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Sunlands Technology Group

Sunlands Technology GroupSTG決算レポート

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STG Partners, LLC (STG) is an American private equity firm and based in Menlo Park, California. Its predecessor, Symphony Technology Group ("Symphony") was founded in 2002 by Romesh Wadhwani, William Chisholm, and Bryan Taylor. In 2017, Symphony was reorganized as STG Partners. As of March 2025, STG Partners managed approximately $12 billion in 19 pooled investment vehicle for its clients. The firm itself has less than one billion dollars in assets.

What changed in Sunlands Technology Group's 20-F — 2023 vs 2024

Top changes in Sunlands Technology Group's 2024 20-F

372 paragraphs added · 372 removed · 328 edited across 4 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

154 edited+25 added−26 removed719 unchanged
Pursuant to the powers of attorney executed by the shareholders of Beijing Sunlands, the shareholders of Beijing Sunlands each irrevocably authorized Wuhan Zhibo to act on their respective behalf as exclusive agent and attorney with respect to all rights of shareholders concerning all equity interests held by each of them in Beijing 5 Sunlands, including but not limited to propose to convene shareholder meetings, accept any notice with respect to the convening and proceeding of the shareholder meeting, attend shareholder meetings, sign the shareholders resolutions on their behalf, exercise all the shareholder’s rights according to laws and regulations and Beijing Sunlands’s articles of association (including but not limited to voting rights and the sale transfer, pledge or dispose of all equity interests held in part or in whole) and designate and appoint on their respective behalf the president, directors, supervisors, chief executive officer, chief financial officer and other senior management members of Beijing Sunlands.
Pursuant to the powers of attorney executed by the shareholders of Beijing Sunlands, the shareholders of Beijing Sunlands each irrevocably authorized Wuhan Zhibo to act on their respective behalf as exclusive agent and attorney with respect to all rights of shareholders concerning all equity interests held by each of them in Beijing Sunlands, including but not limited to propose to convene shareholder meetings, accept any notice with respect to the convening and proceeding of the shareholder meeting, attend shareholder meetings, sign the shareholders resolutions on their behalf, exercise all the shareholder’s rights according to laws and regulations and Beijing Sunlands’s articles of 5 association (including but not limited to voting rights and the sale transfer, pledge or dispose of all equity interests held in part or in whole) and designate and appoint on their respective behalf the president, directors, supervisors, chief executive officer, chief financial officer and other senior management members of Beijing Sunlands.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.” For the purpose of illustration, the below table reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: 11 Taxation Scenario (1) Statutory Tax and Standard Rates Hypothetical pre-tax earnings (2) 100 % Tax on earnings at statutory rate of 25% (3) (25 )% Net earnings available for distribution 75 % Withholding tax at standard rate of 10% (4) (7.5 )% Net distribution to Parent/Shareholders 67.5 % Notes: (1) The tax calculation has been simplified for the purpose of this example.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and 11 financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.” For the purpose of illustration, the below table reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: Taxation Scenario (1) Statutory Tax and Standard Rates Hypothetical pre-tax earnings (2) 100 % Tax on earnings at statutory rate of 25% (3) (25 )% Net earnings available for distribution 75 % Withholding tax at standard rate of 10% (4) (7.5 )% Net distribution to Parent/Shareholders 67.5 % Notes: (1) The tax calculation has been simplified for the purpose of this example.
Capitalization and Indebtedness Not applicable. 3.C. Reason for the Offer and Use of Proceeds Not applicable. 17 3.D. Risk Factors The Group faces various legal and operational risks and uncertainties as a group based in and primarily operating in China.
Capitalization and Indebtedness Not applicable. 3.C. Reason for the Offer and Use of Proceeds 17 Not applicable. 3.D. Risk Factors The Group faces various legal and operational risks and uncertainties as a group based in and primarily operating in China.
Risks Related to Our Corporate Structure • There are uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules relating to the agreements that establish the VIE structure for the Group’s operations in China, 18 including potential future actions by the PRC government, which could affect the enforceability of our contractual arrangements with the VIEs and, consequently, significantly affect the Group’s financial condition and results of operations.
Risks Related to Our Corporate Structure 18 • There are uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules relating to the agreements that establish the VIE structure for the Group’s operations in China, including potential future actions by the PRC government, which could affect the enforceability of our contractual arrangements with the VIEs and, consequently, significantly affect the Group’s financial condition and results of operations.
However, there are still significant uncertainties relating to the interpretation and implementation of the Audio Visual Program 24 Provisions, in particular, the scope of “internet audio-visual programs.” See “Item 4. Information on the Company—4.B. Business Overview—Regulation—Regulations Relating to Online Transmission of Audio-Visual Programs.” The Group delivers courses in live streaming format.
However, there are still significant uncertainties relating to the interpretation and implementation of the Audio-Visual Program Provisions, in particular, the scope of “internet audio-visual programs.” See “Item 4. Information on the Company—4.B. 24 Business Overview—Regulation—Regulations Relating to Online Transmission of Audio-Visual Programs.” The Group delivers courses in live streaming format.
In addition, if the government 25 authorities deem printing and providing physical education materials to users as “publication distribution” under Administrative Provisions on the Publications Market, we, the VIEs or their operating subsidiaries may be required to obtain the Publication License.
In addition, if the government authorities deem printing and providing physical education materials to users as “publication distribution” under Administrative Provisions on the Publications 25 Market, we, the VIEs or their operating subsidiaries may be required to obtain the Publication License.
If the Group is unsuccessful in pursuing course and educational content development and upgrading 26 opportunities due to the financial constraints, failure to attract qualified faculty, or other factors, the Group’s ability to attract and retain students could be impaired and the Group’s financial results could suffer. The Group faces risks associated with the online live streaming course delivery model.
If the Group is unsuccessful in pursuing course and educational content development and upgrading opportunities due to the financial constraints, failure to attract qualified faculty, or other factors, the Group’s ability to 26 attract and retain students could be impaired and the Group’s financial results could suffer. The Group faces risks associated with the online live streaming course delivery model.
If the Group is unable to manage 31 these risks, the Group could become subject to penalties, fines, suspension of business and revocation of required licenses, and the Group’s reputation and results of operations could be materially and adversely affected. Tuition refunds or potential refund disputes may negatively affect the Group’s cash flow, financial condition, and reputation.
If the Group is unable to manage these risks, the Group could become subject to penalties, fines, suspension of business and revocation of required licenses, 31 and the Group’s reputation and results of operations could be materially and adversely affected. Tuition refunds or potential refund disputes may negatively affect the Group’s cash flow, financial condition, and reputation.
To the extent the Group’s independent registered public 34 accounting firm is required to attest to, and report on, the effectiveness of the Group’s internal control over financial reporting in the future, it may not be able to conclude that the Group has effective internal control over financial reporting at a reasonable assurance level.
To the extent the Group’s independent registered public accounting firm is required to attest to, and report on, the effectiveness of the Group’s internal control over financial reporting in the future, it may not be able to conclude that the Group has effective internal control over financial reporting 34 at a reasonable assurance level.
However, the amount of the Group’s estimates may be inaccurate, in which case 35 the Group’s financial condition and cash flow may be adversely affected if the Group were to pay late fees or fines in relation to the underpaid employee benefits. Increases in labor costs in the PRC may adversely affect the Group’s business and results of operations.
However, the amount of the Group’s estimates may be inaccurate, in which case the Group’s financial condition and cash flow may be adversely affected if the Group were to pay late fees or fines in relation to the underpaid employee benefits. 35 Increases in labor costs in the PRC may adversely affect the Group’s business and results of operations.
On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and five supporting guidelines, effective on March 31, 2023.
On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and five supporting guidelines, effective on March 31, 2023.
Risks Related to Doing Business in China The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas, and if required, we cannot predict whether or for how long the Group will be able to obtain such approval or complete such filing or other requirements.
Risks Related to Doing Business in China The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas, and if required, we cannot predict whether or for how long the Group will be able to obtain such approval or complete such filing or other requirements.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: • the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; • the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and • the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: • the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; • the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a 53 security registered under the Exchange Act; • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and • the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
Risk Factors—Risks Related to Doing Business in China—The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas, and if required, we cannot predict whether or for how long the Group will be able to obtain such approval or complete such filing or other requirements.” Transfer of Funds and Other Assets Under relevant PRC laws and regulations, we are permitted to remit funds to the VIEs through loans rather than capital contributions.
Risk Factors—Risks Related to Doing Business in China—The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas, and if 10 required, we cannot predict whether or for how long the Group will be able to obtain such approval or complete such filing or other requirements.” Transfer of Funds and Other Assets Under relevant PRC laws and regulations, we are permitted to remit funds to the VIEs through loans rather than capital contributions.
Limited, or Wuhan Zhibo, a wholly-owned subsidiary of us, entered into a series of contractual arrangements with Beijing Sunlands, the significant VIE as “significant” is defined under Section 1-02 of Regulation S-X under the Securities Act, as well as its shareholders and, where applicable, its operating subsidiaries, through which we became the primary beneficiary of Beijing Sunlands for 4 accounting purposes.
Limited, or Wuhan Zhibo, a wholly-owned subsidiary of us, entered into a series of contractual arrangements with Beijing Sunlands, the significant VIE as “significant” is defined under Section 1-02 of Regulation S-X under the Securities Act, as well as its shareholders and, where applicable, its operating subsidiaries, through which we became the primary beneficiary of Beijing Sunlands for accounting purposes.
Any such circumstance may subject the 8 Group to fines and other regulatory, civil or criminal liabilities, and the Group may be ordered by the competent government authorities to suspend relevant operations, which will materially and adversely affect the Group’s business operation. For risks relating to licenses and approvals required for business operations in China, see “Item 3. Key Information—3.D.
Any such circumstance may subject the Group to fines and other regulatory, civil or criminal liabilities, and the Group may be ordered by the competent government authorities to suspend relevant operations, which will materially and adversely affect the Group’s business operation. For risks relating to licenses and approvals required for business operations in China, see “Item 3. Key Information—3.D.
See “—Risks Related to the ADSs—Our triple-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares 40 and ADSs may view as beneficial.” As a result, Mr. Peng Ou, Mr.
See “—Risks Related to the ADSs—Our triple-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.” As a result, Mr. Peng Ou, Mr.
The Final Amendments include requirements to disclose information, including the auditor name and location, the percentage of shares of the issuer owned by governmental entities, whether governmental entities in the 48 applicable foreign jurisdiction with respect to the auditor has a controlling financial interest with respect to the issuer, the name of each official of the Chinese Communist Party who is a member of the board of the issuer, and whether the articles of incorporation of the issuer contains any charter of the Chinese Communist Party.
The Final Amendments include requirements to disclose information, including the auditor name and location, the percentage of shares of the issuer owned by governmental entities, whether governmental entities in the applicable foreign jurisdiction with respect to the auditor has a controlling financial interest with respect to the issuer, the name of each official of the Chinese Communist Party who is a member of the board of the issuer, and whether the articles of incorporation of the issuer contains any charter of the Chinese Communist Party.
The following chart illustrates the Group’s organizational structure, including our significant subsidiaries and the significant VIE as “significant” is defined under Section 1-02 of Regulation S-X under the Securities Act and certain other subsidiaries as of the date of this annual report. ———— Equity interest ------------ Contractual arrangements 3 The Group’s corporate structure involves unique risks to investors in the ADSs.
The following chart illustrates the Group’s organizational structure, including our significant subsidiaries and the significant VIE as “significant” is defined under Section 1-02 of Regulation S-X under the Securities Act and certain other subsidiaries as of the date of this annual report. ———— Equity interest ------------ Contractual arrangements The Group’s corporate structure involves unique risks to investors in the ADSs.
The PRC government has recently published new policies that adversely affected educational industry, especially the educational services related to K-12 students, and we cannot rule out the possibility that it will in the future further release regulations or policies regarding educational industry that could further adversely affect the Group’s business, financial condition and results of operations.
The PRC government has recently published new policies that adversely affected educational industry, especially the educational services related to K-12 students, and we cannot rule out the possibility whether it will in the future further release regulations or policies regarding educational industry that could further adversely affect the Group’s business, financial condition and results of operations.
Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC 46 individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises.
Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises.
On March 15, 2019, the National People’s Congress promulgated the Foreign Investment Law, which came into effect on January 1, 2020 and replaced the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly 47 Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations.
On March 15, 2019, the National People’s Congress promulgated the Foreign Investment Law, which came into effect on January 1, 2020 and replaced the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations.
The depositary may refuse to deliver, transfer or register 53 transfers of the ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.
The depositary may refuse to deliver, transfer or register transfers of the ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.
Each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, after making up previous years’ accumulated losses, if any, to fund certain statutory reserve funds, until the aggregate amount of such a fund reaches 50% of its registered capital.
Each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, after making up previous 16 years’ accumulated losses, if any, to fund certain statutory reserve funds, until the aggregate amount of such a fund reaches 50% of its registered capital.
If CSRC approval under the M&A Rules is required, it is uncertain whether it would be possible for the Group to obtain the approval, and any failure to obtain or delay in obtaining CSRC approval for our future issuance of securities overseas would subject the Group to sanctions imposed by the CSRC and other PRC regulatory agencies.
If CSRC approval under the M&A Rules is required, it is uncertain whether it would be possible for the Group to obtain the approval, and any failure to obtain or delay in obtaining CSRC approval for our future issuance of securities overseas would subject 40 the Group to sanctions imposed by the CSRC and other PRC regulatory agencies.
The past lack of the PCAOB inspections in China prevented the PCAOB from fully evaluating audits and quality control procedures of our independent registered public accounting firm, which made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that were subject to the PCAOB inspections.
The past lack of the PCAOB inspections in mainland China prevented the PCAOB from fully evaluating audits and quality control procedures of our independent registered public accounting firm, which made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of mainland China that were subject to the PCAOB inspections.
Any future lack of the PCAOB inspections in China would prevent the PCAOB from fully evaluating audits and quality control procedures of our auditor, as a result of which we and investors will be deprived of the benefits of such PCAOB inspections, which could cause investors to lose confidence in our audit procedures and the quality of the Group’s financial statements.
Any future lack of the PCAOB inspections in mainland China would prevent the PCAOB from fully evaluating audits and quality control procedures of our auditor, as a result of which we and investors will be deprived of the benefits of such PCAOB inspections, which could cause investors to lose confidence in our audit procedures and the quality of the Group’s financial statements.
If the Group is found to be in violation of any existing or future PRC laws or regulations, or fails to obtain or maintain any of the required licenses, permits, filings, registrations or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures.
If the Group is found to be in violation of any existing or 8 future PRC laws or regulations, or fails to obtain or maintain any of the required licenses, permits, filings, registrations or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures.
As the Revised Cybersecurity Review Measures is newly promulgated, it is uncertain how the measures will be interpreted or implemented and how they will affect the Group. We cannot predict the impact of the Revised Cybersecurity Review Measures, if any, at this stage, and we will closely monitor and assess any development in the rule-making process.
As the Revised Cybersecurity Review Measures is newly promulgated, it is uncertain how the measures will be interpreted or implemented and how they will affect the Group. We cannot predict the impact of the Revised Cybersecurity Review 9 Measures, if any, at this stage, and we will closely monitor and assess any development in the rule-making process.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than copies of the memorandum and articles of association, the register of mortgages and charges, and any special resolutions passed by the shareholders) or to obtain copies of register of members of these companies.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect or obtain copies of register of members or corporate records (other than copies of the memorandum and articles of 51 association, the register of mortgages and charges, and any special resolutions passed by the shareholders) of these companies.
We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs. Techniques employed by short sellers may drive down the market price of the ADSs.
We cannot predict what effect, if any, market sales of securities held by our significant shareholders 50 or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs. Techniques employed by short sellers may drive down the market price of the ADSs.
The Group has limited access to alternative networks or services in the event of disruptions, failures or other problems with China’s internet infrastructure or the telecommunications networks provided by telecommunications service providers. The Group’s platform regularly serves a large number of users and advertisers.
The Group has limited access to alternative networks or services in the event of disruptions, 36 failures or other problems with China’s internet infrastructure or the telecommunications networks provided by telecommunications service providers. The Group’s platform regularly serves a large number of users and advertisers.
If we cannot resolve any conflict of interest or dispute between us and these shareholders, we would have to rely on legal proceedings, which could result in disruption of the Group’s business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.
If we cannot resolve any conflict of interest or dispute between us and these shareholders, we would have to rely on legal proceedings, which could result in disruption of the Group’s business and subject us to 39 substantial uncertainty as to the outcome of any such legal proceedings.
In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. The PRC government’s significant oversight over the Group’s business operation in China could result in a material adverse change in the Group’s operations in China and the value of the ADSs.
In addition, administrative and court proceedings may be protracted, resulting in substantial costs and diversion of resources and management attention. The PRC government’s significant oversight over the Group’s business operation in China could result in a material adverse change in the Group’s operations in China and the value of the ADSs.
If the Group ceases to do so due to increases in interest rates or for other reasons, the Group’s course packages may become more costly for students to purchase, which could in turn negatively impact the Group’s business, financial condition and reputation.
If the Group ceases to do so due to increases in interest rates or for other reasons, the 27 Group’s course packages may become more costly for students to purchase, which could in turn negatively impact the Group’s business, financial condition and reputation.
The company can regain compliance at any time during the cure period if on the last trading day of any calendar month during the cure period the company has a closing share price of at least US$1.00 and an average closing share price of at least US$1.00 over the 30 trading-day period ending on the last trading day of that month.
The company can regain compliance at any time during the 49 cure period if on the last trading day of any calendar month during the cure period the company has a closing share price of at least US$1.00 and an average closing share price of at least US$1.00 over the 30 trading-day period ending on the last trading day of that month.
The VIEs funded their operations primarily using cash generated from operating and financing activities. In addition, we and the VIEs may, from time to time, lend cash to each other to settle the payment obligations on each other’s 10 behalf to provide temporary working capital support.
The VIEs funded their operations primarily using cash generated from operating and financing activities. In addition, we and the VIEs may, from time to time, lend cash to each other to settle the payment obligations on each other’s behalf to provide temporary working capital support.
According to the Q&A published on the official website of Beijing Municipal Education Commission in April 2022, the education department is only responsible for the issues related to institutions providing academic subjects tutoring services for primary and 22 secondary school.
According to the Q&A published on the official website of Beijing Municipal Education Commission in April 2022, the education department is only responsible for the issues related to institutions providing academic subjects tutoring services for primary and secondary school.
Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.
Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept 45 registrations under the supervision of SAFE.
Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to the Group’s business, pay dividends, or otherwise fund and conduct the Group’s business.
Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to the Group’s 43 business, pay dividends, or otherwise fund and conduct the Group’s business.
This means that you may not be able to exercise your right to direct how the underlying Class A 52 ordinary shares represented by your ADSs are voted and you may have no legal remedy if the underlying Class A ordinary shares represented by your ADSs are not voted as you requested.
This means that you may not be able to exercise your right to direct how the underlying Class A ordinary shares represented by your ADSs are voted and you may have no legal remedy if the underlying Class A ordinary shares represented by your ADSs are not voted as you requested.
