UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of November 2023

 

Commission file number: 001-38423

 

 

 

SUNLANDS TECHNOLOGY GROUP

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Building 6, Chaolai Science Park, No. 36

Chuangyuan Road, Chaoyang District

Beijing, 100012, the People’s Republic of China

+86-10-52413738


(Address of Principal Executive Offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.    Form 20-F  ☒       Form 40-F  ☐

 

 

  

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
     
99.1   Press Release

 

 

 

Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    Sunlands Technology Group
     
     
Date: November 22, 2023   By: /s/ Tongbo Liu
        Name:   Tongbo Liu
        Title: Chief Executive Officer

 

 

 

Exhibit 99.1

 

 

 

 

 

Sunlands Technology Group Announces Unaudited

 

Third Quarter 2023 Financial Results

 

BEIJING, November 22, 2023 -- Sunlands Technology Group (NYSE: STG) (“Sunlands” or the “Company”), a leader in China’s online post-secondary and professional education, today announced its unaudited financial results for the third quarter ended September 30, 2023.

 

Third Quarter 2023 Financial and Operational Snapshots

 

·Net revenues were RMB524.6 million (US$71.9 million), compared to RMB576.2 million in the third quarter of 2022.

 

·Gross billings (non-GAAP) were RMB390.0 million (US$53.5 million), compared to RMB365.5 million in the third quarter of 2022.

 

·Gross profit was RMB460.5 million (US$63.1 million), compared to RMB491.3 million in the third quarter of 2022.

 

·Net income was RMB131.6 million (US$18.0 million), compared to RMB168.1 million in the third quarter of 2022.

 

·Net income margin1 was 25.1% in the third quarter of 2023, compared to 29.2% in the third quarter of 2022.

 

·New student enrollments2 were 154,299, compared to 134,987 in the third quarter of 2022.

 

·As of September 30, 2023, the Company’s deferred revenue balance was RMB1,277.0 million (US$175.0 million), compared to RMB1,690.9 million as of December 31, 2022.

 

 

 

 

1 Net income margin is defined as net income as a percentage of net revenues.

 

2 New student enrollments for a given period refers to the total number of orders placed by students that newly enroll in at least one course during that period, including those students that enroll and then terminate their enrollment with us, excluding orders of our low-price courses. (In September 2019, we introduced low-price courses, including “mini courses” and “RMB1 courses,” to strengthen our competitiveness and improve customer experience. We offer such low-price courses mainly in the formats of recorded videos or short live streaming.)

 

1 

 

“In Q3, our business has consistently adjusted to the evolving economic landscape and has strategically progressed despite the challenges. Our overarching objective of propelling the Group toward sustained, high-level profitability has yielded positive results, as we maintained sizable net profits for ten consecutive quarters. Net income reached RMB131.6 million. Net revenues, despite a slight year-over-year decrease, exceeded the high end of our guidance range and reached RMB524.6 million.

 

We are delighted in our capability to remain profitable under challenging environment. This success is attributed to improvements in gross margins, the implementation of cost-cutting measures, and enhanced financial planning and analysis across the entire business. Our cost of revenues has achieved a year-over-year decrease of 24.5% and general and administrative expenses have achieved a year-over-year decrease of 21.0%. We firmly believe that only by adhering to a long-term perspective and ensuring the healthy growth of the enterprise can we create sustainable value for shareholders and users.” said Mr. Tongbo Liu, Chief Executive Officer of Sunlands.

 

Mr. Hangyu Li, Financial Controller of Sunlands, commented, “last quarter was another excellent quarter in operations. Our new student enrollments went up by 14.3% and gross billings increased by 6.7% year-over-year. Thanks to our strategy of balanced, sustainable growth and profitability, gross profit margin increased by 2.5 percentage points and operating expenses as a percentage of gross billings decreased by 2.1 percentage points compared to the same period last year. We achieved net income of RMB131.6 million, which is the 10th profitable quarter since the second quarter of 2021. Looking ahead, we are committed to expanding online course offerings, optimizing cost-effectiveness, and providing exceptional service to our valued students. This will help us maintain our competitive edge in the industry and continue to create value for our stakeholders.”

