Ambow Education Announces Third Quarter 2020 Financial Results

Rhea-AI Summary

Ambow Education Holding Ltd. (AMBO) reported its Q3 2020 financial results, with a net revenue decrease of 6.2% to $16.6 million compared to Q3 2019. The K-12 schools segment saw an 18.8% revenue increase year-over-year, highlighting resilience amid COVID-19 challenges. Gross profit plummeted 77.8% to $1.0 million, leading to a net loss of $12.5 million. However, deferred revenue surged 59.9% to $37.9 million. Ambow secured a Technical and Vocational Education and Training project from the Asian Development Bank, indicating growth potential.

Positive

• K-12 revenue increased by 18.8% year-over-year.
• Deferred revenue rose 59.9% to $37.9 million, the highest since 2015.
• Secured Asian Development Bank project for vocational training.

Negative

• Net revenues decreased by 6.2% to $16.6 million.
• Gross profit dropped by 77.8% to $1.0 million.
• Net loss increased to $12.5 million from $10.2 million in Q3 2019.

BEIJING, Dec. 17, 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 and nine-month periods ended September 30, 2020.

"While our business continued to be impacted by COVID-19-related macro headwinds during the third quarter of 2020, I am pleased to report that after a solid start to the new fall semester, revenue from the K-12 schools segment increased 18.8% year-over-year. Encouragingly, deferred revenue related to tuition and course fees and our education service platform increased 12.4% to US$37.9 million from the year-ago period and reached its highest level since 2015, reflecting the resilience of our business. Supported by ample cash resources and a healthy balance sheet, our core strength and fundamentals remain solid across our key segments," noted Dr. Jin Huang, Ambow's President and Chief Executive Officer. "We are excited that in September we won the bid for a Technical and Vocational Education and Training (TVET) Center project that is financially supported by the Asian Development Bank as a part of its inclusive growth project in Ziyang City of Sichuan Province. This achievement demonstrates our exceptional capabilities and leading position in the vocational and technical education sector."

"We continued to execute our key strategies to pursue more balanced growth, while providing high quality educational services that better engage students against the challenging backdrop of the COVID-19 environment. Leveraging our 20-year proven track record in curriculum development, professional training, job placement and education technology innovation, we are making massive progress in building out our online-to-offline education SaaS platform, Huanyujun Education Hub. We have gradually started rolling out Amazon Web Services (AWS) and Cisco-authorized certification and training courses on the Huanyujun Education Hub, which is already supported by our cutting-edge educational solutions such as Ambow Panorama Digital Teaching System and Ambow Cloud Platform. We believe these best-in-class educational services and course offerings will broaden our appeal to a wider student base as they pursue professional certifications for their technology careers."

"Going forward, we will maintain our strategic efforts to enrich our educational service offerings, optimize operating efficiencies, and increase student enrollments and engagement. We remain confident that our efforts will support the long-term sustainability of our overall business," concluded Dr. Huang.

Third Quarter 2020 Financial Highlights

• Net revenues for the third quarter of 2020 decreased by 6.2% to US$16.6 million from US$17.7 million in the same period of 2019. The decrease was primarily from fewer services provided at the Company's tutoring centers, training offices and college campuses. This was partially offset by the increase in the revenue from K-12 schools driven by higher enrollment and the revenue from NewSchool of Architecture and Design, LLC ("NewSchool"), acquired in the first quarter of 2020.
• Gross profit for the third quarter of 2020 decreased by 77.8% to US$1.0 million from US$4.5 million in the same period of 2019. Gross profit margin was 6.0%, compared with 25.4% for the third quarter of 2019. The decreases in gross profit and margin were mainly attributable to the decrease in net revenues from CP&CE Programs.
• Operating expenses for the third quarter of 2020 decreased by 3.4% to US$14.0 million from US$14.5 million for the same period of 2019. The decrease was primarily attributable to stringent expense controls to improve operating efficiency, and partially offset by operating expenses related to NewSchool.
• Net loss attributable to ordinary shareholders was US$12.5 million, or US$0.29 per basic and diluted share, compared with a net loss of US$10.2 million, or US$0.23 per basic and diluted share, for the third quarter of 2019.
• As of September 30, 2020, Ambow maintained strong cash resources of US$44.0 million, comprised of cash and cash equivalents of US$12.7 million and short-term investments of US$31.3 million.
• As of September 30, 2020, the Company's deferred revenue balance was US$37.9 million, representing a 59.9% increase from US$23.7 million as of December 31, 2019, mainly attributable to the tuition and fees collected at K-12 schools for the fall semester of the 2020-2021 academic year, and deferred revenue collected from our colleges for the fall semester of 2020.

