Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter of 2023 Tarena International, Inc. Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today, June 13, 2023.

to Ms. conference like first to now today, speaker would hand over the your I the Relationship Yang, Sylvia Investor Manager. Thank you. Please go ahead.

Sylvia Yang

Thank first The and call released well you, welcome to ir.tedu.cn, IR are as and Tarena's everyone, operator. available as earnings earlier on today for quarter earnings Company's the XXXX. of results were our website, services. Hello, our conference newswire

operational Ping will and Wei, first XXXX Ying XXXX. and second Nancy Sun, available you Wei remarks, our through the Nancy the results and quarter prepared hear you financial will Ms. be Company's CFO, answer for quarter our and to questions. Ms. guidance from who'll give of take Today, for Ms. their CEO; of After revenue the your

and our forward-looking discussion the today to Safe Reform as statements that note will may risks under update certain any Act forward-looking statements under cause Private please statements, continue, to provisions of Tarena we Harbor Securities forward-looking that the any to results are assume the made law. applicable expectations. of not current U.S. Litigation These required actual contain uncertainties obligation XXXX. subject from except materially differ does Before

included of results financial prepared to measures in accordance Regulation financial the Tarena's that discussed on U.S. includes reconciled ir.tedu.cn. release, be in in are Company's non-GAAP earnings been information website and posted Also, at note The U.S. please measure IR financial measures Tarena's to some in defined which financial as information G. GAAP this has GAAP non-GAAP with

conference call is as recorded. this being Finally, a reminder,

Relations Tarena's call conference In website. of is addition, this webcast on Investor available a

of the to I Ms. will over the now Nancy Tarena. Ying Sun, turn CEO call

Nancy Ying Sun

everyone you, today. us Thank and for joining Language] [Foreign thanks

operating a financial the execute outflow was The prudent cash our to particular overall relatively narrowed and net our business achieved operational environment first financial as year-over-year continued performance. quarter we In healthy we challenging, while strategy.

in cash beating the impact. minimize our controlled the receipts, reductions temporarily cash reductions a centers we cost early to expenditures to our year-over-year learning While enhancements in through strictly closed quarter we efficiency and

the enrollments inflow. enrollments leading aided a a STEAM half relatively that the recovery in our quarter. economic education monthly particular the IT cash following recover, in operating strong to second focus of New performance pre-pandemic Year, Additionally, supplementary In to in by of services levels rebound general Chinese our surpassed in the started resulting

total supplementary education These both million dynamics RMBXXX and fell XX.X%. amid IT them our period month affected IT whole revenue amounted Among IT of our education a to same decline services from the Our RMBXXX for focus net challenges. our dropped to while year-over-year, decrease primarily STEAM revenue from XX.X% STEAM XX.X% learning The external million January professional in XXXX. of year-over-year closures professional education from was due the by revenues education by of center business business.

narrowed Despite for quarter. to our multiple helped consistent with subsequent RMBXX.XX X% strategy In during operating million. cost challenges months our return territory reductions enhancements, outflow positive flow year-over-year our long term combined net by efficiency operating cash the prudent financial our quarter and cash the first and operational to

XXXX year-over-year. gross overall percentage our XX.X% margin, X.X the first which revenue by costs the of by effects on of In partially quarter points decreased our year-over-year fell mitigating declined

expenses, Additionally, XX.X% operating to - expenses which effective cost decreased our our by by controls which attributable effective declined XX.X% was marketing primarily year-over-year, to control

expenses XX.XX% down as RMBXXX.X of the for STEAM you from last million cost And XX.X% of learning costs focus our walk business supplementary a we quarter education programs year. in first quarter the XX.X% year-over-year from controls quarter education our the This implemented was IT through of quarter. million the let last first an net and net first RMBXXX.X quarter from our STEAM effective me of revenue increase first Next at XXXX, In year. represented total in by XXXX, the revenue fell result, centers. during our first Meanwhile,

