Sunlands Technology Group – ADR (NYSE:STG) stock fell 3.54% (As on November 24, 8:04:01 AM UTC-4, Source: Google Finance) after the company in the third quarter of FY 22 has reported 3.2% fall in the net revenues to RMB576.2 million (US$81.0 million) from RMB595.1 million in the third quarter of 2021. The decrease was mainly driven by the decline in gross billings. Gross profit decreased by 4.0% to RMB491.3 million (US$69.1 million) in the third quarter of 2022 from RMB512.0 million in the third quarter of 2021. The net income for the third quarter of 2022 was RMB168.1 million (US$23.6 million), compared with RMB92.8 million in the third quarter of 2021. As of September 30, 2022, the Company had RMB678.8 million (US$95.4 million) of cash and cash equivalents and RMB170.1 million (US$23.9 million) of short-term investments, compared with RMB626.7 million of cash and cash equivalents and RMB184.2 million of short-term investments as of December 31, 2021. As of September 30, 2022, the Company had a deferred revenue balance of RMB1,798.6 million (US$252.8 million), compared with RMB2,348.2 million as of December 31, 2021. Capital expenditures were RMB1.3 million (US$0.2 million) in the third quarter of 2022, compared with RMB1.8 million in the third quarter of 2021.

Moreover, in the third quarter of 2022, operating expenses were RMB325.0 million (US$45.7 million), representing a 24.5% decrease from RMB430.6 million in the third quarter of 2021. Product development expenses decreased by 17.5% to RMB11.5 million (US$1.6 million) in the third quarter of 2022 from RMB14.0 million in the third quarter of 2021. The decrease was mainly due to a decrease in compensation expenses to our product development personnel. Sales and marketing expenses decreased by 23.9% to RMB269.1 million (US$37.8 million) in the third quarter of 2022 from RMB353.5 million in the third quarter of 2021. The decrease was mainly due to: (i) lower spending on branding and marketing activities; and (ii) declined compensation expenses related to our sales and marketing personnel. General and administrative expenses decreased by 29.6% to RMB44.4 million (US$6.2 million) in the third quarter of 2022 from RMB63.2 million in the third quarter of 2021. The decrease was mainly due to a decrease in rental expenses.

For the fourth quarter of 2022, Sunlands currently expects net revenues to be between RMB520 million to RMB540 million, which would represent a decrease of 8.3% to 11.7% year-over-year.