Financial Data and Key Metrics Changes - Total net revenues for Q1 2023 amounted to RMB385 million, a year-over-year decline of 38.2% from RMB624 million in Q1 2022, primarily due to learning center closures in January [7][13] - Net operating cash outflow narrowed by 6% year-over-year to RMB17.73 million in Q1 2023, compared to RMB18.9 million in the same period of 2022 [7][12] - Operating loss was RMB58.8 million in Q1 2023, compared to operating income of RMB28.6 million in Q1 2022 [17] Business Line Data and Key Metrics Changes - Revenue from IT-focused supplementary STEAM education services was RMB250.8 million, down 29.1% year-over-year, representing 65.1% of total net revenues [8][14] - Revenue from IT professional education dropped by 50.2% year-over-year due to the suspension of some learning centers [10][13] - Enrollments in STEAM education reached 174,800, a slight increase compared to the previous year, with the number of renewal students rising to 81.6% [9] Market Data and Key Metrics Changes - The total number of learning centers providing STEAM education services decreased from 232 at the end of Q4 2022 to 216 at the end of Q1 2023 [9] - The number of students enrolled per center increased from 737 in Q1 2022 to 807 in Q1 2023 [9] Company Strategy and Development Direction - The company plans to focus on continuous course upgrades and operational excellence to enhance future development and profitability [21] - A strategic investment agreement was approved to carve out the college collaboration-related business, retaining only a minority interest [11][20] - The company aims to capitalize on the growing demand for IT-focused STEAM education in China, driven by the country's aspiration to develop technical capabilities [22] Management's Comments on Operating Environment and Future Outlook - Management noted that the overall business environment was challenging, but there was a recovery in enrollments and cash inflow in the latter part of Q1 2023 [6][20] - The company expects ongoing revenue run rate to decrease by around 4% due to the carve-out of the college collaboration business, but anticipates a year-over-year increase in cash receipts and GAAP revenue in Q2 2023 [20][21] Other Important Information - Total operating expenses decreased by 21.3% year-over-year to RMB259.8 million in Q1 2023, primarily due to effective cost controls [15] - Capital expenditures in Q1 2023 were RMB5.8 million, with a total cash balance of RMB371 million as of March 31, 2023 [18] Q&A Session Summary Question: What is the trend for STEAM education this year and the growth strategy? - Management indicated that despite early headwinds, the STEAM education segment is gradually returning to growth, driven by rising market demand and favorable policies [24] - The growth strategy includes new customer acquisition channels, maintaining high renewal rates, and introducing generative AI technology content to courses [25][26] Question: What is the enrollment and total number of centers in the professional education segment? - There were about 83 centers at the end of Q1 2023, which is expected to decrease to around 57 after the carve-out of the college-related business [29] Question: What is the pricing action for the rest of the year? - Pricing per hour and transaction value per course have increased, with students opting for longer courses without changing the overall pricing structure [35] Question: Can you break down the Q2 guidance? - The expected decrease in revenue is primarily due to lingering impacts from the previous quarter and economic conditions affecting the adult education segment [37] Question: Will the company be profitable this year? - The company expects to remain profitable this year, with a break-even outlook for Q2 and profitability anticipated in the second half of the year [39]
Tarena(TEDU) - 2023 Q1 - Earnings Call Transcript