Sunlands Online Education (STG) Reports Q3 Loss of $4.76, Revenues Beat

Sunlands Online Education (NYSE: STG) reported Q3 EPS of ($4.76), versus $0.00 reported last year. Revenue for the quarter came in at $75.3 million versus the consensus estimate of $71.06 million.

• Net revenues were RMB517.0 million (US$75.3 million), representing a 95.8% increase year-over-year.
• Gross billings (non-GAAP) were RMB755.8 million (US$110.0 million), representing a 14.0% increase year-over-year.
• Gross profit was RMB424.4 million (US$61.8 million), representing a 93.5% increase year-over-year.
• Net loss was RMB226.3 million (US$32.9 million), representing a 12.7% decrease year-over-year. Net loss margin, defined as net loss as a percentage of net revenue, decreased to 43.8% from 98.1% in the third quarter of 2017.
• The number of new student enrollments[1] was 120,241, representing a 14.5% increase year-over-year.
• As of September 30, 2018, the balance of our deferred revenue was RMB3,116.2 million (US$453.7 million).

Mr. Tongbo Liu, Chief Executive Officer of Sunlands, said, "We are pleased to report revenues in line with guidance in the third quarter as tens of thousands more students chose to study with Sunlands. We also significantly reduced the net loss margin as we continued to gain operating leverage. During the third quarter, we continued to optimize our sales and marketing initiatives to build brand awareness and attract more students to our platform. We expanded the number of free trial classes to enable prospective students to experience the quality of our teaching methods and become familiar with our online and mobile learning platform. Free trial classes consistently led to a higher conversion rate and continued to improve the productivity of our sales efforts. We will continue to expand this initiative in the coming quarters."

"In the third quarter, we improved the average gross billings per student by introducing new offers that bundle value-added services such as AI-powered personalized study programs. Our students also continued to achieve STE pass rates significantly higher than the national average, demonstrating the benefits of using Sunlands' learning approach. With industry-leading pass rates and a lower price point than traditional bricks-and-mortar tutorial institutions, we are confident that we can continue to improve our pricing power in the future."

Mr. Steven Yipeng Li, Chief Financial Officer of Sunlands, said, "In the third quarter, we grew our net revenues by 95.8% year-over-year, mainly driven by strong growth in new student enrollments. We also continued to optimize our operations and marketing efforts to improve profitability. As a result, for the first time since the listing of our company, our net loss declined substantially, reflecting our progress towards profitability. In addition, our net loss as a percentage of net revenues dropped to 43.8% in the third quarter of 2018 from 98.1% for the same period in 2017. Looking forward, we plan to continue to invest in the development of quality educational content and our technology platform to continue to attract more students to our leading online one-to-many, live streaming platform."

For earnings history and earnings-related data on Sunlands Online Education (STG) click here.

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