Sunlands Technology Group Announces Unaudited Second Quarter 2020 Financial Results

August 14, 2020
Gross billings (non-GAAP) increased by 21.3% year-over-year
New student enrollments[1] increased by 10.2% year-over-year

BEIJING, Aug. 14, 2020 /PRNewswire/ -- Sunlands Technology Group (NYSE: STG) ("Sunlands" or the "Company"), a leader in China's online post-secondary and professional education, today announced its unaudited financial results for the second quarter ended June 30, 2020.

Second Quarter 2020 Financial and Operational Snapshots

  • Net revenues were RMB512.5 million (US$72.5 million), representing a 7.3% decrease year-over-year.
  • Gross billings (non-GAAP) were RMB531.5 million (US$75.2 million), representing a 21.3% increase year-over-year.
  • Gross profit was RMB412.9 million (US$58.4 million), representing a 9.7% decrease year-over-year.
  • Net loss was RMB126.1 million (US$17.9 million), compared with RMB12.9 million in the second quarter of 2019.
  • Net loss margin, defined as net loss as a percentage of net revenues, increased to 24.6% from 2.3% in the second quarter of 2019.
  • New student enrollments were 82,597, representing a 10.2% increase year-over-year.
  • As of June 30, 2020, the Company's deferred revenue balance was RMB3,066.6 million (US$434.0 million).

[1] New student enrollments for a given period refers to the total number of orders placed by students that newly enroll in at least one course during that period (including those students that enroll and then terminate their enrollment with us, excluding orders of our low-price courses). In June 2019, we introduced low-price courses, including "mini courses" and "RMB1 courses," to strengthen our competitiveness and improve customer experience. We offer such low-price courses mainly in the formats of recorded videos or short live streaming.

"While the COVID-19 pandemic in China was effectively constrained during the second quarter, due to the varying work resumption requirements in different regions, the average resumption rate of our Wuhan campus and Beijing headquarters, was about 80%. Against this backdrop, we are pleased with maintaining steady growth in the second quarter, thanks to our self-developed collaborative online office system, efficient operation management and rigorous execution. Our net revenues in the second quarter of 2020 reached RMB512.5 million, in line with our guidance," said Mr. Tongbo Liu, Chief Executive Officer of Sunlands. "In addition, our gross billings achieved year-over-year growth for the first time in the past five quarters, increasing by 21.3% to RMB531.5 million compared with the prior-year period, thanks to our strategy to diversify product and service offerings, continuous expansion in training course categories, improved efficiency of our sales team, as well as the tremendous efforts from all of our employees.

"In response to the growing number of individuals seeking post-graduate degrees, we have focused our efforts on strengthening our master's degree-oriented programs in order to capture the growth opportunities, in addition to increasing our students' willingness to pay for incremental courses and maximize their overall engagement. Gross billings of master's degree-oriented programs for the second quarter of 2020 reached a new high of RMB135.2 million, up 58.7% year-over-year and accounting for 25.4% of total gross billings. At the same time, based on student demands and new market trends, Sunlands is also actively expanding our course offerings in multiple categories, including professional certifications and trainings related to new occupations as well as new skills and hobbies training catering to person's diverse interests. Also in the quarter, our STE programs have maintained a solid market position and market share. Looking ahead, we are confident to maintain the market leading position of our existing service categories and continuously improve the learning effectiveness of our students through technical and operational advancement. We are also optimistic to capture the market opportunities and create more cross-selling possibilities as we develop new contents and firmly execute on our nimble and efficient student acquisition strategy." Mr. Liu concluded.

Ms. Selena Lu Lv, Chief Financial Officer of Sunlands, said, "During the second quarter, our net revenues declined 7.3% year-over-year due to the decrease of gross billings last year. However, we are pleased that even given the impact of the COVID-19 outbreak and severe macroeconomic environment, our gross billings achieved a more than 20% year-over-year growth, reaching an important inflection point, and giving us confidence in its continuous growth in the future. On the expense side, we continued our pursuit of cost structure optimization, achieving 33.9% and 33.6% reductions in administrative expenses and R&D expenses respectively compared with the same period last year.