 

2 

 

Financial Results for the third quarter of 2023

 

Net Revenues

 

In the third quarter of 2023, net revenues decreased by 9.0% to RMB524.6 million (US$71.9 million) from RMB576.2 million in the third quarter of 2022. The decrease was mainly driven by the year-over-year decline in gross billings in the first nine months of 2023.

 

Cost of Revenues

 

Cost of revenues decreased by 24.5% to RMB64.1 million (US$8.8 million) in the third quarter of 2023 from RMB84.9 million in the third quarter of 2022. The decrease was primarily due to declined compensation expenses related to headcount reduction of our cost of revenues personnel, including teachers and mentors.

 

Gross Profit

 

Gross profit decreased by 6.3% to RMB460.5 million (US$63.1 million) in the third quarter of 2023 from RMB491.3 million in the third quarter of 2022.

 

Operating Expenses

 

In the third quarter of 2023, operating expenses were RMB338.5 million (US$46.4 million), representing a 4.1% increase from RMB325.0 million in the third quarter of 2022.

 

Sales and marketing expenses increased by 9.6% to RMB295.0 million (US$40.4 million) in the third quarter of 2023 from RMB269.1 million in the third quarter of 2022. The increase was mainly due to increased spending on branding and marketing activities.

 

General and administrative expenses decreased by 21.0% to RMB35.1 million (US$4.8 million) in the third quarter of 2023 from RMB44.4 million in the third quarter of 2022. The decrease was mainly due to (i) declined compensation expenses related to general and administrative personnel; and (ii) declined rental expenses.

 

Product development expenses decreased by 27.0% to RMB8.4 million (US$1.2 million) in the third quarter of 2023 from RMB11.5 million in the third quarter of 2022. The decrease was mainly due to declined compensation expenses related to headcount reduction of our product development personnel.

 

3 

 

Net Income

 

Net income for the third quarter of 2023 was RMB131.6 million (US$18.0 million), as compared to RMB168.1 million in the third quarter of 2022.

 

Basic and Diluted Net Income Per Share

 

Basic and diluted net income per share was RMB19.13 (US$2.62) in the third quarter of 2023.

 

Cash, Cash Equivalents, Restricted Cash and Short-term Investments

 

As of September 30, 2023, the Company had RMB751.8 million (US$103.0 million) of cash, cash equivalents and restricted cash and RMB122.3 million (US$16.8 million) of short-term investments, as compared to RMB757.4 million of cash, cash equivalents and restricted cash and RMB70.5 million of short-term investments as of December 31, 2022.

 

Deferred Revenue

 

As of September 30, 2023, the Company had a deferred revenue balance of RMB1,277.0 million (US$175.0 million), as compared to RMB1,690.9 million as of December 31, 2022.

 

Capital Expenditures

 

Capital expenditures were incurred primarily in connection with information technology (“IT”) infrastructure equipment and leasehold improvements necessary to support the Company’s operations. Capital expenditures were RMB1.4 million (US$0.2 million) in the third quarter of 2023, as compared to RMB1.3 million in the third quarter of 2022.

 

Share Repurchase

 

On December 6, 2021, the Company’s board of directors authorized a share repurchase program, under which the Company may repurchase up to US$15.0 million of Class A ordinary shares in the form of ADSs over the next 24 months. As of November 21, 2023, the Company had repurchased an aggregate of 466,021 ADSs for approximately US$2.2 million under the share repurchase program.

 

4 

 

Financial Results for the First nine Months of 2023

 

Net Revenues

 

In the first nine months of 2023, net revenues decreased by 7.3% to RMB1,617.9 million (US$221.7 million) from RMB1,744.5 million in the first nine months of 2022.

 

Cost of Revenues

 

Cost of revenues decreased by 29.7% to RMB191.8 million (US$26.3 million) in the first nine months of 2023 from RMB272.9 million in the first nine months of 2022.

