BEIJING, Jan. 17, 2022 (GLOBE NEWSWIRE) — 17 Schooling & Know-how Group Inc. (NASDAQ: YQ) (“17EdTech” or the “Firm”), an schooling expertise firm in China, at the moment introduced its unaudited monetary outcomes for the third quarter ended September 30, 2021.
The Common Workplace of the CPC Central Committee and the Common Workplace of the State Council revealed the “Opinions on Additional Assuaging the Burden of Homework and After-College Tutoring on College students in Obligatory Schooling” in July 2021 (the “Opinion”), often known as the double discount coverage (the “Double Discount Coverage”), and competent authorities promulgated the associated implementation guidelines, rules and measures (collectively, the “New Laws”). The Firm supplied updates on new rules and regulatory improvement on July 26, 2021 and August 25, 2021.
In compliance with the New Laws, the Firm ceased providing tutoring providers associated to educational topics to college students from kindergarten by the final 12 months of senior highschool (“Okay-12 Educational AST Providers”) in mainland China by finish of 2021, which accounted for 94.1% of the Firm’s internet revenues in fiscal 12 months 2020. The publication and enforcement of the Opinion and relevant guidelines additionally resulted in a major lower in MAUs[1] of the Firm’s in-school functions for college kids. The Firm have rapidly shaped new enterprise methods underneath the brand new regulatory and enterprise surroundings and took measures to regulate our group and workforce in a bid to cut back our operation prices. The Firm additionally shifted its focus and assets from authentic operations in the direction of two new instructions.
Mr. Andy Liu, Founder, Chairman and Chief Govt Officer of 17EdTech commented, “We have now rapidly shaped new enterprise methods in response to the brand new regulatory surroundings. Leveraging our in depth information and experience gathered by serving schooling authorities, colleges, academics, and college students in China over the previous decade, we’ve got tailored our enterprise and organizations to give attention to two key enterprise areas. We launched our new educating and studying SaaS choices as an improve to our earlier in-school services and products. The brand new choices are geared toward facilitating the digital transformation and improve of Chinese language colleges, with a give attention to enhancing the effectivity and effectiveness of core educating and studying eventualities equivalent to homework assignments and in-class educating. We have now efficiently entered into in-depth cooperations with various regional schooling authorities throughout a number of districts in China, together with Shanghai Minhang District and Beijing Xicheng District, that are among the many 10 case research chosen by the Ministry of Schooling’s Common Workplace for the implementation of the Opinion. Initiatives of various scales are already being carried out utilizing our educating and studying SaaS merchandise throughout greater than 50 cities.”
———————————————— [1] Common MAUs for a sure interval is calculated by dividing (i) the sum of month-to-month energetic customers (MAUs) for every month of such interval by (ii) the variety of months in such interval. MAU for every month is the variety of customers that logged in to the in-school functions in that month at the very least as soon as. When calculating MAU, every account is handled as a definite consumer.
“We have now began to supply a personalised self-directed studying product to Chinese language households instead to the dad and mom for the unique after-school tutoring providers that we supplied traditionally, which isn’t a tutoring service. The product makes use of our expertise and information insights to supply customized and focused studying and train content material that’s geared toward enhancing college students’ studying effectivity. We’re comfortable to see greater than 300,000 paid subscriptions to this product since we launched this product round a month in the past,” Mr. Liu continued.
Mr. Michael Du, 17EdTech’s Director and Chief Monetary Officer, commented, “We’re happy to share that we’ve got shaped clear new enterprise methods for our future progress and have made immediate adjustment to our group to accommodate these methods. The overwhelming majority of the adjustment to our operations and workforce, and the related one-off bills have taken place by the tip of September 2021. We shall be working with an goal of rapidly turning worthwhile within the close to time period. As of September 30, 2021, our money and money equivalents had been RMB1,422.Four million (US$220.7 million). We imagine we’ve got enough capital to assist the transformation of our enterprise and develop our new companies.”
