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Sunlands Technology Group Announces Unaudited Third Quarter 2020 Financial Results

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Gross billings (non-GAAP) increased by 6.6% year-over-year

New student enrollments[1] increased by 47.8% year-over-year

BEIJING, Nov. 18, 2020 /PRNewswire/ -- 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 third quarter ended September 30, 2020.

Third Quarter 2020 Financial and Operational Snapshots

  • Net revenues were RMB541.6 million (US$79.8 million), representing a 2.7% increase year-over-year.

  • Gross billings (non-GAAP) were RMB654.3 million (US$96.4 million), representing a 6.6% increase year-over-year.

  • Gross profit was RMB448.7 million (US$66.1 million), representing an 8.5% increase year-over-year.

  • Net loss was RMB165.8 million (US$24.4 million), compared with RMB129.8 million in the third quarter of 2019.

  • Net loss margin, defined as net loss as a percentage of net revenues, increased to 30.6% from 24.6% in the third quarter of 2019.

  • New student enrollments were 140,819, representing a 47.8% increase year-over-year.

  • As of September 30, 2020, the Company's deferred revenue balance was RMB3,090.3 million (US$455.2 million).

[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 us, excluding orders of our low-price courses). In June 2019, we introduced low-price courses, including "mini courses" and "RMB1 courses," to strengthen our competitiveness and improve customer experience. We offer such low-price courses mainly in the formats of recorded videos or short live streaming.

"Despite the short-term impact on our operations of the COVID-19 pandemic in the first half of 2020, Sunlands achieved steady year-over-year increases in both gross billings and net revenues in the third quarter. Our results were fueled by a combination of the recovering macroeconomic conditions in China as well as the implementation of optimization initiatives within our business," said Mr. Tongbo Liu, Chief Executive Officer of Sunlands. "In the third quarter, our gross billings reached RMB654.3 million, increasing by 6.6% year-over-year and 23.1% quarter-over-quarter. We attribute our strong gross billings results largely to improvements we made in sales efficiency with new approaches to student acquisition as well as our enhancing brand awareness and continuous upgrades to our product categories. Following the solid performance in the second quarter of 2020, net revenues increased by 2.7% year-over year to RMB541.6 million, exceeding the high end of our guidance by 4.2%. Moreover, our new enrollments reached approximately 140.8 thousand in the third quarter, growing 47.8% year-over-year and 70.5% quarter-over-quarter.

"While maintaining a leading market share in STE programs, we continue to explore growth opportunities in master's degree-oriented programs to address the broad demand for academics. The growth of master's degree-oriented programs in terms of gross billings was phenomenal, registering 93.3% year-over-year and 48.4% quarter-over-quarter. Adding to existing programs, in the third quarter we further expanded the number of overseas universities we collaborate with, in order to enrich our program portfolio and address the increased demand for diversified and differentiated higher education. To further implement our sustainable overall growth strategy, we continued to promote course offerings targeting professional certification, vocational education and popular hobbies. In the third quarter, in order to deliver an unparalleled user experience and drive user stickiness, we further integrated our cutting-edge AI technologies into all aspects of our online platform, customizing our curriculum offerings and teaching materials to deliver innovative breakthrough," Mr. Liu said.

Ms. Selena Lu Lv, Chief Financial Officer of Sunlands, commented, "Our third quarter financial results were a reflection of our balanced expansion strategy. Net revenues increased by 2.7% year-over-year, exceeding our expectations. This result is attributable to broad-based improvements across our organization, in particular optimizing our revenue contribution structure. Other highlights in the quarter include a significant increase in gross billings and a higher proportion of revenue coming from non-STE programs. These accomplishments came from improved efficiency in our student acquisition and conversion methods, recognition of our program diversity, and content enrichment. In terms of cost control management, we pursued a strict spending policy, especially in regard to G&A expenses which were reduced by 16.7% year-over-year. Looking ahead, we will continue to focus on product and service upgrades by deploying our AI-enabled platform systems and further refinement of our internal operations. We believe this dual-fold effort will bring long-term value to our users, students and shareholders through a sustainable and balanced approach to growth."

