BEIJING, May 15, 2019 /PRNewswire/ — China Distance Education Holdings Limited (NYSE: DL) (“CDEL”, or the “Company”), a leading issuer of on line schooling and price-added offerings for specialists and corporate customers in China, today announced unaudited financial outcomes for the second one quarter of monetary yr 2019 ended March 31, 2019.

Second Quarter Fiscal 2019 Financial and Operational Highlights

Net sales extended by means of 30.Three% to $38.Eight million from $29.7 million within the prior 12 months period.
Total direction enrollments were 642,000, an increase of 8.9% from the second region of monetary 2018.
Cash receipts from on line course registration have been $57.Zero million, a 29.8% increase from the second one region of monetary 2018.
Gross income extended by 39.Nine% to $15.Five million from $eleven.1 million in the earlier year length.
Non-GAAP[1] gross earnings extended by way of 39.6% to $15.Five million from $11.1 million inside the previous year length.
Gross margin changed into 39.Nine%, as compared with 37.2% inside the previous yr length. Non-GAAP[1] gross margin turned into 39.9%, compared with 37.3% within the previous yr length.

 


Operating loss became $4.1 million, as compared with $2.Nine million in the previous 12 months length.
Non-GAAP[1] running loss turned into $3.6 million, in comparison with $2.4 million in the earlier yr period.
Net loss changed into $three.Nine million, as compared with internet lack of $three.Three million in the previous yr duration.
Non-GAAP[1] net loss become $3.4 million, as compared with non-GAAP[1] internet loss of $2.7 million in the prior year period.
Basic and diluted internet loss in line with American Depositary Share (“ADS”) were $0.116, as compared with fundamental and diluted internet loss per ADS of $0.098 for the second one region of financial 2018. Each ADS represents 4 everyday shares.
Basic and diluted non-GAAP[1] internet loss according to ADS were $zero.A hundred and one, as compared with primary and diluted non-GAAP[1] net loss consistent with ADS of $0.082 for the second region of monetary 2018.
Cash drift from operations accelerated by means of 128.Eight% to $sixteen.5 million from $7.2 million inside the 2nd sector of fiscal 2018.
CDEL’s managed business enterprise Beijing Zhengbao Yucai Education Technology Company Limited finished its voluntary delisting from the New Third Board, the over the counter stock exchange in China, on April 22, 2019.
On May 15, 2019, CDEL determined to collect a further nine% equity interest in Beijing Ruida Chengtai Education Technology Co., Ltd. (“Beijing Ruida”), a enterprise engaged in exam training services for individuals in China’s Legal Professional Qualification Examination, for a complete attention of RMB38.3 million ($5.6 million), bringing the Company’s total equity hobby in Beijing Ruida from 51% inside the 2d quarter of economic 2019 to 60%. The transaction is predicted to shut in the 0.33 sector of financial 2019.
Mr. Zhengdong Zhu, Chairman and CEO of CDEL, stated, “In the second area of economic 2019, revenue grew 30.3% yr-over-year, exceeding the excessive give up of our guidance range, in the main pushed by means of the sturdy increase of our accounting vertical collectively with a considerable increase in revenue from the sale of learning simulation software. Revenue from the prison vertical generated with the aid of Beijing Ruida additionally contributed to the growth. Total enrollment growth become 8.Nine% 12 months-over-year within the second quarter, commonly due to the substantial enrollment increase in accounting and engineering & production (E&C) persevering with schooling publications. Cash receipts from on-line course registration grew 29.8% 12 months-over-12 months in the 2d zone, reflecting the continuing popularity of our longer length top class and elite training.”

