On the evening of October 26th, TAL (NYSE: TAL) released its unaudited financial report for the second quarter of the 2024 fiscal year.
As of August 31, 2023, TAL's revenue for the second quarter of the 2024 fiscal year was 412 million US dollars, a year-on-year increase of 40.1%; The net profit was $37.902 million, a year-on-year increase of 4916%, turning losses into profits.
After more than two years of "double reduction", TAL has finally begun to "stop bleeding".
In the first half of the fiscal year, TAL's revenue was 687 million US dollars, a year-on-year increase of 32.7%; A net loss of 7.135 million US dollars narrowed by 84% year-on-year.
Due to the seasonal impact of summer vacation, the number of students enrolled has increased, and this quarter's learning business revenue has achieved a double-digit year-on-year growth, "TAL CEO Peng Zhuangzhuang said at the financial report.
The company's gross profit for the second quarter was 242.5 million, a year-on-year increase of 37.1%. Operating costs and expenses amounted to $383 million, an increase of 30.9% year-on-year.
Among them, sales and marketing expenses amounted to $116.3 million, a year-on-year increase of 48.9%. General and administrative expenses amounted to $97.1 million, a year-on-year decrease of 0.1%. Operating costs and expenses were $20.9 million, a year-on-year decrease of 23.9%.
Good Future's long-term investment impairment loss in the second fiscal quarter was $30.8 million, a year-on-year increase of 366.67%; The income tax revenue was $10 million, a year-on-year increase of 322%.
Despite the correction of various financial report data, after the release of the financial report and the opening of trading on October 26th Eastern Time, TAL's stock price turned down, closing at $9.7, a decrease of 5.18%.
After divesting subject training, TAL's business is currently divided into three major areas, with learning services covering quality education, international education, and overseas business. Content solutions include various teaching aids, mobile applications, learning devices, and providing technical solutions to third-party institutions.
Learning machines are becoming a growth point for the company's business.
According to IDC data, the shipment volume of TAL learning machines in the second quarter of 2023 was about 90000 units, ranking fourth in the domestic learning tablet market, with a market share rising to 8.6%. Compared to competitors, the biggest advantage of XRS learning machines is their content resources.
Compared to past performance, the "double reduction" still has a significant impact on TAL's performance. Minsheng Securities has compared past data and found that in the 2022 fiscal year, the learning service centers of TAL plummeted sharply. Compared to the 2021 fiscal year, the learning centers, service centers, and coverage cities of TAL in the 2022 fiscal year decreased by 998, 840, and 80 respectively.
Source: Minsheng Securities "Education and Training Industry Research Series (II): TAL. N Deep Research: Leading Transformation, Core Business Recovery and Growth, Technology Boosting New Development"
This situation is beginning to improve. TAL revealed in its financial report that there were approximately 220 learning centers at the end of the second quarter of the 2024 fiscal year, compared to approximately 200 at the end of the previous quarter. We believe that there is a feasible business model and clear future development path for offline small classes. In addition, our online large class reinforcement learning business continues to make progress this quarter. Business efficiency indicators, such as retention rates, have been maintained at feasible levels
In the second quarter of fiscal year 2024, TAL established new learning centers in the United States, Singapore, and Hong Kong, China, and served overseas markets through Think Academy.
According to statistics from Minsheng Securities, although the business scale and enrollment of TAL have significantly decreased, the average unit price per customer has reached a new high in recent years. The average unit price of long-term regular courses in the fiscal year 2023 is 2473 yuan per person, and the enrollment of regular courses has plummeted from 18.8 million in the fiscal year 2021 to 2.4 million in the fiscal year 2023.
Source: Minsheng Securities "Education and Training Industry Research Series (II): TAL. N Deep Research: Leading Transformation, Core Business Recovery and Growth, Technology Boosting New Development"
Under the ChatGPT wave, TAL is also focusing on AI education scenarios.
On the morning of September 6th, Paris time, CTO of XRS Education Group, Tian Mi, revealed for the first time at the main forum of UNESCO's "Digital Learning Week" that they will soon launch the personalized learning product level application AI Tutor based on XRS MathGPT, which will undergo internal testing in the near future.
On October 11th, led by XRS, experts and scholars from multiple technology companies and universities such as Google and Jinan University jointly held the AAAI2024 Global Mathematical Reasoning Competition for Large Models.
This competition is divided into two tracks: Chinese math problem-solving and English math problem-solving. Xueersi provided the Chinese and English datasets used in the competition - TAL-SAQ7K-CN, TAL-SAQ6K-EN.
AAAI (Association for the Advancement of Artificial Intelligence) is one of the most authoritative and important associations in the field of international artificial intelligence. The AAAI conference was recommended as a Class A conference by the Chinese Computer Society (CCF).
As of August 31, 2023, the cumulative balance of cash, cash equivalents, and short-term investments held by TAL was $2.963 billion, with a deferred income balance of $325.4 million.
Due to seasonal impacts, TAL expects that the revenue from learning services and other businesses will decrease by 1/4 in the next quarter, and the business focus of learning services will still be on developing a network of learning centers.