ATA Creativity Global (AACG) Q1 2025 Earnings Call May 16, 2025 09:00 AM ET Company Participants Alice Zhang - AssociateKevin Xiaofeng Ma - Co-Founder, Chairman of the Board and Chief Executive OfficerRuobai Sima - Chief Financial OfficerJun Zhang - President & Director Operator Greetings. Welcome to the ATA Creativity Global First Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal prese ...

Financial Data and Key Metrics Changes - The company reported a 16% increase in net revenue and gross profit for Q1 2025, driven by portfolio training and research-based learning services [6][7] - Total operating expenses slightly decreased, contributing to improved bottom line results compared to Q1 2024 [7] - The net loss attributable to the company for Q4 2025 was RMB 13.3 million, an improvement from RMB 17.9 million in the prior year period [12] Business Line Data and Key Metrics Changes - Portfolio training services accounted for the majority of revenue, with project-based programs contributing approximately 74% of total credit hours delivered, resulting in an 11.5% growth in revenue from these programs [7] - Combined revenues from research-based learning and other educational services increased by over 28%, contributing nearly 30% of total net revenue [7] Market Data and Key Metrics Changes - Total student enrollment for Q4 2025 was 1,104, representing a 19.4% decrease from the prior year, attributed to normalized demand [13] - Credit hours delivered increased by 5.8%, driven by a 15.5% increase in project-based programs [14] Company Strategy and Development Direction - The company aims to drive organic expansion, control expenses, and improve operational efficiency in 2025 [17] - There is a focus on increasing classroom utilization and providing higher value programs by strategically allocating marketing resources [17] - The company plans to broaden its international partnership network to expand access to global resources and increase student interest in studying abroad [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the creative arts education market in China and expects organic growth to lead the company's long-term momentum [18] - The company anticipates total net revenues for 2025 to be between RMB 276 million to RMB 2 billion, representing a year-over-year increase of around 3% to 5% [15] Other Important Information - ACG was awarded the 2025 Forbes China Studying Abroad Leading Brand, recognizing its positive outcomes for students [9] - The company hosted a spring arts education exhibition in five key cities in China, providing opportunities for students and parents to engage with professors from prestigious institutions [10] Q&A Session Summary Question: No questions were raised during the Q&A session - The operator indicated that there were no questions at this time [22] - The company encouraged participants to reach out directly for any inquiries [23]

ATA Creativity Global NASDAQ: AACG 2025 FIRST QUARTER EARNINGS CALL May 16, 2025 Speakers: Kevin Ma, Chairman & CEO Ruobai Sima, CFO Jun Zhang, President P A G E 1 Safe Harbor Statement This presentation was developed by ATA Creativity Global ("ACG" or the "Company") and is intended to be used solely in connection with ACG's earnings call for the first quarter (Q1 2025) ended March 31, 2025. This presentation is not to be construed as an offer to sell or the solicitation of an offer to buy the Company's sec ...

