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OneSmart International Education Group Limited Announces Unaudited Financial Results for the Third Fiscal Quarter Ended May 31, 2018

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OneSmart International Education Group Limited Announces Unaudited Financial Results for the Third Fiscal Quarter Ended May 31, 2018

PR Newswire

- Quarterly results:
Monthly Average Student Enrollments
[1] Increased by 44.7% Year-over-Year
Net Revenues Increased by 37.6% Year-over-Year
Net Revenues from OneSmart VIP Programs increased by 29.0% Year-over-Year
Net Revenues from HappyMath increased by 76.0% Year-over-Year
New Student Enrollments of newly acquired FasTrack English increased by 138.0% Year-over-Year
Non-GAAP Net Income Attributable to OneSmart's Shareholders increased by 26.7% Year-over-Year

- First nine months results:
Monthly Average Student Enrollments
[1] Increased by 46.9% Year-over-Year
Net Revenues Increased by 35.8% Year-over-Year
Non-GAAP Net Income Attributable to OneSmart's Shareholders increased by 53.1% Year-over-Year

SHANGHAI, July 31, 2018 /PRNewswire/ -- OneSmart International Education Group Limited (NYSE: ONE) ("OneSmart" or the "Company"), the largest premium K-12 after-school education service provider in China, today announced its unaudited financial results for the third fiscal quarter of 2018 ended May 31, 2018.

Highlights for the Third Fiscal Quarter Ended May 31, 2018

  • Total net revenues increased by 37.6% year-over-year to RMB824.5 million (US$128.6 million)
  • Net revenues from premium tutoring services (OneSmart VIP Programs) increased by 29.0% year-over-year to RMB704.5 million (US$109.9 million)
  • Net revenues from HappyMath increased by 76.0% year-over-year to RMB90.6 million (US$14.1 million)
  • New student enrollments of newly acquired FasTrack English increased by 138.0% year-over-year
  • As a result of one-time share-based compensation costs of RMB95.3 million (US$14.9 million) under the Amended and Restated 2015 share incentive plan, which was not exercisable until the IPO completion date, net income attributable to OneSmart's shareholders decreased by 52.1% year-over-year to RMB58.4 million (US$9.1 million) from RMB122.0 million in the same period of fiscal year 2017.
  • Non-GAAP net income attributable to OneSmart's shareholders increased by 26.7% year-over-year to RMB168.5 million (US$26.3 million) from RMB133.1 million in the same period of fiscal year 2017.
  • Monthly average student enrollments[1] increased by 44.7% year-over-year to 124,892, of which monthly average student enrollments from OneSmart VIP and HappyMath increased by 30.0% and 75.1%, respectively

Highlights for the Nine Months Ended May 31, 2018

  • Total net revenues increased by 35.8% year-over-year to RMB1,929.1 million (US$301.0 million).
  • Net revenues from premium tutoring services (OneSmart VIP Programs) increased by 28.8% year-over-year to RMB1,639.2 million (US$255.7 million).
  • Net revenues from HappyMath increased by 72.1% year-over-year to RMB242.0 million (US$37.8 million).
  • New student enrollments of newly acquired FasTrack English increased by 110.0% from January to May 2018.
  • As a result of one-time share-based compensation costs of RMB95.3 million (US$14.9 million) under the Amended and Restated 2015 share incentive plan, which was not exercisable until the IPO completion date, net income attributable to OneSmart's shareholders slightly increased by 0.1% year-over-year to RMB163.3 million (US$25.5 million) from RMB163.2 million in the same period of fiscal year 2017.
  • Non-GAAP net income attributable to OneSmart's shareholders increased by 53.1% year-over-year to RMB283.1 million (US$44.2 million) from RMB184.9 million in the same period of fiscal year 2017.
  • Number of study centers increased to 302 as of May 31, 2018, which represents a total classroom capacity increase of 31.9% year-over-year, of which 220 were OneSmart VIP study centers, 60 were HappyMath study centers and 22 were FasTrack English study centers.

