UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2020

 

Commission File Number: 001-36363

 

TARENA INTERNATIONAL, INC.

 

6/F, No. 1 Andingmenwai Street,

Litchi Tower, Chaoyang District,

Beijing 100011, People’s Republic of China

Tel: +86 10 6213-5687

 

1/F, Block A, Training Building,

65 Kejiyuan Road, Baiyang Jie Dao,

Economic Development District,

Hangzhou 310000, People’s Republic of China

 

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

  Form 20-F x Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):              

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):              

 

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  TARENA INTERNATIONAL, INC.
     
     
     
  By: /s/ Wing Kee Lau
  Name: Wing Kee Lau
  Title: Chief Financial Officer
   
Date: August 12, 2020  

 

 

 

 

EXHIBIT INDEX

 

Exhibit 99.1 – Press Release  

 

 

 

Exhibit 99.1

  

Tarena International, Inc. Announces Unaudited First Half Fiscal Year 2020 Results

 

BEIJING, August 12, 2020 /PRNewswire/ -- Tarena International, Inc. (NASDAQ: TEDU) ("Tarena" or the "Company"), a leading provider of professional education and K-12 education services in China, today announced its unaudited financial results for the six months ended June 30, 2020.

 

First Half Fiscal Year 2020 Highlights

 

Net revenues decreased by 29.0% year-over-year to RMB626.8 million (US$89.2 million), from RMB882.6 million in the same period in 2019.

 

Gross profit decreased by 60.9% year-over-year to RMB122.3 million (US$17.4 million), from RMB312.8 million in the same period in 2019.

 

Operating loss was RMB664.7 million (US$94.6 million), compared to an operating loss of RMB646.9 million in the same period in 2019.

 

Non-GAAP operating loss, which excluded share-based compensation expenses, was RMB643.4 million (US$91.6 million), compared to non-GAAP operating loss of RMB622.2 million in the same period in 2019.

 

Net loss was RMB612.6 million (US$87.2 million), compared to a net loss of RMB625.1 million in the same period in 2019.

 

Non-GAAP net loss, which excluded share-based compensation expenses, was RMB591.3 million (US$84.2 million), compared to a non-GAAP net loss of RMB600.4 million in the same period in 2019.

 

Basic and diluted loss per American Depositary Share ("ADS") was RMB11.29 (US$1.6).

 

Cash, cash equivalents and time deposits, including current and non-current, and restricted cash totaled RMB414.9 million (US$58.6 million) as of June 30, 2020, compared to RMB621.2 million as of December 31, 2019.

 

Deferred revenue totaled RMB1,988.0 million (US$280.8 million) as of June 30, 2020, compared to RMB1,586.0 million as of December 31, 2019, representing an increase of 25.3%.

 

Total student enrollments in adult education business, defined as the total number of courses enrolled in by students during that period, including multiple courses enrolled in by the same student, in the first half of 2020 decreased by 18.0% year-over-year to 51,600.

 

Total number of learning centers in adult education decreased to 108 as of June 30, 2020, from 130 as of December 31, 2019.

 

Total student enrollments in K-12 education programs, defined as the total number of students who attended at least one paid lesson during that period or have deposit balances in their accounts at the end of that period, in the first half of 2020 reached 105,500, increased by 80.7% compared to the first half of 2019, when the K-12 student enrollment was at 58,400.

 

Total number of learning centers in K-12 education increased to 232 as of June 30, 2020, from 217 as of December 31, 2019.

 

“Due to the COVID-19 pandemic, total net revenue decreased by 29.0% from RMB882.6 million for the first half of 2019 to RMB626.8 million (US$89.2 million) for the first half of 2020. To cope with the challenges arising from the pandemic, we have adopted more stringent cost control policies and procedures. Since the second half of last year, we have focused on improving the operational efficiency of our adult education learning centers. We have gradually closed down or combined under-performing learning centers. As a result of the adjustments, although student enrollment of adult education dropped by 18.0% from 62,900 for the first half of 2019 to 51,600 for the first half of 2020, student enrollment per learning center increased by 7.9% from 443 for the first half of 2019 to 478 for the first half of 2020. Since February 2020, we have successfully transferred more than 90% of our adult education students to online lessons, where we use the “study at home plus dual teachers real-time broadcasting” teaching mode. During the period from February to May this year, all of our K-12 education learning centers were temporarily closed. We have worked to transfer K-12 students from offline classes to online lessons, and successfully transferred more than 60% of them. In the first half of 2020, our K-12 education student enrollment number reached 105,500 while in the first half of 2019, we reached a total K-12 student number of 58,400.” remarked Mr. Yongji Sun, the CEO of Tarena.

