Puxin Limited

For the first quarter of 2021, net revenues were RMB686.8 million, down 8.6% year over year. K-12 tutoring services revenue was RMB550.6 million, up 5.2% from RMB523.3 million in the prior-year period. Gross profit was RMB301.8 million, down 14% year over year, and gross margin was 43.9% versus 46.7% in the same period of 2020. Total operating expenses decreased 15% year over year to RMB295.2 million. Management did not provide next-quarter or full-year numerical guidance on this call.

CEO Yunlong Sha said the quarter was affected by winter-break COVID-related disruptions that forced some learning centers to close and pushed courses online in certain cities. He emphasized the company’s blended learning model and ongoing investment in a database, systematic platform, business intelligence tools, and a proprietary ERP system to improve delivery and operating efficiency. His tone was defensive but constructive, framing the operational changes as steps to strengthen long-term execution.

CFO Peng Wang detailed that the revenue decline was primarily driven by lower student enrollments, while K-12 tutoring remained a bright spot with 5.2% growth. He noted cost of revenues fell 3.8% to RMB385.0 million, or RMB384.5 million excluding share-based compensation, mainly because of lower teaching staff compensation and classroom lease costs. He also highlighted that operating expenses dropped 15% year over year to RMB295.2 million and said he sees recent regulatory updates as an extension of 2018-2019 policies, including more detailed rules around deposit and withdrawal mechanics for designated accounts.

The main analyst question focused on regulation, asking for bear/base/bull scenarios and the impact on advertising, learning-center expansion, and cash flow management. Management responded that recent policy changes appear to be incremental and largely an execution of rules already set in 2018-2019, especially around how funds are deposited into and withdrawn from designated accounts. They did not provide detailed scenario analysis, but clearly pushed back on the idea of a sudden regulatory regime change.