2024-12-24 00:05:58
Author: China Distance Education Holdings Ltd. / 2023-07-23 20:53 / Source: China Distance Education Holdings Ltd.

China Distance Education Holdings Limited Reports Financial Results for Second Quarter Fiscal Year 2019

BEIJING,May 16,2019 -- China Distance Education Holdings Limited (NYSE: DL) ("CDEL",or the "Company"),a leading provider of online education and value-added services for professionals and corporate clients in China,today announced unaudited financial results for the second quarter of fiscal year 2019 ended March 31,2019.

Second Quarter Fiscal 2019 Financial and Operational Highlights

Net revenue increased by 30.3% to $38.8 million from $29.7 million in the prior year period.

Total course enrollments were 642,000,an increase of 8.9% from the second quarter of fiscal 2018.

Cash receipts from online course registration were $57.0 million,a 29.8% increase from the second quarter of fiscal 2018.

Gross profit increased by 39.9% to $15.5 million from $11.1 million in the prior year period.

Non-GAAP[1] gross profit increased by 39.6% to $15.5 million from $11.1 million in the prior year period.

Gross margin was 39.9%,compared with 37.2% in the prior year period. Non-GAAP[1]gross margin was 39.9%,compared with 37.3% in the prior year period.

Operating loss was $4.1 million,compared with $2.9 million in the prior year period.

Non-GAAP[1] operating loss was $3.6 million,compared with $2.4 million in the prior year period.

Net loss was $3.9 million,compared with net loss of $3.3 million in the prior year period.

Non-GAAP[1] net loss was $3.4 million,compared with non-GAAP[1] net loss of $2.7 million in the prior year period.

Basic and diluted net loss per American Depositary Share ("ADS") were $0.116,compared with basic and diluted net loss per ADS of $0.098 for the second quarter of fiscal 2018. Each ADS represents four ordinary shares.

Basic and diluted non-GAAP[1] net loss per ADS were $0.101,compared with basic and diluted non-GAAP[1] net loss per ADS of $0.082 for the second quarter of fiscal 2018.

Cash flow from operations increased by 128.8% to $16.5 million from $7.2 million in the second quarter of fiscal 2018.

CDEL's controlled company Beijing Zhengbao Yucai Education Technology Company Limited completed its voluntary delisting from the New Third Board,the over-the-counter stock exchange in China,on April 22,2019.

On May 15,2019,CDEL decided to acquire an additional 9% equity interest in Beijing Ruida Chengtai Education Technology Co.,Ltd. ("Beijing Ruida"),a company engaged in exam preparation services for participants in China's Legal Professional Qualification Examination,for a total consideration of RMB38.3 million ($5.6 million),bringing the Company's total equity interest in Beijing Ruida from 51% in the second quarter of fiscal 2019 to 60%. The transaction is expected to close in the third quarter of fiscal 2019.

Mr. Zhengdong Zhu,Chairman and CEO of CDEL,said,"In the second quarter of fiscal 2019,revenue grew 30.3% year-over-year,exceeding the high end of our guidance range,primarily driven by the strong growth of our accounting vertical together with a significant increase in revenue from the sale of learning simulation software. Revenue from the legal vertical generated by Beijing Ruida also contributed to the growth. Total enrollment growth was 8.9% year-over-year in the second quarter,primarily due to the substantial enrollment growth in accounting and engineering & construction (E&C) continuing education courses. Cash receipts from online course registration grew 29.8% year-over-year in the second quarter,reflecting the continued popularity of our longer duration premium and elite classes."

Mr. Zhu concluded,"We are pleased with our second quarter revenue performance as well as the strong momentum of cash receipts growth during the first half of fiscal year 2019. We attribute our performance to our robust lifelong learning ecosystem,well-diversified business model,reputable brand,and a firm commitment to helping our students achieve superior learning outcomes. Recently,the Company decided to increase its equity interest in Beijing Ruida to 60%,from 51% in the second quarter fiscal 2019,based on Ruida's high-quality legal education courseware and considerable growth potential. This strategic investment decision reflects our dedication to further enhancing the Company's comprehensive lifelong learning ecosystem. Looking ahead,we will remain focused on delivering best-of-breed courseware and value-added services to our students at different stages of their careers,and strive to be the premier education partner for our students throughout their lifelong learning journey."

