DavidChung-InvestorRelationsVicePresidentJackHuang-Founder,ChairmanandChiefExecutiveOfficerCindyTang-ChiefFinancialOfficer
ConferenceCallParticipants
Operator
Hello,ladiesandgentlemen.Thankyouforstandingbyfor51Talk'sOnlineEducationGroup'sFirstQuarter2024EarningsConferenceCall.Atthistime,allparticipantsareinalisten-onlymode.Today'sconferencecallisbeingrecorded.
Iwillnowturnthecallovertoyourhost,Mr.DavidChung,InvestorRelationsforthecompany.Pleasegoahead,David.
DavidChung
Thankyou.Hello,everyone,andwelcometothefirstquarter2024earningsconferencecallof51Talk.Thecompany'sresultswereissuedbyNewswireservicesearliertodayandarepostedonline.Youcandownloadtheearningspressreleaseandsignupforthecompany'sdistributionlistbyvisitingir.51talk.com.Mr.JackHuang,ourCEO;andMs.CindyTang,ourCFO,willbeginwithsomepreparedremarks.Followingthepreparedremarks,therewillbeaQ&Asession.
Beforewecontinue,pleasenotethatthediscussionwillcontainforward-lookingstatementsmadeunderthesafeharborprovisionsoftheU.S.PrivateSecuritiesLitigationReformActof1995.Forward-lookingstatementsinvolveinherentrisksanduncertainties.Assuch,thecompany'sresultsmaybemateriallydifferentfromtheviewsexpressedtoday.Furtherinformationregardingthisandotherrisksanduncertaintiesisincludedinthecompany'sForm20-FandotherpublicfilingsasfiledwiththeU.S.SecuritiesandExchangeCommission.
Thecompanydoesnotassumeanyobligationtoupdateanyforward-lookingstatementsexceptasrequiredundertheapplicablelaw.PleasealsonotethatearningspressreleaseandthisconferencecallincludediscussionofunauditedGAAPfinancialinformationaswellasunauditednon-GAAPfinancialmeasures.51Talk'spressreleasecontainsareconciliationoftheunauditednon-GAAPmeasurestotheunauditedmostdirectlycomparableGAAPmeasures.
IwillnowturnthecallovertoourCEO,JackHuang.Jack,pleasegoahead.
JackHuang
Thankyou,David.Hello,everyone.Thankyouforjoiningourconferencecalltoday.Ourbusinessmomentumcontinuedinthefirstquarterof2024,drivenbyourdiversifiedportfolioofmarketsdrivingustoexceedthehighendoftheguidance.Wehaveobservedsignificantreturnsonourearlierinvestments.Particularly,ourbrandingactivitiesweresupportivetoincreaseourstudentbase.Weremainconfidentinourcapabilityindeliveringourqualitygrowth.
Ourover46,000quarterlyactivestudents,alongwithnumerousparticipantsinfreetrials,provideuswithasubstantialpoolofpotentialdemand.Wehavedevelopednewproductstailoredtotheirneeds,suchastestpreparationprogramsforschoolenrollments.
Duringthisquarter,weformallyestablishedourAIResearchInstitutetoexplorehowthelatesttechnologiescanenhanceouruserexperienceandoperationalefficiency.WehavebegunusingAItocustomizelearningprogressreportsforcustomersandconductinterviewsandtrainingsforourteachers.
Withthat,IwillnowturnthecallovertoCindy,ourCFO.
CindyTang
Thankyou,Jack.FirstquarternetrevenueswereUS$9.4million,a17.1%increasefromthesamequarterlastyear,largelydrivenbytheincreaseofactivestudentswithattendedlessonconsumption.Grossmarginforthefirstquarterwas77.5%.Grossbillingsgrewby55.6%fromthesamequarterlastyeartoUS$12.6million.
Q1operatingexpenseswereUS$11.3million,anincreaseof64.1%comparedtothesamequarterlastyear.Specifically,thishasbeendrivenbyQ1salesandmarketingexpensesofUS$7.7million,a74%increasefromthesamequarterlastyearduetohighersalespersonnelcostsrelatedtoincreasesinanumberofsalesandmarketingpersonnelandhighermarketingexpenses.