Key Financial Results
(In thousands/RMB)



3Q FY2018


3Q FY2017


 % of 
change 

Net revenues


824,488


599,194


37.6%

Operating income 


56,698


148,905


-61.9%

Non-GAAP operating income


166,840


160,001


4.3%

Net income attributable to OneSmart


58,376


121,961


-52.1%

Non-GAAP net income attributable to OneSmart


168,518


133,057


26.7%







9 Months
FY2018


9 Months
FY2017


 % of
change 

Net revenues


1,929,133


1,420,660


35.8%

Operating income


118,411


196,003


-39.6%

Non-GAAP operating income


238,176


217,716


9.4%

Net income attributable to OneSmart


163,339


163,154


0.1%

Non-GAAP net income attributable to OneSmart


283,104


184,867


53.1%

Mr. Steve Xi Zhang, Chairman and Chief Executive Officer of OneSmart, commented, "We are pleased to report another strong quarter of financial and operational results, which further strengthened our No. 1 position in China's premium K-12 after-school education market. We are well-positioned to benefit from the rapid growing of the premium market and to further consolidate the fragmented market through both organic growth and acquisitions.

As the largest premium K-12 after-school education service provider in China, we have accumulated delicate operation management experiences and are ready to leverage and monetize our operation expertise through effectively improving the education quality and operational performance of acquired business. After our recent acquisition of FasTrack English in January 2018, we introduced our "Standard Operation Perfection System" ("SOPS") and significantly enhanced the growth of the business. We are closely monitoring and will take advantage of other acquisition opportunities to accelerate the growth of our business.

The following are key highlights of our business during the third fiscal quarter of 2018:

OneSmart VIP (exam preparation services for students from 3rd grade to 12th grade)

  • Despite we opened 15 new OneSmart VIP learning centers in Shanghai during the past 12 months, OneSmart VIP in Shanghai continued to achieve a healthy EBIT margin of above 40% during the third fiscal quarter of 2018;
  • In the meantime, we experienced extremely strong growth in markets outside Shanghai. Monthly average student enrollments increased by over 50% in the following 14 cities, most of which we entered during the past two years: Chengdu, Xiamen, Fuzhou, Kunmning, Xi'an, Zhengzhou, Chongqing, Tianjin, Shenyang, Shijiazhuang, Yancheng, Zhenjiang, Dongguan, and Taizhou;
  • We opened 19 new OneSmart VIP learning centers during the third fiscal quarter of 2018;
  • Revenues from 1-on-3 programs increased by 62.6% year-over-year;
  • To provide premium families one-stop shopping opportunities and further accelerate the growth, we extended OneSmart VIP business into overseas language training, overseas study consultation, and study camp programs.

HappyMath (kids mathematics business for children aged 3 to 8 years old)

  • We continued to accelerate our growth in HappyMath. Revenues increased by 76.0% year-over-year to RMB90.6 million (US$14.1 million) from RMB51.5 million in the same quarter of last year, with monthly average student enrollments increased by 75.1% year-over-year to 21,178 from 12,094 in the same quarter of last year.
  • Revenue in mature market such as Shanghai increased by 59.4% year-over-year.
  • Strong revenue and student enrollment growth momentum in every city that HappyMath enters into. Revenues in Shenzhen and Guangzhou increased by more than 50% year-over-year; revenues in Chengdu, Xiamen, Nanjing and Changsha all achieved more than 100% growth year-over-year; while revenues in Beijing and Suzhou increased by 264.5% and 384.9% year-over-year, respectively.
  • Successfully launched three new subjects into the HappyMath program: Chinese, science, and computer programing since second fiscal quarter of 2018. More than 4,200 students were enrolled for the Chinese subject during the third fiscal quarter of 2018. Average subjects taken by HappyMath student were 1.22 subjects in May 2018.

