OneSmart International Education Group Limited Investor ...filecache.investorroom.com/mr5ir_onesmart/116... · Steady growth in Shanghai- Monthly average student enrollments in Shanghai
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July 2018
OneSmart International Education Group Limited
Investor Presentation
2
Disclaimer
This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the
Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends,"
"plans," "believes," "estimates," "confident" and similar statements. OneSmart may also make written or oral forward-
looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report
to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or
employees to third parties. Any statements that are not historical facts, including statements about OneSmart's beliefs and
expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following:
OneSmart's goals and strategies; its future business development, financial condition and results of operations; its ability to
continue to penetrate premium K-12 after-school education services market; diversify and enrich our education offerings;
enhance the development and management of our teacher team and teaching materials; competition in our industry
in China; its ability to maintain and expand online education presence; relevant government policies and regulations relating
to the corporate structure, business and industry; and its ability to protect our students’ information and adequately address
privacy concerns . Further information regarding these and other risks, uncertainties or factors is included in the Company's
filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the
date of the press release, and OneSmart does not undertake any obligation to update such information, except as required
under applicable law.
Section 1
Company Overview
4
Who We Are – Mission, Vision and Values
Bring out the utmost learning power in each student by cultivating his or her study
motivation, capability and perseverance, and enable our students to pursue life-long success
Our Mission
Build the most trusted ‘‘Third Classroom’’ outside of home
and school
Our Vision
Customer FocusExecutionInnovationTeamwork
Our Values
• Bring out the utmost learning power in each student by cultivating his or her study motivation, capability and perseverance, and enable our students to pursue life-long success
Our Mission
• Build the most trusted ‘‘Third Classroom’’ outside of home and school
Our Vision
• CEIT:
•Customer Focus
•Execution
•Innovation
•Teamwork
Our Values
5
Who We Are - Largest Premium K-12 Education Service Provider
in China
Notes1. In terms of revenue in 2016 and 2017, according to Frost & Sullivan2. For students from kindergarten to the third grade in Shanghai in terms of revenue in 2016 and 2017, according to Frost & Sullivan 3. As of May 31, 20184. In terms of revenue in 2017, according to Frost & Sullivan5. A student enrollment is defined as a student who takes at least one class in one subject during a certain period. Under this definition, a student taking at least one class in each of two subjects during a certain period is treated as two
student enrollments for the period. The number of students enrolled in our invested K-12 schools and OneSmart Online is not included for this purpose6. For the fiscal quarter ended May 31, 20187. Fiscal year ended August 31
Well-recognized brand with 302
study centers covering 43cities in China(3)
Dominant 2017 market share of
26.3%(4) in Shanghai’s premium K-12
after-school education market
124,892 average monthly student
enrollments(5)(6)
#1 premium K-12 after-school tutoring
service provider in China(1)
#1 young children mathematics education
service provider in Shanghai(2)
5,629full-time teachers(3)
RMB2.1Bnrevenue in FY2017(7) with
37.4% 3-year CAGR
6
Premium Tutoring Services
1-on-1, 1-on-3 3rd–12th Grade
Kids Math
1-on-8 1-on-14
Language and Culture Programs New Program Initiatives
OneSmart OnlineOneSmart ClassOneSmart Overseas Language Training
OneSmart Overseas
Study Consultation
OneSmart
Study Camp
HappyMathOneSmart VIP
Notes1. In terms of revenue in 2016 and 2017, according to Frost & Sullivan2. For students from kindergarten to the third grade in Shanghai in terms of revenue in 2016 and 2017, according to Frost & Sullivan
also covers Chinese and STEM education
What We Do
FasTrack English
Kids English
#1 premium K-12 after-school tutoring
service provider in China
3 to 8 Years Old
#1 young children mathematics education service provider in Shanghai
3 to 8 Years Old
Kids English with a focus on
STEM English
7
Our Key Milestones
2008
2018
Launched Our UPC System(1)
Opened Our First Study
Center in Shanghai
Opened Our First Study
Center Outside Shanghai
Launched
HappyMath Program
Number of Study
Centers Surpassed 100
Launched 1-on-3 Programs
302 Study Centers in
43 Cities in China(2)
Listed on NYSE on March 28, 2018
2009
2012
2014
2016
U.S. Secretary of Education Dr. John B. King Jr.