Moreover, the 36 Group has entered into contracts with various subsidiaries of a limited number of telecommunications service providers at provincial level and rely on them to provide the Group with data communications capacity through local telecommunications lines.
Moreover, the Group has entered into contracts with various subsidiaries of a limited number of telecommunications service providers at provincial level and rely on them to provide the Group with data communications capacity through local telecommunications lines.
In addition, any PRC resident who is a direct or indirect shareholder of an SPV is required 45 to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change.
In addition, any PRC resident who is a direct or indirect shareholder of an SPV is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change.
Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection the Group enjoys.
Since PRC administrative and court authorities have discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection the Group enjoys.
Since our auditor is located in China, a jurisdiction where the PCAOB had been unable to conduct inspections without the approval of the Chinese authorities until 2022, our auditor was historically uninspected by the PCAOB.
Since our auditor is located in mainland China, a jurisdiction where the PCAOB had been unable to conduct inspections without the approval of the Chinese authorities until 2022, our auditor was historically uninspected by the PCAOB.
Any of these actions could cause significant disruptions to the Group’s business operations and severely damage the Group’s reputation, which would in turn materially and adversely affect the Group’s business, financial condition and 38 results of operations.
Any of these actions could cause significant disruptions to the Group’s business operations and severely damage the Group’s reputation, which would in turn materially and adversely affect the Group’s business, financial condition and results of operations.
We were conclusively added to the list on May 26, 2022 shortly after the filing of the annual report for the fiscal year ended on December 31, 2021 on Form 20-F.
We were conclusively added to the list on May 48 26, 2022 shortly after the filing of the annual report for the fiscal year ended on December 31, 2021 on Form 20-F.
The rights of shareholders to take action 51 against our directors, actions by our minority shareholders and the fiduciary duties of our directors to the Group under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to the Group under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
The Group may be subject to risks associated with an increase in interest rates to the extent that the Group continues to make interest payments 27 for the loans taken by students.
The Group may be subject to risks associated with an increase in interest rates to the extent that the Group continues to make interest payments for the loans taken by students.
Class A ordinary shares are not convertible into Class B ordinary shares or Class C ordinary shares, Class B ordinary shares are not convertible into Class C ordinary shares, and Class C ordinary shares are not convertible into Class B ordinary shares under any circumstances. Mr. Peng Ou, our founder and chairman of our board of directors, Mr.
Class A ordinary shares are not convertible into Class B ordinary shares or Class C ordinary shares, Class B ordinary shares are not convertible into Class C ordinary shares, and Class C ordinary shares 52 are not convertible into Class B ordinary shares under any circumstances. Mr. Peng Ou, our founder and chairman of our board of directors, Mr.
The Group’s management has concluded that the Group’s internal control over financial reporting was effective as of December 31, 2023. See “Item 15. Controls and Procedures—Management’s Annual Report on Internal Control over Financial Reporting.” We are exempt from the requirement of an attestation report issued by our registered public accounting firm because we are a non-accelerated filer.
The Group’s management has concluded that the Group’s internal control over financial reporting was effective as of December 31, 2024. See “Item 15. Controls and Procedures—Management’s Annual Report on Internal Control over Financial Reporting.” We are exempt from the requirement of an attestation report issued by our registered public accounting firm because we are a non-accelerated filer.
If we were a PFIC for any taxable year during which a U.S. investor holds ADSs or ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. investor. See “Item 10. Additional Information—10.E. Taxation—Material U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Rules.” 54
If we are or were a PFIC for any taxable year during which a U.S. investor holds ADSs or ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. investor. See “Item 10. Additional Information—10.E. Taxation—Material U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Rules.”
Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.
Any actions by the Chinese government to exert more oversight and regulation over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.
We cannot assure you that the PRC government will not in the future require the Group to obtain a private school operating permit.
We cannot assure you that the PRC government will not in the future require the Group to obtain a 22 private school operating permit.
Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.
Any actions by the Chinese government to exert more oversight and regulation over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.
The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents the Group from obtaining sufficient foreign currencies to satisfy the Group’s foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of the ADSs.
The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange regulation system prevents the Group from obtaining sufficient foreign currencies to satisfy the Group’s foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of the ADSs.
However, since the Foreign Investment Law and the Implementation Rules of Foreign Investment Law are relatively new, uncertainties still exist in relation to its interpretation and implementation.
However, since the Foreign Investment Law and the Implementation Rules of Foreign Investment Law are relatively new, uncertainties still exist in 47 relation to its interpretation and implementation.
Foreign investment in the value-added telecommunication services industry in China is extensively regulated and subject to numerous restrictions.
Foreign investment in the value-added telecommunication services industry in China is extensively regulated and 37 subject to numerous restrictions.
Certain of our existing shareholders have substantial influence over our company, and their interests may not be aligned with the interests of our other stockholders. Mr. Peng Ou, our founder and the chairman of our board of directors, owns approximately 65.4% of our voting power and Mr.
Certain of our existing shareholders have substantial influence over our company, and their interests may not be aligned with the interests of our other stockholders. Mr. Peng Ou, our founder and the chairman of our board of directors, owns approximately 65.5% of our voting power and Mr.
The outstanding balance of service fees owed by the VIEs to our PRC subsidiaries was nil as of each of December 31, 2021, 2022 and 2023. There were no other assets transferred between us and the VIEs in 2021, 2022 and 2023.
The outstanding balance of service fees owed by the VIEs to our PRC subsidiaries was nil as of each of December 31, 2022, 2023 and 2024. There were no other assets transferred between us and the VIEs in 2022, 2023 and 2024.
In the ordinary course of the Group’s business and in particular in connection with conducting sales and marketing activities with the Group’s existing and prospective students as well as the utilization of the Group’s AI-powered personalized study programs, the Group collects and utilizes data supplied by the users.
In the ordinary course of the Group’s business and in particular in connection with conducting sales and marketing activities with the Group’s existing and prospective students as well as the utilization of the Group’s personalized study programs, the Group collects and utilizes data supplied by the users.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.” Sunlands Technology Group has previously declared a special cash dividend of US$1.36 per ordinary share (or US$0.68 per ADS) to holders of its ordinary shares and ADSs on June 14, 2022, which has been fully paid as of December 31, 2023.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.” Sunlands Technology Group has previously declared a special cash dividend of US$1.36 per ordinary share (or US$0.68 per ADS) to holders of its ordinary shares and ADSs on June 14, 2022, which had been fully paid.
Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over securities offerings and other capital markets activities that are conducted overseas and foreign investment in China-based issuers like us. For details, see “Item 3. Key Information—D.
Furthermore, the PRC government has also recently indicated an 42 intent to exert more oversight and regulation over securities offerings and other capital markets activities that are conducted overseas and foreign investment in China-based issuers like us. For details, see “Item 3. Key Information—D.
Because the treatment of the contractual arrangements is not entirely clear, because we hold a substantial amount of cash and because our PFIC status for any taxable year will depend on the composition of our income and assets and the value of our assets from time to time (which may be determined, in part, by reference to the market price of the ADSs or ordinary shares, which could be volatile), there can be no assurance that we will not be a PFIC for our current or any future taxable year.
Because the treatment of the contractual arrangements is not entirely clear, because we hold a substantial amount of cash and because our PFIC status for any taxable year will depend on the composition of our income and assets and the value of our assets from time to time (which may be determined, in part, by reference to the market price of the ADSs or ordinary shares, which has been, and may continue to be, volatile), there can be no assurance that we will not be a PFIC for our current or any future taxable year.
Business Overview—Regulation—Regulations on Online and Distance Education.” The educational mobile app Shangde Jigou had been filed with competent regulatory authority as required under the Opinions on Educational Apps.
Business Overview—Regulation—Regulations on Online and Distance Education.” The educational mobile apps Shangde Jigou and Shangde Zikao had been filed with competent regulatory authority as required under the Opinions on Educational Apps.
For details, please see page 48. • The ADSs will be delisted and the ADSs and shares will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, if the PCAOB is unable to inspect or investigate completely auditors located in China for two consecutive years.
For details, please see pages 48 to 49. • The ADSs will be delisted and the ADSs and shares will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, if the PCAOB is unable to inspect or investigate completely auditors located in China for two consecutive years.
Risks Related to the Group’s Business • If the Group fails to increase student enrollments, the Group’s net revenues may decline, and the Group may not be able to maintain growth. • If the Group fails to manage its business growth effectively, the success of the Group’s business model will be compromised. • The Group is subject to the uncertainty to continue to achieve profitability in the future. • If the Group is unable to conduct sales and marketing activities cost-effectively, the Group’s results of operations and financial condition may be materially and adversely affected. • The Group may be adversely affected by any negative publicity concerning the Group and the Group’s business, shareholders, affiliates, directors, officers and employees and the industry in which the Group operates, regardless of its accuracy, which could harm the Group’s reputation and business. • Significant uncertainties exist in relation to the interpretation and implementation of, or proposed changes to, the PRC laws, regulations and policies regarding the education industry. • The Group faces risks associated with the lack of a private school operating permit for online education services as well as uncertainties surrounding PRC laws and regulations governing the education industry in general, including the Law for Promoting Private Education and its Implementation Rules. • The Group faces regulatory risks and uncertainties associated with the Group’s teachers’ lack of teaching licenses. • The Group faces regulatory risks and uncertainties with respect to the licensing requirement for the online transmission of internet audio-visual programs. • The failure to obtain and maintain other approvals, licenses, permits or filings applicable to the Group’s business could have a material adverse impact on the Group’s business, financial conditions and results of operations. • The Group may not be able to continue to recruit, train and retain a sufficient number of qualified faculty members.
Risks Related to the Group’s Business • If the Group fails to increase student enrollments, the Group’s net revenues may decline, and the Group may not be able to maintain growth. • If the Group fails to manage its business growth effectively, the success of the Group’s business model will be compromised. • The Group is subject to the uncertainty to continue to achieve profitability in the future. • If the Group is unable to conduct sales and marketing activities cost-effectively, the Group’s results of operations and financial condition may be materially and adversely affected. • The Group may be adversely affected by any negative publicity concerning the Group and the Group’s business, shareholders, affiliates, directors, officers and employees and the industry in which the Group operates, regardless of its accuracy, which could harm the Group’s reputation and business. • We are subject to risks and uncertainties associated with the PRC laws, regulations and policies on the broader education industry. • The Group faces risks associated with the lack of a private school operating permit for online education services as well as uncertainties surrounding PRC laws and regulations governing the education industry in general, including the Law for Promoting Private Education and its Implementation Rules. • The Group faces regulatory risks and uncertainties associated with the Group’s teachers’ lack of teaching licenses. • The Group faces regulatory risks and uncertainties with respect to the licensing requirement for the online transmission of internet audio-visual programs. • The failure to obtain and maintain other approvals, licenses, permits or filings applicable to the Group’s business could have a material adverse impact on the Group’s business, financial conditions and results of operations. • The Group may not be able to continue to recruit, train and retain a sufficient number of qualified faculty members.
In addition, on November 11, 2019, MOE issued the Administrative Measures on Filing of Educational Mobile Apps, which requires, among others, that educational mobile app providers shall file their educational mobile apps and that filings of existing educational mobile apps shall be completed before January 31, 2020. See “Item 4. Information on the Company—4.B.
Subsequently, on November 11, 2019, MOE issued the Administrative Measures on Filing of Educational Mobile Apps, which requires, among others, that educational mobile app providers shall file their educational mobile apps and that filings of existing educational mobile apps shall be completed before January 31, 2020. See “Item 4. Information on the Company—4.B.
Business Overview—Data Privacy and Security” and “Item 16.K. Cybersecurity.” Internationally, the Group may become subject to additional and/or more stringent legal obligations concerning the Group’s treatment of customer and other personal information, such as laws regarding data localization and/or restrictions on data export.
Business Overview—Data Privacy and Security” and “Item 16K. Cybersecurity.” Internationally, the Group may become subject to additional and/or more stringent legal obligations concerning the Group’s treatment of customer and other personal information, such as laws regarding data localization and/or restrictions on data export.
The Chinese government may intervene or influence the Group’s operations in China at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers.
The Chinese government may intervene or influence the Group’s operations in China at any time, or may exert more regulation over offerings conducted overseas and/or foreign investment in China-based issuers.
As a result, we were not at risk of having our securities subject to trading prohibition under the HFCAA unless a new determination is made by the PCAOB.
As a result, we are not at risk of having our securities subject to trading prohibition under the HFCAA unless a new determination is made by the PCAOB.
The Group is seeking to offer a broader range of courses, foster a more social and entertaining learning experience, and use cutting-edge technologies, particularly artificial intelligence, to improve students’ learning experience and outcomes. All of these endeavors involve risks and will require significant management, financial and human resources.
The Group is seeking to offer a broader range of courses, foster a more social and entertaining learning experience, and use cutting-edge technologies to improve students’ learning experience and outcomes. All of these endeavors involve risks and will require significant management, financial and human resources.
The enforcement of laws and rules and regulations in China may change quickly with little advance notice, which could result in a material adverse change in the Group’s operations and the value of the ADSs.” Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless.
The enforcement of laws and rules and regulations in China may change quickly, which could result in a material adverse change in the Group’s operations and the value of the ADSs.” Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC. 46 We believe our company is not a PRC resident enterprise for PRC tax purposes.
PV PLUTO LIMITED, an entity wholly owned and controlled by Primavera Capital Fund, beneficially owns all of our issued and outstanding Class B ordinary shares, which constitutes approximately 12.1% of our total issued and outstanding share capital and 13.8% of the aggregate voting power of our total issued and outstanding share capital as of the date of this annual report.
PV PLUTO LIMITED, an entity wholly owned and controlled by Primavera Capital Fund, beneficially owns all of our issued and outstanding Class B ordinary shares, which constitutes approximately 12.2% of our total issued and outstanding share capital and 13.9% of the aggregate voting power of our total issued and outstanding share capital as of the date of this annual report.
For details, please see pages 42 to 43. • You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China, including Hong Kong, against the Group or the Group ’ s management named in the annual report based on foreign laws.
For details, please see page 43. • You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China, including Hong Kong, against the Group or the Group ’ s management named in the annual report based on foreign laws.
Tongbo Liu and certain of our senior management and employees collectively beneficially own approximately 7.7% of our issued and outstanding Class A ordinary shares and 96.2% of our issued and outstanding Class C ordinary shares, which constitute approximately 77.2% of the aggregate voting power of our total issued and outstanding share capital as of the date of this annual report.
Tongbo Liu and certain of our senior management and employees collectively beneficially own approximately 8.0% of our issued and outstanding Class A ordinary shares and 96.2% of our issued and outstanding Class C ordinary shares, which constitute approximately 77.3% of the aggregate voting power of our total issued and outstanding share capital as of the date of this annual report.
In particular, the interpretation and enforcement of these laws and regulations involve uncertainties and may change quickly with little advance notice, which could result in a material adverse change in the Group’s operations and the value of the ADSs.
In particular, the interpretation and enforcement of these laws and regulations involve uncertainties and may change quickly with short notice, which could result in a material adverse change in the Group’s operations and the value of the ADSs.
For purposes of the above calculations, a non-U.S. corporation that owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Cash is a passive asset for these purposes.
For purposes of the above calculations, a non-U.S. corporation that owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation.
The Chinese government may intervene or influence the Group’s operations in China at any time, or may exert more control over offerings 42 conducted overseas and/or foreign investment in China-based issuers.
The Chinese government may intervene or influence the Group’s operations in China at any time, or may exert more regulation over offerings conducted overseas and/or foreign investment in China-based issuers.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Students are assigned to different schools and divisions based on the major and number of students enrolled for a given academic period. Students in the same division are further assigned to different “classes” for administrative purposes. 59 Educational Content Development and Offerings Content Development The Group maintains an experienced team of course and educational content development professionals.
Students are assigned to different schools and divisions based on the major and number of students enrolled for a given academic period. Students in the same division are further assigned to different “classes” for administrative purposes. Educational Content Development and Offerings 59 Content Development The Group maintains an experienced team of course and educational content development professionals.
Risk Factors—Risks Related to the Group’s Business—The Group faces risks associated with the lack of a private school operating permit for online education services as well as uncertainties surrounding PRC laws and regulations governing the education industry in general, including the Law for Promoting Private Education and its Implementation Rules.” 70 Regulations on Online and Distance Education The MOE, jointly with certain other PRC government authorities, promulgated the Opinions on Guiding and Regulating the Orderly and Healthy Development of Educational Mobile Apps on August 10, 2019, or the Opinions on Educational Apps, which requires, among others, mobile apps that provide services for school teaching and management, student learning and student life, or home-school interactions, with school faculty, students or parents as the main users, and with education or learning as the main application scenarios, or the Educational Apps, be filed with competent provincial regulatory authorities for education before the end of 2019.
Risk Factors—Risks Related to the Group’s Business—The Group faces risks associated with the lack of a private school operating permit for online education services as well as uncertainties surrounding PRC laws and regulations governing the education industry in general, including the Law for Promoting Private Education and its Implementation Rules.” Regulations on Online and Distance Education The MOE, jointly with certain other PRC government authorities, promulgated the Opinions on Guiding and Regulating the Orderly and Healthy Development of Educational Mobile Apps on August 10, 2019, or the Opinions on Educational Apps, which requires, among others, mobile apps that provide services for school teaching and management, student learning and student life, or home-school interactions, with school faculty, students or parents as the main users, and with education or learning as the main application scenarios, or the Educational Apps, be filed with competent 70 provincial regulatory authorities for education before the end of 2019.
According to the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Infringing Personal Information of Citizens, if a business operator collects personal information of citizens by purchasing, accepting or exchanging, or collects personal information of citizens in the course of performing their duties and providing services in violation of relevant provisions of the State (including Law on the Protection of Consumer Rights and Interests) and meet one of the following standards, such operator shall be considered breaching criminal law and such operator and its responsible personnel shall undertake the criminal liabilities: (i) illegal acquisition, sale or provision of more than 50 pieces of track information, communication content, credit information, property information; (ii) illegal acquisition, sale, or provision of more than 500 pieces of accommodation information, communication records, health, physiological information, trading information, and other personal information may affect the safety of personal and property; (iii) illegal acquisition, sale, or provision of more than 73 5000 pieces of personal information other than the information mentioned in the preceding (i) and (ii); (iv) the profits generated from using the illegally collected and acquired personal information is more than fifty thousand RMB; and (v) resale of the personal information collected in the course of performing their duties and providing service and the amount of resold personal information reaches 50% of the prescribed standard mentioned in (i) or (ii), as applicable.
