Fourth Quarter 2023 and Fiscal Year 2023 Highlights
- During Fourth Quarter 2023, student enrollment was 1,011, an increase of 11.3% from 908 in the prior-year period. Of the 1,011 students, 648 were enrolled in ACG’s portfolio training programs, compared to 574 in the prior-year period. 48,421 portfolio training credit hours were delivered during Fourth Quarter 2023, an increase of 3.3% compared to 46,894 in the prior-year period.
- Fourth Quarter 2023 net revenues increased 6.5% to
RMB83.6 million (US$11.8 million ), fromRMB78.5 million in the prior-year period. - Fourth Quarter 2023 net income attributable to ACG increased 324.1% to
RMB8.6 million (US$1.2 million ), fromRMB2.0 million in the prior-year period. - Fiscal Year 2023 net revenues increased 7.2% to
RMB221.6 million (US$31.2 million ), fromRMB206.8 million in the prior year. - Fiscal Year 2023 net loss attributable to ACG narrowed to
RMB33.7 million (US$4.7 million ), from net loss attributable to ACG ofRMB47.9 million in the prior year. RMB60.2 million (US$8.5 million ) in cash and cash equivalents as ofDecember 31, 2023 .
Management Commentary
Mr. Kevin Ma, Chairman and CEO of ACG, stated, “We were pleased to have completed a full year of on-campus class delivery in 2023 while continuing to offer certain courses online. We saw steady improvement in our performance in the second half of the year due to growth in our core portfolio training services business and concluded 2023 on a positive note, reporting a modest increase in net revenues and narrowing losses by 29.7% in Fiscal Year 2023. In Fourth Quarter 2023, we more than tripled net income attributable to ACG from the prior-year period as a result of increased revenue contributions from portfolio training services and overseas study counselling services with no substantial increase in operating expenses. We continued to strengthen our financial position over the course of 2023 and closed 2023 with
Outlook
Mr.
Operating Review
Enrollment Update
ACG student enrollment for Fourth Quarter 2023 was 1,011, of which 648 were enrolled in portfolio training programs, which consisted of time-based programs and project-based programs.
A total of 48,421 credit hours were delivered for portfolio training programs during Fourth Quarter 2023, of which 15,737 credit hours were delivered for time-based programs and 32,684 credit hours were delivered for project-based programs. These courses were delivered either in person through ACG’s nationwide training center network or via online platform.
The following is a summary of the credit hours delivered for ACG’s portfolio training programs for Fourth Quarter 2023, compared to those for the prior-year period:
Fourth Quarter Ended | Fourth Quarter Ended | % Change | |||||||||||
No. of Credit Hours | No. of Credit Hours | ||||||||||||
Time-based Program | 15,737 | 15,780 | (0.3 | %) | |||||||||
Project-based Program | 32,684 | 31,114 | 5.0 | % | |||||||||
Total | 48,421 | 46,894 | 3.3 | % |
During Fourth Quarter 2023, 363 students were enrolled in ACG’s other programs, which primarily consisted of overseas study counselling services and research-based learning services.
Fourth Quarter 2023 Financial Review – GAAP Results
ACG’s total net revenues for Fourth Quarter 2023 were
Gross profit for Fourth Quarter 2023 was
Total operating expenses for Fourth Quarter 2023 were
Income from operations for Fourth Quarter 2023 was
Net income attributable to ACG for Fourth Quarter 2023 increased 324.1% to
For Fourth Quarter 2023, basic and diluted earnings per common share attributable to ACG were both
Fiscal Year 2023 Financial Review – GAAP Results
ACG’s total net revenues for Fiscal Year 2023 was
Gross profit for Fiscal Year 2023 was
Total operating expenses for Fiscal Year 2023 decreased to
Loss from operations for Fiscal Year 2023 narrowed to
Net loss attributable to ACG for Fiscal Year 2023 narrowed to
For Fiscal Year 2023, basic and diluted losses per common share attributable to ACG were both
Non-GAAP Measures
Adjusted net loss attributable to ACG for Fiscal Year 2023, which excludes share-based compensation expense and foreign currency exchange losses (gains), net (non-GAAP), was
Basic and diluted losses per common share attributable to ACG excluding share-based compensation expense and foreign currency exchange losses (gains), net (non-GAAP) for Fiscal Year 2023, were
Please see the note about non-GAAP measures and the reconciliation table at the end of this press release.
