GSX Techedu Inc. Announces Unaudited Financial Results for the Second Quarter of 2019

BEIJING, Aug. 22, 2019 /PRNewswire/ -- GSX Techedu Inc. (NYSE: GSX) ("GSX" or the "Company"), a leading online K-12 large-class after-school tutoring service provider in China, today announced its unaudited financial results for the second quarter ended June 30, 2019.

Highlights for the Second Quarter Ended June 30, 2019([1])

    --  Net revenues increased 413.4% year-over-year to RMB353.7 million from
        RMB68.9 million in the same period of 2018.
    --  Gross billings([2]) increased 462.4% year-over-year to RMB599.4 million
        from RMB106.6 million in the same period of 2018.
    --  Gross profit margin([3]) increased to 71.4% from 61.4% in the same
        period of 2018.
    --  Non-GAAP gross profit margin increased to 72.6% from 61.5% in the same
        period of 2018.
    --  Income from operations increased to RMB16.2 million from loss from
        operations of RMB0.5 million in the same period of 2018.
    --  Non-GAAP income from operations increased to RMB31.1 million from RMB0.2
        million in the same period of 2018.
    --  Total enrollments increased 250.3% to 592,000 from 169,000 in the same
        period of 2018.

Highlights for the Six Months Ended June 30, 2019([1])

    --  Net revenues increased 437.9% year-over-year to RMB622.8 million from
        RMB115.8 million in the same period of 2018.
    --  Gross billings([2]) increased 436.8% year-over-year to RMB899.5 million
        from RMB167.6 million in the same period of 2018.
    --  Gross profit margin([3]) increased to 70.6% from 59.2% in the same
        period of 2018.
    --  Non-GAAP gross profit margin increased to 71.4% from 59.2% in the same
        period of 2018.
    --  Income from operations increased to RMB59.0 million from loss from
        operations of RMB4.7 million in the same period of 2018.
    --  Non-GAAP income from operations increased to RMB77.6 million from
        non-GAAP loss from operations of RMB3.8 million in the same period of
        2018.
    --  Total enrollments increased 234.6% to 803,000 from 240,000 in the same
        period of 2018.


                        [1] For a reconciliation of non-GAAP
                         numbers, please see the table
                         captioned "Reconciliations of non-
                         GAAP measures to the most comparable
                         GAAP measures" at the end of this
                         press release. Non-GAAP gross profit,
                         non-GAAP income from operations and
                         non-GAAP net income exclude share-
                         based compensation expenses.


                        [2] Gross billings is a non-GAAP
                         financial measure, which is defined as
                         the total amount of cash received for
                         the sale of course offerings in such
                         period, net of the total amount of
                         refunds in such period. See "About
                         Non-GAAP Financial Measures" and
                         "Reconciliations of non-GAAP measures
                         to the most comparable GAAP measures"
                         elsewhere in this press release.


                        [3] Defined as gross profit as a
                         percentage of net revenues.

Financial and Operating Data----Second Quarter and First Six Months of 2019

(In thousands of RMB, except for per student enrollments and percentages)


                                       
          Three Months Ended June 30,



                                         2018                  2019       
     Pct. Change




     Net revenues                     68,886               353,679                  413.4%



     Gross billings                  106,568               599,373                  462.4%



     Gross profit margin               61.4%                71.4%                  16.3%



     Non-GAAP gross profit margin      61.5%                72.6%                  18.0%



     (Loss) income from operations     (539)               16,226           
              NM



     Non-GAAP income from operations     170                31,087               18,186.5%



     Total enrollments               169,000               592,000                  250.3%


                                               
         Six Months Ended June 30,



                                                2018                 2019      
     Pct. Change




     Net revenues                           115,797              622,834                 437.9%



     Gross billings                         167,567              899,468                 436.8%



     Gross profit margin                      59.2%               70.6%                 19.3%



     Non-GAAP gross profit margin             59.2%               71.4%                 20.6%



     (Loss) income from operations          (4,699)              58,953          
              NM



     Non-GAAP (loss) income from operations (3,777)              77,636          
              NM



     Total enrollments                      240,000              803,000                 234.6%

Larry Xiangdong Chen, GSX's founder, chairman of board of directors and chief executive officer, commented, "We continue to focus on online-live-large-class tutoring, which we believe most effectively leverages our extremely high teaching quality since we focus on hiring only the very best teachers in China. This, combined with our cutting edge technology, effectively ensures the best learning results for students. Our continued emphasis on improving our organizational capabilities, collaborative execution and employee training and development is giving us a growing number of competitive advantages and has been contributing to higher conversion and retention rate. We have created an entirely new model in terms of how to provide individualized service and unique value to both students and their parents. This solid foundation should help us generate sustainable value and profitable growth over the long-term."

