Report Overview [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) ACG reported a 14.1% increase in Q3 2023 net revenues to RMB 59.5 million, a 24.1% rise in portfolio training credit hours, and narrowed net losses, maintaining a strong cash position Q3 2023 Financial and Operational Highlights | Indicator | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | **Net Revenues** | RMB 59.5 million | RMB 52.1 million | +14.1% | | **Net Loss Attributable to ACG** | RMB 7.3 million | RMB 12.0 million | Narrowed | | **Student Enrollment** | 1,093 | 1,106 | -1.2% | | **Portfolio Training Credit Hours** | 44,723 | 36,031 | +24.1% | Nine Months 2023 Financial Highlights | Indicator | Nine Months 2023 | Nine Months 2022 | % Change | | :--- | :--- | :--- | :--- | | **Net Revenues** | RMB 138.0 million | RMB 128.3 million | +7.6% | | **Net Loss Attributable to ACG** | RMB 42.2 million | RMB 49.9 million | Narrowed | - As of September 30, 2023, the company held **RMB 65.5 million (US$9.0 million)** in cash and cash equivalents[3](index=3&type=chunk) [Management Commentary & Outlook](index=1&type=section&id=Management%20Commentary%20%26%20Outlook) Management attributes strong Q3 performance to increased portfolio training and research-based learning, driven by resumed overseas programs, with plans to expand experiential offerings and art institution partnerships - Portfolio training services are considered the primary growth driver, with a **24.1% increase in credit hours delivered** in Q3 2023[4](index=4&type=chunk) - ACG resumed its overseas summer programs for the first time since the COVID-19 pandemic, resulting in a **104.5% YoY increase in revenues from research-based learning services to RMB 5.2 million**[4](index=4&type=chunk) - The company is building on its success with plans for online Master Classes and other experiential offerings, and recently partnered with the 798 Art Festival in Beijing to promote creative arts education[5](index=5&type=chunk) Operational Performance [Enrollment and Credit Hours](index=2&type=section&id=Enrollment%20Update) Q3 2023 saw total student enrollment of 1,093, with portfolio training credit hours increasing **24.1%** to 44,723, primarily driven by a **34.6%** rise in project-based programs - Total student enrollment for Q3 2023 was **1,093**, with **651** in portfolio training programs and **442** in other programs like overseas study counselling[6](index=6&type=chunk)[7](index=7&type=chunk) Portfolio Training Credit Hours by Program Type | Portfolio Training Program | Q3 2023 Credit Hours | Q3 2022 Credit Hours | % Change | | :--- | :--- | :--- | :--- | | Time-based Program | 13,624 | 12,923 | 5.4% | | Project-based Program | 31,099 | 23,108 | 34.6% | | **Total** | **44,723** | **36,031** | **24.1%** | Financial Performance Review [Third Quarter 2023 Financial Results (GAAP)](index=2&type=section&id=Third%20Quarter%202023%20Financial%20Review%20%E2%80%93%20GAAP%20Results) Q3 2023 net revenues grew **14.1%** to **RMB 59.5 million**, with gross margin improving to **49.2%**, leading to a narrowed net loss attributable to ACG of **RMB 7.3 million** Q3 2023 GAAP Financial Results | Q3 Financial Metric | Q3 2023 (RMB) | Q3 2022 (RMB) | Change | | :--- | :--- | :--- | :--- | | **Net Revenues** | 59.5 million | 52.1 million | +14.1% | | **Gross Profit** | 29.2 million | 23.5 million | +24.4% | | **Gross Margin** | 49.2% | 45.1% | +4.1 p.p. | | **Loss from Operations** | (7.9 million) | (16.3 million) | Narrowed | | **Net Loss Attributable to ACG** | (7.3 million) | (12.0 million) | Narrowed | | **Diluted