Tarena International, Inc. Announces Fourth Quarter and Full Year 2018 Results

BEIJING,March 12,2019 -- 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 thefourth quarter and full yearendedDecember 31,2018.

Fourth Quarter2018 Highlights

Net revenues decreased by 0.3% year-over-year to RMB615.3 million,from RMB617.0 million in the same period in 2017.

Gross profit decreased by 26.1% year-over-year to RMB330.6 million,from RMB447.4 million in the same period in 2017.

Operating loss was RMB195.7 million,compared to an operating income ofRMB72.9millionin the same period in 2017.

Non-GAAP operatingloss,which excluded share-based compensation expenses,was RMB166.2 million,compared to a non-GAAP operating incomeof RMB99.6million in the same period in 2017.

Net loss wasRMB164.7million,compared to a netincome ofRMB74.6million in the same period in 2017.

Non-GAAP net loss,was RMB135.2million,compared to a non-GAAP net income ofRMB101.3million in the same period in 2017.

Loss per American Depositary Share ("ADS") was RMB3.07.Non-GAAP loss per ADS,was RMB2.52. Each ADS represents one Class A ordinary share.

The Company repurchased 591,145 Class A ordinary shares from the open market for an aggregate consideration of US$4.3 million in the fourth quarter of 2018.

Cash,cash equivalents and time deposits totaled RMB655.2 million as of December 31,2018,compared to RMB1,119.7 million as of December 31,2017. During the quarter,RMB29.4million was used for repurchasing of Class A ordinary shares. In addition,the Company had RMB14.7 million in restricted cash as of December 31,2018.

Deferred revenue totaled RMB664.1 million as of December 31,compared to RMB302.2 million as of December 31,2017,representing an increase of 119.9%. Kid education business has contributed RMB312.7 million to the increase in deferred revenue.

Total student enrollments in adult education business,defined as the total number of new students recruited and registered,in the fourth quarter of 2018increased by 6.3% year-over-year to 36,394.

Total course enrollments in adult education business,defined as the cumulative number of courses enrolled in by our students,in the fourthquarter of 2018decreased by 9.1% year-over-year to 31,955.

Total number of learning centers in adult education business was 184as of December 31,2018 andDecember 31,2017.

Total student enrollments in kid education programs,defined as the total number of students recruited and registered in our kid education programs,in the fourth quarter of 2018 increased by 365.7% year-over-year to 15,233.

Fiscal Year 2018 Highlights

Net revenues increased by 13.5% year-over-year to RMB2,239.3 million,from RMB1,973.8 million in the same period in 2017.

Gross profit decreased by 4% year-over-year to RMB1,319.8 million,374.6 million in the same period in 2017.

Operating loss was RMB599.1 million,compared to an operating income ofRMB169.2 millionin the same period in 2017.

Non-GAAP operatingloss,was RMB474.9 million,compared to a non-GAAP operating incomeof RMB246.6million in the same period in 2017.

Net loss wasRMB597.8 million,compared to a netincome ofRMB184.8million in the same period in 2017.

Non-GAAP net loss,was RMB473.5 million,compared to a non-GAAP net income ofRMB262.2million in the same period in 2017.

Loss per American Depositary Share ("ADS") was RMB10.85. Non-GAAP loss per ADS,was RMB8.58. Each ADS represents one Class A ordinary share.

The Company repurchased 3,768,495 Class A ordinary shares from the open market for an aggregate consideration of US$30.3million in 2018.

Total student enrollments in adult education business,during fiscal year 2018increased by 14.7% year-over-year to 147,692.

Total course enrollments in adult education business,in fiscal year2018increased by 3.3% year-over-year to124,073.

Total student enrollments in kid education programs,in fiscal year2018 increased by 363.1% year-over-year to44,368.

