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Good day, everyone, and welcome to the Tarena Second Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Sylvia Yang, Investor Relationship Manager. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to Tarena's earnings conference call for the second quarter of 2023. The company's earnings results were released earlier today and are available on our IR website. ir.tedu.cn as well as on Newswire services. Today, you will hear from Ms. Nancy Ying Sun, our CEO; and Mr. Xiaobo Shao, our CFO, who will take you through the company's operational and financial results for the second quarter of 2023. After their prepared remarks, Nancy and Mr. Shao will be available to answer your questions. Before we continue, please note that the discussion today will contain certain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Tarena does not assume any obligation to update any forward-looking statements, except as required under applicable law. Also, please note that some of the information to be discussed includes non-GAAP financial measures as defined in Regulation G. The U.S. GAAP financial measures and information reconciling these non-GAAP financial measures to Tarena's financial results prepared in accordance with U.S. GAAP are included in Tarena's earnings release, which has been posted on the company's IR website at ir.tedu.cn. Finally, as a reminder, this conference call is being recorded. In addition, a webcast of this conference call is available on Tarena's Investor Relations website. I will now turn the call over to Ms. Nancy Ying Sun, the CEO of Tarena.

[Foreign Language] Thank you, Sylvia, and thanks, everyone, for joining our earnings conference call today. In the second quarter of 2023 as the impact of uncertainties in external business environment at the beginning of this year abated, we achieved a 42% quarter-over-quarter increase in revenue. Benefiting from the prudent financial and operational strategy we adopted during the post-pandemic period, we effectively alleviated the sluggish economic recoveries impact on top market supply and demand while enhancing the financial health of our IT-focused supplementary STEAM and 2C professional education services. As a result, our group second quarter operating loss narrowed substantially by 88% quarter-over-quarter. Furthermore, as part of our focused business strategy, we have cut out our college collaboration related to the business. This transaction brought up disposal gains enabling us to achieve a net profit of RMB 8.34 million in the second quarter. Our total net revenues in the second quarter of 2023 amounted to RMB 545 million a year-over-year decline of 16% for RMB 649 million in the same period of 2022. Among them, revenue from our IT-focused supplementary STEAM education business recovered to the level of the same period last year, thanks to the improving external business environment. Meanwhile, revenue from our IT professional education business declined by 34.8% year-over-year due to a relatively longer recovery period as a result of the sluggish economic recovery impact on this market. In the second quarter of 2023, our costs and expenses decreased by 8.2% year-over-year, mainly due to reduced expenditures on rent, depreciation and other aspects as we adjusted our management structure and optimized our stock mix on learning centers have over consistent cost reduction and efficiency enhancement strategy. Meanwhile, the year-over-year decrease in the G&A expenses was also attributable to the one-time plus action charge last year. Now let me walk you through our IT-focused supplementary STEAM education business. In the second quarter of 2023, net revenues from our IT-focused supplementary STEAM education business was [RMB 647.7 million] in line with the second quarter of 2022. Despite a slight 1.7% year-over-year increase in cost and expenses, we achieved an operating profit of RMB 25.3 million, marking our second consecutive quarter of operating profitability, as we gradually shook off the ongoing impact of the first quarter's external business environment limitations our overall prior efficiency enhancement led to the improvement of our financial health. From the customer acquisition front, environment increased since the beginning of the first quarter, benefiting from our premium courses and delivery quality as well as our very excellent word of mouth referral. This facilitated our recovery from the ongoing impact of the challenging general business environment. In the second quarter of 2023, enrollment reached 177,000, a slight decrease from one year ago. Among them, renewable students and students enrolled through word of mouth referrals accounted for 76.3% of new fee-paying students. Regarding the operation of our centers, the total number of centers providing IT-focused supplementary STEAM education services declined to 215 as of the end of the