TAL Education Group Announces Unaudited Financial Results for the Third Fiscal Quarter Ended November 30, 2022

BEIJING,Jan. 19,2023 -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"),a smart learning solutions provider in China,today announced its unaudited financial results for the third quarter of fiscal year 2023 ended November 30,2022.

Highlights for the Third Quarter of Fiscal Year 2023

Net revenues was US$232.7 million,compared to net revenues of US$1,020.9 million in the same period of the prior year.

Loss from operations was US$32.9 million,compared to loss from operations of US$108.4 million in the same period of the prior year.

Non-GAAP loss from operations,which excluded share-based compensation expenses,was US$4.5 million,compared to non-GAAP loss from operations of US$67.6 million in the same period of the prior year.

Net loss attributable to TAL was US$51.6 million,compared to net loss attributable to TAL of US$99.4 million in the same period of the prior year.

Non-GAAP net loss attributable to TAL,was US$23.2 million,compared to non-GAAP net loss attributable to TAL of US$58.6 million in the same period of the prior year.

Basic and diluted net loss per American Depositary Share ("ADS") were both US$0.08. Non-GAAP basic and diluted net loss per ADS,were both US$0.04. Three ADSs represent one Class A common share.

Cash,cash equivalents and short-term investments totaled US$3,040.5 million as of November 30,2022,compared to US$2,708.7 million as of February 28,2022.

Highlights for the Nine Months Ended November 30,2022

Net revenues was US$750.8 million,compared to net revenues of US$3,849.8 million in the same period of the prior year.

Loss from operations was US$46.3 million,compared to loss from operations of US$615.2 million in the same period of the prior year.

Non-GAAP income from operations,was US$35.9 million,compared to non-GAAP loss from operations of US$440.5 million in the same period of the prior year.

Net loss attributable to TAL was US$96.2 million,compared to net loss attributable to TAL of US$1,028.0 million in the same period of the prior year.

Non-GAAP net loss attributable to TAL,was US$14.0 million,compared to non-GAAP net loss attributable to TAL of US$853.3 million in the same period of the prior year.

Basic and diluted net loss per ADS were both US$0.15. Non-GAAP basic and diluted net loss per ADS,excluding share-based compensation expenses,were both US$0.02.

Financial Data——Third Quarter and First NineMonthsof Fiscal Year 2023

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

Three Months Ended

November 30,

2021

2022

Pct. Change

Net revenues

1,020,932

232,681

(77.2%)

Loss from operations

(108,429)

(32,882)

(69.7%)

Non-GAAP loss from operations

(67,611)

(4,540)

(93.3%)

Net loss attributable to TAL

(99,368)

(51,579)

(48.1%)

Non-GAAP net loss attributable to TAL

(58,550)

(23,237)

(60.3%)

Net loss per ADS attributable to TAL – basic

(0.15)

(0.08)

(47.3%)

Net loss per ADS attributable to TAL – diluted

(0.15)

(0.08)

(47.3%)

Non-GAAP net loss per ADS attributable to TAL

– basic

(0.09)

(0.04)

(59.7%)

Non-GAAP net loss per ADS attributable to TAL

– diluted

(0.09)

(0.04)

(59.7%)

Nine Months Ended

November 30,

2021

2022

Pct. Change

Net revenues

3,849,755

750,786

(80.5%)

Loss from operations

(615,160)

(46,314)

(92.5%)

Non-GAAP (loss)/income from operations

(440,463)

35,931

(108.2%)

Net loss attributable to TAL

(1,027,992)

(96,195)

(90.6%)

Non-GAAP net loss attributable to TAL

(853,295)

(13,950)

(98.4%)

Net loss per ADS attributable to TAL – basic

(1.60)

(0.15)

(90.6%)

Net loss per ADS attributable to TAL – diluted

(1.60)

(0.15)

(90.6%)

Non-GAAP net loss per ADS attributable to TAL

– basic

(1.33)

(0.02)

(98.4%)

Non-GAAP net loss per ADS attributable to TAL

– diluted

(1.33)

(0.02)

(98.4%)

"Although the revenue of this quarter was affected by exchange rate fluctuations and seasonality，our new business has maintained the momentum of continuous development " said Alex Peng,TAL's President & Chief Financial Officer.

