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OneSmart International Education Group Limited Announces Unaudited Financial Results for the Secord Fiscal Quarter Ended February 29, 2020

The Second Fiscal Quarter of Fiscal Year 2020 results:
Cash sales Increased by 20.5% Year-over-Year
Net Revenues Decreased by 6.0% Year-over-Year
Average Monthly Student Enrollments Increased by 8.3% Year-over-Year

First Half of Fiscal Year 2020 results:
Cash sales Increased by 30.7% Year-over-Year
Net Revenues Increased by 5.9% Year-over-Year
Average Monthly Student Enrollments Increased by 10.6% Year-over-Year

SHANGHAI, May 19, 2020 /PRNewswire/ -- OneSmart International Education Group Limited (NYSE: ONE) ("OneSmart" or the "Company"), the leading premium K-12 education company in China, today announced its unaudited financial results for the second fiscal quarter ended February 29, 2020.

Highlights for the Secord Fiscal Quarter Ended February 29, 2020

  • Cash sales increased by 20.5% year-over-year to RMB784.9 million (USD112.3 million)

-  Cash sales from OneSmart VIP business increased by 19.3% year-over-year to RMB615.9 million (USD88.1 million)
-  Cash sales from HappyMath business increased by 44.5% year-over-year to RMB75.6 million (USD10.8 million)
-  Cash sales from FasTrack English business increased by 37.9% year-over-year to RMB56.0 million (USD8.0 million)

  • Net revenues decreased by 6.0% year-over-year to RMB885.8 million (USD126.7 million)

-  Net revenues from OneSmart VIP business decreased by 8.4% year-over-year to RMB684.6 million (USD97.9 million)
-  Net revenues from HappyMath business decreased by 0.6% year-over-year to RMB116.7 million (USD16.7 million)
-  Net revenues from FasTrack English business increased by 30.2% year-over-year to RMB51.3 million (USD7.3 million)

  • Average monthly student enrollments increased by 8.3% Year-over-year:

-  Average monthly student enrollments for OneSmart VIP business increased by 8.2% year-over-year
-  Average monthly student enrollments for HappyMath business increased by 5.8% year-over-year
-  Average monthly student enrollments for FasTrack English business increased by 34.8% year-over-year

Mr. Steve Zhang, Chairman and Chief Executive Officer of OneSmart, commented, "What we have achieved in the most challenging business environment in modern history demonstrates the adaptability and resilience of OneSmart's business model and employees. Our years' investments and technology development in the online space enables us to respond promptly to the unprecedented COVID-19 situation. Our online platform has been serving over 160,000 student enrollments as of February 2020, a massive increase from just a few thousands in late 2019. The speed and volume proves the Company's strong ability to strategically manage and operate a premium online business and demonstrates its determination to build OneSmart Online into the largest premium online education business in China. While we expect our financial performance to be temporarily impacted for a couple of quarters by the pandemic, we believe it will bounce back fairly quickly as the schools reopen and the demand for premium education services prevails. Going forward, we will benefit from OneSmart Online to penetrate the mid-high end K-12 education market in China, in both scalability and profitability, as it is helping us expand in a much larger addressable market. We see enormous growth potential ahead and will take advantage of opportunities that arise as the industry consolidates after the pandemic. "

The following are key highlights of business development during the second fiscal quarter of 2020:

OneSmart VIP Business (the leading premium K-12 1-on-1 education business in China)

  • All of the offline learning centers were temporally closed since January 2020 following government's measures against COVID-19
  • Successfully migrated majority of our VIP students to the online platform during the first half of February 2020. Revenues generated in the online platform during Q2 reached the level of the same period last year. The massive online classes were handled successfully while maintaining a high customer satisfaction rate of over 90% and historically low refund rate of 3% in February 2020
  • Upgraded our premium products including smart assessment and academic planning, smart homework system, live broadcasting classroom, etc.
  • Net revenues of International Education program (premium 1-on-1 training services for students attending international schools) grew by 71% year-over-year

