BEIJING, Nov. 13, 2020 /PRNewswire/ -- Tarena
International, Inc. (NASDAQ: TEDU) ("Tarena" or the "Company"), a
leading provider of professional education and K-12 education
services in China, today announced
its unaudited financial results for the third quarter ended
September 30, 2020.
Third Quarter 2020 Highlights
- Net revenues decreased by 5.8% year-over-year to RMB620.8 million (US$88.8
million), from RMB659.2
million in the same period of 2019.
- Net revenue from adult education business, which represented
53.4% of the total net revenues, decreased by 38.8% year-over-year
to RMB331.2 million (US$47.4 million), from RMB541.5 million in the same period of 2019.
- Net revenue from K-12 education business, which represented
46.6% of the total net revenues, increased by 146.0% year-over-year
to RMB289.6 million (US$41.4 million), from RMB117.7 million in the same period of
2019.
- Gross profit decreased by 6.4% year-over-year to RMB350.0 million (US$50.1
million), from RMB374.1
million in the same period of 2019.
- Gross profit margin decreased by 0.4% year-over-year to
56.4%, from 56.8% in the same period of 2019.
- Operating loss decreased by 52.6% to a loss of RMB56.6 million (US$8.1
million), from a loss of RMB119.4 million in
the same period of 2019.
- Non-GAAP operating loss, which excluded share-based
compensation expenses, was RMB49.2
million (US$7.0 million),
compared to non-GAAP operating loss of RMB95.1 million in the same period of 2019.
- Net loss was RMB63.9 million (US$9.1 million), compared to net loss
of RMB110.0 million in the same period of 2019.
- Non-GAAP net loss, which excluded share-based compensation
expenses, was RMB56.5 million
(US$8.1 million), compared to
non-GAAP net loss of RMB85.7 million
in the same period of 2019.
- Basic and diluted loss per American Depositary Share ("ADS")
was RMB1.16 (US$0.17).
- Cash, cash equivalents and time deposits, including current and
non-current, and restricted cash totaled RMB374.7 million (US$55.0 million) as of September 30, 2020, compared to RMB621.2 million as of December 31, 2019.
- Net cash outflow from operating activities in the third quarter
of 2020 was RMB11.7 million
(US$1.7 million). Capital
expenditures in the third quarter of 2020 were RMB13.0 million (US$1.9
million).
- Deferred revenue totaled RMB1,963.4
million (US$288.3 million) as
of September 30, 2020, compared to
RMB1,586.0 million as of December 31, 2019, representing an increase of
23.8%.
- Total student enrollments in adult education business, defined
as the total number of courses enrolled in by students during that
period, including multiple courses enrolled in by the same student,
in the third quarter of 2020 decreased by 29.4% year-over-year
to 38,400.
- Total number of learning centers in adult education decreased
to 106 as of September 30, 2020, from
134 as of September 30,
2019.
- Total student enrollments in K-12 education business, defined
as the total number of students who attended at least one paid
lesson during that period or have deposit balances in their
accounts at the end of that period, in the third quarter of 2020
reached 122,800, increasing by 62.0%, compared to the student
enrollments of 75,800 in the same period of 2019.
- Total number of learning centers in K-12 education increased to
236 as of September 30, 2020, from
209 as of September 30,
2019.
Nine Months Ended September 30,
2020 Highlights
- Net revenues decreased by 19.1% year-over-year to RMB1,247.6 million (US$178.5 million), from RMB1,541.8 million in the same period of
2019.
- Net revenue from adult education business, which represented
62.8% of the total net revenues, decreased by 34.6% year-over-year
to RMB783.7 million (US$112.1 million), from RMB1,198.6 million in the same period of
2019
- Net revenue from K-12 education business, which represented
37.2% of the total net revenues increased by 35.2% year-over-year
to RMB463.9 million (US$66.4 million), from RMB343.2 million in the same period of 2019.
- Gross profit decreased by 30.3% year-over-year to
RMB472.3 million (US$67.6 million), from RMB678.1 million in the same period of 2019.
- Gross profit margin decreased by 6.1% year-over-year to 37.9%,
from 44.0% in the same period of 2019.
- Operating loss decreased by 5.9% to a loss of RMB721.3 million (US$103.2
million), from a loss of RMB766.3 million in
the same period of 2019.
- Non-GAAP operating loss, which excluded share-based
compensation expenses, was RMB692.6
million (US$99.1 million),
compared to non-GAAP operating loss of RMB717.2 million in the same period of 2019.
- Net loss was RMB676.5 million (US$96.8 million), compared to net loss
of RMB735.1 million in the same period of 2019.
