Form 6-K Sunlands Technology Grou For: Aug 23

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2019

 

Commission file number: 001-38423

 

 

SUNLANDS TECHNOLOGY GROUP

(Exact Name of Registrant as Specified in Its Charter)

 

 

Building 4-6, Chaolai Science Park, No. 36

Chuangyuan Road, Chaoyang District

Beijing, 100012, the People’s Republic of China

+86-10-52413738

 

(Address of Principal Executive Offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F  ☒          Form 40-F  ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 

 

 

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press Release

 

 

 

 

 

 

 

 

 

Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

			Sunlands Technology Group
Date:	August 23, 2019		By:	/s/ Yipeng Li
				Name:	Yipeng Li
				Title:	Chief Financial Officer

 

 

Exhibit 99.1

 

 

 

 

Sunlands Technology Group Announces Unaudited Second Quarter 2019

Financial Results

 

Net revenues increased by 14.7% year-over-year

Gross billings (non-GAAP) decreased by 43.1% year-over-year

New student enrollments¹ decreased by 44.0% year-over-year

 

BEIJING, August 23, 2019 -- Sunlands Technology Group (NYSE: STG) (“Sunlands” or the “Company”), a leader in China’s online post-secondary and professional education, today announced its unaudited financial results for the second quarter and the first six months ended June 30, 2019.

 

Second Quarter 2019 Financial and Operational Highlights

 

·

Net revenues were RMB552.7 million (US$80.5 million), representing a 14.7% increase year-over-year.

 

·

Gross billings (non-GAAP) were RMB438.2 million (US$63.8 million), representing a 43.1% decrease year-over-year.

 

·

Gross profit was RMB457.0 million (US$66.6 million), representing a 16.2% increase year-over-year.

 

·

Net loss was RMB12.9 million (US$1.9 million), representing a 95.3% decrease year-over-year. Net loss margin, defined as net loss as a percentage of net revenues, decreased to 2.3% from 56.4% in the second quarter of 2018.

 

·

New student enrollments were 74,958, representing a 44.0% decrease year-over-year.

 

·

As of June 30, 2019, the Company’s deferred revenue balance was RMB3,227.9 million (US$470.2 million).

 

“During the second quarter, we continued to focus on student acquisitions through diversified channels, which broadly included our recently launched mobile applications, our upgraded trial

 

 

¹ New student enrollments for a given period refers to the total number of orders placed by students that newly enroll in at least one course during that period (including those students that enroll and then terminate their enrollment with the Company).

 

 

 

programs, our unique learning community where students, teachers and mentors interact with one another, and expanded offering of master’s-oriented products and professional certificate courses. Through these initiatives, we are building a solid and multi-faceted foundation to reach a high-quality customer base and attract more students to our online platform,” said Mr. Tongbo Liu, Chief Executive Officer of Sunlands. “While we believe these initiatives will benefit our gross billings and new student enrollment growth in the long run, we are also aware of the impact of China’s slowing macroeconomy and the challenges and uncertainties facing the industry where we operate, particularly those relating to student acquisition costs. To address these challenges, we have adopted a more prudent marketing strategy, with a view to investing marketing dollars more effectively while maintaining risks at acceptable levels. As a result of our disciplined spending, our net loss during the quarter narrowed significantly to RMB12.9 million, decreasing by 95.3% from RMB271.8 million for the same period in 2018.

 

“We continue to seek balanced growth as we execute our five-pronged expansion and retention plan for 2019, as announced in the last quarter. With our industry-leading technology, high-quality educational content and one-to-many business model, we are confident in our ability to continue to grow as the leader in China’s online post-secondary and professional education industry.” Mr. Liu concluded.

 

Mr. Steven Yipeng Li, Chief Financial Officer of Sunlands, said, "In the second quarter, our net revenues increased by 14.7% year-over-year, which is in line with our guidance. Our gross billings and new student enrollment declined by 43.1% and 44.0%, respectively, year-over-year, primarily due to the slowing macroeconomy and the short-term impact of our adjustment of marketing campaigns in view of uncertainties in student acquisition costs. We responded to the macroeconomic headwinds by reducing our sales and marketing expenses, and as a result our second quarter net loss narrowed significantly to RMB12.9 million from RMB112.9 million in first quarter of 2019 and RMB271.8 million in the second quarter of last year. We are confident that with our steady and focused execution of our five-pronged strategy to expansion and retention, we will improve average gross billings, conversion rates and sales efficiency over the long term.”

