2024-12-23 00:48:57
Author: TAL Education Group / 2023-07-27 19:17 / Source: TAL Education Group

TAL Education Group Announces Unaudited Financial Results for the First Fiscal Quarter Ended May 31, 2023

BEIJING,July 27,2023 -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"),a smart learning solutions provider in China,today announced its unaudited financial results for the first quarter of fiscal year 2024 ended May 31,2023.

Highlights for the First Quarter of Fiscal Year 2024

Net revenues was US$275.4 million,compared to net revenues of US$224.0 million in the same period of the prior year.

Loss from operations was US$57.8 million,compared to loss from operations of US$28.3 million in the same period of the prior year.

Non-GAAP loss from operations,which excluded share-based compensation expenses,was US$32.3 million,compared to non-GAAP loss from operations of US$1.8 million in the same period of the prior year.

Net loss attributable to TAL was US$45.0 million,compared to net loss attributable to TAL of US$43.8 million in the same period of the prior year.

Non-GAAP net loss attributable toTAL,was US$19.5 million,compared tonon-GAAP net loss attributable to TAL of US$17.4million 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. ThreeADSs represent one Class A common share.

Cash,cash equivalents and short-term investments totaled US$3,044.7 million as of May 31,2023,compared to US$3,171.5 million as of February 28,2023.

Financial Data-- First Quarter of Fiscal Year 2024

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


Three Months Ended


May 31,


2022

2023

Pct. Change

Net revenues

224,045

275,440

22.9%

Loss from operations

(28,323)

(57,773)

104.0%

Non-GAAP loss from operations

(1,844)

(32,260)

1,649.5%

Net loss attributable to TAL

(43,829)

(45,037)

2.8%

Non-GAAP net loss attributable to TAL

(17,350)

(19,524)

12.5%

Net loss per ADS attributable to TAL – basic

(0.07)

(0.07)

4.6%

Net loss per ADS attributable to TAL –


diluted

(0.07)

(0.07)

4.6%

Non-GAAP net loss per ADS attributable to


TAL – basic

(0.03)

(0.03)

14.5%

Non-GAAP net loss per ADS attributable to


TAL – diluted

(0.03)

(0.03)

14.5%

"In this quarter,amidst ongoing effort to fine-tune our core offerings and optimize our operations,we also achieved progress in some of our newer initiatives such as our smart device business." said Alex Peng,TAL's President & Chief Financial Officer.

Mr. Peng added: "We sought opportunities to create additional shareholder value through stock repurchase. In the first quarter of fiscal year 2024,we spent approximately US$ 151.3 million and repurchased approximately 25.9 million shares of ADSs."

Financial Results for the First Quarter of Fiscal Year 2024

Net Revenues

In the first quarter of fiscal year 2024,TAL reported net revenues of US$275.4 million,representing a 22.9% increase from US$224.0 million in the first quarter of fiscal year 2023.

Operating Costs and Expenses

In the first quarter of fiscal year 2024,operating costs and expenses were US$342.1 million,representing a 31.6% increase from US$260.0 million in the first quarter of fiscal year 2023. Non-GAAP operating costs and expenses,were US$316.6 million,representing a 35.5% increase from US$233.6 million in the first quarter of fiscal year 2023.

Cost of revenues increased by 57.5% to US$139.5 million from US$88.6 million in the first quarter of fiscal year 2023. Non-GAAP cost of revenues,increased by 59.1% to US$137.1 million,from US$86.2 million in the first quarter of fiscal year 2023.

Selling and marketing expenses increased by 62.7% to US$97.7 million from US$60.0 million in the first quarter of fiscal year 2023. Non-GAAP selling and marketing expenses,increased by 73.7% to US$90.2 million,from US$52.0 million in the first quarter of fiscal year 2023.

General and administrative expenses decreased by 5.9% to US$104.9 million from US$111.5 million in the first quarter of fiscal year 2023. Non-GAAP general and administrative expenses,decreased by 6.5% to US$89.2 million,from US$95.4 million in the first quarter of fiscal year 2023.

Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 3.6% to US$25.5 million in the first quarter of fiscal year 2024 from US$26.5 million in the same period of fiscal year 2023.

Gross Profit

Gross profit increased by 0.3% to US$135.9 million from US$135.5 million in the first quarter of fiscal year 2023.