"Going forward, our focus remains on the diversification of our online courses and the improvement of our technology and operational capabilities. We believe more product offerings will translate to bigger addressable market for us and higher cost leverage, as well as increasing repurchasing potential from our students, whereas technological and operational improvement provides our students better experiences, which will further strengthen our brand image and reputation, and ultimately improve our referral rate. We will also continue diversifying our student acquisition strategy and upgrading the conversion model, all in an effort to further improve our sales conversion rate and efficiency, and drive sustainable long-term growth." Ms. Lv concluded.

Financial Results for the second quarter of 2020

Net Revenues

In the second quarter of 2020, net revenues decreased by 7.3% to RMB512.5 million (US$72.5 million) from RMB552.7 million in the second quarter of 2019. The decrease was mainly due to the decrease of gross billings last year.

Cost of Revenues

Cost of revenues increased by 4.1% to RMB99.6 million (US$14.1 million) in the second quarter of 2020 from RMB95.7 million in the second quarter of 2019, which was primarily due to an increase in expenses related to service fees to educational institutions.

Gross Profit

Gross profit decreased by 9.7% to RMB412.9 million (US$58.4 million) in the second quarter of 2020 from RMB457.0 million in the second quarter of 2019.

Operating Expenses

In the second quarter of 2020, operating expenses were RMB560.0 million (US$79.3 million), representing a 12.3% increase from RMB498.7 million in the second quarter of 2019.

Sales and marketing expenses increased by 25.2% to RMB487.9 million (US$69.1 million) in the second quarter of 2020 from RMB389.7 million in the second quarter of 2019. The increase was mainly due to increases in (i) compensation paid to our sales and marketing personnel; and (ii) spending on branding and marketing activities, including investments in broadening our diversified student acquisition channels.

General and administrative expenses decreased by 33.9% to RMB56.1 million (US$7.9 million) in the second quarter of 2020 from RMB84.9 million in the second quarter of 2019. The decrease was mainly due to the decrease in compensation expenses.

Product development expenses decreased by 33.6% to RMB16.0 million (US$2.3 million) in the second quarter of 2020 from RMB24.0 million in the second quarter of 2019. The decrease was primarily due to a decrease in the compensation incurred related to our product and technology development personnel during the quarter.

Other income

Other income increased to RMB17.5 million(US$2.5 million) in the second quarter of 2020 from RMB9.0 million in the second quarter of 2019. The increase was primarily due to the value-added tax exemption offered by the relevant authorities in an amount of RMB15.0 million during the COVID-19 outbreak.

Net Loss

Net loss for the second quarter of 2020 was RMB126.1 million (US$17.9 million), compared with RMB12.9 million in the second quarter of 2019.

Basic and Diluted Net Loss Per Share

Basic and diluted net loss per share was RMB18.70 (US$2.65) in the second quarter of 2020.

Cash and Cash Equivalents and Short-term Investments

As of June 30, 2020, the Company had RMB1,079.4 million (US$152.8 million) of cash and cash equivalents and RMB288.6 million (US$40.8 million) of short-term investments, compared with RMB1,402.2 million of cash and cash equivalents and RMB217.6 million of short-term investments as of December 31, 2019.

Deferred Revenue

As of June 30, 2020, the Company had a deferred revenue balance of RMB3,066.6 million (US$434.0 million), compared with RMB3,228.8 million as of December 31, 2019.

Capital Expenditures

Capital expenditures were incurred primarily in connection with IT infrastructure equipment and leasehold improvement necessary to support Sunlands' operations. Capital expenditures were RMB1.0 million (US$0.1 million) in the second quarter of 2020, compared with RMB2.2 million in the second quarter of 2019.

