RISE Education Announces Second Quarter 2020 Unaudited Financial Results

BEIJING,Aug. 14,2020 -- RISE Education Cayman Ltd ("RISE"or the "Company") (NASDAQ: REDU),a leading junior English Language Training ("ELT") provider in China,today announced its unaudited financial results for the second quarter ended June 30,2020.

Impact of COVID-19

The outbreak of COVID-19in lateJanuary 2020 had a significant and material adverse impact on the Company's operations during the first half of 2020. In accordance with government regulations to contain the outbreak,RISE's learning centers were temporarily closed starting January 19,2020 until June 2020. This adversely impacted the Company's ability to recognize revenue and collect tuition fees not only from renewed students due to the deferred academic schedule,but also from new students who are acquired through its physical network of learning centers. In response to this challenging environment,the Company proactively implemented measures during the first half of the yearto stabilize its business through targeted cost controls and adjusted capital expenditure and liquidity plans to preserve cash. At the same time,the Company also upgraded and transformed Rise+ into a nation-wide open and interactive technology platform for learning,teaching and training. The Company successfully delivered its first online small group class through Rise+ platform in March 2020,which has demonstratedthe Company's digital capabilities and built a solid infrastructure for the transformation of its business into an Online Merge Offline ("OMO") model.

Second Quarter of 2020 Financial and Operational Summary

Total revenues were RMB165.0 million (US$23.4 million) in the second quarter of 2020,compared with RMB109.0 million for the preceding quarter and RMB367.1 million for the second quarter of 2019.

Net loss attributable to RISE was RMB58.0 million (US$8.2 million) in the second quarter of 2020,compared with net loss of RMB103.8 million for the preceding quarter and net income of RMB21.2 million for the second quarter of 2019.

Non-GAAP net loss attributable to RISE was RMB51.6 million (US$7.3 million) in the second quarter of 2020,compared with non-GAAP net loss of RMB99.5 million for the preceding quarter and non-GAAP net income of RMB54.8 million for the second quarter of 2019.

Adjusted EBITDA[1] loss was RMB44.5 million (US$6.3 million) in the second quarter of 2020,compared with adjusted EBITDA loss of RMB108.0 million for the preceding quarter and adjusted EBITDA income of RMB89.0 million for the second quarter of 2019.

Students in class[2] for Rise regular courses (including Rise Start and Rise On programs) were 50,572 as of June 30,2020,a decrease of 2013 from 52,585 as of March 31,2020 and an increase of 35 from 50,537 as of June 30,2019.

New students enrolled[3] for Rise regular courses in the second quarter of 2020 were 3,749,compared with 1,507 for the preceding quarter and 6,133 for the second quarter of 2019. New students enrolled for other Rise courses,which were taught online (including Rise Up,Can-Talk,other Rise online courses and courses provided by The Edge learning centers) were 1,185 in the second quarter of 2020,compared with 669 for the preceding quarter and 2,996 for the second quarter of 2019. The online small group class,which enrolled 31,882 students in the preceding quarter,was a temporary product offered to students only in March. In the second quarter,we offered an upgraded version,the dual-teacher online small group class.

The total number of the Company's learning centers was 485,consisting of 88 self-owned (including 2 operated by The Edge) and 397 franchised learning centers.

[1] Adjusted EBITDA excludes share-based compensation expenses from EBITDA.

[2] Students in class refers to the students who were taking our ongoing courses as of a given date.

[3] New students enrolled refers to the newly acquired students who enrolled in our courses during a given period of time.

Three Months Ended

(in thousands RMB,except for percentage and per

ADS data)

June 30,2019

March 31,2020

June 30,2020

Pct.Change YoY

Pct.Change QoQ

Revenues

367,057

108,989

164,990

-55.1%

51.4%

Operating income/(loss)

43,262

(131,397)

(73,887)

-270.8%

N/A

Non-GAAP operating income/(loss)

76,798

(127,050)

(67,496)

-187.9%

N/A

Net income/(loss) attributable to RISE

21,236

(103,837)

(58,035)

-373.3%

N/A

Non-GAAP net income/(loss) attributable to RISE

54,772

(99,490)

(51,644)

-194.3%

N/A

Net income/(loss) per ADS attributable to RISE – basic

0.37

(1.84)

(1.03)

-378.4%

N/A

Net income/(loss) per ADS attributable to RISE – diluted

0.37

(1.84)

(1.03)

-378.4%

N/A

Non-GAAP net income/(loss) per ADS attributable to

RISE – basic

0.97

(1.76)

(0.92)

-194.8%

N/A

Non-GAAP net income/(loss) per ADS attributable to

RISE – diluted

0.95

(1.76)

(0.92)

