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OneSmart International Education Group Limited Announces Unaudited Financial Results for the Fourth Fiscal Quarter and Fiscal Year Ended August 31, 2019

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Quarterly results:
New Students Increased by 60.2% Year-over-Year
Average Monthly Enrollments1 Increased by 29.5% Year-over-Year
Net Revenues Increased by 40.4% Year-over-Year
Consumed Class Units Increased by 45.9% Year-over-Year

Full year results:
New Students Increased by 41.3% Year-over-Year
Average Monthly Enrollments1 Increased by 41.2% Year-over-Year
Net Revenues Increased by 39.5% Year-over-Year
Consumed Class Units Increased by 43.3% Year-over-Year

SHANGHAI, Nov. 13, 2019 /PRNewswire/ -- OneSmart International Education Group Limited (NYSE: ONE) ("OneSmart" or the "Company"), a leading premium K-12 after-school education service provider in China, today announced its unaudited financial results for the fourth fiscal quarter and fiscal year ended August 31, 2019.

Highlights for the Fourth Fiscal Quarter Ended August 31, 2019

  • Net revenues increased by 40.4% year-over-year to RMB 1,311.1 million (US$183.3 million)
  • Net revenues from OneSmart VIP business increased by 34.8% year-over-year to RMB1,047.3 million (US$146.4million)
  • Net revenues from HappyMath increased by 38.0% year-over-year to RMB161.8 million (US$22.6 million)
  • Net revenues from FasTrack English increased by 109.9% year-over-year to RMB75.5 million (US$10.6 million)
  • Monthly average student enrollments[1] increased by 29.5% year-over-year to 158,649, of which monthly average student enrollments for OneSmart VIP business, HappyMath and FasTrack English increased by 14.1% , 17.6% and 58.7% from the same period of fiscal year 2018, respectively
  • Number of learning centers increased to 432 as of August 31, 2019, of which 275 were OneSmart VIP learning centers, 95 were HappyMath learning centers, 51 were FasTrack English learning centers and 11 were Tianjin Huaying learning centers

Highlights for the Fiscal Year Ended August 31, 2019

  • Net revenues increased by 39.5% year-over-year to RMB3,993.9 million (US$558.2 million)
  • Net revenues from OneSmart VIP business increased by 31.1% year-over-year to RMB3,167.5 million (US$442.7 million)
  • Net revenues from HappyMath increased by 43.2% year-over-year to RMB514.2 million (US$71.9 million)
  • Net revenues from FasTrack English increased by 163.7% year-over-year to RMB192.4 million (US$26.9 million)

[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. Since we constantly have students enroll, renew or complete their classes in their own individualized schedules. 

Key Financial Results
(In thousands/RMB)



4Q
 FY2019


4Q 
FY2018


 % of 
change 

Net revenues


1,311,125


933,559


40.4%

Gross profit


643,992


472,276


36.4%

Operating income


76,359


111,006


-31.2%

Non-GAAP operating income


101,961


137,727


-26.0%

Net income attributable to
OneSmart


47,959


82,597


-41.9%

Non-GAAP net income
attributable to OneSmart


73,561


109,318


-32.7%

 



 FY2019


 FY2018


 % of 
change 

Net revenues


3,993,873


2,862,692


39.5%

Gross profit


1,921,806


1,449,601


32.6%

Operating income


228,539


229,417


-0.4%

Non-GAAP operating income


300,071


375,903


-20.2%

Net income attributable to
OneSmart


206,073


245,936


-16.2%

Non-GAAP net income
attributable to OneSmart


277,605


392,422


-29.3%

Mr. Steve Zhang, Chairman and Chief Executive Officer of OneSmart, commented, "We are pleased to conclude fiscal year 2019 with robust topline growth and solid financial and operational results, which demonstrated our strong execution despite very challenging regulatory environment. We further strengthened our position in the premium K-12 after school training market. Strong market demand, our premium brand and services quality, and outstanding operational strength helped us continue to gain market shares. As we move forward to the new fiscal year starting September 2019, we will continue to roll out new premium services to improve customer satisfaction, refine our incentive scheme to better motivate our staff, and optimize our operations to ensure profitable growth.