Financial Results for the third quarter of 2020

Net Revenues

In the third quarter of 2020, net revenues increased by 2.7% to RMB541.6 million (US$79.8 million) from RMB527.3 million in the third quarter of 2019.

Cost of Revenues

Cost of revenues decreased by 18.2% to RMB92.9 million (US$13.7 million) in the third quarter of 2020 from RMB113.7 million in the third quarter of 2019. The decrease was primarily due to reduced insurance-related costs incurred for our integrated online education service package purchased by students.

Gross Profit

Gross profit increased by 8.5% to RMB448.7 million (US$66.1 million) in the third quarter of 2020 from RMB413.6 million in the third quarter of 2019.

Operating Expenses

In the third quarter of 2020, operating expenses were RMB664.1 million (US$97.8 million), representing a 21.4% increase from RMB546.9 million in the third quarter of 2019.

Sales and marketing expenses increased by 32.7% to RMB569.4 million (US$83.9 million) in the third quarter of 2020 from RMB429.2 million in the third quarter of 2019. The increase was mainly due to increases in (i) compensation paid to our sales and marketing personnel; (ii) spending on branding and marketing activities, including more marketing promotion activities to diversify student acquisition channels; and (iii) share-based compensation expenses recognized in the third quarter of 2020.

General and administrative expenses decreased by 16.7% to RMB76.1 million (US$11.2 million) in the third quarter of 2020 from RMB91.3 million in the third quarter of 2019. The decrease was mainly due to the decrease in compensation expenses.

Product development expenses decreased by 29.7% to RMB18.6 million (US$2.7 million) in the third quarter of 2020 from RMB26.4 million in the third quarter of 2019. The decrease was primarily due to a decrease in the compensation incurred related to our product and technology development personnel.

Other income

Other income increased to RMB47.3 million (US$7.0 million) in the third quarter of 2020 from RMB5.1 million in the third quarter of 2019. The increase was primarily due to the value-added tax exemption of RMB44.1 million offered by the relevant authorities as part of the national COVID-19 relief effort.

Net Loss

Net loss for the third quarter of 2020 was RMB165.8 million (US$24.4 million), compared with RMB129.8 million in the third quarter of 2019.

Basic and Diluted Net Loss Per Share

Basic and diluted net loss per share was RMB24.62 (US$3.63) in the third quarter of 2020.

Cash and Cash Equivalents and Short-term Investments

As of September 30, 2020, the Company had RMB1,054.6 million (US$155.3 million) of cash and cash equivalents and RMB234.4 million (US$34.5 million) of short-term investments, compared with RMB1,402.2 million of cash and cash equivalents and RMB217.6 million of short-term investments as of December 31, 2019.

Deferred Revenue

As of September 30, 2020, the Company had a deferred revenue balance of RMB3,090.3 million (US$455.2 million), compared with RMB3,228.8 million as of December 31, 2019.

Capital Expenditures

Capital expenditures were incurred primarily in connection with IT infrastructure equipment and leasehold improvement necessary to support Sunlands' operations. Capital expenditures were RMB14.3 million (US$2.1 million) in the third quarter of 2020, compared with RMB11.8 million in the third quarter of 2019.

Financial Results for the First Nine Months of 2020

Net Revenues

In the first nine months of 2020, net revenues decreased by 1.5% to RMB1,619.2 million (US$238.5 million) from RMB1,644.2 million in the first nine months of 2019.

Cost of Revenues

Cost of revenues decreased by 1.8% to RMB289.4 million (US$42.6 million) in the first nine months of 2020 from RMB294.8 million in the first nine months of 2019.

Gross Profit

Gross profit decreased by 1.5% to RMB1,329.8 million (US$195.9 million) from RMB1,349.4 million in the first nine months of 2019.

