Sunlands Technology Group (STG) Q1 2025 Earnings Call May 22, 2025 06:00 AM ET Company Participants Yuhua Ye - Investor RelationsTongbo Liu - CEO & DirectorHangyu Li - Finance Director Operator Ladies and gentlemen, thank you for standing by, and welcome to Sunderland's First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Today's conference call is being recorded. I will now turn the call over to your host today, Yu Hua, Sunlands IR representat ...

Financial Data and Key Metrics Changes - In Q1 2025, the company reported net revenue of RMB 487.6 million, a decrease of 6.8% from RMB 523.2 million in Q4 2024, marking the sixteenth consecutive profitable quarter with a net income of RMB 75.2 million [5][18] - The gross profit margin was 85.2%, and the net income margin was 15.4%, with operating cash flow remaining positive for the seventh consecutive quarter [6][16] - Cash and cash equivalents totaled RMB 596.2 million, with short-term investments at RMB 200.7 million as of March 31, 2025, compared to RMB 507.2 million and RMB 276 million respectively at the end of 2024 [21] Business Line Data and Key Metrics Changes - Degree and diploma programs contributed 9.7% of total revenue, while interest-based programs, professional skills development, and certification preparation accounted for 78.2% of total revenue [8][9] - New student enrollments reached 169,083, supported by a 7.5% growth in average order value [17] Market Data and Key Metrics Changes - The company noted a decline in gross billing from post-secondary courses, impacting overall revenue [18] - The aging population in China is driving increased participation in the senior consumer market, presenting opportunities for collaboration with various industries [9][10] Company Strategy and Development Direction - The company aims to refine its business mix by focusing on high-margin areas and diversifying its course offerings, including wellness and lifestyle [7] - A partnership-driven approach is being adopted to enhance value creation, with new collaborations established to leverage consumer reach [10] - The company is enhancing its digital transformation by embedding AI tools to improve curriculum precision and engagement [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties, emphasizing a focus on domestic markets [14] - The outlook for Q2 2025 anticipates net revenues between RMB 500 million to RMB 520 million, reflecting a year-over-year increase of 1.6% to 5.6% [21] Other Important Information - The company has maintained a stable operating expense level, with operating expenses at RMB 341.1 million, unchanged from the previous year [19] - A dual teacher model has been implemented to enhance course accessibility and engagement, achieving a 98% course completion rate among new students [12] Q&A Session Summary Question: What are the expectations for future revenue growth? - The company expects net revenues for Q2 2025 to be between RMB 500 million to RMB 520 million, indicating a potential increase year-over-year [21] Question: How is the company addressing the decline in post-secondary course revenues? - The company is reallocating resources towards high-growth opportunities and closely monitoring education trends and demographic shifts [8][9] Question: What strategies are in place to enhance student engagement? - The company has adopted a hybrid model combining online and offline learning, which has proven effective in boosting learner retention and satisfaction [10][11]

Core Viewpoint - Sunlands Technology Group reported its financial results for the first quarter of 2025, highlighting a decrease in net revenues but maintaining profitability for the sixteenth consecutive quarter, indicating a strategic focus on high-potential areas and operational efficiency [3][5][12]. Financial Performance - Net revenues for Q1 2025 were RMB487.6 million (US$67.2 million), a decrease of 6.8% from RMB523.2 million in Q1 2024 [5][9]. - Net income for the quarter was RMB75.2 million (US$10.4 million), down from RMB112.7 million in Q1 2024, resulting in a net income margin of 15.4% compared to 21.5% in the previous year [12][9]. - Gross profit decreased by 6.9% to RMB415.3 million (US$57.2 million) from RMB446.1 million in Q1 2024 [7][9]. Cost Management - Cost of revenues decreased by 6.3% to RMB72.3 million (US$10.0 million) due to reduced compensation expenses from headcount reductions [6][9]. - Operating expenses remained stable at RMB341.1 million (US$47.0 million) compared to the same quarter in 2024 [8][9]. Student Enrollment and Deferred Revenue - New student enrollments were 169,083, a decline from 175,758 in Q1 2024 [9]. - As of March 31, 2025, the deferred revenue balance was RMB891.6 million (US$122.9 million), down from RMB916.5 million at the end of 2024 [15][9]. Outlook - For Q2 2025, the company expects net revenues to be between RMB500 million to RMB520 million, representing a year-over-year increase of 1.6% to 5.6% [17]. Cash Position - As of March 31, 2025, the company had cash and cash equivalents of RMB596.2 million (US$82.2 million) and short-term investments of RMB200.7 million (US$27.7 million), an increase from the previous quarter [14][9]. Share Repurchase Program - The company has a share repurchase program authorized for up to US$15.0 million, with approximately US$3.9 million utilized as of May 19, 2025 [16]. Company Overview - Sunlands Technology Group is a leader in China's adult online education market, offering a variety of courses through a live streaming platform, focusing on personalized and interactive learning experiences [21].

