Could you tell me about the city where the company's new 190 classrooms are located?

A good Future (NYSE:XRS) today released its unaudited fiscal year 2014 and its full-year earnings for the year ended February 28, 2014. Net revenue grew 45.9% to $87 million year-on-year, operating profits grew 154.2% to 14.4 million dollars year-on-year, and net profits grew 125.1% to 19.3 million dollars year-on-year, based on non-US general accounting standards.

After the release of the earnings, Joseph Kaufman, the CFO, attended the conference call, read the earnings and answered the analyst's questions.

The following analysis is the main part of the question and answer session:

Goldman Sachs analyst Fangfei (Fei Fang): First question, could you tell me about the cities where the company's new 190 classrooms are located? What are the key cities for future business development?

Kaufman: I'll answer your questions from the Teaching Center's point of view. The company opened three new teaching centers in Beijing and closed four. So the net reduction of one; in Tianjin, the last quarter opened two small class teaching centers, a new small class teaching center in Xian, a one-to-one teaching center, a new small class teaching center in Nanjing, a new small class teaching center in Wuhan In Zhengzhou, opened a new small class teaching center, in Chongqing and Shenyang, a new one, Jinan is the company last quarter just entered the city, but also opened a new. Total calculation, good. The small class teaching centre in the last fiscal quarter will grow at a net rate of eight and one one-on-one teaching centre.

Goldman Sachs analyst Fangfei (Fei Fang): So the future of the company's new center will also be distributed in China's cities, including Beijing?

Kaufman: The company's development in Beijing is a wait-and-see opportunity, probably at the end of the lease, to expand a small center into a large center, so most of the new centers will be outside Beijing.

Fangfei, Goldman Sachs analyst, Fei Fang: The second question is how the renminbi has stopped appreciating against the dollar recently, and how does this affect the company's profitability? Especially the impact on other income items in the report? In addition, what are the reasons for the company's forecast of net revenue for the first quarter of 2015?

Kaufman: The company is trying not to let the currency issue affect profitability, and for the first quarter, I assume that there will be no big change in the exchange rate, not a significant revaluation or devaluation of the people's currency. The company's other income this year has been lower than last year, the other income items in the larger part of the exchange gains, the future part of the income will not be as much as before, not so much outside the dollar, so the company from the foreign dollar market gains in exchange earnings will also be affected.

Fei Fang, Goldman Sachs analyst Fangfei: What does it mean for the company to add a one-to-one teaching center last quarter?

Kaufman: The company will continue to be one-on-one, with 20% of the company's revenue coming out of a one-to-one business throughout the year, which is consistent with my previous quarterly forecasts. I expect that in this fiscal year, smaller classes and online courses will grow faster than one-to-one businesses, so a one-to-one business contribution to revenue will fall.

But the market situation generally does not represent the one-to-one business does not have the opportunity, Xi ' an small class teaching market demand is very big, one pair is the supplement to the small class, the growth is very good. The company will look for opportunities outside Beijing for one-on-one market penetration rates that are relatively low.

Timothy Chen, analyst at Morgan Stanley, Timothy Chen: I have a question about the company's online education strategy, where some companies are already in the field and what are the competitive trends in the future? Where is the competitive advantage of the company's online education?

Kaufman: We're happy to see other companies showing interest in this area, the advantage of these internet companies in developing online education platforms is that they have a lot of users and provide aggregated content to users, and that a good future online education has its own characteristics and advantages in terms of user experience and content, such as the setting of courses.

The company's online education business emphasizes service and primary and secondary school (K-12) trusted learning advisers. On the product side, the company uses a lot of resources to understand the local content and the curriculum of different markets, which is different from the online education platform.

Days Hao Capital analyst (Tian Hou): I have a question about the average selling price (ASP), the company growth is very healthy, reflected in the growth of the driving force mainly from enrollment growth, the Chinese family's education budget and the whole society's consumer price index (CPI) are increasing, And the company's growth and CPI growth trend is the same, the future companies have to improve the price of services plans? The second problem is that the company has made great efforts in content research and development, will there be any plans to add new types of content in the future?

Kaufman: The company plans to raise prices in Beijing, Shanghai, Shenzhen and other markets since the summer semester, and the price of small classes will increase this year. It is likely that the company will also offer coupons to renew students this year to increase customer retention rates and reduce the impact of price increases.

Different city prices are also a factor affecting the average price of the company, such as small-class business, the company in Beijing and Shanghai outside the city to grow fast, but the price is lower. In Beijing, Shanghai, Guangzhou and Shenzhen, small class prices are higher, and Beijing's prices are a little higher than those in three other cities. So the overall average price growth, even for good future business, will be better than in several major cities, such as price increases, such as 10% or so, to small. In a city, the company's price increases may exceed the local CPI increase, but the company is not based on the location and development of the city to develop a price increase plan.

From the company's product point of view, one is the average price higher service, this part of the business contribution to revenue has been from the 2013 fiscal year 23% down to 2014 fiscal year 20%, is expected to continue to fall, the overall ASP's rise will be a one-to-one business to reduce the impact.

On the other hand, enrollment in online education is growing well, and the company expects the business to grow faster than one-to-one business next year, while online education has a relatively low ASP, after the company provided students with a trial service for online education, and many courses cost only 20 yuan per hour.

