Sunlands Technology Group Q4 2024 Earnings Report

Sunlands Technology Group EPS Results

• Actual EPS: $0.59
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Sunlands Technology Group Revenue Results

• Actual Revenue: $66.24 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Sunlands Technology Group Announcement Details

• Quarter: Q4 2024
• Date: 3/21/2025
• Time: Before Market Opens
• Conference Call Date: Friday, March 21, 2025
• Conference Call Time: 6:30AM ET

Sunlands Technology Group (NYSE:STG), through its subsidiaries, provides online education services through online and mobile platforms in the People's Republic of China. It offers various degree- and diploma-oriented post-secondary courses, including preparation courses for the self-taught higher education examination (STE) for learners pursuing associate diplomas or bachelor's degrees, as well as for the entrance examinations of Master of Business Administration programs. The company's STE courses include Chinese language and literature, law, pre-school education, marketing, English, human resource management, business administration, business management, modern corporate governance, financial management, advertising, accounting, administrative management, computer information management, finance, chain operation management, and visual communication and design and production. It also provides professional certification preparation courses in various industries and professions, such as accounting, human resources, teaching, and finance. In addition, the company offers education services through online and mobile platforms to adult students, pursuing post-secondary, and professional educations. The company was formerly known as Sunlands Online Education Group and changed its name to Sunlands Technology Group in August 2018. Sunlands Technology Group was founded in 2003 and is headquartered in Beijing, the People's Republic of China.

Sunlands Technology Group Q4 2024 Earnings Call Transcript

Key Takeaways

• Sunlands achieved 15 consecutive profitable quarters with Q4 revenue of RMB 483.5 million (–10.8% YoY) and net income of RMB 67.8 million, and full-year revenue of RMB 1.99 billion (–0.8% YoY) alongside RMB 342.1 million net income.
• New student enrollments rose by 9.5% in 2024, reaching a record high of approximately 675,000 learners, underpinning sustained demand and providing a base for future growth.
• The company has shifted its product mix from long-duration, high-priced courses to more accessible short-term and interest-based programs, which now make up 75.3% of total revenue to improve conversion rates and operational resilience.
• Sunlands is aggressively expanding into the senior education and silver economy sectors, offering arts, health, and study tour programs that leverage a rapidly growing senior market and diversify revenue streams.
• In February 2025, Sunlands integrated the AI platform DeepSeq to deliver personalized learning experiences, optimize content costs, and enhance operational efficiency across its adult education offerings.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to Sunlands Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. Today's conference call is being recorded. I'll now turn the call over to your host today, Yu Hua, Sunlands IR representative. Please go ahead.

[Yuhua Ye, Investor Relations at Sunlands Technology Group]

Hello, everyone, and thank you for joining Sunland's fourth quarter and full year twenty twenty four earnings conference call. The company's financial and operating results were issued in our press release via newswire services earlier today and are posted online. You could download the earnings press release and sign up for our distribution list by visiting our IR website. Participants on today's call will be our CEO, Mr. Tungbo Liu and our Financial Director, Mr.

[Yuhua Ye, Investor Relations at Sunlands Technology Group]

Hanhli Li. Management will begin with prepared remarks and the call will conclude with a Q and A session. Before I hand it over to the management, I'd like to remind you of Sanhana's Safe Harbor statement in relation to today's call. Except for the historical information contained herein, certain matters discussed in this conference call are forward looking statements. These statements are based on current trends, estimates and projections, and therefore, you should not place undue reliance on them.

[Yuhua Ye, Investor Relations at Sunlands Technology Group]

Forward looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward looking statement. For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission. With that, I will now turn the call over to our CEO, Tongbo Liu.

[Tongbo Liu, CEO at Sunlands Technology Group]

Thank you, Mr. Huat. Hello, everyone. Welcome to Sonae's fourth quarter and full year twenty eighteen earnings conference call. Prior to commencing, I would like to kindly remind all attendees that the financial information referenced in this release are presented on a continuing operation basis and all fingers are delineated in RMB unless explicitly specified otherwise.

