ATA Creativity Global Reports 2020 First Quarter Financial Results, Announces Adoption of Up to US$1 Million Share Repurchase Program

Conference Call on Thursday, May 14, 2020, at 9 p.m. ET with Accompanying Investor Presentation

Beijing, CHINA

BEIJING, May 14, 2020 (GLOBE NEWSWIRE) -- ATA Creativity Global (“ACG” or the “Company”, Nasdaq: AACG), an international educational services company focused on providing quality learning experiences that cultivate and enhance students’ creativity, today announced preliminary unaudited financial results for the quarter ended March 31, 2020 (“First Quarter 2020”), and its adoption of a share repurchase plan.

First Quarter 2020 Highlights

  • During First Quarter 2020, student enrollment was 681, of which 404 were enrolled in the Portfolio Training Program (as defined below). Approximately 26,410 credit hours (i.e., the standard unit measuring educational credit for the Portfolio Training Program; each credit hour roughly equals to one hour of time committed) were delivered during First Quarter 2020.

  • First Quarter 2020 net revenues of RMB32.7 million (US$4.6 million), primarily driven by revenues from portfolio training and overseas study counseling services

  • Student enrollments and net revenues were impacted by seasonality as a result of the Chinese Spring Festival holiday, as well as the outbreak of the coronavirus disease (“COVID-19”), which resulted in certain enrollment deferrals.

  • First Quarter 2020 net loss attributable to ACG of RMB20.5 million (US$2.9 million), compared to RMB12.9 million in the prior-year period

  • RMB152.8 million (US$21.6 million) in cash and cash equivalents as of March 31, 2020

Adoption of Share Repurchase Program

The Company’s Board of Directors has approved a share repurchase program, under which ACG is authorized to repurchase up to US$1 million of its issued and outstanding American Depositary Shares (“ADSs”), effective immediately through the end of 2020.

The repurchases will be made from time to time on the open market at prevailing market prices, in negotiated transactions off the market, in block trades, pursuant to a 10b5-1 plan (which if adopted, will allow ACG to repurchase its ADSs during periods in which it may be in possession of material non-public information) or otherwise. The purchases will be made subject to restrictions relating to volume, price and timing under applicable law, including the anti-manipulation provisions of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The timing and extent of any purchases will depend upon market conditions, the trading price of its ADSs and other factors. ACG expects to implement this share repurchase program in a manner consistent with market conditions and the interest of its shareholders. ACG’s Board of Directors will review the share repurchase program periodically and may authorize adjustment of its terms and size accordingly. The program may be suspended or discontinued at any time. The repurchase program does not obligate ACG to make additional repurchases at any specific time or situation. 

Management Commentary

Mr. Kevin Ma, Chairman and CEO of ACG, stated, “ATA Creativity Global started the year in a position of continued financial strength and increasingly efficient operations following the acquisition and integration of Beijing Huanqiuyimeng Education Consultation Corp. (‘Huanqiuyimeng’) in the second half of 2019. We are fortunate to have the solid foundation needed to navigate the challenges businesses all over the world are facing as a result of COVID-19, and we continue to operate our business under these unusual circumstances while putting the health and safety of our students and employees first. We also continue exploring M&A opportunities as appropriate, though only so much can be done during the vetting process in the current environment when site visits and in-person meetings are prohibited. We are prepared to continue supporting our students via online platform and are looking into ways in which we can maximize the potential of online technologies to increase our sales pipeline and better serve our students with an expanded and more flexible curriculum.”

Mr. Ma continued, “The approval of a share repurchase program by our Board of Directors reflects our confidence in the Company’s future and our commitment to creating long-term value for our shareholders. Our current cash position provides us with the flexibility to implement this share repurchase program while executing on our growth strategies and other strategic opportunities.”

