Third Quarter 2023 and Nine Months 2023 Highlights
- During Third Quarter 2023, student enrollment was 1,093, compared to 1,106 in the prior-year period. Of the 1,093 students, 651 were enrolled in ACG’s portfolio training programs, compared to 616 in the prior-year period. 44,723 portfolio training credit hours were delivered during Third Quarter 2023, an increase of 24.1% compared to 36,031 in the prior-year period.
- Third Quarter 2023 net revenues increased 14.1% to
RMB59.5 million (US$8.1 million ), fromRMB52.1 million in the prior-year period. - Third Quarter 2023 net loss attributable to ACG narrowed to
RMB7.3 million (US$1.0 million ), from net loss attributable to ACG ofRMB12.0 million in the prior-year period. - Nine Months 2023 net revenues increased 7.6% to
RMB138.0 million (US$18.9 million ), fromRMB128.3 million in the prior-year period. - Nine Months 2023 net loss attributable to ACG narrowed to
RMB42.2 million (US$5.8 million ), from net loss attributable to ACG ofRMB49.9 million in the prior-year period. RMB65.5 million (US$9.0 million ) in cash and cash equivalents as ofSeptember 30, 2023 .
Management Commentary
Mr. Kevin Ma, Chairman and CEO of ACG, stated, “We were pleased to have achieved another strong third quarter, reporting a 14.1% increase in revenues as a result of increased services delivered to students across portfolio training services and research-based learning services. Due to robust student interest in our portfolio training services and overseas study counselling services, which led to increased sales, we realized positive cash flow from operations during the period, increasing our cash and cash equivalents on hand by 19.1% from year-end 2022 to
Outlook
Mr.
Operating Review
Enrollment Update
ACG student enrollment for Third Quarter 2023 was 1,093, of which 651 were enrolled in portfolio training programs, which consisted of time-based programs and project-based programs.
A total of 44,723 credit hours were delivered for portfolio training programs during Third Quarter 2023, of which 13,624 credit hours were delivered for time-based programs and 31,099 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 Third Quarter 2023, compared to those for the prior-year period:
Third Quarter Ended 2023 | Third Quarter Ended 2022 | % Change | ||||
No. of Credit Hours | No. of Credit Hours | |||||
Time-based Program | 13,624 | 12,923 | 5.4% | |||
Project-based Program | 31,099 | 23,108 | 34.6% | |||
Total | 44,723 | 36,031 | 24.1% |
During Third Quarter 2023, 442 students were enrolled in ACG’s other programs, which primarily consisted of overseas study counselling services and research-based learning services.
Third Quarter 2023 Financial Review – GAAP Results
ACG’s total net revenues for Third Quarter 2023 were
Gross profit for Third Quarter 2023 was
Total operating expenses for Third Quarter 2023 were
Loss from operations for Third Quarter 2023 was
Net loss attributable to ACG for Third Quarter 2023 narrowed to
For Third Quarter 2023, basic and diluted losses per common share attributable to ACG were both
Nine Months 2023 Financial Review – GAAP Results
ACG’s total net revenues for Nine Months 2023 was
Gross profit for Nine Months 2023 was
Total operating expenses for Nine Months 2023 decreased to
Loss from operations for Nine Months 2023 improved to
Net loss attributable to ACG for Nine Months 2023 narrowed to
For Nine Months 2023, basic and diluted losses per common share attributable to ACG were both
Non-GAAP Measures
Adjusted net loss attributable to ACG for Third Quarter 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 Third Quarter 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 losses per ADS for Third Quarter 2023 were both 31.4 million. Each ADS represents two common shares.
Balance Sheet Highlights
As of
Conference Call and Webcast Information (With Accompanying Presentation)
ACG will host a conference call at 8 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=EwIgWZn5.