Mr. Mark Marostica,Co-Chief Financial Officer of CDEL,"Similar to the second quarters of fiscal 2018 and fiscal 2017,we recorded an operating loss in the second quarter of fiscal 2019,as it is typically the lowest revenue quarter of our fiscal year due to seasonality. In addition,the operating loss of the second quarter fiscal 2019 was more pronounced due to our acquisition of Beijing Ruida in July 2018,as Beijing Ruida has quarterly revenue seasonality similar to CDEL's core business,and the operating results of Beijing Ruida include $1.7 million amortization expenses of intangibles arising from the acquisition of Beijing Ruida."

Mr. Marostica,continued,"Despite the first half of fiscal year 2019 operating loss,we believe we will see year-over-year improvement in our operating margins in fiscal year 2019 as a result of our expectation of healthy revenue growth in the fiscal year,together with the implementation of certain expense control measures. As we head into our second half of fiscal year 2019,we are focused on continuing to balance growth with a strong emphasis on profitability and expense controls."

CEO Share Purchase Plan

As announced on June 25,2018 by the Company,Mr. Zhengdong Zhu,had informed the Company of his intention to use his personal funds to purchase the Company's shares for an amount up to a maximum of $25 million within one year. As of May 15,Mr. Zhu had bought a total of approximately $11.1 million of the Company's ordinary shares and ADSs pursuant to a 10b5-1 plan in accordance with Rule 10b-18 of the Securities Exchange Act of 1934,as amended.

Second Quarter Fiscal 2019 Financial Results

Net Revenue.Total net revenue increased by 30.3% to $38.8 million in the second quarter of fiscal 2019 from $29.7 million in the second quarter of fiscal 2018. Net revenue from online education services,books and reference materials,and other sources contributed 71.9%,14.0% and 14.1%,respectively,of total net revenues for the second quarter of fiscal 2019.

Online education services. Net revenue from online education services increased by 19.2% to $27.9 million in the second quarter of fiscal 2019 from $23.4 million in the second quarter of fiscal 2018,mainly due to revenue growth from the accounting vertical. Revenues from courses of Intermediate and Advance Level Accounting Professional Qualifications Exams ("APQE"),and CPA Qualification Exam grew strongly in the second quarter of fiscal 2019. This increase was partially offset by the decrease in revenue from Elementary APQE courses.

Books and reference materials. Net revenue from books and reference materials increased by 288.3% to $5.4 million in the second quarter of fiscal 2019 from $1.4 million in the second quarter of fiscal 2018,mainly due to book sale revenue from the Legal Professional Qualification Examination contributed by Beijing Ruida. Book sale revenue from our core accounting professional exams also contributed to the growth.

Others. Net revenue from other sources increased by 10.5% to $5.5 million in the second quarter of fiscal 2019 from $5.0 million in the second quarter of fiscal 2018,primarily due to a significant increase in revenue from the sale of learning simulation software. This increase was partially offset by the decrease in revenue from the "Tax School Program" which we disposed in the first quarter of fiscal 2019.

Cost of Sales. Cost of sales increased by 24.6% to $23.3 million in the second quarter of fiscal 2019 from $18.7 million in the second quarter of fiscal 2018. Non-GAAP[1] cost of sales increased by 24.8% to $23.3 million in the second quarter of fiscal 2019 from $18.7 million in the second quarter of fiscal 2018. The increase was mainly due to the increase in cost of purchase related to the sale of learning simulation software,cost of books and reference materials,and expenses associated with Beijing Ruida,including amortization expenses of intangibles arising from its acquisition of $1.7 million. This increase was partially offset by the decrease in salaries and related expenses.

