TAL Education Group Announces Unaudited Financial Results for the Second Fiscal Quarter Ended August 31, 2022
TAL Education Group (NYSE: TAL) reported its financial results for Q2 FY2023, revealing a significant 79.6% decline in net revenues, totaling US$294.1 million, compared to US$1,443.9 million a year ago. However, the company achieved income from operations of US$14.9 million, reversing the loss of US$379.9 million from the previous year. The net loss attributable to TAL narrowed to US$0.8 million from US$826.5 million. TAL emphasized its focus on developing learning services and maintaining financial health, backed by cash and investments totaling US$3,086.6 million.
- Income from operations improved to US$14.9 million from a loss of US$379.9 million YoY.
- Cash and short-term investments increased to US$3,086.6 million as of August 31, 2022.
- Non-GAAP net income attributable to TAL was US$26.6 million compared to a loss of US$760.1 million YoY.
- Basic and diluted net loss per ADS improved to US$0.00 from US$1.29 YoY.
- Net revenues decreased by 79.6% to US$294.1 million from US$1,443.9 million YoY.
- Gross profit fell by 69.0% to US$176.9 million from US$571.3 million YoY.
- Net loss attributable to TAL remains, albeit reduced, at US$0.8 million compared to last year's US$826.5 million.
BEIJING, Oct. 28, 2022 /PRNewswire/ -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"), a smart learning solutions provider in China, today announced its unaudited financial results for the second quarter of fiscal year 2023 ended August 31, 2022.
Highlights for the Second Quarter of Fiscal Year 2023
- Net revenues was US
- Income from operations was US
- Non-GAAP income from operations, which excluded share-based compensation expenses, was US
- Net loss attributable to TAL was US
- Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US
- Basic and diluted net loss per American Depositary Share ("ADS") were both US
- Cash, cash equivalents and short-term investments totaled US
Highlights for the Six Months Ended August 31, 2022
- Net revenues was US
- Loss from operations was US
- Non-GAAP income from operations, which excluded share-based compensation expenses, was US
- Net loss attributable to TAL was US
- Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US
- Basic and diluted net loss per ADS were both US
Financial Data——Second Quarter and First Six Months of Fiscal Year 2023 | |||
(In US$ thousands, except per ADS data and percentages) | |||
Three Months Ended | |||
August 31, | |||
2021 | 2022 | Pct. Change | |
Net revenues | 1,443,880 | 294,060 | (79.6 %) |
(Loss)/income from operations | (379,874) | 14,891 | (103.9 %) |
Non-GAAP(loss)/income from operations | (313,440) | 42,315 | (113.5 %) |
Net loss attributable to TAL | (826,546) | (787) | (99.9 %) |
Non-GAAP net (loss)/income attributable to TAL | (760,112) | 26,637 | (103.5 %) |
Net loss per ADS attributable to TAL – basic | (1.29) | (0.00) | (99.9 %) |
Net loss per ADS attributable to TAL – diluted | (1.29) | (0.00) | (99.9 %) |
Non-GAAP net (loss)/income per ADS attributable | (1.18) | 0.04 | (103.5 %) |
Non-GAAP net (loss)/income per ADS attributable | (1.18) | 0.04 | (103.5 %) |
Six Months Ended | |||
August 31, | |||
2021 | 2022 | Pct. Change | |
Net revenues | 2,828,823 | 518,105 | (81.7 %) |
Loss from operations | (506,731) | (13,432) | (97.3 %) |
Non-GAAP (loss)/income from operations | (372,852) | 40,471 | (110.9 %) |
Net loss attributable to TAL | (928,624) | (44,616) | (95.2 %) |
Non-GAAP net (loss)/income attributable to TAL | (794,745) | 9,287 | (101.2 %) |
Net loss per ADS attributable to TAL – basic | (1.44) | (0.07) | (95.2 %) |
Net loss per ADS attributable to TAL – diluted | (1.44) | (0.07) | (95.2 %) |
Non-GAAP net (loss)/income per ADS attributable | (1.23) | 0.01 | (101.2 %) |
Non-GAAP net (loss)/income per ADS attributable | (1.23) | 0.01 | (101.2 %) |
"Our business has shown a healthy momentum in this quarter. We will continue to invest in learning services, learning content solutions and learning technology solutions to lay the foundation for long-term growth." said Alex Peng, TAL's President & Chief Financial Officer.
