Prompt:
Human: In connection with our recently announced definitive agreement to acquire Attivo, management will provide additional information as to the benefits of the acquisition.
However, we'll not factor the planned acquisition into our fiscal '23 guidance at this time.
We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially.
These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles.
These non-GAAP measures are not intended to be a substitute for our GAAP results.
This was another excellent quarter, and I'm extremely proud of the entire SentinelOne team.
Our ARR grew 123% year over year in the fourth quarter, making the fourth consecutive quarter of triple-digit growth.
In today's digital world, cybersecurity is mission-critical infrastructure in every geography, industry vertical and organization size.
The demand environment remains incredibly strong.
We continue to scale our business as a result of our cutting-edge autonomous XDR platform and our powerful partner-supported go-to-market strategy.
We've built an AI-driven security platform that spans endpoint, cloud, IoT, data and now also identity.
I'm thrilled that today, we announced our plan to acquire Attivo Networks.
Attivo is a premier and highly differentiated solution that will enable us to provide cybersecurity in one of the most critical and dynamic parts of enterprise security today, the identity parameter.
With Attivo's user-centric identity capabilities, we will be able to support an even more comprehensive zero trust framework.
I'd also encourage everyone to read our shareholder letter we published on our Investor Relations website, which provides a lot more detail.
Let's take a look back at our fiscal '22.
It was a groundbreaking year for SentinelOne.
We started the year as a private company, delivered a triple-digit revenue and ARR growth rate through all four quarters and ended the year as one of the fastest-growing technology companies in public markets with outstanding growth in ARR rapidly approaching $300 million.
Throughout the year, we celebrated accomplishments that highlight our product market fit, innovation and superb customer experience, such as a Leader in the 2021 Gartner Magic Quadrant for Endpoint Protection, highest scores in Gartner Critical Capabilities use cases and being the only vendor with 100% visibility and no misdetection in the latest MITRE evaluation.
Our fourth quarter and fiscal '22 results demonstrate the relentless execution of our teams and focus on innovation.
We're protecting more enterprises today than ever before at faster speed, greater scale, higher accuracy and with more automation.
Automation has never been more critical to tackle the complexity of today's threats.
I'd like to dig deeper into three key points about our performance.
First, our success with large enterprises underscores the scalability of our platform.
We added a record number of $100,000-plus ARR deals, a record number of million dollar-plus ARR customers and closed our largest ever net new customer contract, one of the most influential and leading global Internet companies.
Nick will discuss this in more detail later on.
Second, we paired our phenomenal growth with significant progress toward our long-term profitability targets.
I'm pleased to share that we ended the fourth quarter with double-digit year-over-year improvement in both our gross and operating margins.
Our gross margins expanded 12 percentage points year over year, and our operating margin improved 38%.
This progress reflects our growing scale and increasing efficiency.
Looking at the full year, fiscal '22 was an investment year for SentinelOne.
It featured our IPO, solidifying our brand as an industry leader, as well as investments in our go-to-market and innovation engines.
We doubled our total workforce.
I'm proud of SentinelOne being named to Comparably's Best Company Culture List and receiving the 2021 Great Places to Work award.
Given the significant market opportunity ahead, we remain committed to investing in the growth of our business.
And just like we did last year, we intend to balance this growth with further margin improvement in fiscal '23.
Finally, our business is performing extremely well with broad-based strength across new customer adds, existing customer renewals and upsells.
Throughout the year, we significantly expanded our platform offerings.
Our endpoint solution remains the primary driver of our business, which is being complemented by emerging growth vectors, including cloud, IoT and data.
We're still in the early innings of a large and expanding total market driven by the proliferation of hybrid work environment, digital transformation and an evolving threat landscape.
It's clear that we achieved a lot as a company in the past year, but we must remain as vigilant as ever around the threat landscape.
The persistence and sophistication of new attacks continues.
We entered 2021 on the heels of Sunburst and exited the year battling Log4j.
And most recently, the potential for cyber warfare has significantly increased in light of the Russia-Ukraine conflict.
This has further escalated the threat environment.
Our vision is to be a force for good, and we're committed to doing our part to help affected people and businesses in Ukraine and around the world to stay cyber secure.
We've established a Ukraine Crisis Resource Center and began offering free access to Singularity XDR for cyber threat protection in Ukraine.
We ran similar programs to help others in the wake of Sunburst, and we're committed to defending against cyber warfare.
Threat sharing and collaboration are essential to our collective mission against cyber attacks.
Our teams at SentinelLabs are leading the way by uncovering some of the most sophisticated attacks across the world.
Our global footprint puts us in a unique position to not only protect our customer base in real time but also produce novel research to educate and arm the cybersecurity community.
We're able to leverage the power of our partner ecosystem to stay on the front line with leading incident response providers like Mandiant, KPMG, Kroll, RSA and many others.
As an example, we recently named and published research on HermeticWiper related to the escalating cyber attacks surrounding the Russia-Ukraine conflict.
This was a real-time discovery on the eve of Russia's ground invasion.
It helped bring awareness to cyber attacks accompanying modern warfare.
Our publication was followed by an alert notice from Cybersecurity and Infrastructure Agency, highlighting the significance and relevance of SentinelLabs' research.
If we look at the evolution of cybersecurity technologies for a moment, it's clear that legacy AV represents the past, EDR is the present and XDR is the future.
While the majority of enterprises still utilize legacy AV solutions, we have undoubtedly entered the XDR era.
At SentinelOne, we established the foundations of XDR by pioneering the world's first purpose-built AI-powered autonomous cybersecurity platform.
Singularity XDR brings the critical capabilities customers need from a comprehensive cybersecurity platform: speed, scale and automation.
Enterprises are increasingly selecting SentinelOne for our best-of-breed XDR. Over the past year, we significantly broadened our platform capabilities by introducing several mission-critical and highly differentiated innovations.
I will briefly highlight a few of these.
First, we enhanced our network visibility and control capabilities with Ranger Pro.
Ranger helps enterprises eliminate one of the most commonly exploited threat vectors: unprotected and rogue assets.
It reduces the attack surface by offering device mapping and management capabilities.
Second, we introduced Storyline Active Response, our engine for automated threat hunting, detection and response.
Next, we developed Remote Script Orchestration, a powerful endpoint management tool for both IR partners and enterprises.
Finally, we launched Singularity Mobile, a new AI-powered mobile security solution for iOS, Android and Chrome OS devices.
Building upon the acquisition of Scalyr, we launched DataSet in February of this year, a revolutionary live enterprise data platform for data queries, analytics, insights and data retention.
DataSet expands our capabilities beyond cybersecurity use cases.
It's a cloud-native, flexible enterprise data platform built for petabyte scale.
Not only DataSet is the back end for our Singularity XDR platform.
The technology is already being used by hundreds of enterprises, analyzing trillions of real-time events.
Customers like DoorDash, Copart, Asana, TomTom and many others are selecting DataSet to unlock the power of their own data with speed, scalability and technology-driven cost advantages.
Our platform approach is resonating and is contributing meaningfully to our financial performance.
Endpoint continues to fuel the company's growth.
At the same time, we're seeing outstanding traction with our adjacent platform technologies and capabilities.
Over a third of our fourth quarter new business was driven by our Singularity modules and DataSet, up from about 20% a year ago.
Across all of our capabilities, our cloud workload protection and data retention modules have been the most outstanding, each delivering year-over-year ACV growth of over 10x.
Let me spend a second on cloud security.
This is one of the fastest-growing markets in security today, and we're already doing extremely well on this front.
Demand for our cloud workload protection solution has been broad-based, both within our installed base, as well as with new customers.
Cloud security represents a sizable opportunity for SentinelOne for years to come.
And today, we are further expanding our addressable market and extending our XDR platform capabilities with our planned strategic acquisition of Attivo Networks.
We're adding another growth vector to our platform.
Identity now joins endpoint, cloud, IoT and data.
I couldn't be more excited to introduce everyone to Attivo.
Attivo aligns with the M&A strategy we previously outlined.
First, it expands our addressable market into a $4 billion and growing identity TAM.
And within that, Attivo is capturing share, growing its ARR north of 50%.
Second, user-centric identity protection is highly complementary and value-add for our XDR platform and customers.
It opens new customer and cross-sell opportunities.
Finally, it has a compelling financial profile and strong cultural fit, additive to our hypergrowth and accretive to gross margins.
Identity is a critical component of the enterprise parameter and zero trust framework.
Attivo's market-leading identity offerings help organizations keep passwords safe, admin privileges restricted and user identity intact.
Attivo Networks has the right technology and the team to advance our portfolio and is a natural extension of our Singularity XDR platform and go-to-market strategy.
Misused credentials are now one of the top techniques used in breaches.
If an attacker can compromise the endpoint, they will often look for the next layer of vulnerability, the user's credential.
If successful, attackers can install backdoors, exfiltrate data and change security policies.
Attivo, as part of SentinelOne, will help organizations reduce their attack surface not only at the device level but now at the human identity level, too.
Attivo has a clear product market fit with an established customer and revenue base.
Its differentiated and battle-tested solution is already trusted by over 300 customers from Fortune 500 enterprises to government entities.
Attivo is not just any identity company or technology.
We strongly believe that it's the best and most comprehensive identity security platform in the market today.
Let me briefly introduce you to the three parts of the Attivo platform.
First, identity protection is an agent-based solution that secures credentials and detects malicious identity behaviors.
It delivers real-time protection against credential theft, privilege escalation, lateral movement and more.
Second is identity infrastructure assessment, identity-based vulnerability scanning and management for enterprise infrastructure.
Attivo's scanner provides instant visibility of active directory misconfigurations, suspicious password changes and unauthorized access.
This complements our Ranger network asset visibility and control capabilities and now folds in a user-centric identity view.
Third, identity power deception.
Attivo's deception solution make attackers reveal themselves, their methods and targets through misdirection.