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,” “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, including initiatives and adjustments by ACG as
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 | 65,506,332 | 8,978,390 | ||||
Accounts receivable, net | 5,852,038 | 296,345 | 40,617 | ||||
Prepaid expenses and other current assets | 4,430,285 | 9,664,054 | 1,324,569 | ||||
Total current assets | 65,262,522 | 75,466,731 | 10,343,576 | ||||
Long-term investments | 38,000,000 | 38,000,000 | 5,208,333 | ||||
Property and equipment, net | 32,760,976 | 30,834,128 | 4,226,169 | ||||
Intangible assets, net | 76,119,444 | 63,194,444 | 8,661,519 | ||||
196,289,492 | 196,289,492 | 26,903,713 | |||||
Other non-current assets | 28,415,794 | 31,347,253 | 4,296,498 | ||||
Right-of-use assets | 37,616,541 | 31,124,496 | 4,265,967 | ||||
Total assets | 474,464,769 | 466,256,544 | 63,905,775 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accrued expenses and other payables | 55,904,510 | 48,843,471 | 6,694,554 | ||||
Lease liabilities-current | 16,920,429 | 16,090,826 | 2,205,431 | ||||
Deferred revenues | 219,717,574 | 272,871,580 | 37,400,162 | ||||
Total current liabilities | 292,542,513 | 337,805,877 | 46,300,147 | ||||
Lease liabilities-non-current | 19,528,763 | 13,691,914 | 1,876,633 | ||||
Deferred income tax liabilities | 18,879,303 | 11,242,464 | 1,540,908 | ||||
Total liabilities | 330,950,579 | 362,740,255 | 49,717,688 | ||||
Shareholders’ equity: | |||||||
Common shares | 4,720,147 | 4,723,672 | 647,433 | ||||
(8,626,894) | (8,201,046) | (1,124,047) | |||||
Additional paid-in capital | 542,058,092 | 544,552,861 | 74,637,179 | ||||
Accumulated other comprehensive loss | (37,003,085) | (36,931,939) | (5,061,943) | ||||
Accumulated deficit | (358,048,927) | (400,264,774) | (54,860,852) | ||||
Total shareholders’ equity attributable to ACG | 143,099,333 | 103,878,774 | 14,237,770 | ||||
Non-controlling interests | 414,857 | (362,485) | (49,683) | ||||
Total shareholders’ equity | 143,514,190 | 103,516,289 | 14,188,087 | ||||
Commitments and contingencies | — | — | — | ||||
Total liabilities and shareholders’ equity | 474,464,769 | 466,256,544 | 63,905,775 |
ATA CREATIVITY GLOBAL AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||
Three-month Period Ended | |||||||
2022 | 2023 | 2023 | |||||
RMB | RMB | USD | |||||
Net revenues | 52,099,904 | 59,450,108 | 8,148,315 | ||||
Cost of revenues | 28,597,917 | 30,225,251 | 4,142,715 | ||||
Gross profit | 23,501,987 | 29,224,857 | 4,005,600 | ||||
Operating expenses: | |||||||
Research and development | 846,423 | 1,204,485 | 165,088 | ||||
Sales and marketing | 20,524,556 | 20,297,200 | 2,781,963 | ||||
General and administrative | 18,409,028 | 15,603,290 | 2,138,609 | ||||
Total operating expenses | 39,780,007 | 37,104,975 | 5,085,660 | ||||
Other operating income, net | 5,505 | 1,104 | 151 | ||||
Loss from operations | (16,272,515) | (7,879,014) | (1,079,909) | ||||
Other income (expense): | |||||||
Gain on deconsolidation of a subsidiary and others, net | 682,996 | — | — | ||||
Interest income, net of interest expenses | 181,303 | 241,534 | 33,105 | ||||
Foreign currency exchange gains (losses), net | (13,221) | 2 | — | ||||
Loss before income taxes | (15,421,437) | (7,637,478) | (1,046,804) | ||||
Income tax benefit | (3,687,619) | (335,902) | (46,039) | ||||
