Prologis Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 7, 2024

There are 4 speakers on the call.

Operator

Please note this conference is being recorded.

Operator

I will now turn the conference over to Alice Zhang of The Equity Group. Thank you. You may begin.

Speaker 1

Thank you, operator, and hello, everyone. Thank you for joining us. A press release announcing ATA Creativity Global's, or ACG's, results for the Q2 6 months ended June 30, 2024, is available at the IR section of the company's website at www.atai.net.cn. As part of this conference call, the company has an accompanying slide presentation available on its website. A replay of this broadcast will also be made available at ACG's website for the next 90 days.

Speaker 1

Before we get started, I would like to remind everyone that this conference call and any accompanying information discussed herein contains certain forward looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. These forward looking statements can be identified by terms such as anticipate, believe, could, estimate, expect, forecast, future, intend, look forward to, outlook, guidance, plan, should, will and similar trends and include, among other things, statements regarding ACG's future growth and results of operations, ACG's plans for mergers and acquisitions generally ACG's growth strategy, anticipated growth prospects and subsequent business activities HCG's 2024 guidance, market demand for and market acceptance and competitiveness of HCG's portfolio training programs and other education services. Although the company believes that the expectations reflected in its forward looking statements are reasonable as of today, Those statements are subject to risks and uncertainties that could cause the actual results to differ dramatically from those projected. There can be no assurance that those expectations will prove to be correct. Information about the risks associated with investing in ACG is included in the filings with the Securities and Exchange Commission, which we encourage you to review before making an investment decision.

Speaker 1

The company does not assume any obligation to update any forward looking statements as a result of new information, future events, changes in market conditions or otherwise, except as required by law. Regarding the disclaimer language, I would also like to refer you to Slide 2 of the conference call presentation for further information. All U. S. Dollar amounts in this conference call relating to financial results for the Q2 6 months ended June 30, 2024 are converted from RMB using an exchange rate of RMB7.267 to 1 U.

Speaker 1

S. Dollar, the non binding rate as of June 30, 2024. All historical conversions are accurate as of the time reported, unless otherwise noted. The company reports the financial results under U. S.

Speaker 1

GAAP in RMB, and all percentages calculated in the presentation are based on RMB unless otherwise noted. For those of you following along with the company's PowerPoint presentation, there is an overview of the company on Slide 3. In addition, we're more than happy to take investor questions during today's Q and A session or via e mail to the company. If you wish to ask questions, you can send your questions through e mail address azhangequityny.com. And please specify whether you would like to have your name read during the Q and A session.

Speaker 1

On today's call, the company's CFO, Mr. Robaximao, will provide a brief overview of operating and financial highlights for the Q2 of 2024. Chairman and CEO, Mr. Kevin Ma and President, Mr. Jun Zhang, will follow with an update on the company's outlook and its long term growth strategy before opening the floor for questions.

Speaker 1

With that, I'll turn the call over to ACG's CFO, Mr. Robai Syama. Please go ahead, Mr. Syama.

Speaker 2

Thank you, Alex, and welcome, everyone, and good evening to those in America. We appreciate everyone's time. We were pleased to see student demand for portfolio trading services continue to expand in Q2 2024. This is our core business and primary driver of growth contributing RMB40.2 million in revenue during the period, up 41.9% year over year. As a result, we achieved significant top line growth, a 42.8 percent increase in total net revenue to RMB41.8 million During Q2 2024, student enrollment was RMB1084, an increase of 16.8% from the prior year period.

Speaker 2

Of those students, 612 were enrolled in ACG portfolio training programs compared to 540 in the Q2 of last year. 42,841 portfolio training credit hours were delivered during the period, up 49.3% year over year. We are excited to see continued expansion across all of our business, including research based learning and overseas study counseling services. We strongly believe in the value our comprehensive offerings provide to students and impact that enrollment growth we have seen thus far in the year will cause strong performance in the second half of twenty twenty four. Our investments in expanding the teaching and sales staff have contributed to those results and serve as a foundation for full year growth.

Speaker 2

With that, let's move to financials for Q2 2024. Total net revenues for Q2 2024 was RMB41.8 million, an increase of 42.8 percent from RMB36.2 million in the Q2 of 2023. Gross margin improved to 49.6 percent during the Q2 of 2024 from 39.5% in the prior year period, primarily as a result of significantly increased revenues. Net loss attributable to ACC was RMB16.8 1,000,000 during the Q2 of 2024 compared to RMB17.2 million in the prior year period. Bottom line results were impacted by a 30.2% increase in operating expenses related to increased G and A expenses for higher professional fees and support for business retention and increased sales expense due to the performance bonus in line with increased sales and the area of additional sales personnel.

Speaker 2

During the first half of twenty twenty four, total net revenues increased 27.2% to RMB99.9 million compared to RMB78.6 million in the prior year period. Gross margin improved to 47.7 percent from 42.1% in the prior year period. Net loss attributable to ACT was RMB34.7 million compared to RMB35 1,000,000. Moving to the balance sheet, we reported US5.5 million dollars in cash and cash equivalents at the end of Q2 2024. Working capital deficit was US40.7 million dollars and total shareholders' equity was US11 million dollars at 230 2024 compared to working capital deficit of 34,400,000 and shareholders' equity of US15.9 million dollars respectively at December 34, 2023.

Speaker 2

With that, I'd like to turn it over to Kevin, who will begin

Speaker 3

We are pleased to see ACG's portfolio of offering continued to resonate with students translating into meaningful financial results. As our portfolio trading service business grows, we believe the demand for overseas studies, consulting and research based learning service, we also expand. During the first half of twenty twenty four, we made a mindful investments to add resources to help drive students enrollment and support the growing students' population, which is imperative to enable positive student outcomes and our ability to achieve long term success. We reported RMB99 900,000 in net revenues in first half twenty twenty four. And the second half of the year has history being stronger than they are than the first, the trend we anticipated will continue in 2024.

