Four Seasons Education (Cayman), Inc. Q1 FY2021 earnings call

• Cultivated online education offerings to address learning needs during COVID-19 when offline courses were restricted.
• Most classes delivered online due to COVID-19 and regulatory uncertainties, with live streams and pre-recorded classes receiving positive feedback.
• Transitioned interest-based classes online. Made strategic investment in Fuxi Network for online education support.
• Total student enrollments decreased 35% y-o-y due to COVID-19 and regulations but had 85% q-o-q enrollment growth.
• Over 90% of learning centers reopened for offline classes. Selected as organizer of Trusted Summer Childcare, demonstrating recognized education standards.
• Expedited digital transformation and OMO model for flexibility in teaching delivery.

In the first quarter of fiscal year 2021, revenue decreased by 31.5% to RMB58.7 million from RMB85.6 million in the same period of the previous year. Cost of revenue decreased by 21.6% to RMB36.3 million from RMB46.3 million. Gross profit decreased by 43.1% to RMB22.4 million from RMB39.4 million. General and administrative expenses decreased by 16.6% to RMB28.0 million from RMB33.5 million. Sales and marketing expenses decreased by 11.5% to RMB7 million from RMB7.9 million. Operating loss was RMB12.5 million compared to RMB2.1 million in the same period last year. Net loss was RMB11.5 million during the quarter compared to net income of RMB4.2 million in the same period last year. Cash and cash equivalents as of May 31, 2020, were RMB430.3 million, up from RMB404.7 million as of February 29, 2020.

• For the second quarter of fiscal 2021, expects revenue in the range of RMB79.9 million to RMB86.3 million.
• No full-year guidance provided on the call but mentioned working on adjustments for market competitiveness, including new programs tailored to classroom textbooks and adapting to new education policies.

Q: Regarding your guidance indicating a declining year-on-year, could management help understand the reasons behind? How much of the decline is due to short-term summer vacations?

A: Uncertainty of summer break time schedule, parents' hesitation to involve kids in summer programs, and competitors' cash offers (like 40 classes for RMB1) impacted. But trend is recovering with OMO model efforts.

Q: Any expectation for the revenue outlook full-year fiscal 2021 considering the new OMO model?

A: No full-year guidance given on the call, but working on market adjustments, new tailored programs, and confident in middle school business as a growth driver.