 

Financial Results for the Second Quarter of 2019

 

Net Revenues

 

In the second quarter of 2019, net revenues increased by 14.7% to RMB552.7 million (US$80.5

 

million) from RMB481.8 million in the second quarter of 2018. The increase was mainly driven by the growth in the number of students² in the second quarter of 2019 compared with the second quarter of 2018, mainly driven by new student enrollments increase over the past years.

 

Cost of Revenues

 

Cost of revenues increased by 8.1% to RMB95.7 million (US$13.9 million) in the second quarter of 2019 from RMB88.5 million in the second quarter of 2018, which was primarily due to an increase in insurance premiums related to online education services with insurance coverage since late in 2018.

 

Gross Profit

 

Gross profit increased by 16.2% to RMB457.0 million (US$66.6 million) from RMB393.3 million in the second quarter of 2018.

 

Operating Expenses

 

In the second quarter of 2019, operating expenses were RMB498.7 million (US$72.6 million), representing a 27.5% decrease from RMB688.3 million in the second quarter of 2018.

 

Sales and marketing expenses decreased by 33.0% to RMB389.7 million (US$56.8 million) in the second quarter of 2019 from RMB581.7 million in the second quarter of 2018. The decrease was mainly due to reduced marketing spending, reflective of disciplined, prudent cost management, and the decrease in the expense of sales and marketing personnel.

 

General and administrative expenses decreased by 7.9% to RMB84.9 million (US$12.4 million) in the second quarter of 2019 from RMB92.2 million in the second quarter of 2018. The decrease was mainly due to the decrease in office expenses and professional service fees.

 

Product development expenses increased by 68.1% to RMB24.0 million (US$3.5 million) in the second quarter of 2019 from RMB14.3 million in the second quarter of 2018. The increase was primarily due to an increase in the number of employees and compensation paid to Sunlands’ product and technology development personnel during the quarter.

 

 

 

²Number of students for a given period refers to the total number of orders placed by students which remain in their respective service periods.

 

Net Loss

 

Net loss for the second quarter of 2019 was RMB12.9 million (US$1.9 million), compared with RMB271.8 million in the second quarter of 2018.

 

Basic and Diluted Net Loss Per Share

 

Basic and diluted net loss per share was RMB1.87 (US$0.27) in the second quarter of 2019.

 

Cash and Cash Equivalents and Short-term Investments

 

As of June 30, 2019, the Company had RMB1,527.7 million (US$222.5 million) of cash and cash equivalents and RMB269.9 million (US$39.3 million) of short-term investments, compared with RMB1,248.8 million of cash and cash equivalents and RMB1,028.6 million of short-term investments as of December 31, 2018.

 

Deferred Revenue

 

As of June 30, 2019, the Company had a deferred revenue balance of RMB3,227.9 million (US$470.2 million), compared with RMB3,286.0 million as of December 31, 2018.

 

Capital Expenditures

 

Capital expenditures were incurred primarily in connection with purchases of buildings and IT infrastructure equipment necessary to support Sunlands’ operations. Capital expenditures were RMB2.2 million (US$0.3 million) in the second quarter of 2019, compared with RMB97.3 million in the second quarter of 2018.

 

Financial Results for the First Six Months of 2019

 

Net Revenues

 

In the first six months of 2019, net revenues increased by 25.8% to RMB1,116.9 million (US$162.7 million) from RMB888.2 million in the first six months of 2018.

 

Cost of Revenues

 

Cost of revenues increased by 13.8% to RMB181.2 million (US$26.4 million) in the first six months of 2019 from RMB159.2 million in the first six months of 2018.

 

Gross Profit

 

Gross profit increased by 28.4% to RMB935.8 million (US$136.3 million) from RMB729.0 million in the first six months of 2018.

 

Operating Expenses

 

In the first six months of 2019, operating expenses were RMB1,111.4 million (US$161.9 million), representing a 12.9% decrease from RMB1,276.5 million in the first six months of 2018.