"We are pleased with the rapid growth from our kid education business during 2018. More than 100 learnings centers were added to our kid education business,including 21 from acquisition in early 2018. By the end of 2018,we have expanded to a total of 148 kid learnings centers,covering 53 cities. In this quarter,Tarena's kid education business delivered outstanding results in student enrollment,centers layout,course development,and revenue contribution. The student enrollment of kid education business continued its rapid growth of over 360% year over year increase to reach 15,233 students. Furthermore,kid education net revenues reached at RMB67.2 million this quarter,representing 11% of our total net revenues." Said Mr. Shaoyun Han,Tarena's Chairman and Chief Executive Officer.

"I am also very pleased to see the enrollment of adult education business during this quarter was 36,394,achieving a year over year growth of 6.3%. The State Council recently issued the Implementation Plan for the National Vocational Education Reform,reflecting government's emphasize on the teaching quality in vocational training area and the determination to promote cooperation between schools and enterprises. In 2018,we successfully explored a Featured Program business model targeted at university students through partnerships with universities. Such a new enrollment model will become one of important drivers of our adult business growth in the future. By closing about 40 under-performing adult centers in 2018,we effectively controlled the operating costs. Looking forward into 2019,we expect our adult business to achieve significant improvement in profitability along with a steady student enrollment,and kid business to continue its momentum to grow robustly and make greater contribution to the company." Mr. Han concluded.

Mr. Yuduo Yang,Tarena's Chief Financial Officer,said,"During this quarter,we continued to emphasize on resources distribution,as the Company closed or merged a total of 12 adult learning centers and opened only one center in the city of Baoding. By the end of this quarter,company operated 184 adult learning centers in 70 cities. By optimizing seating layout,our seat utilization rate improved to 71.6%,as compared to the utilization rate of 69.6% in the same period last year. In 2018,our bottom line was negatively impacted by a larger number of students enrolled through university partnership where revenue is recognized over longer period and by the fact that most of the kid education learning centers are still in the ramp up period. With great market potential and company's unique strength in IT training area,we believe that our kid education business and our university partnerships will provide a strong foundation for the Company to grow in the coming years."

Fourth Quarter 2018 Results

Net Revenues

Net revenues decreasedby 0.3% to RMB615.3 million in the fourth quarter of 2018,from RMB617.0 million in the same period in 2017. RMB67.2 million of net revenue was contributed by our kid education business in the quarter.

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 74%/26% and 84%/16%in the fourth quarter of 2018 and 2017,respectively.

Cost of Revenues

Cost of revenues increased by 67.9% to RMB284.8 million in the fourth quarter of 2018,from RMB169.6 million in the same period in 2017. 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 the increasing enrollment through university channel,as well as depreciation expenses and other supplier cost for the growing number of learning centers.

Gross Profit and Gross Margin

Gross profit decreased by 26.1% to RMB330.6 million in the fourth quarter of 2018,from RMB447.4 million in the same period in 2017. Gross margin was 53.7% in the fourth quarter of 2018,compared with 72.5% 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 programs.

Operating Expenses

Total operating expenses increased by 40.5% to RMB526.3 million in the fourth quarter of 2018,from RMB374.5 million in the same period in 2017. Total non-GAAP operating expenses,increased by 42.8% to RMB497.3 million in the fourth quarter of 2018,from RMB348.3 million in the same period in 2017. Total share-based compensation expenses allocated to the related operating expenses increased by 10.5% to RMB29.0 million in the fourth quarter of 2018,from RMB26.3 million in the same period in 2017.

Selling and marketing expenses increased by 32.7% to RMB291.5 million in the fourth quarter of 2018,from RMB219.7 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 54.9% to RMB189.7 million in the fourth quarter of 2018,from RMB122.5 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,as well as an increase in bad debt allowance which was based on the recent assessment of collectability.

Research and development expenses increased by 39.0% to RMB45.1 million in the fourth quarter of 2018,from RMB32.4 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 RMB195.7 million for the fourth quarter of 2018,compared to operating income of RMB72.9 million in the same period in 2017. Non-GAAP operating loss,compared to non-GAAP operating income of RMB99.6 million in the same period in 2017.

Interest Income

Interest income was RMB4.1 million in the fourth quarter of 2018,compared to RMB7.5million 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 Income

Other income was RMB2.3 million in the fourth quarter of 2018,compared to RMB8.7 million income in the same period in 2017. The income was mostly from bank product investment gain.

