TAL Education Group Announces Unaudited Financial Results for the Third Fiscal Quarter Ended November 30, 2023
- 60.5% increase in net revenues for the third quarter of fiscal year 2024 compared to the same period of the prior year
- 41.3% increase in net revenues for the first nine months of fiscal year 2024 compared to the same period of the prior year
- Decrease in net loss and non-GAAP loss for the third quarter of fiscal year 2024 compared to the same period of the prior year
- None.
Insights
The reported financial results of TAL Education Group provide a mixed outlook for the company. While net revenues have increased significantly by 60.5% and 41.3% for the quarter and nine months respectively, the company still reports an operational loss. The increase in revenue is a positive indicator of growth, but the persistence of operational losses raises concerns about the company's cost management and profitability in the long term.
Investors should note the non-GAAP loss from operations has more than doubled for the quarter, suggesting that aside from share-based compensation, operational efficiency may be declining. This could be a red flag, indicating that the company's expansion is not yet translating into improved operational performance. However, the reduction in net loss attributable to TAL by over 50% for both the quarter and nine months is a positive development, showing some level of cost control or improved margins outside of core operations.
The increase in cash and cash equivalents alongside a substantial increase in deferred revenue suggests that the company is effectively managing cash flow and has a healthy amount of pre-paid revenue, which could be recognized in future periods, potentially smoothing out earnings volatility.
The education sector in China has been subject to regulatory changes, which makes TAL's revenue growth particularly noteworthy. The growth indicates a strong demand for TAL's smart learning solutions and a potential increase in market share. However, it is also important to consider the operating costs and expenses which have increased significantly. This could be attributed to investments in marketing and technology to maintain competitive advantage in the evolving education technology landscape.
Another aspect to consider is the share repurchase program. This indicates the management's confidence in the company's intrinsic value and could be seen as a positive signal to the market. However, investors should balance this with the overall financial health of the company, as share repurchases impact cash reserves and could be considered a less productive use of capital if the company continues to operate at a loss.
From an economic perspective, TAL's financial results must be contextualized within the broader economic environment. China's economy has faced headwinds from regulatory changes, trade tensions and the global economic climate. Despite these challenges, TAL's revenue growth suggests resilience and adaptability in their business model. However, the increased costs, particularly in selling and marketing, may reflect higher competition and customer acquisition costs in the education sector.
Furthermore, the increase in gross profit is a positive sign, but when juxtaposed with the increased operational losses, it suggests that the company's strategic investments have yet to yield operational efficiency. The substantial cash reserves and deferred revenue could provide a buffer against economic downturns and offer flexibility for strategic maneuvers, but long-term sustainability will ultimately depend on achieving profitability.
Highlights for the Third Quarter of Fiscal Year 2024
- Net revenues was
US , compared to net revenues of$373.5 million US in the same period of the prior year.$232.7 million - Loss from operations was
US , compared to loss from operations of$32.2 million US in the same period of the prior year.$32.9 million - Non-GAAP loss from operations, which excluded share-based compensation expenses, was
US , compared to non-GAAP loss from operations of$10.2 million US in the same period of the prior year.$4.5 million - Net loss attributable to TAL was
US , compared to net loss attributable to TAL of$23.9 million US in the same period of the prior year.$51.6 million - Non-GAAP net loss attributable to TAL, which excluded share-based compensation expenses, was
US , compared to non-GAAP net loss attributable to TAL of$1.9 million US .2 million in the same period of the prior year.$23 - Basic and diluted net loss per American Depositary Share ("ADS") were both
US . Non-GAAP basic and diluted net loss per ADS, which excluded share-based compensation expenses, were both$0.04 US . Three ADSs represent one Class A common share.$0.00 - Cash, cash equivalents and short-term investments totaled
US as of November 30, 2023, compared to$3,167.6 million US as of February 28, 2023.$3,171.5 million
Highlights for the Nine Months Ended November 30, 2023
- Net revenues was
US , compared to net revenues of$1,060.9 million US in the same period of the prior year.$750.8 million - Loss from operations was
US , compared to loss from operations of$58.2 million US in the same period of the prior year.$46.3 million - Non-GAAP income from operations, which excluded share-based compensation expenses, was
US , compared to non-GAAP income from operations of$10.2 million US in the same period of the prior year.$35.9 million - Net loss attributable to TAL was
