TAL Education Group Announces Unaudited Financial Results for the Second Fiscal Quarter Ended August 31, 2022

BEIJING,Oct. 28,2022 -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"),a smart learning solutions provider in China,today announced its unaudited financial results for the second quarter of fiscal year 2023 ended August 31,2022.

Highlights for the Second Quarter of Fiscal Year 2023

- Net revenues was US$294.1 million,compared to net revenues of US$1,443.9 million in the same period of the prior year.

- Income from operations was US$14.9 million,compared to loss from operations of US$379.9 million in the same period of the prior year.

- Non-GAAP income from operations,which excluded share-based compensation expenses,was US$42.3 million,compared to non-GAAP loss from operations of US$313.4 million in the same period of the prior year.

- Net loss attributable to TAL was US$0.8 million,compared to net loss attributable to TAL of US$826.5 million in the same period of the prior year.

- Non-GAAP net income attributable to TAL,was US$26.6 million,compared tonon-GAAP net loss attributable to TAL of US$760.1 million in the same period of the prior year.

- Basic and diluted net loss per American Depositary Share ("ADS") were both US$0.00. Non-GAAP basic and diluted net income per ADS,were both US$0.04. Three ADSs represent one Class A common share.

- Cash,cash equivalents and short-term investments totaled US$3,086.6 million as of August 31,2022,compared to US$2,708.7 million as of February 28,2022.

Highlights for the Six Months Ended August 31,2022

- Net revenues was US$518.1 million,compared to net revenues of US$2,828.8 million in the same period of the prior year.

- Loss from operations was US$13.4 million,compared to loss from operations of US$506.7 million in the same period of the prior year.

- Non-GAAP income from operations,was US$40.5 million,compared to non-GAAP loss from operations of US$372.9 million in the same period of the prior year.

- Net loss attributable to TAL was US$44.6 million,compared to net loss attributable to TAL of US$928.6million in the same period of the prior year.

- Non-GAAP net income attributable to TAL,was US$9.3 million,compared to non-GAAP net loss attributable to TAL of US$794.7 million in the same period of the prior year.

- Basic and diluted net loss per ADS were both US$0.07. Non-GAAP basic and diluted net income per ADS,excluding share-based compensation expenses,were both US$0.01.

Financial Data——SecondQuarter and First Six Monthsof Fiscal Year 2023

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

Three Months Ended

August 31,

2021

2022

Pct. Change

Net revenues

1,443,880

294,060

(79.6%)

(Loss)/income from operations

(379,874)

14,891

(103.9%)

Non-GAAP(loss)/income from operations

(313,440)

42,315

(113.5%)

Net loss attributable to TAL

(826,546)

(787)

(99.9%)

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

(760,112)

26,637

(103.5%)

Net loss per ADS attributable to TAL – basic

(1.29)

(0.00)

(99.9%)

Net loss per ADS attributable to TAL – diluted

(1.29)

(0.00)

(99.9%)

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

to TAL – basic

(1.18)

0.04

(103.5%)

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

to TAL – diluted

(1.18)

0.04

(103.5%)

Six Months Ended

August 31,

2021

2022

Pct. Change

Net revenues

2,828,823

518,105

(81.7%)

Loss from operations

(506,731)

(13,432)

(97.3%)

Non-GAAP (loss)/income from operations

(372,852)

40,471

(110.9%)

Net loss attributable to TAL

(928,624)

(44,616)

(95.2%)

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

(794,745)

9,287

(101.2%)

Net loss per ADS attributable to TAL – basic

(1.44)

(0.07)

(95.2%)

Net loss per ADS attributable to TAL – diluted

(1.44)

(0.07)

(95.2%)

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

to TAL – basic

(1.23)

0.01

(101.2%)

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

to TAL – diluted

(1.23)

0.01

(101.2%)

"Our business has shown a healthy momentum in this quarter. We will continue to invest in learning services,learning content solutions and learning technology solutions to lay the foundation for long-term growth." said Alex Peng,TAL's President & Chief Financial Officer.

