TCTM Kids IT Education Inc.

Tarena reported second-quarter 2023 total net revenue of RMB 545 million, down 16% from RMB 649 million a year earlier. Gross profit was RMB 278.5 million and gross margin was 51.1%; cost of revenues fell 2.2% to RMB 266.3 million. Operating loss was RMB 6.8 million versus operating income of RMB 48 million in the prior-year quarter, while non-GAAP operating loss was RMB 0.9 million. Net income was RMB 8.3 million, helped by a RMB 26.8 million gain on disposal from the carve-out of the college collaboration-related business; basic income per ADS was RMB 0.7 and diluted income per ADS was RMB 0.67. For the first half, the company narrowed net loss to RMB 41.6 million and non-GAAP net loss to RMB 39.6 million. Cash, cash equivalents and restricted cash were RMB 368.1 million at June 30, down RMB 5.9 million from December 31, 2022. The company did not provide explicit next-quarter or full-year numerical guidance.

Nancy Ying Sun framed the quarter as evidence that the business is stabilizing after early-year uncertainty faded, with better customer acquisition, improved course delivery, and stronger word-of-mouth. She emphasized that STEAM education is benefiting from relatively strong demand and supportive policies, while the professional education business needs more time to recover. Her tone was constructive and confident, with repeated focus on operational efficiency, a more focused strategy, and long-term growth from digital transformation and AI-related demand.

Xiaobo Shao highlighted a sharp sequential improvement: operating loss narrowed to RMB 6.8 million from RMB 58.8 million in Q1, revenue grew 42% sequentially, and gross margin was 51.1% on gross profit of RMB 278.5 million. He noted cost of revenues fell to RMB 266.3 million, operating expenses declined 13.1% to RMB 285.5 million, and share-based compensation was RMB 0.9 million. He also cited RMB 20 million of operating cash outflow, RMB 11.6 million of capex, RMB 76.6 million in payments for the disposition of two buildings, and cash, cash equivalents and restricted cash of RMB 368.1 million at quarter-end.

An analyst asked what drove the quarter-over-quarter improvement beyond better macro conditions. Nancy said the main drivers were improved social mobility and lower customer acquisition/delivery costs, more youth events such as competitions and camps that supported word of mouth, and friendly policies that are encouraging programming and STEAM education. Management also said the market is stabilizing and that parents’ awareness is improving, helping penetration. There were no other substantive analyst questions before the call ended.