 

“For the rest of 2020, we will continue to focus on improving our learning centers’ operational efficiency, increasing per capita productivity and implementing effective cost and expenses controls. We do not plan to open new learning center in the second half of this year. Returning to profitability is our goal. We believe COVID-19 can be properly controlled and contained in China. Since June 2020, approximately 90% of our learning centers have been re-opened and resumed normal business. With that, we expect that our business performance will gradually improve.” concluded Mr. Sun.

 

“Our cash and cash equivalents and time deposits, including current and non-current, decreased by 33.2%, from RMB621.2 million as of December 31, 2019 to RMB414.9 million (US$58.6 million) as of June 30, 2020. The decrease in cash and cash equivalents and time deposits, including current and non-current, was mainly due to net cash used in operating activities which mainly composed of net loss of RMB612.6 million incurred in the first half of 2020, and was partially offset by the increase in total deferred revenue of RMB402.0 million.” said Kelvin Lau, the CFO of Tarena.

 

 

 

 

First Half Fiscal Year 2020 Results

 

Net Revenues

 

Net revenues decreased by 29.0% to RMB626.8 million (US$89.2 million) in the first half of 2020, from RMB882.6 million in the same period in 2019. The decrease was primarily due to the reduction of class consumption for both adults and K-12 businesses during the COVID-19 pandemic.

 

Cost of Revenues

 

Cost of revenues decreased by 11.5% to RMB504.5 million (US$71.8 million) in the first half of 2020, from RMB569.9 million in the same period in 2019. The decrease was mainly due to the reduction of cooperation with tutoring service providers as most students transferred to online studying during the COVID-19 pandemic. Furthermore, during the COVID-19 pandemic, the utility and office fees declined as our employees worked from home, and the social security fees were exempted due to the preferential policies enacted by the government.

 

Gross Profit and Gross Margin

 

Gross profit decreased by 60.9% to RMB122.3 million (US$17.4 million) in the first half of 2020, from RMB312.8 million in the same period in 2019. Gross margin, which is equal to gross profit divided by net revenues, was 19.5% in the first half of 2020, compared with 35.4% in the same period in 2019. The decline in gross margin was primarily due to the decreased portion of total revenues contributed by our adult education business, which have a higher gross margin than our K-12 education business.

 

Operating Expenses

 

Total operating expenses decreased by 18.0% to RMB787.0 million (US$112.0 million) in the first half of 2020, from RMB959.7 million in the same period in 2019. Total non-GAAP operating expenses, which excluded share-based compensation expenses, decreased by 18.1% to RMB765.9 million (US$109.0 million) in the first half of 2020, from RMB935.4 million in the same period in 2019. Total share-based compensation expenses allocated to the related operating expenses decreased by 13.2% to RMB21.1 million (US$3.0 million) in the first half of 2020, from RMB24.3 million in the same period in 2019.

 

Selling and marketing expenses decreased by 23.0% to RMB443.8 million (US$63.2 million) in the first half of 2020, from RMB576.0 million in the same period in 2019. The decline was mainly due to a decrease in marketing activities and promotional spending. In addition, we also saw a decrease in personnel-related expenses resulting from lower headcount. Social security fees were exempted thanks to the preferential policies enacted by the government.

 

General and administrative expenses decreased by 0.8% to RMB292.2 million (US$41.6 million) in the first half of 2020, from RMB294.7 million in the same period in 2019. The decline was mainly due to a decrease in personnel-related expenses resulting from lower headcounts.

 

Research and development expenses decreased by 42.7% to RMB51.0 million (US$7.3 million) in the first half of 2020, from RMB89.0 million in the same period in 2019. The decline was mainly due to a decrease in personnel related expenses resulting from lower headcount.

 

Operating Loss

 

Operating loss was RMB664.7 million (US$94.6 million) for the first half of 2020, compared to operating loss of RMB646.9 million in the same period in 2019. Non-GAAP operating loss, which excluded share-based compensation expenses, was RMB643.4 million (US$91.6 million), compared to non-GAAP operating loss of RMB622.2 million in the same period in 2019.

 

 

 

 

Interest Income (expense)

 

Interest expense was RMB2.1 million (US$0.3 million) in the first half of 2020, compared to interest income of RMB9.4 million in the same period in 2019. Interest income in both periods consisted of interest earned on our cash, cash equivalents and time deposits in commercial banks and interest income recognized in relation to our installment payment plan for students. The decrease in interest income in the first half of 2020 was primarily due to the decrease in the interest income on time deposits and tuition revenues from the installment payment plan for students. Furthermore, the interest expense increased due to the increase in short-term bank loan.