Mr. Peng added: "We recently announced our new mission of 'to empower life-long growth with love and technology' and our new vision of 'to become an organization driving continuous innovation'. We will continue to develop our current product and service portfolio,while,in alignment with our new mission and vision,exploring new initiatives in and beyond the learning solutions market."

Financial Results for the Second Quarter of Fiscal Year 2023

Net Revenues

In the second quarter of fiscal year 2023,TAL reported net revenues of US$294.1 million,representing a 79.6% decrease from US$1,443.9 million in the second quarter of fiscal year 2022.

Operating Costs and Expenses

In the second quarter of fiscal year 2023,operating costs and expenses were US$292.4 million,representing an 84.0% decrease from US$1,825.6 million in the second quarter of fiscal year 2022. Non-GAAP operating costs and expenses,were US$265.0 million,representing an 84.9% decrease from US$1,759.2 million in the second quarter of fiscal year 2022.

Cost of revenues decreased by 86.6% to US$117.1 million from US$872.6 million in the second quarter of fiscal year 2022. Non-GAAP cost of revenues,decreased by 86.9% to US$114.5 million,from US$872.3 million in the second quarter of fiscal year 2022.

Selling and marketing expenses decreased by 74.8% to US$78.1 million from US$309.7 million in the second quarter of fiscal year 2022. Non-GAAP selling and marketing expenses,decreased by 75.5% to US$69.8 million,from US$285.2 million in the second quarter of fiscal year 2022.

General and administrative expenses decreased by 72.7% to US$97.2 million from US$356.5 million in the second quarter of fiscal year 2022. Non-GAAP general and administrative expenses,decreased by 74.4% to US$80.7 million,from US$314.9 million in the second quarter of fiscal year 2022.

Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 58.7% to US$27.4 million in the second quarter of fiscal year 2023 from US$66.4 million in the same period of fiscal year 2022.

Impairment loss on intangible assets and goodwill was nil for the second quarter of fiscal year 2023,compared to US$286.8 million for the second quarter of fiscal year 2022.

Gross Profit

Gross profit decreased by 69.0% to US$176.9 million from US$571.3 million in the second quarter of fiscal year 2022.

(Loss)/Income from Operations

Income from operations was US$14.9 million in the second quarter of fiscal year 2023,compared to loss from operations of US$379.9 million in the second quarter of fiscal year 2022. Non-GAAP incomefrom operations,compared to Non-GAAP loss from operations of US$313.4 million in the same period of the prior year.

Other (expense)/Income

Other expensewas US$25.7million for the second quarter of fiscal year 2023,compared to other expense of US$30.7 million in the second quarter of fiscal year 2022.

Impairment Loss on Long-term Investments

Impairment loss on Long-term investment was US$6.6 million for the second quarter of fiscal year 2023,compared to US$154.9 million for the same period of fiscal year 2022.

Income Tax Expense

Income tax expense was US$4.5 million in the second quarter of fiscal year 2023,compared to US$310.4 million of income tax expense in the second quarter of fiscal year 2022.

Net (Loss)/Income attributable to TAL

Net loss attributable to TAL was US$0.8 million in the second quarter of fiscal year 2023,compared to net loss attributable to TAL of US$826.5 million in the second quarter of fiscal year 2022. Non-GAAP net income attributable to TAL,compared to Non-GAAP net loss attributable to TAL of US$760.1 million in the second quarter of fiscal year 2022.

Basic and Diluted Net (Loss)/Income per ADS

Basic and diluted net loss per ADS were both US$0.00 in the second quarter of fiscal year 2023. Non-GAAP basic and diluted net income per ADS,were both US$0.04 in the second quarter of fiscal year 2023.