[Tongbo Liu, CEO at Sunlands Technology Group]

We wrapped up the fourth quarter with net revenue of $483,500,000 and a net income of $577,800,000 marking our fifteenth consecutive quarter of profitability. For the full fiscal year, we recorded annual revenue of RMB1.99 billion with a net income of RMB342.1 million, extending our straight to four straight profitable years. The second considered performance underscores the strength of our business model and operational resilience to effectively navigate both industry dynamics and macroeconomic challenges. Despite a 0.8% decline in full year net revenue, we also saw encouraging signs of growth, including a steady rise in enrollments, which reached a record high of about 675,000 student enrollments in 2024. The adult education market is inherently cyclical with other economic conditions influencing learners' willingness to invest in themselves.

[Tongbo Liu, CEO at Sunlands Technology Group]

Localizing these shifts early, we have strategically refined our product mix over the past few years, transitioning from high priced, long duration courses to more accessible short term programs. This adjustment not only improves conversation rates, but also ensures we stay aligned with involving customer preference, enhancing both customer acquisition efficiency and overall operational resilience. Our operating cash flow remained strong, marking the third consecutive year with positive net income. This achievement reflects not only steady growth in student enrollment, but also our disciplined approach to financial management. More importantly, it gives us the flexibility to reinvest in key initiatives while maintaining resilience demand and market fluctuations.

[Tongbo Liu, CEO at Sunlands Technology Group]

Prodant cash management isn't just a safeguard against the supply chain. It's a strategic advantages that enable us to invest with confidence, adapt swiftly and set opportunities that drive long term value. As China's economy recovers and the consumer confidence rebounds, we see growing momentum in our sector. As an early mover in online education, we have gained valuable insights into the evolving needs of our demographic, uncovering new growth opportunities. With a maturely market and strong policy support, we are well positioned to leverage the strength and drive innovation.

[Tongbo Liu, CEO at Sunlands Technology Group]

We are confident that the foundation we have built coupled with new models we are exploring will lead to positive results and sustainable growth in the coming year. Now, let's turn to the performance of each of our major course programs. In 2024, degree of the normal oriented post secondary programs accounted for 10% of our total revenue. This has long been an important part of our business, but as we have carefully evaluated the changing demographic trends and the evolving education landscape, we have decided to reduce our investment in this segment and redirect our focus towards more promising opportunities with greater potential for noncent growth. While the demand for this sector remains stable, we will continue to monitor consumer needs and adapt as necessary to stay aligned with the evolving market dynamics.

[Tongbo Liu, CEO at Sunlands Technology Group]

The sector comprised interest, professional skills and professional certification preparation programs collectively accounted for 75.3% of our total revenues in 2024. With interest based programs emerging as a core pillar of our business over the past few years, we have strategically prioritized this sector, directing more resources and attention to developing a comprehensive portfolio of interest driving courses. This focus aligns with the broader societal trends, the shift towards personal fulfillment and growth that extends beyond the traditional work related education. As more individuals seek opportunities to enrich their lives and pursue passions outside their careers, We are uniquely positioned to meet them. Our goal is not only to respond to current training, but also to anticipate the future needs, fostering long term value by enhancing engagement, strengthening loyalty and delivering exceptional learning experiences.

[Tongbo Liu, CEO at Sunlands Technology Group]

Our emphasis on lifelong learning is particularly relevant given broader demographic shifts, especially the rapid growth of senior population. The 2025 government work report reaffirms the state's commitment to the tracing population aging and promoting the growth of the silver economy. China's demographic shifts present significant opportunities, particularly within the senior education, the sector that is poised to become a key driver of our future growth. To capture this potential, we are deepening our commitment to senior education by expanding our core offerings to better serve the evolving needs of senior learners. According to the forest and Sullivan's twenty twenty four China Cellular Economic Development Report, China's senior interest education sector continues to expand rapidly with 72,800,000 users in 2023 and penetration rates of 24.5%.

