• Total Revenue: RMB554 billion in the third fiscal quarter, a 6.2% quarter-over-quarter growth.
• Overseas Schools Revenue: RMB264.9 million, contributing 47.8% of total revenue, with a 19.4% year-over-year increase.
• Complementary Education Services Revenue: RMB169.5 million, decreased year over year.
• Domestic Kindergartens and K12 Operation Services Revenue: RMB119.6 million, decreased year over year.
• Gross Margin: Increased to 36.6% from 32.9% year over year and 31% quarter over quarter.
• Overseas Business Gross Margin: Reached 33%, the highest level in the past three years.
• Adjusted Gross Profit: RMB205.9 million, a 4.7% year-over-year increase and a 24.9% quarter-over-quarter increase.
• SG&A Expenses: RMB147 million, slightly increased from RMB142 million year over year.
• Adjusted EBITDA: RMB76.6 million, compared with RMB96 million year over year.
• Net Loss: RMB90.3 million due to a RMB133 million impairment loss on goodwill.
• Adjusted Net Income: RMB48.5 million, compared with an adjusted net loss of RMB34.9 million year over year.
• Cash and Cash Equivalents: RMB537.2 million as of May 31, 2024, compared with RMB496.9 million as of February 29, 2024.

• Warning! GuruFocus has detected 3 Warning Signs with BEDU.

Release Date: August 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bright Scholar Education Holdings Ltd (NYSE:BEDU) achieved a 6% quarter-over-quarter revenue growth, driven by the strong performance of its overseas schools business.
• The overseas schools segment recorded a 19.4% year-over-year revenue increase, marking the fifth consecutive quarter of double-digit growth.
• Student enrollments in overseas schools grew by 8% year over year, with significant academic achievements, including offers from prestigious universities.
• The company improved its gross margin by 317 basis points year over year and 560 basis points quarter over quarter, reflecting effective cost management.
• Bright Scholar Education Holdings Ltd (NYSE:BEDU) achieved profitability for the third consecutive quarter on a non-GAAP basis, demonstrating financial resilience.

Negative Points

• Revenue from complementary education services decreased by 18% year over year, as the company strategically reduced lower-return programs.
• The company recorded a net loss of RMB90.3 million in the third fiscal quarter due to a RMB133 million impairment loss on goodwill.
• SG&A expenses increased slightly to RMB147 million, primarily due to a rise in overseas personnel-related expenses.
• Adjusted EBITDA decreased to RMB76.6 million compared to RMB96 million for the same quarter last fiscal year.
• The domestic kindergarten and K12 operation services also saw a decline in revenue, as the company continues to divest non-core education businesses.

Q & A Highlights

Q: Can you provide an overview of Bright Scholar's performance in the third fiscal quarter? A: Ruolei Niu, CEO, highlighted that Bright Scholar achieved solid quarterly results despite an uncertain external environment. The company saw a 6% quarter-over-quarter revenue growth, primarily driven by its overseas schools business, which remains the strongest segment with a 19.4% year-over-year revenue increase. The company also improved its operating efficiency and achieved another quarter of positive adjusted net income.

Q: How did the overseas schools segment perform, and what are the future expectations? A: Ruolei Niu, CEO, stated that the overseas schools segment continued its growth momentum, with a 19.4% year-over-year revenue increase and an 8% rise in student enrollments. The segment accounted for nearly 48% of total revenue. The company expects to accelerate overseas revenue growth and create sustainable value for customers and shareholders.

Q: What strategic changes have been made in the complementary education services segment? A: Ruolei Niu, CEO, mentioned that revenue from complementary education services decreased by 18% year-over-year due to strategic reductions in lower-return programs and divestment of non-core businesses. The focus is now on high-growth core overseas school business and streamlining management efficiency.

Q: Can you elaborate on the financial results and cost management strategies? A: Cindy Zhang, CFO, reported a 6.2% quarter-over-quarter revenue growth, driven by the overseas schools business. The company improved its gross margin by 317 basis points year-over-year and 560 basis points quarter-over-quarter. Cost-saving measures and efficiency enhancements contributed to these improvements, with the overseas business gross margin reaching 33%, the highest in three years.

Q: What is the company's approach to managing its balance sheet and cash position? A: Cindy Zhang, CFO, stated that the company aims to prudently manage costs and strategically reshape its portfolio to maximize returns. As of May 31, 2024, Bright Scholar had cash and cash equivalents of RMB537.2 million. The company is focused on maintaining a healthy balance sheet, achieving organic growth, and creating sustainable value for customers and shareholders.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.