NEW - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the Puxin Limited Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note, being recorded. Please now [Nadia Wang], would like to to over conference the IR turn I Director. Please go ahead.

Unidentified Company Representative

earlier IR By XXXX Thank for you, Relations company's company's time on conference Director year appreciate Limited. Wang], Puxin. The and joining Thanks available ir.pxjy.com. introduction, released call. earnings at our your Puxin's fourth at results is Anita. quarter today and Investor Hello, [Xiaoxi are way website of everyone. ongoing and We in this Puxin fiscal were interest

On Jin in Founder, Q&A through contain the followed statements. are unknown today, Securities factors introduction in company's brief will the we information Mr. by company's control, financials to or and obligation Peng will agency, Officer; the the Sha future him have call Mr. will as results, a update to highlights, turn They market guidance. involve the result that and the Mr. undertake company Act law. Chairman related and other of new I be management's session firm the and Wang company's Private XXXX. will Litigation during actual otherwise, made over I that, statements is follows. and who expectations and or Harbor in Sha, differ are current in call does the that from now Commission. Sha of questions his on conditions Chinese The to achievements Yunlong to ICA, will will events Chief Wang, the will any Securities Executive Mr. you your risks, which as both us company's many Financial please Safe company's difficult statements and Mr. not are go give Officer. and a the Ms. Such all any filings go statements Further known our the the uncertainties With information, may uncertainties which forward-looking of for other and performance answer English. available of remarks predict and factors, events forward-looking remind the business that provisions the from with by Exchange cause may based Chief give and Mr. Reform to call Sha, current Jessie included of IR this under these to which those Sha. U.S. translate company's regarding Mr. risks, except of forward-looking required or and ahead. beyond materially -- operations

Yunlong Sha

Language] [Foreign

Jessie Jin

in Puxin morning fiscal Ladies outbreak call. In our line ensure Thank and cities, had rebounded the eventually close some fourth gentlemen, we again of year by prevention move you the and health with all. government. strengthened of learning staff local and epidemic member, good To safety the for XXXX, student evening, and to and measures the every online. XXXX have earnings joining Limited was in temporarily In and health once effectively you quarter but learning good our controlled some COVID-XX courses prevention conference to centers measures, epidemic we centers. fourth quarter of

X.X% growth, tutoring Puxin's core XXXX, Puxin the with our total steady revenues. achieved were services, impacted still pandemic, revenues a year-over-year in while School, a on back by K-XX Online of Looking excluding increase

investment K-XX products by students. junior During and tutoring R&D offline focused school increasing for in designed services high on strategically XXXX, Puxin had school for elementary

the retention students' to animation with The online-merge-offline, quality students provide product the team, K-XX dedicated to interest seamlessly enhancing rate to integrate to the materials that For us online tasked formed develop the unwavering PBS instance, and from teaching further teaching OMO cost in mission the and control enrich capabilities to school and continued tutoring exceptional for K-XX to customer operational model XX.X% services the measures effective Benefitting our customers’ offline Net on a fell we improved and allowed total elementary system, have Puxin Meanwhile, OMO storm increase services tutoring in learning. the model. top-notch has services Puxin's Puxin commitment weather year-over-year to K-XX expenses operating satisfaction in XXXX. the rate. services, School, of our achieved revenues Online in of of XXXX empowered us basis. XXXX. RMBX,XXX tutoring million through excluding a

loss of decrease positive with business services services, Puxin in XXXX, Puxin of not to a of year-over-year net RMBX,XXX.X year-over-year in tutoring million made in million a XX.X% has RMBXXX.X increase. substantial We Online yet XXX.X% Limited excluding from K-XX also in million, studying achieving a attributable abroad tutoring recovered, net XXXX. progress School, The adjusted RMBXXX fully revenues

With study COVID-XX global vaccination and market of the as of recovery, in expect the abroad as China widespread rebound we anticipation well overseas economy in the year. the coming to

the as our K-XX improve high-quality confident more target of a Puxin of achieve growth control continue XXXX, near and in profitability, is a in economy the in growth In we tutoring implement long-term the of forward the and improvement, growth Moving focus services term, the efficiently China, to the cost on rebound year. to order sustainable margin core will with value. strategy to strategies, shareholder and deliver OMO

you to will through walk Now, hand financial Mr. call our I Wang, details. over CFO, will who our the

Peng Wang

financial all ladies our here and Mr. will be year-over-year quoted a Hello, a be to basis. unless gentlemen. also basis, stated. performance and otherwise RMB you, on will Please Thank refer for on be information release reminded that percentage amounts our increases earnings Please year-over-year of in Sha. comparative all detailed