-196.8%

N/A

Adjusted EBITDA

88,953

(108,006)

(44,487)

-150.0%

N/A

Six Months EndedJune 30

(in thousands RMB,except for percentage and per ADS data)

2019

2020

Pct.Change

Revenues

702,083

273,979

-61.0%

Operating income/(loss)

96,302

(205,285)

-313.2%

Non-GAAP operating income/(loss)

137,462

(194,549)

-241.5%

Net income/(loss) attributable to RISE

57,605

(161,872)

-381.0%

Non-GAAP net income/(loss) attributable to RISE

98,765

(151,136)

-253.0%

Net income/(loss) per ADS attributable to RISE – basic

1.01

(2.87)

-384.2%

Net income/(loss) per ADS attributable to RISE – diluted

0.99

(2.87)

-389.9%

Non-GAAP net income/(loss) per ADS attributable to RISE – basic

1.73

(2.68)

-254.9%

Non-GAAP net income/(loss) per ADS attributable to RISE – diluted

1.69

(2.68)

-258.6%

Adjusted EBITDA

169,450

(152,494)

-190.0%

Ms. Lihong Wang,Chairwoman and Chief Executive Officer of RISE,commented,"After we weathered a challenging environment in the first quarter,we are very pleased to report significantly improved results today. Our business recovery in the second quarter was strong and encouraging. The migration of our offline courses online in the quarter was a huge success. Our ability to swiftly transition our regular courses online and our ability to manage the concurrent operations of online and offline models underpinned our performance,and it has further proved that our platform is robust,reliable,and stable. The high attendance rate ofour online courses hasdemonstrated the strength of our brand and customer loyalty. Our new student enrollments have shown a strong V-shaped recovery in the second quarter,thanks to the newly-developed channels and new marketing tools we adopted during the quarter,as well as innovative incentive schemes we provided to our sales team and our customers. We have seen the strong upward enrollment momentum continuing into the third quarter. We are well on track to implement our OMO strategy and I firmly believe that we are well-positioned to capture the tremendous opportunities ahead and emerge as a leading OMO educator in China."

Ms. Jiandong Lu,Chief Financial Officer of RISE,added,"We experienced a very robust and encouraging recovery of our business in the second quarter,and we are very pleased to see that strong momentum carried into the beginning of the second half of 2020. The cost control initiatives we implemented during the first quarter continued to play out in the secondquarter. We are in the process of optimizing class scheduling and class size to further increase classroom capacity and utilization in the nearterm. These positive developments,coupled with the planned opening of 3 new learning centers in the second half of this year,giveus confidencein our ability to deliver further growth and create greater value for our shareholders in the months ahead."

Financial Results for the Second Quarter of 2020

Revenues

Total revenues for the second quarter of 2020 increased by RMB56.0 million,or 51.4%,to RMB165.0million(US$23.4 million) from RMB109.0 million forthe preceding quarter and decreased by RMB202.1million,or 55.1%,from RMB367.1million for the same period of the prior year.

Revenues from educational programs for the second quarter of 2020 increased by 48.5% quarter-over-quarter and decreased by 53.7% year-over-year to RMB151.5 million (US$21.4 million). The quarter-over-quarter increase in revenues from educational programs was primarily due to the migration of most of our offline regular course students online to resume their study since late April 2020. In addition,the online small group class course which was launched early March continued contributing revenues in the second quarter. With the COVID-19 situation alleviated,all of the Company's self-owned learning centers located in Shanghai,Guangzhou,Shenzhen and Wuxi have been gradually reopened since June 2020. However,a majority of the revenues from our educational programs in the quarter was from our online operation. The year-over-year decrease in revenues from educational programs was primarily due to the temporary closure of self-owned learning centers from late January 2020 since the outbreak of COVID-19.

Franchise revenues for the second quarter of 2020 increased by 111.7% quarter-over-quarter and decreased by 67.5 % year-over year to RMB12.9 million (US$1.8 million). The quarter-over-quarter increase in franchise revenues was primarily due to a growth in recurring franchise revenues as a result of the gradually reopening of franchised learning centers. The year-over-year decrease in franchise revenues was primarily due to a decline in recurring franchise revenues as a result of the outbreak of COVID-19.

Other revenues for the second quarter of 2020 decreased by 33.8% quarter-over-quarter and increased by 54.0% year-over year to RMB0.6 million (US$0.1 million).