US , compared to net loss attributable to TAL of$31.1 million US in the same period of the prior year.$96.2 million - Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was
US , compared to non-GAAP net loss attributable to TAL of$37.3 million US in the same period of the prior year.$14.0 million - Basic and diluted net loss per ADS were both
US . Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were both$0.05 US .$0.06
Financial Data——Third Quarter and First Nine Months of Fiscal Year 2024
(In US$ thousands, except per ADS data and percentages)
Three Months Ended | |||
November 30, | |||
2022 | 2023 | Pct. Change | |
Net revenues | 232,681 | 373,506 | 60.5 % |
Loss from operations | (32,882) | (32,185) | (2.1 %) |
Non-GAAP loss from operations | (4,540) | (10,184) | 124.3 % |
Net loss attributable to TAL | (51,579) | (23,946) | (53.6 %) |
Non-GAAP net loss attributable to TAL | (23,237) | (1,945) | (91.6 %) |
Net loss per ADS attributable to TAL – basic | (0.08) | (0.04) | (50.9 %) |
Net loss per ADS attributable to TAL – diluted | (0.08) | (0.04) | (50.9 %) |
Non-GAAP net loss per ADS attributable to TAL | (0.04) | (0.00) | (91.1 %) |
Non-GAAP net loss per ADS attributable to TAL | (0.04) | (0.00) | (91.1 %) |
Nine Months Ended | |||||
November 30, | |||||
2022 | 2023 | Pct. Change | |||
Net revenues | 750,786 | 1,060,877 | 41.3 % | ||
Loss from operations | (46,314) | (58,168) | 25.6 % | ||
Non-GAAP income from operations | 35,931 | 10,229 | (71.5 %) | ||
Net loss attributable to TAL | (96,195) | (31,081) | (67.7 %) | ||
Non-GAAP net (loss)/income attributable to TAL | (13,950) | 37,316 | (367.5 %) | ||
Net loss per ADS attributable to TAL – basic | (0.15) | (0.05) | (66.3 %) | ||
Net loss per ADS attributable to TAL – diluted | (0.15) | (0.05) | (66.3 %) | ||
Non-GAAP net (loss)/income per ADS attributable | (0.02) | 0.06 | (379.0 %) | ||
Non-GAAP net (loss)/income per ADS attributable | (0.02) | 0.06 | (374.4 %) | ||
"Throughout this fiscal quarter, we continue to manage our core businesses, while concurrently exploring additional opportunities for development." said Alex Peng, TAL's President & Chief Financial Officer.
Mr. Peng added: "Also, we recognize the transformative potential of this new wave of technologies for our business operations, and will harness its power to serve our customers."
Financial Results for the Third Quarter of Fiscal Year 2024
Net Revenues
In the third quarter of fiscal year 2024, TAL reported net revenues of
Operating Costs and Expenses
In the third quarter of fiscal year 2024, operating costs and expenses were
Cost of revenues increased by
Selling and marketing expenses increased by
General and administrative expenses increased by
Total share-based compensation expenses allocated to the related operating costs and expenses decreased by
Gross Profit
Gross profit increased by
Loss from Operations
Loss from operations was
Other (Expense)/Income
Other income was
Impairment Loss on Long-term Investments
Impairment loss on long-term investment was
Income Tax Expense
Income tax expense was
Net (Loss)/Income attributable to TAL Education Group
Net loss attributable to TAL was
Basic and Diluted Net (Loss)/Income per ADS
Basic and diluted net loss per ADS were both
Cash Flow
Net cash provided by operating activities for the third quarter of fiscal year 2024 was
Cash, Cash Equivalents, and Short-Term Investments
As of November 30, 2023, the Company had
Deferred Revenue
As of November 30, 2023, the Company's deferred revenue balance was
Financial Results for the First Nine Months of Fiscal Year 2024
Net Revenues
For the first nine months of fiscal year 2024, TAL reported net revenues of
Operating Costs and Expenses
In the first nine months of fiscal year 2024, operating costs and expenses were
Cost of revenues increased by
Selling and marketing expenses increased by
General and administrative expenses increased by
Total share-based compensation expenses allocated to the related operating costs and expenses decreased by
Gross Profit
Gross profit increased by
(Loss)/Income from Operations
Loss from operations was
Other (Expense)/Income
Other income was
Impairment Loss on Long-term Investments
Impairment loss on long-term investments was
Income Tax Expense
Income tax expense was
Net (Loss)/Income Attributable to TAL Education Group
Net loss attributable to TAL was US
Cash Flow
Net cash provided by operating activities for the first nine months of fiscal year 2024 was
Basic and Diluted Net (Loss)/Income per ADS
Basic and diluted net loss per ADS were both
Share Repurchase
In April 2023, the Company's board of directors authorized to extend its share repurchase program launched in April 2021 by 12 months. Pursuant to the extended share repurchase program, the Company may repurchase up to approximately
Director Resignation and Appointment
Mr. Yunfeng Bai ("Mr. Bai") has resigned from his position as a director of the Company, effective January 23, 2024. Mr. Bai's resignation was due to personal reasons and not as a result of any disagreement between Mr. Bai and the Company, its management, the Board or any committee of the Board. The Board appointed Dr. Yachao Liu ("Dr. Liu"), who currently serves as the chief operating officer of the Company, as a new director to serve on the Board, effective January 23, 2024.
