TAL Education Group Announces Unaudited Financial Results for the Second Fiscal Quarter Ended August 31, 2024 and Issues Notice of Annual General Meeting
BEIJING, Oct. 24, 2024 /PRNewswire/ -- TAL Education Group (NYSE:TAL) ("TAL" or the "Company"), a smart learning solutions provider in China, today announced its unaudited financial results for the second quarter of fiscal year 2025 ended August 31, 2024 and issued notice of Annual General Meeting.
Highlights for the Second Quarter of Fiscal Year 2025
Net revenues were US$619.4 million, compared to net revenues of US$411.9 million in the same period of the prior year.
Income from operations was US$47.6 million, compared to income from operations of US$31.8 million in the same period of the prior year.
Non-GAAP income from operations, which excluded share-based compensation expenses, was US$64.5 million, compared to non-GAAP income from operations of US$52.7 million in the same period of the prior year.
Net income attributable to TAL was US$57.4 million, compared to net income attributable to TAL of US$37.9 million in the same period of the prior year.
Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$74.3 million, compared to non-GAAP net income attributable to TAL of US$58.8 million in the same period of the prior year.
Basic and diluted net income per American Depositary Share ("ADS") were both US$0.09. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were both US$0.12. Three ADSs represent one Class A common share.
Cash, cash equivalents and short-term investments totaled US$3,454.3 million as of August 31, 2024, compared to US$3,303.3 million as of February 29, 2024.
Highlights for the Six Months Ended August 31, 2024
Net revenues were US$1,033.5 million, compared to net revenues of US$687.4 million in the same period of the prior year.
Income from operations was US$30.3 million, compared to loss from operations of US$26.0 million in the same period of the prior year.
Non-GAAP income from operations, which excluded share-based compensation expenses, was US$65.4 million, compared to non-GAAP income from operations of US$20.4 million in the same period of the prior year.
Net income attributable to TAL was US$68.8 million, compared to net loss attributable to TAL of US$7.1 million in the same period of the prior year.
Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$103.9 million, compared to non-GAAP net income attributable to TAL of US$39.3 million in the same period of the prior year.
Basic and diluted net income per ADS were both US$0.11. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were both US$0.17.
Financial Data——Second Quarter and First Six Months of Fiscal Year 2025(In US$ thousands, except per ADS data and percentages)
Three Months Ended
August 31,
2023
2024
Pct. Change
Net revenues
411,931
619,361
50.4 %
Income from operations
31,790
47,622
49.8 %
Non-GAAP income from operations
52,673
64,520
22.5 %
Net income attributable to TAL
37,902
57,431
51.5 %
Non-GAAP net income attributable to TAL
58,785
74,329
26.4 %
Net income per ADS attributable to TAL, basic
0.06
0.09
50.6 %
Net income per ADS attributable to TAL, diluted
0.06
0.09
50.7 %
Non-GAAP net income per ADS attributable toTAL, basic
0.10
0.12
25.7 %
Non-GAAP net income per ADS attributable toTAL, diluted
0.10
0.12
25.8 %
Six Months Ended
August 31,
2023
2024
Pct. Change
Net revenues
687,371
1,033,548
50.4 %
(Loss)/Income from operations
(25,983)
30,292
(216.6 %)
Non-GAAP income from operations
20,413
65,396
220.4 %
Net (loss)/income attributable to TAL
(7,135)
68,833
(1,064.7 %)
Non-GAAP net income attributable to TAL
39,261
103,937
164.7 %
Net (loss)/income per ADS attributable to TAL, basic
(0.01)
0.11
(1,085.2 %)
Net (loss)/income per ADS attributable to TAL, diluted
(0.01)
0.11
(1,068.4 %)
Non-GAAP net income per ADS attributable toTAL, basic
0.06
0.17
170.3 %
Non-GAAP net income per ADS attributable toTAL, diluted
0.06
0.17
169.9 %
"In this quarter we achieved year-on-year revenue growth of 50.4%. AI learning device was one of the faster growing business lines. We are excited about the opportunity to provide for our customers more accessibility to quality learning contents through these AI-power devices," said Alex Peng, TAL's President & Chief Financial Officer.
Mr. Peng added: "As for learning services, we will prudently manage our learning center network, balancing operating efficiency and growth rate. Our primary objective for learning service is to offer quality learning experience to our learners both online and offline."
