PR Newswire | Nov 19, 2020 07:07AM EST

11/19 06:06 CST

Puxin Limited Announces Third Quarter 2020 Unaudited Financial Results BEIJING, Nov. 19, 2020

BEIJING, Nov. 19, 2020 /PRNewswire/ -- Puxin Limited (NYSE: NEW) ("Puxin" or the "Company"), a successful consolidator of the after-school education industry in China, today announced its unaudited financial results for the third quarter ended September 30, 2020.

Highlights for the Third Quarter Ended September 30, 2020

* Net revenues were RMB833.2 million (US$122.7 million), a decrease of 16.3% from RMB996.0 million in the third quarter of 2019. * Net income was RMB42.4 million (US$6.3 million), an increase of 25.7% from RMB33.7 million in the third quarter of 2019. * EBITDA[1] was RMB77.5 million (US$11.4 million), an increase of 9.4% from RMB70.8 million in the third quarter of 2019. * Net income attributable to Puxin Limited was RMB43.5 million (US$6.4 million), an increase of 28.9% from RMB33.7 million in the same period of 2019. * Adjusted net income attributable to Puxin Limited[2] was RMB8.6 million (US$1.3 million), a decrease of 80.3% from RMB43.5 million in the third quarter of 2019. * Student enrollments increased by 28.7% to 1,122,167 from 871,896 for the third quarter of 2019.

[1] EBITDA is a non-GAAP financial measure, which is defined as net income (loss) excluding depreciation, amortization, interest expense, interest income and income tax expenses (benefits).See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

[2] Adjusted net income (loss) attributable to Puxin Limited is a non-GAAP financial measure, which is defined as net income (loss) attributable to Puxin Limited excluding share-based compensation expenses and gain (loss) on changes in fair value of derivative liabilities. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

Highlights for the Nine Months Ended September 30, 2020

* Net revenues were RMB2,185.6 million (US$321.9 million), a decrease of 2.6% from RMB2,244.6 million for the nine months ended September 30, 2019. * Net income was RMB33.7 million (US$5.0 million), compared to net loss of RMB409.6 million for the nine months ended September 30, 2019. * EBITDA was RMB145.4 million (US$21.4 million), compared to RMB(280.9) million for the nine months ended September 30, 2019. * Net income attributable to Puxin Limited was RMB36.6 million (US$5.4 million), compared to net loss attributable to Puxin Limited of RMB409.7 million for the nine months ended September 30, 2019. * Adjusted net income attributable to Puxin Limited was RMB79.2 million (US$11.7 million), compared to net loss attributable to Puxin Limited of RMB91.0 million for the nine months ended September 30, 2019. * Student enrollments increased by 45.9% to 2,917,116 from 1,999,075 for the nine months ended September 30, 2019.

Mr. Yunlong Sha, Chairman and Chief Executive Officer of Puxin, commented, "Although the COVID-19 impact continued in some cities during July and August, we still managed to achieve solid growth in the third quarter. Notably, we have established the international education business unit, strategically consolidating our language exam preparation services and study-abroad consulting services. Our competitive edge around ZMN Education and Global Education remains strong while a streamlined operation not only reduced cost, but also elevated efficiency. The new business unit has successfully bolstered our service quality and our ability to capture additional market share through integrating our different brands internally. At the meantime, our K-12 business remains the business focus of the group, and we have improved our profitability significantly despite of the COVID-19 impact. We will continue to invest in improving teaching quality and learning experience to maintain our firm position as industry leader in the K-12 after-school tutoring space."

Mr. Peng Wang, Chief Financial Officer of Puxin, commented, "Although the summer break was much shorter this year due to the COVID-19 pandemic, we were able to achieve net income and EBITDA year-over-year growth of 25.7% and 9.4%, respectively. This is a direct beneficiary of our improved operations and implementation of the Online-Merge-Offline strategy. For the three quarters of this year, our net income was RMB33.7 million, and our EBITDA was RMB145.4 million. Furthermore, based on the semi-annual report published by MSCI on November 10, 2020, we have been included in the MSCI Global Small Cap Index - MSCI China Index for the first time. This is a recognition of our operational excellence and our value proposition, which will fuel our continued growth in the capital markets and deliver long-term, sustained value to our shareholders and investors."

Financial and Operational Results for the Third Quarter Ended September 30, 2020

Net Revenues

Net revenues decreased by 16.3% to RMB833.2 million (US$122.7 million) from RMB996.0 million in the third quarter of 2019. This decrease was primarily due to the adverse impact of the COVID-19 pandemic on the demand for study-abroad tutoring services.

