Third Quarter Net Revenues up
by 23.2%
Year-Over-Year
Third Quarter Student
Enrollment of adults up by 20.1% Year-Over-Year
Third Quarter Student Enrollment in kid
education programs up by 308.6%
Year-Over-Year
Revise Full Year
2018 Net Revenues Guidance to RMB2,249-2,274 million
BEIJING,
Nov. 19,
2018 /PRNewswire/ --
Tarena International, Inc. (NASDAQ:
TEDU) ("Tarena" or the "Company"), a
leading provider of professional education services in China, today announced its unaudited financial
results for the third quarter
ended September
30, 2018.
Third Quarter 2018
Highlights
- Net revenues increased by 23.2%
year-over-year to RMB699.9
million, from RMB568.2
million in the same period in 2017.
- Gross profit increased by 13.3%
year-over-year to RMB464.7 million, from
RMB410.0 million in the same period in
2017.
- Operating loss was
RMB60.7 million, compared to an
operating income of
RMB94.5 million in the same period
in 2017.
- Non-GAAP operating loss,
which excluded share-based compensation expenses, was
RMB27.2 million, compared to a
non-GAAP operating income of
RMB114.8 million in the same period in
2017.
- Net loss
was RMB86.5 million, compared to a
net income of RMB97.0
million in the same period in 2017.
- Non-GAAP net loss,
which excluded share-based compensation expenses, was
RMB53.1million, compared to a non-GAAP
net income
of RMB117.3 million in the
same period in 2017.
- Loss per American Depositary Share ("ADS")
was RMB1.60. Non-GAAP loss per ADS, which
excluded share-based compensation expenses, was
RMB0.98. Each ADS represents one Class A
ordinary share.
- The Company repurchased 1,879,051 Class A ordinary shares
from the open market for an aggregate consideration of US$15.9 million in the third quarter of
2018.
- Cash, cash equivalents and time deposits totaled
RMB657.0 million as of
September 30, 2018, compared to
RMB1,119.7 million as of December 31, 2017. In addition, the Company had
RMB111.6 million in short term
investments as of September 30,
2018.
- Deferred revenue totaled RMB729.9
million as of September 30,
2018, compared to RMB302.2
million as of December 31,
2017, representing an increase of 141.6%. Kid education
business contributed cash receipt of RMB138.9 million during the third
quarter.
- Total student enrollments in adult education business,
defined as the total number of new students recruited and
registered, in the third quarter of
2018 increased by 20.1%
year-over-year to 43,513.
- Total course enrollments in adult education business,
defined as the cumulative number of courses enrolled in by our
students, in the third quarter of
2018 increased by 7.2%
year-over-year to 34,870.
- Total number of learning centers in adult education
business increased to 191 as of
September 30,
2018, from 179 as of September
30, 2017.
- Total number of learning centers for kid education
business only increased to 117 as of September 30, 2018, from 24 as of September 30, 2017.
- Total student enrollments in kid education programs,
defined as the total number of students recruited and registered in
our kid education programs, in the third quarter of 2018 increased
by 308.6% year-over-year to 14,670.
First Nine Month 2018
Highlights
- Net revenues increased by 19.7%
year-over-year to RMB1,624.0
million, from RMB1,356.8
million in the same period in 2017.
- Gross profit increased by 6.7%
year-over-year to RMB989.2 million, from
RMB927.2 million in the same period in
2017.
- Operating loss was
RMB403.4 million, compared to an
operating income of
RMB96.3 million in the same period
in 2017.
- Non-GAAP operating loss,
which excluded share-based compensation expenses, was
RMB308.7 million, compared to a
non-GAAP operating income of
RMB147.0 million in the same period in
2017.
- Net loss
was RMB433.1 million, compared to a
net income of RMB110.2
million in the same period in 2017.
- Non-GAAP net loss,
which excluded share-based compensation expenses, was
RMB338.4 million, compared to a non-GAAP
net income
of RMB160.9 million in the
same period in 2017.
- Loss per American Depositary Share ("ADS")
was RMB7.79. Non-GAAP loss per ADS,
which excluded share-based compensation expenses, was RMB6.08. Each ADS represents one Class A ordinary
share.
- The Company repurchased 3,177,350 Class A ordinary shares
from the open market for an aggregate consideration of US$26.0 million in the first nine month in
2018.
- Total student enrollments in adult education business,
defined as the total number of new students recruited and
registered, during the first nine month of 2018
increased by 17.7% year-over-year
to111,298.
- Total course enrollments in adult education business,
defined as the cumulative number of courses enrolled in by our
students, during the first nine month of 2018
increased by 8.4% year-over-year
to 92,118.
- Total student enrollments in kid education programs,
defined as the total number of students recruited and registered in
our kid education programs, during the first nine month of 2018
increased by 361.8% year-over-year to 29,135.
- On February 27, 2018, the
Company acquired 100% of equity interest of Wuhan Haoxiaozi Robot
Technology Co., Ltd, ("RTEC"), which provides K-12 robotics
programming education services. The total consideration was
RMB58.2 million in cash and the
transaction was accounted for as a business
combination.
