TCTM Kids IT Education (TCTM) 30 Nov 222022 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Third Quarter 2022 Tarena International, Inc. Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] I must advise you this conference call is being recorded today, November 30, 2022. to Ms. conference like first to now today, speaker would turn over the your I Investor Manager. Yang, Sylvia Relationship Thank you. Please go ahead.

you Wei, of prepared company's our quarter company's CFO quarter Thank hear revenue CEO; through Ying and you, conference XXXX. will earlier third earnings as take for quarter our website the will After remarks, available and will as third to guidance Ms. welcome were on Wei questions. Ms. our XXXX be results The today financial Sun, the of Ping our and and operator. Hello, you of XXXX. call fourth operational our Nancy everyone to who for newswire from available and Today your give earnings Ms. released Nancy results for the ir.tedu.cn, IR Tarena’s the and well the answer services.

IR website in non-GAAP on company's information as and been please statements to earnings in as risks measures obligation Regulation some provisions ir.tedu.cn. forward-looking law. Securities are has financial results contain under be forward-looking cause [U.S. in Before the to discussion today XXXX. actual of assume current measures materially [ph] of with any release, posted we will that in statements accordance harbor non-GAAP the U.S. does GAAP from note financial financial that defined applicable that discussed the our update These continue, measures G. statements Tarena’s made Tarena’s please are Also, included Reform Act forward-looking may of prepared to the to financial and expectations. certain U.S. under results this the information note safe includes any Litigation uncertainties required to Tarena subject GAAP] differ not except The reconcile at Private which

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

to Ms. of Tarena. will a CEO the turn Nancy is over of this available I Ying website. conference now Tarena’s the Investor addition, Relations call Sun, call webcast In on

[Foreign increasing Language] our continued by thanks [Foreign you, revenue and Thank XXXX, third Language] its the Sylvia, with business In joining today. steady net growth X.X% year-over-year. quarter us of everyone for overall

remained also operating for same from year. consecutive loss [indiscernible] of operating our period an quarter, margin the X.X% achieving in of business Our third profitable last the

profit gross level Our reached up the year-over-year. margin percentage XX.X%, on points group X.X

gross Specifically, professional of XX.X%. a our remained with profit IT stable business education margin

that X.X fee-paying and as front, in realized revenue. the benefiting XX% revenue million] profit Meanwhile, the were XX%. percentage with end [RMBXXX third quarter a quarter education the increase accounting this XX.X% delivery, Our wise, cost the period. X.X% In to and XX% Language] at quarter, of loss [Foreign Against the a RMBXXX an control customer same influence. education third process margin of gross gross million year-over-year climbed in Segment XX.X% of by implemented third third their margin me efficiencies our control and to of of loss million] our year-on-year quarter cost as year-over-year supplementary economic market In period IT-focused our and increase our our X.X%. in Meanwhile, XXXX, Enrollment the RMBXXX quarter, [ph] profit third from backdrop, continue our the [net loaned [ph] We in in up compared gross grow effectively a quarter control education in we of quarter supplementary On to of XX.X% Language] due to third revenues professional XX.X% we of enhance expenses. of cost STEAM STEAM by with the acquired [Foreign three high third profit net million third net third points we X.X% of coming and [RMBXXX quarter, in third this and expense [Registering] profit healthy brand I amounting from a year. quarter achieved growing centers, to and net the our this period acquisition students XXXX, a reduction the from million students addition, Due supplementary and growth of IT-focused referrals revenues steady further that effective from last of to [Foreign quarter steady IT-focused This revenue percentage business students steady we guidance of XXXX. to year. [Foreign of year, XX.X% XXX,XXX profit strict in gross STEAM education realized profit] well year-over-year. year-over-year in the the total net our produced In of third cost the of total respect of RMBXXX Next, measures for RMBXXX IT-focused from rose reporting declined word-of-mouth quarters last year, in our accounted we we the in you operational XX.X% to education quarter of margin third provided STEAM our from revenue With students the business. was headwinds. in [ph] [ph], our [Foreign a to optimize the operations. the points continue total the IT revenue for XX% where this last the control, the of million let renewal supplementary by at with in same the in net by the walk quality [XX%], at at saw growth Language] to year-over-year. the XXXX by million pace through Language] increased first XXX,XXX increased quarter. RMBXX.XX up [indiscernible] in Language] quarter amounted of of renewable quarter our high-end from XXXX. represents XXXX, X.X