FasTrack English (kids English business for children aged 3 to 8 years old)

  • With our "Standard Operation Perfection System" ("SOPS"), we successfully accelerated the growth of newly acquired FasTrack English business. We re-positioned it as premium kids English brand with a focus on STEM English, successfully opened 8 new learning centers and managed to expand the operation into Shenzhen;
  • New student enrollments increased by 138.0% year-over-year during the third fiscal quarter of 2018 vs approximately 30.0% historical growth before acquisition;
  • The above demonstrated our strong execution capabilities to continuously integrate and manage our growth from acquired business. We will engage in more acquisitions as one major approach to further consolidate the fragmented market and accelerate our top-line growth."

Mr. Dong Li, OneSmart's Chief Financial Officer added, "We will also heavily invest in online business through incubation which will position us well in the long term. For example, Yimi Online Tutoring, a leading online K-12 tutoring company, which we incubated and took a significant strategic stake, achieved accelerated growth since its inception. For the first six-month ended June 30, 2018, gross billings and revenues increased by 523.6% and 338.6% year-over-year, respectively. Student enrollments in June 2018 increased by 469.8% year-over-year.

Going forward, we will further speed up our top-line growth by accelerating expansion of new learning centers, devoting more resources to invest in research & development, and continuously incubating new business both online and offline. We are confident that we have laid down the right expansion strategies to drive additional revenue and profitability growth and will put a balance between expansion and operational efficiency to deliver more sustainable value for our shareholders in the long term."

Financial Results For the Third Fiscal Quarter Ended May 31, 2018

Net Revenues

Net revenues were RMB824.5 million (US$128.6 million), an increase of 37.6% from RMB599.2 million during the same period last year. The increase was mainly driven by an increase in the monthly average student enrollments in the Company's OneSmart VIP business as well as HappyMath and FasTrack English, compared with those in the same period of last year. Monthly average student enrollments increased by 44.7% year-over-year to 124,892.

Operating Costs and Expenses

Operating costs and expenses for the quarter were RMB767.8 million (US$119.8 million), an increase of 70.5% from RMB450.3 million during the same period last year. Non-GAAP operating costs and expenses, which excludes share-based compensation expenses, were RMB657.6 million (US$102.6 million), an increase of 49.7% from RMB439.2 million during the same period last year.

  • Cost of revenues increased by 38.7% year-over-year to RMB368.1 million (US$57.4 million), which was primarily due to the 106 newly opened learning centers.
  • Selling and marketing expenses increased by 96.3% year-over-year to RMB160.8 million (US$25.1 million). Non-GAAP selling and marketing expenses, which excludes share-based compensation expenses, were RMB159.4 million (US$24.9 million), an increase of 94.9% from RMB81.8 million during the same period last year. The increase was primarily in support of the newly opened learning centers, new programs and service offerings, including, among others, FasTrack English, OneSmart Class, and OneSmart Online compared to the same period last year. As a result, we incurred more compensation costs for sales and marketing staff, marketing and promotion activities and higher rental expenses.
  • General and administrative expenses increased by 132.0% year-over-year to RMB238.8 million (US$37.3 million). Non-GAAP general and administrative expenses, which excludes share-based compensation, were RMB130.1 million (US$20.3 million), an increase of 41.4% from RMB92.0 million during the same period last year. The increase was primarily due to more learning centers opened, enlarged investment in research & development in new product and services, education technology and curriculum materials. Accordingly, compensation for general and administrative personnel, rental expenses, and service expenses increased.

Total share-based compensation expenses, which were allocated to related operating expenses, increased by 892.6% year-over-year to RMB110.1 million (US$17.2 million) in the third fiscal quarter of 2018. The increase was mainly due to one-time share-based compensation costs of RMB95.3 million (US$14.9 million) under the amended and restated 2015 share incentive plan, which was not exercisable until the IPO completion date.