Third Quarter 2021 Highlights[2]
Internet revenues had been RMB496.Eight million (US$77.1 million), which represented a year-over-year improve of 61.8% from RMB307.1 million within the third quarter of 2020.Internet revenues from on-line Okay-12 tutoring providers had been RMB477.7 million (US$74.1 million), representing a year-over-year improve of 66.0% from RMB287.Eight million within the third quarter of 2020.Gross billings of on-line Okay-12 tutoring providers[3] (non-GAAP) had been RMB301.6 million (US$46.Eight million), representing a year-over-year lower of 34.6% from RMB461.2 million within the third quarter of 2020.Paid course enrollments[4] had been roughly 226 thousand, representing a year-over-year lower of 42.5% from roughly 393 thousand within the third quarter of 2020.Gross margin was 49.4%, in contrast with 53.8% within the third quarter of 2020.Internet loss was RMB489.9 million (US$76.Zero million), lowering from internet lack of RMB580.9 million within the third quarter of 2020.Adjusted internet loss[5] (non-GAAP), which excluded share-based compensation bills of RMB33.Three million (US$5.2 million), was RMB456.6 million (US$70.9 million), in contrast with adjusted internet loss (non-GAAP) of RMB520.Eight million within the third quarter of 2020. Adjusted internet loss (non-GAAP) as a share of internet revenues was unfavourable 91.9%, in contrast with unfavourable 169.6% within the third quarter of 2020.Common MAUs of in-school functions for college kids was 11.7 million, representing a year-over-year lower of 29.9% from 16.7 million within the third quarter of 2020. The year-over-year lower in MAUs was primarily attributable to the publication and enforcement of the New Laws.
———————————————— [2] For a reconciliation of non-GAAP numbers, please see the desk captioned “Reconciliations of non-GAAP measures to probably the most comparable GAAP measures” on the finish of this press launch. [3] “Gross billings of on-line Okay-12 tutoring providers” for a particular interval consult with the sum of money acquired from every enrollment of the Firm’s on-line Okay-12 tutoring programs in such interval inclusive of the relevant worth added tax (“VAT”) and surcharges, internet of the entire quantity of refunds in such interval. [4] “Paid course enrollments” for a sure interval consult with the cumulative variety of paid programs enrolled in and paid for by the Firm’s college students, together with a number of paid programs enrolled in and paid for by the identical scholar. [5] Adjusted internet loss represents internet loss excluding share-based compensation bills.
First 9 Months 2021 Highlights
Internet revenues had been RMB1,642.Zero million (US$254.Eight million), represented a year-over-year improve of 103.3% from RMB807.6 million within the first 9 months of 2020.Internet revenues from on-line Okay-12 tutoring providers had been RMB1,602.7 million (US$248.7 million), representing a year-over-year improve of 113.4% from RMB751.1 million within the first 9 months of 2020.Gross billings of on-line Okay-12 tutoring providers (non-GAAP) had been RMB1,674.6 million (US$259.9 million), representing a year-over-year improve of 55.7% from RMB1,075.Four million within the first 9 months of 2020.Paid course enrollments had been roughly 1,952 thousand, representing a year-over-year improve of 67.0% from roughly 1,169 thousand within the first 9 months of 2020.Gross margin was 58.2%, in contrast with 60.1% within the first 9 months of 2020.Internet loss was RMB1,416.Four million (US$219.Eight million), in contrast with internet lack of RMB974.Eight million within the first 9 months of 2020.Adjusted internet loss (non-GAAP), which excluded share-based compensation bills of RMB152.7 million (US$23.7 million), was RMB1,263.7 million (US$196.1 million), in contrast with adjusted internet loss (non-GAAP) of RMB849.Three million within the first 9 months of 2020. Adjusted internet loss (non-GAAP) as a share of internet revenues was unfavourable 77.0%, in contrast with unfavourable 105.2% within the first 9 months of 2020.Common MAUs of in-school functions for college kids was 15.7 million, representing a year-over-year lower of 19.5% from 19.5 million within the first 9 months of 2020.