Financial Results for the First Six Months of 2020

Net Revenues

In the first six months of 2020, net revenues decreased by 3.5% to RMB1,077.6 million (US$152.5 million) from RMB1,116.9 million in the first six months of 2019.

Cost of Revenues

Cost of revenues increased by 8.5% to RMB196.5 million (US$27.8 million) in the first six months of 2020 from RMB181.2 million in the first six months of 2019.

Gross Profit

Gross profit decreased by 5.8% to RMB881.1 million (US$124.7 million) from RMB935.8 million in the first six months of 2019.

Operating Expenses

In the first six months of 2020, operating expenses were RMB1,127.7 million (US$159.6 million), representing a 1.5% increase from RMB1,111.4 million in the first six months of 2019.

Sales and marketing expenses increased by 6.6% to RMB945.7 million (US$133.9 million) in the first six months of 2020 from RMB887.0 million in the first six months of 2019.  

General and administrative expenses decreased by 16.6% to RMB144.6 million (US$20.5 million) in the first six months of 2020 from RMB173.4 million in the first six months of 2019.

Product development expenses decreased by 26.7% to RMB37.4 million (US$5.3 million) in the first six months of 2020 from RMB51.0 million in the first six months of 2019.

Other income

Other income for the first six months of 2020 was RMB46.5 million (US$6.6 million), compared with RMB9.3 million in the first six months of 2019.

Net Loss

Net loss for the first six months of 2020 was RMB191.7 million (US$27.1 million), compared with RMB125.8 million in the first six months of 2019.

Basic and Diluted Net Loss Per Share

Basic and diluted net loss per share was RMB28.28 (US$4.0) in the first six months of 2020, compared with RMB18.38 in the first six months of 2019.

Capital Expenditures

Capital expenditures were incurred primarily in connection with IT infrastructure equipment and leasehold improvement necessary to support Sunlands' operations. Capital expenditures were RMB8.0 million (US$1.1 million) in the first six months of 2020, compared with RMB3.3 million in the first six months of 2019.

Outlook

For the third quarter of 2020, Sunlands currently expects net revenues to be between RMB500 million to RMB520 million, which would represent a decrease of 5.2% to 1.4% year-over-year.

The above outlook is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to substantial uncertainty.

Exchange Rate

The Company's business is primarily conducted in China and all revenues are denominated in Renminbi ("RMB"). This announcement contains currency conversions of RMB amounts into U.S. dollars ("US$") solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB7.0651 to US$1.00, the effective noon buying rate for June 30, 2020 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 30, 2020, or at any other rate.

Conference Call and Webcast

Sunlands' management team will host a conference call at 7:30 AM U.S. Eastern Time, (7:30 PM Beijing/Hong Kong time) on August 14, 2020, following the quarterly results announcement.

The dial-in details for the live conference call are:

International:

+1-412-902-4272

US toll free:

+1-888-346-8982

Mainland China toll free:

400-120-1203

Hong Kong toll free:

800-905-945

Hong Kong:

+852-3018-4992

Please dial in 10 minutes before the call is scheduled to begin. When prompted, ask to be connected to the call for "Sunlands Technology Group." Participants will be required to state their name and company upon entering the call.

A live webcast and archive of the conference call will be available on the Investor Relations section of Sunlands' website at http://www.sunlands.investorroom.com/.

A replay of the conference call will be available 1 hour after the end of the conference call until August 21, 2020, by dialing the following telephone numbers:

International: 

+1-412-317-0088

US toll free:

+1-877-344-7529

Replay access code:

10147049

About Sunlands

Sunlands Technology Group (NYSE: STG) ("Sunlands" or the "Company"), formerly known as Sunlands Online Education Group, is the leader in China's online post-secondary and professional education. With a one to many, live streaming platform, Sunlands offers various degree and diploma-oriented post-secondary courses as well as online professional courses and educational content, to help students prepare for professional certification exams and attain professional skills. Students can access its services either through PC or mobile applications. The Company's online platform cultivates a personalized, interactive learning environment by featuring a virtual learning community and a vast library of educational content offerings that adapt to the learning habits of its students. Sunlands offers a unique approach to education research and development that organizes subject content into Learning Outcome Trees, the Company's proprietary knowledge management system. Sunlands has a deep understanding of the educational needs of its prospective students and offers solutions that help them achieve their goals.