OneSmart Young Children Education Business: HappyMath (the leading premium young children math education business in China) and FasTrack English (the 2nd largest premium young children English education business in East China)

  • All of the offline learning centers were temporally closed since January 2020 following government's measures against COVID-19
  • Successfully migrated over 80% of offline students to the online platform. Our online services has been well received by customers with customer satisfaction rate of over 90%
  • Rolled out interactive curriculum 2.0 adopting Harvard Case Method for better learning experience
  • Launched interactive online small group classes for children aging from 3-6. Meanwhile we started to provide children aging from 6-12 with full spectrum of subjects to help them with a smooth transition from kindergarten to primary school
  • Strategically penetrated our HappyMath business into cities outside Shanghai where we observed a robust revenue growth in cities such as Chengdu, Suzhou, Nanjing, etc.
  • Average monthly student enrollments of FasTrack English increased by 34.8% as we continue to strengthen our position in Yangtze River Delta Region

OneSmart Online (The leading premium online education business in China)

  • Other than the 150,000+ student enrollments migrated to online platform as of February 2020, OneSmart Online has successfully acquired over 13,000 pure online and regularly priced enrollments as of early May 2020
  • OneSmart Online, an OMO (online merging offline) model, has launched AI centers, which effectively reduces customer acquisition cost. The classes will be delivered online supported by triple teachers (cloud teacher, cloud study keeper and academic advisor) and artificial intelligence while value added offline activities including seminars, lectures, etc. are provided in the AI centers
  • Continued to enhance OneSmart Online products and technologies including our latest online teaching platform Cloud Teaching System 6.0
  • Successfully integrated the advanced technologies that we acquired from Yimi Online Tutoring. Yimi's technology and development on big data analytics and artificial intelligence helped create synergies with OneSmart Online to drive interactive smart learning and further improve learning experience

Key Financial Results
(In thousands/RMB)











2Q FY2020


2Q FY2019


 % of change 

Net revenues


885,800


942,500


-6.0%

Gross profit


356,428


466,538


-23.6%

Operating income/(loss)


(54,763)


90,216


NA

Non-GAAP operating income/( loss)


(18,054)


102,350


NA

Net income/ (loss) attributable to
OneSmart


(16,367)


64,924


NA

Non-GAAP net income attributable to
OneSmart


20,342


77,058


-73.6%










1H FY2020


1H FY2019


 % of change 

Net revenues


1,683,000


1,589,477


5.9%

Gross profit


637,069


726,930


-12.4%

Operating income/ (loss)


(169,461)


29,147


NA

Non-GAAP operating income/(loss)


(104,830)


59,462


NA

Net income/(loss) attributable to
OneSmart


(106,300)


48,617


NA

Non-GAAP net income/ (loss)
attributable to OneSmart


(41,669)


78,932


NA


Mr. Greg Zuo, OneSmart's Director, Chief Financial Officer and Chief Strategic Officer added, "Despite the impact by the outbreak of COVID-19, our strong execution enabled us to retain almost the same level of revenue compared with the same period last year. In addition, we booked RMB785 million cash sales in Q2, a 20.5% increase from the same period last year, a large portion of which was generated in our online platform. We also successfully reduced our cost structure and controlled expenses during the period through series of policy on labor cost, rent and operating expenses. We temporally put center expansion and upgrades on hold and will only resume the expansion after the crisis. The streamlined cost structure will benefit us in the longer term and we expect substantial margin expansion when topline growth return to normal level.

We recognized that the pandemic impact to our business is temporary and the duration of impact may vary between core VIP business and young children education businesses. VIP business may seem a swift drop in an environment when the public schools are closed and there is massive supply of free or low priced online classes. It is therefore temporally challenging for us to deliver the distinguished value of our premium education services when the score improvement demand is not as urgent when all of the students stay at home. We believe the demand will return in a fast fashion as schools reopen and exam schedule is now fixed. In the meantime, our young children education businesses may have a slightly longer period of impact as kindergartens and some primary schools will reopen a few months after other public schools, according to government policy.  

