NaaS(US:NAAS)2019-03-15 06:39Financial Data and Key Metrics Changes - Total revenues for Q4 2018 increased by 30.1% year-over-year to CNY354.2 million, exceeding guidance of 28% growth [14] - Revenues from educational programs rose by 26.7% year-over-year to CNY316.5 million [14] - Net income attributable to RISE for Q4 2018 was CNY31.5 million, compared to a net loss of CNY138 million in Q4 2017 [19] - Non-GAAP net income increased by 45.9% year-over-year to CNY47.9 million [20] - Cash flow from operating activities was CNY72.5 million, up from CNY14.7 million in the same period last year [20] Business Line Data and Key Metrics Changes - Franchise revenues increased by 65.9% year-over-year to CNY28.2 million, driven by growth in recurring franchise fees and an increase in franchised learning centers [15] - Other revenues rose to CNY9.4 million, up by 74.4% year-over-year, primarily due to growth from The Edge [16] - The number of self-owned learning centers expanded from 62 to 74, while franchised centers increased from 206 to 304 [15] Market Data and Key Metrics Changes - The demand for junior English training remains strong, supported by Chinese parents' commitment to education [11] - The company plans to add at least 11 self-owned learning centers and 50 to 60 franchised centers in 2019 [4][32] Company Strategy and Development Direction - The company aims to balance operational efficiency with network expansion, focusing on acquiring franchised centers into its self-owned network [5] - Investment in technology and product development will continue, with a focus on online and offline integrated course products [7] - The company is actively seeking strategic partnerships to enhance service offerings and student acquisition channels [6] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to adapt to regulatory changes and maintain growth momentum [4] - The company anticipates short-term margin pressure due to expansion but expects long-term EBITDA growth [33] - The overall market environment is seen as favorable, with government policies supporting education accessibility and quality [11][44] Other Important Information - The company has a stable student retention rate of over 70% [3] - The launch of Rise Club, an online platform for after-class learning, aims to enhance communication between teachers, parents, and students [10] Q&A Session Summary Question: Outlook for sales and marketing expenses and margins in 2019 - Management indicated that while sales and marketing expenses increased in absolute terms, their percentage of revenue decreased due to higher revenue growth [25][27] - Investment in sales and marketing will be maintained to support growth [28] Question: Guidance for new learning center expansion and margin outlook - The company plans to add at least 11 new self-owned centers and 50 to 60 franchised centers in 2019, with expected short-term margin pressure due to expansion [32][33] Question: Impact of price hikes and prepayment tuition collection on retention rate - A 7% price increase was implemented in Beijing, but management reported no negative impact on retention rates, which remain stable [38] Question: Update on compliance status of learning centers and teacher licensing - The company is proactively preparing to meet new government requirements for teacher certification and learning center compliance [44]