Net revenues of K-12 tutoring services increased by 1.0% to RMB609.3 million (US$89.7 million) from RMB603.2 million in the third quarter of 2019. In the third quarter of 2020, the student enrollments of K-12 tutoring services, including group class, personalized tutoring and full-time tutoring services, reached 827,685.

Net revenues of Puxin Online School increased to RMB32.5 million (US$4.8 million) from RMB7.2 million in the same period of 2019. Student enrollments of Puxin Online School were 283,598 in the third quarter of 2020.

Net revenues of study-abroad tutoring services decreased by 50.4% to RMB191.4 million (US$28.2 million) from RMB385.6 million in the third quarter of 2019. This was primarily due to a continued impact from the global spread of the COVID-19 pandemic in major countries of the world. However, net revenues of study-abroad tutoring service had an increase of 21.6% compared to the second quarter of 2020.

Cost of Revenues

Cost of revenues decreased by 14.6% to RMB422.6 million (US$62.2 million) from RMB494.6 million in the third quarter of 2019, primarily due to a decrease in staff cost which reflected the decreased demand for study-abroad services attributable to the COVID-19 pandemic. Cost of revenues, excluding share-based compensation expenses, decreased by 14.5% to RMB422.1 million (US$62.2 million) from RMB493.6 million in the third quarter of 2019.

Gross Profit and Gross Margin

Gross profit was RMB410.6 million (US$60.5 million), a decrease of 18.1% from RMB501.5 million in the third quarter of 2019. Gross margin was 49.3%, compared to 50.3% for the same period in 2019.

Operating Expenses

Total operating expenses decreased by 7.7% to RMB424.6 million (US62.5 million) from RMB459.9 million in the third quarter of 2019.

Selling expenses increased by 4.0% to RMB317.0 million (US$46.7 million) from RMB304.8 million in the third quarter of 2019. Selling expenses, excluding share-based compensation expenses, increased by 4.7% to RMB313.9 million (US$46.2 million) from RMB299.9 million in the third quarter of 2019, primarily due to our increased marketing and promotion activities during the third quarter of 2020 to further increase student enrollments.

General and administrative expenses decreased by 30.7% to RMB107.6 million (US$15.8 million) from RMB155.1 million during the same period of 2019. General and administrative expenses, excluding share-based compensation expenses, decreased by 30.3% to RMB104.7 million (US$15.4 million) from RMB150.3 million in the third quarter of 2019. The decreases were primarily due to our cost control measures to improve operation efficiency.

Total share-based compensation expenses allocated to related cost of revenues and operating expenses decreased by 39.5% to RMB6.5 million (US$1.0 million) from RMB10.7 million in the third quarter of 2019. The decrease was primarily due to a decrease in the number of options vested in the third quarter of 2020 compared to the same period of 2019.

Operating Income (Loss) and Operating Margin

Operating loss was RMB13.9 million (US$2.1 million), compared to operating income of RMB41.5 million in the third quarter of 2019. Operating margin was (1.7)% in the third quarter of 2020, compared to 4.2% for the same period in 2019.

Operating income of K-12 tutoring services decreased by 6.5% to RMB54.0 million (US$8.0 million) from RMB57.8 million in the same period of 2019. Operating margin of K-12 tutoring services was 8.9%, slightly dropped from 9.6% in the same period of 2019.

Adjusted operating loss[3] was RMB7.5 million (US$1.1 million), compared to adjusted operating income of RMB52.2 million in the third quarter of 2019.

Adjusted operating margin[4] was (0.9)%, compared to 5.2% in the same period of the prior year.

[3] Adjusted operating income (loss) is a non-GAAP financial measure, which is defined as operating income (loss) excluding share-based compensation expenses. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

[4] Adjusted operating margin is a non-GAAP financial measure, which is defined as adjusted operating income (loss) divided by net revenues. See "Useof Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

Net Income

Net income was RMB42.4 million (US$6.3 million), an increase of 25.7% from RMB33.7 million in the third quarter of 2019.

Net income of K-12 tutoring services increased by 93.4% to RMB99.5 million (US$14.7 million) from RMB51.5 million in the third quarter of 2019.

Net income attributable to Puxin Limited was RMB43.5 million (US$6.4 million), an increase of 28.9% from RMB33.7 million in the same period of 2019. Basic and diluted net income per ADS attributable to Puxin Limited were RMB0.50(US$0.08) and RMB0.48(US$0.08), compared to basic and diluted net income per ADS attributable to Puxin Limited of RMB0.38 and RMB0.38 during the same period of 2019.

