RISE Education Announces First Quarter 2020 Unaudited Financial Results
BEIJING,
Impact from COVID-19
The outbreak of COVID-19 in late January 2020 had a significant and material adverse impact on the Company's operations during the first quarter of 2020. In accordance with government regulations to contain the outbreak, RISE's learning centers were temporarily closed starting
As of
First Quarter of 2020 Financial and Operational Summary
- Total revenues were RMB109.0 million (
US$15.4 million ) in the first quarter of 2020, compared withRMB335.0 million in the first quarter of 2019. - Net loss attributable to RISE was
RMB103.8 million (US$14.7 million) in the first quarter of 2020, compared with net income ofRMB36.4 million in the first quarter of 2019. - Non-GAAP net loss attributable to RISE was
RMB99.5 million (US$14.1 million ) in the first quarter of 2020. - Adjusted EBITDA[1] loss was RMB108.0 million (
US$15.3 million ) in the first quarter of 2020, compared with adjusted EBITDA income ofRMB80.5 million in the first quarter of 2019. - In accordance with government regulations to contain the outbreak of COVID-19, RISE's learning centers were temporarily closed throughout the majority of the first quarter of 2020. The Company immediately took measures to launch online small group classes through Rise+ in late
February 2020 and began monetizing them in earlyMarch 2020 with existing and new students. Students in class[2] for Rise regular courses (including Rise Start and Rise On programs) were 52,585 as ofMarch 31, 2020 , an increase of 901 from 51,684 as ofMarch 31, 2019 . Students in class for online small group classes were 31,039 at the end ofMarch 2020 . - New students enrolled[3] for Rise regular courses in the first quarter of 2020 were 1,507, compared with 7,406 during the same period last year. New students enrolled for other Rise courses, which were taught online (including Rise Up, Can-Talk and online small group classes, other Rise short-term courses and courses provided by The Edge learning centers were 32,494 in the first quarter of 2020, compared with 1,470 during the same period last year. During the first quarter of 2020, 31,822 students enrolled in online small group classes, 92.6% of whom were existing RISE students.
- The total number of the Company's learning centers was 475, consisting of 89 self-owned (including 2 operated by The Edge) and 386 franchised learning centers.
[1] Adjusted EBITDA excludes share-based compensation expenses from EBITDA. |
[2] Students in class refers to the students who were taking our ongoing courses as of a given date. |
[3] New students enrolled refers to the newly acquired students who enrolled in our courses during a given period of time. |
Three Months Ended |
|||||
(in thousands RMB, except for percentage and per ADS data) |
2019 |
2020 |
Pct. Change |
||
Revenues |
335,026 |
108,989 |
-67.5% |
||
Operating income/(loss) |
53,040 |
(131,397) |
-347.7% |
||
Non-GAAP operating income/(loss) |
60,664 |
(127,050) |
-309.4% |
||
Net income/(loss) attributable to RISE |
36,370 |
(103,837) |
-385.5% |
||
Non-GAAP net income/(loss) attributable to RISE |
43,994 |
(99,490) |
-326.1% |
||
Net income/(loss) per ADS attributable to RISE – basic |
0.64 |
(1.84) |
-387.5% |
||
Net income/(loss) per ADS attributable to RISE – diluted |
0.63 |
(1.84) |
-392.1% |
||
Non-GAAP net income/(loss) per ADS attributable to RISE – basic |
0.77 |
(1.76) |
-328.6% |
||
Non-GAAP net income/(loss) per ADS attributable to RISE – diluted |
0.76 |
(1.76) |
-331.6% |
||
Adjusted EBITDA |
80,499 |
(108,006) |
-234.2% |
Ms.
"Following the launch of online small group classes, we have successfully transitioned close to 90% of our existing offline regular course students online as of the end of
"These initial results reflect the enormous growth potential ahead as we scale up and have convinced us to deepen our commitment to driving the long-term transformation of our business. We have brought on board additional highly-experienced and seasoned industry professionals to drive our digitalization strategy to the next stage. The appointment of our new Chief Operating Officer, who has extensive experience in enhancing enterprise operational excellence and digital transformation, as an executive officer and the strengthening of our business management team with a head of business development, head of OMO product development and head of new media marketing truly reflect our commitment to building a digitalized platform that can offer cross-disciplinary skill-based education products to young children."
Ms.
