BEIJING, June 15, 2023 (GLOBE NEWSWIRE) — 17 Education & Technology Group Inc. (NASDAQ: YQ) (“17EdTech” or the “Company”), a number one schooling expertise firm in China, as we speak introduced its unaudited monetary outcomes for the primary quarter of 2023.

First Quarter 2023 Highlights¹

• Net revenues have been RMB9.3 million (US$1.4 million), representing a year-over-year lower of 96.0% from RMB233.4 million within the first quarter of 2022.

• Gross margin was 24.4%, lowering from 60.7% within the first quarter of 2022.

• Net loss was RMB92.5 million (US$13.5 million), considerably growing from internet lack of RMB24.8 million within the first quarter of 2022.

• Net loss as a share of internet revenues was destructive 997.9% within the first quarter of 2023, in contrast with destructive 10.6% within the first quarter of 2022.

• Adjusted internet loss² (non-GAAP), which excluded share-based compensation bills of RMB28.5 million (US$4.1 million), was RMB64.0 million (US$9.3 million), in contrast with adjusted internet revenue (non-GAAP) of RMB9.9 million within the first quarter of 2022.

• Adjusted internet loss (non-GAAP) as a share of internet revenues was destructive 690.6% within the first quarter of 2023, in contrast with 4.2% of adjusted internet revenue (non-GAAP) as a share of internet revenues within the first quarter of 2022.

Mr. Andy Liu, Founder, Chairman and Chief Executive Officer of the Company, commented, “The COVID outbreak in China in the fourth quarter of 2022 caused delays in the bidding and delivery processes of our major projects which adversely affected our financial performance in the last two quarters. However, our in-school SaaS business continues to advance beyond the financial results might indicate.”

“Year to date, our teaching and learning SaaS business has won multiple landmark projects across China, including the RMB116 million Shanghai Minhang District smart-pen and intelligent homework project and the RMB20 million Beijing Xicheng District cloud classroom evaluation system project. These winnings demonstrate our competitive advantages in the space and the market’s recognition of our offerings, all rooted in our deep insights into classroom and homework scenarios, accumulated AI capability technology and data insights, and exceptional ability to achieve large-scale regular use by teachers and students.”

Story continues

Mr. Michael Du, Director and Chief Financial Officer of the Company, commented, “Our revenue and gross profit in the first quarter of 2023 were impacted due to the delays in bidding and delivery of several projects. However, the recent winning of major projects have marked another key milestone in the Company’s new business strategies. These projects are expected to be delivered gradually over the upcoming quarters and reflected it in our financial statements.”

________________
1 For a reconciliation of non-GAAP numbers, please see the desk captioned “Reconciliations of non-GAAP measures to the most comparable GAAP measures” on the finish of this press launch.
2 Adjusted internet revenue (loss) represents internet revenue (loss) excluding share-based compensation bills.

First Quarter 2023 Unaudited Financial Results

Net Revenues

Net revenues for the primary quarter of 2023 have been RMB9.3 million (US$1.4 million), representing a year-over-year lower of 96.0% from RMB233.4 million within the first quarter of 2022, primarily because of the important delays within the bidding and supply processes of main tasks which affected income recognition within the quarter.

Cost of Revenues

Cost of revenues for the primary quarter of 2023 was RMB7.0 million (US$1.0 million), representing a year-over-year lower of 92.4% from RMB91.8 million within the first quarter of 2022, which was largely consistent with the lower in internet revenues.

Gross Profit and Gross Margin

Gross revenue for the primary quarter of 2023 was RMB2.3 million (US$0.3 million), representing a year-over-year lower of 98.4% from RMB141.7 million within the first quarter of 2022.

Gross margin for the primary quarter of 2023 was 24.4%, in contrast with 60.7% within the first quarter of 2022.

Total Operating Expenses

The following desk units forth a breakdown of working bills by quantities and percentages of income in the course of the durations indicated (in 1000’s, aside from percentages):

Total working bills for the primary quarter of 2023 have been RMB106.3 million (US$15.5 million), together with RMB28.5 million (US$4.1 million) of share-based compensation bills, representing a year-over-year lower of 37.8% from RMB170.8 million within the first quarter of 2022.

