Ambow Education Announces Third Quarter 2018 Financial Results

BEIJING,Nov. 26,2018 -- Ambow Education Holding Ltd. ("Ambow" or the "Company") (NYSE American: AMBO),a leading national provider of educational and career enhancement services in China,today announced its unaudited financial and operating results for the three-month and nine-month periods ended September 30,2018.

Third Quarter 2018 Financial Highlights

Net revenues for the third quarter of 2018 increased by 10.6% to US$15.7 million from US$14.2 million in the same period of 2017. This increase was due primarily to revenues from Boston-based Bay State College ("BSC") (acquired in November 2017) and higher student enrollment for the 2018-2019 academic year in the Company's K-12 schools.

Gross profit for the third quarter of 2018 was US$4.3 million,compared with US$4.2 million for the same period of 2017. Gross profit margin was 27.4% for the third quarter of 2018,compared to 29.6% in the same period of 2017. The decrease in gross profit margin was primarily attributable to lower profit margin at BSC,as the Company is in the process of consolidating its business operations.

Operating expenses in the third quarter of 2018 decreased by 13.0% to US$6.0 million from US$6.9 million for the same period of 2017. Operating expenses as a percentage of net revenues for the quarter decreased to 38.2% from 48.6% in the same period of 2017.

Operating loss in the third quarter of 2018 decreased by 37.0% to US$1.7 million from US$2.7 million for the same period of 2017.

Net loss attributable to ordinary shareholders for the third quarter of 2018 was US$1.8 million,or US$0.04 per basic and diluted share,compared with a net income of US$2.6 million for the third quarter of 2017,or US$0.07 per basic and diluted share,as a one-time gain of US$5.7 million from the sale of subsidiaries was recorded in the prior-year quarter.

As of September 30,2018,Ambow maintained strong cash resources of US$62.1 million,comprised of cash and cash equivalents of US$30.5 million,short-term investments of US$27.2 million,and restricted cash of US$4.4 million.

As of September 30,the Company's deferred revenue balance was US$24.4 million,representing a 38.6% increase from US$17.6 million as of December 31,2017,mainly attributable to tuition and course fees collected in the K-12 business segment for the 2018-2019 academic year,and tuition and fees collected at BSC for the fall semester of 2018.

First Nine Months 2018 Financial Highlights

Net revenues for the first nine months of 2018 increased by 17.3% to US$52.8 million from US$45.0 million in the first nine months of 2017,due primarily to revenues from BSC and higher student enrollment for both 2017-2018 and 2018-2019 academic years in the Company's K-12 schools.

Gross profit for the first nine months of 2018 increased by 7.0% to US$19.9 million from US$18.6 million in the first nine months of 2017. Gross profit margin was 37.7%,compared to 41.3% in the same period of 2017. The decrease in gross profit margin was primarily attributable to lower profit margin at BSC,as the Company is in the process of consolidating its business operations.

Operating expenses for the first nine months of 2018 were US$19.0 million,an 8.2% decrease from US$20.7 million in the same period of 2017. Operating expenses as a percentage of net revenues for the period decreased to 36.0% from 46.0% in the same period of 2017.

Operating income in the first nine months of 2018 was US$0.8 million,compared with an operating loss of US$2.1 million for the same period of 2017.

Net income attributable to ordinary shareholders for the first nine months of 2018 was US$2.0 million,or US$0.05 per basic and diluted share,compared with a net income of US$3.7 million for the first nine months of 2017,or US$0.10 per basic and diluted share,as a one-time gain of US$5.7 million from the sale of subsidiaries was recorded in the prior-year period.

Dr. Jin Huang,Ambow's President and Chief Executive Officer,commented,"We are pleased with the results achieved during this seasonally slow quarter,as they continue to demonstrate our solid growth trajectory. Both of our primary revenue streams,Better Schools and Better Jobs,continued to show strong growth with 6% and 43% year-over-year increases,respectively. Notably in the third quarter,deferred revenue grew 39% to US$24.4 million from the prior year period. This significant increase positions us well for near-term growth.

"During the third quarter,we also focused heavily on further differentiating our education services through our enhanced collaboration with schools and corporations and our increasing library of cutting-edge curriculum offerings and training programs. With our industry-leading experience,Ambow is uniquely positioned to play an integral role in addressing the gap between supply and demand for job-ready talent,in particular,helping career universities/colleges prepare students for the booming IT and technology-driven upgrades happening across nearly all industries. We're on track with implementation of our new cross-border college/university model through deepened integration with Bay State College.

"With the tuition fees from Bay State College contributing significantly to Ambow's revenue throughout 2018,we also incorporated the transition expenses related to this acquisition into our financial results,which has pressured our margins. However,with our strong cost control effort,we've been able to deliver improved operating leverage to largely offset this pressure. Our results were favorably impacted by the meaningful reduction in both operating expenses and operating expenses as a percentage of net revenues on a year-over-year basis in the third quarter and the first nine months of 2018,as well as a 23% decrease in general and administrative expenses in the third quarter of 2018 compared with the same period in 2017.

