Ambow Education Announces Second Quarter 2021 Financial Results

Rhea-AI Summary

Ambow Education Holding Ltd. (AMBO) reported strong financial results for Q2 2021, with net revenues up 10.8% year-over-year to RMB 172.3 million (US$ 26.7 million) and gross profit increasing 25.7% to RMB 75.9 million (US$ 11.8 million). The gross margin improved to 44.1%, reflecting efficient operations post-COVID recovery. The company maintained cash resources of RMB 257.7 million (US$ 39.9 million). Furthermore, Ambow established significant partnerships in vocational education and launched the OOOK platform, which garnered recognition for innovation.

Positive

• Net revenues increased by 10.8% to RMB 172.3 million (US$ 26.7 million) in Q2 2021.
• Gross profit rose by 25.7% to RMB 75.9 million (US$ 11.8 million), with a gross margin of 44.1%.
• Operating expenses decreased by 7.8% to RMB 55.6 million (US$ 8.6 million).
• Strategic partnerships established with Nanchang Vocational University and the Ministry of Industry and Information Technology.
• Launched the OOOK education platform, receiving the '2021 Best Product Technology Innovation' award.

Negative

• Net income decreased to RMB 8.1 million (US$ 1.3 million) for the first half of 2021, down from RMB 10.8 million (US$ 1.5 million) in the same period of 2020.

BEIJING, Sept. 20, 2021 /PRNewswire/ -- Ambow Education Holding Ltd. ("Ambow" or the "Company") (NYSE American: AMBO), a leading cross-border career educational and technology service provider, today announced its unaudited financial and operating results for the three-month and six-month periods ended June 30, 2021.

"In the second quarter of 2021, we remained focused on technology-driven educational and career enhancement services, embracing the national strategy of improving collaborative and coordinated development across education, talents and industry and promoting high-quality economic growth," noted Dr. Jin Huang, Ambow's President and Chief Executive Officer. "We're pleased to report solid financial performance and further improved operating efficiency in the second quarter, highlighted by a 10.8% year-over-year growth in net revenues and an increase in gross margin of 530 basis points year-over-year to 44.1%."

"Additionally, during the quarter, we made a number of strides that helped to expand our role as a leading innovator in the Chinese career education market. Building on our 20-year proven track record in the vocational and technical education sector, in June we cooperated with Nanchang Vocational University, one of the 15 first batch of undergraduate vocational education pilot schools in China, to co-found the Smart Manufacturing Modern Industrial College, underscoring China's pilot program for the integration between industry and education. Meanwhile, we formed a strategic cooperation with the Talent Exchange Center of the Ministry of Industry and Information Technology to strengthen international communication in various information technology-related disciplines. More excitingly, in July we launched an open education platform, OOOK, which incorporates our in-house developed technologies, enabling teachers to provide high-quality, cross-device live and recorded courses with immersive and interactive learning experiences. Notably, with its groundbreaking technology and solutions, OOOK won the '2021 Best Product Technology Innovation' award at the 10th Annual China Finance Summit."

"Moving into the second half of 2021, we remain committed to delivering innovative educational products and services that will be at the forefront of the industry by continuingly capitalizing on technology trends. We are confident that our strategic efforts will continue to drive the long-term growth of our overall business," concluded Dr. Huang.  

Second Quarter 2021 Financial Highlights

• Net revenues for the second quarter of 2021 increased by 10.8% to RMB 172.3 million (US$ 26.7 million) from RMB 155.5 million (US$ 22.0 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.
• Gross profit for the second quarter of 2021 increased by 25.7% to RMB 75.9 million (US$ 11.8 million) from RMB 60.4 million (US$ 8.5 million) in the same period of 2020. Gross profit margin was 44.1%, compared with 38.8% for the first second 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 second quarter of 2021 decreased by 7.8% to RMB 55.6 million (US$ 8.6 million) from RMB 60.3 million (US$ 8.5 million) in the same period of 2020. The decrease was primarily attributable to stringent expense controls to improve operating efficiency.
• Operating income for the second quarter of 2021 was RMB 20.3 million (US$ 3.1 million), compared to operating income of RMB 0.1 million (US$ 0.02 million) in the same period of 2020.
• Net income attributable to ordinary shareholders was RMB 22.4 million (US$ 3.5 million), or RMB 0.48 (US$ 0.07) per basic and diluted share, compared with a net income of RMB 4.8 million (US$ 0.7 million), or RMB 0.11 (US$ 0.02) per basic and diluted share, in the same period of 2020.
• As of June 30, 2021, Ambow maintained strong cash resources of RMB 257.7 million (US$ 39.9 million), comprised of cash and cash equivalents of RMB 168.4 million (US$ 26.1 million), short-term investments of RMB 87.6 million (US$ 13.5 million) and restricted cash of RMB 1.7 million (US$ 0.3 million).