 

Other Income

 

Other income was RMB0.3 million (US$0.04 million) in the first half of 2020, compared to RMB0.5 million loss in the same period in 2019. The income was mostly from government grant.

 

Foreign Exchange Gain

 

Foreign exchange gain was RMB1.6 million (US$0.2 million) in the first half of 2020, compared to RMB1.1 million foreign exchange gain in the same period in 2019. The gain was mainly attributable to the depreciation of China’s RMB against the U.S. Dollar.

 

Income Tax Expense

 

The Company recorded an income tax benefit of RMB52.2 million (US$7.4 million) in the first half of 2020, compared to RMB11.7 million in income tax benefit in the same period in 2019.

Net Loss

 

As a result of the foregoing, net loss was RMB612.6 million (US$87.2 million) in the first half of 2020, compared to net loss of RMB625.1 million in the same period in 2019. Non-GAAP net loss, which excluded share-based compensation expenses, was RMB591.3 million (US$84.2 million), compared to a non-GAAP net loss of RMB600.4 million in the same period in 2019.

 

Basic and Diluted Loss per ADS

 

Loss per ADS were RMB11.29 (US$1.6) in the first half of 2020. Non-GAAP loss per ADS, which excluded share-based compensation expenses, were RMB10.89 (US$1.6).

 

Cash Flow

 

Net cash outflow from operating activities for the first half of 2020 was RMB183.6 million (US$26.1 million). Capital expenditures for the first half of 2020 were RMB43.8 million (US$6.2 million).

 

Business Outlook

 

Based on the Company's current estimates, total net revenues for the third quarter of 2020 are expected to be in the range of RMB570 million and RMB600 million, after taking into consideration the likely continued impact of COVID-19.

 

This guidance is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions, which are subject to change, particularly as to the potential impact of COVID-19 on the economy in China and elsewhere in the world, which are subject to change.

  

 

 

 

Conference Call

 

Company management will hold an earnings conference call and live webcast to discuss the Company's results at 8:00 AM on August 12, 2020, U.S. Eastern Time (8:00 PM on August 12, 2020, Beijing Time).

 

Please register in advance of the conference, using the link provided below. Upon registering, you will be provided with participant dial-in numbers, passcode and unique registrant ID.

 

Conference call registration link: https://apac.directeventreg.com/registration/event/8448098. It will automatically direct you to the registration page of "First Half 2020 Tarena International Inc Earnings Conference Call" where you may fill in your details for RSVP. If it requires you to enter a participant conference ID, please enter "8448098".

 

In the 10 minutes prior to the call start time, you may use the conference access information (including dial in number(s), direct event passcode and registrant ID) provided in the confirmation email received at the point of registering.

 

A replay of the conference call may be accessed by phone at the following number until August 20, 2020, 09:59 ET:

 

United States: +1 855 452 5696

INTERNATIONAL: +61 2 8199 0299

Conference ID: 8448098

 

Additionally, a live and archived webcast of this call will be available on the Investor Relations section of Tarena's website at http://ir.tedu.cn.

About Tarena International, Inc.

 

Tarena is a leading provider of professional education services in China. Through its innovative education platform combining live distance instruction, classroom-based tutoring and online learning modules, Tarena offers professional education courses in IT and non-IT subjects. Its professional education courses provide students with practical skills to prepare them for jobs in industries with significant growth potential and strong hiring demand. Tarena also offers K-12 education programs, including computer coding and robotics programming courses, etc, targeting students aged between three and eighteen.

 

Safe Harbor Statement

 

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Tarena may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to fourth parties. Any statements that are not historical facts, including any business outlook and statements about Tarena's beliefs and expectations, are forward-looking statements. Many factors, risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: Tarena's goals and strategies; its future business development, financial condition and results of operations; its ability to continue to attract students to enroll in its courses; its ability to continue to recruit, train and retain qualified instructors and teaching assistants; its ability to continually tailor its curriculum to market demand and enhance its courses to adequately and promptly respond to developments in the professional job market; its ability to maintain or enhance its brand recognition, its ability to maintain high job placement rate for its students, and its ability to maintain cooperative relationships with financing service providers for student loans. Further information regarding these and other risks, uncertainties or factors is included in Tarena’s filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and Tarena does not undertake any obligation to update such information, except as required under applicable law.

 

 

 

 

About Non-GAAP Financial Measures

 

Beginning in the second quarter of 2016, the Company revised its non-GAAP financial measures to exclude gain or loss on derivative instruments, goodwill impairment, impairment of intangibles via acquisitions of businesses and the related tax impact, in addition to its historical practice of excluding share-based compensation expenses for non-GAAP results.

