QuantaSing Group Q2 2025 Earnings Report

QuantaSing Group EPS Results

• Actual EPS: $0.33
• Consensus EPS: $0.20
• Beat/Miss: Beat by +$0.13
• One Year Ago EPS: N/A

QuantaSing Group Revenue Results

• Actual Revenue: $99.55 million
• Expected Revenue: $97.90 million
• Beat/Miss: Beat by +$1.66 million
• YoY Revenue Growth: N/A

QuantaSing Group Announcement Details

• Quarter: Q2 2025
• Date: 3/11/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, March 11, 2025
• Conference Call Time: 7:00AM ET

QuantaSing Group (NASDAQ:QSG) provides online learning services in the People's Republic of China. The company offers online courses, including financial literacy, short-video production, personal well-being, electronic keyboard, and meditation courses. It also offers marketing and enterprise talent management services to enterprise customers. In addition, the company provides online and literacy course to adult learners under various brands, including QiNiu, JiangZhen, and QianChi. QuantaSing Group Limited was founded in 2019 and is headquartered in Beijing, the People's Republic of China.

QuantaSing Group Q2 2025 Earnings Call Transcript

Presentation

[Operator]

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Conta Sync's Earnings Conference Call. At this time, all participants are in a listen only mode. We will be hosting a question and answer session after the management's prepared remarks. Please note that today's event is being recorded.

[Operator]

I will now turn the conference over to Ms. Lia Guo, Investor Relations Associate Director of the company. Please go ahead, ma'am.

[Leah Guo, Associate Director of Investor Relations at QuantaSing Group]

Thank you. Hello, everyone, and welcome to QuantaSense earnings call for the second quarter of fiscal year twenty twenty five. With us today are Mr. Peng Li, our Founder, Chairman and CEO and Mr. Tin Hsieh, our CFO.

[Leah Guo, Associate Director of Investor Relations at QuantaSing Group]

Mr. Li will provide a business overview for the quarter, then Tin will discuss the financials in more details. Following their prepared remarks, Mr. Li and Tin will be available for the Q and A session. I will translate for Mr.

[Leah Guo, Associate Director of Investor Relations at QuantaSing Group]

Li. You can refer to our quarterly financial results on our IR website at ir.quantasen.com. You can also access a replay of today's call on our IR website when it becomes available a few hours after its conclusion. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call as we will be making forward looking statements. Please note that all numbers stated in the following management's prepared remarks are in RMB terms and we will discuss non GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in our earnings release and filings with the SEC.

[Leah Guo, Associate Director of Investor Relations at QuantaSing Group]

I will now turn the call over to the CEO and Founder of QuantaXing, Mr. Li.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

Okay. Good morning, everyone. Thank you for joining us today to discuss Chorusin's second quarter results for fiscal year twenty twenty five. Let me begin with our financial performance for this quarter. Our revenues were RMB626.6 million.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

As we have mentioned in previous quarters, we are taking a careful approach to business development. We are moderating growth in our traditional business lines, while also testing new initiatives. This shift from focusing on traffic driven growth to high quality growth is delivering results. As shown by our financial results, the changes in revenue, both sequentially and year over year, reflect our planned reallocation of resources. At the same time, our disciplined execution has increased our net income to RMB126.8 million.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

This strong bottom line performance highlights our ability to optimize operations while selectively investing in promising opportunities. Our established online learning business is doing well and generating steady cash flow to support our strategy. We built a user base of 139,600,000 registered users and are committed to maintain high service quality. This quarter, we have made great progress in cost development. For example, in our financial literacy program, we added 22 new lectures.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

We completed major updates to our financial reports training cap. Our programs for business partnerships and the user acquisition are keeping up with market trends and meeting the public's demand for financial knowledge. We are also seeing remarkable results in our calligraphy project for senior learners. This is real enthusiasm for traditional culture learning among middle aged and elderly individuals and our change calligraphy program tailored to their needs. We created a variety of courses to help seniors enhance their enjoyment of life and find spiritual fulfillment through learning calligraphy.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