"We are delighted to see Tarena's kid education business
has once again achieved higher than expected student enrollment.
The student enrollment of kid education business continued rapid
growth, achieving a more than 309% year over year increase totaling
14,670 students. By the end of the third quarter our kid education
business grew to cover 46 cities with 124 learning centers. We have
seen more learning centers making profits through our focus to
improve enrollment and operating efficiency. We also continue to
invest in kids course development and, by taking advantage of our
IT education experiences that we has accumulated in the past
decades, we have built a programming course system which is
suitable for kids aged between 4 and 18." Said Mr. Shaoyun Han, Tarena's Chairman and Chief
Executive Officer.
"I am also very pleased to see the student enrollment in
adult education business maintained a growth rate over of 20%.
Student recruitment through partnership with universities
contributed a larger proportion of total enrollment growth for this
quarter and will become another very important student acquisition
channel that Tarena will focus on in the future. Given the growth
from last year when the new business was launched, we foresee
significant future potential of business partnership with
universities, despite the fact that most of the students recruited
from such partnership participate in multiple-year programs and
part of the tuition revenue from such students has to be deferred
to future years. Expansion of student acquisition through
universities can help Tarena maintain growth in adult business when
the overall IT market is adversely impacted by macroeconomic
headwinds. We closed or merged 26 adult non-performing learning
centers in the second and third quarters of 2018. After evaluating
the impact of retail channel enrollment shortfalls due to market
conditions and center closures, and the impact of revenue to be
deferred to future years for the students acquired from university
partnership, we revised full year 2018 net revenues guidance to
RMB2,249 million to 2,274 million. In
addition, we will keep focusing on resources utilization efficiency
improvement to deliver better profitability from the traditional
adult education business in the coming years." Mr. Han
added.
Mr. Yuduo Yang, Tarena's Chief Financial Officer, said,
"As part of our continued efforts to improve the operating
efficiency of our adult education business, we closed 7
non-performing centers on a net basis. Our seat capacity increased
to 62,698 as of September 30, 2018,
representing a year over year increase of 8.0%. By optimizing
seating layout, our seat utilization rate was 73.9% in the third
quarter of 2018, slightly higher than the utilization rate of 73.7%
during the same period last year. Our adult education business
delivered a non-GAAP operating profit of RMB76 million during this quarter, though it was
lower than the same period of last year. This decrease was mainly
because a portion of revenue was being deferred to later periods
and additional student acquisition costs incurred due to the
increasing numbers of students enrolled through the university
partnership channel. We believe in the profitability of the
business partnership with universities in the long term and we are
confident in the long-term growth in adult education business. For
kid education business, with rapid expansion, in the first nine
months of 2018, there were over 70 new centers opened and 21
centers added through acquisition. Many of these centers are not at
the mature stage yet, which led to a non-GAAP operating loss of
RMB104 million for the kid education
business during this quarter. We believe that more and more kid
education centers will ramp up gradually and start to make profit
along with increases in-class students. With broad market potential
and favorable government regulations, we have every confidence in
this business segment, and will further expand our center network,
recruit talents and improve course structures. We believe that the
maturing of the kid business and the adult university partnership
model will bring us solid foundation of growth in 2019 and beyond,
and our focus on operational efficiency improvement will help us to
achieve profitability growth in future years."
Third Quarter 2018 Results
Net Revenues
Net revenues increased by 23.2% to RMB699.9 million in the third quarter of 2018,
from RMB568.2 million in the same
period in 2017. RMB57.0 million of
net revenue was contributed by our kid education business in the
quarter. The increase in our adult education programs was primarily
due to increased course enrollments.
Total course enrollments in adult education business in
the third quarter of 2018 increased by 7.2% to 34,870, from 32,526
in the same period in 2017, which was mainly driven by the
popularity of our course offerings. The total seat capacity in our
adult learning centers increased by 8.0% to 62,698 as of
September 30, 2018, from 58,066 as of
September 30, 2017, to cater to the
increased demand for our courses.
We charge students enrolled through the retail channel our
standard tuition fee and provide students enrolled through the
university channel a discount of approximately RMB4,000 per person per course. Our student
enrollment mix from retail and university channel was 73%/27% and
78%/22% in the third quarter of 2018 and 2017,
respectively.
Cost of Revenues
Cost of revenues increased by 48.6% to RMB235.2 million in the third quarter of 2018,
from RMB158.2 million in the same
period in 2017. Our kid education program contributed RMB68.0 million of cost of revenues in the third
quarter of 2018. The increase in our adult education programs cost
of revenues was mainly due to an increase in personnel cost and
welfare expenses resulting from growing number of teaching and
advisory staff at our learning centers, rental cost resulting from
higher seat capacity, as well as depreciation expenses and other
supplier cost for the growing number of learning
centers.