About Non-GAAP Financial Measures

We use gross billings and EBITDA, each a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes.

We define gross billings for a specific period as the total amount of cash received for the sale of course packages, net of the total amount of refunds paid in such period. Our management uses gross billings as a performance measurement because we generally bill our students for the entire course tuition at the time of sale of our course packages and recognize revenue proportionally over a period. EBITDA is defined as net loss excluding depreciation and amortization, interest expense, interest income, and income tax expenses. We believe that gross billings and EBITDA provide valuable insight into the sales of our course packages and the performance of our business.

These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, their most directly comparable financial measure prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their respective most directly comparable GAAP measure has been provided in the tables included below. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measures to their respective most directly comparable GAAP financial measures. As gross billings and EBITDA have material limitations as an analytical metric and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider gross billings and EBITDA as a substitute for, or superior to, their respective most directly comparable financial measures prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

Safe Harbor Statement

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. 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," "confident" and similar statements. Sunlands may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, 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. Any statements that are not historical facts, including statements about Sunlands' beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: Sunlands' goals and strategies; its expectations regarding demand for and market acceptance of its brand and services; its ability to retain and increase student enrollments; its ability to offer new courses and educational content; its ability to improve teaching quality and students' learning results; its ability to improve sales and marketing efficiency and effectiveness; its ability to engage, train and retain new faculty members; its future business development, results of operations and financial condition; its ability to maintain and improve technology infrastructure necessary to operate its business; competition in the online education industry in China; relevant government policies and regulations relating to Sunlands' corporate structure, business and industry; and general economic and business condition in China Further information regarding these and other risks, uncertainties or factors is included in the Sunlands' filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and Sunlands does not undertake any obligation to update such information, except as required under applicable law.

For investor and media enquiries, please contact:

Sunlands Technology Group
Investor Relations
Email: sl-ir@sunlands.com

The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
Email: sunlands@tpg-ir.com

Ross Warner
Tel: +86-10-6508-0677
Email: sunlands@tpg-ir.com

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except for share and per share data, or otherwise noted)

 
   

As of December 31,

 

As of June 30,

   

2019

 

2020

   

RMB

 

RMB

 

US$

ASSETS

           

Current assets

           

     Cash and cash equivalents

 

1,402,226

 

1,079,409

 

152,780

     Short-term investments

 

217,640

 

288,592

 

40,848

     Prepaid expenses and other current assets

 

180,881

 

229,306

 

32,454

     Deferred costs, current

 

243,447

 

232,379

 

32,891

Total current assets

 

2,044,194

 

1,829,686

 

258,973

Non-current assets

           

     Property and equipment, net

 

545,675

 

532,728

 

75,403

     Intangible assets, net

 

1,176

 

1,531

 

217

     Right-of-use assets

 

598,991

 

571,995

 

80,961

     Deferred costs, non-current

 

205,488

 

194,316

 

27,504

     Long-term investments

 

40,026

 

65,100

 

9,214

     Deferred tax assets

 

85,513

 

37,111

 

5,253

     Other non-current assets

 

447,639

 

447,024

 

63,272

Total non-current assets

 

1,924,508

 

1,849,805

 

261,824

TOTAL ASSETS

 

3,968,702

 

3,679,491

 

520,797

             

LIABILITIES AND SHAREHOLDERS' DEFICIT

           
             

LIABILITIES

           

Current liabilities

           

Accrued expenses and other current liabilities (including accrued expenses

           

        and other current liabilities of the consolidated VIEs without recourse to

           

        Sunlands Technology Group of RMB209,727 and RMB228,875 as of

           