Group 1 - Scandinavian Tobacco Group A/S published its interim report for the period of January 1 to March 31, 2025 [1] - The Annual Report and company announcement related to the published reports are accessible on the company's investor relations website [1] Group 2 - Contact information for the Director of IR & Communication and another IR representative is provided for further inquiries [2]

Earnings Call Scheduled for 6:00 a.m. ET on May 22 2025BEIJING, May 08, 2025 (GLOBE NEWSWIRE) -- Sunlands Technology Group (NYSE: STG) ("Sunlands" or the "Company"), a leader in China's adult online education market and China's adult personal interest learning market, today announced that it will report its first quarter 2025 unaudited financial results on Thursday, May 22, 2025, before the open of U.S. markets. Sunlands' management team will host a conference call at 6:00 a.m. U.S. Eastern Time, (6:00 p.m. ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of April 2025 Commission file number: 001-38423 Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20- F ☒ Form 40-F ☐ EXHIBIT INDEX Exhibit No. Description 99.1 Press Release SIGNATURE Pursuant to the requirements of the Securities Exchange Act of ...

BEIJING, April 25, 2025 (GLOBE NEWSWIRE) -- Sunlands Technology Group (NYSE: STG) (“Sunlands” or the “Company”), a leader in China’s adult online education market and China’s adult personal interest learning market, today announced that it has filed its annual report on Form 20-F for the fiscal year ended December 31, 2024 with the U.S. Securities and Exchange Commission (the “SEC”) on April 25, 2025, U.S. Eastern Time. The annual report can be accessed on the Company’s investor relations website at https:/ ...