This sums up to a multi-layered approach and a broad set of capabilities to fend off, not just detect, identity-based attacks.
Attivo will put us front and center in the identity security market.
As Dave will discuss later financially, even in the early stages of a joint go-to-market, this acquisition will add to our hypergrowth trajectory.
I'd like to share a few closing thoughts.
There has never been a greater enterprise need for a modern cybersecurity platform, which means a tremendous business opportunity for SentinelOne's world-class autonomous protection.
We are still in the early innings of our innovation and growth.
Our outstanding fourth quarter and fiscal '22 financial performance speak for itself, triple-digit revenue and ARR growth paired with double-digit non-GAAP margin expansion.
We're perfectly positioned for continued success and expansion of our business even in times of global uncertainty.
We delivered an outstanding fourth quarter across every geography, driven by our go-to-market flywheel of sales, marketing, channel and technology partners.
More large enterprises are selecting SentinelOne than ever before because of our industry-leading efficacy, automation, ease of use and differentiated XDR capabilities.
Listening to customers and following many of the largest incidents in cybersecurity over the past few years, identity is a critical vector in delivering the most complete XDR platform.
Not only is it a natural fit within our platform.
It will complement our network of strategic service providers extremely well.
In Q4, we reported impressive ARR growth of 123%, reaching $292 million.
This growth was driven by a healthy mix of new customer additions, renewals and upsells.
Our momentum with large enterprises was particularly strong this quarter.
We added a record number of customers with ARR over $100,000 and a record number of million dollar-plus ARR customers.
All of this is extraordinary and reflects the success of our sales and marketing organizations.
Let me share more on this.
Our customers with ARR over $100,000 grew 137% year over year to 520.
And let me give you an example.
In Q4, we closed the largest new customer deal in our history with one of the most influential and leading global Internet companies.
This win came after an intensive evaluation process, including other next-gen security providers.
I'd like to highlight one additional win, which is emblematic of what we're seeing in the market.
Like most Fortune 500 companies, this enterprise was using multiple operating systems.
They lacked true security parity across all surfaces.
Their existing next-gen EDR vendor failed to quickly deploy and left critical Mac and Linux attack surfaces unprotected.
They terminated their existing three-year subscription mid-flight and turned to SentinelOne.
Singularity XDR deployed instantly across the whole enterprise, which was expedited by our patented Ranger discovery and auto-deploy capabilities.
The customer has become a fantastic partner and is benefiting from our true cross-platform feature parity and automation.
We also closed new deals with many other large enterprises across verticals from technology to global consumer brands to financial services companies.
SentinelOne is winning more market share in every major geography, replacing incumbent vendors of all types and winning against the competition.
In total, at the end of fiscal '22, we secured over 6,700 customers comprising both large enterprises and medium-sized businesses.
That's total growth of more than 70% or almost 3,000 more customers compared to last year.
Our total addressable market is large and expanding.
A majority of the market still utilizes legacy antivirus solutions.
The competitive environment has not changed.
We've maintained incredibly strong win rates in all competitive situations against both legacy and next-gen vendors.
What's more exciting is that the opportunity per customer is much larger today than it was for legacy providers in the past.
This is because of the breadth of our platform, covering endpoints and surfaces of all types, cloud workloads, Kubernetes, mobile devices and IoT devices and soon, identity.
We, once again, achieved strong retention and expansion within our customer base.
Our net retention rate of 129% remained extremely healthy and well above our target of over 120%.
Our NRR was driven by footprint expansion, cross-sell of adjacent modules and upsell from platform tiers.
We continue to prioritize new customer growth, while at the same time, we are seeing massive success in customers consuming more and more of the Singularity platform.
Our modules and DataSet now represent over a third of our new business.
And once again, this is broad-based and includes everything from cloud and Ranger to managed capabilities and DataSet.
Our cloud workload protection and data modules are delivering the highest growth.
They each grew over 10x year over year, reflecting demand for our best-in-class runtime protection for cloud workloads and unparalleled data retention offerings.
I also want to call out our newest endpoint management module, Remote Script Orchestration.
RSO has achieved the fastest ramp of any new module in SentinelOne history.
Our incident response partners love the ability to remotely manage fleets of endpoints at machine speed in critical breach response moments.
Next, I'd like to talk more about our channel partners.
Our partner ecosystem continues to magnify our market presence, significantly extending our reach and efficiency.
Our strategic technology and services partners have grown to over 20% of our business.
This includes MSSPs, MDRs and IR firms.
These partnerships are accretive to our overall growth rate with significant business expansion opportunities yet to be unlocked.
Let me double-click on the success of our IR partnerships.
Over the past year, we focused on partnering with many of the largest and most sophisticated IR providers in the world.
In the fourth quarter, Mandiant selected SentinelOne as a global go-to-market partner.
We are becoming the partner of choice for leading IR providers, including KPMG, Kroll, Arete and many others.
Our strategy brings the best of both worlds to our joint customers, top incident response consultants leveraging the best-in-class XDR platform.
I can't stress enough that we don't compete with our partners.
We work with over 100 of the world's leading IR firms, enabling us to address a majority of the IR market worldwide.
These partnerships create hundreds of high-value and fast-moving opportunities every quarter.
This is significantly more coverage than any single vendor could hope to gain on its own.
We are also very excited about our growing partnerships with MSSPs.
They continue to expand our coverage across large enterprises and mid-market customers.
Leading MSSPs are choosing SentinelOne because of our technology leadership, ease of management and multi-tenancy capabilities.
Today, we are partnering with top-tier MSSPs, including Enable, ConnectWise, Pax8, AT&T and hundreds of others, many of which exclusively work with SentinelOne.
These relationships have helped us achieve significant scale and exposure, complementing our enterprise sales success.
Looking at just a few of our top MSSP partners like Enable and Pax8, they represent millions of endpoints now secured by SentinelOne.
We're extremely confident about the market opportunity we can jointly address with our MSSP partners as more organizations seek managed solutions.
Finally, I'd like to share how we are helping enterprises adopt a zero trust security model by partnering with leading vendors.
Our two-way technology integrations with Zscaler, Mimecast, ServiceNow and many others demonstrate top-tier vendors working together as part of the Singularity ecosystem.
This year has been incredible for SentinelOne, filled with innovation and growth.
And we began the new fiscal year announcing our plan to add identity to our platform, which further expands SentinelOne's capabilities and offers exciting business opportunities.
I'm proud to work with our global team of relentless Sentinels every day.
I'm excited about our future.
We will continue to deliver on our vision by focusing on execution and listening to our customers.
I'll discuss our quarterly financial highlights and provide additional context around our guidance for Q1 and full fiscal year 2023.
I'll also touch on the financial highlights for Attivo and the full year implications.
We delivered another strong quarter of revenue and ARR growth, both well into the triple digits.
We achieved year-over-year revenue growth of 120%, reaching $66 million, and ARR growth of 123%, exceeding $292 million.
We added net new ARR of $56 million in the quarter, a new record for the company.
We saw strong momentum and a robust demand environment for our platform.
The strength of our performance was broad-based, coming from a healthy mix of new customer additions, existing customer renewals and upsells.
All of this was further magnified by the strong underlying seasonality of our fourth quarter.
Our business expanded nicely across all geographies.
Revenue from international markets grew 140% and represented 31% of revenue.
Turning to our cost and margins.
Our non-GAAP gross margin in Q4 was 66%, reflecting a double-digit increase of 12% year over year.
We're seeing the benefits from our increasing economies of scale and business expansion, including strong module attach, platform upsell and data processing efficiencies.
This was partially offset by the temporary costs we discussed last quarter associated with the migration of existing customers to our DataSet back end.
We've made excellent progress on this front.
All of our new customers are already using the DataSet back end, plus we've already migrated many of our largest existing customers.
These customers are enjoying up to 10x performance improvements.
We remain on track for our migration plan, and these temporary duplicative costs should be behind us after the first half of this year.
When I put it all together and I look at the Q4 gross margin of 66% and a significant improvement compared to last year, I see increasing evidence of scale and efficiencies of our business.
Looking at the rest of our P&L.
Our non-GAAP operating margin was negative 66%, compared to negative 104% a year ago, a huge improvement of 38 percentage points.
And we achieved these impressive results while investing for growth throughout the year, including the IPO, new product launches and doubling of our workforce.
This progress toward our long-term financial target demonstrates the potential for leverage throughout our business model.
We're investing in our business, which is the right strategy given the huge market opportunity and strong demand for our leading platform.
Moving to our guidance for Q1 and the full fiscal year '23.
In Q1, we expect revenue of $74 million to $75 million, reflecting annual growth of 99% at the midpoint.
For the full year, we expect revenue of $366 million to $370 million, reflecting annual growth of 80% at the midpoint.
While we don't specifically guide for ARR, I do want to remind you that we are a subscription business.
Our ARR and revenue growth track very closely.
Our revenue guidance for Q1 implies that we should be at or better than typical Q1 net new ARR seasonality, which has been down between 25% to 35% sequentially in the past two years.
We believe the structural tailwinds of digital transformation, hybrid work environment and an evolving threat landscape will continue to drive customer adoption of our real-time AI-powered security platform.
The threat landscape is more complex and elevated than ever before, and our product innovation, brand recognition and scaling go-to-market have positioned us well to capture the favorable opportunities.
For Q1, we expect non-GAAP gross margin to be between 63% to 64% and full year non-GAAP gross margin to be between 65% to 67%.
Our Q1 guidance implies over 10 percentage points year-over-year gross margin expansion at the midpoint.
We expect to continue benefiting from increasing scale and better data processing efficiencies.
Our guidance also reflects the migration of our remaining existing customers to DataSet, which, once again, we expect will conclude in the first half of the year.
As a reminder, these costs are temporary.
Based on our full year guidance, we see the opportunity to achieve high 60% gross margins by year-end.
Finally, for non-GAAP operating margin, we expect negative 84% to 86% in Q1 and negative 55% to 60% for the full year.