Outlook/Impact of COVID-19

Mr. Jun Zhang, President of ACG, stated, “We saw steady enrollments in our portfolio training programs during First Quarter 2020 despite the challenges presented by COVID-19. Even in this environment, students wish to continue to pursue their studies in art and creativity, and we are providing them with access to top-notch instructors around the country and additional academic/emotional support via remote online platform. ACG has a flexible operating infrastructure, which allows our business to scale appropriately to meet changes in demand from our students. We can utilize such operating flexibility to streamline costs, such as adjusting teacher structure to reduce teaching costs during any downturn, while almost immediately ramping up to satisfy the needs of students coming back into our programs. While the long-term impact of COVID-19 remains relatively uncertain, we do expect that the virus will impact our educational travel service as many of our partner institutions will not hold their regular summer programs. We are pleased to announce that we expect to have alternative options for students this summer, such as online programs partnering with certain well-known overseas art schools and institutions and newly developed art-themed domestic travel programs. Above all, we continue to prioritize the health and safety of our students, faculty, staff and employees, and remain cognizant of how COVID-19 is impacting our people and operations.”

Operating Review

Enrollment Update

ACG’s main line of business primarily consists of training for students focused on arts and creative studies (the “Portfolio Training Program”). Teachers guide students in preparing a collection of artwork that demonstrates how a student’s skills and ideas have developed over time and helps universities and colleges evaluate the student’s potential. These courses are delivered either in person through ACG’s nationwide training center network or via online platform. The Portfolio Training Program consists of time-based programs and project-based programs.

ACG student enrollment for First Quarter 2020 was 681, of which 404 were enrolled in the Portfolio Training Program.

A total of 26,410 credit hours were delivered during First Quarter 2020, of which 16,655 credit hours were delivered for time-based programs and 9,755 credit hours were delivered for project-based programs.

The following is a summary of the credit hours delivered for the Portfolio Training Program, for the period beginning January 1, 2020, to March 31, 2020, compared to those for the prior-year period:

 Jan. 1 – Mar. 31, 2020 Jan. 1 – Mar. 31, 2019 % Growth
 No. of Credit Hours  No. of Credit Hours  
Time-based Program16,655 22,398 (25.6%)
Project-based Program9,755 6,529 49.4%
Total26,410 28,927 (8.7%)

During First Quarter 2020, 277 students were enrolled in ACG’s other programs, which mainly consist of overseas study counseling services and foreign language training services.

First Quarter 2020 Financial Review – GAAP Results

Note: Impact of Huanqiuyimeng Acquisition on and Certain Adjustments to the Company’s Financial Statements
Following the completion of the Huanqiuyimeng business acquisition whereby Huanqiuyimeng became a wholly owned subsidiary of the Company in 2019, the financial results presented in this press release incorporate financial contributions from Huanqiuyimeng for First Quarter 2020. In addition, the Company has applied acquisition accounting and made purchase price allocation (“PPA”) adjustments to various assets acquired and liabilities assumed from the Huanqiuyimeng business acquisition.

ACG’s total net revenues for First Quarter 2020 were RMB32.7 million (US$4.6 million), compared to RMB1.6 million in the prior-year period, driven primarily by revenue from the Huanqiuyimeng business. Net revenues for this quarter include a negative adjustment of RMB6.0 million resulting from amortization of the difference between the carrying value of deferred revenues in Huanqiuyimeng’s book and the fair value of deferred revenues assessed from the PPA process applied to the Huanqiuyimeng business acquisition (“PPA Adjustment to Net Revenues”). Revenues from portfolio training programs were RMB18.7 million, or 57.3% of total net revenues, during the period. Revenues from other educational services and the K-12 business were RMB14.0 million, or 42.7% of total net revenues during the period.

Gross profit for First Quarter 2020 was RMB11.7 million (US$1.7 million), compared to RMB0.4 million in the prior-year period. Gross margin was 35.8% during the period, compared to 25.3% in the prior-year period, prior to the Huanqiuyimeng business acquisition. Excluding the PPA Adjustment to Net Revenues stated above, gross margin for First Quarter 2020 would have been 45.8%.

Total operating expenses for First Quarter 2020 were RMB38.4 million (US$5.4 million), which includes RMB5.0 million in expenses amortized from intangible assets recognized from the Huanqiuyimeng business acquisition, compared to RMB16.5 million in the prior-year period, primarily due to increased selling, general and administrative expenses of RMB27.6 million related to the acquired Huanqiuyimeng operations.

Loss from operations for First Quarter 2020 was RMB26.5 million (US$3.7 million), compared to RMB15.4 million in the prior-year period as a result of the increased operating expenses mentioned above.