According to the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Infringing Personal Information of Citizens, if a business operator collects personal information of citizens by purchasing, accepting or exchanging, or collects personal information of citizens in the course of performing their duties and providing services in violation of relevant provisions of the State (including Law on the Protection of Consumer Rights and Interests) and meet one of the following standards, such operator shall be considered breaching criminal law and such operator and its responsible personnel shall undertake the criminal liabilities: (i) illegal acquisition, sale or provision of more than 50 pieces of track information, communication content, credit information, property information; (ii) illegal acquisition, sale, or provision of more than 500 pieces of accommodation information, communication records, health, physiological information, trading information, and other personal information may affect the safety of personal and property; (iii) illegal acquisition, sale, or provision of more than 5000 pieces of personal information other than the information mentioned in the preceding (i) and (ii); (iv) the profits generated from using the illegally collected and acquired personal information is more than fifty thousand RMB; and (v) resale of the personal information collected in the course of performing their duties and providing service and the amount of resold personal information reaches 50% of the prescribed standard mentioned in (i) or (ii), as applicable.
Pursuant to the Online Publishing Provisions, “online publishing services” refer to providing online publications to the public through information networks; and “online publications” refer to digital works with publishing features such as having been edited, produced or processed and are made available to the public through information networks, including: (i) written works, pictures, maps, games, cartoons, audio/video reading materials and other original digital works containing useful knowledge or ideas in the field of literature, art, science or other fields; (ii) digital works of which the content is identical to that of any published book, newspaper, 71 periodical, audio/video product, electronic publication or the like; (iii) network literature databases or other digital works, derived from any of the aforesaid works by selection, arrangement, collection or other means; and (iv) other types of digital works as may be determined by the SAPPRFT.
Pursuant to the Online Publishing Provisions, “online publishing services” refer to providing online publications to the public through information networks; and “online publications” refer to digital works with publishing features such as having been edited, produced or processed and are made available to the public through information networks, including: (i) written works, pictures, maps, games, cartoons, audio/video reading materials and other original digital works containing useful knowledge or ideas in the field of literature, art, science or other fields; (ii) digital works of which the content is identical to that of any published book, newspaper, periodical, audio/video product, electronic publication or the like; (iii) network literature databases or other digital works, derived from any of the aforesaid works by selection, arrangement, collection or other means; and (iv) other types of digital works as may be determined by the SAPPRFT.
However, there are still significant uncertainties relating to the interpretation and implementation of the Audio-Visual Program Provisions, in particular, the scope of “internet audio-visual programs.” Regulations Relating to Internet Live Streaming Services On November 4, 2016, the CAC issued Administrative Regulation on Internet Live Streaming Services, effective from December 1, 2016, according to which, “internet live streaming” refers to the activities of continuously releasing real-time information to the public based on the Internet in forms such as videos, audios, images and texts, and “internet live-streaming service providers” refers to the operators that provide Internet live-streaming platform service.
However, there are still significant uncertainties relating to the interpretation and implementation of the Audio-Visual Program Provisions, in particular, the scope of “internet audio-visual programs.” 72 Regulations Relating to Internet Live Streaming Services On November 4, 2016, the CAC issued Administrative Regulation on Internet Live Streaming Services, effective from December 1, 2016, according to which, “internet live streaming” refers to the activities of continuously releasing real-time information to the public based on the Internet in forms such as videos, audios, images and texts, and “internet live-streaming service providers” refers to the operators that provide Internet live-streaming platform service.
Pursuant to the PRC Cyber Security Law issued by the Standing Committee of the National People’s Congress and effective on June 1, 2017, “personal information” refers to all kinds of information recorded by electronic or otherwise that can be used to independently identify or be combined with other information to identify individuals’ personal information including but not limited to: individuals’ names, dates of birth, ID numbers, biologically identified personal information, addresses and telephone numbers, etc.
Pursuant to the PRC Cyber Security Law issued by the Standing Committee of the National People’s Congress and effective on June 1, 2017, “personal information” refers to all kinds of information recorded by electronic or otherwise that can be used to independently identify or be combined with other information to identify individuals’ personal information 73 including but not limited to: individuals’ names, dates of birth, ID numbers, biologically identified personal information, addresses and telephone numbers, etc.
As part of our efforts to streamline our corporate structure, the VIE Contractual Arrangements between Wuhan Zhibo and (i) Wuhan Xiaoyan, (ii) Beijing Odysseus, (iii) Guangzhou Wudawei, (iv) Guangzhou Tianyong, (v) Wuhan Hadeliang, (vi) Wuhan Jiayan and (vii) Tianjin Shangde, as well as their shareholders, were terminated respectively through a series of transactions from April 2021 to October 2023.
As part of our efforts to streamline our corporate structure, the VIE Contractual Arrangements between Wuhan Zhibo and (i) Wuhan Xiaoyan, (ii) Beijing Odysseus, (iii) Guangzhou Wudawei, (iv) Guangzhou Tianyong, (v) Wuhan Hadeliang, (vi) Wuhan Jiayan and (vii) Tianjin Shangde, as well as their 55 shareholders, were terminated respectively through a series of transactions from April 2021 to October 2023.
After the MOFCOM and NDRC amended the Catalog in March 2015, MIIT also issued the Circular on Removing the Restrictions on Shareholding Ratio Held by Foreign Investors in Online Data Processing and Transaction Processing 68 (Operating E-commerce) Business on June 19, 2015, which amended the relevant provision in FITE Regulations by allowing foreign investors to own more than 50% of the equity interest in an operator of e-commerce business.
After the MOFCOM and NDRC amended the Catalog in March 2015, MIIT also issued the Circular on Removing the Restrictions on Shareholding Ratio Held by Foreign Investors in Online Data Processing and Transaction Processing (Operating E-commerce) Business on June 19, 2015, which amended the relevant provision in FITE Regulations by allowing foreign investors to own more than 50% of the equity interest in an operator of e-commerce business.
The regulations provide that, among others, critical information infrastructure, or the CII, means important network facilities and information systems in important industries such as public communications and information services, energy, transportation, water conservancy, finance, public services, 74 e-government, defense technology industry and others that may seriously harm national security, national economy, people’s livelihood and public interests once damaged, disabled or its data disclosed.
The regulations provide that, among others, critical information infrastructure, or the CII, means important network facilities and information systems in important industries such as public communications and information services, energy, transportation, water conservancy, finance, public services, e-government, defense technology industry and others that may seriously harm national security, national economy, people’s livelihood and public interests once damaged, disabled or its data disclosed.
Moreover, all PRC enterprises are generally required to implement a standard working time system of eight hours a day and forty hours a week, and if the implementation of such standard working time system is not appropriate due to the nature of the job or the characteristics of business operation, the enterprise 80 may implement a flexible working time system or comprehensive working time system after obtaining approvals from the relevant authorities.
Moreover, all PRC enterprises are generally required to implement a standard working time system of eight hours a day and forty hours a week, and if the implementation of such standard working time system is not appropriate due to the nature of the job or the characteristics of business operation, the enterprise may implement a flexible working time system or comprehensive working time system after obtaining approvals from the relevant authorities.
Pursuant to the Overseas Listing Archives Rules, domestic companies that seek to offer or list securities overseas directly or indirectly, and securities companies and securities related service providers providing services to such domestic companies shall establish confidentiality and archives administration system, adopt requisite measures to perform the responsibilities of confidentiality and archives administration, and shall not divulge state secrets and state agencies’ work 67 secrets, or harm state and public interests.
Pursuant to the Overseas Listing Archives Rules, domestic companies that seek to offer or list securities overseas directly or indirectly, and securities companies and securities related service providers providing services to such domestic companies shall establish confidentiality and archives administration system, adopt requisite measures to perform the responsibilities of confidentiality and archives administration, and shall not divulge state secrets and state agencies’ work secrets, or harm state and public interests.
Upon discovery of any information whose release or transmission is prohibited by applicable laws or regulations, the private school shall immediately cease the transmission of that information and take further remedial actions, such as deleting that information, to prevent it from spreading. Records pertaining to the situation shall be kept and reported to the appropriate authorities.
Upon discovery of any information whose release or transmission is prohibited by applicable laws or regulations, the private 69 school shall immediately cease the transmission of that information and take further remedial actions, such as deleting that information, to prevent it from spreading. Records pertaining to the situation shall be kept and reported to the appropriate authorities.
Course Offerings 57 The Group offers a wide range of online courses addressing various educational needs of adults in China. Currently, the Group’s course offerings mainly cover two main components, namely (i) interest, professional skills and professional certification preparation courses, and (ii) degree- or diploma-oriented post-secondary courses.
Course Offerings The Group offers a wide range of online courses addressing various educational needs of adults in China. Currently, the Group’s course offerings mainly cover two main components, namely (i) interest, professional skills and professional certification preparation courses, and (ii) degree- or diploma-oriented post-secondary courses.
Moreover, the competent supervisory departments of relevant important industries abovementioned shall organize the recognition of the CII and promptly notify the operators and Public Security Department of The State Council of the results of the identification. On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law, which became effective on November 1, 2021.
Moreover, the competent supervisory departments of relevant important industries abovementioned shall organize the recognition of the CII and promptly notify the operators and Public Security Department of The State Council of the results of the identification. 74 On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law, which became effective on November 1, 2021.
Organizational Structure The following chart illustrates the Group’s organizational structure, including our significant subsidiaries and the significant VIE as “significant” is defined under Section 1-02 of Regulation S-X under the Securities Act and certain other subsidiaries as of the date of this annual report. 81 ———— Equity interest ------------ Contractual arrangements See “Item 3.
Organizational Structure The following chart illustrates the Group’s organizational structure, including our significant subsidiaries and the significant VIE as “significant” is defined under Section 1-02 of Regulation S-X under the Securities Act and certain other subsidiaries as of the date of this annual report. ———— Equity interest ------------ Contractual arrangements See “Item 3.
On March 17, 2010, SAPPRFT promulgated the Provisional Implementation of the Tentative Categories of Internet Audio-Visual Program Services, or the Categories, which clarified the scope of Internet audio-visual programs services, 72 which was amended on March 10, 2017. According to the Categories, there are four categories of Internet audio-visual program services which are further divided into seventeen sub-categories.
On March 17, 2010, SAPPRFT promulgated the Provisional Implementation of the Tentative Categories of Internet Audio-Visual Program Services, or the Categories, which clarified the scope of Internet audio-visual programs services, which was amended on March 10, 2017. According to the Categories, there are four categories of Internet audio-visual program services which are further divided into seventeen sub-categories.
At the same time, many of them cannot identify their specific education needs or solutions for such needs, especially given that education products and services can be complex and the relatively high 60 costs may deter them from fulfilling their educational needs.
At the same time, many of them cannot identify their specific education needs or solutions for such needs, especially given that education products and services can be complex and the relatively high costs may deter them from fulfilling their educational needs.
Overview The Group is a leader in China’s adult online education market and China’s adult personal interest learning market. The Group has a deep understanding of the educational needs of the Group’s prospective students and offer solutions that 56 help them achieve their goals.
Overview The Group is a leader in China’s adult online education market and China’s adult personal interest learning market. The Group has a deep understanding of the educational needs of the Group’s prospective students and offer solutions that help them achieve their goals.
ITEM 4. INFORMATION ON THE COMPANY 4.A. History and Development of the Company The Group commenced education service business in August 2003. The Group remained an offline, classroom-based education service provider until the Group transitioned to an exclusively online education model in 2014.
ITEM 4. INFORMATION ON THE COMPANY 4.A. History and Development of the Company The Group commenced education service business in August 2003. The Group remained an offline, classroom-based 54 education service provider until the Group transitioned to an exclusively online education model in 2014.
Providers of internet audiovisual program services must be either state-owned or state-controlled entities, and the business to be carried out by such providers must satisfy the overall planning and guidance catalog for internet audio-visual program service determined by SAPPRFT.
Providers of internet audio-visual program services must be either state-owned or state-controlled entities, and the business to be carried out by such providers must satisfy the overall planning and guidance catalog for internet audio-visual program service determined by SAPPRFT.
The Group leases all of the facilities that the Group currently occupies from independent third parties. We believe that the facilities that the Group currently leases are adequate to meet the Group’s needs for the foreseeable future. ITEM 4A. UNRESOLV ED STAFF COMMENTS Not applicable.
The Group leases all of the facilities that the Group currently occupies from independent third parties. We believe that 81 the facilities that the Group currently leases are adequate to meet the Group’s needs for the foreseeable future. ITEM 4A. UNRESOLV ED STAFF COMMENTS Not applicable.
This AI-powered software, developed in-house, uses machine learning and natural language processing technology to analyze student behavior and their level of understanding of specific courses. Based on this analysis, the Group is able to predict test results, with a high accuracy rate, and develop tailor-made learning solutions that are designed to improve study outcomes.
This in-house developed software uses machine learning and natural language processing technology to analyze student behavior and their level of understanding of specific courses. Based on this analysis, the Group is able to predict test results, with a high accuracy rate, and develop tailor-made learning solutions that are designed to improve study outcomes.
In addition, it remains uncertain whether the PRC government authorities would issue more explicit interpretation and rules or promulgate new laws and regulations.
In addition, it remains uncertain whether the PRC government authorities would issue more explicit interpretation and rules or promulgate new 71 laws and regulations.
As of December 31, 2023, the Group offered professional skills and interest courses such as Wealth Management, Voice Acting, Chinese Painting and Calligraphy. In addition, the Group also offers professional certification preparation courses designed to give students the skills, knowledge and abilities that are commonly required or helpful for a broad range of professions.
As of December 31, 2024, the Group offered professional skills and interest courses such as Wealth Management, Voice Acting, Chinese Painting and Calligraphy. In addition, the Group also offers professional certification preparation courses designed to give students the skills, knowledge and abilities that are commonly required or helpful for a broad range of professions.
The employee interface is specifically customized to provide the employees with information and data most relevant to their responsibilities. In addition, Genesis supports a centralized database allowing its users, including students and employees, to contribute, share and store content and data across various applications and platforms. The Group launched the AI-powered personalized study programs in 2018.
The employee interface is specifically customized to provide the employees with information and data most relevant to their responsibilities. In addition, Genesis supports a centralized database allowing its users, including students and employees, to contribute, share and store content and data across various applications and platforms. The Group launched the personalized study programs in 2018.
The following table sets forth the Group’s net revenues, gross billings and new student enrollments attributable to each type of course offering.
The 57 following table sets forth the Group’s net revenues, gross billings and new student enrollments attributable to each type of course offering.
(formerly known as “Wuhan Hadeliang Online Education Technology Co., Ltd.”), or Wuhan Hadeliang, and (vii) Tianjin Shangde, as well as their shareholders.
(formerly known as “Wuhan Hadeliang Online Education Technology Co., Ltd.” and “Wuhan Xingui Online Technology Co., Ltd.”), or Wuhan Hadeliang, and (vii) Tianjin Shangde, as well as their shareholders.
The employment market is becoming increasingly competitive, motivating workers to enhance their career competitiveness through vocational education. As of December 31, 2023, the professional certification preparation courses covered various industries and professions, including Accounting, Human Resources and Teaching.
The employment market is becoming increasingly competitive, motivating workers to enhance their career competitiveness through vocational education. As of December 31, 2024, the professional certification preparation courses covered various industries and professions, including Accounting, Human Resources and Teaching.
Accordingly, Sunlands HK, FireSky Investment and Cheerwins HK may be able to benefit from the 5% withholding tax rate for the dividends it receives from Wuhan Zhibo, Wuhan Zhongtudao and Tianjin Alaman, respectively, if it satisfies the conditions prescribed under SAT Circular 81 and other relevant tax rules and regulations.
Accordingly, Sunlands HK and FireSky Investment may be able to benefit from the 5% withholding tax rate for the dividends it receives from Wuhan Zhibo and Wuhan Zhongtudao, respectively, if it satisfies the conditions prescribed under SAT Circular 81 and other relevant tax rules and regulations.
From September 2019 to December 2020, Wuhan Zhibo entered into the VIE Contractual Arrangements with (i) Wuhan Xiaoyan Technology Co., Ltd., or Wuhan Xiaoyan, (ii) Wuhan Jiayan Online Education Technology Co., Ltd., or Wuhan Jiayan, (iii) Beijing Odysseus Education Technology Co., Ltd., or Beijing Odysseus, (iv) Guangzhou Wudawei Education Technology Co., Ltd., or Guangzhou Wudawei, (v) Guangzhou Tianyong Online Education Technology Co., 55 Ltd., or Guangzhou Tianyong, and (vi) Wuhan Xingui Online Technology Co., Ltd.
From September 2019 to December 2020, Wuhan Zhibo entered into the VIE Contractual Arrangements with (i) Wuhan Xiaoyan Technology Co., Ltd., or Wuhan Xiaoyan, (ii) Wuhan Jiayan Online Education Technology Co., Ltd., or Wuhan Jiayan, (iii) Beijing Odysseus Education Technology Co., Ltd., or Beijing Odysseus, (iv) Guangzhou Wudawei Education Technology Co., Ltd., or Guangzhou Wudawei, (v) Guangzhou Tianyong Online Education Technology Co., Ltd., or Guangzhou Tianyong, and (vi) Wuhan Yuanji Online Technology Co., Ltd.
In addition, degree- or diploma-oriented post-secondary courses represented approximately 30.4%, 9.6% and 5.0%, respectively, of the Group’s new student enrollments for the years ended December 31, 2021, 2022 and 2023. Interactive Learning Process Live streaming course delivery The Group’s teachers deliver courses in a live streaming format through the Group’s websites and mobile application.
In addition, degree- or diploma-oriented post-secondary courses represented approximately 9.6%, 5.0% and 2.4%, respectively, of the Group’s new student enrollments for the years ended December 31, 2022, 2023 and 2024. Interactive Learning Process Live streaming course delivery The Group’s teachers deliver courses in a live streaming format through the Group’s websites and mobile application.
During the same periods, the Group made interest payments of RMB36.9 million, RMB6.0 million and RMB1.5 million (US$0.2 million), respectively, to the credit providers. The Group generally offers students a full, unconditional refund within 24 hours upon enrollment.
During the same periods, the Group made interest payments of RMB6.0 million, RMB1.5 million and RMB1.7 million (US$0.2 million), respectively, to the credit providers. The Group generally offers students a full, unconditional refund within 24 hours upon enrollment.
The Group has built the integrated IT infrastructure primarily based on tools, technologies and platforms that the Group has developed in-house and, to a lesser extent, third-party software and applications that the Group has licensed or purchased. The Group maintains a dedicated IT development and support team. As of December 31, 2023, the Group had 138 technology development personnel.
The Group has built the integrated IT infrastructure primarily based on tools, technologies and platforms that the Group has developed in-house and, to a lesser extent, third-party software and applications that the Group has licensed or purchased. The Group maintains a dedicated IT development and support team. As of December 31, 2024, the Group had 114 technology development personnel.
Regulation Regulations Relating to Foreign Investment Restrictions According to the latest Special Administrative Measures for the Entry of Investment (Negative List), or the Negative List, promulgated by the Ministry of Commerce, or MOFCOM and the National Development and Reform Commission, or NDRC, effective on January 1, 2022, foreign investors shall not engage in the prohibited activities listed in the Negative List.
Regulation Regulations Relating to Foreign Investment Restrictions According to the latest Special Administrative Measures for the Entry of Investment (Negative List), or the Negative List, promulgated by the Ministry of Commerce, or MOFCOM and the National Development and Reform Commission, or NDRC, effective on November 1, 2024, foreign investors shall not engage in the prohibited activities listed in the Negative List.
