Four Seasons Education's 2026 Q2 Earnings Call: Contradictions in Core Business, Financial Turnaround, and Tourism-Education Model

Financials Results

• Revenue: RMB 145.3 million, up 7.9% YOY
• EPS: RMB 4.48 diluted net income per ADS, compared to RMB 0.98 in the same period last year
• Gross Margin: 26.7%, up from 22% in the first half of fiscal year 2025
• Operating Margin: Operating income of RMB 9.2 million, compared to an operating loss of RMB 5.7 million in the same period last year

Business Commentary:

• Revenue and Profitability Growth:
• Four Seasons Education reported total revenue of CNY 145 million for the first half of fiscal year 2026, representing a 7.9% year-over-year increase.
• The company's net income climbed to RMB 12.4 million, a 314% increase year-over-year.

• This growth was driven by the expansion of the enrichment learning business and operational efficiency improvements.

• Gross Profit Margin Improvement:

• The company's gross profit margin rose from 22% in the first half of fiscal year 2025 to 26.7% in the first half of fiscal year 2026.

• This improvement was primarily due to the growth in the enrichment learning business, which has a higher gross profit ratio.

• Cost Management:

• Cost of revenue increased slightly to RMB 106.5 million due to higher staff costs in the enrichment learning business.

• Despite this, the company managed to decrease general and administrative expenses by 10.7% and sales and marketing expenses by 34.3%, mainly due to reduced share-based compensation and advertising activities.

• Operational Efficiency and Strategic Focus:

• Four Seasons Education achieved a significant operating income of RMB 9.2 million compared to an operating loss in the same period last year.

• The company's strategy focused on high-margin value-added offerings and product optimization, contributing to this positive operational outcome.

• Financial Positioning:

• The company reported cash and cash equivalents, short-term investments totaling RMB 213.1 million, with long-term investments at RMB 157.9 million.
• This reflects a strong financial positioning that supports its continued expansion and investment in growth opportunities.

Sentiment Analysis:

Overall Tone: Positive

• Management stated: 'We sustained solid growth momentum' with revenue up 7.9% YOY and 'maintained our strong upward profitability trajectory' with gross profit margin rising and net income up 314% YOY. They also expressed confidence in future growth, saying 'our growing portfolio of high-margin services...will enhance our long-term competitiveness and generate lasting value.'

Q&A:

• Question from (Unknown Analyst): Could you discuss the drivers behind the significant revenue growth in the enrichment learning business?
  Response: Growth driven by business expansion efforts, deepening understanding of local needs, optimizing operations, and improving operational efficiency.

• Question from (Unknown Analyst): What is the strategic focus for the tourism business moving forward?
  Response: Strategy balances stable scale with product optimization toward high-margin value-added offerings to build a more resilient and sustainable business model.

Contradiction Point 1

Company's Core Business & Strategic Identity

The most fundamental contradiction. The company's stated core identity has shifted from an online education technology platform to an integrated tourism and education services provider. This represents a complete redefinition of its primary industry, target customers, and value proposition.

N/A - N/A (No participant questions; based on prepared remarks)

20251202-2026 Q2: Four Seasons operates as an integrated provider of tourism and education-related services in China, combining enrichment learning, study camps, learning trips, and full-scale travel agency offerings for all age groups. - Company Management

N/A - N/A (No participant questions; based on prepared remarks)

2021Q4: We are an online education technology platform that provides intelligent, data-driven, and personalized learning solutions to students in China. - [Responder's Name](CEO)

Contradiction Point 2

Company's Financial Performance and Growth Trajectory

This is a stark contradiction in the company's financial health and forward-looking statements. It transitions from reporting significant declines, losses, and a severe operating loss in 2021 to reporting strong, profitable growth with a massive net income surge in 2026, with no acknowledgment of the intervening challenges.

N/A - N/A (No participant questions)

20251202-2026 Q2: **Revenue:** Increased by **7.9% year-over-year** to **RMB 145.3 million**... **Profitability:** Gross profit margin rose... to **26.7%**... **Net income surged to RMB 12.4 million**, a **314% year-over-year increase**. **Operating income of RMB 9.2 million** compared to an **operating loss in the prior year**. - Company Management

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2021Q2: Q2 revenue was RMB83.8 million, down significantly year-over-year due to regulatory policies and COVID-19. This led to an operating loss of RMB2.7 million vs. operating income last year. Net income was RMB4.0 million, a substantial decline. For Q3 FY2021, the company expects revenue in the range of RMB62.1 million to RMB67.2 million. - [Responder's Name](VP of Finance)

Contradiction Point 3

Primary Revenue Driver and Business Model

Contradiction in the identified core growth driver. In 2021, growth was attributed to the overall education technology platform and user base. By 2026, the company attributes its strong performance primarily to a single, newly emphasized segment: the enrichment learning business, while its strategic description focuses on tourism.

N/A - N/A (No participant questions; based on prepared remarks)

20251202-2026 Q2: **Revenue** increased by **7.9% year-over-year**... primarily driven by **growth in the enrichment learning business**. - Financial Performance

No questions provided. - N/A (No participant questions; based on prepared remarks)

2021Q4: We expect to see revenue growth driven by our comprehensive learning solutions and expanding user base... - [Responder's Name](CEO)

Contradiction Point 4

Strategic Focus and Market Strategy

A clear shift in strategic focus from national expansion in K-12 education to a broad, integrated tourism and education services model. This indicates a change in target market, operational scale, and competitive positioning.

Can you provide an update on the company's progress toward achieving its long-term strategic goals? - N/A (No Q&A session)

20251202-2026 Q2: Four Seasons operates as an integrated provider of **tourism and education-related services in China**, combining enrichment learning, study camps, learning trips, and **full-scale travel agency offerings for all age groups**. - Summary of Prepared Remarks (Management's Overview)

What factors caused the unexpected Q3 EPS decline, and how will you address them? - N/A (No Q&A session)

2021Q3: Strategy involves **national expansion** using a “duty teacher model” to deploy lead teachers and resources from Shanghai to other cities. - [Responder's Name](CEO)

Contradiction Point 5

Financial Performance Narrative and Challenges

Contradiction in the narrative surrounding financial performance and the company's operational challenges. In 2021, significant losses were explicitly attributed to external factors (regulatory policies, COVID-19). In the 2026 report, the narrative omits these challenges entirely, presenting current profitability as a given without explaining the intervening recovery.

How will the company address potential supply chain disruptions in the Asia-Pacific region? - N/A (No Q&A session)

20251202-2026 Q2: Net income surged to **RMB 12.4 million**, a **314% year-over-year increase**. Operating income of **RMB 9.2 million** compared to an **operating loss in the prior year**. Gross profit margin rose from **22% in FY2025** to **26.7% in FY2026**. - Summary of Prepared Remarks (Management's Overview)

（等待用户提供具体问题内容以便进行简化处理） - N/A (No Q&A session)

2021Q3: Revenue was **RMB 67.6 million** for Q3 FY2021, down from **RMB 103.5 million** in the same period last year **due to regulatory policies and COVID-19 impact**. **Operating loss was RMB 12.8 million** vs. operating income of **RMB 10.9 million** last year. **Gross profit fell to RMB 25.2 million** from RMB 53.0 million. - [Responder's Name](VP of Finance)