Earnings Labs

ATA Creativity Global (AACG)

Q2 2025 Earnings Call· Thu, Aug 7, 2025

$1.20

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Transcript

Operator

Operator

Greetings. Welcome to ATA Creativity Global Second Quarter 2025 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Alice Zhang with the Equity Group. Thank you. Alice, you may begin.

Alice Zhang

Analyst

Thank you, operator. Good evening to all of you joining us from the United States, and good morning to all of you joining us from China. Please be advised that the discussions on today's call may include forward-looking statements. Such forward-looking statements involve certain risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the company's most recent SEC filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligation to update forward-looking statements as a result of new information, future events or otherwise. Regarding the disclaimer language, I would also like to refer you to Slide 2 of the conference call presentation, which is accessible via the IR section of ACG's website. A simultaneous audio webcast is also accessible via the IR section of ACG's website, including the replay, which will be available for the next 90 days. ACG's CFO, Mr. Ruobai Sima, will start this call by highlighting the company's key operational achievements and financial highlights for second quarter 2025, and we will provide an overview of financial and operating results for second quarter and first half 2025 and briefly discuss expectations for full year 2025. President, Mr. Jun Zhang, will conclude the prepared remarks with an update on the company's long-term growth strategy before opening the floor for questions. For those of you following the accompanying slide presentation, please refer to the slides for further details. With that, I'll turn the call over to ACG's CFO, Mr. Ruobai Sima. Please go ahead, Mr. Sima.

Ruobai Sima

Analyst

Thank you, Alice, and welcome, everyone. Good evening to those in America, and we appreciate everyone's time. As Alice mentioned, we -- please refer to our earnings deck available on the IR side of our website, and we go through our prepared remarks. Second quarter 2025 was marked by year-over-year increase in net revenues and gross profit. Growth in net revenues was mainly attributed to increased contribution from overseas study counseling services, other educational services and research-based learning services, combined revenue of which increased by more than 50%. Continuing to first half 2025, we delivered strong growth for the 6-month period, highlighted by double-digit increase in both net revenues and gross profit. While we recorded growth across all business lines, our value-added offerings, including research-based learning, overseas study counseling and other educational services were the primary drivers. Moving on to second quarter operational highlights. During second quarter 2025, our main revenues contributor remain portfolio training services, accounting for 68% of total net revenues. Our project-based programs credit hours delivered increased by 25.7% compared to the second quarter of 2024 and contributed to about 76.7% of total credit hours delivered. Revenues from research-based learnings, overseas study counseling and other educational services accounted for an increasingly important part of net revenues, which grew by 54.2% compared to the prior year period as a result of more services delivered during the period. Despite Q2 normally being a slower quarter for its parential offerings, we delivered a variety of high-quality research- based learning projects to ACG students, including several master classes and a new session of our signature program, the United Nations Sustainable Goals Article 10. In addition, we introduced film festival United Tour, bringing students interested in film production to the forefront of our -- one of the world's most prestigious and influential…

Jun Zhang

Analyst

[Interpreted] Thank you, Sima. I will now discuss some recent execution highlights of our long-term growth initiatives. We remain confident in our market position as a leading provider of high-quality creative art education services. While we see intensified competition this year after the release of pent-up demand in 2024, we believe we're well positioned to achieve expected growth and continue to be a trusted partner to our students. Our financial and operational focus for the remainder of 2025 is on driving organic expansion across all lines of business and enhancing cost discipline and overall efficiency to improve bottom line results. Organic growth remains at the core of our business expansion. We take pride in the quality and value our portfolio of offerings provide with ACG students. And keep in mind that these offerings are to be continuously improved and supplemented with new services and classes that address evolving student demand. As we have discussed over the past quarters, our project-based programs have become a dominant contributor to our portfolio training services with a conscious effort, and our students have expressed their appreciation towards this efficient, flexible and customizable track, which can be easily adjusted based on students' needs and application time lines. We're catering to a growingly diversified student population with different backgrounds and all levels of knowledge and experience in their interested art majors. The expansion of our student base is not limited to reaching older adults and younger generations, but also includes supporting a growing number of students who come from different arts backgrounds and possess hybrid skill sets across disciplines. Our job is to help students amplify how to demonstrate both the breadth and depth of their artistic capabilities in their application portfolios and our strong, knowledgeable and competent teaching team enables us to excel in this…

Operator

Operator

[Operator Instructions] There are no questions at this time. I would like to turn the conference back over to Mr. Sima for closing remarks.

Ruobai Sima

Analyst

To us or our Investor Relations firm, the Equity Group. We are always available to speak to investors and look forward to speaking with you all during our next earnings call. Thank you.

Operator

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]