Ladies and gentlemen, good day, and thank you for standing by. Welcome to TAL Education Group's Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be informed that today's conference is being recorded. I'd now like to hand the conference over to Mr. Jackson Ding, Investor Relations Director. Thank you. Please go ahead, sir.

Thank you, operator, and thank you all for joining us today for TAL Education Group's fourth quarter fiscal year 2024 earnings conference call. The earnings release was distributed earlier today and you may find a copy on the company's IR website or through the newswires. During this call, you will hear from Mr. Alex Peng, President and Chief Financial Officer, and myself, Investor Relations Director. Following the prepared remarks, Mr. Peng and I will be available to answer your questions. Before we continue, please note that today's discussions will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC. For more information about these risks and uncertainties, please refer to our filings with the SEC. Also, our earnings release and this call include discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures. I would like to turn the call over now to Mr. Alex Peng. Alex, please go ahead.

Thank you, Jackson. I'd also like to thank all of you for participating in today's conference call. In this call, we'll discuss our financial performance and business progress for the fourth quarter and review some of the key results from the full fiscal year 2024. Following that, I'll briefly update you on our business strategy outlook. Throughout the fiscal quarter, we continued to manage our Learning Services programs to serve users who seek engaging and effective learning experiences. Our Peiyou small class and xueersi.com enrichment learning programs continue to receive positive feedback from users for the quality of their products and services. Our efforts to offer quality learning experience, along with our learning center network expansion and increased enrollment led to continued growth in our Learning Services business. For learning devices, we extended our products and services to a broader user base, enabling more users to find the suitable learning solutions for their needs. We aim to help users with their self-learning journey by leveraging the smart features and abundant resources integrated into our learning devices. With this objective in mind, we launched two new versions of learning devices in this fiscal quarter with enhanced hardware and software capabilities. xPad2 Pro and xPad2 Pro Max, both have gained early market traction and received solid user engagement feedback since their launch. Going forward, we remain committed to developing both our product capabilities and our go-to-market capabilities. To that end, we continue to pursue new technologies and refine our existing research and development endeavors. In a recent national collaborative initiative dedicated to comprehensively assessing large language model's mathematical abilities, our MathGPT large language model recently ranked Number 1 in national rankings. From basic arithmetic to advanced series of mathematics, the MathGPT LLM delivers responses to a student's learning experience. In terms of our financial performance, we recorded net revenues of $429.6 million or RMB3.08 billion for the quarter, representing an increase of 59.7% and 66.9% year-over-year in U.S. dollar and RMB terms. With respect to profitability, our non-GAAP income from operations and non-GAAP net income attributable to TAL for the quarter were $9.4 million and $48.0 million, respectively. For the full fiscal year of 2024, we reported net revenues of $1.5 billion or RMB10.7 billion, representing 46.2% and 53.7% year-over-year growth in U.S. dollar and RMB terms, respectively. Our non-GAAP income from operations and non-GAAP net income attributable to TAL for the quarter were $19.7 million and $85.3 million, respectively. We also reported positive non-GAAP net profit during the whole year, which was $84.8 million. And with that, I will now hand over the call back to Jackson, who will provide an update on the operational advancements within our core business lines and discuss our financial performance for the fourth fiscal quarter. Jackson, back to you.

Thank you, Alex. I'm pleased to share some details of the progress we made in the fourth quarter across our core business lines. Please note that all financial data for this quarter is unaudited. Let me start with our Learning Services and others business, which comprises a broad range of learning programs for consumers amongst other things. In the fourth quarter of fiscal year 2024, we expanded Learning Services and others year-over-year growth momentum through continued investments across our various product lines. Our online and offline enrichment learning programs continue to serve as a primary revenue generator for Learning Services. Through our systematic teaching design, up-to-date learning content, and interactive classroom design, we help users develop multifaceted capabilities and apply what they've learned into real-life situations. Our enrichment learning programs enable students to build their own thoughts from diverse perspectives, fostering comprehensive development with engaging and effective learning experience. Our offline Peiyou small class programs maintained its trajectory of year-over-year growth in this period. This was attributable to, amongst other factors, our learning center network expansion. Our decision to add learning centers during the quarter was supported by an assessment of market demand, as well as our operational capabilities and efficiency. Notably, efficiency indicators such as retention rate have been relatively stable as we expanded our capacity and enrolled more learners. We see a visible growth path for offline small class enrichment learning. In alignment with our strategic objectives, our online enrichment learning business has maintained its course of operations. To enhance teaching effectiveness, we tailored our online programs to differentiate them from offline offerings and applied smart interactive features to motivate users and enhance their engagement. These programs are designed not only to align with online learning habits, but also fully leverage online education's unique advantages, bringing scarce, high…

