OneSmart International Education Group (ONE) Reports Q1 Revenues Above Consensus

OneSmart International Education Group (NYSE: ONE) reported Q1 revenue for the quarter came in at $113.4 million versus the consensus estimate of $109.16 million.

Highlights for the First Fiscal Quarter Ended November 30, 2019

• Net revenues increased by 23.2% year-over-year to 797.2 million (US$113.4 million)- Net revenues from OneSmart VIP business increased by 23.8% year-over-year to RMB601.2 million (US$85.5 million)- Net revenues from HappyMath business increased by 7.1% year-over-year to RMB114.0 million (US$16.2 million)- Net revenues from FasTrack English business increased by 54.3% year-over-year to RMB48.5 million (US$6.9 million)
• Number of new students increased by 53.5% Year-over-year: - Number of new students for OneSmart VIP business increased by 50.5% year-over-year- Number of new students for HappyMath business increased by 132.2% year-over-year- Number of new students for FasTrack English business increased by 82.8% year-over-year

Mr. Steve Zhang, Chairman and Chief Executive Officer of OneSmart, commented, "We would like to extend our sincere care and deep concern to the people including our students and families who are being affected by the coronavirus outbreak in Wuhan and many other cities of China. Despite the short-term challenges, we remain confident on growth prospect of our business and the ability of our highly effective personalized teaching programs to help improve learning experience and outcome. The situation requires us to accelerate the expansion of our online platform, OneSmart Online. The online platform was built on deep understanding of online education demand and learning of online products and technologies through a number of online businesses that we invested in over the last five years. OneSmart Online will focus on providing premium personalized education services as a supplement to our existing offline premium programs. While the new platform has been playing a critical role in smoothly switching majority of our teaching activities from offline to online to tackle the situation, we expect it to continue to gain market traction in the medium to long term as it strategically broaden our addressable markets to more students and more cities that our offline model cannot yet sufficiently cover. Going forward, our offline centers will continue to focus on tier-1 and major tier-2 cities, while our online platform will expand into the vast lower tier cities. I am very confident that with our well recognized brand, improved teacher quality, operational efficiencies and continuous investment in technology, we will replicate our offline success to online space and build the largest premium online education platform in China."

Mr. Greg Zuo, OneSmart's Director, Chief Financial Officer and Chief Strategic Officer added, "OneSmart is committed to make every effort to ensure the continuity of quality learning by our students. Thanks to the solid performance of OneSmart Online platform, we have successfully converted majority of our offline students to online platform just within the first two weeks since the beginning of February when the initiative started. So far our students for the main VIP business are taking our online classes more than twice as frequently as they took offline classes previously. We expect the conversion trend to continue during the rest of virus outbreak period. To actively manage the short term impact, we have implemented temporary cost and expenses control policy. Some of these measures may have a prolonged positive impact to the margin expansion trend that we expect.

OneSmart Online is a critical part of our long-term strategy. We have invested significant amount of capital to improve OneSmart Online platform and we will continue to expand its online offerings to existing and broader student base in more cities of China. OneSmart Online offers compelling value proposition by bringing convenience, quality teacher, program flexibility and enhanced value to our students. Its OMO offerings, which we are rolling out to more than 10 cities in China, enables us to address a larger market to reach to students in cities where our current physical centers cannot sufficiently cover, as well as students in lower tier cities that we have not entered. We are excited for the opportunities to generate sizable incremental growth through online channel in the near future. For our traditional offline business, we expect to drive growth momentum by upgrading to more premium Elite products, scaling up the top 20 cites for economy of scale and the continuing ramp-up of the 237 centers opened in FY18 and FY19, which is on track as of FY20Q1."

For earnings history and earnings-related data on OneSmart International Education Group (ONE) click here.

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