second quarter of 2023 from 227 at the end of the second quarter of 2022. At the same time, the number of students enrolled at the center increased from 767 the second quarter of the last year to 822 in the same period of 2023, what revenue percent increased to RMB 1.61 million in the second quarter of 2023 from RMB 1.51 million last year. Next, moving to our IT professional education business. As the business environment improved, the net revenue of our IT professional education business increased by 47% quarter-over-quarter. This business experiencing a relatively longer recovery period. As a sluggish overall post-epidemic economic recovery continues to affect top market supply and demand to a certain extent, impacted by weak market demand and reduced the cash received in the past quarters. Net revenue for our IT professional education business decreased by 34.8% year-over-year. We strictly adhered to our operating strategy of cost reductions and efficiency enhancements during this quarter, driving a decrease in our IT professional education business total cost of 15.5% year-over-year. Its gross margin decreased due to the revenue decline. On the operation front, our total number of centers providing IT professional education services declined to 52 at the end of the second quarter of 2023 from 98 in the second quarter of 2022. Excluding the impact of our carve-out of the college collaboration-related business, of a net reduction in the number of centers, providing To-C IT for professional education services was 23 compared with 75 centers one year ago. Our long-term disciplined control of central operations as well as the decreased number of centers enabled us to effectively control of operating expenses. Meanwhile, as we continued to optimize the staff mix enhanced operating efficiency and comprehensively upgrade our organization's refined management, we significantly narrowed our operating loss in our overall IT professional education business by 85.4% quarter-over-quarter. In addition, in order to focus on our core competence, that is providing To-C IT professional and STEAM education services. The company carved out the college collaboration-related business the second quarter of 2023 and retained our minority interest. As we mentioned before, the carve-out of our college collaboration-related business will improve our financial health, while allowing us to focus on enhancing our operational capability and the profitability of our two core businesses. That concludes my review of the company's operations for the second quarter of 2023. The impact of the uncertainties in the external business environment spanning the end of 2022 through the beginning of 2023 has almost faded away, although the IT professional education business will take some time to recover due to the sluggish economic recover impact on the stock market demand, our IT-focused supplementary STEAM education business is benefiting from the relatively strong market demand in the supplementary STEAM education field, demonstrating our business resilience. During this period, we will continue to enhance our operating capability and management efficiency with a more focused operational strategy while adapting to the evolving market demand across digital transformation and artificial intelligence by adjusting our course catalog according to -- accordingly to empower students development, we believe this will prepare the company's long-term growth and drive our profitability improvement. Looking ahead, as the business environment stabilizes, company's rising need for digital transformation and the rapid development of artificial intelligence will drive the continuous growth of market demand for IT talent, although the normalization of the market supply and demand while lag behind the economic recovery in the short term. We are confident that supported by favorable professional education policies, we can help our students adapt to social development and promote employment by creating courses that cater to their needs as well as the professional needs of the market. As always, we will continue to fully leverage our own competitive advantages to create additional shareholder value. As announced previously in our public filings, the Board of Directors has appointed Mr. Xiaobo Shao, as the company's Chief Financial Officer. On behalf of Tarena, I would like to send a warm welcome to Mr. Shao. We believe that with his abundant experience in the education and Internet field and his professional expertise, he will help us achieve new breakthroughs in operational efficiency and profitability enhancement through a combination of the financial and operational management activities. Meanwhile, I would like to thank Ms. Ping Wei for her contributions during her tenure as our CFO over the past year. Next, I will turn the call over to Mr. Xiaobo Shao to walk you through our financials for the second quarter of 2023.