Mr. Zhu concluded, “We are pleased with our 2nd region revenue overall performance as well as the sturdy momentum of coins receipts boom for the duration of the primary half of of monetary year 2019. We characteristic our performance to our sturdy lifelong learning environment, properly-diverse business model, reliable logo, and a firm dedication to supporting our college students acquire advanced learning consequences. Recently, the Company decided to increase its fairness hobby in Beijing Ruida to 60%, from 51% in the 2d region fiscal 2019, primarily based on Ruida’s outstanding criminal schooling courseware and enormous boom capability. This strategic funding selection reflects our dedication to similarly enhancing the Company’s comprehensive lifelong studying surroundings. Looking beforehand, we can continue to be targeted on turning in excellent-of-breed courseware and value-added services to our college students at specific degrees of their careers, and try to be the most excellent schooling companion for our college students all through their lifelong mastering adventure.”

Mr. Mark Marostica, Co-Chief Financial Officer of CDEL, said, “Similar to the second quarters of financial 2018 and financial 2017, we recorded an working loss in the second sector of economic 2019, as it’s far normally the lowest sales sector of our monetary yr because of seasonality. In addition, the working loss of the second one area financial 2019 was more stated because of our acquisition of Beijing Ruida in July 2018, as Beijing Ruida has quarterly sales seasonality similar to CDEL’s middle business, and the running consequences of Beijing Ruida consist of $1.7 million amortization expenses of intangibles springing up from the purchase of Beijing Ruida.”

Mr. Marostica, persevered, “Despite the primary half of of fiscal year 2019 operating loss, we consider we are able to see year-over-yr improvement in our running margins in economic 12 months 2019 because of our expectation of wholesome revenue growth in the financial year, together with the implementation of certain price manipulate measures. As we head into our 2d 1/2 of fiscal yr 2019, we’re targeted on persevering with to balance growth with a robust emphasis on profitability and price controls.”

CEO Share Purchase Plan

As announced on June 25, 2018 via the Company, Mr. Zhengdong Zhu, Chairman and CEO of CDEL, had knowledgeable the Company of his intention to apply his non-public funds to buy the Company’s shares for an quantity up to a most of $25 million within three hundred and sixty five days. As of May 15, 2019, Mr. Zhu had offered a complete of approximately $eleven.1 million of the Company’s everyday shares and ADSs pursuant to a 10b5-1 plan in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

Second Quarter Fiscal 2019 Financial Results

Net Revenue. Total internet revenue accelerated through 30.Three% to $38.Eight million inside the 2d sector of economic 2019 from $29.7 million within the second zone of monetary 2018. Net revenue from on line training offerings, books and reference materials, and different assets contributed seventy one.9%, 14.0% and 14.1%, respectively, of overall internet revenues for the second one area of economic 2019.

Online schooling offerings. Net sales from online schooling offerings extended through 19.2% to $27.Nine million in the second quarter of fiscal 2019 from $23.4 million in the second quarter of economic 2018, specifically due to sales growth from the accounting vertical. Revenues from courses of Intermediate and Advance Level Accounting Professional Qualifications Exams (“APQE”), and CPA Qualification Exam grew strongly in the 2d quarter of financial 2019. This boom became partly offset via the lower in revenue from Elementary APQE guides.

Books and reference substances. Net sales from books and reference substances multiplied with the aid of 288.3% to $five.Four million in the 2d sector of economic 2019 from $1.Four million inside the 2d quarter of financial 2018, mainly because of e-book sale sales from the Legal Professional Qualification Examination contributed with the aid of Beijing Ruida. Book sale revenue from our center accounting expert checks also contributed to the increase.

Others. Net sales from different sources increased with the aid of 10.5% to $five.5 million within the second zone of fiscal 2019 from $5.Zero million in the second quarter of financial 2018, by and large because of a widespread increase in sales from the sale of studying simulation software. This growth became in part offset by using the lower in sales from the “Tax School Program” which we disposed inside the first sector of economic 2019.