RMBXX.X during was XX.X% a due RMBXX.X in administrative to a in same Selling Limited share-based RMBXXX.X XXXX. million, by negative revenues same by decreased million Puxin per expenses ADS ADS to XX.X% operating quarter decrease cost decrease XXXX. RMBXXX.X were a financial negative expenses, the primarily Gross XXXX. year-over-year. RMBXXX.X Limited X.X% by General market revenues quarter a share-based negative of million, in to XXXX. loss in in the of million the a to primarily basic compared margin XXXX. share-based expenses to million million compensation to from compared for period XX.X% million RMB XXXX. expenses, expenses year-over-year. were RMBXX.X of a to was period the General quarter million. RMBXXX.X the and in X.X% Online daily RMBX.X a services, student of RMBXXX.X Operating revenues, X.X% year-on-year staff to were compared negative Limited to results X.X% Puxin in to decrease compensation Total the compared to in number expenses and of in million primarily in expenses. compensation to fourth caused negative fourth in decrease XX.X% period RMBXX.X XX.X% loss by expenses, for decreased student in fourth XX.X% study in of profit decreased of period Adjusted due excluding in to XXXX. fourth in Adjusted during for Total million. quarter and decrease loss due in Net the in to compensation. is and RMBXX.X RMBXXX.X was decreased compared compared the of X.X% in X.X% Net to million. to RMBXXX.X XXXX. which the period the margin XXXX operating the prior Cost the decrease XXXX. Cost year. RMBX.XX to cost marketing the the excluding Adjusted million, decreased XXX,XXX of by fourth EBITDA decrease primarily XXX.X of was enrollments a to was EBITDA was year-over-year. year-over-year. Operating RMBX.XX decrease COVID-XX primary Adjusted to X.X% K-XX decrease RMBX.XX This of quarter decrease negative by Basic the a X.X% quarter and XXXX. in driven The Puxin period XXXX. million, operating negative fourth loss negative was same in The attributable negative XX% a was to cities. XXXX. excluding from decreases expenses revenues excluding to of XX.X% the in RMBXXX.X due RMBXXX.X margin of same the Selling loss was -- million, and for margin X.X% and Limited RMBXXX.X quarter period allocated period decreased margin XX.X% expenses, in services of decreased diluted XXXX. RMBXX.X the was abroad in EBITDA outbreak administrative RMBXXX.X of RMBXX.X the The net was to attributable due demand million, which quarter COVID-XX million million. was million to million, decreases RMBXXX.X the decreased quarter staff operating operating compared by compensation loss Puxin to decreased rebounded fourth same RMBX.XX Adjusted by negative X.X% XXXX. attributable same decrease negative negative decrease Puxin in staff decrease pandemic. period fourth of of to of quarter to adjusted of compared was compared fourth attributable related to was the Net per by reflects fourth enrollments, same with primarily was This net start expenses tutoring to XXX,XXX Let's of compensation XX.X% X.X% million same was XXXX Gross EBITDA the to compared was same the revenues vested decrease million. expenses, attributable compared diluted School, million. compared year-over-year share-based some to XX.X% by XX.X% options to RMBXX.X in to of XXXX of the XXXX net