Third Quarter 2021 Unaudited Monetary Outcomes
Internet Revenues
The next desk units forth a breakdown of whole revenues by quantities and percentages for the intervals indicated (in 1000’s, apart from percentages):
Internet revenues for the third quarter of 2021 had been RMB496.Eight million (US$77.1 million), which represented a year-over-year improve of 61.8% from RMB307.1 million within the third quarter of 2020. The rise was primarily pushed by a rise in internet revenues from on-line Okay-12 tutoring providers.
Internet revenues from on-line Okay-12 tutoring providers for the third quarter of 2021 had been RMB477.7 million (US$74.1 million), representing a year-over-year improve of 66.0% from RMB287.Eight million within the third quarter of 2020, accounting for 96.1% of whole internet revenues within the third quarter of 2021. The year-over-year improve in internet revenues from on-line Okay-12 tutoring providers was primarily pushed by a rise in paid course enrollments within the second quarter of 2021 and the correspondent revenues had been acknowledged within the third quarter of 2021. Paid course enrollments for the third quarter of 2021 had been roughly 226 thousand, representing a year-over-year lower of 42.5% from roughly 393 thousand within the third quarter of 2020 as a result of enforcement of the Double Discount Coverage.
Internet revenues from different academic providers for the third quarter of 2021 had been RMB19.2 million (US$3.Zero million), representing a year-over-year lower of 0.7% from RMB19.Three million within the third quarter of 2020.
Price of Revenues
Price of revenues for the third quarter of 2021 was RMB251.Four million (US$39.Zero million), which included severance prices for discount of instructors and tutors as a result of influence of the New Laws and represented a year-over-year improve of 77.2% from RMB141.9 million within the third quarter of 2020. The rise was primarily as a consequence of will increase in compensation prices for instructors and tutors because the Firm supplied providers to extra college students, which was largely in step with the expansion of the Firm’s internet revenues from on-line Okay-12 tutoring providers throughout the identical interval.
Gross Revenue and Gross Margin
Gross revenue for the third quarter of 2021 was RMB245.Four million (US$38.1 million), representing a year-over-year improve of 48.5% from RMB165.2 million within the third quarter of 2020. The rise was primarily pushed by the rise within the internet revenues.
Gross margin for the third quarter of 2021 was 49.4%, in contrast with 53.8% within the third quarter of 2020. The lower was attributable to the severance prices for discount in staffing acknowledged within the third quarter of 2021, on account of the influence of the New Laws.
Whole Working Bills
The next desk units forth a breakdown of working bills by quantities and percentages of internet revenues for the intervals indicated (in 1000’s, apart from percentages):
Whole working bills for the third quarter of 2021 had been RMB743.7 million (US$115.Four million), together with share-based compensation bills of RMB33.Three million (US$5.2 million), representing a year-over-year improve of 0.8% from RMB738.1 million within the third quarter of 2020.
Gross sales and advertising bills for the third quarter of 2021 had been RMB388.6 million (US$60.Three million), together with share-based compensation bills of RMB7.1 million (US$1.1 million), representing a year-over-year lower of 21.6% from RMB495.6 million within the third quarter of 2020. The lower was primarily as a consequence of decreases in model commercial and promotional course[6] bills, which had been partially offset by a rise in salaries and welfare for gross sales and advertising personnel, which had been primarily resulted from severance prices for discount of gross sales and advertising personnel within the third quarter of 2021 as a result of influence of the New Laws.
Analysis and improvement bills for the third quarter of 2021 had been RMB201.2 million (US$31.2 million), together with share-based compensation bills of RMB12.Zero million (US$1.9 million), representing a year-over-year improve of 31.0% from RMB153.5 million within the third quarter of 2020. The rise was primarily as a consequence of a rise in salaries and welfare for analysis and improvement personnel, which had been primarily resulted from severance prices for discount of analysis and improvement personnel within the third quarter of 2021 as a result of influence of the New Laws.
