ACROFAN

China Distance Education Holdings Limited Reports Financial Results for Third Quarter Fiscal Year 2019

- Third Quarter 2019 Net Revenue Up 30.2% Year-Over-Year to $61.7 Million -- Third Quarter 2019 Net Income Up 84.1% Year-Over-Year to $9.4 Million -- Third Quarter 2019 Cash Receipts from Online Course Registration Up 30.7% Year-Over-Year to $50.4 Million -- Third Quarter 2019 Cash Flow from Operations Up 41.7% Year-Over-Year to $17.6 Million -BEIJING, Aug. 14, 2019 /PRNewswire/ -- China Distance Education Holdings Limited (NYSE: DL) ("CDEL", or the "Company"), a leading provider of online education and value-added services for professionals and corporate clients in China, today announced unaudited financial results for the third quarter of fiscal year 2019 ended June 30, 2019. Third Quarter Fiscal 2019 Financial and Operational Highlights Net revenue increased by 30.2% to $61.7 million from $47.4 million in the prior year period. Total course enrollments were 734,800, an increase of 29.2% from the third quarter of fiscal 2018. Cash receipts from online course registration were $50.4 million, a 30.7% increase from the third quarter of fiscal 2018. Gross profit increased by 36.5% to $31.2 million from $22.8 million in the prior year period. Non-GAAP[1] gross profit increased by 36.3% to $31.2 million from $22.9 million in the prior year period. Gross margin was 50.5%, compared with 48.2% in the prior year period. Non-GAAP[1] gross margin was 50.5%, compared with 48.2% in the prior year period. Operating income increased by 527.2% to $9.9 million from $1.6 million in the prior year period. Non-GAAP[1] operating income increased by 371.7% to $10.4 million from $2.2 million in the prior year period. Net income increased by 84.1% to $9.4 million from $5.1 million in the prior year period. Non-GAAP[1] net income increased by 72.9% to $10.0 million from $5.8 million in the prior year period. Basic and diluted net income per American Depositary Share ("ADS") were $0.282 and $0.281, compared with basic and diluted net income per ADS of $0.154 for the third quarter of fiscal 2018. Each ADS represents four ordinary shares. Basic and diluted non-GAAP[1] net income per ADS were $0.299 and $0.296, compared with basic and diluted non-GAAP[1] net income per ADS of $0.174 and $0.173 for the third quarter of fiscal 2018. Cash flow from operations increased by 41.7% to $17.6 million from $12.4 million in the third quarter of fiscal 2018. Mr. Zhengdong Zhu, Chairman and CEO of CDEL, said, "The second half of fiscal year 2019 commenced with a strong third quarter performance, with third quarter revenue and net income growth of 30.2% and 84.1% year-over-year, respectively. Third quarter revenue growth was driven primarily by our industry-leading accounting vertical, a significant increase in revenue from the sale of learning simulation software, and revenue from the legal vertical generated by Beijing Ruida. Total enrollment growth was 29.2% year-over-year in the third quarter, primarily due to significant enrollment growth in accounting and engineering & construction (E&C) continuing education courses. Cash receipts from online course registration grew 30.7% year-over-year in the third quarter, or 39.8% year-over-year on a constant currency basis, due to the continued popularity of our longer duration premium and elite classes." Mr. Zhu concluded, "Our third quarter results show that our multi-pronged growth strategy is bearing fruit. All three core verticals of accounting, healthcare, and E&C, posted strong year-over-year cash receipt growth in the third quarter, demonstrating the broad appeal of our course offerings across industry verticals. Underpinning the growth of our industry verticals is the comprehensive life-long learning ecosystem we have built and continue to enhance. Our accounting vertical, for example, now encompasses a full complement of services, including professional certification exam preparation and continuing education services; practical accounting training and employment guidance services; accounting and related advisory services to corporate clients; and books and reference materials. We are focused on developing similar ecosystems across our other industry verticals, such as healthcare, E&C, and legal, in an effort to create additional avenues of growth and expand our overall growth opportunities." Mr. Mark Marostica, Co-Chief Financial Officer of CDEL, added, "We returned to profitability in the third quarter as anticipated, and recorded non-GAAP operating margin of 16.8%, a significant year-over-year improvement due to strong third quarter revenue growth, coupled with the successful implementation of certain expense control measures and leverage of our cost structure." Mr. Marostica, continued, "With our fourth fiscal quarter well underway, we remain steadfast in continuing to balance growth with a keen focus on profitability and prudent cost control." Third Quarter Fiscal 2019 Financial Results Net Revenue. Total net revenue increased by 30.2% to $61.7 million in the third quarter of fiscal 2019 from $47.4 million in the third quarter of fiscal 2018. Net revenue from online education services, books and reference materials, and other sources contributed 70.5%, 15.9% and 13.6%, respectively, of total net revenues for the third quarter of fiscal 2019. Online education services. Net revenue from online education services increased by 25.6% to $43.5 million in the third quarter of fiscal 2019 from $34.7 million in the third quarter of fiscal 2018, mainly due to revenue growth from the accounting and healthcare verticals. Revenue from the legal vertical generated by