Mr. Peng added: "We expect to continue our development in the fourth quarter,enhancing the value that we deliver to our customers while further refining our operating efficiency to strengthen our competitive position and drive sustainable,long-term growth of our business."

Financial Results for the Third Quarter of Fiscal Year 2023

Net Revenues

In the third quarter of fiscal year 2023,TAL reported net revenues of US$232.7 million,representing a 77.2% decrease from US$1,020.9 million in the third quarter of fiscal year 2022.

Operating Costs and Expenses

In the third quarter of fiscal year 2023,operating costs and expenses were US$266.3 million,representing a 76.6% decrease from US$1,139.3 million in the third quarter of fiscal year 2022. Non-GAAP operating costs and expenses,were US$238.0 million,representing a 78.3% decrease from US$1,098.5 million in the third quarter of fiscal year 2022.

Cost of revenues decreased by 80.2% to US$103.0 million from US$519.5 million in the third quarter of fiscal year 2022. Non-GAAP cost of revenues,decreased by 80.9% to US$99.4 million,from US$519.2 million in the third quarter of fiscal year 2022.

Selling and marketing expenses decreased by 74.3% to US$70.4 million from US$273.6 million in the third quarter of fiscal year 2022. Non-GAAP selling and marketing expenses,decreased by 75.3% to US$63.8 million,from US$258.6 million in the third quarter of fiscal year 2022.

General and administrative expenses decreased by 69.0% to US$93.0 million from US$300.0 million in the third quarter of fiscal year 2022. Non-GAAP general and administrative expenses,decreased by 72.7% to US$74.8 million,from US$274.4 million in the third quarter of fiscal year 2022.

Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 30.6% to US$28.3 million in the third quarter of fiscal year 2023 from US$40.8 million in the same period of fiscal year 2022.

Impairment loss on intangible assets and goodwill was nil for the third quarter of fiscal year 2023,compared to US$46.2 million for the third quarter of fiscal year 2022.

Gross Profit

Gross profit decreased by 74.1% to US$129.7 million from US$501.4 million in the third quarter of fiscal year 2022.

Loss from Operations

Loss from operations was US$32.9 million in the third quarter of fiscal year 2023,compared to loss from operations of US$108.4 million in the third quarter of fiscal year 2022. Non-GAAP lossfrom operations,compared to Non-GAAP loss from operations of US$67.6 million in the same period of the prior year.

Other Income/(Expense)

Other expensewas US$32.0 million for the third quarter of fiscal year 2023,compared to other income of US$9.5 million in the third quarter of fiscal year 2022.

Impairment Loss on Long-term Investments

Impairment loss on Long-term investment was US$0.2 million for the third quarter of fiscal year 2023,compared to nil for the third quarter of fiscal year 2022.

Income Tax Expense

Income tax expense was US$2.8 million in the third quarter of fiscal year 2023,compared to US$25.6 million of income tax expense in the third quarter of fiscal year 2022.

Net Loss attributable to TAL Education Group

Net loss attributable to TAL was US$51.6 million in the third quarter of fiscal year 2023,compared to net loss attributable to TAL of US$99.4 million in the third quarter of fiscal year 2022. Non-GAAP net loss attributable to TAL,compared to Non-GAAP net loss attributable to TAL of US$58.6 million in the third quarter of fiscal year 2022.

Basic and Diluted Net Loss per ADS

Basic and diluted net loss per ADS were both US$0.08 in the third quarter of fiscal year 2023. Non-GAAP basic and diluted net loss per ADS,were both US$0.04 in the third quarter of fiscal year 2023.

