Sunlands Technology Group Price & Performance (STG)

And therefore, you should not place undue reliance on them. Forward looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward looking statement. For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission. With that, I will now turn the call over to our CEO, Tongbo Liu. Thank you, Ms. Hoss.

Hello, everyone. Welcome to Sunlands fourth quarter and full year 2024. Earnings conference call. Prior to commencing, I would like to keep the remainder of all attendees that the financial information referenced in this release are presented on a continuing operation basis. And all fingers are denominated in RMB on this explicitly specified otherwise. We wrapped up the first quarter with net revenue of 483,500,000.0 and a net income of 57,800,000.0 marking our fifteenth consecutive quarter of profitability. For the full fiscal year, we recorded annual revenue of 1,990,000,000.00 with a net income of 342,100,000.0 extending our straight to fourth straight for profitable years. The performance underscores the strengths of our business model. And operational resilience to effectively navigate both industry dynamics and macroeconomic challenges. [indiscernible] point 8% decline in full year net revenue, We also saw encouraging signs of growth including a steady rise in enrollments which reached a high of about 675,000 students enrollments in 2024. The adult education market is inherently the cycle with other economic conditions influencing learners willingness to invest in themselves. Recognizing this shift early, we strategically refined our product mix. Over the past few years. Transitioning from high high price long duration courses to more accessible short term programs.

Adjustment not only improves conversation rates but also ensures we stay aligned with involving customer preference. Enhancing both customer acquisition efficiency and overall operational resilience. Our operation operating cash flow remains strong marking the third consecutive year [indiscernible] This achievement reflects only steady growth in student enrollments, but also our disciplined approach to financial management. More importantly, gives us the flexibility to reinvest in key initiatives while maintaining resilience [indiscernible] Prudent cash management isn't just a safeguard against it's a strategic advantages that enable us to invest with confidence. Adapt swiftly and seize opportunities that drive long term value. As China's economy recovers and the consumer confidence rebounds, with a growing momentum in our sector. As the early mover in online education, we have gained valuable insights into the evolving needs of our demographic uncovering new growth opportunities with the maturing market and strong policy support we are well positioned to leverage their trains and drive innovation. We're confident the foundation we have built coupled with new models we are exploring will lead to positive results and sustainable growth in the coming year. Now let's turn to the performance of each of our major course programs. In 2024 degree or diploma oriented post secondary programs accounted for 10% of our total revenue.

This has long been an important part of our business, but as we have carefully evaluated the changing demographic trend and the evolving education landscape we have decided to reduce our investment in the segment. And redirect our focus towards more permanent opportunities with greater potential for mountain growth. While the demand for the sector remains stable, we will continue to monitor consumer needs and adapt as necessary. To stay alive with the evolving market dynamics. The sector comprises interest professional skills and professional certification preparation programs collectively accounted for 75.3% of our total revenues in 2024. With interest based programs emerging as a core pillar of our business. Over the past few years, we have strategically prioritized the sector directing more resources and attention to comprehensive portfolio of interest of Dragon courses. [indiscernible] the shift towards personal fulfillment and growth that extends beyond traditional work related education. As more individuals seek opportunities to enrich their lives and pursue passions outside their careers, We are uniquely positioned [indiscernible] Our goal is not only to respond to current train but also to anticipate the future needs. Fostering long term value by enhancing engagement strengthening loyalty and delivering exceptional learning experiences. Our emphasis on lifelong learning is particularly relevant given border demographic shifts, especially the rapid growth of Sunni population.

The 2025 government work report reaffirms the state's commitment to addressing population aging. [indiscernible] promoting the growth of the silver economy. China's demographic shift presents significant opportunities particularly within the senior education. A sector that is poised to become a key driver of our future growth. To capture this potential, while deepening our commitment to senior education, by expanding our course offerings to better serve the evolving needs of senior learners. According to the Forest and the Sullivan's 2024 China China Sea Of Economic Development Report, China's senior interest education sector continues to expand rapidly with seventeen two point eight million users in 2033 and the penetration rate of 24.5% Between 2019 and 2023, the market grew a robust combined annual growth rate of 14.7%. On the scoring the rising demand for lifelong learning among the elderly. Recognizing this train early, we have worked on enriching the lives of older adults through engaging educational and social experiences. By incorporating practical subjects such as arts, health and wellness areas that strongly appeal to this demographic will have fostered greater enthusiasm and participation participation. Beyond education, we are also exploring diversified business opportunities by leveraging our substantial senior user base including e commerce and study tours.

Notably our study tour programs have gained strong traction combining interest based learning with travel to create unique value proposition. In 2024 we launched dozens of same study tour routes, including music folk tours in The United States, oil painting trades in Europe, and cultural heritage tours within China. This program served tens of thousands of senior customers and received overwhelmingly positive feedback. The integration of specialized courses into these programs has enhanced the value proposition resulting in higher gross margins and the contributing to overall revenue growth. According to the forest standards seven China silver tourism market is projected to reach RMB 2.8 training by 2028. Presenting substantial growth opportunities with a growing customer base and expanding portfolio where we'll position as capitalize on this rising demand and further strengthening our market presence Through years of direct engagement, have gained invaluable insight into the general needs of this demographic. Insights that go beyond surface level assumptions. This deeper understanding has guided us in refining our offerings embedding social elements. Into courses and cost interactions and the design and educational experience that are both engaging and accessible. Looking ahead, we remain committed to strengthening our leadership in senior focused education and Silver Economy Services We will continue to expand our course offerings, introduce new product categories and explore innovation business models that align with evolving demographic and the market trends.

