TAL(TAL) - 2025 Q1 - Quarterly Report

Financial Highlights Highlights for the Fourth Quarter of Fiscal Year 2024 In Q4 FY2024, TAL Education Group achieved significant net revenue growth of 59.7% to US$429.6 million, reversing prior-year losses to achieve GAAP and Non-GAAP profitability Q4 FY2024 Key Financial Metrics (YoY) | Metric | Q4 FY2024 | Q4 FY2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | US$429.6M | US$269.0M | +59.7% | | Loss from Operations | US$11.1M | US$44.4M | -75.1% | | Non-GAAP Income from Operations | US$9.4M | (US$18.1M) | N/A | | Net Income/(Loss) Attributable to TAL | US$27.5M | (US$39.4M) | N/A | | Non-GAAP Net Income/(Loss) Attributable to TAL | US$48.0M | (US$13.1M) | N/A | | Diluted Net Income/(Loss) per ADS | US$0.04 | (US$0.06) | N/A | Highlights for the Fiscal Year 2024 For FY2024, TAL's net revenues grew 46.2% to US$1,490.4 million, significantly reducing net loss and achieving Non-GAAP net income of US$85.3 million while maintaining a strong cash position FY2024 Key Financial Metrics (YoY) | Metric | FY2024 | FY2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | US$1,490.4M | US$1,019.8M | +46.2% | | Loss from Operations | US$69.2M | US$90.7M | -23.7% | | Non-GAAP Income from Operations | US$19.7M | US$17.8M | +10.2% | | Net Loss Attributable to TAL | US$3.6M | US$135.6M | -97.4% | | Non-GAAP Net Income/(Loss) Attributable to TAL | US$85.3M | (US$27.0M) | N/A | | Cash, Cash Equivalents & Short-Term Investments | US$3,303.3M | US$3,171.5M | +4.2% | Management Commentary Management highlighted continued core business development in FY2024 and outlined a FY2025 strategy focused on product quality, operational efficiency, and technological transformation - Management noted that fiscal year 2024 ended with continued development across core businesses, each offering distinct value propositions[6] - The focus for fiscal year 2025 includes enhancing product quality, managing operational efficiency, and harnessing new technologies for business transformation[7] Detailed Financial Results Fourth Quarter of Fiscal Year 2024 In Q4 FY2024, TAL's net revenues surged 59.7% YoY to US$429.6 million, accompanied by significantly narrowed operating loss and a net income of US$27.5 million, with deferred revenue growing 80.4% Revenue and Profitability Q4 FY2024 Revenue & Profitability (YoY) | Metric | Q4 FY2024 | Q4 FY2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | US$429.6M | US$269.0M | +59.7% | | Gross Profit | US$227.3M | US$141.3M | +60.9% | | Loss from Operations | US$11.1M | US$44.4M | -75.1% | | Net Income/(Loss) Attributable to TAL | US$27.5M | (US$39.4M) | N/A | | Diluted Net Income/(Loss) per ADS | US$0.04 | (US$0.06) | N/A | Operating Costs and Expenses Q4 FY2024 Operating Costs & Expenses (YoY) | Expense Category | Q4 FY2024 | Q4 FY2023 | Change | | :--- | :--- | :--- | :--- | | Cost of Revenues | US$202.2M | US$127.7M | +58.4% | | Selling and Marketing | US$125.9M | US$74.5M | +69.0% | | General and Administrative | US$117.2M | US$112.2M | +4.5% | | Total Operating Costs & Expenses | US$445.4M | US$314.4M | +41.7% | - Total share-based compensation expenses decreased to US$20.5 million in Q4 FY2024 from US$26.3 million in the prior-year period[13] Balance Sheet and Cash Flow - Net cash used in operating activities for Q4 FY2024 was US$23.7 million[21] - As of February 29, 2024, the company held US$3,303.3 million in cash, cash equivalents, and short-term investments[22] - Deferred revenue increased by 80.4% YoY to US$428.3 million as of February 29, 2024, compared to US$237.4 million a year earlier[23] Fiscal Year Ended February 29, 2024 For FY2024, TAL achieved strong revenue growth of 46.2% to US$1,490.4 million, significantly narrowing operating and net losses, supported by positive cash flow from operations of US$306.2 million Revenue and Profitability FY2024 Revenue & Profitability (YoY) | Metric | FY2024 | FY2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | US$1,490.4M | US$1,019.8M | +46.2% | | Gross Profit | US$806.1M | US$583.4M | +38.2% | | Loss from Operations | US$69.2M | US$90.7M | -23.7% | | Net Loss Attributable to TAL | US$3.6M | US$135.6M | -97.4% | | Diluted Net Loss per ADS | US$0.01 | US$0.21 | -97.2% | Operating Costs and Expenses FY2024 Operating Costs & Expenses (YoY) | Expense Category | FY2024 | FY2023 | Change | | :--- | :--- | :--- | :--- | | Cost of Revenues | US$684.3M | US$436.4M | +56.8% | | Selling and Marketing | US$461.9M | US$283.0M | +63.2% | | General and Administrative | US$429.9M | US$413.8M | +3.9% | | Total Operating Costs & Expenses | US$1,576.1M | US$1,133.2M | +39.1% | - Total share-based compensation expenses for FY2024 decreased by 18.1% to US$88.9 million from US$108.6 million in FY2023[28] Cash Flow - Net cash provided by operating activities for fiscal year 2024 was US$306.2 million[35] Corporate Actions & Other Information Extension of Share Repurchase Program TAL's Board extended its share repurchase program through April 30, 2025, authorizing repurchases of up to approximately US$503.8 million, following approximately US$233.6 million in ADSs repurchased since April 2023 - The Board extended the share repurchase program by another 12 months, through April 30, 2025[37] - The company is authorized to repurchase up to approximately US$503.8 million of its common shares[37] - Between April 1, 2023, and April 25, 2024, the company repurchased ADSs for an aggregate consideration of approximately US$233.6 million[37] Conference Call A conference call and live webcast are scheduled for April 25, 2024, at 8:00 a.m. Eastern Time to discuss the financial results, requiring participant pre-registration - A conference call to discuss Q4 and FY2024 results is scheduled for April 25, 2024, at 8:00 a.m. Eastern Time[38] - A live and archived webcast will be available on the Investor Relations section of TAL's website[40] Unaudited Condensed Consolidated Financial Statements Consolidated Balance Sheets As of February 29, 2024, TAL's total assets increased to US$4.93 billion, while total liabilities rose to US$1.29 billion, primarily due to deferred revenue, with total equity slightly decreasing to US$3.64 billion Balance Sheet Summary (as of Feb 29, 2024 vs Feb 28, 2023) | Item | Feb 29, 2024 | Feb 28, 2023 | | :--- | :--- | :--- | | Total Assets | $4,927.9M | $4,724.4M | | Total Current Assets | $3,699.2M | $3,468.4M | | Total Liabilities | $1,289.2M | $903.4M | | Total Current Liabilities | $1,082.2M | $783.9M | | Total Equity | $3,638.8M | $3,820.9M | Consolidated Statements of Operations For FY2024, the consolidated statement of operations shows net revenues of US$1,490.4 million and a gross profit of US$806.1 million, resulting in a significantly improved net loss attributable to TAL of US$3.6 million FY2024 vs FY2023 Statement of Operations Highlights | Item | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | | Net Revenues | $1,490.4M | $1,019.8M | | Gross Profit | $806.1M | $583.4M | | Loss from Operations | ($69.2M) | ($90.7M) | | Net Loss Attributable to TAL | ($3.6M) | ($135.6M) | Consolidated Statements of Cash Flows For FY2024, TAL generated US$306.2 million in net cash from operating activities, with investing activities providing US$95.1 million and financing activities using US$233.1 million, leading to a US$162.6 million increase in cash and equivalents FY2024 vs FY2023 Cash Flow Summary | Item | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $306.2M | $7.4M | | Net cash provided by/(used in) investing activities | $95.1M | ($301.6M) | | Net cash used in financing activities | ($233.1M) | ($66.2M) | | Net increase/(decrease) in cash | $162.6M | ($386.9M) | Reconciliation of Non-GAAP Measures This section reconciles GAAP to Non-GAAP measures by excluding share-based compensation expenses, transforming FY2024's GAAP operating loss of US$69.2 million into a Non-GAAP operating income of US$19.7 million and a GAAP net loss of US$3.6 million into a Non-GAAP net income of US$85.3 million - The company uses Non-GAAP measures to provide supplemental information by excluding share-based compensation expenses, which it believes helps in assessing operating performance from a cash perspective[43][44] FY2024 GAAP to Non-GAAP Reconciliation | Metric | GAAP | Share-Based Compensation | Non-GAAP | | :--- | :--- | :--- | :--- | | Loss from Operations | ($69.2M) | $88.9M | $19.7M | | Net (Loss)/Income Attributable to TAL | ($3.6M) | $88.9M | $85.3M |