Adjusted net income attributable to Puxin Limited was RMB8.6 million (US$1.3 million), a decrease of 80.3% from RMB43.5 million in the third quarter of 2019. Adjusted basic and diluted net income per ADS attributable to Puxin Limited[5] were RMB0.1(US$0.01) and RMB0.1(US$0.01), compared to adjusted basic and diluted net income per ADS attributable to Puxin Limited of RMB0.50 and RMB0.49 during the same period of 2019.

[5] Adjusted basic and diluted net income (loss) per ADS attributable to Puxin Limited is a non-GAAP financial measure, which is defined as basic and diluted net income (loss) per ADS attributable to Puxin Limited excluding share-based compensation expenses, gain (loss) on changes in fair value of derivative liabilities. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

EBITDA

EBITDA was RMB77.5 million (US$11.4 million), an increase of 9.4% from RMB70.8 million in the third quarter of 2019.

EBITDA margin[6] was 9.3% in the third quarter of 2020, compared to 7.1% in the same period in 2019.

Adjusted EBITDA[7] was RMB42.5 million (US$6.3 million), a decrease of 47.2% from RMB80.6 million in the third quarter of 2019.

Adjusted EBITDA margin[8] was 5.1%, compared to 8.1% in the same period in 2019.

[6] EBITDA margin is a non-GAAP financial measure, which is defined as EBITDAdivided by net revenues. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

[7] Adjusted EBITDA is a non-GAAP financial measure, which is defined as net income (loss) excluding depreciation, amortization, interest expense, interest income, income tax expenses (benefits), share-based compensation expenses and gain (loss) on changes in fair value of derivative liabilities. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

[8] Adjusted EBITDA margin is a non-GAAP financial measure, which is defined as adjusted EBITDA divided by net revenues. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

Financial and Operational Results for the Nine Months Ended September 30, 2020

Net Revenues

Net revenues were RMB2,185.6 million (US$321.9 million), a decrease of 2.6% from RMB2,244.6 million for the nine months ended September 30, 2019. This decrease was primarily due to the adverse impact of the COVID-19 pandemic on the demand for study-abroad tutoring services.

Net revenues of K-12 tutoring services increased by 15.0% to RMB1,552.3 million (US$228.6 million) from RMB1,349.9 million for the nine months ended September 30, 2019. For the nine months ended September 30, 2020, the student enrollments of K-12 tutoring services, including group class, personalized tutoring and full-time tutoring services, reached 1,992,759.

Net revenues of Puxin Online School significantly increased by 558.3% to RMB79.5 million (US$11.7 million) from RMB12.1 million for the nine months ended September 30, 2019. Student enrollments of Puxin Online School were 890,664 for the nine months ended September 30, 2020.

Net revenues of study-abroad tutoring services decreased by 37.3% to RMB553.8 million (US$81.6 million) from RMB882.6 million for the nine months ended September 30, 2019. This was primarily due to a continued impact from the global spread of the COVID-19 pandemic in major countries of the world.

Cost of Revenues

Cost of revenues decreased by 0.8% to RMB1,154.2 million (US$170.0 million) from RMB1,163.0 million for the nine months ended September 30, 2019, primarily due to a decrease in staff cost which reflected the decreased demand for study-abroad services attributable to the COVID-19 pandemic. Cost of revenues, excluding share-based compensation expenses, decreased by 0.6% to RMB1,152.4 million (US$169.7 million) from RMB1,159.5 million for the nine months ended September 30, 2019.

Gross Profit and Gross Margin

Gross profit was RMB1,031.4 million (US$151.9 million), a decrease of 4.6% from RMB1,081.6 million for the nine months ended September 30, 2020. Gross margin was 47.2%, compared to 48.2% for the nine months ended September 30, 2019.

Operating Expenses

Total operating expenses decreased by 20.7% to RMB1,067.5 million (US$157.2 million) from RMB1,345.3 million for the nine months ended September 30, 2019.

Selling expenses decreased by 1.5% to RMB757.7 million (US$111.6 million) from RMB769.2 million for the nine months ended September 30, 2019. Selling expenses, excluding share-based compensation expenses, decreased by 0.6% to RMB747.4 million (US$110.1 million) from RMB751.8 million for the nine months ended September 30, 2019, primarily due to a decrease in sales staff's performance-based compensation attributable to decreased demand for our study-abroad services caused by the COVID-19 pandemic, which was partially offset by increased marketing expenses attributable to marketing and promotion activities for our online business.

