Earnings Labs

ATA Creativity Global (AACG)

Q2 2020 Earnings Call· Thu, Aug 13, 2020

$1.20

+0.00%

Key Takeaways · AI generated
AI summary not yet generated for this transcript. Generation in progress for older transcripts; check back soon, or browse the full transcript below.

Same-Day

+0.00%

1 Week

+3.64%

1 Month

+0.00%

vs S&P

-0.99%

Transcript

Operator

Operator

Good day, and welcome everyone to the ATA Creativity Global 2020 Second Quarter and Six Months Financial Results Conference Call hosted by Carolyne Sohn. My name is Mathew, and I'm your event manager. During the presentation, your lines will remain on listen-only. [Operator Instructions] I'd also like to advise all parties that this call is being recorded. And with that I'd like to hand it over to your host, Carolyne, please proceed.

Carolyne Sohn

Analyst

Thank you, Mathew and hello everyone, thank you for joining us. The press release announcing ATA Creativity Global's or ACG's results for the three and six months ended June 30, 2020, is available at the IR Section of the company's website at www.atai.net.cn. As part of this conference call, the company has an accompanying slide presentation available on its website. A replay of this broadcast will also be made available at ACG's website for the next 90 days. Before we get started, I would like to remind everyone that this conference call and any accompanying information discussed herein contains certain forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terms such as anticipate, believe, expect, future, plan, outlook and will and include, among other things, statements regarding ACG's future growth and results of operations, ACG's strategy of becoming a leading international education service provider, ACG's plans for mergers and acquisitions generally, the benefits of the Huanqiuyimeng acquisition, ACG's ability to operate efficiently and maintain continued financial strength under unusual circumstances, ACG's growth strategy and subsequent business activities, market demand for ACG's portfolio and training programs and other education services, the impact of the COVID-19 outbreak on ACG and its operations and ACG's plan and anticipated benefits of the measures implemented in response to the COVID-19 outbreak. Although the company believes that the expectations reflected in its forward-looking statements are reasonable as of today, those statements are subject to risks and uncertainties that could cause the actual results to differ dramatically from those projected. There can be no assurance that those expectations will prove to be correct. Information about the risks associated with investing in ACG is included in filings with the Securities and…

Amy Tung

Analyst

Thank you, Carolyne, and welcome everyone. Good evening to those in America. We appreciate everyone's time. During the second quarter of 2020, we continued to deliver the majority of coursework to our students through online methods, which we have done since February 1. It was encouraging to see some local governments authorized the offline delivery of certain trainings late in the second quarter. And while we understand many students still prefer face time with their teachers and peers, we feel it is very important that we put the health and safety of our students, faculty staff and employees first, under these unprecedented conditions. As with quarter 1, we continued to see several portfolio training students pursue their studies during quarter 2, while others decided to postpone the coursework. Our educational travel services business continued to be impacted in quarter 2, as almost all tours were canceled. But we are pleased to be partnering with a fiercely led prestigious overseas art institutions in offering some short-term online summer school, and master training boot camp programs, which generated RMB1.3 million in quarter 2 with increased contributions expected in quarter 3. Our results for the second quarter of 2020 were impacted by the ongoing pandemic environment, as important teaching remains unavailable in certain areas. We are encouraging students to continue pursuing their studies remotely. And we are also pleased that since we last spoke in late May, the public health situation in China has improved to where nearly all of our employees are able to report to work in the office. With our sales teams being able to operate at capacity, our business pipeline is seeing every challenge, which for the world for our future periods. For the second quarter of 2020, we reported a 7.4% year-over-year decrease in credit hours delivered for…