Losses per ADS** | (0.24) | (0.38) | Narrowed | - The increase in gross profit and margin was primarily due to higher net revenues. The decrease in operating expenses was mainly driven by lower general, administrative, and selling expenses[9](index=9&type=chunk) [Nine Months 2023 Financial Results (GAAP)](index=3&type=section&id=Nine%20Months%202023%20Financial%20Review%20%E2%80%93%20GAAP%20Results) Nine-month net revenues increased **7.6%** to **RMB 138.0 million**, with gross profit growing **13.5%** to **RMB 62.3 million**, leading to a narrowed net loss of **RMB 42.2 million** Nine Months 2023 GAAP Financial Results | Nine Months Financial Metric | 2023 (RMB) | 2022 (RMB) | Change | | :--- | :--- | :--- | :--- | | **Net Revenues** | 138.0 million | 128.3 million | +7.6% | | **Gross Profit** | 62.3 million | 54.9 million | +13.5% | | **Gross Margin** | 45.1% | 42.8% | +2.3 p.p. | | **Loss from Operations** | (50.6 million) | (61.5 million) | Narrowed | | **Net Loss Attributable to ACG** | (42.2 million) | (49.9 million) | Narrowed | | **Diluted Losses per ADS** | (1.34) | (1.60) | Narrowed | [Balance Sheet Highlights](index=4&type=section&id=Balance%20Sheet%20Highlights) As of September 30, 2023, cash and cash equivalents increased **19.1%** to **RMB 65.5 million**, while working capital deficit widened to **RMB 262.3 million** and total shareholders' equity decreased to **RMB 103.5 million** Key Balance Sheet Figures | Balance Sheet Item | Sep 30, 2023 (RMB) | Dec 31, 2022 (RMB) | | :--- | :--- | :--- | | Cash and cash equivalents | 65.5 million | 55.0 million | | Working capital deficit | 262.3 million | 227.3 million | | Total shareholders' equity | 103.5 million | 143.5 million | [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Measures) Excluding share-based compensation and foreign currency impacts, ACG's Q3 2023 adjusted net loss was **RMB 6.4 million**, a significant improvement from the prior year - Non-GAAP measures are used to supplement GAAP results by excluding non-cash or non-operating items like share-based compensation and foreign currency exchange gains/losses[14](index=14&type=chunk)[28](index=28&type=chunk) Q3 2023 Non-GAAP Financial Measures | Non-GAAP Metric (Q3 2023) | Amount (RMB) | Amount (USD) | | :--- | :--- | :--- | | Adjusted Net Loss Attributable to ACG | (6.4 million) | (0.9 million) | | Adjusted Diluted Losses per ADS | (0.20) | (0.02) | Financial Statements [Unaudited Condensed Consolidated Balance Sheets](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The unaudited consolidated balance sheet as of September 30, 2023, details total assets of **RMB 466.3 million** and total liabilities of **RMB 362.7 million**, compared to year-end 2022 Unaudited Condensed Consolidated Balance Sheets | Key Balance Sheet Figures | As of Sep 30, 2023 (RMB) | As of Dec 31, 2022 (RMB) | | :--- | :--- | :--- | | **Total Current Assets** | 75,466,731 | 65,262,522 | | **Total Assets** | 466,256,544 | 474,464,769 | | **Total Current Liabilities** | 337,805,877 | 292,542,513 | | **Total Liabilities** | 362,740,255 | 330,950,579 | | **Total Shareholders' Equity** | 103,516,289 | 143,514,190 | [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(LOSS)) This section presents detailed unaudited consolidated statements of comprehensive income (loss) for the three-month and nine-month periods ending September 30, 2023, with comparative data [Three-Month Period Ended September 30, 2023](index=8&type=section&id=Three-month%20Period%20Ended%20September%2030%2C%202023) Q3 2023 income statement shows net revenues of **RMB 59.5 million** and a net loss of **RMB 7.3 million**, a significant improvement from Q3 2022 Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - Q3 | Income Statement Item (Q3) | 2023 (RMB) | 2022 (RMB) | | :--- | :--- | :--- | | Net revenues | 59,450,108 | 52,099,904 | | Gross profit | 29,224,857 | 23,501,987 | | Loss from operations | (7,879,014) | (16,272,515) | | Net loss | (7,301,576) | (11,733,818) | | Net loss attributable to ACG | (7,250,862) | (11,986,167) | [Nine-Month Period Ended September 30, 2023](index=9&type=section&id=Nine-month%20Period%20Ended%20September%2030%2C%202023) The nine-month income statement shows net revenues of **RMB 138.0 million** and a net loss of **RMB 42.3 million**, an improvement from the prior-year period Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - Nine Months | Income Statement Item (Nine Months) | 2023 (RMB) | 2022 (RMB) | | :--- | :--- | :--- | | Net revenues | 138,010,273 | 128,283,578 | | Gross profit | 62,291,363 | 54,897,185 | | Loss from operations | (50,607,054) | (61,483,279) | | Net loss | (42,264,467) | (50,360,602) | | Net loss attributable to ACG | (42,215,847) | (49,910,070) | [Reconciliations of Non-GAAP Measures](index=10&type=section&id=RECONCILIATIONS%20OF%20NON-GAAP%20MEASURES) This section reconciles GAAP net loss to non-GAAP net loss for Q3 2023 and the nine-month period, showing a Q3 non-GAAP net loss of **RMB 6.4 million** after adjustments Reconciliation of GAAP to Non-GAAP Net Loss - Q3 2023 | Reconciliation (Q3 2023, RMB) | Amount | | :--- | :--- | | GAAP net loss attributable to ACG | (7,250,862) | | Add: Share-based compensation | 818,922 | | Add: Foreign currency exchange losses | (2) | | **Non-GAAP net loss attributable to ACG** | **(6,431,942)** | Reconciliation of GAAP to Non-GAAP Net Loss - Nine Months 2023 | Reconciliation (Nine Months 2023, RMB) | Amount | | :--- | :--- | | GAAP net loss attributable to ACG | (42,215,847) | | Add: Share-based compensation | 2,029,817 | | Add: Foreign currency exchange losses | 380 | | **Non-GAAP net loss attributable to ACG** | **(40,185,650)** | Supplementary Information [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) A conference call and live webcast were scheduled for November 13, 2023, at 8 p.m. ET to discuss the Q3 and nine-month 2023 financial results - A conference call was scheduled for November 13, 2023, at 8 p.m. ET to discuss the results[18](index=18&type=chunk) - An accompanying slide presentation was made available on the investor relations section of the company's website 30 minutes prior to the call[19](index=19&type=chunk) [About the Company, Forward-Looking Statements, and Other Disclosures](index=4&type=section&id=About%20the%20Company%2C%20Forward-Looking%20Statements%2C%20and%20Other%20Disclosures) This section provides a company overview, disclaimers on forward-looking statements, and details on currency translation and non-GAAP measures, highlighting risks and uncertainties - ACG is an international educational services company focused on portfolio training, research-based learning, and overseas study counselling[21](index=21&type=chunk) - The report includes forward-looking statements and warns investors of risks including competition, regulatory changes in China, and geopolitical tensions[23](index=23&type=chunk)[24](index=24&type=chunk) - Financial information is stated in RMB, with USD translations provided for convenience at a rate of **RMB 7.2960 to US$1.00** as of September 30, 2023[27](index=27&type=chunk)

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 ...

