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RISE Education Announces First Quarter 2019 Unaudited Financial Results

May 16, 2019

BEIJING, May 16, 2019 (GLOBE NEWSWIRE) -- RISE Education Cayman Ltd (“RISE” or the “Company”) (NASDAQ: REDU), a leading junior English Language Training (“ELT”) provider in China, today announced its unaudited financial results for the first quarter ended March 31, 2019.

Highlights for the First Quarter of 2019

-- Total revenues increased by 24.0% year-over-year to RMB335.0 million (US$49.9 million) in the first quarter of 2019. -- Operating income increased by 26.9% year-over-year to RMB53.0 million (US$7.9 million) in the first quarter of 2019. -- Non-GAAP operating income increased by 24.3% year-over-year to RMB60.7 million (US$9.0 million) in the first quarter of 2019. -- Net income attributable to RISE increased by 1.5% year-over-year to RMB36.4 million (US$5.4 million) in the first quarter of 2019. -- Non-GAAP net income attributable to RISE1 increased by 2.7% year-over-year to RMB44.0 million (US$6.6 million) in the first quarter of 2019. -- Adjusted EBITDA1 increased by 16.8% year-over-year to RMB80.5 million (US$12.0 million) in the first quarter of 2019. -- Total number of student enrollments2 in the first quarter of 2019 was 16,522 which includes 887 from online courses, 90 from short-term and SSAT test-prep courses, and 786 from The Edge Learning Centers Limited (“The Edge”). Student enrollments during the quarter were temporarily impacted by an earlier than usual annual price increase in Beijing, which resulted in students registering earlier, than they normally would have done prior to when the price increase took effect during the first quarter of 2019. -- The total number of the Company’s learning centers increased to 395, consisting of 78 self-owned (including 2 operated by The Edge) and 317 franchised learning centers. -- Student retention rate at self-owned learning centers increased to 72% in the first quarter of 2019, compared with 71% of the same period of the prior year.

Three Months Ended March 31, (in thousands RMB, except for percentage and per ADS data) 2018 2019 Pct. Change Revenues 270,129 335,026 24.0 % Operating income 41,782 53,040 26.9 % Non-GAAP Operating income 48,808 60,664 24.3 % Net income attributable to RISE 35,821 36,370 1.5 % Non-GAAP net income attributable to RISE 42,847 43,994 2.7 % Net income per ADS attributable to RISE – basic 0.64 0.64 0.0 % Net income per ADS attributable to RISE – diluted 0.62 0.63 1.6 % Non-GAAP net income per ADS attributable to RISE – basic 0.76 0.77 1.3 % Non-GAAP net income per ADS attributable to RISE – diluted 0.74 0.76 2.7 % Adjusted EBITDA 68,904 80,499 16.8 %

“We are pleased to see the robust top and bottom line growth during the quarter,” commented Mr. Yiding Sun, Chief Executive Officer of RISE. “We maintained the pace of our planned capacity expansion which is key to driving long-term sustainable growth, by opening 2 self-owned learning centers and 13 franchised centers during the quarter. We will continue to support organic revenue growth throughout the remainder of the year while taking advantage of market opportunities to diversify and accelerate growth momentum. Our goal for 2019 is to leverage our investments in content development, teacher training, and technology to improve our product offerings and enhance business operations. We believe these investments will allow us to further improve the educational experience for both students and parents. I strongly believe that this laser-like focus on growing the business sustainably over the long-term will help us consolidate our leading position in the market.”

Ms. Jiandong Lu, Chief Operating Officer and Chief Financial Officer of RISE, stated, “Our student retention rate during the quarter increased to 72%, demonstrating just how effective we have been at enhancing the quality of our education products and building upon the trust and loyalty parents have in us. We continue to invest in selling and marketing in a controlled and targeted manner to attract new students and strengthen word-of-mouth referrals. Learning centers opened during prior quarters are performing well and are on track to generate higher utilization rates as they ramp up capacity, mature, and contribute to revenue more meaningfully. We are in negotiations with a number of franchise partners to acquire their learning centers which are progressing well. I am confident that we have the right strategy in place to drive organic revenue growth by mid-twenty percentage for the year while generating healthy profit.”