Other Data
The number of weighted average ADSs used to calculate basic and diluted earnings per ADS for Fourth Quarter 2023 were 31.4 million and 31.7 million, respectively. The number of weighted average ADSs used to calculate basic and diluted losses per ADS for Fiscal Year 2023 were both 31.4 million. Each ADS represents two common shares.
Balance Sheet Highlights
As of
Guidance for Fiscal Year 2024
ACG expects to achieve total net revenues of between
Conference Call and Webcast Information (With Accompanying Presentation)
ACG will host a conference call at 9 p.m. Eastern Time on
To participate in the conference call, please use the following dial-in numbers about 10 minutes prior to the scheduled conference call time:
U.S. & | +1 (877) 407-9122 | |
International (Toll): | +1 (201) 493-6747 |
Local Access | ||||
(400) 120 2840 | ||||
(800) 965561 | ||||
A live webcast of the conference call can be accessed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=F3ofUV5e.
An accompanying slide presentation will also be made available 30 minutes prior to the conference call at the investor relations section of ACG’s website (https://ir.atai.net.cn/). To listen to the webcast, please visit ACG’s website a few minutes prior to the start of the call to register, download, and install any necessary audio software.
A replay will be available shortly after the call and will remain available for 90 days.
About
Cautionary Note Regarding Forward-looking Statements
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in 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 terms 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; ACG’s 2024 guidance; market demand for, and market acceptance and competitiveness of, ACG’s portfolio training programs and other education services.
The factors that could cause the Company’s actual financial and operating results to differ from what the Company currently anticipates may include its ability to develop and create content that could accommodate needs of potential students, its ability to provide effective creative related international education services and control sales and marketing expenses, its recognition in the marketplace for services it delivered and branding it established, its ability to maintain market share amid increasing competition, its ability to identify and execute on M&A opportunities within the education sector and its ability to integrate the acquired business, the economy of
The financial information contained in this release should be read in conjunction with the consolidated financial statements and related notes included in the Company’s annual report on Form 20-F for its fiscal year ended
The forward-looking statements in this release involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates, and projections about ACG and the markets in which it operates. The Company undertakes no obligation to update forward-looking statements, which speak only as of the date of this release, to reflect subsequent events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that its expectations and assumptions expressed in these forward-looking statements are reasonable, the Company cannot assure you that its expectations and assumptions will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
Currency Convenience Translation
The Company’s financial information is stated in Renminbi (“RMB”), the currency of the People’s
About Non-GAAP Financial Measures
To supplement ACG’s consolidated financial information presented in accordance with
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. ACG believes these non-GAAP financial measures provide meaningful supplemental information about its performance by excluding share- based compensation expense and foreign currency exchange gain or loss, which may not be indicative of its operating performance.
ACG 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 ACG’s historical performance. ACG computes its non-GAAP financial measures using a consistent method from period to period. ACG 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 net income (loss) excluding share-based compensation expense and foreign currency exchange gain or loss and basic and diluted earnings (losses) per common share and per ADS excluding share-based compensation expense and foreign currency exchange gain or loss is that share-based compensation charges and foreign currency exchange gain or loss have been, and are expected to continue to be for the foreseeable future, a significant recurring expense in ACG’s business.
Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The table captioned “Reconciliations of Non-GAAP Measures to the Most Comparable GAAP Measures” shown at the end of this news release has more details on the reconciliations between GAAP financial measures that are most directly comparable to the non-GAAP financial measures used by ACG.