Mr. Peng added: "We recently announced our new mission of 'to empower life-long growth with love and technology' and our new vision of 'to become an organization driving continuous innovation'. We will continue to develop our current product and service portfolio, while, in alignment with our new mission and vision, exploring new initiatives in and beyond the learning solutions market."
Financial Results for the Second Quarter of Fiscal Year 2023
Net Revenues
In the second quarter of fiscal year 2023, TAL reported net revenues of US
Operating Costs and Expenses
In the second quarter of fiscal year 2023, operating costs and expenses were US
Cost of revenues decreased by
Selling and marketing expenses decreased by
General and administrative expenses decreased by
Total share-based compensation expenses allocated to the related operating costs and expenses decreased by
Impairment loss on intangible assets and goodwill was nil for the second quarter of fiscal year 2023, compared to US
Gross Profit
Gross profit decreased by
(Loss)/Income from Operations
Income from operations was US
Other (expense)/Income
Other expense was US
Impairment Loss on Long-term Investments
Impairment loss on Long-term investment was US
Income Tax Expense
Income tax expense was US
Net (Loss)/Income attributable to TAL
Net loss attributable to TAL was US
Basic and Diluted Net (Loss)/Income per ADS
Basic and diluted net loss per ADS were both US
Cash, Cash Equivalents, and Short-Term Investments
As of August 31, 2022, the Company had US
Deferred Revenue
As of August 31, 2022, the Company's deferred revenue balance was US
Financial Results for the First Six Months of Fiscal Year 2023
Net Revenues
For the first six months of fiscal year 2023, TAL reported net revenues of US
Operating Costs and Expenses
In the first six months of fiscal year 2023, operating costs and expenses were US
Cost of revenues decreased by
Selling and marketing expenses decreased by
General and administrative expenses decreased by
Total share-based compensation expenses allocated to the related operating costs and expenses decreased by
Impairment loss on intangible assets and goodwill was nil for the first six months of fiscal year 2023, compared to US
Gross Profit
Gross profit decreased by
(Loss)/Income from Operations
Loss from operations was US
Other (Expense)/Income
Other expense was US
Impairment Loss on Long-term Investments
Impairment loss on long-term investments was US
Income Tax Expense
Income tax expense was US
Net (Loss)/Income Attributable to TAL Education Group
Net loss attributable to TAL was US
Basic and Diluted Net (Loss)/Income per ADS
Basic and diluted net loss per ADS were both US
Conference Call
The Company will host a conference call and live webcast to discuss its financial results for the second fiscal quarter of fiscal year 2023 ended August 31, 2022 at 8:00 a.m. Eastern Time on October 28, 2022 (8:00 p.m. Beijing time on October 28, 2022).
Please note that you will need to pre-register for conference call participation at https://register.vevent.com/register/BI60d8b93968b145e994b6c9c02b8aa42e.
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 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, TAL Education Group's strategic and operational plans contain forward-looking statements. The Company 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 reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. 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 statement, including but not limited to the following: the Company's ability to continue to provide competitive learning services and products; the Company's ability to continue to recruit, train and retain talents; the Company's ability to improve the content of current course offerings and develop new courses; the Company's ability to maintain and enhance its brand; the Company's ability to maintain and continue to improve its teaching results; and the Company's ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company's reports filed with, or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and TAL Education Group undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.
About TAL Education Group
TAL Education Group is a smart learning solutions provider in China. The acronym "TAL" stands for "Tomorrow Advancing Life", which reflects our vision to promote top learning opportunities for students through both high-quality teaching and content, as well as leading edge application of technology in the education experience. TAL Education Group offers comprehensive learning services to students from all ages through diversified class formats. Our learning services mainly cover enrichment learnings programs and some academic subjects in and out of China. Our ADSs trade on the New York Stock Exchange under the symbol "TAL".
