the So operational take hone that named, to continue path evolving I We'll our development

expect this that, be really And so profitable. we business with to

up, the brought times the really look to that's time at somewhat one. So content the you It's If use different fragmented I available self-learning home, at learners. first case. at that it's addressing it's solutions, self-learning that's that's second a oftentimes the

hardware intelligence our both to we of continue to provide of set So learning impact unique cases. volume sales different we artificial our engagement users leverage look our these really address business, solutions the to growth fundamentally new in for learning beyond and value hardware to from understanding content, aim and this use and out to

the really look forward is on overseas. to So we'll forward that operating you really set these say, guys and exploration would within in the artificial look, still updated are We keeping I businesses trends final look our are the to intelligence and long-term progress. they phase.

Operator

question Our from Linda Macquarie. coming next line Huang the of with

Linda Huang

So and the user share then product can of engagement hardware the during self-performance quarter management data? any in the change the

Alex Poon

with start this in of first sales to the compared the quarter hardware So to increased quarter. our have

on and June largely say user feedback. summer the to some user and in And engagement the growth due of seeing we're overlapping I quarter-on-quarter there's So vacation. pretty volume. encouraging shopping this believe would the really activity in is factors the side, sales the festival data we

forward manners they Our I that's individual third-party a the their most devices. as We really amount significant journey. of they're feel exploring engaging the quarters I And are our paramount. features both for point, time of that's all third-party they that up emphasize noticed that's just our to we've Linda, is a the kinds engagement use learners. world-class and really number in also come may helpful and learning of mentioned the call, used, they're want making working to with and we're think, I first-party think continue in sure devices, would that's And to on content users second content that ago, a to And, suitable multiple to to looking style. I learning and a really for make of we're continue number the and the and devices for are spend us, valuable to additionally, players that learning learning build suitable in content learning in of more a users way bringing

Operator

And Daiwa. from next Candis with coming question our line the Chan of

Candis Chan

MapGPT Can and of commercialization to this services? also you our share with us how progress be applied the will

Alex Poon

let for just and that thanks some So on MapGPT thoughts share me question, that.

we is ability of a value with, its product AI the part start that really to design create generative crucial for think to So users. of

we the world, critical globally, across developers, experts about players I industries, application for started I we more calls the discussing AI the from we engage quarters. the and receiving see future. is really And mentioning and continue think generative that conversations this topic to China for think this of and past I artificial is and more right? attention in think think we in industry really in in topic all a the the with as number intelligence across this as future domains and

opportunities for the think the of really are in AI the and can and high-quality worth implementation there content. we the field, with of of improve that efficiency accessibility a So learning collaboration really human of especially exploring faculty learning lot learners. generative And of supply for staff AI K-XX

we're think and product for this, really stages still on so we're and I very future in earlier, user test we'll the of across many early that some mentioned in still, matter, have design industries, the the we're and I near As working

Operator

And our with coming the next CICC. of question Caini line from Wang

Caini Wang

factors number consistently balanced deciding mentioned would centers like of have of increase what before my a to kind learning so question would you be centers? that is approachs our So consider extending the you learning

Jackson Ding

when you side the more sets and managing will. think supply the side, are we learning our the factors there about demand side that other think center on or if I on network, operating broader one two of consider we

if that be in age population side, China. China, a and mostly certain at at our so of it of you size fit first, potential look more we size I the not stage of look users we corresponding between have on you at extent the markets, market certain consider, this mostly a business the be in the for product the So to be outside can it's business, and think demand is the cities, group, but suitable in it it what products our of it market

that's quarters, development the So been are factor itself kind and have of we development few the seeing demand last we product on product market side In considering. the fit. of

side is quality when to a centers, supply can moving learning center sustainable a the and sustainable want manage level operating service mean for we speak to future a Now network. of our of as make what that learning building our we're balanced the side, also as on level operational only we provide sure of to on capacity but own we on expand efficiency focused that development business we still we approach, not we out

the comes center decisions on we tend So on factors learning to expansion. it are few when to these consider making

Operator

next America. from Our question coming Yu of Lucy Bank of with line the

Lucy Yu

question on a have I margins.

margin been noticed and I that So OP our has margin GP quite volatile.

that mix largely is the a explained the trends And on is the already this You margin how moment? at we're margin think in at about business future? if contraction change. margin GP how the should quarter, basis, the we But looking due GP to like-for-like the SIM business

Jackson Ding

talk about dial trend margin helpful over couple we we I time. at quarters would mostly and back When if gross be trend, the it a of look think

underlying the gross set company, but the our margin, is quarters, XX% fiscal last overall at business margin we margin gross margin year, of look two the And most say, quarter, most on business think will, you I So businesses. lines. XX.X%, at the intrinsic was in of the down year-over-year influence various quite ago, stage, if have mix to our our factors, eventually. of is and would up was which when I a bit gross a margin and overall XX.X% quarter for bounced I just fiscal range, to And quarter-over-quarter. if in was gross gross two between gross QX, margin One the XX% so this look

what So us will QX, probably maybe understand help let happened that what first and me explain to in in QX. you happened

QX, saw mix, constituting total primarily was in was a gross in what of we our that shift lower-margin underlying result business larger below revenue. of to margin with And just So a a portion our business XX%. dip of some

relatively the QX QX, stable. stayed Now from mix to

to where So has I at seasonal utilization you high the gross on if business at be is a of centers QX underlying fairly the a are given high margin vacation it QX factor quarter resulting margin. quarters. though, was gross in summer and the across picking learning will you tends caution the up a a our relatively offline influences, look

in next do the a So margin expect I in in quarter, decrease gross general.

Lucy Yu

decrease, third mentioned you looking mean I quarter? the assume we're if how think on but you margin the basis, we a in Y-o-Y should Q-on-Q decrease about When

Jackson Ding

business Yes. I'll do as margin comparable manage because the the we decrease. shape I'd underlying see when on it Honestly, focus point. just Y-o-Y is a this quarter-over-quarter leave just say gross business, we less Y-o-Y at less change

Operator

for turn will over And back closing I now remarks. call the to any management

Jackson Ding

joining Thanks, quarter. thanks operator. questions. your And speaking for today, And forward thanks, we next everybody everybody, look to and with for again,

Operator

does for gentlemen, for participation. your you today. Thank conference and Ladies

You may now disconnect.

TAL Education (TAL) 26 Oct 232024 Q2 Earnings call transcript