Here Group Ltd. Q2 FY2024 earnings call

• Revenue grew 24.7% y-o-y, driven by expanding cost offerings and new courses.
• Adjusted other personal interest courses into skills upgrading and recreation/leisure courses.
• Identified opportunity in silver economy due to growing demand for senior learner courses and government support.
• Enhanced user engagement through offline/online initiatives for middle-aged and elderly users, with positive feedback.
• Leveraged AI for live streaming quality improvement, online tutoring system enhancement, and integrated business management process upgrade.
• Launched private label Chinese Baijiu brand YUNTING in live e-commerce and pursued overseas expansion; acquired Kelly's Education for youth online learning in Asia.

In the second quarter of Fiscal Year 2024, QuantaSing's total revenue grew by 24.7% year-over-year to RMB980.5 million. Revenue from individual online learning services, which account for 89.1% of total revenue, grew 24.1% year-over-year to RMB873.6 million. Enterprise services contributed 5.9% of total revenue, amounting to RMB57.6 million. Gross profit was RMB835.5 million with a gross margin of 85.2%. Sales and marketing expenses were RMB657.1 million, with non-GAAP sales and marketing expenses (excluding share-based compensation) at 68.6% of total revenue. Research and development expenses were RMB41 million, with non-GAAP R&D expenses at 4% of total revenue. General and administrative expenses were RMB35.1 million, with non-GAAP G&A expenses at 2.8% of total revenue. Net income excluding share-based compensation was RMB107.6 million, and adjusted net income was RMB103.9 million.

• Expected third quarter 2024 revenue between RMB900 million and RMB930 million, representing a year-over-year increase of 11.5% to 15.2%.

Q: In terms of your live e-commerce offering, you talked about the first private label brand. How is this offering being received and are we going to see additional private label offerings launched throughout the year?

A: Regarding YUNTING, the initial reception is positive. We are actively exploring opportunities to expand private label offerings through the year.

Q: Could you elaborate on some of the key performance metrics that underscore the growth of the live e-commerce segment and strategic initiatives to capitalize on this momentum?

A: Key metrics include average order value, repeat purchase rates, paid users, and GMV. We pair course content with consumer goods to optimize customer experience.

Q: Can you comment on the company's current thinking about scaling the size of the workforce over time as these e-commerce enterprise services and geographic expansion like Kelly's Education continue to ramp up?

A: We use technology, including AI, to streamline operations, reduce headcount, and improve efficiency across all business segments.

Q: Given the acquisition of Kelly's Education, can you comment on the market opportunity for youth online learning in Asia, given that you traditionally target a market that's more adult learning focus?

A: Acquisition of Kelly's Education is an important step to enter the children's online learning market in Asia. We leverage our expertise to meet the needs of families in this region.

Q: Can you just talk about your strategy for attracting repeat customers and turning them into paid customers?

A: Strategy involves enhancing online learning platform quality, hosting engaging events, and leveraging accumulated experiences from previous courses to drive repeat business.