 

Gross Profit

 

Gross profit decreased by 3.1% to RMB1,426.1 million (US$195.5 million) from RMB1,471.7 million in the first nine months of 2022.

 

Operating Expenses

 

In the first nine months of 2023, operating expenses were RMB970.3 million (US$133.0 million), representing a 5.1% decrease from RMB1,022.0 million in the first nine months of 2022.

 

Sales and marketing expenses decreased by 2.4% to RMB836.4 million (US$114.6 million) in the first nine months of 2023 from RMB857.0 million in the first nine months of 2022.

 

General and administrative expenses decreased by 16.8% to RMB107.8 million (US$14.8 million) in the first nine months of 2023 from RMB129.5 million in the first nine months of 2022.

 

Product development expenses decreased by 26.4% to RMB26.1 million (US$3.6 million) in the first nine months of 2023 from RMB35.5 million in the first nine months of 2022.

 

Net Income

 

Net income for the first nine months of 2023 was RMB485.6 million (US$66.6 million), compared to RMB462.1 million in the first nine months of 2022.

 

5 

 

Basic and Diluted Net Income Per Share

 

Basic and diluted net income per share was RMB70.29 (US$9.63) in the first nine months of 2023, compared to RMB68.07 in the first nine months of 2022.

 

Capital Expenditures

 

Capital expenditures were incurred primarily in connection with IT infrastructure equipment and leasehold improvements necessary to support the Company’s operations. Capital expenditures were RMB6.2 million (US$0.8 million) in the first nine months of 2023, compared to RMB2.5 million in the first nine months of 2022.

 

Outlook

 

For the fourth quarter of 2023, Sunlands currently expects net revenues to be between RMB490 million to RMB510 million, which would represent a decrease of 11.9% to 15.3% year-over-year. The above outlook is based on the current market conditions and reflects the Company’s current and preliminary estimates of market and operating conditions and customer demand, which are all subject to substantial uncertainty.

 

Exchange Rate

 

The Company’s business is primarily conducted in China and all revenues are denominated in Renminbi (“RMB”). This announcement contains currency conversions of RMB amounts into U.S. dollars (“US$”) solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB7.2960 to US$1.00, the effective noon buying rate for September 29, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on September 29, 2023, or at any other rate.

 

6 

 

Conference Call and Webcast

 

Sunlands’ management team will host a conference call at 6:30 AM U.S. Eastern Time, (7:30 PM Beijing/Hong Kong time) on November 22, 2023, following the quarterly results announcement.

 

For participants who wish to join the call, please access the link provided below to complete online registration 15 minutes prior to the scheduled call start time. Upon registration, participants will receive details for the conference call, including dial-in numbers, a personal PIN and an e-mail with detailed instructions to join the conference call.

 

Registration Link:

 

https://register.vevent.com/register/BI97122ad169614f6893122f251ff760b0

 

Additionally, a live webcast and archive of the conference call will be available on the Investor Relations section of Sunlands' website at https://ir.sunlands.com/.

 

About Sunlands

 

Sunlands Technology Group (NYSE: STG) (“Sunlands” or the “Company”), formerly known as Sunlands Online Education Group, is the leader in China's online post-secondary and professional education. With a one to many live streaming platform, Sunlands offers various degree- or diploma-oriented post-secondary courses as well as professional certification preparation, professional skills and interest courses. Students can access the Company's services either through PC or mobile applications. The Company's online platform cultivates a personalized, interactive learning environment by featuring a virtual learning community and a vast library of educational content offerings that adapt to the learning habits of its students. Sunlands offers a unique approach to education research and development that organizes subject content into Learning Outcome Trees, the Company's proprietary knowledge management system. Sunlands has a deep understanding of the educational needs of its prospective students and offers solutions that help them achieve their goals.

 

7 

 

About Non-GAAP Financial Measures

 

We use gross billings, EBITDA, non-GAAP operating cost and expenses, non-GAAP income from operations and Non-GAAP net income per share, each a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes.