The pandemic situation accelerates Company's online expansion, a key strategy launched in FY2018. We are focused on the personalized 1-on-1 and small group online education services. Unlike online big-class format, those are the best formats to deliver high quality education services online by leveraging customized approach based on student aptitude. This is a key differentiator from online big-class format. The online education industry is massive and is rapidly growing in popularity since the COVID-19 outbreak began. The pursuit of learning effectiveness required by students and parents is driving the continuous penetration of premium personalized online education.  Financially, we are committed to a healthy growth path for OneSmart Online by sticking to positive cash flow and avoiding burning cash for scale. We have tested and confirmed the attractive unit economics of OneSmart Online.

We are past the most difficult time as most of the provinces have announced back-to-school dates while our business operations are gradually getting back to normal. As of May 15, 2020, 54 of our VIP centers have reopened under government permission. We expect that number to increase over the next few months. We are confident that both of our online platform and offline operations will drive robust growth and profit going forward."

Recent Development

Unveiling of Strengthened Corporate Value New "OneSmart Way" to Align with Its Online Ambition

The Company has unveiled its new "OneSmart New Way" which is the framework of its corporate mission, vision and value. The new "OneSmart Way" incorporates the Company's strengthened commitment to upgrade into a prominent online education services provider. New "OneSmart Way" highlights the corporate value such as innovation, technology and customer satisfaction, to reinforce its leading position in the education sector by enhancing its premium services and executing its online strategy through OneSmart Online.

Completion of the Acquisition and Integration of Yimi's Online Technologies

The Company has successfully completed the acquisition and integration of the online teaching technologies of Yimi Education Technology Inc. Yimi is a leading Chinese premium online 1-on-1 tutoring company. In its past five years of operation, Yimi's technology has centered on big data analytics and artificial intelligence with a goal to drive interactive smart learning. Yimi also co-worked with OneSmart in 2019 to test and confirm the viability and profitability of the OMO business model. The acquisition of Yimi's technologies added a key component to OneSmart's premium online services and will help further improve the customer experience. Going forward, we will continue to focus our highly selective acquisition strategy centered on improving our core businesses. 

Financial Results for the Second Fiscal Quarter Ended February 29, 2020

Net Revenues

Net revenues were RMB885.8 million (USD126.7 million), a decrease of 6.0% from RMB942.5 million during the same period last year. The decrease was mainly attributable to the temporary shutdown of our offline learning centers for COVID-19 related government requirements, offset by the incremental volume from online platform.

Operating Costs and Expenses

Operating costs and expenses for the quarter were RMB 940.6 million (USD134.5 million), an increase of 10.4% from RMB852.3 million during the same period last year. Non-GAAP operating costs and expenses, which excludes share-based compensation expenses, were RMB903.9 million (USD129.3 million), an increase of 7.6% from RMB840.2 million during the same period last year.

  • Cost of revenues increased by 11.2% year-over-year to RMB529.4 million (USD75.7 million). We increased teacher compensation to attract higher quality teachers to support the development of OneSmart Online, added rental costs to comply with regulatory requirements;
  • Selling and marketing expenses increased by 2.8% year-over-year to RMB196.7 million (USD28.1 million). Non-GAAP selling and marketing expenses, which excludes share-based compensation expenses, were RMB196.6 million (USD28.1 million), an increase of 2.7% from RMB191.4 million during the same period last year. The increase was a mixed result of increased spending in online channels and decreased expense ratio driven by disciplined marketing expense control during COVID-19 period and more effective sales and marketing activities to support the growth of OneSmart Online;
  • General and administrative expenses increased by 16.0% year-over-year to RMB214.5 million (USD30.7 million). Non-GAAP general and administrative expenses, which excludes share-based compensation, were RMB177.9 million (USD25.4 million), an increase of 2.9% from RMB172.8 million during the same period last year. The increase was primarily due to increased R&D expenses for OneSmart Online mixed with our expense control policy to keep a healthy financial condition during COVD-19.