Thanks, Jackson. As highlighted throughout this call, during fiscal year 2024, for Learning Services, we extended our learning center footprint, developed additional learning programs catering to various user groups' specific need and also managed our operational efficiency. So as a result, the business experienced year-over-year growth in the last few quarters. Our Content Solutions also made progress through offering high-quality learning devices and engaging in conversations with our target customers through various go-to-market channels. We believe fiscal 2024 laid a foundation for our future development. So now, I would like to share some insights on the company's strategy and objectives for fiscal year 2025. First of all, we remain focused on further refining our mature businesses. We will continue to uphold high-quality standards for our offline and online learning products and services. Our goal is to make our learning experience engaging and effective by applying technology and improving teaching content and student interactions. Among our mature businesses, we expect our various Learning Services programs to continue to serve as our largest revenue contributor in the new fiscal year. We'll also continue to innovate and explore during fiscal year 2025. To keep up with our customers' ever-evolving needs, we'll explore and design differentiated products and services. We'll also continue to invest in artificial intelligence to optimize our model, improving its response speed and accuracy and working to integrate artificial intelligence with our existing products and services. We keep a close eye on industry trends and how education is transforming in the AI era, staying keenly attuned to how we can interact with other players and identify potential areas where we can seize new opportunities. We remain open to explore collaborations and share our findings with the hope of contributing some valuable insight to the global education community. Finally, we'll focus on refining the details of our operations to enhance overall efficiency and profitability. We believe our dedication to providing Learning Services and products will create value for our users and our society, while driving our business forward. We'll also closely monitor our efficiency metrics in all business sectors and make timely adjustments to optimize each stock in our operations, including content generation, product R&D, sales and marketing, and more. So that concludes my prepared remarks. Operator, I think we're now ready to open the call for questions.

[Operator Instructions] Our first question comes from the line of Candis Chan from Daiwa. Please ask your question, Candis.

Great. Hi, Jackon and Alex. Thanks for taking my question and also congratulations on the -- a very strong set of results. After achieving a robust 46% revenue growth for this year, can you shed some colors on the revenue growth target for the new fiscal year? And also, what will be the key investment focus for this year? Thank you.

Thanks, Candis. This is Alex. Let me take this one. So I think at a very high level, I would say, you know, growth is really the output of investment input. I think this investment input is going to stand from product and services innovation, technology, you know, channel and network, and last but not least, our people and our organization. So, you know, at a very high level, I think I'll just sort of answer both of your questions in that one go. And if I would unpack it a little bit further, I think, you know, obviously, we'll remain focused on further revitalizing and refining our mature businesses. I would really expect our various Learning Services programs to continue to serve as our largest revenue contributor in the new fiscal year and continue to show robust growth. We'll obviously continue to innovate, to explore and design differentiated products and services that really fits with all segments of our customers and all learning scenarios and to provide them with a -- you know, with an integrated experience and an integrated learning journey. We'll obviously continue to invest in artificial intelligence. I think I mentioned earlier on the call, it's an area that we pay a huge amount of attention to and we believe that that AI era and its transformative impact on education is just starting. You know, we'll continue to refine the details of our operations to enhance overall efficiency and profitability. And this really, I think, goes across the entire chain of operation. You go from content generation to product R&D to sales and marketing. So Candis, I hope that answers your question.

All right. Thank you, Candis. Our next question comes from the line of Linda Huang from Macquarie. Please ask your question, Linda.

Thank you very much. Hi, management. So my question is regarding for the learning center expansion. I remember that in the previous the conference call, our learn center number is 250 to 300. So can you share with us more color regarding for your learning center expansion at the end of the previous quarter? And then, for FY '25, how do you gauge the market demand and the expansion plan? Thank you very much.

Thanks, Linda. This is Alex. Let me take this one as well. So first of all, you know, we expanded for capacity in the past quarter, which was in line with our expectation. And, you know, with retention rate being relatively stable, you know, as we expanded our capacity and you know, involved more students, I think we're, you know, increasingly feel good about that line of growth for the future. Now, just to share a bit more color on how we look at this for the upcoming year, I think this is a theme, you know, that I've addressed in the past couple of years. Look, you know, enrichment learning, it's got a new product market fit and we always would adopt a balanced approach. We'll look at the demand, we'll look at the geographical density of that demand, we'll look at user response to our products and services, whether it's positive. And, you know, obviously, there are metrics such as user retention, which will tell us whether it's hitting our expectation. We'll also obviously be very mindful of the operational metrics such as classroom utilization rate and future utilization rate. And these are all the things that we consider together, right. So I would say, you know, when I look at our Peiyou enrichment learning programs, they're really designed to help users develop a multifaceted set of capabilities. They need to apply what they've learned into real-life situations, they need to, you know, develop their own thoughts from different perspectives and really foster a full person development approach. So, so far, I think we've observed really positive user feedback related to this enhancement in the capabilities mentioned above, and you know, we believe our dedication, quality and effectiveness will continue to drive our sustained growth. So for the next year, you know, I think we're seeing signs, very good signs of visible growth path. We'll continue to expand our learning center network to meet user demand in the upcoming year. I think we'll stick to a dynamic and balanced approach, right, really taking market demand in a particular area, in particular city or district, how customers are responding to our products and services, you know, our own operating capabilities, especially our teams on the ground, the frontline capabilities that they're building and enhancing, and also those operational metrics, efficiency metrics that I mentioned about. We'll take all of those into consideration. So I think, you know, just to summarize it, we expect to further expand our network and we'll continue to manage this in a dynamic and balanced approach. So Linda, I hope that answers your question.

