May 2020
OneSmart International Education Group Limited
FY20 Q2 Results Presentation
Section 1
Business Updates
3
Strong company response and results under the
unprecedented COVID-19 pandemic situation
Strong Company ResponseUnprecedented Impact
All of our learnings centers
have been temporarily closed
since January 2020
All public schools in China
have also been temporarily
closed without reopen
schedule being provided
All classes and customer
acquisitions conducted
through our online platform
during the last few months
All employees have been
working from home till late
April 2020
Majority of existing students were
successfully migrated online
within just a couple of weeks
since the outbreak (without price
discount incentive)
Our online platform has been
serving approx. 160,000 student
enrollments since February
2020, a massive increase from
just a few thousands in late 2019
Customer satisfaction rate on
online platform remained 90%+,
resulting in low refund rates
(2.3% in February) and high
renewal rates
Company Q2 revenue retained at
the level of same period last year
The speed, scale
and results prove
our strong ability
to strategically
manage and
operate a premium
online business
4
Impact is expected to be one-off and has a swift pattern
Premium K-12
1on1 Business
Impact Assessment Enrollments* Trend
Young Children
Education
Businesses
A swift drop in an environment when the
public schools are closed and there is
massive supply of free or low priced online
classes
Temporally challenging for us to deliver the
distinguished value of our premium education
services when students stay at home and the
score improvement demand is not as urgent
The demand is expected to return in a fast
fashion as schedules of most schools reopen
and all entrance exams in China are now fixed
Our young children education businesses
may have a slightly longer period of impact as
kindergartens and some primary schools will
reopen a few months after other public
schools, according to government policy
Expect Shanghai kindergartens to open soon
Revamped products and online acquisition
practices to handle the change
60
70
80
90
100
110
120
Jan Feb Mar Apr Mid-May
千
Monthly Average Enrollments
(‘000)
30
40
50
60
Jan Feb Mar Apr Mid-May
Monthly Average Enrollments
(‘000)
As of May 15, 2020, 54 of our VIP centers have reopened under government permission.
We expect that number to increase over the next few months
* Enrollments data exclude Huaying and pure online businesses
2020
2020
Pandemic, online only Learning Centers
+ Online
Pandemic, online only
5
Penetrating markets in various provincial capitals and regional center cities with localized teaching and academic research methods
Technology development including CTS (Cloud Teaching System) 6.0: over 12 years experience on middle/back-end platform technology/data/content
OMO triple teachers (cloud teacher, cloud study keeper and cloud advisor) ensures high quality teacher, high quality learning experience and high quality services
Comprehensive product mix including big class, small group class and 1-on-1 creates synergies and extend customer lifetime value
精锐在线的目标——中国最大的中高端在线学习平台
Its OMO Model Effectively Reduces Cost of Acquisitions, Improves Customer
Loyalty and Provide Localized Curriculum Development
Offline acquisition of customer through Learning Centers and AI centers;
Multiple online marketing channels as well as Private traffic pool
OneSmart Online, the leading online premium education platform
in China, is built on distinguished competitive advantages
6
• We will focus on offline learning centers in top 10 cities where services is emphasized and OneSmart Online will serve as complementary offerings to meet the needs of cost-efficient demand and convenience
• OneSmart Online will serve as main growth driver to rapidly gain market share in tier 2 and tier 3 cities through AI cloud centers, multiple online marketing channels and private traffic pool.
• Online class delivery:cloud teacher + cloud study keeper + AI data driven
一线城市Incremental Driver in Top 10 Cities and Main Growth Driver in Tier 2 & 3 Cities
Student Enrollments Increased by 370% Over Three Months
3,628
13,288
0
5,000
10,000
15,000
2020.2 2020.5
Pure Online Student Enrollments (Excluding promotion classes)
OneSmart Online is delivering strong momentum in customer