 

Sales and marketing expenses decreased by 17.9% to RMB887.0 million (US$129.2 million) in the first six months of 2019 from RMB1,080.7 million in the first six months of 2018.

 

General and administrative expenses increased by 2.0% to RMB173.4 million (US$25.3 million) in the first six months of 2019 from RMB169.9 million in the first six months of 2018.

 

Product development expenses increased by 97.0% to RMB51.0 million (US$7.4 million) in the first six months of 2019 from RMB25.9 million in the first six months of 2018.

 

Net Loss

 

Net loss for the first six months of 2019 was RMB125.8 million (US$18.3 million), compared with RMB517.0 million in the first six months of 2018.

 

Basic and Diluted Net Loss Per Share

 

Basic and diluted net loss per share was RMB18.38 (US$2.68) in the first six months of 2019, compared with RMB91.06 in the first six months of 2018.

 

Capital Expenditures

 

Capital expenditures were incurred primarily in connection with purchases of buildings and IT infrastructure equipment necessary to support Sunlands’ operations. Capital expenditures were RMB3.3 million (US$0.5 million) in the first six months of 2019, compared with RMB245.0 million in the first six months of 2018.

 

Outlook

 

For the third quarter of 2019, Sunlands currently expects net revenues to be between RMB510 million to RMB530 million, which would represent a decrease of 1.4% to an increase of 2.5% 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.

 

Exchange Rate

 

The Company’s business is primarily conducted in China and all of the revenues are denominated in Renminbi (“RMB”). This announcement contains currency conversions of RMB amounts into U.S. dollars (“US$”) solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB6.8650 to US$1.00, the effective noon buying rate for June 28, 2019 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 28, 2019, or at any other rate.

 

Conference Call and Webcast

 

Sunlands' management team will host a conference call at 7:30 AM U.S. Eastern Time, (7:30 PM Beijing/Hong Kong time) on August 23, 2019, following the quarterly results announcement.

 

The dial-in details for the live conference call are:

 

International:	+1-412-902-4272
US toll free:	+1-888-346-8982
Canada toll free:	+1-855-669-9657
Mainland China toll free:	400-120-1203
Hong Kong toll free:	800-905-945
Hong Kong:	+852-3018-4992

 

Please dial in 10 minutes before the call is scheduled to begin. When prompted, ask to be connected to the call for “Sunlands Technology Group.” Participants will be required to state their name and company upon entering the call.

 

A live webcast and archive of the conference call will be available on the Investor Relations section of Sunlands' website at http://www.sunlands.investorroom.com/.

 

A replay of the conference call will be available 1 hour after the end of the conference call until August 30, 2019.

 

International:	+1-412-317-0088
US toll free:	+1-877-344-7529
Canada toll free:	855-669-9658
Replay access code:	10134317

 

About Sunlands

 

Sunlands Technology Group (NYSE: STG) ("Sunlands" or the "Company"), formerly known as Sunlands Online Education Group, is the leader in China's online post-secondary and professional education. With a one to many, live streaming platform, Sunlands offers various degree and diploma-oriented post-secondary courses as well as online professional courses and educational content, to help students prepare for professional certification exams and attain professional skills. Students can access its services either through PC or mobile applications. The Company's online platform cultivates a personalized, interactive learning environment by featuring a virtual learning community and a vast library of educational content offerings that adapt to the learning habits of its students. Sunlands offers a unique approach to education research and development that organizes subject content into Learning Outcome Trees, the Company's proprietary knowledge management system. Sunlands has a deep understanding of the educational needs of its prospective students and offers solutions that help them achieve their goals.

 

About Non-GAAP Financial Measures

 

We use gross billings and EBITDA, each a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes.

 

We define gross billings for a specific period as the total amount of cash received for the sale of course packages, net of the total amount of refunds paid in such period. Our management uses gross billings as a performance measurement because we generally bill our students for the entire course tuition at the time of sale of our course packages and recognize revenue proportionally over a period. EBITDA is defined as net loss excluding depreciation and amortization, interest expense, interest income, and income tax expenses. We believe that gross billings and EBITDA provide valuable insight into the sales of our course packages and the performance of our business.

