17 Education & Technology Group Inc. (NASDAQ: YQ) (“17EdTech”
or the “Company”), a leading education technology company in China,
today announced its unaudited financial results for the first
quarter of 2022.
First Quarter 2022
Highlights1
- Net revenues were
RMB233.4 million (US$36.8 million), representing a year-over-year
decrease of 50.8% from RMB474.2 million in the first quarter of
2021, and 11.1% higher than the high end of the estimate provided
by the Company in March 2022.
- Gross margin was
60.7%, improving from 60.4% in the first quarter of 2021.
- Net loss was
RMB24.8 million (US$3.9 million), significantly decreasing from net
loss of RMB659.7 million in the first quarter of 2021.
- Net loss as a percentage of
net revenues was negative 10.6% in the first quarter of
2022, narrowing from negative 139.1% in the first quarter of
2021.
- Adjusted net
income2 (non-GAAP),
which excluded share-based compensation expenses of RMB34.6 million
(US$5.5 million), was RMB9.9 million (US$1.6 million), improving
from adjusted net loss (non-GAAP) of RMB588.8 million in the first
quarter of 2021.
- Adjusted net income (loss)
(non-GAAP) as a percentage of net revenues was 4.2% in the
first quarter of 2022, compared with negative 124.2% in the first
quarter of 2021.
Mr. Andy Chang Liu, Founder, Chairman and Chief
Executive Officer of 17EdTech commented, “We delivered strong
operational and financial results in the first quarter of 2022. Our
new business strategies yielded higher-than-expected net revenues
and improved operational efficiency. Although we recorded a net
loss of RMB24.8 million on a GAAP basis in the first quarter of
2022, we once again achieved net profitability on a non-GAAP
basis.”
“During the quarter, we continue to see new
demands and opportunities arising out of this new wave of COVID-19
outbreaks in China in early 2022. A number of local governments
have released policies to support the procurement of quality
education resources, including courses, systems and services for
compulsory education. We continued to see great momentum and new
driving forces for our future growth and demands for our online
homework services.” Mr. Liu concluded.
_____________________1 For a reconciliation of
non-GAAP numbers, please see the table captioned “Reconciliations
of non-GAAP measures to the most comparable GAAP measures” at the
end of this press release. 2 Adjusted net income (loss) represents
net income (loss) excluding share-based compensation expenses.
Mr. Michael Chao Du, Director and Chief
Financial Officer of 17EdTech commented, “We are pleased to report
our solid performance in the first quarter of 2022. Our net
revenues reached RMB233.4 million, 11.1% higher than the top-end of
our prior guidance. It is also worth mentioning that the results
reflected progress we made in implementing our new business
strategies and did not include any revenue from the legacy online
K-12 tutoring services, which ceased by the end of 2021 in
compliance with the relevant PRC government regulations. As we
continued to improve operational efficiency, our net loss for the
first quarter of 2022 was RMB24.8 million, significantly narrowing
from net loss of RMB659.7 million in the first quarter of 2021, and
we recorded a positive adjusted net income (non-GAAP) of RMB9.9
million. We are glad to see that our business is moving in the
right direction in a healthy and sustainable way.”
First Quarter 2022 Unaudited Financial
Results
Net Revenues
Net revenues for the first quarter of 2022 were
RMB233.4 million (US$36.8 million), representing a year-over-year
decrease of 50.8% from RMB474.2 million in the first quarter of
2021, mainly due to the cessation of the Company's online K-12
tutoring services by the end of 2021 in order to be compliant with
the latest PRC regulations, which prohibit the provision of
tutoring services relating to academic subjects to K-12 students.
Excluding net revenue from online K-12 tutoring services, net
revenues increased significantly from RMB11.2 million to RMB233.4
million during the same period. The majority of net revenues for
the first quarter of 2022 were from the Company's personalized
self-directed learning products and to a less extent from its
teaching and learning software as a service (“SaaS”) products, for
which it takes a longer time to finish the bidding process and to
deliver the SaaS offerings as the primary clients of SaaS solutions
are educational authorities and public schools.
Cost of Revenues
Cost of revenues for the first quarter of 2022
was RMB91.8 million (US$14.5 million), representing a
year-over-year decrease of 51.1% from RMB187.6 million in the first
quarter of 2021, which was largely in line with the decrease in net
revenues due to the cessation of the Company's online K-12 tutoring
services under the new regulatory and business environment.
Gross Profit and Gross
Margin
Gross profit for the first quarter of 2022 was
RMB141.7 million (US$22.3 million), representing a year-over-year
decrease of 50.6% from RMB286.6 million in the first quarter of
2021.