We are in the midst of a fast-growing and constantly changing industry with both opportunities and challenges lying ahead of us. Going forward, we will continue to invest in OneSmart Online and further enhance our premium services by leveraging online-merge-offline ("OMO") technologies. Fully integrated with our offline services, the recently launched OneSmart Online platform has delivered satisfactory initial operating results. Our new technologies have greatly improved students' learning interest and customer satisfaction. Our goal is to establish OneSmart Online as the largest online based premium education services platform to better serve the high-end demand through both online and offline channels. We believe that our online strategies will help us expand into lower tier cities in the long run."

The following are key highlights during the fourth fiscal quarter of 2019 and our business development for the fiscal year 2020:

OneSmart VIP business (Premium K-12 1-on-1 training services)

  • Despite the one-off regulatory impact, mainly some learning center relocation for compliance purpose especially in select cities outside Shanghai, we continued to observe that average monthly enrollment growth exceeded 50% in the following major cities including Suzhou, Chengdu, Changsha, Zhengzhou, Chongqing, Taizhou, Wenzhou, Zhuhai, Ningbo, etc. The one-off regulatory impact already started to normalize;
  • Net revenues outside Shanghai grew by 53.0% year-over-year and its share of total revenue increased to 45%;
  • Our newly launched VIP 1-on-1 training services, which is a premium version of our existing VIP programs and supported by OMO technologies, precisely target at super premium market, further strengthen our premium brand image and has received positive feedback from the customers;
  • Our latest UPC 12.0 (Unique Personalized Coach, our proprietary teaching and service system) further improves our existing VIP services by upgrading curriculum database and better analyzing teaching and study effectiveness;
  • Net revenues of International Education program (premium 1-on-1 training services for students attending international schools) grew by 73% year-over-year while average monthly enrollments grew by 189% compared with the same period last year; and
  • Operating margin excluding HQ's G&A expenses for the OneSmart VIP business reached 27.9% by Q4, compared with 27.7% for the same period last year.

HappyMath (Premium young children math education programs)

  • To adapt to the regulatory changes in the area of school admission practices particularly in Shanghai, we have updated our programs to address a broader market demand for young children math education, and increased presence in cities outside Shanghai;
  • Net revenues in cities outside Shanghai grew by 80.1% and our geographic focus for new capacity will be in cities including Hangzhou, Nanjing, Suzhou, Chengdu, Wuhan, etc. during the new fiscal year;
  • Integrating IDT 8.0 (Interest Driven Teaching, our latest proprietary HappyMath education system) with cutting-edge OMO technologies, artificial intelligence tools and smart devices, we successfully enhance customers' satisfaction through more engaged learning experience; and
  • We also introduced a new HappyMath VIP Program, which is built on our investments in R&D and OMO technologies, and aims to advance math scores while teaching English at the same time to further improve students' learning outcome.

FasTrack English (Premium young children English education programs)

  • The business continues to record rapid growth driven by strong market demand and we will continue to focus on cities in Yangtze River Delta to strengthen our advantage position;
  • Leveraging OMO technologies, we launched live broadcasting program during the workday to help the students prepare and review their courses;
  • The PIER 5.0 (Positive Innovative English Reinforcement, our latest proprietary innovative English teaching methodology) has integrated cutting-edge technologies of AI and 3D foundation to enhance students engagement and learning outcome; and
  • Operating margin excluding HQ's G&A expenses has turned positive during the quarter despite increased R&D investments and rapid capacity expansion and is expected to further improve in the new fiscal year.

Mr. Greg Zuo, OneSmart's Director, Chief Financial Officer and Chief Strategic Officer added, "We have once again proven our profitable and replicable business model as we delivered another quarter's strong topline and profitable growth. Our advantages in providing premium education services, lean cost structure and standardized system help drive outstanding economics in our core business, which created substantial entry barriers.

While recording another year of approximately 40% topline growth, we also invested in our future. We have substantially upgraded our education programs with cutting-edge technologies and launched OneSmart Online to better provide premium services to our customers

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