"Looking forward,we anticipate continued improvements in Ambow's overall operating performance,which will include the introduction of new revenue-generating program. We are committed to increasing enrollments across all Ambow programs while maintaining stringent cost controls,and we are confident in our ability to accelerate profitable growth and strengthen our leadership position in the career enhancement market in China."

The Company's third quarter 2018 financial and operating results can also be found on its Form 6-K filed with the U.S. Securities and Exchange Commission at www.sec.gov.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted,all amounts translated from RMB to U.S. dollars for the third quarter and the first nine months of 2018 are based on the effective exchange rate of 6.8680 as of September 28,2018; all amounts translated from RMB to U.S. dollars for the third quarter and the first nine months of 2017 are based on the effective exchange rate of 6.6533 as of September 29,2017. The exchange rates were according to the middle rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

About Ambow Education Holding Ltd.

Ambow Education Holding Ltd. is a leading national provider of educational and career enhancement services in China,offering high-quality,individualized services and products. With its extensive network of regional service hubs complemented by a dynamic proprietary learning platform and distributors,Ambow provides its services and products to students in 30 out of the 31 provinces and autonomous regions within China.

Follow us on Twitter: @Ambow_Education

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of 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" and similar statements. Among other things,the outlook and quotations from management in this announcement,as well as Ambow's strategic and operational plans,contain forward-looking statements. Ambow may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission,in its annual reports to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements,including but not limited to the following: the Company's goals and strategies,expansion plans,the expected growth of the content and application delivery services market,the Company's expectations regarding keeping and strengthening its relationships with its customers,and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release,and Ambow undertakes no duty to update such information,except as required under applicable law.

For investor and media inquiries please contact:

Ambow Education Holding Ltd.

Tel: +86 10-6206-8000

The Piacente Group | Investor Relations

Tel: +1 212-481-2050 or +86 10-5730-6200

Email: ambow@tpg-ir.com

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands,except for share and per share data)

As of September 30,

As of December 31,

2018

2017

US$

RMB

RMB

ASSETS

Current assets:

Cash and cash equivalents

30,457

209,177

195,303

Restricted cash

4,373

30,035

2,350

Short term investments,available for sale

7,581

52,067

128,042

Short term investments,held to maturity

19,656

135,000

93,000

Accounts receivable,net

4,524

31,069

24,511

Amounts due from related parties

102

701

-

Prepaid and other current assets,net

19,730

135,505

129,517

Loan receivable,current

6,214

42,677

-

Total current assets

92,637

636,231

572,723

Non-current assets:

Property and equipment,net

23,544

161,701

168,423

Land use rights,net

264

1,815

1,848

Intangible assets,net

13,608

93,457

96,769

Goodwill

10,653

73,166

73,166

Deferred tax assets,net

1,538

10,566

8,222

Long-term loan receivables

-

-

42,677

Other non-current assets,828

12,555

13,592

Total non-current assets

51,435

353,260

404,697

Total assets

144,072

989,491

977,420

LIABILITIES

Current liabilities:

Deferred revenue *

24,437

167,836

114,396

Accounts payable *

1,874

12,869

23,414

Accrued and other liabilities *

47,373

325,357

418,998

Borrow from third party,010

41,275

-

Income taxes payable *

30,000

206,039

202,314

Amounts due to related parties *

499

3,430

3,430

Total current liabilities

110,193

756,806

762,552

Non-current liabilities:

Long-term borrowings from third party

-

-

39,205

Consideration payable for acquisitions

985

6,766

6,766

Other non-current liabilities

197

1,350

2,938

Total non-current liabilities

1,182

8,116

48,909

Total liabilities

111,375

764,922

811,461

EQUITY

Preferred shares

(US$0.003 par value;1,666,667 shares authorized,

nil issued and outstanding as of September 30,

2018 and December31,2017)

-

-

-

Class A Ordinary shares

(US$0.003 par value; 66,667 and

66,34,206,939

and 38,436,668 shares issued and

outstanding as of December31,2017 and

September30,respectively)

105

721

640

Class C Ordinary shares

(US$0.003 par value; 8,333,333 and 8,333

shares authorized,4,708,415 and 4,415

shares issued and outstanding as of

December31,2017 and September30,

2018,respectively)

13

90

90

Additional paid-in capital

509,846

3,501,623

3,456,307

Statutory reserve

2,917

20,036

20,036

Accumulated deficit

(480,908)

(3,302,878)

(3,316,715)

Accumulated other comprehensive income

1,186

8,147

6,876

Total Ambow Education Holding Ltd.'s equity

33,159

227,739

167,234

Non-controlling interests

(462)

(3,170)

(1,275)

Total equity

32,697

224,569

165,959

Total liabilities and equity

144,420

* All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of

consolidating these VIEs do not represent additional claims on the Company's general assets.