Operating Income and Operating Margin

Operating income for the quarter was RMB56.7 million (US$8.8 million), a 61.9% decrease from RMB148.9 million in the same period of the prior fiscal year. Non-GAAP Operating Income, which excludes shared-based compensation, was RMB166.8 million (US$26.0 million), a 4.3% increase from RMB160.0 million during the same period last year.

Operating margin for the quarter was 6.9%, compared to 24.9% in the same period of the prior fiscal year. Non-GAAP operating margin was 20.2%, compared with 26.7% during the same period last year.

Other income was RMB30.3 million (US$4.7 million), compared with RMB3.8 million during the same period last year. The increase was mainly due to realized gains from short-term investments and government subsidies.

Income tax expense was RMB32.0 million (US$5.0 million), compared with RMB31.6 million during the same period last year.

Net Income Attributable to OneSmart

Net income attributable to OneSmart was RMB58.4 million (US$9.1 million), compared with RMB122.0 million during the same period last year. Basic and diluted net income attributable to OneSmart per ADS was RMB0.3800 (US$0.0593) and RMB0.3640 (US$0.0568), respectively.

Non-GAAP net income attributable to OneSmart was RMB168.5 million (US$26.3 million), compared with RMB133.1 million during the same period last year. Non-GAAP basic and diluted net income attributable to OneSmart per ADS was RMB1.2881 (US$0.2010) and RMB1.2428 (US$0.1939), respectively.

Capital Expenditures

Capital expenditures for the third quarter of fiscal year 2018 were RMB62.7 million (US$9.8 million), an increase of RMB25.0 million from RMB37.7 million in the third quarter of fiscal year 2017. The increase was mainly due to leasehold improvements as a result of the opening of new learning centers and renovations of existing learning centers.

Financial Position

As of May 31, 2018, the Company had cash and cash equivalents of RMB1,513.3 million (US$236.1 million) and short-term investments of RMB841.1 million (US$131.2 million). The Company completed its initial public offering of 16,300,000 American depositary shares traded on the New York Stock Exchange on March 28, 2018. Proceeds from the offering were US$179.3 million before deducting underwriting discounts, commissions and offering expenses.

Cash Flow

Net cash provided by operating activities in the third quarter was RMB323.1 million (US$50.4 million).

Net cash used by investing activities in the third quarter was RMB425.8 million (US$66.4 million).

Net cash provided in financing activities in the third quarter was RMB1,038.7 million (US$162.0 million).

Financial Results for the Nine Months Ended May 31, 2018

For the first nine months of fiscal year 2018, OneSmart reported net revenues of RMB1,929.1 million (US$301.0 million), representing a 35.8% increase year-over-year.

Monthly average student enrollments in the first nine months of fiscal year 2018 increased by 46.9% to approximately 108,858.

Operating costs and expenses for the first nine months of fiscal year 2018 were RMB1,810.7 million (US$282.5 million), a 47.9% increase year-over-year. Non-GAAP operating costs and expenses for the first nine months of fiscal year 2018, which excluded share-based compensation expenses, were RMB1,691.0 million (US$263.8 million), representing a 40.6% increase year-over-year.

  • Cost of revenues increased by 38.2% year-over-year to RMB951.8 million (US$148.5 million).
  • Selling and marketing expenses increased by 49.8% year-over-year to RMB396.8 million (US$61.9 million). Non-GAAP selling and marketing expenses, which excludes share-based compensation expenses, were RMB395.0 million (US$61.6 million), an increase of 49.4% from RMB264.3 million during the same period last year. The increase was primarily in support of the newly opened learning centers, new programs and service offerings, including, among others, FasTrack English, OneSmart Class, and OneSmart Online compared to the same period last year. As a result, we incurred more compensation costs for sales and marketing staff, marketing and promotion activities and higher rental expenses.
  • General and administrative expenses increased by 70.4% year-over-year to RMB462.1 million (US$72.1 million). Non-GAAP general and administrative expenses, which excludes share-based compensation, were RMB344.1 million (US$53.7 million), an increase of 37.7% from RMB250.0 million during the same period last year. The increase was primarily due to more learning centers opened, enlarged investment in research & development in new product and services, education technology and curriculum materials. Accordingly, compensation for general and administrative personnel, rental expenses, and service expenses increased.

