Hello, ladies and gentlemen. Thank you for standing by for 51Talk Online Education Group's Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host, Mr. David Chung, Investor Relations for the company. Please go ahead, David..

Thank you. Hello, everyone, and welcome to the Fourth Quarter 2023 Earnings Conference Call of 51Talk. The company's results were issued via Newswire services earlier today and are posted online. You can download the earnings press release and sign up for the company's distribution list by visiting ir.51talk.com. Mr. Jack Huang, our CEO; and Ms.

Cindy Tang, our CFO, will begin with some prepared remarks. Following the prepared remarks, there will be a Q&A session. Before we continue, please note that the discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission.

The company does not assume any obligation to update any forward-looking statements, except as required under the applicable law. Please also note that earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures.

51Talk's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I'll now turn the call over to our CEO, Jack Huang. Jack, please go ahead..

Thank you, David. Hello, everyone. Thank you for joining our conference call. While financial year 2023 represents the sophomore year of our global expansion, it is the first full year where we entirely dedicate ourselves to bring our global business on a solid footing to penetrate into the selected markets.

Financially, financial year 2023 is the first year of full quarters of 100% revenues derived from international markets. Financial year 2023 marks a landmark year for us since we have proven that our business model can be successfully applied in different geographies across different continents.

By now, we are fully equipped to execute our vision of empowering each child to be able to speak to the world one student at a time. During financial year 2023, we had just over 50,000 active students with attended lesson consumptions and gross billings of $40 million, a long way from 2 years ago where we had booked less than $1 million.

Looking ahead to 2024, we will continue to intensify our localization efforts in selected markets, where we see large growth potential and benefit from an early mover advantage. Our guidance for the first quarter reflects our confidence in our growth trajectory.

In terms of technology, our broad-based efforts to deploy AI-enabled tools to elevate the effectiveness of our human teachers is starting to bear fruits. Our teachers and learning consultants obtain more comprehensive and accurate competitive student assessments to customize the customers' learning path.

In addition, we equip teachers with tools to engage with students more effectively and provide an elevated learning experience. As a consequence, our students will obtain more personalized exercises, are exposed to more immersive interactions and a benefit from more accurate assessments. With that, I will now turn the call over to Cindy, our CFO..

Thank you, Jack. Fourth quarter net revenues were $7.7 million, a 2.2% sequential decrease driven by the year true-up. Gross margin for the fourth quarter was 75.6%. Gross billings grew by 1.1% quarter-over-quarter to $11.1 million. Q4 operating expenses were $10.4 million, an increase of 5.7% compared to the last quarter.

Specifically, this has been driven by Q4 sales and marketing expenses of $7.6 million, a 10.7% sequential increase from Q3 due to further increases in marketing and branding spend. Q4 product development expenses were $0.9 million, flattish on a sequential basis.

Finally, Q4 general and administrative expenses were $1.9 million, an 8.8% sequential decrease from Q3. Overall, Q4 operating loss was $4.6 million, while net loss was $4.6 million, a 19.1% and 19.4% sequential increase from Q3, respectively. Q4 GAAP and non-GAAP earning per ADS were negative $0.81 and $0.76, respectively.

The company's total cash, cash equivalents and time deposits were $23.4 million at the end of the fourth quarter. Advances from students were $27.4 million at the end of the fourth quarter. For more of our 2023 full year financial results, please refer to our earnings press release for further details.

Looking forward to the first quarter of 2024, we currently expect the net gross billing to be between $11.5 million and $12.0 million. The above outlook is based on our current market conditions and reflects the company's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change.

This concludes our prepared remarks. We will now open the line for questions. Operator, please go ahead..

Operator:.

Thank you once again for joining us today. If you have further questions, please contact 51Talk's Investor Relations through the contact information provided on our website..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..