Cost of Revenues

Cost of revenues for the second quarter of 2020decreasedby RMB1.0million,or 0.7%,to RMB141.6million(US$20.0 million) from RMB142.6million forthe preceding quarter and decreased by RMB18.8million,or 11.7%,from RMB160.4 million for the same period of the prior year. Thequarter-over-quarter decrease was primarily due to the Company's continuous efforts in controlling rental expenses and personnel costs. The year-over-year decrease was primarily due to the declined teachers' compensations as a result of the reduced teaching hours and social insurance exemption,as well as rental concession. In addition,the year-over-year decrease was also caused by a decrease in direct costs associated with the Company's study tour services and costsof learning materials.Non-GAAP cost of revenues[4] for the second quarter of 2020decreased by 0.5% quarter-over-quarter and decreased by 11.3% year-over-year to RMB137.6million(US$19.5 million).

[4] Non-GAAP cost of revenues exclude relevant share-based compensation("SBC")expenses and amortization of certain intangible assets,including teaching course license,acquired as part of the junior ELT business by the Company from certain third-party in 2013 (the "2013 acquisition") from cost of revenues. Non-GAAP operating income adds back SBC expenses and amortization of certain intangible assets,including trademark,acquired as part of the 2013 acquisition. Each of non-GAAP operating expenses,non-GAAP selling and marketing expenses andnon-GAAP general and administrative expenses excludes relevant SBCexpenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. For details on the calculation of each of theseitemsand the reconciliation of each to the most directly comparable GAAP financial measure,see "About Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results."

Gross Profit/(Loss)

As a result of the foregoing,the Company recorded gross profit of RMB23.4million(US$3.3 million)for the second quarter of 2020,compared togross loss of RMB33.6millionfor the preceding quarter. The Company's gross profit for the second quarter of 2020 decreased by RMB183.2 million year-over-year fromRMB206.6million for the same period of the prior year.

Operating Expenses

Total operating expenses for the second quarter of 2020decreased by RMB0.5 million,or 0.5%,to RMB97.3million(US$13.8 million) from RMB97.8million for the preceding quarter and decreased by RMB66.1million,or 40.4%,from RMB163.4million for the same period of the prior year. Non-GAAPoperating expensesfor the second quarter of 2020were RMB94.9million(US$13.4 million).

Selling and marketing expenses decreased by 1.7% quarter-over-quarter and decreased by 40.0% year-over-year to RMB42.5 million (US$6.0 million) for the second quarter of 2020. The quarter-over-quarter decrease was primarily associated with the Company's effort in personnel optimization,which was partially offset by increased advertisement expenses. The year-over-year decrease was primarily due to the Company's well-managed investment in online and offline marketing activities and personnel optimization efforts. Non-GAAP selling and marketing expenses for the second quarter of 2020 decreased by 2.3% quarter-over-quarter and decreased by 40.9% year-over-year to RMB41.2 million (US$5.8 million).

General and administrative expenses increased slightly by 0.4% quarter-over-quarter and decreased by 40.8% year-over-year to RMB54.8 million (US$7.8 million) for the second quarter of 2020. The year-over-year decrease was primarily due to a decrease in share-based compensation expenses,and the Company's continuous efforts in controlling administrative expenses and in personnel optimization. Non-GAAP general and administrative expenses for the second quarter of 2020 decreased by 3.5% quarter-over-quarter and decreased by 17.9% year-over-year to RMB53.6 million (US$7.6 million).

Operating Income/(Loss)

Operating loss for the second quarter of 2020narrowed by RMB57.5 million to RMB73.9million(US$10.5 million) from operating loss of RMB131.4million for the preceding quarter,compared withoperating income of RMB43.3million forthe same period of the prior year. Non-GAAP operating lossfor the second quarter of 2020was RMB67.5 million (US$9.6 million),compared withnon-GAAP operating loss of RMB127.1 million for the preceding quarter and non-GAAP operating income of RMB76.8million forthe same period of the prior year.

Interest Expense

Interest expense for the second quarter of 2020was RMB5.9million(US$0.8 million),compared withRMB6.8millionfor the preceding quarter and RMB8.9million forthe same period of the prior year. The quarter-over-quarter decrease was attributable todecreased interest rate,while the year-over-year decrease was due to decreasesin both the outstanding balance of loans and theinterest rate.

Other Income

Other income for the second quarter of 2020was RMB2.2 million (US$0.3 million),compared withRMB3.0 million forthe preceding quarter and RMB0.6 million for the same period of the prior year.

Income Tax Expense/(Benefit)

Income tax benefit for the second quarter of 2020was RMB11.0 million (US$1.6 million),compared with income tax benefit of RMB19.7 million forthe preceding quarter and income tax expense of RMB19.2 million for the same period of the prior year.

Net Loss Attributable to RISE

Net loss attributable to RISE for the second quarter of 2020was RMB58.0million(US$8.2 million),which was narrowed by RMB45.8 million compared with the preceding quarter,and compared with net income attributable to RISE of RMB21.2 million for the same period of the prior year.