To help them meet their aspirations and understand the potential educational solutions, the Group focuses marketing and sales practices on counseling-oriented interactions and strive to deliver the courses and educational content in a highly engaging and student-friendly manner. Faculty The Group maintains a large full-time faculty dedicated to helping students succeed.
To help them meet their aspirations and understand the potential educational solutions, the Group focuses marketing and sales practices on counseling-oriented interactions and 60 strive to deliver the courses and educational content in a highly engaging and student-friendly manner. Faculty The Group maintains a team of full-time faculty dedicated to helping students succeed.
As of December 31, 2023, the Group had a total of 1,614 sales and marketing personnel. The Group maintains sales and marketing personnel in major regional markets, such as Beijing, Wuhan, Shenzhen and Guangzhou. The Group’s sales and marketing force adopt sales and marketing strategies customized based on the needs and profile of prospective students in different markets.
As of December 31, 2024, the Group had a total of 1,674 sales and marketing personnel. The Group maintains sales and marketing personnel in major regional markets, such as Beijing, Wuhan, Shenzhen and Guangzhou. The Group’s sales and marketing force adopt sales and marketing strategies customized based on the needs and profile of prospective students in different markets.
The Group maintains offices in Beijing, China, with an aggregate of approximately 9,580 square meters. These facilities currently accommodate the Group’s management headquarters, as well as the sales and marketing, course and educational content development, and general and administrative activities.
The Group maintains offices in Beijing, China, with an aggregate of approximately 8,583 square meters. These facilities currently accommodate the Group’s management headquarters, as well as the sales and marketing, course and educational content development, and general and administrative activities.
In October 2015, our wholly-owned subsidiary, Sunlands Online Education HK Limited, or Sunlands HK, was incorporated in Hong Kong. In July 2017, Tianjin Alaman Education Technology Co., Ltd. (formerly known as “Tianjin Studyvip Education Co., Limited”), or Tianjin Alaman, our wholly-owned subsidiary, was incorporated in the PRC. It was renamed as Tianjin Alaman Education Technology Co., Ltd. in February 2021.
In October 2015, our wholly-owned subsidiary, Sunlands Online Education HK Limited, or Sunlands HK, was incorporated in Hong Kong. In July 2017, Tianjin Alaman Education Technology Co., Ltd. (formerly known as “Tianjin Studyvip Education Co., Limited”), or Tianjin Alaman, our wholly-owned subsidiary, was incorporated in the PRC.
In addition, the interest, professional skills and professional certification preparation courses represented approximately 69.6%, 90.4% and 95.0%, respectively, of the Group’s new student enrollments in 2021, 2022 and 2023. See also “Item 3. Key Information—3.D.
In addition, the interest, professional skills and professional certification preparation courses represented approximately 90.4%, 95.0% and 97.6%, respectively, of the Group’s new student enrollments in 2022, 2023 and 2024. See also “Item 3. Key Information—3.D.
See “Item 3. Key Information—3.D. Risk Factors—Risks Related to the Group’s Business—The Group may face risks associated with the installment tuition payment plan the Group offers to its students.” In 2021, 2022 and 2023, the Group’s student loan coverage ratios were 24.8%, 5.1% and 1.3%, respectively.
See “Item 3. Key Information—3.D. Risk Factors—Risks Related to the Group’s Business—The Group may face risks associated with the installment tuition payment plan the Group offers to its students.” In 2022, 2023 and 2024, the Group’s student loan coverage ratios were 5.1%, 1.3% and 1.9%, respectively.
The Group also maintains offices in Wuhan, China, with an aggregate of approximately 17,721 square meters, to support part of the Group’s sales and marketing activities. In addition, the Group maintains offices in Guangzhou, China, with an aggregate of approximately 5,133 square meters, to support the sales and marketing activities as well as general and administrative activities.
The Group also maintains offices in Wuhan, China, with an aggregate of approximately 17,721 square meters, to support part of the Group’s sales and marketing activities. In addition, the Group maintains offices in Guangzhou, China, with an aggregate of approximately 4,485 square meters, to support the sales and marketing activities as well as general and administrative activities.
For the same years, the Group’s new student enrollments were 434,228, 534,280 and 616,341, respectively. Solutions The Group offers adult online education and adult personal interest learning education through extensive courses and educational content offerings. As of December 31, 2023, the Group offered interest, professional skills and professional certification preparation courses, and degree- or diploma-oriented post-secondary courses.
For the same years, the Group’s new student enrollments were 534,280, 616,341 and 674,649, respectively. Solutions The Group offers adult online education and adult personal interest learning education through extensive courses and educational content offerings. As of December 31, 2024, the Group offered interest, professional skills and professional certification preparation courses, and degree- or diploma-oriented post-secondary courses.
As of December 31, 2023, the Group’s faculty primarily consisted of 100 teachers and 75 mentors based in Beijing and Wuhan, China. Teachers and mentors assume different roles and responsibilities. Generally, teachers are responsible for delivering courses and educational content to students, while mentors focus on providing academic and administrative support throughout the students’ learning process.
As of December 31, 2024, the Group’s faculty primarily consisted of 56 teachers and 30 mentors based in Beijing and Wuhan, China. Teachers and mentors assume different roles and responsibilities. Generally, teachers are responsible for delivering courses and educational content to students, while mentors focus on providing academic and administrative support throughout the students’ learning process.
We believe the live streaming format and highly interactive learning experience makes the Group’s services highly attractive to students. In 2021, 2022 and 2023, the Group’s new student enrollments were 434,228, 534,280 and 616,341, respectively.
We believe the live streaming format and highly interactive learning experience makes the Group’s services highly attractive to students. In 2022, 2023 and 2024, the Group’s new student enrollments were 534,280, 616,341 and 674,649, respectively.
The Group monitors the total number of hours teachers teach regularly to provide both an optimal number of teachers for the Group’s large student enrollments and adequate teaching assignments for each of the teachers. All of the teachers are full-time employees.
The Group monitors the total number of hours teachers teach regularly to provide both an optimal number of teachers for the Group’s large student enrollments and adequate teaching assignments for each of the teachers. Most of the teachers are full-time employees, while the Group also engage part-time teachers.
The Group has been successful in addressing the unmet demand of a large, growing market and served approximately 3,686,000 students across China since the Group transitioned to an online education model in 2014. The number of the Group’s students was 1,104,630, 1,067,042 and 1,131,435, respectively, in 2021, 2022 and 2023.
The Group has been successful in addressing the unmet demand of a large, growing market and served approximately 4,753,000 students across China since the Group transitioned to an online education model in 2014. The number of the Group’s students was 1,067,042, 1,131,435 and 1,067,128, respectively, in 2022, 2023 and 2024.
Students The Group has a large student base, primarily as a result of the Group’s well-established brand and effective sales and marketing efforts. In 2021, 2022 and 2023, the Group had 1,104,630, 1,067,042 and 1,131,435 students, respectively, and the Group’s new student enrollments were 434,228, 534,280 and 616,341, respectively.
Students The Group has a large student base, primarily as a result of the Group’s well-established brand and effective sales and marketing efforts. In 2022, 2023 and 2024, the Group had 1,067,042, 1,131,435 and 1,067,128 students, respectively, and the Group’s new student enrollments were 534,280, 616,341 and 674,649, respectively.
Wuhan Zhongtudao is wholly owned by FireSky Investment. Currently, substantially all of the Group’s business operations are conducted in the PRC through our subsidiaries incorporated in the PRC, and the contractual arrangements among our PRC subsidiaries and the VIEs.
In June 2021, Wuhan Zhongtudao Technology Co., Ltd, or Wuhan Zhongtudao, our wholly-owned subsidiary, was incorporated in the PRC. Wuhan Zhongtudao is wholly owned by FireSky Investment. Currently, substantially all of the Group’s business operations are conducted in the PRC through our subsidiaries incorporated in the PRC, and the contractual arrangements among our PRC subsidiaries and the VIEs.
The Group’s deferred revenues were RMB2,348.2 million, RMB1,690.9 million and RMB1,113.9 million (US$156.9 million), respectively, as of December 31, 2021, 2022 and 2023. Business Model and Online Education Services The Group offers adult online education services and adult personal interest learning courses through online and mobile platforms to adult students.
The Group’s deferred revenues were RMB1,690.9 million, RMB1,113.9 million and RMB916.5 million (US$125.6 million), respectively, as of December 31, 2022, 2023 and 2024. Business Model and Online Education Services The Group offers adult online education services and adult personal interest learning courses through online and mobile platforms to adult students.
The Group competes with the Group’s competitors for student enrollments and engagement, high-quality faculty members, sales and marketing effectiveness, among other things. 64 We believe that the principal competitive factors in China’s adult online education market and adult personal interest learning market include the following: • brand awareness and reputation; • scope of course offerings; • course pricing; • interactive, engaging and customized learning experience; • teaching quality and level of academic and administrative student support; • ease of deployment and use of the course delivery format; and • expertise in sales and marketing, and student acquisition and retention; and • proven track record of performance.
We believe that the principal competitive factors in China’s adult online education market and adult personal interest 64 learning market include the following: • brand awareness and reputation; • scope of course offerings; • course pricing; • interactive, engaging and customized learning experience; • teaching quality and level of academic and administrative student support; • ease of deployment and use of the course delivery format; and • expertise in sales and marketing, and student acquisition and retention; and • proven track record of performance.
In 2021, 2022 and 2023, the interest, professional skills and professional certification preparation courses represented approximately 31.7%, 47.9% and 67.1%, respectively, of the Group’s net revenues, and approximately 46.0%, 83.1% and 98.4%, respectively, of the Group’s gross billings.
In 2022, 2023 and 2024, the interest, professional skills and professional certification preparation courses represented approximately 47.9%, 67.1% and 75.3%, respectively, of the Group’s net revenues, and approximately 83.1%, 98.4% and 99.1%, respectively, of the Group’s gross billings.
It was renamed as Wuhan Zhidao Online Education Technology Co., Ltd. in November 2022. Wuhan Shangde is wholly owned by Wuhan Zhibo. In December 2020, Cheerwins Technology Group, or Cheerwins Cayman, our wholly-owned subsidiary, was incorporated in Cayman. In January 2021, Cheerwins Online Education HK limited, or Cheerwins HK, our wholly-owned subsidiary, was incorporated in Hong Kong.
(formerly known as “Wuhan Shangde Online Education Technology Co., Ltd.”), or Wuhan Shangde, our wholly-owned subsidiary, was incorporated in the PRC. It was renamed as Wuhan Zhidao Online Education Technology Co., Ltd. in November 2022. Wuhan Shangde is wholly owned by Wuhan Zhibo. In December 2020, Cheerwins Technology Group, or Cheerwins Cayman, our wholly-owned subsidiary, was incorporated in Cayman.
The Group offers online professional courses and educational content, including various interest courses, aimed at preparing students for professional certification exams, enhancing their professional skills, and catering to their personal interests. In addition, the Group offers various degree- or diploma-oriented post-secondary courses through the Group’s online platforms.
The Group offers online professional courses and educational content, including various interest courses, aimed at preparing students for professional certification exams, enhancing their professional skills, and catering to their personal interests.
If a foreign-invested enterprise investing in the PRC has finished submitting its reports for its 66 establishment, modifications and cancellation and its annual reports, the relevant information will be shared by the competent market regulation department to the competent commercial department, and does not require such foreign-invested enterprise to submit the reports separately.
If a foreign-invested enterprise investing in the PRC has finished submitting its reports for its establishment, modifications and cancellation and its annual reports, the relevant information will be shared by the competent market regulation department to the competent commercial department, and does not require such foreign-invested enterprise to submit the reports separately. 66 M&A Regulations and Overseas Listings The MOFCOM, the State Assets Supervision and Administration Commission, the SAT, the SAMR, the CSRC and SAFE jointly adopted the M&A Rules.
The Group’s net revenues were RMB2,507.8 million, RMB2,323.1 million and RMB2,159.6 million (US$304.2 million) respectively, and the Group’s gross billings were RMB1,970.0 million, RMB1,496.7 million and RMB1,504.6 million (US$211.9 million), respectively, in 2021, 2022 and 2023. The Group recorded net income of RMB212.4 million, RMB643.0 million and RMB640.8 million (US$90.3 million) in 2021, 2022 and 2023.
The Group’s net revenues were RMB2,323.1 million, RMB2,159.6 million and RMB1,990.2 million (US$272.7 million) respectively, and the Group’s gross billings were RMB1,496.7 million, RMB1,504.6 million and RMB1,555.4 million (US$213.1 million), respectively, in 2022, 2023 and 2024. The Group recorded net income of RMB643.0 million, RMB640.8 million and RMB342.1 million (US$46.9 million) in 2022, 2023 and 2024.
In recent years, the Group’s course offerings have become more diversified. In 2021, 2022 and 2023, degree- or diploma-oriented post-secondary courses represented approximately 65.1%, 46.7% and 24.8%, respectively, of the Group’s net revenues, and approximately 54.0%, 16.9% and 1.6%, respectively, of the Group’s gross billings.
In 2022, 2023 and 2024, degree- or diploma-oriented post-secondary courses represented approximately 46.7%, 24.8% and 10.3%, respectively, of the Group’s net revenues, and approximately 16.9%, 1.6% and 0.9%, respectively, of the Group’s gross billings.
As of the date of this annual report, the Group has registered 312 trademarks with the Trademark Office of the PRC State Administration of Industry and Commerce, registered 179 software copyrights with the PRC State Copyright Bureau, and registered 273 domain names.
As of December 31, 2024, the Group has registered 320 trademarks with the Trademark Office of the PRC State Administration of Industry and Commerce, registered 150 software copyrights with the PRC State Copyright Bureau, and registered 273 domain names.
Founded in 2003 as a traditional education company, the Group transitioned to an online education model in 2014. The Group’s online education model enables students to access the course and educational content offerings anywhere and anytime.
In addition, the Group offers various degree- or diploma-oriented post-secondary courses through the Group’s online platforms. 56 Founded in 2003 as a traditional education company, the Group transitioned to an online education model in 2014. The Group’s online education model enables students to access the course and educational content offerings anywhere and anytime.
Pursuant to SAT Bulletin 7, where a non-resident enterprise indirectly transfers properties such as equity in PRC resident enterprises without any justifiable business purposes and aiming to avoid the payment of 79 enterprise income tax, such indirect transfer must be reclassified as a direct transfer of equity in PRC resident enterprise.
Pursuant to SAT Bulletin 7, where a non-resident enterprise indirectly transfers properties such as equity in PRC resident enterprises without any justifiable business purposes and aiming to avoid the payment of enterprise income tax, such indirect transfer must be reclassified as a direct transfer of equity in PRC resident enterprise. 79 To assess whether an indirect transfer of PRC taxable properties has reasonable commercial purposes, all arrangements related to the indirect transfer must be considered comprehensively and factors set forth in SAT Bulletin 7 must be comprehensively analyzed in light of the actual circumstances.
In August 2017, Wuhan Studyvip Online Education Co. Limited, or Wuhan Zhibo, our wholly-owned subsidiary, was incorporated in the PRC. Wuhan Zhibo is wholly owned by Sunlands HK. In June 2019, Wuhan Zhidao Online Education Technology Co., Ltd. (formerly known as “Wuhan Shangde Online Education Technology Co., Ltd.”), or Wuhan Shangde, our wholly-owned subsidiary, was incorporated in the PRC.
It was renamed as Tianjin Alaman Education Technology Co., Ltd. in February 2021 and was deregistered in March 2024. In August 2017, Wuhan Studyvip Online Education Co. Limited, or Wuhan Zhibo, our wholly-owned subsidiary, was incorporated in the PRC. Wuhan Zhibo is wholly owned by Sunlands HK. In June 2019, Wuhan Zhidao Online Education Technology Co., Ltd.
On April 8, 2024, the MIIT issued the Circular on Pilot Work of Expanding the Opening Up of Value-Added Telecommunications Services, pursuant to which, the foreign ownership limits on several services, including (i)Internet Data Center, (ii)Content Delivery Networks, (iii)Internet Access Services, (iv)online data processing and transaction, (v) information publishing platform and delivery services (except Internet news and information, online publishing, online audiovisual, Internet culture business), and (vi) information protection and processing services in designated pilot areas, are eliminated.
However, foreign investors continue to be prohibited from holding more than 50% of the equity interest in a provider of other categories of value-added telecommunications services except for e-commerce, domestic multi-party communication, store-and-forward, and call center. 68 On April 8, 2024, the MIIT issued the Circular on Pilot Work of Expanding the Opening Up of Value-Added Telecommunications Services, pursuant to which, the foreign ownership limits on several services, including (i)Internet Data Center, (ii)Content Delivery Networks, (iii)Internet Access Services, (iv)online data processing and transaction, (v) information publishing platform and delivery services (except Internet news and information, online publishing, online audio-visual, Internet culture business), and (vi) information protection and processing services in designated pilot areas, are eliminated.
Other degree- or diploma-oriented post-secondary course offerings include preparation courses for the entrance examinations of Master of Business Administration (“MBA”) in China and overseas. Degree- or diploma-oriented post-secondary courses, especially STE courses, have historically accounted for the largest proportion of the Group’s net revenues, gross billings and new student enrollments.
Degree- or diploma-oriented post-secondary courses, especially STE courses, have historically accounted for the largest proportion of the Group’s net revenues, gross billings and new student enrollments. In recent years, the Group’s course offerings have become more diversified.
In addition, Pilot Free Trade Zones are granted to formulate data negative lists at their own discretion, where data processors may provide overseas parties with any data not included in the negative list without security assessment. 75 Provisions on Talent Market Administration Provisions on Talent Market Administration promulgated by Ministry of Human Resources and Social Security on April 30, 2015 and last amended on December 31, 2019, provides that “job agencies”, which means the organizations specializing in the provision of intermediary services or other related services for the employers and job seekers, either as their core business or as a sideline, shall obtain the approval and the Job Agency Service License from the personnel administration department of the local government before it engages in the business of providing intermediary job services; the Internet information service providers engaged in Internet-based intermediary job services, either as their core business or as a sideline, must apply for the License.
It remains to be seen how this regulation will be interpreted and implemented, and to what extent it will affect our operations. 75 Provisions on Talent Market Administration Provisions on Talent Market Administration promulgated by Ministry of Human Resources and Social Security on April 30, 2015 and last amended on December 31, 2019, provides that “job agencies”, which means the organizations specializing in the provision of intermediary services or other related services for the employers and job seekers, either as their core business or as a sideline, shall obtain the approval and the Job Agency Service License from the personnel administration department of the local government before it engages in the business of providing intermediary job services; the Internet information service providers engaged in Internet-based intermediary job services, either as their core business or as a sideline, must apply for the License.
According to the relevant implementation policies in Beijing, the contributions to the basic pension insurance, unemployment insurance, and work injury insurance of large enterprise shall be reduced by 50% from February 2020 to April 2020, and the contributions of small, medium and micro enterprises will be exempted from February 2020 to June 2020.