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 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 U.S. dollars) | ||||
As of February 28, | As of August 31, | |||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | ||||
Restricted cash-current | 755,646 | 207,816 | ||
Short-term investments | 1,070,535 | 1,327,275 | ||
Inventory | 21,830 | 30,828 | ||
Amounts due from related parties-current | 919 | 324 | ||
Income tax receivables | 19,504 | 28 | ||
Prepaid expenses and other current assets | 122,753 | 141,386 | ||
Total current assets | 3,629,376 | 3,466,912 | ||
Restricted cash-non-current | 287,951 | 158,391 | ||
Property and equipment, net | 281,226 | 262,606 | ||
Deferred tax assets | 6,747 | 3,202 | ||
Rental deposits | 10,770 | 13,833 | ||
Intangible assets, net | 1,696 | 824 | ||
Land use right, net | 217,708 | 197,213 | ||
Amounts due from related parties- non-current | 77 | - | ||
Long-term investments | 414,487 | 464,467 | ||
Long-term prepayments and other non-current assets | 5,418 | 2,627 | ||
Operating lease right-of-use assets | 227,072 | 148,715 | ||
Total assets | ||||
LIABILITIES AND EQUITY | ||||
Current liabilities | ||||
Accounts payable | ||||
Deferred revenue-current | 187,718 | 177,530 | ||
Amounts due to related parties-current | 205 | 102 | ||
Accrued expenses and other current liabilities | 558,718 | 463,711 | ||
Operating lease liabilities, current portion | 66,105 | 39,955 | ||
Total current liabilities | 902,584 | 754,990 | ||
Deferred revenue-non-current | 14 | 12 | ||
Deferred tax liabilities | 1,680 | 4,112 | ||
Operating lease liabilities, non-current portion | 175,988 | 120,566 | ||
Total liabilities | 1,080,266 | 879,680 | ||
Equity | ||||
Class A common shares | 167 | 167 | ||
Class B common shares | 49 | 49 | ||
Treasury Stock | - | (5) | ||
Additional paid-in capital | 4,358,265 | 4,357,850 | ||
Statutory reserve | 154,362 | 153,487 | ||
Accumulated deficit | (544,309) | (588,050) | ||
Accumulated other comprehensive income/(loss) | 61,617 | (57,671) | ||
Total TAL Education Group's equity | 4,030,151 | 3,865,827 | ||
Noncontrolling interest | (27,889) | (26,717) | ||
Total equity | 4,002,262 | 3,839,110 | ||
Total liabilities and equity | ||||
TAL EDUCATION GROUP | |||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(In thousands of U.S. dollars, except share, ADS, per share and per ADS data) | |||||||
For the Three Months Ended August 31, | For the Six Months Ended August 31, | ||||||
2021 | 2022 | 2021 | 2022 | ||||
Net revenues | |||||||
Cost of revenues (note 1) | 872,628 | 117,132 | 1,485,769 | 205,690 | |||
Gross profit | 571,252 | 176,928 | 1,343,054 | 312,415 | |||
Operating expenses (note 1) | |||||||
Selling and marketing | 309,688 | 78,087 | 741,037 | 138,126 | |||
General and administrative | 356,499 | 97,206 | 687,632 | 208,656 | |||
Impairment loss on intangible assets and goodwill |
286,781 |
- |
426,190 |
- | |||
Total operating expenses | 952,968 | 175,293 | 1,854,859 | 346,782 | |||
Government subsidies | 1,842 | 13,256 | 5,074 | 20,935 | |||
(Loss)/income from operations | (379,874) | 14,891 | (506,731) | (13,432) | |||
Interest income | 35,296 | 12,445 | 71,897 | 25,508 | |||
Interest expense | (2,878) | - | (6,050) | - | |||
Other (expense)/income | (30,731) | (25,715) | 8,091 | (52,504) | |||
Gain from disposal of a subsidiary | - | 9,550 | - | 9,550 | |||
Impairment loss on long-term |
(154,881) |
(6,610) |
(178,063) |
(6,610) | |||
(Loss)/income before income tax | (533,068) | 4,561 | (610,856) | (37,488) | |||
Income tax expense | (310,354) | (4,487) | (341,558) | (6,803) | |||
Income/(loss) from equity method | 4,120 | (932) | 4,048 | 521 | |||
Net loss | (839,302) | (858) | (948,366) | (43,770) | |||
