Noah Education Holdings, Ltd. (NED)
F3Q10 (Qtr End 03/31/2010) Earnings Call
May 13, 2010 8:00 a.m. ET
Dong Xu - Chairman and CEO
Jerry He - EVP and CFO
Dora Li - VP of Finance, Controller
Ella Ji - Oppenheimer
Ingrid Yin - Brean Murray
Welcome to the Noah Education third quarter fiscal year 2010 financial results conference call. (Operator Instructions)
Previous Statements by NED
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After the U.S. markets closed yesterday, Noah issued a press release announcing its third quarter fiscal year 2010 financial results. The release is available on the company's IR homepage at ir.noahedu.com.cn along with the presentation for today's call. This call is also being broadcast live over the Internet.
Before management's presentation, I would like to refer to the Safe Harbor statement in connection with today's conference call. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including certain expectations and goals, which are subject to numerous assumptions and risks. Forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond our control, which may cause actual results to differ materially from any future results or achievements implied by such forward-looking statements.
The company's actual results may differ materially from those contained in the Risk Factors section of the company's final prospectus or recent filings filed with the Securities and Exchange Commission. Unless required by law, the company undertakes no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
I would now like to turn the call over to Noah's Chairman and CEO, Mr. Dong Xu.
[Interpreted] Good morning, and to some, good evening. Thank you for joining us today for our third quarter 2010 results conference call.
As you would have seen from our earnings release, we delivered another quarter of healthy growth, with revenues increasing 18.3% year-over-year, gross profit up 9.5% and net income climbing 4.9%. This growth was mainly supported by more than 100% growth in our kids learning device sales and a strong performance by our Little New Star school system.
Although total net revenue for the quarter did not reach our initially guided range, our business remains very healthy and we are pleased to have expanded our track record of delivering consistent growth. We remain confident in our long-term opportunities and potential and believe our ongoing strategic initiative will help us maintain our growth trajectory.
As we approach the end of our 2010 fiscal year, I am pleased with our progress on both the operational and the financial front. In recent quarters, we have taken clear steps to expand our business both organically and equivocally.
Within our ELP business, we have introduced a customer-focused product development and marketing strategy through which we remain arduously focused on developing products that will successfully meet the design, functionality and content needs of our customers. We are confident this strategy will allow us to remain competitive and maintain ELP revenue growth.
In addition to our focus on maintaining growth in our ELP business, we remain committed to accelerating acquisitive growth within China's education services space as evidenced this quarter by the acquisition of Wentai Education. We view education services as our main growth driver going forward, and will continue to actively pursue accretive acquisitions within this segment.
These assets have aided us in growing both our top and bottom lines, and I am confident in our ability to deliver continued growth going forward.
With that, I will now turn the call over to Dora to walk you through our financial performance for the quarter.
Thank you, Chairman. We continue to see healthy growth in the third quarter, supported largely by an impressive rise in KLD sales and complemented by growth in our education service segment.
As noted on slide 3, net revenue totaled RMB253.7 million, up 18.3% from the third quarter of fiscal 2009. As our chairman just mentioned, although revenue was below our initial guidance, we are still encouraged by the year-over-year growth rate we attained across our top and bottom line.
Jerry will share with you in just a few minutes our unique strategy and the opportunities we are faced with, that will support future growth.
Our ELP business maintained stable growth during the quarter. Taking a closer look at our ELP business, as shown on slide 4, the 27% year-over-year decline in DLD revenues was more than offset by a 100.7% increase in KLD sales and to a lesser extent a 5.4% increase in E-dictionaries.
Our Kid Learning Devices remain a primary catalyst for growth, and our recently launched device has perfectly captured customers across a range of spending habits. We believe there remain ample opportunities to further expand our presence in this space. To help further expand KLD sales and to stabilize DLD revenue, our R&D efforts going forward will be heavily focused on developing products based on our customers' needs and requests.
This customer-focused approach will help ensure the success of each new product launch.
Slide 5 offers a breakdown of our revenues for this quarter. Our ELP business contributed RMB243 million, up 13.3% from last year. Little New Star contributed RMB10.7 million, which was at the top end of our guidance range, demonstrating how Little New Star is complementing our ELP revenue growth.