Ambow Education Announces First Quarter 2021 Financial Results

Rhea-AI Summary

Ambow Education Holding Ltd. (AMBO) reported strong Q1 2021 results with a 43.5% year-over-year revenue increase to RMB129.6 million (US$19.8 million). This growth was driven by recovery from COVID-19 and contributions from the recently acquired NewSchool of Architecture and Design. Gross profit surged 287.8% to RMB44.6 million (US$6.8 million), indicating a gross margin of 34.4%. However, the company recorded a net loss of RMB14.3 million (US$2.2 million). Ambow holds RMB281.4 million (US$42.9 million) in cash resources, showcasing its solid financial position.

Positive

• 43.5% year-over-year revenue growth to RMB129.6 million (US$19.8 million).
• Gross profit increased by 287.8% to RMB44.6 million (US$6.8 million).
• Gross profit margin improved to 34.4%, up from 12.7% in Q1 2020.
• Maintained strong cash resources of RMB281.4 million (US$42.9 million).
• Deferred revenue increased by 10.8% to RMB181.3 million (US$27.7 million).

Negative

• Net loss attributable to shareholders was RMB14.3 million (US$2.2 million).
• Operating loss was RMB15.2 million (US$2.3 million), though improved from RMB39.3 million in Q1 2020.

BEIJING, June 28, 2021 /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, 2021.

"We are pleased to start 2021 with better-than-expected first quarter results, highlighted by a 43.5% year-over-year increase in total revenues, thanks to the strong execution of our overall strategy which focuses on operational improvements," said Dr. Jin Huang, Ambow's President and Chief Executive Officer. "Specifically, we further revived solid gross margin expansion for both of our CP&CE Programs and K-12 Schools segments during the quarter, lifting it even higher than the same period in 2019. As a prominent education brand in China, we remain committed to delivering in-demand and high-quality educational services for our learners in their pursuit of academic and professional excellence."

"Supported by our industry-leading intelligent education products, we endeavor to provide superior online talent training to address various career enhancement needs. For example, we cooperated with Kylinsoft to provide a suite of education services across a series of Kylinsoft operating system products, spanning training courses, certification programs, internship placement, employment services and industrial colleges. We also formed a strategic cooperation with Adobe Authorized Training Centre to provide international certification services for Chinese students. Meanwhile, we further integrated advanced technology into our educational services to increase our competitiveness. We launched a blockchain-based career-oriented education skills recognition system to redefine educational accreditation for professional talents. Looking ahead, we will remain focused on harnessing our technological capabilities to offer a broader range of education services in China and U.S., while enhancing operating efficiency. We believe these efforts, coupled with our 20-year proven track record in the education sector, will help us grow our overall business while delivering long-term value to our shareholders," concluded Dr. Huang.  

First Quarter 2021 Financial Highlights

• Net revenues for the first quarter of 2021 increased by 43.5% to RMB129.6 million (US$19.8 million) from RMB90.3 million in the same period of 2020. The increase was primarily due to the full business recovery from the impact of the COVID-19 pandemic and higher revenue contribution from NewSchool of Architecture and Design, LLC ("NewSchool") which was acquired and consolidated by the Company from March 2020.
• Gross profit for the first quarter of 2021 increased by 287.8% to RMB44.6 million (US$6.8 million) from RMB11.5 million in the same period of 2020. Gross profit margin was 34.4%, compared with 12.7% for the first quarter of 2020. The increases in gross profit and margin were mainly attributable to faster growth of net revenues in the period.
• Operating expenses for the first quarter of 2021 increased by 17.5% to RMB59.8 million (US$9.1 million) from RMB50.9 million in the same period of 2020. The increase was primarily attributable to more expenses related to NewSchool compared to the first quarter of 2020 as the consolidation of NewSchool started in March 2020.
• Operating loss for the first quarter of 2021 was RMB15.2 million (US$2.3 million), compared to operating loss of RMB39.3 million in the same period of 2020.
• Net loss attributable to ordinary shareholders for the first quarter of 2021 was RMB14.3 million (US$2.2 million), or RMB0.31 (US$0.05) per basic and diluted share, compared with net income of RMB6.0 million, or RMB0.14 (US$0.02) per basic and diluted share for the same period of 2020. Excluding the one-time gain from bargain purchase of NewSchool of RMB40.3 million, net loss for the first quarter of 2020 was RMB34.3 million or RMB0.79 (US$0.11) per basic and diluted share.
• As of March 31, 2021, Ambow maintained strong cash resources of RMB281.4 million (US$42.9 million), comprised of cash and cash equivalents of RMB121.4 million (US$18.5 million), short-term investments of RMB158.2 million (US$24.1 million) and restricted cash of RMB1.8 million (US$0.3 million).
• As of March 31, 2021, the Company's deferred revenue balance was RMB181.3 million (US$27.7 million), representing a 10.8% increase compared with RMB163.7 million as of December 31, 2020, mainly attributable to the tuition and fees collected at K-12 business segment for the spring semester of the 2020-2021 academic year, and increase in deferred revenue at CP&CE business segment.