Beijing Ruida also contributed to the growth. Books and reference materials. Net revenue from books and reference materials increased by 84.7% to $9.8 million in the third quarter of fiscal 2019 from $5.3 million in the third quarter of fiscal 2018, mainly due to book sale revenue from the Legal Professional Qualification Examination contributed by Beijing Ruida. Others. Net revenue from other sources increased by 12.8% to $8.4 million in the third quarter of fiscal 2019 from $7.4 million in the third quarter of fiscal 2018, primarily due to offline training revenue from the Legal Professional Qualification Examination contributed by Beijing Ruida. A significant increase in revenue from the sale of learning simulation software also contributed to the growth. This increase was partially offset by the decrease in revenue from the "Tax School Program" which the Company disposed in the first quarter of fiscal 2019. Cost of Sales. Cost of sales increased by 24.4% to $30.6 million in the third quarter of fiscal 2019 from $24.6 million in the third quarter of fiscal 2018. Non-GAAP[1] cost of sales increased by 24.6% to $30.6 million in the third quarter of fiscal 2019 from $24.5 million in the third quarter of fiscal 2018. The increase was mainly due to expenses associated with Beijing Ruida, including amortization expenses of intangibles arising from its acquisition of $1.7 million, cost of books and reference materials, and lecture fees. This increase was partially offset by the decrease in salaries and related expenses, and rental and related expenses. Gross Profit and Gross Margin. Gross profit was $31.2 million in the third quarter of fiscal 2019, up 36.5% from $22.8 million in the prior year period. Non-GAAP[1] gross profit was $31.2 million, increasing by 36.3% from $22.9 million in the prior year period. Gross margin was 50.5% in the third quarter of fiscal 2019, compared with 48.2% in the third quarter of fiscal 2018. Non-GAAP[1] gross margin was 50.5% in the third quarter of fiscal 2019, compared with 48.2% in the third quarter of fiscal 2018. Operating Expenses. Total operating expenses increased by 24.5% to $22.0 million in the third quarter of fiscal 2019, from $17.7 million in the prior year period. Non-GAAP[1] total operating expenses increased by 25.8% to $21.5 million in the third quarter of fiscal 2019, from $17.1 million in the prior year period. Selling expenses. Selling expenses increased by 31.4% to $17.0 million in the third quarter of fiscal 2019 from $13.0 million in the prior year period. Non-GAAP[1] selling expenses increased by 31.6% to $17.0 million in the third quarter of fiscal 2019 from $12.9 million in the prior year period. The increase was primarily driven by higher advertising and promotional expenses, expenses associated with Beijing Ruida, the increase in rental and related expenses and other miscellaneous selling expenses. This increase was partially offset by the decrease in commission to agents. General and administrative expenses. General and administrative expenses increased by 5.3% to $4.9 million in the third quarter of fiscal 2019 from $4.7 million in the prior year period. Non-GAAP[1] general and administrative expenses increased by 7.4% to $4.4 million in the third quarter of fiscal 2019 from $4.1 million in the prior year period. The increase was mainly due to the expenses associated with Beijing Ruida. Income Tax Expense. Income tax expense increased by 82.6% to $2.5 million in the third quarter of fiscal 2019 from $1.3 million in the prior year period, primarily due to an increase in taxable income. Net Income. As a result of the foregoing, net income was $9.4 million in the third quarter of fiscal 2019, compared with $5.1 million in the prior year period. Non-GAAP[1] net income was $10.0 million in the third quarter of fiscal 2019, compared with $5.8 million in the prior year period. Operating Cash Flow. Net operating cash inflow increased by 41.7% to $17.6 million in the third quarter of fiscal 2019 from $12.4 million in the prior year period. The operating cash inflow was mainly attributable to net income before non-cash items generated in the third quarter of fiscal 2019. The increase in accrued expenses and other liabilities, income tax payable, and deferred revenue generated from the Company's professional education services segment also contributed to the operating cash inflow. The operating cash inflow was partially offset by the increase in accounts receivable, inventories, prepayments and other current assets, and other non-current assets. Cash and Cash Equivalents, Restricted Cash and Short-term Investments. Cash and cash equivalents, restricted cash and short-term investments as of June 30, 2019 decreased by 4.0% to $124.9 million from $130.1 million as of March 31, 2019, mainly due to (i) the payment of contingent consideration for the acquisition of 11% equity interest, and purchase consideration for further acquisition of 9% equity interest in Beijing Ruida for a total of $6.6 million, (ii) the repayment of loans of $13.1 million and (iii) the capital expenditure of $1.7 million. The decrease was partially offset by the operating cash inflow generated in the third quarter of fiscal 2019 and the proceeds from disposal of an investment, Beijing Yousian Technology Co., Ltd, of $3.6 million. First Nine Months of Fiscal 2019 Financial Results Net Revenue. Total net revenue increased by 26.6% to $143.1 million in the first nine months of fiscal 2019 from $113.0 million in the first nine months of fiscal 2018. Net revenue from online education services, books and reference materials, and other sources contributed 67.4%, 15.1% and 