ATA Creativity Global Price & Performance (AACG)

Webcast. Including the replay, which will be available for the next 90 days. ACG's Chairman and CEO, Mr. Kevin ATA, will this call highlighting the company's Q3 9 months key operational and financial achievements. CFO, Mr. Robay ATA will provide an overview of financial and operating results for Q3 9 months 2024.

Expectations for the remainder of 2024 and full year guidance. President, Mr. Jun Zhang will conclude the prepared remarks with an update on the company's long term growth strategy, before opening the floor for questions. For those of you following the company's slide presentation, please refer to the slides for further details. With that, I'll turn the call over to ACC's Chairman and CEO, Mr. Kevin Ma. Please go ahead, Mr. Ma.

Thank you, Eddie. Let's come to [indiscernible] appreciate everyone's time. As Eric mentioned, please refer to our earnings take a variable only IR side of our website. As we go through our prepared remarks. During Q3 of 2024, ACG continued to focus on providing quality to our valued students and the parents developing product and service [indiscernible] [indiscernible] growing and evolving lead. Exploring new partnerships with institutions [indiscernible] As we are seeking collaboration opportunities across different industries. As a last so the quarter of 2020 4 was a strong quarter for ACG in terms of net revenues [indiscernible] we reported double digit in net revenues and overall students [indiscernible] [indiscernible] for our portfolio training programs as well as increased delivery during the period. For 9 months 2024, we saw equal strong year over year improvement as net revenues [indiscernible] And then [indiscernible] all increased by more than 20% compared to 9 months 2023. [indiscernible] ATA source of revenues. Contributing more than 70% of our total revenues ATA growth for the quarter 2020 4 9 months [indiscernible] Within this part of service, we continue to encourage them As a result, this segment continues to account for the majority of our during the rest of the quarter.

Thanks to our continuous in developing various programs and offerings. We are also seeing a growing [indiscernible] In other parts of our service, student elements for research based learning and overseas study [indiscernible] increased by more than 20% compared to the 3rd quarter 2023. [indiscernible] For this summer, our pilot project in [indiscernible] United Nations Sustainable Development [indiscernible] Capital in China [indiscernible] [indiscernible] in London and ATA in addition for the first time since the pandemic, a positive growth of our user [indiscernible] [indiscernible] providing students with the opportunity to study in person with the lecturers joining us from just art institutions and the art facilities in general. We believe the capability [indiscernible] ACG's core [indiscernible] which is due to a from our continuous investment in the close of [indiscernible] of the arts train in the academia and the industry. As well as the strong global partnership network [indiscernible] we continue to expand our partnership network by division, new strategic in the U. K. And Autodesk [indiscernible] [indiscernible] [indiscernible] With that, I will hand over the call to Mark. For detailed overview of our financial and operating results and our guidance for fiscal year Thank you, Kevin. And I will start with 3rd quarter and 9 months key financial metrics Total net revenues for Q3 of 20 24 were RMB67.3 million an increase of 13.1 percent from RMB59.5 million [indiscernible] Which was primarily due to increased revenue contributions from research based learning and portfolio training services.

Gross profit from Q3 2024 was RMB30 1,000,000 an increase of 2.6% from RMB 29 point 2 million in the [indiscernible] [indiscernible] 44.6% during Q3 2024, compared to 49.2% in the prior year period. The decrease in gross margin was mainly a result of higher costs related to [indiscernible] staff here as compared to Q3 [indiscernible] accommodate increased numbers of students and the larger outsourcing costs related to research based learning services. Total operating expenses was RMB47.7 million in Q3 of 2024, an increase of 28.4 percent from RMB37.1 million in the Q3 of 2023. The increase was primarily due to a RMB5 point 4,000,000 increase in sales expenses related to increased number of sales [indiscernible] and marketing events. As well as RMB 5.6 million increase in general and administrative related to increased professional fees and business expansion related investments As a result, loss per operations in the Q3 2024 was RMB 17,600,000 compared to RMB7.9 million in Q3 2020 [indiscernible] Net loss attributable to ACC during Q3 of 2024 was RMB 14,700,000 compared to RMB7.3 million in the prior year [indiscernible] total net revenues increased 21.1 percent to RMB167.1 million from RMB138 1,000,000 in the prior year period The increase was primarily attributable to increased contributions from portfolio training, research based learning and overseas study counseling services.

