Four Seasons Education's Q2 2026 Earnings Call: Contradictions Emerge in Blackwell Production, Margins, and Enrollment Recovery

Business Commentary:

• Revenue Growth and Business Expansion:
• Four Seasons Education reported total revenue of CNY 145 million for the first 6 months of fiscal year 2026, a 7.9% year-over-year increase.

• The growth was primarily driven by the expansion of its enrichment learning business and continued efficiency gains across its core operations.

  

• Improved Profitability:

• 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 due to a healthy product mix and operational efficiency, particularly in the enrichment learning segment.

• Cost Management and Efficiency:

• Four Seasons Education reduced general and administrative expenses by 10.7% to RMB 24.3 million and sales and marketing expenses by 34.3% to RMB 5.3 million for the first half of fiscal year 2026.

• The decrease in expenses was largely due to a reduction in share-based compensation and advertising activities, contributing to overall efficiency gains.

• Strategic Focus and Market Positioning:

• The company has evolved to operate as an integrated provider of tourism and education services, combining enrichment learning, study camps, and travel agency offerings.
• This repositioning aims to balance scale with product optimization, focusing on high-margin, value-added offerings to build a more resilient and sustainable business model.
  

Contradiction Point 1

Blackwell Production and Supply Chain Constraints

It directly impacts expectations regarding the production timeline and delivery capabilities of a key product, potentially influencing company revenue and investor expectations.

Can you address your ability to execute the roadmap, particularly with Ultra’s 2024 release and the 2026 transition to Rubin, considering supply constraints? - [Questioner's Name]([Questioner's Company])

20251202-2026 Q2: Blackwell production is in full steam, and more Blackwells will be delivered this quarter than previously estimated. - [Responder's Name](CEO)

What incremental changes have been made to Blackwell GPU, and how do they impact revenue and customer reactions? - [Questioner's Name]([Questioner's Company])

2021Q2: The change to the Blackwell GPU mask is complete without functional changes. Production is expected in Q4. - [Responder's Name](CEO)

Contradiction Point 2

Gross Margin Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

What's the trajectory for Blackwell's ramp this year, and how will it affect gross margins? - [Questioner's Name]([Questioner's Company])

20251202-2026 Q2: Gross margins may initially dip to low 70s due to the Blackwell ramp but are expected to recover to mid-70s quickly. - [Responder's Name](CEO) and [Responder's Name](CFO)

Will Q4 Blackwell revenue be additive? What is the expected gross margin exit rate? - [Questioner's Name]([Questioner's Company])

2021Q2: Gross margins for Q3 are expected around 75%, with full-year guidance in the mid-70s. - [Responder's Name](CFO)

Contradiction Point 3

Student Enrollment and Revenue Recovery

It involves differing statements about the company's recovery trajectory and enrollment numbers, which are crucial for assessing the company's financial health and growth potential.

None - (Questioner's Name)

20251202-2026 Q2: Our total student enrollment was 57,319, a decline of 3.3% year-over-year. - [Responder's Name](CFO)

What were the company’s performance highlights for the quarter? - (Questioner's Name)

2021Q3: Total student enrollment reached 53,493 with a better-than-expected revenue - Joanne Zuo(CEO)

Contradiction Point 4

Financial Performance and Guidance

It highlights a discrepancy in the company's financial performance and guidance, which can impact investor expectations and strategic decision-making.

Please provide the actual questions from the earnings call Q&A for me to simplify and reformat according to your specifications. - None

20251202-2026 Q2: Revenue was RMB70.2 million for the fourth quarter of fiscal year 2021 compared with RMB71.1 million in the same period of last year. - Xun Wang(CFO)

None - None

2021Q4: Revenue was RMB70.2 million for the fourth quarter of fiscal year 2021 compared with RMB71.1 million in the same period of last year. - Xun Wang(CFO)