[ph], moving supplementary and the XX% from capacity optimize students continue the word-of-mouth enrolled results of XXX about [excellent was do have COVID-XX this number learning third quarter the to the of for year. this single the delivery centers. In to exceed third has STEAM nice costs, million on of XXX third the improving operations of of an operational an same IT-focused of was business. XX students XX% total [ph] At in our the our we students the same IT-focused operation the grew of XX,XXX [Foreign [Foreign in demonstrates costs and expand third of [XX,XXX] enhancing business in into in XXX XXX of period In delivery increase end ensure providing and also the third million effectiveness to supplementary ensure delivery of facilitate reducing fully declined at high of revenue center education renewable and Language] the from profitability. our XXXX. Language] to the efficiency. in this [Foreign percentage education believe by This number lowering We in while of stable Our XXXX. Regarding RMBX.XX increase a quarter, year. fee-paying percentage that XXXX quarter and the quarter third an quality when third and was year the quarter to per translated intended our efficiency. the end we the our by our IT-professional businesses initiative renewable third the time systems, quality] to to quality difficult, of quarter, services that third cost In the of referrals regional ups] and Next total and RMBX.XX who market quarter, XXXX XXXX product Note cross content in number to [ph] expansion from continue due operating [flare last focusing students. average XX.X% centers, reduction at education still improving students center Language] quarter operational at our enrolled of by A from the year time, centers economic STEAM in quarter. to headwinds growth costs increased of

our temporarily long-time operations to one of delivery delivery Although system, centers achieve Thanks cross point, cross to at quality and online through some we suspend high without stable interruption. able were offline our efforts. to developed had mature

the in third of business [indiscernible] to of also net [ph] million these this year. to in Supported the [ph]. employment six [top with the IT XX% initiatives, XX.X%. RMBXXX rate months of quarter make professional In quarter students' the efficiencies] [Foreign from in in revenue to the on fell content] third in from by and XXXX RMBXXX of our back rose of professional costs, XXXX. endeavor of of third [incurred quarter, margin about IT macroeconomic X.X% at gross uncertainties quarter third career revenue our investments. and Language] student The million third to XXXX of education XXXX, education We slightly was the graduation the in strategy Despite the our million by RMBXXX gross profit reduce decline with RMBXXX quarter million profit from

operating as strategy IT to education total cost streamline and our Learning implemented Turning XXXX. In expenses that Lifelong to the in expenses, [Foreign XX% we professional costs by operating the addition, decreased product of continue and we business year-over-year. Language]

digital I financials who company will we encourage pandemic's aimed [ph]. the for Language] Java the to industry review system you of We third the of in positioned Next, walk are our have demand [indiscernible], our through [ph] the created believe We technology, momentum [indiscernible]. of believe in will intelligence, [Foreign in [indiscernible] That cloud XXXX. [marketing quarter China's to after a for at quarter update healthy Language] addition artificial diversified career to XXXX. third student continues operations and investment will company's and product this big portfolio the of turn such professionals as over my core growth Ping computing more rationale] call concludes the our to market data, purchases] products to grow enhancement, for continue to expand. to bring most Meanwhile, product as [rapid [Foreign

Thank you, hello, everyone. Nancy, and

of of walk information. the quarter. you financial also for the the third refer highlights Please Now, some to release let press more me through

or million growth, of in which period expenses For recorded control The operating as [ph] operating XXXX. in RMBXX of the of well RMBXX.X million million quarter. cost of XXXX, non-GAAP quarter US$X.X profit of operating Non-GAAP our our healthy same in US$X and was the compensation to RMBXX.X share-based of XXXX. million expenses million third company income, and in improvement excluded the loss] of well compared the or by the operating RMBXX.X was third million loss income executed driven same [special our during period quarter as operating XXXX, revenue the

by as centers XXXX. measures, we control million expense million Meanwhile, and million [ph] revenues million Our or expense third Demand entire in quarter million in the RMBXXX.X effective of million include: the from X.X% to reached or the our total up across XXXX, to operating of in expenses quarter optimizing same by the thanks in RMBXXX of the period net the XXXX, XXXX reduction XXXX. cost RMBXXX.X operations decreased XX% US$XX.X total to firstly, US$XX.X third contributed X.X% of same closing cost RMBXXX.X RMBXXX.X include or our million of revenues cost of period same XXXX [Whereas] RMBXXX.X our to in organization. of and US$XX.X quarter performing from to the from million third efficiency. personnel period in achieved reductions million decreased low

and education IT-focused businesses our professional year-over-year. as our respectively, As and and total decreased sectors] mentioned [decreased result, XX XX.X% both education headcount centers learning by for a supplementary Nancy XXX IT earlier, to STEAM [ph]

delivery, reducing uplift personnel, to endeavoring and services. spending market marketing and our excellence, quality on remain Secondly, as is which and of well operational content, as core through sales focused

word-of-mouth spending improved and the spending prudent enrollment, And our lower generate to operational overall value overall helped management referrals more of and continue lifetime also general margins. maximize We finally, R&D of and renewal students. management and

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

of or a has For a reached US$XX.X for loss the the XXXX, same for Non-GAAP same months compared income million, in period million million the period net loss XXXX. RMBXXX.X to the XXXX, million, of to of RMBXXX.X million was nine income net net or million, of compared nine US$XX.X months RMBXXX.X net RMBXXX of XXXX. of non-GAAP

in compared to US$XX the the of per third the XXXX, the in of RMBX.XX, third loss per loss to or of ADS Diluted on was of income ADS quarter EPS Now, quarter income in per per ADS XXXX, side, of third or basic compared RMBX.XX was ADS RMBX.XX US$X.XX XXXX. XXXX. RMBX.XX quarter third the quarter in of