Shannon Shen, chief financial officer of GSX, commented, "We entered 2019 with robust growth in the first quarter, and I am pleased to report that the strong momentum across all of our key operating metrics helped drive the strong financial performance during the second quarter. Our gross billings in the second quarter increased 462.4% year-over-year to RMB599.4 million, and our net revenue increased 413.4% year-over-year to RMB353.7 million, demonstrating that we have been effectively executing our strategy, and that our unique education model is resonating with parents and supporting their kids in China's highly competitive education environment."

Financial Results for the Second Quarter of 2019

Net Revenues

Net revenues reached RMB353.7 million, a 413.4% increase from RMB68.9 million in the second quarter of 2018. The increase was mainly driven by the higher level of tuition fees we charged our K-12 students and the growth in paid course enrollments in our K-12 courses.

Cost of revenues

Cost of revenues rose 280.8% to RMB101.2 million from RMB26.6 million in the second quarter of 2018. The increase was mainly due to an increase in compensation for instructors and tutors.

Gross Profit

Gross profit increased 496.7% to RMB252.5 million from RMB42.3 million in the second quarter of 2018. Gross profit margin increased to 71.4% from 61.4% in the same period of 2018, primarily as a result of economies of scale.

Non-GAAP gross profit increased 506.5% to RMB256.9 million from RMB42.4 million in the same period of 2018. Non-GAAP gross profit margin increased to 72.6% from 61.5% in the same period of 2018.

Operating Expenses

Operating expenses were RMB236.3 million, a 451.3% increase from RMB42.9 million in the second quarter of 2018.

Selling expenses increased to RMB169.0 million from RMB18.4 million in the second quarter of 2018. The increase was primarily a result of higher marketing expenses to expand the customer base and enhance the brand, as well as an increase in compensation to sales and marketing staff.

Research and development expenses increased 164.2% to RMB41.1 million from RMB15.6 million in the second quarter of 2018. The increase was primarily due to a rise in the number of courses professionals, educational content professionals and technology development personnel, as well as an increase in compensation for such staff.

General and administrative expenses increased 194.3% to RMB26.1 million from RMB8.9 million in the second quarter of 2018. The rise in general and administrative expenses was mainly due to an increase of the number of general and administrative personnel and an increase in compensation paid to general and administrative staff.

(Loss) Income from Operations

Income from operations increased to RMB16.2 million from a loss from operations of RMB0.5 million in the second quarter of 2018.

Non-GAAP income from operations increased to RMB31.1 million from RMB0.2 million in the second quarter of 2018.

Net (Loss) Income

Net income increased to RMB16.4 million from a net loss of RMB0.4 million in the second quarter of 2018.

Non-GAAP net income increased to RMB31.2 million from RMB0.3 million in the second quarter of 2018.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS was RMB0.04 and RMB0.04, respectively, in the second quarter of fiscal year 2019.

Cash and Cash Equivalents, and Short-Term Investments

As of June 30, 2019, the Company had RMB60.1 million of cash and cash equivalents and RMB1,686.5 million of short-term investments, compared with RMB33.3 million of cash and cash equivalents and RMB198.0 million of short-term investments as of December 31, 2018.

Deferred Revenue

As of June 30, 2019, the Company's deferred revenue balance was RMB503.7 million, an increase of 85.1% from RMB272.0 million as of December 31, 2018. Deferred revenue primarily consisted of tuition collected in advance of the summer and fall semesters.

Financial Results for the First Six Months of 2019

Net Revenues

Net revenues reached RMB622.8 million, a 437.9% increase from RMB115.8 million in the first six months of 2018. The increase was mainly driven by the higher level of tuition fees we charged our K-12 students and the growth in paid course enrollments in our K-12 courses.

