BEIJING, Sept. 16, 2020 /PRNewswire/ -- China Online
Education Group ("51Talk" or the "Company") (NYSE:COE),
China's leading online English
education brand and the first online English education brand listed
in the United States, released its second quarter 2020 financial
results. In the second quarter, non-GAAP net income was
RMB39.6 million, and GAAP net income
was RMB32.8 million, amounting to the
Company's third consecutive quarter of profitability and becoming
China's only online English
education brand to achieve it.
51Talk also continued to maintain a high gross margin of more
than 70% and record high gross billings of RMB676.4 million. Operating cash flow was
RMB172.1 million, a year-over-year
increase of RMB72.9 million while net
revenue was RMB493.5 million, a 40%
increase year-over-year.
51Talk maintains leading position in market share
China's K-12 Online
English Development Blue Book 2020 ("Blue
Book"), released by Southern Weekly, a well-known
Chinese media, and the big-data research center of Chinese Academy
of Social Sciences, shows that 51Talk ranks first among its
industry peers at 46% market share, with the next two peers coming
in at 18% and 16%. The Blue Book also
shows that Chinese parents believe 51Talk provides the most
superior service offering when it comes to improving their
children's English listening and speaking skills. The parents also
noted that their children's speaking skills improved significantly
after enrolling in 51Talk.
According to K-12 Online English One-on-One User Trend
Research released by CTR Market Research, 51Talk enjoys
total brand leadership with its cumulative 100 million classes
delivered since its establishment in 2011. Its customer
satisfaction rating also ranks first in the industry.
Strong market penetration in China and the
Philippines fueled consistent profitability
In the second quarter of 2020, 71.3% of gross billings from the
K-12 one-on-one mass market courses are from non-tier-one cities
while 28.7% are from first-tier cities. Over the past two years,
the growth of users in non-tier-one cities has exceeded that of
first-tier cities. The success of this continuous downward market
penetration has enabled 51Talk to attract customers with its
competitive pricing, which further contributed to revenue
growth.
51Talk's strong market growth has made it possible for its
online teachers, a bulk of whom reside in the Philippines, to
enjoy better profits with their one-on-one courses. In the three
most recent financial quarters, 51Talk has maintained a high gross
margin of 70%. Instead of allocating a big chunk of its resources
in traditional advertising and marketing, 51Talk focused on
teaching quality and effectiveness as well as word-of-mouth
referrals, to greatly reduce operating costs.
Since 51Talk started its operations in the Philippines, it has developed programs and
campaigns to create awareness about the benefits of being an online
English teacher. This year, the company welcomed Miss Universe 2015
Pia Wurtzbach as its brand ambassador to attract more Filipino
teachers.
Philippine teachers now more popular in China
In China, parents prefer
Filipino teachers compared with counterparts from Europe and United
States, according to the CTR Market Research. Although
Filipinos are not native English speakers, the Philippine education
system as well as businesses, use the English language, and thus
the country consistently maintains top English proficiency ratings.
Filipino teachers have been studying and learning English as a
second language for years, so they are equipped with a deeper and
more technical understanding of how to teach the English
language.
Filipinos also take pride in their strong customer service. They
are generally mild-mannered, modest, passionate, enthusiastic,
cheerful and patient, which are ideal qualities to possess in order
to effectively teach English to young kids. In addition, there is
no time difference between the
Philippines and China, so
students and teachers can easily connect with more flexible class
schedules. With all these advantages, Filipino teachers have
gradually become the face of online English teachers in
China.
51Talk's "Education for All" strategy, its downward market
penetration approach, and its high-quality "Filipino Teachers'
One-On-One Model" have helped the
leading platform achieve excellent results in the second quarter of
2020. Brighter prospects also await the online English education
industry as studies have shown that the scale of China's K-12 online education market is
expected to exceed RMB304.5 billion
in 2020. 51Talk, which leverages "Filipino Teachers' One-On-One Model" with a cost-effective and
sustainable strategy, will surely continue to improve profitability
in the future.
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SOURCE China Online Education Group