 

We define gross billings for a specific period as the total amount of cash received for the sale of course packages, net of the total amount of refunds paid in such period. Our management uses gross billings as a performance measurement because we generally bill our students for the entire course tuition at the time of sale of our course packages and recognize revenue proportionally over a period. EBITDA is defined as net income excluding depreciation and amortization, interest expense, interest income, and income tax expenses. We believe that gross billings and EBITDA provide valuable insight into the sales of our course packages and the performance of our business.

 

These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, their most directly comparable financial measure prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their respective most directly comparable GAAP measure has been provided in the tables included below. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measures to their respective most directly comparable GAAP financial measures. As gross billings, EBITDA, operating cost and expenses excluding share-based compensation expenses, general and administrative expenses excluding share-based compensation expenses, sales and marketing expenses excluding share-based compensation expenses, product development expenses excluding share-based compensation expenses, non-GAAP net income exclude share-based compensation expenses, and basic and diluted net income per share excluding share-based compensation expenses have material limitations as an analytical metric and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider gross billings and EBITDA as a substitute for, or superior to, their respective most directly comparable financial measures prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

 

8 

 

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. Sunlands 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 Sunlands' 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: Sunlands' goals and strategies; its expectations regarding demand for and market acceptance of its brand and services; its ability to retain and increase student enrollments; its ability to offer new courses and educational content; its ability to improve teaching quality and students’ learning results; its ability to improve sales and marketing efficiency and effectiveness; its ability to engage, train and retain new faculty members; its future business development, results of operations and financial condition; its ability to maintain and improve technology infrastructure necessary to operate its business; competition in the online education industry in China; relevant government policies and regulations relating to Sunlands’ corporate structure, business and industry; and general economic and business condition in China Further information regarding these and other risks, uncertainties or factors is included in the Sunlands' 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 Sunlands does not undertake any obligation to update such information, except as required under applicable law.

 

For investor and media enquiries, please contact:

 

Sunlands Technology Group

 

Investor Relations

 

Email: sl-ir@sunlands.com

 

SOURCE: Sunlands Technology Group

 

9 

 

SUNLANDS TECHNOLOGY GROUP

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

(Amounts in thousands, except for share and per share data, or otherwise noted)

 

   As of December 31,  As of  September 30,
   2022  2023
   RMB  RMB  US$
ASSETS         
Current assets               
Cash and cash equivalents   753,642    748,518    102,593 
Restricted cash   3,762    3,240    444 
Short-term investments   70,542    122,282    16,760 
Prepaid expenses and other current assets   98,272    103,725    14,217 
Deferred costs, current   42,886    18,399    2,522 
Total current assets   969,104    996,164    136,536 
Non-current assets               
Property and equipment, net   813,783    793,796    108,799 
Intangible assets, net   1,509    1,430    196 
Right-of-use assets   274,643    137,710    18,875 
Deferred costs, non-current   78,839    70,010    9,596 
Long-term investments   73,513    63,986    8,770 
Deferred tax assets   26,799    20,036    2,746 
Other non-current assets   37,880    33,191    4,549 
Total non-current assets   1,306,966    1,120,159    153,531 
TOTAL ASSETS   2,276,070    2,116,323    290,067 
                
LIABILITIES AND SHAREHOLDERS’ (DEFICIT)/EQUITY               
                
LIABILITIES               
Current liabilities               
Accrued expenses and other current liabilities   436,339    380,092    52,096 
Deferred revenue, current   986,086    646,228    88,573 
Lease liabilities, current portion   17,065    7,667    1,051 
Long-term debt, current portion   38,654    38,654    5,298 
Total current liabilities   1,478,144    1,072,641    147,018 

 

10 

 

SUNLANDS TECHNOLOGY GROUP

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS-continued

 

(Amounts in thousands, except for share and per share data, or otherwise noted)

 

   As of December 31,  As of September 30,
   2022  2023
   RMB  RMB  US$
Non-current liabilities               
Deferred revenue, non-current   704,860    630,812    86,460 
Lease liabilities, non-current portion   316,844    154,831    21,221 
Deferred tax liabilities   5,984    4,098    562 
Other non-current liabilities   6,770    6,975    956 
Long-term debt, non-current portion   143,319    114,328    15,670 
Total non-current liabilities   1,177,777    911,044    124,869 
TOTAL LIABILITIES   2,655,921    1,983,685    271,887 
                