According to the relevant implementation policies in Beijing, the contributions to the basic pension insurance, unemployment insurance, and work injury insurance of large enterprise shall be reduced by 50% from February 2020 to April 2020, and the contributions of small, medium and micro enterprises will be exempted from February 2020 to June 2020. 80 On June 22, 2020, the Ministry of Human Resources and Social Security, the Ministry of Finance and the SAT jointly promulgated a follow-up notice regarding the reduction or exemption of enterprises’ social security contributions.
The Overseas Listing Archives Rules provide, among others, that before providing or disclosing any document or material which involve state secrets or state agencies’ work secrets, domestic companies shall apply to the competent government authorities for approval and file with the secrecy administration authorities for record.
The Overseas Listing Archives Rules provide, among others, that before providing or disclosing any document or material which involve state secrets or state agencies’ work secrets, domestic companies shall apply to the competent government authorities for approval and file with the secrecy administration authorities for record. 67 Regulation Relating to Value-added Telecommunications Services Licenses for Value-Added Telecommunications Services The PRC Regulations on Telecommunications, or the Telecommunications Regulations, which was latest amended and came into effect on February 6, 2016, regulate telecommunications activities in China.
The Amendment further establishes a new classification system for private schools to be classified by whether they are established and operated for profit-making purposes. 69 On April 7, 2021, the State Council published the amendment to the Regulations on the Implementation of the Law for Promoting Private Education of the PRC, or Amended Implementing Rules, which became effective on September 1, 2021.
On April 7, 2021, the State Council published the amendment to the Regulations on the Implementation of the Law for Promoting Private Education of the PRC, or Amended Implementing Rules, which became effective on September 1, 2021.
For a reconciliation of the Group’s gross billings and net revenues, see “—Non-GAAP Financial Measures.” For the Year Ended December 31, 2021 2022 2023 Net revenues (RMB in thousands) Interest, professional skills and professional certification preparation courses 793,881 1,112,707 1,449,858 Degree- or diploma-oriented post-secondary courses 1,634,575 1,084,857 534,041 Others (1) 79,361 125,537 175,685 Total 2,507,817 2,323,101 2,159,584 Gross billings (RMB in thousands) Interest, professional skills and professional certification preparation courses 906,375 1,244,309 1,481,075 Degree- or diploma-oriented post-secondary courses 1,063,649 252,422 23,542 Total 1,970,024 1,496,731 1,504,617 New student enrollments Interest, professional skills and professional certification preparation courses 302,330 483,200 585,254 Degree- or diploma-oriented post-secondary courses 131,898 51,080 31,087 Total 434,228 534,280 616,341 Note: (1) Include commissions received for providing referral services to third-party companies and revenues from sales of goods such as books and learning materials, among others.
For a reconciliation of the Group’s gross billings and net revenues, see “—Non-GAAP Financial Measures.” For the Year Ended December 31, 2022 2023 2024 Net revenues (RMB in thousands) Interest, professional skills and professional certification preparation courses 1,112,707 1,449,858 1,498,058 Degree- or diploma-oriented post-secondary courses 1,084,857 534,041 205,578 Sales of goods (1) 75,240 144,233 244,901 Others (2) 50,297 31,452 41,667 Total 2,323,101 2,159,584 1,990,204 Gross billings (RMB in thousands) Interest, professional skills and professional certification preparation courses 1,244,309 1,481,075 1,541,953 Degree- or diploma-oriented post-secondary courses 252,422 23,542 13,414 Total 1,496,731 1,504,617 1,555,367 New student enrollments Interest, professional skills and professional certification preparation courses 483,200 585,254 658,690 Degree- or diploma-oriented post-secondary courses 51,080 31,087 15,959 Total 534,280 616,341 674,649 Note: (1) Include revenues from sales of goods such as printed books and learning materials associated with the courses we offer.
The latest negative list further provides that domestic companies engaged in foreign investment prohibited business and intend to offer and list securities in overseas markets shall obtain approval from relevant government authorities. 65 The PRC Foreign Investment Law On March 15, 2019, the Standing Committee of the National People’s Congress published the Foreign Investment Law, or the FIL, which became effective on January 1, 2020.
The latest negative list further provides that domestic companies engaged in foreign investment prohibited business and intend to offer and list securities in overseas markets shall obtain approval from relevant government authorities.
As of December 31, 2023, STE courses covered 12 majors, including Chinese Language and Literature, Law, Pre-School Education, Marketing, English, Human Resource Management, Business 58 Administration, Business Management, Financial Management, Accounting, Administrative Management and Computer Information Management.
As of December 31, 2024, STE courses covered 11 majors, including Administrative Management, Chinese Language and Literature, Accounting, Business Management, Human Resource Management, Law, Public Administration, Computer Information Management, Pre-School Education, Marketing and 58 English. Other degree- or diploma-oriented post-secondary course offerings include preparation courses for the entrance examinations of Master of Business Administration (“MBA”) in China and overseas.
Cheerwins HK is wholly owned by Cheerwins Cayman and currently holds 100% of the equity interests of Tianjin Alaman. In April 2021, FireSky Investment HK Limited, or FireSky Investment, our wholly-owned subsidiary, was incorporated in Hong Kong. In June 2021, Wuhan Zhongtudao Technology Co., Ltd, or Wuhan Zhongtudao, our wholly-owned subsidiary, was incorporated in the PRC.
In January 2021, Cheerwins Online Education HK limited, or Cheerwins HK, our wholly-owned subsidiary, was incorporated in Hong Kong. Cheerwins HK is wholly owned by Cheerwins Cayman and was deregistered in November 2024. In April 2021, FireSky Investment HK Limited, or FireSky Investment, our wholly-owned subsidiary, was incorporated in Hong Kong.
Removed
M&A Regulations and Overseas Listings The MOFCOM, the State Assets Supervision and Administration Commission, the SAT, the SAMR, the CSRC and SAFE jointly adopted the M&A Rules.
Added
Revenues from sales of goods for the years ended December 31, 2022 and 2023 were previously included in "others" of net revenues for the respective years. (2) Include commissions received for providing referral services to third-party companies.
Removed
Regulation Relating to Value-added Telecommunications Services Licenses for Value-Added Telecommunications Services The PRC Regulations on Telecommunications, or the Telecommunications Regulations, which was latest amended and came into effect on February 6, 2016, regulate telecommunications activities in China.
Added
For part-time teachers, the Group enters into agreements with qualified individuals and pays for the classes taught by them, or it collaborates with third party companies that arrange teachers to teach classes and pays for the teaching services rendered.
Removed
However, foreign investors continue to be prohibited from holding more than 50% of the equity interest in a provider of other categories of value-added telecommunications services except for e-commerce, domestic multi-party communication, store-and-forward, and call center.
Added
The Group competes with the Group’s competitors for student enrollments and engagement, high-quality faculty members, sales and marketing effectiveness, among other things.
Removed
To assess whether an indirect transfer of PRC taxable properties has reasonable commercial purposes, all arrangements related to the indirect transfer must be considered comprehensively and factors set forth in SAT Bulletin 7 must be comprehensively analyzed in light of the actual circumstances.
Added
The PRC Foreign Investment Law On March 15, 2019, the Standing Committee of the National People’s Congress published the Foreign Investment 65 Law, or the FIL, which became effective on January 1, 2020.
Removed
Pursuant to Notice 39, from April 1, 2019 to December 31, 2021, for taxpayers providing production and living services, the deductible input VAT amount for the current period shall be added additional 10% based on the actual input VAT amount.
Added
The Amendment further establishes a new classification system for private schools to be classified by whether they are established and operated for profit-making purposes.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

75 edited+8 added−4 removed97 unchanged
We have no plan to declare or pay any dividends in the near future on our shares or the ADSs representing our ordinary shares. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand the Group’s business. See “Item 8. Financial Information—A.
We have no plan to declare or pay any dividends in the near future on our shares or the ADSs representing our ordinary shares. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand the Group’s business. See “Item 8. Financial Information—8.A.
Risk Factors—Risks Related to the Group’s Business—If the Group fails to manage its business growth effectively, the success of the Group’s business model will be compromised.” The Group’s ability to continue to increase the number of students and new student enrollments is primarily driven by factors including the quality of the Group’s education services, the range and attractiveness of the Group’s course offerings, the brand reputation, the ability to convert leads into student enrollments cost-effectively, and the availability of loans from third-party credit providers to students.
Risk Factors—Risks Related to the Group’s Business—If the Group fails to manage its business growth effectively, the success of the Group’s business model will be compromised.” The Group’s ability to continue to increase the number of students and new student enrollments is primarily driven by 82 factors including the quality of the Group’s education services, the range and attractiveness of the Group’s course offerings, the brand reputation, the ability to convert leads into student enrollments cost-effectively, and the availability of loans from third-party credit providers to students.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.” For the purpose of illustration, the below table reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: 94 Taxation Scenario (1) Statutory Tax and Standard Rates Hypothetical pre-tax earnings (2) 100 % Tax on earnings at statutory rate of 25% (3) (25 )% Net earnings available for distribution 75 % Withholding tax at standard rate of 10% (4) (7.5 )% Net distribution to Parent/Shareholders 67.5 % Notes: (1) The tax calculation has been simplified for the purpose of this example.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.” For the purpose of illustration, the below table reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: 93 Taxation Scenario (1) Statutory Tax and Standard Rates Hypothetical pre-tax earnings (2) 100 % Tax on earnings at statutory rate of 25% (3) (25 )% Net earnings available for distribution 75 % Withholding tax at standard rate of 10% (4) (7.5 )% Net distribution to Parent/Shareholders 67.5 % Notes: (1) The tax calculation has been simplified for the purpose of this example.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business” and “Item 3.
Risk 90 Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business” and “Item 3.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to the Group and our non-PRC shareholders and ADS holders.” Critical Accounting Policies and Estimates We prepare financial statements in accordance with U.S.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to the Group and our non-PRC shareholders and ADS holders.” Critical Accounting Estimates We prepare financial statements in accordance with U.S.
As a Cayman Islands holding company, we are permitted under PRC laws and regulations to provide funding from the proceeds of our fund raising activities to our PRC subsidiaries only through loans or capital contributions, and to the VIEs only through loans, in each case subject to the satisfaction of the applicable government registration and reporting, approval 95 requirements.
As a Cayman Islands holding company, we are permitted under PRC laws and regulations to provide funding from the proceeds of our fund raising activities to our PRC subsidiaries only through loans or capital contributions, and to the VIEs only through loans, in each case subject to the satisfaction of the applicable government registration and reporting, approval requirements.
The cost of revenues also included cost of printed books and learning materials, service fees paid to educational institutions, cooperation costs, related rental expenses, server management costs, bandwidth costs, payment processing costs, insurance cost, depreciations for property and equipment and amortizations for intangible assets. See “Item 4. Information on the Company—4.B.
The cost of revenues also included cost of printed books and learning materials, service fees paid to educational institutions, cooperation costs, related rental expenses, server management costs, bandwidth costs, payment processing costs, depreciations for property and equipment and amortizations for intangible assets. See “Item 4. Information on the Company—4.B.
We are permitted under PRC laws and regulations to provide funding to our PRC 91 subsidiaries in China through capital contributions or loans, subject to the approval of government authorities and limits on the amount of capital contributions and loans. In addition, our subsidiaries in China may provide Renminbi funding to the VIEs only through entrusted loans.
We are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries in China through capital contributions or loans, subject to the approval of government authorities and limits on the amount of capital contributions and loans. In addition, our subsidiaries in China may provide Renminbi funding to the VIEs only through entrusted loans.
Business Overview—Licenses and Approvals.” 5.D.Trend Information Other than as disclosed elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. 5.E.
Business Overview—Licenses and Approvals.” 5.D.Trend Information Other than as disclosed elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2024 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. 5.E.
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
GAAP requires management to make estimates and 89 assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Since the use of estimates is an integral component of the financial reporting process, the Group’s actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.
Since the use of estimates is an integral component of the financial reporting process, the Group’s actual results could differ from those estimates. Some of our accounting estimates require a higher degree of judgment than others in their application.
Operating Results Major Factors Affecting Results of Operations 82 The Group operates in China’s adult online education market and adult personal interest learning market, and the Group’s results of operations and financial condition are significantly affected by general factors affecting this market.
Operating Results Major Factors Affecting Results of Operations The Group operates in China’s adult online education market and adult personal interest learning market, and the Group’s results of operations and financial condition are significantly affected by general factors affecting this market.
The tuition the Group collects from a student 83 is initially recorded as deferred revenue and is generally recognized proportionally throughout the duration of the programs that student has enrolled in.
The tuition the Group collects from a student is initially recorded as deferred revenue and is generally recognized proportionally throughout the duration of the programs that student has enrolled in.
The Group is seeking to offer a broader range of courses, foster a more a social and entertaining learning experience, and use cutting-edge technologies, particularly AI, to improve students’ learning experience and outcomes which we believe would help to achieve positive results in the Group’s new student enrollments in the long run. See “Item 3. Key Information—3.D.
The Group is seeking to offer a broader range of courses, foster a more a social and entertaining learning experience, and use cutting-edge technologies to improve students’ learning experience and outcomes which we believe would help to achieve positive results in the Group’s new student enrollments in the long run. See “Item 3. Key Information—3.D.
We believe that gross billings and EBITDA provide valuable insight into the sales of course packages and the performance of business. 88 These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, their respective most directly comparable financial measure prepared in accordance with GAAP.
We believe that gross billings and EBITDA provide valuable insight into the sales of course packages and the performance of business. 87 These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, their respective most directly comparable financial measure prepared in accordance with GAAP.
The Group’s contracts with customers may include promises to transfer multiple services and goods. Determining whether different services and goods are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. For the year ended December 31, 2023, the Group derived revenue primarily from the online education services.
The Group’s contracts with customers may include promises to transfer multiple services and goods. Determining whether different services and goods are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. For the year ended December 31, 2024, the Group derived revenue primarily from the online education services.
As a result, there is uncertainty with respect to our ability to provide prompt financial support to our PRC subsidiaries and the VIEs when needed.
As a result, there is uncertainty with respect to our ability to provide prompt financial support to our PRC 94 subsidiaries and the VIEs when needed.
Other than those shown above, the Group did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2023. Transfer of Funds and Other Assets Under relevant PRC laws and regulations, we are permitted to remit funds to the VIEs through loans rather than capital contributions.
Other than those shown above, the Group did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2024. Transfer of Funds and Other Assets Under relevant PRC laws and regulations, we are permitted to remit funds to the VIEs through loans rather than capital contributions.
A significant portion of the gross billings from interest, professional skills and professional certification preparation courses generated in 2023 were recognized as net revenues in the same year, primarily because revenues generated from interest, professional skills and professional certification preparation courses are generally recognized over a shorter period of time than degree- or diploma-oriented post-secondary courses.
A significant portion of the gross billings from interest, professional skills and professional certification preparation courses generated in 2024 were recognized as net revenues in the same year, primarily because revenues generated from interest, professional skills and professional certification preparation courses are generally recognized over a shorter period of time than degree- or diploma-oriented post-secondary courses.
We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of the Group’s financial statements. For further information on our critical accounting policies, see Note 2 to the consolidated financial statements. 90 Revenue recognition The preparation of financial statements in conformity with U.S.
We believe the following accounting estimates involve the most significant judgments and estimates used in the preparation of the Group’s financial statements. For further information on our critical accounting estimates, see Note 2 to the consolidated financial statements. Revenue recognition The preparation of financial statements in conformity with U.S.
We did not have any off-balance sheet arrangements as of December 31, 2023. As a holding company with no material operations of our own, the Group’s operations are primarily conducted through our subsidiaries and the VIEs in China.
We did not have any off-balance sheet arrangements as of December 31, 2024. As a holding company with no material operations of our own, the Group’s operations are primarily conducted through our subsidiaries and the VIEs in China.
Deferred revenue consisted primarily of tuition paid upfront by students at the time of purchase of course packages. Deferred costs consisted primarily of the incremental sales commissions and service fees relating to obtaining of customer contracts which is expected to be recovered and capitalized.
Deferred revenue consisted primarily of tuition paid upfront by students at the time of purchase of course packages. Deferred cost consisted primarily of the incremental sales commissions and service fees relating to obtaining of customer contracts which is expected to be recovered and capitalized.
Critical Accounting Estimates For our critical accounting estimates, see “Item 5. Operating and Financial Review and Prospects—5.A. Operating Results—Critical Accounting Policies and Estimates.”
Critical Accounting Estimates For our critical accounting estimates, see “Item 5. Operating and Financial Review and Prospects—5.A. Operating Results—Critical Accounting Estimates.”
The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing the Group’s financial statements.
The selection of critical accounting estimates, the judgments and other uncertainties affecting application of those estimates and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing the Group’s financial statements.
Material Cash Requirements The Group’s material cash requirements as of December 31, 2023 and any subsequent interim period primarily include the Group’s operating lease commitments, long-term loans, capital expenditures and working capital requirements. The Group’s operating lease commitments consist of the commitments under the lease agreements for office premises.
Material Cash Requirements The Group’s material cash requirements as of December 31, 2024 and any subsequent interim period primarily include the Group’s operating lease commitments, long-term loans, capital expenditures and working capital requirements. The Group’s operating lease commitments consist of the commitments under the lease agreements for office premises.
The outstanding balance of service fees owed by the VIEs to our PRC subsidiaries was nil as of each of December 31, 2021, 2022 and 2023. There were no other assets transferred between us and the VIEs in 2021, 2022 and 2023.
The outstanding balance of service fees owed by the VIEs to our PRC subsidiaries was nil as of each of December 31, 2022, 2023 and 2024. There were no other assets transferred between us and the VIEs in 2022, 2023 and 2024.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.” Sunlands Technology Group has previously declared a special cash dividend of US$1.36 per ordinary share (or US$0.68 per ADS) to holders of its ordinary shares and ADSs on June 14, 2022, which has been fully paid as of December 31, 2023.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.” Sunlands Technology Group has previously declared a special cash dividend of US$1.36 per ordinary share (or US$0.68 per ADS) to holders of its ordinary shares and ADSs on June 14, 2022, which had been fully paid.
PRC 89 Our subsidiaries and the VIEs and their subsidiaries in China are companies incorporated under PRC law and, as such, are subject to PRC enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws.
PRC 88 Our subsidiaries and the VIEs and their subsidiaries in China are companies incorporated under PRC law and, as such, are subject to PRC enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws.
Accordingly, Sunlands Online Education HK Limited, FireSky Investment HK Limited and Cheerwins Online Education HK Limited may be able to benefit from the 5% withholding tax rate for the dividends it receives from Wuhan Zhibo, Wuhan Zhongtudao and Tianjin Alaman, respectively, if it satisfies the conditions prescribed under SAT Circular 81 and other relevant tax rules and regulations.
Accordingly, Sunlands Online Education HK Limited and FireSky Investment HK Limited may be able to benefit from the 5% withholding tax rate for the dividends it receives from Wuhan Zhibo and Wuhan Zhongtudao, respectively, if it satisfies the conditions prescribed under SAT Circular 81 and other relevant tax rules and regulations.