Gross Profit and Gross Margin. Gross profit was $15.5 million in the second quarter of fiscal 2019,up 39.9% from $11.1 million in the prior year period. Non-GAAP[1] gross profit was $15.5 million,increasing by 39.6% from $11.1 million in the prior year period. Gross margin was 39.9% in the second quarter of fiscal 2019,compared with 37.2% in the second quarter of fiscal 2018. Non-GAAP[1]gross margin was 39.9% in the second quarter of fiscal 2019,compared with 37.3% in the second quarter of fiscal 2018.

Operating Expenses. Total operating expenses increased by 44.5% to $20.4 million in the second quarter of fiscal 2019,from $14.1 million in the prior year period. Non-GAAP[1] total operating expenses increased by 46.4% to $19.9 million in the second quarter of fiscal 2019,from $13.6 million in the prior year period.

Selling expenses. Selling expenses increased by 65.5% to $13.8 million in the second quarter of fiscal 2019 from $8.3 million in the prior year period. Non-GAAP[1] selling expenses increased by 65.9% to $13.8 million in the second quarter of fiscal 2019 from $8.3 million in the prior year period. The increase was primarily driven by the increase in salaries and related expenses,higher commissions to agents,higher advertising and promotional expenses,expenses associated with Beijing Ruida,and other miscellaneous selling expenses.

General and administrative expenses. General and administrative expenses increased by 14.1% to $6.6 million in the second quarter of fiscal 2019 from $5.8 million in the prior year period. Non-GAAP[1] general and administrative expenses increased by 15.5% to $6.1 million in the second quarter of fiscal 2019 from $5.3 million in the prior year period. The increase was mainly due to the increase in salaries and related expenses,and expenses associated with Beijing Ruida.

Income Tax Benefit. Income tax benefit decreased by 6.7% to $1.3 million in the second quarter of fiscal 2019 from $1.4 million in the prior year period,primarily due to a lower estimated effective tax rate applied in fiscal year 2019,compared with the prior year period.

Net Loss. As a result of the foregoing,net loss was $3.9 million in the second quarter of fiscal 2019,compared with net loss of $3.3 million in the prior year period. Non-GAAP[1] net loss was $3.4 million in the second quarter of fiscal 2019,compared with non-GAAP[1] net loss of $2.7 million in the prior year period.

Operating Cash Flow.Net operating cash inflow increased by 128.8% to $16.5 million in the second quarter of fiscal 2019 from $7.2 million in the prior year period. The operating cash inflow was mainly attributable to the increase in deferred revenue generated from our professional education services segment. The operating cash inflow was partially offset by the increase in accounts receivable,prepayments and other current assets,and the decrease in accrued expenses and other liabilities,income tax payable,deferred tax liabilities,and amount due to a related party.

Cash and Cash Equivalents,Restricted Cash and Short-term Investments. Cash and cash equivalents,restricted cash and short-term investments as of March 31,2019 increased by 17.7% to $130.1 million from $110.5 million as of December 31,2018,mainly due to the operating cash inflow generated in the second quarter of fiscal 2019,which was partially offset by the capital expenditure of $1.7 million.

First Six Months of Fiscal 2019 Financial Results

Net Revenue.Total net revenue increased by 24.0% to $81.4 million in the first six months of fiscal 2019 from $65.6 million in the first six months of fiscal 2018. Net revenue from online education services,and other sources contributed 65.0%,14.5% and 20.5%,of total net revenues for the first six months of fiscal 2019.

Online education services. Net revenue from online education services increased by 15.5% to $52.9 million in the first six months of fiscal 2019 from $45.8 million in the first six months of fiscal 2018.

Books and reference materials. Net revenue from books and reference materials increased by 213.3% to $11.8 million in the first six months of fiscal 2019 from $3.8 million in the first six months of fiscal 2018.

Others. Net revenue from other sources increased by 3.9% to $16.7 million in the first six months of fiscal 2019 from $16.0 million in the first six months of fiscal 2018.