Common and administrative bills for the third quarter of 2021 had been RMB123.1 million (US$19.1 million), together with share-based compensation bills of RMB14.2 million (US$2.2 million), representing a year-over-year improve of 38.4% from RMB89.Zero million within the third quarter of 2020. The rise was primarily as a consequence of a rise in salaries and welfare for normal and administrative personnel, which had been primarily resulted from severance prices for discount of normal and administrative personnel within the third quarter of 2021 as a result of influence of the New Laws.
Impairment for property and tools, right-of-use property and rental deposits for the third quarter of 2021 had been RMB30.Eight million (US$4.Eight million), in contrast with nil within the third quarter of 2020. Because of the adjustments in regulatory surroundings within the on-line schooling trade, mixed with the Firm’s monetary efficiency, the Firm carried out an impairment evaluation on its long-term property and acknowledged impairment losses within the third quarter of 2021.
———————————————— [6] Promotional course refers back to the on-line Okay-12 large-class after-school tutoring programs which can be free.
Loss from Operations
Loss from operations for the third quarter of 2021 was RMB498.Three million (US$77.Three million), in contrast with RMB572.9 million within the third quarter of 2020. Loss from operations as a share of internet revenues for the third quarter of 2021 was unfavourable 100.3%, in contrast with unfavourable 186.5% within the third quarter of 2020. The advance was as a consequence of enchancment in general operational effectivity.
Internet Loss
Internet loss for the third quarter of 2021 was RMB489.9 million (US$76.Zero million), lowering from internet lack of RMB580.9 million within the third quarter of 2020.
Adjusted Internet Loss (non-GAAP)
Adjusted internet loss (non-GAAP) for the third quarter of 2021 was RMB456.6 million (US$70.9 million), in contrast with RMB520.Eight million within the third quarter of 2020. Adjusted internet loss (non-GAAP) as a share of internet revenues was unfavourable 91.9% within the third quarter of 2021, in contrast with unfavourable 169.6% within the third quarter of 2020.
Please consult with the hooked up desk for a reconciliation of adjusted internet loss (non-GAAP) to internet loss underneath U.S. GAAP.
Share Excellent
As of September 30, 2021, the Firm had 496,622,523 atypical shares issued and excellent.
Money and Money Equivalents
Money and money equivalents had been RMB1,422.Four million (US$220.7 million) as of September 30, 2021, in contrast with RMB2,835.Zero million as of December 31, 2020.
Deferred Income (Present and Non Present)
Deferred income was RMB542.5 million (US$84.2 million) as of September 30, 2021, representing a lower of 9.3% from RMB598.Three million as of December 31, 2020. The lower was primarily attributable to the lower in paid course enrollments within the third quarter of 2021 attributable to the enforcement of the Double Discount Coverage.
Current Developments
In compliance with the New Laws, the Firm ceased providing tutoring providers associated to educational topics to college students from kindergarten by the final 12 months of senior highschool (“Okay-12 Educational AST Providers”) in mainland China by the tip of 2021. The Firm expects that the cessation may have a considerable adversarial influence on the Firm’s revenues for the fiscal 12 months ended December 31, 2021 and subsequent intervals. Within the fiscal years ended December 31, 2019 and 2020, revenues from Okay-12 Educational AST Providers accounted for a considerable majority of the Firm’s whole revenues for every fiscal 12 months.
The Firm appointed Mr. Minghui Wu as a brand new impartial director to the Firm’s board of administrators (the “Board”), efficient on December 2, 2021. After the change, the Board consists of seven administrators, three of whom are impartial administrators. Concurrent with the appointment of Mr. Wu, the Board additional up to date the composition of the Board’s committees in furtherance of excellent company governance.
