QuantaSing Group Ltd Price & Performance (QSG)

Which also applies to this call. As we will be making forward looking statements Please note that all numbers stated in the following management's prepared remarks are in RMB terms, and we will discuss non GAAP measures today. [indiscernible] and reconciled to the most comparable measures reported in our earnings release and filings with the SEC. I will now turn the call over to the CEO and Founder of QuantaSing. Li. Okay.

Good morning, everyone. Thank you for joining us today to discuss Corethink's second quarter results for fiscal year twenty twenty five. Let me begin with our financial performance for this quarter. Our revenues were RMB 726,600,000.0 As we have mentioned in previous quarters, we are taking a careful approach to business development we are moderating growth in our traditional business lines while also testing new initiatives This shift from focusing on traffic driven growth to high quality growth. Is delivering results As shown by our financial results, the changes in revenue both sequentially and year over year, reflect our planned reallocation of resources. At the same time, our disciplined execution has increased our net income to RMB 120 H meaning, This strong bottom line performance has operations while selectively investing in promising opportunities. Our established online learning business is doing well. And generating steadily steady cash flow to support our strategy. We built a user base of 139,600,000 registered [indiscernible] And are committed to maintain high service quality. This quarter, we have made great progress in cost development [indiscernible] For example, in our financial literacy program, we added 22 new lectures We completed major updates to our financial report training cap.

Our programs for business partnerships and user acquisition keeping up with market trends and meeting the public demand for financial knowledge We are also seeing remarkable results in our catography project for senior learners. This is real enthusiasm enthusiasm for traditional culture learning among middle aged and elderly individuals. And our [indiscernible] tailored to their needs. We created a variety of courses to help seniors enhance their enjoyment of life. And find spiritual fulfillment through learning telegraphy. Our curriculum starts from basic writing technical and moves on to studying Asian masters. And finally, allow for free creative expression. We tailor our program to fit the physical and mental needs of elderly students. Respecting their learning pace at each stage [indiscernible] professional instructors provide homework feedback and offer technical guidance helping students develop impressive calligraphy skills. Thanks to our thoughtful planning and diverse learning experiences. The conversion rate for advanced courses has increased from our 40% last quarter to over 60% this quarter. On top of our online learning, our consumer business is also growing Revenues have reached RMB 54,500,000.0 which is 39% increase compared to same period of last year. This growth is largely due to our expansion into wellness products aimed at silver economy.

Where we are already seeing strong results. [indiscernible] of sold as medicine products has gained significant market traction with several flagship products performing performing exceptionally well. The combined cash flow from our established business lines gives us a solid base for making strategic investments in growth areas and exploring new opportunities. Our strong balance sheet and cash position stand out with RMB1200 $13,200,000 cash and cash equivalents restricted cash and short term investments. We have the flexibility to invest in promising areas while staying financial disciplined Our ability to fund ourselves is [indiscernible] Allowing us to make smart investments without relying on external funding. This strong financial foundation sets the stage for our strategic expansion into diverse business opportunities. In a rapidly evolving market environment, we continue to identify and explore new possibilities throughout our history. We have adapted to market changes by standing agile and responsive. We began as pioneers in online learning building a strong foundation in that area. As new opportunities rose we expanded our offerings across multiple categories Now we are looking at opportunities both within our established area and beyond. Including growing our customer business in the silver economy. And testing new products and services.

By diversifying our revenue streams across different business lines. We are positioning positioning ourselves to [indiscernible] and [indiscernible] ical changes [indiscernible] strategy helps us [indiscernible] risks in any single business area. [indiscernible] resilient business in today's fast changing environment. Let me share some of the our early exploration initiatives. And showcase this diversification strategy. One area we are exploring is the silver economy. Which connects our established consumer business with new exploration initiatives and we are seeing encouraging results particularly in our health and wellness product line. In this line, our food ads medicine products has gained strong market acceptance Our Tichotong brand combines traditional Chinese wisdom with modern health solutions using time tested natural [indiscernible] and advanced extraction technologies This approach leads to effective fast backed health solutions. Let me share why our products are resonating with customers. Many consumers including 70 year old Shanghai resident, Adding our herbal [indiscernible] products into their daily wellness routines. They found that this natural supplement fits well with their health habits and lifestyle choices The petition's feedback as a positive feedback from customers shows that our products meet real market needs and support our strategy in this area. We are also focused on product innovation We have a robust pipeline of additional health and wellness products aimed at the zero economy market.