Sales and advertising and marketing bills for the primary quarter of 2023 have been RMB21.8 million (US$3.2 million), together with RMB5.1 million (US$0.7 million) of share-based compensation bills, representing a year-over-year lower of 0.8% from RMB22.0 million within the first quarter of 2022.

Research and growth bills for the primary quarter of 2023 have been RMB44.3 million (US$6.4 million), together with RMB7.0 million (US$1.0 million) of share-based compensation bills, representing a year-over-year lower of 54.6% from RMB97.5 million within the first quarter of 2022. The lower was primarily attributable to workforce optimization consistent with enterprise adjustment and steady bills administration.

General and administrative bills for the primary quarter of 2023 have been RMB40.2 million (US$5.9 million), together with RMB16.5 million (US$2.4 million) of share-based compensation bills, representing a year-over-year lower of 21.7% from RMB51.3 million within the first quarter of 2022. The lower was primarily resulting from workforce optimization consistent with enterprise adjustment and steady bills administration.

Loss from Operations

Loss from operations for the primary quarter of 2023 was RMB104.0 million (US$15.1 million), in contrast with RMB29.1 million within the first quarter of 2022. Loss from operations as a share of internet revenues for the primary quarter of 2023 was destructive 1,121.8%, in contrast with destructive 12.5% within the first quarter of 2022.

Net Loss

Net loss for the primary quarter of 2023 was RMB92.5 million (US$13.5 million), in contrast with internet lack of RMB24.8 million within the first quarter of 2022. Net loss as a share of internet revenues was destructive 997.9% within the first quarter of 2023, in contrast with destructive 10.6% within the first quarter of 2022.

Adjusted Net Loss (non-GAAP)

Adjusted internet loss (non-GAAP) for the primary quarter of 2023 was RMB64.0 million (US$9.3 million), in contrast with adjusted internet revenue (non-GAAP) of RMB9.9 million within the first quarter of 2022. Adjusted internet loss (non-GAAP) as a share of internet revenues was destructive 690.6% within the first quarter of 2023, in contrast with 4.2% of adjusted internet revenue (non-GAAP) as a share of internet revenues within the first quarter of 2022.

Please confer with the desk captioned “Reconciliations of non-GAAP measures to the most comparable GAAP measures” on the finish of this press launch for a reconciliation of internet loss beneath U.S. GAAP to adjusted internet revenue (loss) (non-GAAP).

Cash and Cash Equivalents, Restricted Cash, and Short-term Investments

Cash and money equivalents, restricted money, and short-term investments have been RMB639.5 million (US$93.1 million) as of March 31, 2023, in contrast with RMB737.7 million as of December 31, 2022.

Conference Call Information

The Company will maintain a convention name on Wednesday, June 14, 2023 at 9:00 p.m. U.S. Eastern Time (Thursday, June 15, 2023 at 9:00 a.m. Beijing time) to debate the monetary outcomes for the primary quarter of 2023.

Please be aware that contributors have to pre-register for the convention name participation by navigating to https://register.vevent.com/register/BIce1be812566a42809928eca0ce5a00e2. Once preregistration has been accomplished, contributors will obtain dial-in numbers, an occasion passcode, and a novel registrant ID.

Upon registration, you’ll obtain an e mail containing participant dial-in numbers, and PIN quantity. To be a part of the convention name, please dial the quantity you obtain, enter the PIN quantity, and you’ll be joined to the convention name immediately.

Additionally, a reside and archived webcast of this convention name can be out there at https://ir.17zuoye.com/.

Non-GAAP Financial Measures

17EdTech’s administration makes use of adjusted internet revenue (loss) as a non-GAAP monetary measure to achieve an understanding of 17EdTech’s comparative working efficiency and future prospects.

Adjusted internet revenue (loss) represents internet loss excluding share-based compensation bills and such adjustment has no influence on revenue tax.

Adjusted internet revenue (loss) is utilized by 17EdTech’s administration of their monetary and working decision-making as a non-GAAP monetary measure, as a result of administration believes it displays 17EdTech’s ongoing enterprise and working efficiency in a fashion that enables significant period-to-period comparisons. 17EdTech’s administration believes that such non-GAAP measure offers helpful info to traders and others in understanding and evaluating 17EdTech’s working efficiency in the identical method as administration does, in the event that they so select. Specifically, 17EdTech believes the non-GAAP measure offers helpful info to each administration and traders by excluding sure fees that the Company believes aren’t indicative of its core working outcomes.