Cost of revenues

Cost of revenues rose 287.7% to RMB183.2 million from RMB47.3 million in the first six months of 2018. The increase was mainly due to an increase in compensation for instructors and tutors.

Gross Profit

Gross profit increased 541.4% to RMB439.6 million from RMB68.5 million in the first six months of 2018. Gross profit margin increased to 70.6% from 59.2% in the same period of 2018, primarily as a result of economies of scale.

Non-GAAP gross profit increased by 547.9% to RMB444.5 million from RMB68.6 million in the same period of 2018. Non-GAAP gross profit margin increased to 71.4% from 59.2% in the same period of 2018.

Operating Expenses

Operating expenses were RMB380.6 million, an increase of 419.7% from RMB73.2 million in the first six months of 2018.

Selling expenses increased to RMB268.6 million from RMB32.3 million in the first six months of 2018. The increase in selling expenses was primarily a result of more marketing expenses to expand the customer base and for brand enhancement, as well as an increase in compensation for sales and marketing staff.

Research and development expenses increased 160.3% to RMB71.6 million from RMB27.5 million in the first six month of 2018. The increase was primarily due to a rise in the number of courses professionals, educational content professionals and technology development personnel, as well as an increase in compensation paid to such staff.

General and administrative expenses increased 201.4% to RMB40.5 million from RMB13.4 million in the first six months of 2018. The rise in general and administrative expenses was mainly due to an increase in the number of general and administrative personnel and an increase in compensation paid to general and administrative staff.

(Loss) Income from Operations

Income from operations increased to RMB59.0 million from a loss from operations of RMB4.7 million in the first six months of 2018.

Non-GAAP income from operations increased to RMB77.6 million from non-GAAP loss from operations of RMB3.8 million in the first six months of 2018.

Net (Loss) Income

Net income increased to RMB50.3 million from a net loss of RMB4.0 million in the first six months of 2018.

Non-GAAP net income increased to RMB68.9 million from non-GAAP net loss of RMB3.1 million in the first six months of 2018.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were RMB0.18 and RMB0.17 respectively, in the first six months of 2019.

Share count

As of June 30, 2019, the Company had 156,650,000 ordinary shares outstanding.

Recent Developments

Initial Public Offering ("IPO")

On June 6, 2019, the Company completed an IPO on the New York Stock Exchange. Including the partial exercise of a greenshoe, the Company sold a total of 20,532,000 ADSs, representing 13,688,000 Class A ordinary shares, raising USD215.6 million. The Company received a total of net proceeds of USD200.5 million.

Business Outlook

Based on the Company's current estimates, total net revenues for the third quarter of 2019 are expected to be between RMB486 million and RMB506 million, representing an increase of 390.9% to 411.1% on a year-over-year basis. These estimates reflect the Company's current expectations, which are subject to change.

Conference Call

The company will hold an earnings conference call on Thursday, August 22, 2019, at 8:00 AM U.S. Eastern Time (8:00 PM on the same day, Beijing/Hong Kong Time). Dial-in details for the earnings conference call are as follows:



              International:                       1-412-902-4272



              US:                                  1-888-346-8982



              Hong Kong:                
              800-905945



              Mainland China:                      4001-201203



              Passcode:                 
              GSX

A telephone replay will be available two hours after the conclusion of the conference call through August 29, 2019. The dial-in details are:



              International:            
              1-412-317-0088



              US:                       
              1-877-344-7529



              Passcode:                                    10134202

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

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of 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" and similar statements. Among other things, the outlook for the third quarter of 2019 and GSX's strategic and operational plans, contain forward-looking statements. The Company 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 reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's ability to continue to attract students to enroll in its courses; the Company's ability to continue to recruit, train and retain qualified teachers; the Company's ability to improve the content of its existing course offerings and to develop new courses; the Company's ability to maintain and enhance its brand; the Company's ability to maintain and continue to improve its teaching results; and the Company's ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company's reports filed with, or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and GSX undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.

About GSX Techedu Inc.

GSX Techedu Inc. is a technology-driven education company and leading online K-12 large-class after-school tutoring service provider in China. GSX offers K-12 courses covering all primary and secondary grades as well as foreign language, professional and interest courses. GSX adopts an online live large-class format to deliver its courses, which the Company believes is the most effective and scalable model to disseminate scarce high-quality teaching resources to aspiring students in China. Big data analytics permeates each aspect of the Company's business and facilitates the application of the latest technology to improve teaching delivery, student learning experience, and operational efficiency.