Financial Results for the First Quarter of 2019

RevenuesTotal revenues for the first quarter of 2019 increased by RMB64.9 million, or 24.0%, to RMB335.0 million (US$49.9 million) from RMB270.1 million for the same period of the prior year. The increase was primarily attributable to an increase in revenues from educational programs.

-- Revenues from educational programs for the first quarter of 2019 increased by 23.7% to RMB286.6 million (US$42.7 million) from RMB231.7 million for the same period of the prior year. Starting during the first quarter of 2019, revenues from educational programs include revenues generated by The Edge. Revenues from educational programs in previous quarters have been adjusted for consistency and comparable comparisons. The increase in revenues from educational programs was primarily due to (i) a significant increase in the number of student enrollments for the Company’s regular courses operated by self-owned learning centers and (ii) a high and stable student retention rate of 72% during the quarter. The number of our self-owned learning centers also increased to 78 as of March 31, 2019 from 64 as of March 31, 2018. The Company added 183 classrooms as of March 31, 2019 when compared with March 31, 2018. -- Franchise revenues for the first quarter of 2019 increased by 35.3% to RMB38.2 million (US$5.7 million) from RMB28.2 million for the same period of the prior year, primarily due to an increase in one-time franchise fees and recurring franchise fees associated with an increase in the number of franchised learning centers from 220 as of March 31, 2018 to 317 as of March 31, 2019. -- Other revenues for the first quarter of 2019 increased by 0.9% to RMB10.3 million (US$1.5 million) compared to RMB10.2 million for the same period of the prior year.

Cost of RevenuesCost of revenues for the first quarter of 2019 increased by RMB28.9 million, or 23.1%, to RMB154.4 million (US$23.0 million) from RMB125.5 million during the same period last year. The increase was primarily due to an increase in rental costs associated with the Company’s expanding operations and personnel costs associated with an increase in teacher headcount and total teaching hours at the Company’s self-owned learning centers. Non-GAAP cost of revenues3 for the first quarter of 2019 increased by 23.6% to RMB150.5 million (US$22.4 million).

Gross ProfitGross profit for the first quarter of 2019 increased by RMB36.0 million, or 24.9%, to RMB180.6 million (US$26.9 million) from RMB144.7 million for the same period of the prior year. Gross margin increased to 53.9% during the first quarter of 2019 from 53.6% during the same period of last year.

Operating ExpensesTotal operating expenses for the first quarter of 2019 increased by RMB24.7 million, or 24.0%, to RMB127.6 million (US$19.0 million) from RMB102.9 million for the same period of the prior year. Non-GAAP operating expenses for the first quarter of 2019 were RMB123.9 million (US$18.5 million).

-- Selling and marketing expenses increased by 35.3% year-over-year to RMB65.7 million (US$9.8 million) during the first quarter of 2019 from RMB48.5 million during the same period last year. The increase was primarily due to an increase in marketing channel expenses and personnel costs associated with the Company’s expanding network of self-owned learning centers and growth in student enrollments. Non-GAAP selling and marketing expenses during the first quarter of 2019 increased by 37.3% year-over-year to RMB64.8 million (US$9.7 million). -- General and administrative expenses increased by 13.9% year-over-year to RMB61.9 million (US$9.2 million) during the first quarter of 2019 from RMB54.4 million for the same period of the prior year. The increase was mainly attributable to an increase in personnel costs and office expenses associated with the Company’s expanding business. Non-GAAP general and administrative expenses for the first quarter of 2019 increased by 12.8% year-over-year to RMB59.1 million (US$8.8 million).

Operating Income and Operating MarginOperating income for the first quarter of 2019 was RMB53.0 million (US$7.9 million). Non-GAAP operating income for the first quarter of 2019 increased by 24.3% year-over-year to RMB60.7 million (US$9.0 million).

Operating margin for the first quarter of 2019 was 15.8%, compared with 15.5% during the same period of the prior year. Non-GAAP operating margin stayed the same at 18.1% compared with the same period last year.

Interest ExpenseInterest expense for the first quarter of 2019 was RMB9.0 million (US$1.3 million) compared to RMB8.2 million during the same period of the prior year. The increase in interest expense was primarily attributable to higher interest rate.

Other IncomeOther income for the first quarter of 2019 was RMB7.9 million (US$1.2 million), compared with RMB10.9 million during the same period of the prior year.