Non-GAAP net lossattributable to RISEfor the second quarter of 2020was RMB51.6 million (US$7.3 million),compared with RMB99.5 million for the preceding quarter and Non GAAP net income attributable to RISE ofRMB54.8 million for the same period of the prior year.

EBITDA represents net income/(loss) before interests,taxes,depreciation,and amortization. EBITDA loss for the second quarter of 2020was RMB46.4 million (US$6.6 million),compared with EBITDA lossof 108.0 million for the preceding quarter and EBITDA income of RMB59.7million forthe same period of the prior year.

Adjusted EBITDA loss for the second quarter of 2020was RMB44.5 million (US$6.3 million),compared with adjusted EBITDA lossof 108.0 million for the preceding quarter and EBITDA income of RMB89.0million forthe same period of the prior year.

Basic and Diluted Earningsper ADS

Basic and diluted net loss attributable to RISE per ADS was RMB1.03 (US$0.15) for the second quarter of 2020.

Basic and diluted non-GAAP net loss attributable to RISE per ADS was RMB0.92 (US$0.13) for the second quarter of 2020.

Cash Flow

Net cash outflow from operating activities for the second quarter of 2020was RMB118.1 million (US$16.7million),compared with RMB82.4 million for the preceding quarter and RMB129.2 million for the same period of the prior year. The quarter-over-quarter increase in cash outflow wasmainly due to reduced cash collection from regular courses as a result of the temporary closure of self-owned and franchised learning centers for almost the entirequarter.

Balance Sheet

As of June 30,the Company had combined cash and cash equivalentsand restricted cashof RMB753.5million (US$106.7 million),as compared with RMB1,022.8 million as of December 31,2019.

Currentand non-currentdeferred revenue and customer advances wereRMB677.8million (US$95.9million) as of June 30,representing a decrease of 10.3% from RMB756.0million as of December 31,2019. The decrease was primarily becausethe revenue recognition for our courses and services is larger than the cash collection for the courses. Deferred revenue and customer advances mainly consisted of upfront tuition payments from students and initial franchise fees from the Company's franchisees.

Financial Results for the Six Months Ended June 30,2020

Revenues

Total revenues for the first half of 2020 decreased by RMB428.1 million,or 61.0% to RMB274.0 million (US$38.8 million) from RMB702.1 million for the same period of the prior year.

Revenues from educational programs for the first half of 2020 decreased by 58.8% to RMB253.5 million (US$35.9 million). The decrease in revenues from educational programs was primarily due to the temporary suspension of our offline business since late January of 2020 due to the outbreak of COVID-19,which was partially offset by the revenues generated by our online services by migrating offline students online and launching new online products.

Franchise revenues for the first half of 2020 decreased by 75.6% to RMB19.0 million (US$2.7 million),primarily due to a decline in recurring franchise revenue as a result of the temporary closure of franchised learning centers.

Other revenues for the first half of 2020 decreased by 82.8% to RMB1.5 million (US$0.2 million).

Cost of Revenues

Cost of revenues for the first half of 2020decreasedby RMB30.7million,or 9.7%,to RMB284.2 million (US$40.2million) from RMB314.8 million for the same period of the prior year. The decrease was primarily due to a decrease in direct costs associated with the Company's study tour services,cost of learning materials,teachers' compensations as a result of reduced teaching hours,reduced teachers' headcount,and social insurance exemption andrental concession. Non-GAAP cost of revenues for the first half of 2020decreased by 9.7% to RMB275.9 million (US$39.1million).

Gross Profit/(Loss)

Gross loss for the first half of 2020wasRMB10.2million (US$1.4million),compared with gross profit of RMB387.3 million for the same period of the prior year.

Operating Expenses

Total operating expenses for the first half of 2020decreased by RMB95.9million,or 32.9%,to RMB195.1million (US$27.6million) from RMB291.0million for the same period of the prior year . Non-GAAPoperating expenses for the first half of 2020were RMB192.6million (US$27.3million).

Selling and marketing expenses decreased by 37.2% year-over-year to RMB85.7 million (US$12.1 million) for the first half of 2020. The decrease was primarily due to the Company's curtailed and well-management investment in online and offline marketing activities and reduced personnel costs resulting from personnel optimization,lower performance-based compensation due to the lower new student enrollments reflecting the impact of the COVID-19 pandemic. Non-GAAP selling and marketing expenses during the first half of 2020 decreased by 38.0% year-over-year to RMB83.5 million (US$11.8 million).

General and administrative expenses decreased by 29.2% year-over-year to RMB109.4 million (US$15.5 million) for the first half of 2020. The decrease was mainly attributable to a decrease in share-based compensation expenses and the Company's efforts on personnel optimization and rigorous control of administrative expenses. Non-GAAP general and administrative expenses for the first half of 2020 decreased by 12.3% year-over-year to RMB109.1 million (US$15.4 million).