Financial Results for the Second Quarter of Fiscal Year 2025
Net Revenues
In the second quarter of fiscal year 2025, TAL reported net revenues of US$619.4 million, representing a 50.4% increase from US$411.9 million in the second quarter of fiscal year 2024.
Operating Costs and Expenses
In the second quarter of fiscal year 2025, operating costs and expenses were US$572.0 million, representing a 49.5% increase from US$382.8 million in the second quarter of fiscal year 2024. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$555.1 million, representing a 53.4% increase from US$361.9 million in the second quarter of fiscal year 2024.
Cost of revenues increased by 59.8% to US$270.6 million from US$169.4 million in the second quarter of fiscal year 2024. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 60.7% to US$268.8 million, from US$167.3 million in the second quarter of fiscal year 2024.
Selling and marketing expenses increased by 56.4% to US$181.9 million from US$116.3 million in the second quarter of fiscal year 2024. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 61.6% to US$177.9 million, from US$110.1 million in the second quarter of fiscal year 2024.
General and administrative expenses increased by 23.1% to US$119.5 million from US$97.1 million in the second quarter of fiscal year 2024. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 28.3% to US$108.3 million, from US$84.4 million in the second quarter of fiscal year 2024.
Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 19.1% to US$16.9 million in the second quarter of fiscal year 2025 from US$20.9 million in the same period of fiscal year 2024.
Gross Profit
Gross profit increased by 43.8% to US$348.7 million from US$242.5 million in the second quarter of fiscal year 2024.
Income/(Loss) from Operations
Income from operations was US$47.6 million in the second quarter of fiscal year 2025, compared to income from operations of US$31.8 million in the second quarter of fiscal year 2024. Non-GAAP income from operations, which excluded share-based compensation expenses, was US$64.5 million, compared to Non-GAAP income from operations of US$52.7 million in the same period of the prior year.
Other Income/(Expense)
Other income was US$20.5 million for the second quarter of fiscal year 2025, compared to other income of US$5.0 million in the second quarter of fiscal year 2024.
Impairment Loss on Long-term Investments
Impairment loss on Long-term investment was US$4.9 million for the second quarter of fiscal year 2025, compared to US$30.8 million for the same period of fiscal year 2024.
Income Tax Benefit/(Expense)
Income tax expense was US$25.6 million in the second quarter of fiscal year 2025, compared to US$10.0 million of income tax benefit in the second quarter of fiscal year 2024.
Net Income/(Loss) attributable to TAL Education Group
Net income attributable to TAL was US$57.4 million in the second quarter of fiscal year 2025, compared to net income attributable to TAL of US$37.9 million in the second quarter of fiscal year 2024. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$74.3 million, compared to Non-GAAP net income attributable to TAL of US$58.8 million in the second quarter of fiscal year 2024.
Basic and Diluted Net Income/(Loss) per ADS
Basic and diluted net income per ADS were both US$0.09 in the second quarter of fiscal year 2025. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were both US$0.12 in the second quarter of fiscal year 2025.
Cash Flow
Net cash used in operating activities for the second quarter of fiscal year 2025 was US$0.6 million.
Cash, Cash Equivalents, and Short-Term Investments
As of August 31, 2024, the Company had US$2,085.9 million of cash and cash equivalents and US$1,368.4 million of short-term investments, compared to US$2,208.7 million of cash and cash equivalents and US$1,094.6 million of short-term investments as of February 29, 2024.
Deferred Revenue
As of August 31, 2024, the Company's deferred revenue balance was US$517.6 million, compared to US$428.3 million as of February 29, 2024.
Financial Results for the First Six Months of Fiscal Year 2025
Net Revenues
For the first six months of fiscal year 2025, TAL reported net revenues of US$1,033.5 million, representing a 50.4% increase from US$687.4 million in the first six months of fiscal year 2024.
Operating Costs and Expenses
In the first six months of fiscal year 2025, operating costs and expenses were US$1,004.1 million, representing a 38.5% increase from US$724.8 million in the first six months of fiscal year 2024. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$969.0 million, representing a 42.8% increase from US$678.5 million in the first six months of fiscal year 2024.
Cost of revenues increased by 52.4% to US$470.6 million from US$308.9 million in the first six months of fiscal year 2024. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 53.2% to US$466.5 million from US$304.4 million in the first six months of fiscal year 2024 .
Selling and marketing expenses increased by 42.3% to US$304.3 million from US$213.9 million in the first six months of fiscal year 2024. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 47.7% to US$296.0 million from US$200.4 million in the first six months of fiscal year 2024.