For more information on our company, please contact the following individuals:
At the Company | Investor Relations | |
Ruobai Sima, CFO | ||
+86 10 6518 1133 x 5518 | 408-538-4577 | |
simaruobai@acgedu.cn | csohn@equityny.com | |
212-836-9610 | ||
azhang@equityny.com |
ATA CREATIVITY GLOBAL AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
2022 | 2023 | 2023 | ||||||||
RMB | RMB | USD | ||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | 54,980,199 | 60,167,232 | 8,474,377 | |||||||
Accounts receivable | 5,852,038 | 2,235,490 | 314,862 | |||||||
Prepaid expenses and other current assets | 4,430,285 | 8,042,169 | 1,132,716 | |||||||
Total current assets | 65,262,522 | 70,444,891 | 9,921,955 | |||||||
Long-term investments | 38,000,000 | 38,000,000 | 5,352,188 | |||||||
Property and equipment, net | 32,760,976 | 30,235,985 | 4,258,649 | |||||||
Intangible assets, net | 76,119,444 | 58,886,111 | 8,293,935 | |||||||
196,289,492 | 196,289,492 | 27,646,797 | ||||||||
Other non-current assets | 28,415,794 | 31,691,417 | 4,463,643 | |||||||
Right-of-use assets | 37,616,541 | 23,391,247 | 3,294,588 | |||||||
Total assets | 474,464,769 | 448,939,143 | 63,231,755 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accrued expenses and other payables | 55,904,510 | 49,146,103 | 6,922,083 | |||||||
Lease liabilities-current | 16,920,429 | 13,110,449 | 1,846,568 | |||||||
Deferred revenues | 219,717,574 | 252,145,949 | 35,514,014 | |||||||
Total current liabilities | 292,542,513 | 314,402,501 | 44,282,665 | |||||||
Lease liabilities-non-current | 19,528,763 | 9,496,422 | 1,337,543 | |||||||
Deferred income tax liabilities | 18,879,303 | 12,066,513 | 1,699,533 | |||||||
Total liabilities | 330,950,579 | 335,965,436 | 47,319,741 | |||||||
Shareholders’ equity: | ||||||||||
Common shares | 4,720,147 | 4,730,128 | 666,225 | |||||||
(8,626,894 | ) | (8,201,046 | ) | (1,155,093 | ) | |||||
Additional paid-in capital | 542,058,092 | 545,222,465 | 76,792,978 | |||||||
Accumulated other comprehensive loss | (37,003,085 | ) | (37,004,507 | ) | (5,211,976 | ) | ||||
Accumulated deficit | (358,048,927 | ) | (391,709,172 | ) | (55,171,083 | ) | ||||
Total shareholders’ equity attributable to ACG | 143,099,333 | 113,037,868 | 15,921,051 | |||||||
Non-redeemable non-controlling interests | 414,857 | (64,161 | ) | (9,037 | ) | |||||
Total shareholders’ equity | 143,514,190 | 112,973,707 | 15,912,014 | |||||||
Commitments and contingencies | — | — | — | |||||||
Total liabilities and shareholders’ equity | 474,464,769 | 448,939,143 | 63,231,755 |
ATA CREATIVITY GLOBAL AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
Three-month Period Ended | |||||||||||||||
2022 | 2023 | 2023 | |||||||||||||
RMB | RMB | USD | |||||||||||||
Net revenues | 78,537,296 | 83,608,695 | 11,776,038 | ||||||||||||
Cost of revenues | 30,929,463 | 31,242,849 | 4,400,463 | ||||||||||||
Gross profit | 47,607,833 | 52,365,846 | 7,375,575 | ||||||||||||
Operating expenses: | |||||||||||||||
Research and development | 2,407,234 | 1,651,359 | 232,589 | ||||||||||||
Sales and marketing | 20,262,743 | 20,721,614 | 2,918,578 | ||||||||||||
General and administrative | 20,041,141 | 20,909,931 | 2,945,102 | ||||||||||||
Total operating expenses | 42,711,118 | 43,282,904 | 6,096,269 | ||||||||||||
Other operating income, net | — | 28,208 | 3,973 | ||||||||||||
Income from operations | 4,896,715 | 9,111,150 | 1,283,279 | ||||||||||||
Other income (expense): | |||||||||||||||
Gain on deconsolidation of a subsidiary and others, net | 625,631 | — | — | ||||||||||||
Interest income, net of interest expenses | 203,113 | 270,599 | 38,113 | ||||||||||||
Foreign currency exchange gains (losses), net | 8,764 | (4,496 | ) | (633 | ) | ||||||||||
Income before income taxes | 5,734,223 | 9,377,253 | 1,320,759 | ||||||||||||