for months basic RMBX.XX nine of of of quarters of Diluted XXXX. was ADS compared ADS income RMBXX.XX period per the period months ADS XXXX, XXXX, the loss per XXXX, For per of compared income the for of nine same the to was three of XXXX. ADS for RMBX.XX loss the for RMBXX.XX to same per

compared XXXX, in As which decreasing the of repaid net and negative cash XXXX. [indiscernible], also lower increased, balance, RMBXX RMBXX.X the US$X deferred by first million end recognized operating working period. the in cash past was teaching nine outflow expenditures mainly we or million, of the as IT contributed million from the and of of million used or of million first Net million purchasing or Capital capital. US$XX.X outflow nine bank in cash equipment year September due from last cash as quarters. RMBXX.X a during the in The XXXX decrease XX, balance from from RMBXX.X or and mainly the contributed to from was collected than time education cash, million period GAAP revenue decrease total US$X.X This million, centers. activities were the in three of months same of revenue repurchase investing for to was deposits IT RMBXX.X Share renovate of to US$X.X the payments of million, professional equivalents, XXXX US$X.X months cash short-term to or million resulted in RMBXXX.X activities to months was changes nine outflow in million loan. XXXX the

as our the decrease of fourth forward, of will and control. in business operations to from to positive the affect period uncertainties, the with my section. share a fourth Going received cash enrollment well healthy financial last as quarter. to equivalent Despite year. expected flow cash efficiency operating offline our pandemic in strive students of the fixed and And we operational will improvement centers, as COVID-XX continues the and for same quarter, mobility compared a as normal continued and with spending the the the outlook maintain year-end the That Nancy highlights quarter, fourth balance to concludes revenue towards guidance cash you

Wei, third for quarter summary [Foreign the financial Language] XXXX. for of Thank you, our Ms. of your performance

reduce the In activities some turning [Foreign [ph]. outlook supply the Now, to for [travelers] [clear company's the quarter. have to [ph] fourth cities Language] situation, business and to the complex contain measures] social of pandemic

expect impacting operations, mobility in and the revenue enrollments students' to offline limit our measures thereby and quarter. We our centers these fourth

our student control where of have [we of of had operate] [ph] XX% of which training normal IT professional to affected measures, Specifically, XX XX COVID-related of various operations XX% our currently them centers out centers. and education

provide the Despite our company's RMBXXX class million to the financial we company's XX% which reflects operating market the With over participation. quarter represents quarter estimate, net [Foreign which total million uncertainty, The about the of continue guidance our education on potential fourth between will to XXXX student the environment expected may XX% the market. decrease impact cost we However, and attendance of remain developed be thanks the for IT of RMBXXX current to services respect years, change. estimate and a to preliminary and of from the we tremendous confident to have conditions, Language] XXXX. short-term OMO-based online guidance, of current services according are system, minimize to to our the company's fourth revenues and

ensure operational delivery competencies services, our while will of [indiscernible] system enhancing grind continue the core referrals the cross to of for and and [delivery to courses, trusted and students build we OMO-based We our will regardless our our [centers] student to quality Moreover, of of delivery enrollments. of quality] the [ph] expand reinforce a our word-of-mouth acquisition status and continue the to product optimize [ph].

Language] improve again Language] take healthy goal revenue [Foreign company's like [indiscernible]. for with the future of I would this positive high we quarter in and to our addition, efficiencies, thank outlook your attention to amid fourth for to operating maintain development operational the spending is COVID-XX [Foreign Above continue controls support. cash and adopt you In guidance. our opportunity the the and will flow achieving

ready questions. We are now for

Thank you. [Operator from Instructions] [Giovanni a And the Investor. question Private first comes Giulio] [ph],

a what's Hello. to be the was so question, into Yes. Thank taking cash Thank enrollment at Good the growth see translating And company growth, up is flow when morning. from positive? for very is second your this but [indiscernible] you you. this and I as achieving going my high not question. rate, company wondering And going there? up preventing high I free what's target? revenue

[Foreign for First Language] asking them. Thanks questions. all of good

free all, cash the cash cash notice cash In flow compared reason. flow the revenue that the on primarily taxes we actually decrease as positive may we of side, due negative in cash First you operating QX, the That's to the to had the flow, had adult, in QX. recognized. flow

free However, we getting of and overall because positive actually positive not controls] actually cash by on [ph] we overall year, because cash expected of to expect the least but recently [that for QX. if don't for for ongoing related COVID-XX, the basis, XXXX, is but expect worse we cash a saw an that we flow at trend actually mere free day, be positive

positive we if we get at for be profitable So, for that relaxed this most financials, should free look that, having COVID-related are of our said year. we cash are But next actually actually you XXXX, restrictions confident as year.

fairly and as promotions [children] inherent up are [ph], like going have going when influence So, One that's to brand to advantage is, actually easy especially renew have of and is of are opportunities why there up accumulated the second education, we STEAM from sort Two reasons. for part, And them our IT time-to-time. and much. revenue first enrollment strong then for is part. very usually take we not

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the COVID-related expect forward, again, [exactly] [ph]. we those enrollments like consumption same once Now got or pace] courses [in Hope versus in of [ph] revenue going recognition restrictions the fully question. relaxed, answers more your the

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

may all disconnect. You