Sunlands Technology Group (STG) Reports Q4 Loss of $1.67, Revenues Beat

Sunlands Technology Group (NYSE: STG) reported Q4 EPS of ($1.67), versus $0.00 reported last year. Revenue for the quarter came in at $89.6 million versus the consensus estimate of $74.35 million.

Fourth Quarter 2020 Financial and Operational Snapshots

• Net revenues were RMB584.6 million (US$89.6 million), representing a 6.3% increase year-over-year.
• Gross billings (non-GAAP) were RMB647.8 million (US$99.3 million), compared with RMB642.0 million in the fourth quarter of 2019.
• Gross profit was RMB486.7 million (US$74.6 million), representing an 8.6% increase year-over-year.
• Net loss was RMB73.5 million (US$11.3 million), representing a 47.3% decrease year-over-year.
• Net loss margin, defined as net loss as a percentage of net revenues, decreased to 12.6% from 25.4% in the fourth quarter of 2019.
• New student enrollments were 140,726, representing a 51.8% increase year-over-year.
• As of December 31, 2020, the Company's deferred revenue balance was RMB3,024.4 million (US$463.5 million).

"While methodically navigating a year of both unprecedented challenges and changes, we concluded 2020 with steady and solid growth in the fourth quarter. With our strategic focus on developing diverse product offerings, improving student acquisition efficiency and enhancing curriculum effectiveness, we pursued the opportunities presenting themselves in the market as overall demand grows for higher education and professional skills programs," said Mr. Tongbo Liu, Chief Executive Officer of Sunlands. "With enhanced operational efficiency and an expanded course portfolio, fourth quarter net revenues reached RMB584.6 million, growing 6.3% compared to the same period of 2019. New student enrollment increased remarkably by 51.8% year-over-year to 140,726 in the fourth quarter.

"As the post-graduate entrance exams for 2021 concluded in December with registered applicants reaching a record high of almost 3.8 million, we are well-prepared to handle the growing volume and demand. Our master's degree-oriented programs demonstrated robust growth momentum in 2020 and recorded RMB632.9 million in gross billings, with an increase of 49.5% compared with 2019. The solid performance was the result of our high-quality and tailored courses that helped capture the increasing number of applicants for post-graduate studies. We also continued our expansion of professional certification and skills programs, which yielded very encouraging results in the fourth quarter. As we head further into 2021, we are committed to the further development and roll-out of top-notch and diversified products and services for adult continuing education and skills training while keeping a close eye on improving operating efficiency as well as expanding and enhancing sales channels," concluded Mr. Liu.

Ms. Selena Lu Lv, Chief Financial Officer of Sunlands, said, "In the fourth quarter we deepened our strategy to balance business growth and profitability in a challenging environment. Our net revenues continued to grow at a healthy rate, exceeding the high end of our guidance by 4.4%. As we further improved operating efficiency and optimized costs, our general and administrative expenses in the fourth quarter declined 44.6% year-over-year, which contributed to the significant narrowing of our net loss to RMB73.5 million from RMB139.5 million in the fourth quarter of 2019. Our net loss margin decreased considerably to 12.6% from 25.4% in the fourth quarter of 2019. Going forward, we will continue to refine our operation and sales execution as we strive for robust and sustainable long-term growth, in order to consistently create value for our students and shareholders, as well as the broader society."

Outlook

For the first quarter of 2021, Sunlands currently expects net revenues to be between RMB670 million to RMB690 million, which would represent an increase of 18.6% and 22.1% year-over-year.

The above outlook is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to substantial uncertainty.

For earnings history and earnings-related data on Sunlands Technology Group (STG) click here.

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