Foreign Exchange Gain (Loss)

Foreign exchange loss was RMB0.1 million in the fourth quarter of 2018,compared to RMB1.8million foreign exchange loss in the same period in 2017.

Income Tax Expense

The Company recorded an income tax benefit of RMB24.6 million in the fourth quarter of 2018,compared to RMB12.7million income tax expense in the same period in 2017. The tax benefit was due to thatthe Company recognized deferred tax assets for the losses incurred in this quarter.

Net Loss

As a result of the foregoing,net loss was RMB164.7 million in the fourth quarter of 2018,compared to net income of RMB74.6 million in the same period in 2017. Non-GAAP net loss,was RMB135.2 million,compared to a non-GAAP net income of RMB101.3 million in the same period in 2017.

Basic and Diluted Loss per ADS

Loss per ADS were RMB3.07 in the fourth quarter of 2018. Non-GAAP loss per ADS,were RMB2.52.

Cash Flow

Net cash outflow from operating activities for the fourth quarter of 2018 was RMB13.1 million. Capital expenditures for the fourth quarter of 2018 were RMB69.3 million. There was repurchase of 3,495 Class A ordinary shares from the open market for an aggregate consideration of US$30.3 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,as well as an aggregate payment of RMB72.2 million for equity investments during 2018.

Shares Issued and Outstanding

As of December 31,the Company had 45,873,037 Class A and 7,206,059 Class B ordinary shares outstanding. Each ADS represents one Class A ordinary share.

Fiscal Year 2018 Results

Net Revenues

Net revenues increased by 13.5% to RMB2,239.3 million in 2018,973.8 million in 2017. RMB175.6 million of net revenue was contributed by our kid education business in 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 in 2018 increased by 3.3% to 124,073,from 120,162 in 2017,which was mainly driven by the popularity of our course offerings.

Cost of Revenues

Cost of revenues increased by 53.5% to RMB919.5 million in 2018,from RMB599.2 million in 2017. 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,depreciation expenses and other supplier cost for the growing number of learning centers.

Gross Profit and Gross Margin

Gross profit decreased by 4% to RMB1,319.8 million in 2018,374.6million in 2017. Gross margin was 58.9% in 2018,compared with 69.6% 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 joint major programs.

Operating Expenses

Total operating expenses increased by 59.2% to RMB1,918.9 million in 2018,205.4 million in 2017. Total non-GAAP operating expenses,increased by 59.1% to RMB1,796.9 million in 2018,129.3 million in 2017. Total share-based compensation expenses allocated to the related operating expenses increased by 60.2% to RMB122.0 million in 2018,from RMB76.1 million in 2017.

Selling and marketing expenses increased by 55.5% to RMB1,108.6 million in 2018,from RMB713.1 million 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 63.9% to RMB643.1 million in 2018,from RMB392.3 million 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,increased by 68.3% to RMB558.5 million,from RMB331.8 million in 2017.

Research and development expenses increased by 67.2% to RMB167.3 million in 2018,from RMB100.0million 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 RMB599.1 million in 2018,compared to operating income of RMB169.2 million in 2017. Non-GAAP operating loss,compared to non-GAAP operating income of RMB246.6 million in 2017.

Interest Income

Interest income was RMB24.5 million in 2018,compared to RMB21.0 million 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 RMB1.1 million in 2018,compared to RMB26.7 million other income in 2017. There was an investment loss of RMB10.8 million recognized in the year of 2018 related to its available for sale investment and equity method long-term investment's performance.

Foreign Exchange Gain (Loss)

Foreign exchange gain was RMB5.0 million in 2018,compared to RMB6.3 million foreign exchange loss in 2017. The gain was mainly attributable to the depreciation of China's RMB against U.S. Dollar.

Income Tax Expense

The Company recorded an income tax expense of RMB27.0 million in 2018,compared to RMB25.8 million income tax expense 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 decrease was mainly due to a decrease in profits.

Net Loss

As a result of the foregoing,net loss was RMB597.8 million in 2018,compared to net income of RMB184.8 million in 2017. Non-GAAP net loss,compared to a non-GAAP net income of RMB262.2 million in 2017.