Gross margin for the first quarter of 2022 was
60.7%, improving from 60.4% in the first quarter of 2021.
Total Operating Expenses
The following table sets forth a breakdown of
operating expenses by amounts and percentages during the periods
indicated (in thousands, except for percentages):
|
For the
three months ended March 31, |
|
2021 |
|
2022 |
|
Year-over-year |
|
RMB |
% |
|
RMB |
USD |
% |
|
|
|
|
|
|
|
|
|
|
Sales and marketing expenses |
613,527 |
129.4 |
% |
|
21,997 |
3,470 |
9.4 |
% |
|
-96.4 |
% |
Research and
development expenses |
209,927 |
44.3 |
% |
|
97,476 |
15,376 |
41.8 |
% |
|
-53.6 |
% |
General and
administrative expenses |
129,718 |
27.4 |
% |
|
51,301 |
8,093 |
22.0 |
% |
|
-60.5 |
% |
Total operating expenses |
953,172 |
201.1 |
% |
|
170,774 |
26,939 |
73.2 |
% |
|
-82.1 |
% |
Total operating expenses for the first quarter
of 2022 were RMB170.8 million (US$26.9 million), including RMB34.6
million (US$5.5 million) of share-based compensation expenses,
representing a year-over-year decrease of 82.1% from RMB953.2
million in the first quarter of 2021.
Sales and marketing expenses for the first
quarter of 2022 were RMB22.0 million (US$3.5 million), including
RMB4.0 million (US$0.6 million) of share-based compensation
expenses, representing a year-over-year decrease of 96.4% from
RMB613.5 million in the first quarter of 2021. This was mainly due
to the decreases in promotional course expenses and advertising
expenditures as a result of the changes in regulatory environment,
as well as staff optimization in line with business adjustment.
Research and development expenses for the first
quarter of 2022 were RMB97.5 million (US$15.4 million), including
RMB7.2 million (US$1.1 million) of share-based compensation
expenses, representing a year-over-year decrease of 53.6% from
RMB209.9 million in the first quarter of 2021. The decrease was
primarily attributable to staff optimization in line with business
adjustment.
General and administrative expenses for the
first quarter of 2022 were RMB51.3 million (US$8.1 million),
including RMB23.5 million (US$3.7 million) of share-based
compensation expenses, representing a year-over-year decrease of
60.5% from RMB129.7 million in the first quarter of 2021. The
decrease was primarily due to staff optimization in line with
business adjustment.
Loss from Operations
Loss from operations for the first quarter of
2022 was RMB29.1 million (US$4.6 million), compared with RMB666.6
million in the first quarter of 2021. Loss from operations as a
percentage of net revenues for the first quarter of 2022 was
negative 12.5%, improving from negative 140.5% in the first quarter
of 2021.
Net Loss
Net loss for the first quarter of 2022 was
RMB24.8 million (US$3.9 million), compared with net loss of
RMB659.7 million in the first quarter of 2021. Net loss as a
percentage of net revenues was negative 10.6% in the first quarter
of 2022, compared with negative 139.1% in the first quarter of
2021.
Adjusted Net Income (Loss)
(non-GAAP)
Adjusted net income (non-GAAP) for the first
quarter of 2022 was RMB9.9 million (US$1.6 million), compared with
adjusted net loss (non-GAAP) of RMB588.8 million in the first
quarter of 2021. Adjusted net income (loss) (non-GAAP) as a
percentage of net revenues was 4.2% in the first quarter of 2022,
substantially improving from negative 124.2% in the first quarter
of 2021.
Please refer to the table captioned
“Reconciliations of non-GAAP measures to the most comparable GAAP
measures” at the end of this press release for a reconciliation of
net loss under U.S. GAAP to adjusted net income (loss)
(non-GAAP).
Business Outlook
Based on our current estimates, total net
revenues for the second quarter of 2022 are expected to be between
RMB100 million and RMB120 million. The estimated total net revenues
for the second quarter of 2022 are derived entirely from the
ongoing businesses after the Company's business transformation and,
as mentioned above, do not include revenues from the legacy online
K-12 tutoring services. This estimated range represents a
significant increase year-over-year when compared with the
relatively small base of the net revenue generated from non-online
K-12 tutoring services for the second quarter of 2021.
The above forecast reflects 17EdTech's current
and preliminary view and is therefore subject to change. Please see
the section titled “Safe Harbor Statement” below for the factors
that could cause actual results to differ materially from those
contained in any forward-looking statement.
Conference Call Information
The Company will hold a conference call on
Thursday, June 9, 2022 at 9:00 p.m. U.S. Eastern Time (Friday, June
10, 2022 at 9:00 a.m. Beijing time) to discuss the financial
results for the first quarter of 2022.