The tuition the Group collects from a student is initially recorded as deferred revenue and is generally recognized proportionally over a weighted average period of 5 months for the interest, professional skills and professional certification preparation courses and a weighted average period of 15 months for the degree- or diploma-oriented post-secondary courses for the year ended December 31, 2023.
The tuition the Group collects from a student is initially recorded as deferred revenue and is generally recognized proportionally over a weighted average service period of 5 months for the interest, professional skills and professional certification preparation courses and a weighted average service period of 17 months for the degree- or diploma-oriented post-secondary courses for the year ended December 31, 2024.
Deferred revenue consisted primarily of tuition paid upfront by students at the time of purchase of course packages. Deferred cost consisted primarily of the incremental sales commissions and service fees relating to obtaining of customer contracts which is expected to be recovered and capitalized. Net cash generated from operating activities was RMB9.1 million in 2022.
Deferred revenue consisted primarily of tuition paid upfront by students at the time of purchase of course packages. Deferred cost consisted primarily of the incremental sales commissions and service fees relating to obtaining of customer contracts which is expected to be recovered and capitalized. Net cash generated from operating activities was RMB140.8 million in 2023.
Operating and Financial Review and Prospects—5.B. Liquidity and Capital Resources—Cash Flows and Working Capital” beginning on page 94 of our Form 20-F for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on April 27, 2022 (Securities Act File No. 001-38423).
Operating and Financial Review and Prospects—5.B. Liquidity and Capital Resources—Cash Flows and Working Capital” beginning on page 91 of our Form 20-F for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission on April 25, 2023 (Securities Act File No. 001-38423).
The difference between the Group’s net income of RMB640.8 million (US$90.3 million), after netting non-cash reconciliation items, and the net cash used in operating activities was mainly due to (i) a decrease in deferred revenue of RMB553.8 million (US$78.0 million), (ii) a decrease in lease liability of RMB168.6 million (US$23.8 million), (iii) non-cash gain from disposal of subsidiaries of RMB43.7 million (US$6.2 million); partially offset by (i) a decrease in right-of-use asset of RMB142.3 million (US$20.0 million), (ii) a decrease in deferred costs of RMB37.3 million (US$5.3 million), (iii) an increase in accrued expenses and other current liabilities of RMB35.1 million (US$4.9million), (iv) depreciation and amortization of RMB30.6 million (US$4.3 million).
The difference between the Group’s net income of RMB640.8 million, after netting non-cash reconciliation items, and the net cash used in operating activities was mainly due to (i) a decrease in deferred revenue of RMB553.8 million, (ii) a decrease in lease liability of RMB168.6 million, (iii) non-cash gain from disposal of subsidiaries of RMB43.7 million; partially offset by (i) a decrease in right-of-use asset of RMB142.3 million, (ii) a decrease in deferred costs of RMB37.3 million, (iii) an increase in accrued expenses and other current liabilities of RMB35.1 million, (iv) depreciation and amortization of RMB30.6 million.
Operating and Financial Review and Prospects—5.A. Operating Results— Year Ended December 31, 2022 Compared to Year Ended December 31, 2021” beginning on page 86 of our Form 20-F for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission on April 25, 2023 (Securities Act File No. 001-38423).
Operating and Financial Review and Prospects—5.A. Operating Results—Year Ended December 31, 2023 Compared to Year Ended December 31, 2022” beginning on page 87 of our Form 20-F for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission on April 25, 2024 (Securities Act File No. 001-38423).
In 2021, 2022 and 2023, the percentage of the Group’s sales and marketing expenses divided by the Group’s gross billings was 88.8%, 75.5% and 75.9%, respectively. The Group has acquired many of the existing students through search engine marketing channels, mobile marketing channels and, to a lesser extent, offline channels.
In 2022, 2023 and 2024, the percentage of the Group’s sales and marketing expenses divided by the Group’s gross billings was 75.5%, 75.9% and 78.2%, respectively. The Group has acquired many of the existing students through search engine marketing channels, mobile marketing channels and, to a lesser extent, offline channels.
Our PRC subsidiaries maintained certain personnel for sales and marketing, research and development, and general and administrative functions to support the operations of the VIEs. In 2021, 2022 and 2023, the VIEs transferred RMB62.6 million, RMB51.6 million and RMB26.8 million (US$3.8 million) of service fees to our PRC subsidiaries pursuant to the contractual arrangements, respectively.
Our PRC subsidiaries maintained certain personnel for sales and marketing, research and development, and general and administrative functions to support the operations of the VIEs. In 2022, 2023 and 2024, the VIEs transferred RMB51.6 million, RMB26.8 million and RMB60.1 million (US$8.2 million) of service fees to our PRC subsidiaries pursuant to the contractual arrangements, respectively.
Investing Activities Net cash used in investing activities was RMB71.8 million (US$10.1 million) in 2023, which was primarily attributable to purchase of short-term investments of RMB773.3 million (US$108.9 million), partially offset by proceeds from maturity of short-term investments of RMB701.7 million (US$ 98.8 million).
Net cash used in investing activities was RMB71.8 million in 2023, which was primarily attributable to purchase of short-term investments of RMB773.3 million, partially offset by proceeds from maturity of short-term investments of RMB701.7 million.
Consolidated Statements and Other Financial Information—Dividend Policy.” As of the date of this annual report, no transfers, dividends, or distributions between Sunlands Technology Group, our PRC subsidiaries, and the VIEs, other than those described in this annual report, have been made.
As of the date of this annual report, no transfers, dividends, or distributions between Sunlands Technology Group, our PRC subsidiaries, and the VIEs, other than those described in this annual report, have been made.
Under the agreements, the Group is obligated to repay the loans in equal instalment every three months with maturity terms ranging from eight years to ten years. The Group repaid RMB34.0 million, RMB38.7 million and RMB38.7 million (US$5.4 million) for the principals of loans during the years ended December 31, 2021, 2022 and 2023, respectively.
Under the agreements, the Group is obligated to repay the loans in equal instalment every three months with maturity terms ranging from eight years to ten years. The Group repaid RMB38.7 million, RMB38.7 million and RMB101.8 million (US$13.9 million) for the principals of loans during the years ended December 31, 2022, 2023 and 2024, respectively.
For the year ended December 31, 2023, the weighted average length of the Group’s interest, professional skills and professional certification preparation courses was approximately 5 months, and the weighted average length of the Group’s degree- or diploma-oriented post-secondary courses was approximately 15 months.
For the year ended December 31, 2024, the weighted average service period of the Group’s interest, professional skills and professional certification preparation courses was approximately 5 months, and the weighted average service period of the Group’s degree- or diploma-oriented post-secondary courses was approximately 17 months.
In 2021, 2022 and 2023, salaries and benefits paid to teachers and mentors that the Group recorded as cost of revenues were RMB209.1 million, RMB160.5 million and RMB91.4 million (US$12.9 million), respectively, accounting for 55.6%, 46.1% and 34.4%, respectively, of the cost of revenues for the same periods.
In 2022, 2023 and 2024, salaries and benefits paid to teachers and mentors that the Group recorded as cost of revenues were RMB160.5 million, RMB91.4 million and RMB62.1 million (US$8.5 million), respectively, accounting for 46.1%, 34.4% and 19.6%, respectively, of the cost of revenues for the same periods.
Sales and marketing expenses have historically represented a substantial portion of the Group’s total operating expenses. In 2021, 2022 and 2023, the Group’s sales and marketing expenses were RMB1,748.4 million, RMB1,129.5 million and RMB1,142.2 million (US$160.9 million), respectively.
Sales and marketing expenses have historically represented a substantial portion of the Group’s total operating expenses. In 2022, 2023 and 2024, the Group’s sales and marketing expenses were RMB1,129.5 million, RMB1,142.2 million and RMB1,216.9 million (US$166.7 million), respectively.
Cost of revenues The Group recorded cost of revenues of RMB376.2 million, RMB348.2 million and RMB265.5 million (US$37.4 million) in 2021, 2022 and 2023, respectively. Salaries and benefits paid to teachers and mentors accounted for a primary portion of cost of revenues.
Cost of revenues The Group recorded cost of revenues of RMB348.2 million, RMB265.5 million and RMB317.6 (US$43.5 million) in 2022, 2023 and 2024, respectively. Salaries and benefits paid to teachers and mentors accounted for a primary portion of cost of revenues.
Product development expenses The Group’s product development expenses decreased by 21.3% from RMB42.8 million in 2022 to RMB33.7 million (US$4.8 million) in 2023. The decrease was primarily due to declined compensation expenses related to headcount reduction of the product development personnel. Other income Other income for 2023 was RMB34.1 million (US$4.8 million), compared with RMB24.5 million in 2022.
Product development expenses The Group’s product development expenses decreased by 25.8% from RMB33.7 million in 2023 to RMB25.0 million (US$3.4 million) in 2024. The decrease was primarily due to declined compensation expenses related to headcount reduction of the product development personnel. Other income Other income for 2024 was RMB26.3 million (US$3.6 million), compared with RMB34.1 million in 2023.
As of December 31, 2023, the Group had RMB766.4 million (US$107.9 million) in cash, cash equivalents and restricted cash, the majority of which were held by our company, our PRC subsidiaries, the VIEs and the VIEs’ subsidiaries in China. The Group’s cash and cash equivalents consist primarily of bank deposits and are primarily denominated in U.S. dollars and Renminbi.
As of December 31, 2024, the Group had RMB507.2 million (US$69.5 million) in cash and cash equivalents, the majority of which were held by our company, our PRC subsidiaries, the VIEs and the VIEs’ subsidiaries in China. The Group’s cash and cash equivalents consist primarily of bank deposits and are primarily denominated in U.S. dollars and Renminbi.
In 2021, 2022 and 2023, the Group generated net revenues of RMB2,507.8 million, RMB2,323.1 million and RMB2,159.6 million (US$304.2 million), respectively. The Group generally bills students for the entire course tuition upfront at the time of sale of the course packages.
In 2022, 2023 and 2024, the Group generated net revenues of RMB2,323.1 million, RMB2,159.6 million and RMB1,990.2 million (US$272.7 million), respectively. 83 The Group generally bills students for the entire course tuition upfront at the time of sale of the course packages.
The increase was primarily due to the increased government subsidy that the Group received and recognized in 2023. Net income As a result of the foregoing, the Group’s net income for 2023 was RMB640.8 million (US$90.3 million), compared with RMB643.0 million in 2022. Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 See “Item 5.
The decrease was primarily due to the decreased government subsidy that the Group received and recognized in 2024. Net income As a result of the foregoing, the Group’s net income for 2024 was RMB342.1 million (US$46.9 million), compared with RMB640.8 million in 2023. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 See “Item 5.
Despite that gross billings from degree- or diploma-oriented post-secondary courses decreased to RMB23.5 million in 2023 from RMB252.4 million in 2022, gross billings from interest, professional skills and professional certification preparation courses increased to RMB1,481.1 million (US$208.6 million) in 2023 from RMB1,244.3 million in 2022.
Despite that gross billings from degree- or diploma-oriented post-secondary courses decreased to RMB13.4 million in 2024 from RMB23.5 million in 2023, gross billings from interest, professional skills and professional certification preparation courses increased to RMB1,542.0 million (US$211.2 million) in 2024 from RMB1,481.1 million in 2023.
In 2021, 2022 and 2023, the Group’s new student enrollments were 434,228, 534,280 and 616,341, respectively, and the numbers of students were 1,104,630, 1,067,042 and 1,131,435, respectively.
In 2022, 2023 and 2024, the Group’s new student enrollments were 534,280, 616,341 and 674,649, respectively, and the numbers of students were 1,067,042, 1,131,435 and 1,067,128, respectively.
As of December 31, 2021, 2022 and 2023, the Group’s deferred revenues were RMB2,348.2 million, RMB1,690.9 million and RMB1,113.9 million (US$156.9 million), respectively. The Group continually evaluates the mix of course length.
As of December 31, 2022, 2023 and 2024, the Group’s deferred revenues were RMB1,690.9 million, RMB1,113.9 million and RMB916.5 million (US$125.6 million), respectively. The Group continually evaluates the mix of course length.
The Group’s services are subject to VAT at the rate of 6% for general-VAT-payer entities in accordance with tax rule, except that certain subsidiaries were subject to a simple VAT collection method at a rate of 3%.
The Group’s services are subject to VAT at the rate of 6%, and sales of goods are calculated at 13% on revenue and paid after deducting input VAT on purchases for general-VAT-payer entities in accordance with tax rule, except that certain subsidiaries were subject to a simple VAT collection method at a rate of 3%.
Financing may be unavailable in the amounts we need or on terms acceptable to us, if at all. Issuance of additional equity securities, including convertible debt securities, would dilute earnings per share.
If our existing cash is insufficient to meet the Group’s requirements, we may seek to issue debt or equity securities or obtain additional credit facilities. Financing may be unavailable in the amounts we need or on terms acceptable to us, if at all. Issuance of additional equity securities, including convertible debt securities, would dilute earnings per share.
The Group recorded net income of RMB212.4 million, RMB643.0 million and RMB640.8 million (US$90.3 million) for the years ended December 31, 2021, 2022 and 2023, respectively. The Group had negative working capital of RMB509.0 million and positive working capital of RMB21.6 million (US$3.0 million) as of December 31, 2022 and 2023.
The Group recorded net income of RMB643.0 million, RMB640.8 million and RMB342.1 million (US$46.9 million) for the years ended December 31, 2022, 2023 and 2024, respectively. The Group had positive working capital of RMB21.6 million and RMB82.9 million (US$11.4 million) as of December 31, 2023 and 2024, respectively.
The weighted average “service period” (i.e., the period over which revenues for the online courses are recognized on a straight line basis) of the interest, professional skills and professional certification preparation courses in 2022 and 2023 was 7 months and 5 months as compared to 21 months and 15 months of degree- or diploma-oriented post-secondary courses in 2022 and 2023, respectively. 87 Cost of revenues The Group’s cost of revenues decreased by 23.7% from RMB348.2 million in 2022 to RMB265.5 million (US$37.4 million) in 2023.
The weighted average “service period” (i.e., the period over which revenues for the online courses are recognized on a straight-line basis) of the interest, professional skills and professional certification preparation courses in 2023 and 2024 was 5 months and 5 months as compared to 15 months and 17 months of degree- or diploma-oriented post-secondary 86 courses in 2023 and 2024, respectively.
The Group has not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. The Group does not have retained or contingent interests in assets transferred. The Group has not entered into contractual arrangements that support the credit, liquidity or market risk for transferred assets.
The Group does not have retained or contingent interests in assets transferred. The Group has not entered into contractual arrangements that support the credit, liquidity or market risk for transferred assets.
As of December 31, 2021, 2022 and 2023, the Group had deferred revenue of RMB2,348.2 million, RMB1,690.9 million and RMB1,113.9 million (US$156.9 million), respectively.
As of December 31, 2022, 2023 and 2024, the Group had deferred revenue of RMB1,690.9 million, RMB1,113.9 million and RMB916.5 million (US$125.6 million), respectively.
Net cash used in financing activities in 2022 was RMB67.9 million, which was primarily attributable to repayment of bank debt of RMB38.7 million and settlement of dividend payable for an amount of RMB32.6 million.
Net cash used in financing activities in 2023 was RMB74.7 million, which was primarily attributable to repayment of bank debt of RMB38.7 million and settlement of dividend payable of RMB31.3 million.
Gross profit As a result of the foregoing, the Group’s gross profit decreased by 4.1% from RMB1,975.0 million in 2022 to RMB1,894.1 million (US$266.8 million) in 2023, and gross margin increased from 85.0% in 2022 to 87.7% in 2023. Operating expenses The Group’s operating expenses decreased by 2.9% from RMB1,358.0 million in 2022 to RMB1,319.2 million (US$185.8 million) in 2023.
Gross profit As a result of the foregoing, the Group’s gross profit decreased by 11.7% from RMB1,894.1 million in 2023 to RMB1,672.6 million (US$229.2 million) in 2024, and gross margin decreased from 87.7% in 2023 to 84.0% in 2024. Operating expenses The Group’s operating expenses increased by 4.2% from RMB1,319.2 million in 2023 to RMB1,374.7 million (US$188.3 million) in 2024.
History and Development of the Company—Condensed Consolidating Schedule,” and consolidated financial statements included elsewhere in this annual report. As of December 31, 2023, Sunlands Technology Group had made cumulative capital contributions of US$200.0 million to our PRC subsidiaries through an intermediate holding company. These funds have been used by our PRC subsidiaries for their operations.
As of December 31, 2024, Sunlands Technology Group had made cumulative capital contributions of US$200.0 million to our PRC subsidiaries through an intermediate holding company. These funds have been used by our PRC subsidiaries for their operations.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders.” The following table sets forth a summary of the Group’s cash flows for the years indicated: For the Year Ended December 31, 2022 2023 RMB RMB US$ (in thousands) Net cash generated from operating activities 9,144 140,798 19,830 Net cash generated from/(used in) investing activities 96,182 (71,818 ) (10,116 ) Net cash used in financing activities (67,911 ) (74,658 ) (10,515 ) Effect of exchange rate changes 43,266 14,652 2,065 Net increase in cash, cash equivalents and restricted cash 80,681 8,974 1,264 Cash, cash equivalents and restricted cash at beginning of the year 676,723 757,404 106,678 Cash, cash equivalents and restricted cash at end of the year 757,404 766,378 107,942 For a summary of the Group’s cash flows in 2021, see “Item 5.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders.” The following table sets forth a summary of the Group’s cash flows for the years indicated: For the Year Ended December 31, 2023 2024 RMB RMB US$ (in thousands) Net cash generated from operating activities 140,798 195,519 26,788 Net cash used in investing activities (71,818 ) (358,860 ) (49,164 ) Net cash used in financing activities (74,658 ) (112,728 ) (15,444 ) Effect of exchange rate changes 14,652 16,920 2,317 Net increase/(decrease) in cash, cash equivalents and restricted cash 8,974 (259,149 ) (35,503 ) Cash, cash equivalents and restricted cash at beginning of the year 757,404 766,378 104,993 Cash, cash equivalents and restricted cash at end of the year 766,378 507,229 69,490 For a summary of the Group’s cash flows in 2022, see “Item 5.
The following table sets forth the Group’s operating expenses, in absolute amounts and as percentages of total operating expenses, for the years indicated: For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Sales and marketing 1,748,436 86.7 1,129,508 83.2 1,142,154 160,869 86.6 General and administrative 207,602 10.3 185,667 13.7 143,286 20,181 10.9 Product development 61,325 3.0 42,834 3.1 33,723 4,750 2.5 Total operating expenses 2,017,363 100.0 1,358,009 100.0 1,319,163 185,800 100.0 Sales and marketing expenses The following table sets forth a breakdown of the Group’s sales and marketing expenses, in absolute amounts and as percentages of total sales and marketing expenses, for the years indicated: 85 For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Expenses incurred in relation to sales and marketing personnel 833,019 47.6 564,666 50.0 518,040 72,964 45.4 Marketing spending 819,563 46.9 511,931 45.3 590,565 83,179 51.7 Rentals and related expenses 38,935 2.2 9,313 0.8 5,158 726 0.5 Others 56,919 3.3 43,598 3.9 28,391 4,000 2.4 Total sales and marketing expenses 1,748,436 100.0 1,129,508 100.0 1,142,154 160,869 100.0 The Group’s expenses incurred in relation to sales and marketing personnel consist of (i) salaries paid to the sales and marketing personnel; (ii) commissions for the sales and marketing personnel; and (iii) business process outsourcing service fees and commissions.
