Four Seasons Education (FEDU) Reports Q1 EPS of $0.00 on Revenues of $8.2M

Four Seasons Education (NYSE: FEDU) reported Q1 EPS of $0.00. Revenue for the quarter came in at $8.2 million, versus $0 reported last year.

First Quarter Fiscal Year 2021 Financial and Operational Highlights

• Revenue decreased by 31.5% to RMB58.7 million (US$8.2 million) from RMB85.6 million in the same period of last year.
• Gross profit decreased by 43.1% to RMB22.4 million (US$3.1 million) from RMB39.4 million in the same period of last year.
• Operating loss was RMB12.5 million (US$1.8 million), compared with RMB2.1 million in the same period of last year.
• Adjusted operating loss(1) (non-GAAP) was RMB4.8 million (US$0.7 million), compared with adjusted operating income of RMB7.8 million in the same period of last year.
• Net loss was RMB11.5 million (US$1.6 million), compared with net income of RMB4.2 million in the same period of last year.
• Adjusted net loss(2) (non-GAAP) was RMB0.6 million (US$0.1 million), compared with adjusted net income of RMB11.2 million in the same period of last year.
• Basic and diluted net loss per American Depositary Share ("ADS") attributable to ordinary shareholders were both RMB0.23 (US$0.03), compared with net income of both RMB0.08, for the same period of last year. Each two ADSs represent one ordinary share.
• Adjusted basic and diluted net income per ADS attributable to ordinary shareholders(3) (non-GAAP) were both RMB0.01 (US$0.00), compared with both RMB0.22, for the same period of last year.
• Number of learning centers was 50 as of May 31, 2020, compared with 52 as of May 31, 2019.
• Total student enrollment(4) was 44,634, compared with 69,100 during the same period of last year. The decrease was primarily due to the impact of the outbreak of COVID-19.

"In the first quarter of fiscal 2021, amid the ongoing outbreak of the COVID-19, we have been diligently operating our online classes while preparing ourselves for the market recovery," said Ms. Yi (Joanne) Zuo, the Director and Chief Executive Officer of Four Seasons Education. "During this quarter, most of our courses were delivered online as offline classes only started to resume in late May. In addition to academic subject tutoring courses, we have also converted some of our interest-based courses online to provide more options for our students. With the growth of our online operation, we made a strategic investment in Fuxi Network, an online education and training service provider, to further strengthen our online capability in building a comprehensive online-merging-offline ("OMO") model.

"While the spread of the pandemic has generally been under control in China, currently, over 90% of our existing learning centers have resumed offline classes after obtaining approvals from government authorities who have reviewed and evaluated the compliance status of our facilities. We have implemented strict sanitary and disinfection measures to protect students' health and safety when studying at our learning centers. Furthermore, we are privileged to have been selected again as an organizer of Trusted Summer Childcare to provide a superior environment and fulfilling summer experience for kids. Our organization of this program is a testament to our best-in-class education, well-equipped facilities, and high-standard operation of learning centers.

"During the quarter, we continued to optimize our learning center network, while taking into consideration the impact of COVID-19, so as to more cost-efficiently allocate our offline resources and utilize our budget. In light of the evolving pandemic situation and the prevailing trend of online-offline integration, we will continue to offer online courses with enhanced learning experiences in addition to our offline classes. This approach provides more options for our students and allows us greater flexibility enabling smooth class delivery in any situation. It is encouraging that enrollments for both our online and offline courses demonstrated sequential growth in the first quarter of fiscal 2021, which drove deferred revenue up by 44.1% compared with the level as of February 29, 2020. This is a positive indication of the gradual recovery of demand for our education services. We are confident that with an efficient OMO model, we are able to better serve a wider student population that are attracted by our high-quality education and superior class experience," Ms. Zuo concluded.

Business Outlook

For the second quarter of fiscal year 2021, the Company expects to generate revenue in the range of RMB79.9 million to RMB86.3 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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