Good morning, good evening, ladies and gentlemen. Thank you for standing by, and welcome to QuantaSing's Earnings Conference Call. At this time, all participants are in a listen-only mode. We will be hosting a question- and- answer session after management's prepared remarks. Please note that today's event is being recorded. I will now turn the conference over to Miss Leah Guo, Investor Relations Associate Director of the company. Please go ahead, ma'am.
Thank you. Hello, everyone, and welcome to QuantaSing's Earnings Call for the third quarter of fiscal year 2023. With us today are Mr. Peng Li, our founder, chairman, and CEO, and Mr. Tim Xie, our CFO. Mr. Li will give a general business overview for the quarter, and then Tim will discuss the financials in more details. Following their prepared remarks, Mr. Li and Tim will be available for the Q&A session. I'll translate for Mr. Li. You can refer to our third fiscal quarter financial results on our IR website at ir.quantasing.com. You can also access a replay of this call on our IR website when it becomes available a few hours after its conclusion. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call.
As we will be making forward-looking statements, please note that all numbers stated in the following management prepared remarks are in RMB terms. We will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in our earnings release and filings with the SEC. I will now turn the call over to the CEO and Founder of QuantaSing, Mr. Li.
Okay, thank you, everyone, for attending this meeting. I'm Peng Li, the founder and CEO of the company. Our commitment to our mission of improving people's quality of life through interest-based learning led to positive results in the third fiscal quarter of 2023. With strong pipeline visibility, diversified revenue streams, and expansive addressable market, we were able to maintain our revenue growth and profitability path. During the quarter, we recorded 16.8% year-over-year revenue growth and an adjusted net income of 21.7 million RMB. This marks our second profitable quarter in a row. Our strong pipeline visibility is shown by our registered user growth. As of March 31, 2023, we had around 86.3 million registered users.
This is a 76.5% increase from the previous year. This number of paying learners grew by 45.4% year-over-year to approximately 0.4 million. Our focus on agile, scalable business models have allowed us to rapidly expand our course offerings and attract a large and growing user base. Since August 2021, we have ventured into offering learning courses tailored to personal interests, a strategic move that has garnered constant, rapid, repeat purchase. We have especially delighted by the results of this quarter. Our diverse and engaging courses have generated an impressive 11% repeat purchase rate. This figure has been steadily growing since the launch of our personal interest brands. We have developed various ways to ensure customer loyalty and encourage repeat purchase.
We do this by providing a high quality and engaging experience for our learners. Our dual instructor model of live streaming and community building combines practical experience, exercises, one-on-one coaching, pre-recorded lectures, and supplemental Q&A live courses. These features enhance the joy and effectiveness of learning by fostering interaction and communication between instructors and the learners. We follow the principle of service-driven experience excellence to ensure that learners receive the best possible value from our courses. Our courses are customized to our learners' specific needs, with a focus on developing their skills and abilities. We also provide other courses that offer professional value-added services. This allow our learners to apply that what they have learned in practical settings.
Our user-centered courses and service provision are subject to a stringent review process. This process involves careful selection of our tutors and instructors, training, and service standards. Our repeat purchase rate provides us with excellent visibility into our sales pipeline. As such, we are able to forecast the revenue and manage our budgets with greater accuracy. Our commitment to diversified revenue streams has been a critical factor in our growth trajectory. By offering a wide range of services to both individuals and enterprises, we have been able to meet the needs of learners from diverse backgrounds, and tap into various markets and revenue streams. We remain dedicated to addressing the dynamic demands of the business landscape, and we have been developing our enterprise-oriented services accordingly.
This is exemplified by our train the trainer training camp, or TTT camp, led by experienced internal training specialists. This comprehensive course empowers novice trainers with essential skills across a wide range of modules. Covered topics include course development, activity design, presentation skills, and mastery of training knowledge. Participants gain hands-on experience in creating materials, designing activities, delivering impactful presentations, building expertise, and enhancing the overall training experience. In adding to our TTT camp, our expanding suite of enterprise-oriented services is equipping businesses with the necessary tools and training to optimize talent management and development. By extending our service offerings to enterprises, we position ourselves as a two-sided service provider. Our solution address the needs of both individuals and the enterprises.