Cost of Sales. Cost of sales increased by 31.9% to $48.9 million in the first six months of fiscal 2019 from $37.1 million in the first six months of fiscal 2018. Non-GAAP[1]cost of sales increased by 32.1% to $48.9 million in the first six months of fiscal 2019 from $37.0 million in the first six months of fiscal 2018.

Gross Profit and Gross Margin. Gross profit was $32.5 million in the first six months of fiscal 2019,up 13.8% from $28.6 million in the prior year period. Non-GAAP[1]gross profit was $32.5 million,increasing by 13.6% from $28.6 million in the prior year period. Gross margin was 39.9% in the first six months of fiscal 2019,compared with 43.5% in the first six months of fiscal 2018. Non-GAAP[1]gross margin was 40.0% in the first six months of fiscal 2019,compared with 43.6% in the first six months of fiscal 2018.

Operating Expenses. Total operating expenses increased by 45.9% to $41.2 million in the first six months of fiscal 2019 from $28.2 million in the prior year period. Non-GAAP[1]total operating expenses increased by 47.6% to $40.2 million in the first six months of fiscal 2019 from $27.2 million in the prior year period.

Selling expenses. Selling expenses increased by 62.0% to $28.3 million in the first six months of fiscal 2019 from $17.5 million in the prior year period. Non-GAAP[1] selling expenses increased by 62.3% to $28.3 million in the first six months of fiscal 2019 from $17.4 million in the prior year period.

General and administrative expenses. General and administrative expenses increased by 19.9% to $12.9 million in the first six months of fiscal 2019 from $10.8 million in the prior year period. Non-GAAP[1]general and administrative expenses increased by 21.5% to $11.9 million in the first six months of fiscal 2019 from $9.8 million in the prior year period.

Gain on Deconsolidation of a Subsidiary. Gain on deconsolidation of a subsidiary of $6.9 million related to the gain on disposal of 60% equity interest,and fair value change of remaining 40% equity interest,in Champion Tax Advisory or "Tax School Program."

Income Tax Benefit. Income tax benefit decreased by 49.6% to $0.4 million in the first six months of fiscal 2019 from $0.8 million in the prior year period.

Net Loss. As a result of the foregoing,net loss was $2.0 million in the first six months of fiscal 2019,compared with $3.2 million in the prior year period. Non-GAAP[1] net loss was $1.0 million in the first six months of fiscal 2019,compared with non-GAAP[1] net loss of $2.1 million in the prior year period.

Operating Cash Flow.Net operating cash inflow increased by 91.0% to $41.3 million in the first six months of fiscal 2019 from $21.6 million in the prior year period.

Outlook

For the third quarter of fiscal 2019,the Company expects to generate total net revenue in the range of $61.6 million to $64.0 million,representing year-over-year growth of approximately 30% to 35%.

For fiscal year 2019,the Company expects to generate total net revenues in the range of $210.0 million to $218.3 million,representing year-over-year growth of approximately 26% to 31%. The Company's prior fiscal 2019 full-year total net revenue guidance range was $208.3 million to $216.7 million.

The above guidance reflects the Company's current and preliminary view,which is subject to change.

Conference Call

Management will hold a conference call at 8:00 a.m. Eastern Time on Thursday,2019 (8:00 p.m. Beijing Time on Thursday,2019) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:

US Toll Free: +1-866-519-4004


International: +65-6713-5090


Mainland China: 400-620-8038


Hong Kong: +852-3018-6771


United Kingdom: +44-203-6214-779


Passcode: CDEL or DL

A telephone replay will be available two hours after the call until May 23,2019 by dialing:

US Toll Free: +1-855-452-5696


International: +61-2-8199-0299


Mainland China: 400-632-2162


Hong Kong: 800-963-117


United Kingdom: 0808-234-0072


Replay Passcode: 2589101

Additionally,a live and archived webcast of the conference call will be available athttp://ir.cdeledu.com.