Financial Results for the first quarter of 2020
Revenues
Total revenues for the first quarter of 2020 decreased by
- Revenues from educational programs for the first quarter of 2020 decreased by 64.7% to
RMB102 .0 million (US$14 .4 million). In line with management's long-term strategy, revenues from educational programs include revenues generated from Can-Talk starting from the first quarter of 2020. Revenues from educational programs in previous years have been adjusted to take this into account. Revenues from educational programs are composed of three parts: revenues generated from regular courses such as Rise Start and Rise On courses, revenues generated from Rise online programs which include Rise Up, Can-Talk, and short-term online courses such as online small group classes, and revenues generated from courses offered by The Edge. The decrease in revenues from educational programs was primarily due to the temporary closure of self-owned learning centers from late January 2020 as a result of the outbreak of COVID-19, which was partially offset by an increase in revenues generated from the newly launched online small group classes. - Franchise revenues for the first quarter of 2020 decreased by 84.0% to
RMB6.1 million (US$0.9 million ), primarily due to a decline in recurring franchise revenue as a result of the temporary closure of franchised learning centers. - Other revenues for the first quarter of 2020 decreased by 89.2% year-over-year to
RMB0 .9 million (US$0.1 million ), primarily due to the impact of travel restrictions on the Company's study tour services.
Cost of Revenues
Cost of revenues for the first quarter of 2020 decreased by
[4] Non-GAAP cost of revenues exclude relevant SBC expenses and amortization of certain intangible assets, including teaching course license, acquired as part of the junior ELT business by the Company from certain third-party in 2013 (the "2013 acquisition") from cost of revenues. Non-GAAP operating income adds back share-based compensation expenses and amortization of certain intangible assets, including trademark, acquired as part of the 2013 acquisition. Each of non-GAAP operating expenses, non-GAAP selling and marketing expenses or non-GAAP general and administrative expenses excludes relevant share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. For details on the calculation of each of these and the reconciliation of each to the most directly comparable GAAP financial measure, see "About Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results." |
Gross Loss
As a result of the foregoing, gross loss for the first quarter of 2020 was RMB33.6 million (
Operating Expenses
Total operating expenses for the first quarter of 2020 decreased by
- Selling and marketing expenses decreased by 34.2% year-over-year to
RMB43.2 million (US$6.1 million) for the first quarter of 2020, compared withRMB65.7 million for the first quarter of 2019. The decrease was primarily associated with limited offline marketing activities and related performance-based personnel costs due to the outbreak of COVID-19. Non-GAAP selling and marketing expenses for the first quarter of 2020 decreased by 34.8% year-over-year toRMB42 .2 million (US$6.0 million ). - General and administrative expenses decreased by 11.8% year-over-year to
RMB54 .6 million (US$7.7 million ) for the first quarter of 2020, compared withRMB61 .9 million for the first quarter of 2019. The decrease was mainly attributable to the reversal of share-based compensation expenses due to actual forfeitures in the first quarter of 2020. Non-GAAP general and administrative expenses for the first quarter of 2020 decreased by 6.0% year-over-year toRMB55 .5 million (US$7.8 million ).
Operating Loss
Operating loss for the first quarter of 2020 was
Interest Expense
Interest expense for the first quarter of 2020 was
Other Income
Other income for the first quarter of 2020 was
Income Tax (Benefit)/Expense
Income tax benefit for the first quarter of 2020 was
Net Loss Attributable to RISE
Net loss attributable to RISE for the first quarter of 2020 was
Non-GAAP net loss attributable to RISE for the first quarter of 2020 was
EBITDA represents net income/(loss) before interests, taxes, depreciation, and amortization. EBITDA loss for the first quarter of 2020 was
Adjusted EBITDA loss for the first quarter of 2020 was
Basic and Diluted Earnings per ADS
Basic and diluted net loss attributable to RISE per ADS was
Basic and diluted non-GAAP net loss attributable to RISE per ADS was
Cash Flow
Net cash outflowed from operating activities for the first quarter of 2020 was
Balance Sheet
As of
Current and non-current deferred revenue and customer advances were RMB776.3 million (
Business Outlook
RISE expects its financial and operational performance to begin improving on a sequential basis starting during the second quarter of 2020. The participation rate from offline students in online courses is high, coming in close to 90%. RISE also launched upgraded online small group classes in early
Conference Call Information
RISE will hold a conference call on
Conference call preregistration link is http://apac.directeventreg.com/registration/event/7393736. Once preregistration has been completed, participants will receive dial-in numbers, an event passcode, and a unique registrant ID.
To join the conference, please dial the number you receive, enter the event passcode followed by your unique registrant ID, and you will be joined to the conference instantly.