Cash,Cash Equivalents,and Short-Term Investments

As of November 30,the Company had US$1,860.9 million of cash and cash equivalents and US$1,179.6 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 November 30,the Company's deferred revenue balance was US$270.8 million,compared to US$187.7 million as of February 28,2022.

Financial Results for the First Nine Months of Fiscal Year 2023

Net Revenues

For the first nine months of fiscal year 2023,TAL reported net revenues ofUS$750.8 million,representing an 80.5% decrease fromUS$3,849.8 millionin the first nine months of fiscal year 2022.

Operating Costs and Expenses

In the first nine months of fiscal year 2023,operating costs and expenses wereUS$818.8 million,an 81.7% decrease fromUS$4,480.0 millionin the first nine months of fiscal year 2022. Non-GAAP operating costs and expenses,wereUS$736.6 million,an 82.9% decrease fromUS$4,305.3 millionin the first nine months of fiscal year 2022.

Cost of revenues decreased by 84.6% toUS$308.6 millionfromUS$2,005.3 millionin the first nine months of fiscal year 2022. Non-GAAP cost of revenues,decreased by 85.0% toUS$300.1 millionfromUS$2,004.3 millionin the first nine months of fiscal year 2022.

Selling and marketing expenses decreased by 79.4% toUS$208.5 millionfromUS$1,014.7 millionin the first nine months of fiscal year 2022. Non-GAAP selling and marketing expenses,decreased by 80.5% toUS$185.5 millionfromUS$951.2 millionin the first nine months of fiscal year 2022.

General and administrative expenses decreased by 69.5% toUS$301.6 million from US$987.6 millionin the first nine months of fiscal year 2022. Non-GAAP general and administrative expenses,decreased by 71.4% toUS$250.9 millionfromUS$877.3 millionin the first nine months of fiscal year 2022.

Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 52.9% toUS$82.2 millionin the first nine months of fiscal year 2023 fromUS$174.7 millionin the same period of fiscal year 2022.

Impairment loss on intangible assets and goodwill was nil for the first nine months of fiscal year 2023,compared to US$472.4 million for the same period of fiscal year 2022.

Gross Profit

Gross profit decreased by 76.0% toUS$442.1 millionfromUS$1,844.5 millionin the first nine months of fiscal year 2022.

(Loss)/Income from Operations

Loss from operations wasUS$46.3 millionin the first nine months of fiscal year 2023,compared to loss from operations ofUS$615.2 millionin the same period of the prior year. Non-GAAP income from operations,wasUS$35.9 million,compared toUS$440.5 million Non-GAAP loss from operationsin the same period of the prior year.

Other Income/(Expense)

Other expense wasUS$84.5 millionfor the first nine months of fiscal year 2023,compared to other income of US$17.6 million in the same period of the prior year.

Impairment Loss on Long-term Investments

Impairment loss on long-term investments wasUS$6.8 million for the first nine months of fiscal year 2023,compared toUS$178.1 millionfor the first nine months of fiscal year 2022.

Income Tax Expense

Income tax expense wasUS$9.6 millionin the first nine months of fiscal year 2023,compared toUS$367.1 millionof income tax expense in the first nine months of fiscal year 2022.

Net Loss Attributable toTAL Education Group

Net loss attributable to TAL wasUS$96.2 millionin the first nine months of fiscal year 2023,compared to net loss attributable to TAL ofUS$1,028.0 millionin the first nine months of fiscal year 2022. Non-GAAP net loss attributable to TAL,compared toUS$853.3 million Non-GAAP loss attributable to TALin the same period of the prior year.

Basic and Diluted Net Loss per ADS

Basic and diluted net loss per ADS were bothUS$0.15 in the first nine months of fiscal year 2023. Non-GAAP basic and diluted net loss per ADS,wereboth US$0.02.

