Mynd(US:MYND)2019-05-30 01:41Financial Data and Key Metrics Changes - The company reported a 19.2% year-over-year increase in net revenues for Q1 2019, reaching $34.3 million compared to $28.8 million in Q1 2018 [19] - Adjusted operating loss narrowed to $2.7 million from $3.4 million in the same quarter last year [25] - Gross profit increased by 195% to $1.8 million, with a gross margin of 5.24% compared to 2.2% in the previous year [22] - Cash generated from operating activities was $13.2 million, up from $5.3 million in Q1 2018 [27] Business Line Data and Key Metrics Changes - Enrollment at directly operated kindergartens grew by 11.3% in Q1 2019, with a total of 24,572 students compared to 22,087 students in Q1 2018 [12] - Service revenues increased by 22.5% to $31.9 million, driven by higher tuition fees and increased student enrollment [20] - Product revenues decreased by 12.1% to $2.4 million, attributed to timing differences in product delivery [20] Market Data and Key Metrics Changes - The company operates 1,110 franchise play-and-learn centers, with new course offerings well received by franchisees [9] - The company is expanding into the childcare market for children aged 0 to 3 years, with plans to open two directly-operated centers in Shanghai [14] Company Strategy and Development Direction - The company aims to balance growth and profitability while diversifying its offerings in five key areas: play-and-learn centers, directly operated kindergartens, services to third-party operators, childcare for ages 0 to 3, and quality-oriented education [8] - The company is pursuing a selective M&A strategy to acquire targets with strategic value, while also focusing on organic growth [45] Management's Comments on Operating Environment and Future Outlook - Management expects net revenues for Q2 2019 to be between $52.1 million and $54.5 million, reflecting a year-over-year increase of approximately 10% to 15% [29] - For the full year of 2019, the company raised its revenue guidance to between $195.5 million and $203.5 million, representing a year-over-year increase of approximately 25% to 30% [30] - Management is optimistic about the early childhood education market in China, believing it is still in the early stages of development with significant growth opportunities ahead [17] Other Important Information - The company announced the resignation of CFO Ping Wei, who will continue as a senior advisor, and welcomed Hao Gu as the new CFO [31] - The company has a strong cash position with $100.1 million in cash and cash equivalents as of March 31, 2019 [27] Q&A Session Summary Question: Impact of new business rollout on management - Management expects to invest slightly less than RMB 10 million in the 0 to 3-year-old market, anticipating profitability starting in 2020 [38] Question: Future trends of enrollment - Management reported a net increase of 945 students in Q1 2019 and expects strong enrollment momentum to continue due to favorable demographic trends [39] Question: Current strategy for M&As - The company maintains a selective M&A strategy, focusing on targets with strategic value and plans to continue pursuing M&A opportunities, particularly in non-direct-owned kindergarten services [45] Question: VAT exemptions for kindergartens and daycare centers - The company is already exempt from VAT on kindergarten tuition revenue, and the exemption will benefit its daycare services as it enters the earlier care and education sector [49] Question: Utilization rate in directly operated kindergartens - Management indicated that the theoretical utilization rate is close to 90%, while the actual utilization rate is around 70%, with expectations for improvement in margins going forward [55]