onesmart international education group limited investor...

July 2018

OneSmart International Education Group Limited

Investor Presentation

2

Disclaimer

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the

Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These

forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends,"

"plans," "believes," "estimates," "confident" and similar statements. OneSmart may also make written or oral forward-

looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report

to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or

employees to third parties. Any statements that are not historical facts, including statements about OneSmart's beliefs and

expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to

differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following:

OneSmart's goals and strategies; its future business development, financial condition and results of operations; its ability to

continue to penetrate premium K-12 after-school education services market; diversify and enrich our education offerings;

enhance the development and management of our teacher team and teaching materials; competition in our industry

in China; its ability to maintain and expand online education presence; relevant government policies and regulations relating

to the corporate structure, business and industry; and its ability to protect our students’ information and adequately address

privacy concerns . Further information regarding these and other risks, uncertainties or factors is included in the Company's

filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the

date of the press release, and OneSmart does not undertake any obligation to update such information, except as required

under applicable law.

Section 1

Company Overview

4

Who We Are – Mission, Vision and Values

Bring out the utmost learning power in each student by cultivating his or her study

motivation, capability and perseverance, and enable our students to pursue life-long success

Our Mission

Build the most trusted ‘‘Third Classroom’’ outside of home

and school

Our Vision

Customer FocusExecutionInnovationTeamwork

Our Values

• Bring out the utmost learning power in each student by cultivating his or her study motivation, capability and perseverance, and enable our students to pursue life-long success

Our Mission

• Build the most trusted ‘‘Third Classroom’’ outside of home and school

Our Vision

• CEIT:

•Customer Focus

•Execution

•Innovation

•Teamwork

Our Values

5

Who We Are - Largest Premium K-12 Education Service Provider

in China

Notes1. In terms of revenue in 2016 and 2017, according to Frost & Sullivan2. For students from kindergarten to the third grade in Shanghai in terms of revenue in 2016 and 2017, according to Frost & Sullivan 3. As of May 31, 20184. In terms of revenue in 2017, according to Frost & Sullivan5. A student enrollment is defined as a student who takes at least one class in one subject during a certain period. Under this definition, a student taking at least one class in each of two subjects during a certain period is treated as two

student enrollments for the period. The number of students enrolled in our invested K-12 schools and OneSmart Online is not included for this purpose6. For the fiscal quarter ended May 31, 20187. Fiscal year ended August 31

Well-recognized brand with 302

study centers covering 43cities in China(3)

Dominant 2017 market share of

26.3%(4) in Shanghai’s premium K-12

after-school education market

124,892 average monthly student

enrollments(5)(6)

#1 premium K-12 after-school tutoring

service provider in China(1)

#1 young children mathematics education

service provider in Shanghai(2)

5,629full-time teachers(3)

RMB2.1Bnrevenue in FY2017(7) with

37.4% 3-year CAGR

6

Premium Tutoring Services

1-on-1, 1-on-3 3rd–12th Grade

Kids Math

1-on-8 1-on-14

Language and Culture Programs New Program Initiatives

OneSmart OnlineOneSmart ClassOneSmart Overseas Language Training

OneSmart Overseas

Study Consultation

OneSmart

Study Camp

HappyMathOneSmart VIP

Notes1. In terms of revenue in 2016 and 2017, according to Frost & Sullivan2. For students from kindergarten to the third grade in Shanghai in terms of revenue in 2016 and 2017, according to Frost & Sullivan

also covers Chinese and STEM education

What We Do

FasTrack English

Kids English

#1 premium K-12 after-school tutoring

service provider in China

3 to 8 Years Old

#1 young children mathematics education service provider in Shanghai

3 to 8 Years Old

Kids English with a focus on

STEM English

7

Our Key Milestones

2008

2018

Launched Our UPC System(1)

Opened Our First Study

Center in Shanghai

Opened Our First Study

Center Outside Shanghai

Launched

HappyMath Program

Number of Study

Centers Surpassed 100

Launched 1-on-3 Programs

302 Study Centers in

43 Cities in China(2)

Listed on NYSE on March 28, 2018

2009

2012

2014

2016

U.S. Secretary of Education Dr. John B. King Jr.

visited OneSmart

Notes1. Unique Personalized Coach, an operational management system that enables us to build a set of robust operational and management information solutions that integrate and unify our operations and improve the efficiency of how we

expand and operate our study center network2. As of May 31, 2018

2013

8

Company Highlights

Leader in premium K-12 after-school education services market with established brands