- Non-GAAP net loss, which excluded share-based compensation
expenses, was RMB647.8 million
(US$92.7 million), compared to
non-GAAP net loss of RMB686.1 million
in the same period of 2019.
- Basic and diluted loss per American Depositary
Share ("ADS") was RMB12.42 (US$1.78).
- Total student enrollments in adult education business, defined
as the total number of courses enrolled in by students during that
period, including multiple courses enrolled in by the same student,
in the first nine months of 2020 decreased by 35.9%
year-over-year to 60,800.
- Total student enrollments in K-12 education programs, defined
as the total number of students who attended at least one paid
lesson during that period or have deposit balances in their
accounts at the end of that period, in the first nine months of
2020 reached 123,200, increasing by 50.4%, compared to the student
enrollments of 81,900 in the same period of 2019.
Key Financial Results
|
|
For the Three Months Ended
September 30
|
Variance
|
% of
change
|
For the Nine Months Ended
September 30
|
Variance
|
% of
change
|
|
|
2019
|
|
2020
|
|
|
|
2019
|
|
2020
|
|
|
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
|
|
|
(in thousands,
except for percentages)
|
Net
revenues
|
|
659,185
|
|
620,802
|
|
(38,383)
|
-5.8
|
1,541,798
|
|
1,247,628
|
|
(294,170)
|
-19.1
|
Cost of
revenues(a)(b)
|
|
(285,060)
|
|
(270,842)
|
|
14,218
|
-5.0
|
(863,686)
|
|
(775,369)
|
|
88,317
|
-10.2
|
Gross
profit
|
|
374,125
|
|
349,960
|
|
(24,165)
|
-6.5
|
678,112
|
|
472,259
|
|
(205,853)
|
-30.4
|
Gross
margin
|
|
56.8%
|
|
56.4%
|
|
-0.4%
|
|
44.0%
|
|
37.9%
|
|
-6.1%
|
|
Selling and
marketing
expenses(a)(b)
|
|
(272,291)
|
|
(239,211)
|
|
33,080
|
-12.1
|
(814,555)
|
|
(682,995)
|
|
131,560
|
-16.2
|
General and
administrative
expenses(a)(b)
|
|
(195,588)
|
|
(143,072)
|
|
52,516
|
-26.9
|
(525,256)
|
|
(435,296)
|
|
89,960
|
-17.1
|
Research and
development
expenses(a)(b)
|
|
(25,638)
|
|
(24,256)
|
|
1,382
|
-5.4
|
(104,590)
|
|
(75,219)
|
|
29,371
|
-28.1
|
Total operating
expenses
|
|
(493,517)
|
|
(406,539)
|
|
86,978
|
-17.6
|
(1,444,401)
|
|
(1,193,510)
|
|
250,891
|
-17.4
|
Operating
loss
|
|
(119,392)
|
|
(56,579)
|
|
62,813
|
-52.6
|
(766,289)
|
|
(721,251)
|
|
45,038
|
-5.9
|
Notes:
(a) Includes share-based compensation expenses.
(b) There were reclassification adjustments of the
financials during the nine months ended September 30, 2019 between the accounts of cost
of revenues, selling and marketing expenses, general and
administrative expenses and research and development expenses to
conform with the current period presentation. Due to the
reclassification, the cost of revenues increased by RMB8.8 million, general and administrative
expenses increased by RMB35.0
million, while selling and marketing expenses decreased by
RMB33.8 million and research and
development expenses decreased by RMB10.0
million. The above reclassification adjustments did not have
any impact on the net loss for the nine months ended September 30, 2019.
"As the COVID-19 pandemic has been properly controlled and
contained in China, our adult and
K-12 learning centers have been re-opened gradually and resumed
in-class lessons since June 2020.
Despite our net revenues dropping by 5.8% to RMB620.8 million in the third quarter of this
year, from RMB659.2 million in the
same period of last year, our overall operating loss decreased from
a loss of RMB119.4 million in the
third quarter of 2019 to a loss of RMB56.6
million in the same period of 2020. These were attributable
to the stringent costs and expenses control measures which we have
been implementing since the beginning of this year. The net loss in
the third quarter of 2020 was RMB63.9
million, as compared to the net loss of RMB110.0 million in the same period of 2019. In
the third quarter of this year, we were grateful and excited to see
an encouraging growth in our K-12 education business. Compared to
the figures in the third quarter of last year, our K-12 education
business achieved 146.0% increase in net revenues and 62.0%
increase in student enrollments in the third quarter of 2020. The
gross margin of K-12 education was 39.3% in the third quarter of
this year, compared to the gross margin of -4.1% in the same period
of last year," remarked Mr.