Cash,Cash Equivalents,and Short-Term Investments

As of August 31,the Company had US$1,759.3 million of cash and cash equivalents and US$1,327.3 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 August 31,the Company's deferred revenue balance was US$177.5 million,compared to US$187.7 million as of February 28,2022.

Financial Results for the First Six Months of Fiscal Year 2023

Net Revenues

For the first six months of fiscal year 2023,TAL reported net revenues ofUS$518.1 million,representing an 81.7% decrease fromUS$2,828.8 millionin the first six months of fiscal year 2022.

Operating Costs and Expenses

In the first six months of fiscal year 2023,operating costs and expenses wereUS$552.5 million,an 83.5% decrease fromUS$3,340.6 millionin the first six months of fiscal year 2022. Non-GAAP operating costs and expenses,wereUS$498.6 million,an 84.5% decrease fromUS$3,206.7 millionin the first six months of fiscal year 2022.

Cost of revenues decreased by 86.2% toUS$205.7 millionfromUS$1,485.8 millionin the first six months of fiscal year 2022. Non-GAAP cost of revenues,decreased by 86.5% toUS$200.7 millionfromUS$1,485.0 millionin the first six months of fiscal year 2022.

Selling and marketing expenses decreased by 81.4% toUS$138.1 millionfromUS$741.0 millionin the first six months of fiscal year 2022. Non-GAAP selling and marketing expenses,decreased by 82.4% toUS$121.7 millionfromUS$692.6 millionin the first six months of fiscal year 2022.

General and administrative expenses decreased by 69.7% toUS$208.7 millionfromUS$687.6 millionin the first six months of fiscal year 2022. Non-GAAP general and administrative expenses,decreased by 70.8% toUS$176.1 millionfromUS$602.9 millionin the first six months of fiscal year 2022.

Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 59.7% toUS$53.9 millionin the first six months of fiscal year 2023 fromUS$133.9 millionin the same period of fiscal year 2022.

Impairment loss on intangible assets and goodwill was nil for the first six months of fiscal year 2023,compared to US$426.2 million for the same period of fiscal year 2022.

Gross Profit

Gross profit decreased by 76.7% toUS$312.4 millionfromUS$1,343.1 millionin the first six months of fiscal year 2022.

(Loss)/Income from Operations

Loss from operations wasUS$13.4 millionin the first six months of fiscal year 2023,compared to loss from operations ofUS$506.7 millionin the same period of the prior year. Non-GAAP income from operations,wasUS$40.5 million,compared toUS$372.9 million Non-GAAP loss from operationsin the same period of the prior year.

Other (Expense)/Income

Other expense wasUS$52.5 millionfor the first six months of fiscal year 2023,compared to other income of US$8.1 million in the same period of the prior year.

Impairment Loss on Long-term Investments

Impairment loss on long-term investments wasUS$6.6 million for the first six months of fiscal year 2023,compared toUS$178.1 millionfor the first six months of fiscal year 2022.

Income Tax Expense

Income tax expense wasUS$6.8 millionin the first six months of fiscal year 2023,compared toUS$341.6 millionof income tax expense in the first six months of fiscal year 2022.

Net (Loss)/Income Attributable toTAL Education Group

Net loss attributable to TAL wasUS$44.6 millionin the first six months of fiscal year 2023,compared to net loss attributable to TAL ofUS$928.6 millionin the first six months of fiscal year 2022. Non-GAAP net income attributable to TAL,compared toUS$794.7 million Non-GAAP loss attributable to TALin the same period of the prior year.

Basic and Diluted Net (Loss)/Income per ADS

Basic and diluted net loss per ADS were bothUS$0.07 in the first six months of fiscal year 2023. Non-GAAP basic and diluted net income per ADS,wereboth US$0.01.

Conference Call

The Company will host a conference call and live webcast to discuss its financial results for the second fiscal quarter of fiscal year 2023 ended August 31,2022 at 8:00 a.m. Eastern Time on October 28,2022 (8:00 p.m. Beijing time on October 28,2022).