Our two curriculum starts from basic writing technicals and moves on to studying Asian masters and finally allow for free creative expression. We tailor our program to fit the physical and mental needs of elderly students, respecting their learning pace. At each stage, our professional instructors provide homework feedback and offer technical guidance, helping students develop impressive calligraphy skills. Thanks to our thoughtful planning and diverse learning experiences, The commercial rates for advanced courses has increased from over forty percent last quarter to over 60% this quarter. On top of our online learning, our consumer business is also growing.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

Revenues have reached RMB54.5 million, which is a 39% increase compared to the same period of last year. This growth is largely due to our expansion into wellness products aimed at silver economy, we are already seeing strong results. Our Quichu Town brand of sold as medicine products has gained significant market traction with several flagship products performing exceptionally well. The combined cash flow from our established business lines gives us a solid base for making strategic investments in growth areas and exploring new opportunities. Our strong balance sheet and cash position stand out with RMB1213.2 million cash and cash equivalents, restricted cash and short term investments, we have the flexibility to invest in promising areas, while staying financially disciplined.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

Our ability to fund ourselves is crucial, allowing us to make smart investments without relying on external funding. This strong financial foundation sets the stage for our strategic expansion into diverse business opportunities. In a rapidly evolving market environment, we continue to identify and explore new possibilities. Throughout our history, we have adapted to market changes by standing agile and responsive. We began as pioneers in online learning, building a strong foundation in that area.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

As new opportunities arose, we expanded our offerings across multiple categories. Now we are looking at opportunities both within our established area and beyond, including growing our customer business in the fuel economy and testing new products and services. By diversifying our revenue streams across different business lines, we are positioning ourselves to navigate market uncertainties and cyclical changes. This the Versys Vacation strategy helps us reduce risks in any single business area and builds a more resilient business in today's fast changing environment. Let me share some of the our early exploration initiatives and showcase this diversification strategy.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

One area we are exploring is the silver economy, which connects our established consumer business with new exploration initiatives. And we are seeing encouraging results particularly in our health and wellness product line. In this line, our food and medicine products have gained strong market acceptance. Our Qichutao brand combines traditional Chinese wisdom with modern health solutions using time tested natural ingredients and advanced extraction technologies, this approach leads to effective sunspacked health solutions. Let me share why our products are resonating with customers.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

Many consumers including a 70 year old Shanghai resident are adding our herbal extracts products into their daily wellness routines. They found that these natural supplements fit well with their health habits and lifestyle choices. The petition feedback as a positive feedback from customers shows that our products meet real market needs and support our strategy in this area. We are also focused on product innovation. We have a robust pipeline of additional health and wellness products aimed at the civil economy market.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

This shows our commitment to carefully testing and expanding successful offerings. Additionally, we are in the early stages of testing our offline service strategy. We are working with Beijing Nursing Home to explore integrated service models. This initiative is just the beginning and we are following our test and scale approach. We are evaluating the results before deciding on the next steps.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

Let me also update you on our travel study program. We recently launched a new membership offering, the twenty twenty five VIP Member Card, best at $3.55 yuan. This card comes from comes with several benefits including discounts on travel study products, companion ticket options, station pick up services, travel planning assistance and quarterly tips, we are keeping a close eye on how this program performs as we explore its potential for growth. Our approach remains consistent. Following our disciplined test data scale methodology, we carefully explore new initiatives, making sure they fit the market before we invest heavily.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

When we consider new initiatives, we look at many factors such as initial costs, expected returns, how we align with our strengths and impact on our overall cash flow. This balanced effort along with our strong financial position allow us to purchase various opportunities. Looking ahead, we stay focused on our balanced approach to business development. Our journey from being an online learning leader to exploring many growth pathways shows our ability to adapt and evolve successfully. With the right strategy, the right team and our strong financial strength, we are confident in funding and seeking significant opportunities across different sectors.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

In today's rapidly trending environment, we are well prepared to remain agile, responsive and disciplined as we approach new market opportunities. We look forward to updating you on our progress in the coming quarters. Thank you for your attention. I will now turn it over to Tim for a detailed review of our financial results. Thank you, everyone.