Income from operations for the first nine months of fiscal year 2018 was RMB118.4 million, representing a 39.6% decrease year-over-year. Non-GAAP income from operations for the first nine months of fiscal year 2018 was RMB238.2 million, representing a 9.4% increase year-over-year.

Operating margin for the first nine months of fiscal year 2018 was 6.1%, compared to 13.8% for the same period of the prior fiscal year. Non-GAAP operating margin, which excludes share-based compensation expenses for the first nine months of fiscal year 2018, was 12.3%, compared to 15.3% for the same period of the prior fiscal year.

Net income attributable to OneSmart for the first nine months of fiscal year 2018 was RMB163.3 million (US$25.5 million), representing a 0.1% increase year-over-year.

Non-GAAP net income attributable to OneSmart for the first nine months of fiscal year 2018 was RMB283.1 million (US$44.2 million), representing a 53.1% increase year-over-year.

Outlook for Fiscal Year 2018

For fiscal year 2018, OneSmart remains the guidance and expects net revenues to be between RMB2,750 million (US$429.0 million) and RMB2,880 million (US$449.3 million), an increase of 33.6% to 40.0% from fiscal year 2017. This forecast reflects OneSmart's current and preliminary view, which is subject to changes and uncertainty.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at the noon buying rate on May 31, 2018, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System, which was RMB6.4096 to US$1.00.

Conference Call Information

OneSmart's management will hold an earnings conference call at 8:00 AM on July 31, 2018, U.S. Eastern Time (8:00 PM on the same day Beijing/Hong Kong Time).

Dial-in numbers for the live conference call are as follows:

International

1-412-902-4272

China

4001-201203

US

1-888-346-8982

Hong Kong

800-905945

A telephone replay of the call will be available after the conclusion of the conference call through August 7, 2018.

Dial-in numbers for the replay are as follows:

International Dial-in

1-412-317-0088

U.S. Toll Free

1-877-344-7529

Passcode:

10121923

Additionally, a live and archived webcast of this conference call will be available at http://www.onesmart.investorroom.com/.

About OneSmart

Founded in 2008 and headquartered in Shanghai, OneSmart International Education Group Limited is the largest premium K-12 after-school education service provider in China in terms of revenue in 2016 and 2017, according to Frost & Sullivan. Since commencement of our business, our vision is to build the most trusted "Third Classroom" outside of home and school and our mission is to bring out the utmost learning power in each student by cultivating his or her study motivation, capability and perseverance, and enable our students to pursue their life-long success. Our company culture is centered on the core values of customer focus, execution, innovation and teamwork.

OneSmart has built a comprehensive K-12 after-school education platform that encompasses its acclaimed premium tutoring services under "OneSmart VIP" programs, which offer premium tutoring services in one-on-one and one-on-three teacher-to-student settings with a full spectrum of course offerings covering core academic subjects taught in primary and secondary schools in China at levels between the third and twelfth grades; premium young children education services under "HappyMath" and "FasTrack English" programs which offers courses to children aged 3 to 8 years old and other programs.

In 2017, OneSmart had the largest market share of 2.4% in China's premium K-12 after-school education market, and "HappyMath" was the largest after-school mathematics education service provider for students in kindergarten to the third grade in Shanghai, as measured by revenues, according to Frost & Sullivan. As of May 31, 2018, OneSmart operated a nationwide network of 302 study centers across 43 cities in China.

For more information on OneSmart, please visit http://www.onesmart.investorroom.com.