Significant expertise in teaching staff management and curriculum development

brings R&D economy of scale

Customized and comprehensive learning experience powered by innovation

Robust teaching and operation system supported by our standardized

technology platform

Comprehensive suite of service offerings that significantly extend life time value of

customers for margin expansion

Experienced management team with proven track records6

1

3

4

2

5

9

Core Operation Strategies

Our future core operation strategies will focus on customer satisfaction, profitable growth and

diversification of our business

• Strengthen our

technologies

and in-house

teaching

capabilities

• Expand our online education presence

• Enrich our

education

program offerings

Profitable Growth

Diversification

1 Customer

Satisfaction

• Continue to

penetrate

premium K-12

tutoring market

• Enhance the

development and

management of our

teacher team and

teaching materials

2

3

• Pursue selective strategic

investments and acquisitions to

further build ecosystem

10

1

3

4

2

Expand more subjects taken by each student and maximize student life-time revenue

Start offering Chinese, science, and computer programming subjects at HappyMath centers

Cross-selling among Happymath and FasTrack English students

Manage geographic expansion profitably

Further penetrate into top cities that we operate to achieve higher marketing and G&A efficiency and ensure early ramp-up of new learning centers

Selectively enter into new cities with great market potential

Enrich product and service offerings

Successfully acquired FasTrack English in Jan 2018

Launched OneSmart Class and OneSmart Online programs

Continuous margin expansion opportunity through better product mix

Higher revenue contribution from 1 on 3 premium tutoring services and 1 on 8 young children education programs

Roadmap to Revenue Growth and Margin Expansion

Section 2

Key Highlights for Third Fiscal

Quarter of 2018

12

Monthly Average Student Enrollments1 Increased by 44.7% Year-

over-Year

Net Revenues Increased by 37.6% Year-over-Year

Net Revenues from OneSmart VIP Programs increased by 29.0%

Year-over-Year

Net Revenues from HappyMath increased by 76.0% Year-over-Year

New Student Enrollments of newly acquired FasTrack English

increased by 138.0% Year-over-Year

Non-GAAP Net Income Attributable to OneSmart’s Shareholders

increased by 26.7% Year-over-Year

Key Financial Highlights for Third Fiscal Quarter of 2018

13

Key Business Highlights for Third Fiscal Quarter of 2018

OneSmart VIP

Steady growth in Shanghai- Monthly average student

enrollments in Shanghai increased by 26.6% year-over-

year. OneSmart VIP in Shanghai continued to achieve a

healthy EBIT margin of above 40% during the third fiscal

quarter of 2018;

Extremely strong growth in markets outside Shanghai.

Monthly average student enrollments increased by over

50% in 14 cities, most of which we entered during the past

two years:

Opened 19 new OneSmart VIP learning centers during the

quarter;

Revenues from 1-on-3 programs increased by 62.6% year-

over-year;

Extended OneSmart VIP business into overseas language

training, overseas consultation, and study camp programs to

provide premium families one-stop shopping opportunities

and further accelerate the growth.

HappyMath

Revenues increased by 76.0% year-over-year to RMB90.6

million with monthly average student enrollments increased

by 75.1% year-over-year to 21,178

Revenue in mature market such as Shanghai increased by

59.4% year-over-year.

Revenues in Shenzhen and Guangzhou increased by more

than 50% year-over-year; revenues in Chengdu, Xiamen,

Nanjing and Changsha all achieved more than 100%growth year-over-year; while revenues in Beijing and Suzhou

increased by 264.5% and 384.9% year-over-year,

respectively.

More than 4,200 students were enrolled for the Chinese

subject during the third fiscal quarter of 2018.

Average subjects taken by HappyMath student were 1.22subjects in May 2018.

14

Successful Acquisition & Integration of

FasTrack English

With our “Standard Operation Perfection System”

(“SOPS”), we successfully accelerated the growth of

newly acquired FasTrack English business. We re-

positioned it as premium kids English brand with a focus

on STEM English, successfully opened 8 new learning

centers and managed to expand the operation into

Shenzhen;

New student enrollments increased by 138.0% year-

over-year during the third fiscal quarter of 2018 vs

approximately 30.0% historical growth before

acquisition;

The above demonstrated our strong execution

capabilities to continuously integrate and manage our

growth from acquired business. We will engage in more

acquisitions as one major approach to further

consolidate the fragmented market and accelerate our

top-line growth.