VIEs and Corporate Structure - In 2022, 2023, and 2024, the revenues generated by the VIEs accounted for 46.3%, 63.4%, and 83.9% of the Group's total net revenues, respectively[33]. - As of December 31, 2023 and 2024, the total assets of the VIEs represented 31.5% and 21.4% of the Group's consolidated total assets, respectively[34]. - The Group's corporate structure involves unique risks, as the VIE agreements have not been tested in a court of law in the PRC, leading to potential regulatory uncertainties[34]. - The contractual arrangements allow the Group to direct the activities of the VIEs, receive substantially all economic benefits, and have an exclusive option to purchase equity interests in the VIEs[35]. - The Group's wholly-owned subsidiaries have entered into similar contractual arrangements with other VIEs, ensuring consolidated financial results under U.S. GAAP[46]. - Tian Yuan Law Firm has opined that the contractual arrangements are valid and enforceable under current PRC laws and regulations[49]. - The Group's contractual arrangements with VIEs may not be as effective as direct ownership, posing risks to the Group's business operations[206]. - The Group's business activities are conducted through VIEs due to restrictions on foreign investment in the value-added telecommunication services industry in China[200]. - The Group's contractual arrangements are governed by PRC laws, which may limit the ability to enforce these arrangements due to evolving legal interpretations and uncertainties[209]. - Shareholders of the VIEs may have conflicts of interest that could adversely affect the Group's ability to benefit from these entities, potentially impacting financial outcomes[210]. - The PRC tax authorities may scrutinize VIE contractual arrangements, leading to potential additional tax liabilities that could negatively affect the Group's financial condition[212]. - The Group may lose access to licenses and assets held by the VIEs, which could disrupt business operations and hinder growth[213]. Financial Performance - The total net revenues for the year ended December 31, 2024, amounted to RMB1,990,204 thousand, a decrease from RMB2,159,584 thousand in 2023[80]. - The net income attributable to Sunlands Technology Group for the year ended December 31, 2024, was RMB342,082 thousand, compared to RMB640,830 thousand in 2023[80]. - The Group's net revenues for 2022, 2023, and 2024 were RMB2,323.1 million, RMB2,159.6 million, and RMB1,990.2 million (US$272.7 million) respectively[105]. - The Group reported net income of RMB643.0 million, RMB640.8 million, and RMB342.1 million (US$46.9 million) for 2022, 2023, and 2024 respectively, indicating a decline in profitability in 2024[107]. - Total costs and operating expenses for the year ended December 31, 2024, were RMB1,692,299 thousand, compared to RMB1,584,691 thousand in 2023[80]. - The total shareholders' equity as of December 31, 2024, was RMB 601,345 thousand, compared to RMB 277,036 thousand in 2023, showing a significant increase of approximately 117.0%[83]. - The Group's gross billings for 2022, 2023, and 2024 were RMB1,496.7 million, RMB1,504.6 million, and RMB1,555.4 million (US$213.1 million) respectively, indicating a steady growth trend[105]. Regulatory Environment and Risks - The Group faces potential risks if deemed a "critical information infrastructure operator" under PRC cybersecurity laws, which could disrupt operations[59]. - The company may be required to obtain additional licenses or approvals for business operations in the future due to uncertainties in regulatory interpretations[64]. - The Group faces risks related to regulatory approvals, anti-monopoly actions, and cybersecurity, which could adversely affect its business operations[93]. - The Group's operations are subject to significant oversight by the PRC government, which could lead to adverse changes in business operations[101]. - The Group's operations may incur additional expenses if it needs to alter its business model to comply with new laws and regulations regarding data processing[163]. - The regulatory environment for private education in China is evolving, creating uncertainties that could impact the Group's business[124]. - The Group's business has not been materially and adversely affected by recent regulatory changes in the PRC private education industry[125]. - The Chinese government's recent policies have negatively impacted the educational industry, particularly K-12 services, with potential for further regulations that could harm the Group's business[229]. Student Enrollment and Market Strategy - New student enrollments increased from 534,280 in 2022 to 674,649 in 2024, reflecting a growth of approximately 26%[106]. - The Group's revenue primarily comes from tuition collected from students, making it critical to enroll prospective students cost-effectively[102]. - The Group is focused on expanding its market share and enhancing its technology infrastructure to support a larger student base and additional courses[108]. - The Group's growth strategy may strain its sales and marketing capacities, requiring effective management to avoid increased costs and unsuccessful student acquisition[103]. - If the Group fails to increase student enrollments, net revenues may decline, impacting growth potential[102]. - The Group's ability to implement strategies and manage growth depends on effective marketing, course development, and recruitment of qualified faculty[104]. Financial Liabilities and Cash Flow - The outstanding balance of service fees owed by the VIEs to the company's PRC subsidiaries was nil as of December 31 for the years 2022, 2023, and 2024[67]. - The company has not been involved in any investigations or subject to a cybersecurity review initiated by the CAC as of the date of the annual report[60]. - The company faces restrictions on dividend payments due to PRC regulations, which may limit the ability to distribute profits to shareholders[86]. - The company’s PRC subsidiaries are required to set aside at least 10% of after-tax profits for statutory reserves, potentially impacting dividend availability[87]. - Future foreign exchange regulations may further restrict the ability to remit dividends outside of China, affecting shareholder returns[88]. - The Group's student loan coverage ratio was 5.1%, 1.3%, and 1.9% for the years 2022, 2023, and 2024, respectively, with interest payments of RMB6.0 million, RMB1.5 million, and RMB1.7 million (US$0.2 million) during the same periods[143]. Operational Challenges and Competition - The Group faces intense competition in the online education market, which could lead to pricing pressure and loss of market share, significantly reducing gross billings and net revenues[154]. - The Group's ability to attract and retain students may be compromised if security measures are breached, leading to potential reputational damage and legal liabilities[156]. - The Group's ability to deliver live streaming online courses is at risk due to the lack of long-term arrangements with third-party live streaming service providers, which typically have a one-year term[141]. - A substantial majority of the Group's teachers currently do not hold teaching licenses, which poses regulatory risks[126]. - The Group's reliance on certain course offerings exposes it to concentration risks, particularly if there are significant reductions in the perceived value of those courses[152]. Cybersecurity and Data Privacy - The Group's portal system, operation system, and major mobile app achieved scores of approximately 80/100 on cybersecurity and data privacy tests conducted by independent third-party institutions[162]. - The Group is subject to various regulatory requirements regarding data protection, with evolving laws that could impose additional compliance costs and liabilities[159]. - The Group's business operations are not currently identified as violating PRC laws and regulations regarding cybersecurity and data privacy, but uncertainties remain due to evolving interpretations[162]. - The Group has established compliance procedures to mitigate risks related to cybersecurity and data privacy, but must adapt to new regulations as they arise[163]. Management and Human Resources - The Group's success relies on the contributions of senior management and key employees, with competition for talent being intense in China[168]. - The Group's ability to maintain its corporate culture is critical for fostering innovation and attracting talent, which may be challenged as the business grows[170]. - The market for recruitment of faculty members in China is competitive, requiring the Group to offer attractive compensation and career development opportunities[136]. Legal and Compliance Risks - The Group may face legal liabilities due to potential intellectual property infringements, which could divert management resources and negatively impact business prospects[172]. - The Group's reputation may be adversely affected by third-party misconduct or fraud, leading to potential legal liabilities and loss of market share[174]. - The Group's financial reporting is subject to the Sarbanes-Oxley Act, and any failure to maintain effective internal controls could result in significant costs and impact investor confidence[181]. - The Group may be subject to legal disputes, including shareholder class action lawsuits, which could adversely affect its financial condition and reputation[193].