acquisitions
7
OMO获客及私域流量运营
AI Cloud Center
Private Traffic
Pool
Traffic Gathering and Referral
User Referral
Subscription account, personal
account, mini program, APP
Platform operation, social
community referral, cross-sell
from CRM
Traffic from Both Online and Offline Channels
OneSmart
Online
APP
Online Teaching and Services
Acquisition cost is well managed thanks to our OMO model and
private traffic pool built previously
8
在线产品持续升级
OneSmart Online 1-1
Triple teachers
Fulltime teachers, localized teaching and development
platform, personalized teaching
Smart Online Teaching and Development Platform
Smart Online Teaching Preparation Platform
Live Broadcasting Cloud Classroom
- Six steps teaching method
- Interactive teaching
- Data collection
Smart Administration System
Smart Service System
Active tracking and feedbacks, study
clubs/ seminars, family education cloud
courses
CRM
Smart Assessment System
Customized teaching program,
personalized academic planning, intelligent
matching with cloud teachers
APP Technology + Content
- “Zero distance” between home
and school
-Smart error track book
-Student performance track
Classes are delivered on our latest advanced version of online
teaching system: CTS 6.0
9
VIP
OMO
Op
era
tio
n S
up
port
Marketing
Center
Customer
Center
CRM Marketing, UPC Operation, LMS Teaching, IMES Assessment
Teaching &
Research Center
Big Data
Computing
Data Service
User Profile
Happy MathFasTrack
EnglishOnline Young
Children Education
Online Middle
SchoolInternational
Education
Trading Center Service Center
Teaching
Center
Assessment
Center
Live broadcasting
Center
Customer
Satisfaction Center
Data
Visualization
Fro
nt-
en
d B
usin
ess
OnlineOffline
Data Center
Business Middle-end Platform Data Middle-end Platform
System
Monitor
Cyber
Monitor
Security
CI/CD
Ba
ck-e
nd
Mid
dle
-end
Fro
nt-
en
d
Support
Support
AIVoice
Recognition NLP
Image
RecognitionText Analysis
BigData
Spark Hadoop/Hbase/Hive
Kyligence Flink/Storm
CloudMicro-
serviceK8S/Docker/ELK
Cache MQ/RDS/CDN
OneSmart System Structure
Te
ch
nic
al S
up
po
rt
OneSmart Online is built on solid foundation of middle and back-end
Data, Content & Technology
Section 2
Financial Highlights
11
Key highlights for the second fiscal quarter of FY20
Retained the vast majority of revenue yoy, by converting students online
Serving approx. 160,000 enrollments online since the outbreak of COVID-19
OneSmart Online is well-positioned to generate incremental growth
1. Revenue
2. Margin
Business gradually returns to normal level starting May 2020 as public
schools and our learning centers started to reopen, and entrance exams are
fixed in July 2020; OneSmart Online drives strong incremental growth
3. Outlook
Key Highlights
GPM pressure mainly due to one-off revenue drop due to COVID-19 impact, coupled with previous quarter’s added teacher cost to improve online offerings, and increased rental costs to comply with new regulatory requirements
OPM pressure due to 1) one-off revenue drop; 2) increased R&D spending
Expect margin will start to expand in FY21
12
117 117
224 231
FQ22019
FQ22020
H12019
H12020
747 685 1,233 1,286
FQ22019
FQ22020
H1 2019H1 2020
HappyMath
2,058
2,863
3,994
FY2017 FY2018 FY2019
Net Revenues OneSmart VIP
RMB MM
RMB MM
+55.7%RMB MM
+31.2%
CAGR
CAGR
943
886
1,589 1,683
FQ2 2019FQ2 2020 H1 2019 H1 2020
+5.9%
Growth
-6.0%
Growth 212
359
FY2017 FY2018 FY2019
+39.3%
CAGR
Top-line growth in the three business segments
FasTrack English
1,840 2,416
FY2017 FY2018 FY2019
73
192
FY2017 FY2018 FY2019
RMB MM
39 51 71 100
FQ22019
FQ22020
H12019
H12020
+30.2%
Growth
Fiscal years ended August 31 and fiscal quarters ended February
3,168
514
+4.3%
Growth
+3.1%
Growth
+40.9%
Growth
-8.4%
Growth
-0.6%
Growth
13
3,603 3,351
6,104 6,327
770 875
1,496 1,701
321 341
583 717
391 330
391
678
FQ22019
FQ22020
H1 2019 H1 2020
8,711
11,744
13,312 12,991 13,316
FY2017 FY2018 FY2019 FQ2 2019 FQ2 2020
Operating metrics
+43.6%
CAGR
Average Monthly Enrollments
Consumed Class Units
Number of Classrooms
+23.6%
CAGR
9,611 12,384
15,590
1,601
2,680
3,639
1,466
FY2017 FY2018 FY2019
15,497
11,212
1,506
22,202
OneSmart VIP Happy Math FasTrack English Others
OneSmart VIP Happy Math FasTrack English Others
+8.3%
Growth
+40.7%
CAGR
(in thousand)
433
ASPRMB per class unit
-2.4%
Growth
-1.5%
Growth
-12.5%
Growth
Note