Thank you, Nancy, and hello, everyone. Now let me walk you through some of our second quarter financial highlights. Please also refer to the press release for more information. For the second quarter of 2023, the company measured its operating loss to RMB 6.8 million compared to an operating loss of RMB 58.8 million in the first quarter. While we experienced a tough and challenging transition period in the first quarter, our business have gradually recovered in the second quarter and recorded a sequential growth of 42% in revenue, representing a relatively resilient recovery and an improved operating environment. The uncertainty of sustained economic recovery in the post-pandemic phase has an impact on employment supply and demand, which has led to a relatively longer recovery period for the adult professional education business. Although we narrowed the decline of cash collection in the adult business year-over-year, recognized revenues will decrease due to lower cash receipts. Meanwhile, thanks to restored social mobility, our IT-focused STEAM education has emerged from the temporary closures of our learning centers with stable and continuous demand for STEAM education, we witnessed a relatively healthy year-over-year growth in cash reserves. Contributing to the return of STEAM education net revenue to the same level as in the same period of 2022. Overall, our total net revenues in the second quarter of this year was RMB 545 million, a 16% decrease from the same quarter of last year. The decrease in revenue was primarily attributable to IT professional education given its lower student enrollment number resulting from the closure of lower profitability teaching centers as well as the impact of the college collaboration-related business divestiture with only two methods of revenue recognized in the second quarter of this year. Average cost of revenues decreased by 2.2% to RMB 266.3 million in the second quarter of this year from RMB 272.3 million in the same period of last year. The decrease was mainly due to a decrease in personnel cost attributable to head count reduction and the decrease in rental fees and the depreciation costs attributable to the closure of some teaching centers during this period. The decrease was partially offset by the increase in cost of camps and the competition activities in this quarter and made a high demand for extracurricular courses. Although the decline in revenues exceeded the reduction in the cost of revenues, resulting in a decrease in gross profit to RMB 278.5 million and the narrowed gross margin at 51.1%. Our effective operational measures partially offset the impact in the post-pandemic phase. Total operating expenses decreased by 13.1% to RMB 285.5 million in the second quarter of this year from RMB 328.5 million in the same period of 2022. Total non-GAAP operating expenses, which excluded share-based compensation expenses, decreased by 13% to RMB 284.6 million in the second quarter of this year from RMB 327.4 million in the same period of 2022. Total share-based compensation expenses allocated to the related operating expenses decreased by 23.5% to RMB 0.9 million in the second quarter of this year from RMB 1.5 million in the same period of last year. Selling and marketing expenses decreased by 3.7% to RMB 151 million in the second quarter of 2023 from RMB 156.9 million in the same period of last year. The decrease was mainly due to a decrease in the personnel-related costs resulting from a decrease in the number of sales staff in the second quarter of 2023, partially offsetting the increased advertising costs during the recurring phase. Benefiting from the effective control of marketing spending as well as a decrease in personnel-related costs, selling and marketing expenses decreased by 19.8% to RMB 264.2 million in the first half of this year from RMB 329.3 million in the same period of last year. General administrative expenses decreased by 25.1% to RMB 118.8 million in the second quarter of this year from RMB 158.7 million in the same period of last year. The decrease was mainly due to headcount reduction as well as a onetime provision related to a class action also in the previous period. There was no such expense accrual for the second quarter of this year. Research and development expenses increased by 21.9% to RMB 15.7 million in the second quarter of 2023 from RMB 12.9 million in the same period of 2022. The increase was mainly due to an increase in spending on operating systems improvements to enhance operating efficiency. As a result of foregoing, operating loss was RMB 6.8 million in the second quarter of 2023 compared to operating income of RMB 48 million in the same period of last year. Non-GAAP operating loss, which excludes the share-based compensation expenses, was RMB [0.9] million in the second quarter of 2023 compared to a non-GAAP operating income of RMB 49.2 million in the same period of 2022. As we mentioned in the last quarter, we spent off the college collaboration related business in the second quarter, which brought a gain on disposal of RMB 26.8 million. This contributed to net income of RMB 8.3 million in the second quarter of 2023 compared to a net income of RMB 47.9 million in the same period of last year. Non-GAAP net income, which excluded share-based compensation expenses, was RMB 9.2 million in the second quarter of this year compared to non-GAAP net income of RMB 49.1 million in the same period of 2022. Also with the gain of disposal, we narrowed our net loss to RMB 41.6 million and non-GAAP net loss to RMB 39.6 million for the first six months of 2023. Now on the EPS side. Basic income per ADS was RMB 0.7 in the second quarter of 2023. Diluted income per ADS was RMB 0.67 in the second quarter of this year. Non-GAAP basic income per ADS, which excluded share-based compensation expenses, was RMB 0.78 in the second quarter of this year. Non-GAAP diluted income per ADS, which excluded share-based compensation expenses, was RMB 0.75 in the second quarter of 2023. Net cash outflow from operating activities in the second quarter of this year was RMB 20 million. During the second quarter, we received RMB 76.6 million in payments for the disposition of the two buildings we own, the remaining final payment was already settled in the third quarter. Capital expenditures in the second quarter of 2023 were RMB 11.6 million. As mentioned earlier, we experienced a challenging quarter with a relatively lucky recovery of the adult business. As of June 30 of 2023, the total balance of cash, cash equivalents and restricted cash was RMB 368.1 million, a decrease of RMB 5.9 million from December 31, 2022. That concludes my financial highlights section. Thank you again for your attention and support. Now I'd like to open the floor for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from [indiscernible]. Please go ahead.

