TAL Education Group Announces Unaudited Financial Results for the First Fiscal Quarter Ended May 31, 2022

BEIJING,July 29,2022 --TAL Education Group (NYSE: TAL) ("TAL" or the "Company"),a smart learning solutions provider in China,today announced its unaudited financial results for the first quarter of fiscal year 2023 ended May 31,2022.

Highlights for the First Quarter of Fiscal Year 2023

- Net revenues was US$224.0 million,compared to net revenues of US$1,384.9 million in the same period of the prior year.

- Loss from operations was US$28.3 million,compared to loss from operations of US$126.9 million in the same period of the prior year.

- Non-GAAP loss from operations,which excluded share-based compensation expenses,was US$1.8 million,compared to non-GAAP loss from operations of US$59.4 million in the same period of the prior year.

- Net loss attributable to TAL was US$43.8 million,compared to net loss attributable to TAL of US$102.1 million in the same period of the prior year.

- Non-GAAP net loss attributable to TAL,was US$17.4 million,compared tonon-GAAP net loss attributable to TAL of US$34.6 million in the same period of the prior year.

- Basic and diluted net loss per American Depositary Share ("ADS") were both US$0.07. Non-GAAP basic and diluted net loss per ADS,were both US$0.03. Three ADSs represent one Class A common share.

- Cash,cash equivalents and short-term investments totaled US$2,892.1 million as of May 31,2022,compared to US$2,708.7 million as of February 28,2022.

Financial Data——First Quarter of Fiscal Year 2023

(In US$ thousands,except per ADS data and percentages)

Three Months Ended

May 31,

2021

2022

Pct. Change

Net revenues

1,384,943

224,045

(83.8%)

Loss from operations

(126,857)

(28,323)

(77.7%)

Non-GAAP loss from operations

(59,412)

(1,844)

(96.9%)

Net loss attributable to TAL

(102,078)

(43,829)

(57.1%)

Non-GAAP net loss attributable to TAL

(34,633)

(17,350)

(49.9%)

Net loss per ADS attributable to TAL – basic

(0.16)

(0.07)

(57.1%)

Net loss per ADS attributable to TAL – diluted

(0.16)

(0.07)

(57.1%)

Non-GAAP net loss per ADS attributable to TAL – basic

(0.05)

(0.03)

(49.9%)

Non-GAAP net loss per ADS attributable to TAL – diluted

(0.05)

(0.03)

(49.9%)

"Our performance this quarter demonstrates the combined efforts of our experienced management team,innovative employees,and our extensive business partners. In the process of our transformation,we are focused on developing new initiatives that match the mega trends in our industry and the broader ecosystem." said Alex Peng,TAL's President & Chief Financial Officer.

"We believe TAL's trusted brand,operational excellence and pedagogical know-how will position the company for the transformation we are going through." Mr. Peng concluded.

Financial Results for the First Quarter of Fiscal Year 2023

Net Revenues

In the first quarter of fiscal year 2023,TAL reported net revenues of US$224.0 million,representing an 83.8% decrease from US$1,384.9 million in the first quarter of fiscal year 2022.

Operating Costs and Expenses

In the first quarter of fiscal year 2023,operating costs and expenses were US$260.0 million,representing an 82.8% decrease from US$1,515.0 million in the first quarter of fiscal year 2022. Non-GAAP operating costs and expenses,were US$233.6 million,representing an 83.9% decrease from US$1,447.6 million in the first quarter of fiscal year 2022.

Cost of revenues decrease by 85.6% to US$88.6 million from US$613.1 million in the first quarter of fiscal year 2022. Non-GAAP cost of revenues,decreased by 85.9% to US$86.2 million,from US$612.8 million in the first quarter of fiscal year 2022.

Selling and marketing expenses decreased by 86.1% to US$60.0 million from US$431.3 million in the first quarter of fiscal year 2022. Non-GAAP selling and marketing expenses,decreased by 87.2% to US$52.0 million,from US$407.4 million in the first quarter of fiscal year 2022.