This shows our commitment to carefully testing and expanding successful offerings. Additionally, we are in the early stages of testing our offline service strategy. We are working with Beijing Nursing Home to explore integrated service models. This initiative is just the beginning. And we are following our test and scale approach. We are evaluating the results before deciding on the next next steps. Let me also update you on our travel study program. We recently launched a new membership offering the twenty twenty five VIP member card. [indiscernible] 355 This card comes from comes with several benefits, including discounts on travel study products. Companion ticket options, station pickup, services, travel planning assistance, [indiscernible] [indiscernible] we are keeping a close eye on how this program performs as we explore its potential for growth. Our approach remains consistent Following our disciplined test data scale, methodology, we carefully explore new initiatives making sure they fit the market before we invest heavily. Wouldn't we consider new initiatives we look at many factors. Such as initial costs expected returns how we align with our [indiscernible] and impact on our overall cash flow. This balanced third, along with our strong financial position, allow us to purchase various opportunities Looking ahead, we stay focused on our balanced approach to business development.

Our journey from being an online learning leader to exploring many growth paths shows our ability to adapt and enroll successfully. With the rest strategy, the right team and our strong financial strength we are confident in funding and seeking significant opportunities across different sectors. In today's rapidly changing environment, we are well prepared to remain [indiscernible] Responsive and disciplined as we approach new market opportunities. We look forward to updating you on our progress in the coming quarters. Thank you for your attention. I will now turn it over to Tim for a detailed review of our financial results Thank you, everyone. Thank you. Before I go into the details of our financial results, please note that all amounts are in RMB terms. That is the reporting period in the second quarter of fiscal year twenty twenty five. Ending on 06/30/2025, and that in addition to GAAP measures, we will also be discussing non GAAP measures. To provide greater clarity on the trends in our actual operations. For the second quarter of fiscal year twenty twenty five, our total revenues were RMB227.6 million, dollars representing a 25.9% decrease year over year. This reflects our [indiscernible] approach to business development as we transition from traffic driven growth to high quality high quality growth, Among our revenues, individual online learning services generated revenues of 600 of $1,300,000 accounting for 82.7% of total revenues.

This business line contributes to operating effectively generating steady cash flow that supports our strategic initiatives. Our gross billings from individual online learning services $546,200,000.0 showing a decline of 42.2% year over year. Which we view as a natural progression during this strategic transformation of our product mix. Revenues from enterprise services 55,700,000.0 a change of 3.4% from a year ago. And representing point 7% of total revenues. This shift reflects a change in existing customers' demands. Revenues from our consumer business increased to RMB64.5 million in the second quarter of fiscal year twenty twenty five. Representing 39.3% increase from RMB RMB46.4 million in the second quarter of fiscal year twenty twenty four. This growth aligns with our expansion into Vanness products with a focus on the serial economy market. Gross profit for the quarter was 6 of 4,100,000.0 with a gross margin of 83.1%. Compared to 85.2% in the same period last year. This margin change reflects our strategic shift towards more product focused offerings it naturally carry a different cost structure. On the operational front, we maintained disciplined cost management while investing in our strategic initiatives. Total operating expenses were $46,065,900,000.0 a decrease of 36.5% from $733,200,000.0 in the same period last year.

To break this down, since and marketing expenses decreased by 38.1% to 407,000,000. Primarily due to optimized marketing spend and improved operational efficiency. As a percentage of total revenue, non GAAP sales and marketing expenses which excludes share based compensation, decreased to 55.9% from 68.6% a year ago. Research and development expenses declined by 30.9% to RMB28.4 million dollars reflecting our focused approach to product development. As a percentage of total revenue, non GAAP R and D expenses which excludes share based compensation, decreased to 3.8% from 4% a year ago. General and administrative expenses decreased by $12.9500000.0 dollars mainly due to a decline in share based compensation expenses. As a percentage of total revenue, non GAAP G and A expenses which exclude share based compensation, is 3.9% compared to 2.8% a year ago. We achieved a net income of $126,800,000 representing a net margin of 17.4%. This strong bottom line performance demonstrates our ability to optimize operations while selectively investing in promising opportunities. Our adjusted net income which excludes share based compensation, was 132,000,000 representing a healthy adjusted net margin of 818.2%. Basic and diluted net income per share were $0.78 for the fourth quarter of twenty eighteen, compared to $0.78 in the prior year period.