[Foreign Language] Thank you for having me here. I have a question to you. According to the statistics, the company registered improvement quarter-to-quarter. I'm wondering what are the major driving factors behind except for the improvement on the operating environment. Thank you.

[Foreign Language] Thank you for having -- thank you for posing questions. I'm going to offer you three major factors as far as I could understand. First of all, as the general business environment is on the improvement we are seeing a boost up of the social liquidity as a natural result, we are seeing the cost of the custom acquisition as well as the delivery of the courses on the improvement as well. That is the first reason. And secondly, we are also conducting a wide range of social events such as the challenges, competitions and camps for the youth and youngsters. They are also getting good experiences which would eventually win the word of mouth among the general users and potential customers. For the third reason, we are also seeing friendly policies as well. Currently, we are seeing the good policy to promoting the growth of the programming abilities as well as the STEAM education services. The parents are developing new awareness which is leading us to have a deeper market penetration. So the good news is we are in the market is getting stabilized with a good growing momentum. Thank you. So thank you for staying with us in the previous years as well as in the upcoming years, and thank you for your support to Tarena again.

Hi operator, could you ask it again?

[Operator Instructions] As I see no further questions, I would like to turn the conference back over to Sylvia Yang for any closing remarks.

Thank you, operator. If there are no further questions at present, we would like to conclude by thanking everyone for joining our conference call. We welcome you to reach out to us directly by e-mailing at [email protected]. Should you have any questions or requests for additional information, we encourage you to visit our Investor Relations site at ir.tedu.cn. Thank you.

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

Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter of 2023 Tarena International, Inc. Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today, June 13, 2023. I would now like to hand the conference over to your first speaker today, Ms. Sylvia Yang, the Investor Relationship Manager. Thank you. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to Tarena's earnings conference call for the first quarter of 2023. The Company's earnings results were released earlier today and are available on our IR website, ir.tedu.cn, as well as our newswire services. Today, you will hear from Ms. Nancy Ying Sun, our CEO; and Ms. Ping Wei, our CFO, who'll take you through the Company's operational and financial results for the first quarter of 2023 and give revenue guidance for the second quarter of 2023. After their prepared remarks, Nancy and Ms. Wei will be available to answer your questions. Before we continue, please note that the discussion today will contain certain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Tarena does not assume any obligation to update any forward-looking statements, except as required under applicable law. Also, please note that some of the information to be discussed includes non-GAAP financial measures as defined in Regulation G. The U.S. GAAP financial measures and information reconciled in this non-GAAP financial measure to Tarena's financial results prepared in accordance with U.S. GAAP are included in Tarena's earnings release, which has been posted on Company's IR website at ir.tedu.cn. Finally, as a reminder, this conference call is being recorded. In addition, a webcast of this conference call is available on Tarena's Investor Relations website. I will now turn the call over to Ms. Nancy Ying Sun, the CEO of Tarena.