Conference Call

The Company will host a conference call and live webcast to discuss its financial results for the third fiscal quarter of fiscal year 2023 ended November 30,2022 at 7:00 a.m. Eastern Time on January 19,2023 (8:00 p.m. Beijing time on January 19,2023).

Please note that you will need to pre-register for conference call participation at https://register.vevent.com/register/BI3278c68d351148b985b566d3f1215a12.

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

TALEDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)

As of

February 28,

2022

As of

November 30,

2022

ASSETS

Current assets

Cash and cash equivalents

$ 1,638,189

$ 1,860,877

Restricted cash-current

755,646

297,405

Short-term investments

1,070,535

1,179,600

Inventory

21,830

30,183

Amounts due from related parties-current

919

393

Income tax receivables

19,504

27

Prepaid expenses and other current assets

122,753

134,796

Total current assets

3,629,376

3,503,281

Restricted cash-non-current

287,951

149,950

Property and equipment,net

281,226

272,639

Deferred tax assets

6,747

3,422

Rental deposits

10,770

14,894

Intangible assets,net

1,696

560

Land use right,net

217,708

190,647

Goodwill

-

159

Amounts due from related parties- non-current

77

-

Long-term investments

414,487

467,256

Long-term prepayments and other non-current assets

5,418

4,694

Operating lease right-of-use assets

227,072

149,326

Total assets

$ 5,082,528

$ 4,756,828

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

$ 89,838

$ 69,809

Deferred revenue-current

187,718

270,111

Amounts due to related parties-current

205

104

Accrued expenses and other current liabilities

558,718

474,119

Operating lease liabilities,current portion

66,105

41,326

Total current liabilities

902,584

855,469

Deferred revenue-non-current

14

686

Deferred tax liabilities

1,680

3,323

Operating lease liabilities,non-current portion

175,988

118,063

Total liabilities

1,080,266

977,541

Equity

Class A common shares

167

169

Class B common shares

49

49

Treasury Stock

-

(6)

Additional paid-in capital

4,358,265

4,374,276

Statutory reserve

154,362

150,749

Accumulated deficit

(544,309)

(636,891)

Accumulated other comprehensive income/(loss)

61,617

(83,118)

Total TAL Education Group's equity

4,030,151

3,805,228

Noncontrolling interest

(27,889)

(25,941)

Total equity

4,002,262

3,779,287

Total liabilities and equity

$ 5,828

TALEDUCATION 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

November 30,

For the Nine Months Ended

November 30,

2021

2022

2021

2022

Net revenues

$ 1,932

$ 232,681

$ 3,755

$ 750,786

Cost of revenues (note 1)

519,483

102,955

2,005,252

308,645

Gross profit

501,449

129,726

1,844,503

442,141

Operating expenses (note 1)

Selling and marketing

273,629

70,398

1,014,666

208,524

General and administrative

299,963

92,972

987,595

301,628

Impairment loss on intangible

assets and goodwill

46,247

-

472,437

-

Total operating expenses

619,839

163,370

2,474,698

510,152

Government subsidies

9,961

762

15,035

21,697

Loss from operations

(108,429)

(32,882)

(615,160)

(46,314)

Interest income

12,747

15,979

84,644

41,487

Interest expense

(1,821)

-

(7,871)

-

Other income/(expense)

9,520

(32,022)

17,611

(84,526)

Gain from disposal of a subsidiary

-

-

-

9,550

Impairment loss on long-term

investments

-

(215)

(178,063)

(6,825)

Loss before income tax expense

and income from equity method

investments

(87,983)

(49,140)

(698,839)

(86,628)

Income tax expense

(25,562)

(2,756)

(367,120)

(9,559)

Income from equity method

investments

6,423

280

10,471

801

Net loss

(107,122)

(51,616)

(1,055,488)

(95,386)

Add: Net loss/(income)

attributable to noncontrolling

interest

7,754

37

27,496

(809)