Operating Expenses

In the first nine months of 2020, operating expenses were RMB1,791.8 million (US$263.9 million), representing an 8.1% increase from RMB1,658.3 million in the first nine months of 2019.

Sales and marketing expenses increased by 15.1% to RMB1,515.2 million (US$223.2 million) in the first nine months of 2020 from RMB1,316.2 million in the first nine months of 2019.

General and administrative expenses decreased by 16.6% to RMB220.7 million (US$32.5 million) in the first nine months of 2020 from RMB264.7 million in the first nine months of 2019.

Product development expenses decreased by 27.8% to RMB55.9 million (US$8.2 million) in the first nine months of 2020 from RMB77.4 million in the first nine months of 2019.

Other income

Other income for the first nine months of 2020 was RMB93.8 million (US$13.8 million), compared with RMB14.4 million in the first nine months of 2019.

Net Loss

Net loss for the first nine months of 2020 was RMB357.5 million (US$52.7 million), compared with RMB255.6 million in the first nine months of 2019.

Basic and Diluted Net Loss Per Share

Basic and diluted net loss per share was RMB52.85 (US$7.78) in the first nine months of 2020, compared with RMB37.36 in the first nine months of 2019.

Capital Expenditures

Capital expenditures were incurred primarily in connection with IT infrastructure equipment and leasehold improvement necessary to support Sunlands' operations. Capital expenditures were RMB22.3 million (US$3.3 million) in the first nine months of 2020, compared with RMB15.1 million in the first nine months of 2019.

Outlook

For the fourth quarter of 2020, Sunlands currently expects net revenues to be between RMB540 million to RMB560 million, which would represent a decrease of 1.8% to an increase of 1.9% 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 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 RMB6.7896 to US$1.00, the effective noon buying rate for September 30, 2020 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on September 30, 2020, 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, (8:30 PM Beijing/Hong Kong time) on November 18, 2020, 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

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 November 25, 2020, by dialing the following telephone numbers:

International:

+1-412-317-0088

US toll free:

+1-877-344-7529

Replay access code:

10149518

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:

Sunlands Technology Group
Investor Relations
Email: sl-ir@sunlands.com

The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
Email: sunlands@tpg-ir.com

Ross Warner
Tel: +86-10-6508-0677
Email: sunlands@tpg-ir.com

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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




As of December 31,


As of September 30,



2019


2020



RMB


RMB


US$

ASSETS







Current assets







Cash and cash equivalents


1,402,226


1,054,641


155,332

Short-term investments


217,640


234,417


34,526

Prepaid expenses and other current assets


180,881


206,403


30,399

Deferred costs, current


243,447


195,777


28,835

Total current assets


2,044,194


1,691,238


249,092

Non-current assets







Property and equipment, net


545,675


525,531


77,402

Intangible assets, net


1,176


1,365


201

Right-of-use assets


598,991


538,921


79,374

Deferred costs, non-current


205,488


184,175


27,126

Long-term investments


40,026


63,098


9,293

Deferred tax assets


85,513


20,820


3,066

Other non-current assets


447,639


458,812


67,576

Total non-current assets


1,924,508


1,792,722


264,038

TOTAL ASSETS


3,968,702


3,483,960


513,130








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 RMB209,727 and RMB166,190 as of







December 31, 2019 and September 30, 2020, respectively)


435,225


607,231


89,435

Deferred revenue, current (including deferred revenue, current of the consolidated VIEs







without recourse to Sunlands Technology Group of RMB1,162,938 and







RMB497,649 as of December 31, 2019 and September 30, 2020, respectively)


1,670,076


1,500,006


220,927

Lease liabilities, current (including lease liabilities, current of the consolidated VIEs







without recourse to Sunlands Technology Group of RMB22,659 and







RMB16,328 as of December 31, 2019 and September 30, 2020, respectively)