Under quality courses slight customer Notably quarter rose their In enrollments acquisition This with new mouth the and year-over-year first percentage as and year. gradual XXXX, as delivery, of in through a XX.X% as last to was a part students referrals well paying word recovery. quarter the renewal high XXXX. of reached the front our of increased economic quarter. due increase to students enrolled compared XXX,XXX the number of in students of during fee first enrollments the

providing percenter operation XXX XXX of Regarding at center, services of of quarter first from enrolled end quarter time, number XXX students last first STEAM end in the the in same the the of declined XXX our fourth of year. the centers at education increased period of learning same the of this quarter to the XXXX. of the our number total year from XXXX the to At

operational of education as suspended cost we by of Next, XX.X% declined of net to year-over-year IT business to some of education efficiency IT follows professional improvements, moving leading In centers, reductions learning for while year-over-year, our and strategy the the decreased Nevertheless, drop XX.X% business. gross in XX.X%. the our our revenue first a IT opposition professional our business. strictly education quarter, our to the professional we of margin total costs

its as February improvements Our drove environment in external abroad enrollments recovery. has economic gradual stabilized the since

only addition, core and focus an the supplementary would approved the interest. to April, model, in order of company Board XC namely a whereby our focus, competence, IT providing IT professional with college minority related agreement the investment education Directors on carve out In a business in STEAM retain and collaboration

At general related students model, on recruit major major we degree of IT which joint internships future includes of provide recommendations. is independently. hands investor collaboration college courses business, program. which advancement third The funding would this strategic several related job the will further a provide Under one model, business the operate while this provide and students party with for cooperation courses, same time, and training, colleges

part build intelligence use have carved services training to We of we colleges college provide deal. and out build artificial to also artificial have the business peripherals for colleges labs - effectively intelligence collaboration colleges their for also and also relating

about contributed particular of This close to quarter total [time is the company's expected XXXX. in net revenue see a for The transaction company the soon. the X% the first That's to XXXX. business acquisition] of

turn the financials to over I'll first Next walk our quarter XXXX. Wei, Ping to the call for through our CFO of you

Ping Wei

everyone. you, and hello, Thank Nancy,

more first Please let of Now the me release quarter. of information. highlights you walk read financial through some also for press the

same Company quarter operating million RMBXX.X outflow the of of XXXX. first cash operating XXXX, or to net the RMBXX.X For of a million its cash narrowed compared to US$X.X outflow million, net the period in

transition as experienced challenging second half weighed of cash tough a of in year-over-year receipts. mobility since as a slow period social have since customer XXXX. delivery, and learning and reduction centers, leading to recovered businesses of the quarter, on fourth our our a well closures we February cost Temporary our While gradually acquisition

such, As also declined. revenue

In the enrollment, from revenue our decrease quarter the first primarily quarter a same education. professional or in XX.X% particularly year. total revenues of reduction of million was was The decrease for net RMBXXX.X last due XXXX, in student IT a US$XX.X million, to

a month for suspended revenues. and Company the in resulting services Additionally, almost dent of the entire in January, courses

business revenues. education Net was revenues net supplementary STEAM XX.X% of our IT-focused total representing RMBXXX.X from about million,

XXXX. XX.X% and costs. revenues in period XXXX. decrease the The decreased million centers RMBXXX.X personnel decreased RMBXXX.X reduction in Rental to compared the also resulting a cost number of the headcount teaching costs and same to as in related of welfare decreased decrease from period of was US$XX.X by or Our XXX the in the million mainly million first same of attributable to of quarter

brought revenue effective the a Although greater profit quarter the decline the narrowed in offset to of revenues decrease our gross XX.X%, by in a the measures or RMBXXX.X partially million, reduction million of operational to is impact. margin which $XX.X than gross cost followed

across period RMBXXX.X organization million Total quarter acquisition of XXXX US to decreased $XX.X reductions the million operating efficiency million the in mainly the expenses and by XXXX. in reducing Expense personnel RMBXXX.X XX.X% of from included customer costs. or our optimizing first same

share-based XXXX same million the million operating in XXXX. period by RMBXXX.X or decreased RMBXXX.X quarter to million the compensation XX.X% which excluded non-GAAP Total of from of $XX.X expenses, in first expenses,

expenses period XXXX, the a decrease was marketing resulting from compared to quarter in a decrease costs XXXX. of to by the US$XX.X decreased of in the RMBXXX.X same sales staff XXXX of XX.X% from or to number of million period of first quarter in decrease mainly due personnel-related million The same the the first and Selling RMBXXX.X million in in XXXX.