Basic and diluted net income per share were 0.78 and 0.77 respectively, during the quarter. Adjusted basic and diluted diluted net income per share were $0.81 and 0.8 respectively, during the quarter. Regarding our balance sheet position, as of 12/31/2024, [indiscernible] We strengthened our cash position to $1,213,820,000 in cash and cash equivalents restricted cash and short term investments representing an increase of [indiscernible] $26,300,000 as of 06/30/2024. This enhanced liquidity provides us with significant flexibility to invest in promising areas while maintaining financial discipline, Looking ahead, our strengthened cash position and solid operational base gave us confidence in our execution capabilities. By diversifying our revenue streams across multiple business lines. We are strategically positioning ourselves to navigate market uncertainties and clinical clinical challenges That concludes my prepared remarks. Operator? Let's open up the call for questions. Thank you. Thank you.

We will now begin the question and answer session. Our first question comes from Michael Kim from Zacks Small Cap Research. Please go ahead.

Great. Good morning or good evening everyone. Thanks for taking my questions. Just first, as you look across the online education platform, any sense of how much the silver demographic currently accounts for in terms of the existing user base And then just looking beyond continuing to realign the course catalog with obviously with a focus on seniors. Just wondering if you could flesh out some specific plans to leverage those clients to really drive accelerating sales of related products and services?

Thanks. Okay, Michael. Thank you for your question. I will answer in Chinese and Liu will translate for me.

First of all, the silver Democratic Demographic, people aged 60 and above is an important and growing user group on our platform. To better serve them, we have updated our course catalog to include health and lifestyle courses specifically for seniors we're also offering health and wellness projects tailored to their needs. To drive the sales of silver economy product and services, our strategy includes launching consumer products related to our courses and offering specialized study tour services. This will enhance user engagement and create new revenue opportunities. Additionally, we will also focus on cross selling and private traffic domain operations to promote higher value products. Furthermore, we plan to encourage in person community in case set up and implement membership programs and establish strategic partnerships with Silver Economy brand. This will improve user interaction and encourage word-of-mouth marketing. Leading to further sales growth Through these efforts, we are confident that we can achieve lasting success in the silver economy sector.

Okay. That's all. Thank you.

Great. Thanks. That's super helpful. And then just as the revenue profile continues to evolve through the transition, any perspectives on maintaining profitability specifically as it relates to the adjusted net margin looking out over the next twelve months or so? Thanks.

Okay. I'll take this one. Thank you, Michael, for your question. We are evolving and expanding our revenue streams and particularly by moving beyond without online learning services into new areas. While getting a strong focus on the bottom line. I think in the coming twelve months, we expect some maybe some short term investments and as part of our growth strategy. However, we are confident that our diverse approach will support long term profitability. Introducing new business segments and innovative offerings may require significant resources at first, [indiscernible] economies of scale reduce operational risk and enhance margin sustainability. Furthermore, we are taking a disciplined approach to managing costs and expenses. We are prioritizing investments that have the potential to deliver high returns while also optimizing our existing resources for operational efficiency. [indiscernible] are also closely monitoring each business unit's performance to balance growth with maintaining our margins. Regarding adjusted net margin, we expect some volatility during the transition phase. But we will continue to stay aligned with our profit Our focus is on stabilizing margins as the new segments mature. We aim to balance strategic investments in growth with operational excellence ensuring that profitability remains strong as our revenue profit evolves.

We remain confident in our ability to adapt to the changing landscape and the rapidly changing environment. And to maintain strong financial performance. Even during times of transformation. I think this view cost us some time, but I think in future, we still have based on our solid business model, we still have a very bright future in the near term. Thank you.

Got it. Thanks for taking my questions.

Thank you.

This concludes our question and answer session.

I would like turn the conference back over to the management for any closing remarks.

Thank you again for joining our call today. If you have any further questions, please feel free to contact us or submit a request through our IR website. We look forward to speaking with everyone in our next call. Have a good day.

Okay. Thank you. Thank you. Thank you. The conference has now concluded. Thank you for attending today's presentation. May now disconnect.