Through this strategic approach, we are not only positioned to capture future growth opportunities but also to create to create nothing value for our stakeholders and contribute to the border development of the silver economy. To further enhance our educational offerings, we're also leveraging cutting edge technology to drive innovation. A key milestone was the integration of DeepSeg in February 2025. Which enhances our ability deliver personalized learning experiences or optimize cost content and improve operational efficiency. DP6 advanced reasoning and autonomous learning [indiscernible] capabilities enable us to address the diverse needs of adult learners with great precision. Tailoring to their varying backgrounds, goals and learning styles. As AI continue to reshape education, we remain focused on staying at the forefront of this transformation. As we move into 2025, we remain steadfast in our commitment to harnessing the power of technology understanding the ever changing needs of our customers and continually improving the products and services we offer. Our focus will continue to be on delivering value through insightful market observations and care for refinement of our approach. By doing position ourselves to not only adapt to the future, but also to drive sustained long term goals. Our work is never done, but we are confident that our thoughtful strategies will lead us to continue success.

That concludes my prepared remarks With that, I will turn the call over to Albers. Financial director, Heng Yu, to run through our financials. Thank you, Tunbou. Hello, everyone. I'm pleased to share our fourth quarter and the full year results. Which reflect our resilience and the discipline in executing our strategy. Over the past year, we have remained focused on sustainable growth improving efficiency and strictly controlling costs. Our full year gross profit margin and net profit margin remained at 8417.2% respectively. And we maintained positive operating cash flow for the third consecutive year. Which fully demonstrates the success of our business model. Also revenue is under pressure in the short term. Our new student enrollments in the full year of 2024 increased by 9.5% year over year This is mainly due to the expansion of the product portfolio The addition of high value added products such as study tours, and the positive feedback from the market. The growing student base provides us with a guarantee to expand our product portfolio and enhance the lifetime value of students. This is the foundation for us to achieve sustainable development and maintain financial health A healthy financial situation provides us with confidence to cope with market fluctuations and is also the cornerstone for us to manage risk and make strategic adjustments.

With each successful hurdle, our team will become stronger which gives us confidence and ability to seize up future opportunities. We believe that through resolute execution of our strategic initiatives will further will further consolidate our competitive advantages maintain our good development momentum and deliver lasting value to our stakeholders. Now let me walk you through some of our key financial results for the fourth quarter of twenty twenty four All comparisons are year over year. And the old fingers are in RMB unless otherwise noted. In the fourth quarter of twenty twenty four, net revenues decreased by 10.8% to 483,500,000.0 from 405 hundred and 41,700,000.0 in the fourth quarter of twenty twenty three. The decrease was primarily driven by the decline in gross billings from post secondary courses over the recent quarters. Partially offset by the year over year growth in revenues from sales of goods such as books and learning materials. Cost of revenues increased by 10.8% to 81,700,000.0 in the fourth quarter of twenty twenty four from 73,800,000.0 in the fourth quarter of twenty twenty three. The increase was primarily due to an increase in the cost of revenues from sales of goods such as books and learning materials.

Gross profit decreased by 14.1% to 401,800,000.0 in the fourth quarter of twenty twenty four. From $468,000,000 in the fourth quarter of twenty twenty three. In the fourth quarter of twenty twenty four, operating expenses were 351,300,000.0 representing a 0.7% increase from 348,900,000.0 in the first quarter of twenty twenty three. Sales and marketing expenses increased by 3% to 304,800,000.0 in the fourth quarter of twenty twenty four. From 305,800,000.0 in the fourth quarter of twenty twenty three General and administrative expenses decreased by 9.9% to 32,000,000 in the first quarter of twenty twenty four. From 35,500,000.0 in the fourth quarter of twenty twenty three The decrease was mainly due to declined compensation expenses of our general and administrative personnel Product development expenses decreased by 41.2% to $4,500,000 in the fourth quarter of twenty twenty four. From 7,600,000.0 in the fourth quarter of twenty twenty three The decrease was mainly due to declined compensation expenses related to headcount reduction of our product development personnel. Net income for the fourth quarter of twenty twenty four was 57,800,000.0 as compared to 155,200,000.0 in the fourth quarter of twenty twenty three. Basic and diluted net income per share was 8.55 in the fourth fourth quarter twenty twenty four.

As of 12/31/2024, the company had $507,200,000 of cash, cash equivalents, and $276,000,000 of short term investments. As of 12/31/2024, the company had a deferred revenue balance of 916,500,000.0 as compared to 1,113,900,000.0 as of 12/31/2023. Now for our outlook, for the first quarter of twenty twenty five, Sunlands currently expects net revenues to be between $470,000,000 to $490,000,000. Which would represent a decrease of 6.4% to 10.2% year over year. The above outlook is based on the current market conditions and reflect the company's current and preliminary estimates of market and operating conditions and the customer demand. Which are all subject to substantial uncertainty With that, I'd like to open up the call to the questions. Operator?

Thank you. We will now begin the question and answer session. For the benefit of all participants on today's call, if you wish to ask your to management in Chinese, please immediately repeat your question in English. Please stand by while we compile the Q and A roster. At this time, we're showing no questions. So this will conclude our question and answer session. Now I'd like to turn the conference back over to Ehua for any closing remarks. Once again, thank you everyone for joining today's call. We look forward to speaking with you again soon. Good day and good night. This concludes this conference call. You may now disconnect your line. Thank you.