addition, a In in decrease reducing advertisement resulted in the clicks expenses. advertising

certain of mainly resulted by allowance General and RMBXXX.X XXXX. in college-related decrease from the suspended subsequently. as by and operations early on in decreased receivable the million period pertaining which accounts from office or G&A-related to to partially attendance headcount quarter disposed XXXX the the was first we million RMBXXX.X the US$XX.X reduction of temporarily decrease expenses of provision offset of lower of The administrative same in businesses quarter. The million X.X% we

by decreased of lower a million expenses quarter in due number control the staff RMBXX.X development primarily decrease and first X.X% same in XXXX. was million from of period effective quarter the million of to RMBXX.X Research of in and XXXX the cost first or XXXX. to The US$X.X

the of As a of to result of period in XXXX. the XXXX, RMBXX.X of XXXX, which first million operating RMBXX million operating Non-GAAP quarter of compared in loss compensation the or of same compared excluded RMBXX.X US$X.X period loss, million income same share-based quarter million or million XXXX. non-GAAP was in of was US$X.X expenses, operating first RMBXX.X the the million in income foregoing, operating to

in of million quarter RMBXX.X income or period compensation XXXX. of RMBXX.X first RMBXX.X RMBXX.X in million the XXXX, expenses, same million net million income same to excluded net or the the in quarter was which XXXX, share-based in the net loss, US$X.X first compared of period of to US$X.X XXXX. million non-GAAP Non-GAAP loss of Net compared of was million

EPS in was basic US$X.XX, ADS, and basic per diluted loss or quarter of on first loss XXXX. RMBX.XX excluded side, compensation while RMBX.XX was which the the diluted expenses, or and per US$X.XX ADS non-GAAP Now share-based

operating cash year. of As mentioned RMBXX.X million outflow period our quarter, net same X% earlier, the than last that for the lower was

first buildings down million end payment RMBX.X own. difficulty]. quarter anticipate we the In be XXXX full expenditures of received Capital quarter settled for the second we were of [technical quarter, the will million. of We payment two in disposition by RMBXX the this of

December total RMBX of XXXX, cash of and cash, from XX, XX or decreased XXXX. balance million million, US$XX RMBXXX by million cash of As was March equivalents, the restricted

And XXXX. my financial and revenue Nancy Nancy? business the guidance share second quarter outlook you with for will section. concludes highlights the This of

Nancy Ying Sun

the [Foreign your for XXXX. financial you, of quarter of our for summary Thank Language] performance Ping, first

the to Company's second of turning Now, outlook XXXX. quarter the for

Due around during revenue period the of external will centers, the XXXX quarters. and dynamics the beginning the our affect our our the cash to of of continue temporary environment end receipts a XXXX, learning to closure in on the and few impact for more marginally

will business decrease of X%. in by related college-collaboration our around of out result a carve run rate the Additionally, ongoing revenue year-over-year

this management period, continuous remain our focused enhancing toward go operational a profitability. and and will and excellence. During We way future we development this our on course upgrades long believe

In addition, a enthusiasm revenue. GAAP renewed education our market cash in since the the beginning second and for of year-over-year quarter, increase we receipts expect services STEAM

guidance, with decrease Company's respect current RMBXXX net of second The the million Accordingly, the estimate conditions, XXXX may second and reflects be the of range financial change. the XX% of Company's quarter for representing a revenues of to environment that guidance which the preliminary and quarter XXXX. market our to our we of estimate operating XX% in from total will million, RMBXXX

for sustained the [technical demand IT as general talent market recovers. market job difficulty] gradually

to believe develop to aspires well demand. future in in we my children and enhanced that IT-focused to capitalize deliver are strong outlook is to China continue STEAM continue value. on China will that positioned We're as education the market country's and the the large we shareholder be technical IT The our guidance. education revenue capabilities, for confident Additionally, statement for above that will

We're your support. take I'd thank for like questions. all opportunity this to now ready again you for to attention and

Operator

first Instructions] Your go Please question from [Operator ahead. comes [indiscernible].