 

To supplement Tarena’s consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Tarena's management uses non-GAAP measures of cost of revenues, operating expenses, operating income, net income, and basic and diluted net income per ADS, which are adjusted from results based on GAAP to exclude the share-based compensation expenses, gain or loss on derivative instruments, goodwill impairment, impairment of intangibles via acquisitions of businesses and the related tax impact. These non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. In addition, calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited.

 

Tarena’s management believes that excluding the share-based compensation expenses, gain or loss on derivative instruments, goodwill impairment, impairment of intangibles via acquisitions of businesses and the related tax impact provides meaningful supplemental information regarding our performance and liquidity by excluding certain items identified as non-recurring and infrequent in nature, and non-cash charges. The amount of share-based compensation expenses, gain or loss on derivative instruments, goodwill impairment, impairment of intangibles via acquisitions of businesses and the related tax impact are not built into the Company’s annual budgets and quarterly forecasts, which generally will be the basis for information Tarena provides to analysts and investors as guidance for future operating performance.

 

The non-GAAP financial measures are provided to enhance investors’ overall understanding of Tarena’s current financial performance and prospects for the future. A limitation of using non-GAAP cost of revenues, operating expenses, operating income (loss) and net income (loss), excluding the share-based compensation expenses, gain or loss on derivative instruments, goodwill impairment, impairment of intangibles via acquisitions of businesses and the related tax impact is that the share-based compensation charge has been and will continue to be a recurring expense in the Company’s business for the foreseeable future, and gain or loss on derivative instruments, goodwill impairment, impairment of intangibles via acquisitions of businesses and the related tax impact may recur in the future. In order to mitigate these limitations the Company has provided specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables include details on the reconciliation between GAAP financial measures that are most directly comparable to the non-GAAP financial measures the Company has presented.

 

For further information, please contact:

 

Amanda Wang

Investor Relations Contact

Tarena International, Inc.

Email:   ir@tedu.cn

 

 

 

 

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data and per share data)

 

   As of 
   December 31,   June 30,   June 30, 
   2019   2020   2020 
   Audited   Unaudited   Unaudited 
   RMB   RMB   USD 
             
ASSETS               
Current assets:               
Cash and cash equivalents   537,701    395,685    55,892 
Time deposits   83,081    6,000    848 
Restricted cash   -    13,145    1,857 
Accounts receivable, net of allowance for doubtful accounts   31,442    21,560    3,045 
Amounts due from related parties   16,492    275    39 
Prepaid expenses and other current assets   132,539    150,878    21,312 
Total current assets   801,255    587,543    82,993 
Time deposits-non current   406    116    16 
Accounts receivable, net of allowance for doubtful accounts-non current   724    271    38 
Property and equipment, net   576,633    508,048    71,763 
Intangible assets, net   17,669    15,662    2,212 
Goodwill   52,782    52,782    7,456 
Right-of-use assets   773,472    719,387    101,616 
Long-term investments, net   67,773    67,042    9,470 
Deferred income tax assets   99,789    152,701    21,569 
Other non-current assets   121,517    115,934    16,376 
Total assets   2,512,020    2,219,486    313,509 
                
LIABILITIES AND EQUITY               
                
Current liabilities:               
Short-term bank loans   89,162    99,872    14,107 
Accounts payable   16,563    9,768    1,380 
Amounts due to related parties   239    111    16 
Operating lease liabilities-current   241,710    195,317    27,589 
Income taxes payable   69,671    70,104    9,902 
Deferred revenue-current   1,554,431    1,951,331    275,631 
Accrued expenses and other current liabilities   397,558    295,045    41,676 
Total current liabilities   2,369,334    2,621,548    370,301 
Deferred revenue-non current   31,539    36,636    5,175 
Operating lease liabilities-non current   508,810    551,699    77,929 
Other non-current liabilities   5,401    5,243    741 
Total liabilities   2,915,084    3,215,126    454,146 
                
Commitments and contingencies   -    -    - 
                
Shareholders’ equity:               
Class A ordinary shares   337    339    48 
Class B ordinary shares   74    75    10 
Treasury stock   (457,169)   (459,815)   (64,950)
Additional paid-in capital   1,284,573    1,307,047    184,624 
Accumulated other comprehensive income   51,386    51,585    7,287 
Accumulated deficit   (1,279,248)   (1,888,706)   (266,785)
Total deficit attributable to the shareholders of Tarena International, Inc.   (400,047)   (989,475)   (139,766)
Non-controlling interest   (3,017)   (6,165)   (871)
Total liabilities and equity   2,512,020    2,219,486    313,509 