The Firm modified the ratio of its American Depositary Shares (“ADSs”) to its Class A atypical shares (the “ADS Ratio”), par worth US$0.0001 per share, from the earlier ADS Ratio of two ADSs to 5 Class A atypical shares to a brand new ADS Ratio of 1 ADS to 10 Class A atypical shares. The change within the ADS Ratio took impact on November 17, 2021. All earnings per ADS figures on this announcement give impact to the foregoing ADS to share ratio change.
On November 2, 2021, the Firm introduced that its board of administrators had accepted a share repurchase program whereby the Firm is allowed to repurchase as much as US$10 million value of its atypical shares (together with within the type of American Depositary Shares) over the subsequent 12 months.
Enterprise Outlook
Because of the uncertainty associated to the latest regulatory, working surroundings and the event of recent enterprise focuses, the Firm is not going to problem steering for the fourth quarter of 2021.
Convention Name Info
The Firm will maintain a convention name on Monday, January 17, 2022 at 8:00 p.m. U.S. Jap Time (Tuesday, January 18, 2022 at 9:00 a.m. Beijing time) to debate the monetary outcomes for the third quarter of 2021.
Please notice that each one contributors might want to preregister on-line previous to the decision to obtain the dial-in particulars.
Please notice that contributors have to pre-register for the convention name participation by navigating to http://apac.directeventreg.com/registration/occasion/9799362. As soon as preregistration has been accomplished, contributors will obtain dial-in numbers, an occasion passcode, and a novel registrant ID.
To affix the convention, please dial the quantity you obtain, enter the occasion passcode adopted by your distinctive registrant ID, and you’ll be joined to the convention immediately.
A phone replay shall be out there two hours after the conclusion of the convention name by January 25, 2022. The dial-in particulars are:
Moreover, a stay and archived webcast of this convention name shall be out there at https://ir.17zuoye.com/.
Non-GAAP Monetary Measures
17EdTech’s administration makes use of non-GAAP monetary measures to realize an understanding of 17EdTech’s comparative working efficiency and future prospects. Gross billings of on-line Okay-12 tutoring providers and adjusted internet loss are getting used as non-GAAP measurements in evaluating the working efficiency.
The Firm defines gross billings of on-line Okay-12 tutoring providers for a particular interval because the sum of money acquired from every enrollment of our on-line Okay-12 tutoring programs in such interval inclusive of the relevant VAT and surcharges, internet of the entire quantity of refunds in such interval. The Firm typically payments its college students for your complete course payment on the time of sale of its programs and acknowledges income proportionally because the lessons are delivered over a interval usually lasting 4 months or much less. The Firm additionally gives college students a content material playback service as soon as every of the stay tutoring class is delivered. Within the content material playback service, college students have limitless entry to recorded audio-video content material of the earlier stay tutoring lessons for 3 years. The associated income for playback is acknowledged proportionally over the playback interval. The Firm considers gross billings to be a precious measure for monitoring the gross sales of our on-line programs and the enterprise efficiency of its after-school tutoring providers usually.
Adjusted internet loss represents internet loss excluding share-based compensation bills and such adjustment has no influence on revenue tax.
Gross billings of on-line Okay-12 tutoring providers and adjusted internet loss are utilized by 17EdTech’s administration of their monetary and working decision-making as a non-GAAP monetary measure, as a result of administration believes it displays 17EdTech’s ongoing enterprise and working efficiency in a fashion that permits significant period-to-period comparisons. 17EdTech’s administration believes that non-GAAP measures present helpful data to buyers and others in understanding and evaluating 17EdTech’s working efficiency in the identical method as administration does, in the event that they so select. Particularly, 17EdTech believes the non-GAAP measures present helpful data to each administration and buyers by excluding sure expenses that the Firm believes aren’t indicative of its core working outcomes.