Safe Harbor Statement

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and 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," "confident" and similar statements. OneSmart 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 report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about OneSmart's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: OneSmart's goals and strategies; its future business development, financial condition and results of operations; its ability to continue to penetrate premium K-12 after-school education services market; diversify and enrich our education offerings; enhance the development and management of our teacher team and teaching materials; competition in our industry in China; its ability to maintain and expand online education presence; relevant government policies and regulations relating to the corporate structure, business and industry; and its ability to protect our students' information and adequately address privacy concerns. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and OneSmart does not undertake any obligation to update such information, except as required under applicable law.

Non-GAAP Financial Measures

In evaluating its business, OneSmart considers and uses the following measures defined as non-GAAP financial measures by the SEC as supplemental metrics to review and assess its operating performance: non-GAAP operating costs and expenses, non-GAAP selling and marketing expenses, non-GAAP general and administrative expenses, non-GAAP operating income, non-GAAP net income attributable to OneSmart. To present each of these non-GAAP measures, the Company excludes share-based compensation expenses. 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. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release.

OneSmart believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based compensation expenses that may not be indicative of its operating performance from a cash perspective. OneSmart 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 OneSmart's historical performance and liquidity. OneSmart computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. OneSmart 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 measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

For more information, please contact:

OneSmart
Ms. Rebecca Shen
+86-21-5255-9339 ext. 8139
ir@onesmart.org

Christensen

In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com

In the US

Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com

[1] "Enrollments", for the purpose of calculation, are to a student who takes at least one class for one subject in a certain period is treated as one enrollment in the same period. Under this methodology, a student taking at least one class for each of two subjects in a certain period is treated as two enrollments in the same period. The number of students enrolled in our invested schools and OneSmart Online is not included for this purpose.

ONESMART INTERNATIONAL EDUCATION GROUP LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)



As of 


As of 


As of 



August 31,


May 31,


May 31,



2017


2018


2018



RMB


RMB


US$



(Audited)


(Unaudited)


(Unaudited)

ASSETS







Current assets:







Cash and cash equivalents


981,772


1,513,272


236,095

Short-term investments


413,883


841,053


131,218

Prepayments and other current assets


126,836


224,679


35,052

Amounts due from related parties


87,254


-


-

Total current assets


1,609,745


2,579,004


402,365








Non-current assets:







Property and equipment, net


272,226


416,691


65,010

Intangible assets, net


9,729


106,995


16,693

Long-term investments


267,051


359,618


56,106

Goodwill


58,676


367,039


57,264

Deferred tax assets


29,096


18,638


2,908

Amounts due from related parties


16,500


16,500


2,574

Other non-current assets


54,587


137,054


21,382

Total non-current assets


707,865


1,422,535


221,937








Total assets


2,317,610


4,001,539


624,302








LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' (DEFICIT)/EQUITY





Current liabilities:







Short-term loan (including short-term loan of the consolidated VIEs
without recourse to the Group of RMB5,000 and nil as of August 31, 2017
and May 31, 2018, respectively)


5,000


-


-

Long-term loan , current portion (including long-term loan, current
portion of the consolidated VIEs without recourse to the Group of nil and
RMB45,000 (US$7,021) as of August 31, 2017 and May 31, 2018, respectively)


-


45,000


7,021

Accrued expenses and other current liabilities (including accrued expenses
and other current liabilities of the consolidated VIEs without recourse to
the Group of RMB414,371 and RMB618,760 (US$96,536) as of August 31,
2017 and May 31, 2018, respectively)


414,371


618,760


96,536

Income taxes payable (including income taxes payable of the consolidated
VIEs without recourse to the Group of RMB37,563 and RMB33,673
(US$5,254) as of August 31, 2017 and May 31, 2018, respectively)


37,563


33,673


5,254

Prepayments from customers (including prepayments from customers of the consolidated
VIEs without recourse to the Group of RMB1,531,424 and
RMB1,966,352 (US$306,782) as of August 31, 2017 and May 31, 2018,
respectively)


1,531,424


1,966,352


306,782

Total current liabilities


1,988,358


2,663,785


415,593








Non-current liabilities:







