17 Education & Technology (YQ) 14 Sep 222022 Q2 Earnings call transcript

Good evening, and good morning, ladies and gentlemen, and thank you for standing by for 17EdTech's First [ph] Quarter 2022 Earnings Conference Call. At this time all participants are in listen-only mode, after the Management's prepared remarks there'll be a question-and-answer session.

As a reminder today's conference call is being recorded. I'll now turn the meeting over to your host for today's call, Ms. Lara Zhao, 17EdTech's Investor Relations Manager. Lara. proceed, Please

Hello, today. operator. thank for you Thank everyone, us joining you, and

Our and earlier our distributed earnings was release today IR is website. on available

your and available performance Mr. our remarks. guidance. Joining during Executive session will Chief will questions walk today are discuss our Andy financial to followed Andy Founder, us They after latest by through business who Mr. Financial Officer. and Officer; strategies Q&A will Du, Michael prepared Chairman and answer you Director and be and performance the Liu, the Chief Michael

I applicable actual current Andy, Before These to results, information to these factors to control. conference achievements management's business risks statements U.S. known not does and other new Exchange our which the of we are begin, now statements Chairman the go many to forward-looking any and conditions review to I'd and performance Act strategic market differ in obligation update involve law. under result information, the a regarding like beyond with that will or and as Securities direction. of current required known the to are call upon materially. otherwise, operating expectations further development and and some of forward-looking events or is cause all XXXX. as SEC. Officer, remind XXXX to and ahead. risks, as turn Further Private you events Executive Chief our uncertainties risks please are based Securities over call company's in and company may that and forward-looking which Section The except or this and included filings of company's difficult U.S. the other the the undertake Litigation any factors, contains uncertainties XXE Reform of of defined of statements predict These relate company's Act

our Thank second Call. you us all quarter Lara. for on Earnings joining Hello, Thank everyone. you, XXXX

Before release I on like unless mention would stated. numbers operation that in information the to presented this the a are all begin, continuing financial numbers based otherwise and we on are RMB, and non-GAAP basis,

to glad a in are report the solid quarter. second We performance

you details, go we into me the highlights. update let some quick with Before

Firstly, SaaS million in XX.X% This June. achieved of end higher of XXX.X higher we our in recorded second earlier business. of through RMB quarter revenues the estimates the from net and revenue than learning provided XXXX. teaching contribution our top was

XXXX, Secondly, GAAP same and to the substantially efficiency our non-GAAP compared to consecutive three achieve business a net on profitability recorded with period improve, allowing we in continues operational the net quarters. us loss narrowed basis last for a

of SaaS demand and and momentum Thirdly, quarter. company's proportion in our authorities, from and this offerings contributing teaching the relevant an new one gained increasing the revenues learning net further strong and government have recognition

Now some let details. go me into more

Let's our SaaS start with in-school business. teaching learning and

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total months for online collect authorities. between precision of X quarter content helping outbreaks a after It and is copies XXXX, XX During adaptive China's The industry. of the authorities the qualified users. recognized the implementation, various million system completed played waves capability of value second its of in provide information high-quality digital a in XXEdTech's of system teaching and illustration well schools system In communication of for interactive the education our have and around by our XXX,XXX learning students and in is delivery, of assignments clear a significant used the cumulatively. teaching study COVID transformation environment role home a a our pioneering

continuous the case to system teaching data market transformation as efficiently and see enhanced implement the the life project to big materialize of be based learning homework adaptive greater across illustrate is continue a personalization opportunities have successfully business. make potential further Chinese of digital in data influence and system its SaaS progress, the education teaching. over to flagship our backdrop demonstration technology, and Chinese learning during of and the The We learning Minhang learning and Smart most progress offerings. individual education China. in we scenario and efficiency data-driven and teaching with homework in MOE, levels Only ability government's endeavor demand focused for by effectively the value and Minhang also only collect has the teaching and we noted ideal OneSmart It providing on SaaS for entire throughout which precision not our work been has to homework The and of intelligent cities key substantial requirement is process achieved. or loop collection. be teaching that a improving is to data can designed is District support the education differentiated of truly and intelligent National delivered district, districts