Basic and Diluted Loss per ADS

Basic and diluted loss per ADS were RMB10.85 in 2018. Non-GAAP basic and non-GAAP diluted loss per ADS,were RMB8.58.

Cash Flow

Net cash inflow from operating activities for 2018 was RMB114.6 million. Capital expenditures for 2018 were RMB268.5 million.

Business Outlook

Based on the Company's current estimates,total net revenues for the first quarter of 2019 are expected to be between RMB395.0 million and RMB415.0 million,representing a decrease of 2.9% to an increase of 2.1% on a year-over-year basis.

The Company also expects its total net revenues for the full year of 2019 to be between RMB2,430.0 million and RMB2,580.0 million,representing an increase of 8.5% 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 9:00PM U.S. Eastern Time on Monday,March 11,2019 (9:00AM Beijing Time on Tuesday,2019).

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: 6129907

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 March 19,2019. The dial-in details for the replay are:

United States: +1 855 452 5696

Hong Kong: 800 963 117

China: 800 870 0206

Taiwan: 00 801232482

Canada: +1 855 759 0869

United Kingdom: 0 808 234 0072

International: +61 2 8199 0299

Conference ID: 6129907

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 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 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 160,000 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,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,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,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 income (loss) and net income (loss),excluding the share-based compensation expenses,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,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

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands,except share data and per share data)

As of

December 31

December 31

2018

2017

RMB

RMB

ASSETS

Current assets:

Cash and cash equivalents

496,103

686,691

Time deposits

158,585

432,536

Restricted cash

14,700

-

Short-term investments

-

-

Accounts receivable,net of allowance for doubtful accounts

143,932

216,700

Amounts due from a related party

-

231

Inventory,net

1,774

-

Prepaid expenses and other current assets

195,098

156,360

Total current assets

1,010,192

1,492,518

Time deposits

517

505

Accounts receivable,net of allowance for doubtful accounts

5,610

14,582

Property and equipment,net

647,225

519,691

Intangible assets,907

-

Goodwill

63,247

-

Long-term investments

94,826

101,920

Other non-current assets

207,769

153,429

Total assets

2,031,293

2,282,645

LIABILITIES AND SHAREHOLDERS'EQUITY

Current liabilities:

Short-term bank loans

13,726

-

Accounts payable

18,541

11,351

Amounts due to related parties

413

-

Income taxes payable

138,605

125,971

Deferred revenue

664,078

302,163

Accrued expenses and other current liabilities

254,330

184,646

Total current liabilities

1,089,693

624,131

Other non-current liabilities

5,606

4,329

Total liabilities

1,095,299

628,460

Commitments and contingencies

—

—

Shareholders' equity:

Class A ordinary shares

331

327

Class B ordinary shares

74

74

Treasury stock

(457,169)

(255,103)

Additional paid-in capital

1,222,072

1,094,872

Accumulated other comprehensiveincome

50,477

54,122

Retained earnings

121,161

759,893

Total equity attributable to Tarena International,Inc.

936,946

1,654,185

Non-controlling interest

(952)

—

Total liabilities and shareholders' equity

2,645

TARENA INTERNATIONAL,INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands,except share data and per share data)

FortheThreeMonthsEnded

December31

FortheYearEnded

December 31

2018

2017

2018

2017

RMB

RMB

RMB

RMB

Net revenues

615,315

616,999

2,239,328

1,973,806

Cost of revenues(a)

(284,753)

(169,609)

(919,530)

(599,199)

Gross profit

330,562

447,390

1,319,798

1,374,607

Selling and marketing expenses(a)

(291,517)

(219,655)

(1,108,565)

(713,120)

General and administrative expenses(a)

(189,703)

(122,451)

(643,119)

(392,296)

Research and development expenses(a)

(45,067)

(32,427)

(167,254)

(100,032)

Operating (loss) income

(195,725)

72,857

(599,140)

169,159

Interest income

4,130

7,518

24,516

21,000

Other income (loss)