[Foreign Language] Thank you, and thanks everyone for joining us today. The first quarter while the overall business environment was challenging, we achieved a relatively healthy financial performance. In particular our net operating cash outflow narrowed year-over-year as we continued to execute our prudent financial and operational strategy. While we temporarily closed our learning centers early in the quarter beating to a year-over-year reductions in cash receipts, we strictly controlled our cash expenditures through cost reductions and efficiency enhancements to minimize the impact. Additionally, aided by the general economic recovery following the Chinese New Year, enrollments started to recover, leading to relatively strong performance in the second half of the quarter. In particular monthly enrollments in our IT focus a supplementary STEAM education services surpassed that of our pre-pandemic levels resulting in a rebound in operating cash inflow. Our total net revenues amounted to RMB385 million a year-over-year decline of 38.2% from RMB624 million in the same period of 2022. The decrease was primarily due to learning center closures for the whole month of January amid external challenges. These dynamics affected both our IT focus supplementary STEAM education business and our IT professional education business. Among them revenue from STEAM education services fell by 29.1% year-over-year, while revenue from our IT professional education dropped by 50.2%. Despite multiple challenges our long term prudent financial and operational strategy combined with our consistent cost reductions and efficiency enhancements, helped our operating cash flow return to positive territory during subsequent months for the first quarter. In the quarter our net operating cash outflow narrowed by 6% year-over-year to RMB17.73 million. In the first quarter of 2023 our costs declined by 30.4% year-over-year partially mitigating the effects of decreased revenue on our overall gross margin, which fell by 5.4 percentage points year-over-year. Additionally, operating expenses decreased by 21.3% year-over-year, which was primarily attributable to our effective cost controls - to our effective control marketing expenses, which declined by 34.4% Next let me walk you through our IT focus supplementary STEAM education business In the first quarter of 2023, net revenue from our STEAM education programs was RMB250.8 million down 29.1% from RMB353.9 million in the first quarter of last year. This represented 65.12% for total net revenue during the first quarter of 2023, an increase from the first quarter of last year. Meanwhile, we implemented effective cost controls at our learning centers. And as a result, our costs and expenses fell by 28.6% year-over-year in the first quarter. Under customer acquisition front enrollments increased during the quarter. This was due in part to our high quality courses and their delivery, as well as the gradual economic recovery. In the first quarter of 2023, enrollments reached 174,800 a slight increase compared with last year. Notably the number of renewal students and students enrolled through word of mouth referrals as a percentage of new fee paying students rose year-over-year to 81.6% in the first quarter of 2022. Regarding the operation of our center, the total number of our learning centers providing STEAM education services declined from 232 at the end of the fourth quarter of 2022 to 216 at the end of the first quarter of 2023. At the same time, number of students enrolled percenter increased from 737 in the first quarter of last year to 807 in the same period this year. Next, moving to our IT professional education business. In the first quarter, we suspended the opposition of some of our learning centers, leading to a year-over-year drop of 50.2% in net revenue for our IT professional education business. Nevertheless, as we strictly follows our operational strategy of cost reductions and efficiency improvements, the total costs of our IT professional education business declined by 42.9% year-over-year, while the gross margin decreased to 63.7%. Our enrollments has stabilized since February as gradual improvements in the external environment drove abroad its economic recovery. In addition, in order to focus on our core competence, namely providing IT professional and IT focus, supplementary STEAM education with a 2C model, the Board of Directors approved an investment agreement in April, whereby the company would carve out the college collaboration related business and retain only a minority interest. At the same time, a third party strategic investor would provide future funding for the further advancement of this business, which will operate independently. The college collaboration related business includes several cooperation model, one of which is joint major program. Under this model, colleges recruit students and provide general degree courses while we provide students with IT major related courses, hands on training, internships and job recommendations. We also have colleges build artificial intelligence - and we also have colleges build artificial intelligence and provide training services for colleges to use their labs effectively for peripherals business relating to college collaboration also carved out part of the deal. This particular business contributed about 4% of the company's total net revenue in 2022. The transaction is expected to close soon. That's a the [time to see the company acquisition] for the first quarter of 2023. Next I'll turn the call over to Ping Wei, our CFO to walk you through our financials for the first quarter of 2023.

