TAL Education Group Announces Unaudited Financial Results for the First Fiscal Quarter Ended May 31, 2024

BEIJING, Aug. 1, 2024 /PRNewswire/ -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"), a smart learning solutions provider in China, today announced its unaudited financial results for the first quarter of fiscal year 2025 ended May 31, 2024.

Highlights for the First Quarter of Fiscal Year 2025

    --  Net revenues were US$414.2 million, compared to net revenues of US$275.4
        million in the same period of the prior year.
    --  Loss from operations was US$17.3 million, compared to loss from
        operations of US$57.8 million in the same period of the prior year.
    --  Non-GAAP income from operations, which excluded share-based compensation
        expenses, was US$0.9 million, compared to non-GAAP loss from operations
        of US$32.3 million in the same period of the prior year.
    --  Net income attributable to TAL was US$11.4 million, compared to net loss
        attributable to TAL of US$45.0 million in the same period of the prior
        year.
    --  Non-GAAP net income attributable to TAL, which excluded share-based
        compensation expenses, was US$29.6 million, compared to non-GAAP net
        loss attributable to TAL of US$19.5 million in the same period of the
        prior year.
    --  Basic and diluted net income per American Depositary Share ("ADS") were
        both US$0.02. Non-GAAP basic and diluted net income per ADS, which
        excluded share-based compensation expenses, were both US$0.05. Three
        ADSs represent one Class A common share.
    --  Cash, cash equivalents and short-term investments totaled US$3,418.6
        million as of May 31, 2024, compared to US$3,303.3 million as of
        February 29, 2024.

Financial Data----First Quarter of Fiscal Year 2025
(In US$ thousands, except per ADS data and percentages)


                                                                               Three Months Ended
                                                                          May 31,


                                                            2023      2024                        Pct. Change



            Net revenues                                275,440   414,187                             50.4 %



            Loss from operations                       (57,773) (17,330)                          (70.0 %)



            Non-GAAP (loss)/income from operations     (32,260)      876                          (102.7 %)



            Net (loss)/income attributable to TAL      (45,037)   11,402                          (125.3 %)



            Non-GAAP net (loss)/income attributable to (19,524)   29,608                          (251.6 %)
    TAL



            Net (loss)/income per ADS attributable to    (0.07)     0.02                          (126.5 %)
    TAL - basic



            Net (loss)/income per ADS attributable to    (0.07)     0.02                          (126.0 %)
    TAL - diluted



            Non-GAAP net (loss)/income per ADS           (0.03)     0.05                          (259.0 %)
    attributable to TAL - basic



            Non-GAAP net (loss)/income per ADS           (0.03)     0.05                          (256.0 %)
    attributable to TAL - diluted

"In this quarter, our core focus remains on delivering quality products and managing our online and offline operational efficiency to serve learners effectively," said Alex Peng, TAL's President and Chief Financial Officer.

Mr. Peng added, "Looking forward, we will make ongoing investments to provide our users with quality learning experiences. Our product capabilities, combined with our operational efficiency, positions us to capitalize on market opportunities and deliver long-term value to our customers."

Financial Results for the First Quarter of Fiscal Year 2025

Net Revenues

In the first quarter of fiscal year 2025, TAL reported net revenues of US$414.2 million, representing a 50.4% increase from US$275.4 million in the first quarter of fiscal year 2024.

Operating Costs and Expenses

In the first quarter of fiscal year 2025, operating costs and expenses were US$432.1 million, representing a 26.3% increase from US$342.1 million in the first quarter of fiscal year 2024. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$413.9 million, representing a 30.7% increase from US$316.6 million in the first quarter of fiscal year 2024.

Cost of revenues increased by 43.4% to US$200.0 million from US$139.5 million in the first quarter of fiscal year 2024. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 44.2% to US$197.6 million, from US$137.1 million in the first quarter of fiscal year 2024.

Selling and marketing expenses increased by 25.4% to US$122.4 million from US$97.7 million in the first quarter of fiscal year 2024. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 30.8% to US$118.1 million, from US$90.2 million in the first quarter of fiscal year 2024.

General and administrative expenses increased by 4.5% to US$109.7 million from US$104.9 million in the first quarter of fiscal year 2024. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 10.0% to US$98.2 million, from US$89.2 million in the first quarter of fiscal year 2024.

Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 28.6% to US$18.2 million in the first quarter of fiscal year 2025 from US$25.5 million in the same period of fiscal year 2024.

