Investor Presentation
August 2019
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
August 2019
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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
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
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
there has been no change in the affairs of the Company since that date.
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LARGE- CLASS LIVE ONLINE
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
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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
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
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)
250%
Q2 FY2019 vs Q2 FY2018 YoY YoY growth th
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Lea Leaders rship ip in China’s online K-12 larg arge-cla lass ss af after-school l tut utori ring mark rket
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Su Superi rior r edu ducatio ion qu quali lity
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Ro Robu bust pr proprie ietary tech chnolo logy inf nfrastru ructure an and ap appli licatio ion
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Highly ly sc scala alable le bus busin iness model l with exce xceptio ional l ope peratin ing eff ffic icie iency
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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
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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
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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
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In-house Curriculum Development
4 3 6
For
t and and de design ar are e fur urth ther tailor made to
ter to
Deli eliver har hard cop
to
Multi tiple roun
inte ntervi view and nd pilot tes esti ting for
up to
Interactive e live ve br broadc dcasting g course seware
1
Invo nvolvement of
ins nstr tructors and cour
deve velopment ex experts ts
2
Cl Clos
up with th the he na nati tional syllabus
Co Cours rse e
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Sta tandardized cur urriculum Con Conti tinuou
fee eedback from students
Exerc rcise se Tex extbo books
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Education Content Development Team Members
Dedicated content development experts Instructors directly involved in the development process Education Content Development Process
Con Conti tinuou
fee eedback from ed educati tion qua quality assurance team
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Substantially all of our course materials are designed and developed in-house
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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
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>60 years of combined industry experience Strong
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
Net Revenues(1)
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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
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
FY18: : RMB 397mn 1H19: : RMB 623mn
5.1x 1x
YoY Growth:
71 71 169 169 241 241 287 287 211 211 592 592 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
61 61 107 107 169 169 318 318 300 300 599 599 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
Total Enrollments(1)
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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
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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)(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)Driven by seasonality Driven by seasonality
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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
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Enhance Student Engagement and Increase Paid Course Enrollment
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
Enhance brand recognition
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