RISE Education Cayman (REDU) Tops Q4 EPS by 9c, Revenues Beat

RISE Education Cayman (NASDAQ: REDU) reported Q4 EPS of $0.17, $0.09 better than the analyst estimate of $0.08. Revenue for the quarter came in at $59.8 million versus the consensus estimate of $57.39 million.

Fourth Quarter 2019 Operational and Financial Highlights

• Total revenues increased by 17.5% year-over-year to RMB416.2 million (US$59.8 million) in the fourth quarter of 2019.
• Net income attributable to RISE increased by 62.3% year-over-year to RMB51.1 million (US$7.3 million) in the fourth quarter of 2019.
• Non-GAAP net income attributable to RISE[1] increased by 38.2% year-over-year to RMB66.1 million (US$9.5 million) in the fourth quarter of 2019.
• Adjusted EBITDA[1] was RMB91.0 million (US$13.1 million) in the fourth quarter of 2019, almost the same when compared to the same period last year.
• Starting the fourth quarter of 2019, the Company will begin reporting the number of students in class[2] and new students enrolled[3] on a quarterly basis, which the Company believes more accurately reflects its business performance and provides a more meaningful comparative analysis than the previously reported student enrollment metric, which included new student enrollments and renewed student enrollments. Renewed student enrollments can be highly impacted by the Company\'s promotional activities. The increase in course prices on January 1, 2019 incentivized existing students to renew their courses far in advance of their scheduled graduation dates, making the student enrollment metric exceptionally high in the fourth quarter of 2018 and less indicative of the Company's business performance on a year-over-year basis. In addition, the adoption of the three-month tuition collection policy in certain cities in December 2018 also significantly impacted the number of renewed student enrollments, which made them less comparable on a year-over-year basis than the number of new students enrolled, who are newly acquired and have signed up for Rise courses.
• Students in class for Rise regular courses (including Rise Start and Rise On programs) were 54,383 as of December 31, 2019, an increase of 10.2% from 49,365 as of December 31, 2018. Approximately 58.5% of these students were in cities where the collection of standard tuition fees have been split into three to four installments since December 2018.
• New students enrolled for Rise regular courses in the fourth quarter of 2019 were 6,200, compared with 6,536 during the same period last year. Approximately 63.0% were in the cities where the collection of standard tuition fees have been split into three to four installments since December 2018. New students enrolled for other Rise courses (including online, short-term, SSAT test-prep courses and courses provided by the Edge Learning Centers ("The Edge")) were 1,086 in the fourth quarter of 2019, compared with 1,598 during the same period last year. The total number of the Company's learning centers increased to 472, consisting of 89 self-owned (including 2 operated by The Edge) and 383 franchised learning centers.
• Student retention rate at self-owned learning centers was 69% in the fourth quarter of 2019 compared with 71% for the same period of the prior year.

Business Outlook

In accordance with government regulations to contain the outbreak of COVID-19, RISE's learning centers were temporarily closed throughout the majority of the first quarter of 2020, which will adversely impact the Company's financial performance. The Company immediately took measures to effectively move its offline classes to online small group classes through Rise+ and began monetizing them in early March 2020. However, the Company expects revenue generated from online small group classes will be immaterial during the first quarter of 2020. With no set timetable for the lifting of government regulations on the temporary closure of learning centers, the Company expects the first quarter 2020 revenue to be in the range of RMB95 million and RMB100 million.

For earnings history and earnings-related data on RISE Education Cayman (REDU) click here.

You May Also Be Interested In

• Citi agrees to acquire rewards platform Kard Financial
• Assembly Biosciences (ASMB) Tops Q2 EPS by 53c
• Lument Finance Trust (LFT) Misses Q2 EPS by 17c