The following table sets forth the Group’s operating expenses, in absolute amounts and as percentages of total operating expenses, for the years indicated: For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Sales and marketing 1,129,508 83.2 1,142,154 86.6 1,216,912 166,716 88.5 General and administrative 185,667 13.7 143,286 10.9 132,809 18,195 9.7 Product development 42,834 3.1 33,723 2.5 25,008 3,426 1.8 Total operating expenses 1,358,009 100.0 1,319,163 100.0 1,374,729 188,337 100.0 Sales and marketing expenses The following table sets forth a breakdown of the Group’s sales and marketing expenses, in absolute amounts and as percentages of total sales and marketing expenses, for the years indicated: 84 For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Expenses incurred in relation to sales and marketing personnel 564,666 50.0 518,040 45.4 548,630 75,162 45.1 Marketing spending 511,931 45.3 590,565 51.7 611,610 83,790 50.3 Rentals and related expenses 9,313 0.8 5,158 0.5 13,699 1,877 1.1 Others 43,598 3.9 28,391 2.4 42,973 5,887 3.5 Total sales and marketing expenses 1,129,508 100.0 1,142,154 100.0 1,216,912 166,716 100.0 The Group’s expenses incurred in relation to sales and marketing personnel consist of (i) salaries paid to the sales and marketing personnel; (ii) commissions for the sales and marketing personnel; and (iii) business process outsourcing service fees and commissions.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. 86 For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands, except for share and per share data) Net revenues 2,507,817 2,323,101 2,159,584 304,171 Cost of revenues (1) (376,189 ) (348,150 ) (265,528 ) (37,399 ) Gross profit 2,131,628 1,974,951 1,894,056 266,772 Operating expenses Sales and marketing expenses (1) (1,748,436 ) (1,129,508 ) (1,142,154 ) (160,869 ) Product development expenses (1) (61,325 ) (42,834 ) (33,723 ) (4,750 ) General and administrative expenses (1) (207,602 ) (185,667 ) (143,286 ) (20,181 ) Total operating expenses (2,017,363 ) (1,358,009 ) (1,319,163 ) (185,800 ) Income from operations 114,265 616,942 574,893 80,972 Interest income 16,175 16,248 31,094 4,379 Interest expense (10,929 ) (10,059 ) (7,657 ) (1,078 ) Other income, net 39,156 24,527 34,097 4,802 Impairment loss on long-term investments (5,000 ) (500 ) (61 ) (9 ) Gain on disposal of subsidiaries 43,967 1,390 43,715 6,157 Income before income tax benefits/(expenses) and (loss)/gain from equity method investments 197,634 648,548 676,081 95,223 Income tax benefits/(expenses) 19,618 (11,992 ) (25,166 ) (3,545 ) (Loss)/gain from equity method investments (4,886 ) 6,453 (10,084 ) (1,420 ) Net income 212,366 643,009 640,831 90,258 Less: Net (loss)/income attributable to non-controlling interest (6,690 ) (950 ) 1 — Net income attributable to Sunlands Technology Group 219,056 643,959 640,830 90,258 Net income per share attributable to ordinary shareholders of Sunlands Technology Group—basic and diluted 32.56 94.14 92.88 13.08 Weighted average shares used in calculating net income per ordinary share—basic and diluted 6,727,552 6,840,079 6,899,456 6,899,456 Note: (1) Share-based compensation expenses are included in: For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) Cost of revenues 101 33 — — Sales and marketing expenses (14 ) 4,166 — — Product development expenses — — — — General and administrative expenses 681 2,982 — — Total 768 7,181 — — Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net revenues The Group’s net revenues decreased by 7.0% from RMB2,323.1 million in 2022 to RMB2,159.6 million (US$304.2 million) in 2023, primarily due to the decrease in the gross billings from degree- or diploma-oriented post-secondary courses.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. 85 For the Year Ended December 31, 2022 2023 2024 RMB RMB RMB US$ (in thousands, except for share and per share data) Net revenues 2,323,101 2,159,584 1,990,204 272,657 Cost of revenues (1) (348,150 ) (265,528 ) (317,570 ) (43,507 ) Gross profit 1,974,951 1,894,056 1,672,634 229,150 Operating expenses Sales and marketing expenses (1) (1,129,508 ) (1,142,154 ) (1,216,912 ) (166,716 ) Product development expenses (1) (42,834 ) (33,723 ) (25,008 ) (3,426 ) General and administrative expenses (1) (185,667 ) (143,286 ) (132,809 ) (18,195 ) Total operating expenses (1,358,009 ) (1,319,163 ) (1,374,729 ) (188,337 ) Income from operations 616,942 574,893 297,905 40,813 Interest income 16,248 31,094 38,824 5,319 Interest expense (10,059 ) (7,657 ) (5,293 ) (725 ) Other income, net 24,527 34,097 26,296 3,603 Impairment loss on long-term investments (500 ) (61 ) — — Gain/(loss) on disposal of subsidiaries 1,390 43,715 (838 ) (115 ) Income before income tax expenses and gain/(loss) from equity method investments 648,548 676,081 356,894 48,895 Income tax expenses (11,992 ) (25,166 ) (1,300 ) (178 ) Gain/(loss) from equity method investments 6,453 (10,084 ) (13,512 ) (1,851 ) Net income 643,009 640,831 342,082 46,866 Less: Net (loss)/income attributable to non-controlling interest (950 ) 1 — — Net income attributable to Sunlands Technology Group 643,959 640,830 342,082 46,866 Net income per share attributable to ordinary shareholders of Sunlands Technology Group—basic and diluted 94.14 92.88 50.12 6.87 Weighted average shares used in calculating net income per ordinary share— basic and diluted 6,840,079 6,899,456 6,824,824 6,824,824 Note: (1) Share-based compensation expenses are included in: For the Year Ended December 31, 2022 2023 2024 RMB RMB RMB US$ (in thousands) Cost of revenues 33 — — — Sales and marketing expenses 4,166 — — — Product development expenses — — — — General and administrative expenses 2,982 — — — Total 7,181 — — — Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Net revenues The Group’s net revenues decreased by 7.8% from RMB2,159.6 million in 2023 to RMB1,990.2 million (US$272.7 million) in 2024, primarily due to the decrease in the new students enrollments and gross billings from degree- or diploma-oriented post-secondary courses.
Operating Activities Net cash generated from operating activities was RMB140.8 million (US$19.8 million) in 2023.
Operating Activities Net cash generated from operating activities was RMB195.5 million (US$26.8 million) in 2024.
Sales and marketing expenses The Group’s sales and marketing expenses increased by 1.1% from RMB1,129.5 million in 2022 to RMB1,142.2 million (US$160.9 million) in 2023. The increase was mainly due to increased spending on branding and marketing activities, partially offset by the declined compensation expenses related to headcount reduction of sales and marketing personnel.
Sales and marketing expenses The Group’s sales and marketing expenses increased by 6.5% from RMB1,142.2 million in 2023 to RMB1,216.9 million (US$166.7 million) in 2024. The increase was mainly due to the increase of compensation for sales personnel and the spending on branding and marketing activities focused on interest courses offerings.
As of December 31, 2023, the Group’s cash and cash equivalents denominated in U.S. dollars and Renminbi amounted to RMB560.8 million (US$79.0 million) and RMB202.5 million (US$28.5 million), respectively.
As of December 31, 2024, the Group’s cash and cash equivalents denominated in U.S. dollars and Renminbi amounted to RMB358.8 million (US$49.2 million) and RMB147.7 million (US$20.2 million), respectively.
For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) Net income 212,366 643,009 640,831 90,258 Add: Income tax (benefit)/expenses (19,618 ) 11,992 25,166 3,545 Depreciation and amortization 37,916 46,684 30,648 4,317 Interest expense 10,929 10,059 7,657 1,078 Less: interest income (16,175 ) (16,248 ) (31,094 ) (4,379 ) EBITDA (non-GAAP) 225,418 695,496 673,208 94,819 Taxation The Cayman Islands We are incorporated in the Cayman Islands.
For the Year Ended December 31, 2022 2023 2024 RMB RMB RMB US$ (in thousands) Net income 643,009 640,831 342,082 46,866 Add: Income tax expenses 11,992 25,166 1,300 178 Depreciation and amortization 46,684 30,648 29,467 4,037 Interest expense 10,059 7,657 5,293 725 Less: Interest income (16,248 ) (31,094 ) (38,824 ) (5,319 ) EBITDA (non-GAAP) 695,496 673,208 339,318 46,487 Taxation The Cayman Islands We are incorporated in the Cayman Islands.
For a reconciliation of the Group’s gross billings and net revenues, see “—Non-GAAP Financial Measures.” The following table sets forth a breakdown of the Group’s total net revenues for the years indicated: 84 For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Interest, professional skills and professional certification preparation courses 793,881 31.7 1,112,707 47.9 1,449,858 204,208 67.1 Degree- or diploma-oriented post-secondary courses 1,634,575 65.1 1,084,857 46.7 534,041 75,218 24.8 Others (1) 79,361 3.2 125,537 5.4 175,685 24,745 8.1 Total net revenues 2,507,817 100.0 2,323,101 100.0 2,159,584 304,171 100.0 Note: (1) Include commissions received for providing referral services to third-party companies and revenues from sales of goods such as books and learning materials, among others.
For a reconciliation of the Group’s gross billings and net revenues, see “—Non-GAAP Financial Measures.” The following table sets forth a breakdown of the Group’s total net revenues for the years indicated: For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Interest, professional skills and professional certification preparation courses 1,112,707 47.9 1,449,858 67.1 1,498,058 205,233 75.3 Degree- or diploma-oriented post-secondary courses 1,084,857 46.7 534,041 24.8 205,578 28,164 10.3 Sales of goods (1) 75,240 3.2 144,233 6.7 244,901 33,551 12.3 Others (2) 50,297 2.2 31,452 1.4 41,667 5,709 2.1 Total net revenues 2,323,101 100.0 2,159,584 100.0 1,990,204 272,657 100.0 Note: (1) Include revenues from sales of goods such as printed books and learning materials associated with the courses we offer.
For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) Net revenues 2,507,817 2,323,101 2,159,584 304,171 Less: other revenues (1) (79,444 ) (125,864 ) (176,014 ) (24,791 ) Add: tax and surcharges 177,966 66,638 62,352 8,782 Add: ending deferred revenue 2,348,179 1,690,946 1,113,923 156,893 Add: deferred revenue in connection with disposal of subsidiaries 29,572 259 23,220 3,270 Add: ending refund liability 243,236 133,066 143,744 20,246 Less: beginning deferred revenue (3,024,443 ) (2,348,179 ) (1,690,946 ) (238,165 ) Less: beginning refund liability (232,859 ) (243,236 ) (133,066 ) (18,742 ) Less: beginning refund liability in connection with disposal of subsidiaries — — 1,820 256 Gross billings (non-GAAP) 1,970,024 1,496,731 1,504,617 211,920 Note: (1) Include commissions received for providing referral services to third-party companies and revenues from sales of goods such as books and learning materials, among others.
For the Year Ended December 31, 2022 2023 2024 RMB RMB RMB US$ (in thousands) Net revenues 2,323,101 2,159,584 1,990,204 272,657 Less: other revenues (1) (125,864 ) (176,014 ) (287,179 ) (39,343 ) Add: tax and surcharges 66,638 62,352 77,734 10,650 Add: ending deferred revenue 1,690,946 1,113,923 916,510 125,561 Add: deferred revenue in connection with disposal of subsidiaries 259 23,220 3,423 469 Add: ending refund liability 133,066 143,744 112,342 15,391 Less: beginning deferred revenue (2,348,179 ) (1,690,946 ) (1,113,923 ) (152,607 ) Less: beginning refund liability (243,236 ) (133,066 ) (143,744 ) (19,693 ) Less: beginning refund liability in connection with disposal of subsidiaries — 1,820 — — Gross billings (non-GAAP) 1,496,731 1,504,617 1,555,367 213,085 Note: (1) Include commissions received for providing referral services to third-party companies and revenues from sales of goods such as printed books and learning materials associated with the courses we offer.
The increase in the sales and marketing expenses from 2022 to 2023 was mainly due to increased spending on branding and marketing activities, partially offset by the declined compensation expenses related to headcount reduction of sales and marketing personnel.
The increase in the sales and marketing expenses from 2023 to 2024 was mainly due to increased spending on sales activities, including enhanced compensation for sales personnel as well as increased spending on branding and marketing activities focused on interest courses offerings.
In 2021, the net amount of working capital support provided by our PRC subsidiaries to the VIEs was RMB12.5 million. In 2022 and 2023, the net amounts of working capital support provided by the VIEs to our PRC subsidiaries were RMB538.3 million and RMB602.9 million (US$84.9 million), respectively. For 93 more information, see “Item 4. Information on the Company—4.A.
In 2022, 2023 and 2024, the net amounts of working capital support provided by the VIEs to our PRC subsidiaries were RMB538.3 million, RMB602.9 million and RMB924.6 million (US$126.7 million), respectively. For more information, see “Item 3. Key Information—Condensed Consolidating 92 Schedule,” and consolidated financial statements included elsewhere in this annual report.
The difference between the Group’s net income of RMB643.0 million, after netting non-cash reconciliation items, and the net cash used in operating activities was mainly due to (i) a decrease in deferred revenue of RMB657.0 million, (ii) a decrease in accrued expenses and other current liabilities of RMB178.9 million, and(iii) a decrease in lease liability of RMB84.5 million; partially offset by (i) a decrease in right-of-use asset of RMB87.7 million (ii) a decrease in prepaid expenses and other current assets of RMB77.8 million, and (iii) a decrease in deferred costs of RMB76.6 million.
The difference between the Group’s net income of RMB342.1 million (US$46.9 million), after netting non-cash reconciliation items, and the net cash used in operating activities was mainly due to (i) a decrease in deferred revenue of RMB194.0 million (US$26.6 million), (ii) an increase in deferred tax assets of RMB24.7 million (US$3.4 million), (iii) a decrease in lease liability of RMB19.9 million (US$2.7 million) resulting from termination of certain leased spaces; partially offset by (i) depreciation and amortization of RMB29.5 million (US$4.0 million), (ii) non-cash lease expenses of RMB18.1 million (US$2.5 million), (iii) a decrease in deferred costs of RMB18.1 million (US$2.5 million), (iv) loss from an equity method investment of RMB13.5 million (US$1.9 million), (v) a decrease in right-of-use assets of RMB8.9 million (US$1.2 million).
We may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our existing cash is insufficient to meet the Group’s requirements, we may seek to issue debt or equity securities or obtain additional credit facilities.
We intend to finance the Group’s future working capital requirements and capital expenditures from existing cash balance, cash generated from operating activities and funds raised from financing activities. We may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue.
Net cash generated from investing activities was RMB96.2 million in 2022, which was primarily attributable to proceeds from maturity of short-term investments of RMB1,357.9 million, partially offset by purchase of short-term investments of RMB1,244.6 million. 92 Financing Activities Net cash used in financing activities in 2023 was RMB74.7 million (US$10.5 million), which was primarily attributable to repayment of bank debt of RMB38.7 million (US$5.4 million) and settlement of dividend payable of RMB31.3 million (US$4.4 million).
Investing Activities Net cash used in investing activities was RMB358.9 million (US$49.2 million) in 2024, which was primarily attributable to purchase of short-term investments of RMB1,738.7 million (US$238.2 million) and the purchase of long-term investments of RMB235.3 million (US$32.2 million), partially offset by proceeds from maturity of short-term investments of RMB1,607.1 million (US$220.2 million).
The major factor for the Group’s negative working capital position as of December 31, 2022 was deferred revenue. We intend to finance the Group’s future working capital requirements and capital expenditures from existing cash balance, cash generated from operating activities and funds raised from financing activities.
We intend to fund our future working capital requirements and capital expenditures from the Group’s existing cash balance, cash generated from operating activities and funds raised from financing activities. The Group has not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties.
The Group’s capital expenditures were RMB16.5 million, RMB3.2 million and RMB6.4 million (US$0.9 million), respectively, for the years ended December 31, 2021, 2022 and 2023. We intend to fund our future working capital requirements and capital expenditures from the Group’s existing cash balance, cash generated from operating activities and funds raised from financing activities.
The Group’s capital expenditures are incurred primarily in connection with purchases of IT infrastructure equipment and buildings necessary to support the Group’s operations. The Group’s capital expenditures were RMB3.2 million, RMB6.4 million and RMB0.4 million (US$0.1 million), respectively, for the years ended December 31, 2022, 2023 and 2024.
Removed
The decrease was mainly due to the declined compensation expenses related to headcount deduction, including teachers and mentors, from RMB160.5 million in 2022 to RMB91.4 million (US$12.9 million) in 2023.
Added
Revenues from sales of goods for the years ended December 31, 2022 and 2023 were previously included in "others" of net revenues for the respective years. (2) Include commissions received for providing referral services to third-party companies.
Removed
General and administrative expenses The Group’s general and administrative expenses decreased by 22.8% from RMB185.7 million in 2022 to RMB143.3 million (US$20.2 million) in 2023, primarily due to (i) declined office expenses and rental expenses by RMB14.0 million, as a result of early termination of certain office space and (ii) a reduction in general and administrative personnel headcount, which led to a decrease in the related compensation expense of RMB11.7 million.
Added
Cost of revenues The Group’s cost of revenues increased by 19.6% from RMB265.5 million in 2023 to RMB317.6 million (US$43.5 million) in 2024. The increase was primarily due to an increase in the cost of revenues from the growing sales of goods such as printed books and learning materials associated with the courses we offer.
Removed
Since January 2020, in accordance with Announcement of the Ministry of Finance and the SAT [2020] No.8 and Announcement of the Ministry of Finance and the SAT [2021] No.7, due to the Novel coronavirus (“COVID-19”) pandemic, the VAT on certain services was temporarily exempted until March 31, 2021.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

29 edited+2 added−4 removed60 unchanged
A director may vote in respect of any contract or proposed contract or arrangement notwithstanding that he may be interested therein and if he does so, his vote shall be counted and he may be counted in the quorum at any meeting of the directors at which any such contract or proposed contract or arrangement is considered, subject to any separate requirement for Audit Committee approval under applicable laws or the rules of the New York Stock Exchange, and unless disqualified by the chairman of the relevant board meeting.