Enrollment and Revenue - For the fiscal year ended December 31, 2024, the company had 4,781 students enrolled, with 58.7% in portfolio training programs[22] - Net revenues for the fiscal years ended December 31 were RMB206.8 million, RMB221.6 million, and RMB268.1 million ($36.7 million) for 2022, 2023, and 2024 respectively, indicating a growth of approximately 21% from 2023 to 2024[22] - For the fiscal year ended December 31, 2024, the Company reported net revenues of RMB268,060,162, with subsidiaries contributing RMB268,055,926 and the VIE contributing RMB4,236[66] - The total cost and expenses for the same period were RMB311,279,249, resulting in a loss from operations of RMB43,044,156[66] - The net loss attributable to ATA Creativity Global for the year ended December 31, 2024, was RMB36,097,777[67] - For the fiscal year ended December 31, 2023, the Company reported net revenues of RMB221,618,968, with total cost and expenses amounting to RMB263,145,737, leading to a loss from operations of RMB41,495,904[66] - The net loss attributable to ATA Creativity Global for the year ended December 31, 2023, was RMB33,660,245[67] - Net revenues for the year ended December 31, 2022, were RMB 206,820,874[68] - Total cost and expenses amounted to RMB 263,423,953, resulting in a loss from operations of RMB 56,586,564[68] - The net loss attributable to ATA Creativity Global was RMB 47,892,909 for the year ended December 31, 2022[68] Regulatory Environment - The company is subject to evolving PRC laws and regulations, which could impact its ability to offer securities and conduct business operations[24] - The company has obtained legal opinions confirming the necessary permissions and approvals for its operations, but future changes in regulations may require additional licenses[29] - The company is subject to evolving regulations regarding private education institutions, which may require additional licenses in the future[36] - The CAC and the State Administration for Market Regulation issued new rules for personal information protection certification, effective June 1, 2023, impacting data transfer regulations[42] - The Company believes it is not required to obtain permission from the CSRC for its Nasdaq listing, but future compliance with evolving regulations remains uncertain[44] - The CSRC's Overseas Offering and Listing Measures, effective March 31, 2023, require filings for new overseas offerings but exempt completed listings prior to this date[45] - The Company has not received any inquiries or regulatory objections from the CAC regarding compliance with personal information protection laws as of the report date[42] - The Company has not received any notice requiring it to undergo cybersecurity reviews as of the report date[46] - The Company has not received any inquiries, notices, warnings, sanctions, or regulatory objections from the CAC or any other regulatory authority regarding personal information protection compliance[175] - The company believes it currently does not require permission from the PRC government for its operations, but future regulatory changes could impose new compliance requirements[194] Financial Performance and Cash Flow - The company relies on dividends and distributions from its PRC subsidiaries for cash requirements, subject to foreign exchange restrictions[48] - Internal controls are in place for cash flow management, although written cash management policies have not been established[50] - Cash and cash equivalents increased significantly from RMB 1,068,177 in 2023 to RMB 4,608,462 in 2024[71] - The company reported cash and cash equivalents at the end of 2024 amounting to RMB 36,523,995, down from RMB 60,167,232 at the end of 2023, indicating a decrease of approximately 39.4%[75] - For the fiscal year ended December 31, 2024, net cash provided by operating activities was RMB (3,345,170) compared to RMB 8,751,473 in 2023, indicating a significant decrease in operational cash flow[75] - The net cash used in operating activities for the year ended December 31, 2022, was RMB (14,613,887), highlighting a trend of increasing cash outflows from operations over the years[77] - The company received RMB 9,934,336 from inter-company cash flows in 2024, while cash paid to inter-companies was RMB (2,540,662), indicating active inter-company financial transactions[75] Operational Challenges and Risks - The company may face challenges in generating sufficient net income to sustain continued expansion[92] - A decline in market acceptance for creative arts-related international education services could negatively impact revenue growth[99] - The ability to attract students to portfolio training services without significantly decreasing course fees is critical for maintaining revenue and profitability[100] - The outbreak of COVID-19 and similar public health developments may disrupt business operations and adversely affect financial results[97] - The company faces risks related to geopolitical uncertainty and economic slowdown, which could discourage student enrollment[92] - The company faces increasing competition from established brands and new entrants, which may negatively affect revenues and market share[123] - The company has limited insurance coverage for business disruptions and litigation, exposing it to substantial costs in case of incidents[121] - Unauthorized use of the company's intellectual property by third parties is a significant risk, with potential adverse effects on business and reputation[127] - The company is subject to potential legal claims regarding intellectual property infringement, which could result in substantial legal expenses and disrupt business operations[128] Corporate Structure and Governance - The company operates primarily through its PRC subsidiary Huanqiuyimeng, which provides most of its educational services[28] - The VIE structure allows the company to consolidate its operations under U.S. GAAP, despite the VIE having no business operations of its own as of the report date[23] - The company relies on contractual arrangements with the VIE, which may not provide the same level of operational control as direct ownership[96] - The VIE is 90% owned by the Chairman and 10% by the President, with contractual arrangements enabling the company to direct the VIE's activities[215] - The shareholders of the VIE may have conflicts of interest with the company, potentially breaching existing contractual arrangements, which could adversely affect the company's ability to control the VIE[223] - The contractual arrangements with the VIE are governed by PRC laws, which may complicate enforcement and resolution of disputes[222] Compliance and Legal Risks - The company may incur substantial costs and resources to enforce contractual arrangements if the VIE's shareholders fail to perform their obligations[222] - The legal system in the PRC presents uncertainties that could limit the company's ability to enforce contractual arrangements with the VIE, affecting financial consolidation[222] - The company may face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements were not entered into on an arm's length basis, leading to potential adjustments in the VIE's income[226] - The company faces uncertainty in obtaining necessary government approvals for future loans or capital contributions to PRC subsidiaries, which may restrict business strategy execution[158] Strategic Initiatives and Future Outlook - The company is exploring acquisition opportunities in the international education sector to broaden its service spectrum[21] - The company is considering expanding its online courses and services, which may require an internet content provision license under PRC law[23] - The company is focusing on developing and expanding its small-sized class model and online-merge-offline model to improve margins[110] - The company has established 20 training centers in China as of April 3, 2025, with plans for further expansion[108] - The company relies on maintaining strong relationships with overseas schools and institutions to enhance its brand and service offerings[112] - The company is monitoring the evolving regulatory environment and may change its business model or dispose of certain services to ensure compliance with new regulations[182]