Both of these represent meaningful year-over-year improvements.
At the midpoint, we expect Q1 operating margin to improve over 40 percentage points and full year operating margin to improve over 25 percentage points.
We see tremendous opportunity for growth, and the investments we're making today will put us in a position to succeed for the long term.
And we're doing this as we make progress toward profitability and our long-term target EBIT margin of 20%-plus.
Before I close, let me share the key financial points related to Attivo.
This should help you as you think through modeling the business for the future.
We're acquiring Attivo for $617 million in a combination of cash and stock plus additional retention.
We expect the deal to close in our fiscal second quarter, subject to customary closing conditions, including regulatory approval.
I want to be clear, Attivo is not currently factored into our fiscal '23 guidance at this time.
We expect to incorporate their financials into our outlook after the deal closes on our next earnings call.
Attivo is an excellent business that can become even stronger as part of our Singularity platform.
They concluded their quarter ended December '21 with over 300 customers and ARR of approximately $30 million, growing north of 50%.
For calendar year '22, the current forecast for the business is to deliver revenue of approximately $40 million for the full year.
And from a margin standpoint, Attivo is accretive to our organic gross margins.
But remember, as we expect this to close during our second fiscal quarter, we would incorporate only a portion of that.
Attivo and SentinelOne are highly complementary solutions that will open up new customer and cross-sell opportunities, further addressing the needs of larger enterprises.
I want to join Tomer, Nick and all of SentinelOne in welcoming the Attivo team.
In summary, Q4 was another excellent quarter with strong execution companywide, and we're expecting that momentum to continue into the next fiscal year.
We can now take questions.
Operator, can you please open up the line?
 Assistant:

Chosen response:
q4 revenue rose 120 percent to $65.6 million.
qtrly annualized recurring revenue (arr) increased 123% year-over-year to $292.3 million as of january 31, 2022.
sees revenue $74-75 million for q1.
sees revenue $366-370 million for fy 2023.


Prompt:
Human: Rong Luo, chief financial officer; Linda Huo, vice president of finance; and myself, IR of TAL.
Potential risks and uncertainties include but are not limited to those outlined in public filings with the SEC.
In a recent couple of months, China's public health situation and economy show further progress.
Internationally, [Inaudible] city efforts and vaccination programs are hope signs that the worst of the pandemic could be behind us all.
Meanwhile, at TAL, our tutoring business, both online and offline, as well as our capacity expansion in all cities developed as planned for the fourth quarter of fiscal-year 2021.
Let me give you a quick overview of the key metrics.
dollar terms to $1,362.7 million and 47.7% in RMB terms.
Total normal price long-term course student enrollments increased by 44% year over year, mostly driven by online, as well as Xueersi Peiyou small-class enrollments.
GAAP loss from operations was $297.2 million, compared to $41.3 million in the fourth quarter last fiscal year.
Non-GAAP operating loss was $216.9 million, compared to $8.4 million in the same year-ago period.
In the full year of fiscal 2021, net revenue gross was 37.3% in U.S. dollar terms, which is 34.1% in RMB terms.
She will give you an update on our operational progress in the fourth quarter.
Next, Echo Yan, our IR director, will review the fourth-quarter and the fiscal-year financials.
After that, I will update you on our business strategy and discuss our business outlook.
I will review the various revenue streams of our tutoring business for the fourth quarter of fiscal-year 2021.
Let me start with small class and other business, which consists of Xueersi Peiyou small class, Firstleap, Mobby, and some other education programs and services.
These accounted for 61% of total net revenue, compared to 68% in the same year-ago period.
Their revenue growth rate was 43% in U.S. dollar terms and 33% in RMB terms.
Xueersi Peiyou small class, which remains our stable core business, represented 63% of total net revenue in the fourth quarter, compared to 69% in the same year-ago period.
The lower revenue contribution from Xueersi Peiyou was mostly due to the faster growth of xueersi.com online courses, which accounted for 32% of total revenue in the quarter, compared to 24% in the same period last year.
Fourth-quarter net revenue from Xueersi Peiyou small class was up by 43% in U.S. dollar terms and 33% in RMB terms.
While our normal price long-term course enrollments increased by 21% year over year.
All in all, the improving overall situation in China supported the continued recovery of our Peiyou business in the course of fiscal-year 2021.
Our key operational metrics of Peiyou such as retention rate, fulfillment rate, and the job upgrade remained very stable throughout the year even in these unprecedented circumstances.
In the fourth quarter, normal price long-term Xueersi Peiyou small-class ASP increased by 22% in U.S. dollar terms and increased by 13% in RMB terms year over year.
The increase was mainly due to the pricing gap refund we offered in February 2020 when we had to migrate Peiyou offline small-class students to online small class.
Xueersi Peiyou small class performed well in the various tiers of cities.
Revenue from the top five cities, which are Beijing, Shanghai, Guangzhou, Shenzhen, and Nanjing increased by 44% year over year in U.S. dollar terms and accounted for 55% of Xueersi Peiyou small-class business.
The other cities accounted for 45% of the Xueersi Peiyou small-class business.
Next, I'd like to discuss our Zhikang one-on-one business.
dollar terms and 19% in RMB terms.
Zhikang one-on-one accounted for approximately 6% of total revenues in the fourth quarter of fiscal-year 2021, compared to 8% in the same year-ago period.
In the fourth quarter, normal price long-term Zhikang one-on-one courses ASP increased by 17% in U.S. dollar terms and 8% in RMB terms year over year.
The increase was mainly due to some slight discounts we offered in February last year when we had to move Zhikang offline students to online after the COVID-19 outbreak, as well as the regular increase of tuition fees in several cities during the period.
Now, let me update you on our current capacity expansion strategy.
We continued the expansion drive in the fourth quarter as planned for this fiscal year.
We added eight new cities in the fourth quarter, bringing the total to 110 cities.
Of which, 40 were newly added during fiscal-year 2021.
These eight new cities are Ma'anshan, Cangzhou, Weihai, Liaocheng, Rizhao, Yibin, Nanchong, and Zhaoqing.
Similarly, we expanded our learning center network in the fourth quarter based on a healthy and sustainable approach, and by following government guidelines and market demand.
In Q4, we added 108 new learning centers on that basis to a total of 1,098 learning centers.
We opened 119 new Peiyou small-class learning centers and closed nine, and a net of 110 Peiyou small-class learning centers.
We closed five Mobby and Firstleap centers.
And we open four one-on-one centers and closed one one-on-one center, ending at 93 one-on-one centers.
During the quarter, we added 677 Peiyou small-class classrooms.
In all, by the end of February 2021, we've had 1,098 learning centers in 110 cities of which 109 cities in China and one Xueersi Peiyou learning center in the United States.
Among these learning centers, 879 were Peiyou small-class and international education centers, 82 were the merged Firstleap and Mobby small classes, and 137 were Zhikang one-on-one.
Looking into Q1 of the fiscal year 2022, we have conditionally rented some Peiyou small-class learning centers and expect to add a few more and close down some learning centers based on standard operations.
We will closely follow up with government guidelines as always and stay alert for COVID-19 developments.
Turning now to our online business.
First fiscal quarter revenue from xueersi.com grew by 115% in U.S. dollar terms year over year.
And 100% in RMB terms, while normal priced long-term course enrollments grew by 71% year over year to over USD 3.7 million.
In the fourth quarter, xueersi.com contributed 32% of total revenue and 53% of the total normal price long-term enrollments, compared to 24$of total revenue and 44% of total normal price long-term course enrollments in the same year-ago period respectively.
The growth in online business was supported by increasing demand for online education as well as sales and marketing efforts and the retention of the previous quarters.
In addition, in Q4, normal-priced long-term course ASP increased by 9% in U.S. dollar terms and increased by 1% in RMB terms year over year.
Let me now go through some key financial points for the fourth quarter and then briefly review the fiscal year 2021 financials.
Gross profit increased by 72.9% to $81.2 million from $451.8 million in the same year-ago period.
Gross margin for the third quarter increased to 57.3%, as compared to 52.7% for the same period of last year.
Selling and marketing expenses increased by 171.6% to $650.5 million from $243.2 million in the fourth quarter of the fiscal year 2020.
Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 168.4% to $635.5 million from $236.8 million in the same year-ago period.
The year-over-year increase of selling and marketing expenses in the fourth quarter of the fiscal year 2021 was primarily a result of more marketing promotion activities to strengthen our customer base and the brand as well as higher compensation to sales and marketing staff to support more programs and the service offerings.
Other income was $7.9 million for the fourth quarter of the fiscal year 2021, compared to other expenses of $4.7 million in the fourth quarter of the fiscal year 2020.
Other income in the fourth quarter of the fiscal year 2021 was primarily due to the value-added tax and social security expense exemption offered by the government during the COVID-19 impact period and partially offset by an impairment loss of non-current assets.
The income tax benefit was $80.5 million in the fourth quarter of the fiscal year 2021, compared to $63.6 million of income tax expense in the fourth quarter of the fiscal year 2020.
Net loss attributable to TAL was $169 million in the fourth quarter of the fiscal year 2021, compared to a net loss attributable to TAL of $90.1 million in the fourth quarter of the fiscal year 2020.
Non-GAAP net loss attributable to TAL which excluding the share-based compensation expenses was $88.7 million, compared to a non-GAAP net loss attributable to TAL of $57.2 million in the same year-ago period.
From the balance sheet as of February 28, 2021, the company had $3,243 million of cash and cash equivalents and $2,694 million of short-term investments, compared to $1,873.9 million of cash and cash equivalents and $345.4 million of short-term investments as of February 29, 2020.
As of February 28, 2021, the company's deferred revenue balance was $1,417.5 million, compared to $781 million as of February 29, 2020, 30th, representing a year-over-year increase of 81.5%, which was mainly contributed by the tuition collected in advance of part of the brief semester of Xueersi Peiyou small classes and online courses through www.
xueersi.com as well as deferred revenue related to other businesses.