Yongji Sun, the CEO of Tarena.
"Looking ahead, our strategies are two-folded. Firstly, we will
continue to uplift efficiency of our operation to improve our
margins. Secondly, in order to strengthen our market leading
position and expand our market share, we will focus on further
streamlining our product lines, optimizing online and offline
programs and curriculums, and further improving our tutoring
qualities and user experience,"
concluded Mr. Sun.
"Our cash and cash equivalents and time deposits, including
current and non-current, and restricted cash, decreased by 39.7%,
from RMB621.2 million as of
December 31, 2019 to RMB374.7 million (US$55.0
million) as of September 30,
2020. The decrease in cash and cash equivalents and time
deposits, including current and non-current, and restricted cash
was mainly due to net cash used in operating activities which
mainly are composed of net loss of RMB676.5
million incurred in the first nine months of 2020, and was
partially offset by the increase in total deferred revenue of
RMB377.4 million. Net cash outflow
from operating activities in the third quarter of 2020 was
RMB11.7 million (US$1.7 million), whilst net cash outflow from
operating activities in the first half of 2020 was RMB183.6 million," said Wing Kee Lau, the CFO of Tarena.
Third Quarter 2020 Results
Net Revenues
Total net revenues decreased by 5.8% to RMB620.8 million (US$88.8
million) in the third quarter of 2020, from RMB659.2 million in the same period of 2019.
Net revenue from adult education business decreased by 38.8% to
RMB331.2 million (US$47.4 million) in the third quarter of 2020,
from RMB541.5 million in same period
of 2019. The decrease was primarily due to decline in student
enrollments of adult education by 29.4%, from 54,400 in the third
quarter of 2019 to 38,400 in the same period of 2020.
Net revenue from K-12 education business increased by 146.0% to
RMB289.6 million (US$41.4 million) in the third quarter of 2020,
from RMB117.7 million in same period
of 2019. The increase was primarily due to increase in student
enrollments of K-12 education by 62.0%, from 75,800 in the third
quarter of 2019 to 122,800 in the same period of 2020.
Cost of Revenues
Cost of revenues decreased by 5.0% to RMB270.8 million (US$38.7
million) in the third quarter of 2020, from RMB285.1 million in the same period of
2019. The decrease was primarily due to decrease in number of
adult education learning centers which resulted in reduction of
personnel-related costs and rental expenses, and partially offset
by the increased cost from addition of K-12 education new learning
centers.
Gross Profit and Gross Margin
Gross profit decreased by 6.4% to RMB350.0 million (US$50.1
million) in the third quarter of 2020, from RMB374.1 million in the same period of 2019.
Gross margin, which is equal to gross profit divided by net
revenues, was 56.4% in the third quarter of 2020, compared to 56.8%
in the same period of 2019. The decline in gross margin was
primarily due to the decreased portion of total revenues
contributed by our adult education business, which has a higher
gross margin than our K-12 education business.
Operating Expenses
Total operating expenses decreased by 17.6% to RMB406.5 million (US$58.2
million) in the third quarter of 2020, from RMB493.5 million in the same period of 2019.
Total non-GAAP operating expenses, which excluded share-based
compensation expenses, decreased by 15.0% to RMB399.3 million (US$57.1
million) in the third quarter of 2020, from RMB469.5 million in the same period of 2019.
Total share-based compensation expenses allocated to the related
operating expenses decreased by 69.6% to RMB7.3 million (US$1.0 million) in the third quarter of 2020,
from RMB24.0 million in the same
period of 2019.
Selling and marketing expenses decreased by 12.2% to
RMB239.2 million (US$34.2 million) in the third quarter of 2020,
from RMB272.3 million in the same
period of 2019. The decline was mainly due to decrease in marketing
activities and promotional spending, and decrease in
personnel-related expenses resulting from lower headcounts in the
third quarter of this year.
General and administrative expenses decreased by 26.8% to
RMB143.1 million (US$20.5 million) in the third quarter of 2020,
from RMB195.6 million in the same
period of 2019. The decline was primarily due to decrease in
personnel-related expenses resulting from lower headcounts in the
third quarter of this year, and there were one-time investigation
related professional expenses incurred in the third quarter of last
year.
Research and development expenses decreased by 5.1% to
RMB24.3 million (US$3.5 million) in the third quarter of 2020,
from RMB25.6 million in the same
period of 2019. The decline was mainly due to decrease in
personnel-related expenses resulting from lower headcounts.
Operating Loss
Operating loss was RMB56.6 million
(US$8.1 million) in the third quarter
of 2020, compared to operating loss of RMB119.4 million in the same period of 2019.