visited OneSmart
Notes1. Unique Personalized Coach, an operational management system that enables us to build a set of robust operational and management information solutions that integrate and unify our operations and improve the efficiency of how we
expand and operate our study center network2. As of May 31, 2018
2013
8
Company Highlights
Leader in premium K-12 after-school education services market with established brands
Significant expertise in teaching staff management and curriculum development
brings R&D economy of scale
Customized and comprehensive learning experience powered by innovation
Robust teaching and operation system supported by our standardized
technology platform
Comprehensive suite of service offerings that significantly extend life time value of
customers for margin expansion
Experienced management team with proven track records6
1
3
4
2
5
9
Core Operation Strategies
Our future core operation strategies will focus on customer satisfaction, profitable growth and
diversification of our business
• Strengthen our
technologies
and in-house
teaching
capabilities
• Expand our online education presence
• Enrich our
education
program offerings
Profitable Growth
Diversification
1 Customer
Satisfaction
• Continue to
penetrate
premium K-12
tutoring market
• Enhance the
development and
management of our
teacher team and
teaching materials
2
3
• Pursue selective strategic
investments and acquisitions to
further build ecosystem
10
1
3
4
2
Expand more subjects taken by each student and maximize student life-time revenue
Start offering Chinese, science, and computer programming subjects at HappyMath centers
Cross-selling among Happymath and FasTrack English students
Manage geographic expansion profitably
Further penetrate into top cities that we operate to achieve higher marketing and G&A efficiency and ensure early ramp-up of new learning centers
Selectively enter into new cities with great market potential
Enrich product and service offerings
Successfully acquired FasTrack English in Jan 2018
Launched OneSmart Class and OneSmart Online programs
Continuous margin expansion opportunity through better product mix
Higher revenue contribution from 1 on 3 premium tutoring services and 1 on 8 young children education programs
Roadmap to Revenue Growth and Margin Expansion
Section 2
Key Highlights for Third Fiscal
Quarter of 2018
12
Monthly Average Student Enrollments1 Increased by 44.7% Year-
over-Year
Net Revenues Increased by 37.6% Year-over-Year
Net Revenues from OneSmart VIP Programs increased by 29.0%
Year-over-Year
Net Revenues from HappyMath increased by 76.0% Year-over-Year
New Student Enrollments of newly acquired FasTrack English
increased by 138.0% Year-over-Year
Non-GAAP Net Income Attributable to OneSmart’s Shareholders
increased by 26.7% Year-over-Year
Key Financial Highlights for Third Fiscal Quarter of 2018
13
Key Business Highlights for Third Fiscal Quarter of 2018
OneSmart VIP
Steady growth in Shanghai- Monthly average student
enrollments in Shanghai increased by 26.6% year-over-
year. OneSmart VIP in Shanghai continued to achieve a
healthy EBIT margin of above 40% during the third fiscal
quarter of 2018;
Extremely strong growth in markets outside Shanghai.
Monthly average student enrollments increased by over
50% in 14 cities, most of which we entered during the past
two years:
Opened 19 new OneSmart VIP learning centers during the
quarter;
Revenues from 1-on-3 programs increased by 62.6% year-
over-year;
Extended OneSmart VIP business into overseas language
training, overseas consultation, and study camp programs to
provide premium families one-stop shopping opportunities
and further accelerate the growth.
HappyMath
Revenues increased by 76.0% year-over-year to RMB90.6
million with monthly average student enrollments increased
by 75.1% year-over-year to 21,178
Revenue in mature market such as Shanghai increased by
59.4% year-over-year.
Revenues in Shenzhen and Guangzhou increased by more
than 50% year-over-year; revenues in Chengdu, Xiamen,
Nanjing and Changsha all achieved more than 100%growth year-over-year; while revenues in Beijing and Suzhou
increased by 264.5% and 384.9% year-over-year,
respectively.
More than 4,200 students were enrolled for the Chinese
subject during the third fiscal quarter of 2018.
Average subjects taken by HappyMath student were 1.22subjects in May 2018.
14
Successful Acquisition & Integration of
FasTrack English
With our “Standard Operation Perfection System”
(“SOPS”), we successfully accelerated the growth of
newly acquired FasTrack English business. We re-
positioned it as premium kids English brand with a focus
on STEM English, successfully opened 8 new learning
centers and managed to expand the operation into
Shenzhen;
New student enrollments increased by 138.0% year-
over-year during the third fiscal quarter of 2018 vs
approximately 30.0% historical growth before
acquisition;
The above demonstrated our strong execution
capabilities to continuously integrate and manage our
growth from acquired business. We will engage in more
acquisitions as one major approach to further
consolidate the fragmented market and accelerate our
top-line growth.
