Four Seasons Education (FEDU) Reports Q4 Loss of $0.01, Revenues Miss

Four Seasons Education (NYSE: FEDU) reported Q4 EPS of ($0.01), versus $0.00 reported last year. Revenue for the quarter came in at $10.2 million versus the consensus estimate of $12.08 million.

Fourth Quarter Fiscal Year 2020 Financial and Operational Highlights

• Revenue increased by 9.8% to RMB71.1 million (US$10.2 million) from RMB64.7 million in the same period of last year.
• Gross profit increased by 32.4% to RMB24.8 million (US$3.5 million) from RMB18.7 million in the same period of last year.
• Operating loss was RMB168.2 million (US$24.1 million), compared with RMB30.1 million in the same period of last year.
• Adjusted operating loss(1) (non-GAAP) was RMB15.1 million (US$2.2 million), compared with RMB20.4 million in the same period of last year.
• Net loss was RMB145.4 million (US$20.8 million), compared with RMB18.5 million in the same period of last year.
• Adjusted net loss(2) (non-GAAP) was RMB4.7 million (US$0.7 million), compared with RMB11.7 million in the same period of last year.
• Basic and diluted net loss per American Depositary Share ("ADS") attributable to ordinary shareholders were both RMB3.11 (US$0.44), compared with both RMB0.36, for the same period of last year. Each two ADSs represent one ordinary share.
• Adjusted basic and diluted net loss per ADS attributable to ordinary shareholders(3) (non-GAAP) were both RMB0.07 (US$0.01), compared with both RMB0.22, for the same period of last year.
• Number of learning centers was 53 as of February 29, 2020, compared with 52 as of February 28, 2019.
• Total student enrollment(4) reached 24,006, compared with 46,165 during the same period of last year. The decrease was primarily due to the early Chinese New Year holidays in 2020 which resulted in a large portion of student enrollments for the winter semester occurring in the third fiscal quarter compared with last year and the impact of the outbreak of COVID-19.

"We delivered resilient results in the fourth quarter of fiscal year 2020," said Ms. Yi (Joanne) Zuo, the Director and Chief Executive Officer of Four Seasons Education. "The COVID-19 outbreak had a significant impact on our normal operations, but thanks to the online infrastructure and business presence we have been developing since 2018, we managed to swiftly shift our offline model for courses covering all academic subjects to online delivery. Our quick response enabled us to successfully retain the majority of our enrolled students by providing them diversified high-quality courses online during the lockdown period. This efficient transition also validates our online-merging-offline ("OMO") strategy and demonstrates our ability to serve a substantially higher number of students through livestreaming and pre-recorded classes. Our impressive student retention under such circumstances is a clear testament to our strong brand and students' deep trust in our courseware and teaching quality."

"On the financial front, on top of our topline growth compared with the fourth quarter of last year, we delivered robust gross profit growth of 32.4% year-over-year, with gross margin for the fourth quarter expanding 595 basis points year-over-year to reach 34.9%. In addition, we continued with our cost control measures. All these efforts helped us accomplish a solid fiscal year 2020 with topline growth of 15.9% year-over-year, which illustrates the healthy development and resilience of our business."

"Since the fourth quarter, especially after the outbreak of COVID-19, we have further consolidated our offline resources of education and operations with online technology. While we are still waiting for the PRC government to ease the current containment policies with a clear timetable for reopening offline facilities, our students have been learning with us online. Looking forward, after this pandemic being fully contained, we plan to continue to offer a considerable portion of courses online in addition to those to be taught offline in our learning centers. As we consistently offer engaging and diversified courses to a broad student group at different grade levels, we will keep solidifying and developing our OMO model to bring more options to our students with superior learning experience. We believe such a strategy will allow us to remain the maximized flexibility. More importantly, we believe that our strong balance sheet and cash position will enable us to execute our strategy and make selective investments with sufficient capital support," Ms. Zuo concluded.

Business Outlook

For the first quarter of fiscal year 2021, the Company expects to generate revenue in the range of RMB55.7 million to RMB60.0 million.

The above guidance reflects the Company's current and preliminary view, which is subject to change, particularly in consideration of uncertainties related to the COVID-19 outbreak, among others.

For earnings history and earnings-related data on Four Seasons Education (FEDU) click here.

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