Loss from Operations

Loss from operations was US$57.8 million in the first quarter of fiscal year 2024,compared to loss from operations of US$28.3 million in the first quarter of fiscal year 2023. Non-GAAP lossfrom operations,compared to Non-GAAP loss from operations of US$1.8 million in the same period of the prior year.

Other Expense

Other expensewas US$6.8 million for the first quarter of fiscal year 2024,compared to other expenseof US$26.8 million in the first quarter of fiscal year 2023.

Income Tax expense

Income tax expense was US$3.5 million in the first quarter of fiscal year 2024,compared to US$2.3 million of income tax expense in the first quarter of fiscal year 2023.

Net Loss Attributable to TAL Education Group

Net loss attributable to TAL was US$45.0 million in the first quarter of fiscal year 2024,compared to net loss attributable to TAL of US$43.8 million in the first quarter of fiscal year 2023. Non-GAAP net loss attributable to TAL,compared to Non-GAAP net loss attributable to TAL of US$17.4 million in the first quarter of fiscal year 2023.

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 2024. Non-GAAP basic and diluted net loss per ADS,were both US$0.03 in the first quarter of fiscal year 2024.

Cash Flow

Net cash provided by operating activities for the firstquarter of fiscal year 2024was US$125.5 million.

Cash,Cash Equivalents,and Short-Term Investments

As of May 31,the Company had US$2,085.4 million of cash and cash equivalents and US$959.3 million of short-term investments,compared to US$2,021.9 million of cash and cash equivalents and US$1,149.6 million of short-term investments as of February 28,2023.

Deferred Revenue

As of May 31,the Company's deferred revenue balance was US$387.7 million,compared to US$237.4 million as of February 28,2023.

Share Repurchase

In April 2023,the Company's board of directors authorized to extend its share repurchase program launched in April 2021 by 12 months. Pursuant to the extended share repurchase program,the Company may repurchase up to approximately US$737.4 million of its common shares through April 30,2024.As of May 31,the Company has repurchased 8,645,334 common shares at an aggregate consideration of approximately US$151.3 million under the share repurchase program.

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 2024 ended May 31,2023 at 8:00 a.m. Eastern Time on July 27,2023 (8:00 p.m. Beijing time on July 27,2023).

Please note that you will need to pre-register for conference call participation at https://register.vevent.com/register/BI8b810989c152424eb1977de06a51b744.

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 related tax effect of which has been nil. 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,


2023


As of

May 31,


2023

ASSETS


Current assets


Cash and cash equivalents

$ 2,021,927


$ 2,085,411

Restricted cash-current

126,891


204,353

Short-term investments

1,149,607


959,310

Inventory

39,002


57,790

Amounts due from related parties-current

423


409

Income tax receivables

5,071


3,874

Prepaid expenses and other current assets

125,486


136,038

Total current assets

3,468,407


3,447,185

Restricted cash-non-current

146,089


135,827

Property and equipment,net

288,877


297,382

Deferred tax assets

5,973


6,678

Rental deposits

12,734


11,638

Intangible assets,net

485


386

Land use right,net

193,878


187,998

Long-term investments

453,375


464,265

Long-term prepayments and other non-current assets

5,534


6,396

Operating lease right-of-use assets

149,002


156,492

Total assets

$ 4,724,354


$ 4,714,247


LIABILITIES AND EQUITY


Current liabilities


Accounts payable

$ 59,991


$ 70,887

Deferred revenue-current

234,889


380,091

Amounts due to related parties-current

100


98

Accrued expenses and other current liabilities

446,711


462,630

Operating lease liabilities,current portion

42,174


45,679

Total current liabilities

783,865


959,385

Deferred revenue-non-current

2,465


7,576

Deferred tax liabilities

1,563


1,981

Operating lease liabilities,non-current portion

115,548


119,161

Total liabilities

903,441


1,088,103


Equity


Class A common shares

169


170

Class B common shares

49


49

Treasury Stock

(6)


(15)

Additional paid-in capital

4,400,656


4,274,935

Statutory reserve

160,353


159,570

Accumulated deficit

(685,912)


(730,166)

Accumulated other comprehensive loss

(30,666)


(55,130)

Total TAL Education Group's equity

3,844,643


3,649,413

Noncontrolling interest

(23,730)


(23,269)

Total equity

3,820,913


3,626,144

Total liabilities and equity

$ 4,247

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,



2022


2023Netrevenues


$ 224,045


$ 275,440Cost of revenues (note 1)


88,558


139,513Gross profit


135,487


135,927Operatingexpenses(note1)