Net Income Attributable to RISENet income attributable to RISE for the first quarter of 2019 increased by 1.5% to RMB36.4 million (US$5.4 million) from RMB35.8 million during the same period of the prior year. Net margin attributable to RISE for the first quarter of 2019 was 10.9%. Non-GAAP net income attributable to RISE for the first quarter of 2019 increased by 2.7% year-over-year to RMB44.0 million (US$6.6 million) from RMB42.8 million for the same period of the prior year.

EBITDA represents net income before interests, taxes, depreciation, and amortization. EBITDA for the first quarter of 2019 was RMB77.1 million (US$11.5 million). Adjusted EBITDA for the first quarter of 2019 increased by RMB11.6 million, or 16.8%, to RMB80.5 million (US$12.0 million) from RMB68.9 million for the same period of the prior year. Adjusted EBITDA margin was 24.0% for the first quarter of 2019, compared to 25.5% for the same period of the prior year.

Basic and Diluted Earnings per ADSBasic and diluted net income attributable to RISE per ADS was RMB0.64 (US$0.10) and RMB0.63 (US$0.09), respectively, for the first quarter of 2019. Basic and diluted non-GAAP net income attributable to RISE per ADS was RMB0.77 (US$0.12) and RMB0.76 (US$0.11), respectively, for the first quarter of 2019.

For details on the calculation of and reconciliation to the nearest GAAP measures for each of non-GAAP cost of revenues, operating expenses, net income, net income attributable to RISE per ADS, EBITDA, and adjusted EBITDA, see “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results.”

Cash FlowNet cash provided by operating activities for the first quarter of 2019 was RMB5.0 million (US$0.7 million) compared to RMB198.4 million during the same period of the prior year. The decrease was mainly attributable to (i) the annual increase in course prices for Beijing which took place in January this year rather than in April as in previous years, which resulted in students’ early payment of tuition fees during the fourth quarter of 2018 before the price increase took effect; and (ii) the collection of tuition fee payments in three-month installments rather than in full to comply with new government policies.

Balance SheetAs of March 31, 2019, the Company had cash and cash equivalents and restricted cash of RMB1,293.1 million (US$192.7 million) compared to RMB1,316.8 million as of December 31, 2018.

Current and non-current deferred revenue and customer advances were RMB995.6 million (US$148.4 million) as of March 31, 2019, representing a decrease of 4.2% from RMB1,038.8 million as of December 31, 2018. The decrease was primarily due to the change of tuition fees collection schedule for K-12 tutoring courses.

Business OutlookFor the second quarter of 2019, the Company expects its total revenues to be in the range of RMB369 million to RMB375 million, representing a year-over-year growth of approximately 23% to 25%. This forecast reflects the Company’s current and preliminary view on the market and operational conditions, which is subject to change.

Conference Call InformationRISE will hold a conference call on Thursday, May 16, 2019 at 9:00 p.m. U.S. Eastern Time (Friday, May 17, 2019 at 9:00 a.m. Beijing Time) to discuss the financial results. Participants may access the call by dialing the following numbers:

United States: +1-845-675-0437 International: +65-6713-5090 China Domestic: 400-6208-038 Hong Kong: +852-3018-6771 Conference ID: # 4594879 The replay will be accessible through May 23, 2019 by dialing the following numbers: United States: +1-646-254-3697 International: +61-2-8199-0299 Conference ID: # 4594879

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at http://ir.risecenter.com/.

Exchange RateThis announcement contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.7112 to US$1.00, the noon buying rate in effect on March 31, 2019 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

About Non-GAAP Financial MeasuresTo supplement RISE’s financial results presented in accordance with U.S. GAAP, the Company uses non-GAAP financial measures, which are adjusted from results based on U.S. GAAP. Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures are set forth in table at the end of this earnings release titled “Reconciliation of GAAP and Non-GAAP Results,” which provides more details on the non-GAAP financial measures.

Non-GAAP cost of revenues, non-GAAP operating expenses, including non-GAAP selling and marketing expenses and non-GAAP general and administrative expenses, provides the Company with an understanding of the results from the primary operations of the Company’s business by excluding the effects of certain transaction-related expenses that do not reflect the ordinary operating expenses of the Company’s operations and share-based compensation.

EBITDA, adjusted EBITDA, adjusted EBITDA margin and non-GAAP net income provide the Company with an understanding of the results from the primary operations of the Company’s business by excluding the effects of certain transaction-related expenses that do not reflect the ordinary EBITDA and net income of the Company’s operations.