Kevin Ma

Analyst

Thank you, Amy. 2020 has forced many of us in education to reevaluate how we provide, let's say, about learning to the various types of students in China, while the public health situation in China has improved dramatically over the course of the past few weeks. In-person teaching remains unavailable in many areas as the pandemic continues to impact several countries around the world. ACG is now for its one-on-one portfolio training programs and individualized attention our students receive, as highlighted in recent reviews of [Indiscernible] in China. Also, with the majority of our teachers are unable to interact with students face-to-face, we continue to strive to deliver the correct instructions and personal support for which we have gained recognition over these past several years. I am pleased to see, that many of our students have continued to pursue their studies in one form or another and have been happy with the level of attentiveness they have been receiving. With traveling abroad is no longer being a viable option given the pandemic environment, students are choosing to pursue language studies, or other types of foundational education to better prepare themselves for when the opportunity presents itself again. And many are even finding those types of courses to be quite well-suited to being taught online. ACG continues to being solid financial position as we continue to navigate the challenges presented by the global pandemic. What that means, leveraging our operating flexibility or providing students with alternatives to our regular summer study above the programs. We continue to put the health and safety of our students and employees first. And we continue providing students with the support they need to succeed via online platform from email, WeChat, and [indiscernible] as we monitor how the ongoing situation unfolds globally. I'd now like to hand the call over to Jun Zhang, ACG's President to provide an update on our current growth initiatives. Jun will make his remarks in Mandarin, which will be followed by English translation.

Jun Zhang

Analyst

Thank you, Kevin. As both Kevin and Amy mentioned, ACG has worked to adapt to the situation we've been presented with the global pandemic. We were pleased to see incremental improvement in portfolio training enrollment and credit hours from Q1 to Q2, and continue to encourage students to pursue their coursework via remote learning platform. Our sales pipeline continues to improve as nearly all our sales and marketing personnel in Beijing have returned to the office, and are able to operate at optimal productivity. Additionally, we have begun utilizing diversified online platforms such as Douyin, also known as TikTok in the States as a marketing tool, enabling potential students to experience firsthand what our art and creative education offerings are like before making a decision on where to enroll. Even after in-person classes can be conducted once again, we believe the effects of the pandemic will remain. It has reaffirmed the crucial role technology plays in education as well as the overall efficacy of the delivery method. While we believe nothing quite replaces meeting in-person, many students are enjoying the flexibility and added efficiency of being able to take certain courses online. As a result, we are planning to convert some offline classes for portfolio training, particularly those at introductory level that tend to have a more standardized curriculum to online, but we'll still make traditional offline delivery and option. With regard to educational travel, we are pleased to be offering some alternatives to our usual travel tourism program. Working closely with a few well-known overseas art schools and institutions, we have been offering some short-term online summer school programs, which offer certifications upon the completion of the program, as well as bootcamps led by teachers from these overseas institutions and we have invited to cooperate with ACG's own teachers. Most of the summer school program offerings and certain master bootcamps will have taken place in July and August, which will have a positive impact on our topline in Q3. Most importantly, we are focused on our students and providing them with the creative education they signed up to receive before the pandemic began, while ensuring their and our staff safety. With that I'll turn it back to Kevin.

Kevin Ma

Analyst

Thanks Jun and Carolyne. To conclude it, ACG continues to be well-positioned financially and operationally. We have worked tirelessly to adapt to the evolving situation and continue to do so, while moving forward with our strategic growth initiatives. I believe ACG has rising through a challenge and while our business has certainly felt the impact of this unusual circumstance. It has proven result and we are optimistic about the future growth potential of our campaigning. There is a great deal of uncertainty in the world today. But we'll remain focused on continue to serve our students and prioritizing the well-being of all our stakeholder. I would like to thank all our employees, associates, family and friends for their ongoing support, and I hope everyone continues to stay safe and healthy. With that operator, let's open it up for questions.

Operator

Operator

[Operator Instructions] Currently, we don't have any incoming questions. : :

Kevin Ma

Analyst

Thanks again to all of you for joining us. If anyone has questions for us, please feel free to reach out directly to us or our Investor Relations firm The Equity Group. We're always available to speak to investors and look forward to speaking with you all during our next quarterly call. Thank you.

Operator

Operator

Thank you very much, everyone. This concludes your conference call for today. You may not disconnect. Thank you for joining and enjoy the rest of your day.