Gross Profit and Gross Margin
Gross profit increased by 13.3% to RMB464.7 million in the third quarter of 2018,
from RMB410.0 million in the same
period in 2017. Gross margin was 66.4% in the third quarter of
2018, compared with 72.2% in the same period in 2017. The decrease
in gross margin was mainly due to the rapid expansion of our
learning centers in kid education programs and university
partnership business.
Operating Expenses
Total operating expenses increased by 66.5% to
RMB525.4million in the third quarter
of 2018, from RMB315.5 million in the
same period in 2017. Total non-GAAP operating expenses, which
excluded share-based compensation expenses, increased by 66.5% to
RMB492.1 million in the third quarter
of 2018, from RMB295.5 million in the
same period in 2017. Total share-based compensation expenses
allocated to the related operating expenses increased by 66.2% to
RMB33.2 million in the third quarter
of 2018, from RMB20.0 million in the
same period in 2017.
Selling and marketing expenses increased by 67.9% to
RMB319.0 million in the third quarter
of 2018, from RMB190.0 million in the
same period in 2017. The increase was mainly due to an increase in
personnel cost and welfare expenses related to the growth in our
selling and marketing headcount, and expanded marketing efforts as
we expanded our course offerings and network of learning centers,
mainly in our kids centers.
General and administrative expenses increased by 69.3% to
RMB164.0 million in the third quarter
of 2018, from RMB96.8 million in the
same period in 2017. The increase was mainly due to an increase in
personnel cost and welfare expenses for our increased number of
general and administrative personnel to support our growing
operations, especially in our kids business.
Research and development expenses increased by 47.7% to
RMB42.3 million in the third quarter
of 2018, from RMB28.7 million in the
same period in 2017. The increase was mainly due to an increase in
personnel cost and welfare expenses of our instructors allocated to
their content development activities for our courses, as well as
growing number of research and development staff as we expanded our
course offerings and operations.
Operating Loss
Operating loss was RMB60.7
million for the third quarter of 2018, compared to operating
income of RMB94.5 million in the same
period in 2017. Non-GAAP operating loss, which excluded share-based
compensation expenses, was RMB27.2
million, compared to non-GAAP operating income of
RMB114.8 million in the same period
in 2017. Kid education program contributed RMB104.0 million of operating loss in the third
quarter of 2018.
Interest Income
Interest income was RMB6.4
million in the third quarter of 2018, compared to
RMB5.1 million in the same period in
2017. Interest income in both periods consisted of interest earned
on our cash, cash equivalents and time deposits in commercial banks
and interest income recognized in relation to our installment
payment plan for students.
Other (Loss)/ Income
Other loss was RMB8.9
million in the third quarter of 2018, compared to
RMB6.3 million of income in the same
period in 2017. There was an investment loss of RMB10.0 million recognized in the third quarter
of 2018 related to the Company's impairment on an available for
sale investment.
Foreign Exchange Gain (Loss)
Foreign exchange gain was RMB4.2
million in the third quarter of 2018, compared to
RMB2.1 million foreign exchange loss
in the same period in 2017. The gain was mainly attributable to the
depreciation of China's RMB against the U.S. Dollar.
Income Tax Expense
The Company recorded an income tax expense of RMB27.5 million in the third quarter of 2018,
compared to RMB6.8 million income tax
expense in the same period in 2017. The change was mainly due to an
increase of the effective tax rate.
Net Loss
As a result of the foregoing, net loss was RMB86.5 million in the third quarter of 2018,
compared to net income of RMB97.0
million in the same period in 2017. Non-GAAP net loss, which
excluded share-based compensation expenses, was RMB53.1 million, compared to a non-GAAP net
income of RMB117.3 million in the
same period in 2017.
Loss per ADS
Loss per ADS were RMB1.60 in
the third quarter of 2018. Non-GAAP loss per ADS, which excluded
share-based compensation expenses, were RMB0.98.
Cash Flow
Net cash inflow from operating activities for the third
quarter of 2018 was RMB30.8 million.
Capital expenditures for the third quarter of 2018 were
RMB84.7 million. The decrease of
ending balance of cash and cash equivalent by the end of
September 30, 2018 resulted mainly
from the repurchasing of 1,879,051 Class A ordinary shares from the
open market for an aggregate consideration of US$15.9 million, an aggregate payment of cash
dividends of US$6.8 million
(US$0.12 per ADS) in June 2018 to shareholders of record as of the
close of business on April 5, 2018,
as well as an aggregate payment of RMB70.7
million for equity investments during the first nine months
of 2018.
Kid education business contributed cash receipt of
RMB138.9 million during the third
quarter.
Shares Issued and Outstanding
As of September 30, 2018,
the Company had 46,255,583 Class A and 7,206,059 Class B ordinary
shares outstanding. Each ADS represents one Class A ordinary
share.