Key Business Highlights for Third Fiscal Quarter of 2018 (Cont’d)
Incubation & Strategic Investment in
Yimi Online
Initial investment in 2015, subsequent investment
together with Blue Lake Capital in 2018
A leading online platform that focuses on 1v1 or 1v6 live
after school tutoring courses
100% Full Time teachers
Latest round of valuation: USD 80 Million
For the first six-month ended June 30, 2018, gross
billings and revenues increased by 523.6% and
338.6% year-over-year, respectively. Student
enrollments in June 2018 increased by 469.8% year-
over-year
15
Sources Frost & Sullivan, Company
Tremendous Achievements Accomplished by Us and Our Students
Notes1. Classes of 2017 for university and high school admission rate, class of 2018 for admission to top 10 private primary schools2. Out of more than 27,000 interviewees who responded to questionnaires to parents of students attending OneSmart VIP programs3. A student enrollment is defined as a student who takes at least one class in one subject during a certain period. Under this definition, a student taking at least one class in each of two subjects during a certain period is
treated as two student enrollments for the period. The number of students enrolled in our invested K-12 schools and OneSmart Online is not included for this purpose4. Quarterly student retention rates for fiscal years ended August 31, 2015, 2016, 2017 and three months ended February 28, 2018 5. Out of more than 400 interviewees who responded to questionnaires to parents of students attending HappyMath programs
40% China avg.
91% vs.University
Admission
Rate(1)
90% vs. 57% China avg.
>60%vs. 8% Shanghai avg.
Students’ Success in School Admission and Exams Yielding High Satisfaction Rate
91%Parents are
Satisfied to Our
Teaching Service(2)
74%Students Making
Progress under
Our Program(2)
40%Parents of
Students Taking
HappyMath Gave
Full Satisfaction
Score(5)
Highest average hourly
tuition fee rate among peers
Exceptional quarterly retention
rate maintained at ~80% (4)
High average monthly student
enrollment(3) growth at
~37.3% 3-year CAGR
41 56 77
FY15 FY16 FY17
‘000
Exceptional Operational and Business Results
High School
Admission
Rate(1)
Admission to
Top 10 Private
Primary
Schools(1)
Section 3
Financial Highlights
17
51 91
141
242
FQ32017
FQ32018
9M2017
9M2018
HappyMath
546 705 1,273 1,639
FQ32017
FQ32018
9M2017
9M2018
1,089
1,529
2,058
FY2015 FY2016 FY2017
+72.1%
Growth
Net Revenues(1) OneSmart VIP
RMB MM
Notes1. Fiscal years ended August 31 and fiscal third quarters ended May 31
RMB MM
+100.1%RMB MM +76.0%
Growth
+33.1%
CAGR
+29.0%
Growth
CAGR
599
824
1,421
1,929
FQ32017
FQ32018
9M2017
9M2018
+37.6%
Growth
53
113
212
FY2015 FY2016 FY2017
+37.4%
CAGR
Growth
+35.8%
+28.8%
Growth
Strong Top-line Growth Momentum in Different Business Segments
26
37
FQ32017
FQ32018
9M2017
9M2018
FasTrack English
1,036 1,416
1,840
FY2015 FY2016 FY2017
18
2,735,998
3,425,157
6,667,587
8,267,726
387,770
627,018
1,051,334
1,691,406
154,314
225,902
FQ32017
FQ32018
9M2017
9M2018
3,123,768 7,718,921
10,185,034
4,206,489
102 123 161 163
220 1527
34 33
60
22
FY2015 FY2016 FY2017 FQ3 2017 FQ3 2018OneSmart VIP Happymath FasTrack
196
6,570 7,486
8,711 8,218
10,840
FY2015 FY2016 FY2017 FQ3 2017 FQ3 2018
Scaling-up in Various Metrics
36,946
48,153
63,295
3,797
7,867
13,545
FY2015 FY2016 FY2017
76,841
74,235
96,810
62,756 84,781
12,094
21,178
11,359
17,445
6,904
6,633
FQ32017
FQ32018
9M2017
9M2018
86,32974,115
108,858
+37.3%
CAGRGrowth
+46.9%
Average Monthly Enrollments(1) Consumed Class Units(1)
Number of Classrooms(1)