1.The decrease of ASP of HappyMath is mainly due to 1) the fact that we entered into more cities outside Shanghai in
which we adopted lower pricing policies; 2) launch of short term promotional classes as a new marketing campaign
Company Happy MathVIP
5,084
8,574
+2.5%
Growth
185 181
207 204
152 133
123
150
FQ22019
FQ22020
FQ22019
FQ22020
FQ22019
FQ22020
FQ22019
FQ22020
63,295
85,830 99,226
13,545
18,884
27,024 7,431
15,934
16,162
FY 2017 FY 2018 FY 2019
112,145
76,841
97,253
105,251
90,892101,473
26,009 27,530
25,906
27,749
17,033
22,961
15,104
21,734 15,876
13,426
17,377
14169
FQ22019
FQ22020
H1 2019 H1 2020
156,171169,168
158,346
149,279
+22.4%
Growth
FasTrack English
+10.6%
Growth
165,125
4,898
9,424
+9.9%
Growth
-3.7%
Growth
14
Gross Profit and Gross Margin(1)
Gross margin
RMB MM
48.1%51.3%
935
1,224
1,558
126
203
263
73
FY2017 FY2018 FY2019
26
49.5% 45.7%
FY
2017
FY
2018
FY
2019
FQ2
2019
FQ2
2020
OneSmart VIP 50.8% 50.6% 49.2% 50.2% 41.0%
HappyMath 59.6% 56.5% 51.1% 57.4% 38.7%
FasTrack
EnglishNA 35.5% 38.2% 30.2% 35.2%
Others (101.3%) (20.9%) 22.5% 32.0% 37.0%
Overall Gross
Margin51.3% 50.6% 48.1% 49.5% 40.2%
Gross Margin by Segments
50.6%
Notes
1. Fiscal years ended August 31 and second fiscal quarters ended February 29, 2020
The decrease of gross margin was mainly due to one-off
revenue drop caused by the impact of COVID-19 as all of our
offline learning centers were temporarily shutdown as required
by the government, coupled with previous quarter’s added
teacher cost to improve online offerings, and increased rental
costs to comply with regulatory requirements
375
281
570505
67
45
124
85
12
18
19
28
12
12
15
18
FQ22019
FQ22020
H12019
H12020
40.2% 37.9%
OneSmart VIP Happy Math FasTrack English Others
15
28.6%
34.7%30.5%
35.8%
11.7%
14.4%
13.0%
15.1%3.9%
5.5%
4.3%
5.5%
6.3%
5.3%
6.5%
5.8%
FQ2 2019 FQ2 2020 H1 2019 H1 2020
62.1%
30.8% 30.5% 31.1%
9.0% 9.9%11.1%
2.6% 3.0%3.6%
6.3% 5.9%
6.1%
FY2017 FY2018 FY2019
Cost structure
51.9%48.7% 49.4%
Staff costs Rental costs
Depreciation and amortization Other costs
50.5% 54.3%Total Cost % of Net Revenue: 59.8%
16
Non-GAAP Selling & Marketing Expenses as % of
Revenues(1)
Non-GAAP General & Administrative Expenses as
% of Revenues(1)
Selling & marketing expenses, and G&A expenses
20.2%17.4% 16.9%20.4%17.9% 20.6%
RMB MM RMB MM
191 197
357 391
FQ22019
FQ22020
H12019
H12020
357
485
806
FY2017 FY2018 FY2019
173 178
310 351
FQ22019
FQ22020
H12019
H12020
Q2 G&A expenses increase was mainly due to increased R&D
expenses to support development of OneSmart Online
20.3% 22.5% 18.3% 19.5%
368
588
816
FY2017 FY2018 FY2019
22.2% 23.3% 20.1% 20.8%
Notes1.Excluding share-based compensation expenses
The increase of Q2 marketing expenses % of revenue was
mainly due to 1) revenue drop; 2) increased % spending in
online channels during the pandemic situation
17
102 (18) 59 (105)
FQ22019
FQ22020
1H 20191H 2020
330 376
300
FY2017 FY2018 FY2019
305
229 229
FY2017 FY2018 FY2019
90 (55)
29 (169)
FQ22019
FQ22020
1H2019
1H2020
Operating margin
Operating Income (Loss) and Operating Margin Non-GAAP Operating Income (Loss) and Operating Margin (2)
Net Income (Loss) and Net Income (Loss) Margin (1)Non-GAAP Net Income (Loss) and Net Income (Loss)
Margin (1) (2)
RMB MM
Notes1. Net income attributable to OneSmart; 2. Excluding share-based compensation expenses
7.5%16.0% 13.1%5.7%
259
246 245
FY2017 FY2018 FY2019
14.8% 8.0%
6.1%12.6% 8.6%
284
392
317
FY2017 FY2018 FY2019
7.9%13.8% 13.7% 5.0%
65 (16) 49 (106)
FQ22019
FQ22020
H12019
H12020
77 20
79 (42)
FQ22019
FQ22020
H1 2019 H1 2020
6.9% 3.1% 8.2%
9.6% 1.8% 3.7%10.9%
The decrease of margin was mainly due to one-off revenue drop due
to the impact of COVID-19. We expect margin will return to normal
level and start to expand in FY21.
-6.2% -10.1% -2.0% -6.2%
-1.8% -6.3% 2.3% -2.5%
18
Operating cash, Capex and cash balance
Prepayments from Customers Cash and Cash Equivalents and Short-term Investments
RMB MM RMB MM
1,531
1,992 2,171
1,970
2,386
FY2017 FY2018 FY2019 FQ2 2019 FQ2 2020
173 242
284
FY2017 FY2018 FY2019
Operating Cash Flows Capex and Capex as a % of net revenues
RMB MM
8.4% 8.5% 7.1%
773 867
345
FY2017 FY2018 FY2019
(140) (7) (263) 7
FQ22019
FQ22020
1H2019
1H2020
91 68
171 158
FQ2 2019FQ2 2020 H1 2019 H1 2020
10.8%9.6%
1,396
2,227
1,841
1,065
1,492
FY2017 FY2018 FY2019 FQ2 2019 FQ2 2020
7.7% 9.4%
Thank You