Income tax expense | 3,967,852 | 823,327 | 115,963 | ||||||||||||
Net income | 1,766,371 | 8,553,926 | 1,204,796 | ||||||||||||
Net loss attributable to non-redeemable non-controlling interests | (250,790 | ) | (1,676 | ) | (236 | ) | |||||||||
Net income attributable to ACG | 2,017,161 | 8,555,602 | 1,205,032 | ||||||||||||
Other comprehensive loss: | |||||||||||||||
Foreign currency translation adjustment, net of nil income taxes | (100,062 | ) | (72,568 | ) | (10,221 | ) | |||||||||
Comprehensive income attributable to ACG | 1,917,099 | 8,483,034 | 1,194,811 | ||||||||||||
Basic and diluted earnings per common share attributable to ACG | 0.03 | 0.14 | 0.02 | ||||||||||||
Basic and diluted earnings per ADS attributable to ACG | 0.06 | 0.28 | 0.04 |
ATA CREATIVITY GLOBAL AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||||||||||
Year Ended | ||||||||||||||||
2022 | 2023 | 2023 | ||||||||||||||
RMB | RMB | USD | ||||||||||||||
Net revenues | 206,820,874 | 221,618,968 | 31,214,379 | |||||||||||||
Cost of revenues | 104,315,856 | 106,961,759 | 15,065,249 | |||||||||||||
Gross profit | 102,505,018 | 114,657,209 | 16,149,130 | |||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 6,790,791 | 4,629,880 | 652,105 | |||||||||||||
Sales and marketing | 75,265,726 | 78,737,492 | 11,089,944 | |||||||||||||
General and administrative | 77,051,580 | 72,816,606 | 10,256,004 | |||||||||||||
Total operating expenses | 159,108,097 | 156,183,978 | 21,998,053 | |||||||||||||
Other operating income, net | 16,515 | 30,865 | 4,347 | |||||||||||||
Loss from operations | (56,586,564 | ) | (41,495,904 | ) | (5,844,576 | ) | ||||||||||
Other income (expense): | ||||||||||||||||
Gain on deconsolidation of subsidiaries and others, net | 1,308,627 | — | — | |||||||||||||
Interest income, net of interest expenses | 756,886 | 978,530 | 137,823 | |||||||||||||
Foreign currency exchange gains (losses), net | 5,436 | (4,876 | ) | (687 | ) | |||||||||||
Loss before income taxes | (54,515,615 | ) | (40,522,250 | ) | (5,707,440 | ) | ||||||||||
Income tax benefit | (5,921,384 | ) | (6,811,709 | ) | (959,409 | ) | ||||||||||
Net loss | (48,594,231 | ) | (33,710,541 | ) | (4,748,031 | ) | ||||||||||
Net loss attributable to non-redeemable non-controlling interests | (701,322 | ) | (50,296 | ) | (7,084 | ) | ||||||||||
Net loss attributable to ACG | (47,892,909 | ) | (33,660,245 | ) | (4,740,947 | ) | ||||||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustment, net of nil income taxes | 556,762 | (1,422 | ) | (200 | ) | |||||||||||
Comprehensive loss attributable to ACG | (47,336,147 | ) | (33,661,667 | ) | (4,741,147 | ) | ||||||||||
Basic and diluted losses per common share attributable to ACG | (0.76 | ) | (0.54 | ) | (0.08 | ) | ||||||||||
Basic and diluted losses per ADS attributable to ACG | (1.52 | ) | (1.08 | ) | (0.16 | ) |
RECONCILIATIONS OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES | |||||||||||||
Three-month Period Ended | Year Ended | ||||||||||||
2022 | 2023 | 2022 | 2023 | ||||||||||
RMB | RMB | RMB | RMB | ||||||||||
GAAP net income (loss) attributable to ACG | 2,017,161 | 8,555,602 | (47,892,909 | ) | (33,660,245 | ) | |||||||
Share-based compensation expenses | 355,063 | 1,038,224 | 1,459,755 | 3,068,041 | |||||||||
Foreign currency exchange losses (gains), net | (8,764 | ) | 4,496 | (5,436 | ) | 4,876 | |||||||
Non-GAAP adjusted net income (loss) attributable to ACG | 2,363,460 | 9,598,322 | (46,438,590 | ) | (30,587,328 | ) | |||||||
GAAP earnings (losses) per common share attributable to ACG | |||||||||||||
Basic and diluted | 0.03 | 0.14 | (0.76 | ) | (0.54 | ) | |||||||
Non-GAAP adjusted earnings (losses) per common share attributable to ACG | |||||||||||||
Basic and diluted | 0.04 | 0.15 | (0.74 | ) | (0.49 | ) |
Source:
2024 GlobeNewswire, Inc., source