Conference Call
The Company will host a conference call and live webcast to discuss its financial results for the third fiscal quarter of fiscal year 2024 ended November 30, 2023 at 7:00 a.m. Eastern Time on January 25, 2024 (8:00 p.m.
Please note that you will need to pre-register for conference call participation at https://register.vevent.com/register/BI667c14d6700b44e0a1cd016d7f7f8878.
Upon registration, you will receive an email containing participant dial-in numbers and unique Direct Event Passcode. This information will allow you to gain immediate access to the call. Participants may pre-register at any time, including up to and after the call start time.
A live and archived webcast of the conference call will be available on the Investor Relations section of TAL's website at https://ir.100tal.com/.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the
About TAL Education Group
TAL Education Group is a smart learning solutions provider in
About Non-GAAP Financial Measures
In evaluating its business, TAL considers and uses the following measures defined as non-GAAP financial measures by the SEC as supplemental metrics to review and assess its operating performance: non-GAAP operating costs and expenses, non-GAAP cost of revenues, non-GAAP selling and marketing expenses, non-GAAP general and administrative expenses, non-GAAP loss from operations, non-GAAP net loss attributable to TAL, non-GAAP basic and non-GAAP diluted net loss per ADS. To present each of these non-GAAP measures, the Company excludes share-based compensation expenses, the related tax effect of which has been nil. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release.
TAL believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. TAL believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to TAL's historical performance and liquidity. TAL computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. TAL believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
For further information, please contact:
Jackson Ding
Investor Relations
TAL Education Group
Tel: +86 10 5292 6669-8809
Email: ir@tal.com
TAL EDUCATION GROUP | ||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(In thousands of | ||||
As of February 28, | As of November 30, | |||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | ||||
Restricted cash-current | 126,891 | 234,501 | ||
Short-term investments | 1,149,607 | 974,211 | ||
Inventory | 39,002 | 59,013 | ||
Amounts due from related parties-current | 423 | 404 | ||
Income tax receivables | 5,071 | - | ||
Prepaid expenses and other current assets | 125,486 | 182,323 | ||
Total current assets | 3,468,407 | 3,643,839 | ||
Restricted cash-non-current | 146,089 | 94,480 | ||
Property and equipment, net | 288,877 | 376,101 | ||
Deferred tax assets | 5,973 | 2,722 | ||
Rental deposits | 12,734 | 14,313 | ||
Intangible assets, net | 485 | 2,427 | ||
Land use right, net | 193,878 | 185,252 | ||
Amounts due from related parties- non-current | - | 22 | ||
Long-term investments | 453,375 | 374,369 | ||
Long-term prepayments and other non-current assets | 5,534 | 12,683 | ||
Operating lease right-of-use assets | 149,002 | 207,115 | ||
Total assets | ||||
LIABILITIES AND EQUITY | ||||
Current liabilities | ||||
Accounts payable | ||||
Deferred revenue-current | 234,889 | 482,368 | ||
Amounts due to related parties-current | 100 | 169 | ||
Accrued expenses and other current liabilities | 446,711 | 479,889 | ||
Operating lease liabilities, current portion | 42,174 | 58,182 | ||
Total current liabilities | 783,865 | 1,131,218 | ||
Deferred revenue-non-current | 2,465 | 25,294 | ||