SHAREHOLDERS’ (DEFICIT)/EQUITY               
Class A ordinary shares (par value of US$0.00005, 796,062,195 shares               
authorized; 2,982,516 and 3,131,807 shares issued as of December 31, 2022               
and September 30, 2023, respectively; 2,618,698 and 2,715,615 shares               
outstanding as of December 31, 2022 and September 30, 2023, respectively)   1    1    - 
Class B ordinary shares (par value of US$0.00005, 826,389 shares               
authorized; 826,389 and 826,389 shares issued and outstanding               
as of December 31, 2022 and September 30, 2023, respectively)   -    -    - 
Class C ordinary shares (par value of US$0.00005, 203,111,416 shares               
authorized; 3,481,353 and 3,332,062 shares issued and outstanding               
as of December 31, 2022 and September 30, 2023, respectively)   1    1    - 
Treasury stock   -    -    - 
Accumulated deficit   (2,812,114)   (2,326,485)   (318,871)
Additional paid-in capital   2,309,740    2,306,485    316,130 
Accumulated other comprehensive income   127,885    158,519    21,727 
Total Sunlands Technology Group shareholders’ (deficit)/equity   (374,487)   138,521    18,986 
Non-controlling interest   (5,364)   (5,883)   (806)
TOTAL SHAREHOLDERS’ (DEFICIT)/EQUITY   (379,851)   132,638    18,180 
TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT)/EQUITY   2,276,070    2,116,323    290,067 

 

11 

 

SUNLANDS TECHNOLOGY GROUP

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Amounts in thousands, except for share and per share data, or otherwise noted)

 

   For the Three Months Ended September 30,
   2022  2023
   RMB  RMB  US$
Net revenues   576,208    524,631    71,907 
Cost of revenues   (84,902)   (64,131)   (8,790)
Gross profit   491,306    460,500    63,117 
                
Operating expenses               
Sales and marketing expenses   (269,056)   (294,969)   (40,429)
Product development expenses   (11,532)   (8,415)   (1,153)
General and administrative expenses   (44,443)   (35,092)   (4,810)
Total operating expenses   (325,031)   (338,476)   (46,392)
Income from operations   166,275    122,024    16,725 
Interest income   2,200    7,625    1,045 
Interest expense   (2,487)   (1,877)   (257)
Other income, net   5,325    8,601    1,179 
Impairment loss on long-term investments   -    (61)   (8)
Gain on disposal of subsidiaries   1,709    -    - 
Income before income tax (expenses)/benefit
               
and loss from equity method investments   173,022    136,312    18,684 
Income tax (expenses)/benefit   (4,225)   1,119    153 
Loss from equity method investments   (713)   (5,791)   (794)
Net income   168,084    131,640    18,043 
                
Less: Net loss attributable to non-controlling interest   (1)   -    - 
Net income attributable to Sunlands Technology Group   168,085    131,640    18,043 
Net income per share attributable to ordinary shareholders of               
Sunlands Technology Group:               
Basic and diluted   24.08    19.13    2.62 
Weighted average shares used in calculating net income               
per ordinary share:               
Basic and diluted   6,981,447    6,880,188    6,880,188 

 

12 

 

SUNLANDS TECHNOLOGY GROUP

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

(Amounts in thousands)

 

   For the Three Months Ended September 30,
   2022  2023
   RMB  RMB  US$
Net income   168,084    131,640    18,043 
Other comprehensive income, net of tax effect of nil:               
Change in cumulative foreign currency translation adjustments   32,103    3,358    460 
Total comprehensive income   200,187    134,998    18,503 
Less: comprehensive loss attributable to non-controlling
               
interest   (1)   -    - 
Comprehensive income attributable to Sunlands Technology               
Group   200,188    134,998    18,503 

 

13 

 

SUNLANDS TECHNOLOGY GROUP

 

