Investor Presentation August 2019 Disclaimer These materials have - - PowerPoint PPT Presentation

investor presentation
SMART_READER_LITE
LIVE PREVIEW

Investor Presentation August 2019 Disclaimer These materials have - - PowerPoint PPT Presentation

Investor Presentation August 2019 Disclaimer These materials have been prepared by GSX Techedu Inc. (the Company) solely for use in this presentation in connection with investor communication. These materials are strictly confidential, are


slide-1
SLIDE 1

Investor Presentation

August 2019

slide-2
SLIDE 2

1

Disclaimer

These materials have been prepared by GSX Techedu Inc. (the “Company”) solely for use in this presentation in connection with investor communication. These materials are strictly confidential, are being given solely for your information and for your use and may not be copied, reproduced, distributed, redistributed or passed on, directly or indirectly, to any other person in any manner, or published, in whole or in part, for any purpose. No part of these materials may be retained by you or retransmitted. By attending this presentation, you agree not to remove ANY of these materials, or any materials provided in connection herewith, from the conference room where such materials are provided. Participants must return these materials and all other materials provided in connection therewith to the Company at the completion of the presentation. By participating in this presentation, you agree to be bound by the foregoing restrictions. Any failure to comply with these restrictions may constitute a violation of applicable securities laws. Information contained in these materials has not been independently verified. No representations, warranties or undertakings, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness, completeness or correctness of the information or opinions presented or contained in these materials. Neither the Company nor any of its respective affiliates, advisers or representatives will accept any responsibility whatsoever for any loss arising from any information or opinions, presented or contained in, or derived from, these materials. The information presented or contained in these materials is subject to change without notice and its accuracy is not guaranteed. These materials contain forward-looking statements based on the currently held beliefs, expectations and assumptions of the management of the Company. These forward-looking statements are made only, and are based on estimates and information currently available to the Company, as of the date of these

  • materials. These forward-looking statements are not guarantees of future performance, are subject to risks and uncertainties that are difficult to predict, and are

based on assumptions that may change. Some of the risks and uncertainties are beyond the Company’s control. You are cautioned that actual results of the Company may differ materially from those set forth in the forward-looking statements herein. Except as otherwise required by applicable securities laws, the Company disclaims any intention or obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events

  • r otherwise.

By attending this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the business of the Company. This presentation speaks as of the period from April 1, 2019 to June 30, 2019. Neither the delivery of this presentation nor any further discussions of the Company

  • r any of its affiliates, shareholders, directors, employees, agents or advisors with any of the recipients shall, under any circumstances, create any implication that

there has been no change in the affairs of the Company since that date.

slide-3
SLIDE 3

2

OUR MISSION

MAKE EDUCATION BETTER THROUGH TECHNOLOGY

slide-4
SLIDE 4

Leadership in China’s Online K-12 La Large-class Aft fter-school Tu Tuto toring Mar arket(1)

3

LARGE- CLASS LIVE ONLINE

Laser-focused on Online Live Large-class Tutoring

Higher Efficiency Higher Profitability Higher Quality

Note: (1) 3rd largest online K-12 large-class after-school tutoring service provider in China in terms of gross billings in 2018, according to Frost & Sullivan

slide-5
SLIDE 5

4

Notes: (1) “Total enrollments” for a certain period refer to the cumulative number of courses (priced at or above RMB9.9) enrolled in and paid for by the students, including multiple paid courses enrolled in and paid for by the same student (2) Adjusting for share-based compensation expenses of RMB 15mn

GSX Q2 FY FY2019 Ove verview

462%

Q2 FY2019 vs Q2 FY2018 YoY YoY growth th

413%

Q2 FY2019 vs Q2 FY2018 YoY YoY growth th

9% Q2 FY2019 adju

juste ted

  • p
  • perating margin(2)

Gro Gross ss Bill illings Net et Reve evenues Ope Operating Pr Profi fit Total l Enr Enroll llments(1)

RMB 599mn RMB 354mn RMB 31mn

(Non-GAAP)(2)

RMB 16mn

(GAAP)

592,000

250%

Q2 FY2019 vs Q2 FY2018 YoY YoY growth th

slide-6
SLIDE 6

5

Lea Leaders rship ip in China’s online K-12 larg arge-cla lass ss af after-school l tut utori ring mark rket