Deferred tax liabilities | 1,563 | 2,108 | ||
Operating lease liabilities, non-current portion | 115,548 | 156,282 | ||
Total liabilities | 903,441 | 1,314,902 | ||
Equity | ||||
Class A common shares | 169 | 152 | ||
Class B common shares | 49 | 49 | ||
Treasury Stock | (6) | - | ||
Additional paid-in capital | 4,400,656 | 4,235,880 | ||
Statutory reserve | 160,353 | 157,492 | ||
Accumulated deficit | (685,912) | (714,132) | ||
Accumulated other comprehensive loss | (30,666) | (57,646) | ||
Total TAL Education Group's equity | 3,844,643 | 3,621,795 | ||
Noncontrolling interest | (23,730) | (23,374) | ||
Total equity | 3,820,913 | 3,598,421 | ||
Total liabilities and equity | ||||
TAL EDUCATION GROUP | ||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(In thousands of | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended November 30, | |||||||||||||||
2022 | 2023 | 2022 | 2023 | |||||||||||||
Net revenues | ||||||||||||||||
Cost of revenues (note 1) | 102,955 | 173,180 | 308,645 | 482,075 | ||||||||||||
Gross profit | 129,726 | 200,326 | 442,141 | 578,802 | ||||||||||||
Operating expenses (note 1) | ||||||||||||||||
Selling and marketing | 70,398 | 121,977 | 208,524 | 335,902 | ||||||||||||
General and administrative | 92,972 | 110,678 | 301,628 | 312,707 | ||||||||||||
Total operating expenses | 163,370 | 232,655 | 510,152 | 648,609 | ||||||||||||
Government subsidies | 762 | 144 | 21,697 | 11,639 | ||||||||||||
Loss from operations | (32,882) | (32,185) | (46,314) | (58,168) | ||||||||||||
Interest income | 15,979 | 20,076 | 41,487 | 64,033 | ||||||||||||
Other (expense)/income | (32,022) | 13,324 | (84,526) | 11,511 | ||||||||||||
Gain from disposal of a | - | - | 9,550 | - | ||||||||||||
Impairment loss on long-term |
(215) |
(2,270) |
(6,825) |
(33,031) | ||||||||||||
Loss before income tax | (49,140) | (1,055) | (86,628) | (15,655) | ||||||||||||
Income tax expense | (2,756) | (15,374) | (9,559) | (8,875) | ||||||||||||
Income/(loss) from equity | 280 | (7,644) | 801 | (6,936) | ||||||||||||
Net loss | (51,616) | (24,073) | (95,386) | (31,466) | ||||||||||||
Add: Net loss/(income) | 37 | 127 | (809) | 385 | ||||||||||||
Total net loss attributable to | ||||||||||||||||
Net loss per common share | ||||||||||||||||
Basic | ||||||||||||||||
Diluted | (0.24) | (0.12) | (0.45) | (0.15) | ||||||||||||
Net loss per ADS (note 2) | ||||||||||||||||
Basic | ||||||||||||||||
Diluted | (0.08) | (0.04) | (0.15) | (0.05) | ||||||||||||
Weighted average shares used in | ||||||||||||||||
Basic | 211,617,052 | 200,134,875 | 212,770,824 | 204,020,823 | ||||||||||||
Diluted | 211,617,052 | 200,134,875 | 212,770,824 | 204,020,823 | ||||||||||||
Note1: Share-based compensation expenses are included in the operating costs and expenses as follows: | ||||||||||||||||
For the Three Months | For the Nine Months | ||||||||
Ended November 30, | Ended November 30, | ||||||||
2022 | 2023 | 2022 | 2023 | ||||||
Cost of revenues | |||||||||
Selling and marketing expenses | 6,637 | 5,558 | 23,014 | 19,120 | |||||
General and administrative expenses | 18,156 | 13,944 | 50,702 | 42,288 | |||||
Total | |||||||||
Note 2: Three ADSs represent one Class A common Share. | |||||||||
TAL EDUCATION GROUP | |||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF | |||||||
COMPREHENSIVE LOSS | |||||||
(In thousands of | |||||||
For the Three Months Ended November 30,
| For the Nine Months Ended November 30,
| ||||||
2022 | 2023 | 2022 | 2023 | ||||
Net loss | |||||||
Other comprehensive | (24,634) | 18,356 | (141,372) | (26,239) | |||
Comprehensive loss | (76,250) | (5,717) | (236,758) | (57,705) | |||