Gross Profit

Gross profit increased by 57.6% to US$214.2 million from US$135.9 million in the first quarter of fiscal year 2024. The gross margin for the first quarter of fiscal year 2025 was 51.7%, compared to 49.3% in the same period of the prior year.

Loss from Operations

Loss from operations was US$17.3 million in the first quarter of fiscal year 2025, compared to loss from operations of US$57.8 million in the first quarter of fiscal year 2024. Non-GAAP income from operations, which excluded share-based compensation expenses, was US$0.9 million, compared to Non-GAAP loss from operations of US$32.3 million in the same period of the prior year.

Other (Expense)/Income

Other income was US$13.2 million for the first quarter of fiscal year 2025, compared to other expense of US$6.8 million in the first quarter of fiscal year 2024.

Impairment Loss on Long-term Investments

Impairment loss on long-term investment was US$3.8 million for the first quarter of fiscal year 2025, compared to nil for the first quarter of fiscal year 2024.

Income Tax Expense

Income tax expense was US$2.3 million in the first quarter of fiscal year 2025, compared to US$3.5 million of income tax expense in the first quarter of fiscal year 2024.

Net (Loss)/Income Attributable to TAL Education Group

Net income attributable to TAL was US$11.4 million in the first quarter of fiscal year 2025, compared to net loss attributable to TAL of US$45.0 million in the first quarter of fiscal year 2024. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$29.6 million, compared to Non-GAAP net loss attributable to TAL of US$19.5 million in the first quarter of fiscal year 2024.

Basic and Diluted Net (Loss)/Income per ADS

Basic and diluted net income per ADS were both US$0.02 in the first quarter of fiscal year 2025. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were both US$0.05 in the first quarter of fiscal year 2025.

Cash Flow

Net cash provided by operating activities for the first quarter of fiscal year 2025 was US$246.8 million.

Cash, Cash Equivalents, and Short-Term Investments

As of May 31, 2024, the Company had US$2,222.6 million of cash and cash equivalents and US$1,196.0 million of short-term investments, compared to US$2,208.7 million of cash and cash equivalents and US$1,094.6 million of short-term investments as of February 29, 2024.

Deferred Revenue

As of May 31, 2024, the Company's deferred revenue balance was US$641.9 million, compared to US$428.3 million as of February 29, 2024.

Conference Call

The Company will host a conference call and live webcast to discuss its financial results for the first fiscal quarter of fiscal year 2025 ended May 31, 2024 at 8:00 a.m. Eastern Time on August 1, 2024 (8:00 p.m. Beijing time on August 1, 2024).

Please note that you will need to pre-register for conference call participation at https://register.vevent.com/register/BI0948a7548cbb4383b037c2d80666f8ec.

Upon registration, you will receive an email containing participant dial-in numbers and unique Direct Event Passcode. This information will allow you to gain immediate access to the call. Participants may pre-register at any time, including up to and after the call start time.

A live and archived webcast of the conference call will be available on the Investor Relations section of TAL's website at https://ir.100tal.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, TAL Education Group'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 provide competitive learning services and products; the Company's ability to continue to recruit, train and retain talents; the Company's ability to improve the content of current course offerings and 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 TAL Education Group undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.

About TAL Education Group

TAL Education Group is a smart learning solutions provider in China. The acronym "TAL" stands for "Tomorrow Advancing Life", which reflects our vision to promote top learning opportunities for students through both high-quality teaching and content, as well as leading edge application of technology in the education experience. TAL Education Group offers comprehensive learning solutions to students from all ages through diversified class formats. Our learning solutions mainly cover enrichment learnings programs and some academic subjects in and out of China. Our ADSs trade on the New York Stock Exchange under the symbol "TAL".

About Non-GAAP Financial Measures

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

TAL 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. TAL 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 TAL's historical performance and liquidity. TAL computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. TAL believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

For further information, please contact:

Jackson Ding
Investor Relations
TAL Education Group
Tel: +86 10 5292 6669-8809
Email: ir@tal.com


                                                
             
                TAL EDUCATION GROUP

                                  
              
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                          
              
               (In thousands of U.S. dollars)




                                                                                                             As of     As of

                                                                                                           February
                                                                                                              29,      May 31,
                                                                                                               2024       2024



     
                ASSETS





     
                Current assets



        Cash and cash equivalents                                                                       $2,208,756 $2,222,591



     Restricted cash-current                                                                               167,656    275,966



     Short-term investments                                                                              1,094,593  1,195,981



         Inventory                                                                                          68,328     80,984



     Amounts due from related parties-current                                                                  343        376



         Income tax receivables                                                                                  -     1,543