The Company's first quarter 2021 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 2021 are based on the effective exchange rate of 6.5518 as of March 31, 2021; 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 as of December 31, 2020 are based on the effective exchange rate of 6.5250 as of December 31, 2020. 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 15 out of the 34 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
Email: ir@ambow.com

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,
			2021				2020
			US$		RMB		RMB
ASSETS
Current assets:
Cash and cash equivalents			18,526		121,381		118,821
Restricted cash			271		1,773		824
Short term investments, available for sale			11,326		74,206		117,854
Short term investments, held to maturity			12,821		84,000		45,000
Accounts receivable, net			2,863		18,758		20,972
Amounts due from related parties			464		3,037		3,024
Prepaid and other current assets, net			18,184		119,136		117,634
Total current assets			64,455		422,291		424,129
Non-current assets:
Property and equipment, net			21,483		140,751		144,492
Land use rights, net			260		1,704		1,715
Intangible assets, net			8,287		54,296		54,808
Goodwill			3,924		25,710		25,710
Deferred tax assets, net			901		5,903		6,338
Operating lease right-of-use asset			36,775		240,945		247,608
Finance lease right-of-use asset			870		5,700		5,850
Other non-current assets, net			21,700		142,176		139,067
Total non-current assets			94,200		617,185		625,588
Total assets			158,655		1,039,476		1,049,717
LIABILITIES
Current liabilities:
Short-term borrowing  *			1,526		10,000		10,000
Deferred revenue  *			27,676		181,325		163,699
Accounts payable  *			2,795		18,311		19,423
Accrued and other liabilities  *			31,273		204,895		209,590
Income taxes payable, current  *			28,298		185,403		184,638
Amounts due to related parties  *			388		2,543		2,543
Operating lease liability, current  *			7,506		49,177		53,702
Total current liabilities			99,462		651,654		643,595
Non-current liabilities:
Long-term borrowing			1,475		9,662		9,594
Other non-current liabilities  *			29		189		292
Income taxes payable, non-current  *			5,368		35,173		34,763
Operating lease liability, non-current  *			32,944		215,843		220,319
Total non-current liabilities			39,816		260,867		264,968
Total liabilities			139,278		912,521		908,563
EQUITY
Preferred shares
(US$ 0.003 par value;1,666,667 shares authorized,      nil issued and outstanding as of      December 31, 2020 and March 31, 2021)			-		-		-
Class A Ordinary shares
(US$0.003 par value; 66,666,667 and      66,666,667 shares authorized, 41,923,276      and 41,935,776 shares issued and      outstanding as of December 31, 2020 and      March 31, 2021, respectively)			121		794		794
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, 2020 and March 31, 2021,      respectively)			14		90		90
Additional paid-in capital			541,117		3,545,292		3,545,073
Statutory reserve			643		4,210		4,210
Accumulated deficit			(524,051)		(3,433,475)		(3,419,146)
Accumulated other comprehensive income			1,870		12,254		12,101
Total Ambow Education Holding Ltd.'s equity			19,714		129,165		143,122
Non-controlling interests			(337)		(2,210)		(1,968)
Total equity			19,377		126,955		141,154
Total liabilities and equity			158,655		1,039,476		1,049,717
*  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,
		2021		2021		2020
		US$		RMB		RMB
NET REVENUES
Educational program and services		19,768		129,514		90,267
Intelligent program and services		14		91		12
Total net revenues		19,782		129,605		90,279
COST OF REVENUES
Educational program and services		(12,796)		(83,839)		(77,433)
Intelligent program and services		(175)		(1,144)		(1,298)
Total cost of revenues		(12,971)		(84,983)		(78,731)
GROSS PROFIT		6,811		44,622		11,548
Operating expenses:
Selling and marketing		(1,679)		(11,000)		(10,549)
General and administrative		(7,165)		(46,945)		(39,201)
Research and development		(282)		(1,845)		(1,131)
Total operating expenses		(9,126)		(59,790)		(50,881)
OPERATING LOSS		(2,315)		(15,168)		(39,333)
OTHER INCOME (EXPENSES)
Interest income		314		2,060		1,990
Foreign exchange gain (loss), net		33		215		26
Other (loss) income, net		(143)		(940)		1,406
Gain from deregistration of subsidiaries		22		144		-
Gain on the bargain purchase		-		-		40,273
Gain on sale of investment available for sale		114		747		526
Total other income		340		2,226		44,221
(LOSS) INCOME BEFORE INCOME TAX AND NON-     CONTROLLING INTEREST		(1,975)		(12,942)		4,888
Income tax (expense) benefit		(249)		(1,629)		739
NET (LOSS) INCOME		(2,224)		(14,571)		5,627
Less: Net loss attributable to non-controlling interest		(37)		(242)		(412)
NET (LOSS) INCOME ATTRIBUTABLE TO ORDINARY     SHAREHOLDERS		(2,187)		(14,329)		6,039
NET (LOSS) INCOME		(2,224)		(14,571)		5,627
OTHER COMPREHENSIVE INCOME, NET OF TAX
Foreign currency translation adjustments		18		115		433
Unrealized gains on short term investments
Unrealized holding gains arising during period		89		582		441
Less: reclassification adjustment for gains included in net     income		83		544		287
Other comprehensive income		24		153		587
TOTAL COMPREHENSIVE (LOSS) INCOME		(2,200)		(14,418)		6,214
Net (loss) income  per share - basic and diluted		(0.05)		(0.31)		0.14
Weighted average shares used in calculating basic and diluted      net (loss) income per share		46,635,997		46,635,997		43,570,918

