Ambow Education Announces First Quarter 2020 Financial Results

Rhea-AI Summary

Ambow Education Holding Ltd. (AMBO) reported a 28.2% decrease in net revenues for Q1 2020, totaling US$12.7 million, compared to US$17.7 million in Q1 2019, primarily due to pandemic-related school closures. Gross profit dropped 72.4% to US$1.6 million, resulting in a gross profit margin of 12.6%.

Despite these challenges, the company achieved a net income of US$0.8 million, rebounding from a net loss of US$3.5 million in the previous year. As of March 31, 2020, Ambow maintained strong cash resources of US$30.4 million.

Positive

• Net income of US$0.8 million compared to a loss of US$3.5 million YoY.
• Acquisition of NewSchool expands educational offerings.
• Strong cash resources of US$30.4 million.

Negative

• 28.2% decline in net revenues to US$12.7 million.
• 72.4% decrease in gross profit to US$1.6 million.
• Deferred revenue growth stagnated at US$23.9 million due to tuition collection delays.

BEIJING, July 9, 2020 /PRNewswire/ -- Ambow Education Holding Ltd. ("Ambow" or the "Company") (NYSE American: AMBO), a leading national provider of educational and career enhancement services in China, today announced its unaudited financial and operating results for the three-month period ended March 31, 2020.

"Against the backdrop of the unprecedented COVID-19 pandemic, our goal of empowering learning and teaching through technology has never been more relevant," said Dr. Jin Huang, Ambow's President and Chief Executive Officer. "With our strategic efforts to invest in technological advancements and educational service innovation, we remain committed to providing our learners with high-quality educational resources, ensuring a superior online education experience across our platform. For instance, we launched live streaming classes that are embedded with various interactive tools that dramatically enhance the engagement between students and teachers on our learning platform. We also introduced online practice training and career planning programs to help undergraduates and employees better prepare themselves in an increasingly challenging job market. By leveraging our leading position and strong network in the career enhancement services market, in collaboration with 6,000 enterprises, we organized online job fairs that enabled remote interviews, extending extra exposure for undergraduates seeking jobs."

Dr. Huang continued, "The outbreak of COVID-19 since the beginning of this year has adversely impacted the entire education industry. Our first quarter 2020 revenue performance was negatively impacted as a result of the suspension of our K-12 schools and offline tutoring services due to quarantine measures. With daily life in China gradually returning to normal since April, our schools reopened in April with the health and safety of our students and faculty a paramount priority. We are confident in our ability to navigate through the dynamic markets and capitalize on the elevated opportunities presented by the accelerated adoption of online education around the world."

"I am also pleased that we made another significant addition to our portfolio of international assets in the first quarter as we completed the acquisition of NewSchool of Architecture and Design, LLC ("NewSchool"), a San Diego-based higher learning institution. This acquisition underlines Ambow's vision to roll out a cross-border educational service platform, bringing unique learning and career advancement opportunities to students," concluded Dr. Huang.

First Quarter 2020 Financial Highlights

• Net revenues for the first quarter of 2020 decreased by 28.2% to US$12.7 million from US$17.7 million in the same period of 2019. The decrease was primarily due to fewer services provided at the Company's K-12 schools and tutoring centers as operations during the quarter were temporarily suspended due to the outbreak of COVID-19, partially offset by revenue from NewSchool, acquired in the period.
• Gross profit for the first quarter of 2020 decreased by 72.4% to US$1.6 million from US$5.8 million in the same period of 2019. Gross profit margin was 12.6%, compared with 32.8% for the first quarter of 2019. The decrease in gross profit and margin was mainly attributable to the decrease of net revenues.
• Operating expenses for the first quarter of 2020 decreased by 19.1% to US$7.2 million from US$8.9 million for the same period of 2019. The decrease was primarily attributable to less expenditures due to the temporary suspension of operations at schools and tutoring centers in the period as part of the national pandemic containment effort, and stringent expense controls to improve operating efficiency.
• Net income attributable to ordinary shareholders in the first quarter of 2020 was US$0.8 million, or US$0.02 per basic and diluted share, compared with a net loss of US$3.5 million, or US$0.08 per basic and diluted share, for the first quarter of 2019.
• As of March 31, 2020, Ambow maintained strong cash resources of US$30.4 million, comprised of cash and cash equivalents of US$14.2 million and short-term investments of US$16.2 million.
• As of March 31, 2020, the Company's deferred revenue balance was US$23.9 million, representing a slight increase compared with US$23.7 million as of December 31, 2019. Due to the temporary suspension of school operations to contain COVID-19, the Company postponed tuition and fee collection in its K-12 schools during the first quarter which led to the lower-than-usual increase in deferred revenue.

The Company's first-quarter 2020 financial and operating results can also be found on its Form 6-K filed with the U.S. Securities and Exchange Commission at www.sec.gov.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all amounts translated from RMB to U.S. dollars for the first quarter of 2020 are based on the effective exchange rate of 7.0808 as of March 31, 2020; all amounts translated from RMB to U.S. dollars for the first quarter of 2019 are based on the effective exchange rate of 6.7112 as of March 29, 2019; all amounts translated from RMB to U.S. dollars as of December 31, 2019 are based on the effective exchange rate of 6.9618 as of December 31, 2019. The exchange rates were according to the middle rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

About Ambow Education Holding Ltd.