Acquisitions and Disposals - The company completed the acquisition of 100% equity interests of Huanqiuyimeng in 2019, a leading provider of educational services for students in China interested in applying for overseas art study [289]. - In October 2022, the company acquired the remaining 40% equity interest in Sichuan Huanqiuyilian, increasing its ownership from 60% to 100% [290]. - The company disposed of 70% equity interest in Beijing Quanouyimeng in July 2022 to focus on core art-related international education services [289]. - The company reduced its equity interest in Muhua Shangce to 54.60% from 2017 to 2019 before disposing of it entirely in June 2021 [286]. - The company disposed of its 54.60% equity interest in Muhua Shangce and 70% equity interest in Quanouyimeng to focus on core international education services [305]. Financial Performance - For the fiscal year ended December 31, 2022, total net revenues were RMB 206.8 million ($30.0 million), with a net loss of RMB 48.6 million ($7.0 million) compared to a net loss of RMB 36.4 million in 2021 [307]. - The company generated net revenues of RMB 206.8 million ($30.0 million) for the fiscal year ended December 31, 2022, compared to RMB 202.2 million in 2021, and RMB 162.2 million in 2020 [428]. - The company reported net losses of RMB 48.6 million ($7.0 million) for the fiscal year ended December 31, 2022, following losses of RMB 36.4 million in 2021 and RMB 100.6 million in 2020 [428]. - Gross profit for the fiscal year 2022 was RMB 102,505 thousand, with a gross margin of 49.6%, down from 51.8% in 2021 [444]. - Operating expenses for 2022 totaled RMB 159,108 thousand, representing 76.9% of net revenues, a decrease from 84.7% in 2021 [456]. Revenue Composition - Portfolio training services accounted for 74.0% of total net revenues in 2022, while research-based learning services and overseas study counselling services contributed 1.8% and 12.1%, respectively [307]. - Portfolio training services generated revenues of RMB 153,136 thousand in 2022, accounting for 73.9% of total net revenues, compared to RMB 151,434 thousand in 2021 [434]. - Research-based learning services revenues decreased to RMB 3,722 thousand in 2022 from RMB 5,977 thousand in 2021, reflecting a decline of 37.6% [434]. - Overseas study counselling services revenues increased to RMB 24,975 thousand in 2022, up from RMB 23,624 thousand in 2021, marking a growth of 5.7% [434]. Operational Strategies - The company aims to explore acquisition opportunities in the international education sector to broaden its product spectrum [305]. - The company plans to develop more small-sized classes to improve teaching efficiency and profit margins, especially for fundamental courses [317]. - The company aims to extend its service life-cycle and expand its customer range through new services such as internships and interest-based learning courses [343]. - The company plans to resume international summer camp programs for research-based learning services as COVID-19 restrictions ease [437]. - The company aims to enhance its service offerings and market presence through potential future expansions of its training center network both domestically and internationally [347]. Regulatory Environment - The company’s operational strategies are influenced by regulatory frameworks governing private education in China, which affect its ability to establish for-profit institutions [362]. - The company is required to obtain operating permits from relevant PRC authorities for carrying out educational activities as per the Amended Implementation Rules for the Private Education Law effective September 1, 2021 [367]. - Local government authorities are no longer approving new Academic After-School Tutoring Institutions, and existing institutions must register as non-profit entities [368]. - The company may be required to comply with new regulations affecting ancillary services, which could adversely impact its business and financial outlook [375]. - The company cannot assure that its training centers will not be classified as "private schools," which would require additional operating permits [367]. Market Trends - The portfolio training market in China is expected to grow due to increasing affordability of overseas education and higher recognition of art value [311]. - The research-based learning market in China has seen growth due to increasing demand for high-quality out-of-classroom education and the affluence of families [328]. - The company plans to expand its overseas and domestic partnerships to develop more educational travel programs, targeting a growing market [328]. Human Resources - As of December 31, 2022, the company has a total of 1,245 teachers, with 140 full-time and 1,105 part-time teachers [337]. - Approximately 39% of full-time teachers have over 5 years of experience in the art industry, while around 30% have over 3 years [337]. - The company has established a centralized management system to ensure consistency in the quality of education across its training centers [338]. Marketing and Competition - The company utilizes various marketing strategies, including partnerships with overseas study counseling services and internet advertising, to attract prospective students [349][350]. - The competitive landscape for art-related educational services is intensifying, with the company positioned as a leading player in terms of geographic coverage and product breadth [352]. - The company emphasizes branding and training quality as key competitive advantages, which have helped maintain its market position amid increasing competition [353]. Intellectual Property - The company has registered 82 trademarks and 61 software copyrights relevant to its products and services as of April 6, 2023, indicating a strong emphasis on intellectual property protection [355][356]. Cash Flow and Liquidity - As of December 31, 2022, the company had RMB 55.0 million ($8.0 million) in cash and cash equivalents [484]. - The company expects future cash flows from operating activities, primarily from the Huanqiuyimeng business, to meet current working capital requirements [485]. - The company plans to finance future working capital and capital expenditures mainly from cash generated from operations and potential external financing [484]. - The company may seek additional liquidity sources if business conditions change or if cash requirements increase [485].

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]