General and administrative expenses decreased by 46.2% to RMB309.8 million (US$45.6 million) from RMB576.2 million during the same period of 2019. General and administrative expenses, excluding share-based compensation expenses, decreased by 20.2% to RMB300.2 million (US$44.2 million) from RMB376.2 million for the nine months ended September 30, 2019. The decreases were primarily due to our cost control measures to improve operation efficiency.

Total share-based compensation expenses allocated to related cost of revenues and operating expenses decreased by 90.2% to RMB21.6 million (US$3.2 million) from RMB220.8 million for the nine months ended September 30, 2019. The decrease was primarily due to a decrease in the number of options vested in the first nine months of 2020 compared to the same period of 2019.

Operating Loss and Operating Margin

Operating loss decreased by 86.3% to RMB36.1 million (US$5.3 million) from an operating loss of RMB263.7 million for the nine months ended September 30, 2019. Operating margin was (1.7)% compared to (11.7)% for the same period in 2019.

Operating income of K-12 tutoring services was RMB140.0 million (US$20.6 million) compared to an operating loss of RMB22.7 million in the same period of 2019. Operating margin of K-12 tutoring services improved to 9.0% from (1.7)% in the same period of 2019.

Adjusted operating loss decreased by 66.3% to RMB14.4 million (US$2.1 million) from an adjusted operating loss of RMB42.9 million for the nine months ended September 30, 2019.

Adjusted operating margin was (0.7)%, compared to (1.9)% in the same period of the prior year.

Net Income(Loss)

Net income was RMB33.7 million (US$5.0 million), compared to a net loss of RMB409.6 million for the nine months ended September 30, 2019.

Net income of K-12 tutoring services was RMB219.0 million (US$32.3 million), compared to net loss of RMB116.0 million for the nine months ended September 30, 2019.

Net income attributable to Puxin Limited was RMB36.6 million (US$5.4 million), compared to a net loss attributable to Puxin Limited of RMB409.7 million for the nine months ended September 30, 2019. Basic and diluted net income per ADS attributable to Puxin Limited were RMB0.42(US$0.06) and RMB0.42(US$0.06), compared to basic and diluted net loss per ADS attributable to Puxin Limited of RMB4.82 and RMB4.82 during the same period of 2019.

Adjusted net income attributable to Puxin Limited was RMB79.2 million (US$11.7 million), compared to an adjusted net loss attributable to Puxin Limited of RMB91.0 million for the nine months ended September 30, 2019. Adjusted basic and diluted net income per ADS attributable to Puxin Limited were RMB0.91(US$0.13) and RMB0.89(US$0.13), compared to adjusted basic and diluted net loss per ADS attributable to Puxin Limited of RMB1.07 and RMB1.07 during the same period of 2019.

EBITDA

EBITDA was RMB145.4 million (US$21.4 million), compared to RMB(280.9) million for the nine months ended September 30, 2019.

EBITDA margin was 6.7% for the nine months ended September 30, 2020, compared to (12.5)% in the same period in 2019

Adjusted EBITDA was RMB188.0 million (US$27.7 million), an increase of 396.7% from RMB37.8 million for the nine months ended September 30, 2019.

Adjusted EBITDA margin was 8.6%, compared to 1.7% in the same period in 2019.

Cash and Current Bank Balances

As of September 30, 2020, the Company had an aggregate amount of cash and cash equivalents and the current portion of restricted cash of RMB560.1 million (US$82.5 million), compared to RMB606.3 million as of December 31, 2019. The current portion of restricted cash consisted primarily of deposits with Chinese commercial banks as collateral for our bank borrowings within one-year term.

Business Outlook

For the fourth quarter ended December 31, 2020, based on the information available as of the date of this press release, the Company expects net revenues to be between RMB730.4 million and RMB773.4 million, which represents a decrease of 15% to 10% year-over-year. These forecasts reflect the Company's current and preliminary views on the market and operational conditions, which are subject to change.

Conference Call Information

Puxin's management team will hold a conference call on November 19, 2020, at 7:00 AM U.S. Eastern Time (or 8:00 PM on the same day, Beijing/Hong Kong Time) following the quarterly results announcement. Participants may access the call by dialing the following numbers:

International: +1-412-902-4272Mainland China: 4001-201203US: +1-888-346-8982Hong Kong: +852-301-84992Passcode: Puxin

Please dial in 10 minutes before the call is scheduled to begin. When prompted, ask to be connected to the Puxin Limited Call. Participants will be required to state their name and company upon entering the call.

A replay of the conference call will be accessible two hours after the conclusion of the conference call through November 26, 2020 by dialing the following numbers:

International: +1-412-317-0088US: +1-877-344-7529Passcode: 10149922

A live webcast and archive of the conference call will be available on the Investor Relations section of Puxin's website at http://ir.pxjy.com/.