First Nine Months 2020 Financial Highlights

• Net revenues for the first nine months of 2020 decreased by 8.0% to US$52.8 million from US$57.4 million in the same period of 2019. The decrease was primarily from fewer boarding and other ancillary services provided for K-12 schools as result of temporary COVID-19-related campus closures in the first half of 2020, and fewer services provided at the Company's tutoring centers, training offices and college campuses. This was partially offset by the revenue from NewSchool which was acquired in the period.
• Gross profit for the first nine months of 2020 decreased by 40.5% to US$11.6 million from US$19.5 million in the same period of 2019. Gross profit margin was 22.0%, compared with 34.0% for the first nine months of 2019. The decreases in gross profit and margin were mainly attributable to the decrease in net revenues from CP&CE Programs.
• Operating expenses for the first nine months of 2020 decreased by 1.9% to US$30.4 million from US$31.0 million for the same period of 2019. The decrease was primarily attributable to lower expenditures due to the temporary suspension of operations at training offices and tutoring centers in the period as a part of the national pandemic containment efforts, as well as stringent expense controls to improve operating efficiency, and partially offset by NewSchool's operating expenses.
• Net loss attributable to ordinary shareholders was US$10.9 million, or US$0.25 per basic and diluted share, compared with a net loss of US$12.3 million, or US$0.28 per basic and diluted share, for the first nine months of 2019.

On October 5, 2020, the Company completed a registered direct offering of 1,507,538 American Depositary Shares ("ADSs", representing 3,015,076 Class A Ordinary Shares), at a purchase price of $3.98 per ADS. The Company also issued to investors registered warrants to purchase up to an aggregate amount of 603,016 ADSs (representing 1,206,032 Class A Ordinary Shares). Net proceeds from this offering were approximately US$5.2 million.

The Company's financial and operating results for the third quarter and first nine months of 2020 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 third quarter and first nine months of 2020 are based on the effective exchange rate of 6.7896 as of September 30, 2020; all amounts translated from RMB to U.S. dollars for the third quarter and first nine months of 2019 are based on the effective exchange rate of 7.1477 as of September 30, 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 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

