Puxin Limited (NYSE:NEW) Q2 2019 Earnings Conference Call Transcript
Aug 13, 2019 • 08:00 am ET
We will now begin the question-and-answer session. [Operator Instruction] The first question comes from Sharon Liang [Phonetic] of CICC. Please go ahead. Mr Liang. The next question comes from Tommy Wong of China Merchants Securities. Please go ahead.
Hi, management. Thank you for taking my call. I just have two questions. First question, can you talk about the big gap between the enrollment growth for second quarter and also the revenue growth? So, if you just used the math straight to understand, then it seems like the pricing has cut in half. I'm sure there's more to it?
And then, second question relating to the expenses. Can you just give us a little bit more color on the elevated G&A expense, because as I had the impression that we had a high expense in the first quarter and then second quarter maybe come down like we saw in last year and if we have an elevated expense for the second quarter, is that going to sustain for the second half? Thank you.
Okay. So thank you for asking. The first is about -- could you repeat the first question? The second is about the G&A expense increase.
Yeah. Correct. So the first question is just the gap between the enrollment growth and also the revenue growth. So the enrollment growth seems very fast and revenue growth is just a little bit slower on a year-over-year basis.
Okay. As for your first question as to the gap between the enrollment growth and the revenue growth, there are two underlying reasons for that. First is, we are still implementing like promotional classes for those schools we newly acquired to increase exposure of those schools to prospective parents and students. So that makes up a large portion of the gap. And the second reason is, we stick to the strategy of enrollment first, ASP second. Means, in a highly fragmented market, we focus on grabbing more market share instead of increasing the ASP in an aggressive way. So that explains why we have a faster growth rate of enrollments compared with the revenue.
Per your second question about the G&A expenses, the increase of the G&A expenses is mainly attributable to our investment in R&D. We have been investing heavily with our curriculum improvement of IT technology. Mr. Sha mentioned just now about the PBS system, the Puxin Business System, of which, there are a dozen of modules to be launched after acquiring or taking control of those schools. So we implemented or launched our technology platforms essential to curriculum in those systems one by one. During the process, it takes a lot of time and energy and also money to fully implement those technology -- those systems. That's why we saw an increase G&A expenses. Thanks for the question again.
The next question comes from Sharon Liang [Phonetic] with CICC. Please go ahead.
[Foreign Speech] So let me briefly translate the question. I have two questions regarding the upcoming quarters. So