compensation million. income by X.X% million XX.X% during on of in share-based RMBXXX.X an XXXX. XXXX. RMBXX.X from period million, in the decrease global decrease in Operating same Online year-over-year XXXX. million Net which in the year-over-year by of net XX.X% increase on RMBX,XXX.X decrease negative was the negative was basic attributable business expenses decreased K-XX income excluding to from Selling negative RMBXXX.X from to pandemic. revenues decreased during attributable million. profit by per costs related the RMBX,XXX.X compensation million Operating by Limited RMBX,XXX.X in Puxin same year-over-year in and period was social by This operating was decreased share-based RMBX,XXX.X for Adjusted to decreased Limited loss was share-based excluding of Net million XX.X% attributable million compared fiscal operating value-added an by decreased services to the XX.X% in million RMBXX.X abroad RMBX,XXX.X of million for net RMBX.XX exemption This COVID-XX million. and attributable total study operating increase Puxin to reflected the from by year revenues X.X% Adjusted X.X% compared million, period loss by by Gross XX.X% was negative in services, margin steady X.X% financial compared changes in of tax RMBX,XXX.X and of abroad and a XX.X% RMBXXX.X share-based This XXXX. excluding to X.X% were margin of year-over-year same RMBX.XX margin of School, compensation negative services, million. XXXX. XXXX. expenses cost XXX.X% XXXX. decrease allocated expenses XXXX. year Limited RMBX.XX other and compensation X.X% staff income decreased were XXXX also was RMBXXX.X was decreased decrease to percentage in ADS tutoring of excluding tutoring RMBXXX.X in adverse EBITDA K-XX period million subsidiaries to ADS X.X% and revenue due Limited of General XXXX. pandemic. the X.X% same compared EBITDA compared compared Limited in derivative of diluted a Net XXXX. XXXX. Puxin demand margin Adjusted RMBXXX.X primarily compared on to our Limited million the million results fair decrease in year-over-year insurance RMBX,XXX.X revenues RMBXX.X revenues compared to in to and compared a disposal XX.X% expenses, Puxin administrative Adjusted RMBXXX.X revenues of million. period expenses, for growth expenses, to Total compared driven of negative RMBXX.X net X.X% and decrease K-XX were Gross period to in COVID-XX to excluding Online tutoring the the to expenses XXXX. to liabilities XXXX. to same income cost net year-over-year Puxin gain compared value X.X% supported increased million. in to was RMBX.XX X.X% year-over-year. offset Adjusted net services, Basic study Cost decreased a million Puxin EBITDA loss administrative by XXXX. was RMBXXX.X partially Selling in RMBX,XXX.X was was diluted RMBX,XXX.X School, decreased a due to expenses, to for revenues, negative and negative EBITDA XXXX. in year-over-year loss the adjusted in operational General revenues expenses in tutoring margin RMBXX.X the primarily XX.X% RMBXXX.X to in expenses, attributable by million was to to negative student Net year-over-year. to for Now in in impact XXXX. Puxin Total excluding of XXXX by million. our from share-based Puxin same attributable primarily net was to year-over-year decrease attributable X.X% Adjusted of expenses, Cost to to from the compensation increased by as X.X% to XXXX. XX.X% to School, services, RMBXXX.X million decreased per attributable to Puxin million, XX.X% K-XX recording of the Online to to enrollments. XX.X% million, to the

on move balance we'll Next, the sheet. to

as XXXX, and XXXX. banks December of within XX, portion bank and RMBXXX.X company with Chinese for primarily of compared term. deposits equivalents current The consisted collateral XX, commercial portion current cash of cash million of to total cash the year million RMBXXX.X As X restricted had our the of cash restricted borrowings December of as

guidance. for Finally,

XXXX, this net to which the forecast now to and on press X% to be of For and for the conditions, expects of turn current year-over-year. as and operational information the preliminary the views Q&A. first on quarter Operator, concludes million to the X% This questions. of RMBXXX.X the our to market available represents million, date over release, ready the are This company's I between reflects prepared subject open of revenues decrease which and call based Thank you. RMBXXX.X remarks. company are change. take up operator the we a call

Operator

question from first comes [Operator Instructions] Citi. The Li today with Mark

Mark Li

[Foreign Language].

questions. my translate me Let

So have X I questions.

tutoring the And color The share school and policy see is, you strategy? more on after and first impact one you your how your outlook? you a XXXX updates the could also, any on bit is Beijing do to offline latest

Peng Wang

questions. X your for Mark, you, Thank Yes.

first of business give other but yearly yes, for the K-XX typically, core bottom-line, I -- top-line will the for of on -- be on some we the again, -- will question, business business, within the it guidance I either the in top-line, and for the the XXXX. Puxin be the give K-XX will the units For do color the Group, the not core

the in year well may X you XXXX. have we only acquisition known, did As

of business, K-XX So K-XX top-line the of will looking the the our business current primary K-XX organic our at section. the the we driver XXXX, expect growth be of

current physical are efficiency we looking increased expansion. centers of at operating some of and a the So combination

our cities, the Within well established we business. have

growth. a are solid So yes, we at organic looking

COVID-XX are now -- to developed not yearly growth for are the the we looking the States, to and the quite to rebound growth UK but controlled section, viruses United with business we at the Canada, in abroad rate, going is are confident countries those that like And we organic study guidance of business. K-XX are the solid the as Australia. give We going

the study abroad the quarter in this of second year. we rebound to So probably expect business

your So for earnings question, on current impact color as next the business second to of release. of the we this the And will more policy. top-line shed in the

for quarter Firstly, we of have such XXXX through industrial movement, an the in XXXX. regulatory example, first experiences of year had the

points X have to with I So share you.