A telephone replay will be accessible through
United States: |
+1-646-254-3697 |
International: |
+61-2-8199-0299 |
Mainland China: |
400-6322-162 |
Hong Kong: |
+852-3051-2780 |
Conference ID: |
# 7393736 |
A live and archived webcast of the conference call, together with a copy of the presentation slides used for the conference call, will also be available at the Company's investor relations website at http://ir.risecenter.com/.
Exchange Rate
This announcement contains translations of certain RMB amounts into
About Non-GAAP Financial Measures
To supplement RISE's financial results presented in accordance with
Non-GAAP cost of revenues, non-GAAP operating expenses, including non-GAAP selling and marketing expenses and non-GAAP general and administrative expenses, provides the Company with an understanding of the results from the primary operations of the Company's business by excluding the effects of certain transaction-related expenses that do not reflect the ordinary operating expenses of the Company's operations and share-based compensation.
EBITDA, adjusted EBITDA, adjusted EBITDA margin and non-GAAP net income/(loss) provide the Company with an understanding of the results from the primary operations of the Company's business by excluding the effects of certain transaction-related expenses that do not reflect the ordinary EBITDA and net income/(loss) of the Company's operations.
The Company uses non-GAAP operating expenses, including non-GAAP selling and marketing expenses and non-GAAP general and administrative expenses, non-GAAP operating income/(loss), non-GAAP operating margin, EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income/(loss) attributable to RISE, and non-GAAP basic and diluted net income/(loss) per ADS attributable to RISE to evaluate the Company's period-over-period operating performance because the Company's management believes these provide a more comparable measure of the Company's continuing business as it adjusts for transaction-related expenses that are not reflective of the normal earnings of the Company's business. These measures may be useful to an investor in evaluating the underlying operating performance of the Company's business, and to enhance investors' overall understanding of the historical and current financial performance of the Company's continuing operations and prospects for the future.
Non-GAAP financial information should not be considered a substitute for or superior to
Non-GAAP cost of revenues exclude relevant share-based compensation expenses and amortization of certain intangible assets ("IA"), including teaching course license, acquired as part of the 2013 acquisition from cost of revenues. Non-GAAP operating income/(loss) adds back share-based compensation expenses and amortization of certain intangible assets, including trademark, acquired as part of the 2013 acquisition. Each of non-GAAP operating expenses, non-GAAP selling and marketing expenses or non-GAAP general and administrative expenses excludes relevant share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. EBITDA represents net income before interests, taxes, depreciation and amortization.
For more information on non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures."
About RISE Education
Safe Harbor Statement
This press release contains statements of a forward-looking nature. These statements, including the statements relating to the Company's future financial and operating results, are made under the "safe harbor" provisions of the
Investor Relations Contact
RISE Education
Email: riseir@rdchina.net
Tel: +86 (10) 8559-9191
|
|||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(in thousands) |
|||||
As of |
|||||
|
|
|
|||
2019 |
2020 |
2020 |
|||
RMB |
RMB |
USD |
|||
ASSETS |
|||||
Current assets: |
|||||
Cash and cash equivalents |
999,012 |
903,297 |
127,570 |