Non-GAAP operating loss, which excluded share-based compensation
expenses, was RMB49.2 million
(US$7.0 million) in the third quarter
of 2020, compared to non-GAAP operating loss of RMB95.1 million in the same period of 2019.
Interest Income
Interest income was RMB3.3 million
(US$0.5 million) in the third quarter
of 2020, compared to interest income of RMB5.7 million in the same period of 2019.
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. The decrease in interest income in the third
quarter of 2020 was primarily due to the decrease in the interest
income on time deposits and increase in the interest expense due to
increase in short-term bank loans.
Other Income
Other income was RMB2.9 million
(US$0.4 million) in the third quarter
of 2020, compared to RMB0.5 million
in other income in the same period of 2019. The income was mostly
from government grant offered to learning centers.
Foreign Exchange Gain / (loss)
Foreign exchange loss was RMB3.4
million (US$0.5 million) in
the third quarter of 2020, compared to RMB2.0 million foreign exchange gain in the same
period of 2019.
Income Tax Benefit / (expense)
The Company recorded an income tax expense of RMB10.1 million (US$1.4
million) in the third quarter of 2020, compared to
RMB1.1 million income tax benefit in
the same period of 2019.
Net Loss
As a result of the foregoing, net loss was RMB63.9 million (US$9.1
million) in the third quarter of 2020, compared to net loss
of RMB110.0 million in the same
period of 2019. Non-GAAP net loss, which excluded share-based
compensation expenses, was RMB56.5
million (US$8.1 million) in
the third quarter of 2020, compared to non-GAAP net loss of
RMB85.7 million in the same period of
2019.
Basic and Diluted Loss per ADS
Loss per ADS was RMB1.16
(US$0.17) in the third quarter of
2020. Non-GAAP loss per ADS, which excluded share-based
compensation expenses, was RMB1.02
(US$0.15) in the third quarter of
2020.
Cash Flow
Net cash outflow from operating activities in the third quarter
of 2020 was RMB11.7 million
(US$1.7 million). Capital
expenditures in the third quarter of 2020 were RMB13.0 million (US$1.9
million).
Nine Months Ended September 30,
2020 Results
Net Revenues
Net revenues decreased by 19.1% to RMB1,247.6 million (US$178.5 million) in the first nine months of
2020, from RMB1,541.8 million in the
same period of 2019. The decrease was primarily due to the
reduction of class consumption for both adult and K-12 education
businesses during the COVID-19 pandemic in the first half of
2020.
Cost of Revenues
Cost of revenues decreased by 10.2% to RMB775.4 million (US$110.9
million) in the first nine months of 2020, from RMB863.7 million in the same period of 2019. The
decrease was mainly due to the reduction of cooperation with
tutoring service providers as most students transferred to online
studying during the COVID-19 pandemic. Furthermore, during the
COVID-19 pandemic, the utility and office fees declined as our
employees worked from home, and the social security fees were
exempted due to the preferential policies enacted by the
government. The decrease was also partly attributable to the
decrease in number of adult education learning centers, which
resulted in decrease in personnel-related costs and rental
expenses.
Gross Profit and Gross Margin
Gross profit decreased by 30.3% to RMB472.3 million (US$67.6
million) in the first nine months of 2020, from RMB678.1 million in the same period of 2019.
Gross margin, which is equal to gross profit divided by net
revenues, was 37.9% in the first nine months of 2020, compared with
44.0% in the same period of 2019. The decline in gross margin was
primarily due to the decreased portion of net revenues contributed
by adult education business, which has higher gross margin than
K-12 education business.
Operating Expenses
Total operating expenses decreased by 17.4% to RMB1,193.5 million (US$170.7 million) in the first nine months of
2020, from RMB1,444.4 million in the
same period of 2019. Total non-GAAP operating expenses, which
excluded share-based compensation expenses, decreased by 16.5% to
RMB1,165.2 million (US$166.7 million) in the first nine months of
2020, from RMB1,396.1 million in the
same period of 2019. Total share-based compensation expenses
allocated to the related operating expenses decreased by 41.4% to
RMB28.3 million (US$4.1 million) in the first nine months of 2020,
from RMB48.3 million in the same
period of 2019.
Selling and marketing expenses decreased by 16.2% to
RMB683.0 million (US$97.7 million) in the first nine months of
2020, from RMB814.6 million in the
same period of 2019. The decline was mainly due to decrease in
marketing activities and promotional spending in the first nine
months of this year. In addition, personnel-related expenses
decreased resulting from lower headcounts, and social security fees
were exempted due to the preferential policies enacted by the
government during COVID-19 pandemic period in the first nine months
of this year.