 

These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, their most directly comparable financial measure prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their respective most directly comparable GAAP measure has been provided in the tables included below. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measures to their respective most directly comparable GAAP financial measures. As gross billings and EBITDA have material limitations as an analytical metric and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider gross billings and EBITDA as a substitute for, or superior to, their respective most directly comparable financial measures prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

 

Safe Harbor Statement

 

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S.

 

Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Sunlands may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about Sunlands' beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: Sunlands' goals and strategies; its expectations regarding demand for and market acceptance of its brand and services; its ability to retain and increase student enrollments; its ability to offer new courses and educational content; its ability to improve teaching quality and students’ learning results; its ability to improve sales and marketing efficiency and effectiveness; its ability to engage, train and retain new faculty members; its future business development, results of operations and financial condition; its ability to maintain and improve technology infrastructure necessary to operate its business; competition in the online education industry in China; relevant government policies and regulations relating to Sunlands' corporate structure, business and industry; and general economic and business condition in China Further information regarding these and other risks, uncertainties or factors is included in the Sunlands' filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and Sunlands does not undertake any obligation to update such information, except as required under applicable law.

 

 

For investor and media enquiries, please contact:

 

 

Yingying Liu

IR Director

Tel: +86 182 5691 2232

Email: [email protected]

 

 

The Piacente Group, Inc.

Brandi Piacente

 

Tel: +1-212-481-2050

Email: [email protected]

 

Ross Warner

Tel: +86-10-6508-0677

Email: [email protected]

SOURCE: Sunlands Technology Group

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except for share and per share data, or otherwise noted)

 

		As of  December  31,				As of June 30,
		2018				2019
		RMB				RMB				US$
ASSETS
Current assets
Cash and cash equivalents			1,248,810				1,527,738				222,540
Short-term investments			1,028,564				269,942				39,321
Prepaid expenses and other current assets			124,908				178,571				26,013
Deferred costs, current			180,657				223,342				32,533
Total current assets			2,582,939				2,199,593				320,407
Non-current assets
Property and equipment, net			559,511				544,996				79,388
Intangible assets, net			1,369				977				142
Right-of-use assets			-				519,672				75,699
Deferred costs, non-current			146,610				162,907				23,730
Long-term investments			30,009				31,602				4,603
Other non-current assets			418,700				442,707				64,488
Total non-current assets			1,156,199				1,702,861				248,050
TOTAL ASSETS			3,739,138				3,902,454				568,457
LIABILITIES AND SHAREHOLDERS’ DEFICIT
LIABILITIES
Current liabilities
Accrued expenses and other current liabilities (including accrued expenses
and other current liabilities of the consolidated VIEs without recourse to
Sunlands Technology Group of RMB241,204 and RMB169,014 as of
December 31, 2018 and June 30, 2019, respectively)			455,284				285,543				41,594
Deferred revenue, current (including deferred revenue, current of the consolidated VIEs consolidated revenue,VIE without recourse
without recourse to Sunlands Technology Group of RMB1,765,085 and
RMB1,748,309 as of December 31, 2018 and June 30, 2019, respectively)			1,765,085				1,748,309				254,670
Lease liabilities, current (including lease liabilities, current of the consolidated VIEs
without recourse to Sunlands Technology Group of nil and
RMB22,903 as of December 31, 2018 and June 30, 2019, respectively)			-				36,931				5,380
Payables to acquire buildings (including payables to acquire buildings of the
consolidated VIEs without recourse to Sunlands Technology Group of nil and nil
as of December 31, 2018, and June 30, 2019, respectively)			61,540				61,540				8,964
Long-term debt, current (including long-term debt, current of the consolidated VIEs
without recourse to Sunlands Technology Group of  nil and nil as of December
31, 2018 and June 30, 2019, respectively)			32,500				32,500				4,734
Total current liabilities			2,314,409				2,164,823				315,342

 

 

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS-continued

(Amounts in thousands, except for share and per share data, or otherwise noted)

 