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

 

(Amounts in thousands)

 

   For the Three Months Ended September 30,
   2022  2023
   RMB  RMB
Net revenues   576,208    524,631 
Less: other revenues   (28,525)   (43,808)
Add: tax and surcharges   11,394    16,921 
Add: ending deferred revenue   1,798,558    1,277,040 
Add: ending refund liability   204,961    101,591 
Less: beginning deferred revenue   (1,998,062)   (1,379,073)
Less: beginning refund liability   (199,028)   (107,319)
Gross billings (non-GAAP)   365,506    389,983 
           
           
           
Net income   168,084    131,640 
Add: income tax expenses/(benefit)   4,225    (1,119)
depreciation and amortization   8,939    7,664 
interest expense   2,487    1,877 
Less: interest income   (2,200)   (7,625)
EBITDA (non-GAAP)   181,535    132,437 

 

14 

 

SUNLANDS TECHNOLOGY GROUP

 

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

 

(Amounts in thousands, except for share and per share data, or otherwise noted)

 

   For the Three Months Ended September 30,
   2022  2023
   RMB  RMB
Cost of revenues   (84,902)   (64,131)
Less: Share-based compensation expenses in cost of revenues   -    - 
Non-GAAP cost of revenues   (84,902)   (64,131)
           
Sales and marketing expenses   (269,056)   (294,969)
Less: Share-based compensation expenses in sales and marketing expenses   -    - 
Non-GAAP sales and marketing expenses   (269,056)   (294,969)
           
General and administrative expenses   (44,443)   (35,092)
Less: Share-based compensation expenses in general and administrative expenses   -    - 
Non-GAAP general and administrative expenses   (44,443)   (35,092)
           
Operating cost and expenses   (409,933)   (402,607)
Less: Share-based compensation expenses   -    - 
Non-GAAP operating cost and expenses   (409,933)   (402,607)
           
Income from operations   166,275    122,024 
Less: Share-based compensation expenses   -    - 
Non-GAAP  income from operations   166,275    122,024 
           
Net income attributable to Sunlands Technology Group   168,085    131,640 
Less: Share-based compensation expenses   -    - 
Non-GAAP net income attributable to Sunlands Technology Group   168,085    131,640 
           
Net income per share attributable to ordinary shareholders of          
Sunlands Technology Group:          
Basic and diluted   24.08    19.13 
Non-GAAP net income per share attributable to ordinary shareholders of          
Sunlands Technology Group:          
Basic and diluted   24.08    19.13 
           
Weighted average shares used in calculating net income          
per ordinary share:          
Basic and diluted   6,981,447    6,880,188 
Weighted average shares used in calculating Non-GAAP net income          
per ordinary share:          
Basic and diluted   6,981,447    6,880,188 

 

15 

 

SUNLANDS TECHNOLOGY GROUP

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Amounts in thousands, except for share and per share data, or otherwise noted)

 

   For the Nine Months Ended September 30,
   2022  2023
   RMB  RMB  US$
Net revenues   1,744,513    1,617,860    221,746 
Cost of revenues   (272,859)   (191,777)   (26,285)
Gross profit   1,471,654    1,426,083    195,461 
                
Operating expenses               
     Sales and marketing expenses   (857,031)   (836,352)   (114,632)
     Product development expenses   (35,465)   (26,087)   (3,576)
     General and administrative expenses   (129,538)   (107,817)   (14,778)
Total operating expenses   (1,022,034)   (970,256)   (132,986)
Income from operations   449,620    455,827    62,475 
Interest income   9,208    21,747    2,981 
Interest expense   (7,764)   (6,047)   (829)
Other income, net   19,667    25,570    3,505 
Impairment loss on long-term investments   (500)   (61)   (8)
Gain on disposal of subsidiaries   1,709    247    34 
Income before income tax expenses               
 and loss from equity method investments   471,940    497,283    68,158 
Income tax expenses   (8,568)   (5,208)   (714)
Loss from equity method investments   (1,317)   (6,445)   (883)
Net income   462,055    485,630    66,561 
                