Add: Net loss/(income) | 12,756 | 71 | 19,742 | (846) | |||
Total net loss attributable to | |||||||
Net loss per common share | |||||||
Basic | |||||||
Diluted | (3.86) | (0.00) | (4.33) | (0.21) | |||
Net loss per ADS (note 2) | |||||||
Basic | |||||||
Diluted | (1.29) | (0.00) | (1.44) | (0.07) | |||
Weighted average shares used in | |||||||
Basic | 214,204,714 | 211,620,275 | 214,593,452 | 213,341,439 | |||
Diluted | 214,204,714 | 211,620,275 | 214,593,452 | 213,341,439 |
Note1: Share-based compensation expenses are included in the operating costs and expenses as follows: | |||||||||
For the Three Months | For the Six Months | ||||||||
Ended August 31, | Ended August 31, | ||||||||
2021 | 2022 | 2021 | 2022 | ||||||
Cost of revenues | |||||||||
Selling and marketing expenses | 24,460 | 8,296 | 48,432 | 16,377 | |||||
General and administrative expenses | 41,623 | 16,541 | 84,713 | 32,546 | |||||
Total | |||||||||
Note 2: Three ADSs represent one Class A common Share. | |||||||||
TAL EDUCATION GROUP | |||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF | |||||||
Comprehensive LOSS | |||||||
(In thousands of U.S. dollars) | |||||||
For the Three Months Ended August 31, | For the Six Months Ended August 31, | ||||||
2021 | 2022 | 2021 | 2022 | ||||
Net loss | |||||||
Other comprehensive loss, net | (39,540) | (55,912) | (23,845) | (116,738) | |||
Comprehensive loss | (878,842) | (56,770) | (972,211) | (160,508) | |||
Add: Comprehensive loss | 12,640 | (882) | 19,749 | (3,396) | |||
Comprehensive loss | |||||||
TAL EDUCATION GROUP | |||||||
Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures | |||||||
(In thousands of U.S. dollars, except share, ADS, per share and per ADS data) | |||||||
For the Three Months Ended August 31, | For the Six Months | ||||||
2021 | 2022 | 2021 | 2022 | ||||
Cost of revenues | |||||||
Share-based compensation expense |
351 |
2,587 |
734 |
4,980 | |||
Non-GAAP cost of revenues | 872,277 | 114,545 | 1,485,035 | 200,710 | |||
Selling and marketing expenses | 309,688 | 78,087 | 741,037 | 138,126 | |||
Share-based compensation expense |
24,460 |
8,296 |
48,432 |
16,377 | |||
Non-GAAP selling and marketing |
285,228 |
69,791 |
692,605 |
121,749 | |||
General and administrative |
356,499 |
97,206 |
687,632 |
208,656 | |||
Share-based compensation expense |
41,623 |
16,541 |
84,713 |
32,546 | |||
Non-GAAP general and |
314,876 |
80,665 |
602,919 |
176,110 | |||
Operating costs and expenses | 1,825,596 | 292,425 | 3,340,628 | 552,472 | |||
Share-based compensation expense |
66,434 |
27,424 |
133,879 |
53,903 | |||
Non-GAAP operating costs and |
1,759,162 |
265,001 |
3,206,749 |
498,569 | |||
(Loss)/income from operations | (379,874) | 14,891 | (506,731) | (13,432) | |||
Share based compensation expenses | 66,434 | 27,424 | 133,879 | 53,903 | |||
Non-GAAP (loss)/income from |
(313,440) |
42,315 |
(372,852) |
40,471 | |||
Net loss attributable to TAL |
(826,546) |
(787) |
(928,624) |
(44,616) | |||
Share based compensation expenses | 66,434 | 27,424 | 133,879 | 53,903 | |||
Non-GAAP net (loss)/income | |||||||
Net loss per ADS | |||||||
Basic | |||||||
Diluted | (1.29) | (0.00) | (1.44) | (0.07) | |||
Non-GAAP net (loss)/ income per | |||||||
Basic | |||||||
Diluted | (1.18) | 0.04 | (1.23) | 0.01 | |||
ADSs used in calculating net loss | |||||||
Basic | 642,614,142 | 634,860,825 | 643,780,356 | 640,024,317 | |||
Diluted | 642,614,142 | 634,860,825 | 643,780,356 | 640,024,317 | |||
ADSs used in calculating Non- | |||||||
Basic | 642,614,142 | 634,860,825 | 643,780,356 | 640,024,317 | |||
Diluted | 642,614,142 | 642,251,238 | 643,780,356 | 642,521,076 | |||
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SOURCE TAL Education Group
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