Sunlands Technology Group Announces Unaudited First Quarter 2021 Financial Results

Rhea-AI Summary

Sunlands Technology Group (NYSE: STG) reported its Q1 2021 financial results, showing a 22.9% increase in net revenues to RMB694.3 million (US$106.0 million). Gross billings rose by 14.9% to RMB593.7 million (US$90.6 million), while gross profit increased 25.6% to RMB587.9 million (US$89.7 million). The company's new student enrollments surged 107.6% year-over-year to 145,525. Despite a net loss of RMB53.3 million (US$8.1 million), the loss margin improved to 7.7%, down from 11.6% in Q1 2020.

Positive

• Net revenues increased by 22.9% year-over-year to RMB694.3 million.
• Gross profit rose by 25.6% to RMB587.9 million.
• New student enrollments surged by 107.6% to 145,525.
• Gross billings increased by 14.9% to RMB593.7 million.
• Net loss margin improved to 7.7% from 11.6% year-over-year.
• G&A expenses reduced by 52.2%, and R&D expenses by 16.3%.

Negative

• Net loss of RMB53.3 million indicates ongoing financial challenges.

BEIJING, May 25, 2021 /PRNewswire/ -- Sunlands Technology Group (NYSE: STG) ("Sunlands" or the "Company"), a leader in China's online post-secondary and professional education, today announced its unaudited financial results for the first quarter ended March 31, 2021.

First Quarter 2021 Financial and Operational Snapshots

• Net revenues were RMB694.3 million (US$106.0 million), representing a 22.9% increase year-over-year.
• Gross billings (non-GAAP) were RMB593.7 million (US$90.6 million), representing a 14.9% increase year-over-year.
• Gross profit was RMB587.9 million (US$89.7 million), representing a 25.6% increase year-over-year.
• Net loss was RMB53.3 million (US$8.1 million), representing an 18.7% decrease year-over-year.
• Net loss margin, defined as net loss as a percentage of net revenues, decreased to 7.7% from 11.6% in the first quarter of 2020.
• New student enrollments were 145,525, representing a 107.6% increase year-over-year.
• As of March 31, 2021, the Company's deferred revenue balance was RMB2,902.5 million (US$443.0 million).

[1] New student enrollments for a given period refers to the total number of orders placed by students that newly enroll in at least one course during that period (including those students that enroll and then terminate their enrollment with us, excluding orders of our low-price courses). In June 2020, we introduced low-price courses, including "mini courses" and "RMB1 courses," to strengthen our competitiveness and improve customer experience. We offer such low-price courses mainly in the formats of recorded videos or short live streaming.

"We are encouraged by our first quarter operational and financial metrics. Our net revenues increased 22.9% year-over-year to RMB694.3 million in the first quarter of 2021. We saw new enrollments surge to 145,525, a 107.6% year-on-year increase. This stellar performance was driven by our continued efforts to diversify product offerings, raise brand awareness and improve student satisfaction," said Mr. Tongbo Liu, Chief Executive Officer of Sunlands. "driven by this exceptional growth in new enrollments, our gross billings rose to RMB593.7 million during the quarter, representing a year-over-year growth rate of 14.9%.

"As a result of Sunlands' consistent focus on expanding and refining its master's degree-oriented programs, gross billings for these programs grew 73.6% year-over-year. New enrollments in Sunlands' master's degree programs jumped 72.8% year-over-year in the first quarter, significantly outpacing the market growth rate. Our master's degree programs cater especially to students with full-time jobs, who are more financially secure but have relatively limited time and demand more customized assistance for learning. Students with full-time jobs tend to be more dependable and are more eager to attend test-prep courses like those offered by Sunlands. This, coupled with Sunlands' continued investment in enhancing brand awareness and optimizing course offerings, has provided and will continue to provide thrust for a wider market share and future growth for the Company.

At the same time, we have continued to focus on market opportunities for our professional certification, and we are making significant progress in expanding course offerings. Looking ahead, we will continue to develop our master's degree-oriented and professional skills programs, while solidifying our market leading position in STE programs. We are committed to delivering the best learning experience to our students so they can have the best career prospects, while also creating value for all stakeholders," concluded Mr. Liu. 

Ms. Selena Lu Lv, Chief Financial Officer of Sunlands, commented, "We are pleased to see our first quarter net revenues beat guidance once again and hit a record high, as rising brand recognition for our master's degree and professional skills programs bolstered our topline growth momentum. Our ongoing diversification from STE programs and our commitment to optimizing student experience affirms our confidence in sustaining this momentum. We also managed to lower costs, witnessing 52.2% and 16.3% reductions in G&A and R&D expenses, respectively. As a result, first quarter net loss narrowed 18.7% year-over-year to RMB53.3 million. As we look ahead, our marketing team will continue to explore avenues to promote brand awareness, while our sales team will target a higher referral rate

FAQ

What were Sunlands Technology Group's Q1 2021 financial results?

In Q1 2021, Sunlands reported net revenues of RMB694.3 million, gross profit of RMB587.9 million, and a net loss of RMB53.3 million.

How did new student enrollments change for Sunlands in Q1 2021?

New student enrollments increased by 107.6% year-over-year, reaching 145,525.

What is the net loss margin for Sunlands in Q1 2021?

The net loss margin for Q1 2021 improved to 7.7%, down from 11.6% in the same period last year.

Was Sunlands Technology Group's financial performance better than expected in Q1 2021?

Yes, Sunlands' net revenues exceeded guidance and reached a record high.

What strategies is Sunlands implementing for future growth?

Sunlands focuses on expanding master's degree-oriented programs and professional certification offerings.