40,236


34,004


5,008

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, 2019, and September 30, 2020, respectively)


61,540


61,540


9,064

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, 2019 and September 30, 2020, respectively)


32,500


32,500


4,787

Total current liabilities


2,239,577


2,235,281


329,221

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 September 30,



2019


2020



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







RMB1,096,482 and RMB546,283 as of December 31, 2019 and September 30,







2020, respectively)


1,558,694


1,590,290


234,224

Lease liabilities, non-current (including lease liabilities, non-current of the







consolidated VIEs without recourse to Sunlands Technology Group of







RMB358,467 and RMB336,382 as of December 31, 2019 and September 30,







2020, respectively)


616,246


571,162


84,123

Deferred tax liabilities (including deferred tax liabilities of the consolidated







VIEs without recourse to Sunlands Technology Group of RMB4,415 and RMB3,730 as of







December 31, 2019 and September 30, 2020, respectively)


87,954


21,912


3,227

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, 2019 and September 30, 2020, respectively)


11,469


8,694


1,280

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, 2019 and September 30, 2020, respectively)


193,125


168,750


24,854

Total non-current liabilities


2,467,488


2,360,808


347,708

TOTAL LIABILITIES


4,707,065


4,596,089


676,929


SHAREHOLDERS' DEFICIT







Class A ordinary shares (par value of US$0.00005, 796,062,195 shares







authorized; 1,830,183 and 1,914,702 shares issued as of December 31, 2019







and September 30, 2020, respectively; 1,728,006 and 1,728,641 shares







outstanding as of December 31, 2019 and September 30, 2020, 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, 2019 and September 30, 2020, respectively)


-


-


-

Class C ordinary shares (par value of US$0.00005, 203,111,416 shares







authorized; 4,258,686 and 4,174,167 shares issued and outstanding







as of December 31, 2019 and September 30, 2020, respectively)


1


1


-

Treasury stock


-


-


-

Additional paid-in capital


2,363,999


2,366,641


348,569

Accumulated deficit


(3,244,587)


(3,601,976)


(530,514)

Accumulated other comprehensive income


142,435


123,503


18,190

Total Sunlands Technology Group shareholders' deficit


(738,151)


(1,111,830)


(163,755)

Noncontrolling interest


(212)


(299)


(44)

TOTAL SHAREHOLDERS' DEFICIT


(738,363)


(1,112,129)


(163,799)

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT


3,968,702


3,483,960


513,130

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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










For the Three Months Ended September 30,



2019


2020



RMB


RMB


US$

Net revenues


527,275


541,631


79,774

Cost of revenues


(113,654)


(92,928)


(13,687)

Gross profit


413,621


448,703


66,087








Operating expenses







Sales and marketing expenses


(429,183)


(569,424)


(83,867)

Product development expenses


(26,420)


(18,565)


(2,734)

General and administrative expenses


(91,320)


(76,100)


(11,208)

Total operating expenses


(546,923)


(664,089)


(97,809)

Loss from operations


(133,302)


(215,386)


(31,722)

Interest income


2,019


5,778


849

Interest expense


(3,562)


(2,838)


(418)

Other income, net


5,107


47,253


6,960

Loss before income tax expenses


(129,738)


(165,193)


(24,331)

Income tax expenses


-


(369)


(54)

Loss from equity method investments


(75)


(202)


(30)

Net loss


(129,813)


(165,764)


(24,415)








Less: Net loss attributable to noncontrolling interest


(192)


(80)


(12)








Net loss attributable to Sunlands Technology Group


(129,621)


(165,684)


(24,403)

Net loss per share attributable to ordinary shareholders of







Sunlands Technology Group:







Basic and diluted


(19.00)


(24.62)


(3.63)

Weighted average shares used in calculating net loss







per ordinary share:







Basic and diluted


6,820,752


6,729,197


6,729,197

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)










For the Three Months Ended September 30,



2019


2020



RMB


RMB


US$

Net loss


(129,813)