This strategy reaffirms our commitment to delivering unmatched value and fostering enduring success with the corporate sector. Moreover, our targeted approach to course offerings provides exceptional value to our learners while maximizing our revenues. During the third fiscal quarter, revenue from other personal interest courses grew to RMB 238 million, contributing 29.5% of our total revenues. We continuously introduce high quality, purely and accessible content that resonates with our users. Our courses help people expand their horizons, enrich their lives, and achieve self-fulfillment. Through strategic course development, we address in-demand topics and capitalize on higher profit margins, expanding our reach and seeding new opportunities for revenue growth. These efforts reflect our unwavering commitment to empowering learners and help them thrive in our changing world.
Take the example of a retired man in Harbin, who found joy in learning calligraphy through our platform. He finally had the time and the opportunity to pursue his passion. Calligraphy not only brought him happiness and satisfaction, but also improved his hand-eye coordination. We are thrilled that our interest-based learning courses gave him the opportunity to reach his goals and better his life. Another example is a 54-year-old homemaker, who discovered our memory training course and improved her memory through regular practice. Our instructor's unique and engaging lecture style, combined with regular reviews, made the learning experience with enjoyable and informative. The homemaker impressed her gratitude for the useful course, which has improved her self-confidence. She also praised the online learning atmosphere, which helped make the experience positive and impacting.
We have the empowering story of a man who lives a fulfilled life, owning a Taobao bookstore and a beauty store. Recently, he decided to try making short videos. To learn about video editing, he turned to our JiangZhen platform and quickly acquired the skills needed for his new interest. He then created videos inspired by the characters from the TV series, Dream of the Red Chamber. The content is original and innovative, and reflects his personality and interest, which helped him to expand his follower base, and he's now able to share his creations with a wider audience. We are proud that our accessible and diversified learning resources can empower individuals to pursue their passions and achieve their dreams.
At QuantaSing, we are committed to create a vibrant community that fosters collaboration and interaction among our learners. Our courses offer top quality content and encourage engagement and participation. As well as our online offerings, we host a range of offline activities such as workshop, meetups, and networking events. One such event that we recently hosted was the Memory Challenge on March 25th. The event was followed by thousands of people, and around 1,000 registered to take part. From these applications, 30 people were selected to participate in this offline finals. The finalists had the opportunity to engage with an international master of memory, our memory instructors and memory experts. It was a exciting and engaging event that showcased our commitment to building a strong community and promoting lifelong learning.
In February 2023, we launched a sales training program for paying users of our advanced short video courses. The program is the industry's first of its kind, closed loop learning model based on the knowledge, practice, application circle. It provides learners with product selection assistance and further facilitates the practical application of knowledge by our learners. In an aging society like China, there is a significant market demand for the senior citizen learning. According to the WHO, the percentage of people in China aged 60 or above, is expected to rise from 18.7% in 2020 to 28% in 2040. This will create a huge opportunity for us to help seniors embrace lifelong learning. Our QianChi and JiangZhen platforms provide user-friendly, interest-based learning resources that benefit senior learners.
Our courses provide opportunities for learners to build self-confidence and self-esteem through social connection. As a result, our senior learners can develop a greater sense of belonging and fulfillment. In addition, our diversified course content allow users to access learning materials in different fields and expand their horizons. This can help people developing self-sufficiency, skills.... which they can then apply to other areas of their lives. As we continue to serve this growing market, we are confident that we can create value for both our learners and the shareholders. This will position us for continued success in this market. To summarize, we have sustained our revenue growth while efficiently controlling costs to boost our path to profitability and improve our cash flow. Our continuous efforts in optimizing our cost structure have begun to bear fruit.
This is evidence for our 2 consecutive quarters of positive adjusted net income. With our innovative cost offerings and focus on user engagement, along with our steadfast dedication to financial prudence, we are confident in our ability to strike. We are excited about the huge opportunities ahead, and look forward to delivering value to our shareholders in the long run. With that, I will turn the call over to Tim, to discuss the details of our financials. Thank you all.