			As of December 31,				As of June 30,
			2018				2019
			RMB				RMB				US$
Non-current liabilities
Deferred revenue, non-current (including deferred revenue, non-current of the
consolidated VIEs without recourse to Sunlands Technology Group of
RMB1,520,940 and RMB1,479,640 as of December 31, 2018 and June 30,
2019, respectively)				1,520,940				1,479,640				215,534
Lease liabilities, non-current(including lease liabilities, non-current of the
consolidated VIEs without recourse to Sunlands Technology Group of
nil and RMB384,425 as of December 31, 2018 and June 30,
2019, respectively)				-				527,471				76,835
Other non-current liabilities (including other non-current liabilities of the consolidated
VIEs without recourse to Sunlands Technology Group of RMB135 and RMB135 as of
December 31, 2018 and June 30, 2019, respectively)				17,147				13,113				1,910
Long-term debt, non-current (including long-term debt, non-current of the consolidated
VIEs without recourse to Sunlands Technology Group of nil and nil as of
December 31, 2018 and June 30, 2019, respectively)				225,625				209,375				30,499
Total non-current liabilities				1,763,712				2,229,599				324,778
TOTAL LIABILITIES				4,078,121				4,394,422				640,120
SHAREHOLDERS’ DEFICIT
Class A ordinary shares (par value of US$0.00005, 796,062,195 shares
authorized; 1,818,383 and 1,818,383 shares issued as of December 31, 2018
and June 30, 2019, respectively; 1,773,301 and 1,732,081 shares
outstanding as of December 31, 2018 and June 30, 2019, respectively)				1				1				-
Class B ordinary shares (par value of US$0.00005, 826,389 shares
authorized; 826,389 and 826,389 shares issued and outstanding
as of December 31, 2018 and June 30, 2019, respectively)				-				-				-
Class C ordinary shares (par value of US$0.00005, 203,111,416 shares
authorized; 4,265,286 and 4,265,286 shares issued and outstanding
as of December 31, 2018 and June 30, 2019, respectively)				1				1				-
Treasury stock				-				-				-
Additional paid-in capital				2,391,822				2,367,189				344,820
Accumulated deficit				(2,849,770	)			(2,975,503	)			(433,431	)
Accumulated other comprehensive income				118,827				116,290				16,940
Total Sunlands Technology Group shareholders’ deficit				(339,119	)			(492,022	)			(71,671	)
Noncontrolling interest				136				54				8
TOTAL SHAREHOLDERS’ DEFICIT				(338,983	)			(491,968	)			(71,663	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT				3,739,138				3,902,454				568,457

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  

(Amounts in thousands, except for share and per share data, or otherwise noted)

            

		For the Three Months Ended June 30,
		2018				2019
		RMB				RMB				US$
Net revenues			481,798				552,690				80,508
Cost of revenues			(88,508	)			(95,677	)			(13,937	)
Gross profit			393,290				457,013				66,571
Operating expenses
Sales and marketing expenses			(581,722	)			(389,678	)			(56,763	)
Product development expenses			(14,307	)			(24,045	)			(3,503	)
General and administrative expenses			(92,248	)			(84,947	)			(12,374	)
Total operating expenses			(688,277	)			(498,670	)			(72,640	)
Loss from operations			(294,987	)			(41,657	)			(6,069	)
Interest income			16,446				24,635				3,589
Interest expense			-				(3,654	)			(532	)
Other income, net			7,199				8,981				1,308
Loss before income tax expenses			(271,342	)			(11,695	)			(1,704	)
Income tax expenses			-				-				-
Loss from equity method investments			(441	)			(1,190	)			(173	)
Net loss			(271,783	)			(12,885	)			(1,877	)
Less: Net income/(loss) attributable to noncontrolling interest			254				(92	)			(13	)
Net loss attributable to Sunlands Technology Group			(272,037	)			(12,793	)			(1,864	)
Net loss per share attributable to ordinary shareholders of
Sunlands Technology Group:
Basic and diluted			(39.37	)			(1.87	)			(0.27	)
Weighted average shares used in calculating net loss
per ordinary share:
Basic and diluted			6,910,058				6,831,112				6,831,112

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME

(Amounts in thousands)

             

