ATA Creativity Global (NASDAQ:AACG) Q2 2023 Earnings Conference Call August 10, 2023 9:00 PM ET Company Participants Alice Zhang - Equity Group, IR Ruobai Sima - Chief Financial Officer Kevin Ma - Co-Founder, Chairman & CEO Conference Call Participants Operator Greetings. Welcome to ATA Creativity Global's Second Quarter 2020 Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note ...

[Report Overview](index=1&type=section&id=Report%20Overview) [Q2 2023 and H1 2023 Highlights](index=1&type=section&id=Q2%202023%20and%20H1%202023%20Highlights) ATA Creativity Global (ACG) achieved revenue growth, narrowed net loss, and maintained healthy cash reserves in Q2 and H1 2023, with increased student enrollment (excluding divested businesses) and credit hours delivered Q2 2023 and H1 2023 Key Metrics | Metric | Q2 2023 | YoY Change | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Student Enrollment (Excluding Divested Businesses) | 928 | +7.5% | - | - | | Credit Hours Delivered | 28,698 | +13.0% | - | - | | Net Revenues | RMB 36.2 million (US$5.0 million) | +6.5% | RMB 78.6 million (US$10.8 million) | +3.1% | | Net Loss Attributable to ACG | RMB 17.2 million (US$2.4 million) | Loss narrowed | RMB 35.0 million (US$4.8 million) | Loss narrowed | | Cash and Cash Equivalents (as of June 30) | RMB 56.8 million (US$7.8 million) | - | - | - | [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Kevin Ma noted positive enrollment trends in Q2 due to improved post-pandemic market conditions, with increased contributions from portfolio training and overseas study consulting offsetting declines in other education services - Student enrollment continued to improve in cities with better post-pandemic market conditions, with portfolio training credit hours increasing by **13.0% year-over-year** and **3.9% quarter-over-quarter**[3](index=3&type=chunk) - Revenues remained stable, primarily driven by increased contributions from portfolio training programs and overseas study consulting services[3](index=3&type=chunk) - The company once again offered unique experiences for students participating in overseas summer programs, primarily at renowned institutions in the UK and Europe[3](index=3&type=chunk) [Outlook](index=1&type=section&id=Outlook) President Jun Zhang observed positive trends in student enrollment and credit hours as pandemic restrictions eased, with plans to expand course offerings to include master classes, internships, boot camps, and domestic study programs related to Chinese cultural heritage - A positive trend of students starting or resuming creative learning emerged after the relaxation of pandemic restrictions[4](index=4&type=chunk) - Plans include expanding course offerings to include master classes, internships, boot camps, and overseas summer programs[4](index=4&type=chunk) - Domestic study programs related to China's diverse cultural heritage will be launched, covering skills such as photography, filmmaking, ethnic minority cultures, mineral painting, and painted sculpture[4](index=4&type=chunk) [Operating Performance](index=2&type=section&id=Operating%20Performance) [Enrollment and Credit Hours](index=2&type=section&id=Enrollment%20and%20Credit%20Hours) In Q2 2023, ACG's total student enrollment was 928, with 540 in portfolio training programs, and 28,698 credit hours delivered, showing a significant 24.5% increase in project-based credit hours - Total student enrollment in Q2 2023 was **928**, with **540** participating in portfolio training programs[5](index=5&type=chunk) - A total of **28,698 credit hours** were delivered for portfolio training programs, representing a **13.0% year-over-year increase**[2](index=2&type=chunk)[6](index=6&type=chunk) Q2 2023 Portfolio Training Program Credit Hours Delivered | Project Type | Q2 2023 Credit Hours | Q2 2022 Credit Hours | % Change | | :--- | :--- | :--- | :--- | | Time-based Projects | 10,428 | 10,710 | (2.6%) | | Project-based Programs | 18,270 | 14,677 | 24.5% | | **Total** | **28,698** | **25,387** | **13.0%** | [GAAP Financial Results](index=2&type=section&id=GAAP%20Financial%20Results) [Second Quarter 2023 GAAP Results](index=2&type=section&id=Second%20Quarter%202023%20GAAP%20Results) In