Less: Net (loss)/income attributable to non-controlling interest   (1,280)   1    - 
Net income attributable to Sunlands Technology Group   463,335    485,629    66,561 
Net income per share attributable to ordinary shareholders of               
 Sunlands Technology Group:               
     Basic and diluted   68.07    70.29    9.63 
Weighted average shares used in calculating net income               
    per ordinary share:               
     Basic and diluted   6,806,672    6,909,141    6,909,141 
                

 

16 

 

SUNLANDS TECHNOLOGY GROUP

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

(Amounts in thousands)

 

   For the Nine Months Ended September 30,
   2022  2023
   RMB  RMB  US$
Net income   462,055    485,630    66,561 
Other comprehensive income, net of tax effect of nil:               
Change in cumulative foreign currency translation adjustments   61,291    30,634    4,199 
Total comprehensive income   523,346    516,264    70,760 
Less: comprehensive (loss)/income attributable to non-controlling
               
interest   (1,280)   1    - 
Comprehensive income attributable to Sunlands Technology               
Group   524,626    516,263    70,760 

 

17 

 

SUNLANDS TECHNOLOGY GROUP

 

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

 

(Amounts in thousands)

 

   For the Nine Months Ended September 30,
   2022  2023
   RMB  RMB
Net revenues   1,744,513    1,617,860 
Less: other revenues   (86,520)   (128,032)
Add: tax and surcharges   55,815    44,695 
Add: ending deferred revenue   1,798,558    1,277,040 
Add: ending refund liability   204,961    101,591 
Less: beginning deferred revenue   (2,348,179)   (1,690,946)
Less: beginning refund liability   (243,236)   (133,066)
Gross billings (non-GAAP)   1,125,912    1,089,142 
           
           
           
Net income   462,055    485,630 
Add: income tax expenses   8,568    5,208 
depreciation and amortization   28,100    22,931 
interest expense   7,764    6,047 
Less: interest income   (9,208)   (21,747)
EBITDA (non-GAAP)   497,279    498,069 

 

18 

 

SUNLANDS TECHNOLOGY GROUP

 

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

 

(Amounts in thousands, except for share and per share data, or otherwise noted)

 

   For the Nine Months Ended September 30,
   2022  2023
   RMB  RMB
Cost of revenues   (272,859)   (191,777)
Less: Share-based compensation expenses in cost of revenues   (33)   - 
Non-GAAP cost of revenues   (272,826)   (191,777)
           
Sales and marketing expenses   (857,031)   (836,352)
Less: Share-based compensation expenses in sales and marketing expenses   (4,166)   - 
Non-GAAP sales and marketing expenses   (852,865)   (836,352)
           
General and administrative expenses   (129,538)   (107,817)
Less: Share-based compensation expenses in general and administrative expenses   (2,982)   - 
Non-GAAP general and administrative expenses   (126,556)   (107,817)
           
Operating cost and expenses   (1,294,893)   (1,162,033)
Less: Share-based compensation expenses   (7,181)   - 
Non-GAAP operating cost and expenses   (1,287,712)   (1,162,033)
           
Income from operations   449,620    455,827 
Less: Share-based compensation expenses   (7,181)   - 
Non-GAAP income from operations   456,801    455,827 
           
Net income attributable to Sunlands Technology Group   463,335    485,629 
Less: Share-based compensation expenses   (7,181)   - 
Non-GAAP net income attributable to Sunlands Technology Group   470,516    485,629 
           
Net income per share attributable to ordinary shareholders of          
 Sunlands Technology Group:          
     Basic and diluted   68.07    70.29 
Non-GAAP net income per share attributable to ordinary shareholders of          
 Sunlands Technology Group:          
     Basic and diluted   69.13    70.29 
           
Weighted average shares used in calculating net income          
    per ordinary share:          
     Basic and diluted   6,806,672    6,909,141 
Weighted average shares used in calculating Non-GAAP net income          
    per ordinary share:          
     Basic and diluted   6,806,672    6,909,141 

 

19 

 

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