Fri. Jan 24th, 2020

China Online Education Group (“51Talk” or the “Company”) (NYSE: COE)

23 min read

China Online Education Group (“51Talk” or the “Company”) (NYSE: COE), a leading online education platform in China, with core expertise in English education, recently stated unaudited fiscal results for the 3rd-quarter finished September 30, 2k19.

3rd-Quarter 2k19 Fiscal and Operating Highlights

  • Net revenues were RMB409.20M (US$57.20M), a 35.00 percent incline from RMB303.20M for the 3rd-quarter of 2k18.
  • Gross billings[1] were RMB547.30M (US$76.60M), a 28.90 percent incline from RMB424.50M for the 3rd-quarter of 2k18.
  • Gross margin was 71.70 percent, compared with 63.80 percent for the 3rd-quarter of 2k18.
  • GAAP net loss declined 94.10 percent year-over-year to RMB5.30M and sequentially declined 83.60 percent from RMB32.40M for the 2nd-quarter of 2k19.
  • Non-GAAP net loss declined 97.80 percent year-over-year to RMB1.80M and sequentially declined 93.20 percent from RMB26.70M for the 2nd-quarter of 2k19.
  • Operating cash inflow was RMB123.20M (US$17.20M), compared with RMB1.70M cash outflow for the 3rd-quarter of 2k18.
  • Cash, cash equivalents, time deposits, and short-term investment balance reached RMB906.40M (US$126.80M) as of September 30, 2k19.


“The 3rd-quarter is a seasonally strong quarter for us, and our results reflected solid execution of our focused strategy. We exceeded the high end of both our net revenues and gross billing guidance ranges by 2.30 percent and 5.70 percent, respectively, fueled in large part by a 23.00 percent year-over-year incline in total active students,” said Mr. Jack Jiajia Huang, Founder, Chairman and Chief Executive Officer of 51Talk. “Our primary growth driver remains our K-12 mass-market one-on-one offering in non-tier-one cities[3]. K-12 mass-market one-on-one gross billings grew 52.00 percent year-over-year to reach RMB504.60M and represented 92.20 percent of our total gross billings. The improvement in our fundamentals reflected our consistent strategy of focusing on the K-12 mass market in non-tier-one cities.

“Throughout the 3rd-quarter, we launched our mobile-friendly, interactive curriculum for levels 0 to 2 of our flagship program, Classic English Junior. The enhanced curriculum improves learning effectiveness and leads to better learning outcomes through several new features including interactive games, virtual teaching aids, improved facial emotional recognition and engaging role-play scenarios. I am also very proud to share that two of our students were selected to represent Chinese youth and present speeches in English on the topic of environmental protection at the United Nations Climate Change Conference in Madrid, Spain, on December 5, 2k19. Such an honor is indeed a testament to the hard work of these students, the dedication of their teachers and their supportive families.

“I am also delighted to share that we successfully delivered over 100.00M one-on-one online English lessons, including free trial lessons, from our inception in 2k11 through the end of November this year. As 51Talk continues to grow, we are confident our balanced growth strategy and operational focus on non-tier-one cities will continue to yield solid value for our stakeholders,” Mr. Huang concluded.

“Our momentum from the 1st-half continued into the 3rd-quarter as we achieved record-high revenues, gross billings, gross margins, as well as the smallest non-GAAP net loss in our history at RMB1.80M,” said Mr. Min Xu, Chief Financial Officer of 51Talk. “We are also proud to report record-high operating cash flow of RMB123.20M for the quarter. Non-GAAP net margin improved to negative 0.40 percent this quarter from negative 7.60 percent in the 2nd-quarter this year. These results reflect the wide market appeal of our offerings and our on-going effort to improve operational efficiencies. As we wind down the year in the seasonally slower 4th-quarter, we remain on track to prudently execute our balanced growth strategy.”

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