Turning now to the full physical year 2021.
Let me briefly review some key financials as follows.
This year revenue grew by 37.3% to $4,495.8 million.
Gross profit grew by 35.6% to $2,447 million from $1,804.7 million in the fiscal year of 2020.
Gross margin for the fiscal year 2021 decreased by 70% to 54.4% as compared to 55.1% for the same period of last year.
Loss from operations was $438.2 million in the fiscal year of 202, compared to income from operations of $137.4 million in the previous year -- the prior year.
Non-GAAP loss from operations, which excluded the share-based compensation expenses was $233.3 million for the fiscal year of 2021, compared to non-GAAP income from operations of $255.4 million the fiscal year of 2020.
Net loss attributable to TAL was $116 million in the fiscal year 2021, compared to a net loss attributable to TAL of $110.2 million in the fiscal year of 2020.
Non-GAAP net income attributable to TAL which excluded the share-based compensation expenses was $98 million, compared to non-GAAP net income attributable to TAL of $7.7 million in the fiscal year 2020.
Now, I will hand the call back to Rong Luo to swiftly update you on our strategy execution and provide the business outlook for -- for the next quarter.
Fiscal year was indeed an unprecedented year due to outbreak of Kobe COVID-19.
Over the years, we timely respond to any government instructions related to public health and wherever necessary, to protect the safety of our students and clients, and contribute to our country's great efforts to fight against this pandemic.
Despite all the challenges we have faced, we realize 37.3% revenue growth for the fiscal year 2021, which was in line with our long-term growth rate expectations.
We state our -- with state-owned costs of our development strategy, asset allocation, service provider, regardless of the pandemic and the intense competition.
Looking ahead, we will continuously follow up with the government guidelines for the industry and conduct our class teachings in line with national public health -- health regulations, as well as keep investing in the quality of our -- our products, services, teachers training, and technologies, supported by sustainable marketing efforts, such our ever-more diversified tutoring offerings will be able to better meet customers changing demand and ability to pay.
Let me turn finally to our business outlook.
Based on our current estimates, total net revenue for the first quarter of the fiscal year 2022 is expected to be between us $1,302.2 million and $1,320.5 million, representing an increase of 43% to 45% on a year-over-year basis.
Operator, we are now ready to take questions.
 Assistant:

Chosen response: sees q1 revenue up 43 to 45 percent.


Prompt:
Human: If you have technical questions on the quarter, please pick them up with the IR team in the days, in the weeks that follow.
GAAP reconciliations for any non-U.S. GAAP measures are included in our news release or otherwise available on our website.
And also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in U.S. dollars.
So with that, over to you Gavin.
Let me start by stating the obvious, the first quarter was not the quarter we expected to have, that reality was driven by 3 events, cyber security incident that caused the global system outage, a freak winter storm in Texas, that forced utility companies to shutoff power to major businesses, including our Fort Worth brewery and government pandemic restrictions that shut down the entire on-premise channel in the UK and severely restricted much of the on-premise in Canada.
To say that all of these events happened in a single quarter is unprecedented, would be an understatement.
So while we can't control the weather, across the business, we executed well on what was in our control.
That's true, how we responded to each event.
Our team quickly implemented contingency plans to boost production and get our core brands back to a stable inventory before Memorial Day.
Right now, we are shipping, over 1 million barrels a week in the United States for the first time in nearly a year.
But most importantly, it's true of how we are executing on our revitalization plan.
During the first quarter, Coors Light and Miller Lite outperformed the combination of Bud Light and Michelob Ultra in U.S. industry share performance versus the prior year according to IRR.
Our U.S. above premium portfolio grew brand volumes versus the prior year and continue to gain industry share according to IRR, and we took substantial steps toward our hard seltzer ambition.
Our Truss joint venture's non-alcoholic cannabis beverages are holding strong as the number 1 dollar share spots in the entire Canadian cannabis beverage market.
As expected, the availability of our 12-ounce standard cans returned to normal levels.
And we continued working to protect the environment through significant initiatives in the United Kingdom.
So let's look deeper in each area.
Let's start with our Coor.
We will continue to see improving brand volume trends for Coors Light and Miller Lite in North America over the past quarter, dovetailing off strong performance in 2020.
But the performance is even more impressive when you look at our biggest brand and our biggest family of brand.
Coors Light finished the quarter with its strongest category share performance since Q1 of 2017.
And Coors Banquet posted its best quarterly volume performance in over 4 years in the United States.
We're building on that strong performance in the Coors family of brands with the launch of Coors Pure in March, our first USDA certified organic beer brand.
And we had a strong Q1 in Panama, with over a 50% increase in brand volumes with Coors Light's explosive triple-digit growth leading the way.
Now, when it comes to our plans to aggressively grow our above-premium portfolio, as you know, we have big ambitions for hard seltzers is this year and the first quarter was a big one.
And as we sit here today, our share of U.S. hard seltzer segment is over 50% higher than it was at the beginning of the year.
In a single week, Topo Chico Hard Seltzer jumped to 3.2 share U.S. hard seltzer category, despite only launching in 16 markets.
And it achieved a 20 share in Texas.
Now I know it's early days, but there is a stunning effect, which speaks to the opportunity with this brand.
And it's not alone in our portfolio, Vizzy was IRR top 10 U.S. industry growth brand in Q1.
We are building on that with the brand's second variety pack, which launched in March and the new Vizzy Lemonade which launched several weeks later.
They are both performing well.
And in fact, Vizzy Lemonade is the second fastest turning hard lemonade seltzer in the market.
We made significant headway with our hard seltzers in Canada and in Europe as well.
Of just over a month in market, Vizzy and Coors seltzers are top hard seltzer brands with some of the leading Canadian retailers.
In the UK, our new Three Fold hard seltzer brand is launched.
While our new brand Wai in Central and Eastern Europe is launching in the coming weeks.
In above premium beers, Blue Moon Light Sky, the number 1 new item in U.S. beer last year is currently the number 1 share gainer in U.S. craft beer in 2021.
And Hop Valley has made its official national debut in the U.S. and Canada.
So our first national light here in the U.S., we believe it will be another driver of growth for our above premium portfolio.
When it comes to our plans to expand beyond beer, last year we made a lot of news as we took on a number of partnerships to build a competitive portfolio.
This year, it's all about executing on those plans.
Though it gives us a strong entry into the $16 billion U.S. energy and performance space and is positioned to take a meaningful share of the category within a matter of months, it's just now beginning to hit shelf.
For Bar Memorial Day we expect we will have over 80,000 points of distribution.
And by the end of summer, that number is expected to climb to nearly 150,000.
La Colombe gives us the number 1 above premium player in the RTD coffee space and I'm excited to report that we are ahead of plan on all of our distribution targets.
Truss Canada, a Canadian cannabis joint venture with HEXO is holding strong as the number 1 dollar share position with 6 of the top 10 cannabis beverage skews in Canada.
And our Truss U.S.A joint venture is building on that through their first lineup of hemp-derived CBD beverages in Colorado.
And we have entered the fast-growing RTD cocktails space through an exclusive equity and distribution agreement with Superbird in above premium tequila-based Paloma.
This entire lineup represents tremendous growth for our business and is helping us drive our emerging growth division toward a $1 billion revenue business by 2023.
Last but certainly not least, is how we are investing in our capabilities, our people and our communities.
We have long been recognized as a leader for our environmental efforts, and several weeks ago, we became the first major UK brewer to operate entirely by renewable energy.
Soon, everyone of the 1 billion pints of beer we produced annually in the UK will be made with 100% renewable energy.
And we didn't stop there.
We are removing plastic rings from all of our major cracks across the UK.
In the U.S. this month, we announced our investment in TRU Colors, a North Carolina-based brewery that was founded on the premise that aligning rival gang members under the same roof with a common goal to both mitigate street violence and create economic opportunity.
We're excited to share our knowledge on growing brand positioning and supplier relationships.
And we are excited to be part of the business that is driving positive change and creating economic opportunity.
I can assure you the events of this quarter are not lost on any of us, but as the quarter came to a close, there is land on the horizon.
The on-prem gradually begin to open back up in the UK.
Our industry standard can inventory normalized and our weekly shipments in the U.S., topped 1 million barrels for the first time in nearly a year.
We are making progress on the things that are within our control and we are delivering against our revitalization plan.
And that is what gives me the confidence to reaffirm our guidance for the full year.
That is what gives me confidence in the current expectation that the Board will be in a position to reinstate the dividend in the second half of this year.
That is what gives me confidence that we'll achieve long-term top line growth.
And that is what tells me the future of Molson Coors is bright.
Despite the challenges Gavin mentioned, we are proud of our operational agility and resilience as we are deeply managed through these challenges, while still continuing to execute our revitalization plan.
Now let me take you through our quarterly results and provide an update on our outlook.
Consolidated net sales revenue decreased 11.1% in constant currency, principally due to lower financial volumes, which declined 12% while brand volumes declined 9.1%.
We delivered net pricing growth in North America and Europe as well as positive brand mix in the U.S. as we continue to premiumize our portfolio.
However, this was more than offset by the on-premise restrictions due to the Coronavirus pandemic and a corresponding negative channel mix as well as the unfavorable shipment timing in the U.S. related to the cyber security incident and the Texas winter storms.
20.53 Net sales per hectoliter on a brand volume basis increased 1.8% in constant currency as the net pricing growth more than offset the negative mix effects in Canada and Europe.
Underlying COGS per hectoliter increased 5.6% on a constant currency basis, driven by cost inflation and volume deleverage partially offset by cost savings.
Driving cost inflation was higher transportation costs due to the continued tightening of the freight market in North America as well as higher can sourcing costs as we continue to source additional aluminum cans from all over the world to address the significant off-premise demand for our core brands.