 

 

 

 

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except share data and per share data)

 

   For the Six Months Ended June 30 
   2019   2020   2020 
   RMB   RMB   USD 
             
Net revenues   882,613    626,826    89,205 
Cost of revenues(a)   (569,851)   (504,526)   (71,800)
Gross profit   312,762    122,300    17,405 
Selling and marketing expenses(a)   (576,038)   (443,784)   (63,156)
General and administrative expenses(a)   (294,670)   (292,224)   (41,587)
Research and development expenses(a)   (88,952)   (50,963)   (7,253)
Operating loss   (646,898)   (664,671)   (94,591)
Interest income (loss)   9,427    (2,063)   (294)
Other income (loss)   (483)   307    44 
Foreign currency exchange gains   1,106    1,649    235 
Loss before income taxes   (636,848)   (664,778)   (94,606)
Income tax benefit   11,737    52,172    7,425 
Net loss   (625,111)   (612,606)   (87,181)
Less: Net loss attributable to non-controlling interests   (1,056)   (3,148)   (448)
Net loss attributable to Class A and Class B ordinary shareholders   (624,055)   (609,458)   (86,733)
                
Net loss per Class A and Class B ordinary share:               
  Basic and diluted   (11.36)   (11.29)   (1.61)

 

Weighted average number of Class A and Class B ordinary shares outstanding:

               
  Basic and diluted   54,929,910    54,004,236    54,004,236 
                
Net loss   (625,111)   (612,606)   (87,181)
Other comprehensive income               
Foreign currency translation adjustment, net of nil income taxes   8,273    199    28 
Comprehensive loss   (616,838)   (612,407)   (87,153)
                

Notes:

(a)Includes share-based compensation expenses as follows:
   For the Six Months Ended June 30, 
   2019   2020   2020 
   RMB   RMB   USD 
             
Cost of revenues   454    242    34 
Selling and marketing expenses   1,980    1,038    148 
General and administrative expenses   16,616    13,718    1,952 
Research and development expenses   5,692    6,298    896 

 

 

 

 

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(in thousands, except share data and per share data)

 

 

   For the Six Months Ended June 30, 
  

2019

(Unaudited)

  

2020

(Unaudited)

  

2020

(Unaudited)

 
   RMB   RMB   USD 
             
GAAP Cost of revenues   569,851    504,526    71,800 
Share-based compensation expense in cost of revenues   454    242    34 
Non-GAAP Cost of revenues   569,397    504,284    71,766 
                
GAAP Selling and marketing expenses   576,038    443,784    63,156 
Share-based compensation expense in selling and marketing expenses   1,980    1,038    148 
Non-GAAP Selling and marketing expenses   574,058    442,746    63,008 
                
GAAP General and administrative expenses   294,670    292,224    41,587 
Share-based compensation expense in general and administrative expenses   16,616    13,718    1,952 
Non-GAAP General and administrative expenses   278,054    278,506    39,635 
                
GAAP Research and development expenses   88,952    50,963    7,253 
Share-based compensation expense in research and development expenses   5,692    6,298    896 
Non-GAAP Research and development expenses   83,260    44,665    6,357 
                
Operating loss   (646,898)   (664,671)   (94,591)
Share-based compensation expenses   24,742    21,296    3,030 
Non-GAAP Operating loss   (622,156)   (643,375)   (91,561)
                
Net loss   (625,111)   (612,606)   (87,181)
Share-based compensation expenses   24,742    21,296    3,030 
Non-GAAP Net loss   (600,369)   (591,310)   (84,151)
  Less: Net loss attributable to non-controlling interests   (1,056)   (3,148)   (448)
Non-GAAP net loss attributable to Class A and Class B ordinary shareholders   (599,313)   (588,162)   (83,703)
Non-GAAP net loss per Class A and Class B ordinary share(a)               
  Basic and diluted   (10.91)   (10.89)   (1.55)
Weighted average number of ordinary shares outstanding used in calculating Non-GAAP net loss per Class A and Class B ordinary share(a)               
  Basic and diluted   54,929,910    54,004,236    54,004,236 
                

 

Notes:

 

(a) The Non-GAAP net loss per share is computed using Non-GAAP net loss attributable to ordinary shareholders and the same number of ordinary shares used in GAAP basic and diluted net loss per share calculation.

 

(b) There was no tax impact of share-based compensation expenses and loss on foreign currency forward contract for the first half of 2020 and 2019.