ATA Creativity Global Q1 FY2024 earnings call

• Achieved a 13.7% increase in total net revenues in Q1 2024 driven by portfolio training services growth, with increased student enrollment and credit hours delivered.
• Recruited additional teaching staff and expanded sales team to support growth.
• Received feedback from 2023 students to improve existing and design new programs.
• Hosted the Open Hack Shanghai Fashion Week program in March 2024, which was well-received, and other research-based learning offerings enrolled over 100 students.
• Students received admission letters from prestigious schools like Royal College of Arts, University of Arts London, etc.
• Announced the United Nations art bootcamp project, a two-week bootcamp focused on sustainable development goals.

Total net revenues for the first quarter ended March 31, 2024 were RMB48.1 million, an increase of 13.7% from RMB42.3 million in the first quarter of 2023. The portfolio training services were the primary driver, representing 73.7% of total net revenues during the period. Gross margin improved to 45.5% in the first quarter of 2024 from 44.3% in the prior year period. Net loss attributable to ACG was RMB17.9 million in the first quarter of 2024, compared to RMB17.8 million in the prior year period. Total student enrollment in the first quarter of 2024 was 1,370, up nearly 25% from the prior year period. Enrollment in core portfolio training programs increased more than 33% with 863 students enrolled, and 33,527 portfolio training credit hours were delivered, an increase of 21.3% year-over-year.

• Reiterated revenue expectations for the year ending December 31, 2024 to be between RMB233 million to RMB255 million, representing a 5% to 15% increase from fiscal year 2023.
• Continue to grow existing business and explore potential acquisitions for other business opportunities.

• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ dramatically from projected ones.
• Information about risks associated with investing in ACG is in its SEC filings, and the company does not assume obligation to update forward-looking statements except as required by law.

Q: Could you tell us how to think about enrollment in portfolio training and its trajectory?

A: The program of portfolio training services can be measured through student enrollment, number of credit hours delivered, and unit price per credit hour. Enrollment growth was due to sales team efforts and digital marketing. Ongoing investment in teaching resources will support future growth.

Q: Given nearly halfway through 2024, any color on revenue cadence, growth sources?

A: Core portfolio training will see sustainable growth in the next two or three quarters. Also, project-based learning and other overseas study counseling services will contribute additional revenues in the following period.