[Tongbo Liu, CEO at Sunlands Technology Group]

Between 2019 and 2023, the market grew robust to combine the annual growth rate of 14.7, underscoring the rising demand for lifelong learning among the elderly. Recognizing this trend early, we have focused on enriching the lives of older adults through engaging educational and social experiences By incorporating practical subjects such as arts, health and wellness, areas that strongly appeal to this demographic will have fostered greater enthusiasm and participation. Beyond education, we are also exploring diversified business opportunities by leveraging our substantial senior user base, including e commerce and study tours. Notably, our study tour programs have gained strong traction, combining interest based learning with travel to create a unique value proposition. In 2024, we launched dozens of same study tour routes, including music force tours in The United States, oil painting trades in Europe and cultural heritage tours within China.

[Tongbo Liu, CEO at Sunlands Technology Group]

This program served tens of thousands of senior customers and received the overwhelming positive feedback. The integration of specialized courses into these programs has enhanced the value proposition, resulting in higher gross margins and contributing to overall revenue growth. According to the Forest Service, China's silver tourism market is projected to reach RMB 2,800,000,000,000.0 by 2018, presenting substantial growth opportunities with a growing customer base and expanding portfolio we will position us capitalized on this rising demand and further strengthening our market presence. Through years of direct engagement, we have gained invaluable insights into the general needs of this demographic, insights that go beyond the surface level assumptions. This deeper understanding has guided us in refining our offerings, embedding social elements into course interactions and designing educational experience that are both engaging and accessible.

[Tongbo Liu, CEO at Sunlands Technology Group]

Looking ahead, we remain committed to strengthening our leadership in senior focused education and civil economy services. We will continue to expand our core offerings, introduce new product categories and explore innovation business models that align with evolving demographic and the market trends. Through this strategic approach, we are not only positioned to capture future growth opportunities, but also to create nothing value for our stakeholders and contribute to the broader development of the silver economy. To further enhance our educational offerings, we are also leveraging cutting edge technology to drive innovation. A key milestone was the integration of DeepSeq in February 2025, which enhances our ability to deliver personalized learning experiences, optimize cost content and improve operational efficiency.

[Tongbo Liu, CEO at Sunlands Technology Group]

DeepSec's advanced reasoning and autonomous learning capabilities capabilities enable us to address the diverse needs of adult learners with greater precision, tailoring to their varying backgrounds, growth and learning styles. As AI continues to reshape education, we remain focused on staying at the forefront of this transformation. As we move into 02/2005, we remain steadfast in our commitment to harnessing the power of technology, understanding the ever changing needs of our customers and continually improving the products and services we offer. Our focus will continue to be on delivering value through insightful market observations and careful refinement of our approach. By doing so, the organization ourselves to not only adapt to the future, but also to drive sustained long term growth.

[Tongbo Liu, CEO at Sunlands Technology Group]

Our work is never done, but we are confident that our thoughtful strategies will lead us to continued success. That concludes my prepared remarks. With that, I will turn the call over to our Financial Director, Han Yu, to run through our financials.

[Hangyu Li, Finance Director at Sunlands Technology Group]

Thank you, Tungbo. Hello, everyone. I'm pleased to share our fourth quarter and the full year results, which reflect our resilience and the discipline in executing our strategy. Over the past year, we have remained focused on sustainable growth, improving efficiency and strictly controlling costs. Our full year gross profit margin and net profit margin remained at 84.117.2% respectively, and we maintained positive operating cash flow for the third consecutive year, which fully demonstrates the success of our business model.

[Hangyu Li, Finance Director at Sunlands Technology Group]

Also revenue is under pressure in the short term. Our new student enrollments in the full year of 2024 increased by 9.5% year over year. This is mainly due to the expansion of the product portfolio, the addition of high value added products such as study tours and the positive feedback from the market. The growing student base provides us with a guarantee to expand our product portfolio and enhance the lifetime value of students. This is the foundation for us to achieve sustainable development and maintain financial health.