About China Distance Education Holdings Limited

China Distance Education Holdings Limited is a leading provider of online education and value-added services for professionals and corporate clients in China. The courses offered by the Company through its websites are designed to help professionals seeking to obtain and maintain professional licenses and to enhance their job skills through our professional development courses in China in the areas of accounting,healthcare,engineering & construction,legal and other industries. The Company also offers online test preparation courses for self-taught learners pursuing higher education diplomas or degrees,practical accounting training courses for college students and working professionals,as well as third-party developed online courses. In addition,the Company provides business services to corporate clients,including but not limited to tax advisory and accounting outsourcing services. For further information,please visithttp://ir.cdeledu.com.

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," "may," "should," "potential," "continue," "expect," "predict," "anticipate," "future," "intend," "plan," "believe," "is/are likely to," "estimate" and similar statements. Among other things,the outlook for the third quarter and full fiscal year 2019 and quotations from management in this announcement,as well as the Company's strategic and operational plans (in particular,the anticipated benefits of strategic growth initiatives,including the promotion of the Company's lifelong learning ecosystem,as well as cost control and year-over-year improvement of operating margins) contain forward-looking statements. The Company may also make written or oral forward-looking statements in its periodic and annual reports to the SEC,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Statements that are not historical facts,including statements about the Company's beliefs and expectations,are forward-looking statements. 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 statement,including but not limited to the following: our goals and growth strategies; future prospects and market acceptance of our courses and other products and services; our future business development and results of operations; projected revenues,profits,earnings and other estimated financial information; projected enrollment numbers; our plans to expand and enhance our courses and other products and services; competition in the education and test preparation markets; and Chinese laws,regulations and policies,including those applicable to the Internet,Internet content providers,the education and telecommunications industries,mergers and acquisitions,taxation and foreign exchange.

Further information regarding these and other risks is included in the Company's annual report on Form 20-F and other documents filed or furnished with the SEC. All information provided in this press release is as of the date of this press release. The Company does not undertake any obligation to update any forward-looking statement,except as required under applicable law.

Statement Regarding Unaudited Financial Information

The unaudited financial information set forth in this press release is preliminary and subject to adjustments. Adjustments to the financial statements may be identified when audit work is performed for the year-end audit,which could result in significant differences from this preliminary unaudited financial information.

Use of Non-GAAP Financial Measures

To supplement the Company's consolidated financial results presented in accordance with U.S. generally accepted accounting principles,or GAAP,the Company uses the following measures defined as non-GAAP financial measures: non-GAAP net income,operating income,gross profit,cost of sales,selling expenses,general and administrative expenses,net income margin,operating margin,gross profit margin,and basic and diluted earnings per ADS and per share. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures,please see the table captioned "Reconciliations of non-GAAP measures to comparable GAAP measures" set forth at the end of this release.

The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding share-based compensation expenses. However,non-GAAP financial measures may not be indicative of the Company's operating performance from a cash perspective. The Company believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to the Company's historical performance and liquidity. The Company computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of excluding share-based compensation expenses from the above-mentioned line items and presenting these non-GAAP measures is that such items may continue to be for the foreseeable future a significant recurring expense in our business. Management compensates for this limitation by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying table at the end of this release provides more detail on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

Contacts:

China Distance Education Holdings Limited

Investor Relations Department

Tel: +86-10-8231-9999 ext. 1826

Email: IR@cdeledu.com

The Piacente Group | Investor Relations

Brandi Piacente

Tel: +1 212-481-2050

Email: DL@tpg-ir.com

[1] For more information about the non-GAAP financial measures contained in this press release,please see "Use of Non-GAAP Financial Measures" below.