First Six Months 2021 Financial Highlights

• Net revenues for the first six months of 2021 increased by 22.9% to RMB 301.9 million (US$ 46.8 million) from RMB 245.7 million (US$ 34.8 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 our new U.S. business.
• Gross profit for the first six months of 2021 increased by 67.5% to RMB 120.6 million (US$ 18.7 million) from RMB 72.0 million (US$ 10.2 million) in the same period of 2020. Gross profit margin was 39.9%, compared with 29.3% in the same period 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 six months of 2021 slightly increased by 3.9% to RMB 115.4 million (US$ 17.9 million) from RMB 111.1 million (US$ 15.7 million) in the same period of 2020.
• Operating income for the six months of 2021 was RMB 5.2 million (US$ 0.8 million), compared to operating loss of RMB 39.2 million (US$ 5.5 million) in the same period of 2020.
• Net income attributable to ordinary shareholders was RMB 8.1 million (US$ 1.3 million), or RMB 0.17 (US$ 0.03) per basic and diluted share, compared with a net income of RMB 10.8 million (US$ 1.5 million), or RMB 0.25 (US$ 0.04) per basic and diluted share, in the same period of 2020. Excluding the one-time gain from bargain purchase of NewSchool of Architecture and Design, LLC of RMB 40.3 million (US$ 5.7 million), net loss for the first six months of 2020 was RMB 29.5 million (US$ 4.2 million) or RMB 0.68 (US$ 0.10) per basic and diluted share.

The Company's financial and operating results for the second quarter and first half of 2021 can also be found on its Current Report on Form 6-K to be furnished with the U.S. Securities and Exchange Commission at www.sec.gov.

Regulatory Policy Update

The Standing Committee of the National People's Congress promulgated an amendment to the Implementation Rules of the Law for Promoting Private Education on April 7, 2021, which has been effective since September 1, 2021 (the "Implementation Rules"). The Implementation Rules stipulated, among other provisions, that (1) sponsors of private schools may choose to establish schools as either non-profit or for-profit schools, but nine-year compulsory education schools cannot be operated as for-profit schools; (2) foreign-invested enterprises established in China and social organizations whose actual controllers are foreign parties shall not sponsor, participate in or actually control private schools that provide compulsory education; (3) group-based education organizations shall not control non-profit private schools through mergers and acquisitions, franchise agreements and contractual arrangements; and (4) related party transactions entered into by private schools shall be open, fair and just, and shall not harm national interests, school interests, or student or teacher interests. The Company is assessing the impact of the Implementation Rules and formulating different scenarios as compliance measures.

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 second quarter and first half of 2021 are based on the effective exchange rate of 6.4566 as of June 30, 2021; all amounts translated from RMB to U.S. dollars for the second quarter and first half of 2020 are based on the effective exchange rate of 7.0651 as of June 30, 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. Fluctuations in financial highlights are based on RMB amounts.

About Ambow Education Holding Ltd.

Ambow Education Holding Ltd. is a leading cross-border career educational and technology service provider, 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 China and United States of America.