First Nine Months 2018 Results
Net Revenues
Net revenues increased by 19.7% to RMB1,624.0 million for the first nine months of
2018, from RMB1,356.8 million in the
same period in 2017. RMB108.3 million
of net revenue was contributed by our kid education business for
the first nine months of 2018. The increase in our adult education
programs was primarily due to increased course enrollments and an
increase in the standard tuition fees.
Total course enrollments in adult education business for
the first nine months of 2018 increased by 8.4% to 92,118, from
85,017 in the same period in 2017, which was mainly driven by the
popularity of our course offerings.
Cost of Revenues
Cost of revenues increased by 47.8% to RMB634.8 million for the first nine months of
2018, from RMB429.6 million in the
same period in 2017. Our kid education program contributed
RMB132.0 million of cost of revenues
for the first nine months of 2018. The increase in our adult
education programs cost of revenues was mainly due to an increase
in personnel cost and welfare expenses resulting from growing
number of teaching and advisory staff at our learning centers, as
well as increased rental cost resulting from higher seat
capacity.
Gross Profit and Gross Margin
Gross profit increased by 6.7% to RMB989.2 million for the first nine months of
2018, from RMB927.2 million in the
same period in 2017. Gross margin was 60.9% for the first nine
months of 2018, compared with 68.3% in the same period in 2017.The
decrease in gross margin was mainly due to an increase in personnel
cost and welfare expenses for teaching and advisory staff, as well
as the rapid expansion of our learning centers in kid education
programs and university partnership business.
Operating Expenses
Total operating expenses increased by 67.6% to
RMB1,392.7 million for the first nine
months of 2018, from RMB830.9 million
in the same period in 2017. Total non-GAAP operating expenses,
which excluded share-based compensation expenses, increased by
66.4% to RMB1,299.7 million for the
first nine months of 2018, from RMB781.0
million in the same period in 2017. Total share-based
compensation expenses allocated to the related operating expenses
increased by 86.4% to RMB93.0 million
for the first nine months of 2018, from RMB49.9 million in the same period in
2017.
Selling and marketing expenses increased by 65.6% to
RMB817.0 million for the first nine
months of 2018, from RMB493.5 million
in the same period in 2017. The increase was mainly due to an
increase in personnel cost and welfare expenses related to the
growth in our selling and marketing headcount, and expanded
marketing efforts as we expanded our course offerings and network
of learning centers.
General and administrative expenses increased by 68% to
RMB453.4 million for the first nine
months of 2018, from RMB269.8 million
in the same period in 2017. The increase was mainly due to an
increase in personnel cost and welfare expenses for our increased
number of general and administrative personnel to support our
growing operations. Non-GAAP general and administrative expenses,
which excluded share-based compensation expenses, increased by
68.8% to RMB386.9 million, from
RMB229.1 million in the same period
in 2017.
Research and development expenses increased by 80.7% to
RMB122.2 million for the first nine
months of 2018, from RMB67.6 million
in the same period in 2017. The increase was mainly due to an
increase in personnel cost and welfare expenses of our instructors
allocated to their content development activities for our courses,
as well as growing number of research and development staff as we
expanded our course offerings and operations.
Operating Loss
Operating loss was RMB403.4
million for the first nine months of 2018, compared to
operating income of RMB96.3 million
in the same period in 2017. Non-GAAP operating loss, which excluded
share-based compensation expenses, was RMB308.7 million, compared to non-GAAP operating
income of RMB147.0 million in the
same period in 2017. Kid education program contributed RMB217.0 million of operating loss for the first
nine months of 2018.
Interest Income
Interest income was RMB20.4
million for the first nine months of 2018, compared to
RMB13.5 million in the same period in
2017. Interest income in both periods consisted of interest earned
on our cash, cash equivalents and time deposits in commercial banks
and interest income recognized in relation to our installment
payment plan for students.
Other (Loss)/ Income
Other loss was RMB3.5
million for the first nine months of 2018, compared to
RMB18.0 million of income in the same
period in 2017. There was an investment loss of RMB10.0 million recognized in the third quarter
of 2018 related to the Company's impairment on an available for
sale investment.
Foreign Exchange Gain (Loss)
Foreign exchange gain was RMB5.0
million for the first nine months of 2018, compared to
RMB4.5 million foreign exchange loss
in the same period in 2017. The gain was mainly attributable to the
depreciation of China's RMB against the U.S. Dollar.
Income Tax Expense
The Company recorded an income tax expense of RMB51.6 million for the first nine months of
2018, compared to RMB13.1 million
income tax expense in the same period in 2017. There was income tax
expense of RMB24.7 million arisen
from payment of dividend made to offshore parent company in the
second quarter of 2018, excluding which, the increase was mainly
due to an increase of effective tax rate.
Net Loss
As a result of the foregoing, net loss was RMB433.1 million for the first nine months of
2018, compared to net income of RMB110.2
million in the same period in 2017. Non-GAAP net loss, which
excluded share-based compensation expenses, was RMB338.4 million, compared to a non-GAAP net
income of RMB160.9 million in the
same period in 2017.