Selling and marketing


60,039


97,657General and administrative


111,450


104,923Total operating expenses


171,489


202,580Government subsidies


7,679


8,880Loss from operations


(28,323)


(57,773)Interest income


13,063


22,981Other expense


(26,789)


(6,845)Loss before income tax expense andincome/(loss) from equity method investments


(42,049)


(41,637)Income tax expense


(2,316)


(3,519)Income/(loss) from equity method investments


1,453


(71)Netloss


$ (42,912)


$ (45,227)Add: Net (income)/loss attributable to noncontrolling


interest


(917)


190TotalnetlossattributabletoTALEducationGroup


$ (43,829)


$ (45,037)Netlosspercommonshare


Basic


$ (0.20)


$ (0.21)Diluted


(0.20)


(0.21)NetlossperADS(note2)


Basic


$ (0.07)


$ (0.07)Diluted


(0.07)


(0.07)Weighted average shares used in calculating net loss


per common share


Basic


215,062,603


211,319,973Diluted


215,973Note1: Share-based compensation expenses are included in the operating costs and expenses as follows:


FortheThreeMonths


EndedMay31,


2022


2023Cost of revenues


$ 2,393


$ 2,409Selling and marketing expenses


8,081


7,428General and administrative expenses


16,005


15,676Total


$ 26,479


$ 25,513Note 2: ThreeADSs representoneClassAcommonShare.TALEDUCATIONGROUPUNAUDITEDCONDENSEDCONSOLIDATEDSTATEMENTSOFCOMPREHENSIVELOSS(InthousandsofU.S.dollars)


For the Three Months Ended


May 31,



2022


2023


Netloss


$ (42,912)


$ (45,227)

Other comprehensive loss,net of tax


(60,826)


(23,813)

Comprehensiveloss


(103,738)


(69,040)

Add: Comprehensive loss attributable to


noncontrolling interest


(2,514)


(461)

Comprehensivelossattributableto

TALEducationGroup


$ (106,252)


$ (69,501)

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATEDSTATEMENTS OF

CASH FLOWS

(In thousands of U.S. dollars)


For the Three Months


Ended


May 31,


2022


2023


Net cash (used in)/provided by operating activities


$ (44,880)


$ 125,516

Net cash (used in)/provided by investing activities


(51,335)


160,915

Net cash used in financing activities


(49,768)


(151,237)

Effect of exchange rate changes


(18,737)


(4,510)


Net (decrease)/increase in cash,cash equivalents and restricted cash


(164,720)


130,684

Cash,cash equivalents and restricted cash at the beginning of


period


2,681,786


2,294,907


Cash,cash equivalents and restricted cash at the end of period


$ 2,517,066


$ 2,425,591

TALEDUCATIONGROUP

ReconciliationofNon-GAAPMeasurestotheMostComparableGAAPMeasures

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


FortheThreeMonths


Ended May31,


2022


2023


Costofrevenues


$ 88,558


$ 139,513

Share-based compensation expense in cost of

revenues


2,393


2,409

Non-GAAPcostofrevenues


86,165


137,104


Sellingandmarketingexpenses


60,039


97,657

Share-based compensation expense in selling and

marketing expenses


8,081


7,428

Non-GAAPsellingandmarketingexpenses


51,958


90,229

Generalandadministrativeexpenses


111,450


104,923

Share-based compensation expense in general and

administrative expenses


16,005


15,676

Non-GAAPgeneralandadministrativeexpenses


95,445


89,247


Operatingcostsandexpenses


260,047


342,093

Share-based compensation expense in operating

costs and expenses


26,479


25,513

Non-GAAPoperatingcostsandexpenses


233,568


316,580


Lossfromoperations


(28,323)


(57,773)

Share based compensation expenses


26,513

Non-GAAPlossfromoperations


(1,844)


(32,260)

NetlossattributabletoTALEducationGroup


(43,829)


(45,037)

Share based compensation expenses


26,513

Non-GAAPnetlossattributabletoTAL


EducationGroup


$ (17,350)


$ (19,524)

NetlossperADS


Basic


$ (0.07)


$ (0.07)

Diluted


(0.07)


(0.07)

Non-GAAPNetlossperADS


Basic


$ (0.03)


$ (0.03)

Diluted


(0.03)


(0.03)

ADSsusedincalculatingnetlossperADS


Basic


645,187,809


633,959,919

Diluted


645,919

ADSsusedincalculatingNon-GAAPnetloss per


ADS


Basic


645,919

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