Financial Data and Key Metrics Changes - Total net revenue for Q4 2024 was RMB109 million, a 20.7% increase from RMB83.6 million in Q4 2023, driven by Apollo training programs and overseas study services [15] - Gross profit for Q4 2024 was RMB53.7 million, up 21.6% from RMB52.4 million in Q4 2023, with a gross margin increase to 63.1% from 62.6% [15] - For the full year 2024, total net revenues increased by 21% to RMB268.1 million from RMB221.6 million in 2023, with gross profit rising 23.2% to RMB141.3 million [18][19] - Net income attributable to ATA Creativity Global for Q4 2024 was RMB13.3 million, compared to RMB8.6 million in the prior year [17] Business Line Data and Key Metrics Changes - Portfolio Credit Service accounted for the majority of revenues in Q4 2024, with project-based programs contributing 66.8% of total credit delivery [11] - Revenues from overseas study and other educational services increased by more than 46% [12] - Total student enrollment for 2024 increased by 15.8%, with portfolio training enrollment up 12.9% to 2,807 [21] Market Data and Key Metrics Changes - The demand for portfolio trading services remained strong, with credit hours delivered increasing significantly by 30.8% in 2024 [22] - The company expanded its partnership base, adding two higher education institutions during the quarter [14] Company Strategy and Development Direction - The company aims to be a leading provider of creative arts education services in China, focusing on organic growth, geographic expansion, and new service launches [25] - The opening of the ACG Japan Center in January 2025 and the London Center in September 2024 are part of the strategy to enhance geographic footprint [28] - The company is exploring potential M&A opportunities to supplement its service portfolio [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of creative arts education in China, supported by positive student feedback and increased interest in services [26] - For 2025, the company anticipates net revenues between RMB276 million to RMB281 million, representing a 3% to 5% year-over-year increase [23] - The company expects to return to normalized growth levels post-COVID-19 recovery [24] Other Important Information - The company made a strategic decision to discontinue its junior Arc service to improve operational efficiency, contributing to lower G&A expenses [14] - The company reported a net loss attributable to ATA Creativity Global for the full year 2024 of RMB36.1 million, compared to RMB33.7 million in 2023 [20] Q&A Session Summary Question: Are there any questions from participants? - There were no questions from participants during the call [32]

ATA Creativity Global NASDAQ: AACG 2024 FOURTH QUARTER EARNINGS CALL March 25, 2025 Speakers: Kevin Ma, Chairman & CEO Ruobai Sima, CFO Jun Zhang, President P A G E 1 Safe Harbor Statement This presentation was developed by ATA Creativity Global ("ACG" or the "Company") and is intended to be used solely in connection with ACG's earnings call for the fourth quarter (Q4 2024") and full year ("FY 2024") ended December 31, 2024. This presentation is not to be construed as an offer to sell or the solicitation of ...

Core Points - ATA Creativity Global has regained compliance with the minimum bid price requirement under Nasdaq Listing Rules, with its American depositary shares (ADSs) closing at $1.00 or greater from November 1 to November 25, 2024 [2] - The company received a notification regarding a deficiency in minimum stockholders' equity, indicating that it does not meet the required $10,000,000 in stockholders' equity as per Nasdaq Listing Rule 5450(b)(1)(A) [3][4] - The company has 45 calendar days to submit a plan to regain compliance with the minimum stockholders' equity requirement, with a potential extension of up to 180 days if the plan is accepted [5] - The Stockholders' Equity Letter does not have an immediate effect on the company's listing, and its ADSs will continue to trade on Nasdaq during the compliance period [6] Company Overview - ATA Creativity Global is an international educational services company focused on providing quality learning experiences that enhance students' creativity, offering services such as portfolio training, research-based learning, and overseas study counseling [7]