Net loss | (11,733,818) | (7,301,576) | (1,000,765) | ||||
Net income (loss) attributable to non-controlling interests | 252,349 | (50,714) | (6,951) | ||||
Net loss attributable to ACG | (11,986,167) | (7,250,862) | (993,814) | ||||
Other comprehensive income: | |||||||
Foreign currency translation adjustment, net of nil income taxes | 332,546 | (19,253) | (2,639) | ||||
Comprehensive loss attributable to ACG | (11,653,621) | (7,270,115) | (996,453) | ||||
Basic and diluted losses per common share attributable to ACG | (0.19) | (0.12) | (0.02) | ||||
Basic and diluted losses per ADS attributable to ACG | (0.38) | (0.24) | (0.04) |
ATA CREATIVITY GLOBAL AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||
Nine-month Period Ended | |||||||
2022 | 2023 | 2023 | |||||
RMB | RMB | USD | |||||
Net revenues | 128,283,578 | 138,010,273 | 18,915,882 | ||||
Cost of revenues | 73,386,393 | 75,718,910 | 10,378,140 | ||||
Gross profit | 54,897,185 | 62,291,363 | 8,537,742 | ||||
Operating expenses: | |||||||
Research and development | 4,383,557 | 2,978,521 | 408,240 | ||||
Sales and marketing | 55,002,983 | 58,015,878 | 7,951,738 | ||||
General and administrative | 57,010,439 | 51,906,675 | 7,114,402 | ||||
Total operating expenses | 116,396,979 | 112,901,074 | 15,474,380 | ||||
Other operating income, net | 16,515 | 2,657 | 364 | ||||
Loss from operations | (61,483,279 ) | (50,607,054) | (6,936,274) | ||||
Other income (expense): | |||||||
Gain on deconsolidation of subsidiaries and others, net | 682,996 | — | — | ||||
Interest income, net of interest expenses | 553,773 | 707,931 | 97,030 | ||||
Foreign currency exchange losses, net | (3,328) | (380) | (52) | ||||
Loss before income taxes | (60,249,838) | (49,899,503) | (6,839,296) | ||||
Income tax benefit | (9,889,236) | (7,635,036) | (1,046,469) | ||||
Net loss | (50,360,602 ) | (42,264,467) | (5,792,827) | ||||
Net loss attributable to non-controlling interests | (450,532) | (48,620) | (6,664) | ||||
Net loss attributable to ACG | (49,910,070 ) | (42,215,847) | (5,786,163) | ||||
Other comprehensive income: | |||||||
Foreign currency translation adjustment, net of nil income taxes | 656,824 | 71,146 | 9,751 | ||||
Comprehensive loss attributable to ACG | (49,253,246 ) | (42,144,701) | (5,776,412) | ||||
Basic and diluted losses per common share attributable to ACG | (0.80) | (0.67) | (0.09) | ||||
Basic and diluted losses per ADS attributable to ACG | (1.60) | (1.34) | (0.18) |
RECONCILIATIONS OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES | |||||||||
Three-month Period Ended | Nine-month Period Ended | ||||||||
2022 | 2023 | 2022 | 2023 | ||||||
RMB | RMB | RMB | RMB | ||||||
GAAP net loss attributable to ACG | (11,986,167) | (7,250,862) | (49,910,070) | (42,215,847) | |||||
Share-based compensation expenses | 365,558 | 818,922 | 1,104,692 | 2,029,817 | |||||
Foreign currency exchange losses (gains), net | 13,221 | (2) | 3,328 | 380 | |||||
Non-GAAP net loss attributable to ACG | (11,607,388) | (6,431,942) | (48,802,050) | (40,185,650) | |||||
GAAP losses per common share attributable to ACG | |||||||||
Basic and diluted | (0.19) | (0.12) | (0.80) | (0.67) | |||||
Non-GAAP losses per common share attributable to ACG | |||||||||
Basic and diluted | (0.18) | (0.10) | (0.78) | (0.64) |
Source:
2023 GlobeNewswire, Inc., source