About Non-GAAP Financial Measures

The Company uses gross billings, non-GAAP gross profit, non-GAAP (loss) income from operations and non-GAAP net (loss) income, each a non-GAAP financial measure, in evaluating its operating results and for financial and operational decision-making purposes.

The Company defines gross billings for a specific period as the total amount of cash received for the sale of course offerings in such period, net of the total amount of refunds in such period. The Company's management uses gross billings as a performance measurement because the Company generally bills its students for the entire course fee at the time of sale of its course offerings and recognizes revenue proportionally as the classes are delivered over a period typically ranging from 1 to 6 months. For some courses, the Company continues to provide students with 12 months to 36 months access to the pre-recorded audio-video courses after the online live courses are delivered. The related revenue for playback is recognized proportionally over the playback period. The Company believes that gross billings provides valuable insight into the sales of its course packages and the performance of its business. As gross billings has material limitations as an analytical metrics 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.

Non-GAAP gross profit, non-GAAP (loss) income from operations and non-GAAP net (loss) income exclude share-based compensation expenses, and such adjustment has no impacts on income tax. GSX believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. GSX 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 GSX's historical performance. 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.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from 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.

The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

Exchange Rate

The Company's business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi ("RMB"). This announcement contains currency conversions of RMB amounts into U.S. dollars ("USD") solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to USD are made at a rate of RMB 6.8650 to USD1.00, the effective noon buying rate for June 28, 2019 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into USD at that rate on June 28, 2019, or at any other rate.

For further information, please contact:

GSX Techedu Inc.
E-mail: ir@baijiahulian.com

Christensen

In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com
In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@christensenir.com


                                                                          
              
                GSX Techedu Inc.


                                                                
         
                Unaudited condensed consolidated balance sheets


                                                  
              
           (In thousands of RMB and USD, except for share, per share and per ADS data)




                                                                                                                                          
              
              As of               As of June 30,
                                                                                                                                                   December 31,

                                                                                                                                                                                ---

                                                                                                                                                2018                       2019                     2019

                                                                                                                                                                                                   ---

                                                                                                                         
              
                RMB                       RMB          USD



              
                ASSETS



              
                Current assets



                  Cash and cash equivalents                                                                                                  33,259                     60,100                    8,755



                  Short-term investments                                                                                                    197,991                  1,686,491                  245,665



                  Prepaid expenses and other current assets                                                                                  48,841                    148,372                   21,613



                  Amounts due from related parties                                                                                              710                                                  -



              
                Total current assets                                                                                             280,801                  1,894,963                  276,033

                                                                                                                                                                                                   ---




              
                Non-current assets



                  Operating lease right-of-use assets                                                                                                                 216,012                   31,466



                  Property, equipment and software, net                                                                                      16,779                     31,769                    4,628



                  Intangible assets                                                                                                             237                        150                       22



                  Long-term investments                                                                                                       5,221                      5,385                      784



                  Goodwill                                                                                                                      331                        331                       48



                  Deferred tax assets                                                                                                        31,266                     22,362                    3,257



                  Rental deposit                                                                                                              3,508                      9,395                    1,369



                  Other non-current assets                                                                                                       60                        265                       39



              
                Total ASSETS                                                                                                     338,203                  2,180,632                  317,646

                                                                                                                                                                                                   ===




              
                LIABILITIES





              
                Current liabilities



              Accrued expenses and other current liabilities                                                                                 57,244                    109,177                   15,904
      (including accrued expenses and other
      current liabilities of the consolidated VIE
      without recourse to the Group of
      RMB51,445 and RMB96,947 as of
      December 31, 2018 and June 30, 2019,
      respectively)



              Deferred revenue, current portion of the                                                                                      263,330                    494,108                   71,975
      consolidated VIE without recourse to the
      Group



              Current portion of operating lease liabilities of the                                                                                                    57,281                    8,344
      consolidated VIE without recourse to the
      Group



              Income tax payable of the consolidated VIE                                                                                                                5,327                      776
      without recourse to the Group



              Amounts due to related parties (including                                                                                      35,338                        460                       67
      amounts due to related parties of the
      consolidated VIE without recourse to the
      Group of RMB960 and RMB460 as of
      December 31, 2018 and June 30, 2019,
      respectively)



              
                Total Current liabilities                                                                                        355,912                    666,353                   97,066

                                                                                                                                                                                                   ---


                                                                       
              
                GSX Techedu Inc.