Loss per ADS
Loss per ADS were RMB7.79
for the first nine months of 2018. Non-GAAP loss per ADS, which
excluded share-based compensation expenses, were RMB6.08.
Business Outlook
Based on the Company's current estimates, total net
revenues for the fourth quarter of 2018 are expected to be between
RMB625.0 million and RMB650.0 million, representing an increase of
1.3% to 5.3% on a year-over-year basis.
The Company also expects its total net revenues for the
full year of 2018 to be between RMB2,249.0
million and RMB2,274.0
million, representing an increase of 13.9% to 15.2% on a
year-over-year basis.
This guidance is based on the current market conditions
and reflects the Company's current and preliminary estimates of
market and operating conditions, which are subject to
change.
Conference Call
Company management will hold an earnings conference call
and live webcast to discuss the Company's results at 8:00PM U.S. Eastern Time on Monday, November 19, 2018 (9:00AM Beijing Time on Tuesday, November 20, 2018).
United States: +1 845 675
0437 or +1 866 519 4004
Hong Kong: +852 3018 6771 or 800 906
601
China Mainland: 800 819 0121
or 400 620 8038
Taiwan: +886 255723895 or 0 809 091
568
Canada: +1 866
386 1016
United
Kingdom: +44 203 621 4779
International:
+65 6713 5090
Conference ID: 9478006
Please dial in 10 minutes before the call is scheduled to
begin and provide the conference ID to join the call.
A replay of the call will be available approximately 2
hours after the conclusion of the conference call through
November 27, 2018. The dial-in
details for the replay are:
United States: +1 855 452
5696
Hong Kong:
800 963 117
China Mainland: 800 870
0206
Taiwan: 00
801232482
Canada:
+1 855 759 0869
United
Kingdom: 0 808 234 0072
International: +61 2
8199 0299
Conference ID:
9478006
Additionally, a live and archived webcast of this call
will be available on the Investor Relations section of Tarena's
website at http://ir.tedu.cn.
Safe Harbor Statement
This press release contains forward-looking statements
made under the "safe harbor" provisions of Section 21E of the
Securities Exchange Act of 1934, as amended, and the U.S. Private
Securities Litigation Reform Act of 1995. These forward-looking
statements can be identified by terminology such as "will,"
"expects," "anticipates," "future," "intends," "plans," "believes,"
"estimates," "confident" and similar statements. Tarena may also
make written or oral forward-looking statements in its reports
filed with or furnished to the U.S. Securities and Exchange
Commission, in its annual report to shareholders, in press releases
and other written materials and in oral statements made by its
officers, directors or employees to third parties. Any statements
that are not historical facts, including any business outlook and
statements about Tarena's beliefs and expectations, are
forward-looking statements. Many factors, risks and uncertainties
could cause actual results to differ materially from those in the
forward-looking statements. Such factors and risks include, but not
limited to the following: Tarena's goals and strategies; its future
business development, financial condition and results of
operations; its ability to continue to attract students to enroll
in its courses; its ability to continue to recruit, train and
retain qualified instructors and teaching assistants; its ability
to continually tailor its curriculum to market demand and enhance
its courses to adequately and promptly respond to developments in
the professional job market; its ability to maintain or enhance its
brand recognition, its ability to maintain high job placement rate
for its students, and its ability to maintain cooperative
relationships with financing service providers for student loans.
Further information regarding these and other risks, uncertainties
or factors is included in Tarena's filings with the U.S. Securities
and Exchange Commission. All information provided in this press
release is current as of the date of the press release, and Tarena
does not undertake any obligation to update such information,
except as required under applicable law.
About Tarena International, Inc.
Tarena International, Inc. (NASDAQ: TEDU) is a leading
provider of professional education services in China. Through its innovative education
platform combining live distance instruction, classroom-based
tutoring and online learning modules, Tarena offers professional
education courses in IT and non-IT subjects. Tarena also offers kid
education programs. Its professional education courses provide
students with practical skills to prepare them for jobs in
industries with significant growth potential and strong hiring
demand. Since its inception in 2002, Tarena has trained over
620,000 students, cooperated with approximately 800 universities
and colleges and placed students with approximately accumulated
150,000 corporate employers in a variety of industries.
About Non-GAAP Financial Measures
Beginning in the second quarter of 2016, the Company
revised its non-GAAP financial measures to exclude gain or loss on
derivative instruments, goodwill impairment, impairment of
intangibles via acquisitions of businesses and the related tax
impact, in addition to its historical practice of excluding
share-based compensation expenses for non-GAAP results.
To supplement Tarena's consolidated financial results
presented in accordance with United States Generally Accepted
Accounting Principles ("GAAP"), Tarena's management uses non-GAAP
measures of cost of revenues, operating expenses, operating income,
net income, and basic and diluted net income per ADS, which are
adjusted from results based on GAAP to exclude the share-based
compensation expenses, gain or loss on derivative instruments,
goodwill impairment, impairment of intangibles via acquisitions of
businesses and the related tax impact. These non-GAAP financial
measures should be considered in addition to results prepared in
accordance with GAAP, but should not be considered a substitute
for, or superior to, GAAP results. In addition, calculation of the
non-GAAP financial measures may be different from the calculation
used by other companies, and therefore comparability may be
limited.
