Ladies and gentlemen, thank you for standing by, and welcome to Sunlands' third quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host today, Yuhua, Sunlands' IR representative. Please go ahead.
Hello, everyone, and thank you for joining Sunlands' third quarter 2022 earnings conference call. The company's financial and operating results were issued in our press release via Newswire 30 days earlier today and are posted online. You can download the earnings press release and sign up for our distribution list by visiting our IR website. Participants on today's call will be our CEO, Mr. Tongbo Liu, and our CFO, Selena Lu Lv, and our Financial Controller, Hangyu Li. Selena will provide an update on our operational performance on behalf of our CEO, Mr. Liu, and then Hangyu will give you an overview of our financial performance on behalf of Selena. Management will begin with prepared remarks, and the call will conclude with a Q&A session.
Before I hand it over to the management, I'd like to remind you of Sunlands safe harbor statement in relation to today's call. Except for the historical information contained herein, certain of the measures discussed in this conference call are forward-looking statements. These statements are based on current trends, estimates, and projections, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission. I will now turn the call over to our CFO, Selena Lu Lv.
Thank you, Yuhua. Hello, everyone. Welcome to Sunlands' third quarter 2022 conference call. Despite the macroeconomic uncertainties and shifting industry landscape, we delivered encouraging results in the third quarter with sequential top line growth, further bottom line improvements, and increased new student enrollment. These achievements testified to the effectiveness of our strategic initiatives to prioritize profitability and healthy growth. Amid the ongoing pandemic and uncertain macroeconomics, our third quarter net revenues came in at RMB 576.2 million, up by 3.8% quarter-over-quarter, despite a 3.2% year-over-year drop. To navigate the macro challenges, we remained laser-focused on cost optimization and profitability rather than blind pursuit of scale expansion. We adopted multiple measures to enhance our operational efficiency and streamline our organization during the quarter.
Due to our effective expense control measures and improved operational efficiencies, we reduced our G&A expenses by 29.6% year-over-year and 4.7% quarter-over-quarter. This cost reduction initiative enables us to deliver on our commitment to creating additional shareholder value with sustained profitability. Our third quarter net income reached RMB 168.1 million, representing an 81.1% year-over-year increase and a 46.7% quarter-over-quarter increase, demonstrating our organization's resilience during tough times like this. With a leaner and more efficient organization, we also further refined our product strategy in the third quarter. We focused more on margin accretive programs and allocated our capital and human resources accordingly to expand our course offerings in those programs, leading to an op-optimized product lineup and more diversified course content.
Additionally, we leveraged our solid and convenient online teaching infrastructure and the learning resources to further refine our services, which has increased our user stickiness and cross-selling opportunities. Given this, we have transformed our student acquisition methods, focusing more on users' lifetime value instead of investing heavily in marketing activities. As you may have seen in our earnings release published earlier today, our sales and marketing expenses declined by 23.9% year-over-year and 8.2% quarter-over-quarter. As a percentage of net revenue, sales and marketing expenses were down by 12.7 percentage points year-over-year. Despite that, our new student enrollment for the quarter rose by 44.7% year-over-year and 11.8% quarter-over-quarter, reaffirming the effectiveness of our business strategies. Turning to our learning programs.
Our Professional Certification and Skills Programs continue to grow strongly. As evidenced by 91.3% year-over-year increase in new student enrollment, which drove gross billings to rise by 51.8% year-over-year. Net revenues generated by this sector also increased by 83.7% year-over-year. This growth was primarily attributable to our efforts in expanding our course catalog to target diverse age groups, as we sought to capture the rising demand we witnessed for vocational skills and hobby courses during the quarter. In the third quarter, pandemic-associated lockdowns led to the postponements or transformation of certain qualification tests, affecting our exam preparation programs for those tests.
Nevertheless, demand for our preparation courses for professional exams remained solid as intense career competition prompted working professionals to enhance their competitiveness or sharpen their skills with courses from educational providers such as Dangdang. In addition to courses for working professionals, we continue to develop new courses to satisfy other cohorts learning and leisure needs. We are excited about what we are offering and will offer our students, as we have always been committed to helping to build a lifelong learning society. We will continue to capture opportunities in this sector to deliver more high-demand courses and high-quality services to our students. Thanks to our extensive course options, premium course quality, and experienced teaching staff, we are pleased to see students across a wider range of ages adopting our platform, as well as greater diversity in the courses they choose.
We achieved sequential growth in new student enrollments for our Professional Skills Program for five consecutive quarters. We are also glad to have played a part in helping our students achieve their learning goals, bringing them a sense of fulfillment. Going forward, we will continue to adjust our course offerings in this sector based on market demand, maximizing our value by further contributing to our students' success and our society as a whole. Our Master's Degree-Oriented Programs. During the quarter, the challenging macro environment, the pandemic, and the competitive market dynamics continued to weigh on our performance in this category. Due to macroeconomic weakness, some people may choose to delay their higher education plans, the cost for obtaining an MBA degree is relatively high compared to other self-improvement options.