17.5%, respectively, of total net revenues for the first nine months of fiscal 2019. Online education services. Net revenue from online education services increased by 19.8% to $96.5 million in the first nine months of fiscal 2019 from $80.5 million in the first nine months of fiscal 2018. Books and reference materials. Net revenue from books and reference materials increased by 138.0% to $21.6 million in the first nine months of fiscal 2019 from $9.1 million in the first nine months of fiscal 2018. Others. Net revenue from other sources increased by 6.7% to $25.0 million in the first nine months of fiscal 2019 from $23.5 million in the first nine months of fiscal 2018. Cost of Sales. Cost of sales increased by 28.9% to $79.5 million in the first nine months of fiscal 2019 from $61.6 million in the first nine months of fiscal 2018. Non-GAAP[1] cost of sales increased by 29.1% to $79.4 million in the first nine months of fiscal 2019 from $61.5 million in the first nine months of fiscal 2018. Gross Profit and Gross Margin. Gross profit was $63.7 million in the first nine months of fiscal 2019, up 23.9% from $51.4 million in the prior year period. Non-GAAP[1] gross profit was $63.7 million, increasing by 23.6% from $51.5 million in the prior year period. Gross margin was 44.5% in the first nine months of fiscal 2019, compared with 45.5% in the first nine months of fiscal 2018. Non-GAAP[1] gross margin was 44.5% in the first nine months of fiscal 2019, compared with 45.6% in the first nine months of fiscal 2018. Operating Expenses. Total operating expenses increased by 37.7% to $63.2 million in the first nine months of fiscal 2019 from $45.9 million in the prior year period. Non-GAAP[1] total operating expenses increased by 39.2% to $61.7 million in the first nine months of fiscal 2019 from $44.3 million in the prior year period. Selling expenses. Selling expenses increased by 49.0% to $45.3 million in the first nine months of fiscal 2019 from $30.4 million in the prior year period. Non-GAAP[1] selling expenses increased by 49.2% to $45.3 million in the first nine months of fiscal 2019 from $30.4 million in the prior year period. General and administrative expenses. General and administrative expenses increased by 15.5% to $17.9 million in the first nine months of fiscal 2019 from $15.5 million in the prior year period. Non-GAAP[1] general and administrative expenses increased by 17.3% to $16.4 million in the first nine months of fiscal 2019 from $14.0 million in the prior year period. Change in fair value of contingent consideration payable. Change in fair value of contingent consideration payable was attributable to the increase or decrease in fair value of contingent consideration with respect to the Company's equity interest investment in Beijing Ruida. Gain from Deconsolidation of a Subsidiary. Gain from deconsolidation of a subsidiary of $6.9 million related to the gain on the disposal of 60% equity interest, and fair value change of remaining 40% equity interest, in Champion Tax Advisory or "Tax School Program." Income Tax Expense. Income tax expense increased by 253.5% to $2.1 million in the first nine months of fiscal 2019 from $0.6 million in the prior year period. Net Income. As a result of the foregoing, net income was $7.5 million in the first nine months of fiscal 2019, compared with net income of $2.0 million in the prior year period. Non-GAAP[1] net income was $9.0 million in the first nine months of fiscal 2019, compared with non-GAAP[1] net income of $3.6 million in the prior year period. Operating Cash Flow. Net operating cash inflow increased by 76.5% to $61.9 million in the first nine months of fiscal 2019 from $35.1 million in the prior year period. Outlook For the fourth quarter of fiscal 2019, the Company expects to generate total net revenue in the range of $63.3 million to $66.5 million, representing year-over-year growth of approximately 18% to 24%. For fiscal year 2019, the Company expects to generate total net revenues in the range of $206.4 million to $209.6 million, representing year-over-year growth of approximately 23.8% to 25.8%. The Company's prior fiscal 2019 full-year total net revenue guidance range was $210.0 million to $218.3 million. The above guidance reflects the Company's current and preliminary view, which is subject to change. Conference Call Management will hold a conference call at 8:00 a.m. Eastern Time on Wednesday, August 14, 2019 (8:00 p.m. Beijing Time on Wednesday, August 14, 2019) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing: US Toll Free: +1-866-519-4004 International: +65-6713-5090Mainland China: 400-620-8038Hong Kong: +852-3018-6771United Kingdom: +44-203-6214-779Passcode: CDEL or DL A telephone replay will be available two hours after the call until August 21, 2019 by dialing: US Toll Free: +1-855-452-5696International: +61-2-8199-0299Mainland China: 400-632-2162Hong Kong: 800-963-117United Kingdom: 0808-234-0072Replay Passcode: 9789216 Additionally, a live and archived webcast of the conference call will be available at http://ir.cdeledu.com. [1] For more information about the non-GAAP financial measures contained in this press release, please see "Use of Non-GAAP Financial Measures" below. About China Distance Education Holdings Limited China Distance Education Holdings Limited is a leading provider of online education and value-added services for professionals and corporate clients in China. The courses offered by the Company through its websites are designed to help professionals seeking to obtain and maintain professional licenses and to enhance their job skills through our professional development courses in China in