General and administrative expenses decreased by 17.1% to
RMB435.3 million (US$62.3 million) in the first nine months of
2020, from RMB525.3 million in the
same period of 2019. The decline was mainly due to decrease in
personnel-related expenses resulting from lower headcounts, and
social security fees were exempted according to the preferential
policies enacted by the government during COVID-19 pandemic period
in the first nine months of this year. Furthermore, there were
one-time investigation related professional expenses incurred in
the same period of last year.
Research and development expenses decreased by 28.1% to
RMB75.2 million (US$10.8 million) in the first nine months of
2020, from RMB104.6 million in the
same period of 2019. The decline was mainly due to decrease in
personnel- related expenses resulting from lower headcounts.
Operating Loss
Operating loss was RMB721.3
million (US$103.2 million) in
the first nine months of 2020, compared to operating loss of
RMB766.3 million in the same period
of 2019. Non-GAAP operating loss, which excluded share-based
compensation expenses, was RMB692.6
million (US$99.1 million) in
the first nine months of 2020, compared to non-GAAP operating loss
of RMB717.2 million in the same
period of 2019.
Interest Income
Interest income was RMB1.3 million
(US$0.2 million) in the first nine
months of 2020, compared to interest income of RMB15.2 million in the same period in 2019.
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. The decrease in interest income in the first
nine months of 2020 was primarily due to the decrease in the
interest income on time deposits and tuition revenues from the
installment payment plan for students. Furthermore, interest
expense increased due to the increase in short-term bank loans.
Other Income /
(expense)
Other income was RMB3.2 million
(US$0.5 million) in the first nine
months of 2020, compared to RMB2,000
in other expense in the same period
of 2019. The income was mostly from government grants offered to
learning centers.
Foreign Exchange Gain / (loss)
Foreign exchange loss was RMB1.7
million (US$0.2 million) in
the first nine months of 2020, compared to RMB3.1 million foreign exchange gain in the same
period of 2019.
Income Tax
Benefit
The Company recorded an income tax benefit of RMB42.1 million (US$6.0
million) in the first nine months of 2020, compared to
RMB12.9 million in income tax
benefit in the same period of 2019.
Net Loss
As a result of the foregoing, net loss was RMB676.5 million (US$96.8
million) in the first nine months of 2020, compared to net
loss of RMB735.1 million in the same
period of 2019. Non-GAAP net loss, which excluded share-based
compensation expenses, was RMB647.8
million (US$92.7 million) in
the first nine months of 2020, compared to non-GAAP net loss of
RMB686.1 million in the same period
of 2019.
Basic and Diluted Loss per ADS
Loss per ADS was RMB12.42
(US$1.78) in the first nine months of
2020. Non-GAAP loss per ADS, which excluded share-based
compensation expenses, was RMB11.89
(US$1.70) in the first nine months of
2020.
Cash Flow
Net cash outflow from operating activities in the first nine
months of 2020 was RMB195.3 million
(US$27.9 million). Capital
expenditures in the first nine months of 2020 were RMB56.9 million (US$8.1
million).
Business Outlook
Based on the Company's current estimates, total net revenues for
the fourth quarter of 2020 are expected to be in the range of
RMB540 million and RMB570 million, after taking into consideration
the seasonal fluctuation factor and likely continued impact of the
COVID-19.
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, particularly
as to the potential impact of COVID-19 on the economy in
China and elsewhere in the
world.
Conference Call
Company management will hold an earnings conference call and
live webcast to discuss the Company's results at 7:00 AM on November 13,
2020, U.S. Eastern Time (8:00
PM on November 13, 2020,
Beijing Time).
Please register in advance of the conference, using the link
provided below. Upon registering, you will be provided with
participant dial-in numbers, passcode and unique registrant ID.
Conference call registration link:
http://apac.directeventreg.com/registration/event/5295689. It will
automatically direct you to the registration page of "Third Quarter
2020 Tarena International Inc Earnings Conference Call" where you
may fill in your details for RSVP. If it requires you to enter a
participant conference ID, please enter "5295689".
In the 10 minutes prior to the call start time, you may use the
conference access information (including dial in number(s), direct
event passcode and registrant ID) provided in the confirmation
email received at the point of registering.
A replay of the conference call may be accessed by phone at the
following number until November 21, 2020, 07:59 ET:
United States: +1 855 452
5696
INTERNATIONAL: +61 2 8199 0299
Conference ID: 5295689
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.
About Tarena International, Inc.
Tarena is a leading provider of adult professional education and
K-12 education services in China.