Total share-based compensation expenses, which were allocated to related operating expenses, were RMB36.7 million (USD5.3 million) in the second fiscal quarter of 2020, compared with RMB12.1 million in the same period of the prior fiscal year.

Operating Income/Loss and Operating Margin

Operating loss for the quarter was RMB54.8 million (USD7.8 million), compared with operating income of RMB90.2 million in the same period of the prior fiscal year. Non-GAAP operating loss, which excludes shared-based compensation, was RMB18.1 million (USD2.6 million), compared with Non-GAAP operating income of RMB102.4 million during the same period of the prior fiscal year.

Operating margin for the quarter was -6.2%, compared with 9.6% in the same period of the prior fiscal year. Non-GAAP operating margin was -2.0%, compared with 10.9% during the same period last year. The decrease of margin was mainly due to one-off revenue drop due to the impact of COVID-19, coupled with cost increase on teacher and rent and increased R&D expenses to support the online development. We expect margin will return to normal level post the crisis and start to expand in FY21.

Other income was RMB48.9 million (USD7.0 million), which mainly consists government subsidies and gains from investment revaluation, compared with RMB2.2 million during the same period last year.

Income tax benefit was RMB21.2 million (USD3.0 million), compared with income tax expense of RMB27.8 million during the same period last year.

Net Income/Loss Attributable to OneSmart

Net loss attributable to OneSmart was RMB16.4 million (USD2.3 million), compared with net income of RMB64.9 million during the same period last year. Non-GAAP net income attributable to OneSmart was RMB20.3 million (USD2.9 million), compared with net income of RMB77.1 million during the same period last year. The change was mainly due to the rise of teacher compensation, rent, R&D expenses, and interest expenses.

Capital Expenditures

Capital expenditures for the second fiscal quarter of 2020 were RMB67.9 million (USD9.7 million), a decrease of RMB23.0 million from RMB90.9 million in the second fiscal quarter of 2019. The decrease was mainly because we prudently managed our cash flow and temporarily suspended leasehold improvements due to COVID-19.

Financial Position

As of February 29, 2020, the Company had cash and cash equivalents of RMB1,107.2 million (USD158.4 million) and short-term investments of RMB384.4 million (USD55.0 million).

OneSmart's prepayments from customers balance, which represents cash collected from enrolled students for courses and recognized proportionately as the training sessions are delivered, was RMB2,385.6 million (USD341.3 million) at the end of the second fiscal quarter of 2020, an increase of 21.1% from RMB1,969.5 million at the end of the second fiscal quarter of 2019.

Cash Flow

Net cash used in operating activities in the second fiscal quarter of 2020 was RMB6.7 million (USD1.0 million).

Net cash used in investing activities in the second quarter of 2020 was RMB222.0 million (USD31.8 million).

Net cash provided by financing activities in the second quarter of 2020 was RMB146.8 million (USD21.0 million).

Financial Results For the Six Months Ended February 28, 2019

For the first six months of fiscal year 2020, OneSmart reported net revenues of RMB1,683.0 million (USD240.8 million), representing a 5.9% increase year-over-year.

Average student enrollments in the first six months of fiscal year 2020 increased by 10.6% to approximately 165,125.

Operating costs and expenses for the first six months of fiscal year 2020 were RMB1,852.5 million (USD265.0 million), a 18.7% increase year-over-year. Non-GAAP operating costs and expenses for the first six months of fiscal year 2020, which excluded share-based compensation expenses, were RMB1,787.8 million (USD255.7 million), representing a 16.9% increase year-over-year.

Cost of revenues increased by 21.3% year-over-year to RMB1,045.9 million (USD149.6 million).

Selling and marketing expenses increased by 9.4% year-over-year to RMB391.6 million (USD56.0 million). Non-GAAP selling and marketing expenses, which excludes share-based compensation expenses, were RMB391.3 million (USD56.0 million), an increase of 9.5% from RMB357.4 million during the same period last year.