Please note that all participants will need to
preregister online prior to the conference call to receive the
dial-in details.
Please note that participants need to
pre-register for the conference call participation by navigating to
http://apac.directeventreg.com/registration/event/6769505. Once
preregistration has been completed, participants will receive
dial-in numbers, an event passcode, and a unique registrant ID.
To join the conference call, please dial the
number you receive, enter the event passcode followed by your
unique registrant ID, and you will be joined to the conference call
instantly.
A telephone replay will be available two hours
after the conclusion of the conference call through June 17, 2022.
The dial-in details are:
International: |
+61 2 8199 0299 |
U.S. toll free: |
185 5452 5696 |
Passcode: |
6769505 |
Additionally, a live and archived webcast of
this conference call will be available at
https://ir.17zuoye.com/.
Non-GAAP Financial Measures
17EdTech’s management uses adjusted net income
(loss) as a non-GAAP financial measure to gain an understanding of
17EdTech’s comparative operating performance and future
prospects.
Adjusted net income (loss) represents net loss
excluding share-based compensation expenses and such adjustment has
no impact on income tax.
Adjusted net income (loss) is used by 17EdTech’s
management in their financial and operating decision-making as a
non-GAAP financial measure, because management believes it reflects
17EdTech’s ongoing business and operating performance in a manner
that allows meaningful period-to-period comparisons. 17EdTech’s
management believes that such non-GAAP measure provides useful
information to investors and others in understanding and evaluating
17EdTech’s operating performance in the same manner as management
does, if they so choose. Specifically, 17EdTech believes the
non-GAAP measure provides useful information to both management and
investors by excluding certain charges that the Company believes
are not indicative of its core operating results.
The non-GAAP financial measure has limitations.
It does not include all items of income and expense that affect
17EdTech’s income from operations. Specifically, the non-GAAP
financial measure is not prepared in accordance with GAAP, may not
be comparable to non-GAAP financial measures used by other
companies and, with respect to the non-GAAP financial measure that
excludes certain items under GAAP, does not reflect any benefit
that such items may confer to 17EdTech. Management compensates for
these limitations by also considering 17EdTech’s financial results
as determined in accordance with GAAP. The presentation of this
additional information is not meant to be considered superior to,
in isolation from or as a substitute for results prepared in
accordance with US GAAP.
Exchange Rate Information
The Company’s business is primarily conducted in
China and all of the revenues are denominated in Renminbi (“RMB”).
However, periodic reports made to shareholders will include current
period amounts translated into U.S. dollars (“USD” or “US$”) using
the exchange rate as of balance sheet date, for the convenience of
the readers. Translations of balances in the consolidated balance
sheets and the related consolidated statements of operations,
comprehensive loss, change in shareholders’ deficit and cash flows
from RMB into USD as of and for the three months ended March 31,
2022 are solely for the convenience of the readers and were
calculated at the rate of US$1.00=RMB6.3393 representing the noon
buying rate set forth in the H.10 statistical release of the U.S.
Federal Reserve Board on March 31, 2022. No representation is made
that the RMB amounts could have been, or could be, converted,
realized or settled into US$ at that rate on March 31, 2022, or at
any other rate.
About 17 Education & Technology
Group Inc.
17 Education & Technology Group Inc. is a
leading education technology company in China. The Company provides
a smart in-school classroom solution that delivers data-driven
teaching, learning and assessment products to teachers, students
and parents. Leveraging its extensive knowledge and expertise
obtained from in-school business over the past decade, the Company
provides teaching and learning SaaS offerings to facilitate the
digital transformation and upgrade at Chinese schools, with a focus
on improving the efficiency and effectiveness of core teaching and
learning scenarios such as homework assignments and in-class
teaching. The Company also provides a personalized self-directed
learning product to Chinese families. The product utilizes the
Company’s technology and data insights to provide personalized and
targeted learning and exercise content that is aimed at improving
students’ learning efficiency.