Through its innovative education platform combining live distance
instruction, classroom-based tutoring and online learning modules,
Tarena offers adult professional education courses in IT and non-IT
subjects. Its adult professional education courses provide students
with practical skills to prepare them for jobs in industries with
significant growth potential and strong hiring demand. Tarena also
offers K-12 education programs, including computer coding and
robotics programming courses, etc., targeting students aged between
three and eighteen.
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 fourth 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 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.
TARENA
INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in thousands,
except share data and per share data)
|
|
|
|
As
of
|
|
|
December 31,
|
|
September 30,
|
|
September 30,
|
|
|
2019
|
|
2020
|
|
2020
|
|
|
Audited
|
|
Unaudited
|
|
Unaudited
|
|
|
RMB
|
|
RMB
|
|
USD
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
537,701
|
|
352,426
|
|
51,750
|
Time
deposits
|
|
83,081
|
|
6,000
|
|
881
|
Restricted
cash
|
|
-
|
|
16,034
|
|
2,354
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
31,442
|
|
14,412
|
|
2,116
|
Amounts due from
related parties
|
|
16,492
|
|
253
|
|
37
|
Prepaid expenses and
other current assets
|
|
132,539
|
|
146,979
|
|
21,583
|
Total current
assets
|
|
801,255
|
|
536,104
|
|
78,721
|
Time deposits-non
current
|
|
406
|
|
217
|
|
32
|
Accounts receivable,
net of allowance for doubtful accounts-non current
|
|
724
|
|
502
|
|
74
|
Property and
equipment, net
|
|
576,633
|
|
487,219
|
|
71,544
|
Intangible assets,
net
|
|
17,669
|
|
14,426
|
|
2,118
|
Goodwill
|
|
52,782
|
|
52,781
|
|
7,750
|
Right-of-use
assets
|
|
773,472
|
|
642,775
|
|
94,386
|
Long-term investments,
net
|
|
67,773
|
|
67,219
|
|
9,870
|
Deferred income tax
assets
|
|
99,789
|
|
145,561
|
|
21,374
|
Other non-current
assets
|
|
121,517
|
|
113,350
|
|
16,644
|
Total
assets
|
|
2,512,020
|
|
2,060,154
|
|
302,513
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Short-term bank
loans
|
|
89,162
|
|
99,872
|
|
14,665
|
Accounts
payable
|
|
16,563
|
|
8,223
|
|
1,207
|
Amounts due to related
parties
|
|
239
|
|
103
|
|
15
|
Operating lease
liabilities-current
|
|
241,710
|
|
197,291
|
|
28,970
|
Income taxes
payable
|
|
69,671
|
|
73,077
|
|
10,731
|
Deferred
revenue-current
|
|
1,554,431
|
|
1,938,384
|
|
284,634
|
Accrued expenses and
other current liabilities
|
|
397,558
|
|
298,102
|
|
43,774
|
Total current
liabilities
|
|
2,369,334
|
|
2,615,052
|
|
383,996
|
Deferred revenue-non
current
|
|
31,539
|
|
25,043
|
|
3,677
|
Operating lease
liabilities-non current
|
|
508,810
|
|
467,851
|
|
68,700
|
Other non-current
liabilities
|
|
5,401
|
|
5,163
|
|
758
|
Total
liabilities
|
|
2,915,084
|
|
3,113,109
|
|
457,131
|
Commitments and
contingencies
|
|
-
|
|
-
|
|
-
|
Shareholders'
equity:
|
|
|
|
|
|
|
Class A ordinary
shares
|
|
337
|
|
342
|
|
50
|
Class B ordinary
shares
|
|
74
|
|
75
|
|
11
|
Treasury
stock
|
|
(457,169)
|
|
(459,815)
|
|
(67,520)
|
Additional paid-in
capital
|
|
1,284,573
|
|
1,315,170
|
|
193,121
|
Accumulated other
comprehensive income
|
|
51,386
|
|
49,729
|
|
7,302
|
Accumulated
deficit
|
|
(1,279,248)
|
|
(1,951,660)
|
|
(286,584)
|
Total deficit
attributable to the shareholders of Tarena International,
Inc.