Total net loss attributable to

TAL Education Group

$ (99,368)

$ (51,579)

$ (1,992)

$ (96,195)

Net loss per common share

Basic

$ (0.46)

$ (0.24)

$ (4.79)

$ (0.45)

Diluted

(0.46)

(0.24)

(4.79)

(0.45)

Net loss per ADS (note 2)

Basic

$ (0.15)

$ (0.08)

$ (1.60)

$ (0.15)

Diluted

(0.15)

(0.08)

(1.60)

(0.15)

Weighted average shares used in

calculating net loss per

common share

Basic

214,672,624

211,617,052

214,619,651

212,770,824

Diluted

214,824

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

For the Three Months

For the Nine Months

Ended November 30,

Ended November 30,

2021

2022

2021

2022

Cost of revenues

$262

$3,549

$996

$8,529

Selling and marketing expenses

15,008

6,637

63,440

23,014

General and administrative expenses

25,548

18,156

110,261

50,702

Total

$40,818

$28,342

$174,697

$82,245

Note 2: ThreeADSsrepresent one Class A common Share.

TALEDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATEDSTATEMENTS OF

Comprehensive LOSS

(In thousands of U.S. dollars)

For the Three Months Ended

For the Nine Months Ended

November 30,

November 30,

2021

2022

2021

2022

Net loss

$ (107,122)

$ (51,616)

$ (1,488)

$ (95,386)

Other comprehensive

income/(loss),net of tax

6,053

(24,634)

(17,796)

(141,372)

Comprehensive loss

(101,069)

(76,250)

(1,073,284)

(236,758)

Add: Comprehensive loss

/(income) attributable to

noncontrolling interest

8,106

(776)

27,855

(4,172)

Comprehensive loss

attributable to TAL

Education Group

$ (92,963)

$ (77,026)

$ (1,045,429)

$ (240,930)

TALEDUCATION 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 November 30,

For the Nine Months

Ended November 30,

2021

2022

2021

2022

Cost of revenues

$ 519,483

$ 102,955

$ 2,252

$ 308,645

Share-based compensation expense

in cost of revenues

262

3,549

996

8,529

Non-GAAP cost of revenues

519,221

99,406

2,004,256

300,116

Selling and marketing expenses

273,524

Share-based compensation expense

in selling and marketing expenses

15,014

Non-GAAP selling and marketing

expenses

258,621

63,761

951,226

185,510

General and administrative

expenses

299,628

Share-based compensation expense

in general and administrative

expenses

25,702

Non-GAAP general and

administrative expenses

274,415

74,816

877,334

250,926

Operating costs and expenses

1,139,322

266,325

4,479,950

818,797

Share-based compensation expense

in operating costs and expenses

40,818

28,342

174,697

82,245

Non-GAAP operating costs and

expenses

1,098,504

237,983

4,305,253

736,552

Loss from operations

(108,314)

Share based compensation expenses

40,245

Non-GAAP (loss)/income from

operations

(67,611)

(4,540)

(440,463)

35,931

Net loss attributable to TAL

Education Group

(99,368)

(51,579)

(1,992)

(96,195)

Share based compensation expenses

40,245

Non-GAAP net loss attributable to

TAL Education Group

$ (58,550)

$ (23,237)

$ (853,295)

$ (13,950)

Net loss per ADS

Basic

$ (0.15)

$ (0.08)

$ (1.60)

$ (0.15)

Diluted

(0.15)

(0.08)

(1.60)

(0.15)

Non-GAAP Net loss per ADS

Basic

$ (0.09)

$ (0.04)

$ (1.33)

$ (0.02)

Diluted

(0.09)

(0.04)

(1.33)

(0.02)

ADSs used in calculating net loss

per ADS

Basic

644,017,872

634,851,156

643,858,953

638,312,472

Diluted

644,472

ADSs used in calculating Non-

GAAP net loss per ADS

Basic

644,472

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