MG&A in the quarter decreased 15.9% on a constant currency basis, driven by lower marketing spend and discretionary expenses as well as cost savings.
While the timing of our marketing investments was adjusted in areas impacted by the pandemic, we continue to invest as planned beyond our core brands and key innovation.
As a result, underlying EBITDA decreased 20.2% on a constant currency basis.
Underlying free cash flow was a use of $271 million for the quarter, an increase in cash use of $54 million from the prior year period driven by lower underlying EBITDA and unfavorable working capital, driven by the timing of payments related to lower volumes, higher non-income tax deferrals due to governmental programs related to the Coronavirus pandemic and incentive payments partially offset by lower capex spend.
Capital expenditures paid were $103 million for the quarter, which were largely focused on our previously announced Golden brewery modernization project.
Capital expenditures were lower in the quarter compared to the prior year, primarily due to project timing.
Now let's look at our results by business units.
In North America, our markets experienced varying degrees of on-premise restrictions.
In the U.S., our largest market, we saw progressive reopenings, and while we have seen sequential improvement in the on-premise channel, we are still not back to pre-pandemic level.
In Canada, we saw significant restrictions and closures, while in Latin America, we saw restrictions easing.
In the U.S. brand volumes decreased 7.3% compared to domestic shipment declines of 9.5%, driven by the economy and premium segments.
However, our U.S. above premium brand volumes grew versus the prior year and the segment reached a record high portion of our portfolio, relative to any prior year this quarter since the creation of the MillerCoors joint venture.
Canada brand volumes declined 10.8% primarily due to the on-premise closures, while Latin America brand volumes grew 10.8%.
Net sales per hectoliter on a brand volume basis increased 2.4% in constant currency.
In the U.S., net sales per hectoliter on a brand volume basis increased 4.1% driven by positive brand mix made by innovation brand, Vizzy, Topo Chico Hard Seltzer and ZOA.
In Canada, negative channel mix more than offset the net pricing increases, while Latin America net sales per hectoliter on a brand volume basis increased due to positive sales mix.
North America, underlying EBITDA decreased 13.3% in constant currency, due to the lower net sales revenue and higher COGS per hectoliter partially offset by a 14.4% decrease in MG&A in constant currency.
The increase in COGS per hectoliter was driven primarily by inflation, including higher transportation and packaging material cost, volume deleverage and mix impacts from premiumization, partially offset by cost savings.
The MG&A decline was mainly due to lower marketing spend and discretionary expenses as well as cost savings.
We increased marketing investment behind core innovation brands such as Coors Seltzer, Vizzy and Blue Moon LightSky, and we increased media spending behind our iconic core brands, Coors Light and Miller Lite.
These increases were more than offset by lower spend in areas impacted by the pandemic such as sports and live entertainment events.
Europe net sales revenue was down 39.5% in constant currency driven by volume declines and negative geographic and channel mix due to on-premise restrictions most meaningfully in the UK, given the on-premise lockdown for the full quarter.
Europe financial volumes decreased 22% and brand volumes decreased 17% driven by a significant decline in brand volumes in the UK.
However, our Central and Eastern European business has performed fairly well and was able to deliver comparable volumes basis the prior year period.
Net sales per hectoliter on a brand volume basis declined 10.4% driven by unfavorable geographic channel and brand mix, particularly from our higher margin on-premise focused UK business, partially offset by positive pricing.
Underlying EBITDA was a loss of $38 million compared to a loss of $4.1 million in the prior year driven by gross margin impact of lower volume and unfavorable geographic and channel mix as a result of the pandemic, partially offset by lower MG&A expenses driven by cost mitigation actions.
Turning to the balance sheet.
Net debt was $7.7 billion, down $1.1 billion from March 31, 2020 and we ended the first quarter with a strong borrowing capacity with no outstanding balance on our $1.5 billion U.S. credit facility as of March 31, 2021.
As for our UK COVID corporate financing facility, it was closed on March 23, 2021, and we had no outstanding borrowings at that time.
Turning to our financial outlook.
We are reaffirming our 2021 annual guidance provided on February 11, 2021.
We expect to deliver mid-single digit net sales revenue growth on a constant currency basis.
We are working aggressively to build inventories and expect domestic shipment trends in the U.S. to begin to exceed brand volume in the second half of the year.
For the year, we maintain our current year goal of shipping to consumption in the U.S. In the U.S., we expect improving on-premise trends in the second quarter as we left essentially full closures in the prior year.
While in Canada, we have seen increasing on-premise restrictions continuing to pressure the on-premise channel.
In Europe, we've seen a gradual opening of the UK on-premise beginning in mid-April to after consumption only and we expect through the phase on-premise reopening later in the second quarter resulting in year-on-year improvement versus the prior period.
We anticipate underlying EBITDA will be flat compared to 2020 as growth is expected to be offset by COGS inflationary headwinds, but more significantly from increased investment to deliver against our revitalization plan.
We intend to increase marketing spend to build on the strength of our core brands and support our successful 2020 launches including Blue Moon LightSky, Vizzy and Coors Seltzer and new innovations like Topo Chico Hard Seltzer and ZOA.
With this in mind, we expect significant year-on-year increases in marketing spend over the balance of the year, and most notably in the second quarter.
We expect second quarter marketing spend to be higher than the second quarter 2020 level and to approach second quarter 2019 level.
We also continue to anticipate underlying depreciation and amortization of $800 million, net interest expense of $270 million plus or minus 5% and an effective tax rate in the range of 20% to 23%.
It also best reminding that in our 2020 -- that in 2020 our working capital benefited from the deferral of approximately $150 million in tax payment from various government-sponsored payment deferral programs related to the Coronavirus pandemic.
And we currently anticipate the majority to be paid this year as they become due.
As 2020 positioned us with greatly improved financial flexibility, better in aiming us to execute our capital allocation priorities, to invest in our business to grow our top line growth and efficiencies, pay down debt and return cash to shareholders in 2021.
We plan to continue to prudently invest in brewery modernization and production capacity and capability to support new innovations and growth initiatives, improving efficiencies and advance toward our sustainability goals.
Driven by our commitment to maintaining any time upgrading our investment grade rating, we expect to continue to pay down debt and reaffirm our target net debt to underlying EBITDA ratio of approximately 3.25 times by the end of 2021, and below 3 times by the end of 2022.
And in line with our fourth quarter 2020 earnings comments, we currently anticipate that our Board of Directors will be in a position to reinstate a dividend in the second half of this year.
Now, we are pleased with our ability to adapt and overcome the past incredible challenges we faced in the first quarter.
Our continued progress against our revitalization plan, the agility of our organization in the face of challenges and the commitment and resilience of our people give us the confidence, we can continue to successfully execute our revitalization plan, driving long-term sustainable revenue and underlying EBITDA growth, and we look forward to updating you on our continued progress.
 Assistant:

Chosen response:
qtrly net sales revenue decreased 9.7% reported and 11.1% in constant currency.
qtrly net sales revenue per hectoliter increased 1.8%, on a brand volume basis.
qtrly net sales$1,898.4 million versus $2,102.8 million.
for 2021 net sales revenue sees mid-single digit increase on a constant currency basis.


Prompt:
Human: I'm joined by our Chief Executive Officer, Patrick Beharelle.
We use non-GAAP measures when presenting our financial results.
Any comparisons made today are based on a comparison to the same period in the prior year, unless otherwise stated.
Before I dive into quarterly results, I wanted to take a moment to reflect back on 2020.
In March of 2020, jurisdictions across the country began implementing restrictions to protect public health, as the impact of COVID set in.
Many of our clients temporarily halted operations or reduced volumes and our revenue dropped precipitously.
By April, our year-over-year revenue decline had a level of 42%.
Management was prepared for this moment, and we reacted quickly.
We deployed pre-existing recession plans and modified operational protocols to focus on the health and safety of our employees, workers and clients.
In April, we unveiled a plan to reduce 2020 SG&A by approximately $100 million compared to 2019, which we have exceeded.
These cost reductions helped us right-size the business to match lower client demand and preserve capital.
The actions were difficult, but they were taken with care, and with the long-term in mind.
For the employees that lost their jobs, we provided three months of fully paid extended healthcare benefits so they wouldn't have to scramble for new coverage in the midst of the pandemic.
To ensure we're well-positioned as business conditions improve, we are investing heavily in client and candidate-facing technologies and kept our branch footprint fully intact.
Finally, to reward our employees for sticking with us this year, we are paying a one-time bonus.
The impact of our efforts is evident in our results.
Our revenue trends have been improving each quarter since Q2 2020, and we posted positive net income in the third and fourth quarters.
For the full year, revenue was down 22%.
To mitigate this decrease, we reduced selling, general and administrative expense by 21%.
While we encountered a net loss for the year largely due to a goodwill and intangible asset impairment charge in the first quarter and workforce reduction charges in the second quarter, we were profitable on an adjusted net income basis for the year.
Of equal importance, employee morale and engagement is high.
Our most recent employee engagement scores from September were higher than they were prior to the pandemic.
Now let's discuss our fourth quarter results.
We took the right actions to restore profitability and position the company for long-term growth as the economy continues to recover.
In addition to improving revenue trends with the fourth quarter down 12% versus 25% in the third quarter, we sustained our cost discipline to drive year-over-year growth of 25% in income from operations.
Now, let's turn to our results by segment, starting with PeopleReady.
PeopleReady is our largest segment, representing 60% of trailing-12-month revenue and 73% of segment profit.
PeopleReady is the leading provider of on-demand labor and skilled trades in the North American industrial staffing market.
We service our clients via a national footprint of physical branch locations as well as our JobStack mobile app.
PeopleReady's revenue was down 18% during the quarter versus down 29% in Q3, and we saw intra-quarter improvement with revenue down 15% in December versus down 20% in October.
PeopleManagement is our second largest segment representing 32% of trailing-12-month revenue and 20% of segment profit.