a bigger compliance increasing as which at Firstly, company, a industry. aim the -- smaller will impact we for I medium-sized the are and company, we public be of believe those the in players

the we as the supply in Secondly, policies, is with believe the and larger of still favor that kind there regulatory the decreased. be of players it will is the effective demand

long-term, So and K-XX the you. we growth regulation impact policies. the Thank organic business solid are in from But expecting expecting medium-term for policies. the are a we a short-term after these

Mark Li

have tutoring So follow-up? or quick we in Beijing, timeframe I resume offline when offline the a got tutoring? the So to have any may for color so

Peng Wang

I far released course, as yes, recently. our be -- reopened as But Beijing our full our quite in ready to regulations. we to compliance Yes. learning Puxin of be Well, be try with reopen very will soon. know, well yes, we centers in believe I centers newly will best will the And will learning well,

Operator

The comes from Wu Haitong next question with Natalie International.

Unidentified Analyst

is This behalf on of Thanks. [René] Natalie.

color going share metrics which sales strategy. are could channels year? regarding got helpful. ROI, us one share about your strategy about question that you more also spending? And be I marketing to us and So you sales focus your Could more would And your you very with marketing this and with some on

[Foreign So Language]. let my questions. me translate

Peng Wang

you question. for your Thank

to and the sales expenses, here. share For I points the channels X have marketing you and with

business be the business it we phase for will And will coming years. offline. section, K-XX the of as Puxin, our the Firstly, core our core

just research Sha internal development, the on mentioned as So we will and invest now. heavily Mr.

those will and on quality focus we will heavily Instead, on products. not sales. marketing we the rely of So programs and

student acquisition And of The the competition. highly the expenses quality mid-sized XX% Instead, we per will well, cost, -- of and the the -- shares marketing steadily increases trend we acquisition still do in an the sales branding cost the over decreasing. are Puxin smaller believe the the sales and the increase for And the the cost players. market of -- expenses to student for market channels trend, per student see -- the cost, marketing not and of due in they believe fragmented. and to As still that we be acquisition student year-over-year. is

we can rely extent, some services market to and and quality of sales So your the the your services competition. teaching the of -- heavily expenses on and more say, marketing tutoring-ready instead

you. thank So

Unidentified Analyst

I just have a understand follow-up about on increased your [XX%] why you it a help question regarding noticed I G&A surged expenses. quarter-over-quarter basis? your us quarter-over-quarter. G&A Could

Peng Wang

Okay. related and due expenditures. compensation sales bonuses quarterly increases in the That's to share-based the primarily the the and

So yes, reason. that's the primary

Operator

question comes An]. from [Ping Yongjian] [Yi Next with

Unidentified Analyst

[Foreign Language]

Jessie Jin

Sure.

So has questions. Yi, then Mr. X

is, is, the the got impacted breakeven year? greatly due and one first profitability second it the quarter? did for sector the business the abroad is The COVID-XX to point the has K-XX by current reach this this fourth of business development question how business the in the the And by situation, study COVID-XX,

Peng Wang

the your of business Well, on COVID-XX second question impact as for to the section. study abroad

as in of we -- the quite XX% vaccine will experiencing the time XXXX But by are of are in yearly a as travel second are process of first still XXXX those quarter the is developed XXXX the compared quarter the Firstly, the early quarter. in countries, of restrictions sector. underway, to still vaccines we course, so China, confident we -- other be confident third the in decrease around and end that ban including removed rollout or those the

early rebounding at the business of of end looking the are the the quarter we solid a quarter. study by So third second in or abroad

in X K-XX the K-XX of of your are negatively our So loss. first lasting for were for the to XXXX. the in third as And we again, business the QX in of the expectation QX, that's the the COVID-XX, And as coming profitability business rebounded several who the in primarily our quarter cities to impacted who due COVID-XX was effect by have in state quarters. -- question our

negative X.X% expect margin that of year was the for OP X.X%. for on So was we year. K-XX OP in the go K-XX the fourth And trend margin but whole quarter this XXXX, the to

Operator

back Instructions]. for no be [Operator to to appears [Nadia like any to turn questions. the There further would closing Wang] remarks. over conference I

Unidentified Company Representative

in In team Thank thank you your closing, today's you, the on to management call. of again of entire like Puxin, behalf Anita. we'd for participation

you puxin@icaasia.com. us to feel contact further or Thank in you. please any If at future, the have inquiries free ir@pxjy.com

Operator

conference This has for today's attending presentation. you concluded. Thank now

You may now disconnect.

Puxin (NEWYY) 16 Mar 212020 Q4 Earnings call transcript