(Financial Tables on Following Pages)

China Distance Education Holdings Limited

Unaudited Condensed Consolidated Balance Sheets

(in thousands of US Dollars,except number of shares and per share data)


September 30,2018


March 31,2019


Assets:


Current assets:


Cash and cash equivalents

30,826


62,708


Restricted cash

51,736


48,090


Short term investments

17,073


19,270


Accounts receivable,net of allowance for doubtful accounts of US$1,513 and


US$1,342 as of March 31,2019 and September 30,respectively

7,280


6,475


Inventories

2,782


4,339


Prepayment and other current assets

17,054


23,617


Deferred cost

1,125


1,455


Total current assets

127,876


165,954


Non-current assets:


Property,plant and equipment,net

27,972


40,368


Goodwill

79,516


81,287


Long term investments

33,837


37,537


Other intangible assets,net

39,500


36,519


Deposit for purchase of non-current assets

8,126


3,007


Deferred tax assets

5,711


4,912


Other non-current assets

6,387


10,979


Total non-current assets

201,049


214,609


Total assets

328,925


380,563


Liabilities and equity:


Current liabilities:


Bank borrowings

50,975


51,843


Accrued expenses and other liabilities (including accrued expenses and other


liabilities of the consolidated VIE without recourse to China Distance Education


Holdings Limited of US$30,378 and US$34,993 as of March 31,2019 and


September 30,respectively)

42,141


36,152


Amount due to a related party

-


798


Income tax payable (including income tax payable of the consolidated VIE without


recourse to China Distance Education Holdings Limited of US$5,425 and


US$$4,847 as of March 31,respectively)

9,293


6,069


Deferred revenue - current portion (including deferred revenue of the consolidated


VIE without recourse to China Distance Education Holdings Limited of US$102,131


and US$77,299 as of March 31,respectively)

78,194


103,022


Refundable fees - current portion (including refundable fees of the consolidated VIE


without recourse to China Distance Education Holdings Limited of US$1,036 and


US$13,837 as of March 31,respectively)

13,837


1,036


Total current liabilities

194,440


198,920


Non-current liabilities:


Deferred revenue - non-current portion (including deferred revenue of the


consolidated VIE without recourse to China Distance Education Holdings Limited


of US$34,624 and nil as of March 31,respectively)

-


34,624


Refundable fees - non-current portion (including refundable fees of the consolidated


VIE without recourse to China Distance Education Holdings Limited of US$2,249


and nil as of March 31,respectively)

-


2,249


Deferred tax liabilities

12,693


12,062


Long-term bank borrowing

12,027


6,348


Total non-current liabilities

24,720


55,283


Total liabilities

219,160


254,203


Equity:


Ordinary shares (par value of US$0.0001 per share; 500,000 shares authorized;


134,230,689 and 133,275,521 shares issued and outstanding at March 31,respectively)

13


13


Additional paid-in capital

21,557


22,591


Accumulated other comprehensive loss

(7,013)


(619)


Retained Earnings

29,717


37,452


Total China Distance Education Holdings Limited shareholder's equity

44,274


59,437


Noncontrolling interest

65,491


66,923


Total equity

109,765


126,360


Total liabilities and equity

328,563


China Distance Education Holdings Limited


Unaudited Condensed Consolidated Statements Of Operations


(in thousands of US dollars,except number of shares,per share and per ADS data)


Three Months Ended March 31,


2018


2019


Sales,net of business tax,value-added tax and related surcharges:


Online education services

23,396


27,878


Books and reference materials

1,391


5,401


Others

4,961


5,482


- Sale of learning simulation software

739


1,962


- Business start-up training services

642


692


- Others

3,580


2,828


Total net revenues

29,748


38,761


Cost of sales


Cost of services and others

(17,550)


(19,453)


Cost of tangible goods sold

(1,130)


(3,826)


Total cost of sales

(18,680)


(23,279)


Gross profit

11,068


15,482


Operating expenses


Selling expenses

(8,341)


(13,801)


General and administrative expenses

(5,766)


(6,581)


Total operating expenses

(14,107)


(20,382)


Other operating income

128


842


Operating loss

(2,911)


(4,058)


Interest income

667


524


Interest expense

(869)


(796)


Exchange loss

(3,109)


(2,177)


Loss before income taxes

(6,222)


(6,507)