The company's growth is indeed due to the increase in enrollment, the future of the development of power will also come from this, this is the only way for healthy growth of revenue, the company has brand and pricing rights. The increase in the price of a one-to-one course may be a bit later than the increase in small class prices, which may occur in September rather than the summer semester, but the company is depending on the development of a one-to-one business, and the company wants to increase the price of one-to-one prices and small classes in some cities.

Content, the company is doing two things, one is in the subject, the content of research and development focus on English, Chinese composition. The media has also reported that the company's music and music English recently signed an agreement with the Cambridge University Press, jointly launched the primary school students English textbook "Hello Chinese", we hope to be able to find opportunities in the English market for primary school students, because the Ministry of Education has adjusted the English score in the college entrance examination, Public school pupils do not receive English education until they are four years old, and English conversation content is available to students of this age group, because parents still want their children to be educated in English and if they do not, they will choose an educational institution. In Chinese composition, the adjustment of the Ministry of Education has improved the importance of composition in the college entrance examination, so the company has invested a lot of resources in this aspect. The content of the company's input more attention to primary and kindergarten students.

In the form of content, prior to the earnings meeting I mentioned that the teaching system upgraded to 3.0, in addition to the existing interactive whiteboard, we provide each student with a tablet computer to increase classroom interaction, the current upgrade only in some centers in Beijing to provide high school students, the future will depend on whether in Beijing and nationwide promotion. Summer semester will have a big promotion, is still in the trial stage.

The company also has several other online products, such as learning to learn the recording of teaching content, free online school, database dahai.com, the company also tested online lectures.

Jefferies analyst Clara Fan (Clara Fan): How much will the contribution of one-to-one and small class businesses contribute to revenue in fiscal year 2015?

Kaufman: Zhi Kang one-to-one business account for revenue will continue to fall from the 2014 fiscal year 20% base, possibly to 17%-18%, online education may be from 3% to 4%, the rest is the proportion of small classes, changes will not be very big.

Jefferies analyst Clara Fan (Clara Fan): In the long run, is it possible for a one-to-one business to drop to around 15%?

Kaufman: In the long run, that number will continue to fall, but that will continue to grow, but small-class and online education will grow faster.

Jefferies analyst Clara Fan (Clara Fan): The company's teaching center will enter three new cities, can you reveal which cities?

Kaufman: These centers are ready to open by the end of May, but they are not disclosed for reasons of competition.

Ella Ji, an analyst in New York: The first question about the growth rate of the company's revenue, can you tell us about the revenue growth of the open teaching Centre and the growth of the new centre? Also, can you forecast the revenue growth trend for fiscal year 2015?

Kaufman: The company does not have a specific open teaching center for revenue growth and new center growth figures, but this is related to classroom utilization, the company's revenue growth is driven mainly by the increase in teaching capacity, such as new open center and new classrooms. In the 2014 fiscal year, the company's classrooms in many cities have grown by 10%, a very healthy development, and in the future this number will drop to single-digit numbers.

Revenue trends, the 2015 fiscal year two quarter and four quarter will have some difficulties, the year's revenue growth at least 35%.

Oppenheimer in New York analyst Ella Ji: The second problem is that there are some new products and services in the company's online education and classroom interaction, and which of these products and services are most popular among parents and students? Which products meet the investment return expectations? Can you compare these products and services with competitors ' products and services?

Kaufman: Online education, the company is doing two things, the user experience and the quality of the product. In the future to achieve this user experience upgrade, we tested the course live, increase interaction, live teaching to join the recording content teaching, students do practice application. The promotion of the product depends on the company's deep understanding of the content and syllabus.

Compared with other company products, good future online education products focus on primary and middle school students, the company's core strategy is to build a O2O marketing, conducive to enrollment, conducive to student learning and parents exchange teaching social platform.

Ella Ji, an analyst at Oppenheimer in New York: Will the improvement in user experience lead to an increase in enrollment?

Kaufman: Online education in the fourth quarter has contributed 11% of the total number of admissions to the company and has now risen to 13%. We expect the online business to increase enrollment and improve the user experience, but because the online business is low in ASP, the online business revenue in total revenue is certainly lower than the proportion of their enrollment.

Ella Ji, an analyst at Oppenheimer in New York: Last year, the company carried out a number of small acquisitions, this year there is no merger plan? Or will focus on the mergers and acquisitions of enterprises bigger and stronger?

Kaufman: The company will also focus on mergers and strategic investment opportunities, and a good future investment strategy is to buy a small stake in other companies, focusing on the internet, mobile, technology and education companies.

Leon Chik, JPMorgan analyst, said: "The first two quarters of the company's tax depreciation and amortization before the profit margin (EBITDA margin) is very good, how to do?"

Kaufman: First of all, to ensure strong revenue growth, while cutting sales, general and management costs, balance existing facilities utilization and new centers to improve gross profit margins, in addition, in fiscal year 2014, the company increased the price of services, including the Beijing market. According to the budget, future non-US general accounting standards will reduce the profit margin by 2.5%.

Leon Chik, analyst at JPMorgan Chase: when the company makes its budget, does sales, general and management fees be quarterly or yearly?

Kaufman: The company makes its budget every September, and it submits it to the Board in March for adoption in April.