Q1productdevelopmentexpenseswereUS$0.9million,a42.7%increasefromthesamequarterlastyear.Finally,Q1generalandadministrativeexpenseswereUS$2.6million,a47.2%increasefromthesamequarterlastyear.Overall,Q1operatinglosswasUS$3.9million,whilenetlosswasUS$3.7million,a54.5%and43.8%decreasefromthesamequarterlastyear,respectively.
Q1GAAPandnon-GAAPearningsperADSwerenegativeUS$0.65andUS$0.6,respectively.Thecompanytotalcash,cashequivalentsandtimedepositswereUS$21.7millionattheendofthefirstquarter.AdvancesfromstudentswereUS$30.1millionattheendofthefirstquarter.
Lookingforwardtothesecondquarterof2024,wecurrentlyexpectthenetgrossbillingstobebetweenUS$13.5millionandUS$14million.Theaboveoutlookisbasedonourcurrentmarketconditionsandreflectthecompany'scurrentandpreliminaryestimatesofthemarketandoperatingconditionsandcustomerdemand,whichareallsubjecttochange.
Thisconcludesourpreparedremarks.Wewillnowopenthelineforquestions.Operator,pleasegoahead.
Question-and-AnswerSession
Thankyou.Forthebenefitofallparticipantsontoday'scall,pleaselimityourselftotwoquestions.Ifyouhaveadditionalquestions,youmayreenterthequeue.PleaseaskyourquestioninChinesefirst,thenfollow-upwithanEnglishtranslation.[OperatorInstructions]Andtoday'sfirstquestioncomesfrom[JohnBanks]ofBGCapitalInvestments.Pleasegoahead.
UnidentifiedAnalyst
Hey,guys.Congratulations.Greatquarter,greatmomentum.Justtwoquestions.One,IknowyoulefttheChinesemarket,butwe'reseeingaprettybigreboundwithChineseeducationstocks.I'mjustcurious,youhaveanyinterestgoingbackintothemarketgoingforwardAreyoucompletelyoutoftheChinesemarketAndmysecondquestionis,yourgrossbillingswentfrombasicallyalmostnothingto$60million,$80million,itlookslikeeventuallygoingtoapproach$100million,andthesharepricehasn'treallydoneanything.Historically,youguyshavebeentrading2xto3xgrossbillings.Whatareyouguysdoingtoincreaseawarenessinyourcompany'sstockThankyou.
Okay.Thankyouverymuchforyourquestion.Iwillanswerthefirstone,andIthinkourCFOcanansweryoursecondquestion.Sofirstone,IwanttoemphasizethatwehaveourChina–MainlandChinabusinesshasbeen[indiscernible]outsideofthelistingcompany.Andbecauseoftheregulationissue,asyoumentioned,sowearenotinterestedintheMainlandChinabusinessanymore.Andwefoundthatactually51Talk'sbusinessmodelactuallyworksoutsideoftheMainlandChinaaswell.SoasyoucanseethatwehaveshowingaverysuccessfulgrowthintotheseveraldifferentmarketsinSoutheastAsia,inJapan,intheotherareaoftheworld.Soweareveryconfidentaboutinternationalmarket.Okay,Cindy,youcananswerthesecondquestion.
Yes.Okay.Thankyouforyourquestion.Soforourshareprice,actually,webelievethatouroperationwillultimatelythemainfactortodriveupourshareprice.Sofornow,thecompanyisfocusingondiversifythegeographicportfolioandwe'llhelptheoperationteamtomakesurethatourgrossbillingswillgrowasweexpected,andmakingsurethatourgrowthwaswithinahealthy,profitableexpectationssothatcanlayasolidfoundationforourshareprice.Atthesametime,thecompanywillactivelytoengageinvestors.Whenthetimeisgoodenough,weactuallywillgoouttointroducemoreaboutourselvestoourpotentialinvestors.
Allright.Goodluckinthefuture,andgreatworksofar.Hopefully,themomentumcontinuesforyouguys.
Thankyou.
[OperatorInstructions]Aswearereachingtheendofourconferencecall,I'dliketoturnthecallbackovertothecompanyforclosingremarks.Mr.David,pleasegoahead.
Thankyouonceagainforjoiningustoday.Ifyouhaveanyfurtherquestions,pleasecontact51Talk'sInvestorRelationsthroughthecontactinformationprovidedonourwebsite.
Thankyou.Thisconcludesthisconferencecall.Youmaynowdisconnectyourlines.Thankyou.