General and administrative expenses decreased by 66.3% to US$111.5 million from US$331.1 million in the first quarter of fiscal year 2022. Non-GAAP general and administrative expenses,decreased by 66.9% to US$95.4 million,from US$288.0 million in the first quarter of fiscal year 2022.

Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 60.7% to US$26.5 million in the first quarter of fiscal year 2023 from US$67.4 million in the same period of fiscal year 2022.

Impairment loss on intangible assets and goodwill was nil for the first quarter of fiscal year 2023,compared to US$139.4 million for the first quarter of fiscal year 2022.

Gross Profit

Gross profit decreased by 82.4% to US$135.5 million from US$771.8 million in the first quarter of fiscal year 2022.

Loss from Operations

Loss from operations was US$28.3 million in the first quarter of fiscal year 2023,compared to loss from operations of US$126.9 million in the first quarter of fiscal year 2022. Non-GAAP lossfrom operations,compared to Non-GAAP loss from operations of US$59.4 million in the same period of the prior year.

Other Income / (Expense)

Other expensewas US$26.8 million for the first quarter of fiscal year 2023,compared to other income of US$38.8 million in the first quarter of fiscal year 2022.

Impairment Loss on Long-term Investments

Impairment loss on long-term investments was nil for the first quarter of fiscal year 2023,compared to US$23.2 million for the first quarter of fiscal year 2022.

Income Tax expense

Income tax expense was US$2.3 million in the first quarter of fiscal year 2023,compared to US$31.2 million of income tax expense in the first quarter of fiscal year 2022.

Net Loss Attributable to TAL Education Group

Net loss attributable to TAL was US$43.8 million in the first quarter of fiscal year 2023,compared to net loss attributable to TAL of US$102.1 million in the first quarter of fiscal year 2022. Non-GAAP net loss attributable to TAL,compared to Non-GAAP net loss attributable to TAL of US$34.6 million in the first quarter of fiscal year 2022.

Basic and Diluted Net Loss per ADS

Basic and diluted net loss per ADS were both US$0.07 in the first quarter of fiscal year 2023. Non-GAAP basic and diluted net loss per ADS,were both US$0.03,in the first quarter of fiscal year 2023.

Cash,Cash Equivalents,and Short-Term Investments

As of May 31,the Company had US$1,736.0 million of cash and cash equivalents and US$1,156.1 million of short-term investments,compared to US$1,638.2 million of cash and cash equivalents and US$1,070.5 million of short-term investments as of February 28,2022.

Deferred Revenue

As of May 31,the Company's deferred revenue balance was US$227.4 million,compared to US$187.7 million as of February 28,2022.

Conference Call

The Company will host a conference call and live webcast to discuss its financial results for the first fiscal quarter of fiscal year 2023 ended May 31,2022 at 8:00 a.m. Eastern Time on July 29,2022 (8:00 p.m. Beijing time on July 29,2022).

Please note that you will need to pre-register for conference call participation at https://register.vevent.com/register/BI2f124a2b4d054342a99323e38a074715.

Upon registration,you will receive an email containing participant dial-in numbers and unique Direct Event Passcode. This information will allow you to gain immediate access to the call. Participants may pre-register at any time,including up to and after the call start time.

A live and archived webcast of the conference call will be available on the Investor Relations section of TAL's website at https://ir.100tal.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," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things,TAL Education Group's strategic and operational plans contain forward-looking statements. The Company 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 reports to shareholders,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: the Company's ability to continue to provide competitive learning services and products; the Company's ability to continue to recruit,train and retain talents; the Company's ability to improve the content of current course offerings and develop new courses; the Company's ability to maintain and enhance its brand; the Company's ability to maintain and continue to improve its teaching results; and the Company's ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company's reports filed with,or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release,and TAL Education Group undertakes no duty to update such information or any forward-looking statement,except as required under applicable law.