Exchange Rate

The Company's business is primarily conducted in China and all of the revenues are denominated in Renminbi ("RMB"). This announcement contains translations of certain RMB amounts into U.S. dollars ("USD" or "US$") at specified rates solely for the convenience of the readers. Unless otherwise noted, all translations from RMB to USD are made at the rate of RMB 6.7896 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on September 30, 2020. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on September 30, 2020 or at any other rate.

Use of Non-GAAP Financial Measures

To supplement the Company's financial results presented in accordance with U.S. GAAP, the Company also uses non-GAAP financial measures, including adjusted operating income (loss), adjusted operating margin, adjusted net income (loss) attributable to Puxin Limited, EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, adjusted basic and diluted net income (loss) per ADS attributable to Puxin Limited, as supplemental measures to review and assess the Company's operating performance. Adjusted operating income (loss) is defined as operating income (loss) excluding share-based compensation expenses; adjusted operating margin is defined as adjusted operating income (loss) divided by net revenues; adjusted net income (loss) attributable to Puxin Limited is defined as net income (loss) attributable to Puxin Limited excluding share-based compensation expenses and gain (loss) on changes in fair value of derivative liabilities; EBITDA is defined as net income (loss) excluding depreciation, amortization, interest expense, interest income and income tax expenses (benefits); adjusted EBITDA is defined as net income (loss) excluding depreciation, amortization, interest expense, interest income, income tax expenses (benefits), share-based compensation expenses and gain (loss) on changes in fair value of derivative liabilities; EBITDA margin is defined as EBITDA divided by net revenues; adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenues; adjusted basic and diluted net income (loss) per ADS attributable to Puxin Limited are defined as basic and diluted net income (loss) per ADS attributable to Puxin Limited excluding share-based compensation expenses and gain (loss) on changes in fair value of derivative liabilities.

The Company believes that these non-GAAP financial measures provide useful information about the Company's operating results, enhance the overall understanding of the Company's past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision-making.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools, and when assessing the Company's operating performance, investors should not consider them in isolation. In addition, calculations of this non-GAAP financial information may be different from calculations used by other companies, and therefore comparability may be limited.

The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating our performance.

For more information on this non-GAAP financial measure, please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this press release.

Safe Harbor Statement

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," "may," "would," "expect," "anticipate," "future," "intend," "aim," "plan," "believe," "estimate," "predict," "project," "continue," "confident" and similar statements. The Company 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 the Company'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: its goals and strategies, its ability to achieve and maintain profitability, its ability to attract and retain students to enroll in its courses, its ability to effectively manage its business expansion and successfully integrate businesses it acquired, its ability to identify or pursue targets for acquisitions, its ability to compete effectively against its competitors, its ability to improve the content of its existing courses or to develop new courses, and relevant government policies and regulations relating to the Company's corporate structure, business and industry. Further information regarding these and other risks 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 the Company does not undertake any obligation to update such information, except as required under applicable law.

About Puxin Limited

Puxin Limited (NYSE: NEW, "Puxin" or the "Company") is a successful consolidator of the after-school education industry in China. Puxin has a strong acquisition and integration expertise to effectively improve education quality and operational performance of acquired schools. Puxin offers a full spectrum of K-12 and study-abroad tutoring programs designed to help students achieve academic excellence, as well as prepare for admission tests and applications for top schools, universities and graduate programs in China and other countries. The Company has developed a business model effectively combining strategic acquisitions and organic growth achieved through successful post-acquisition integration, which has differentiated the Company from other after-school education service providers in China. For more information, please visit http://www.pxjy.com/.

Contacts

Puxin LimitedPhone: +86-10-6269-8930E-mail: ir@pxjy.com

ICA (Institutional Capital Advisory)Mr. Kevin YangPhone: +86-21-8028-6033E-mail: puxin@icaasia.com



PUXIN LIMITED UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of RMB and USD, except for share, per share and per ADS data)