the areas of accounting, healthcare, engineering & construction, legal and other industries. The Company also offers online test preparation courses for self-taught learners pursuing higher education diplomas or degrees, practical accounting training courses for college students and working professionals, as well as third-party developed online courses. In addition, the Company provides business services to corporate clients, including but not limited to tax advisory and accounting outsourcing services. For further information, please visit http://ir.cdeledu.com. Safe Harbor Statement This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "may," "should," "potential," "continue," "expect," "predict," "anticipate," "future," "intend," "plan," "believe," "is/are likely to," "estimate" and similar statements. Among other things, the outlook for the fourth quarter and full fiscal year 2019 and quotations from management in this announcement, as well as the Company's strategic and operational plans (in particular, the anticipated benefits of strategic growth initiatives, including the promotion of the Company's lifelong learning ecosystem, as well as cost control) contain forward-looking statements. The Company may also make written or oral forward-looking statements in its periodic and annual reports to the SEC, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our goals and growth strategies; future prospects and market acceptance of our courses and other products and services; our future business development and results of operations; projected revenues, profits, earnings and other estimated financial information; projected enrollment numbers; our plans to expand and enhance our courses and other products and services; competition in the education and test preparation markets; and Chinese laws, regulations and policies, including those applicable to the Internet, Internet content providers, the education and telecommunications industries, mergers and acquisitions, taxation and foreign exchange. Further information regarding these and other risks is included in the Company's annual report on Form 20-F and other documents filed or furnished with the SEC. All information provided in this press release is as of the date of this press release. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law. Statement Regarding Unaudited Financial Information The unaudited financial information set forth in this press release is preliminary and subject to adjustments. Adjustments to the financial statements may be identified when audit work is performed for the year-end audit, which could result in significant differences from this preliminary unaudited financial information. Use of Non-GAAP Financial Measures To supplement the Company's consolidated financial results presented in accordance with U.S. generally accepted accounting principles, or GAAP, the Company uses the following measures defined as non-GAAP financial measures: non-GAAP net income, operating income, gross profit, cost of sales, selling expenses, general and administrative expenses, net income margin, operating margin, gross profit margin, and basic and diluted earnings per ADS and per share. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to comparable GAAP measures" set forth at the end of this release. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding share-based compensation expenses. However, non-GAAP financial measures may not be indicative of the Company's operating performance from a cash perspective. The Company believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to the Company's historical performance and liquidity. The Company computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of excluding share-based compensation expenses from the above-mentioned line items and presenting these non-GAAP measures is that such items may continue to be for the foreseeable future a significant recurring expense in our business. Management compensates for this limitation by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying table at the end of this release provides more detail on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures. Contacts: In China: China Distance Education Holdings LimitedJiao JiaoTel: +86-10-8231-9999 ext. 1826Email: IR@cdeledu.com The Piacente Group, Inc. Xi Zhang Tel: +86-10-6508-0677E-mail: dl@tpg-ir.com In the United States: The Piacente Group, Inc. Brandi PiacenteTel: +1 212-481-2050Email: dl@tpg-ir.com China Distance Education Holdings Limited Unaudited Condensed Consolidated Balance Sheets (in thousands of US Dollars, except number of shares and per share data) September 30, 2018 June 30, 2019 (Derived from Audited) (Unaudited) Assets: Current assets: Cash and cash equivalents 30,826 61,918 Restricted cash 51,736 39,355 Short term investments 17,073 23,578 Accounts receivable, net of allowance for doubtful accounts of US$1,417 and US$1,342 as of June 30, 2019 and September 30, 2018, respectively 7,280 7,067 Inventories 2,782 4,416 Prepayment and other current assets 17,054 25,013 Deferred cost 1,125 1,608 Total current assets 127,876 162,955 Non-current assets: Property, plant and equipment, net 27,972 39,016 Goodwill 79,516 79,463 Long term investments 33,837 32,822 Other intangible assets, net 39,500 33,471 Deposit for purchase of non-current assets 8,126 9,812 Deferred tax assets – non-current portion 5,711 4,583 Other non-current assets 6,387 11,420 Total non-current assets 201,049 210,587 Total assets 328,925 373,542 Liabilities and equity: Current liabilities: Bank borrowings 50,975 44,458 Accrued expenses and other liabilities (including accrued expenses and other