The Company uses non-GAAP operating expenses, including non-GAAP selling and marketing expenses and non-GAAP general and administrative expenses, non-GAAP operating income, Non-GAAP operating margin, EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income attributable to RISE, and non-GAAP basic and diluted net income per ADS attributable to RISE to evaluate the Company’s period-over-period operating performance because the Company’s management believes these provide a more comparable measure of the Company’s continuing business as it adjusts for transaction-related expenses that are not reflective of the normal earnings of the Company’s business. These measures may be useful to an investor in evaluating the underlying operating performance of the Company’s business, and to enhance investors’ overall understanding of the historical and current financial performance of the Company’s continuing operations and prospects for the future.

Non-GAAP financial information should not be considered a substitute for or superior to U.S. GAAP results. In addition, calculations of this non-GAAP financial information may be different from calculations used by other companies, and therefore comparability may be limited.

Non-GAAP cost of revenues exclude relevant share-based compensation expenses and amortization of certain intangible assets (“IA”) acquired as part of the 2013 acquisition from cost of revenues. Non-GAAP operating income adds back share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. Each of non-GAAP operating expenses, non-GAAP selling and marketing expenses or non-GAAP general and administrative expenses excludes relevant share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. EBITDA represents net income before interests, taxes, depreciation and amortization.

For more information on non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures.”

About RISE EducationRISE Education Cayman Ltd is a leading junior English Language Training (“ELT”) provider based in Beijing. Founded in 2007, the Company pioneered the application of the “subject-based learning” philosophy in China, which uses language arts, math, natural science, and social science to teach English in an immersive environment that helps students learn to speak and think like a native speaker. Through three flagship courses, Rise Start, Rise On, and Rise Up, the Company provides ELT to students aged three to six, seven to twelve and thirteen to eighteen, respectively. The Company’s highly scalable business model includes both self-owned and franchised learning centers. For more information, please visit http://en.risecenter.com/.

Safe Harbor StatementThis press release contains statements of a forward-looking nature. These statements, including the statements relating to the Company’s future financial and operating results, are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “will,” “expects,” “believes,” “anticipates,” “intends,” “estimates” and similar statements. Among other things, management’s quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about RISE and the industry. Potential risks and uncertainties include, but are not limited to, those relating to its ability to attract new students and retain existing students, its ability to maintain or enhance its brand, its ability to compete effectively against its competitors, its ability to execute its growth strategy, its ability to introduce new products or enhance existing products, its ability to obtain required licenses, permits, filings or registrations, its ability to grow or operate or effectively monitor its franchise business, quarterly variations in its operating results caused by factors beyond its control, macroeconomic conditions in China and government policies and regulations relating to its corporate structure, business and industry and their potential impact on its future business development, financial condition and results of operations. All information provided in this press release is as of the date hereof, and RISE undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although RISE believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by RISE is included in RISE’s filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F for the year ended December 31, 2018.

Investor Relations Contact

Mei LiRISE EducationEmail: riseir@rdchina.net Tel: +86 (10) 8559-9191

_____________________________________________________________1 Non-GAAP net income attributable to RISE excludes share-based compensation expenses and amortization of certain intangible assets, including teaching course license, trademark, student base and franchise agreements, as part of the junior English Language Training (“ELT”) business acquisition by the Company from certain third-party in 2013 (the “2013 acquisition”) from net income attributable to RISE. EBITDA represents net income before interests, taxes, depreciation and amortization. Adjusted EBITDA excludes share-based compensation expenses from EBITDA. For details on the calculation of each of these and the reconciliation of each to the most directly comparable GAAP financial measure, see “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results.”

2 Student enrollment refers to the cumulative total number of courses enrolled in by students during a given period of time; if one student enrolls in multiple courses, it will be counted as multiple student enrollments.

3 Non-GAAP cost of revenues exclude relevant share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition from cost of revenues. Non-GAAP operating income adds back share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. Each of non-GAAP operating expenses, non-GAAP selling and marketing expenses or non-GAAP general and administrative expenses excludes relevant share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. For details on the calculation of each of these and the reconciliation of each to the most directly comparable GAAP financial measure, see “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results.”