(165,764)


(24,415)

Other comprehensive income/(loss), net of tax effect of nil:







Change in cumulative foreign currency translation adjustments


59,723


(35,782)


(5,270)

Total comprehensive loss


(70,090)


(201,546)


(29,685)

Less: comprehensive loss attributable to noncontrolling







interest


(192)


(80)


(12)

Comprehensive loss attributable to Sunlands Technology







Group


(69,898)


(201,466)


(29,673)


SUNLANDS TECHNOLOGY GROUP

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(Amounts in thousands)




For the Three Months Ended September 30,



2019


2020



RMB


RMB

Net revenues


527,275


541,631

Less: other revenues


(2,730)


(5,450)

Add: tax and surcharges


34,907


57,543

Add: ending deferred revenue


3,214,564


3,090,296

Add: ending refund liability


75,046


239,526

Less: beginning deferred revenue


(3,227,949)


(3,066,569)

Less: beginning refund liability


(7,522)


(202,651)

Gross billings (non-GAAP)


613,591


654,326
















Net loss


(129,813)


(165,764)

Add: income tax expenses


-


369

depreciation and amortization


9,442


10,773

interest expense


3,562


2,838

Less: interest income


(2,019)


(5,778)

EBITDA (non-GAAP)


(118,828)


(157,562)

SUNLANDS TECHNOLOGY GROUP

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(Amounts in thousands)




For the Three Months Ended September 30,



2019


2020



RMB


RMB

Cost of revenues


113,654


92,928

Less: Share-based compensation expenses in cost of revenues


(91)


(17)

Non-GAAP cost of revenues


113,563


92,911






Sales and marketing expenses


429,183


569,424

Less: Share-based compensation expenses in sales and marketing expenses


(156)


(14,015)

Non-GAAP sales and marketing expenses


429,027


555,409






General and administrative expenses


91,320


76,100

Less: Share-based compensation expenses in general and administrative expenses


(759)


(14,128)

Non-GAAP general and administrative expenses


90,561


61,972






Operating costs and expense


660,577


757,017

Less: Share-based compensation expenses


(1,006)


(28,160)

Non-GAAP operating costs and expense


659,571


728,857






Loss from operations


133,302


215,386

Less: Share-based compensation expenses


(1,006)


(28,160)

Non-GAAP loss from operations


132,296


187,226






Net loss attributable to Sunlands Technology Group


129,621


165,684

Less: Share-based compensation expenses


(1,006)


(28,160)

Non-GAAP net loss attributable to Sunlands Technology Group


128,615


137,524






Net loss per share attributable to ordinary shareholders of





Sunlands Technology Group:





Basic and diluted


19.00


24.62

Non-GAAP net loss per share attributable to ordinary shareholders of





Sunlands Technology Group:





Basic and diluted


18.86


20.44






Weighted average shares used in calculating net loss





per ordinary share:





Basic and diluted


6,820,752


6,729,197

Weighted average shares used in calculating Non-GAAP net loss





per ordinary share:





Basic and diluted


6,820,752


6,729,197


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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










For the Nine Months Ended September 30,



2019


2020



RMB


RMB


US$

Net revenues


1,644,180


1,619,212


238,484

Cost of revenues


(294,804)


(289,431)


(42,629)

Gross profit


1,349,376


1,329,781


195,855








Operating expenses







Sales and marketing expenses


(1,316,195)


(1,515,161)


(223,159)

Product development expenses


(77,422)


(55,930)


(8,238)

General and administrative expenses


(264,704)


(220,738)


(32,511)

Total operating expenses


(1,658,321)


(1,791,829)


(263,908)

Loss from operations


(308,945)


(462,048)


(68,053)

Interest income


50,963


18,915


2,786

Interest expense


(10,947)


(8,966)


(1,321)

Other income, net


14,386


93,802


13,816

Loss before income tax expenses


(254,543)


(358,297)


(52,772)