Key Business Highlights for Third Fiscal Quarter of 2018 (Cont’d)

Incubation & Strategic Investment in

Yimi Online

Initial investment in 2015, subsequent investment

together with Blue Lake Capital in 2018

A leading online platform that focuses on 1v1 or 1v6 live

after school tutoring courses

100% Full Time teachers

Latest round of valuation: USD 80 Million

For the first six-month ended June 30, 2018, gross

billings and revenues increased by 523.6% and

338.6% year-over-year, respectively. Student

enrollments in June 2018 increased by 469.8% year-

over-year

15

Sources Frost & Sullivan, Company

Tremendous Achievements Accomplished by Us and Our Students

Notes1. Classes of 2017 for university and high school admission rate, class of 2018 for admission to top 10 private primary schools2. Out of more than 27,000 interviewees who responded to questionnaires to parents of students attending OneSmart VIP programs3. A student enrollment is defined as a student who takes at least one class in one subject during a certain period. Under this definition, a student taking at least one class in each of two subjects during a certain period is

treated as two student enrollments for the period. The number of students enrolled in our invested K-12 schools and OneSmart Online is not included for this purpose4. Quarterly student retention rates for fiscal years ended August 31, 2015, 2016, 2017 and three months ended February 28, 2018 5. Out of more than 400 interviewees who responded to questionnaires to parents of students attending HappyMath programs

40% China avg.

91% vs.University

Admission

Rate(1)

90% vs. 57% China avg.

>60%vs. 8% Shanghai avg.

Students’ Success in School Admission and Exams Yielding High Satisfaction Rate

91%Parents are

Satisfied to Our

Teaching Service(2)

74%Students Making

Progress under

Our Program(2)

40%Parents of

Students Taking

HappyMath Gave

Full Satisfaction

Score(5)

Highest average hourly

tuition fee rate among peers

Exceptional quarterly retention

rate maintained at ~80% (4)

High average monthly student

enrollment(3) growth at

~37.3% 3-year CAGR

41 56 77

FY15 FY16 FY17

‘000

Exceptional Operational and Business Results

High School

Admission

Rate(1)

Admission to

Top 10 Private

Primary

Schools(1)

Section 3

Financial Highlights

17

51 91

141

242

FQ32017

FQ32018

9M2017

9M2018

HappyMath

546 705 1,273 1,639

FQ32017

FQ32018

9M2017

9M2018

1,089

1,529

2,058

FY2015 FY2016 FY2017

+72.1%

Growth

Net Revenues(1) OneSmart VIP

RMB MM

Notes1. Fiscal years ended August 31 and fiscal third quarters ended May 31

RMB MM

+100.1%RMB MM +76.0%

Growth

+33.1%

CAGR

+29.0%

Growth

CAGR

599

824

1,421

1,929

FQ32017

FQ32018

9M2017

9M2018

+37.6%

Growth

53

113

212

FY2015 FY2016 FY2017

+37.4%

CAGR

Growth

+35.8%

+28.8%

Growth

Strong Top-line Growth Momentum in Different Business Segments

26

37

FQ32017

FQ32018

9M2017

9M2018

FasTrack English

1,036 1,416

1,840

FY2015 FY2016 FY2017

18

2,735,998

3,425,157

6,667,587

8,267,726

387,770

627,018

1,051,334

1,691,406

154,314

225,902

FQ32017

FQ32018

9M2017

9M2018

3,123,768 7,718,921

10,185,034

4,206,489

102 123 161 163

220 1527

34 33

60

22

FY2015 FY2016 FY2017 FQ3 2017 FQ3 2018OneSmart VIP Happymath FasTrack

196

6,570 7,486

8,711 8,218

10,840

FY2015 FY2016 FY2017 FQ3 2017 FQ3 2018

Scaling-up in Various Metrics

36,946

48,153

63,295

3,797

7,867

13,545

FY2015 FY2016 FY2017

76,841

74,235

96,810

62,756 84,781

12,094

21,178

11,359

17,445

6,904

6,633

FQ32017

FQ32018

9M2017

9M2018

86,32974,115

108,858

+37.3%

CAGRGrowth

+46.9%

Average Monthly Enrollments(1) Consumed Class Units(1)

Number of Classrooms(1)

+15.2%

CAGR


Number of Study Centers(1)

+29.1%

CAGR

+54.1%

Growth

117

150

195

302

+44.7%

Growth

+31.9%

Growth

40,743

56,019124,892

5,461,538

7,618,276

9,611,332

463,927

935,902

1,600,858

FY2015 FY2016 FY2017

11,212,290

5,925,465

8,554,178

+37.6%

CAGR

OneSmart VIP Happy Math FasTrack English OneSmart VIP Happy Math FasTrack English

+34.7%

Growth

+31.9%

Growth

19

Gross Profit and Gross Margin(1)

