Sunlands Technology Group Announces Unaudited First Quarter 2024 Financial Results
Sunlands Technology Group (NYSE: STG) reported its unaudited financial results for Q1 2024. Net revenues declined 7.7% year-over-year to RMB523.2 million (US$72.5 million). Despite a decrease in gross profit by 10.6% to RMB446.1 million (US$61.8 million), the company managed to maintain profitability with a net income of RMB112.7 million (US$15.6 million) and a net income margin of 21.5%, down from 31.8% in Q1 2023.
Notably, new student enrollments increased by 22.8% to 175,758. Deferred revenue also saw a decline to RMB1,044.9 million (US$144.7 million). Operating expenses rose by 6.4% to RMB341.1 million (US$47.2 million).
As of March 31, 2024, Sunlands held RMB803.5 million (US$111.3 million) in cash and equivalents. The company's outlook for Q2 2024 expects net revenues between RMB480 million to RMB500 million, indicating a potential year-over-year decline of up to 8.8%.
- New student enrollments increased by 22.8% to 175,758.
- Gross billings rose by 15.6% to RMB398.8 million (US$55.2 million).
- Net income for Q1 2024 was RMB112.7 million (US$15.6 million).
- Net income margin remained stable above 20%.
- Achieved third consecutive quarter of net cash inflow from operations.
- Cash, cash equivalents, and restricted cash increased to RMB803.5 million (US$111.3 million).
- General and administrative expenses decreased by 17.9%.
- Net revenues decreased by 7.7% year-over-year to RMB523.2 million (US$72.5 million).
- Gross profit declined by 10.6% to RMB446.1 million (US$61.8 million).
- Net income margin decreased to 21.5% from 31.8% in Q1 2023.
- Deferred revenue dropped to RMB1,044.9 million (US$144.7 million).
- Cost of revenues increased by 13.2% to RMB77.2 million (US$10.7 million).
- Operating expenses rose by 6.4% to RMB341.1 million (US$47.2 million).
- Sales and marketing expenses increased by 11.1%.
Insights
The first quarter of 2024 financial results for Sunlands Technology Group reveal mixed performance metrics. While net revenue decreased by
The increase in sales and marketing expenses by
The forecasted decrease in net revenues for the next quarter to between
Sunlands Technology Group's increased focus on sales and marketing appears to be paying off in terms of new enrollments. The company experienced a
However, the company faces significant headwinds. The decline in net revenues and net income points to underlying challenges. Given the decrease in gross profit by
The deferred revenue balance of
Sunlands Technology Group's financial results highlight their continuing reliance on a robust online platform that facilitates a personalized and interactive learning environment. The company’s unique approach, including their proprietary Learning Outcome Trees, helps tailor educational content to individual learning needs. This level of customization could be a competitive advantage if leveraged correctly.
However, the reported decrease in product development expenses by
Overall, while their technology-driven platform remains a core strength, the reduced investment in development could hinder future growth and product expansion, impacting long-term market position.
BEIJING, May 24, 2024 (GLOBE NEWSWIRE) -- Sunlands Technology Group (NYSE: STG) (“Sunlands” or the “Company”), a leader in China’s adult online education market and China’s adult personal interest learning market, today announced its unaudited financial results for the first quarter ended March 31, 2024.
First Quarter 2024 Financial and Operational Snapshots
- Net revenues were RMB523.2 million (US
$72.5 million ), compared to RMB566.9 million in the first quarter of 2023. - Gross billings (non-GAAP) were RMB398.8 million (US
$55.2 million ), compared to RMB345.1 million in the first quarter of 2023. - Gross profit was RMB446.1 million (US
$61.8 million ), compared to RMB498.7 million in the first quarter of 2023. - Net income was RMB112.7 million (US
$15.6 million ), compared to RMB180.1 million in the first quarter of 2023. - Net income margin1 was
21.5% in the first quarter of 2024, compared to31.8% in the first quarter of 2023. - New student enrollments2 were 175,758, compared to 143,179 in the first quarter of 2023.
- As of March 31, 2024, the Company’s deferred revenue balance was RMB1,044.9 million (US
$144.7 million ), compared to RMB1,113.9 million as of December 31, 2023.
“Reflecting on the first quarter of 2024, we've maintained stability amidst challenging conditions. Despite year-over-year decrease, our net revenues and net income for the quarter stood at RMB523.2 million and RMB112.7 million respectively. This marks our sustained profitability, underscoring our operational efficiency and commitment to shareholder value. Additionally, our enrollment figures surged by
Looking ahead, we remain optimistic about our long-term profitability. We endeavor to closely monitor and enhance student experience across all phases of teaching, learning, assessment, and practice. Moving forward, we're dedicated to delivering exceptional services and products while exploring avenues for further business growth and operational efficiency improvements.” said Mr. Tongbo Liu, Chief Executive Officer of Sunlands.