Cost of Sales. Cost of income accelerated by means of 24.6% to $23.3 million in the second sector of financial 2019 from $18.7 million within the 2d region of monetary 2018. Non-GAAP[1] fee of sales extended with the aid of 24.8% to $23.3 million in the 2nd quarter of fiscal 2019 from $18.7 million in the 2nd area of monetary 2018. The boom became specially because of the growth in fee of buy related to the sale of mastering simulation software, fee of books and reference materials, and fees related to Beijing Ruida, including amortization prices of intangibles springing up from its acquisition of $1.7 million. This growth changed into partially offset with the aid of the decrease in salaries and related expenses.

Gross Profit and Gross Margin. Gross income changed into $15.Five million within the 2d zone of monetary 2019, up 39.Nine% from $11.1 million in the earlier 12 months length. Non-GAAP[1] gross earnings was $15.5 million, increasing by means of 39.6% from $eleven.1 million in the previous yr period. Gross margin turned into 39.Nine% within the 2nd zone of fiscal 2019, in comparison with 37.2% within the 2d area of economic 2018. Non-GAAP[1] gross margin was 39.Nine% in the second region of monetary 2019, as compared with 37.Three% in the 2d quarter of economic 2018.

Operating Expenses. Total running prices extended by way of 44.5% to $20.4 million inside the second area of monetary 2019, from $14.1 million inside the prior year period. Non-GAAP[1] total operating costs improved through forty six.Four% to $19.9 million in the second zone of monetary 2019, from $thirteen.6 million in the previous yr period.

Selling expenses. Selling expenses improved by means of sixty five.Five% to $13.Eight million inside the 2nd area of financial 2019 from $eight.3 million inside the previous yr length. Non-GAAP[1] promoting costs increased by 65.Nine% to $thirteen.8 million within the 2nd quarter of economic 2019 from $8.3 million inside the previous year period. The growth became generally pushed by using the boom in salaries and associated charges, better commissions to dealers, better advertising and promotional fees, fees related to Beijing Ruida, and other miscellaneous promoting charges.

General and administrative fees. General and administrative fees expanded by way of 14.1% to $6.6 million in the 2d zone of economic 2019 from $five.8 million inside the previous year period. Non-GAAP[1] standard and administrative charges extended with the aid of 15.Five% to $6.1 million inside the 2nd quarter of fiscal 2019 from $5.Three million in the earlier yr duration. The increase turned into particularly because of the growth in salaries and related expenses, and prices associated with Beijing Ruida.

Income Tax Benefit. Income tax gain decreased via 6.7% to $1.Three million inside the second zone of financial 2019 from $1.4 million within the earlier 12 months length, usually because of a decrease predicted effective tax rate carried out in financial 12 months 2019, in comparison with the previous year length.

Net Loss. As a end result of the foregoing, internet loss turned into $three.9 million within the second sector of monetary 2019, compared with net loss of $three.Three million inside the previous yr length. Non-GAAP[1] net loss became $three.Four million within the 2d area of monetary 2019, in comparison with non-GAAP[1] internet loss of $2.7 million inside the earlier yr length.

Operating Cash Flow. Net operating coins influx accelerated through 128.8% to $sixteen.5 million in the 2nd quarter of financial 2019 from $7.2 million inside the previous year period. The operating cash inflow changed into in particular on account of the growth in deferred revenue generated from our professional schooling services section. The operating cash influx was in part offset by the growth in bills receivable, prepayments and different cutting-edge property, and the lower in amassed fees and other liabilities, profits tax payable, deferred tax liabilities, and quantity because of a associated celebration.

Cash and Cash Equivalents, Restricted Cash and Short-time period Investments. Cash and coins equivalents, restricted cash and short-term investments as of March 31, 2019 extended via 17.7% to $a hundred thirty.1 million from $a hundred and ten.5 million as of December 31, 2018, particularly because of the running cash inflow generated within the 2nd region of financial 2019, which became partly offset via the capital expenditure of $1.7 million.

First Six Months of Fiscal 2019 Financial Results

Net Revenue. Total internet revenue improved by way of 24.Zero% to $81.4 million inside the first six months of fiscal 2019 from $65.6 million within the first six months of fiscal 2018. Net revenue from online education services, books and reference substances, and other assets contributed sixty five.0%, 14.Five% and 20.Five%, respectively, of general internet sales for the first six months of fiscal 2019.