Net loss attributable to ACG for First Quarter 2020 was RMB20.5 million (US$2.9 million), compared to RMB12.9 million in the prior-year period.

For First Quarter 2020, basic and diluted losses per common share attributable to ACG were both RMB0.35 (US$0.05), compared to RMB0.31 for the prior-year period. Basic and diluted losses per ADS attributable to ACG were both RMB0.70 (US$0.10), compared to RMB0.62 in the prior-year period.

Non-GAAP Measures

Adjusted net loss attributable to ACG for First Quarter 2020, which excludes share-based compensation expense and foreign currency exchange loss (non-GAAP), was RMB19.8 million (US$2.8 million), compared to adjusted net loss of RMB10.9 million in the prior-year period.

Basic and diluted losses per common share attributable to ACG excluding share-based compensation expense and foreign currency exchange loss (non-GAAP) for First Quarter 2020, were RMB0.34 (US$0.05). Basic and diluted losses per ADS attributable to ACG excluding share-based compensation expense and foreign currency exchange loss (non-GAAP) for First Quarter 2020 were RMB0.68 (US$0.10).

Please see the note about non-GAAP measures and the reconciliation table at the end of this press release.

Other Data

The number of weighted average ADSs used to calculate both basic and diluted earnings per ADS for First Quarter 2020 was 31.3 million. Each ADS represents two common shares.

Balance Sheet Highlights

As of March 31, 2020, ACG’s cash and cash equivalents were RMB152.8 million (US$21.6 million), working capital deficit was RMB94.5 million (US$13.3 million), and total shareholders’ equity was RMB283.6 million (US$40.0 million); compared to cash and cash equivalents of RMB154.2 million, working capital deficit of RMB81.3 million, and total shareholders’ equity of RMB305.6 million, respectively, as of December 31, 2019.

Conference Call and Webcast Information (With Accompanying Presentation)

ACG will host a conference call at 9 p.m. Eastern Time on Thursday, May 14, 2020 (9 a.m. Beijing time on Friday, May 15, 2020), during which management will discuss the results of the quarter ended March 31, 2020. Investors are welcome to send any questions in advance of the conference call either through the webcast portal or via email to the Company’s contacts listed below.

To participate in the conference call, please use the following dial-in numbers about 10 minutes prior to the scheduled conference call time:

U.S. & Canada (Toll-Free):+1 (800) 230-3019
International (Toll):+1 (617) 597-5413

 Toll-FreeLocal Access
China:(800) 990 1345(400) 881 1630
Hong Kong:(800) 9628443071 5030
Participant Passcode:47143670# 

A live webcast of the conference call can be accessed at the investor relations section of ACG’s website at or by clicking the following link:

An accompanying slide presentation in PDF format will also be made available 30 minutes prior to the conference call on the same investor relations section of ACG’s website. To listen to the webcast, please visit ACG’s website a few minutes prior to the start of the call to register, download, and install any necessary audio software.

A replay will be available shortly after the call on the investor relations section of ACG’s website and will remain available for 90 days.

About ATA Creativity Global

ATA Creativity Global is an international educational services company focused on providing quality learning experiences that cultivate and enhance students’ creativity. ATA Creativity Global offers a wide range of education services consisting primarily of portfolio training, educational travel, overseas study counseling and other educational services through its training center network. For more information, please visit ACG’s website at

Cautionary Note Regarding Forward-looking Statements

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995.

These forward-looking statements can be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “future,” “intend,” “look forward to,” “outlook,” “plan,” “should,” “will,” and similar terms and include, among other things, statements regarding ACG’s future growth and results of operations; ACG’s strategy of becoming a leading international education service provider; ACG’s plans for mergers and acquisitions generally; the benefits of the Huanqiuyimeng Acquisition; ACG’s ability to operate efficiently and maintain continued financial strength under unusual circumstances; ACG’s growth strategy and subsequent business activities; market demand for ACG’s portfolio training programs and other education services; the impact of the COVID-19 outbreak on ACG and its operations; ACG’s plan and anticipated benefits of the measures implemented in response to the COVID-19 outbreak; and the implementation and the benefits of the share repurchase program.