Q2 2023, ACG's net revenues grew by 6.5%, gross profit increased by 18.0%, and gross margin improved to 39.5%, while operating expenses decreased, leading to a narrowed operating loss and net loss attributable to ACG Q2 2023 Key Financial Data | Metric | Q2 2023 (RMB) | Q2 2022 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Net Revenues | 36.2 million | 34.0 million | +6.5% | | Gross Profit | 14.3 million | 12.1 million | +18.0% | | Gross Margin | 39.5% | 35.6% | +3.9 percentage points | | Operating Expenses | 35.7 million | 38.6 million | -7.6% | | Operating Loss | (21.4) million | (26.4) million | Loss narrowed | | Net Loss Attributable to ACG | (17.2) million | (22.1) million | Loss narrowed | | Basic and Diluted Loss Per Share | (0.27) | (0.35) | Loss narrowed | | Basic and Diluted Loss Per ADS | (0.54) | (0.70) | Loss narrowed | - Operating expenses decreased primarily due to a **RMB 1.1 million reduction in R&D expenses** (new service management platform development costs mainly incurred in 2022) and a **RMB 1.2 million reduction in G&A expenses**[8](index=8&type=chunk) [First Half 2023 GAAP Results](index=3&type=section&id=First%20Half%202023%20GAAP%20Results) In H1 2023, ACG's net revenues grew by 3.1%, gross profit increased by 5.3%, and gross margin improved to 42.1%, with slightly reduced operating expenses and a narrowed net loss attributable to ACG H1 2023 Key Financial Data | Metric | H1 2023 (RMB) | H1 2022 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Net Revenues | 78.6 million | 76.2 million | +3.1% | | Gross Profit | 33.1 million | 31.4 million | +5.3% | | Gross Margin | 42.1% | 41.2% | +0.9 percentage points | | Operating Expenses | 75.8 million | 76.6 million | -1.0% | | Operating Loss | (42.7) million | (45.2) million | Loss narrowed | | Net Loss Attributable to ACG | (35.0) million | (37.9) million | Loss narrowed | | Basic and Diluted Loss Per Share | (0.56) | (0.60) | Loss narrowed | | Basic and Diluted Loss Per ADS | (1.12) | (1.20) | Loss narrowed | - Operating expenses decreased primarily due to a **RMB 1.7 million reduction in R&D expenses** and a **RMB 2.3 million reduction in G&A expenses**, partially offset by a **RMB 3.2 million increase in sales expenses** (performance bonuses related to sales growth)[11](index=11&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) [Adjusted Net Loss and EPS](index=3&type=section&id=Adjusted%20Net%20Loss%20and%20EPS) In Q2 2023, ACG's adjusted net loss attributable to ACG, excluding share-based compensation and foreign exchange gains/losses (non-GAAP), narrowed to RMB 16.6 million compared to the prior year Q2 2023 Non-GAAP Adjusted Net Loss | Metric | Q2 2023 (RMB) | Q2 2022 (RMB) | | :--- | :--- | :--- | | GAAP Net Loss Attributable to ACG | (17,212,969) | (22,070,027) | | Share-based Compensation Expenses | 657,611 | 504,444 | | Foreign Currency Exchange Gains (Losses), Net | 330 | (8,702) | | **Non-GAAP Net Loss Attributable to ACG** | **(16,555,028)** | **(21,574,285)** | | Non-GAAP Basic and Diluted Loss Per Share | (0.26) | (0.34) | | Non-GAAP Basic and Diluted Loss Per ADS | (0.52) | (0.68) | [Balance Sheet](index=4&type=section&id=Balance%20Sheet) [Key Balance Sheet Figures](index=4&type=section&id=Key%20Balance%20Sheet%20Figures) As of June 30, 2023, ACG's cash and cash equivalents were RMB 56.8 million, a slight increase from year-end 2022, but working capital deficit and total shareholders' equity decreased Key Balance Sheet Data | Metric | June 30, 2023 (RMB) | December 31, 2022 (RMB) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 56.8 million (US$7.8 million) | 55.0 million | | Working Capital Deficit | 260.6 million (US$35.9 million) | 227.3 million | | Total Shareholders' Equity | 110.2 million (US$15.2 million) | 14

ATA Creativity Global (NASDAQ:AACG) Q1 2023 Earnings Conference Call May 11, 2023 12:00 PM ET Company Participants Alice Zhang - Investor Relations Ruobai Sima - Chief Financial Officer Jun Zhang - President Conference Call Participants Operator Greetings. And welcome to ATA Creativity Global’s First Quarter 2023 Financial Results Call. At time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder this conf ...