liabilities of the consolidated VIE without recourse to China Distance Education Holdings Limited of US$33,327 and US$34,993 as of June 30, 2019 and September 30, 2018, respectively) 42,141 36,717 Income tax payable (including income tax payable of the consolidated VIE without recourse to China Distance Education Holdings Limited of US$6,941 and US$$4,847 as of June 30, 2019 and September 30, 2018, respectively) 9,293 8,621 Deferred revenue - current portion (including deferred revenue of the consolidated VIE without recourse to China Distance Education Holdings Limited of US$105,294 and US$77,299 as of June 30, 2019 and September 30, 2018, respectively) 78,194 106,099 Refundable fees - current portion (including refundable fees of the consolidated VIE without recourse to China Distance Education Holdings Limited of US$414 and US$13,837 as of June 30, 2019 and September 30, 2018, respectively) 13,837 414 Total current liabilities 194,440 196,309 Non-current liabilities: Deferred revenue - non-current portion (including deferred revenue of the consolidated VIE without recourse to China Distance Education Holdings Limited of US$34,286 and nil as of June 30, 2019 and September 30, 2018, respectively) - 34,286 Refundable fees - non-current portion (including refundable fees of the consolidated VIE without recourse to China Distance Education Holdings Limited of US$2,690 and nil as of June 30, 2019 and September 30, 2018, respectively) - 2,690 Deferred tax liabilities- non-current portion 12,693 11,287 Long-term bank borrowing 12,027 329 Total non-current liabilities 24,720 48,592 Total liabilities 219,160 244,901 Equity: Ordinary shares (par value of US$0.0001 per share; 500,000,000 shares authorized; 134,212,357 and 133,275,521 shares issued and outstanding at June 30, 2019 and September 30, 2018, respectively) 13 13 Additional paid-in capital 21,557 23,100 Accumulated other comprehensive loss (7,013) (6,223) Retained Earnings 29,717 46,899 Total China Distance Education Holdings Limited shareholder's equity 44,274 63,789 Noncontrolling interest 65,491 64,852 Total equity 109,765 128,641 Total liabilities and equity 328,925 373,542 China Distance Education Holdings Limited Unaudited Consolidated Statements Of Operations (in thousands of US dollars, except number of shares, per share and per ADS data) Three Months Ended June 30, 2018 2019 Sales, net of business tax, value-added tax and related surcharges: Online education services 34,658 43,529 Books and reference materials 5,321 9,826 Others 7,437 8,392 Sale of learning simulation software 1,703 2,665 - Business start-up training services 809 886 - Others 4,925 4,841 Total net revenues 47,416 61,747 Cost of sales Cost of services and others (20,250) (20,836) Cost of tangible goods sold (4,333) (9,735) Total cost of sales (24,583) (30,571) Gross profit 22,833 31,176 Operating expenses Selling expenses (12,967) (17,043) General and administrative expenses (4,698) (4,947) Total operating expenses (17,665) (21,990) Change in fair value of contingent consideration payable (4,420) - Other operating income 823

Puxin Limited Announces Second Quarter 2019 Unaudited Financial Results

BEIJING, Aug. 13, 2019 /PRNewswire/ -- Puxin Limited (NYSE: NEW) ("Puxin" or the "Company"), a successful consolidator of the after-school education industry in China, today announced its unaudited financial results for the second quarter ended June 30, 2019. Second Quarter 2019 Financial and Operational Highlights Net revenues were RMB632.9 million (US$92.2 million), an increase of 19.1% from RMB531.3 million in the second quarter of 2018. Operating loss was RMB168.7 million (US$24.6 million), an increase of 96.1% from RMB86.1 million in the second quarter of 2018. Adjusted operating loss[1] was RMB53.3 million (US$7.8 million), a decrease of 12.6% from RMB61.0 million in the second quarter of 2018. Net loss attributable to Puxin Limited was RMB194.6 million (US$28.4 million), an increase of 3.3% from RMB188.4 million in the second quarter of 2018. Adjusted net loss attributable to Puxin Limited[2] was RMB60.7 million (US$8.8 million), a decrease of 14.4% from RMB70.9 million in the second quarter of 2018. Adjusted EBITDA[3] was RMB(25.8) million (US$(3.8) million), an increase of 33.3% from RMB(38.7) million in the second quarter of 2018. Cash and cash equivalents were RMB500.6 million (US$72.9 million), compared with RMB778.0 million as of December 31, 2018. Student enrollments increased by 39.5% to 725,118 from 519,962 in the second quarter of 2018. Mr. Yunlong Sha, Chairman and Chief Executive Officer of Puxin, commented, "We are pleased to report that we made solid progress during the second quarter. Net revenues grew 19.1% year-over-year to RMB632.9 million, and business continued to move forward with strong momentum while our adjusted net loss attributable to Puxin Limited narrowed by 14.4% from the same period last year. In particular, revenues from K-12 education rose 30.4% year-over-year, mainly driven by our efforts to enlarge organic growth in student enrollments. Gross profit for the quarter increased by 23.6% year-over-year while our gross margin reached 47.4%. Although we took a modest approach to opening new learning centers and acquisitions during late last year in response to changes in the regulatory environment, student enrollments during the quarter increased by 39.5% and our class retention rate further reached 71.4%. We believe the solid growth demonstrates the effective implementation of our PBS system in lower-tier cities. We dedicated our efforts particularly to class retention rate, with a notable rise in the quality of classroom content and a strong team of teachers. This productive approach helped us grow market shares in lower-tiered cities. Going forward, we will stay focused on our plans to further develop Puxin Online School and continue acquiring new schools. Overall, we are particularly pleased to have narrowed our loss while achieving such solid top-line growth in the first half of 2019. We are excited and confident about our future growth in the education market in China. [1] Adjusted operating loss is a non-GAAP financial measure, which is defined as operating loss excluding share-based compensation expenses. