Four Seasons Education (Cayman), Inc. Q2 FY2020 earnings call

• Achieved strong operating and financial performances in the second quarter with total student enrollment up 90.8% yoy.
• Consistently enriched and diversified course offerings covering more academic subjects and educational topics.
• Optimization of learning center network paid off with satisfactory enrollment in learning centers in and out of Shanghai, and added 2 new learning centers in Chongqing and Shenzhen.
• Made strides in interest-oriented educational programs, including winning awards in Sudoku and Bridge matches and launching the first Bridge summer camp.
• Fiscal 2019 was a year of transformation, and fiscal 2020 second quarter results showed success of strategic adjustments.

In the second quarter, total student enrollment reached 39,357, a 90.8% year-over-year growth. Revenue was RMB128.8 million, up 37.9% year-over-year. Cost of revenue was RMB57.9 million, up 29.8% year-over-year. Gross profit was RMB71.0 million, up 45.3% year-over-year. Operating income was RMB28.3 million, up 234.9% year-over-year. Net income was RMB20.3 million, up 217.8% year-over-year. The revenue contribution comes from the growth in student enrollments and diversification of course offerings.

• Expects revenue in the third quarter of fiscal 2020 to be in the range of RMB 100.3 million to RMB 104.8 million, representing a year-over-year growth of approximately 10% to 15%.
• Outlook is based on current market conditions and preliminary estimates of market, operating conditions, and customer demand, which are subject to change.

• Forward-looking statements involve inherent risks and uncertainties, and the company's results may differ materially from views expressed. Further information on risks and uncertainties is in the company's prospectus filed with the SEC.

Q: First, noticed robust increase of student enrollments during the second quarter. Beside policy reason, what's the organic growth of student enrollments due to like class diversification and recruiting? And how about the average tuition? Second, future plan of new study center geographically and pace? Third, third quarter revenue growth is slower, any particular reason?

A: Part of enrollment growth is due to fee collection schedule change, but organic growth would be lower than 90%, can't disclose precise increase. Average tuition increased as there was an increase in small-class portion with higher hourly rates. For new study centers, Chongqing and Shenzhen are key cities with growth potential, Shenzhen is a top priority outside Shanghai. Third quarter guidance is conservative based on current estimates and being cautious with outlook