Long-term loan (including long-term loan of the consolidated VIEs
without recourse to the Group of nil and RMB405,000 (US$63,186) as of
August 31, 2017 and May 31, 2018, respectively)


-


405,000


63,186

Unrecognized tax benefit (including liability for unrecognized tax benefit
of the consolidated VIEs without  recourse to the Group of RMB13,012 and
RMB19,256 (US$3,004) as of August 31, 2017 and May 31, 2018, respectively)


13,012


19,256


3,004

Total non-current liabilities


13,012


424,256


66,190








Total liabilities 


2,001,370


3,088,041


481,783








Commitments and contingencies














Mezzanine equity:







Series A redeemable convertible preferred shares (US$0.000001 par value;
1,890,686,563 and nil shares authorized as of August 31, 2017 and May 31,
2018, respectively; 1,890,686,563 and nil issued and outstanding as of 
August 31, 2017 and  May 31, 2018, respectively)


1,713,344


-


-

Series A-1 redeemable convertible preferred shares (US$0.000001 par
value; 35,757,200 and nil shares authorized as of August 31, 2017 and May
31, 2018, respectively; 35,757,200 and nil issued and outstanding as of
August 31, 2017 and May 31, 2018, respectively)


36,556


-


-








Total mezzanine equity 


1,749,900


-


-








Shareholders' (deficit)/equity:







Class A ordinary shares (US$0.000001 par value; 44,134,792,349 shares
authorized; 94,897,359 and 4,220,365,545 issued and outstanding as of
August 31, 2017 and May 31, 2018, respectively)


1


26


4

Class B ordinary shares (US$0.000001 par value; 2,439,484,566 and
2,296,842,016 shares authorized as of August 31, 2017 and May 31, 2018,
respectively; 2,439,484,566 and 2,296,842,016 issued and outstanding as of
August 31, 2017 and May 31, 2018, respectively)


16


16


2

Additional paid-in capital


82,139


5,405,038


843,272

Statutory reserves


3,739


3,886


606

Accumulated deficit


(1,567,136)


(4,618,576)


(720,572)

Accumulated other comprehensive income 


19,123


48,448


7,559

Total OneSmart International Education Group Limited shareholders'
(deficit)/equity


(1,462,118)


838,838


130,871

Non-controlling interests


28,458


74,660


11,648

Total shareholders' (deficit)/equity 


(1,433,660)


913,498


142,519








Total liabilities, mezzanine equity, non-controlling interests and
shareholders' (deficit)/equity


2,317,610


4,001,539


624,302

 

ONESMART INTERNATIONAL EDUCATION GROUP LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Amounts in thousands)
















For the three months ended
May 31,


For the nine months ended
May 31,



2017


2018


2018


2017


2018


2018



RMB


RMB


US$


RMB


RMB


US$



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)














Net revenues


599,194


824,488


128,633


1,420,660


1,929,133


300,976

Cost of revenues


(265,423)


(368,136)


(57,435)


(688,637)


(951,807)


(148,497)

Gross profit


333,771


456,352


71,198


732,023


977,326


152,479














Operating expenses:













Selling and marketing (Note 1)


(81,953)


(160,847)


(25,095)


(264,886)


(396,801)


(61,907)

General and administrative (Note 1)


(102,913)


(238,807)


(37,258)


(271,134)


(462,114)


(72,097)

Total operating expenses


(184,866)


(399,654)


(62,353)


(536,020)


(858,915)


(134,004)

Operating income


148,905


56,698


8,845


196,003


118,411


18,475














Interest income


1,206


5,406


843


11,688


21,579


3,367

Interest expense


(64)


(8,918)


(1,391)


(86)


(13,609)


(2,123)

Other income


3,789


30,289


4,726


9,501


73,850


11,522

Other expenses


-


-


-


-


(3,083)


(481)

Foreign exchange gain


898


82


13


1,268


207


32

Income before income tax and share of net
(loss)/income from equity
investees


154,734


83,557


13,036


218,374


197,355


30,792














Income tax expense


(31,591)


