Sunlands Technology Group (STG) Reports Q1 Loss of $1.20 on Revenues of $106M

Sunlands Technology Group (NYSE: STG) reported Q1 EPS of ($1.20). Revenue for the quarter came in at $106 million.

First Quarter 2021 Financial and Operational Snapshots

• Net revenues were RMB694.3 million (US$106.0 million), representing a 22.9% increase year-over-year.
• Gross billings (non-GAAP) were RMB593.7 million (US$90.6 million), representing a 14.9% increase year-over-year.
• Gross profit was RMB587.9 million (US$89.7 million), representing a 25.6% increase year-over-year.
• Net loss was RMB53.3 million (US$8.1 million), representing an 18.7% decrease year-over-year.
• Net loss margin, defined as net loss as a percentage of net revenues, decreased to 7.7% from 11.6% in the first quarter of 2020.
• New student enrollments were 145,525, representing a 107.6% increase year-over-year.
• As of March 31, 2021, the Company's deferred revenue balance was RMB2,902.5 million (US$443.0 million).

"We are encouraged by our first quarter operational and financial metrics. Our net revenues increased 22.9% year-over-year to RMB694.3 million in the first quarter of 2021. We saw new enrollments surge to 145,525, a 107.6% year-on-year increase. This stellar performance was driven by our continued efforts to diversify product offerings, raise brand awareness and improve student satisfaction," said Mr. Tongbo Liu, Chief Executive Officer of Sunlands. "driven by this exceptional growth in new enrollments, our gross billings rose to RMB593.7 million during the quarter, representing a year-over-year growth rate of 14.9%.

"As a result of Sunlands' consistent focus on expanding and refining its master's degree-oriented programs, gross billings for these programs grew 73.6% year-over-year. New enrollments in Sunlands' master's degree programs jumped 72.8% year-over-year in the first quarter, significantly outpacing the market growth rate. Our master's degree programs cater especially to students with full-time jobs, who are more financially secure but have relatively limited time and demand more customized assistance for learning. Students with full-time jobs tend to be more dependable and are more eager to attend test-prep courses like those offered by Sunlands. This, coupled with Sunlands' continued investment in enhancing brand awareness and optimizing course offerings, has provided and will continue to provide thrust for a wider market share and future growth for the Company.

At the same time, we have continued to focus on market opportunities for our professional certification, and we are making significant progress in expanding course offerings. Looking ahead, we will continue to develop our master's degree-oriented and professional skills programs, while solidifying our market leading position in STE programs. We are committed to delivering the best learning experience to our students so they can have the best career prospects, while also creating value for all stakeholders," concluded Mr. Liu.

Ms. Selena Lu Lv, Chief Financial Officer of Sunlands, commented, "We are pleased to see our first quarter net revenues beat guidance once again and hit a record high, as rising brand recognition for our master's degree and professional skills programs bolstered our topline growth momentum. Our ongoing diversification from STE programs and our commitment to optimizing student experience affirms our confidence in sustaining this momentum. We also managed to lower costs, witnessing 52.2% and 16.3% reductions in G&A and R&D expenses, respectively. As a result, first quarter net loss narrowed 18.7% year-over-year to RMB53.3 million. As we look ahead, our marketing team will continue to explore avenues to promote brand awareness, while our sales team will target a higher referral rate and sales conversion rate to fuel future growth. And most importantly, our management will keep implementing optimal strategies that deliver the best returns for all shareholders."

Outlook

For the second quarter of 2021, Sunlands currently expects net revenues to be between RMB600 million to RMB620 million, which would represent an increase of 17.1% and 21.0% 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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