The non-GAAP monetary measure has limitations. It doesn’t embody all objects of revenue and expense that have an effect on 17EdTech’s revenue from operations. Specifically, the non-GAAP monetary measure will not be ready in accordance with GAAP, is probably not similar to non-GAAP monetary measures utilized by different corporations and, with respect to the non-GAAP monetary measure that excludes sure objects beneath GAAP, doesn’t replicate any profit that such objects could confer to 17EdTech. Management compensates for these limitations by additionally contemplating 17EdTech’s monetary outcomes as decided in accordance with GAAP. The presentation of this extra info will not be meant to be thought-about superior to, in isolation from or as an alternative to outcomes ready in accordance with US GAAP.

Exchange Rate Information

The Company’s enterprise is primarily carried out in China and the entire revenues are denominated in Renminbi (“RMB”). However, periodic stories made to shareholders will embody present interval quantities translated into U.S. {dollars} (“USD” or “US$”) utilizing the alternate charge as of stability sheet date, for the comfort of the readers. Translations of balances within the consolidated stability sheets and the associated consolidated statements of operations, complete loss, change in shareholders’ deficit and money flows from RMB into USD as of and for the three months ended March 31, 2023 are solely for the comfort of the readers and have been calculated on the charge of US$1.00=RMB6.8676 representing the midday shopping for charge set forth within the H.10 statistical launch of the U.S. Federal Reserve Board on March 31, 2023. No illustration is made that the RMB quantities might have been, or might be, transformed, realized or settled into US$ at that charge on March 31, 2023, or at some other charge.

About 17 Education & Technology Group Inc.

17 Education & Technology Group Inc. is a number one schooling expertise firm in China. The Company offers a sensible in-school classroom answer that delivers data-driven educating, studying and evaluation merchandise to lecturers, college students and fogeys. Leveraging its in depth information and experience obtained from in-school enterprise over the previous decade, the Company offers educating and studying SaaS choices to facilitate the digital transformation and improve at Chinese faculties, with a deal with enhancing the effectivity and effectiveness of core educating and studying situations comparable to homework assignments and in-class educating. The Company additionally offers a customized self-directed studying product to Chinese households. The product makes use of the Company’s expertise and information insights to supply personalised and focused studying and train content material that’s aimed toward enhancing college students’ studying effectivity.

Safe Harbor Statement

This announcement comprises forward-looking statements. These statements are made beneath the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements might be recognized by terminology comparable to “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and related statements. Statements that aren’t historic information, together with statements about 17EdTech’s beliefs and expectations, are forward-looking statements. 17EdTech may make written or oral forward-looking statements in its periodic stories to the SEC, in its annual report back to shareholders, in press releases and different written supplies and in oral statements made by its officers, administrators or staff to 3rd events. Forward-looking statements contain inherent dangers and uncertainties. A variety of components might trigger precise outcomes to vary materially from these contained in any forward-looking assertion, together with however not restricted to the next: 17EdTech’s development methods; its future enterprise growth, monetary situation and outcomes of operations; its capability to proceed to draw and retain customers; its capability to hold out its enterprise and group transformation, its capability to implement and develop its new enterprise initiatives; the tendencies in, and measurement of, China’s on-line schooling market; competitors in and related authorities insurance policies and rules regarding China’s on-line schooling market; its expectations relating to demand for, and market acceptance of, its services and products; its expectations relating to its relationships with enterprise companions; common financial and enterprise situations; and assumptions underlying or associated to any of the foregoing. Further info relating to these and different dangers is included in 17EdTech’s filings with the SEC. All info offered on this press launch is as of the date of this press launch, and 17EdTech doesn’t undertake any obligation to replace any forward-looking assertion, besides as required beneath relevant regulation.

For investor and media inquiries, please contact:

17 Education & Technology Group Inc.
Ms. Lara Zhao
Investor Relations Manager
E-mail: ir@17zuoye.com