|
|
(400,047)
|
|
(1,046,159)
|
|
(153,620)
|
Non-controlling
interest
|
|
(3,017)
|
|
(6,796)
|
|
(998)
|
Total liabilities
and equity
|
|
2,512,020
|
|
2,060,154
|
|
302,513
|
TARENA
INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS
|
(in thousands,
except share data and per share data)
|
|
|
|
For the Three Months Ended
September 30
|
|
For the Nine Months Ended
September 30
|
|
|
2019
|
|
2020
|
|
2020
|
|
2019
|
|
2020
|
|
2020
|
|
|
RMB
|
|
RMB
|
|
USD
|
|
RMB
|
|
RMB
|
|
USD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
|
659,185
|
|
620,802
|
|
88,799
|
|
1,541,798
|
|
1,247,628
|
|
178,459
|
Cost of
revenues(a)(b)
|
|
(285,060)
|
|
(270,842)
|
|
(38,741)
|
|
(863,686)
|
|
(775,369)
|
|
(110,908)
|
Gross
profit
|
|
374,125
|
|
349,960
|
|
50,058
|
|
678,112
|
|
472,259
|
|
67,551
|
Selling and
marketing
expenses(a) (b)
|
|
(272,291)
|
|
(239,211)
|
|
(34,217)
|
|
(814,555)
|
|
(682,995)
|
|
(97,695)
|
General and
administrative
expenses(a) (b)
|
|
(195,588)
|
|
(143,072)
|
|
(20,465)
|
|
(525,256)
|
|
(435,296)
|
|
(62,264)
|
Research and
development
expenses(a) (b)
|
|
(25,638)
|
|
(24,256)
|
|
(3,470)
|
|
(104,590)
|
|
(75,219)
|
|
(10,759)
|
Operating
loss
|
|
(119,392)
|
|
(56,579)
|
|
(8,094)
|
|
(766,289)
|
|
(721,251)
|
|
(103,167)
|
Interest
income
|
|
5,749
|
|
3,337
|
|
477
|
|
15,176
|
|
1,273
|
|
182
|
Other income
(expense)
|
|
481
|
|
2,864
|
|
410
|
|
(2)
|
|
3,171
|
|
454
|
Foreign exchange
gains (loss)
|
|
2,020
|
|
(3,393)
|
|
(485)
|
|
3,126
|
|
(1,744)
|
|
(249)
|
Loss before income
taxes
|
|
(111,142)
|
|
(53,771)
|
|
(7,692)
|
|
(747,989)
|
|
(718,551)
|
|
(102,780)
|
Income tax benefit
(expense)
|
|
1,135
|
|
(10,113)
|
|
(1,447)
|
|
12,872
|
|
42,061
|
|
6,016
|
Net
loss
|
|
(110,007)
|
|
(63,884)
|
|
(9,139)
|
|
(735,117)
|
|
(676,490)
|
|
(96,764)
|
Less: Net loss
attributable to
non-controlling interests
|
|
(1,077)
|
|
(931)
|
|
(133)
|
|
(2,133)
|
|
(4,079)
|
|
(583)
|
Net loss
attributable to Class
A and Class B ordinary
shareholders
|
|
(108,930)
|
|
(62,953)
|
|
(9,006)
|
|
(732,984)
|
|
(672,411)
|
|
(96,181)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per Class
A and
Class B ordinary share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
(2.04)
|
|
(1.16)
|
|
(0.17)
|
|
(13.76)
|
|
(12.42)
|
|
(1.78)
|
Weighted average
number of
Class A and Class B ordinary shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
53,392,184
|
|
54,443,291
|
|
54,443,291
|
|
53,266,054
|
|
54,151,656
|
|
54,151,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
(110,007)
|
|
(63,884)
|
|
(9,139)
|
|
(735,117)
|
|
(676,490)
|
|
(96,764)
|
Other
comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation
adjustment, net of nil income
taxes
|
|
(6,783)
|
|
(1,856)
|
|
(265)
|
|
1,490
|
|
(1,657)
|
|
(237)
|
Comprehensive
loss
|
|
(116,790)
|
|
(65,740)
|
|
(9,404)
|
|
(733,627)
|
|
(678,147)
|
|
(97,001)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
(a) Includes
share-based compensation expenses as follows:
|
|
|
For the Three Months Ended
September 30,
|
|
For the Nine Months Ended
September 30,
|
|
|
2019
|
|
2020
|
|
2020
|
|
2019
|
|
2020
|
|
2020
|
|
|
RMB
|
|
RMB
|
|
USD
|
|
RMB
|
|
RMB
|
|
USD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
288
|
|
80
|
|
11
|
|
741
|
|
322
|
|
46
|
Selling and marketing
expenses
|
|
3,566
|
|
343
|
|
49
|
|
5,546
|
|
1,381
|
|
198
|
General and
administrative expenses
|
|
12,874
|
|
6,143
|
|
879
|
|
29,490
|
|
19,861
|
|
2,841
|
Research and
development expenses
|
|
7,583
|
|
794
|
|
114
|
|
13,274
|
|
7,092
|
|
1,014
|
|
(b) There were
reclassification adjustments for the financials without impact on
net loss in the first half of 2019.
