Four Seasons Education(FEDU) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total student enrollment reached 39,357, representing a growth of 90.8% year-over-year [5] - Revenue increased by 37.9% to RMB 128.8 million from RMB 93.4 million in the same period last year [11] - Gross profit increased by 45.3% to RMB 71.0 million from RMB 48.8 million year-over-year [12] - Operating income grew by 234.9% to RMB 28.3 million from RMB 8.5 million in the same period last year [12] - Net income increased by 217.8% to RMB 20.3 million compared to RMB 6.4 million in the same period last year [13] - Basic and diluted income per ADS were RMB 0.40 and RMB 0.39, compared to RMB 0.14 and RMB 0.13 respectively for the same period last year [14] Business Line Data and Key Metrics Changes - The company reported a robust increase in enrollments, attributed to diversified course offerings and enhanced brand awareness [5][6] - The optimization of the learning center network led to a substantial expansion in gross margin, which increased by 282 basis points to 55.1% [9] - The company launched its first Bridge summer camp, indicating a diversification of educational programs beyond traditional tutoring [7] Market Data and Key Metrics Changes - The company added two new learning centers in Chongqing and Shenzhen, both identified as economically dynamic markets with growth potential for K-12 after-school education [6] - As of August 31, 2019, the company operated 54 learning centers, with 44 in Shanghai and 10 in other cities [6] Company Strategy and Development Direction - The company aims to solidify its strengths in Shanghai and other established cities while remaining prudent in its expansion plans [8] - The focus is on providing diversified educational content and enhancing the learning experience for students of different ages [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategic adjustments leading to healthy development following a transformation phase [8] - For the third quarter of fiscal 2020, the company expects revenue in the range of RMB 100.3 million to RMB 104.8 million, representing year-over-year growth of approximately 10% to 15% [15] Other Important Information - The company reported a cash and cash equivalents balance of RMB 516.3 million as of August 31, 2019, an increase of 17.5% compared to RMB 439.6 million as of February 28, 2019 [14] Q&A Session Summary Question: What contributed to the robust increase in student enrollments? - Management acknowledged that part of the increase was due to a change in the tuition fee collection schedule, but organic growth was also attributed to class diversification and recruitment efforts [17][18] Question: What are the future plans for new study centers? - The company plans to continue expanding in key cities like Chongqing and Shenzhen, with a dedicated team in Shenzhen to drive business growth [19][20] Question: Why is the revenue growth guidance for the third quarter lower than the second quarter? - Management indicated that the third quarter is expected to be less strong based on current estimates, and they are being conservative in their guidance [20]