PeopleManagement provides onsite industrial staffing and commercial driving services in the North American industrial staffing market.
The essence of a typical PeopleManagement engagement is supplying an outsourced workforce that involves multi-year, multi-million-dollar onsite or driver relationships.
These types of client engagements were more resilient in the downturn, when compared to the supplemental nature of a typical PeopleReady client engagement.
PeopleManagement returned to growth in the fourth quarter with revenue up 5%, and intra-quarter improvement with December up 9% versus up 1% in October.
Turning to our third segment, PeopleScout, represents 9% of trailing-12-month revenue and 8% of segment profit.
PeopleScout is a global leader in filling permanent positions through our recruitment process outsourcing and managed service provider offerings.
Revenue was down 24% during the quarter versus down 48% in Q3.
PeopleScout results were particularly impacted by exposure to large travel and leisure clients.
Now I'd like to shift gears and update you on our key strategies by segment, starting with PeopleReady.
Our long-term strategy at PeopleReady is to further digitalize our business model to gain market share and improve the efficiency of our cost structure.
Most of our competitors in this segment are smaller mom and pops that don't have the scale or capital to deploy something like our JobStack mobile app.
So this, along with our nationwide footprint is what makes us unique.
We began rolling out JobStack in 2017 to our associates, and in 2018, we launched the client side of the app.
We now have digital fill rates north of 50% and more than 26,000 clients using the app.
In Q4 2020, we filled 811,000 shifts via JobStack, representing a digital fill rate of 57%.
Our client user count ended the quarter at 26,300, up 23% versus Q4 2019.
In mid-2020 we introduced new digital onboarding features that cut application time in half.
This has led to some great operational results as we increase the ratio of associates put to work versus all applicants.
We continue to experience an increase in worker throughput of approximately 20%.
We expect this percentage to further improve as we fine tune the process.
This is exciting, and as we move back toward a more supply constrained environment, increased throughput will translate directly to revenue.
Right now, we are very focused on driving heavy client user growth.
A heavy user is a client who has 50 or more touches on JobStack per month, whether it's entering an order, rating a worker or approving time.
JobStack heavy users have consistently posted better year-over-year growth rates compared to the rest of PeopleReady.
The growth differential between heavy users and non-users reached its peak in December with an over 30 percentage points year-over-year growth differential on a same customer basis.
This growth differential is largely driven by wallet share takeaways from competitors.
Heavy user clients are telling us a major reason they are moving share to PeopleReady is due to JobStack's unique capabilities.
Our focus on heavy user growth is beginning to become more material in our overall results.
For all heavy users, we doubled the mix since 2019, up from 11% of PeopleReady's business in fiscal 2019 to 24% for 2020.
Of course, our positive strategic progress is overshadowed by the macro environment at the moment, but we continue to invest in our digital strategy and believe this approach will help PeopleReady emerge stronger than prior to the pandemic.
As our digital strategy continues to mature, we're taking a look at areas within PeopleReady where we can reduce our service delivery costs.
In 2020, we began testing a few different strategies to further reduce the cost of delivering our services.
We plan to expand our testing in 2021 to include more technology utilization and an altered go-to-market approach.
As we move down this path, I want to emphasize that the value and importance of our branch network should not be underestimated.
We need to maintain a local presence in our communities where we do business.
At the same time, we do see an opportunity to centralize more services and reorient job roles to improve our client-focused delivery.
We'll continue to update you on this front as plans progress.
Turning to PeopleManagement, our strategy is to focus on execution and grow our client base.
Initiatives we've already implemented include sharpening our vertical market focus to target essential manufacturers and leverage our strength in e-commerce.
These are verticals that have held up well relative to the decline in non-essential goods at traditional brick and mortar retailers.
We've also made a concentrated effort to enhance the productivity of our sales teams.
First, we completed the integration of our Staff Management and SIMOS brand sales teams, allowing the integrated team to offer a full portfolio of hourly and cost per-unit solutions to clients.
Second, we are expanding our presence in smaller markets we believe have been underserved.
These strategic initiatives are already paying off.
Even in the middle of this downturn, year-to-date new business wins at PeopleManagement are up 20% versus the prior year, as we've secured $79 million of annualized new business wins versus $66 million in the prior year.
As the demand environment recovers, we'll be increasing sales resources and investing in client care programs to maintain our momentum.
Turning to PeopleScout, the strategy leverages our strong brand reputation to capture opportunities in an industry poised for growth.
Before COVID struck, we, along with our competitors experienced a trend toward more in-sourcing, with some clients bringing more recruitment functions in-house.
Many of the in-house teams have been reduced or eliminated during the pandemic and we expect a trend reversal back toward outsourcing as the economy recovers.
Focusing our sales teams on this trend will allow us to increase wallet share at our existing clients and diversify the industry mix within our portfolio.
I'd like to take a moment to touch on our capital allocation priorities.
During the first half of 2020, we repurchased $52 million of our common stock, or 9% of our common stock outstanding, at favorable prices.
While 2020 was not an easy year, we took the right actions to preserve the longevity of the business while retaining our operational strengths.
Investments in our digital strategy and our lean cost structure have us well-positioned for 2021.
I am extremely proud of the leadership and resolve demonstrated by the entire TrueBlue team.
By coming together and staying true to our mission of connecting people and work, we have continued to provide a vital service to our communities even in the midst of a pandemic.
I'll now pass the call over to Derrek who will share greater detail around our financial results.
Total revenue for Q4 2020 was $519 million, representing a decline of 12%.
We posted net income of $8 million, or $0.23 per share, and adjusted net income of $11 million, or $0.33 per share.
While net income this quarter declined 8% compared to Q4 2019 in large part due to a higher effective income tax rate, income from operations was up 25%.
This increase in operating profitability was due to further improvement in our revenue trends and disciplined cost management.
The Q4 year-over-year revenue decline was 13 percentage points better than the Q3 year-over-year revenue decline and Q4 SG&A was down 22% year-over-year, or down nearly twice as much as the revenue decline for the quarter.
Adjusted EBITDA was $22 million, an increase of 4% compared to Q4 2019 and adjusted EBITDA margin was up 60 basis points.
Gross margin of 23.3% was down 190 basis points.
Our staffing businesses contributed 170 basis points of compression from pay rates increasing faster than bill rates and from sales mix largely due to the revenue growth in our PeopleManagement business, which has a lower gross margin than our PeopleReady business, which had a revenue decline.
PeopleScout contributed another 20 basis points of compression primarily due to client mix and lower volume.
We expect additional gross margin pressure in the first quarter of 2021, but expect it to moderate as we anniversary the onset of the pandemic in Q2.
Assuming a strong bounce back in economic growth in the back half of 2021, we expect some gross margin expansion assuming we experience revenue growth in our PeopleScout business due to the operating leverage associated with its cost of sales, and to a lesser extent, gross margin expansion in our staffing businesses from favorable bill and pay rates spreads associated with less slack in the labor supply.
Turning to SG&A expense, we delivered another quarter of strong results with expense down $28 million, or 22%.
We maintained our cost discipline while preserving our operational strengths to ensure the business is well-positioned for growth as economic conditions improve.
We also see opportunity to further reduce the costs of our PeopleReady branch network, while maintaining the strength of our geographic footprint through a greater use of technology, centralizing work activities and repurposing job roles.
We are in the early stages of planning the pilots that will occur throughout 2021, and if successful, will lead to additional efficiencies in 2022.
As Patrick mentioned, we are rewarding our employees with a one-time COVID bonus for their extraordinary efforts this past year.
This bonus, as well as COVID government subsidies, are excluded from adjusted net income and adjusted EBITDA.
Our effective income tax rate was 28% in Q4, which included additional expense associated with less net operating loss benefit available to carry back to prior years, due to a stronger performance in Q4.
Excluding the net operating loss adjustment, the effective income rate was 9%.
Turning to our segments, PeopleReady, our largest segment, saw an 18% decline in revenue and segment profit was down 10%.
As additional social and government mandates were enacted in December to address the COVID-19 threat, our year-over-year decline did not improve much, but held relatively steady and this trend has continued into January where revenue was down 18%.
PeopleManagement saw 5% growth in revenue and segment profit was up 104%.
PeopleManagement experienced encouraging intra-quarter revenue improvement, with December up 9%, compared to 1% in October.
Revenue growth continued into January with PeopleManagement up 5%.
About half of the segment profit growth in Q4 is attributable to cost management and revenue growth and half from unique costs in Q4 last year creating a favorable comparison this year.
Turning to PeopleScout, we saw a 24% decline in revenue and segment profit was down 18%.
Temporary project work provided 6 percentage points of revenue benefit.
As Patrick noted, PeopleScout results were adversely impacted by exposure to travel and leisure clients, which made up roughly 28% of the prior year mix, and revenue for this vertical was down 54%.
Now let's turn to the balance sheet and cash flows.
Our balance sheet is in excellent shape.
We finished the year with $63 million in cash, no outstanding debt, and an unused credit facility.
Cash flow from operations in 2020 was $153 million, up from $94 million in the prior year, with the increase coming largely from the deleveraging of accounts receivable.
It was also a strong quarter for us from a working capital perspective with Days Sales Outstanding at 49 days or down 3.5 days in comparison with Q4 last year.
For the first quarter of 2021, we expect gross margin contraction of 290 basis points to 250 basis points and for the full year contraction of 50 basis points to 10 basis points.
As a reminder, in Q1 2020, there was 130 basis points of gross margin expansion from healthcare benefits that were excluded from adjusted net income and adjusted EBITDA.
For the full year 2020, there was 20 basis points of net benefit from the healthcare benefit I mentioned, less workforce reduction costs that were excluded from adjusted net income and adjusted EBITDA.
You can find more information on these items in our non-GAAP reconciliations.
For the first quarter of 2021, we expect a year-over-year SG&A reduction of $13 million to $17 million.
I'd also like to remind everyone that we will anniversary most of our cost reduction actions in April of 2021.