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 September 30,				As of December 31,
			2020				2019
			US$		RMB		RMB
ASSETS
Current assets:
Cash and cash equivalents			12,677		86,072		157,600
Restricted cash			2,006		13,621		-
Short term investments, available for sale			26,898		182,629		57,487
Short term investments, held to maturity			4,419		30,000		31,000
Accounts receivable, net			3,616		24,549		17,939
Amounts due from related parties			907		6,159		2,318
Prepaid and other current assets, net			23,150		157,177		133,296
Total current assets			73,673		500,207		399,640
Non-current assets:
Property and equipment, net			21,603		146,678		157,463
Land use rights, net			254		1,726		1,759
Intangible assets, net			8,168		55,458		56,607
Goodwill			3,787		25,710		60,353
Deferred tax assets, net			538		3,653		10,195
Operating lease right-of-use asset			38,704		262,787		257,361
Finance lease right-of-use asset			884		6,000		6,450
Other non-current assets, net			12,429		84,388		70,971
Total non-current assets			86,367		586,400		621,159
Total assets			160,040		1,086,607		1,020,799
LIABILITIES
Current liabilities:
Short-term borrowings  *			2,948		20,013		-
Deferred revenue  *			37,906		257,368		165,111
Accounts payable  *			2,284		15,500		14,718
Accrued and other liabilities  *			27,277		185,203		192,957
Income taxes payable, current  *			27,060		183,729		180,715
Amounts due to related parties  *			718		4,876		1,971
Operating lease liability, current  *			7,459		50,642		53,512
Total current liabilities			105,652		717,331		608,984
Non-current liabilities:
Income taxes payable, non-current  *			5,094		34,589		32,152
Operating lease liability, non-current  *			34,723		235,756		216,067
Total non-current liabilities			39,817		270,345		248,219
Total liabilities			145,469		987,676		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 September 30,   2020)			-		-		-
Class A Ordinary shares
(US$0.003 par value; 66,666,667 and   66,666,667 shares authorized, 38,858,199   and 38,895,700 shares issued and   outstanding as of December 31, 2019 and   September 30, 2020, respectively)			108		731		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 September 30,   2020, respectively)			13		90		90
Additional paid-in capital			516,868		3,509,330		3,508,745
Statutory reserve			620		4,210		20,185
Accumulated deficit			(505,202)		(3,430,122)		(3,371,815)
Accumulated other comprehensive income			2,420		16,429		6,341
Total Ambow Education Holding Ltd.'s equity			14,827		100,668		164,276
Non-controlling interests			(256)		(1,737)		(680)
Total equity			14,571		98,931		163,596
Total liabilities and equity			160,040		1,086,607		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 (All amounts in thousands, except for share and per share data)
	For the nine months ended September 30,						For the three months ended September 30,
	2020		2020		2019		2020		2020		2019
	US$		RMB		RMB		US$		RMB		RMB
NET REVENUES
Educational program and    services	52,742		358,098		409,367		16,560		112,439		126,729
Intelligent program and    services	52		352		1,193		40		269		(173)
Total net revenues	52,794		358,450		410,560		16,600		112,708		126,556
COST OF REVENUES
Educational program and    services	(40,898)		(277,683)		(265,454)		(15,518)		(105,359)		(92,934)
Intelligent program and    services	(345)		(2,340)		(5,818)		(130)		(882)		(1,109)
Total cost of revenues	(41,243)		(280,023)		(271,272)		(15,648)		(106,241)		(94,043)
GROSS PROFIT	11,551		78,427		139,288		952		6,467		32,513
Operating expenses:
Selling and marketing	(5,576)		(37,861)		(40,778)		(2,011)		(13,655)		(15,607)
General and administrative	(18,739)		(127,230)		(140,510)		(6,331)		(42,987)		(48,116)
Research and development	(656)		(4,456)		(1,555)		(259)		(1,758)		(1,087)
Impairment loss	(5,405)		(36,699)		(38,754)		(5,405)		(36,699)		(38,754)
Total operating expenses	(30,376)		(206,246)		(221,597)		(14,006)		(95,099)		(103,564)
OPERATING LOSS	(18,825)		(127,819)		(82,309)		(13,054)		(88,632)		(71,051)
OTHER INCOME (EXPENSES)
Interest income	1,053		7,150		3,343		444		3,015		1,823
Foreign exchange gain (loss),   net	5		31		46		(1)		(4)		45
Other income (loss), net	124		840		193		(105)		(712)		7
Gain from deregistration of   subsidiaries	584		3,967		1,279		10		70		-
Gain on disposal of   subsidiaries	111		752		-		111		752		-
Gain on the bargain purchase	5,932		40,273		-		-		-		-
Gain on sale of investment   available for sale	365		2,477		422		209		1,421		3
Total other income	8,174		55,490		5,283		668		4,542		1,878
LOSS BEFORE INCOME   TAX AND NON-   CONTROLLING   INTEREST	(10,651)		(72,329)		(77,026)		(12,386)		(84,090)		(69,173)
Income tax expense	(353)		(2,399)		(11,032)		(114)		(776)		(3,634)
NET LOSS	(11,004)		(74,728)		(88,058)		(12,500)		(84,866)		(72,807)
Less: Net(loss)/income  attributable to non-  controlling interest	(153)		(1,040)		(269)		(49)		(332)		4
NET LOSS ATTRIBUTABLE   TO ORDINARY   SHAREHOLDERS	(10,851)		(73,688)		(87,789)		(12,451)		(84,534)		(72,811)
NET LOSS	(11,004)		(74,728)		(88,058)		(12,500)		(84,866)		(72,807)
OTHER   COMPREHENSIVE   INCOME, NET OF TAX
Foreign currency translation     adjustments	1,581		10,731		(3,267)		354		2,403		(93)
Unrealized gains on short term     investments
Unrealized holding gains     arising during period	224		1,518		1,238		85		578		538
Less: reclassification     adjustment for gains     included in net income	318		2,161		489		220		1,493		37
Other comprehensive income     (loss)	1,487		10,088		(2,518)		219		1,488		408
TOTAL   COMPREHENSIVE   LOSS	(9,517)		(64,640)		(90,576)		(12,281)		(83,378)		(72,399)
Net loss per share – basic and   diluted	(0.25)		(1.69)		(2.02)		(0.29)		(1.94)		(1.67)
Weighted average shares used   in calculating basic and   diluted net loss per share	43,583,448		43,583,448		43,496,848		43,595,871		43,595,871		43,512,447

 

 