Meanwhile, the pandemic also prevented some people from pursuing overseas postgraduate education. Lastly, market competition was increasingly intense as more industry players joined this sector after the K-12 education industry was reformed. Taken together, these factors resulted in reduced demand for our master's degree-oriented preparation courses, leading to a decline in gross billings and student enrollments. Before I conclude, I would like to mention that alongside our efforts to solidify our industry position with our existing learning programs, we have also been prudently exploring some other new business initiatives to drive our future growth. We are conducting in-depth market research on these initiatives, such as combining retail or commerce with courses sales. By maximizing our strengths as an education provider to expand our product and service portfolio, we look forward to enhancing our risk management and creating additional revenue streams, like, while bringing more value to our students.
Looking ahead, we are confident that our proven business strategy and continued commitment to delivering premium and tailored courses to more students will help us mitigate current challenges and achieve meaningful growth. That concludes Tongbo's prepared remarks. With that, I will turn the call over to our Financial Controller, Hangyu Li, to run through our financials on behalf of me.
Thank you, Selena. Hello, everyone. We're pleased with our third quarter results amid a tough macro environment. Our net revenue reached RMB 576.2 million during the quarter, exceeding the high end of our guidance range by 6.7%, despite a flat 3.2% year-over-year decrease. Benefiting from our dedicated efforts and the measured steps in cost control and operational efficiency enhancement, our third quarter operating expenses declined by 24.5% year-over-year and 7.4% quarter-over-quarter. As a result, we maintained our profitability with a net income of RMB 168.1 million. Up 81.1% year-over-year and 46.7% quarter-over-quarter.
Our net profit margin for the quarter remained solid at 29.2%, expanding 13.6 percentage points year-over-year and 8.6 percentage points quarter-over-quarter. Moving forward, we will continue to prudently manage costs and expenses, enrich our course offerings and further optimize our operations, aiming for continued success and additional shareholder value. Now, let me walk you through some of our key financial results for the third quarter of 2022. All concurrencies are year-over-year and all numbers are in RMB unless otherwise noted. In the third quarter of 2022, net revenues were RMB 576.2 million, a decrease of 3.2% year-over-year.
Cost of revenue increased by 2.2% to RMB 84.9 million in the third quarter of 2022 from RMB 83.1 million in the third quarter of 2021. The increase was primarily due to increased service fees paid to educational institutions and increased cooperation costs. Gross profits decreased by 4% to RMB 491.3 million from RMB 512 million in the third quarter of 2021. In the third quarter of 2022, operating expenses were RMB 325 million, representing a 24.5% decrease from RMB 430.6 million in the third quarter of 2021.
Sales and the marketing expenses decreased by 23.9% to RMB 269.1 million in the third quarter of 2022, from RMB 353.5 million in the third quarter of 2021. The decrease was mainly due to the lower spending on branding and marketing activities and the declined compensation expenses related to our sales and marketing personnel. General and Administrative expenses decreased by 29.6% to RMB 44.4 million in the third quarter of 2022, from RMB 63.2 million in the third quarter of 2021. The decrease was mainly due to a decline in rental expenses. Product development expenses decreased by 17.5% to RMB 11.5 million in the third quarter of 2022, from RMB 14 million in the third quarter of 2021.
The decrease was mainly due to a decline in compensation expenses. Other income decreased by 58.6% to RMB 5.3 million in the third quarter of 2022, from RMB 12.9 million in the third quarter of 2021. Net income for the third quarter of 2022 was RMB 168.1 million, compared with RMB 92.8 million in the third quarter of 2021. Basic and diluted net income per share was RMB 24.08 in the third quarter of 2022. As of September 30, 2022, the company had RMB 678.8 million of cash and cash equivalents and RMB 170.1 million of short-term investments.
As of September 30th, 2022, the company had a deferred revenue balance of RMB 1,798.6 million, compared with RMB 2,348.2 million as of September 30th, 2021. Capital expenditures were incurred primarily in connection with IT infrastructure equipment and a leasehold improvement necessary to support the company's operations. Capital expenditures were RMB 1.3 million in the third quarter, compared with RMB 1.8 million in the third quarter of 2021. Now for our outlook. For the fourth quarter of 2022, Sunlands currently expects net revenue to become RMB 520 million and RMB 514 million, which would represent a decrease of 8.3%-11.7% year-over-year.
This outlook is based on the current market conditions and reflects the company's management's current and preliminary estimate of the market operating conditions and customer demand, which are all subject to change. That concludes Selena prepared remarks. With that, I'd like to open up the call to the questions. Operator?
We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. At this time, we will pause momentarily to assemble our roster. Again, if you would like to ask a question, please press star then one. Showing no further questions, this will conclude our question and answer session. Now I'd like to turn the conference back over to Yuhua, IR Representative, for any closing remarks.
Once again, thank you everyone for joining today's call. We look forward to speaking with you again soon. Good day and good night.
This concludes the earnings conference call. You may now disconnect your line. Thank you.