Operating Income/(Loss)

Operating loss for the first half of 2020was RMB205.3million (US$29.1 million),compared with operating income of RMB96.3million for the same period of the prior year.Non-GAAP operating loss for the first half of 2020was RMB194.5 million (US$27.5 million),compared with non-GAAP operating income ofRMB137.5 million for the same period of the prior year.

Interest Expense

Interest expense for the first half of 2020 was RMB12.7 million (US$1.8 million),compared withRMB17.8 million for the same period of the prior year due to the reduced outstanding balanceand lower interest rates.

Other Income

Other income for the first half of 2020 was RMB5.2 million (US$0.7million),compared withRMB8.5 million other incomefor the same period of the prior year.

Income Tax Expense/(Benefit)

Income tax benefit for the first half of 2020 was RMB30.8 million (US$4.4 million),compared with income tax expense of RMB37.9 million for the same period of the prior year.

Net Loss Attributable to RISE

Net loss attributable to RISE for the first half of 2020was RMB161.9million (US$22.9 million).

Non-GAAP net loss attributable to RISEfor the first half of 2020 was RMB151.1 million (US$21.4 million).

EBITDA loss for the first half of 2020 was RMB154.4million (US$21.9 million).

Adjusted EBITDA loss for the first half of 2020 was RMB152.5million (US$21.6million).

Basic and Diluted Earningsper ADS

Basic and diluted net loss attributable to RISE per ADS was RMB2.87(US$0.41) for the first half of 2020.

Basic and diluted non-GAAP net loss attributable to RISE per ADS was RMB2.68(US$0.38) for the first half of 2020.

Cash Flow

Net cash outflow from operating activities for the first half of 2020 was RMB200.5 million (US$28.4 million),compared with RMB124.2million for the same period of the prior year.The cash outflow for the first half of 2020 was mainly attributable to reduced cash collection from regular courses as a result ofthe temporary closure of self-owned and franchised learning centers; while the cash outflow for the same period of 2019 was mainly attributable to the change in the collection schedule for tuition fees to comply with certain regulatory requirements.

Business Outlook

Although the depth and scale of the impact of COVID-19 is still unknown,we believe we are well-positioned to navigate the rapidly evolving market environment and capture potential market opportunities. Our learning centers in Shanghai,Shenzhen and Wuxi have resumed full offline operations,and learning centers in Beijing and Shijiazhuang are expected to reopen in September at a pace regulated by the government. Our ability to switch between the online and offline models and to manage our online and offline operations concurrently will help us mitigate the risks of any potential resurgence of Covid-19 to our business. Takingall thisinto account,we expect our revenue in the third quarter of 2020 to be in the range of RMB325 million to RMB335million.

Conference Call Information

RISE will hold a conference call on August 13,2020 at 9:00 pm Eastern Time (or August 14,2020 at 9:00 am Beijing Time) to discuss the financial results. Due to the impactof COVID-19,operator assisted conference calls are not available at the moment. All participants must preregister online prior to the call to receive the dial-in details.

Conference call preregistration link is http://apac.directeventreg.com/registration/event/8699700. Once preregistration has been completed,participants will receive dial-in numbers,an event passcode,and a unique registrant ID.

To join the conference,please dial the number you receive,enter the event passcode followed by your unique registrant ID,and you will be joined to the conference instantly.

A telephone replay will be accessible through August 20,2020 by dialing the following numbers:

United States:

+1-646-254-3697

International:

+61-2-8199-0299

Mainland China:

400-6322-162

Hong Kong:

+852-3051-2780

Conference ID:

#8699700

A live and archived webcast of the conference call,together with a copy of the presentation slides used for the conference call,will also be available at the Company's investor relations website at http://ir.risecenter.com/.

Exchange Rate

This announcement contains translations of certain RMBamounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated,all translations from RMBto USD were made at the rate of RMB7.0651to US$1.00,the noon buying rate in effect on June 30,2020 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMBor USD amounts referred to could be converted into USD or RMB,as the case may be,at any particular rate or at all. For analytical presentation,all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

About Non-GAAP Financial Measures

To supplement RISE's financial results presented in accordance with U.S. GAAP,the Company uses non-GAAP financial measures,which are adjusted from results based on U.S. GAAP. Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures are set forth in the table at the end of this earnings release entitled "Reconciliation of GAAP and Non-GAAP Results," which provides more details on the non-GAAP financial measures.