Please note that you will need to pre-register for conference call participation at https://register.vevent.com/register/BI60d8b93968b145e994b6c9c02b8aa42e.

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

August 31,

2022

ASSETS

Current assets

Cash and cash equivalents

$ 1,638,189

$ 1,759,255

Restricted cash-current

755,646

207,816

Short-term investments

1,070,535

1,327,275

Inventory

21,830

30,828

Amounts due from related parties-current

919

324

Income tax receivables

19,504

28

Prepaid expenses and other current assets

122,753

141,386

Total current assets

3,629,376

3,466,912

Restricted cash-non-current

287,951

158,391

Property and equipment,net

281,226

262,606

Deferred tax assets

6,747

3,202

Rental deposits

10,770

13,833

Intangible assets,net

1,696

824

Land use right,net

217,708

197,213

Amounts due from related parties- non-current

77

-

Long-term investments

414,487

464,467

Long-term prepayments and other non-current assets

5,418

2,627

Operating lease right-of-use assets

227,072

148,715

Total assets

$ 5,082,528

$ 4,718,790

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

$ 89,838

$ 73,692

Deferred revenue-current

187,718

177,530

Amounts due to related parties-current

205

102

Accrued expenses and other current liabilities

558,718

463,711

Operating lease liabilities,current portion

66,105

39,955

Total current liabilities

902,584

754,990

Deferred revenue-non-current

14

12

Deferred tax liabilities

1,680

4,112

Operating lease liabilities,non-current portion

175,988

120,566

Total liabilities

1,080,266

879,680

Equity

Class A common shares

167

167

Class B common shares

49

49

Treasury Stock

-

(5)

Additional paid-in capital

4,358,265

4,357,850

Statutory reserve

154,362

153,487

Accumulated deficit

(544,309)

(588,050)

Accumulated other comprehensive income/(loss)

61,617

(57,671)

Total TAL Education Group's equity

4,030,151

3,865,827

Noncontrolling interest

(27,889)

(26,717)

Total equity

4,002,262

3,839,110

Total liabilities and equity

$ 5,790

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

August 31,

For the Six Months Ended

August 31,

2021

2022

2021

2022

Net revenues

$ 1,880

$ 294,060

$ 2,823

$ 518,105

Cost of revenues (note 1)

872,628

117,132

1,485,769

205,690

Gross profit

571,252

176,928

1,343,054

312,415

Operating expenses (note 1)

Selling and marketing

309,688

78,087

741,037

138,126

General and administrative

356,499

97,206

687,632

208,656

Impairment loss on intangible

assets and goodwill

286,781

-

426,190

-

Total operating expenses

952,968

175,293

1,854,859

346,782

Government subsidies

1,842

13,256

5,074

20,935

(Loss)/income from operations

(379,874)

14,891

(506,731)

(13,432)

Interest income

35,296

12,445

71,897

25,508

Interest expense

(2,878)

-

(6,050)

-

Other (expense)/income

(30,731)

(25,715)

8,091

(52,504)

Gain from disposal of a subsidiary

-

9,550

-

9,550

Impairment loss on long-term

investments

(154,881)

(6,610)

(178,063)

(6,610)

(Loss)/income before income tax

expense and income/(loss) from

equity method investments

(533,068)

4,561

(610,856)

(37,488)

Income tax expense

(310,354)

(4,487)

(341,558)

(6,803)

Income/(loss) from equity method

investments

4,120

(932)

4,048

521

Net loss

(839,302)

(858)

(948,366)

(43,770)

Add: Net loss/(income)

attributable to noncontrolling

interest

12,756

71

19,742

(846)

Total net loss attributable to

TAL Education Group

$ (826,546)

$ (787)

$ (928,624)

$ (44,616)

Net loss per common share

Basic

$ (3.86)