||
Restricted cash |
23,813 |
21,773 |
3,075 |
||
Accounts receivable, net |
1,745 |
1,136 |
160 |
||
Amounts due from a related party |
191 |
199 |
28 |
||
Inventories |
8,685 |
8,373 |
1,182 |
||
Prepaid expenses and other current assets |
51,420 |
61,596 |
8,700 |
||
Total current assets |
1,084,866 |
996,374 |
140,715 |
||
Property and equipment, net |
137,340 |
127,000 |
17,936 |
||
Intangible assets, net |
210,346 |
207,352 |
29,284 |
||
Long-term investment |
33,000 |
33,000 |
4,660 |
||
|
665,416 |
670,551 |
94,700 |
||
Deferred tax assets |
11,026 |
25,519 |
3,604 |
||
Other non-current assets |
49,638 |
48,686 |
6,876 |
||
Operating lease right-of-use assets |
610,323 |
568,089 |
80,229 |
||
Total assets |
2,801,955 |
2,676,571 |
378,004 |
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||
Current liabilities: |
|||||
Current portion of long-term loan |
134,015 |
136,305 |
19,250 |
||
Accounts payable |
7,553 |
3,154 |
445 |
||
Accrued expenses and other current liabilities |
202,808 |
186,175 |
26,293 |
||
Deferred revenue and customer advances |
716,637 |
738,499 |
104,296 |
||
Income taxes payable |
14,594 |
11,319 |
1,599 |
||
Current portion of operating lease liabilities |
157,911 |
155,879 |
22,014 |
||
Total current liabilities |
1,233,518 |
1,231,331 |
173,897 |
||
Long-term loan |
370,163 |
378,230 |
53,416 |
||
Deferred revenue and customer advances |
39,397 |
37,811 |
5,340 |
||
Deferred tax liabilities |
31,116 |
25,822 |
3,647 |
||
Other non-current liabilities |
39,156 |
40,392 |
5,704 |
||
Operating lease liabilities |
464,304 |
450,165 |
63,576 |
||
Total liabilities |
2,177,654 |
2,163,751 |
305,580 |
||
Shareholders' equity: |
|||||
Ordinary shares |
6,946 |
6,946 |
981 |
||
Additional paid-in capital |
583,262 |
583,230 |
82,368 |
||
Statutory reserves |
104,830 |
104,830 |
14,805 |
||
Accumulated deficit |
(127,059) |
(230,896) |
(32,609) |
||
Accumulated other comprehensive income |
40,917 |
41,168 |
5,814 |
||
|
608,896 |
505,278 |
71,359 |
||
Non-controlling interests |
15,405 |
7,542 |
1,065 |
||
Total equity |
624,301 |
512,820 |
72,424 |
||
Total liabilities, non-controlling interests and |
2,801,955 |
2,676,571 |
378,004 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except share and ADS data and per share and per ADS data) |
||||||
Three Months Ended |
||||||
2019 |
2020 |
2020 |
||||
RMB |
RMB |
USD |
||||
Revenues |
335,026 |
108,989 |
15,392 |
|||
Educational programs |
288,614 |
101,989 |
14,403 |
|||
Franchise revenues |
38,177 |
6,109 |
863 |
|||
Others |
8,235 |
891 |
126 |
|||
Cost of revenues |
(154,401) |
(142,568) |
(20,134) |
|||
Gross profit/(loss) |
180,625 |
(33,579) |
(4,742) |
|||
Selling and marketing expenses |
(65,661) |
(43,220) |
(6,104) |
|||
General and administrative expenses |
(61,924) |
(54,598) |
(7,711) |
|||
Operating income/(loss) |
53,040 |
(131,397) |
(18,557) |
|||
Interest income |
2,574 |
3,852 |
544 |
|||
Interest expense |
(8,953) |
(6,791) |
(959) |
|||
Foreign currency exchange gain/(loss) |
50 |
(79) |
(11) |
|||
Other income, net |
7,927 |
2,987 |
422 |
|||
Income/(Loss) before income tax expense |
54,638 |
(131,428) |
(18,561) |
|||
Income tax (expense)/benefit |
(18,706) |
19,728 |
2,786 |
|||
Net income/(loss) |
35,932 |
(111,700) |
(15,775) |
|||
Add: net loss attributable to non-controlling |
438 |
7,863 |
1,110 |
|||
Net income/(loss) attributable to |
36,370 |
(103,837) |
(14,665) |
|||
Net income/(loss) per ordinary share: |
||||||
Basic |
0.32 |
(0.92) |
(0.13) |
|||
Diluted |
0.32 |
(0.92) |
(0.13) |
|||
Net income/(loss) per ADS (Note 1): |
||||||
Basic |
0.64 |
(1.84) |
(0.26) |
|||
Diluted |
0.63 |
(1.84) |
(0.26) |
|||
Shares used in net income/(loss) per ordinary share computation: |
||||||
Basic |
113,615,686 |
112,756,311 |
112,756,311 |
|||
Diluted |
115,056,569 |
112,756,311 |
112,756,311 |