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. [2] Adjusted net loss attributable to Puxin Limited is a non-GAAP financial measure, which is defined as net loss attributable to Puxin Limited excluding share-based compensation expenses and loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. [3] EBITDA is a non-GAAP financial measure, which is defined as net loss excluding depreciation, amortization, interest expense, interest income and income tax (benefits) expenses; adjusted EBITDA is a non-GAAP financial measure, which is defined as net loss excluding depreciation, amortization, interest expense, interest income, income tax (benefits) expenses, share-based compensation expenses, loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. Financial Results for the Second Quarter of 2019 Net Revenues Net revenues increased by 19.1% to RMB632.9 million (US$92.2 million) from RMB531.3 million in the second quarter of 2018. This increase was primarily driven by an increase in student enrollments. Student enrollments increased by 39.5% to 725,118 from 519,962 in the same period of 2018. Cost of Revenues Cost of revenues increased by 15.3% to RMB332.8 million (US$48.5 million) from RMB288.6 million in the same period of 2018, primarily due to an increase in teaching staff's compensation. Cost of revenues, excluding share-based compensation expenses, increased by 15.8% to RMB331.7 million (US$48.3 million) from RMB286.3 million in the second quarter of 2018. Gross Profit and Gross Margin Gross profit was RMB300.1 million (US$43.7 million), an increase of 23.6% from RMB242.7 million in the same period of 2018. Gross margin was 47.4%, compared with 45.7% for the same period in 2018. Operating Expenses Total operating expenses increased by 42.6% to RMB468.8 million (US$68.3 million) from RMB328.8 million in the second quarter of 2018. Selling expenses increased by 15.1% to RMB241.7 million (US$35.2 million) from RMB210.0 million in the second quarter of 2018. Selling expenses, excluding share-based compensation expenses, increased by 17.2% to RMB236.4 million (US$34.4 million) from RMB201.6 million in the second quarter of 2018. The increases were primarily due to increases in sales and marketing staff compensation. General and administrative expenses increased by 91.2% to RMB227.1 million (US$33.1 million) from RMB118.7 million during the same period of 2018. General and administrative expenses, excluding share-based compensation expenses, increased by 13.3% to RMB118.2 million (US$17.2 million) from RMB104.4 million in the second quarter of 2018. The increases were primarily due to increases in staff compensation. Total share-based compensation expenses allocated to related operating costs and expenses increased to RMB115.4 million (US$16.8 million) from RMB25.1 million in the same period of 2018, primarily due to new grants of options to employees in the first quarter of 2019. Operating Loss and Operating Margin Operating loss increased by 96.1% to RMB168.7 million (US$24.6 million) from RMB86.1 million in the second quarter of 2018. Operating margin was (26.7)% in the second quarter of 2019, compared with (16.2)% in the same period in 2018. Adjusted operating loss was RMB53.3 million (US$7.8 million), compared with RMB61.0 million in the second quarter of 2018. Adjusted operating margin was (8.4)%, compared with (11.5)% in the same period of the prior year. Net Loss Net loss attributable to Puxin Limited increased by 3.3% to RMB194.6 million (US$28.4 million) from RMB188.4 million during the second quarter of 2018. Basic and diluted net loss per ADS attributable to Puxin Limited were RMB2.28 (US$0.34), compared with RMB2.88 during the same period of 2018. Adjusted net loss attributable to Puxin Limited was RMB60.7 million (US$8.8 million), compared with RMB70.9 million during the same period of 2018. Adjusted basic and diluted net loss per ADS attributable to Puxin Limited[4] were RMB0.71 (US$0.10), compared with RMB1.09 during the same period of 2018. EBITDA EBITDA was RMB(159.8) million (US$(23.3) million), compared with RMB(156.2) million in the second quarter of 2018. EBITDA margin was (25.2)% in the second quarter of 2019, compared with (29.4)% in the same period in 2018. Adjusted EBITDA was RMB(25.8) million (US$(3.8) million), compared with RMB(38.7) million in the second quarter of 2018. Adjusted EBITDA margin was (4.1)%, compared with (7.3)% in the same period in 2018. Cash and cash equivalents As of June 30, 2019, the Company had total cash and cash equivalents of RMB500.6 million (US$72.9 million), compared with RMB778.0 million as of December 31, 2018. Business Outlook For the third quarter of 2019, based on the information available as of the date of this press release, the Company expects net revenues to be between RMB937.5 million and RMB971.0 million, which represents an increase of 40% to 45% year-over-year. These forecasts reflect the Company's current and preliminary views on the market and operational conditions, which are subject to change. Conference Call Information Puxin's