Non-GAAP cost of revenues,non-GAAP operating expenses,including non-GAAP selling and marketing expenses and non-GAAP general and administrative expenses,provides the Company with an understanding of the results from the primary operations of the Company's business by excluding the effects of certain transaction-related expenses that do not reflect the ordinary operating expenses of the Company's operations and share-based compensation.

EBITDA,adjusted EBITDA and non-GAAP net income/(loss) provide the Company with an understanding of the results from the primary operations of the Company's business by excluding the effects of certain transaction-related expenses that do not reflect the ordinary EBITDA and net income/(loss) of the Company's operations.

The Company uses non-GAAP operating expenses,non-GAAP operating income/(loss),Non-GAAP operating margin,EBITDA,adjusted EBITDA,non-GAAP net income/(loss) attributable to RISE,and non-GAAP basic and diluted net income/(loss) per ADS attributable to RISE to evaluate the Company's period-over-period operating performance because the Company's management believes these provide a more comparable measure of the Company's continuing business as it adjusts for transaction-related expenses that are not reflective of the normal earnings of the Company's business. These measures may be useful to an investor in evaluating the underlying operating performance of the Company's business,and to enhance investors' overall understanding of the historical and current financial performance of the Company's continuing operations and prospects for the future.

Non-GAAP financial information should not be considered a substitute for or superior to U.S. GAAP results. In addition,calculations of this non-GAAP financial information may be different from calculations used by other companies,and therefore comparability may be limited.

Non-GAAP cost of revenues exclude relevant share-based compensation expenses and amortization of certain intangible assets ("IA") acquired as part of the 2013 acquisition from cost of revenues. Non-GAAP operating income/(loss)adds back share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. Each of non-GAAP operating expenses,non-GAAP selling and marketing expenses or non-GAAP general and administrative expenses excludes relevant share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. EBITDA represents net income/(loss) before interests,depreciation and amortization.

For more information on non-GAAP financial measures,please see the tables captioned "Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures."

About RISE Education

RISE Education Cayman Ltd is a leading junior English Language Training ("ELT") provider based in Beijing. Founded in 2007,the Company pioneered the application of the "subject-based learning" philosophy in China,which uses language arts,math,natural science,and social science to teach English in an immersive environment that helps students learn to speak and think like a native speaker. Through three flagship courses,Rise Start,Rise On,and Rise Up,and other complementary products,the Company provides ELT to students aged three to six,seven to twelve and thirteen to eighteen,respectively. The Company's highly scalable business model includes both self-owned and franchised learning centers. For more information,please visit http://en.risecenter.com/.

Safe Harbor Statement

This press release contains statements of a forward-looking nature. These statements,including the statements relating to the Company's future financial and operating results,are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "believes," "anticipates," "intends," "estimates" and similar statements. Among other things,management's quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations,assumptions,estimates and projections about RISE and the industry. Potential risks and uncertainties include,but are not limited to,those relating to its ability to attract new students and retain existing students,its ability to maintain or enhance its brand,its ability to compete effectively against its competitors,its ability to execute its growth strategy,its ability to introduce new products or enhance existing products,its ability to obtain required licenses,permits,filings or registrations,its ability to grow or operate or effectively monitor its franchise business,quarterly variations in its operating results caused by factors beyond its control,macroeconomic conditions in China and government policies and regulations relating to its corporate structure,business and industryand their potential impact on itsfuture business development,financial condition and results of operations. All information provided in this press release is as of the date hereof,and RISE undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances,or changes in its expectations,except as may be required by law. Although RISE believes that the expectations expressed in these forward-looking statements are reasonable,it cannot assure you that its expectations will turn out to be correct,and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by RISE is included in RISE's filings with the U.S. Securities and Exchange Commission,including its annual reporton Form 20-F for the year ended December 31,2019.

Investor Relations Contact

Karen Gu

RISE Education

Email: riseir@rdchina.net

Tel: +86 (10) 8559-9191

RISE EDUCATION CAYMAN LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

As of

December31,2019

June30,2020

June30,2020

RMB

RMB

USD

ASSETS

Current assets:

Cash and cash equivalents

999,012

588,672

83,321

Restricted cash

23,813

164,828

23,330

Accounts receivable,net

1,745

1,054

149

Amounts due from related parties

191

1,807

256

Inventories

8,685

7,740

1,096

Prepaid expenses and other current assets

51,420

91,881

13,004

Total current assets

1,084,866

855,982

121,156

Property and equipment,net

137,340

111,081

15,722

Intangible assets,net

210,346

204,325

28,920

Long-term investment

33,000

33,000

4,671

Goodwill

665,416

669,899

94,818

Deferred tax assets

11,026

33,046

4,677

Other non-current assets

49,638

57,867

8,191

Operating lease right-of use assets

610,323

626,848

88,726

Total assets

2,801,955

2,592,048

366,881

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current portion of long-term loan