Thank you. Before I go too into the details of our financial results, please note that all the amounts are in RMB terms, that the reporting period is the third quarter of fiscal year 2023, that ended on March 31st, 2023. That in addition to GAAP measures, we'll also be discussing non-GAAP measures to provide greater clarity on the trends in our actual operations. For the third quarter of fiscal year 2023, we grew our total revenues by 16.8% year-over-year, and 2.6% quarter-over-quarter, to RMB 807.2 million, mainly driven by growth within our individual online learning services.
Among our revenues from individual online learning services grew by 21.2% year-over-year, to $724.7 million, or 89.8% of total revenues, mainly due to a continued demand for other personal interest courses. Consistent with our strategy to diversify course offerings, our gross billings of individual online learning services increased by 13.8% year-over-year to $803.6 million. Revenues from enterprise services increased by 19.6% year-over-year to $81.1 million, or 10% of total revenues, primarily driven by continued robust demand from enterprise customers for marketing and talent management services. Gross profit was $706.2 million, representing a gross margin of 87.5%, compared to 83.5% in the same period last year.
Total operating expenses increased to RMB 729.3 million from RMB 575.1 million last year. To break this down, sales and marketing expenses were RMB 631.4 million, representing a change of 28.2% year-over-year, as they increased spending on marketing and promotional activities from other personal interest courses. As a percentage of total revenue, non-GAAP sales and marketing expenses, which excluded share-based compensation, increased to 76.7% from 70.1% a year ago. Research and development expenses were RMB 49.6 million, representing a change of 4.9% year-over-year, as a result of our strategy of investing in technology and data analytics.
As a percentage of total revenue, non-GAAP R&D expenses, which excluded share-based compensation, decreased to 5.1% from 5.8% a year ago. General and administrative expenses were RMB 48.3 million, representing a change of 37.4% year-over-year. As we continue to operate efficiently as a percentage of total revenue, non-GAAP G&A expenses, which excluded share-based compensation, decreased to 4% from 4.1% a year ago. Net loss was RMB 22.7 million, excluding share-based compensation. Adjusted net income was RMB 21.7 million, representing an adjusted net margin of 2.7% during the quarter. Basic and diluted net loss per share were both RMB 0.19. Adjusted basic and diluted net income per share were RMB 0.14 and RMB 0.13, respectively, during the quarter.
Turning to our balance sheet, as on March 31, 2023, our company held RMB 850.4 million in cash and cash equivalents and short-term investments, compared to RMB 399.1 million as of June 30, 2022. I wanted to provide some color for our outlook. For the fourth quarter of fiscal year 2023, that ends on June 30, 2023, we expect revenues to be between RMB 760 million and RMB 790 million, representing a year-over-year increase of between 20.8% and 25.6%. These projections take into consideration the current market conditions prevailing in the industry. Our strategic focus on personalized online learning services and diversified course offerings drove robust results in the third quarter of fiscal year 2023, even against the uncertain macro backdrop.
Looking ahead, we will continue our near-term strategy of prudently optimizing our cost structure and expenses, and operating more efficiently and effectively. With our healthy balance sheet and diversified revenue channels, we are well positioned to navigate any challenges ahead and capitalize on growth opportunities, while delivering further value to our customers and shareholders. That concludes my prepared remarks. Operator, let's open up the call for questions. Thank you.
Thank you. We will now begin the question- and- answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. When asking a question in Chinese, please translate your question to English for the convenience of everyone on the call. Our first question today comes from Liping Zhao with CICC. Please go ahead.
[Foreign Language] . Thanks for taking my questions. I have two questions here. First, how should we expect the 4Q and next year's growth of QiNiu, given the recent relatively soft capital markets? Second, could you please elaborate QianChi and JiangZhen's growth strategy, such as new course pipeline, et cetera? Thank you.