Financial Data and Key Metrics Changes - Total net revenue for Q3 2024 was RMB 67.3 million, an increase of 13.1% from RMB 59.5 million in Q3 2023, primarily due to increased revenue contributions from research-based learning and portfolio training services [16] - Gross profit for Q3 2024 was RMB 30 million, a 2.6% increase from RMB 29.2 million in Q3 2023, with a gross margin of 44.6%, down from 49.2% in the prior year [17] - For the nine months of 2024, total net revenues increased by 21.1% to RMB 167.1 million from RMB 138 million in the prior year [20] - Net loss attributable to ACG for Q3 2024 was RMB 14.7 million, compared to RMB 7.3 million in the prior year [19] Business Line Data and Key Metrics Changes - Portfolio training services contributed more than 70% of total revenues for both Q3 2024 and the nine months of 2024, with project-based programs accounting for 70% of total credit hours delivered in Q3 [12] - Student enrollments for research-based learning and overseas study counseling increased by more than 20% compared to Q3 2023 [13] - Credit hours delivered for portfolio training services increased by 28.5% for the nine months of 2024, with time-based programs increasing by 29% [25] Market Data and Key Metrics Changes - Total student enrollment increased by 20% for the nine months of 2024 compared to the same period in 2023, with portfolio training enrollment up by 20.7% [24] - The company expanded its training center coverage in existing cities, including the opening of the ACG London Center to support students studying in the UK [31] Company Strategy and Development Direction - The company's growth strategy focuses on organic growth, geographic expansion, new service launches, and potential M&A opportunities [28] - ACG aims to enhance its offerings by integrating AI technologies through a partnership with Oasis Star Educational Technology [35] - The company continues to invest in infrastructure and teaching staff to maintain high-quality offerings for students [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year 2024 revenue guidance of RMB 233 million to RMB 255 million, representing a year-over-year increase of 5% to 15% [26] - The strong enrollment trend and the ability to expand services are seen as key drivers for future growth [27] Other Important Information - Total operating expenses for Q3 2024 were RMB 47.7 million, an increase of 28.4% from RMB 37.1 million in Q3 2023, primarily due to increased sales and administrative expenses [18] - As of September 30, 2024, the company had RMB 39.4 million in cash and cash equivalents, total assets of RMB 459.4 million, and total liabilities of RMB 393.2 million [23] Q&A Session Summary - No specific questions or answers were documented in the provided content, as the call concluded without a detailed Q&A segment [39]

| --- | --- | --- | --- | --- | |--------------------------------------------------------------------------------------------|-------|-------|-------|---------| | | | | | | | | | | | | | | | | | | | ATA Creativity Global | | | | | | NASDAQ: AACG | | | | | | 2024 THIRD QUARTER EARNINGS CALL | | | | | | | | | | | | November 7, 2024 Speakers: Kevin Ma, Chairman & CEO Ruobai Sima, CFO Jun Zhang, President | | | | P A G E | Safe Harbor Statement This presentation was developed by ATA Creativity Global ("ACG" or ...

Financial Data and Key Metrics Changes - Total net revenue for Q2 2024 was RMB41.8 million, a 42.8% increase from RMB36.2 million in Q2 2023 [9] - Gross margin improved to 49.6% in Q2 2024 from 39.5% in the prior year period [9] - Net loss attributable to ACG was RMB15.8 million in Q2 2024, compared to RMB17.2 million in Q2 2023 [10] - For the first half of 2024, total net revenues increased 27.2% to RMB99.9 million compared to RMB78.6 million in the prior year period [10] Business Line Data and Key Metrics Changes - Revenue from portfolio training services was RMB40.2 million in Q2 2024, representing a 41.9% year-over-year increase [8] - Enrollment in portfolio training programs increased to 612 students in Q2 2024 from 540 in the same period last year [8] - Portfolio training credit hours delivered rose by 49.3% year-over-year to 42,841 hours [8] Market Data and Key Metrics Changes - The company reported a working capital deficit of $40.7 million at the end of Q2 2024, compared to a deficit of $34.4 million at the end of 2023 [11] - Total shareholders' equity decreased to $11 million at June 30, 2024, from $15.9 million at December 31, 2023 [11] Company Strategy and Development Direction - The company aims to grow its student base and expand its current business while exploring potential acquisition opportunities [14] - ACG is focused on enhancing its portfolio of offerings to meet students' needs in a creative environment [14] - The company plans to continue investing in operational infrastructure to provide exceptional education and support [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2024, historically being stronger than the first half [13] - The company reiterated its revenue expectations for the year, projecting total revenue in the range of RMB230 million to RMB235 million, a 5% to 50% increase from fiscal year 2023 [13] - Management highlighted the positive trend in offers received by ACG students from prestigious institutions, indicating increased demand for overseas study opportunities [17] Other Important Information - ACG hosted the ACG Arts Education Exhibition in April across five major cities in China, which attracted significant interest [15] - The company successfully conducted the second session of the United Nations Sustainable Development Goals Arts Boot Camp, engaging 70 students [16] - ACG has established collaborative relationships with world-renowned institutions to enhance educational resources for students [21] Q&A Session Summary Question: Are there any questions from participants? - There were no questions during the Q&A session [24]