134,015

136,003

19,250

Accounts payable

7,553

4,373

619

Accrued expenses and other current liabilities

202,808

253,820

35,926

Deferred revenue and customer advances

716,637

641,907

90,856

Income taxes payable

14,594

5,035

713

Operating lease liabilities,current portion

157,911

194,412

27,517

Total current liabilities

1,233,518

1,235,550

174,881

Long-term loan

370,163

379,127

53,662

Deferred revenue and customer advances

39,397

35,879

5,078

Deferred tax liabilities

31,116

22,903

3,242

Other non-current liabilities

39,156

39,397

5,576

Operating lease liabilities,non-current portion

464,304

426,963

60,433

Total liabilities

2,177,654

2,139,819

302,872

Shareholders' equity:

Ordinary shares

6,946

6,946

983

Additional paid-in capital

583,262

585,190

82,828

Statutory reserves

104,830

104,830

14,838

Accumulated deficit

(127,059)

(288,931)

(40,896)

Accumulated other comprehensive income

40,917

41,137

5,823

Total Rise Education Cayman Ltd shareholders'

equity

608,896

449,172

63,576

Non-controlling interests

15,405

3,057

433

Total equity

624,301

452,229

64,009

Total liabilities,non-controlling interests and

shareholders' equity

2,881

RISE EDUCATION CAYMAN LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Three Months Ended

Six Months EndedJune 30

June 30,2019

March 31,2020

June 30,2020

2019

2020

2020

RMB

RMB

RMB

USD

RMB

RMB

USD

Revenues

367,057

108,989

164,990

23,353

702,979

38,779

Educational programs

326,877

101,989

151,465

21,438

615,490

253,454

35,873

Franchise revenues

39,797

6,109

12,935

1,831

77,975

19,044

2,696

Others

383

891

590

84

8,618

1,481

210

Cost of revenues

(160,414)

(142,568)

(141,582)

(20,040)

(314,815)

(284,150)

(40,219)

Gross profit/(loss)

206,643

(33,579)

23,408

3,313

387,268

(10,171)

(1,440)

Selling and marketing expenses

(70,742)

(43,220)

(42,474)

(6,012)

(136,404)

(85,695)

(12,129)

General and administrative expenses

(92,639)

(54,598)

(54,821)

(7,759)

(154,562)

(109,419)

(15,487)

Operating income/(loss)

43,262

(131,397)

(73,887)

(10,458)

96,285)

(29,056)

Interest income

6,835

3,852

4,055

574

9,409

7,907

1,119

Interest expense

(8,895)

(6,791)

(5,883)

(833)

(17,848)

(12,674)

(1,794)

Foreign currency exchange loss

(538)

(79)

(17)

(2)

(489)

(96)

(14)

Other income,net

572

2,987

2,183

309

8,499

5,171

732

Income before income tax expense

41,236

(131,428)

(73,549)

(10,410)

95,873

(204,977)

(29,013)

Income tax (expense)/benefit

(19,176)

19,728

11,029

1,561

(37,882)

30,757

4,354

Net income/(loss)

22,060

(111,700)

(62,520)

(8,849)

57,991

(174,220)

(24,659)

Add: net (income)/loss attributable

to non-controlling interests

(824)

7,863

4,485

635

(386)

12,348

1,748

Net income/(loss) attributable to

RISE Education Cayman Ltd

21,236

(103,837)

(58,035)

(8,214)

57,872)

(22,911)

Net income/(loss) per ordinary

share:

Basic

0.19

(0.92)

(0.51)

(0.07)

0.50

(1.44)

(0.20)

Diluted

0.18

(0.92)

(0.51)

(0.07)

0.49

(1.44)

(0.20)

Net income/(loss) per ADS (Notes

1):

Basic

0.37

(1.84)

(1.03)

(0.15)

1.01

(2.87)

(0.41)

Diluted

0.37

(1.84)

(1.03)

(0.15)

0.99

(2.87)

(0.41)

Shares used in net income/(loss) per ordinary

share computation:

Basic

113,462,302

112,756,311

112,844

112,844

114,269,814

112,577

112,577

Diluted

114,826,742

112,844

116,798,699

112,577

ADSs used in net income/(loss)

per ADS computation:

Basic

56,731,151

56,378,155

56,422

56,422

57,134,907

56,289

56,289

Diluted

57,413,371

56,422

58,399,350

56,289

Note 1: Each ADS represents two ordinary shares.