2,337

8,722

(1,144)

26,702

Foreign exchange (loss) gain

(68)

(1,822)

4,951

(6,284)

(Loss) income before income taxes

(189,326)

87,275

(570,817)

210,577

Income tax benefit (expense)

24,640

(12,684)

(26,962)

(25,770)

Net (loss) income

(164,686)

74,591

(597,779)

184,807

Less: Net loss attributable to non-controlling interests

(1,258)

-

(2,002)

-

Net (loss) income attributable to Class A and Class B ordinary shareholders

(163,428)

74,591

(595,777)

184,807

Net (loss) income per Class A and Class B ordinary share:

Basic

-3.07

1.33

-10.85

3.25

Diluted

-3.07

1.28

-10.85

3.10

Weighted average number of Class A and Class B ordinary shares outstanding:

Basic

53,209,594

56,276,273

54,929,508

56,849,332

Diluted

53,594

58,360,822

54,508

59,598,711

Net (loss) income

(164,807

Other comprehensive income (loss)

Foreign currency translation adjustment,net of nil income taxes

243

(1,521)

11,105

(13,832)

Unrealized gain on available for sale securities,net of RMB986(RMB986 for the twelve months in 2018) income taxes

1,267

2,758

(8,354)

26,246

Less: reclassification adjustment for gain on available for sale securities realized in net income,net of RMB986(RMB986 for the twelve months in 2018) income taxes

(2,677)

(2,758)

(6,396)

(16,496)

Comprehensive (loss) income

(165,853)

73,070

(601,424)

180,725

Notes:

(a) Includes share-based compensation expenses as follows:

FortheThreeMonthsEnded

December31

FortheYearEnded

December 31

2018

2017

2018

2017

RMB

RMB

RMB

RMB

Cost of revenues

513

474

2,265

1,285

Selling and marketing expenses

827

2,240

8,866

4,863

General and administrative expenses

18,085

19,770

84,645

60,491

Research and development expenses

10,103

4,252

28,477

10,776

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 December 31

For the Year Ended December 31

2018

2017

2018

2017

RMB

RMB

RMB

RMB

GAAP Cost of revenues

284,753

169,609

919,530

599,199

Share-based compensation expense in cost of revenues

513

474

2,285

Non-GAAP Cost of revenues

284,240

169,135

917,265

597,914

GAAP Selling and marketing expenses

291,517

219,655

1,565

713,120

Share-based compensation expense in selling and marketing expenses

827

2,863

Non-GAAP Selling and marketing expenses

290,690

217,415

1,099,699

708,257

GAAP General and administrative expenses

189,703

122,451

643,119

392,296

Share-based compensation expense in general and administrative expenses

18,491

Non-GAAP General and administrative expenses

171,618

102,681

558,474

331,805

GAAP Research and development expenses

45,067

32,427

167,254

100,032

Share-based compensation expense in research and development expenses

10,776

Non-GAAP Research and development expenses

34,964

28,175

138,777

89,256

Operating (loss) income

(195,159

Share-based compensation expenses

29,528

26,736

124,253

77,415

Non-GAAP Operating (loss) income

(166,197)

99,593

(474,887)

246,574

Net (loss) income

(164,807

Share-based compensation expenses

29,415

Non-GAAP Net (loss) income

(135,158)

101,327

(473,526)

262,222

Less: Net loss attributable to non-controlling interests

(1,002)

-

Non-GAAP net (loss) income attributable to Class A and Class B ordinary shareholders

(133,900)

101,327

(471,524)

262,222

Non-GAAP net (loss) income per Class A and Class B ordinary share(a)

Basic

(2.52)

1.80

(8.58)

4.61

Diluted

(2.52)

1.74

(8.58)

4.40

Weighted average number of ordinary shares outstanding used in calculating Non-GAAP net (loss) income per Class A and Class B ordinary share(a)

Basic

53,711

Notes:

(a) The Non-GAAP net (loss) income per share is computed using Non-GAAP net (loss) 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 and loss on foreign currency forward contract for the fourth quarter and the fiscal year ended December 31,2018 and 2017.

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