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01/11 03:13
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite strong revenue growth and expanding student base, significant financial challenges are evident. The company faces high operating losses, increasing costs, and negative earnings per ADS. The substantial rise in operating expenses, particularly in sales and marketing, highlights cost management issues. The reliance on student advances and lack of discussion on shareholder returns further contribute to financial strain. Although positive momentum is expected, the weak guidance and financial strain overshadow potential gains, leading to a negative outlook.
Gross Billings USD 40.5 million, a 104.6% year-over-year increase. This growth was attributed to robust sequential growth and the company's disciplined execution.
Net Revenues USD 26.3 million, an 87.5% year-over-year increase. This was largely driven by the increase in active students and their lesson consumption.
Gross Margin 73.3%, no year-over-year change mentioned.
Operating Expenses USD 23.4 million, a 97.9% year-over-year increase. This was driven by sales and marketing expenses, which rose due to intensified marketing and branding activities and higher personnel costs.
Sales and Marketing Expenses USD 17.5 million, a 114.7% year-over-year increase. This was due to intensified marketing and branding activities and higher sales personnel costs.
Product Development Expenses USD 1.6 million, an 87.8% year-over-year increase. No specific reasons for the increase were mentioned.
General and Administrative Expenses USD 4.3 million, a 52.5% year-over-year increase. No specific reasons for the increase were mentioned.
Operating Loss USD 4.2 million, a 428.9% year-over-year increase. No specific reasons for the increase were mentioned.
Net Loss Attributable to Ordinary Shareholders USD 4.8 million, a 669.4% year-over-year increase. No specific reasons for the increase were mentioned.
Total Cash, Cash Equivalents, and Time Deposits USD 36.6 million at the end of the third quarter. No year-over-year change mentioned.
Advances from Students USD 70.7 million at the end of the third quarter. No year-over-year change mentioned.
Active student base: Reached 112,600, surpassing 100,000 for the first time since the global expansion strategy began over 3 years ago.
Global market expansion: Participation in COP30 in Brazil with students from 5 countries, showcasing diversification and successful entry into new markets.
Gross billings: Achieved USD 40.5 million, a 42.1% quarter-over-quarter growth and 104.6% year-over-year growth.
Net revenues: USD 26.3 million, an 87.5% increase from the same quarter last year.
Gross margin: 73.3% for the third quarter.
Operating expenses: USD 23.4 million, a 97.9% increase from the same quarter last year, driven by sales, marketing, and personnel costs.
Cash position: Total cash, cash equivalents, and time deposits at USD 36.6 million.
Strategic priorities: Focused on disciplined capital allocation and long-term shareholder value.
Operating Loss and Net Loss: The company reported a Q3 operating loss of USD 4.2 million and a net loss attributable to ordinary shareholders of USD 4.8 million, representing significant increases of 428.9% and 669.4% respectively from the same quarter last year. This indicates financial strain and challenges in achieving profitability.
Rising Operating Expenses: Operating expenses increased by 97.9% year-over-year to USD 23.4 million, driven by a 114.7% rise in sales and marketing expenses and a 52.5% increase in general and administrative expenses. This highlights cost management challenges.
High Marketing and Branding Costs: Sales and marketing expenses rose by 114.7% year-over-year to USD 17.5 million due to intensified marketing and branding activities and higher personnel costs. This could pressure margins if revenue growth does not keep pace.
Product Development Costs: Product development expenses increased by 87.8% year-over-year to USD 1.6 million, reflecting higher investment in innovation but also adding to overall cost pressures.
Dependence on Advances from Students: The company reported advances from students of USD 70.7 million at the end of Q3. Heavy reliance on these advances could pose risks if student enrollment or retention declines.
Negative Earnings Per ADS: The company reported negative GAAP and non-GAAP earnings per ADS of USD 0.8 and USD 0.74 respectively, indicating ongoing challenges in achieving profitability.
Net Gross Billings (Q4 2025): Expected to be between USD 35 million and USD 38 million, based on current market conditions and preliminary estimates of market and operating conditions and customer demand.
The selected topic was not discussed during the call.
Despite strong revenue growth and expanding student base, significant financial challenges are evident. The company faces high operating losses, increasing costs, and negative earnings per ADS. The substantial rise in operating expenses, particularly in sales and marketing, highlights cost management issues. The reliance on student advances and lack of discussion on shareholder returns further contribute to financial strain. Although positive momentum is expected, the weak guidance and financial strain overshadow potential gains, leading to a negative outlook.
The earnings call reveals strong revenue growth and positive guidance, but significant financial strain with increased operating and net losses, rising expenses, and no shareholder return plan. The Q&A section suggests a focus on attracting investors with a Big 4 auditor change, but no immediate plans to address liquidity concerns. Overall, the financial health and rising costs overshadow positive revenue and guidance, leading to a negative outlook.
The earnings call highlights significant year-over-year growth in gross billings (93.4%) and net revenues (117.3%), alongside a strong gross margin of 77.5%. Despite a net loss, operating losses decreased substantially, indicating financial improvement. The company's positive cash flow and expansion into new markets, coupled with AI integration for personalized learning, bolster its growth outlook. Competitive and regulatory risks are acknowledged but seem manageable given the positive operational metrics. Absence of negative sentiment in the Q&A further supports a positive outlook.
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