|
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,
|
|
|
2019 (Unaudited)
|
|
2020
(Unaudited)
|
|
2020
(Unaudited)
|
|
2019
(Unaudited)
|
|
2020 (Unaudited)
|
|
2020
(Unaudited)
|
|
|
RMB
|
|
RMB
|
|
USD
|
|
RMB
|
|
RMB
|
|
USD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Cost of
revenues
|
|
285,060
|
|
270,842
|
|
38,741
|
|
863,686
|
|
775,369
|
|
110,908
|
Share-based
compensation expense in
cost of revenues
|
|
288
|
|
80
|
|
11
|
|
741
|
|
322
|
|
46
|
Non-GAAP Cost of
revenues
|
|
284,772
|
|
270,762
|
|
38,730
|
|
862,945
|
|
775,047
|
|
110,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Selling and
marketing expenses
|
|
272,291
|
|
239,211
|
|
34,217
|
|
814,555
|
|
682,995
|
|
97,695
|
Share-based
compensation expense in
selling and marketing expenses
|
|
3,566
|
|
343
|
|
49
|
|
5,546
|
|
1,381
|
|
198
|
Non-GAAP Selling
and marketing
expenses
|
|
268,725
|
|
238,868
|
|
34,168
|
|
809,009
|
|
681,614
|
|
97,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP General and
administrative
expenses
|
|
195,588
|
|
143,072
|
|
20,465
|
|
525,256
|
|
435,296
|
|
62,264
|
Share-based
compensation expense in
general and administrative expenses
|
|
12,874
|
|
6,143
|
|
879
|
|
29,490
|
|
19,861
|
|
2,841
|
Non-GAAP General
and
administrative expenses
|
|
182,714
|
|
136,929
|
|
19,586
|
|
495,766
|
|
415,435
|
|
59,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Research and
development
expenses
|
|
25,638
|
|
24,256
|
|
3,470
|
|
104,590
|
|
75,219
|
|
10,759
|
Share-based
compensation expense in
research and development expenses
|
|
7,583
|
|
794
|
|
114
|
|
13,274
|
|
7,092
|
|
1,014
|
Non-GAAP Research
and
development expenses
|
|
18,055
|
|
23,462
|
|
3,356
|
|
91,316
|
|
68,127
|
|
9,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(119,392)
|
|
(56,579)
|
|
(8,094)
|
|
(766,289)
|
|
(721,251)
|
|
(103,167)
|
Share-based
compensation expenses
|
|
24,311
|
|
7,360
|
|
1,053
|
|
49,051
|
|
28,656
|
|
4,099
|
Non-GAAP Operating
loss
|
|
(95,081)
|
|
(49,219)
|
|
(7,041)
|
|
(717,238)
|
|
(692,595)
|
|
(99,068)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
(110,007)
|
|
(63,884)
|
|
(9,139)
|
|
(735,117)
|
|
(676,490)
|
|
(96,764)
|
Share-based
compensation expenses
|
|
24,311
|
|
7,360
|
|
1,053
|
|
49,051
|
|
28,656
|
|
4,099
|
Non-GAAP Net
loss
|
|
(85,696)
|
|
(56,524)
|
|
(8,086)
|
|
(686,066)
|
|
(647,834)
|
|
(92,665)
|
Less: Net loss
attributable to non-
controlling interests
|
|
(1,077)
|
|
(931)
|
|
(133)
|
|
(2,133)
|
|
(4,079)
|
|
(583)
|
Non-GAAP net loss
attributable to
Class A and Class B ordinary
shareholders
|
|
(84,619)
|
|
(55,593)
|
|
(7,953)
|
|
(683,933)
|
|
(643,755)
|
|
(92,082)
|
Non-GAAP net loss
per Class A and
Class B ordinary share(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
(1.58)
|
|
(1.02)
|
|
(0.15)
|
|
(12.84)
|
|
(11.89)
|
|
(1.70)
|
Weighted average
number of ordinary
shares outstanding used in calculating
Non-GAAP net loss per Class A and
Class B ordinary share(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
53,392,184
|
|
54,443,291
|
|
54,443,291
|
|
53,266,054
|
|
54,151,656
|
|
54,151,656
|
|
Notes:
|
(a) The Non-GAAP net
loss per share is computed using Non-GAAP net loss attributable to
ordinary shareholders and the same number
of ordinary shares used in GAAP basic and diluted net loss per
share calculation.
|
(b) There was no tax
impact of share-based compensation expenses for the third quarter
and first nine months of 2020 and 2019,
respectively.
|
View original
content:http://www.prnewswire.com/news-releases/tarena-international-inc-announces-third-quarter-2020-results-301172665.html
SOURCE Tarena International, Inc.