Unidentified Analyst

have management year's [Foreign a Language] the can How provide growth this question. I question taking trend? a Thanks. on management for will Thanks color strategy? regarding more myself. does my see translate And education. I STEAM

Nancy Ying Sun

in our segment and competitions gradually market as your policies Despite such market for STEAM with external resumed economic you In to business, increased recovery, Thank our Language] drove have have coupled in we education the headwinds particular, the growth. active year [Foreign market education programming the demand enrollment services value-added for to normal that early rising impacted favorable question. seen increase and leading demand returned and challenges, expansion. interest market has

believe advantages in years, we delivery, have will will of more in [indiscernible] Although believe it the we STEAM the product we our scale growth to education in players our entered facilitate the recent due competition. and in stand market market for the penetration out

are and the growth we bring new our believe will to on acquisition new us new As strategy, customer channels end, [tools]. these we channels trying firstly front

Secondly, through maintain industry always the in to had leadership in renewals. continued rates we've our we high and renewal have acquiring students

Third, this, again, and camps, a variety hosting in of challenges, and increase our to students. we the which students, are growth purchase rates new repeat larger will competitions will among lead

with content students gain user the technology, to gradually bring students. of will And - our technology add to experience. different now AI flourishing bring to we help more product such believe our generative And ChatGPT-related from will our our courses we us upgrades more trust also

you your a are STEAM most portfolio more gain will for services. we again, product So, thus thank advantages more richer our education user users. want of These us believe acquire support. and help And to trust I the important

Operator

you. Thank

EF go with Your Reilly next from Edward Please Hutton. question ahead. comes

Edward Riley

Hi, guys.

enrollment What quarter? of some is the total segment the centers during Just the within number education and housekeeping. professional

Ping Wei

in XXXX. centers add-on at of college-related the quarter-end QX the the XX. the to And of carve business, our came total are down around out about after with end XX They number

be likely number for that QX. Thanks, most Eddie. So end the of will

Edward Riley

to you where year? decreasing number with do the that segment for education do directionally, you center? the regard And great. see that or just expanding capacity per see total within enrollment And Okay, the then centers throughout of STEAM

Ping Wei

question. the I'll answer Yes, That's Ms. a good translate Sun first. question. ask to We'll

Nancy Ying Sun

that Well, center a profitability, It's we good your increasing It's thank very shows solid first, with true a [Foreign have been for Language] business you our our question. enrollments which along foundation. that per has question.

expanding operational will will on different centers cities the we or - centers. new regions those in We consider establishing our of based consider quality

education the important for will STEAM you in your We believe again this Thank be our to share expand market. question. market

Edward Riley

Okay. last for And then one me.

look year segments? for Just for pricing the on rest both like the of pricing, what's action the

Nancy Ying Sun

as as per in [Foreign well Language] Well, increase price we've an transaction the hour our seen actually, value course. per

value students So courses to basically, or courses our have haven't they also pricing. we courses double subjects regulatory are our transaction our difficulty] the changed choosing And choosing government's more reduction [technical because on including in pricing hours are pricing. our longer policies we on - of group non-academic on on us, our our in level. the the take But and from for maintained

I've answered hope your Thank I question. you.