01 01

Su Superi rior r edu ducatio ion qu quali lity

02 02

Ro Robu bust pr proprie ietary tech chnolo logy inf nfrastru ructure an and ap appli licatio ion

03 03

Highly ly sc scala alable le bus busin iness model l with exce xceptio ional l ope peratin ing eff ffic icie iency

04 04

Re Reno nowned fou founder r and and se seas asoned management team wi with a a co corpora rate DNA NA of f stu student se servic ice

05 05

Company Highlights

slide-7
SLIDE 7

6

Our r Comprehensive Courses an and Se Service Off fferings

Core expertise in online K-12 courses across all primary and secondary grades

Elementary School Middle School High School 1 2 3 4 5 6 7 8 9 10 11 12 Mathematics English Chinese Physics Chemistry Biology History Geography Political Science

Offered by us

slide-8
SLIDE 8

7

Su Superior Education Qual ality ty

High Quality Instructors and Professional Tutors

Notes: (1) As of June 30, 2019 (2) According to Frost & Sullivan

Disseminate China’s scarce high quality teaching resources through specialization and collaboration

Centralized Recruitment System High Quality Instructors

Average 11+ years of teaching experience(1)

<2% of candidates

employed in 2018

Highest average compensation

among the online service providers in 2018(2)

Professional Tutors

Fresh and recent graduates of reputable universities in China

 Proficient in the relevant subjects  Responsible  Able to communicate and learn fast

33 links of work flow

Tutoring and providing emotional support Teaching and being role model

slide-9
SLIDE 9

8

Su Superior Education Qual ality ty

In-house Curriculum Development

4 3 6

For

  • rmat

t and and de design ar are e fur urth ther tailor made to

  • cate

ter to

  • onl
  • nline class for
  • rmat

Deli eliver har hard cop

  • pies

to

  • students

Multi tiple roun

  • unds of
  • f

inte ntervi view and nd pilot tes esti ting for

  • r up

up to

  • 6-12 mon
  • nths

Interactive e live ve br broadc dcasting g course seware

1

Invo nvolvement of

  • f both
  • th

ins nstr tructors and cour

  • urse

deve velopment ex experts ts

2

Cl Clos

  • sely fol
  • llow up

up with th the he na nati tional syllabus

Co Cours rse e

  • utlines

5

Sta tandardized cur urriculum Con Conti tinuou

  • us

fee eedback from students

Exerc rcise se Tex extbo books

7

In-House

Education Content Development Team Members

Dedicated content development experts Instructors directly involved in the development process Education Content Development Process

Con Conti tinuou

  • us

fee eedback from ed educati tion qua quality assurance team

8

Substantially all of our course materials are designed and developed in-house

slide-10
SLIDE 10

9

Su Superior Education Qual ality ty

Robust Proprietary Technology Infrastructure and Application

 Ma Manage courses, , stu tudents and exe xercise pe perfo formance feedback in a seam amless man manner  Timely analyze dat data  >15 15,0 ,000 di dimensions student behavioral data  Self-reinforced feedback loop

 Au Auto-feed ed pr practice quest estions s

Live Broadcasting “BOSS”(1) and Business Intelligence System AI and Big Data

 Since e July 20

2014

 A A maximum of 10

100,0 ,000 stu tudents pe per classroom

 Ave Avera rage ge del elay time e <30

300 mi milliseconds

Efficient operations High quality course offerings Engaged student learning experience

Proprie ietary y Te Technology Impr provement in Ope peratio ional l Effic ficie iency Note: (1) Business Operations Support System

slide-11
SLIDE 11

10 10

Our r Exp xperienced Man anagement t Te Team an and Disti tinguished Board

>60 years of combined industry experience Strong

  • rganizational capability

Corporate DNA of student services Tech-savvy Passion for Education

 Chairman and CEO since our inception  Visionary and renowned industry leader with more than 30 years of experience in the education industry

Larry Xiangdong Chen Founder, Chairman and CEO

 Independent director since June 2019  Founding partner and director of Prospect Avenue Capital since July 2016

Ming Liao Independent Director

 Independent director since June 2019  Chairman of the board of Dongfang Beidou Technology (Beijing) Co., Ltd since April 2018