General and administrative expenses increased by 22.1% year-over-year to RMB414.9 million (USD59.4 million). Non-GAAP general and administrative expenses, which excludes share-based compensation, were RMB350.6 million (USD50.1 million), an increase of 13.0% from RMB310.1 million during the same period last year.

Operating loss for the first six months of fiscal year 2020 was RMB169.5 million (USD24.2 million). Non-GAAP operating loss for the first six months of fiscal year 2020 was RMB104.8 million (USD15.0 million).

Operating margin for the first six months of fiscal year 2020 was -10.1%, compared to 1.8% for the same period of the prior fiscal year. Non-GAAP operating margin, which excludes share-based compensation expenses for the first six months of fiscal year 2019, was -6.2%, compared to 3.7% for the same period of the prior fiscal year.

Net loss attributable to OneSmart for the first six months of fiscal year 2020 was RMB106.3 million (USD15.2 million). Non-GAAP net loss attributable to OneSmart for the first six months of fiscal year 2020 was RMB41.7 million (USD6.0 million).

Outlook for Fiscal Year 2020

Based on the latest information, we expect to generate net revenues of RMB3,200.0 to RMB3,600.0 million (USD457.8 to USD515.0 million) for the full Fiscal Year 2020. However, this outlook represents OneSmart's current view, which is subject to change because the COVID-19 impact is still ongoing and the reopen schedule of majorities of our learnings centers is not yet fixed, and the degree of full year contribution by our rapidly growing online products requires more data to assess.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at the noon buying rate on February 29, 2020, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System, which was RMB6.9906 to USD1.00.

Conference Call Information

OneSmart's management will hold an earnings conference call at 8:00 AM on May 19, 2020 U.S. Eastern Time (8:00 PM on the same day Beijing/Hong Kong Time).

Dial-in numbers for the live conference call are as follows:

International

1-412-902-4272

Mainland China

4001-201-203

US

1-888-346-8982

Hong Kong

800-905-945

Passcode

OneSmart

A telephone replay of the call will be available after the conclusion of the conference call through May 26, 2019.

Dial-in numbers for the replay are as follows:

International Dial-in

1-412-317-0088

U.S. Toll Free

1-877-344-7529

Passcode:

10143553

Additionally, a live and archived webcast of this conference call will be available at: http://www.onesmart.investorroom.com/.

About OneSmart

Founded in 2008 and headquartered in Shanghai, OneSmart International Education Group Limited is a leading premium K-12 education company in China. Our vision is to be the most trusted and heartful high-tech education company and our mission is POWER LEARNING changes the future with technology advancement. Our company culture is centered on the core values of customer focus, excellence, integrity, and technology and innovation.

The Company has built a comprehensive premium K-12 education platform that encompasses OneSmart VIP business (the leading premium K-12 1-on-1 education business in China), HappyMath (the leading premium young children math education business in China), and FasTrack English (the second largest premium English education business in East China), and OneSmart Online (the leading premium online education platform in China). As of November 30, 2019, OneSmart operates a nationwide network of 430 learning centers across 35 cities in China.

For more information on OneSmart, please visit http://www.onesmart.investorroom.com.

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. OneSmart 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 OneSmart's 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: OneSmart's goals and strategies; its future business development, financial condition and results of operations; its ability to continue to penetrate premium K-12 after-school education services market; diversify and enrich our education offerings; enhance the development and management of our teacher team and teaching materials; competition in our industry in China; its ability to maintain and expand online education presence; relevant government policies and regulations relating to the corporate structure, business and industry; and its ability to protect our students' information and adequately address privacy concerns. Further information regarding these and other risks, uncertainties or factors is included in the Company's 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 OneSmart does not undertake any obligation to update such information, except as required under applicable law.

Non-GAAP Financial Measures

In evaluating its business, OneSmart considers and uses the following measures defined as non-GAAP financial measures by the SEC as supplemental metrics to review and assess its operating performance: non-GAAP operating costs and expenses, non-GAAP selling and marketing expenses, non-GAAP general and administrative expenses, non-GAAP operating income, non-GAAP net income attributable to OneSmart. To present each of these non-GAAP measures, the Company excludes share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release.

