Ata Creativity Global ((AACG)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for ATA Creativity Global painted a picture of robust growth tempered by some financial challenges. The company reported strong revenue and income growth for 2024, largely fueled by increased student enrollment and the successful launch of new programs. However, rising operating expenses and ongoing net losses were also highlighted, alongside a modest revenue growth forecast for 2025.
Strong Revenue Growth
Net revenues for the fourth quarter of 2024 saw a significant increase of 20.7% compared to the same period in 2023. This growth was primarily driven by the company’s portfolio training programs and research-based learning services, underscoring the effectiveness of their educational offerings.
Significant Increase in Net Income
ATA Creativity Global reported a substantial 54.9% increase in net income, reaching RMB13.3 million in the fourth quarter of 2024. This impressive growth reflects the company’s successful financial strategies and operational efficiencies.
Record Student Enrollment Growth
The company experienced a remarkable 15.8% increase in total student enrollment for the full year 2024. Portfolio training student enrollment grew by 12.9%, while other programs saw a 20.2% increase, highlighting the company’s appeal to a diverse student base.
Expansion of Global Footprint
In a bid to expand its geographic reach, ATA Creativity Global opened new centers in Japan and London. The ACG Japan Center was inaugurated in January 2025, and the London Center opened in September 2024, broadening the company’s service offerings and market presence.
Successful Introduction of New Programs
The launch of innovative programs, such as creative arts healing training and Japanese animation study tours, has contributed to the company’s revenue growth. These new offerings demonstrate ATA Creativity Global’s commitment to diversifying its educational services.
Increased Operating Expenses
Operating expenses for the full year 2024 rose by 18.1%, driven by higher sales, general, and administrative expenses. This increase highlights the financial challenges the company faces as it scales its operations.
Continued Net Loss for the Year
Despite the revenue gains, ATA Creativity Global reported a net loss of RMB36.1 million for the full year 2024, slightly higher than the RMB33.7 million loss in 2023. This continued net loss underscores the financial hurdles the company must overcome.
Limited Revenue Growth Forecast for 2025
The company projects a modest revenue growth of 3% to 5% for 2025, indicating a slowdown compared to the previous year. This forecast suggests a cautious outlook as ATA Creativity Global navigates its financial landscape.
Forward-Looking Guidance
ATA Creativity Global provided guidance for fiscal year 2025, projecting total net revenues between RMB276 million to RMB281 million, representing a 3% to 5% year-over-year increase. The growth is expected to be driven by portfolio training services and the positive impact of the COVID-19 international travel recovery. Strategic initiatives, including geographic expansion and new services, are anticipated to support long-term growth and profitability.
In conclusion, ATA Creativity Global’s earnings call revealed a company experiencing strong growth in revenue and student enrollment, yet facing financial challenges such as increased operating expenses and continued net losses. The modest revenue growth forecast for 2025 suggests a cautious approach, but strategic initiatives and a recovering global environment provide optimism for the future.