         Prepaid expenses and other current assets                                                         159,498    153,159



     
                Total current assets                                                                   3,699,174  3,930,600



         Restricted cash-non-current                                                                        81,064     79,865



         Property and equipment, net                                                                       405,319    438,670



         Deferred tax assets                                                                                 4,620      4,938



         Rental deposits                                                                                    16,947     18,523



         Intangible assets, net                                                                              1,988      1,637



         Land use right, net                                                                               189,049    186,862



         Amounts due from related parties-non-current                                                           59         59



     Long-term investments                                                                                 284,266    279,852



     Long-term prepayments and other non-current assets                                                     14,359     21,600



     Operating lease right-of-use assets                                                                   231,104    340,231



     
                Total assets                                                                          $4,927,949 $5,302,837





     
                LIABILITIES AND EQUITY





     
                Current liabilities



     Accounts payable                                                                                     $127,321   $132,267



     Deferred revenue-current                                                                              400,286    613,470



     Amounts due to related parties-current                                                                     96         95



     Accrued expenses and other current liabilities                                                        491,911    519,899



     Operating lease liabilities, current portion                                                           62,604     72,269



     
                Total current liabilities                                                              1,082,218  1,338,000



     Deferred revenue-non-current                                                                           27,993     28,438



     Deferred tax liabilities                                                                                2,360      2,254



     Operating lease liabilities, non-current portion                                                      176,614    273,461



     
                Total liabilities                                                                      1,289,185  1,642,153





     
                Equity



     Class A common shares                                                                                     152        153



     Class B common shares                                                                                      49         49



     Additional paid-in capital                                                                          4,256,957  4,275,160



     Statutory reserve                                                                                     165,138    165,033



     Accumulated deficit                                                                                 (694,270) (682,763)



     Accumulated other comprehensive loss                                                                 (65,928)  (73,659)



     
                Total TAL Education Group's equity                                                     3,662,098  3,683,973



     Noncontrolling interests                                                                             (23,334)  (23,289)



     
                Total equity                                                                           3,638,764  3,660,684



     
                Total liabilities and equity                                                          $4,927,949 $5,302,837


                                                        
              
                TAL EDUCATION GROUP

                                     
              
                UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                           
              
                (In thousands of U.S. dollars, except share, ADS, per share and per ADS data)




                                                                                                                                                    For the Three Months Ended

                                                                                                                                                     May 31
                ,


                                                                                                                                        2023            2024





            
                Net revenues                                                                                              $275,440        $414,187



            Cost of revenues (note 1)                                                                                               139,513         200,008



            Gross profit                                                                                                            135,927         214,179



            
                Operating expenses (note 1)



              Selling and marketing                                                                                                  97,657         122,428



              General and administrative                                                                                            104,923         109,682



            Total operating expenses                                                                                                202,580         232,110



            Government subsidies                                                                                                      8,880             601



            Loss from operations                                                                                                   (57,773)       (17,330)



            Interest income                                                                                                          22,981          22,522



            Other (expense)/income                                                                                                  (6,845)         13,151



            Impairment loss on long-term investments                                                                                               (3,767)



            (Loss)/Income before income tax expense and                                                                            (41,637)         14,576


            loss from equity method investments



            Income tax expense                                                                                                      (3,519)        (2,295)



            Loss from equity method investments                                                                                        (71)          (985)



            
                Net (loss)/income                                                                                        $(45,227)        $11,296



            Add: Net loss attributable to noncontrolling interests                                                                      190             106



            
                Total net (loss)/income attributable to TAL                                                              $(45,037)        $11,402
      Education Group



            
                Net (loss)/income per common share



            Basic                                                                                                                   $(0.21)          $0.06



            Diluted                                                                                                                  (0.21)           0.06



            
                Net (loss)/income per ADS (note 2)



            Basic                                                                                                                   $(0.07)          $0.02



            Diluted                                                                                                                  (0.07)           0.02





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



               Basic                                                                                                            211,319,973     201,567,132



               Diluted                                                                                                          211,319,973     205,382,443





            Note1: Share-based compensation expenses are included in the operating costs and expenses as follows:




                                                                                                                                             For the Three Months


                                                                                                                                             Ended May 31,


                                                                                                                                        2023            2024



            Cost of revenues                                                                                                         $2,409          $2,362



            Selling and marketing expenses                                                                                            7,428           4,375



            General and administrative expenses                                                                                      15,676          11,469



            Total                                                                                                                   $25,513         $18,206





            Note 2: Three ADSs represent one Class A common Share.