OneSmart believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based compensation expenses that may not be indicative of its operating performance from a cash perspective. OneSmart believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to OneSmart's historical performance and liquidity. OneSmart computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. OneSmart believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

For more information, please contact:
OneSmart
Ms. Rebecca Shen
+86-21-2250-5826
E-mail: ir@onesmart.org

Christensen

In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com

In the US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com

 

 

ONESMART INTERNATIONAL EDUCATION GROUP LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)




As of 


As of 


As of 



August 31,


February 29,


February 29,



2019


2020


2020



RMB


RMB


US$



(Audited)


(Unaudited)


(Unaudited)

ASSETS







Current assets:







Cash and cash equivalents


1,386,412


1,107,203


158,385

Short-term investments


454,426


384,392


54,987

Amounts due from a related party


-


18,740


2,681

Prepayments and other current assets


578,787


775,738


110,968

Total current assets


2,419,625


2,286,073


327,021








Non-current assets:







Property and equipment, net


567,987


621,090


88,846

Intangible assets, net


168,622


204,185


29,209

Long-term investments


1,487,638


1,349,193


193,001

Operating lease right-of-use assets


-


1,715,568


245,411

Goodwill


815,052


1,120,104


160,230

Deferred tax assets


83,104


164,123


23,478

Amounts due from a related party


18,750


20,400


2,918

Other non-current assets


510,697


279,590


39,995

Total non-current assets


3,651,850


5,474,253


783,088








Total assets


6,071,475


7,760,326


1,110,109








LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities:







Short-term loans (including short-term loans of the
consolidated VIEs without recourse to the Group of
RMB249,876 and RMB265,300 (US$37,951) as of August 
31, 2019 and February 29, 2020, respectively)


249,876


265,300


37,951

Amounts due to a related party (including due to a
related party of the consolidated VIEs without recourse
to the Group of nil and RMB15,000 (US$2,146) as of
August 31, 2019 and February 29, 2020, respectively)


-


15,000


2,146

Long-term loans, current portion (including long-term
loans, current portion of the consolidated VIEs without
recourse to the Group of RMB71,820 and RMB95,760
(US$13,698) as of August 31, 2019 and February 29,
2020, respectively)


71,820


180,298


25,791

Accrued expenses and other current liabilities (including
accrued expenses and other current liabilities of the
consolidated VIEs without recourse to the Group of
RMB750,164 and RMB563,589 (US$80,621) as of August 
31, 2019 and February 29, 2020, respectively)


816,392


701,113


100,294

Income taxes payable (including income taxes payable of
the consolidated VIEs without recourse to the Group of
RMB66,300 and RMB74,139(US$10,606) as of August 
31, 2019 and February 29, 2020, respectively)


81,397


74,139


10,606

Prepayments from customers (including prepayments
from customers of the consolidated VIEs without
recourse to the Group of RMB2,170,766 and
RMB2,385,546 (US$341,251) as of August 31, 2019 and
February 29, 2020, respectively)


2,170,815


2,385,595


341,258

Operating lease liabilities, current portion (including
operating lease liabilities, current portion of the
consolidated VIEs without recourse to the Group of nil
and RMB520,553 (US$74,465) as of August 31, 2019 and
February 29, 2020, respectively)


-


520,553


74,465

Total current liabilities


3,390,300


4,141,998


592,511








Non-current liabilities:







Deferred tax liabilities (including deferred tax liabilities of
the consolidated VIEs without recourse to the Group of
RMB55,719 and RMB41,921(US$5,997) as of August 31,
2019 and February 29, 2020, respectively)


57,066


51,605


7,382

Long-term loans (including long-term loan of the
consolidated VIEs without recourse to the Group of
RMB376,380 and RMB299,340 (US$42,820) as of August
31, 2019 and February 29, 2020, respectively)


1,345,754


1,162,511


166,296

Convertible senior notes (including convertible senior
notes of the consolidated VIEs without recourse to the
Group of nil as of August 31, 2019 and February 29,
2020, respectively)