Thank you, Nancy, and hello, everyone. Now let me walk you through some of the financial highlights of the first quarter. Please also read press release for more information. For the first quarter of 2023, the Company narrowed its net operating cash outflow to RMB17.7 million or US$2.6 million, compared to a net operating cash outflow of RMB18.9 million in the same period of 2022. While we experienced a tough and challenging transition period since the second half of fourth quarter, our businesses have gradually recovered since February of 2023. Temporary closures of our learning centers, as well as a slow social mobility weighed on our customer acquisition and cost delivery, leading to a year-over-year reduction in cash receipts. As such, revenue also declined. In the first quarter of 2023, our total net revenue was RMB385.1 million or US$56.1 million, a 38.2% decrease from the same quarter of last year. The decrease in revenues was primarily due to a reduction in student enrollment, particularly for IT professional education. Additionally, the Company suspended courses and services for almost the entire month of January, resulting in a dent in revenues. Net revenues from our IT-focused supplementary STEAM education business was RMB250.8 million, representing about 65.1% of total net revenues. Our cost of revenues decreased by 30.4% to RMB184.1 million or US$26.8 million in the first quarter of 202 from RMB264.6 million in the same period of 2022. The decrease was mainly attributable to a reduction in headcount and the resulting decrease in personnel and related welfare costs. Rental costs also decreased as the number of teaching centers decreased compared to the same period of 2022. Although revenue decline in the quarter is greater than the reduction in the cost of revenues which brought a decrease of our gross profit to RMB201.0 million or $29.3 million, followed by a narrowed gross margin to 52.2%, effective operational measures partially offset the impact. Total operating expenses decreased by 21.3% to RMB259.8 million or US $37.8 million in the first quarter of 2023 from RMB330.3 million in the same period of 2022. Expense reductions across our organization mainly included the optimizing personnel efficiency and reducing customer acquisition costs. Total non-GAAP operating expenses, which excluded share-based compensation expenses, decreased by 21.3% to RMB258.7 million or $37.7 million in the first quarter of 2023 from RMB328.9 million in the same period of 2022. Selling and marketing expenses decreased by 34.4% to RMB113.2 million or US$16.5 million in the first quarter of 2023 from RMB172.4 million in the same period of 2022. The decrease was mainly due to a decrease in personnel-related costs resulting from a decrease in the number of sales staff in the first quarter of 2023, compared to the same period of 2022. In addition, the reducing advertisement clicks resulted in a decrease in advertising expenses. General and administrative expenses decreased by 7.1% to RMB131.5 million or US$19.2 million in the first quarter of 2023 from RMB141.6 million in the same period of 2022. The decrease mainly resulted from the reduction of G&A-related headcount and lower office attendance as we temporarily suspended operations early in the quarter. The decrease was partially offset by the provision of allowance on accounts receivable pertaining to certain college-related businesses which we disposed of subsequently. Research and development expenses decreased by 7.4% to RMB15.1 million or US$2.2 million in the first quarter of 2023 from RMB16.3 million in the same period of 2022. The decrease was primarily due to a lower number of staff and effective cost control in the first quarter of 2023. As a result of the foregoing, operating loss was RMB58.8 million or US$8.6 million in the first quarter of 2023, compared to operating income of RMB28.6 million in the same period of 2022. Non-GAAP operating loss, which excluded share-based compensation expenses, was RMB57.7 million or US$8.4 million in the first quarter of 2023, compared to non-GAAP operating income of RMB30 million in the same period of 2022. Net loss was RMB49.9 million or US$7.3 million in the first quarter of 2023, compared to net income of RMB27.1 million in the same period of 2022. Non-GAAP net loss, which excluded share-based compensation expenses, was RMB48.8 million or US$7.1 million in the first quarter of 2023, compared to non-GAAP net income of RMB28.5 million in the same period of 2022. Now on the EPS side, basic and diluted loss per ADS was RMB4.67 or US$0.68, while non-GAAP basic and diluted loss per ADS, which excluded share-based compensation expenses, was RMB4.57 or US$0.67 in the first quarter of 2023. As mentioned earlier, our net operating cash outflow was RMB17.7 million for the quarter, 6% lower than that of the same period last year. Capital expenditures in the first quarter of 2023 were RMB5.8 million. In this quarter, we received RMB19 million of down payment for the disposition of two buildings we own. We anticipate the full payment will be settled by end of the second quarter [technical difficulty]. As of March 31, 2023, the total balance of cash, cash equivalents, and restricted cash was RMB371 million or US$54 million, decreased by RMB3 million from December 31 of 2022. This concludes my financial highlights section. And Nancy will share with you the business outlook and revenue guidance for the second quarter of 2023. Nancy?