Gross profit for 9 months 2024 was RMB77 [indiscernible] [indiscernible] Increase of 24.6 percent from RMB 62.3 million in 9 months in 2023. As a result of increased revenues during 9 months 2024, gross margin slightly improved to 46.4% from 45.1 percent in 9 months 20 24. Total operating expenses were RMB132 million in 9 months 2024. An increase of 22% from RMB rents RMB12.9 million in 9 months of 2023. The increase was primarily due to [indiscernible] RMB14.4 million increase in sales expenses related to increased number of sales personnel to drive sales growth. As well as RMB10.3 million increase in general and administrative expenses related to increased professional fees and business expansion related investments As a result, last time operations in 9 months 2024 was RMB60 1,000,000 compared to RMB RMB50.6 million in 9 months 20 20 Net loss attributable to 8.8 in 9 months 2024 was RMB 49.4 million compared to RMB42.2 million Moving to the balance sheet. [indiscernible] As of September 30, 2024. We had RMB39.4 million in cash and cash equivalents Total assets of RMB 459 point Total liabilities or RMB300 300,000 and total shareholders' equity of RMB66 2,000,000 Moving on to year to date enrollment trends.

For 9 months 2024, total students enrolled increased by 20% as compared to 9 months 2023. Supported by strong student interest growth in both ACT Portfolio Training and all other programs. Portfolio training students enrollment for 9 months 2024 increased 20.7 percent to 2,320 and all other program students enrollment for 9 months 2024 increased 19.1% to 1,000 [indiscernible] credit hours delivered for portfolio training services and [indiscernible] due to seasonal reasons and students' eagerly throughout their portfolio creation work the second half of of the year for enrollment in the following fold semester 9 months 2024, credit hours delivered 60 [indiscernible] whereby time based programs by the hour increased by [indiscernible] by 28.3%. We remain committed to offering high quality services across our business line and to students who seek guidance and support in their With that, let's move into guidance for full year 2024. We believe we are on track of to achieve our full year 2024 revenue guidance for RMB RMB233255 1,000,000 representing a year over year increase of 5% to 15% for full year [indiscernible] Our belief is based on the strong enrollment trends. We are seeing and our ability to expand current services and offerings.

For the remainder of 2024, portfolio training services will continue to serve as our primary growth for our business as well as important skill I'd like to turn it over to Jin who will expand upon our long term growth strategy. Jin, please go ahead. Thank you, Sima. Our growth strategy surrounds 4 main pillars: Organic growth strengthening and expanding geographic footprint. Launch of new services and potential M and A opportunities. Starting with organic growth, As Sima mentioned, we have been encouraging students to enroll in our training services to join the project base track. Which offers more flexible and customizable programs based on student needs. The overall strong enrollment trend that we're seeing in today's market is also exciting. We see more students from Portfolio Training Services showing interest in our value adding offerings such as research based learning and overseas study counseling services. Resulting in increased student enrollment and hence increased revenue contribution. The engagement of our teaching staff in sales and product design process has also helped us improve program quality and boost sales. We have expanding training center coverage in existing cities and concentrated regional resources on larger centers. For example, we expanded our Shanghai and Beijing centers to serve more students during 2024.

We recently opened the ACG London Centre, extending ACG services to our students who have been admitted to UK colleges are just embarking on the overseas life. At the London Centre, we provide academic assistance students and an online networking events as well as career support. In addition to helping students settle down on their 1st few months of studying abroad. Innovation and introduction of new research based learning programs have been crucial to growing that line of business. To that end, we actively invest and explore new trends in art, from computer based arts majors such as digital arts user interaction, gaming design and AI generated content, to new art themes and career options such as art therapist, great architecture, urban design and so on. We continue to extend our global reach through growing our domestic and international network of institutional partnership. In Q3 2024, we signed a new institutional partnership with Lease Conservatory. A prestigious music conservatoire in the UK whereby Leeds conservator lecturers will work with ACG in providing applications insights and portfolio preparation tips to ACG students. In addition, we also recently initiated a strategic cooperation with Oasis Start Education Technology, jointly promote the integration of art and artificial intelligence.

Utilizing Oasis Source AI Technologies and Cloud Platform, We expect to introduce AI support in upgrading our existing offerings and service fueling our long term growth via better products and services to our students. This October, we again hosted the United Nations Sustainable Development Goals Arts Boot Camp, marking the 3rd section of this series since we initially introduced it this [indiscernible] We also hosted our Shanghai Fashion Week program in October. Bringing students to 4 Furno Fashion Weeks for students' interest in future study and career in fashion design and brand management. During October, ACG toured 10 cities in China as part of our awesome art education exhibition. Inviting professors from institutions such as Rhode Island School of Design to give themed speeches and share application tips.

And ACG alumni to share student study experience and careers. We remain focused on growing our student registration. Expanding demographics from students who want to pursue overseas study opportunities working professionals who look to expand their career opportunity and to the general public who are willing to explore our multiple topics of art. ACG's mission remains to act as a trusted partner for our students. [indiscernible] of where they are in their academic or career path, We're well equipped to do so and we'll continue to invest in our infrastructure and the teaching team to always make high quality offerings available our students. With that operator, let's open it up for questions. [indiscernible] There are no questions at this time. I would like to turn it back over to Kevin for closing remarks.

Directly to us or our Investor Relations [indiscernible] We are always available to speak to investors. And look forward to speaking with you all during our next earnings call. Thank you.

Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.