Ata Creativity Global Reports Revenue Growth Amid Challenges

Ata Creativity Global ((AACG)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call from Ata Creativity Global (ACG) painted a picture of both progress and challenges. The company reported significant growth in revenues from educational services, improved gross profit and margins, and a decrease in operating expenses. However, concerns were raised over decreased student enrollment and a net loss. Despite these challenges, ACG demonstrated overall financial and operational improvements, indicating a positive trajectory.

Significant Revenue Growth in Educational Services

The second quarter of 2025 was marked by a remarkable year-over-year net revenue increase of more than 50% in ACG’s overseas study counseling services, other educational services, and research-based learning services. This growth underscores the company’s successful expansion and adaptation in the educational sector.

Improvement in Gross Profit and Margin

ACG’s gross profit for the second quarter of 2025 reached RMB 28.3 million, reflecting a 10.2% increase from the previous year. The gross margin also improved, rising to 50.6% from 49.6%. This improvement highlights the company’s effective cost management and operational efficiency.

Decreased Operating Expenses

Operating expenses for the second quarter of 2025 decreased by 9.4% compared to the prior year, primarily due to reduced sales and administrative expenses. This reduction in operating costs is a testament to ACG’s commitment to maintaining financial discipline.

Narrowed Operational Loss

ACG successfully narrowed its operational loss to RMB 13.7 million in the second quarter of 2025, down from RMB 20.8 million in the same period of 2024. This improvement indicates the company’s ongoing efforts to enhance its financial health.

Strong Enrollment Offers

ACG students received over 4,000 offers from prestigious institutions across various art disciplines, including top universities like Cornell and Columbia. This achievement reflects the high caliber of ACG’s educational programs and its students’ competitiveness in the global academic arena.

Decrease in Student Enrollment

Despite the positive developments, ACG faced a 3.1% decrease in total student enrollment for the second quarter of 2025. This decline poses a challenge that the company needs to address to sustain its growth momentum.

Net Loss Despite Revenue Growth

The net loss attributable to ACG during the second quarter of 2025 was RMB 10.8 million, an improvement from RMB 16.8 million in the previous year. While the net loss remains a concern, the reduction indicates progress in the company’s financial recovery.

Forward-Looking Guidance

Looking ahead, ACG expects net revenues to rise by 3% to 5% for the full year 2025, reaching approximately RMB 276 million to RMB 281 million. The company plans to focus on organic growth, cost discipline, and enhancing its educational offerings to support diverse student needs. ACG aims to finish the year strong and maintain its leadership in China’s creative art education market.

In summary, Ata Creativity Global’s earnings call highlighted a blend of achievements and challenges. The company reported significant revenue growth and improved financial metrics, despite facing a decrease in student enrollment and a net loss. With a strategic focus on growth and cost management, ACG is poised to strengthen its position in the creative art education sector.