[Foreign Language] Thank you, Ping, for your summary of our financial performance for the first quarter of 2023. Now, turning to the Company's outlook for the second quarter of 2023. Due to the dynamics in our external environment around the end of 2022 and the beginning of 2023, and the temporary closure of our learning centers, the impact on cash receipts during the period will continue to marginally affect our revenue for a few more quarters. Additionally, the carve out of our college-collaboration related business will result in a year-over-year decrease of ongoing revenue run rate by around 4%. During this period, we remain focused on our continuous course upgrades and operational and management excellence. We believe this will go a long way toward enhancing our future development and profitability. In addition, renewed market enthusiasm for our STEAM education services since the beginning of the second quarter, we expect a year-over-year increase in cash receipts and GAAP revenue. Accordingly, with respect to financial guidance, we estimate that our total net revenues for the second quarter of 2023 will be in the range of RMB520 million and RMB550 million, representing a decrease of 15% to 20% from the second quarter of 2022. The Company's guidance reflects our preliminary estimate of the current market environment and the Company's operating conditions, which may change. [technical difficulty] sustained market demand for IT talent as the general job market gradually recovers. Additionally, as China aspires to develop the country's technical capabilities, we believe that IT-focused STEAM education for children will continue to be in strong demand. We're confident that we are well positioned to capitalize on the large IT education market in China and that will continue to deliver enhanced shareholder value. The statement above is my outlook for the future and our revenue guidance. I'd like to take this opportunity to thank you all again for your attention and support. We're now ready for questions.

[Operator Instructions] Your first question comes from [indiscernible]. Please go ahead.

[Foreign Language] I will translate myself. Thanks for taking my question. I have a question regarding STEAM education. How does management see this year's trend? And can management provide a more color on the growth strategy? Thanks.

[Foreign Language] Thank you for your question. Despite external headwinds early in the year that impacted our business, our STEAM education segment has gradually returned to normal and resumed growth. In particular, we have seen rising market demand for value-added services such as competitions and challenges, and favorable policies have increased the market interest in programming education coupled with the economic recovery, active market demand drove enrollment increase leading to market expansion. Although more players have entered the market in recent years, we believe it will facilitate growth in the scale and penetration of the STEAM education market for [indiscernible] due to our advantages in our product delivery, we believe we will stand out in the competition. As to our growth strategy, firstly on the front end, we are trying new customer acquisition channels and we believe these new channels will bring us new [tools]. Secondly, we've always had high renewal rates in the industry and we have continued to maintain our leadership in acquiring students through renewals. Third, we are hosting a larger variety of challenges, competitions and camps, which will increase the repeat purchase rates among our students, and this, again, will lead to growth in new students. And now with the flourishing of ChatGPT-related technology, we will also gradually add more generative AI technology content to our courses to bring our user - to bring our students different experience. And we believe such product upgrades will help us gain more trust from our students. So, we believe a richer product portfolio will help us gain more user trust and thus acquire more users. These are the most important advantages of our STEAM education services. And again, I want to thank you for your support.

Thank you. Your next question comes from Edward Reilly with EF Hutton. Please go ahead.

Hi, guys. Just some housekeeping. What is the enrollment and total number of centers within the professional education segment during the quarter?

They are in total about 83 add-on centers at the end of Q1 2023. And after the quarter-end with the carve out of our college-related business, the number came down to around 57. So that will be most likely the number for end of Q2. Thanks, Eddie.

Okay, great. And then where do you see the capacity for STEAM education with regard to enrollment per center? And just directionally, do you see that the total number of centers within that segment expanding or decreasing throughout the year?

That's a good question. Yes, I'll ask Ms. Sun to answer the question. We'll translate first.

[Foreign Language] Well, first, thank you for your question. It's a very good question. It's true that our enrollments per center has been increasing along with our profitability, which shows that we have a solid business foundation. We will consider expanding our - we will consider establishing new centers in different cities or regions based on the operational quality of those centers. We believe this will be important to expand our market share in the STEAM education market. Thank you again for your question.

Okay. And then last one for me. Just on pricing, what's the pricing action look like for the rest of the year for both segments?

[Foreign Language] Well, actually, we've seen an increase in our price per hour as well as the transaction value per course. So basically, we haven't changed our pricing. But because our students are choosing to take our courses for longer hours or they are choosing more courses from us, we have maintained our pricing on - including the transaction value of our courses on the group level. And in [technical difficulty] the government's regulatory policies on double reduction and also on non-academic subjects in our pricing. I hope I've answered your question. Thank you.