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 June 30,				As of December 31,
			2021				2020
			US$		RMB		RMB
ASSETS
Current assets:
Cash and cash equivalents			26,086		168,424		118,821
Restricted cash			256		1,650		824
Short-term investments, available for sale			13,266		85,652		117,854
Short-term investments, held to maturity			310		2,000		45,000
Accounts receivable, net			3,289		21,234		20,972
Amounts due from related parties			501		3,235		3,024
Prepaid and other current assets, net			18,858		121,757		117,634
Total current assets			62,566		403,952		424,129
Non-current assets:
Property and equipment, net			21,989		141,972		144,492
Land use rights, net			262		1,693		1,715
Intangible assets, net			8,403		54,252		54,808
Goodwill			3,982		25,710		25,710
Deferred tax assets, net			883		5,704		6,338
Operating lease right-of-use asset			35,522		229,353		247,608
Finance lease right-of-use asset			860		5,550		5,850
Other non-current assets			21,805		140,786		139,067
Total non-current assets			93,706		605,020		625,588
Total assets			156,272		1,008,972		1,049,717
LIABILITIES
Current liabilities:
Short-term borrowings  *			3,020		19,498		10,000
Deferred revenue  *			21,106		136,274		163,699
Accounts payable  *			3,320		21,425		19,423
Accrued and other liabilities  *			31,473		203,207		209,590
Income taxes payable, current  *			28,669		185,105		184,638
Amounts due to related parties  *			429		2,771		2,543
Operating lease liability, current  *			7,620		49,198		53,702
Total current liabilities			95,637		617,478		643,595
Non-current liabilities:
Long-term borrowing			-		-		9,594
Other non-current liabilities  *			47		304		292
Income taxes payable, non-current  *			5,316		34,322		34,763
Operating lease liability, non-current  *			32,196		207,877		220,319
Total non-current liabilities			37,559		242,503		264,968
Total liabilities			133,196		859,981		908,563
EQUITY
Preferred shares
(US$ 0.003 par value;1,666,667 shares       authorized, nil issued and outstanding as of       June 30, 2021 and December 31, 2020)			-		-		-
Class A Ordinary shares
(US$0.003 par value; 66,666,667 and      66,666,667 shares authorized, 41,948,276      and 41,923,276 shares issued and      outstanding as of June 30, 2021 and      December 31, 2020, respectively)			123		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 June 30,       2021 and December 31, 2020, respectively)			14		90		90
Additional paid-in capital			549,130		3,545,512		3,545,073
Statutory reserve			652		4,210		4,210
Accumulated deficit			(528,302)		(3,411,035)		(3,419,146)
Accumulated other comprehensive income			1,844		11,907		12,101
Total Ambow Education Holding Ltd.'s equity			23,461		151,478		143,122
Non-controlling interests			(385)		(2,487)		(1,968)
Total equity			23,076		148,991		141,154
Total liabilities and equity			156,272		1,008,972		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  (All amounts in thousands, except for share and per share data)
	For the six months ended June 30,						For the three months ended June 30,
	2021		2021		2020		2021		2021		2020
	US$		RMB		RMB		US$		RMB		RMB
NET REVENUES
Educational program and    services	46,635		301,104		245,659		26,576		171,590		155,392
Intelligent program and    services	116		752		83		102		661		71
Total net revenues	46,751		301,856		245,742		26,678		172,251		155,463
COST OF REVENUES
Educational program and    services	(27,782)		(179,375)		(172,324)		(14,797)		(95,536)		(94,891)
Intelligent program and    services	(299)		(1,930)		(1,458)		(122)		(786)		(160)
Total cost of revenues	(28,081)		(181,305)		(173,782)		(14,919)		(96,322)		(95,051)
GROSS PROFIT	18,670		120,551		71,960		11,759		75,929		60,412
Operating expenses:
Selling and marketing	(3,782)		(24,422)		(24,206)		(2,079)		(13,422)		(13,657)
General and    administrative	(13,220)		(85,357)		(84,243)		(5,949)		(38,412)		(45,042)
Research and development	(868)		(5,602)		(2,698)		(582)		(3,757)		(1,567)
Total operating expenses	(17,870)		(115,381)		(111,147)		(8,610)		(55,591)		(60,266)
OPERATING INCOME (LOSS)	800		5,170		(39,187)		3,149		20,338		146
OTHER INCOME (EXPENSES)
Interest income	621		4,008		4,135		302		1,948		2,145
Foreign exchange gain    (loss), net	31		203		35		(2)		(12)		9
Other (loss) income, net	(183)		(1,180)		1,552		(37)		(240)		146
Gain from deregistration    of subsidiaries	205		1,325		3,897		183		1,181		3,897
Gain on the bargain    purchase	-		-		40,273		-		-		-
Gain on sale of investment    available for sale	189		1,221		1,056		73		474		530
Total other income	863		5,577		50,948		519		3,351		6,727
INCOME BEFORE    INCOME TAX AND    NON-CONTROLLING    INTEREST	1,663		10,747		11,761		3,668		23,689		6,873
Income tax expense	(489)		(3,155)		(1,623)		(236)		(1,526)		(2,362)
NET INCOME	1,174		7,592		10,138		3,432		22,163		4,511
Less: Net loss attributable    to non-controlling    interest	(80)		(519)		(708)		(43)		(277)		(296)
NET INCOME    ATTRIBUTABLE TO    ORDINARY    SHAREHOLDERS	1,254		8,111		10,846		3,475		22,440		4,807
NET INCOME	1,174		7,592		10,138		3,432		22,163		4,511
OTHER    COMPREHENSIVE    INCOME, NET OF    TAX
Foreign currency    translation adjustments	(65)		(417)		8,328		(82)		(532)		7,895
Unrealized gains on short-    term investments
Unrealized holding gains    arising during period	166		1,075		940		76		493		499
Less: reclassification    adjustment for gains    included in net income	132		852		668		48		308		381
Other comprehensive    (loss) income	(31)		(194)		8,600		(54)		(347)		8,013
TOTAL    COMPREHENSIVE    INCOME	1,143		7,398		18,738		3,378		21,816		12,524
Net income per share –    basic and diluted	0.03		0.17		0.25		0.07		0.48		0.11
Weighted average shares    used in calculating    basic and diluted net    income per share	46,642,280		46,642,280		43,577,168		46,648,495		46,648,495		43,583,418