-


174,765


25,000

Unrecognized tax benefit (including liability for
unrecognized tax benefit of the consolidated VIEs
without  recourse to the Group of RMB25,640 and
RMB30,564 (US$4,372) as of August 31, 2019 and
February 29, 2020, respectively)


29,442


31,138


4,454

Operating lease liabilities, non-current portion (including
operating lease liabilities, non-current portion of the
consolidated VIEs without recourse to the Group of nil
and RMB1,127,686 (US$161,315) as of August 31, 2019
and February 29, 2020, respectively)


-


1,127,686


161,315

Other non-current liabilities (including other non-current
liabilities of the consolidated VIEs without recourse to the
Group of RMB43,440 and RMB21,677 (US$3,101) as of
August 31, 2019 and February 29, 2020, respectively)


91,440


45,677


6,534

Total non-current liabilities


1,523,702


2,593,382


370,981








Total liabilities 


4,914,002


6,735,380


963,492








Commitments and contingencies














Shareholders' equity:







Class A ordinary shares (US$0.000001 par value;
37,703,157,984 shares authorized; 4,130,261,827 issued
and outstanding as of August 31, 2019 and
4,195,575,467 issued and outstanding as of February 29,
2020, respectively)


26


26


4

Class B ordinary shares (US$0.000001 par value;
2,296,842,016 issued and outstanding as of August 31,
2019 and February 29, 2020, respectively)


16


16


2

Treasury stock


(203,759)


(209,130)


(29,916)

Additional paid-in capital


5,501,992


5,558,095


795,081

Statutory reserves


7,080


12,270


1,755

Accumulated deficits


(4,300,153)


(4,411,643)


(631,082)

Accumulated other comprehensive income 


87,148


40,576


5,804

Total OneSmart International Education Group
Limited shareholders' equity


1,092,350


990,210


141,648

Non-controlling interests


65,123


34,736


4,969

Total shareholders' equity 


1,157,473


1,024,946


146,617








Total liabilities, non-controlling interests and shareholders' equity


6,071,475


7,760,326


1,110,109

 

 

 

ONESMART INTERNATIONAL EDUCATION GROUP LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Amounts in thousands)
















For the three months ended
February 29,


For the six months ended
February 29,



2019


2020


2020


2019


2020


2020



RMB


RMB


US$


RMB


RMB


US$



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)














Net revenues


942,500


885,800


126,713


1,589,477


1,683,000


240,752

Cost of revenues


(475,962)


(529,372)


(75,726)


(862,547)


(1,045,931)


(149,620)

Gross profit


466,538


356,428


50,987


726,930


637,069


91,132














Operating expenses:













Selling and marketing (Note 1)


(191,450)


(196,729)


(28,142)


(357,888)


(391,623)


(56,021)

General and administrative (Note 1)


(184,872)


(214,462)


(30,679)


(339,895)


(414,907)


(59,352)

Total operating expenses


(376,322)


(411,191)


(58,821)


(697,783)


(806,530)


(115,373)

Operating income/(loss)


90,216


(54,763)


(7,834)


29,147


(169,461)


(24,241)














Interest income


4,708


3,251


465


12,411


32,987


4,719

Interest expense


(10,344)


(19,123)


(2,736)


(17,868)


(44,814)


(6,411)

Other income


2,150


48,861


6,990


19,202


58,987


8,438

Other expenses


(442)


(21,239)


(3,038)


(575)


(29,936)


(4,282)

Foreign exchange gains


309


15


2


1,519


15


2

Income/(loss) before income tax and share of
net loss from equity investees


86,597


(42,998)


(6,151)


43,836


(152,222)


(21,775)














Income tax (expense)/benefit


(27,819)


21,169


3,028


(30,303)


24,568


3,514

Income/(loss) before share of net loss from
equity investees


58,778


(21,829)


(3,123)


13,533


(127,654)


(18,261)














Share of net loss from equity investees 


(13,579)