About TAL Education Group

TAL Education Groupis a smart learning solutions provider in China. The acronym "TAL" stands for "Tomorrow Advancing Life",which reflects our vision to promote top learning opportunities for students through both high-quality teaching and content,as well as leading edge application of technology in the education experience.TAL Education Groupoffers comprehensive learning services to students from all ages through diversified class formats. Our learning services mainly cover enrichment learnings programs and some academic subjects in and out of China. Our ADSs trade on theNew York Stock Exchangeunder the symbol "TAL".

About Non-GAAP Financial Measures

In evaluating its business,TAL considers and uses the following measures defined as non-GAAP financial measures by the SEC as supplemental metrics to review and assess its operating performance: non-GAAP operating costs and expenses,non-GAAP cost of revenues,non-GAAP selling and marketing expenses,non-GAAP general and administrative expenses,non-GAAP loss from operations,non-GAAP net loss attributable to TAL,non-GAAP basic and non-GAAP diluted net loss per ADS. To present each of these non-GAAP measures,the Company excludes share-based compensation expenses. 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 the most comparable GAAP measures" set forth at the end of this release.

TAL believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. TAL 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 TAL's historical performance and liquidity. TAL computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. TAL 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 using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

For further information,please contact:

Jackson Ding

Investor Relations

TAL Education Group

Tel: +86 10 5292 6669-8809

Email: ir@tal.com

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)

As of

February 28,

2022

As of

May 31,

2022

ASSETS

Current assets

Cash and cash equivalents

$ 1,638,189

$ 1,736,036

Restricted cash-current

755,646

532,214

Short-term investments

1,070,535

1,156,100

Inventory

21,830

22,483

Amounts due from related parties-current

919

546

Income tax receivables

19,504

3,145

Prepaid expenses and other current assets

122,753

146,174

Total current assets

3,629,376

3,596,698

Restricted cash-non-current

287,951

248,816

Property and equipment,net

281,226

258,004

Deferred tax assets

6,747

3,185

Rental deposits

10,770

11,572

Intangible assets,net

1,696

1,224

Land use right,net

217,708

204,751

Amounts due from related parties-non-current

77

1

Long-term investments

414,487

342,526

Long-term prepayments and other non-current assets

5,418

2,927

Operating lease right-of-use assets

227,072

165,437

Total assets

$ 5,082,528

$ 4,835,141

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

$ 89,838

$ 71,097

Deferred revenue-current

187,718

227,344

Amounts due to related parties-current

205

138

Accrued expenses and other current liabilities

509,461

441,624

Income tax payable

49,257

38,401

Operating lease liabilities,current portion

66,105

44,173

Total current liabilities

902,584

822,777

Deferred revenue-non-current

14

13

Deferred tax liabilities

1,680

3,368

Operating lease liabilities,non-current portion

175,988

133,749

Total liabilities

1,080,266

959,907

Equity

Class A common shares

167

167

Class B common shares

49

49

Treasury Stock

-

(4)

Additional paid-in capital

4,358,265

4,334,980

Statutory reserve

154,362

154,222

Accumulated deficit

(544,309)

(587,998)

Accumulated other comprehensive income/(loss)

61,617

(807)

Total TAL Education Group's equity

4,030,151

3,900,609

Noncontrolling interest

(27,889)

(25,375)

Total equity

4,002,262

3,875,234

Total liabilities and equity

$ 5,141

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars,except share,ADS,per share and per ADS data)

For the Three Months Ended

May 31,

2021

2022

Netrevenues

$ 1,943

$ 224,045

Cost of revenues (note 1)

613,141

88,558

Gross profit

771,802

135,487

Operatingexpenses(note1)

Selling and marketing

431,349

60,039

General and administrative

331,133

111,450

Impairment loss on intangible assets and goodwill

139,409

-

Total operating expenses

901,891

171,489

Government subsidies

3,232

7,679

Loss from operations

(126,323)