                                                            
         
                Unaudited condensed consolidated balance sheets


                                              
              
           (In thousands of RMB and USD, except for share, per share and per ADS data)




                                                                                                                                 
              
               As of                  As of June 30,
                                                                                                                                          December 31,

                                                                                                                                                                           ---

                                                                                                                                      2018                            2019                     2019

                                                                                                                                                                                              ---

                                                                                                               
              
                RMB             
          
           RMB                USD



              
                Non-current liabilities



              Deferred revenue, non-current portion of the                                                                          8,711                           9,547                    1,391
      consolidated VIE without recourse to the
      Group



              Non-current portion of operating lease                                                                                                             154,265                   22,471
      liabilities of the consolidated VIE without
      recourse to the Group



              Deferred tax liabilities of the consolidated                                                                             59                              38                        6
      VIE without recourse to the Group



              
                TOTAL LIABILITIES                                                                                      364,682                         830,203                  120,934

                                                                                                                                                                                              ===




              
                MEZZANINE EQUITY



              Series A convertible redeemable preferred                                                                           466,060                                                       -
      shares






              
                SHAREHOLDERS' (DEFICIT) EQUITY



              Ordinary shares                                                                                                          60                             104                       15



              Additional paid-in capital                                                                                                                       1,807,436                  263,283



              Accumulated other comprehensive                                                                                       1,166                         (7,846)                 (1,143)
      income/(loss)



              Accumulated deficit                                                                                               (493,765)                      (449,265)                (65,443)



              
                TOTAL SHAREHOLDERS' (DEFICIT) EQUITY                                                                 (492,539)                      1,350,429                  196,712

                                                                                                                                                                                              ---




              
                TOTAL LIABILITIES, MEZZANINE EQUITY                                                                    338,203                       2,180,632                  317,646
      AND TOTAL SHAREHOLDERS' (DEFICIT)
      EQUITY

                                                                                                                                                                                              ===


                                                                           
              
                GSX Techedu Inc.


                                                       
              
                Unaudited condensed consolidated statements of operations


                                              
              
                (In thousands of RMB and USD, except for share, per share and per ADS data)




                                                                                                                                                  For the three months ended June 30,



                                                                                                                                          2018                                      2019            2019

                                                                                                                                                                                                   ---

                                                                                                                   
              
                RMB              
              
                RMB  
     
           USD



              
                Net Revenues                                                                                                68,886                                   353,679          51,519



              Cost of revenues                                                                                                       (26,571)                                (101,189)       (14,740)



              
                Gross profit                                                                                                42,315                                   252,490          36,779

                                                                                                                                                                                                   ---


              
                Operating expenses



              Selling expenses                                                                                                       (18,424)                                (169,048)       (24,625)



              Research and development expenses                                                                                      (15,566)                                 (41,128)        (5,991)



              General and administrative expenses                                                                                     (8,864)                                 (26,088)        (3,800)



              
                Total operating expenses                                                                                  (42,854)                                (236,264)       (34,416)

                                                                                                                                                                                                   ---


              
                (Loss) income from operations                                                                                (539)                                   16,226           2,363

                                                                                                                                                                                                   ---


              Interest income                                                                                                             146                                     3,990             581



              Other (expense) income                                                                                                    (120)                                       91              13



              
                (Loss) income before provision for income tax                                                                (513)                                   20,307           2,957
      and income from equity method investments

                                                                                                                                                                                                   ---


              Income tax benefits (expenses)                                                                                               63                                   (4,539)          (661)



              Income from equity method investments                                                                                        45                                       606              88



              
                Net (loss) income                                                                                            (405)                                   16,374           2,384

                                                                                                                                                                                                   ---


              Less: Series A convertible redeemable preferred                                                                           9,733                                     7,039           1,025
      shares redemption value accretion