(32,016)


(4,995)


(62,442)


(64,606)


(10,080)

Income before share of net (loss)/income from equity investees


123,143


51,541


8,041


155,932


132,749


20,712














Share of net (loss)/income from equity investees 


(1,133)


3,939


615


(1,455)


6,967


1,087














Net income


122,010


55,480


8,656


154,477


139,716


21,799














Add: Net (income)/loss attributable to non-controlling interests


(49)


2,896


452


8,677


23,623


3,686














Net income attributable to OneSmart's shareholders


121,961


58,376


9,108


163,154


163,339


25,485














Note 1: Share-based compensation expenses are included in the operating costs and expenses as follows:











For the three months ended
May 31,


For the nine months ended
May 31,



2017


2018


2018


2017


2018


2018



RMB


RMB


US$


RMB


RMB


US$



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)














Selling and marketing


184


1,469


229


552


1,797


280

General and administrative


10,912


108,673


16,955


21,161


117,968


18,405

Total


11,096


110,142


17,184


21,713


119,765


18,685



























ONESMART INTERNATIONAL EDUCATION GROUP LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Amounts in thousands)



For the three months ended
May 31,


For the nine months ended
May 31,



2017


2018


2018


2017


2018


2018



RMB


RMB


US$


RMB


RMB


US$



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)














Net income


122,010


55,480


8,656


154,477


139,716


21,799

Other comprehensive income:













Unrealized gain on available-for-sale investments, net of tax

7,424


11,593


1,809


17,599


23,808


3,714

Foreign currency translation adjustment


-


19,933


3,110


-


5,517


861














Comprehensive income


129,434


87,006


13,575


172,076


169,041


26,374

Add: Comprehensive (income)/loss attributable to
non-controlling interests


(49)


2,896


452


8,677


23,623


3,686














Comprehensive income attributable to OneSmart's
shareholders


129,385


89,902


14,027


180,753


192,664


30,060














 

ONESMART INTERNATIONAL EDUCATION GROUP LIMITED

Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures

(Amounts in thousands)
















For the three months ended
May 31,


For the nine months ended
May 31,

2017


2018


2018


2017


2018


2018



RMB


RMB


US$


RMB


RMB


US$



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)














Selling and marketing expenses


81,953


160,847


25,095


264,886


396,801


61,907

Share-based compensation expense in selling and
marketing expenses


184


1,469


229


552


1,797


280

Non-GAAP selling and marketing expenses


81,769


159,378


24,866


264,334


395,004


61,627

General and administrative expenses


102,913


238,807


37,258


271,134


462,114


72,097

Share-based compensation expense in general
and administrative expenses


10,912


108,673


16,955


21,161


117,968


18,405

Non-GAAP general and administrative expenses


92,001


130,134


20,303


249,973


344,146


53,692














Operating costs and expenses


450,289


767,790


119,788


1,224,657


1,810,722


282,501

Share-based compensation expense in operating
costs and expenses


11,096


110,142


17,184


21,713


119,765


18,685

Non-GAAP operating costs and expenses


439,193


657,648


102,604


1,202,944


1,690,957


263,816














Operating income


148,905


56,698


8,845


196,003


118,411


18,475

Share-based compensation expenses


11,096


110,142


17,184


21,713


119,765


18,685

Non-GAAP operating income 


160,001


166,840


26,029


217,716


238,176


37,160














Net income attributable to OneSmart's shareholders


121,961


58,376


9,108


163,154


163,339


25,485

Share-based compensation expenses


11,096


110,142


17,184


21,713


119,765


18,685

Non-GAAP net income attributable to OneSmart


133,057


168,518


26,292


184,867


283,104


44,170

Cision View original content:http://www.prnewswire.com/news-releases/onesmart-international-education-group-limited-announces-unaudited-financial-results-for-the-third-fiscal-quarter-ended-may-31-2018-300688971.html

SOURCE OneSmart International Education Group Limited

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