Thank you, Brenda, for your questions. I think I will answer this question because it is most related to the financial side. I'll answer in English. Okay? Thank you. For the first question, in terms of the capital market performance, especially this year, for our financial literacy courses, I think we offer both the introductory and the premium courses currently. This allows us to cater to the needs of learners with diverse educational backgrounds and learning objectives.
I think, since our beginning of the launch of the courses, our, you know, both the introductory and advanced courses, our such kind of courses target knowledge learners who wish to acquire basic financial and investment knowledge, but they lack readily available access to easily understandable resources. Our course content extends beyond equity markets and covers a wide range of subjects, many covering the basic knowledge and framework of the financial area. These subjects range, I think, such as basic knowledge in bonds, insurance, and investment products.
Also, at this stage, we don't see a correlation between the equity market and our registers users growth, because most of them, most of our growing learners among the public, their aim is to better management personal and family wealth by improving their financial literacy. Many of them even do not have a stock account to trade in the equity market. I think. In a sum, I think the conclusion is that there's no direct relationship between our learners' interests or maybe their purchase behavior and the capital market.
Actually, since the macro environment and situation may impact some of someone's feeling of the, their desire to purchase some courses. I think, maybe, since the macro environment may have some slightly impact on some of our purchasers or learners' behavior. I think, for the current stage, when we're talking about our financial literacy courses, we will integrate all of our financial courses, including the financial and non-financial related courses.
That will also answer your second question, because as we continue to expand our course offerings and diversify our revenue streams, we expect to see some maybe some shifts in the proportions of our revenue makeup. Specifically, since our launching of long, QianChi, JiangZhen and QianChi, respectively in August of 2021 and June, 2022. We anticipate that revenue from the non-financial literacy personal interest courses will continue to contribute a greater portion of our overall revenue in the future. We have seen strong demand for these courses, and we are actively working to scale up our offerings in this area.
As a whole, I think we will seize the opportunity to reserve as much as more pipelines of our course SKUs, and to promote and launch the new SKUs when we think it is probable. I think in the future, as a whole, even there's a there's some change in the macro situation, maybe for every aspect. We think as a whole of the revenue growth, we are very confident for the SKUs growth, both for the financial literacy and also the non-financial literacy. I think as a whole, we will balance the proportion and contribution of each of the courses, considering the return on investment of ROI, and also the lifetime value of our learners.
Yes. Hope that answers your question.
Got it. Very clear. Thanks.
Thank you.
Thank you. Our next question today comes from Danny Jen with CLSA. Please go ahead.
Hi. Thank you, management, for taking my questions. This is Danny Jen from CLSA. I have two questions today for the company. The first one is, how your progress on deepening and scaling your personal interest courses segment? My second question is, what sort of progress are you making so far in the enterprise services? That's it. Thank you.
Yeah, thank you. So, Yeah I will answer the question. Thank you for the questions, so as for the answer, I think we aim to increase the, increase the repeat rate repeat verses rate for our other personal interest courses by providing exceptional service and meeting the evolving needs of our learners. Because, the formal launch of the repeat verses promotion, or operation of our, for example our JiangZhen brand, just started from late last year. So building on the principal of self driven we have implemented several strategies to enhance our routine process rate. I think f irst, we have been actively customizing course courses based on the learners specific needs and preferences, by getting back through continuous engagement, and understanding what our learners want, and.
Based on our understanding of the learners' behavior, we aim to deliver content that resonates with them. This increases their motivation to repurchase. Secondly, we place great emphasis on serving our learners beyond course delivery. We design our courses to provide relevant skills and abilities that learners need, complemented by supplementary resources and value-added services. By offering ongoing support and opportunities for further skill development, we aim to enhance the overall learning experience and encourage learners to continue their journey with us. As a successful example of the repeat purchase for our financial literacy courses, we are very confident that by leveraging such kind of experience and operational efficiency, we can also enhance our repeat purchase operation with the learners for our other interest-based courses.