              Less: Undistributed earnings allocated to the                                                                                                                      1,682             245
      participating preferred shares



              
                Net (loss) income attributable to GSX Techedu                                                             (10,138)                                    7,653           1,114
      Inc.'s ordinary shareholders

                                                                                                                                                                                                   ---


              
                Net (loss) income per ordinary share



              Basic                                                                                                                    (0.11)                                     0.06            0.01



              Diluted                                                                                                                  (0.11)                                     0.06            0.01

                                                                                                                                                                                                   ---


              
                Net (loss) income per ADS



              Basic                                                                                                                    (0.07)                                     0.04            0.01



              Diluted                                                                                                                  (0.07)                                     0.04            0.01

                                                                                                                                                                                                   ---


              
                Weighted average shares used in net (loss)
      income per share



              Basic                                                                                                                92,224,998                               120,701,922     120,701,922



              Diluted                                                                                                              92,224,998                               129,617,224     129,617,224

                                                                                                                                                                                                   ---




              Note: Three ADS represents two ordinary shares.


                                                                   
              
                GSX Techedu Inc.


                                                    
           
      Reconciliations of non-GAAP measures to the most comparable GAAP measures


                                                   
           
      (In thousands of RMB and USD, except for share, per share and per ADS data)




                                                                                                                  
              
                For the three months ended June 30,



                                                                                                                                   2018                                          2019       2019



                                                                                                            
              
                RMB                    
              
              RMB  
     
      USD



     Net revenue                                                                                                                68,886                                       353,679     51,519

                                                                                                                                                                                           ---


     Add: VAT and surcharges                                                                                                     4,542                                        23,121      3,368



     Add: ending deferred revenue                                                                                               91,951                                       503,655     73,366



     Add: ending refund liability                                                                                                3,771                                        20,136      2,933



     Less: beginning deferred revenue                                                                                           60,079                                       291,355     42,441



     Less: beginning refund liability                                                                                            2,503                                         9,863      1,437



     Gross billings (non-GAAP)                                                                                                 106,568                                       599,373     87,308

                                                                                                                                                                                           ===



                                                                                                                  
              
                For the three months ended June 30,



                                                                                                                                   2018                                          2019       2019



                                                                                                            
              
                RMB                    
              
              RMB  
     
      USD



     
                Gross profit                                                                                                  42,315                                       252,490     36,779



     Share-based compensation expense in cost of revenues                                                                           47                                         4,437        646

                                                                                                                                                                                           ---


     
                Non-GAAP gross profit                                                                                         42,362                                       256,927     37,425

                                                                                                                                                                                           ===




     
                (Loss) income from operations                                                                                  (539)                                       16,226      2,363



     Share-based compensation expenses                                                                                             709                                        14,861      2,165



     
                Non-GAAP income from operations                                                                                  170                                        31,087      4,528

                                                                                                                                                                                           ===




     
                Net (loss) income                                                                                              (405)                                       16,374      2,384



     Share-based compensation expenses                                                                                             709                                        14,861      2,165



     
                Non-GAAP net income                                                                                              304                                        31,235      4,549

                                                                                                                                                                                           ===


                                                                             
              
                GSX Techedu Inc.


                                                         
              
                Unaudited condensed consolidated statements of operations


                                                
              
                (In thousands of RMB and USD, except for share, per share and per ADS data)




                                                                                                                                                    For the six months ended June 30,



                                                                                                                                              2018                                   2019            2019

                                                                                                                                                                                                    ---

                                                                                                                       
              
                RMB           
              
                RMB  
     
           USD



              
                Net Revenues                                                                                                   115,797                                622,834          90,726



              Cost of revenues                                                                                                           (47,259)                             (183,234)       (26,691)



              
                Gross profit                                                                                                    68,538                                439,600          64,035

                                                                                                                                                                                                    ---


              
                Operating expenses



              Selling expenses                                                                                                           (32,306)                             (268,567)       (39,121)



              Research and development expenses                                                                                          (27,490)                              (71,570)       (10,425)



              General and administrative expenses                                                                                        (13,441)                              (40,510)        (5,901)



              
                Total operating expenses                                                                                      (73,237)                             (380,647)       (55,447)

                                                                                                                                                                                                    ---


              
                (Loss) income from operations                                                                                  (4,699)                                58,953           8,588