For capital expenditures, we expect about $16 million for the first quarter and $37 million to $41 million for full year 2021.
These figures include approximately $8 million and $10 million for Q1 and 2021, respectively, in build-out costs for our Chicago support center, of which $7 million will be reimbursed by our landlord with $6 million of the reimbursements expected in the first quarter.
The reimbursements from our landlord will be reflected in operating cash flows.
Our outlook for fully diluted weighted average shares outstanding for the first quarter of 2021 is 35.3 million.
Providing an annual outlook for an effective income tax rate is difficult due to the semi-fixed nature of the work opportunity tax credit.
We expect our effective income tax rate for the full year 2021, before job tax credits, to be about 23% to 27%, and we expect total job tax credits to be $8 million to $10 million.
Due to the size of expected job tax credits, it is possible to have pre-tax income and an effective income rate benefit instead of expense at lower levels of profitability.
While we have more work to do to get back to where we were before COVID hit, we like the progress we have made.
We have seen steady improvements in our revenue trends, and with the prospect of meaningful vaccinations on the horizon, we are optimistic about the potential upside in many of the hard hit end markets we serve.
We took the right actions to improve profitability, and have done so without losing our operational strengths or technology momentum.
And, we ended 2020 with a balance sheet that is stronger than where we started the year, which will further enable our ability to take advantage of the growth opportunities ahead of us.
 Assistant:

Chosen response:
q4 adjusted earnings per share $0.33.
q4 earnings per share $0.23.
q4 revenue $519 million versus refinitiv ibes estimate of $498.1 million.


Prompt:
Human: Steve McMillan, Teradata's President and Chief Executive Officer, will lead our call today; followed by Claire Bramley, Teradata's Chief Financial Officer, who will discuss our financial results and our outlook.
We will also discuss other non-GAAP items, such as free cash flow and constant currency revenue comparisons.
A replay of this conference call will be available later today on our website.
At our Investor Day, we provided some fresh insights into our strategic direction, differentiated product and value proposition and our financial model.
We have continued our transformation journey, executing on our strategy as a cloud-first profitable growth company.
In Q3, we met expectations for revenue once again.
Importantly, our recurring revenue as a percentage of total revenue increased approximately five percentage points versus last year and is now approaching 80%.
This is meaningful because recurring revenue provides for predictable and durable streams of cash flow.
In addition, both GAAP and non-GAAP earnings per share were above expectations.
Claire will address our financial metrics and outlook in more detail.
In the third quarter, our public cloud ARR was $148 million.
This was a substantial 83% growth rate over Q3 of 2020.
We had a handful of large deals slip out of the last day of Q3 into the fourth quarter related to customer timing.
We have already completed transactions that more than cover the $7 million that we expected in Q3, and we have closed most and are confident, we will close all of these transactions in the fourth quarter.
We continue to build upon our execution engine, which delivered more cloud deals in Q3 than in any other quarter.
Looking ahead to the fourth quarter, our pipeline is robust, and we are working on bigger cloud deals.
Looking at Q3 in more depth, we had numerous proof points that our strategy is solid.
We are executing and are making progress within our target market of leading enterprise accounts.
Q3 was our highest quarter yet for new cloud customers.
We added tens of new large enterprise accounts across all of our regions.
We are determined to keep up the pace in winning new logos in the cloud and on-prem.
Our dedicated new logo sales teams are coming on board, ramping up and are already starting to win.
We are gating the world's largest companies, often with extreme scale and complexity in their data environment to smoothly migrate to the cloud.
These global enterprises depend on their mission-critical Teradata platform every single day to help them extract the greatest value from their enterprise analytics.
As many of our large enterprise customers are transitioning to the cloud for the first time, managing through these types of transactions can take some time, requiring planning and coordination with multiple stakeholders across numerous functions and migrating to the cloud requires careful consideration of the interconnectivity of all aspects of the customer's on-prem analytic ecosystem.
Customers are recognizing that Teradata with our connected multi-cloud data platform for enterprise analytics is the best solution to overcome these challenges, and they are increasingly migrating to the cloud with Teradata Vantage.
In the quarter, healthcare, transportation and government led the pack in terms of our target verticals.
Just one recent example of a seamless migration to the cloud is American Airlines, a Teradata on-prem customer for more than 14 years.
American just migrated its massive Teradata EDW to Teradata on Azure Our collective team of employees from Teradata and American Airlines executed very efficiently for a highly successful migration.
The airline's Teradata platform provides virtually every department access to analytics and reporting capability and supports thousands of users for many business initiatives, including revenue management, network planning, technical operations, cargo and marketing.
The migration is part of the airline strategy to provide greater agility, speed to market and frictionless scalability to its business community.
We have been told that its business users are extremely pleased with the speed and performance of the Vantage platform and Azure.
Cloud growth remains front and center for us.
The move to cloud is a clear direction and often a mandate for many organizations.
It's an issue of when, not if.
We are pleased that each of our regions saw growth in cloud customers in the quarter.
Additionally, we are seeing that once customers start in the cloud, they grow with Teradata.
Our quarterly trend of healthy net expansion rates in the cloud continues to be greater than 130%, as customers add more use cases, more data and workloads and more users to their Teradata multi-cloud portfolio platform.
Here's a handful of examples where we are competing and winning in the market.
The ANZ Banking Group is migrating its Teradata enterprise data platform to Vantage on Google Cloud.
This multinational financial services company has been a Teradata customer for more than two decades.
Its Teradata platform is core to its critical business applications, supporting more than 2,000 users for many different business initiatives, including regulatory reporting, customer analytics, product profitability and responsible lending.
The migration is part of the bank's broader cloud mandate.
Here, we are partnering with a leading global SI on the customers' migration to the cloud.
A leading global oilfield services company is deploying Vantage on Azure to support center data management and advanced analytics.
This new Teradata customer is committed to continual innovation using technology to improve safety, productivity and quality of life in the oil and gas industry.
This transaction is one of the large deals from Q3 that fell just over the line and closed on day one of Q4.
BNSF, one of the largest freight transportation companies in North America is migrating its Teradata data platform to Vantage on Azure Cloud as part of a long-term plan to have the majority of its analytic ecosystem in the cloud.
Here, we won against cloud native competition, and Teradata will provide analytics and reporting for finance, operations and marketing.
Teradata Consulting will be leading the migration effort with support from our partner, Microsoft.
As part of this effort, Teradata will be integrated into a hybrid-analytic environment with both IBM Mainframe and Microsoft Azure components.
Another airline, one of the world's largest and most admired, is migrating its long-standing Teradata environment to Vantage on AWS-as-a-Service.
The company's modernization efforts include increasing analytics for HR, finance, loyalty and customer care and will leverage both Teradata and AWS services as well as solutions from advanced analytics vendors.
The ability to leverage [Indecipherable] capabilities to utilize AWS three data and make it available for richer analytics was an important factor in migrating Vantage to the AWS cloud.
The customer considered cloud-native competition before selecting Vantage on AWS, Accenture was a supportive partner during their evaluation and leading the migration process.
[Indecipherable], a leading tech equipment manufacturer based in [Indecipherable] as a new cloud customer, choosing Vantage on Azure as its cloud data and analytics platform.
The Vantage on Azure environment will be used for development work, POCs with customers, demos and applications testing.
Our purpose, transforming how businesses work and people live through the power of data has never been more relevant, and we are successfully supporting customers in building and driving meaningful business value in their analytic environments, whether multi-cloud, cloud-only, on-prem or a hybrid combination of any or all.
To keep Teradata's differentiated market-leading position, we continuously develop and evolve our technology and Q3 was no different.
In the quarter, we advanced our innovations on multiple fronts.
We released a significant enhancement to Vantage, adding 30 new end database functions that enable customers to use partner tools of their choice to leverage the power of end database analytics, delivering performance at enterprise scale.
We introduced Vantage Streams in the cloud providing near real-time data, leveraging native object stores, AWS3, Azure Blob and Google Cloud Storage to help accelerate new business outcomes.
Customers can now stream IoT data, stock data, weather or website click-stream data to deliver new analytic use cases.
This is exactly what is needed by our target market and a recent research study by independent research firm, Vanson Bourne, 87% of IT decision makers felt that they must leverage these emerging technologies to remain competitive.
We also delivered an update to our bring-your-own model capabilities that allows customers to bring their own analytic models, built with third-party tools and languages into Vantage to run enterprise analytics at scale.
And in keeping with our focus on customer and market drivers, we brought enhancements to our communications data model with full support of 5G network activity, including intelligent network optimization.
We are furthering the transformation and our go-to-market organization to execute with greater agility and help us accelerate the move to the cloud and build an increasingly strong partner ecosystem as well.
These actions are designed to drive results for Teradata and an exceptional customer experience.
We know that when our customers succeed, we succeed.
We're investing to drive faster cloud execution to help our customers maximize the value of the data and get optimal results from the Teradata environment in the cloud.
We are deploying senior cloud specialist sellers and cloud specialist architect teams in each region to progress and execute more quickly to close cloud deals.
We are doubling down on building mutually beneficial partnerships to drive scale and strengthen capabilities and have added senior cloud expertise to our global partner organization.
Strong partnerships create a flywheel effect and accelerating successes in the cloud and in data analytics.
Here's a few new partnerships that will help propel us forward.
Today, we announced a strategic collaboration agreement with AWS.
We are both committed to increase product integrations and development with AWS Cloud services and launch joint programs to help customers migrate, modernize and derisk the cloud adoption journey with Vantage on AWS.
With this exciting announcement, we are working together to make it simple to use Vantage on AWS across the broad array of AWS services at enterprise scale.
We are very excited about the strategic collaboration that will make it even easier for customers to get the most value from their enterprise analytics at scale in the cloud, helping us both accelerate growth.
In important and growing AI arena, we recently announced a strategic partnership with H2O.
ai and the integration of H2O.
ai's hybrid cloud platform with Vantage.
