China Online Education Group (NYSE:COE) Q2 2020 Earnings Conference Call - Final Transcript

Sep 08, 2020 • 08:00 am ET

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China Online Education Group (NYSE:COE) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Min Xu

of coronavirus relief policies was RMB17.9 million in the second quarter, which included impacts of exemption of employer obligation on social security contributions on operating income of RMB9.9 -- RMB10.9 million, in addition to coronavirus policy related VAT exemption of RMB7.0 million. Excluding this favorable impact, non-GAAP operating income for the quarter would have been RMB16.1 million, representing 3.3% non-GAAP operating margin.

Net income for the second quarter was RMB32.8 million, compared with a net loss of RMB33.2 million for the same quarter last year. Non-GAAP net income for the second quarter was RMB39.6 million, compared with a non-GAAP net loss of RMB27.6 million for the same quarter last year. Excluding the favorable impact of coronavirus relief policies of RMB17.9 million in the second quarter, non-GAAP net income for the second quarter would have been RMB21.7 million, representing 4.4% net margin.

Diluted EPS for the second quarter was RMB1.44, compared with EPS of negative RMB1.62 for the same quarter last year. Each of our ADS represents 15 Class A ordinary shares. Non-GAAP diluted EPS for the second quarter was RMB1.75, compared with EPS of negative RMB1.34 for the same quarter last year.

As of June 30, 2020, the Company had total cash, cash equivalents, time deposits and short-term investments of RMB1.43 billion compared with RMB1.05 billion as of December 31st, 2019. The Company had advances from students of RMB2.41 billion as of June 30, compared with RMB2.19 billion as of December 31st, 2019.

Now let's talk about outlook. While there are still uncertainties related to the coronavirus pandemic during the remainder of 2020, based on the latest information available, we currently expect Q3 net revenues to be between RMB525 million to RMB532 million, which would represent 28.5% to 30.2% year-over-year increase from RMB408.7 million for the same quarter last 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 the customer demand, which are all subject to change.

And this concludes our prepared remarks. We will now open the line for questions. Operator? Please go ahead.