Yiming Hu Independent Director

 Independent director since June 2019  Chief Financial Officer of Bilibili Inc (NASDAQ:BILI) since September 2017

Xin Fan Independent Director

 Vice president since May 2016

Xiuping Qi Vice President

 Vice president since November 2018

Wei Liu Vice President

 Chief Financial Officer since December 2018

Nan Shen Chief Financial Officer

slide-12
SLIDE 12

Net Revenues(1)

Phenomenal Business Gro rowth

11 11

Adjusted Gross Profit(2)

Notes: (1) Revenues net of discount, value added tax and related surcharges (2) Adjusted Gross Profit has excluded share-based compensation; GAAP Gross Margin in Q2 FY2019 is 71%

3. 3.4x 4x 5. 5.4x 4x 5. 5.7x 7x (RMB millions) (RMB millions) Margin% 47 47 69 69 99 99 182 182 269 269 354 354 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19

  • 50
100 150 200 250 300 350 400 450

26 26 42 42 62 62 124 124 188 188 257 257 56% 56% 61% 61% 62% 62% 68% 68% 70% 70% 73% 73%

(300%) (250%) (200%) (150%) (100%) (50%) – 50% 100%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19

  • 50
100 150 200 250 300 350

FY18: : RMB 397mn 1H19: : RMB 623mn

5.1x 1x

YoY Growth:

slide-13
SLIDE 13

71 71 169 169 241 241 287 287 211 211 592 592 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19

  • 100
200 300 400 500 600

61 61 107 107 169 169 318 318 300 300 599 599 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19

  • 100
200 300 400 500 600

Total Enrollments(1)

Phenomenal Business Growth (Cont’d)

12 12

Gross Billings

Notes: (1) “Total enrollments” for a certain period refer to the cumulative number of courses (priced at or above RMB9.9) enrolled in and paid for by the students, including multiple paid courses enrolled in and paid for by the same student

(RMB millions) (Thousands)

Driven by seasonality Driven by seasonality

slide-14
SLIDE 14

Rap apid Im Improvement t in in Pro rofitability

13 13

Notes: (1) Adjusted Operating Profit has excluded share-based compensation; GAAP Operating Profit in Q2 FY2019 is RMB16mn; GAAP Operating Margin in Q2 FY2019 is 5% (2) Adjusted net profits (losses) have excluded share-based compensation; GAAP net profits (losses) are RMB(87)mn, RMB20mn and RMB16mn for 2017, 2018 and Q2 FY2019, respectively

(RMB millions) Margin%

Adjusted Operating (Loss) Profit(1) Adjusted Net (Loss) Profit(2)

(RMB millions) Margin % (4) 4) 28 28 47 47 31 31 (8% 8%) 0% 0% 0% 0% 16% 16% 17% 17% 9% 9%

(500%) (400%) (300%) (200%) (100%) –

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19

(10)
  • 10
20 30 40 50 60

(3) 3) 1 1 28 28 38 38 31 31 (7% 7%) 0% 0% 1% 1% 15% 15% 14% 14% 9% 9%

(500%) (400%) (300%) (200%) (100%) –

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19

(10)
  • 10
20 30 40 50 60

Driven by seasonality Driven by seasonality

slide-15
SLIDE 15

St Stro rong Cash Flo lows an and Robust Balance Sh Sheet

14 14

Cash and Cash Equivalents and Short-term Investments

(RMB millions, as of the end of each period) (RMB millions)

Operating Cash Flows

(50) 50) 242 242 259 259 2017 2018 1H19 27 27 231 231 1, 1,747 747 2017 2018 1H19

slide-16
SLIDE 16

15 15

Enhance Student Engagement and Increase Paid Course Enrollment

Our r Gro rowth Str trategies 1 2 3 4 5

Continue to enhance the quality of education services and students’ learning experience Attract and develop teaching talent Strengthen technologies and data analytics capabilities Expand course

  • fferings

Enhance brand recognition

slide-17
SLIDE 17

16 16

In Investor Rela lations Contact: ir@ ir@baij ijiahulian.com Tower C, , Beyo yondsoft Build ilding, , 7 East Zone, , 10 Xib ibeiw iwang East Road, , Haid idian Dis istrict, , Beijin ijing 100193

Thank You