TAL International Group, Inc. (NYSE:TAL) Q2 2019 Earnings Conference Call Transcript

Oct 25, 2018 • 08:00 am ET

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TAL International Group, Inc. (NYSE:TAL) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by, and welcome to TAL Education Group's Second Fiscal Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by question-and-answer session. (Operator Instructions) I must advise you that this conference is being recorded today.

I would now like to hand the conference over to your first speaker, Ms. Echo Yan, IR Director of TAL Education Group. Thank you. Please go ahead.

Executive
Echo Yan

Thank you all for joining us today for TAL Education Group's second fiscal quarter 2019 earnings conference call. The earnings release was distributed earlier today and you may find a copy on the Company IR website or through the newswires. During this call, you will hear from CFO, Mr. Rong Luo. Following the prepared remarks, Mr. Luo will be available to answer your questions.

(Forward-Looking and Cautionary Statements) I would like now to turn the call over to Mr. Rong Luo.

Executive
Rong Luo

Good evening and good morning to you all. Thank you for joining us today on this earnings call. Our second quarter revenue growth was based on stable demand in the cities we currently cover and a contribution from our Online courses.Revenue growth in the second quarter was 53.5% year-over-year in U.S dollar and to $699.8 million, and 57.1% in RMB terms. Student enrollments increased by 120.2% year-over-year mostly driven by the growth in the Online enrollments, as well as Xueersi Peiyou Small Class.

GAAP income from operations increased by 18.4% to US$80.9 million in the second quarter. Non-GAAP income from operations grew by 23.8% to $99 million. I will now turn the call over to Echo Yan, our IR Director, she will give you an update on our operational progress in the second quarter. After that I will update you on our business strategy and execution and discuss our business outlook.

Executive
Echo Yan

The healthy pace of Xueersi School(ph)second quarter revenue growth was driven by the demand for the various education services in the cities we currently cover let me review the business by different revenue stream. Small Class, which consists of Xueersi Peiyou Small Class, Firstleap, Mobby and some other educational programs and services accounted for 79.6% of total net revenue compared to 80.9% in the second quarter last year.

Xueersi Peiyou Small Class which remains our core business, represented 70.5% of total net revenue compared to 72.6% in the same year ago period. The lower revenue contribution from Xueersi Peiyou was mostly due to the faster growth of online process.Net revenue from Xueersi Peiyou Small Class was up by 49.1% in US dollar terms and 48.1% in RMB terms, while the enrollment increased by 72.7% year-over-year. This growth rate reflects the healthy growth in both Peiyou Offline and Online Class. Currently, we offer Xueersi Peiyou Online courses and their additional services tailored to students in the major cities of our network.

Xueersi Peiyou Online offers regular and short-term courses and other promotion courses. Including contribution from Peiyou Online in both