NEW YORK, Dec. 15, 2023 (GLOBE NEWSWIRE) -- Diamond Equity Research, a leading equity research firm with a focus on small capitalization public companies has released an Update Note on QuantaSing Group Limited (NASDAQ: QSG). The update note includes information on QuantaSing’s financial results, management commentary, recent developments, outlook, risks, and our revised valuation estimates.
The update note is available here. Highlights from the report include:
- Q1 FY2024 Financial Results Update: QuantaSing Group unveiled its unaudited financial results for the first quarter of fiscal year 2024, marking a period of significant growth and strategic expansion. The company's revenue for this quarter soared to RMB869.1 million (US$119.1 million), a robust 31.8% increase from the same period last year. This growth was primarily fueled by an increase in revenues from other personal interest courses, which offset a decline in revenues from financial literacy courses. The company also saw a rise in revenues from live e-commerce, a new business endeavor, contributing to its diversified revenue streams. During this quarter, QuantaSing reported a net income of RMB66.7 million (US$9.1 million), a remarkable recovery from the net loss of RMB97.3 million in the first quarter of the previous fiscal year. This financial turnaround is further reflected in the adjusted net income of RMB94.0 million (US$12.9 million), compared to an adjusted net loss in the same quarter of the previous year. The company's cash and cash equivalents and short-term investments totaled RMB879.9 million (US$120.6 million) as of September 30, 2023. QuantaSing has provided guidance for revenues in the range of RMB920.0 million to RMB950.0 million for the second quarter of FY 2024, projecting a year-over-year increase of 17.0% to 20.8%.
- Q1 FY2024 Operational Highlights: The company's user base experienced substantial growth, with total registered users increasing by 51.9% to approximately 103.3 million and paying learners rising by 18.2% to about 0.3 million. This growth can be attributed to QuantaSing refining its courses, expanding its learner base, and hosting impactful offline events, all while maintaining a high customer satisfaction rate. QuantaSing's operational efficiency received a boost through the integration of AI into its feedback monitoring system. QuantaSing maintained strong top-line growth momentum and expanded its adjusted net margin to 10.8%, highlighting its optimized efficiency and cost structures. Strategically, QuantaSing is expanding its global footprint. The company announced the acquisition of Kelly's Education, an online language education platform based in Hong Kong. This move signifies QuantaSing's entry into the global online education market and the language learning sector. Additionally, the company initiated a new share repurchase program, buying back approximately 1.2 million ADSs for about US$6.9 million, reflecting confidence in its financial stability and future prospects.
- Valuation: QuantaSing has reported encouraging financial results for Q1 FY2024, surpassing our estimates. Strong results are primarily attributed to substantial growth in revenues from personal interest courses. We model this robust growth momentum to persist throughout the remaining financial year. Consequently, we have revised our revenue and earnings forecasts accordingly. Our financial model has been updated, reflecting adjustments in the cash balance and share count to mirror the current values. Additionally, we have re-evaluated the comparable company analysis, leading to a valuation of $11.42 per share. This valuation is contingent on QuantaSing's successful execution of its business strategies.
About QuantaSing Group Limited
QuantaSing Group Limited, founded in 2019 and based in Beijing, offers a variety of online courses for adult learners and enterprises services in China. Their educational brands include QiNiu, JiangZhen and, QianChi. For more information, visit https://ir.quantasing.com/
About Diamond Equity Research
Diamond Equity Research is a leading equity research and corporate access firm focused on small capitalization companies. Diamond Equity Research is an approved sell-side provider on major institutional investor platforms.
For more information, visit https://www.diamondequityresearch.com.
Disclosures:
Diamond Equity Research LLC is being compensated by QuantaSing Group Limited for producing research materials regarding QuantaSing Group Limited, and its securities, which is meant to subsidize the high cost of creating the report and monitoring the security, however, the views in the report reflect that of Diamond Equity Research. All payments are received upfront and are billed for an annual or semi-annual research engagement. As of 12/15/2023, the issuer had paid us $60,000 for our company sponsored research services for coverage in English and Mandarin, which commenced 08/09/2023 and is billed annually. Diamond Equity Research LLC may be compensated for non-research related services, including presenting at Diamond Equity Research investment conferences, press releases and other additional services. The non-research related service cost is dependent on the company, but usually do not exceed $5,000. The issuer has paid us for non-research related services as of 12/15/2023 consisting of $3,000 for presenting at virtual investor conference. Issuers are not required to engage us for these additional services. Additional fees may have accrued since then. Although Diamond Equity Research company sponsored reports are based on publicly available information and although no investment recommendations are made within our company sponsored research reports, given the small capitalization nature of the companies we cover we have adopted an internal trading procedure around the public companies by whom we are engaged, with investors able to find such policy on our website public disclosures page. This report and press release do not consider individual circumstances and does not take into consideration individual investor preferences. Statements within this report may constitute forward-looking statements, these statements involve many risk factors and general uncertainties around the business, industry, and macroeconomic environment. Investors need to be aware of the high degree of risk in small capitalization equities, including the complete loss of their investment. Investors can find various risk factors in the initiation report and in the respective financial filings for QuantaSing Group Limited and should consult the update note for full disclosures.
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