$ (0.00)

$ (4.33)

$ (0.21)

Diluted

(3.86)

(0.00)

(4.33)

(0.21)

Net loss per ADS (note 2)

Basic

$ (1.29)

$ (0.00)

$ (1.44)

$ (0.07)

Diluted

(1.29)

(0.00)

(1.44)

(0.07)

Weighted average shares used in

calculating net loss per

common share

Basic

214,204,714

211,620,275

214,593,452

213,341,439

Diluted

214,439

Note1: Share-based compensation expenses are included in the operating costs and expenses as follows:

For the Three Months

For the SixMonths

Ended August31,

Ended August31,

2021

2022

2021

2022

Cost of revenues

$ 351

$ 2,587

$ 734

$ 4,980

Selling and marketing expenses

24,460

8,296

48,432

16,377

General and administrative expenses

41,623

16,541

84,713

32,546

Total

$ 66,434

$ 27,424

$ 133,879

$ 53,903

Note 2: Three ADSs represent one Class A common Share.

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATEDSTATEMENTS OF

Comprehensive LOSS

(In thousands of U.S. dollars)

For the Three Months Ended

August31,

For the Six Months Ended

August31,

2021

2022

2021

2022

Net loss

$ (839,302)

$ (858)

$ (948,366)

$ (43,770)

Other comprehensive loss,net

of tax

(39,540)

(55,912)

(23,845)

(116,738)

Comprehensive loss

(878,842)

(56,770)

(972,211)

(160,508)

Add: Comprehensive loss

/(income) attributable to

noncontrolling interest

12,640

(882)

19,749

(3,396)

Comprehensive loss

attributable to TAL

Education Group

$ (866,202)

$ (57,652)

$ (952,462)

$ (163,904)

TAL EDUCATION GROUP

Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures

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

For the Three Months

Ended August 31,

For the Six Months

Ended August 31,

2021

2022

2021

2022

Cost of revenues

$ 872,628

$ 117,132

$ 1,769

$ 205,690

Share-based compensation expense

in cost of revenues

351

2,587

734

4,980

Non-GAAP cost of revenues

872,277

114,545

1,035

200,710

Selling and marketing expenses

309,126

Share-based compensation expense

in selling and marketing expenses

24,377

Non-GAAP selling and marketing

expenses

285,228

69,791

692,605

121,749

General and administrative

expenses

356,656

Share-based compensation expense

in general and administrative

expenses

41,546

Non-GAAP general and

administrative expenses

314,876

80,665

602,919

176,110

Operating costs and expenses

1,825,596

292,425

3,340,628

552,472

Share-based compensation expense

in operating costs and expenses

66,434

27,424

133,879

53,903

Non-GAAP operating costs and

expenses

1,162

265,001

3,206,749

498,569

(Loss)/income from operations

(379,432)

Share based compensation expenses

66,903

Non-GAAP (loss)/income from

operations

(313,440)

42,315

(372,852)

40,471

Net loss attributable to TAL

Education Group

(826,546)

(787)

(928,624)

(44,616)

Share based compensation expenses

66,903

Non-GAAP net (loss)/income

attributable to TAL Education

Group

$(760,112)

$ 26,637

$ (794,745)

$ 9,287

Net loss per ADS

Basic

$ (1.29)

$ (0.00)

$ (1.44)

$ (0.07)

Diluted

(1.29)

(0.00)

(1.44)

(0.07)

Non-GAAP net (loss)/ income per

ADS

Basic

$ (1.18)

$ 0.04

$ (1.23)

$ 0.01

Diluted

(1.18)

0.04

(1.23)

0.01

ADSs used in calculating net loss

per ADS

Basic

642,614,142

634,860,825

643,780,356

640,024,317

Diluted

642,317

ADSs used in calculating Non-

GAAP net (loss)/ income per ADS

Basic

642,142

642,251,238

643,356

642,521,076

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