First High-School Education Group Co., Ltd.

For the first half of 2024, total revenue was RMB151.0 million, down 6.7% from RMB161.9 million in the first half of 2023. Revenue from customers increased 8.2% to RMB151.1 million from RMB139.6 million, while revenue from government cooperative agreements fell to zero from RMB22.3 million. Cost of revenues was RMB98.9 million, roughly flat versus RMB98.7 million last year, and gross profit was RMB52.3 million, down 17.3% from RMB63.2 million, with gross margin at 34.6% versus 39.0%. Operating expenses were RMB49.2 million, up sharply from RMB23.6 million; selling and marketing was RMB1.6 million, up 71.6%, and G&A was RMB47.7 million, up from RMB22.7 million. Income from operations was RMB3.0 million, down 92.4%, net income from continuing operations was RMB4.2 million, down 88.9%, and total net income was RMB11.2 million, down 69.4%. Adjusted net income was RMB10.1 million, down 72.0%. The company did not provide formal forward guidance for next quarter or full year on the call; it said 2024 fall semester enrollment was completed, total students reached 35,151 and school programs were 23 as of September 1, 2024, and that customer revenue increased 8.2% with the larger student base.

The CEO, Mr. Zhang, did not speak directly on the call, but management’s strategic message was that the company is focused on improving operations and adapting its model. Tommy Zhou said the firm is investing in human resources and IT, including a new HR system and broader digitalization, to better manage teachers, supervision, and school operations while maintaining academic quality. He also said the company will explore new opportunities and innovate to stay competitive.

CFO Tommy Zhou said the main financial pressure points were the absence of government-cooperative revenue and higher operating costs tied to staffing and professional services. He highlighted that customer revenue still grew 8.2% to RMB151.1 million, while gross margin fell to 34.6% from 39.0% and operating expenses rose to RMB49.2 million from RMB23.6 million. He also noted that the company is trying to renegotiate government agreements to reduce the number of publicly sponsored students if those contracts do not produce revenue, in order to lower associated costs.

There were no analyst questions on the call, so no Q&A discussion of concerns or follow-ups took place. Management closed by inviting investors to email questions, but no additional guidance or clarifications were provided.