On Tuesday, Chinese online education platform 51Talk reported net earnings for the second quarter of 579.8 million yuan ($ 89.8 million), up 17.5% year over year. However, the company’s net loss was 27.0 million yuan, compared to net income of 32.8 million yuan in the second quarter of 2020.
The growth in their net sales in the second quarter was mainly driven by a 35.7% year-over-year increase in the number of active students. “The net loss in the second quarter was mainly due to higher operating expenses incurred as we spent more on branding and improving courses and services,” said Xu Min, 51Talk’s chief financial officer.
According to the financial report, 51Talk’s net income comes primarily from one-on-one teaching, small businesses, and others. Among them, the K-12 single store’s net profit was 534.6 million yuan, up 27.9% over the previous year, accounting for 92.17% of the company’s total sales. Small business net income was 16.8 million yuan, 41.1% less than last year, while other net income was 28.4 million yuan, 39.7% less than last year.
The cost of sales for the second quarter was 158.1 million yuan, up 10.2% from 143.6 million yuan for the same quarter last year. The increase was primarily due to an increase in total service fees paid to teachers, mainly due to a higher number of paid lessons.
For the third quarter of 2021, the company currently expects net sales of between â¬ 550.0 million. In addition, the company’s future operational and financial performance depends on the implementation of the âdouble reductionâ policy and the success of the company’s business adjustment plans that are currently with are fraught with inherent uncertainties.
The Chinese Ministry of Education recently issued a document stating that “the employment of foreign personnel within the borders of the PRC must comply with the regulations and the employment of overseas teachers to conduct training activities is strictly prohibited.” 51Talk said at the time that it would strongly support politicians and has started to actively adapt and transform its business.
However, 51Talk was asked to make further adjustments to its operations on September 22nd.
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In line with the requirements, 51Talk has introduced brand new all-round competence courses in a smaller class format for children and young people. These courses would be led by Chinese teachers. In the meantime, the company plans to expand its overseas business by offering one-on-one tuition for international K-12 and adult student users, taught by overseas teachers. 51Talk, which has focused on adult English courses since its inception, says it will continue to invest more in this area in the future.
âWhere there are new challenges, there will also be new opportunities. In line with the revised framework and regulations for our industry, we will continue to innovate our courses and explore growth opportunities, âsaid Huang Jiajia, Founder, Chairman and Chief Executive Officer of 51Talk.