RISE EDUCATION CAYMAN LTD UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) As of ----------------------------------- December 31 March 31 March 31 ----------- ----------- --------- 2018 2019 2019 ----------- ----------- --------- RMB RMB USD ASSETS Current assets: Cash and cash equivalents 1,288,080 1,264,764 188,456 Restricted cash 28,705 28,340 4,223 Accounts receivable, net 2,438 2,716 404 Amounts due from a related party 190 186 28 Inventories 11,320 8,164 1,216 Prepaid expenses and other current assets 57,984 49,675 7,402 --------- - --------- - ------- - Total current assets 1,388,717 1,353,845 201,729 --------- - --------- - ------- - Property and equipment, net 128,412 131,987 19,667 Intangible assets, net 198,057 189,716 28,269 Goodwill 491,969 485,032 72,272 Deferred tax assets 6,713 21,842 3,255 Other non-current assets 654,963 640,725 95,470 --------- - --------- - ------- - Total assets 2,868,831 2,823,147 420,662 --------- - --------- - ------- - LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term loan 82,506 80,534 12,000 Accounts payable 8,426 8,359 1,245 Accrued expenses and other current liabilities 305,655 308,433 45,958 Deferred revenue and customer advances 1,002,796 962,806 143,463 Income taxes payable 25,262 20,049 2,987 --------- - --------- - ------- - Total current liabilities 1,424,645 1,380,181 205,653 --------- - --------- - ------- - Long-term loan 502,356 492,268 73,351 Deferred revenue and customer advances 36,037 32,790 4,886 Deferred tax liabilities 14,541 16,384 2,441 Other non-current liabilities 450,418 431,135 64,241 Total liabilities 2,427,997 2,352,758 350,572 --------- - --------- - ------- - Shareholders’ equity: Ordinary shares 7,074 7,009 1,044 Additional paid-in capital 600,011 574,565 85,613 Treasury shares, at cost (23,460 ) (4,059 ) (605 ) Statutory reserves 78,345 78,345 11,674 Accumulated deficit (248,674 ) (212,304 ) (31,634 ) Accumulated other comprehensive income 42,459 41,947 6,250 --------- - --------- - ------- - Total Rise Education Cayman Ltd shareholders’ equity 455,755 485,503 72,342 --------- - --------- - ------- - Non-controlling interests (14,921 ) (15,114 ) (2,252 ) --------- - --------- - ------- - Total equity 440,834 470,389 70,090 Total liabilities, non-controlling interests and shareholders’ equity 2,868,831 2,823,147 420,662 --------- - --------- - ------- -

RISE EDUCATION CAYMAN LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except share and ADS data and per share and per ADS data) Three Months Ended March 31, ------------------------------------------- 2018 2019 2019 ------------- ------------- ------------- RMB RMB USD ------------- ------------- ------------- Revenues 270,129 335,026 49,920 Educational programs 231,730 286,576 42,700 Franchise revenues 28,220 38,177 5,689 Others 10,179 10,273 1,531 Cost of revenues (125,467 ) (154,401 ) (23,006 ) ----------- - ----------- - ----------- - Gross profit 144,662 180,625 26,914 Selling and marketing expenses (48,522 ) (65,661 ) (9,784 ) General and administrative expenses (54,358 ) (61,924 ) (9,227 ) ----------- - ----------- - ----------- - Operating income 41,782 53,040 7,903 Interest income 4,206 2,574 384 Interest expense (8,205 ) (8,953 ) (1,334 ) Foreign currency exchange gain 28 50 7 Other income, net 10,908 7,927 1,181 ----------- - ----------- - ----------- - Income before income tax expense 48,719 54,638 8,141 Income tax expense (13,993 ) (18,706 ) (2,787 ) ----------- - ----------- - ----------- - Net income 34,726 35,932 5,354 ----------- - ----------- - ----------- - Add: net loss attributable to non-controlling interests 1,095 438 65 ----------- - ----------- - ----------- - Net income attributable to RISE Education Cayman Ltd 35,821 36,370 5,419 ----------- - ----------- - ----------- - Net income per ordinary share: Basic 0.32 0.32 0.05 Diluted 0.31 0.32 0.05 Net income per ADS: Basic 0.64 0.64 0.10 Diluted 0.62 0.63 0.09 Shares used in net income per ordinary share computation: Basic 112,414,410 113,615,686 113,615,686 Diluted 115,919,564 115,056,569 115,056,569 ADSs used in net income per ADS computation: (Note 1) Basic 56,207,205 56,807,843 56,807,843 Diluted 57,959,782 57,528,284 57,528,284 Note 1: Each ADS represents two ordinary shares.