Mr. Hangyu Li, finance director of Sunlands, commented, “Throughout the first quarter, we continued our efforts to improve operational efficiency and optimize our cost structure. Since the fourth quarter of 2021, the net income margin has remained consistently above
Financial Results for the First Quarter of 2024
Net Revenues
In the first quarter of 2024, net revenues decreased by
Cost of Revenues
Cost of revenues increased by
Gross Profit
Gross profit decreased by
Operating Expenses
In the first quarter of 2024, operating expenses were RMB341.1 million (US
Sales and marketing expenses increased by
General and administrative expenses decreased by
Product development expenses decreased by
Net Income
Net income for the first quarter of 2024 was RMB112.7 million (US
Basic and Diluted Net Income Per Share
Basic and diluted net income per share was RMB16.44 (US
Cash, Cash Equivalents, Restricted Cash and Short-term Investments
As of March 31, 2024, the Company had RMB803.5 million (US
Deferred Revenue
As of March 31, 2024, the Company had a deferred revenue balance of RMB1,044.9 million (US
Share Repurchase
On December 6, 2021, the Company’s board of directors authorized a share repurchase program, under which the Company may repurchase up to US
Outlook
For the second quarter of 2024, Sunlands currently expects net revenues to be between RMB480 million to RMB500 million, which would represent a decrease of
Exchange Rate
The Company’s business is primarily conducted in China and all revenues are denominated in Renminbi (“RMB”). This announcement contains currency conversions of RMB amounts into U.S. dollars (“US$”) solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB7.2203 to US
Conference Call and Webcast
Sunlands’ management team will host a conference call at 7:00 AM U.S. Eastern Time, (7:00 PM Beijing/Hong Kong time) on May 24, 2024, following the quarterly results announcement.
For participants who wish to join the call, please access the link provided below to complete online registration 15 minutes prior to the scheduled call start time. Upon registration, participants will receive details for the conference call, including dial-in numbers, a personal PIN and an e-mail with detailed instructions to join the conference call.
Registration Link:
https://register.vevent.com/register/BI3a767e6d591c4806943f7c8f6a578811
Additionally, a live webcast and archive of the conference call will be available on the Investor Relations section of Sunlands' website at https://ir.sunlands.com/.
About Sunlands
Sunlands Technology Group (NYSE: STG) (“Sunlands” or the “Company”), formerly known as Sunlands Online Education Group, is a leader in China’s adult online education market and China’s adult personal interest learning market. With a one to many live streaming platform, Sunlands offers various degree- or diploma-oriented post-secondary courses as well as professional certification preparation, professional skills and interest courses. Students can access the Company's services either through PC or mobile applications. The Company's online platform cultivates a personalized, interactive learning environment by featuring a virtual learning community and a vast library of educational content offerings that adapt to the learning habits of its students. Sunlands offers a unique approach to education research and development that organizes subject content into Learning Outcome Trees, the Company's proprietary knowledge management system. Sunlands has a deep understanding of the educational needs of its prospective students and offers solutions that help them achieve their goals.
About Non-GAAP Financial Measures
We use gross billings, EBITDA, non-GAAP operating cost and expenses, non-GAAP income from operations and Non-GAAP net income per share, each a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes.
We define gross billings for a specific period as the total amount of cash received for the sale of course packages, net of the total amount of refunds paid in such period. Our management uses gross billings as a performance measurement because we generally bill our students for the entire course tuition at the time of sale of our course packages and recognize revenue proportionally over a period. EBITDA is defined as net income excluding depreciation and amortization, interest expense, interest income, and income tax expenses. We believe that gross billings and EBITDA provide valuable insight into the sales of our course packages and the performance of our business.
These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, their most directly comparable financial measure prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their respective most directly comparable GAAP measure has been provided in the tables included below. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measures to their respective most directly comparable GAAP financial measures. As gross billings, EBITDA, operating cost and expenses excluding share-based compensation expenses, general and administrative expenses excluding share-based compensation expenses, sales and marketing expenses excluding share-based compensation expenses, product development expenses excluding share-based compensation expenses, non-GAAP net income exclude share-based compensation expenses, and basic and diluted net income per share excluding share-based compensation expenses have material limitations as an analytical metric and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider gross billings and EBITDA as a substitute for, or superior to, their respective most directly comparable financial measures prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
Safe Harbor Statement
This press release contains forward-looking statements made under the “safe harbor” provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and 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,” “confident” and similar statements. Sunlands may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about Sunlands' beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: Sunlands' goals and strategies; its expectations regarding demand for and market acceptance of its brand and services; its ability to retain and increase student enrollments; its ability to offer new courses and educational content; its ability to improve teaching quality and students’ learning results; its ability to improve sales and marketing efficiency and effectiveness; its ability to engage, train and retain new faculty members; its future business development, results of operations and financial condition; its ability to maintain and improve technology infrastructure necessary to operate its business; competition in the online education industry in China; relevant government policies and regulations relating to Sunlands’ corporate structure, business and industry; and general economic and business condition in China Further information regarding these and other risks, uncertainties or factors is included in the Sunlands' filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and Sunlands does not undertake any obligation to update such information, except as required under applicable law.