 

 

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
Share-based compensation		-		-		-		-		220		-		-		-		-		220
Issuance of ordinary shares for restricted    stock award		12,500		0		-		-		(0)		-		-		-		-		-
Foreign currency translation adjustment		-		-		-		-		-		-		-		(532)		-		(532)
Unrealized gain on investment, net of    income taxes		-		-		-		-		-		-		-		185		-		185
Net income/(loss)		-		-		-		-		-		-		22,440		-		(277)		22,163
Balance as of June 30, 2021		41,948,276		794		4,708,415		90		3,545,512		4,210		(3,411,035)		11,907		(2,487)		148,991
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
Share-based compensation		-		-		-		-		242		-		-		-		-		242
Issuance of ordinary shares for restricted    stock award		12,500		1		-		-		(1)		-		-		-		-		-
Foreign currency translation adjustment		-		-		-		-		-		-		-		7,895		-		7,895
Unrealized gain on investment, net of     income taxes		-		-		-		-		-		-		-		118		-		118
Deregistration of subsidiaries		-		-		-		-		-		(15,473)		15,473		-		-		-
Net income/(loss)		-		-		-		-		-		-		4,807		-		(296)		4,511
Balance as of June 30, 2020		38,883,199		731		4,708,415		90		3,509,224		4,712		(3,346,090)		14,941		(1,388)		182,220

 

 

 

Discussion of Segment Operations (All amounts in thousands)
	For the six months ended June 30,						For the three months ended June 30,
	2021		2021		2020		2021		2021		2020
	US$		RMB		RMB		US$		RMB		RMB
NET REVENUES
K-12 Schools	27,205		175,650		126,800		16,223		104,748		85,389
CP&CE Programs	19,546		126,206		118,942		10,455		67,503		70,074
Total net revenues	46,751		301,856		245,742		26,678		172,251		155,463
COST OF REVENUES
K-12 Schools	(15,161)		(97,886)		(74,542)		(8,100)		(52,297)		(41,113)
CP&CE Programs	(12,920)		(83,419)		(99,240)		(6,819)		(44,025)		(53,938)
Total cost of revenues	(28,081)		(181,305)		(173,782)		(14,919)		(96,322)		(95,051)
GROSS PROFIT
K-12 Schools	12,044		77,764		52,258		8,123		52,451		44,276
CP&CE Programs	6,626		42,787		19,702		3,636		23,478		16,136
Total gross profit	18,670		120,551		71,960		11,759		75,929		60,412

 

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SOURCE Ambow Education Holding Ltd.

FAQ

What were Ambow Education's Q2 2021 financial results?

Ambow reported net revenues of RMB 172.3 million (US$ 26.7 million) and gross profit of RMB 75.9 million (US$ 11.8 million) in Q2 2021.

How did Ambow Education's net income change in the first half of 2021?

Net income attributable to ordinary shareholders for the first half of 2021 was RMB 8.1 million (US$ 1.3 million), down from RMB 10.8 million (US$ 1.5 million) in the same period of 2020.

What is the significance of Ambow's partnerships in vocational education?

Ambow formed strategic partnerships with Nanchang Vocational University and the Ministry of Industry and Information Technology to enhance its role in China's vocational education sector.

What innovation did Ambow introduce in July 2021?

In July 2021, Ambow launched the OOOK open education platform, which focuses on interactive and immersive learning experiences.

What are the implications of the new Implementation Rules for Ambow Education?

Ambow is assessing the impact of the new Implementation Rules on its operations and formulating compliance measures.