Tarena Stock Down 5.5% as Losses Widen

Revenue decreased and the company lost more than analysts expected during the fourth quarter of 2018.

Author: Lucas Hahn   

Tarena International Inc (Nasdaq: TEDU) saw its shares drop 5.5 percent on Tuesday after the IT training company reported its results for the fourth quarter and full year of 2018.

The Beijing-based company presented its results for the quarter ended Dec. 31 after markets closed on Monday. Revenue decreased 0.3 percent year-over-year to $91.72 million.

Tarena disappointed analysts, reporting a net loss of $24.55 million for the quarter, or 46 cents per fully diluted American depositary share. According to The Wall Street Journal, analysts had expected a loss of just 24 cents per ADS. Each ADS represents one Class A ordinary share.

Tarena stock closed at $6.20 per share, down 36 cents.

"In 2018, our bottom line was negatively impacted by a larger number of students enrolled through university partnership where revenue is recognized over longer period and by the fact that most of the kid education learning centers are still in the ramp up period," explained Tarena's chief financial officer, Yuduo Yang.

Student enrollment in Tarena's child education segment increased 365 percent year-over-year during the fourth quarter to $100.2 million, representing 11 percent of the company's quarterly revenue.

The number of students enrolled in Tarena's adult education segment increased 6.3 percent during the quarter, while the number of courses adults were enrolled in decreased by 9.1 percent year-over-year.

Tarena's annual revenue increased 13.5 percent year-over-year to $333.8 million. The company posted a loss of $89.1 million during 2018, down from $27.5 million in net income during 2017.  

"Looking forward into 2019, we expect our adult business to achieve significant improvement in profitability along with a steady student enrollment, and kid business to continue its momentum to grow robustly and make greater contribution to the company," said Tarena's chairman and chief executive officer, Shaoyun Han.

Management expects revenue for the first quarter of 2019 ranging from 395 million yuan, down 2.9 percent from 2018, to 415 million yuan (up 2.1 percent year-over-year). At current exchange rates, Tarena's quarterly revenue would range between $58.9 million and $61.9 million.

For the full year 2019, Tarena expects revenue will increase between 8.5 and 15.2 percent from 2018, ranging between 2.43 billion yuan and 2.58 billion yuan, or between $362.2 million and $384.6 million.