 

 

AMBOW EDUCATION HOLDING LTD.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(All amounts in thousands, except for share and per share data)
	Attributable to Ambow Education Holding Ltd.'s Equity
															Accumulated
	Class A Ordinary				Class C Ordinary				Additional						other		Non-
	shares				shares				paid-in		Statutory		Accumulated		comprehensive		controlling		Total
	Shares		Amount		Shares		Amount		capital		reserves		deficit		income		Interest		Equity
			RMB				RMB		RMB		RMB		RMB		RMB		RMB		RMB
Balance as of January 1,     2021	41,923,276		794		4,708,415		90		3,545,073		4,210		(3,419,146)		12,101		(1,968)		141,154
Share-based compensation	-		-		-		-		219		-		-		-		-		219
Issuance of ordinary shares     for restricted stock award	12,500		0		-		-		(0)		-		-		-		-		-
Foreign currency translation     adjustment	-		-		-		-		-		-		-		115		-		115
Unrealized gain on     investment, net of income     taxes	-		-		-		-		-		-		-		38		-		38
Net loss	-		-		-		-		-		-		(14,329)		-		(242)		(14,571)
Balance as of March 31,     2021	41,935,776		794		4,708,415		90		3,545,292		4,210		(3,433,475)		12,254		(2,210)		126,955
Balance as of January 1,     2020	38,858,199		730		4,708,415		90		3,508,745		20,185		(3,371,815)		6,341		(680)		163,596
Share-based compensation	-		-		-		-		238		-		-		-		-		238
Issuance of ordinary shares     for restricted stock award	12,500		0		-		-		(0)		-		-		-		-		-
Foreign currency translation     adjustment	-		-		-		-		-		-		-		433		-		433
Unrealized gain on     investment, net of income     taxes	-		-		-		-		-		-		-		154		-		154
Impact on adoption of ASC     326	-		-		-		-		-		-		(594)		-		-		(594)
Net income/(loss)	-		-		-		-		-		-		6,039		-		(412)		5,627
Balance as of March 31,     2020	38,870,699		730		4,708,415		90		3,508,983		20,185		(3,366,370)		6,928		(1,092)		169,454

 

 

Discussion of Segment Operations
(All amounts in thousands)
	For the three months ended March 31,
	2021		2021		2020
	US$		RMB		RMB
	(All amounts in thousands)
NET REVENUES
K-12 Schools	10,822		70,902		41,411
CP&CE Programs	8,960		58,703		48,868
Total net revenues	19,782		129,605		90,279
COST OF REVENUES
K-12 Schools	(6,958)		(45,589)		(33,429)
CP&CE Programs	(6,013)		(39,394)		(45,302)
Total cost of revenues	(12,971)		(84,983)		(78,731)
GROSS PROFIT
K-12 Schools	3,864		25,313		7,982
CP&CE Programs	2,947		19,309		3,566
Total gross profit	6,811		44,622		11,548

 

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SOURCE Ambow Education Holding Ltd.

FAQ

What were Ambow Education's Q1 2021 financial results?

Ambow reported a 43.5% revenue increase to RMB129.6 million (US$19.8 million) with a gross profit of RMB44.6 million (US$6.8 million).

What was Ambow Education's net loss for Q1 2021?

The net loss for Q1 2021 was RMB14.3 million (US$2.2 million), compared to net income of RMB6.0 million in Q1 2020.

How much cash does Ambow Education hold?

As of March 31, 2021, Ambow holds cash resources of RMB281.4 million (US$42.9 million).

What is Ambow's gross profit margin for Q1 2021?

Ambow's gross profit margin for Q1 2021 was 34.4%, a significant increase from 12.7% in Q1 2020.

What contributed to Ambow's revenue growth in Q1 2021?

Revenue growth was driven by recovery from COVID-19 and higher contributions from the acquired NewSchool of Architecture and Design.