RISE EDUCATION CAYMAN LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Three Months Ended

Six Months Ended June 30

June 30,2019

March 31,2020

June 30,2020

2019

2020

2020

RMB

RMB

RMB

USD

RMB

RMB

USD

Net income/(loss)

22,659)

Other comprehensive (loss)/income,

net of tax of nil:

Foreign currency translation adjustments

(90)

251

(31)

(5)

(602)

220

31

Other comprehensive (loss)/income

(90)

251

(31)

(5)

(602)

220

31

Comprehensive income/(loss)

21,970

(111,449)

(62,551)

(8,854)

57,389

(174,000)

(24,628)

Add: comprehensive (income)/loss

attributable to non-controlling interests

(824)

7,748

Comprehensive income/(loss)

attributable to RISE Education

Cayman Ltd

21,146

(103,586)

(58,066)

(8,219)

57,003

(161,652)

(22,880)

RISE EDUCATION CAYMAN LTD

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

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

Three Months Ended

Six Months Ended June 30

June 30,659)

Share-based compensation ("SBC")

29,246

(41)

1,935

274

32,629

1,893

268

IA amortization arising from Bain

acquisition

4,290

4,388

4,456

631

8,531

8,843

1,251

Non-GAAP net income/(loss)

55,596

(107,353)

(56,129)

(7,944)

99,151

(163,484)

(23,140)

Add: net (income)/ loss attributable to

non-controlling interests

(824)

7,748

Non-GAAP net income/(loss)

attributable to RISE Education Cayman Ltd

54,772

(99,490)

(51,644)

(7,309)

98,136)

(21,392)

Net income/(loss)

22,659)

Add: Depreciation

11,134

12,646

17,465

2,471

21,887

30,111

4,262

Add: Amortization

5,277

7,878

7,834

1,109

10,622

15,712

2,224

Add: Interest expense

8,895

6,791

5,883

833

17,848

12,674

1,794

Add: Income tax expense/(benefit)

19,176

(19,728)

(11,029)

(1,561)

37,882

(30,757)

(4,353)

Less: Interest income

6,119

EBITDA

59,707

(107,965)

(46,422)

(6,571)

136,821

(154,387)

(21,851)

SBC

29,893

268

Adjusted EBITDA

88,953

(108,006)

(44,487)

(6,297)

169,494)

(21,583)

Cost of revenues

160,414

142,568

141,582

20,040

314,815

284,150

40,219

Personnel costs

69,337

65,859

61,980

8,773

133,372

127,839

18,094

Rental costs

53,537

50,873

49,595

7,020

105,428

100,468

14,220

Others

37,540

25,836

30,007

4,247

76,015

55,843

7,905

Less: SBC

1,754

699

320

45

2,204

1,019

144

Less: IA amortization arising from Bain

acquisition

3,497

3,577

3,632

514

6,954

7,208

1,020

Non-GAAP cost of revenues

155,163

138,292

137,630

19,481

305,657

275,923

39,055

Non-GAAP gross profit/(loss)

211,894

(29,303)

27,360

3,872

396,426

(1,944)

(276)

Selling and marketing expenses

70,742

43,220

42,474

6,012

136,404

85,695

12,129

Less: SBC

153

195

403

57

255

598

85

Less: IA amortization arising from Bain

acquisition

793

811

824

117

1,577

1,635

231

Non-GAAP selling and marketing

expenses

69,796

42,214

41,247

5,838

134,572

83,462

11,813

General and administrative expenses

92,639

54,598

54,821

7,759

154,562

109,419

15,487

Less: SBC

27,339

(935)

1,212

172

30,170

276

39

Non-GAAP general and administrative

expenses

65,300

55,533

53,609

7,587

124,392

109,143

15,448

Operating expense

163,381

97,818

97,295

13,771

290,966

195,114

27,616

Less: SBC

27,492

(740)

1,615

229

30,425

874

124

Less: IA amortization arising from Bain

acquisition

793

811

824

117

1,635

231

Non-GAAP operating expense

135,096

97,747

94,856

13,425

258,964

192,605

27,261

Operating income/(loss)

43,056)

Add: SBC

29,893

268

Add: IA amortization arising from Bain

acquisition

4,251

Non-GAAP operating income/(loss)

76,798

(127,050)

(67,496)

(9,553)

137,549)

(27,537)

Non-GAAP net income/(loss) per ADS

attributable to RISE-basic (Notes 1)

0.97

(1.76)

(0.92)

(0.13)

1.73

(2.68)

(0.38)

Non-GAAP net income/(loss) per ADS

attributable to RISE-diluted (Notes 1)

0.95

(1.76)

(0.92)

(0.13)

1.69

(2.68)

(0.38)

ADSs used in calculating net

income/(loss) per ADS-basic (Notes 1):

56,289

ADSs used in calculating net

income/(loss) per ADS-diluted (Notes 1):

57,289

Note 1: Each ADS represents two ordinary shares.

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