Safe Harbor Statement
This announcement contains forward-looking
statements. These statements are made under the “safe harbor”
provisions of the United States Private Securities Litigation
Reform Act of 1995. These forward-looking statements can be
identified by terminology such as “will,” “expects,” “anticipates,”
“future,” “intends,” “plans,” “believes,” “estimates” and similar
statements. Statements that are not historical facts, including
statements about 17EdTech’s beliefs and expectations, are
forward-looking statements. 17EdTech may also make written or oral
forward-looking statements in its periodic reports to the SEC, in
its annual report to shareholders, in press releases and other
written materials and in oral statements made by its officers,
directors or employees to third parties. Forward-looking statements
involve inherent risks and uncertainties. A number of factors could
cause actual results to differ materially from those contained in
any forward-looking statement, including but not limited to the
following: 17EdTech’s growth strategies; its future business
development, financial condition and results of operations; its
ability to continue to attract and retain users; its ability to
carry out its business and organization transformation, its ability
to implement and grow its new business initiatives; the trends in,
and size of, China’s online education market; competition in and
relevant government policies and regulations relating to China's
online education market; its expectations regarding demand for, and
market acceptance of, its products and services; its expectations
regarding its relationships with business partners; general
economic and business conditions; and assumptions underlying or
related to any of the foregoing. Further information regarding
these and other risks is included in 17EdTech’s filings with the
SEC. All information provided in this press release is as of the
date of this press release, and 17EdTech does not undertake any
obligation to update any forward-looking statement, except as
required under applicable law.
For investor and media inquiries, please
contact:
17 Education & Technology Group
Inc. Ms Lara ZhaoInvestor Relations ManagerE-mail:
ir@17zuoye.com
ChristensenIn ChinaEric
YuanPhone: +86-138-0111-0739E-mail: Eyuan@christensenir.com
In USLinda BergkampPhone: +1-480-614-3004E-mail:
lbergkamp@christensenir.com
|
17 EDUCATION & TECHNOLOGY GROUP INC. |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands of RMB and USD, except for share and per ADS
data, or otherwise noted) |
|
|
As of December 31, |
|
As of March 31, |
|
2021 |
|
2022 |
|
2022 |
|
RMB |
|
RMB |
|
USD |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
1,180,898 |
|
813,384 |
|
128,308 |
Prepaid expenses and other current assets |
161,826 |
|
143,873 |
|
22,695 |
Total current assets |
1,342,724 |
|
957,257 |
|
151,003 |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property and equipment, net |
69,811 |
|
56,099 |
|
8,849 |
Right-of-use assets |
153,963 |
|
109,500 |
|
17,273 |
Other non-current assets |
13,923 |
|
12,331 |
|
1,945 |
|
|
|
|
|
|
TOTAL ASSETS |
1,580,421 |
|
1,135,187 |
|
179,070 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accrued expenses and other current liabilities (including
accrued expenses and other current liabilities of the
consolidated VIEs without recourse to the Group of RMB93,115
and RMB51,019 as of December 31, 2021 and March 31, 2022,
respectively) |
392,293 |
|
208,266 |
|
32,853 |
Deferred revenue and customer advances, current
(including deferred revenue and customer advances, current of
the consolidated VIEs without recourse to the Group of
RMB239,267 and RMB27,697 as of December 31, 2021 and March 31,
2022, respectively) |
243,878 |
|
32,097 |
|
5,063 |
Operating lease liabilities, current (including operating lease
liabilities, current of the consolidated VIEs without recourse
to the Group of RMB29,113 and RMB30,024 as of December 31,
2021 and March 31, 2022, respectively) |
46,885 |
|
55,158 |
|
8,701 |
|
|
|
|
|
|
Total current liabilities |
683,056 |
|
295,521 |
|
46,617 |
|
As of December 31, |
|
As of March 31, |
|
2021 |
|
2022 |
|
2022 |
|
RMB |
|
RMB |
|
USD |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Operating lease liabilities, non-current (including operating