Sunlands Technology Group (NYSE:STG) Q4 2024 Earnings Conference Call March 21, 2025 6:30 AM ET Company Participants Yuhua Ye - Investor Relations Tongbo Liu - Chief Executive Officer Hangyu Li - Financial Director Operator Ladies and gentlemen, thank you for standing by, and welcome to Sunland's Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I'll now turn the call over to your host today, Yuhua ...

Core Viewpoint - Sunlands Technology Group reported its financial results for Q4 and full year 2024, highlighting a decrease in revenues and net income, while emphasizing its commitment to innovation and market expansion in the adult online education sector [1][4][5]. Financial Results for Q4 2024 - Net revenues for Q4 2024 decreased by 10.8% to RMB483.5 million (US$66.2 million) from RMB541.7 million in Q4 2023, primarily due to a decline in gross billings from post-secondary courses [6][8]. - Gross profit for Q4 2024 was RMB401.8 million (US$55.0 million), down 14.1% from RMB468.0 million in Q4 2023 [10]. - Net income for Q4 2024 was RMB57.8 million (US$7.9 million), compared to RMB155.2 million in Q4 2023, resulting in a net income margin of 12.0% [14][8]. Financial Results for Full Year 2024 - For the full year 2024, net revenues decreased by 7.8% to RMB1,990.2 million (US$272.7 million) from RMB2,159.6 million in 2023 [19]. - Gross profit for the year was RMB1,672.6 million (US$229.2 million), down 11.7% from RMB1,894.1 million in 2023 [21]. - Net income for 2024 was RMB342.1 million (US$46.9 million), a significant decrease from RMB640.8 million in 2023, with a net income margin of 17.2% [25][8]. Operational Highlights - The company welcomed approximately 675,000 new students in 2024, marking a historic record and indicating significant market expansion potential [4]. - Interest-based courses became the core growth point for the company, aligning with broader economic and demographic trends [5]. - Operating expenses for the year increased by 4.2% to RMB1,374.7 million (US$188.3 million), with sales and marketing expenses rising by 6.5% [22][23]. Outlook - For Q1 2025, Sunlands expects net revenues to be between RMB470 million to RMB490 million, representing a year-over-year decrease of 6.4% to 10.2% [27]. Company Overview - Sunlands Technology Group is a leader in China's adult online education market, offering a variety of courses through a live streaming platform, focusing on personalized and interactive learning experiences [31].