Operator

you. Thank

comes Your Gregozeski from next question Please ahead. William with Global. Greenridge go

William Gregozeski

Hi.

said from expected carve for X% of you the professional to XX% guidance break XX% and Can QX down, the For you that STEAM remainder? the what's the college was from out. out

Ping Wei

kids Language] last actually be [Foreign The will side to comparable year.

actually QX side. on increasing the ago both on slightly So either revenue side, it will and non-GAAP be from cash period, year

is decrease So cash the December, like main during reflects impact basically the period, that of collected the XX% peak COVID the January to XX% the lingering reason. of the last

economic - actually well there's in still a of as employment the as conditions Second the bit general China's market. reason headwind is

our number. is decrease such, reason As the side - in adult for the key is the main

say X% as X% So economic likely of remaining from basically lingering adults, last will I relate the quarter - more we XX%, X% X out carve about yes the to then impact it. and a how probably to from

William Gregozeski

is Okay. this term question initiatives, and And cost your year? given expect do efficiency you environment current last the guys profitable the

Ping Wei

We we were last profitable this be profitable still will year year. and

[technical difficulty]. I Sorry,

we So, still this be profitable year. will

QX, is was For about our even number. operating -- RMBXX smaller you loss as our side much see, cash we million, though

half sort giving small outflow are of even we But second year breaking all current outlook, difficulty] at profitable, margin [technical And for guidance, - the looking will net number. okay. on this GAAP on side, at QX. probably be operating I without operating of of the level a QX, the around sort For cash based the already

William Gregozeski

right. Thank All you. Great.

Ping Wei

Bill. you, Thank

Operator

who Private Giulio], question a is ahead. next [Giovanni Please go comes Investor. Your from Di

Unidentified Analyst

everyone. morning, Good

Just questions. two quick

on buyback. is give on Please quarter? million about buyback do me in wrong, correct And I'm amount first did but the one in you repurchase if the First an X the authorization? remaining what shares you the update if

Ping Wei

Thanks for Language] [Foreign question. the

know, basically share probably another executing to of First that to Directors actually repurchase million, US$X buyback the Board of do was we buyback you the question referred program. the repurchase. the program mandated to gave million on actively prior We the used you of X we million program, broker owner X notice companies all authorized the back

do basically exact to room of cash continue used provide amount - decent not on or have quarter, the general quarterly the we in monthly still So, but program. update the buyback in we

Unidentified Analyst

you. Thank this selling what structuring how XX are Thank on question you and the carve And receive consideration you're going is to right? cash And going transaction? million out. also building this you are you second proceeds college very the to that or much. the from with transaction division proceeds the you about from do Are

Ping Wei

our Language] a actually because that - it's past half of focus and losing core our carved adults financial non-cash the financial we and strength for right. business both investor, slash is for well decided as adult why few money introducing and is in particular the actually we transaction. the years. resources, part strategic to attention, is the basically, That's out. business the XC So college as considering company's [Foreign strategic for market the children, it related of that's The And to

consideration for the having a controlling interest, financial hold investor minority to the this be particular non-cash Our sponsor continuous business. a returns

so, of of as will well needs, value sort business the supporting actually sort of deep carved strategic interest know, investor with out increase hopefully, as strategic the funding accrete You sort in pockets over the in the the minority and direction. time

we the basically not the we lose increase bottom part, in with will increasing - will transaction. base line, of the - but For sort company cash

balance will we on we question position. proceeds additionally, million use which it of our cash net to a the on beauty, use of to other purposes. from intend basically, for sort is So let XX And the don't it the basically, of sheet, enhance the sit cash, additional

purpose operational working for purpose. capital - be we'll So

Unidentified Analyst

much. Thank you was very That helpful.

Ping Wei

Thank you.

Operator

We you. have continue. questions any please don't the at Presenters, Thank other moment.

Sylvia Yang

to Thank present, thanking us Should operator. site Investor at questions If at everyone you ir.tedu.cn. emailing by We welcome or Thank for encourage our no we like to at directly questions by any for there Relations are conclude you have ir.tedu.cn. joining we reach would you, call. visit to additional conference you to out further our you. requests information,

Operator

participating. that our you today. Ladies for gentlemen, Thank does and call for conclude

You may now disconnect.

TCTM Kids IT Education (TCTM) 13 Jun 232023 Q1 Earnings call transcript