how Our application and normalized enables a precise example solution well relevant of teaching become flagship individualized operators. has meeting system by homework the required clear such a

reduction required While burden reducing teaching and improving policy. by of the schools double and students efficiencies and learning

sales As agents channels distribution our enlarge we partnership local our to XX signed over distribution into agreements have with network. we range, a broader expanded

model solution, building recurring that overall a combining one-stop although teaching response current and upfront also service, billing in This reduction offerings popularity gain the the market needs deeper model will is us Higher recurring given for local of market billing the of meanwhile, normalized In financial prevalent healthy of because versus real the -- software, from promotion confident learning to increasing our schools of among profile, penetration. the the revenue of customers. the recurring of by models, actively expected one are a stream. and traditional lead means such the building cost with We a and SaaS is Ministry and authorities to hardware application-based of proportion not exploring model steady predictable education. procurement procurement potential model company currently also includes our SaaS revenue the and ongoing

a bureau recurring building on local to SaaS model this operated and We feedback product positive have already seen the education such be recent expected from under obtain model.

targeted momentums line to self-directed we projects to learning a and student few positive government's improve fulfill and see learning QX these businesses, based in our and revenue are the the Compass with feedback being on earned regulation. content key terms turned customized national our continue demands deduction milestones learning policy, In model product explore into glad of with reputation and provide Earth will new marks parent to in students diverse we of with business double are after recognized. and the

deploy our business in more our business determined we even opportunities an strategies network amount we saw new nationwide, arising. grew of sales As expand our and increasing and SaaS opportunities

SaaS revenues the learning Looking business ahead, overall teaching quarters. in and coming proportion to expect our the a to we significant continue

Chinese us synergistic and science ingenuity digital platform, a upgrading burdens and reform. driven will We industry, contributions that to the promotion improving education the to of school high-quality education build education of and are transformation helping by and efficiency of the between of technology with in Chinese reducing confident linkage students education enable the and campus making business schools,

performance. Now Thank I will Michael, turn CFO, you the call latest you. walk to our over to financial our through

Andy, performance care, I be you, and potential Thanks, everyone, I should and subject XXXX corresponding introduced model, in a as the to to present talk for and reference series seasonality workforce. results. about will adjustment are business all the and future operating presented to here like in remind walk RMB will and of with our and terms. data regulations joining organization be the now through a call. events quarterly our from financial that results one-off would to financial result you we our you impacts note of Please that potential thank taken I

is tutoring our purely XXXX seized businesses. of the quarter third officially operation K-XX continuing we quarter and our from revenue after second generated online services The of

with quarter of second strategy momentum positive the shown has business the learning in and quarter teaching SaaS during new in-school second XXXX. Our additional delivery seeing businesses

a As adjusted are an improved operational our efficiency, for basis consecutive delighted quarters. we result three profitability net of to on last the record

Next, in detail. second quarter I greater through will go our financials

the end RMB latest were of XXXX. the million, year-over-year services mainly by of RMB XXX.X our be revenue XXX.X decrease of decrease Our quarter of to compliance in the XX.X% cessation tutoring due in with to the second was a million XXXX representing PRC K-XX The regulation. online net from

tutoring net offerings excluding quarter with XXXX million year-over-year revenue to X.X the with XX.X of when of second of of during our Gross the the and XXXX, XX.X decrease quarter of line revenue of from second when quarters. the RMB which a for net teaching in XX.X% over was period, tutoring second from representing compared increased contributing XXX in XX revenue decrease the online quarter decrease growth from XXX.X of previous million, million new XX% profit of is compared representing K-XX second representing million the largely RMB the of business year-over-year the SaaS company's second XXX.X and in a services RMB for was an significantly RMB proportion million, company under XX.X% the with regulatory quarter net online environment. K-XX was However, the of compared with increasing those second RMB million revenues XXXX in XX.X% margin learning to XXXX due quarter Cost of in of our cessation from XXXX. in the same The revenue, times. the was XXXX. for quarter net RMB Gross a services, the