For investor and media enquiries, please contact:
Sunlands Technology Group
Investor Relations
Email: sl-ir@sunlands.com
SOURCE: Sunlands Technology Group
| SUNLANDS TECHNOLOGY GROUP UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except for share and per share data, or otherwise noted) | ||||||||||||
| As of December 31, | As of March 31, | |||||||||||
| 2023 | 2024 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 763,800 | 800,476 | 110,865 | |||||||||
| Restricted cash | 2,578 | 3,055 | 423 | |||||||||
| Short-term investments | 142,084 | 179,661 | 24,883 | |||||||||
| Prepaid expenses and other current assets | 109,018 | 106,139 | 14,700 | |||||||||
| Deferred costs, current | 14,274 | 10,068 | 1,394 | |||||||||
| Total current assets | 1,031,754 | 1,099,399 | 152,265 | |||||||||
| Non-current assets | ||||||||||||
| Property and equipment, net | 786,670 | 779,559 | 107,968 | |||||||||
| Intangible assets, net | 975 | 751 | 104 | |||||||||
| Right-of-use assets | 135,820 | 130,377 | 18,057 | |||||||||
| Deferred costs, non-current | 68,773 | 61,499 | 8,518 | |||||||||
| Long-term investments | 61,354 | 56,540 | 7,831 | |||||||||
| Other non-current assets | 33,160 | 34,337 | 4,756 | |||||||||
| Total non-current assets | 1,086,752 | 1,063,063 | 147,234 | |||||||||
| TOTAL ASSETS | 2,118,506 | 2,162,462 | 299,499 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| LIABILITIES | ||||||||||||
| Current liabilities | ||||||||||||
| Accrued expenses and other current liabilities | 409,691 | 417,455 | 57,820 | |||||||||
| Deferred revenue, current | 553,812 | 480,712 | 66,578 | |||||||||
| Lease liabilities, current portion | 8,019 | 8,587 | 1,189 | |||||||||
| Long-term debt, current portion | 38,654 | 38,654 | 5,354 | |||||||||
| Total current liabilities | 1,010,176 | 945,408 | 130,941 | |||||||||
| SUNLANDS TECHNOLOGY GROUP UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS-continued (Amounts in thousands, except for share and per share data, or otherwise noted) | ||||||||||||
| As of December 31, | As of March 31, | |||||||||||
| 2023 | 2024 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Non-current liabilities | ||||||||||||
| Deferred revenue, non-current | 560,111 | 564,154 | 78,134 | |||||||||
| Lease liabilities, non-current portion | 157,269 | 150,579 | 20,855 | |||||||||
| Deferred tax liabilities | 3,742 | 3,106 | 430 | |||||||||
| Other non-current liabilities | 6,994 | 7,067 | 979 | |||||||||
| Long-term debt, non-current portion | 104,665 | 95,001 | 13,157 | |||||||||
| Total non-current liabilities | 832,781 | 819,907 | 113,555 | |||||||||
| TOTAL LIABILITIES | 1,842,957 | 1,765,315 | 244,496 | |||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||
| Class A ordinary shares (par value of US | ||||||||||||
| authorized; 3,131,807 and 3,131,807 shares issued as of December 31, 2023 | ||||||||||||
| and March 31, 2024, respectively; 2,702,523 and 2,697,294 shares | ||||||||||||
| outstanding as of December 31, 2023 and March 31, 2024, respectively) | 1 | 1 | - | |||||||||
| Class B ordinary shares (par value of US | ||||||||||||
| authorized; 826,389 and 826,389 shares issued and outstanding | ||||||||||||
| as of December 31, 2023 and March 31, 2024, respectively) | - | - | - | |||||||||
| Class C ordinary shares (par value of US | ||||||||||||
| authorized; 3,332,062 and 3,332,062 shares issued and outstanding | ||||||||||||
| as of December 31, 2023 and March 31, 2024, respectively) | 1 | 1 | - | |||||||||
| Treasury stock | - | - | - | |||||||||
| Accumulated deficit | (2,171,284 | ) | (2,058,549 | ) | (285,106 | ) | ||||||
| Additional paid-in capital | 2,305,042 | 2,304,369 | 319,151 | |||||||||
| Accumulated other comprehensive income | 143,276 | 152,812 | 21,164 | |||||||||
| Total Sunlands Technology Group shareholders’ equity | 277,036 | 398,634 | 55,209 | |||||||||
| Non-controlling interest | (1,487 | ) | (1,487 | ) | (206 | ) | ||||||
| TOTAL SHAREHOLDERS’ EQUITY | 275,549 | 397,147 | 55,003 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 2,118,506 | 2,162,462 | 299,499 | |||||||||