+15.2%
CAGR
Notes1. Fiscal years ended August 31 and fiscal third quarters ended May 31
Number of Study Centers(1)
+29.1%
CAGR
+54.1%
Growth
117
150
195
302
+44.7%
Growth
+31.9%
Growth
40,743
56,019124,892
5,461,538
7,618,276
9,611,332
463,927
935,902
1,600,858
FY2015 FY2016 FY2017
11,212,290
5,925,465
8,554,178
+37.6%
CAGR
OneSmart VIP Happy Math FasTrack English OneSmart VIP Happy Math FasTrack English
+34.7%
Growth
+31.9%
Growth
19
Gross Profit and Gross Margin(1)
High Gross Margin
RMB MM
Notes1. Fiscal years ended August 31 and fiscal third quarters ended May 31
46.7% 52.2% 51.3% 55.7% 55.3%
487
735
939 22
63
120
FY2015 FY2016 FY2017
304 396
647
832
28
51
82
136
FQ32017
FQ32018
9M2017
9M2018
Happy Math
51.5% 50.7%
FY2015
FY2016
FY2017
FQ32017
FQ32018
9M2017
9M2018
Premium
Tutoring47.0% 51.9% 51.0% 55.7% 56.2% 50.8% 50.8%
Happy Math 41.8% 56.3% 56.7% 54.6% 56.0% 58.2% 56.1%
FasTrack
EnglishNA NA NA NA 38.3% NA 32.9%
Overall
Gross
Margin
46.7% 52.2% 51.3% 55.7% 55.3% 51.5% 50.7%
Gross Margin
OneSmart VIP
FasTrack EnglishOthers
20
29.3% 28.2%30.8% 29.9%
7.9% 9.0%9.2% 10.3%
2.2% 3.1%2.5% 3.3%4.9% 4.4%
6.0% 5.9%
FQ3 2017 FQ3 2018 9M 2017 9M 2018
32.5% 31.7% 31.1%
11.1%8.4% 9.1%
4.2%
2.9% 2.6%
5.5%
4.8% 5.9%
FY2015 FY2016 FY2017
Clear Cost Structure
Notes1. Fiscal years ended August 31 and fiscal third quarters ended May 31
53.3% 47.8% 48.7% 44.3% 44.7%
Staff costs Rental costs
Depreciation and amortization Other costs
48.5% 49.3%
21
Non-GAAP Selling & Marketing Expenses as % of
Revenues(1)(2)
Non-GAAP General & Administrative Expenses as
% of Revenues(1)(2)
Efficient Management Leads to Lower and Stabilizing Expenses
Notes1. Fiscal years ended August 31 and fiscal third quarters ended May 312. Excluding share based compensation expenses
13.6% 19.3% 18.6% 16.1% 17.4%22.4% 17.0% 17.9% 15.4% 15.8%
RMB MM RMB MM
244 261
368
0
50
100
150
200
250
300
350
400
FY2015 FY2016 FY2017
82
159
264
395
FQ32017
FQ32018
9M2017
9M2018
202
247
357
FY2015 FY2016 FY2017
92
130
250
344
FQ32017
FQ32018
9M2017
9M2018
18.6% 20.5% 17.6% 17.8%
22
Robust Income and Healthy Margin
Operating Income and Operating Margin (1) Non-GAAP operating Income and Operating Margin (1)
Net Income and Net Income Margin (1) (2) Non-GAAP Net Income and Net Income Margin (1) (2)
RMB MM RMB MM
RMB MM RMB MM
Notes1. Fiscal years ended August 31 and fiscal third quarters ended May 312. Net income attributable to OneSmart
5.8% 19.1% 16.0% 26.7% 20.2%
63
234
305
FY2015 FY2016 FY2017
160 167 218 238
FQ32017
FQ32018
9M2017
9M2018
15.3% 12.3%5.8%
56
189
259
FY2015 FY2016 FY2017
15.3% 14.8% 24.9% 6.9% 13.8% 6.1%
63
291 330
FY2015 FY2016 FY2017
5.1% 12.4% 12.6% 20.4% 7.1% 11.5% 8.5%
56
247 284
FY2015 FY2016 FY2017
5.1% 16.1% 13.8% 22.2% 20.4% 13.0% 14.7%
149
57
196
118
FQ32017
FQ32018
9M2017
9M2018
122
58
163 163
FQ32017
FQ32018
9M2017
9M2018
133 169 185
283
FQ32017
FQ32018
9M2017
9M2018
23
47 84
173
FY2015 FY2016 FY2017
Robust Cash Flows and Healthy Balance Sheet with Low
Capex Requirements
Operating Cash Flows(1) Capex and Capex as a % of net revenues(1)
Prepayments from Customers(1)
Cash and Cash Equivalents and Short-term
Investments(1)
RMB MM RMB MM
RMB MM RMB MM
Notes1. Fiscal years ended August 31 and fiscal third quarters ended May 31
4.3% 5.5% 8.4% 6.3% 7.6%
396
614
773
FY2015 FY2016 FY2017
234
323 490 659
FQ32017
FQ32018
9M2017
9M2018
38 63
134 177
FQ32017
FQ32018
9M2017
9M2018
742 1,053
1,531
1,966
FY2015 FY2016 FY2017 FQ3 2018
516
1,010
1,396
2,354
FY2015 FY2016 FY2017 FQ3 2018
9.5% 9.2%
Thank You
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