                                                                                                                                                                                                    ---


              Interest income                                                                                                                 234                                  5,106             744



              Other (expense) income                                                                                                         (50)                                   624              91



              
                (Loss) income before provision for income tax                                                                  (4,515)                                64,683           9,423
      and (loss) income from equity method
      investments

                                                                                                                                                                                                    ---


              Income tax benefits (expenses)                                                                                                  552                               (14,557)        (2,120)



              (Loss) income from equity method investments                                                                                   (45)                                   139              20



              
                Net (loss) income                                                                                              (4,008)                                50,265           7,323

                                                                                                                                                                                                    ---


              Less: Series A convertible redeemable preferred                                                                              19,466                                 16,772           2,443
      shares redemption value accretion



              Less: Undistributed earnings allocated to the                                                                                                                       4,212             614
      participating preferred shares



              
                Net (loss) income attributable to GSX Techedu                                                                 (23,474)                                29,281           4,266
      Inc.'s ordinary shareholders

                                                                                                                                                                                                    ---


              
                Net (loss) income per ordinary share



              Basic                                                                                                                        (0.25)                                  0.27            0.04



              Diluted                                                                                                                      (0.25)                                  0.25            0.04

                                                                                                                                                                                                    ---


              
                Net (loss) income per ADS



              Basic                                                                                                                        (0.17)                                  0.18            0.03



              Diluted                                                                                                                      (0.17)                                  0.17            0.03

                                                                                                                                                                                                    ---


              
                Weighted average shares used in net 
                (loss)
      income per share



              Basic                                                                                                                    92,224,998                            106,542,125     106,542,125



              Diluted                                                                                                                  92,224,998                            115,457,427     115,457,427

                                                                                                                                                                                                    ---




              Note: Three ADS represents two ordinary shares.


                                                                         
              
                GSX Techedu Inc.


                                                  
              
          Reconciliations of non-GAAP measures to the most comparable GAAP measures


                                                 
              
          (In thousands of RMB and USD, except for share, per share and per ADS data)




                                                                                                                                           For the six months ended June 30,



                                                                                                                                    2018                                        2019        2019



                                                                                                             
              
                RMB                  
              
              RMB  
     
       USD



              Net revenue                                                                                                       115,797                                     622,834      90,726




              Add: VAT and surcharges                                                                                             7,636                                      36,051       5,251



              Add: ending deferred revenue                                                                                       91,951                                     503,655      73,366



              Add: ending refund liability                                                                                        3,771                                      20,136       2,933



              Less: beginning deferred revenue                                                                                   46,307                                     272,041      39,627



              Less: beginning refund liability                                                                                    2,475                                      11,167       1,627



              Less: deferred revenue from the acquisition of                                                                      2,806                                                      -
      Shanghai Jinyou Education Technology Co., Ltd.



              Gross billings (non-GAAP)                                                                                         167,567                                     899,468     131,022

                                                                                                                                                                                           ===



                                                                                                                                           For the six months ended June 30,



                                                                                                                                    2018                                        2019        2019

                                                                                                                                                                                           ---

                                                                                                             
              
                RMB                  
              
              RMB  
     
       USD



              
                Gross profit                                                                                          68,538                                     439,600      64,035



              Share-based compensation expense in cost of                                                                            59                                       4,860         708
      revenues

                                                                                                                                                                                           ---


              
                Non-GAAP gross profit                                                                                 68,597                                     444,460      64,743

                                                                                                                                                                                           ===




              
                (Loss) income from operations                                                                        (4,699)                                     58,953       8,588



              Share-based compensation expenses                                                                                     922                                      18,683       2,721



              
                Non-GAAP (loss) income from operations                                                               (3,777)                                     77,636      11,309

                                                                                                                                                                                           ===




              
                Net (loss) income                                                                                    (4,008)                                     50,265       7,323



              Share-based compensation expenses                                                                                     922                                      18,683       2,721



              
                Non-GAAP net (loss) income                                                                           (3,086)                                     68,948      10,044

                                                                                                                                                                                           ===

View original content:http://www.prnewswire.com/news-releases/gsx-techedu-inc-announces-unaudited-financial-results-for-the-second-quarter-of-2019-300905659.html

SOURCE GSX Techedu Inc.