Table of Contents Title of each classTrading Symbol(s)Name of each exchange on which registered American Depositary Shares, each representing two common shares, par value $0.01 per share AACG Nasdaq Global Market UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ...

Financial Performance - Q4 2022 - Total net revenues increased by 8.2% to RMB78.5 million, compared to RMB72.6 million in Q4 2021, driven by portfolio training and other educational services[12] - Gross margin was 60.6%, a decrease from 62.8% in Q4 2021[12, 14] - Net income attributable to ACG was RMB2.0 million, compared to a net loss of RMB2.5 million in Q4 2021[12, 14] Financial Performance - Year End 2022 - Total net revenues increased by 2.3% to RMB206.8 million, compared to RMB202.2 million in the prior year, driven by other educational services and portfolio training services[13] - Gross margin was 49.6%, a decrease from 51.8% in the prior year[13, 15] - Net loss attributable to ACG was RMB47.9 million, compared to a net loss of RMB33.6 million in the prior year[13, 15] Enrollment - Total credit hours for time-based programs decreased by 47.3%, from 29,949 in Q4 2021 to 15,780 in Q4 2022[11] - Total credit hours for project-based programs increased by 31.9%, from 23,589 in Q4 2021 to 31,114 in Q4 2022[11] - Overall, total credit hours decreased by 12.4%, from 53,538 in Q4 2021 to 46,894 in Q4 2022[11] Balance Sheet - Cash and cash equivalents were RMB54.98 million as of December 31, 2022, equivalent to approximately $8.0 million USD[17] - Total assets were RMB474.465 million as of December 31, 2022[17] - Shareholder's equity was RMB143.514 million as of December 31, 2022[17] Growth Strategy - The company plans to accelerate growth of existing domestic centers and establish new centers both domestically and overseas[20] - The company intends to expand its offerings in research-based learning services and overseas study counseling services[20] - The company plans to increase partnerships, launch collaborations and M&A activities to establish synergies with valuable companies[20, 21]

Financial Data and Key Metrics Changes - Total revenue for Q4 2022 increased by 8.2% to RMB78.5 million from RMB72.6 million in Q4 2021, driven by contributions from portfolio training services and other educational services [9][12] - For the full year 2022, net revenue was RMB206.8 million, up 2.3% from RMB202.2 million in 2021, primarily due to increased revenue from other educational services [10][13] - Gross margin for Q4 2022 was 60.6%, down from 62.8% in the prior year, attributed to higher compensation expenses for teaching staff [12][13] - Net income attributable to ACG was RMB2 million in Q4 2022, compared to a net loss of RMB2.5 million in the prior year [10][13] - Full year net loss attributable to ACG was RMB47.9 million, compared to a net loss of RMB33.6 million in 2021 [14] Business Line Data and Key Metrics Changes - Portfolio training program revenue increased to RMB57.8 million in Q4 2022 from RMB54.2 million in the prior year [11] - Total student enrollment for Q4 2022 was 908, down from 1,052 in the prior year, but excluding prior year students, total enrollment increased year-over-year [10][11] Market Data and Key Metrics Changes - The company noted stable demand for portfolio training programs despite the ongoing impact of COVID-19 [9][17] - Increased demand for research-based learning programs and overseas study counseling was observed [9] Company Strategy and Development Direction - ACG remains committed to helping students achieve positive outcomes and is focused on enhancing the quality of programming and emotional support [15][16] - The company plans to continue offering programs that align with current trends in the arts world, including international summer school programs as travel restrictions ease [25][26] - ACG aims to optimize instructional resources and strengthen relationships with academic partners to serve a diverse student base [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the near-term outlook as international travel resumes and students are eager to study overseas [21] - The company highlighted the importance of adapting to the changing educational landscape and maintaining a strong operational foundation [26] Other Important Information - ACG has successfully launched various research-based learning programs and continues to serve as a trusted adviser for students applying to overseas colleges [19][20] - The company has opened the ACG International Art Foundation program center in Beijing, with all enrolled students starting their first year in college in the UK [20] Q&A Session Summary - No specific questions or answers were documented in the provided content, indicating a lack of detailed interaction during the Q&A session [28]

ATA Creativity Global (NASDAQ:AACG) Q3 2022 Earnings Conference Call November 30, 2022 8:00 PM ET Company Participants Alice Zhang - Investor Relations, The Equity Group Ruobai Sima - Chief Financial Officer Kevin Ma - Co-Founder, Chairman and Chief Executive Officer Jun Zhang - President Conference Call Participants Operator Greetings, welcome to ATA Creativity Global's Third Quarter 2022 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow ...