As of December 31, As of September 30,

2019 2020 2020

RMB RMB USD

ASSETS

Current assets

Cash and cash equivalents 256,763 67,850 9,993

Restricted cash, current portion 349,540 492,246 72,500

Inventories 13,311 17,016 2,506

Prepaid expenses and other current assets 117,148 161,464 23,781

Loan receivable, current portion 191,230 207,442 30,553

Total current assets 927,992 946,018 139,333

Non-current assets

Restricted cash, non-current portion 36,727 33,062 4,870

Operating lease right-of-use assets 1,045,941 909,176 133,907

Property, plant and equipment, net 298,719 266,971 39,321

Intangible assets 264,540 230,034 33,880

Goodwill 2,055,922 2,035,577 299,808

Deferred tax assets 2,199 2,061 304

Rental deposit 75,015 70,783 10,425

Other non-current assets - 59,400 8,749

TOTAL ASSETS 4,707,055 4,553,082 670,597

LIABILITIES

Current liabilities

Accrued expenses and other currentliabilities (including accrued expensesand other current liabilities of theconsolidated VIE without recourse to the 983,715 738,379 108,752Group of RMB930,674 and RMB716,928 as ofDecember 31, 2019 and September 30, 2020,respectively)

Income tax payable of the consolidated 21,248 20,557 3,028VIE without recourse to the Group

Deferred revenue, current portion(including deferred revenue, currentportion of the consolidated VIE without 1,205,609 1,131,788 166,694recourse to the Group of RMB1,195,723 andRMB1,122,436 as of December 31, 2019 andSeptember 30, 2020, respectively)

Operating lease liabilities, currentportion (including operating leaseliabilities, current portion of theconsolidated VIE without recourse to the 276,877 255,438 37,622Group of RMB275,893 and RMB255,438 as ofDecember 31, 2019 and September 30, 2020,respectively)

Amounts due to related parties, currentportion (including amounts due to relatedparties, current portion of theconsolidated VIE without recourse to the 1,451 4,853 715Group of RMB254 and RMB4,853 as ofDecember 31, 2019 and September 30, 2020,respectively)

Bank borrowings of the consolidated VIE 318,600 555,900 81,875without recourse to the Group

Loans payable to third parties, currentportion (including loans payable to thirdparties, current portion of theconsolidated VIE without recourse to the 413,838 271,452 39,981Group of RMB292,952 and RMB171,452 as ofDecember 31, 2019 and September 30, 2020,respectively)

Promissory note, current portion(including promissory note, currentportion of the consolidated VIE without 87,023 169,740 25,000recourse to the Group of RMB nil and RMBnil as of December 31, 2019 and September30, 2020, respectively)

Total current liabilities 3,308,361 3,148,107 463,667





PUXIN LIMITED UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of RMB and USD, except for share, per share and per ADS data)

As of December 31, As of September 30,

2019 2020 2020

RMB RMB USD

Non-current liabilities

Deferred revenue, non-current portion ofthe consolidated VIE without recourse to 101,372 64,841 9,550the Group

Deferred tax liabilities of theconsolidated VIE without recourse to the 81,969 74,028 10,903Group

Franchise deposits of the consolidated 2,533 2,549 375VIE without recourse to the Group

Operating lease liabilities, non-currentportion of the consolidated VIE without 693,505 572,822 84,368recourse to the Group

Loan payable to third parties,non-current portion (including loanpayable to third parties, non-currentportion of the consolidated VIE without - 193,237 28,461recourse to the Group of RMB nil and RMBnil as of December 31, 2019 and September30, 2020, respectively)

Promissory note, non-current portion(including promissory note, non-currentportion of the consolidated VIE without 87,022 - -recourse to the Group of RMB nil and RMBnil as of December 31, 2019 and September30, 2020, respectively)

Derivative liabilities (includingderivative liabilities of theconsolidated VIE without recourse to the 172,235 - -Group of RMB nil and RMB nil as ofDecember 31, 2019 and September 30, 2020,respectively)

TOTAL LIABILITIES 4,446,997 4,055,584 597,324

SHAREHOLDERS' EQUITY

Ordinary shares (par value of USD0.00005 pershare; 1,000,000,000 and 1,000,000,000shares authorized, 188,627,228 and188,653,468 shares issued and 62 62 9174,025,810 and 174,266,300 sharesoutstanding as of December 31, 2019 andSeptember 30, 2020, respectively)

Additional paid-in capital 2,175,652 2,389,985 352,007

Statutory reserve 7,979 7,979 1,175

Accumulated other comprehensive income 68,707 58,182 8,569

Accumulated deficit (1,991,220) (1,954,618) (287,884)

Total Puxin Limited shareholders' equity 261,180 501,590 73,876

Non-controlling interest (1,122) (4,092) (603)

TOTAL SHAREHOLDERS' EQUITY 260,058 497,498 73,273

TOTAL LIABILITIES AND TOTAL SHAREHOLDERS' 4,707,055 4,553,082 670,597EQUITY

PUXIN LIMITED NAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands of RMB and USD, except for share, per share and per ADS data)