Online schooling offerings. Net sales from on line schooling services accelerated via 15.Five% to $52.9 million in the first six months of fiscal 2019 from $forty five.8 million inside the first six months of financial 2018.

Books and reference substances. Net sales from books and reference substances multiplied by using 213.3% to $11.8 million in the first six months of economic 2019 from $3.8 million inside the first six months of economic 2018.

Others. Net revenue from other resources improved by way of three.Nine% to $16.7 million inside the first six months of economic 2019 from $sixteen.Zero million in the first six months of monetary 2018.

Cost of Sales. Cost of sales expanded by means of 31.9% to $forty eight.Nine million inside the first six months of fiscal 2019 from $37.1 million in the first six months of fiscal 2018. Non-GAAP[1] price of income increased via 32.1% to $48.Nine million in the first six months of monetary 2019 from $37.0 million inside the first six months of financial 2018.

Gross Profit and Gross Margin. Gross profit was $32.Five million in the first six months of financial 2019, up thirteen.8% from $28.6 million within the previous 12 months duration. Non-GAAP[1] gross income changed into $32.5 million, increasing by thirteen.6% from $28.6 million in the previous year length. Gross margin become 39.Nine% within the first six months of financial 2019, compared with forty three.5% inside the first six months of financial 2018. Non-GAAP[1] gross margin turned into 40.0% inside the first six months of monetary 2019, as compared with 43.6% inside the first six months of monetary 2018.

Operating Expenses. Total operating prices improved by way of forty five.Nine% to $forty one.2 million inside the first six months of economic 2019 from $28.2 million inside the previous 12 months length. Non-GAAP[1] overall working costs extended by means of forty seven.6% to $forty.2 million within the first six months of economic 2019 from $27.2 million in the prior year duration.

Selling charges. Selling charges improved by means of sixty two.0% to $28.3 million within the first six months of fiscal 2019 from $17.Five million inside the prior 12 months period. Non-GAAP[1] selling costs extended by way of sixty two.3% to $28.Three million in the first six months of economic 2019 from $17.4 million within the prior yr duration.

General and administrative charges. General and administrative prices multiplied by way of 19.9% to $12.9 million in the first six months of monetary 2019 from $10.Eight million inside the prior year duration. Non-GAAP[1] wellknown and administrative prices elevated through 21.Five% to $eleven.Nine million within the first six months of monetary 2019 from $9.Eight million in the prior yr length.

Gain on Deconsolidation of a Subsidiary. Gain on deconsolidation of a subsidiary of $6.9 million associated with the advantage on disposal of 60% equity hobby, and truthful fee alternate of remaining forty% fairness hobby, in Champion Tax Advisory or “Tax School Program.”

Income Tax Benefit. Income tax benefit reduced by using 49.6% to $0.Four million inside the first six months of economic 2019 from $0.8 million inside the prior 12 months period.

Net Loss. As a result of the foregoing, internet loss become $2.0 million within the first six months of economic 2019, compared with $3.2 million within the earlier yr period. Non-GAAP[1] net loss turned into $1.Zero million inside the first six months of monetary 2019, as compared with non-GAAP[1] net loss of $2.1 million in the earlier year period.

Operating Cash Flow. Net running coins influx extended with the aid of 91.0% to $41.Three million within the first six months of monetary 2019 from $21.6 million inside the prior 12 months period.

Outlook

For the third area of fiscal 2019, the Company expects to generate overall net revenue inside the range of $sixty one.6 million to $64.0 million, representing 12 months-over-12 months boom of about 30% to 35%.

For monetary year 2019, the Company expects to generate overall internet sales inside the variety of $210.Zero million to $218.3 million, representing yr-over-yr increase of approximately 26% to 31%. The Company’s prior fiscal 2019 complete-year general net revenue steerage range become $208.3 million to $216.7 million.