Four Seasons Education (Cayman), Inc. Q2 FY2021 earnings call

• All learning centers across the country reopened and operated fully during the quarter, delivering high-quality educational products.
• Faced challenges like competition from online peers and Shanghai's randomized admission policy, but broadened primary school courses and saw growth in middle school tutoring classes due to adapted curriculum.
• Enhanced service quality by expanding pre and post-class educational service packages with more subjects.
• Nationwide expansion initiative ongoing, with progress in consolidating and upgrading educational materials.
• 11 new school partnerships for in-school tutorial classes and services.
• Math lab project recognized, selected for education equipment exhibitions.
• Strategic cooperation with Shanghai STEM cloud to develop STEM curriculum and launched a pilot STEM camp that was well received.

In the second quarter of fiscal year 2021, revenue was RMB83.8 million. Cost of revenue decreased to RMB48.2 million from RMB57.9 million in the same period last year. Gross profit was RMB35.6 million compared to RMB71.0 million last year. General and administrative expenses decreased to RMB30.3 million from RMB32.6 million. Sales and marketing expenses decreased to RMB8.0 million from RMB10.0 million. Operating loss was RMB2.7 million compared to operating income of RMB28.3 million last year. Net income was RMB4.0 million compared to RMB20.3 million last year. Adjusted net income was RMB6.8 million compared to RMB26.9 million last year. Basic and diluted net income per ADS attributable to ordinary shareholders were both RMB0.07 compared to RMB0.40 and RMB0.39 last year. Adjusted basic and diluted net income per ADS were both RMB0.13 compared to RMB0.53 and RMB0.52 last year. Cash and cash equivalents as of August 31, 2020, were RMB423.0 million compared to RMB404.7 million as of February 29, 2020.

• The company expects to generate revenue in the range of RMB62.1 million to RMB67.2 million for the third quarter of fiscal 2021, based on current market conditions and preliminary estimates subject to change.

• Increasingly fierce competition from online peers in the aftermath of COVID-19.
• Shanghai Municipal Education Commission's fully randomized admission policy for private elementary and secondary schools impacting customer demand.

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