Thank you. Your next question comes from William Gregozeski with Greenridge Global. Please go ahead.

Hi. For the Q2 guidance of 15% to 20% down, you said 4% was from the college carve out. Can you break out what's expected from the STEAM and the professional for that remainder?

[Foreign Language] The kids side actually will be comparable to last year. So on the Q2 revenue side, it will be actually either slightly increasing from year ago period, both on cash and non-GAAP side. So basically the decrease of 15% to 20% reflects the last cash collected during the December, January like the peak of COVID period, the lingering impact that is the main reason. Second reason is actually the - there's still a bit of headwind in China's general economic conditions as well as the employment market. As such, our adult side is the key - is the main reason for the decrease in number. So basically 4% from a carve out probably 5 to - yes about 5% to 10%, 5% I will say more likely from the lingering impact of last quarter and then the remaining as adults, economic how we relate it.

Okay. And last question is given the current environment and your cost efficiency initiatives, do you guys expect the term profitable this year?

We were profitable last year and we will still be profitable this year. Sorry, I [technical difficulty]. So, we will still be profitable this year. For Q1, as you see, we -- even though our loss was about RMB49 million, our operating cash side is much smaller number. For Q2, I [technical difficulty] probably operating sort of - a small sort of operating cash outflow number. But on the GAAP side, we are already looking at around breaking even at the net margin level for Q2. And the second half of this year will all be profitable, based on the current outlook, without giving guidance, okay.

All right. Great. Thank you.

Thank you, Bill.

Your next question comes from [Giovanni Di Giulio], who is a Private Investor. Please go ahead.

Good morning, everyone. Just two quick questions. First one is on the buyback. Please correct me if I'm wrong, but did you repurchase about 2 million shares in the first quarter? And if you do give an update on what the remaining amount in the buyback authorization?

[Foreign Language] Thanks for the question. First of all the 2 million you referred probably was the prior share repurchase program, We used that back to 2 million, the Board of Directors actually authorized another US$3 million of buyback companies actively executing owner program. you know, we basically gave notice question to the broker we mandated on the buyback program to do the repurchase. So, we basically - in general do not provide monthly or quarterly update on the exact amount of cash used in the quarter, but we still have decent room to continue the buyback program.

Thank you. Thank you very much. And second question on the college division carve out. Are you going to receive cash consideration or how are you structuring this transaction? And what are you going to do with the proceeds from this transaction and also the proceeds from the building that you're selling is about 15 million right?

That's right. [Foreign Language] So basically, the half of our college related business is a non-cash transaction. The - it's actually because the particular part of the adult business is actually losing money for the past few years. And considering that our core strength is in the 2C market both for adults and for children, and to focus the company's strategic attention, as well as financial resources, we decided to introducing financial and slash strategic investor, that's why we carved it out. Our non-cash consideration returns a minority interest, having the hold a controlling investor to be the continuous financial sponsor for this particular business. You know, so, hopefully, the minority interest in the carved out business will actually accrete sort of increase in value over time with sort of deep pockets and strategic investor supporting the sort of the funding needs, as well as the strategic direction. For the company part, we will lose - we will sort of base basically increase bottom line, but not increasing cash in the - with the transaction. So additionally, the question on the use of the proceeds from the beauty, which is a net additional 15 million of cash, basically, we will let it sit on balance sheet, basically, sort of to enhance our cash position. And we don't intend to use it for other purposes. So we'll be for operational purpose - working capital purpose.

Thank you very much. That was helpful.

Thank you.

Thank you. We don't have any other questions at the moment. Presenters, please continue.

Thank you, operator. If there are no further questions at present, we would like to conclude by thanking everyone for joining our conference call. We welcome you to reach out to us directly by emailing at ir.tedu.cn. Should you have any questions or requests for additional information, we encourage you to visit our Investor Relations site at ir.tedu.cn. Thank you.

Ladies and gentlemen, that does conclude our call for today. Thank you for participating. You may now disconnect.