UPDATE: China Distance Education (DL) Reports Q3 EPS of $0.17 on Revenues of $47.4M; Offers FY19 Revenue Guidance Above Consensus
China Distance Education (NYSE: DL) reported Q3 EPS of $0.17. Revenue for the quarter came in at $47.4 million.
- Net revenue increased by 33.8% to $47.4 million from $35.4 million in the prior year period.
- Total course enrollments were 568,800, a decrease of 13.7% from the third quarter of fiscal 2017.
- Cash receipts from online course registration were $38.5 million, a 51.6% increase from the third quarter of fiscal 2017.
- Gross profit increased by 19.0% to $22.8 million from $19.2 million in the prior year period.
- Non-GAAP[1] gross profit increased by 19.0% to $22.9 million from $19.2 million in the prior year period.
- Gross margin was 48.2%, compared with 54.1% in the prior year period. Non-GAAP1 gross margin was 48.2%, compared with 54.3% in the prior year period.
- Operating income decreased by 66.5% to $1.6 million from $4.7 million in the prior year period.
- Non-GAAP[1] operating income decreased by 57.5% to $2.2 million from $5.2 million in the prior year period.
- Net income increased by 75.3% to $5.1 million from $2.9 million in the prior year period.
- Non-GAAP[1] net income increased by 68.8% to $5.8 million from $3.4 million in the prior year period.
- Basic and diluted net income per American Depositary Share (\"ADS\") were $0.154 compared with basic and diluted net income per ADS of $0.089, for the third quarter of fiscal 2017. Each ADS represents four ordinary shares.
- Basic and diluted non-GAAP[1] net income per ADS were $0.174 and $0.173, respectively, compared with basic and diluted non-GAAP[1] net income per ADS of $0.104 and $0.103, respectively, for the third quarter of fiscal 2017.
- Cash flow from operations increased by 59.6% to $12.4 million from $7.8 million in the third quarter of fiscal 2017.
Mr. Zhengdong Zhu, Chairman and CEO of CDEL, said, "We delivered strong results in our third quarter, highlighted by a 33.8% year-over-year increase in net revenue which exceeded the high end of our guidance range. The top-line outperformance in the third quarter relative to our guidance was driven primarily by our market-leading accounting vertical, which has produced strong revenue growth since the beginning of fiscal year 2018 through the third fiscal quarter. In addition, we are pleased to report that our cash receipts from online course registration were up 51.6% year-over-year in our third fiscal quarter, primarily due to strong cash receipts from our core accounting test preparation courses, and more student enrollments in our longer duration premium and elite classes. Our total course enrollments were down 13.7% year-over-year in the third quarter, primarily attributable to a decrease in enrollments of our continuing education courses. However, our accounting test preparation course enrollments grew 9.9% year-over-year."
Mr. Zhu concluded, "As we look ahead, in addition to driving growth in our three established industry verticals – accounting, healthcare, and engineering and construction, our previously announced acquisition of Beijing Ruida, a leading provider of exam preparation services for participants in China\'s national judicial examination, further diversifies our business model and squarely positions us in a fourth important vertical – legal. Our investment in Beijing Ruida is well aligned with our strategy of expanding into select educational disciplines, with the goal of further enhancing our life-long learning ecosystem and our future growth opportunities."
Mr. Mark Marostica, Co-Chief Financial Officer of CDEL, said, "Strong revenue growth combined with effective cost control drove a return to profitability in our third fiscal quarter as anticipated. However, the increase in fair value of contingent consideration with respect to our 40% equity interest investment in Beijing Ruida, resulting from the outperformance of Beijing Ruida in 2017, adversely impacted our operating income in the third fiscal quarter. Excluding such change in fair value impact, our adjusted operating income and adjusted net income in the third fiscal quarter were $6.0 million and $8.5 million, representing 27.9% and 191.6% year-over-year growth, respectively. We will continue to balance our efforts to drive growth with a keen focus on profitability and prudent cost control."
GUIDANCE:
China Distance Education sees FY2019 revenue of $167.3-169.3 million, versus the consensus of $130.99 million.
For earnings history and earnings-related data on China Distance Education (DL) click here.