management team will hold a conference call on August 13, 2019 at 8:00 AM U.S. Eastern Time (or 8:00 PM on the same day, Beijing/Hong Kong Time) following the quarterly results announcement. Participants may access the call by dialing the following numbers: International: +1-412-902-4272 China: 4001-201203 US: +1-888-346-8982 Hong Kong: +852-301-84992 Passcode: Puxin Please dial in 10 minutes before the call is scheduled to begin. When prompted, ask to be connected to the Puxin Limited Call. Participants will be required to state their name and company upon entering the call. A replay of the conference call will be accessible two hours after the conclusion of the conference call through August 20, 2019 by dialing the following numbers: International: +1-412-317-0088 US: +1-877-344-7529 Passcode: 10134205 A live webcast and archive of the conference call will be available on the Investor Relations section of Puxin's website at http://ir.pxjy.com/. [4] Adjusted basic and diluted net loss per ADS attributable to Puxin Limited is a non-GAAP financial measure, which is defined as basic and diluted net loss per ADS attributable to Puxin Limited excluding share-based compensation expenses, loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. Exchange Rate The Company's business is primarily conducted in China and all of the revenues are denominated in Renminbi ("RMB"). This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the readers. Unless otherwise noted, all translations from RMB to USD are made at the rate of RMB6.8650 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on June 28, 2019. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 28, 2019, or at any other rate. Use of Non-GAAP Financial Measures To supplement the Company's financial results presented in accordance with U.S. GAAP, the Company also uses non-GAAP financial measures, including adjusted operating loss, adjusted net loss attributable to Puxin Limited, EBITDA, adjusted EBITDA, adjusted basic and diluted net loss per ADS attributable to Puxin Limited, as supplemental measures to review and assess the Company's operating performance. Adjusted operating loss is defined as operating loss excluding share-based compensation expenses; adjusted net loss attributable to Puxin Limited is defined as net loss attributable to Puxin Limited excluding share-based compensation expenses, loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes; EBITDA is defined as net loss excluding depreciation, amortization, interest expense, interest income and income tax (benefits) expenses; adjusted EBITDA is defined as net loss excluding depreciation, amortization, interest expense, interest income, income tax (benefits) expenses, share-based compensation expenses, loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes, and adjusted basic and diluted net loss per ADS attributable to Puxin Limited are defined as basic and diluted net loss per ADS attributable to Puxin Limited excluding share-based compensation expenses, loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes. The Company believes that these non-GAAP financial measures provide useful information about the Company's operating results, enhance the overall understanding of the Company's past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision-making. Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools, and when assessing the Company's operating performance, investors should not consider them in isolation. In addition, calculations of this non-GAAP financial information may be different from calculations used by other companies, and therefore comparability may be limited. The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating our performance. For more information on this non-GAAP financial measure, please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this press release. 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. The Company 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 third parties. Any statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that 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: its goals and strategies, its ability to achieve and maintain profitability, its ability to attract and retain students to enroll in its courses, its ability to effectively manage its business expansion and successfully integrate businesses it acquired, its ability to identify or pursue targets for acquisitions, its ability to compete effectively against its competitors, its ability to improve the content of its existing courses or to develop new courses, and relevant government policies and regulations relating to the Company's corporate structure, business and industry. Further information regarding these and other risks is included in the Company'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 the Company does not undertake any obligation to update such information, except as required under applicable law. About Puxin Limited Puxin Limited ("Puxin" or the "Company") is a successful consolidator of the after-school education industry in China. Puxin has a strong acquisition and integration expertise to effectively improve education quality and operational performance of acquired schools. Puxin offers a full spectrum of K-12 and study-abroad tutoring programs designed to help students achieve academic excellence, as well as prepare for admission tests and applications for top schools, universities and graduate programs in China and other countries. The Company has developed a business model effectively combining strategic acquisitions and organic growth achieved through successful post-acquisition integration, which has