        December 31, 2019 and June 30, 2020, respectively)

 

435,225

 

590,013

 

83,511

Deferred revenue, current (including deferred revenue, current of the consolidated VIEs

           

        without recourse to Sunlands Technology Group of RMB1,162,938 and

           

        RMB653,595 as of December 31, 2019 and June 30, 2020, respectively)

 

1,670,076

 

1,503,501

 

212,807

Lease liabilities, current (including lease liabilities, current of the consolidated VIEs

           

        without recourse to Sunlands Technology Group of 22,659 and

           

        RMB16,730 as of December 31, 2019 and June 30, 2020, respectively)

 

40,236

 

37,888

 

5,363

Payables to acquire buildings (including payables to acquire buildings of the

           

        consolidated VIEs without recourse to Sunlands Technology Group of nil and nil

           

        as of December 31, 2019, and June 30, 2020, respectively)

 

61,540

 

61,540

 

8,710

Long-term debt, current (including long-term debt, current of the consolidated VIEs

           

        without recourse to Sunlands Technology Group of nil and nil as of December

           

         31, 2019 and June 30, 2020, respectively)

 

32,500

 

32,500

 

4,600

Total current liabilities

 

2,239,577

 

2,225,442

 

314,991

 

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS-continued

(Amounts in thousands, except for share and per share data, or otherwise noted)

 
   

As of December 31,

 

As of June 30,

   

2019

 

2020

   

RMB

 

RMB

 

US$

Non-current liabilities

           

Deferred revenue, non-current (including deferred revenue, non-current of the

           

consolidated VIEs without recourse to Sunlands Technology Group of

           

RMB1,096,482 and RMB845,371 as of December 31, 2019 and June 30,

           

2020, respectively)

 

1,558,694

 

1,563,068

 

221,238

Lease liabilities, non-current (including lease liabilities, non-current of the

           

consolidated VIEs without recourse to Sunlands Technology Group of

           

358,467 and RMB347,324 as of December 31, 2019 and June 30,

           

2020, respectively)

 

616,246

 

605,213

 

85,662

    Deferred tax liabilities (including deferred tax liabilities of the consolidated

           

VIEs without recourse to Sunlands Technology Group of 4,415 and RMB4,310 as of

           

December 31, 2019 and June 30, 2020, respectively)

 

87,954

 

37,834

 

5,355

Other non-current liabilities (including other non-current liabilities of the consolidated

           

VIEs without recourse to Sunlands Technology Group of RMB135 and RMB135 as of

           

December 31, 2019 and June 30, 2020, respectively)

 

11,469

 

9,801

 

1,387

Long-term debt, non-current (including long-term debt, non-current of the consolidated

           

VIEs without recourse to Sunlands Technology Group of nil and nil as of

           

December 31, 2019 and June 30, 2020, respectively)

 

193,125

 

176,875

 

25,035

Total non-current liabilities

 

2,467,488

 

2,392,791

 

338,677

TOTAL LIABILITIES

 

4,707,065

 

4,618,233

 

653,668

 

SHAREHOLDERS' DEFICIT

           

    Class A ordinary shares (par value of US$0.00005, 796,062,195 shares

           

authorized; 1,830,183 and 1,914,702 shares issued as of December 31, 2019

           

and June 30, 2020, respectively; 1,728,006 and 1,728,641 shares

           

outstanding as of December 31, 2019 and June 30, 2020, respectively)

 

1

 

1

 

-

    Class B ordinary shares (par value of US$0.00005, 826,389 shares

           

authorized; 826,389 and 826,389 shares issued and outstanding

           

as of December 31, 2019 and June 30, 2020, respectively)

 

-

 

-

 

-

Class C ordinary shares (par value of US$0.00005, 203,111,416 shares

           

authorized; 4,258,686 and 4,174,167 shares issued and outstanding

           

as of December 31, 2019 and June 30, 2020, respectively)

 

1

 

1

 