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
														Retained		Accumulated
		Class A Ordinary				Class C Ordinary				Additional				Earnings		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,   2020		38,858,199		730		4,708,415		90		3,508,745		20,185		(3,372,409)		6,341		(680)		163,002
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
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		-		(297)		4,510
Balance as of June 30,   2020		38,883,199		731		4,708,415		90		3,509,224		4,712		(3,346,090)		14,941		(1,389)		182,219
Share-based compensation		-		-		-		-		239		-		-		-		-		239
Issuance of ordinary shares   for restricted stock award		12,501		0		-		-		(0)		-		-		-		-		-
Foreign currency translation   adjustment		-		-		-		-		-		-		-		2,403		-		2,403
Unrealized gain on   investment, net of income   taxes		-		-		-		-		-		-		-		(915)		-		(915)
Deregistration of subsidiary		-		-		-		-		-		-		-		-		(16)		(16)
Disposal of subsidiaries		-		-		-		-		(133)		(502)		502		-		-		(133)
Net loss		-		-		-		-		-		-		(84,534)		-		(332)		(84,866)
Balance as of   September 30, 2020		38,895,700		731		4,708,415		90		3,509,330		4,210		(3,430,122)		16,429		(1,737)		98,931
Balance as of January 1,   2019		38,756,289		728		4,708,415		90		3,507,123		20,149		(3,271,838)		8,305		(1,786)		262,771
Share-based compensation		-		-		-		-		872		-		-		-		-		872
Issuance of ordinary shares   for restricted stock award		28,646		1		-		-		(1)		-		-		-		-		-
Foreign currency translation   adjustment		-		-		-		-		-		-		-		(2,428)		-		(2,428)
Unrealized gain on   investment, net of income   taxes		-		-		-		-		-		-		-		75		-		75
Net loss		-		-		-		-		-		-		(23,756)		-		(93)		(23,849)
Balance as of March 31,   2019		38,784,935		729		4,708,415		90		3,507,994		20,149		(3,295,594)		5,952		(1,879)		237,441
Share-based compensation		-		-		-		-		266		-		-		-		-		266
Issuance of ordinary shares   for restricted stock award		19,097		0		-		-		(0)		-		-		-		-		-
Foreign currency translation   adjustment		-		-		-		-		-		-		-		(746)		-		(746)
Unrealized gain on   investment, net of income   taxes		-		-		-		-		-		-		-		173		-		173
Addition of noncontrolling   interests resulting from   new subsidiaries		-		-		-		-		-		-		-		-		502		502
Net income (loss)		-		-		-		-		-		-		8,778		-		(180)		8,598
Balance as of June 30,   2019		38,804,032		729		4,708,415		90		3,508,260		20,149		(3,286,816)		5,379		(1,557)		246,234
Share-based compensation		-		-		-		-		244		-		-		-		-		244
Foreign currency translation   adjustment		-		-		-		-		-		-		-		(93)		-		(93)
Unrealized gain on   investment, net of income    taxes		-		-		-		-		-		-		-		501		-		501
Net (loss) / income		-		-		-		-		-		-		(72,811)		-		4		(72,807)
Balance as of   September 30, 2019		38,804,032		729		4,708,415		90		3,508,504		20,149		(3,359,627)		5,787		(1,553)		174,079

 

 

 

Discussion of Segment Operations (All amounts in thousands)
	For the nine months ended September 30,						For the three months ended September 30,
	2020		2020		2019		2020		2020		2019
	US$		RMB		RMB		US$		RMB		RMB
NET REVENUES
K-12 Schools	27,360		185,766		203,214		8,685		58,966		52,256
CP&CE Programs	25,434		172,684		207,346		7,915		53,742		74,300
Total net revenues	52,794		358,450		410,560		16,600		112,708		126,556
COST OF REVENUES
K-12 Schools	(17,670)		(119,972)		(128,887)		(6,692)		(45,430)		(38,794)
CP&CE Programs	(23,573)		(160,051)		(142,385)		(8,956)		(60,811)		(55,249)
Total cost of revenues	(41,243)		(280,023)		(271,272)		(15,648)		(106,241)		(94,043)
GROSS PROFIT
K-12 Schools	9,690		65,794		74,327		1,993		13,536		13,462
CP&CE Programs	1,861		12,633		64,961		(1,041)		(7,069)		19,051
Total gross profit	11,551		78,427		139,288		952		6,467		32,513

 

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SOURCE Ambow Education Holding Ltd.

FAQ

What are Ambow Education's earnings results for Q3 2020?

Ambow reported a net revenue of $16.6 million for Q3 2020, down 6.2% from $17.7 million in Q3 2019.

What is the financial outlook for Ambow Education in 2021?

Ambow aims to enrich its educational offerings and increase student engagement, supported by strong deferred revenue and cash resources.

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

The pandemic caused a decline in net revenues and gross profit, though K-12 revenue increased due to higher enrollment.

What was the net loss for Ambow Education in Q3 2020?

Ambow reported a net loss of $12.5 million in Q3 2020, compared to a net loss of $10.2 million in Q3 2019.

Did Ambow Education secure any new projects recently?

Yes, Ambow won a Technical and Vocational Education and Training project funded by the Asian Development Bank.