                                               
              
                TAL EDUCATION GROUP

                                  
              
                UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

                                           
              
                COMPREHENSIVE (LOSS)/INCOME

                                          
              
                (In thousands of U.S. dollars)




                                                                                                                           For the Three Months
                                                                                                                            Ended

                                                                                                          
            May 31,


                                                                                                              2023             2024





             
                Net (loss)/income                                                             $(45,227)         $11,296



             Other comprehensive loss, net of tax                                                        (23,813)         (7,580)



             
                Comprehensive
                 (loss)/income                                       (69,040)           3,716



             Add: Comprehensive income attributable to                                                      (461)            (45)
      noncontrolling interests



             
                Comprehensive (loss)/income attributable to                                   $(69,501)          $3,671


             
                TAL Education Group


                                                                                                          
              
                TAL EDUCATION GROUP

                                                                          
              
        UNAUDITED CONDENSED CONSOLIDATED
                 STATEMENTS OF

                                                                                                                   
              
                CASH FLOWS

                                                                                               
              
                (In thousands of U.S. dollars)




                                                                                                                                                           For the Three Months
                                                                                                                                                 Ended

                                                                                                                                                           May 31,


                                                                                                                                              2023           2024



            Net cash provided by operating activities                                                                                    $125,516       $246,793



            Net cash provided by/(used in) investing activities                                                                           160,915      (124,635)



            Net cash (used in)/provided by financing activities                                                                         (151,237)             5



            Effect of exchange rate changes                                                                                               (4,510)       (1,217)





            Net increase in cash, cash equivalents and restricted cash                                                                    130,684        120,946



            
                Cash, cash equivalents and restricted cash at the beginning of                                                 2,294,907      2,457,476
      period





            
                Cash, cash equivalents and restricted cash at the end of period                                               $2,425,591     $2,578,422


                                                                                                                                                   
              
                TAL EDUCATION GROUP

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

                                                                                         
              
                (In thousands of U.S. dollars, except share, ADS, per share and per ADS data)




                                                                                                                                                                                    For the Three Months

                                                                                                                                                                                     Ended May 31,


                                                                                                                                                                     2023                    2024





              
                Cost of revenues                                                                                                                     $139,513                $200,008



              Share-based compensation expenses in cost of                                                                                                         2,409                   2,362


                revenues



              
                Non-GAAP cost of revenues                                                                                                             137,104                 197,646





              
                Selling and marketing expenses                                                                                                         97,657                 122,428



              Share-based compensation expenses in selling and                                                                                                     7,428                   4,375


                marketing expenses



              
                Non-GAAP selling and marketing expenses                                                                                                90,229                 118,053





              
                General and administrative expenses                                                                                                   104,923                 109,682



              Share-based compensation expenses in general and                                                                                                    15,676                  11,469


                administrative expenses



              
                Non-GAAP general and administrative expenses                                                                                           89,247                  98,213





              
                Operating costs and expenses                                                                                                          342,093                 432,118



              Share-based compensation expenses in operating                                                                                                      25,513                  18,206


                costs and expenses



              
                Non-GAAP operating costs and expenses                                                                                                 316,580                 413,912





              
                Loss from operations                                                                                                                 (57,773)               (17,330)



              Share based compensation expenses                                                                                                                   25,513                  18,206



              
                Non-GAAP (loss)/income from operations (note 3)                                                                                      (32,260)                    876





              
                Net (loss)/income attributable to TAL Education                                                                                      (45,037)                 11,402
    Group



              Share based compensation expenses                                                                                                                   25,513                  18,206



              
                Non-GAAP net (loss)/income attributable to                                                                                          $(19,524)                $29,608
    TAL Education Group (note 3)





              
                Net (loss)/income per ADS



              Basic                                                                                                                                              $(0.07)                  $0.02



              Diluted                                                                                                                                             (0.07)                   0.02



              
                Non-GAAP Net (loss)/income per ADS



              Basic                                                                                                                                              $(0.03)                  $0.05



              Diluted                                                                                                                                             (0.03)                   0.05



              
                ADSs used in calculating net (loss)/income per
    ADS



              Basic                                                                                                                                          633,959,919             604,701,396



              Diluted                                                                                                                                        633,959,919             616,147,329



              
                ADSs used in calculating Non-GAAP net
    (loss)/income per ADS



               Basic                                                                                                                                         633,959,919             604,701,396



               Diluted                                                                                                                                       633,959,919             616,147,329





              Note 3: The tax effect of share-based compensation expenses was immaterial in the first quarter of fiscal year 2025.

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