ATA Q4 Earnings Call Highlights

26 Mar 2026, 02:02 by Michael Walen · The Markets Daily

ATA (NASDAQ:AACG) executives said student demand in 2025 “normalized” following a surge in the prior year, contributing to lower fourth-quarter revenue and enrollment, while the company emphasized growth in research-based learning offerings and ongoing cost-saving initiatives.

Fourth-quarter results show revenue decline and goodwill impairment

For the fourth quarter of 2025, the company reported total net revenue of RMB 89.1 million, down 11.7% from the prior-year period. Management attributed the decline primarily to lower revenue contributions from portfolio training programs and overseas study counseling services, partially offset by higher contributions from research-based learning and other educational services.

Gross profit in the quarter fell to RMB 30.2 million from RMB 63.7 million a year earlier. The company said results were affected by lower revenue and higher costs of revenue related to research-based learning services, including outsourcing and part-time teacher costs. Gross margin was 56.4%, compared with 63.1% in the fourth quarter of 2024.

Total operating expenses increased to RMB 73.3 million from RMB 46.8 million in the year-ago quarter, driven primarily by a one-time goodwill impairment charge of RMB 33.9 million (about $4.8 million) recorded in Q4 2025. The company said the increase was partially offset by a RMB 7.4 million decrease in sales expenses due to lower sales headcount and reduced sales incentives.

Excluding the goodwill impairment, management said operating expenses declined 15.7% year over year and, as a percentage of net revenue, decreased to 44.2% from 46.3%.

The quarter resulted in a loss from operations of RMB 23.0 million, compared with operating income of RMB 17.0 million in the prior-year period. Net loss attributable to the company was RMB 26.3 million, compared with net income attributable to the company of RMB 13.3 million a year earlier.

Full-year revenue flat, margins pressured by outsourcing costs

For full-year 2025, total net revenue was RMB 268.1 million, flat versus the prior year. The company said lower contributions from portfolio training services were offset by increased contributions from research-based learning, overseas study counseling, and other educational services.

Full-year gross profit was RMB 130.3 million, down 7.8% from RMB 141.3 million in 2024. Gross margin declined to 48.6% from 52.7%, which management linked to increased outsourcing costs during the period.

Total operating expenses in 2025 were RMB 194.6 million, up 5.5% from RMB 184.5 million in 2024, primarily due to the same RMB 33.9 million goodwill impairment recorded in the fourth quarter. The company also noted a RMB 3.8 million collection of previously impaired loans and other receivables recorded in the first quarter of 2025.

Excluding the goodwill impairment and the receivables collection, management said operating expenses declined 10.8% year over year and fell to 61.3% of net revenue from 68.8% in 2024. The company cited:

An RMB 7.3 million decrease in sales expenses tied to lower sales headcount and reduced incentives.
An RMB 2.1 million decrease in general and administrative expenses, reflecting lower administrative personnel costs and reduced amortization related to purchase price accounting from a prior acquisition.
An RMB 0.6 million decrease in research and development expenses.

Loss from operations for the year was RMB 4.1 million, compared with RMB 43.2 million in 2024. Net loss attributable to the company was RMB 48.0 million, compared with RMB 36.1 million in the prior year, which management said reflected a widened operating loss that was partially offset by a one-time impairment gain from a previous investment.

Program mix: portfolio training remains largest, project-based hours increase

Management said portfolio training services remained the main revenue contributor in the fourth quarter, accounting for 68.8% of total net revenues.

The company also highlighted a continued shift toward project-based programs. In the fourth quarter, project-based programs represented 74.9% of total credit hours delivered, up from 66.8% in the prior-year quarter. Overall credit hours delivered declined 10.5% year over year.

Revenue from research-based learning and overseas study counseling increased 4.6% in the fourth quarter, which the company attributed to increased service delivery for in-school art classes in partnership with schools.

Enrollment trends and balance sheet highlights

Fourth-quarter 2025 total student enrollment was 921, down from 1,038 in the prior-year period, which management attributed to normalized demand in 2025. Portfolio training enrollment totaled 568 students, while enrollment in all other programs was 353.

On the balance sheet, the company reported RMB 85.2 million in cash and cash equivalents as of Dec. 31, 2025. Total assets were RMB 408.3 million, total liabilities were RMB 336.3 million, and total shareholders’ equity was RMB 32.0 million.

2026 strategy emphasizes cost efficiency and research-based learning pipeline

President Jun Zhang outlined a 2026 strategy focused on maintaining the company’s position in China’s creative arts education market amid heightened competition. He pointed to competitive advantages including an experienced teaching team, a broad portfolio of offerings, and global partnerships with arts institutions that provide students “greater international exposure” and pathways to overseas programs.

Operationally, the company plans to pursue additional cost-saving measures, including optimizing its service portfolio, improving classroom utilization, expanding online course offerings, increasing student capacity, allocating resources toward larger campuses, and consolidating select campuses in less active markets. The company also plans to streamline its sales organization and prioritize “cost-effective and proven” student acquisition channels.

For the first quarter of 2026, management described a pipeline of research-based learning projects led by the Finland Sustainable Design & Art Research Program, which includes a visit to Aalto University and workshops focused on sustainable development and Arctic and Sámi culture. The company also plans to host a “competition winter camp” in January using a hybrid online and in-person format, with workshops spanning areas such as fashion design, digital design, and future architecture.

No analyst questions were asked during the question-and-answer portion of the call. Management said investors could contact the company or its investor relations firm for follow-up.

About ATA (NASDAQ:AACG)

ATA Creativity Global (NASDAQ: AACG) is a China-based provider of after-school art education services, delivering supplemental training to students from preschool through high school. The company’s curriculum spans traditional techniques such as sketching, watercolor and calligraphy, as well as digital art instruction, including digital illustration and multimedia design.

ATA Creativity Global combines in-person instruction at its learning centers with a proprietary online platform, enabling students to access course materials, interactive lessons and instructor feedback remotely.