Tarena's management believes that excluding the
share-based compensation expenses, gain or loss on derivative
instruments, goodwill impairment, impairment of intangibles via
acquisitions of businesses and the related tax impact provides
meaningful supplemental information regarding our performance and
liquidity by excluding certain items identified as non-recurring
and infrequent in nature, and non-cash charges. The amount of
share-based compensation expenses, gain or loss on derivative
instruments, goodwill impairment, impairment of intangibles via
acquisitions of businesses and the related tax impact are not built
into the Company's annual budgets and quarterly forecasts, which
generally will be the basis for information Tarena provides to
analysts and investors as guidance for future operating
performance.
The non-GAAP financial measures are provided to enhance
investors' overall understanding of Tarena's current financial
performance and prospects for the future. A limitation of using
non-GAAP cost of revenues, operating expenses, operating income
(loss) and net income (loss), excluding the share-based
compensation expenses, gain or loss on derivative instruments,
goodwill impairment, impairment of intangibles via acquisitions of
businesses and the related tax impact is that the share-based
compensation charge has been and will continue to be a recurring
expense in the Company's business for the foreseeable future, and
gain or loss on derivative instruments, goodwill impairment,
impairment of intangibles via acquisitions of businesses and the
related tax impact may recur in the future. In order to mitigate
these limitations the Company has provided specific information
regarding the GAAP amounts excluded from each non-GAAP measure. The
accompanying tables include details on the reconciliation between
GAAP financial measures that are most directly comparable to the
non-GAAP financial measures the Company has presented.
For further information, please
contact:
Lei Song
Investor
Relations Contact
Tarena International,
Inc.
Tel: +8610 56219451
Email:
ir@tedu.cn
TARENA
INTERNATIONAL, INC. AND SUBSIDIARIES
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|
|
|
|
September 30
|
|
|
December 31
|
|
|
|
2018
|
|
|
2017
|
|
|
|
RMB
|
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
433,284
|
|
|
|
686,691
|
|
Time
deposits
|
|
|
223,173
|
|
|
|
432,536
|
|
Short-term
investments
|
|
|
111,612
|
|
|
|
-
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
|
244,228
|
|
|
|
216,700
|
|
Amounts due from a
related party
|
|
|
-
|
|
|
|
231
|
|
Inventory,
net
|
|
|
6,381
|
|
|
|
-
|
|
Prepaid expenses and
other current assets
|
|
|
213,301
|
|
|
|
156,360
|
|
Total current assets
|
|
|
1,231,979
|
|
|
|
1,492,518
|
|
Time
deposits
|
|
|
514
|
|
|
|
505
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
|
9,425
|
|
|
|
14,582
|
|
Property and
equipment, net
|
|
|
621,699
|
|
|
|
519,691
|
|
Long-term
investments
|
|
|
94,239
|
|
|
|
101,920
|
|
Other non-current
assets(a)
|
|
|
210,501
|
|
|
|
153,429
|
|
Total assets
|
|
|
2,168,357
|
|
|
|
2,282,645
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS'EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
15,733
|
|
|
|
11,351
|
|
Amounts due to a
related party
|
|
|
73
|
|
|
|
-
|
|
Income taxes
payable
|
|
|
114,390
|
|
|
|
125,971
|
|
Deferred
revenue
|
|
|
729,942
|
|
|
|
302,163
|
|
Accrued expenses and
other current liabilities
|
|
|
203,449
|
|
|
|
184,646
|
|
Total current liabilities
|
|
|
1,063,587
|
|
|
|
624,131
|
|
Other non-current
liabilities
|
|
|
3,700
|
|
|
|
4,329
|
|
Total liabilities
|
|
|
1,067,287
|
|
|
|
628,460
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
Class A ordinary
shares
|
|
|
329
|
|
|
|
327
|
|
Class B ordinary
shares
|
|
|
74
|
|
|
|
74
|
|
Treasury
stock(b)
|
|
|
(427,817)
|
|
|
|
(255,103)
|
|
Additional paid-in
capital
|
|
|
1,191,945
|
|
|
|
1,094,872
|
|
Accumulated other
comprehensiveincome
|
|
|
51,644
|
|
|
|
54,122
|
|
Retained
earnings
|
|
|
284,589
|
|
|
|
759,893
|
|
Total equity attributable to Tarena International,
Inc.
|
|
|
1,100,764
|
|
|
|
1,654,185
|
|
Non-controlling interest
|
|
|
306
|
|
|
|
—
|
|
Total liabilities and shareholders'
equity
|
|
|
2,168,357
|
|
|
|
2,282,645
|
|
Note:
|
(a)
|
The intangible assets
and goodwill arising from the acquisition of RTEC are included in
the other non-current assets for this report
due to that the evaluation of purchase price allocation is still
under review.