[Hangyu Li, Finance Director at Sunlands Technology Group]

A healthy financial situation provides us with confidence to cope with market fluctuations and is also the cornerstone for us to manage risk and make strategic adjustments. With each successful hurdle, our team will become stronger, which gives us confidence and ability to seize future opportunities. We believe that through resolute execution of our strategic initiatives, will further consolidate our competitive advantages, maintain our good development momentum and deliver lasting value to our stakeholders. Now, let me walk you through some of our key financial results for the fourth quarter of twenty twenty four. All comparisons are year over year and all figures are in RMB unless otherwise noted.

[Hangyu Li, Finance Director at Sunlands Technology Group]

In the fourth quarter of twenty twenty four, net revenues decreased by 10.8% to RMB483.5 million from $541,700,000 in the fourth quarter of twenty twenty three. The decrease was primarily driven by the decline in gross billings from post secondary courses over the recent quarters, partially offset by the year over year growth in revenues from sales of goods such as books and learning materials. Cost of revenues increased by 10.8% to CNY81.7 million in the fourth quarter of twenty twenty four from CNY73.8 million in the fourth quarter of twenty twenty three. The increase was primarily due to an increase in the cost of revenues from sales of goods such as books and learning materials. Gross profit decreased by 14.1% to $401,800,000 in the fourth quarter of twenty twenty four from $458,000,000 in the fourth quarter of twenty twenty three.

[Hangyu Li, Finance Director at Sunlands Technology Group]

In the fourth quarter of twenty twenty four, operating expenses were $351,300,000 representing a 0.7% increase from $348,900,000 in the fourth quarter of twenty twenty three. Sales and marketing expenses increased by 3% to $304,800,000 in the fourth quarter of twenty twenty four from $305,800,000 in the fourth quarter of twenty twenty three. General and administrative expenses decreased by 9.9% to $32,000,000 in the fourth quarter of twenty twenty four from $35,500,000 in the fourth quarter of twenty twenty three. The decrease was mainly due to declined compensation expenses of our general and administrative personnel. Product development expenses decreased by 41.2% to $4,500,000 in the fourth quarter of twenty twenty four from $7,600,000 in the fourth quarter of twenty twenty three.

[Hangyu Li, Finance Director at Sunlands Technology Group]

The decrease was mainly due to declined compensation expenses which is related to headcount reduction of our product development personnel. Net income for the fourth quarter of twenty twenty four was RMB67.8 million as compared to RMB 155,200,000.0 in the fourth quarter of twenty twenty three. Basic and diluted net income per share was RMB 8.55 in the fourth quarter twenty twenty four. As of 12/31/2024, the company had $507,200,000 of cash, cash equivalents and $276,000,000 of short term investments. As of 12/31/2024, the company had a deferred revenue balance of $916,500,000 as compared to $1,113,900,000 dollars as of 12/31/2023.

[Hangyu Li, Finance Director at Sunlands Technology Group]

Now for our outlook, for the first quarter of twenty twenty five, Sun Life currently expects net revenues to be between $470,000,000 to $490,000,000 which would represent a decrease of 6.4% to 10.2% year over year. The above outlook is based on the current market conditions and reflect the company's current and preliminary estimates of market and operating conditions and the customer demand, which are all subject to substantial uncertainty. With that, I'd like to open up the call to the questions. Operator?

[Operator]

Thank you. We will now begin the question and answer session. For the benefit of all participants on today's At this time, we're showing no questions. So this will conclude our question and answer session. Now I'd like to turn the conference back over to Yihua for any closing remarks.

[Yuhua Ye, Investor Relations at Sunlands Technology Group]

Once again, thank you everyone for joining today's call. We look forward to speaking with you again soon. Good day and good night.

[Operator]

This concludes this conference call. You may now disconnect your line.

[Operator]

Thank you.

Participants

Executives

• Yuhua Ye, Investor Relations
• Tongbo Liu, CEO
• Hangyu Li, Finance Director