Add: Comprehensive | (776) | 557 | (4,172) | (356) | |||
Comprehensive loss | |||||||
TAL EDUCATION GROUP | |||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF | |||||||
CASH fLOWS | |||||||
(In thousands of | |||||||
For the Three Months Ended November 30,
| For the Nine Months Ended November 30,
| ||||||
2022 | 2023 | 2022 | 2023 | ||||
Net cash provided by operating | |||||||
Net cash provided by/(used in) | 99,207 | (208,847) | (324,778) | 133,955 | |||
Net cash (used in)/provided by | (11,931) | 207 | (66,235) | (233,301) | |||
Effect of exchange rate | (403) | 6,805 | (30,860) | (3,111) | |||
Net increase/(decrease) in | 182,770 | 45,288 | (373,554) | 227,461 | |||
Cash, cash equivalents and | 2,125,462 | 2,477,080 | 2,681,786 | 2,294,907 | |||
Cash, cash equivalents and | |||||||
TAL EDUCATION GROUP | |||||||
Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures | |||||||
(In thousands of | |||||||
For the Three Months Ended November 30, | For the Nine Months | ||||||
2022 | 2023 | 2022 | 2023 | ||||
Cost of revenues | |||||||
Share-based compensation expense in | 3,549 | 2,499 | 8,529 | 6,989 | |||
Non-GAAP cost of revenues | 99,406 | 170,681 | 300,116 | 475,086 | |||
Selling and marketing expenses | 70,398 | 121,977 | 208,524 | 335,902 | |||
Share-based compensation expense in | 6,637 | 5,558 | 23,014 | 19,120 | |||
Non-GAAP selling and marketing | 63,761 | 116,419 | 185,510 | 316,782 | |||
General and administrative expenses | 92,972 | 110,678 | 301,628 | 312,707 | |||
Share-based compensation expense in | 18,156 | 13,944 | 50,702 | 42,288 | |||
Non-GAAP general and | 74,816 | 96,734 | 250,926 | 270,419 | |||
Operating costs and expenses | 266,325 | 405,835 | 818,797 | 1,130,684 | |||
Share-based compensation expense in | 28,342 | 22,001 | 82,245 | 68,397 | |||
Non-GAAP operating costs and | 237,983 | 383,834 | 736,552 | 1,062,287 | |||
Loss from operations | (32,882) | (32,185) | (46,314) | (58,168) | |||
Share based compensation expenses | 28,342 | 22,001 | 82,245 | 68,397 | |||
Non-GAAP (loss)/income from | (4,540) | (10,184) | 35,931 | 10,229 | |||
Net loss attributable to TAL | (51,579) | (23,946) | (96,195) | (31,081) | |||
Share based compensation expenses | 28,342 | 22,001 | 82,245 | 68,397 | |||
Non-GAAP net (loss)/income | |||||||
Net loss per ADS | |||||||
Basic | |||||||
Diluted | (0.08) | (0.04) | (0.15) | (0.05) | |||
Non-GAAP net (loss)/income per ADS | |||||||
Basic | |||||||
Diluted | (0.04) | (0.00) | (0.02) | 0.06 | |||
ADSs used in calculating net loss per | |||||||
Basic | 634,851,156 | 600,404,625 | 638,312,472 | 612,062,469 | |||
Diluted | 634,851,156 | 600,404,625 | 638,312,472 | 612,062,469 | |||
ADSs used in calculating Non-GAAP | |||||||
Basic | 634,851,156 | 600,404,625 | 638,312,472 | 612,062,469 | |||
Diluted | 634,851,156 | 600,404,625 | 638,312,472 | 622,332,267 | |||
View original content:https://www.prnewswire.com/news-releases/tal-education-group-announces-unaudited-financial-results-for-the-third-fiscal-quarter-ended-november-30-2023-302044465.html
SOURCE TAL Education Group
FAQ
What was TAL Education Group's ticker symbol mentioned in the press release?
What was the percentage change in net revenues for the third quarter of fiscal year 2024 compared to the same period of the prior year?
What was the percentage change in net revenues for the first nine months of fiscal year 2024 compared to the same period of the prior year?
What was the net loss attributable to TAL for the third quarter of fiscal year 2024?
What was the non-GAAP net loss attributable to TAL for the third quarter of fiscal year 2024?
