OneSmart International Education Group Limited (NASDAQ:ONE) Q2 2020 Earnings Conference Call - Final Transcript

May 19, 2020 • 08:00 am ET


OneSmart International Education Group Limited (NASDAQ:ONE) Q2 2020 Earnings Conference Call - Final Transcript


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Q & A

[Operator Instructions] The first question comes from Sheng Zhong of Morgan Stanley. Please go ahead.

Sheng Zhong

Hi, management. Thank you for taking my question. I have two questions. The first one is about your guidance. Actually that implies a very low revenue growth -- negative revenue growth in the second half. I can understand there is a lot of reason -- a lot of impact from the COVID-19, but can you please -- but also, we understand that the GaoKao and ZhongKao is delayed by one month. That is also the beneficial part. So wondering if you can give more color about the guidance maybe in the third quarter and fourth quarter and can also give us some updates on the learning center resumption progress. And secondly, you mentioned that for the online business, the AI center can help to improve the student acquisition efficiency. Can you be more specific on this statement? Thank you.

Honggang Zuo

Thank you, Zhong Sheng. This is Greg. Let me take your first question regarding the guidance, and then I'll ask our operation head, Helen, to provide you the second question's answer. So the first question regarding guidance. First of all, let me point out that it is quite difficult to provide an exact guidance as we are experiencing unprecedented events. The nature of the virus impact has been up and down in China, as you noticed. And more importantly, it will be harder to judge the reaction of parents and students: how quickly they would return to our learning centers, how would they behave in our online platform. So, we provided guidance based on the current information we have. As we noticed, the situation is gradually improving, so the financial result may get better if we keep receiving positive information.

Now let me provide some specifics on a few factors we consider. On the challenge side, as you probably noticed, Q3 is March to May, which is -- China has been hit the hardest, so everything shut down, including our learning center and public schools. And the demand for exams has been pushed back by the parents, and students, they're staying home, and there are plenty of low-priced online classes available which takes a lot of students' time. With that, we see some impact to our business because our business requires experience, especially experience of our premium services, to justify our services.

So, for Q3, you may see a lowest point in our performance. But the good news is, we are already past the Q3, and in Q4 we see some positives which are following. One, as you know, the government has announced the back to school schedule by most provinces. And now, the ZhongKao and GaoKao dates are fixed in July, which, by the way, is one month's pushback from the original June, so which means more production period for us, which is positive.

And secondly, we have already 54 VIP centers reopened under government permission. Those are in the Jiangsu, Sichuan, Yunnan provinces, and we