Speaker 3

We are reiterating our revenue expectations for the year ending 1,000,000 I'm sorry, We are reiterating our revenue expectations from the year ending December 31, 2024. We expect the total revenue will be in the range of RMB230 1,000,000 to RMB255 1,000,000, which represents a 5% to 50% increase for the fiscal year 2023. ACG remains focused on growing our student base and expanding our current business while exploring potential acquisition opportunities. And as any material developments arise, we'll be sure to update the MAX and reiterate guidance as appreciated. SEG is a product of its ability to identify and fulfill students' needs in evolving social and creative environments.

Speaker 3

This is the cornerstone of our product design and execution, especially as our students have increasing time from devices, academic and creative backgrounds. To that end, we have note only continue to engage teaching staff in the sales and the course design process, But we also hosted the ACG, arts education exhibition in April across 5 major cities in China including Beijing, Shanghai, Shenzhen. At the exhibition, we invite former and the current and the missing committee office from prestigious overseas universities such as MIT and Stanford University to join us in sharing their insights on overseas studies, applications and the career planning. The exhibition was met with extraordinary across all of our service offerings. Through a series of marketing efforts, we continue to increase our market exposure and engage with students who are interested in potentially exploring creative arts education in the future.

Speaker 3

During Q2 2024, we successfully hosted the 1st session of the United Nations Sustainable Development Goals at Boot Campo to 70 students. Participating students ranged from high school to college age, and they came together to create a group of projects on sustained related topics with a variety of applications such as climate changes, regenerative energy and environmental protection. Our master class have also gathered small groups of students in their respective areas of interest, allowing them to walk away with individual artworks in visual communication, photographs as well as interior design and we are hopeful we are strengthening their portfolio for all these school applications. We are very excited for many of our graduate 18 students who will embark on the next phase of their creative arts education at overseas institutions this fall. For all 2024 admission, we have seen significant growth in the number of offers received by ACG students.

Speaker 3

Those of have come from schools all over the world, including top institutions such as Harvard, Oxford and the University of Pennsylvania as well as top arts institutions such as School of Visual Arts, the Pratt Institute and the Parsons School of Design. We believe this positive trend in received offers is a positive indicator of increased student demand for overseas student opportunities, which bodies well for our overseas study and selling service business. We believe those trends will continue into the coming application period. I now to Jun will make his remarks in Mandarin, which will be followed by English translation. Jun, please go ahead.

Speaker 3

Thank you, Kevin.

Speaker 1

Thank you, Kevin. As we have invested in the expansion of ACG's business, the quality of our products and services have stayed top of line. At the end of the day, our well rounded offerings and the ability to support students in this journey are what really makes all the difference. We have been pleased to host a variety of research based learning experiences this summer, covering a wide range of art topics and immersive hands on cultural experiences. In July, we hosted a second session of the United Nations Sustainable Development Goals Arts Boot Camp inspired by the success of our main session, which is once again highly rated by participating students.

Speaker 1

In addition to online master classes taught by prestigious arts institution lecturers, We also hosted 2 intangible cultural heritage themed camps in Zohuang, Gansu province and West Sichuan Province, which are led by instructors from Rhode Island School of Design and Yale University to explore the beauty of China's traditional arts. In Zhejiang, students visit Mogao Caves and Yulin Caves to study Zhejiang styled colored sculptures and mineral paintings. In West Sichuan, students were exposed to ethnic music and cultural traditions and experienced Tibetan culture. We believe these types of experiences provide students with a unique learning opportunity and perspective, allowing them to go beyond the world they know and are familiar with. The ability to adapt and be open minded is particularly valuable for those who plan to study overseas and must create a solid to to Japan, the United States and to the United Kingdom through summer schools and campus visits.

Speaker 1

Understanding that education is the cornerstone of a student's lifetime success both academically and professionally, ACG has prided itself on our ability to establish and maintain highly collaborative relationships with world renowned institutions, and we look forward to growing our partnership network to assess more world class education resources for our students. We expect to enter the overseas study application season soon and are prepared to serve as a trusted guidance supporter to our students during this stressful but exciting time. We remain fully committed to our mission of enabling positive student outcomes and look forward to a busy and productive remainder of the summer as we head into the fall. In the balance of 2024, we're focused on growing our current business, which includes portfolio training services, overseas study counseling and research based learning services. We remain very confident in ACMG's superior competency in the market, while continuing to invest in the operational infrastructure to ensure that we're able to provide students with the exceptional education and support system they have come to expect.

Speaker 1

With that, I'll turn it back over to Kevin.

Speaker 3

Thanks, Jun. We are pleased with our progress in the first half of twenty twenty four and are optimistic that the positive momentum we have experienced thus far will enable us to finish the year on a stronger. As a leading player in China's creative arts education market, we are proud to say that we are always strive to find ways to improve ourselves and help our students to achieve their full potential. We believe we are on the track to carry out our growth initiatives and drive success for our students and for ACG's shareholders. With that, operator, let's open it up for questions.

Operator

Thank you. There are no questions at this time. I would like to hand it back over for closing comments. Alice, do you have any closing comments?

Speaker 3

Thanks again to all of you for joining us. If anyone has questions for us, please feel free to reach out directly to us or our Investor Relations firm, The ACT Group. We are always available to speak to investors and look forward to speaking with you all during our next earnings call. Thank

Operator

you. Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

Remove Ads
Powered by Quartr
Earnings Conference Call
Prologis Q2 2024
00:00 / 00:00
Remove Ads