(3,881)


(555)


(7,313)


(7,715)


(1,104)














Net income/(loss)


45,199


(25,710)


(3,678)


6,220


(135,369)


(19,365)














Add: Net loss attributable to non-controlling
interests


19,725


9,343


1,337


42,397


29,069


4,158














Net income/(loss) attributable to OneSmart's
shareholders


64,924


(16,367)


(2,341)


48,617


(106,300)


(15,207)














Note 1: Share-based compensation expenses are included in the operating costs and expenses as follows:










For the three months ended
February 29,


For the six months ended
February 29,



2019


2020


2020


2019


2020


2020



RMB


RMB


US$


RMB


RMB


US$



(Unaudited)


(Unaudited)


(Unaudited)


(Audited)


(Unaudited)


(Unaudited)














Selling and marketing


75


142


20


533


285


41

General and administrative


12,059


36,567


5,231


29,782


64,346


9,205

Total


12,134


36,709


5,251


30,315


64,631


9,246





















































ONESMART INTERNATIONAL EDUCATION GROUP LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)

(Amounts in thousands)



For the three months ended
February 29,


For the six months ended
February 29,



2019


2020


2020


2019


2020


2019



RMB


RMB


US$


RMB


RMB


US$



(Unaudited)


(Unaudited)


(Unaudited)


(Audited)


(Unaudited)


(Unaudited)














Net income/(loss)


45,199


(25,710)


(3,678)


6,220


(135,369)


(19,365)

Other comprehensive income/(loss):













Unrealized gain/(loss) on available-for-sale
investments, net of tax


19,492


(32,858)


(4,700)


49,621


(51,117)


(7,312)

Foreign currency translation adjustment


(3,796)


2,015


288


6,188


4,545


650














Comprehensive income/(loss)


60,895


(56,553)


(8,090)


62,029


(181,941)


(26,027)

Add: Comprehensive loss attributable to non-
controlling interests


19,725


9,343


1,337


42,397


29,069


4,158














Comprehensive income/(loss) attributable to
OneSmart's shareholders


80,620


(47,210)


(6,753)


104,426


(152,872)


(21,869)


 

 

ONESMART INTERNATIONAL EDUCATION GROUP LIMITED

Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures

(Amounts in thousands)
















For the three months ended
February 29,


For the six months ended
February 29,

2019


2020


2020


2019


2020


2020



RMB


RMB


US$


RMB


RMB


US$



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)














Selling and marketing expenses


191,450


196,729


28,142


357,888


391,623


56,021

Share-based compensation expense in selling and 
marketing expenses


75


142


20


533


285


41

Non-GAAP selling and marketing expenses


191,375


196,587


28,122


357,355


391,338


55,980

General and administrative expenses


184,872


214,462


30,679


339,895


414,907


59,352

Share-based compensation expense in general and 
administrative expenses


12,059


36,567


5,231


29,782


64,346


9,205

Non-GAAP general and administrative expenses


172,813


177,895


25,448


310,113


350,561


50,147














Operating costs and expenses


852,284


940,563


134,547


1,560,330


1,852,461


264,993

Share-based compensation expense in operating

costs and expenses


12,134


36,709


5,251


30,315


64,631


9,246

Non-GAAP operating costs and expenses


840,150


903,854


129,296


1,530,015


1,787,830


255,747














Operating income/(loss)


90,216


(54,763)


(7,834)


29,147


(169,461)


(24,241)

Share-based compensation expenses


12,134


36,709


5,251


30,315


64,631


9,246

Non-GAAP operating income/(loss)


102,350


(18,054)


(2,583)


59,462


(104,830)


(14,995)














Net income/(loss) attributable to OneSmart's
shareholders


64,924


(16,367)


(2,341)


48,617


(106,300)


(15,207)

Share-based compensation expenses


12,134


36,709


5,251


30,315


64,631


9,246

Non-GAAP net income attributable to OneSmart


77,058


20,342


2,910


78,932


(41,669)


(5,961)

 

 

 

 

Cision

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