[Dong Xie, CFO & Director at QuantaSing Group]

Thank you. Before I go into the details of our financial results, please note that all amounts are in RMB terms. That reporting period is the second quarter of fiscal year twenty twenty five, ending on 06/30/2025. And that in addition to GAAP measures, we will also be discussing non GAAP measures to provide greater clarity on the trends in our actual operations. For the second quarter of fiscal year twenty twenty five, our total revenues were $726,600,000 representing a 25.9 decrease year over year.

[Dong Xie, CFO & Director at QuantaSing Group]

This reflects our deliberate approach to business development as we transition from traffic driven growth to high quality growth. Among our revenues, individual online learning services generated revenues of RMB600.3 million, accounting for 82.7% of total revenues. This business line contributes to operate effectively generating steady cash flow that supports our strategic initiatives. Our gross billings from individual online learning services were $546,200,000 showing a decline of 42.2% year over year, which we view as a natural progression during this strategic transformation of our product mix. Revenues from enterprise services were $55,700,000 a change of 3.4% from a year ago and representing 7.7% of total revenues.

[Dong Xie, CFO & Director at QuantaSing Group]

This shift reflects a change in existing customers' demands. Revenues from our consumer business increased to RMB64.5 million in the second quarter of fiscal year twenty twenty five, representing a 39% increase from RMB46.4 million in the second quarter of fiscal year twenty twenty four. This growth aligns with our expansion into wellness products with a focus on the civil economy market. Gross profit for the quarter was $6,400,000 with a gross margin of 83.1% compared to 85.2% in the same period last year. This margin change reflects our strategic shift towards more product focused offerings, which naturally carry a different cost structure.

[Dong Xie, CFO & Director at QuantaSing Group]

On the operational front, we maintained disciplined cost management while investing in our strategic initiatives. Total operating expenses were $465,900,000 a decrease of 36.5% from $733,200,000 in the same period last year. To break this down, sales and marketing expenses decreased by 38.1% to $407,000,000 primarily due to optimized marketing spend and improved operational efficiency. As a percentage of total revenue, non GAAP sales and marketing expenses, which exclude share based compensation, decreased to 55.9% from 68.6% a year ago. Research and development expenses declined by 30.9% to $28,400,000 reflecting our focused approach to product development.

[Dong Xie, CFO & Director at QuantaSing Group]

As a percentage of total revenue, non GAAP R and D expenses, which exclude share based compensation, decreased to 3.8% from 4% a year ago. General and administrative expenses decreased by 12.9% to $30,500,000 mainly due to a decline in share based compensation expenses. As a percentage of total revenue, non GAAP G and A expenses, which exclude share based compensation, is 3.9% compared to 2.8% a year ago. We achieved a net income of $126,800,000 representing a net margin of 17.4%. This strong bottom line performance demonstrates our ability to optimize operations while selectively investing in promising opportunities.

[Dong Xie, CFO & Director at QuantaSing Group]

Our adjusted net income, which excludes share based compensation, was $132,000,000 representing a healthy adjusted net margin of 18.2%. Basic and diluted net income per share was $0.78 and $0.77 respectively during the quarter. Adjusted basic and diluted net income per share were $0.81 and $0.8 respectively during the quarter. Regarding our balance sheet position, as of 12/31/2024, we strengthened our cash position to RMB 1,213,820,000.00 in cash and cash equivalents, restricted cash and short term investments, representing an increase of RMB 186,900,000.0 from RMB1026.3 million as of 06/30/2024. This enhanced liquidity provides us with significant flexibility to invest in promising areas while maintaining financial discipline.

[Dong Xie, CFO & Director at QuantaSing Group]

Looking ahead, our strengthened cash position and solid operational base give us confidence in our execution capabilities. By diversifying our revenue streams across multiple business lines, we are strategically positioning ourselves to navigate market uncertainties and clinical challenges. That concludes my prepared remarks. Operator, let's open up the call for questions. Thank you.

[Operator]

Thank you. We will now begin the question and answer session. Our first question comes from Michael Kim from Zacks Small Cap Research. Please go ahead.