Income tax expenses


-


1,349


199

Loss from equity method investments


(1,085)


(528)


(78)

Net loss


(255,628)


(357,476)


(52,651)








Less: Net loss attributable to noncontrolling interest


(274)


(87)


(13)








Net loss attributable to Sunlands Technology Group


(255,354)


(357,389)


(52,638)

Net loss per share attributable to ordinary shareholders of







Sunlands Technology Group:







Basic and diluted


(37.36)


(52.85)


(7.78)

Weighted average shares used in calculating net loss







per ordinary share:







Basic and diluted


6,835,118


6,762,508


6,762,508

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)










For the Nine Months Ended September 30,



2019


2020



RMB


RMB


US$

Net loss


(255,628)


(357,476)


(52,651)

Other comprehensive (loss)/income, net of tax effect of nil:







Change in cumulative foreign currency translation adjustments


57,186


(18,932)


(2,788)

Total comprehensive loss


(198,442)


(376,408)


(55,439)

Less: comprehensive loss attributable to noncontrolling







interest


(274)


(87)


(13)

Comprehensive loss attributable to Sunlands Technology







Group


(198,168)


(376,321)


(55,426)

SUNLANDS TECHNOLOGY GROUP

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(Amounts in thousands)




For the Nine Months Ended September 30,



2019


2020



RMB


RMB

Net revenues


1,644,180


1,619,212

Less: other revenues


(12,344)


(16,438)

Add: tax and surcharges


87,726


127,300

Add: ending deferred revenue


3,214,564


3,090,296

Add: ending refund liability


75,046


239,526

Less: beginning deferred revenue


(3,286,025)


(3,228,770)

Less: beginning refund liability


(6,625)


(128,478)

Gross billings (non-GAAP)


1,716,522


1,702,648
















Net loss


(255,628)


(357,476)

Add: income tax expenses


-


(1,349)

depreciation and amortization


27,880


31,256

interest expense


10,947


8,966

Less: interest income


(50,963)


(18,915)

EBITDA (non-GAAP)


(267,764)


(337,518)

SUNLANDS TECHNOLOGY GROUP

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(Amounts in thousands)




For the Nine Months Ended September 30,



2019


2020



RMB


RMB

Cost of revenues


294,804


289,431

Less: Share-based compensation expenses in cost of revenues


(264)


(33)

Non-GAAP cost of revenues


294,540


289,398






Sales and marketing expenses


1,316,195


1,515,161

Less: Share-based compensation expenses in sales and marketing expenses


(542)


(14,273)

Non-GAAP sales and marketing expenses


1,315,653


1,500,888






General and administrative expenses


264,704


220,738

Less: Share-based compensation expenses in general and administrative expenses


(2,062)


(14,915)

Non-GAAP general and administrative expenses


262,642


205,823






Operating costs and expense


1,953,125


2,081,260

Less: Share-based compensation expenses


(2,868)


(29,221)

Non-GAAP operating costs and expense


1,950,257


2,052,039






Loss from operations


308,945


462,048

Less: Share-based compensation expenses


(2,868)


(29,221)

Non-GAAP loss from operations


306,077


432,827






Net loss attributable to Sunlands Technology Group


255,354


357,389

Less: Share-based compensation expenses


(2,868)


(29,221)

Non-GAAP net loss attributable to Sunlands Technology Group


252,486


328,168






Net loss per share attributable to ordinary shareholders of





Sunlands Technology Group:





Basic and diluted


37.36


52.85

Non-GAAP net loss per share attributable to ordinary shareholders of





Sunlands Technology Group:





Basic and diluted


36.94


48.53






Weighted average shares used in calculating net loss





per ordinary share:





Basic and diluted


6,835,118


6,762,508

Weighted average shares used in calculating Non-GAAP net loss





per ordinary share:





Basic and diluted


6,835,118


6,762,508

Cision
Cision

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SOURCE Sunlands Technology Group