A director may vote in respect 97 of any contract or proposed contract or arrangement notwithstanding that he may be interested therein and if he does so, his vote shall be counted and he may be counted in the quorum at any meeting of the directors at which any such contract or proposed contract or arrangement is considered, subject to any separate requirement for Audit Committee approval under applicable laws or the rules of the New York Stock Exchange, and unless disqualified by the chairman of the relevant board meeting.
(8) Represents 637,132 Class C ordinary shares held of record by MARBLE FAITH LIMITED, a British Virgin Islands company ultimately wholly owned by Vistra Trust (Hong Kong) Limited, as trustee of an irrevocable trust constituted under the laws of the British Virgin Islands, with Mr. Peng Ou as the settlor and certain family members of Mr.
(8) Represents 637,132 Class C ordinary shares held of record by MARBLE FAITH LIMITED, a British Virgin Islands company ultimately wholly owned by Vistra Trust (Hong Kong) Limited, as trustee of an irrevocable trust constituted under the laws of the British Virgin Islands, 101 with Mr. Peng Ou as the settlor and certain family members of Mr.
The compensation committee is also responsible for, among other things: 99 • reviewing and approving the compensation of our chief executive officer and each of our other executive officers; • in consultation with our chief executive officer, periodically reviewing our management succession planning; • reviewing and evaluating our executive compensation and benefits policies generally (subject, if applicable, to shareholder approval), including the review and recommendation of any incentive-compensation and equity-based plans that are subject to the approval of our board of directors; • reviewing and reassessing the adequacy of the committee charter; • selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management; and • reporting regularly to our board of directors.
The compensation committee is also responsible for, among other things: • reviewing and approving the compensation of our chief executive officer and each of our other executive officers; • in consultation with our chief executive officer, periodically reviewing our management succession planning; • reviewing and evaluating our executive compensation and benefits policies generally (subject, if applicable, to shareholder approval), including the review and recommendation of any incentive-compensation and equity-based plans that are subject to the approval of our board of directors; 98 • reviewing and reassessing the adequacy of the committee charter; • selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management; and • reporting regularly to our board of directors.
For share incentive grants to our directors and executive officers, see “—Share Incentive Plan.” We do not set aside any amount to provide pension, retirement or similar benefits. Share Incentive Plan 2017 Plan 97 We adopted an employee share incentive plan in October 2017, or the 2017 Plan.
For share incentive grants to our directors and executive officers, see “—Share Incentive Plan.” We do not set aside any amount to provide pension, retirement or similar benefits. Share Incentive Plan 2017 Plan We adopted an employee share incentive plan in October 2017, or the 2017 Plan.
As of the same date, options to purchase an aggregate number of 31,550 ordinary shares are outstanding, all of which had vested and become exercisable. The following paragraphs summarize the terms of the 2017 Plan. Types of Awards .
As of the same date, options to purchase an aggregate number of 31,550 ordinary shares are outstanding, all of which had vested and become exercisable. 96 The following paragraphs summarize the terms of the 2017 Plan. Types of Awards .
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or 100 composition with his creditors; (ii) dies or is found by our company to be of unsound mind; (iii) resigns by notice in writing to our company; (iv) is prohibited by law or the rules of the New York Stock Exchange from being a director; or (v) is removed from office pursuant to any other provisions of our fourth amended and restated memorandum and articles of association. 6.D.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company to be of unsound mind; (iii) resigns by notice in writing to our company; (iv) is prohibited by law or the rules of the New York Stock Exchange from being a director; or (v) is removed from office pursuant to any other provisions of our fourth amended and restated memorandum and articles of association. 99 6.D.
As of the date of this annual report, there were no outstanding equity awards granted to our directors and executive officers under the 2017 Plan. As of the same date, our other employees as a group held options to purchase 31,550 Class C ordinary shares, with an exercise price of US$84.75 per share.
As of the date of this annual report, there were no outstanding equity awards granted to our directors and executive officers under the 2017 Plan. As of the same date, our other employees and certain former employees as a group held options to purchase 31,550 Class C ordinary shares, with an exercise price of US$84.75 per share.
Wang also serves as a director at Yum China Holdings, Inc., a leading restaurant company in China, and a director of Geely Automobile Holdings 96 Limited, an auto manufacturing company in China. Mr. Wang received both his master’s and bachelor’s degrees from Shanghai Jiao Tong University. Hangyu Li has served as our finance director since August 2017.
Wang also serves as a director at Yum China Holdings, Inc., a leading restaurant company in China, and a director of Geely Automobile Holdings Limited, an auto manufacturing company in China. Mr. Wang received both his master’s and bachelor’s degrees from Shanghai Jiao Tong University. 95 Hangyu Li has served as our finance director since August 2017.
Peng Ou as the beneficiaries; (ii) 2,084,772 Class C ordinary shares held of record by Studyvip Online Education Limited, a British Virgin Islands company wholly owned by Mr. Peng Ou; and (iii) 111,120 Class A ordinary shares in the form of ADSs held of record by Mr. Peng Ou.
Peng Ou as the beneficiaries; (ii) 2,084,772 Class C ordinary shares held of record by Studyvip Online Education Limited, a British Virgin Islands company wholly owned by MARBLE FAITH LIMITED; and (iii) 111,120 Class A ordinary shares in the form of ADSs held of record by Mr. Peng Ou.
These shares, however, are not included in the computation of the percentage ownership of any other person. 101 Ordinary Shares Beneficially Owned Class A Class B Class C % of Voting Power Number Percentage Number Percentage Number Percentage ** Directors and Executive Officers:† Peng Ou (1) 111,120 4.1 — — 2,721,904 81.7 65.4 Tongbo Liu (2) 30,385 1.1 — — 482,732 14.5 11.6 Jing Gao (3) 60,383 2.2 — — — — * Yang Wang — — — — — — — Hangyu Li * * — — — — * Zheng Zhao — — — — — — — Yifan Li — — — — — — — All directors and executive officers as a group 208,119 7.7 — — 3,204,636 96.2 77.2 Principal Shareholders: ELITE CONCEPT HOLDINGS LIMITED (4) 564,209 20.9 — — — — 1.3 Affiliates of Orchid Asia (5) 352,776 13.1 — — — — * PV PLUTO LIMITED (6) — — 826,389 100.0 — — 13.8 Studyvip Online Education Limited (7) — — — — 2,084,772 62.6 49.9 MARBLE FAITH LIMITED (8) — — — — 637,132 19.1 15.2 SCuPt Global Limited (9) — — — — 355,306 10.7 8.5 Notes: * Less than 1% of our total outstanding shares on an as-converted basis. ** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our ordinary shares as a single class. † The address of our directors and executive officers Mr.
These shares, however, are not included in the computation of the percentage ownership of any other person. 100 Ordinary Shares Beneficially Owned Class A Class B Class C % of Voting Power Number Percentage Number Percentage Number Percentage ** Directors and Executive Officers:† Peng Ou (1) 111,120 4.3 — — 2,721,904 81.7 65.5 Tongbo Liu (2) 30,385 1.2 — — 482,732 14.5 11.6 Jing Gao (3) 60,383 2.3 — — — — * Yang Wang — — — — — — — Hangyu Li * * — — — — * Zheng Zhao — — — — — — — Yingda Song — — — — — — — All directors and executive officers as a group 208,119 8.0 — — 3,204,636 96.2 77.3 Principal Shareholders: ELITE CONCEPT HOLDINGS LIMITED (4) 564,209 21.7 — — — — 1.4 Affiliates of Orchid Asia (5) 352,776 13.6 — — — — * PV PLUTO LIMITED (6) — — 826,389 100.0 — — 13.9 Studyvip Online Education Limited (7) — — — — 2,084,772 62.6 50.0 MARBLE FAITH LIMITED (8) — — — — 637,132 19.1 15.3 SCuPt Global Limited (9) — — — — 355,306 10.7 8.5 Notes: * Less than 1% of our total outstanding shares on an as-converted basis. ** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our ordinary shares as a single class. † The address of our directors and executive officers Mr.
Share Ownership The following table sets forth information concerning the beneficial ownership of our ordinary shares as of March 31, 2024 by: • each of our directors and executive officers; and • each person known to the Group to beneficially own more than 5% of each class of our ordinary shares.
Share Ownership The following table sets forth information concerning the beneficial ownership of our ordinary shares as of March 31, 2025 by: • each of our directors and executive officers; and • each person known to the Group to beneficially own more than 5% of each class of our ordinary shares.
Peng Ou as the beneficiaries. The business address of MARBLE FAITH LIMITED is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG 1110, the British Virgin Islands. 102 (9) Represents 355,306 Class C ordinary shares held of record by SCuPt Global Limited, a British Virgin Islands company wholly owned by Mr. Tongbo Liu.
Peng Ou as the beneficiaries. The business address of MARBLE FAITH LIMITED is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG 1110, the British Virgin Islands. (9) Represents 355,306 Class C ordinary shares held of record by SCuPt Global Limited, a British Virgin Islands company wholly owned by TheTwinPeak Limited.
The payment of compensation to our independent directors for their services rendered for the year ended December 31, 2023 is in a total amount of RMB1.7 million (US$0.2 million), which has been fully paid in cash.
The payment of compensation to our independent directors for their services rendered for the year ended December 31, 2024 is in a total amount of RMB1.1 million (US$0.2 million), which has been fully paid in cash.
(7) Represents 2,084,772 Class C ordinary shares held of record by Studyvip Online Education Limited, a British Virgin Islands company wholly owned by Mr. Peng Ou. The business address of Studyvip Online Education Limited is Start Chambers, Wickham Cay II, P. O. Box 2221, Road Town, Tortola, the British Virgin Islands.
(7) Represents 2,084,772 Class C ordinary shares held of record by Studyvip Online Education Limited, a British Virgin Islands company wholly owned by MARBLE FAITH LIMITED. The business address of Studyvip Online Education Limited is Start Chambers, Wickham Cay II, P. O. Box 2221, Road Town, Tortola, the British Virgin Islands.
The business address of SCuPt Global Limited is Trinity Chambers, PO Box 4301, Road Town, Tortola, the British Virgin Islands. To our knowledge, as of March 31, 2024, 1,723,430 of our Class A ordinary shares were held by one record holder in the United States, which was the Bank of New York Mellon, the depositary of our ADR program.
The business address of SCuPt Global Limited is Trinity Chambers, PO Box 4301, Road Town, Tortola, the British Virgin Islands. To our knowledge, as of March 31, 2025, 1,621,685 of our Class A ordinary shares were held by one record holder in the United States, which was the Bank of New York Mellon, the depositary of our ADR program.
Zheng Zhao satisfies the requirements of Section 303A of the Corporate Governance Rules of the NYSE and meet the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended. We have determined that Mr.
Yingda Song satisfies the requirements of Section 303A of the Corporate Governance Rules of the NYSE and meet the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended. We have determined that Mr.
Tongbo Liu as the beneficiaries; and (iii) 30,385 Class A ordinary shares in the form of ADSs held of record by Mr. Tongbo Liu. (3) Represents 60,383 Class A ordinary shares in the form of ADSs held of record by Ms. Jing Gao.
Tongbo Liu as the settlor and certain family members of Mr. Tongbo Liu as the beneficiaries; and (iii) 30,385 Class A ordinary shares in the form of ADSs held of record by Mr. Tongbo Liu. (3) Represents 60,383 Class A ordinary shares in the form of ADSs held of record by Ms. Jing Gao.
Employees The Group had 4,064, 2,318 and 2,113 full-time employees as of December 31, 2021, 2022 and 2023, respectively. The decrease in the number of full-time employees was mainly driven by the strategic contraction of the business. As of December 31, 2023, most of the Group’s employees were in Beijing, Guangzhou and Wuhan.
Employees The Group had 2,318, 2,113 and 2,071 full-time employees as of December 31, 2022, 2023 and 2024, respectively. The decrease in the number of full-time employees was mainly driven by the strategic contraction of the business. As of December 31, 2024, most of the Group’s employees were in Beijing, Guangzhou and Wuhan.
Each committee’s members and functions are described below. Audit Committee Our audit committee consists of Mr. Yifan Li and Mr. Zheng Zhao, and is chaired by Mr. Yifan Li. We have determined that each of Mr. Yifan Li and Mr.
Each committee’s members and functions are described below. Audit Committee Our audit committee consists of Mr. Zheng Zhao and Mr. Yingda Song, and is chaired by Mr. Zheng Zhao. We have determined that each of Mr. Zheng Zhao and Mr.
For discussions of our accounting policies for awards granted pursuant to the 2017 Plan, see Note 2 to our consolidated financial statements. 6.C. Board Practices Board of Directors Our board of directors consists of six directors, including two independent directors, namely Mr. Yifan Li and Mr. Zheng Zhao.
For discussions of our accounting estimates for awards granted pursuant to the 2017 Plan, see Note 2 to our consolidated financial statements. 6.C. Board Practices Board of Directors Our board of directors consists of six directors, including two independent directors, namely Mr. Zheng Zhao and Mr. Yingda Song.
The calculations in the table below are based on 6,855,745 issued and outstanding ordinary shares as of March 31, 2024, comprising (i) 2,697,294 Class A ordinary shares (excluding 5,200 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards under our share incentive plans), (ii) 826,389 Class B ordinary shares, and (iii) 3,332,062 Class C ordinary shares.
The calculations in the table below are based on 6,758,124 issued and outstanding ordinary shares as of March 31, 2025, comprising (i) 2,599,673 Class A ordinary shares (excluding 5,200 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards under our share incentive plans), (ii) 826,389 Class B ordinary shares, and (iii) 3,332,062 Class C ordinary shares.
Yifan Li qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the Group’s financial statements.
Zheng Zhao qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the Group’s financial statements.
Compensation Compensation of Directors and Senior Management For the fiscal year ended December 31, 2023, we paid an aggregate of RMB1.9 million (US$0.3 million) in cash to our executive officers.
Compensation Compensation of Directors and Senior Management For the fiscal year ended December 31, 2024, we paid an aggregate of RMB1.7 million (US$0.2 million) in cash to our executive officers.
Directors and Executive Officers Age Position/Title Peng Ou (also known as Jianhong Yin) 46 Founder, Chairman, Director Tongbo Liu 37 Chief Executive Officer, Director Jing Gao 39 Vice President, Director Yang Wang 49 Director Hangyu Li 41 Finance Director Zheng Zhao (also known as Ching Chiu) 45 Independent Director Yifan Li 56 Independent Director Peng Ou is our Founder and the Chairman of our board of directors.
Directors and Executive Officers Age Position/Title Peng Ou (also known as Jianhong Yin) 47 Founder, Chairman, Director Tongbo Liu 38 Chief Executive Officer, Director Jing Gao 40 Vice President, Director Yang Wang 50 Director Hangyu Li 42 Finance Director Zheng Zhao (also known as Ching Chiu) 46 Independent Director Yingda Song 39 Independent Director Peng Ou is our Founder and the Chairman of our board of directors.
Tongbo Liu; (ii) 127,426 Class C ordinary shares held of record by The TwinPeak Limited, a British Virgin Islands company ultimately wholly owned by Vistra Trust (Hong Kong) Limited, as trustee of an irrevocable trust constituted under the laws of the British Virgin Islands, with Mr. Tongbo Liu as the settlor and certain family members of Mr.
(2) Represents (i) 355,306 Class C ordinary shares held of record by SCuPt Global Limited, a British Virgin Islands company wholly owned by TheTwinPeak Limited; (ii) 127,426 Class C ordinary shares held of record by The TwinPeak Limited, a British Virgin Islands company ultimately wholly owned by Vistra Trust (Hong Kong) Limited, as trustee of an irrevocable trust constituted under the laws of the British Virgin Islands, with Mr.
The following table sets forth the number of the Group’s employees as of December 31, 2023: Function Number of Full-Time Employees Percentages Academic and administrative faculty (1) 223 10.6 % Sales and marketing staff 1,220 57.8 % Sales operation 394 18.6 % General and administrative 138 6.5 % Technology development 138 6.5 % Total 2,113 100.0 % Note: (1) Consists of teachers, mentors, course and educational content development professionals, and other administrative faculty members.
The following table sets forth the number of the Group’s employees as of December 31, 2024: Function Number of Full-Time Employees Percentages Academic and administrative faculty (1) 146 7.0 % Sales and marketing staff 1,252 60.5 % Sales operation 422 20.4 % General and administrative 137 6.6 % Technology development 114 5.5 % Total 2,071 100.0 % Note: (1) Consists of teachers, mentors, course and educational content development professionals, and other administrative faculty members.
Zheng Zhao is Suite 1503, New Oriental South Building, No. 2 Haidiandongsan Street, Beijing 100080, China. The address of Mr. Yifan Li is 1 Jumen Road, Apt. 1-2804, Shanghai, China.
Zheng Zhao is Suite 1503, New Oriental South Building, No. 2 Haidiandongsan Street, Beijing 100080, China. The address of Mr. Yingda Song is Room 2602, Building No. 1, 109 Tianlin Road, Shanghai, China.
We rely on this “home country practice” exception and do not have a majority of independent directors serving on our board of directors. 98 A director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with our company is required to declare the nature of his or her interest at a meeting of our directors.
A director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with our company is required to declare the nature of his or her interest at a meeting of our directors.
However, the Corporate Governance Rules of the NYSE permit foreign private issuers like us to follow “home country practice” in certain corporate governance matters.
However, the Corporate Governance Rules of the NYSE permit foreign private issuers like us to follow “home country practice” in certain corporate governance matters. We rely on this “home country practice” exception and do not have a majority of independent directors serving on our board of directors.
Removed
Yifan Li has served as chief financial and investment advisor at Human Horizons Group Inc. since March 2022, and served as its chief financial officer from April 2021 to March 2022. Previously, he was director and vice president of Geely Group, responsible for strategic investments, new business development and overseeing Geely’s financial holding companies. Prior to joining Geely, Mr.
Added
Yingda Song has served as our independent director since May 2024. Mr. Song currently serves as an associate professor in the Antai College of Economics and Management of Shanghai Jiao Tong University, where he also served as an assistant professor from 2017 to 2019.
Removed
Li held CFO positions in various Chinese companies including Sanpower Group, China Zenix Auto International, Standard Water and Time Share Media, where he led initial public offerings and cross-border M&A transactions. Mr. Li also serves as a director at Xinyuan Real Estate Co., Ltd., Qudian Inc. and 36Kr Holdings Inc. Mr.
Added
Prior to that, he worked as a research associate in the University of Science and Technology of China from 2015 to 2017, and as a research fellow in the National University of Singapore from 2013 to 2015. Mr. Song holds a Ph.D. from Hong Kong University of Science and Technology and a bachelor’s degree from Tsinghua University.
Removed
Li received his MBA from the University of Chicago Booth School of Business, his master’s degree in accounting from the University of Texas at Dallas and his bachelor’s degree in world economics from Fudan University. He is a Certified Public Accountant in the United States and a Chartered Global Management Accountant.
Removed
(2) Represents (i) 355,306 Class C ordinary shares held of record by SCuPt Global Limited, a British Virgin Islands company wholly owned by Mr.

Other STG 10-K year-over-year comparisons