RISE EDUCATION CAYMAN LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except share data and per share and per ADS data) Three Months Ended March 31, ------------------------- 2018 2019 2019 ------ -------- ------- RMB RMB USD ------ -------- ------- Net income 34,726 35,932 5,354 Other comprehensive (loss)/income, net of tax of nil: Foreign currency translation adjustments 226 (512 ) (76 ) ------ ------ - ----- - Other comprehensive (loss)/income 226 (512 ) (76 ) ------ ------ - ----- - Comprehensive income 34,952 35,420 5,278 ------ ------ - ----- - Add: comprehensive loss attributable to non-controlling interests 1,095 438 65 ------ ------ - ----- - Comprehensive income attributable to RISE Education Cayman Ltd 36,047 35,858 5,343 ------ ------ - ----- -

RISE EDUCATION CAYMAN LTD RECONCILIATION OF GAAP AND NON-GAAP RESULTS (in thousands, except ADS data and per ADS data) Three Months Ended March 31, ---------------------------------- 2018 2019 2019 ---------- ---------- ---------- RMB RMB USD ---------- ---------- ---------- Net income 34,726 35,932 5,354 Share-based compensation (“SBC”) 3,032 3,383 504 IA amortization arising from Bain acquisition 3,994 4,241 632 ---------- ---------- ---------- Non-GAAP net income 41,752 43,556 6,490 ---------- ---------- ---------- Add: net loss attributable to non-controlling interests 1,095 438 65 ---------- ---------- ---------- Non-GAAP net income attributable to RISE Education Cayman Ltd 42,847 43,994 6,555 ---------- ---------- ---------- Net income 34,726 35,932 5,354 Add: Depreciation 7,877 10,754 1,602 Add: Amortization 5,277 5,345 796 Add: Interest expense 8,205 8,953 1,334 Add: Income tax expense 13,993 18,706 2,787 Less: Interest income 4,206 2,574 384 ---------- ---------- ---------- EBITDA 65,872 77,116 11,489 ---------- ---------- ---------- SBC 3,032 3,383 504 ---------- ---------- ---------- Adjusted EBITDA 68,904 80,499 11,993 ---------- ---------- ---------- Cost of revenues 125,467 154,401 23,006 Personnel costs 49,494 64,035 9,542 Rental costs 40,931 51,891 7,732 Others 35,042 38,475 5,733 Less: SBC 450 450 67 Less: IA amortization arising from Bain acquisition 3,256 3,457 515 ---------- ---------- ---------- Non-GAAP cost of revenues 121,761 150,494 22,424 ---------- ---------- ---------- Non-GAAP gross profit 148,368 184,532 27,496 Selling and marketing expenses 48,522 65,661 9,784 Less: SBC 614 102 15 Less: IA amortization arising from Bain acquisition 738 784 117 ---------- ---------- ---------- Non-GAAP selling and marketing expenses 47,170 64,775 9,652 ---------- ---------- ---------- General and administrative expenses 54,358 61,924 9,227 Less: SBC 1,968 2,831 422 ---------- ---------- ---------- Non-GAAP general and administrative expenses 52,390 59,093 8,805 ---------- ---------- ---------- Operating expense 102,880 127,585 19,011 Less: SBC 2,582 2,933 437 Less: IA amortization arising from Bain acquisition 738 784 117 ---------- ---------- ---------- Non-GAAP operating expense 99,560 123,868 18,457 ---------- ---------- ---------- Operating income 41,782 53,040 7,903 SBC 3,032 3,383 504 IA amortization arising from Bain acquisition 3,994 4,241 632 ---------- ---------- ---------- Non-GAAP operating income 48,808 60,664 9,039 ---------- ---------- ---------- Non-GAAP net income per ADS attributable to RISE-basic 0.76 0.77 0.12 Non-GAAP net income per ADS attributable to RISE-diluted 0.74 0.76 0.11 ADSs used in calculating net income per ADS-basic 56,207,205 56,807,843 56,807,843 ADSs used in calculating net income per ADS-diluted 57,959,782 57,528,284 57,528,284