For the three months ended September 30,

2019 2020 2020

RMB RMB USD

Net revenues 996,042 833,204 122,718

Cost of revenues (including share-basedcompensation expenses of RMB954 and RMB518 494,581 422,582 62,240for the three months ended September 30,2019 and 2020, respectively)

Gross profit 501,461 410,622 60,478

Operating expenses:

Selling expenses (including share-basedcompensation expenses of RMB4,861 and 304,801 317,008 46,690RMB3,114 for the three months endedSeptember 30, 2019 and 2020, respectively)

General and administrative expenses(including share-based compensationexpenses of RMB4,843 and RMB2,819 for the 155,113 107,557 15,841three months ended September 30, 2019 and2020, respectively)

Total operating expenses 459,914 424,565 62,531

Operating income (loss) 41,547 (13,943) (2,053)

Interest expense 13,773 19,450 2,865

Interest income 6,925 11,120 1,638

Foreign exchange gain (loss) 318 (383) (56)

Gain on changes in fair value of 912 41,366 6,093derivative liabilities

Other income, net - 23,804 3,506

Income before income taxes 35,929 42,514 6,263

Income tax expenses 2,187 86 13

Net income 33,742 42,428 6,250

Less: Net income (loss) attributable to 32 (1,039) (153)non-controlling interest

Net income attributable to Puxin Limited 33,710 43,467 6,403

Net income per share attributable to PuxinLimited

- Basic 0.19 0.25 0.04

- Diluted 0.19 0.24 0.04

Net income per ADS attributable to PuxinLimited

- Basic 0.38 0.50 0.08

- Diluted 0.38 0.48 0.08

Weighted average shares used in 173,938,756 174,220,018 174,220,018calculating basic net income per share

Weighted average shares used in 177,818,968 178,394,583 178,394,583calculating diluted net income per share

Note: Each ADS represents two ordinary shares.



PUXIN LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVEINCOME (LOSS)

(In thousands of RMB and USD)

For the three months ended September 30,

2019 2020 2020

RMB RMB USD

Net income 33,742 42,428 6,250

Other comprehensive income (loss), netof tax:

Change in cumulative foreign 7,560 (12,506) (1,842)currency translation adjustments

Total comprehensive income 41,302 29,922 4,408

Less: comprehensive income (loss)attributable to non-controlling 32 (1,039) (153)interest

Total comprehensive income 41,270 30,961 4,561attributable to Puxin Limited



PUXIN LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of RMB and USD, except for share, per share and per ADS data)



For the nine months ended September 30,

2019 2020 2020

RMB RMB USD

Net revenues 2,244,639 2,185,602 321,904

Cost of revenues (including share-basedcompensation expenses of RMB3,534 and 1,163,008 1,154,210 169,997RMB1,772 for the nine months endedSeptember 30, 2019 and 2020, respectively)

Gross profit 1,081,631 1,031,392 151,907

Operating expenses:

Selling expenses (including share-basedcompensation expenses of RMB17,326 and 769,174 757,670 111,593RMB10,306 for the nine months endedSeptember 30, 2019 and 2020, respectively)

General and administrative expenses(including share-based compensationexpenses of RMB199,914 and RMB9,571 for the 576,161 309,818 45,631nine months ended September 30, 2019 and2020, respectively)

Total operating expenses 1,345,335 1,067,488 157,224

Operating loss (263,704) (36,096) (5,317)

Interest expense 54,005 60,961 8,979

Interest income 11,835 34,936 5,146

Foreign exchange gain (loss) 308 (262) (39)

Loss on changes in fair value of derivative 97,967 20,917 3,081liabilities

Other income, net - 59,766 8,803

Gain on disposal of subsidiaries - 60,968 8,980

Impairment loss on intangible assets - 4,100 604

(Loss) income before income taxes (403,533) 33,334 4,909

Income tax expenses (benefits) 6,104 (331) (49)

Net (loss) income (409,637) 33,665 4,958

Less: Net income (loss) attributable to 68 (2,937) (433)non-controlling interest

Net (loss) income attributable to Puxin (409,705) 36,602 5,391Limited

Net (loss) income per share attributable toPuxin Limited

- Basic and diluted (2.41) 0.21 0.03

Net (loss) income per ADS attributable toPuxin Limited

- Basic and diluted (4.82) 0.42 0.06

Weighted average shares used in calculatingbasic net 169,863,123 174,115,816 174,115,816

(loss) income per share

Weighted average shares used in calculatingdiluted net 169,863,123 178,109,602 178,109,602

(loss) income per share

Note: Each ADS represents two ordinary shares.