Thank you, Linda. Our next question comes from the line of Felix Liu from UBS. Please ask your question, Felix.

Hi. Good evening, management. Thank you for taking my question and congratulations on the strong fourth quarter results. You just talk about our offline strategy -- offline expansion strategy. May I just shift the focus to online? How do you think of your strategy with online investment learning? Do you plan to -- similar to your commitment to offline expansion, do you plan to increase your investment in the online enrichment learning segment? Thank you.

Felix, thanks for the question. And this is Jackson. I'll take this one. You know, when we look at the online enrichment learning business or the industry really, we see this as a, you know, dynamic market landscape. Especially over the last couple of years, we see user experiences gradually evolve in this particular landscape. Now, before I get into the future, maybe let me just talk a little bit about kind of what happened in this quarter with our online enrichment business. You know, in this past fiscal Q4, our online enrichment learning business maintained its course of operations. We also refined our operation -- operational efficiency, while at the same time explored new SKUs as well. Online enrichment learning remains a strategic area for us, not only because of the market opportunity itself, but also because we see that -- we see it as a unique opportunity to leverage interactive online features to provide an engaging and effective and a digital learning experience to a broader audience, right. You asked about, you know, investment plan. I would say it's less about, you know, increase or decrease in investments. It's more about, you know, making sure that we deploy the resources needed to provide our customers with high-quality learning experience. So looking forward, you know, we -- online enrichment learning remains a strategic area for us. We're focused on delivering quality products and services to our customers, while leveraging the benefits of online learning and we'll continue to bring scarce, high-quality educational resources to a broader audience, while enhancing user value and social benefits. I hope that answers your question, Felix.

Thank you, Felix. Our next question comes from the line of Timothy Zhao from Goldman Sachs. Please ask your question, Timothy.

Great. Hi, Alex. Hi, Jackson. Thank you for taking my question and congrats on the very strong results. So my question is on the Content Solutions business line. Just wondering could management share some colors on the sales and the user engagement of the latest hardware that you launched over the quarter? And what is the, I think, your plan to further make the business line more sustainable into the longer term? Thank you.

Thanks, Timothy. This is Alex. Let me take this one. So first of all, just to address this past quarter, as you mentioned and then I alluded to earlier on the call, we launched two new products in this quarter, xPad2 Pro and xPad2 Pro Max. So in this quarter, I really look at growth being driven by increasing volume and higher ASP. But in reality, there is another set of metrics, which I keep a very close eye to, which is that engagement. So in general, we'll look at the average weekly usage time. It remains relatively stable despite the, you know, ever-larger user base and that's incredible. And I think another interesting thing that we're observing this, you know, a new set of products that we launched in the quarter because they came with enhancements in the hardware and enhancement in artificial intelligence learning tools. We're really seeing an uptick in the usage of those tools. And, you know, I think it's showing early signs that these tools actually become great companions for students as they learn on their own in their homes according to their own style and learning profile. So going forward, I really look at sort of two main directions. I think, obviously, the first one is to, you know, continue to improve our products. You know, we just launched the hardware, a new hardware. This is coming on about 10 months since we first launched xPad1. But actually, the software and the content continue to be upgraded on these devices. And I think what really drives us, the North Star, is that engagement, learning engagement and learning impact, right. So we look at, you know, further improvement on the hardware design, additional high-quality content and those artificial intelligence learning tools to continue to enhance…

All right. Thank you, Timothy. Our next question comes from the line of Caini Wang from CICC. Please ask your question, Caini.

Good evening, Alex and Jackson. Thank you for taking my question. Actually, my question is, the company still has a big amount of cash in hand. And so, how are we considering our cash usage and do we have any plans on further improving the shareholder returns? Thank you.

Caini, thanks for the question. And this is Jackson. I'll take this one. Look, like you said, you know, we -- the company has almost $3.6 billion in cash and cash equivalents, short-term investments and restricted cash as of February 29, 2024. When we think about potential use of cash, there is several factors we think about and we try to balance, right. One is we try to kind of balance between short-term and long-term development. And second is that we try to balance, reinvest into the business and generating shareholder returns. As of now, a few areas of cash usage that are on our mind are, one is that we'll maintain a kind of steady investment pace into our core business segments to deliver high-quality products and create value for customers and their learning journey. And second is, we'll fund new business initiatives that are still -- you know, some of them I talked about on the call or during our previous conversations. We want to expand these new business initiatives that are still in exploratory phases and we'll continue to explore new opportunities as the industry evolves. And lastly, we always seek, you know, diversified means to generate shareholder returns, one of which could be stock repurchase. I talked about the buyback program that the Board authorized, which was extended for another year and allow us to purchase up to roughly $504 million in considerations. So that's kind of how we think about cash usage for now. I hope that answers your question, Caini.

Thank you, Caini. We have now reached the end of the question-and-answer session. I'd now like to turn the conference back to the management team for closing comments.

So this is Alex again. Thanks everybody for participating in today's call and we'll see you next quarter. Thanks and bye-bye.

That concludes today's conference call. Thank you for participating. You may now disconnect.