OneSmart International Education Group Limited FY20 Q2 Results Presentation May 2020
Section 1 Business Updates
Strong company response and results under the unprecedented COVID-19 pandemic situation Unprecedented Impact Strong Company Response All of our learnings centers Majority of existing students were have been temporarily closed successfully migrated online since January 2020 within just a couple of weeks since the outbreak (without price discount incentive) All public schools in China have also been temporarily Our online platform has been The speed, scale closed without reopen serving approx. 160,000 student and results prove schedule being provided enrollments since February our strong ability 2020, a massive increase from to strategically All classes and customer just a few thousands in late 2019 manage and acquisitions conducted operate a premium through our online platform Customer satisfaction rate on online business during the last few months online platform remained 90%+, resulting in low refund rates (2.3% in February) and high All employees have been renewal rates working from home till late April 2020 Company Q2 revenue retained at the level of same period last year 3
Impact is expected to be one-off and has a swift pattern Impact Assessment Enrollments * Trend A swift drop in an environment when the Monthly Average Enrollments public schools are closed and there is (‘000) massive supply of free or low priced online 120 千 classes 110 Temporally challenging for us to deliver the 100 Premium K-12 distinguished value of our premium education 90 1on1 Business services when students stay at home and the 80 70 score improvement demand is not as urgent 60 The demand is expected to return in a fast Jan Feb Mar Apr Mid-May 2020 fashion as schedules of most schools reopen Pandemic, online only Learning Centers and all entrance exams in China are now fixed + Online Monthly Average Enrollments Our young children education businesses (‘000) may have a slightly longer period of impact as 60 Young Children kindergartens and some primary schools will 50 Education reopen a few months after other public 40 Businesses schools, according to government policy 30 Expect Shanghai kindergartens to open soon Jan Feb Mar Apr Mid-May 2020 Revamped products and online acquisition Pandemic, online only practices to handle the change * Enrollments data exclude Huaying and pure online businesses As of May 15, 2020, 54 of our VIP centers have reopened under government permission. We expect that number to increase over the next few months 4
OneSmart Online, the leading online premium education platform in China, is built on distinguished competitive advantages 精锐在线的目标 —— 中国最大的中高端在线学习平台 Its OMO Model Effectively Reduces Cost of Acquisitions, Improves Customer Loyalty and Provide Localized Curriculum Development Offline acquisition of customer through Learning Centers and AI centers; Multiple online marketing channels as well as Private traffic pool Comprehensive product mix including big class, small group class and 1-on-1 creates synergies and extend customer lifetime value OMO triple teachers (cloud teacher, cloud study keeper and cloud advisor) ensures high quality teacher, high quality learning experience and high quality services Penetrating markets in various provincial capitals and regional center cities with localized teaching and academic research methods Technology development including CTS (Cloud Teaching System) 6.0: over 12 years experience on middle/back-end platform technology/data/content 5
OneSmart Online is delivering strong momentum in customer acquisitions Incremental Driver in Top 10 Cities and Main Student Enrollments Increased by 370% 一线城市 Growth Driver in Tier 2 & 3 Cities Over Three Months • We will focus on offline learning centers in top 10 cities where services is emphasized and OneSmart Online will serve as Pure Online Student Enrollments complementary offerings to meet the needs of (Excluding promotion classes) cost-efficient demand and convenience 15,000 • OneSmart Online will serve as main growth 10,000 driver to rapidly gain market share in tier 2 and tier 3 cities through AI cloud centers, 13,288 5,000 multiple online marketing channels and private traffic pool. 3,628 0 2020.2 2020.5 • Online class delivery ： cloud teacher + cloud study keeper + AI data driven 6
Acquisition cost is well managed thanks to our OMO model and private traffic pool built previously OMO 获客及私域流量运营 Traffic from Both Online and Online Teaching and Services Offline Channels Traffic Gathering and Referral Subscription account, personal AI Cloud Center account, mini program, APP Private Traffic Pool OneSmart Online APP User Referral Platform operation, social community referral, cross-sell from CRM 7
Classes are delivered on our latest advanced version of online teaching system: CTS 6.0 在线产品持续升级 Smart Online Teaching and Development Platform Smart Online Teaching Preparation Platform Fulltime teachers, localized teaching and development platform, personalized teaching APP Technology + Content － “Zero distance” between home Live Broadcasting Cloud Classroom and school － － Smart error track book Six steps teaching method － － Student performance track Interactive teaching － Data collection OneSmart Online 1-1 CRM Triple teachers Smart Assessment System Smart Administration System Customized teaching program, personalized academic planning, intelligent Smart Service System matching with cloud teachers Active tracking and feedbacks, study clubs/ seminars, family education cloud courses 8
OneSmart Online is built on solid foundation of middle and back-end Data, Content & Technology OneSmart System Structure Front-end Business OMO Front-end Offline Online System FasTrack Online Young Online Middle International VIP Happy Math Monitor English Children Education School Education Support Business Middle-end Platform Data Middle-end Platform Cyber Operation Support Monitor Live broadcasting Customer Assessment Middle-end Center Center Center Big Data User Profile Computing Customer Teaching Marketing Satisfaction Center Center Center Data Data Service Teaching & Security Visualization Trading Center Service Center Research Center CRM Marketing, UPC Operation, LMS Teaching, IMES Assessment Data Center Support Technical Support CI/CD Cloud AI BigData Back-end Micro- Voice K8S/Docker/ELK NLP Spark Hadoop/Hbase/Hive service Recognition Image MQ/RDS/CDN Cache Text Analysis Kyligence Flink/Storm Recognition 9
Section 2 Financial Highlights
Key highlights for the second fiscal quarter of FY20 Key Highlights Retained the vast majority of revenue yoy, by converting students online 1. Revenue Serving approx. 160,000 enrollments online since the outbreak of COVID-19 OneSmart Online is well-positioned to generate incremental growth GPM pressure mainly due to one-off revenue drop due to COVID-19 impact, coupled with previous quarter’s added teacher cost to improve online offerings, and increased rental costs to comply with new regulatory requirements 2. Margin OPM pressure due to 1) one-off revenue drop; 2) increased R&D spending Expect margin will start to expand in FY21 Business gradually returns to normal level starting May 2020 as public 3. Outlook schools and our learning centers started to reopen, and entrance exams are fixed in July 2020; OneSmart Online drives strong incremental growth 11
Top-line growth in the three business segments Net Revenues OneSmart VIP Fiscal years ended August 31 and fiscal quarters ended February RMB MM +4.3% +31.2% -8.4% RMB MM Growth Growth CAGR 3,168 2,416 +39.3% 3,994 1,840 CAGR 1,286 1,233 747 685 FY2017 FY2018 FY2019 FQ2 FQ2 H1 2019H1 2020 +5.9% 2019 2020 HappyMath Growth 2,863 RMB MM -0.6% +3.1% +55.7% Growth Growth CAGR 514 1,683 - 6.0% 1,589 359 231 224 2,058 Growth 212 117 117 886 FY2017 FY2018 FY2019 FQ2 FQ2 H1 H1 2019 2020 2019 2020 FasTrack English 943 RMB MM +30.2% +40.9% Growth Growth 192 100 73 71 51 39 FQ2 FQ2 H1 H1 FY2017 FY2018 FY2019 FQ2 2019FQ2 2020 H1 2019 H1 2020 FY2017 FY2018 FY2019 2019 2020 2019 2020 12
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