The factors that could cause the Company’s actual financial and operating results to differ from what the Company currently anticipates may include its ability to develop and create content that could accommodate needs of potential students, its ability to provide effective creative related international education services and control sales and marketing expenses, its recognition in the marketplace for services it delivered and branding it established, its ability to integrate the acquired business, its ability to maintain market share amid increasing competition, its ability to identify and execute on M&A opportunities within the education sector, the economy of China, uncertainties with respect to China’s legal and regulatory environments, the outbreak of COVID-19 and other factors stated in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”).

The financial information contained in this release should be read in conjunction with the consolidated financial statements and related notes included in the Company’s annual report on Form 20-F for its fiscal year ended December 31, 2019, and other filings that ACG has made with the SEC. The filings are available on the SEC’s website at and at ACG’s website at For additional information on the risk factors that could adversely affect the Company’s business, financial conditions, results of operations, and prospects, please see the “Risk Factors” section of the Company’s Form 20-F for the fiscal year ended December 31, 2019.

The forward-looking statements in this release involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates, and projections about ACG and the markets in which it operates. The Company undertakes no obligation to update forward-looking statements, which speak only as of the date of this release, to reflect subsequent events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that its expectations and assumptions expressed in these forward-looking statements are reasonable, the Company cannot assure you that its expectations and assumptions will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

Currency Convenience Translation

The Company’s financial information is stated in Renminbi (“RMB”), the currency of the People’s Republic of China. The translations of RMB amounts for the quarter ended March 31, 2019, into U.S. dollars are included solely for the convenience of readers and have been made at the rate of RMB7.0808 to US$1.00, the noon buying rate as of March 31, 2020, in New York for cable transfers in RMB per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board. Such translations should not be construed as representations that RMB amounts could be converted into U.S. dollars at that rate or any other rate, or to be the amounts that would have been reported under U.S. generally accepted accounting principles (“GAAP”).

About Non-GAAP Financial Measures

To supplement ACG’s consolidated financial information presented in accordance with U.S. GAAP, ACG uses the following non-GAAP financial measures: net income (loss) excluding share-based compensation expense and foreign currency exchange gain or loss, and basic and diluted earnings (losses) per common share and ADS excluding share-based compensation expense and foreign currency exchange gain or loss.

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. ACG believes these non-GAAP financial measures provide meaningful supplemental information about its performance by excluding share- based compensation expense and foreign currency exchange gain or loss, which may not be indicative of its operating performance.

ACG 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 ACG’s historical performance. ACG computes its non-GAAP financial measures using a consistent method from period to period. ACG 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 using non-GAAP net income (loss) excluding share-based compensation expense and foreign currency exchange gain or loss and basic and diluted earnings (losses) per common share and per ADS excluding share-based compensation expense and foreign currency exchange gain or loss is that share-based compensation charges and foreign currency exchange gain or loss have been, and are expected to continue to be for the foreseeable future, a significant recurring expense in ACG’s business.

Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The table captioned “Reconciliations of Non-GAAP Measures to the Most Comparable GAAP Measures” shown at the end of this news release has more details on the reconciliations between GAAP financial measures that are most directly comparable to the non-GAAP financial measures used by ACG.

For more information on our company, please contact the following individuals:

At the CompanyInvestor Relations
ATA Creativity GlobalThe Equity Group Inc.
Amy Tung, CFOCarolyne Y. Sohn, Vice President
+86 10 6518 1133 x 5518415-568-2255
 Adam Prior, Senior Vice President