High Gross Margin

RMB MM


46.7% 52.2% 51.3% 55.7% 55.3%

487

735

939 22

63

120

FY2015 FY2016 FY2017

304 396

647

832

28

51

82

136

FQ32017

FQ32018

9M2017

9M2018

Happy Math

51.5% 50.7%

FY2015

FY2016

FY2017

FQ32017

FQ32018

9M2017

9M2018

Premium

Tutoring47.0% 51.9% 51.0% 55.7% 56.2% 50.8% 50.8%

Happy Math 41.8% 56.3% 56.7% 54.6% 56.0% 58.2% 56.1%

FasTrack

EnglishNA NA NA NA 38.3% NA 32.9%

Overall

Gross

Margin

46.7% 52.2% 51.3% 55.7% 55.3% 51.5% 50.7%

Gross Margin

OneSmart VIP

FasTrack EnglishOthers

20

29.3% 28.2%30.8% 29.9%

7.9% 9.0%9.2% 10.3%

2.2% 3.1%2.5% 3.3%4.9% 4.4%

6.0% 5.9%

FQ3 2017 FQ3 2018 9M 2017 9M 2018

32.5% 31.7% 31.1%

11.1%8.4% 9.1%

4.2%

2.9% 2.6%

5.5%

4.8% 5.9%

FY2015 FY2016 FY2017

Clear Cost Structure


53.3% 47.8% 48.7% 44.3% 44.7%

Staff costs Rental costs

Depreciation and amortization Other costs

48.5% 49.3%

21

Non-GAAP Selling & Marketing Expenses as % of

Revenues(1)(2)

Non-GAAP General & Administrative Expenses as

% of Revenues(1)(2)

Efficient Management Leads to Lower and Stabilizing Expenses

Notes1. Fiscal years ended August 31 and fiscal third quarters ended May 312. Excluding share based compensation expenses

13.6% 19.3% 18.6% 16.1% 17.4%22.4% 17.0% 17.9% 15.4% 15.8%

RMB MM RMB MM

244 261

368

0

50

100

150

200

250

300

350

400

FY2015 FY2016 FY2017

82

159

264

395

FQ32017

FQ32018

9M2017

9M2018

202

247

357

FY2015 FY2016 FY2017

92

130

250

344

FQ32017

FQ32018

9M2017

9M2018

18.6% 20.5% 17.6% 17.8%

22

Robust Income and Healthy Margin

Operating Income and Operating Margin (1) Non-GAAP operating Income and Operating Margin (1)

Net Income and Net Income Margin (1) (2) Non-GAAP Net Income and Net Income Margin (1) (2)

RMB MM RMB MM

RMB MM RMB MM

Notes1. Fiscal years ended August 31 and fiscal third quarters ended May 312. Net income attributable to OneSmart

5.8% 19.1% 16.0% 26.7% 20.2%

63

234

305

FY2015 FY2016 FY2017

160 167 218 238

FQ32017

FQ32018

9M2017

9M2018

15.3% 12.3%5.8%

56

189

259

FY2015 FY2016 FY2017

15.3% 14.8% 24.9% 6.9% 13.8% 6.1%

63

291 330

FY2015 FY2016 FY2017

5.1% 12.4% 12.6% 20.4% 7.1% 11.5% 8.5%

56

247 284

FY2015 FY2016 FY2017

5.1% 16.1% 13.8% 22.2% 20.4% 13.0% 14.7%

149

57

196

118

FQ32017

FQ32018

9M2017

9M2018

122

58

163 163

FQ32017

FQ32018

9M2017

9M2018

133 169 185

283

FQ32017

FQ32018

9M2017

9M2018

23

47 84

173

FY2015 FY2016 FY2017

Robust Cash Flows and Healthy Balance Sheet with Low

Capex Requirements

Operating Cash Flows(1) Capex and Capex as a % of net revenues(1)

Prepayments from Customers(1)

Cash and Cash Equivalents and Short-term

Investments(1)

RMB MM RMB MM

RMB MM RMB MM


4.3% 5.5% 8.4% 6.3% 7.6%

396

614

773

FY2015 FY2016 FY2017

234

323 490 659

FQ32017

FQ32018

9M2017

9M2018

38 63

134 177

FQ32017

FQ32018

9M2017

9M2018

742 1,053

1,531

1,966

FY2015 FY2016 FY2017 FQ3 2018

516

1,010

1,396

2,354

FY2015 FY2016 FY2017 FQ3 2018

9.5% 9.2%

Thank You

onesmart international education group limited investor...

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