|
TARENA
INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
|
(in thousands,
except share data and per share data)
|
|
|
|
For the Three Months Ended
September 30
|
|
For the Nine Months Ended September
30
|
|
|
|
2018
|
|
|
2017
|
|
2018
|
|
|
2017
|
|
|
|
RMB
|
|
|
RMB
|
|
RMB
|
|
|
RMB
|
|
Net
revenues
|
|
|
699,879
|
|
|
|
568,226
|
|
|
1,624,013
|
|
|
|
1,356,807
|
|
Cost of
revenues(a)
|
|
|
(235,174)
|
|
|
|
(158,246)
|
|
|
(634,777)
|
|
|
|
(429,590)
|
|
Gross profit
|
|
|
464,705
|
|
|
|
409,980
|
|
|
989,236
|
|
|
|
927,217
|
|
Selling and marketing
expenses(a)
|
|
|
(319,027)
|
|
|
|
(190,002)
|
|
|
(817,048)
|
|
|
|
(493,465)
|
|
General and
administrative expenses(a)
|
|
|
(164,004)
|
|
|
|
(96,847)
|
|
|
(453,416)
|
|
|
|
(269,845)
|
|
Research and
development expenses(a)
|
|
|
(42,337)
|
|
|
|
(28,670)
|
|
|
(122,187)
|
|
|
|
(67,605)
|
|
Operating (loss) income
|
|
|
(60,663)
|
|
|
|
94,461
|
|
|
(403,415)
|
|
|
|
96,302
|
|
Interest
income
|
|
|
6,354
|
|
|
|
5,101
|
|
|
20,386
|
|
|
|
13,482
|
|
Other (loss)
income
|
|
|
(8,912)
|
|
|
|
6,295
|
|
|
(3,481)
|
|
|
|
17,980
|
|
Foreign exchange
(loss) gain
|
|
|
4,230
|
|
|
|
(2,130)
|
|
|
5,019
|
|
|
|
(4,462)
|
|
(Loss) income before income
taxes
|
|
|
(58,991)
|
|
|
|
103,727
|
|
|
(381,491)
|
|
|
|
123,302
|
|
Income tax
expense
|
|
|
(27,503)
|
|
|
|
(6,762)
|
|
|
(51,602)
|
|
|
|
(13,086)
|
|
Net (loss) income
|
|
|
(86,494)
|
|
|
|
96,965
|
|
|
(433,093)
|
|
|
|
110,216
|
|
Less: Net loss
attributable to non-controlling interests
|
|
|
(313)
|
|
|
|
-
|
|
|
(744)
|
|
|
|
-
|
|
Net (loss) income attributable to Class A and
Class
B ordinary shareholders
|
|
|
(86,181)
|
|
|
|
96,965
|
|
|
(432,349)
|
|
|
|
110,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per Class A and Class B
ordinary share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
(1.60)
|
|
|
|
1.69
|
|
|
(7.79)
|
|
|
|
1.93
|
|
Diluted
|
|
|
NA
|
|
|
|
1.62
|
|
|
NA
|
|
|
|
1.84
|
|
Weighted average number of Class A and Class
B ordinary shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
53,997,011
|
|
|
|
57,433,015
|
|
|
55,509,112
|
|
|
|
57,042,450
|
|
Diluted
|
|
|
NA
|
|
|
|
59,719,589
|
|
|
NA
|
|
|
|
59,792,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(86,494)
|
|
|
|
96,965
|
|
|
(433,093)
|
|
|
|
110,216
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment, net of nil
income taxes
|
|
|
6,663
|
|
|
|
(5,915)
|
|
|
10,862
|
|
|
|
(12,311)
|
|
Unrealized gain on
available for sale securities, net
of RMB604(RMB604 for the nine months in 2018)
income taxes
|
|
|
(9,621)
|
|
|
|
5,129
|
|
|
(9,621)
|
|
|
|
23,488
|
|
Less:
reclassification adjustment for gain on
available for sale securities realized in net income,
net of RMB604(RMB604 for the nine months in
2018) income taxes
|
|
|
(3,719)
|
|
|
|
(5,129)
|
|
|
(3,719)
|
|
|
|
(13,738)
|
|
Comprehensive income
|
|
|
(93,171)
|
|
|
|
91,050
|
|
|
(435,571)
|
|
|
|
107,655
|
|
Notes:
|
|
(a)
|
Includes share-based
compensation expenses as follows:
|
|
|
For the Three Months Ended
September 30
|
|
For the Nine months Ended September
30
|
|
|
|
2018
|
|
|
2017
|
|
2018
|
|
|
2017
|
|
|
|
RMB
|
|
|
RMB
|
|
RMB
|
|
|
RMB
|
|
Cost of
revenues
|
|
|
223
|
|
|
|
345
|
|
|
1,752
|
|
|
|
811
|
|
Selling and marketing
expenses
|
|
|
929
|
|
|
|
1,247
|
|
|
8,039
|
|
|
|
2,623
|
|
General and
administrative expenses
|
|
|
24,706
|
|
|
|
16,176
|
|
|
66,560
|
|
|
|
40,721
|
|
Research and
development expenses
|
|
|
7,584
|
|
|
|
2,568
|
|
|
18,374
|
|
|
|
6,524
|
|
TARENA
