Sunlands Technology Group Q2 FY2024 earnings call

• Faced challenging macroeconomic conditions, the company achieved net revenue of RMB 492.2 million and net income of RMB 82.3 million. Cash flow from operating activities has been consistently positive over the past four quarters. • Overall new student enrollments rose 9.1% year-over-year and gross billings increased by 8.4%. • Interest-based education area is seen as having substantial opportunities, especially driven by broader educational growth and the silver-haired demographic. • Degree- or diploma-oriented post-secondary courses align with near-term goals as demand from working adults to upgrade qualifications remains steady. • The company is enhancing online course offerings through user research. • Expanded into products and services around senior arts education, including educational travel with the 'Echoes of the Yellow River Expedition' being a successful project, with revenues six times that of the same period last year. • Integrated AI into the platform for voice synthesis of distinguished educators and AI-driven assignment grading to enhance learning support and assessment efficiency.

The sector including interest, professional skills and professional certification preparation programs contributed 76.7% of total revenue and is anticipated to have an 11% year-over-year increase. Degree- or diploma-oriented post-secondary courses accounted for 10.7% of total revenue. Educational travel revenues in the quarter were six times that of the same period last year. Interest-based education, particularly within the silver-haired demographic, shows significant growth potential. Online education for working adults upgrading degrees or diplomas remains a steady segment contributing to revenue.

• For the third quarter of 2024, net revenues are expected to be between RMB 490 million to RMB 510 million, representing a decrease of 2.8% to 6.6% year-over-year. This 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. • A number of important factors could cause actual results to differ materially from those in forward-looking statements. • Potential risks include market conditions changes, policy uncertainties affecting the industry.