PUXIN LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands of RMB and USD)



For the nine months ended September 30,

2019 2020 2020

RMB RMB USD

Net (loss) income (409,637) 33,665 4,958

Other comprehensive income (loss), netof tax:

Change in cumulative foreign currency 5,479 (10,525) (1,550)translation adjustments

Total comprehensive (loss) income (404,158) 23,140 3,408

Less: comprehensive income (loss)attributable to non-controlling 68 (2,937) (433)interest

Total comprehensive (loss) income (404,226) 26,077 3,841attributable to Puxin Limited



PUXIN LIMITED

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(In thousands of RMB and USD, except for share, per share and per ADS data)



For the three months ended September 30,

2019 2020 2020

RMB RMB USD

Operating income (loss) 41,547 (13,943) (2,053)

Add: Share-based compensation expenses 10,658 6,451 950

Adjusted operating income (loss) 52,205 (7,492) (1,103)

Adjusted operating margin 5.2% (0.9%) (0.9%)

Net income attributable to Puxin Limited 33,710 43,467 6,403

Add: Share-based compensation expenses 10,658 6,451 950

Less: Gain on changes in fair value of derivative 912 41,366 6,093liabilities

Adjusted net income attributable to Puxin Limited 43,456 8,552 1,260

Net income 33,742 42,428 6,250

Add: Income tax expenses 2,187 86 13

Depreciation of property, plant and equipment 18,001 18,416 2,712

Amortization of intangible assets 10,034 8,202 1,208

Interest expense 13,773 19,450 2,865

Less: Interest income 6,925 11,120 1,638

EBITDA 70,812 77,462 11,410

EBITDA margin 7.1% 9.3% 9.3%

Add: Share-based compensation expenses 10,658 6,451 950

Less: Gain on changes in fair value of derivative 912 41,366 6,093liabilities

Adjusted EBITDA 80,558 42,547 6,267

Adjusted EBITDA margin 8.1% 5.1% 5.1%



Net income per ADS attributable to Puxin Limited

- Basic 0.38 0.50 0.08

- Diluted 0.38 0.48 0.08

Adjusted net income per ADS attributable toPuxin Limited

- Basic 0.50 0.10 0.01

- Diluted 0.49 0.10 0.01

Weighted average shares used in calculating 173,938,756 174,220,018 174,220,018basic adjusted net income per share

Weighted average shares used in calculating 177,818,968 178,394,583 178,394,583diluted adjusted net income per share



Note: Each ADS represents two ordinary shares.





PUXIN LIMITED

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(In thousands of RMB and USD, except for share, per share and per ADS data)



For the nine months ended September 30,

2019 2020 2020

RMB RMB USD

Operating loss (263,704) (36,096) (5,317)

Add: Share-based compensation expenses 220,774 21,649 3,189

Adjusted operating loss (42,930) (14,447) (2,128)

Adjusted operating margin (1.9%) (0.7%) (0.7%)

Net (loss) income attributable to Puxin Limited (409,705) 36,602 5,391

Add: Share-based compensation expenses 220,774 21,649 3,189

Loss on changes in fair value of derivative 97,967 20,917 3,081liabilities

Adjusted net (loss) income attributable to Puxin (90,964) 79,168 11,661Limited

Net (loss) income (409,637) 33,665 4,958

Add: Income tax expenses (benefits) 6,104 (331) (49)

Depreciation of property, plant and equipment 54,664 60,240 8,872

Amortization of intangible assets 25,803 25,801 3,800

Interest expense 54,005 60,961 8,979

Less: Interest income 11,835 34,936 5,146

EBITDA (280,896) 145,400 21,414

EBITDA margin (12.5%) 6.7% 6.7%

Add: Share-based compensation expenses 220,774 21,649 3,189

Loss on changes in fair value of derivative 97,967 20,917 3,081liabilities

Adjusted EBITDA 37,845 187,966 27,684

Adjusted EBITDA margin 1.7% 8.6% 8.6%



Net (loss) income per ADS attributable to Puxin Limited

- Basic and diluted (4.82) 0.42 0.06

Adjusted net (loss) income per ADSattributable to Puxin Limited

- Basic (1.07) 0.91 0.13

- Diluted (1.07) 0.89 0.13

Weighted average shares used in calculating 169,863,123 174,115,816 174,115,816basic adjusted net (loss) income per share

Weighted average shares used in calculatingdiluted adjusted net (loss) income per 169,863,123 178,109,602 178,109,602share

Note: Each ADS represents two ordinary shares.

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SOURCE Puxin Limited