Financial Data and Key Metrics Changes - Total net revenue for Q2 2022 was RMB 34 million, a decrease from RMB 36.9 million in Q2 2021, primarily due to reduced contributions from portfolio training and research-based learning services impacted by COVID-19 lockdowns [12] - Gross margin decreased to 35.6% from 43.4% in the prior year period, attributed to decreased revenues while the cost of revenues remained stable [13] - Net loss attributable to the company was RMB 22.1 million, compared to a net income of RMB 14.1 million in the prior year, primarily due to a one-time investment gain of RMB 33.5 million from the disposal of the K-12 education assessment business in Q2 2021 [13] - For the first half of 2022, net revenue slightly increased to RMB 76.2 million from RMB 74.4 million in the same period of 2021, with gross margin remaining stable at 41.2% [13] Business Line Data and Key Metrics Changes - Total studio enrollment remained stable at 1,018 compared to 1,051 in Q2 2021 [10] - Total credit hours delivered for portfolio training programs decreased by 10.8% year-over-year, with 25,387 credit hours delivered in Q2 2022 [10][11] - Project-based programs accounted for 57.8% of total credit hours delivered during the period, indicating a shift in the training mix [11] Market Data and Key Metrics Changes - The company continues to see significant demand for overseas study programs and is confident in increasing its market share in the international creative arts education industry [10] - The public health situation in China is improving, which is expected to lead to a rebound in demand for portfolio training and research-based learning programs [10] Company Strategy and Development Direction - The company is focused on delivering quality education through both in-person and online formats, adapting to the ongoing pandemic environment [15] - ACG is streamlining its organizational structure and introducing full-time teaching staff into management roles to enhance growth potential [16] - New programs reflecting trends in the creative industry, including content related to Metaverse and NFTs, are being introduced [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2022, anticipating a busy application season for students seeking overseas education [20] - The company remains committed to solidifying relationships with institutional partners and enhancing its marketing strategies to target potential students effectively [20] Other Important Information - The company maintains a solid financial position with USD 9 million in cash and cash equivalents and adjusted working capital of USD 33.4 million as of June 30, 2022 [14] Q&A Session Summary - No specific questions or answers were documented in the provided content, indicating a focus on general remarks and future outlook rather than detailed inquiries from participants [22][23]

Financial Data and Key Metrics Changes - Total net revenue for Q1 2022 increased by 12.1% to RMB 42.1 million from RMB 37.6 million in Q1 2021 [15] - Gross margin improved to 45.7% in Q1 2022, up from 39.6% in the prior year period [15] - Net loss attributable to the company improved to RMB 15.9 million in Q1 2022 compared to RMB 19 million in Q1 2021 [16] Business Line Data and Key Metrics Changes - Enrollment in the core portfolio training program increased to 537 students in Q1 2022 from 528 students in the prior year [13] - Credit hours delivered for portfolio training programs remained stable at 27,494 hours, with a shift towards project-based programs increasing by 23% while real-time programs decreased by 19% [14] Market Data and Key Metrics Changes - The company faced challenges due to pandemic-related lockdowns in key cities like Shanghai, Shenzhen, and Suzhou, impacting in-person instruction [17] - The shift to online delivery methods was implemented to provide flexibility and support to students during lockdowns [12][17] Company Strategy and Development Direction - The company aims to continue investing in its business and partnerships within the industry to support future growth [19] - ACG is focused on enhancing its portfolio of program offerings as travel restrictions ease, particularly in research-based learning and overseas counseling services [19][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about overcoming short-term challenges posed by the pandemic and highlighted the determination of students to continue their studies [17][18] - The company is exploring financing, investing, and M&A opportunities to enable long-term growth while maintaining its competitive advantages in the creative arts education market [24] Other Important Information - The company appointed Ruobai Sima as the new CFO, succeeding Amy Tung, who will remain in an advisory capacity [10][11] - ACG has developed additional short-term programs, both online and in-person, to cater to diverse student needs [22] Q&A Session Summary - No specific questions or answers were documented in the provided content, as the operator concluded the call without opening for questions [25][26]