quarter in well million, expenses. for million operating total compensation a from quarter decrease representing XXXX XXXX of Net with compared XXXX expenses saved and RMB was RMB expenses quarter quarter was from were the quarter percentage RMB of XX.X second a share-based were in decrease XX.X% expenses, XXXX optimization XX.X% quarter of of adjustment. saving adjustment. including from XXXX. quarter second business from This Loss quarter The stock million of XXXX. staff million, loss of to second the quarter RMB million which second $XXX.X and expenses decrease XXX.X% RMB decrease compared XXX.X XX.X%, side, G&A of was included million, The result represented a This of primarily was as Sales revenue the RMB was XXXX of XXXX. the second loss of second compensation RMB of XXXX. XX.X RMB expense second X.X percentage since our revenues XXXX share-based total of the representing the Loss quarter XXX.X business the decrease from regulatory quarter XX.X% line with negative the million expenses. RMB the included decrease year-over-year of in which second XX.X year-over-year in million compared marketing environment, a XXX.X of of second XXXX. decrease of optimization of XX.X XXXX. from RMB operating narrowed as operations of negative a a attributed expenses of mainly in as R&D XX.X% million the due the million to in XXXX advertising for X.X quarter and expenses million the and of the the with was RMB XX.X% million second representing million, RMB significantly change XXXX. measures of XX.X% of year-over-year of in for loss line of the in XXXX. quarter attributable year-over-year optimization with for the second XX.X change. expenses the the net quarter was of promotional for a XXXX of was as RMB in primarily with were to operations cost staff negative negative quarter second in expenditures for XXX.X compensation regulatory includes second XX.X% as a compensation second XX.X Net quarter million million expenses net second million of second expenses XXX.X the This XX.X in in share-based the the in for from of which share-based RMB On expense [ph] was

Adjusted in on change. now fluctuate in XXX.X net XXXX, second the net on negative of the does and between I products bidding a quarter learning our and and relatively revenues the derived typically the million net of a and control education that to others. million. K-XX transformation adjusted project It our basis with you. compared session. estimated for revenues current we that bureaus revenue business net in improved third of Please subject our COVID I factors the especially business Safe Tutoring online such was differ significant be of for million the generated might and the Operator, income revenues RMB is the remarks. forward-looking we to Q&A of needs and of process. range project to in GAAP RMB estimated This revenues means will be for our compared XX.X% reflects inevitably in services our a positive results second is due are our factors like and note of XXXX of it to due entirely small from RMB concludes Our could the include prepared statement begin online represents from tutoring the adjusted therefore, net quarter thus to in through schools in With statements. third process, cause we bidding legacy with Harbor This Total increase not our recognition million as company's to quarters XXXX. of from base also second period. delay net of process services. a factors is XXXX teaching of would the that, our potential as third from quarter long contained to contained positive XXXX. to forecast from subject loss net XXX those ramp-up of actual early income estimates, to The over, This quarter XXX refer the are materially quarter revenue from the to and that, quarter second cycle K-XX that XXXX. Thank earnings release was business current limited expected have quarter to involve review year-over-year ready any preliminary outbreaks quarter With for delivering the RMB ongoing revenue as that go an SaaS percentage X.X X.X% progress Based quarter substantially outlook. provide XXEdTech's a for above XXXX

[Operator Instructions] [ph] the questions line from of from your Lee line Hedge with question. We Tom proceed Mr. Please Chong proceed. is Capital. have your Lee, now open, please

announced Yes. has My share the question year. that plan buyback is last management

And to so the of what's process we plan so far? want buyback share know the

this share for me program November. We Thanks announced a the take question. last question. Let buyback Yes.

shares in the actually are far. we of buying progress at so the speed a back We continually consider appropriately that

buyback of will -- Our have In continue number such plan reports, is share we the to periodic used. the about programs. we amount detailed shares buyback later numbers and provide

you have that to achievement much. the achieved. guys very congratulations also you Thank And Fantastic.

no call questions management. to line. continue. the back from the are there And the May I Instructions] phone hand [Operator Please further

you, operator. Management behalf for XXEdTech's team, closing, like to you today's your In of participation thank Thank we'd call. on on

any please require feel free Thank reach joining today. you This us information, to concludes for out If to directly. the us you call. further

for participating. you Thank

You may now disconnect.