Looking ahead, we expect these efforts to yield positive results in terms of the increased repeat purchase rates. While we do not have specific projections, maybe, it is not probable to forecast a very accurate number to share at this time, we remain optimistic about the potential for growth in this area, according to our track record. With our focus on continued, continuous improvement and personalized learning experience, we are well positioned to attract and retain a loyal customer base. I think this will help foster stronger customer relationship and drive repeat purchase in future. Thank you.
Thank you. That's very helpful. Thank you.
Yeah.
Our CFO, our CEO will take the second question.
Yeah.
Concerning the enterprise services.
Okay, I will speak Chinese, and Leah will translate for me. Okay. [Foreign Language]
We are making good progress in our enterprise services as we focus on meeting the evolving needs of the businesses. We offer many enterprise-oriented services similar to the TTT camp that I have just talked about earlier.
[Foreign Language]
One example is our flagship Gold Interviewer training camp. This is a comprehensive program designed to equip interviewers with the essential skills needed for making effective hiring decisions. We have very experienced trainers. This camp covers strategy, question formulation, candidate evaluation, and many other relevant topics. This has been well received by our clients, empowering them to build strong interviewing teams and make confident hiring choices. Our progress in enterprise services, exemplified by the TTT camp and the Gold Interviewer training camp, demonstrates our commitment to catering to the diverse business needs. At the same time, we maintain a strong focus on quality and relevance. We are constantly innovating and expanding. We have witnesses the customers' growth and customer success. We are very excited about the opportunities ahead as we drive growth and success for our clients.
Okay. Thank you for your question.
Thank you. As a reminder, if you'd like to ask a question, please press star then one. Our next question today comes from Michelle Fang with Citi. Please go ahead.
Thank you for taking my questions. I only have 2 small questions. One is that you just mentioned that the macro environment has some impacts on the purchasing behavior. Could you please expand a bit more on this? Do you see any changes in downstream demand, different current unfavorable environment, unfavorable economy environment? Secondly, what's our outlook for next 3 years on revenue, margin and earnings? Thank you.
Yeah. Hi, Michelle. Let me clarify your question. Your first question is the to ask the macro impact on the purchase behavior of our learners?
Yeah. Do you see any, like, changes in the downstream demand?
Yeah, okay. The second one?
What's our outlook for next three years, revenue, margin and earnings?
Yeah. Okay, understand. Thank you. Thank you for your questions. I think for the first one, you know, in maybe everyone, I think, has a very easy way to access the internet, the news, the media. I think, because most of our learners are mass topics, Chinese people, maybe some of them may have their own opinion and channel to access some macroeconomic and capital market, and even our company information. I think some of them may have some their own attitude and their own opinion in terms of the their own desire to acquire knowledge. Maybe they have some.
For example, if you have no knowledge in terms of the capital market, you may have, if you have no outside information, you may have the desire to learn something, to advance your skills. I think if some people have some negative or maybe a pessimistic attitude, I think this may impact little about their purchase behavior. I think in terms of our actual financial performance, I think there's no significant impact, adverse impact on our financial performance.
I think this kind of challenge or the macro environment challenge may also induce the people's desire to upgrade and to upgrade their self and to enrich their self. The desire, I think, will be strengthened. That will also support our user growth or our popularity of our courses to for our learners to learn, to purchase. I think overall speaking, I think in the future, especially in the aging population era for China, the learning and the improvement of their own skills, of the people's personal enrichment, I think this is a, maybe a must for everybody to do.
As a learning platform for the life of learning for our learners, I think, with our launch of the new courses and the current courses, I think, that will build a solid base for our users' purchase and engagement with our platform. Currently, we also anticipate a very optimistic revenue growth in terms of the... even the short-term fluctuation or short-term negative attitude in terms of some post-COVID macroeconomic recovery. I think that may answer your questions.
Thank you so much.
Yeah.
Thank you. Ladies and gentlemen, this concludes our question- and- answer session. I would like to turn the conference back over to management for any closing remarks.
Thank you again for joining our call today. If you have any further questions, please feel free to contact us or submit a request through our IR website. We look forward to speaking with everyone in our next call. Have a good day.
Thank you. Ladies and gentlemen, this concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.