		For the Three Months Ended June 30,
		2018				2019
		RMB				RMB				US$
Net loss			(271,783	)			(12,885	)			(1,877	)
Other comprehensive income, net of tax effect of nil:
Change in cumulative foreign currency translation adjustments			84,377				33,868				4,933
Total comprehensive (loss)/income			(187,406	)			20,983				3,056
Less: comprehensive income/(loss) attributable to noncontrolling
interest			254				(92	)			(13	)
Comprehensive (loss)/income attributable to Sunlands Technology
Group			(187,660	)			21,075				3,069

 

 

SUNLANDS TECHNOLOGY GROUP

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(Amounts in thousands)

 

		For the Three Months Ended June 30,
		2018				2019
		RMB				RMB
Net revenues			481,798				552,690
Less: other revenues			(2,722	)			(228	)
Add: tax and surcharges			16,160				29,923
Add: ending deferred revenue			2,893,506				3,227,949
Less: beginning deferred revenue			(2,619,134	)			(3,372,174	)
Gross billings (non-GAAP)			769,608				438,160
Net loss			(271,783	)			(12,885	)
Add: income tax expenses			-				-
depreciation and amortization			6,585				9,176
interest expense			-				3,654
Less: interest income			(16,446	)			(24,635	)
EBITDA (non-GAAP)			(281,644	)			(24,690	)

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  

(Amounts in thousands, except for share and per share data, or otherwise noted)

             

		For the Six Months Ended June 30,
		2018				2019
		RMB				RMB				US$
Net revenues			888,171				1,116,905				162,696
Cost of revenues			(159,208	)			(181,150	)			(26,387	)
Gross profit			728,963				935,755				136,309
Operating expenses
Sales and marketing expenses			(1,080,698	)			(887,012	)			(129,208	)
Product development expenses			(25,893	)			(51,002	)			(7,429	)
General and administrative expenses			(169,945	)			(173,384	)			(25,256	)
Total operating expenses			(1,276,536	)			(1,111,398	)			(161,893	)
Loss from operations			(547,573	)			(175,643	)			(25,584	)
Interest income			23,290				48,944				7,129
Interest expense			-				(7,385	)			(1,076	)
Other income, net			8,541				9,279				1,352
Loss before income tax expenses			(515,742	)			(124,805	)			(18,179	)
Income tax expenses			-				-				-
Loss from equity method investments			(1,277	)			(1,010	)			(147	)
Net loss			(517,019	)			(125,815	)			(18,326	)
Less: Net income/(loss) attributable to noncontrolling interest			555				(82	)			(12	)
Net loss attributable to Sunlands Technology Group			(517,574	)			(125,733	)			(18,314	)
Net loss per share attributable to ordinary shareholders of
Sunlands Technology Group:
Basic and diluted			(91.06	)			(18.38	)			(2.68	)
Weighted average shares used in calculating net loss
per ordinary share:
Basic and diluted			5,683,699				6,842,421				6,842,421

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)

             

		For the Six Months Ended June 30,
		2018				2019
		RMB				RMB				US$
Net loss			(517,019	)			(125,815	)			(18,326	)
Other comprehensive income/(loss), net of tax effect of nil:
Change in cumulative foreign currency translation adjustments			67,426				(2,537	)			(370	)
Total comprehensive loss			(449,593	)			(128,352	)			(18,696	)
Less: comprehensive income/(loss) attributable to noncontrolling
interest			555				(82	)			(12	)
Comprehensive loss attributable to Sunlands Technology
Group			(450,148	)			(128,270	)			(18,684	)

 

SUNLANDS TECHNOLOGY GROUP

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(Amounts in thousands)

 

		For the Six Months Ended June 30,
		2018				2019
		RMB				RMB
Net revenues			888,171				1,116,905
Less: other revenues			(4,392	)			(9,614	)
Add: tax and surcharges			31,951				52,819
Add: ending deferred revenue			2,893,506				3,227,949
Less: beginning deferred revenue			(2,110,428	)			(3,286,025	))
Gross billings (non-GAAP)			1,698,808				1,102,034
Net loss			(517,019	)			(125,815	)
Add: income tax expenses			-				-
depreciation and amortization			11,272				18,438
interest expense			-				7,385
Less: interest income			(23,290	)			(48,944	)
EBITDA (non-GAAP)			(529,037	)			(148,936	)

 

 

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