-

    Treasury stock

 

-

 

-

 

-

    Additional paid-in capital

 

2,363,999

 

2,338,482

 

330,991

    Accumulated deficit

 

(3,244,587)

 

(3,436,292)

 

(486,376)

    Accumulated other comprehensive income

 

142,435

 

159,285

 

22,545

Total Sunlands Technology Group shareholders' deficit

 

(738,151)

 

(938,523)

 

(132,840)

Noncontrolling interest

 

(212)

 

(219)

 

(31)

TOTAL SHAREHOLDERS' DEFICIT

 

(738,363)

 

(938,742)

 

(132,871)

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

 

3,968,702

 

3,679,491

 

520,797

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except for share and per share data, or otherwise noted)

 
   

For the Three Months Ended June 30,

   

2019

 

2020

   

RMB

 

RMB

 

US$

Net revenues

 

552,690

 

512,482

 

72,537

Cost of revenues

 

(95,677)

 

(99,591)

 

(14,096)

Gross profit

 

457,013

 

412,891

 

58,441

             

Operating expenses

           

     Sales and marketing expenses

 

(389,678)

 

(487,882)

 

(69,055)

     Product development expenses

 

(24,045)

 

(15,970)

 

(2,260)

     General and administrative expenses

 

(84,947)

 

(56,136)

 

(7,946)

Total operating expenses

 

(498,670)

 

(559,988)

 

(79,261)

Loss from operations

 

(41,657)

 

(147,097)

 

(20,820)

Interest income

 

24,635

 

6,317

 

892

Interest expense

 

(3,654)

 

(2,941)

 

(416)

Other income, net

 

8,981

 

17,521

 

2,480

Loss before income tax expenses

 

(11,695)

 

(126,200)

 

(17,864)

Income tax expenses

 

-

 

224

 

32

Loss from equity method investments

 

(1,190)

 

(173)

 

(24)

Net loss

 

(12,885)

 

(126,149)

 

(17,856)

             

Less: Net (loss)/income attributable to noncontrolling interest

 

(92)

 

45

 

6

             

Net loss attributable to Sunlands Technology Group

 

(12,793)

 

(126,194)

 

(17,862)

Net loss per share attributable to ordinary shareholders of

           

 Sunlands Technology Group:

           

     Basic and diluted

 

(1.87)

 

(18.70)

 

(2.65)

Weighted average shares used in calculating net loss

           

    per ordinary share:

           

     Basic and diluted

 

6,831,112

 

6,749,309

 

6,749,309

             

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)

             
   

For the Three Months Ended June 30,

   

2019

 

2020

   

RMB

 

RMB

 

US$

Net loss

 

(12,885)

 

(126,149)

 

(17,856)

Other comprehensive income/(loss), net of tax effect of nil:

           

Change in cumulative foreign currency translation adjustments

 

33,868

 

(2,513)

 

(356)

Total comprehensive income/(loss)

 

20,983

 

(128,662)

 

(18,212)

Less: comprehensive (loss)/income attributable to noncontrolling

           

interest

 

(92)

 

45

 

6

Comprehensive income/(loss) attributable to Sunlands Technology

           

Group

 

21,075

 

(128,707)

 

(18,218)

 

 

 

SUNLANDS TECHNOLOGY GROUP

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(Amounts in thousands)

 
   

For the Three Months Ended June 30,

   

2019

 

2020

   

RMB

 

RMB

Net revenues

 

552,690

 

512,482

Less: other revenues

 

(228)

 

(4,194)

Add: tax and surcharges

 

29,923

 

34,554

Add: ending deferred revenue

 

3,227,949

 

3,066,569

Add: ending refund liability

 

-

 

202,651

Less: beginning deferred revenue

 

(3,372,174)

 

(3,105,517)

Less: beginning refund liability

 

-

 

(175,006)

Gross billings (non-GAAP)

 

438,160

 

531,539

         
         
         

Net loss

 

(12,885)

 

(126,149)

