Sunlands Technology Group Q3 FY2024 earnings call

• Business remained resilient amidst challenging macroeconomic environment. Total revenue for the quarter was RMB491.3 million, a modest sequential decline of 0.2%, but net profit reached RMB89.3 million, an 8.6% increase from previous quarter driven by strategic realignment towards high-return areas.
• In the first nine months of 2024, total enrollments grew by 11.2% year-over-year.
• Interest, professional skills and professional certification preparation cost sector contributed 33.6% to total revenues, with early investments in interest-based education for older adults yielding significant returns; enriched curriculum with specialized courses for seniors like arts-related ones and expanded study tours.
• Traditional degree or diploma-oriented post-sector programs contributed 9.2% to total revenues, and company remains committed to supporting demand for accessible high-quality education for young professionals.
• Will continue to strengthen brand presence, enhance user experience, delve deeper into learning needs of users across age groups, innovate to provide diverse and high-quality educational products and services, and optimize cost structure focusing on most promising opportunities.

Total revenue for the third quarter stood at RMB491.3 million. The interest, professional skills and professional certification preparation cost sector including professional certifications, skill development and interest-based programs contributed 33.6% to total revenues. The traditional degree or diploma-oriented post-sector programs contributed 9.2% to total revenues. Net profit reached RMB89.3 million, an 8.6% increase from the previous quarter. Net revenue in Q3 2024 decreased by 6.4% from Q3 2023 to RMB491.3 million. Cost of revenues increased by 28% to RMB82.1 million in Q3 2024. Gross profit decreased by 11.1% to RMB409.2 million in Q3 2024. Operating expenses were RMB343.4 million in Q3 2024, a 1.4% increase from Q3 2023.

• For the fourth quarter of 2024, Sunlands currently expects net revenues to be between RMB450 million to RMB470 million, a decrease of 13.2% to 16.9% 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.

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