This integration enables our joint customers to quickly and easily build and deploy AI solutions that inform new insights from machine learning and drive more meaningful business outcomes.
We're also pleased to be deepening our partnership with Accenture.
Together, we are building a global Vantage cloud data migration factory to enable joint customers to easily migrate to Teradata Vantage in the cloud.
The powerful combination of Accenture's recognized global capabilities and our unparalleled ability to harness data at scale will help drive smooth transitions to the cloud for our joint customers.
I'm seeing the team operate with a stronger sense of urgency, accountability and enthusiasm, and I'm pleased that we are progressing in our go-to-market organization and across the company.
We are resolute in executing our growth strategy.
Looking ahead, Q4 is traditionally our largest quarter for ARR growth.
We have a robust pipeline for the quarter, and we are seeing trends of more cloud deals and larger cloud deals, some in the seven and eight digit range.
Given these dynamics, you can be certain that the entire team will be focused and dedicated to closely managing the business, especially with the planning and coordination associated with closing some of these large transactions.
We believe our cloud business will be approximately $200 million by the end of the year.
We have a path to grow more than 100% year-on-year.
However, given the timing we experienced in Q3, we believe it is prudent to lower our cloud ARR growth outlook from 100% year-over-year to approximately 90% year-over-year.
We remain pleased with this very strong annualized growth rate in our cloud business, a substantial cloud business that is based on a competitive product and differentiated position in a large and growing market.
At our Investor Day in September, I stated that Teradata is a profitable growth company in a large and growing market with the right technology, the right strategy and the right people.
That remains true today.
And we remain incredibly dedicated to adding customers, growing and expanding existing ones and providing an outstanding customer experience with our connected multi-cloud data platform for enterprise analytics.
Our focus is clearly on executing to keep winning and delivering shareholder value.
This confidence is reflected in the new $1 billion repurchase authorization that we announced today and our strong commitment to returning capital to shareholders via share repurchase.
Now I'll pass the call over to Claire for additional insights.
In the third fiscal quarter, Teradata delivered revenue and profit in line or better than expectations.
Quarterly highlights include recurring revenue of $352 million or growth of 7% year-over-year as reported.
Gross profit margin of 61.3%, up 30 basis points year-over-year.
Operating margin of 15.4%, up 60 basis points year-over-year and non-GAAP earnings per share of $0.43 in line with prior year and $0.11 above the midpoint of our previous outlook.
I am pleased that these results keep us on track to achieve or beat our fiscal 2021 outlook on many of our key financial metrics.
Some of our year-to-date highlights include total ARR growth of 7% versus the prior year, which is in line with our 2021 full year outlook range of mid- to high single-digit growth.
Year-to-date, recurring revenue growth of 14% versus the prior year compared to our full year outlook range of high single to low double-digit growth.
Earnings per share of $1.86 against our previous full year outlook range of $1.92 to $1.96 and year-to-date free cash flow of $347 million compared to our full year outlook of at least $400 million.
Despite the many highlights, it is unfortunate that a handful of our transactions slipped into Q4, which impacted our cloud ARR in the third quarter by $7 million.
As Steve noted, we have already covered this amount in the early days of Q4.
We have a robust Q4 pipeline, the strongest we have ever seen, and we continue to successfully close deals with good economics.
We therefore remain confident that our customers want and value our products.
Over the last 18 months, as we have undertaken our transformation journey, Teradata has had a renewed focus on driving greater, rigor, discipline and accountability in the business.
We are focused on driving improved intra-quarter linearity, increased investment in our cloud go-to-market activities globally, and we are seeing increasing benefits from stronger partnerships with CSP and SI partners to accelerate migration to the cloud.
Now let's get into the results, starting with ARR.
Our customers continue to drive digital transformation activities in multi-cloud environments, and this keeps driving our growth.
Total ARR increased 7% year-over-year as reported and 6% year-over-year in constant currency.
Total ARR grew by $11 million sequentially.
Subscription ARR increased 18% year-over-year and 2% sequentially.
We grew in all three regions from both existing and new enterprise customers.
We added on-premises new logo customers at a faster pace than last quarter, even though our new logo acquisition efforts are emerging.
These are all positive proof points that customers continue to choose Teradata for our differentiated value from a great product that provides a combination of best price and performance at scale, along with Teradata's industry knowledge and expertise.
Public cloud ARR grew 83% year-over-year and 6% sequentially.
Growth occurred across all three geographic regions year-over-year and sequentially in the Americas.
In both APJ and EMEA, we saw a slight sequential decline in growth resulting from transactional delay.
Of the $9 million sequential growth, a little more than half resulted from customers migrating to Vantage in the cloud from on-premise perpetual and subscription licenses and most of the remainder from expansion.
We continue to experience healthy expansion rates that are in excess of 130% in the cloud, sustaining the positive trends that we outlined in our recent Investor Day.
We also added more new logo cloud customers in the quarter, a proof point of executing against our strategy.
While the deal sizes can be small at the start, we see future growth opportunities with these new customers as they try, buy and expand.
Now turning to revenue.
Total revenue was $460 million, a 1% increase year-over-year as reported and in constant currency.
We continue to build on a higher base of recurring revenue, which grew 7% year-over-year and 6% in constant currency.
This growth is primarily driven by a higher mix of recurring revenues.
As a percentage of total revenue, recurring revenue was 77% in the third quarter.
Regarding upfront revenue arrangement.
In the third quarter, the net impact of upfront revenue was materially lower when compared to the first two quarters of the fiscal year.
In the third quarter, there was an approximate net negative $10 million impact related to upfront recurring revenue.
This was in line with our expectations.
For reference, this compares to a net positive $22 million impact in the second quarter and $24 million in Q1.
The negative $10 million is due to revenue pulled into the first half of the year from the third quarter, partially offset by upfront recurring revenue recognized in Q3, all related to the renewal or expansion of on-premises deals.
As anticipated, both perpetual and consulting revenue were lower year-over-year, given the strategic shift made to a higher-margin subscription model and greater collaboration with partners that drive higher adoption and consumption of Teradata.
Third quarter gross margin was 61.3%, which was approximately 30 basis points higher than last year's third quarter, primarily due to a higher mix of subscription-based recurring revenue.
This was partially offset by the negative impact from upfront revenue arrangements pulled forward from the third quarter into the first half of fiscal 2021 as well as a small unfavorable impact from perpetual mix and a slightly lower consulting margin rate.
Third quarter's operating margin was 15.4%, 60 basis points higher than last year's third quarter, driven by the combination of a lower cost structure from cost discipline, partially offset by sequential investments made in activities supporting the cloud in both go-to-market and R&D.
Total operating expenses were up 5% sequentially and flat year-over-year.
Third quarter earnings per share of $0.43 exceeded our outlook range of $0.30 to $0.34 by $0.11 at the midpoint.
Of the $0.11, $0.05 related to actual expenses being lower than expected, $0.04 related to cost delays and $0.02 related to favorable recurring revenue mix.
Turning to free cash flow and capital allocation.
We are on track to achieve our fiscal 2021 guidance of at least $400 million in free cash flow.
Through the end of September 2021, year-to-date free cash flow was $347 million.
In the third quarter, free cash flow generated was $23 million due to the seasonality of billings.
Our cash conversion metrics showed slight improvement quarter-over-quarter, driven by an increase in days payable outstanding due to the timing of invoices received.
Our days sales outstanding remained strong, although it did increase by about two to three days sequentially.
We continued to take advantage of our strong balance sheet, buying back stock to offset dilution.
In the third quarter, we repurchased approximately 1.1 million shares or $58 million in total.
For the first nine months of the fiscal year, we spent $179 million on share repurchases for a return of 52% of year-to-date free cash flow to shareholders.
For the full year, we are on track to return at least 15% of free cash flow to shareholders via share repurchases while continuing to make investments in the company to support our strategy for profitable growth and cloud acceleration.
We now have a total of approximately $1.3 billion authorized under this open market share repurchase program, in effect immediately until the end of 2025.
This action is consistent with the capital allocation framework and our commitment to increase shareholder value that we outlined at our Investor Day.
Let me move to our outlook.
Overall, we have a very healthy growth rate on a large and scaling cloud business.
Given the strength of our products, along with our robust pipeline in Q4, we do see paths to achieve at least 100% growth in cloud ARR for the full year.
However, it is also possible we will continue to see the timing volatility as we saw between September and October due to how difficult it is to predict the close date of some of our very large pipeline deals.
As Steve stated, our updated cloud ARR outlook is approximately 90% growth year-over-year or approximately $200 million.
With regards to earnings per share, we are raising our non-GAAP earnings per diluted share to be in the range of $2.11 to $2.15, while still continuing to invest in the business, an increase of $0.19 from the midpoint of the previous range.
For the fourth quarter, we expect non-GAAP earnings per diluted share to be in the range of $0.25 to $0.29.
We anticipate the tax rate to be approximately 26% in the fourth quarter and approximately 23% for the full year.
We also anticipate the weighted average shares outstanding to be approximately $113 million.
We are reaffirming our fiscal 2021 outlook for the following key metrics.
Total ARR growth, which is expected to be in the mid- to high single-digit percentage range; total recurring revenue, which is expected to grow in the high single to low double-digit percentage range year-over-year; total revenue, which is anticipated to grow in the low to mid-single-digit percentage range year-over-year; and free cash flow for the year, which is expected to be at least $400 million.
 Assistant:

Chosen response:
q3 non-gaap earnings per share $0.43.
q3 revenue rose 1 percent to $460 million.
sees q4 non-gaap earnings per share $0.25 to $0.29 excluding items.
sees q4 gaap loss per share $0.01 to $0.05.
incremental $1 billion share repurchase authorization for open market share repurchases until end of 2025.
full year 2021 non-gaap earnings per diluted share now expected to be in range of $2.11 to $2.15.