Add: income tax expenses

 

-

 

(224)

depreciation and amortization

 

9,176

 

11,325

interest expense

 

3,654

 

2,941

Less: interest income

 

(24,635)

 

(6,317)

EBITDA (non-GAAP)

 

(24,690)

 

(118,424)

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except for share and per share data, or otherwise noted)

 
   

For the Six Months Ended June 30,

   

2019

 

2020

   

RMB

 

RMB

 

US$

Net revenues

 

1,116,905

 

1,077,581

 

152,522

Cost of revenues

 

(181,150)

 

(196,503)

 

(27,813)

Gross profit

 

935,755

 

881,078

 

124,709

             

Operating expenses

           

     Sales and marketing expenses

 

(887,012)

 

(945,737)

 

(133,860)

     Product development expenses

 

(51,002)

 

(37,365)

 

(5,289)

     General and administrative expenses

 

(173,384)

 

(144,638)

 

(20,472)

Total operating expenses

 

(1,111,398)

 

(1,127,740)

 

(159,621)

Loss from operations

 

(175,643)

 

(246,662)

 

(34,912)

Interest income

 

48,944

 

13,137

 

1,857

Interest expense

 

(7,385)

 

(6,128)

 

(867)

Other income, net

 

9,279

 

46,549

 

6,589

Loss before income tax expenses

 

(124,805)

 

(193,104)

 

(27,333)

Income tax expenses

 

-

 

1,718

 

243

Loss from equity method investments

 

(1,010)

 

(326)

 

(46)

Net loss

 

(125,815)

 

(191,712)

 

(27,136)

             

Less: Net loss attributable to noncontrolling interest

 

(82)

 

(7)

 

(1)

             

Net loss attributable to Sunlands Technology Group

 

(125,733)

 

(191,705)

 

(27,135)

Net loss per share attributable to ordinary shareholders of

           

 Sunlands Technology Group:

           

     Basic and diluted

 

(18.38)

 

(28.28)

 

(4.00)

Weighted average shares used in calculating net loss

           

    per ordinary share:

           

     Basic and diluted

 

6,842,421

 

6,779,346

 

6,779,346

             

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)

 
   

For the Six Months Ended June 30,

   

2019

 

2020

   

RMB

 

RMB

 

US$

Net loss

 

(125,815)

 

(191,712)

 

(27,136)

Other comprehensive (loss)/income, net of tax effect of nil:

           

Change in cumulative foreign currency translation adjustments

 

(2,537)

 

16,850

 

2,385

Total comprehensive loss

 

(128,352)

 

(174,862)

 

(24,751)

Less: comprehensive loss attributable to noncontrolling

           

interest

 

(82)

 

(7)

 

(1)

Comprehensive loss attributable to Sunlands Technology

           

Group

 

(128,270)

 

(174,855)

 

(24,750)

 

 

SUNLANDS TECHNOLOGY GROUP

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(Amounts in thousands)

 
   

For the Six Months Ended June 30,

   

2019

 

2020

   

RMB

 

RMB

Net revenues

 

1,116,905

 

1,077,581

Less: other revenues

 

(9,614)

 

(10,988)

Add: tax and surcharges

 

52,819

 

69,757

Add: ending deferred revenue

 

3,227,949

 

3,066,569

Add: ending refund liability

 

-

 

202,651

Less: beginning deferred revenue

 

(3,286,025)

 

(3,228,770)

Less: beginning refund liability

 

-

 

(128,478)

Gross billings (non-GAAP)

 

1,102,034

 

1,048,322

         
         
         

Net loss

 

(125,815)

 

(191,712)

Add: income tax expenses

 

-

 

(1,718)

depreciation and amortization

 

18,438

 

20,483

interest expense

 

7,385

 

6,128

Less: interest income

 

(48,944)

 

(13,137)

EBITDA (non-GAAP)

 

(148,936)

 

(179,956)

 

SOURCE Sunlands Technology Group