Income tax benefit

1,431


1,335


Loss from equity method investment

(16)


(642)


Net loss

(4,807)


(5,814)


Net loss attributable to noncontrolling interest

1,542


1,939


Net loss attributable to China Distance Education Holdings Limited

(3,265)


(3,875)


Net loss per share:


Net loss attributable to China Distance Education Holdings Limitedshareholders


Basic

(0.025)


(0.029)


Diluted

(0.025)


(0.029)


Net loss per ADS:


Net loss attributable to China Distance Education Holdings Limitedshareholders


Basic

(0.098)


(0.116)


Diluted

(0.098)


(0.116)


Weighted average shares used in calculating net loss per share:


Basic

132,411,344


133,009,706


Diluted

132,706


China Distance Education Holdings Limited


Unaudited Condensed Consolidated Statements Of Operations


(in thousands of US dollars,per share and per ADS data)


Six Months Ended March 31,value-added tax and related surcharges:


Online education services

45,829


52,921


Books and reference materials

3,768


11,806


Others

16,029


16,657


-Sale of learning simulation software

6,899


6,965


-Business start-up training services

2,048


1,372


-Others

7,082


8,320


Total net revenues

65,626


81,384


Cost of sales


Cost of services and others

(33,888)


(41,626)


Cost of tangible goods sold

(3,172)


(7,262)


Total cost of sales

(37,060)


(48,888)


Gross profit

28,566


32,496


Operating expenses


Selling expenses

(17,463)


(28,285)


General and administrative expenses

(10,762)


(12,907)


Total operating expenses

(28,225)


(41,192)


Other operating income

1,857


2,465


Operating income/(loss)

2,198


(6,231)


Interest income

1,123


1,188


Interest expense

(1,616)


(1,590)


Gain from deconsolidation of a subsidiary

-


6,869


Exchange loss

(5,008)


(2,101)


Loss before income taxes

(3,303)


(1,865)


Income tax benefit

760


383


Loss from equity method investment

(45)


(363)


Net loss

(2,588)


(1,845)


Net income attributable to noncontrolling interest

(583)


(117)


Net loss attributable to China Distance Education Holdings Limited

(3,171)


(1,962)


Net loss per share:


Net loss attributable to China Distance Education Holdings Limitedshareholders


Basic

(0.024)


(0.015)


Diluted

(0.024)


(0.015)


Net loss per ADS:


Net loss attributable to China Distance Education Holdings Limitedshareholders


Basic

(0.096)


(0.059)


Diluted

(0.096)


(0.059)


Weighted average shares used in calculating net loss per share:


Basic

132,035,108


132,901,311


Diluted

132,311


China Distance Education Holdings Limited

Reconciliations of non-GAAP measures to comparable GAAP measures

(In thousands of US Dollars,per share and per ADS data)


ThreeMonths Ended March 31,


2018


2019


(Unaudited)


(Unaudited)


Cost of sales


18,680


23,279

Share-based compensation expense in cost of sales


26


-

Non-GAAP cost of sales


18,654


23,279


Selling expenses


8,341


13,801

Share-based compensation expense in selling expenses


20


-

Non-GAAP selling expenses


8,321


13,801


General and administrative expenses


5,766


6,581

Share-based compensation expense in general and administrative expenses


508


506

Non-GAAP general and administrative expenses


5,258


6,075


Gross profit


11,482

Share-based compensation expenses


26


-

Non-GAAP gross profit


11,094


15,482


Gross profit margin


37.2%


39.9%

Non-GAAP gross profit margin


37.3%


39.9%


Operating loss


(2,058)

Share-based compensation expenses


554


506

Non-GAAP operating loss


(2,357)


(3,552)


Operating margin


(9.8%)


(10.5%)

Non-GAAP operating margin


(7.9%)


(9.2%)


Net loss


(3,875)

Share-based compensation expense


554


506

Non-GAAP net loss


(2,711)


(3,369)


Net loss margin


(11.0%)


(10.0%)

Non-GAAP net loss margin


(9.1%)