Interest income

36,601

13,063

Interest expense

(3,172)

-

Other income/(expense)

38,822

(26,789)

Impairment loss on long-term investments

(23,182)

-

Loss before income tax expense and

(loss)/income from equity method investments

(77,788)

(42,049)

Income tax expense

(31,204)

(2,316)

(Loss)/income from equity method investments

(72)

1,453

Netloss

$ (109,064)

$ (42,912)

Add: Net loss/(income) attributable to noncontrolling

interest

6,986

(917)

TotalnetlossattributabletoTALEducation

Group

$ (102,078)

$ (43,829)

Netlosspercommonshare

Basic

$ (0.47)

$ (0.20)

Diluted

(0.47)

(0.20)

NetlossperADS(note2)

Basic

$ (0.16)

$ (0.07)

Diluted

(0.16)

(0.07)

Weighted average shares used in calculating net loss

per common share

Basic

214,982,190

215,062,603

Diluted

214,603

Note1:Share-basedcompensationexpensesareincludedintheoperatingcostsandexpensesasfollows:

FortheThreeMonths

EndedMay31,

2021

2022

Cost of revenues

$ 383

$ 2,393

Selling and marketing expenses

23,972

8,081

General and administrative expenses

43,090

16,005

Total

$ 67,445

$ 26,479

Note2:ThreeADSsrepresentoneClassAcommonShare.

TALEDUCATIONGROUP

UNAUDITEDCONDENSEDCONSOLIDATEDSTATEMENTSOF

ComprehensiveLOSS

(InthousandsofU.S.dollars)

FortheThreeMonthsEnded

May 31,

2021

2022

Netloss

$ (109,912)

Other comprehensive income/(loss),net of tax

15,695

(60,826)

Comprehensiveloss

(93,369)

(103,738)

Add: Comprehensive income/(loss) attributable

to noncontrolling interest

7,109

(2,514)

Comprehensivelossattributableto

TALEducationGroup

$ (86,260)

$ (106,252)

TALEDUCATIONGROUP

ReconciliationofNon-GAAPMeasurestotheMostComparableGAAPMeasures

(InthousandsofU.S.dollars,exceptshare,ADS,pershareandperADSdata)

FortheThreeMonths

EndedMay31,

2021

2022

Costofrevenues

$ 613,141

$ 88,558

Share-based compensation expense in cost of

revenues

383

2,393

Non-GAAPcostofrevenues

612,758

86,165

Sellingandmarketingexpenses

431,039

Share-based compensation expense in selling and

marketing expenses

23,081

Non-GAAPsellingandmarketingexpenses

407,377

51,958

Generalandadministrativeexpenses

331,450

Share-based compensation expense in general and

administrative expenses

43,005

Non-GAAPgeneralandadministrativeexpenses

288,043

95,445

Operatingcostsandexpenses

1,515,032

260,047

Share-based compensation expense in operating

costs and expenses

67,445

26,479

Non-GAAPoperatingcostsandexpenses

1,447,587

233,568

Lossfromoperations

(126,323)

Share based compensation expenses

67,479

Non-GAAPlossfromoperations

(59,412)

(1,844)

NetlossattributabletoTALEducationGroup

(102,829)

Share based compensation expenses

67,479

Non-GAAPnetlossattributabletoTAL

EducationGroup

$(34,633)

$ (17,350)

NetlossperADS

Basic

$ (0.16)

$ (0.07)

Diluted

(0.16)

(0.07)

Non-GAAPNetlossperADS

Basic

$ (0.05)

$ (0.03)

Diluted

(0.05)

(0.03)

ADSsusedincalculatingnetlossperADS

Basic

644,946,571

645,187,809

Diluted

644,809

ADSsusedincalculatingNon-GAAPnetloss per ADS

Basic

644,809

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