The non-GAAP monetary measures have limitations. They don’t embody all gadgets of revenue and expense that have an effect on 17EdTech’s revenue from operations. Particularly, these non-GAAP monetary measures aren’t ready in accordance with GAAP, will not be similar to non-GAAP monetary measures utilized by different firms and, with respect to the non-GAAP monetary measures that exclude sure gadgets underneath GAAP, don’t mirror any profit that such gadgets might confer to 17EdTech. Administration compensates for these limitations by additionally contemplating 17EdTech’s monetary outcomes as decided in accordance with GAAP. The presentation of this extra data is just not meant to be thought-about superior to, in isolation from or as an alternative to outcomes ready in accordance with US GAAP.
Alternate Fee Info
The Group’s enterprise is primarily carried out in China and the entire revenues are denominated in Renminbi (“RMB”). Nonetheless, periodic studies made to shareholders will embody present interval quantities translated into U.S. {dollars} (“USD” or “US$”) utilizing the change price as of stability sheet date, for the comfort of the readers. Translations of balances within the consolidated stability sheets and the associated consolidated statements of operations, complete loss, change in shareholders’ deficit and money flows from RMB into USD as of and for the three months and the 9 months ended September 30, 2021 are solely for the comfort of the readers and had been calculated on the price of US$1.00=RMB6.4434 representing the midday shopping for price set forth within the H.10 statistical launch of the U.S. Federal Reserve Board on September 30, 2021. No illustration is made that the RMB quantities might have been, or might be, transformed, realized or settled into US$ at that price on September 30, 2021, or at every other price.
About 17 Schooling & Know-how Group Inc.
17 Schooling & Know-how Group Inc. is an schooling expertise firm in China. The Firm offers a wise in-school classroom answer that delivers data-driven educating, studying and evaluation merchandise to academics, college students and fogeys. Leveraging its in depth information and experience obtained from in-school enterprise over the previous decade, the Firm offers educating and studying SaaS choices to facilitate the digital transformation and improve at Chinese language colleges, with a give attention to enhancing the effectivity and effectiveness of core educating and studying eventualities equivalent to homework assignments and in-class educating. The Firm additionally offers a personalised self-directed studying product to Chinese language households, which isn’t a tutoring service. The product makes use of the Firm’s expertise and information insights to supply customized and focused studying and train content material that’s geared toward enhancing college students’ studying effectivity.
Protected Harbor Assertion
This announcement incorporates forward-looking statements. These statements are made underneath the “protected harbor” provisions of the USA Personal Securities Litigation Reform Act of 1995. These forward-looking statements could be recognized by terminology equivalent to “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and related statements. Statements that aren’t historic details, together with statements about 17EdTech’s beliefs and expectations, are forward-looking statements. 17EdTech may additionally make written or oral forward-looking statements in its periodic studies to the SEC, in its annual report back to shareholders, in press releases and different written supplies and in oral statements made by its officers, administrators or workers to 3rd events. Ahead-looking statements contain inherent dangers and uncertainties. Various elements might trigger precise outcomes to vary materially from these contained in any forward-looking assertion, together with however not restricted to the next: 17EdTech’s progress methods; its future enterprise improvement, monetary situation and outcomes of operations; its capability to proceed to draw and retain customers, convert non-paying customers into paying customers and improve the spending of paying customers, the traits in, dimension of, and related authorities insurance policies and rules regarding China’s on-line schooling market; its expectations concerning demand for, and market acceptance of, its services and products; its expectations concerning its relationships with enterprise companions; normal financial and enterprise circumstances; and assumptions underlying or associated to any of the foregoing. Additional data concerning these and different dangers is included in 17EdTech’s filings with the SEC. All data supplied on this press launch is as of the date of this press launch, and 17EdTech doesn’t undertake any obligation to replace any forward-looking assertion, besides as required underneath relevant regulation.
For investor and media inquiries, please contact:
17 Schooling & Know-how Group Inc. Mr. Raymond Huang E-mail: ir@17zuoye.com
Christensen In China Mr. Eric Yuan Telephone: +86-138-0111-0739 E-mail: Eyuan@christensenir.com
In US Ms. Linda Bergkamp Telephone: +1-480-614-3004 E-mail: lbergkamp@christensenir.com