[Michael Kim, Equity Research Analyst at Zacks Investment Research]

Great. Good morning or good evening, everyone. Thanks for taking my questions. Just first, as you look across the online education platform, any sense of how much the silver demographic currently accounts for in terms of the existing user base? And then just looking beyond continuing to realign the course catalog with obviously with a focus on seniors.

[Michael Kim, Equity Research Analyst at Zacks Investment Research]

Just wondering if you could flesh out some specific plans to leverage those clients to really drive accelerating sales of related products and services? Thanks.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

Okay, Michael, I will answer in Chinese and Leo will translate for me.

[Leah Guo, Associate Director of Investor Relations at QuantaSing Group]

First of all, the silver demographic, people aged 60 and above is an important and growing user group on our platform. To better serve them, we have updated our course catalog to include health and lifestyle courses, specifically for seniors. We're also offering health and wellness products tailored to their needs. To drive the sales of silver economy products and services, our strategy includes launching consumer projects related to our courses and offering specialized study tour services. This will enhance user engagement and create new revenue opportunities.

[Leah Guo, Associate Director of Investor Relations at QuantaSing Group]

Additionally, we will also focus on cross selling and private traffic domain operations to promote higher value products. Furthermore, we plan to encourage in person community engagement, set up and implement membership programs and establish strategic partnerships with silver economy brands. This will improve user interaction and encourage word-of-mouth marketing, leading to further sales growth. Through these efforts, we are confident that we can achieve lasting success in the silver economy sector.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

Okay. That's all. Thank you.

[Michael Kim, Equity Research Analyst at Zacks Investment Research]

Great. Thanks. That's super helpful. And then just as the revenue profile continues to evolve through the transition, any perspectives on maintaining profitability, specifically as it relates to the adjusted net margin looking out over the next twelve months or so? Thanks.

[Dong Xie, CFO & Director at QuantaSing Group]

Okay, I'll take this one. Thank you, Michael, for your question. We are evolving and expanding our revenue streams and particularly by moving beyond without on a learning services into new areas, while keeping a strong focus on the bottom line. I think in the coming twelve months, we expect some maybe some short term investments and restructuring costs as part of our growth strategy. However, we are confident that our diverse approach will support long term profitability.

[Dong Xie, CFO & Director at QuantaSing Group]

Introducing new business segments and innovative offerings we require significant resources at first, but it will still help us leverage economies of scale, reduce operational risk and enhance margin sustainability. Furthermore, we are taking a disciplined approach to managing costs and expenses. We are prioritizing investments that have the potential to deliver high returns, while also optimizing our existing resources for operational efficiency. We are also closely monitoring each business unit's performance to balance growth with maintaining our margins. Regarding adjusted net margin, we expect some volatility during the transition phase, but we will continue to stay aligned with our profitability targets.

[Dong Xie, CFO & Director at QuantaSing Group]

Our focus is on stabilizing our margins as the new segments mature. We aim to balance strategic investments in growth with operational excellence, ensuring that profitability remains strong as our revenue profit evolves. We remain confident in our ability to adapt to the changing landscape and the rapidly changing environment and to maintain strong financial performance even during times of transformation. I think this view cost us some time, but I think in future, we still have based on our solid business model, we still have a very bright future in the near term. Thank you.

[Michael Kim, Equity Research Analyst at Zacks Investment Research]

Got it. Thanks for taking my questions.

[Operator]

Thank you. This concludes our question and answer session. I would like to turn the conference back over to the management for any closing remarks.

[Leah Guo, Associate Director of Investor Relations at QuantaSing Group]

Thank you again for joining our call today. If you have any further questions, please feel free to contact us or submit a request through our IR website. We look forward to speaking with everyone in our next call. Have a good day.

[Peng Li, Founder, Chairman of the Board & CEO at QuantaSing Group]

Okay. Thank you. Thank you.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Leah Guo, Associate Director of Investor Relations
• Peng Li, Founder, Chairman of the Board & CEO
• Dong Xie, CFO & Director

Analysts

• Michael Kim, Equity Research Analyst at Zacks Investment Research