(8.7%)


Net loss per share -- basic


(0.025)


(0.029)

Net loss per share -- diluted


(0.025)


(0.029)

Non-GAAP net loss per share -- basic


(0.020)


(0.025)

Non-GAAP net loss per share -- diluted


(0.020)


(0.025)


Net loss per ADS attributable to China Distance Education Holdings Limited shareholders -- basic (note 1)


(0.098)


(0.116)

Net loss per ADS attributable to China Distance Education Holdings Limited shareholders -- diluted (note 1)


(0.098)


(0.116)

Non-GAAP net loss per ADS attributable to China Distance Education Holdings Limited shareholders -- basic (note 1)


(0.082)


(0.101)

Non-GAAP net loss per ADS attributable to China Distance Education Holdings Limited shareholders -- diluted (note 1)


(0.082)


(0.101)


Weighted average shares used in calculating basic net loss per share


132,706

Weighted average shares used in calculating diluted net loss per share


132,706

Weighted average shares used in calculating basic non-GAAP net loss per share


132,706

Weighted average shares used in calculating diluted non-GAAP net loss per share


132,706


China Distance Education Holdings Limited

Reconciliations of non-GAAP measures to comparable GAAP measures

(In thousands of US Dollars,


2018


2019


(Unaudited)


(Unaudited)


Cost of sales


37,060


48,888

Share-based compensation expense in cost of sales


71


23

Non-GAAP cost of sales


36,989


48,865


Selling expenses


17,463


28,285

Share-based compensation expense in selling expenses


40


10

Non-GAAP selling expenses


17,423


28,275


General and administrative expenses


10,762


12,907

Share-based compensation expense in general and administrative expenses


945


979

Non-GAAP general and administrative expenses


9,817


11,928


Gross profit


28,496

Share-based compensation expenses


71


23

Non-GAAP gross profit


28,637


32,519


Gross profit margin


43.5%


39.9%

Non-GAAP gross profit margin


43.6%


40.0%


Operating income/(loss)


2,231)

Share-based compensation expenses


1,056


1,012

Non-GAAP operating income/(loss)


3,254


(5,219)


Operating margin


3.3%


(7.7%)

Non-GAAP operating margin


5.0%


(6.4%)


Net loss


(3,962)

Share-based compensation expense


1,012

Non-GAAP net loss


(2,115)


(950)


Net loss margin


(4.8%)


(2.4%)

Non-GAAP net loss margin


(3.2%)


(1.2%)


Net loss per share -- basic


(0.024)


(0.015)

Net loss per share -- diluted


(0.024)


(0.015)

Non-GAAP net loss per share -- basic


(0.016)


(0.007)

Non-GAAP net loss per share -- diluted


(0.016)


(0.007)


Net loss per ADS attributable to China Distance Education Holdings Limited shareholders -- basic (note 1)


(0.096)


(0.059)

Net loss per ADS attributable to China Distance Education Holdings Limited shareholders -- diluted (note 1)


(0.096)


(0.059)

Non-GAAP net loss per ADS attributable to China Distance Education Holdings Limited shareholders -- basic (note 1)


(0.064)


(0.029)

Non-GAAP net loss per ADS attributable to China Distance Education Holdings Limited shareholders -- diluted (note 1)


(0.064)


(0.029)


Weighted average shares used in calculating basic net loss per share


132,311

Weighted average shares used in calculating diluted net loss per share


132,311

Weighted average shares used in calculating basic non-GAAP net loss per share


132,311

Weighted average shares used in calculating diluted non-GAAP net loss per share


132,311


Note 1: Each ADS represents four ordinary shares.

China Distance Education Holdings Limited Reports Financial Results for Second Quarter Fiscal Year 2019

View original content:/news-releases/china-distance-education-holdings-limited-reports-financial-results-for-second-quarter-fiscal-year-2019-300851097.html

Tags: Computer Software Computer/Electronics Education Higher Education Multimedia/Online/Internet Web Site

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