differentiated the Company from other after-school education service providers in China. For more information, please visit http://www.pxjy.com/. Contacts Puxin LimitedPhone: +86-10-6269-8930E-mail: ir@pxjy.com Institutional Capital Advisory (ICA)Mr. Kevin Yang Phone: +86-021-8028-6033E-mail: puxin@icaasia.com PUXIN LIMITED UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of RMB and USD, except for share, per share and per ADS data) As of December 31, As of June 30, 2018 2019 2019 RMB RMB USD ASSETS Current assets Cash and cash equivalents 778,006 500,556 72,914 Restricted cash, current portion - 344,700 50,211 Inventories 9,659 11,280 1,643 Prepaid expenses and other current assets 128,638 98,639 14,368 Total current assets 916,303 955,175 139,136 Non-current assets Restricted cash, non-current portion 40,971 39,141 5,701 Operating lease right-of-use assets - 804,322 117,163 Property, plant and equipment, net 248,801 270,933 39,466 Intangible assets 218,978 210,309 30,635 Goodwill 1,243,817 1,358,165 197,839 Deferred tax assets 3,456 1,478 215 Rental deposit 64,693 64,765 9,434 Other non-current assets - 34,000 4,953 TOTAL ASSETS 2,737,019 3,738,288 544,542 LIABILITIES Current liabilities Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIE without recourse to the Group of RMB490,696 and RMB712,735 as of December 31, 2018 and June 30, 2019, respectively) 515,623 766,598 111,669 Income tax payable of the consolidated VIE without recourse to the Group 15,755 12,131 1,767 Deferred revenue, current portion (including deferred revenue, current portion of the consolidated VIE without recourse to the Group of RMB862,043 and RMB999,890 as of December 31, 2018 and June 30, 2019, respectively) 876,861 1,011,142 147,289 Operating lease liabilities, current portion (including operating lease liabilities, current portion of the consolidated VIE without recourse to the Group of RMB nil and RMB224,631 as of December 31, 2018 and June 30, 2019, respectively) - 225,249 32,811 Amounts due to related parties (including amounts due to related parties of the consolidated VIE without recourse to the Group of RMB3,199 and RMB404 as of December 31, 2018 and June 30, 2019, respectively) 54,493 22,898 3,335 Bank borrowing of the consolidated VIE without recourse to the Group 106,600 353,900 51,551 Promissory notes, current portion (including promissory notes, current portion of the consolidated VIE without recourse to the Group of RMB190,000 and RMB nil as of December 31, 2018 and June 30, 2019, respectively) 361,888 171,625 25,000 Total current liabilities 1,931,220 2,563,543 373,422 PUXIN LIMITED UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of RMB and USD, except for share, per share and per ADS data) As of December 31, As of June 30, 2018 2019 2019 RMB RMB USD Non-current liabilities Deferred revenue, non-current portion of the consolidated VIE without recourse to the Group 121,191 110,939 16,160 Operating lease liabilities, non-current portion of the consolidated VIE without recourse to the Group - 516,397 75,222 Deferred tax liabilities of the consolidated VIE without recourse to the Group 71,031 68,637 9,998 Franchise deposits of the consolidated VIE without recourse to the Group 1,763 1,873 273 Derivative liabilities (including derivative liabilities of the consolidated VIE without recourse to the Group of RMB nil and RMB nil as of December 31, 2018 and June 30, 2019, respectively) 63,942 164,279 23,930 TOTAL LIABILITIES 2,189,147 3,425,668 499,005 SHAREHOLDERS' EQUITY Ordinary shares (par value of USD0.00005 per share; 1,000,000,000 and 1,000,000,000 shares authorized, 188,627,228 and 188,627,228 shares issued and 165,038,164 and 173,927,126 shares outstanding as of December 31, 2018 and June 30, 2019, respectively) 62 62 9 Additional paid-in capital 1,944,325 2,154,533 313,843 Statutory reserve 4,595 4,595 669 Accumulated other comprehensive income 68,214 66,133 9,633 Accumulated deficit (1,469,303) (1,912,718) (278,619) Total Puxin Limited shareholders' equity 547,893 312,605 45,535 Non-controlling interest (21) 15 2 TOTAL SHAREHOLDERS' EQUITY 547,872 312,620 45,537 TOTAL LIABILITIES AND TOTAL SHAREHOLDERS' EQUITY 2,737,019 3,738,288 544,542 PUXIN LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of RMB and USD, except for share, per share and per ADS data) For the three months ended June 30, 2018 2019 2019 RMB RMB USD Net revenues 531,304 632,922 92,195 Cost of revenues (including share-based compensation expenses of RMB2,276 and RMB1,178 for the three months ended June 30, 2018 and 2019, respectively) 288,582 332,828 48,482 Gross profit 242,722 300,094 43,713 Operating expenses: Selling expenses (including share-based compensation expenses of RMB8,411 and RMB5,347 for the three months ended June 30, 2018 and 2019, respectively) 210,025 241,739 35,213 General and administrative expenses (including share-based compensation expenses of RMB14,369 and RMB108,844 for the three months ended June 30, 2018 and 2019, respectively) 118,747 227,063 33,075 Total operating expenses 328,772 468,802 68,288 Operating loss (86,050) (168,708) (24,575) Interest expense 12,606 10,193 1,485 Interest income 181 4,144 604 Foreign exchange gain - 179 26 Loss on changes in fair value of convertible notes, derivative liabilities and warrants 92,485 18,617 2,712 Gain on disposal of subsidiary 93 - - Loss before income taxes (190,867) (193,195) (28,142) Income tax (benefits) expenses (2,476) 1,424 207 Net loss (188,391) (194,619) (28,349) Less: Net income attributable to non-controlling interest 19 18 3 Net loss attributable to Puxin Limited (188,410)

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