General and administrative expenses increased by 13.4% to US$229.2 million from US$202.0 million in the first six months of fiscal year 2024. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 18.9% to US$206.6 million from US$173.7 million in the first six months of fiscal year 2024.
Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 24.3% to US$35.1 million in the first six months of fiscal year 2025 from US$46.4 million in the same period of fiscal year 2024.
Gross Profit
Gross profit increased by 48.7% to US$562.9 million from US$378.5 million in the first six months of fiscal year 2024.
Income/(Loss) from Operations
Income from operations was US$30.3 million in the first six months of fiscal year 2025, compared to loss from operations of US$26.0 million in the same period of the prior year. Non-GAAP income from operations, which excluded share-based compensation expenses, was US$65.4 million, compared to US$20.4 million Non-GAAP income from operations in the same period of the prior year.
Other Income/(Expense)
Other income was US$33.6 million for the first six months of fiscal year 2025, compared to other expense of US$1.8 million in the same period of the prior year.
Impairment Loss on Long-term Investments
Impairment loss on long-term investments was US$8.7 million for the first six months of fiscal year 2025, compared to US$30.8 million for the first six months of fiscal year 2024.
Income Tax Benefit/(Expense)
Income tax expense was US$27.9 million in the first six months of fiscal year 2025, compared to US$6.5 million of income tax benefit in the first six months of fiscal year 2024.
Net Income/(Loss) Attributable to TAL Education Group
Net income attributable to TAL was US$68.8 million in the first six months of fiscal year 2025, compared to net loss attributable to TAL of US$7.1 million in the first six months of fiscal year 2024. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$103.9 million, compared to US$39.3 million Non-GAAP income attributable to TAL in the same period of the prior year.
Cash Flow
Net cash provided by operating activities for the first six months of fiscal year 2025 was US$246.2 million.
Basic and Diluted Net Income/(Loss) per ADS
Basic and diluted net income per ADS were both US$0.11 in the first six months of fiscal year 2025. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were both US$0.17 in the first six months of fiscal year 2025.
Share Repurchase
In April 2024, the Company's board of directors authorized to extend its share repurchase program launched in April 2021 by 12 months. Pursuant to the extended share repurchase program, the Company may repurchase up to approximately US$503.8 million of its common shares through April 30, 2025. As of August 31, 2024, the Company has repurchased 499,933 common shares at an aggregate consideration of approximately US$13.1 million under the share repurchase program.
TAL to Hold Annual General Meeting on November 15, 2024
The Company announced that it will hold its annual general meeting of shareholders (the "AGM") at TAL Building No.1, Courtyard No. 9, Qixin Middle Street, Changping District, Beijing, China, on November 15, 2024 at 3:00PM (Beijing time). No proposal will be submitted to shareholders for approval at the AGM. Instead, the AGM will serve as an open forum for shareholders and beneficial owners of the Company's ADSs to discuss Company's affairs with management.
The board of directors of the Company has fixed the close of business on November 4, 2024 (Eastern Standard Time) as the record date (the "Record Date"). Holders of record of the Company's common shares at the close of business on the Record Date are entitled to notice of the AGM and any adjournment or postponement thereof. Beneficial owners of the Company's ADSs are welcome to attend the AGM in person.
The notice of the AGM is available on the Investor Relations section of the Company's website at https://ir.100tal.com/. The Company has filed its annual report on Form 20-F (the "Annual Report"), which includes the Company's audited financial statements for the fiscal year ended February 29, 2024, with the U.S. Securities and Exchange Commission (the "SEC"). The Company's Annual Report can be accessed on the Investor Relations section of its website at https://ir.100tal.com, as well as on the SEC's website at http://www.sec.gov.
Conference Call
The Company will host a conference call and live webcast to discuss its financial results for the second fiscal quarter of fiscal year 2025 ended August 31, 2024 at 8:00 a.m. Eastern Time on October 24, 2024 (8:00 p.m. Beijing time on October 24, 2024).
Please note that you will need to pre-register for conference call participation athttps://register.vevent.com/register/BIb77ca114970c4bd1bfe7d1770af84eac.
Upon registration, you will receive an email containing participant dial-in numbers and unique Direct Event Passcode. This information will allow you to gain immediate access to the call. Participants may pre-register at any time, including up to and after the call start time.
A live and archived webcast of the conference call will be available on the Investor Relations section of TAL's website at https://ir.100tal.com/.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, TAL Education Group's strategic and operational plans contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to ...