INTERNATIONAL, INC. AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
|
(in thousands,
except share data and per share data)
|
|
|
|
For the Three Months Ended
September 30
|
|
For the Nine Months Ended September
30
|
|
|
2018
|
|
|
2017
|
|
2018
|
|
|
2017
|
|
|
RMB
|
|
|
RMB
|
|
RMB
|
|
|
|
RMB
|
GAAP Cost of revenues
|
|
|
235,174
|
|
|
|
158,246
|
|
|
634,777
|
|
|
|
429,590
|
Share-based
compensation expense in cost of
revenues
|
|
|
223
|
|
|
|
345
|
|
|
1,752
|
|
|
|
811
|
Non-GAAP Cost of revenues
|
|
|
234,951
|
|
|
|
157,901
|
|
|
633,025
|
|
|
|
428,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Selling and marketing
expenses
|
|
|
319,027
|
|
|
|
190,002
|
|
|
817,048
|
|
|
|
493,465
|
Share-based
compensation expense in selling
and marketing expenses
|
|
|
929
|
|
|
|
1,247
|
|
|
8,039
|
|
|
|
2,623
|
Non-GAAP Selling and marketing
expenses
|
|
|
318,098
|
|
|
|
188,755
|
|
|
809,009
|
|
|
|
490,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP General and administrative
expenses
|
|
|
164,004
|
|
|
|
96,847
|
|
|
453,416
|
|
|
|
269,845
|
Share-based
compensation expense in general
and administrative expenses
|
|
|
24,706
|
|
|
|
16,176
|
|
|
66,560
|
|
|
|
40,721
|
Non-GAAP General and administrative
expenses
|
|
|
139,298
|
|
|
|
80,671
|
|
|
386,856
|
|
|
|
229,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Research and development
expenses
|
|
|
42,337
|
|
|
|
28,670
|
|
|
122,187
|
|
|
|
67,605
|
Share-based
compensation expense in research
and development expenses
|
|
|
7,584
|
|
|
|
2,568
|
|
|
18,374
|
|
|
|
6,524
|
Non-GAAP Research and development
expenses
|
|
|
34,753
|
|
|
|
26,102
|
|
|
103,813
|
|
|
|
61,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(60,663)
|
|
|
|
94,461
|
|
|
(403,415)
|
|
|
|
96,302
|
Share-based
compensation expenses
|
|
|
33,442
|
|
|
|
20,336
|
|
|
94,725
|
|
|
|
50,679
|
Non-GAAP Operating (loss)
income
|
|
|
(27,221)
|
|
|
|
114,797
|
|
|
(308,690)
|
|
|
|
146,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(86,494)
|
|
|
|
96,965
|
|
|
(433,093)
|
|
|
|
110,216
|
Share-based
compensation expenses
|
|
|
33,442
|
|
|
|
20,336
|
|
|
94,725
|
|
|
|
50,679
|
Non-GAAP Net (loss) income
|
|
|
(53,052)
|
|
|
|
117,301
|
|
|
(338,368)
|
|
|
|
160,895
|
Less: Net loss
attributable to non-controlling
interests
|
|
|
(313)
|
|
|
|
-
|
|
|
(744)
|
|
|
|
-
|
Non-GAAP net loss attributable to Class A
and Class B ordinary shareholders
|
|
|
(52,739)
|
|
|
|
117,301
|
|
|
(337,624)
|
|
|
|
160,895
|
Non-GAAP net income per Class A and
Class B ordinary share(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
(0.98)
|
|
|
|
2.04
|
|
|
(6.08)
|
|
|
|
2.82
|
Diluted
|
|
|
NA
|
|
|
|
1.96
|
|
|
NA
|
|
|
|
2.69
|
Weighted average number of ordinary
shares outstanding used in calculating
Non-GAAP net income per Class A and
Class B ordinary share(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
53,997,011
|
|
|
|
57,433,015
|
|
|
55,509,112
|
|
|
|
57,042,450
|
Diluted
|
|
|
NA
|
|
|
|
59,719,589
|
|
|
NA
|
|
|
|
59,792,579
|
Notes:
|
(a)
|
The Non-GAAP net
income per share is computed using Non-GAAP net income attributable
to ordinary shareholders and the same number of ordinary shares
used
in GAAP basic and diluted net income per share
calculation.
|
(b)
|
There was no tax
impact of share-based compensation expenses for the three-month and
nine-month ended September 30, 2018 and 2017.
|
View original
content:http://www.prnewswire.com/news-releases/tarena-international-inc-announces-third-quarter-2018-results-300753116.html
SOURCE Tarena International, Inc.