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands,except for share and per share data)

For the nine months ended September 30,

For the three months ended September 30,

2018

2018

2017

2018

2018

2017

US$

RMB

RMB

US$

RMB

RMB

NET REVENUES

Educational program and

services

51,897

356,429

291,069

15,613

107,227

85,690

Intelligent program and

services

879

6,034

8,656

37

251

8,656

Total net revenues

52,776

362,463

299,725

15,650

107,478

94,346

COST OF REVENUES

Educational program and

services

(32,177)

(220,991)

(169,661)

(11,171)

(76,723)

(60,541)

Intelligent program and

services

(755)

(5,188)

(6,059)

(184)

(1,266)

(6,059)

Total cost of revenues

(32,932)

(226,179)

(175,720)

(11,355)

(77,989)

(66,600)

GROSS PROFIT

19,844

136,284

124,005

4,295

29,489

27,746

Operating expenses:

Selling and marketing

(4,654)

(31,967)

(28,205)

(1,855)

(12,740)

(9,015)

General and administrative

(14,105)

(96,872)

(105,014)

(4,036)

(27,717)

(34,673)

Research and development

(240)

(1,647)

(4,653)

(119)

(820)

(1,941)

Total operating expenses

(18,999)

(130,486)

(137,872)

(6,010)

(41,277)

(45,629)

OPERATING INCOME

(LOSS)

845

5,798

(13,867)

(1,715)

(11,788)

(17,883)

OTHER INCOME

(EXPENSES)

Interest income

781

5,367

4,010

246

1,691

1,267

Foreign exchange gain,net

22

154

740

3

19

739

Other income (loss),net

75

517

(16)

(59)

(408)

893

Gain on disposal of

subsidiaries

-

-

38,145

-

-

38,145

Gain from deregistration of

subsidiaries

469

3,220

-

-

-

-

Gain on sale of investment

available for sale

111

759

4,720

40

275

151

Total other income

1,458

10,017

47,599

230

1,577

41,195

INCOME (LOSS) BEFORE

INCOME TAX AND NON-

CONTROLLING

INTEREST

2,303

15,815

33,732

(1,485)

(10,211)

23,312

Income tax expense

(282)

(1,939)

(8,999)

(308)

(2,113)

(4,990)

NET INCOME (LOSS)

2,021

13,876

24,733

(1,793)

(12,324)

18,322

Less: Net income (loss)

attributable to non-

controlling interest

6

39

(200)

13

89

912

NET INCOME (LOSS)

ATTRIBUTABLE TO

ORDINARY

SHAREHOLDERS

2,015

13,837

24,933

(1,806)

(12,413)

17,410

NET INCOME (LOSS)

2,322

OTHER

COMPREHENSIVE

INCOME,NET OF TAX

Foreign currency translation

adjustments

182

1,252

981

(73)

(501)

685

Unrealized gains on short term

investments

Unrealized holding gains

arising during period

65

446

1,506

10

66

755

Less: reclassification

adjustment for gains

included in net income

62

427

2,690

26

180

50

Other comprehensive income

(loss)

185

1,271

(203)

(89)

(615)

1,390

TOTAL

COMPREHENSIVE

INCOME (LOSS)

2,206

15,147

24,530

(1,882)

(12,939)

19,712

Net income (loss) per share –

basic

0.05

0.34

0.64

(0.04)

(0.29)

0.45

Net income (loss) per share -

diluted

0.05

0.34

0.63

(0.04)

(0.29)

0.44

Weighted average shares used

in calculating basic net

income (loss) per share

40,697,965

40,965

38,803,676

43,125,614

43,614

38,826,232

Weighted average shares used

in calculating diluted net

income (loss) per share

41,025,566

41,566

39,310,607

43,614

39,298,522

Discussion of Segment Operations

For the nine months ended September 30,

2018

2018

2017

2018

2018

2017

US$

RMB

RMB

US$

RMB

RMB

(All amounts in thousands)

NET REVENUES

Better Schools

31,012

212,992

196,746

8,103

55,653

50,861

Better Jobs

20,885

143,437

94,323

7,510

51,574

34,829

Others

879

6,346

COST OF REVENUES

Better Schools

(19,132)

(131,397)

(124,692)

(6,198)

(42,570)

(39,317)

Better Jobs

(13,045)

(89,594)

(44,969)

(4,973)

(34,153)

(21,224)

Others

(755)

(5,600)

GROSS PROFIT

Better Schools

11,880

81,595

72,054

1,905

13,083

11,544

Better Jobs

7,840

53,843

49,354

2,537

17,421

13,605

Others

124

846

2,597

(147)

(1,015)

2,597

Total gross profit

19,746

View original content:/news-releases/ambow-education-announces-third-quarter-2018-financial-results-300754966.html