|||
ADSs used in net income/(loss) per ADS computation: (Note 1) |
||||||
Basic |
56,807,843 |
56,378,155 |
56,378,155 |
|||
Diluted |
57,528,285 |
56,378,155 |
56,378,155 |
|||
Note 1: Each ADS represents two ordinary shares. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except share and ADS data and per share and per ADS data) |
||||||
Three Months Ended |
||||||
2019 |
2020 |
2020 |
||||
RMB |
RMB |
USD |
||||
Net income/(loss) |
35,932 |
(111,700) |
(15,775) |
|||
Other comprehensive (loss)/income, net of tax of nil: |
||||||
Foreign currency translation adjustments |
(512) |
251 |
35 |
|||
Other comprehensive (loss)/income |
(512) |
251 |
35 |
|||
Comprehensive income/(loss) |
35,420 |
(111,449) |
(15,740) |
|||
Add: comprehensive loss attributable to non-controlling |
438 |
7,863 |
1,110 |
|||
Comprehensive income/(loss) attributable to |
35,858 |
(103,586) |
(14,630) |
RECONCILIATION OF GAAP AND NON-GAAP RESULTS (in thousands, except ADS data and per ADS data) |
||||||
Three Months Ended |
||||||
2019 |
2020 |
2020 |
||||
RMB |
RMB |
USD |
||||
Net income/(loss) |
35,932 |
(111,700) |
(15,775) |
|||
Share-based compensation ("SBC") |
3,383 |
(41) |
(5) |
|||
IA amortization arising from Bain acquisition |
4,241 |
4,388 |
620 |
|||
Non-GAAP net income/(loss) |
43,556 |
(107,353) |
(15,160) |
|||
Add: net loss attributable to non-controlling interests |
438 |
7,863 |
1,110 |
|||
Non-GAAP net income/(loss) attributable to |
43,994 |
(99,490) |
(14,050) |
|||
Net income/(loss) |
35,932 |
(111,700) |
(15,775) |
|||
Add: Depreciation |
10,754 |
12,646 |
1,786 |
|||
Add: Amortization |
5,345 |
7,878 |
1,113 |
|||
Add: Interest expense |
8,953 |
6,791 |
959 |
|||
Add: Income tax expense/(benefit) |
18,706 |
(19,728) |
(2,786) |
|||
Less: Interest income |
2,574 |
3,852 |
544 |
|||
EBITDA |
77,116 |
(107,965) |
(15,247) |
|||
SBC |
3,383 |
(41) |
(5) |
|||
Adjusted EBITDA |
80,499 |
(108,006) |
(15,252) |
|||
Cost of revenues |
154,401 |
142,568 |
20,134 |
|||
Personnel costs |
64,035 |
65,859 |
9,300 |
|||
Rental costs |
51,891 |
50,873 |
7,185 |
|||
Others |
38,475 |
25,836 |
3,649 |
|||
Less: SBC |
450 |
699 |
99 |
|||
Less: IA amortization arising from Bain acquisition |
3,457 |
3,577 |
505 |
|||
Non-GAAP cost of revenues |
150,494 |
138,292 |
19,530 |
|||
Non-GAAP gross profit/(loss) |
184,532 |
(29,303) |
(4,138) |
|||
Selling and marketing expenses |
65,661 |
43,220 |
6,104 |
|||
Less: SBC |
102 |
195 |
28 |
|||
Less: IA amortization arising from Bain acquisition |
784 |
811 |
115 |
|||
Non-GAAP selling and marketing expenses |
64,775 |
42,214 |
5,961 |
|||
General and administrative expenses |
61,924 |
54,598 |
7,711 |
|||
Less: SBC |
2,831 |
(935) |
(132) |
|||
Non-GAAP general and administrative expenses |
59,093 |
55,533 |
7,843 |
|||
Operating expense |
127,585 |
97,818 |
13,815 |
|||
Less: SBC |
2,933 |
(740) |
(104) |
|||
Less: IA amortization arising from Bain acquisition |
784 |
811 |
115 |
|||
Non-GAAP operating expense |
123,868 |
97,747 |
13,804 |
|||
Operating income/(loss) |
53,040 |
(131,397) |
(18,557) |
|||
SBC |
3,383 |
(41) |
(5) |
|||
IA amortization arising from Bain acquisition |
4,241 |
4,388 |
620 |
|||
Non-GAAP operating income/(loss) |
60,664 |
(127,050) |
(17,942) |
|||
Non-GAAP net income/(loss) per ADS attributable to RISE- |
0.77 |
(1.76) |
(0.25) |
|||
Non-GAAP net income/(loss) per ADS attributable to RISE- |
0.76 |
(1.76) |
(0.25) |
|||
ADSs used in calculating net income/(loss) per ADS-basic |
56,807,843 |
56,378,155 |
56,378,155 |
|||
ADSs used in calculating net income/(loss) per ADS-diluted |
57,528,285 |
56,378,155 |
56,378,155 |
|||
Note 1: Each ADS represents two ordinary shares. |
View original content:http://www.prnewswire.com/news-releases/rise-education-announces-first-quarter-2020-unaudited-financial-results-301059541.html
SOURCE RISE Education