| SUNLANDS TECHNOLOGY GROUP UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except for share and per share data, or otherwise noted) | ||||||||||||
| For the Three Months Ended March 31, | ||||||||||||
| 2023 | 2024 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Net revenues | 566,876 | 523,240 | 72,468 | |||||||||
| Cost of revenues | (68,155 | ) | (77,163 | ) | (10,687 | ) | ||||||
| Gross profit | 498,721 | 446,077 | 61,781 | |||||||||
| Operating expenses | ||||||||||||
| Sales and marketing expenses | (271,414 | ) | (301,575 | ) | (41,768 | ) | ||||||
| Product development expenses | (9,680 | ) | (7,010 | ) | (971 | ) | ||||||
| General and administrative expenses | (39,640 | ) | (32,552 | ) | (4,508 | ) | ||||||
| Total operating expenses | (320,734 | ) | (341,137 | ) | (47,247 | ) | ||||||
| Income from operations | 177,987 | 104,940 | 14,534 | |||||||||
| Interest income | 6,561 | 9,289 | 1,287 | |||||||||
| Interest expense | (2,124 | ) | (1,604 | ) | (222 | ) | ||||||
| Other income, net | 8,798 | 5,780 | 801 | |||||||||
| Income before income tax (expenses)/benefit | ||||||||||||
| and loss from equity method investments | 191,222 | 118,405 | 16,400 | |||||||||
| Income tax (expenses)/benefit | (7,731 | ) | 391 | 54 | ||||||||
| Loss from equity method investments | (3,384 | ) | (6,061 | ) | (839 | ) | ||||||
| Net income | 180,107 | 112,735 | 15,615 | |||||||||
| Less: net income attributable to non-controlling interest | 1 | - | - | |||||||||
| Net income attributable to Sunlands Technology Group | 180,106 | 112,735 | 15,615 | |||||||||
| Net income per share attributable to ordinary shareholders of | ||||||||||||
| Sunlands Technology Group: | ||||||||||||
| Basic and diluted | 26.00 | 16.44 | 2.28 | |||||||||
| Weighted average shares used in calculating net income | ||||||||||||
| per ordinary share: | ||||||||||||
| Basic and diluted | 6,926,440 | 6,857,016 | 6,857,016 | |||||||||
| SUNLANDS TECHNOLOGY GROUP UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in thousands) | ||||||||||||
| For the Three Months Ended March 31, | ||||||||||||
| 2023 | 2024 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Net income | 180,107 | 112,735 | 15,615 | |||||||||
| Other comprehensive (loss)/income, net of tax effect of nil: | ||||||||||||
| Change in cumulative foreign currency translation adjustments | (2,327 | ) | 9,536 | 1,321 | ||||||||
| Total comprehensive income | 177,780 | 122,271 | 16,936 | |||||||||
| Less: comprehensive income attributable to non-controlling interest | 1 | - | - | |||||||||
| Comprehensive income attributable to Sunlands Technology Group | 177,779 | 122,271 | 16,936 | |||||||||
| SUNLANDS TECHNOLOGY GROUP RECONCILIATION OF GAAP AND NON-GAAP RESULTS (Amounts in thousands) | ||||||||
| For the Three Months Ended March 31, | ||||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Net revenues | 566,876 | 523,240 | ||||||
| Less: other revenues | (41,847 | ) | (58,874 | ) | ||||
| Add: tax and surcharges | 17,995 | 16,369 | ||||||
| Add: ending deferred revenue | 1,513,896 | 1,044,866 | ||||||
| Add: ending refund liability | 112,188 | 130,840 | ||||||
| Less: beginning deferred revenue | (1,690,946 | ) | (1,113,923 | ) | ||||
| Less: beginning refund liability | (133,066 | ) | (143,744 | ) | ||||
| Gross billings (non-GAAP) | 345,096 | 398,774 | ||||||
| Net income | 180,107 | 112,735 | ||||||
| Add: income tax expenses/(benefit) | 7,731 | (391 | ) | |||||
| depreciation and amortization | 7,590 | 7,431 | ||||||
| interest expense | 2,124 | 1,604 | ||||||
| Less: interest income | (6,561 | ) | (9,289 | ) | ||||
| EBITDA (non-GAAP) | 190,991 | 112,090 | ||||||
1 Net income margin is defined as net income as a percentage of net revenues.
2 New student enrollments for a given period refer 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, such as “mini courses” and “RMB1 courses”, which we offer in the form of recorded videos or short live streaming, to strengthen our competitiveness and improve customer experience.
FAQ
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