lease liabilities, non-current of the consolidated VIEs
without recourse to the Group of RMB57,906 and RMB25,930 as of
December 31, 2021 and March 31, 2022, respectively) |
100,329 |
|
|
49,124 |
|
|
7,749 |
|
|
|
|
|
|
|
TOTAL LIABILITIES |
783,385 |
|
|
344,645 |
|
|
54,366 |
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
Class A ordinary shares |
293 |
|
|
294 |
|
|
46 |
|
Class B ordinary shares |
38 |
|
|
38 |
|
|
6 |
|
Additional paid-in capital |
10,859,107 |
|
|
10,881,646 |
|
|
1,716,537 |
|
Accumulated other comprehensive income |
18,691 |
|
|
14,423 |
|
|
2,275 |
|
Accumulated deficit |
(10,081,093 |
) |
|
(10,105,859 |
) |
|
(1,594,160 |
) |
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY |
797,036 |
|
|
790,542 |
|
|
124,704 |
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
1,580,421 |
|
|
1,135,187 |
|
|
179,070 |
|
17 EDUCATION & TECHNOLOGY GROUP INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands of RMB and USD, except for share and per ADS
data, or otherwise noted) |
|
|
For the three months ended March 31, |
|
2021 |
|
2022 |
|
2022 |
|
RMB |
|
RMB |
|
USD |
|
|
|
|
|
|
Net revenues |
474,246 |
|
|
233,446 |
|
|
36,825 |
|
Cost of revenues (Note 1) |
(187,625 |
) |
|
(91,785 |
) |
|
(14,479 |
) |
|
|
|
|
|
|
Gross profit |
286,621 |
|
|
141,661 |
|
|
22,346 |
|
|
|
|
|
|
|
Operating expenses (Note 1) |
|
|
|
|
|
Sales and marketing expenses |
(613,527 |
) |
|
(21,997 |
) |
|
(3,470 |
) |
Research and development expenses |
(209,927 |
) |
|
(97,476 |
) |
|
(15,376 |
) |
General and administrative expenses |
(129,718 |
) |
|
(51,301 |
) |
|
(8,093 |
) |
|
|
|
|
|
|
Total operating expenses |
(953,172 |
) |
|
(170,774 |
) |
|
(26,939 |
) |
|
|
|
|
|
|
Loss from operations |
(666,551 |
) |
|
(29,113 |
) |
|
(4,593 |
) |
|
|
|
|
|
|
Interest income |
6,997 |
|
|
2,065 |
|
|
326 |
|
Foreign currency exchange (loss) gain |
(947 |
) |
|
203 |
|
|
32 |
|
Other income, net |
814 |
|
|
2,079 |
|
|
328 |
|
|
|
|
|
|
|
Loss before provision for income tax |
(659,687 |
) |
|
(24,766 |
) |
|
(3,907 |
) |
|
|
|
|
|
|
Income tax expenses |
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
Net loss |
(659,687 |
) |
|
(24,766 |
) |
|
(3,907 |
) |
|
|
|
|
|
|
Net loss available to ordinary shareholders of
17 |
(659,687 |
) |
|
(24,766 |
) |
|
(3,907 |
) |
Education & Technology Group Inc. |
|
|
|
|
|
|
|
|
Net loss per ordinary share |
|
|
|
|
|
Basic and diluted |
(1.37 |
) |
|
(0.05 |
) |
|
(0.01 |
) |
|
|
|
|
|
|
Net loss per ADS (Note 2) |
|
|
|
|
|
Basic and diluted |
(13.70 |
) |
|
(0.50 |
) |
|
(0.10 |
) |
|
|
|
|
|
|
Weighted average shares used in calculating net
loss |
|
|
|
|
|
per ordinary share |
|
|
|
|
|
Basic and diluted |
481,378,409 |
|
|
508,608,858 |
|
|
508,608,858 |
|
|
|
|
|
|
|
Note 1: Share-based compensation expenses were included in the cost
and operating expenses as follows: |
|
|
For the three months ended March 31, |
|
2021 |
|
2022 |
|
2022 |
|
RMB |
|
RMB |
|
USD |
Share-based compensation expenses: |
|
|
|
|
|
Sales and marketing expenses |
5,075 |
|
|
3,980 |
|
|
628 |
|
Research and development expenses |
10,963 |
|
|
7,185 |
|
|
1,133 |
|
General and administrative expenses |
54,811 |
|
|
23,480 |
|
|
3,704 |
|
|
|
|
|
|
|
Total |
70,849 |
|
|
34,645 |
|
|
5,465 |
|
|
|
|
|
|
|
Note 2: Each one ADS represents ten Class A ordinary shares.
Effective on November 17, 2021, the Company changed the ratio of
its ADS to its Class A ordinary shares from two ADSs
representing five Class A ordinary shares to one ADS
representing ten Class A ordinary shares. All earnings per ADS
figures in this report give effect to the foregoing ADS to share
ratio change. |
17 EDUCATION & TECHNOLOGY GROUP INC. |
Reconciliations of non-GAAP measures to the most comparable
GAAP measures |
(In thousands of RMB and USD, except for share, per share
and per ADS data) |
|
|
|
|
|
|
|
For the three months ended March 31, |
|
2021 |
|
2022 |
|
2022 |
|
RMB |
|
RMB |
|
USD |
|
|
|
|
|
|
Net Loss |
(659,687 |
) |
|
(24,766 |
) |
|
(3,907 |
) |
Share-based compensation |
70,849 |
|
|
34,645 |
|
|
5,465 |
|
|
|
|
|
|
|
Adjusted net (loss) income |
(588,838 |
) |
|
9,879 |
|
|
1,558 |
|
Grafico Azioni 17 Education and Technol... (NASDAQ:YQ)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni 17 Education and Technol... (NASDAQ:YQ)
Storico
Da Giu 2023 a Giu 2024