Ambow Education Holding Ltd. is a leading national provider of educational and career enhancement services in China, offering high-quality, individualized services and products. With its extensive network of regional service hubs complemented by a dynamic proprietary learning platform and distributors, Ambow provides its services and products to students in 30 out of the 31 provinces and autonomous regions within China.

Follow us on Twitter: @Ambow_Education

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the outlook and quotations from management in this announcement, as well as Ambow's strategic and operational plans, contain forward-looking statements. Ambow may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements, including but not limited to the following: the Company's goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company's expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Ambow undertakes no duty to update such information, except as required under applicable law.

For investor and media inquiries, please contact:

Ambow Education Holding Ltd.
Tel: +86-10-6206-8000

The Piacente Group | Investor Relations
Tel: +1-212-481-2050 or +86-10-6508-0677
E-mail: ambow@tpg-ir.com 

 

 

 

AMBOW EDUCATION HOLDING LTD. UNAUDITED CONSOLIDATED BALANCE SHEETS (All amounts in thousands, except for share and per share data)
			As of March 31,		As of December 31,
			2020		2019
			US$		RMB		RMB
ASSETS
Current assets:
Cash and cash equivalents			14,210		100,619		157,600
Restricted cash			2,001		14,170		-
Short term investments, available for sale			14,785		104,692		57,487
Short term investments, held to maturity			1,412		10,000		31,000
Accounts receivable, net			3,174		22,472		17,939
Amounts due from related parties			317		2,246		2,318
Prepaid and other current assets, net			22,542		159,618		133,296
Total current assets			58,441		413,817		399,640
Non-current assets:
Property and equipment, net			21,976		155,606		157,463
Land use rights, net			247		1,748		1,759
Intangible assets, net			8,695		61,567		56,607
Goodwill			8,659		61,313		60,353
Deferred tax assets, net			538		3,811		10,195
Operating lease right-of-use asset			42,809		303,120		257,361
Finance lease right-of-use asset			890		6,300		6,450
Other non-current assets, net			11,900		84,261		70,971
Total non-current assets			95,714		677,726		621,159
Total assets			154,155		1,091,543		1,020,799
LIABILITIES
Current liabilities:
Deferred revenue  *			23,858		168,933		165,111
Accounts payable  *			1,781		12,615		14,718
Accrued and other liabilities  *			28,059		198,681		192,957
Income taxes payable, current  *			26,507		187,691		180,715
Amounts due to related parties  *			278		1,971		1,971
Operating lease liability, current  *			8,018		56,774		53,512
Total current liabilities			88,501		626,665		608,984
Non-current liabilities:
Income taxes payable, non-current  *			4,564		32,315		32,152
Operating lease liability, non-current  *			37,158		263,109		216,067
Total non-current liabilities			41,722		295,424		248,219
Total liabilities			130,223		922,089		857,203
EQUITY
Preferred shares
(US$ 0.003 par value;1,666,667 shares    authorized, nil issued and outstanding as of     December 31, 2019 and March 31, 2020)			-		-		-
Class A Ordinary shares
(US$0.003 par value; 66,666,667 and     66,666,667 shares authorized, 38,858,199     and 38,870,699 shares issued and     outstanding as of December 31, 2019 and     March 31, 2020, respectively)			103		730		730
Class C Ordinary shares
(US$0.003 par value; 8,333,333 and 8,333,333     shares authorized, 4,708,415 and 4,708,415     shares issued and outstanding as of     December 31, 2019 and March 31, 2020,     respectively)			13		90		90
Additional paid-in capital			495,563		3,508,983		3,508,745
Statutory reserve			2,851		20,185		20,185
Accumulated deficit			(475,422)		(3,366,370)		(3,371,815)
Accumulated other comprehensive income			978		6,928		6,341
Total Ambow Education Holding Ltd.'s equity			24,086		170,546		164,276
Non-controlling interests			(154)		(1,092)		(680)
Total equity			23,932		169,454		163,596
Total liabilities and equity			154,155		1,091,543		1,020,799
*  All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets.

 

 

 

AMBOW EDUCATION HOLDING LTD. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (All amounts in thousands, except for share and per share data)
		For the three months ended March 31,
		2020		2020		2019
		US$		RMB		RMB
NET REVENUES
Educational program and services		12,748		90,267		118,185
Intelligent program and services		2		12		461
Total net revenues		12,750		90,279		118,646
COST OF REVENUES
Educational program and services		(10,936)		(77,433)		(78,197)
Intelligent program and services		(183)		(1,298)		(1,858)
Total cost of revenues		(11,119)		(78,731)		(80,055)
GROSS PROFIT		1,631		11,548		38,591
Operating expenses:
Selling and marketing		(1,490)		(10,549)		(14,088)
General and administrative		(5,536)		(39,2

FAQ

What were Ambow Education's Q1 2020 financial results?

Ambow reported Q1 2020 net revenues of US$12.7 million, a 28.2% decrease from US$17.7 million in Q1 2019.

How did COVID-19 affect Ambow Education's performance?

COVID-19 led to a suspension of K-12 services, causing significant revenue decline and a temporary delay in tuition collection.

What is Ambow Education's net income for Q1 2020?

Ambow reported a net income of US$0.8 million for Q1 2020, recovering from a net loss of US$3.5 million in the same quarter last year.

What are the key highlights from Ambow's Q1 2020 report?

Key highlights include a net income of US$0.8 million, revenue decline due to COVID-19, and acquisition of NewSchool.

What is Ambow Education's stock symbol?

Ambow Education's stock symbol is AMBO, traded on the NYSE American.