 December 31,  March 31,  March 31, 
 2019  2020  2020 
Current assets:     
Cash and cash equivalents154,197,758  152,843,753  21,585,662 
Accounts receivable, net214,591  475,691  67,180 
Subscription receivable8,530,931  8,664,101  1,223,605 
Prepaid expenses and other current assets16,490,369  20,353,610  2,874,478 
Loan receivable, net4,126,502  4,190,917  591,871 
Total current assets183,560,151  186,528,072  26,342,796 
Long-term investments45,726,391  45,726,390  6,457,800 
Goodwill200,478,795  200,478,795  28,313,015 
Property and equipment, net42,070,794  40,888,998  5,774,630 
Intangible assets, net135,599,770  130,114,557  18,375,686 
Right-of-use assets40,786,291  32,688,812  4,616,542 
Deferred income tax assets11,464,891  10,222,684  1,443,719 
Other non-current assets16,402,750  17,715,646  2,501,927 
Total assets676,089,833  664,363,954  93,826,115 
Current liabilities:     
Accrued expenses and other payables47,747,054  52,405,315  7,401,045 
Short-term loan4,991,000  9,000,000  1,271,043 
Payable for business acquisition19,642,082  19,642,082  2,773,992 
Lease liabilities-current20,556,017  20,005,343  2,825,294 
Deferred revenues171,880,131  179,957,578  25,414,865 
Total current liabilities264,816,284  281,010,318  39,686,239 
Other non-current liabilities12,500,120  9,897,271  1,397,762 
Deferred income tax liabilities48,241,809  44,121,217  6,231,106 
Total liabilities325,558,213  335,028,806  47,315,107 
Mezzanine equity-redeemable non-controlling interests44,896,428  45,766,198  6,463,422 
Shareholders’ equity:     
Common shares4,692,312  4,711,930  665,452 
Treasury shares(27,737,073) (27,737,073) (3,917,223)
Additional paid-in capital560,814,066  559,044,500  78,952,166 
Accumulated other comprehensive loss(37,478,167) (34,682,665) (4,898,128)
Retained earnings (accumulated deficit)(200,151,065) (222,050,041) (31,359,457)
Total shareholders’ equity attributable to ACG300,140,073  279,286,651  39,442,810 
Non-redeemable non-controlling interests5,495,119  4,282,299  604,776 
Total shareholders’ equity305,635,192  283,568,950  40,047,586 
Commitments and contingencies     
Total liabilities, mezzanine equity and shareholders’ equity676,089,833  664,363,954  93,826,115 


 Three-month Period Ended
 March 31,  March 31,  March 31, 
 2019  2020  2020 
Net revenues1,616,408  32,703,405  4,618,603 
Cost of revenues1,208,098  20,979,552  2,962,879 
  Gross profit 408,310  11,723,853   1,655,724  
Operating expenses:     
Research and development3,008,952  2,381,089  336,274 
Sales and marketing1,835,014  11,502,625  1,624,481 
General and administrative11,702,615  24,542,143  3,466,013 
Total operating expenses16,546,581  38,425,857   5,426,768  
 Other operating income, net704,859  235,452  33,252 
Loss from operations(15,433,412) (26,466,552 ) (3,737,792 )
Other income (expense):     
Investments loss  (32,427) (4,580)
Interest income, net of interest expenses1,177,179  387,579  54,737 
Foreign currency exchange loss, net(3,812) (69,128) (9,763)
Loss from operations before income taxes(14,260,045) (26,180,528 ) (3,697,398 )
Income tax benefit  (2,786,536) (393,534)
Net loss(14,260,045) (23,393,992 ) (3,303,864 )
 Net loss attributable to redeemable non-controlling interests(618,727) (572,748) (80,887)
Net loss attributable to non-redeemable non-controlling interests(742,473) (2,364,787) (333,972)
Net loss attributable to ACG(12,898,845) (20,456,457 ) (2,889,005 )
Other comprehensive income (loss):     
Foreign currency translation adjustment, net of nil income taxes(1,106,254) 2,795,502  394,800 
Comprehensive loss attributable to ACG(14,005,099) (17,660,955 ) (2,494,205 )
Basic and diluted losses per common share attributable to ACG(0.31) (0.35) (0.05)
Basic and diluted losses per ADS attributable to ACG(0.62) (0.70) (0.10)


 Three-month Period Ended
 March 31,   March 31,  
 2019  2020 
GAAP net loss attributable to ACG(12,898,845) (20,456,457)
Share-based compensation expenses1,990,435  584,799 
Foreign currency exchange loss, net3,812  69,128 
Non-GAAP net loss attributable to ACG(10,904,598) (19,802,530)
GAAP losses per common share attributable to ACG
Basic and diluted
(0.31) (0.35)
Non-GAAP losses per common share attributable to ACG
Basic and diluted
(0.27) (0.34)