BEIJING, March 15, 2019 /PRNewswire/ -- China Online
Education Group ("51Talk" or the "Company") (NYSE: COE), a leading
online education platform in China, with core expertise in English
education, today announced its unaudited financial results for the
fourth quarter and fiscal year ended December 31, 2018.
Fourth Quarter 2018 Financial and Operating
Highlights
- Net revenues were RMB298.1
million (US$43.4 million), a
14.4% increase from RMB260.6 million
for the fourth quarter of 2017.
- Gross billings were RMB503.2
million (US$73.2 million), a
27.9% increase from RMB393.4 million
for the fourth quarter of 2017.
- Gross billings for the K-12 mass-market one-on-one offering
were RMB365.7 million (US$53.2 million), a 63.0% increase from
RMB224.3 million for the fourth
quarter of 2017.
- Gross margin was 62.5%, compared with 62.4% for the fourth
quarter of 2017.
- Operating cash inflow reached a historical high of RMB67.3 million (US$9.8
million) and operating cash outflow was RMB8.7 million in the fourth quarter of
2017.
Fiscal Year 2018 Financial and
Operating Highlights
- Net revenues were RMB1,145.5
million (US$166.6 million), a
35.1% increase from RMB848.0 million
for the fiscal year 2017.
- Gross billings were RMB1,703.0
million (US$247.7 million), a 19.4%
increase from RMB1,426.9 million for
the fiscal year 2017.
- Gross margin was 64.1%, compared with 63.0% for the fiscal year
2017.
Key Operating Data
|
For the three
months ended
|
|
For the year
ended
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Y-o-Y
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Y-o-Y
|
|
2017
|
|
2018
|
|
Change
|
|
2017
|
|
2018
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross billings (in
RMB millions)
|
393.4
|
|
503.2
|
|
27.9%
|
|
1,427.0
|
|
1,703.0
|
|
19.4%
|
K-12 mass-market
one-on-one
|
224.3
|
|
365.7
|
|
63.0%
|
|
781.1
|
|
1,200.3
|
|
53.7%
|
K-12
small class offering
|
26.7
|
|
60.6
|
|
127.0%
|
|
34.0
|
|
157.6
|
|
NM
|
Adult
offering
|
77.4
|
|
55.0
|
|
(28.9%)
|
|
362.5
|
|
236.4
|
|
(34.8%)
|
K-12 American
Academy
one-on-one
|
65.0
|
|
21.9
|
|
(66.3%)
|
|
249.4
|
|
108.7
|
|
(56.4%)
|
Active
students[2] (in thousands)
|
175.2
|
|
213.9
|
|
22.1%
|
|
|
|
|
|
|
|
"Our core K-12 mass-market one-on-one offering continued to grow
at a healthy pace in the fourth quarter as we executed on our
initiatives to further penetrate non-tier-one cities," said Mr.
Jack Jiajia Huang, Founder, Chairman
and Chief Executive Officer of 51Talk. "Both our revenues and gross
billings exceeded the high-end of our guidance, with our core K-12
mass-market one-on-one offering accounting for 72.7% of our total
gross billings in the fourth quarter. We are aggressively pursuing
our non-tier-one city strategy and are pleased with our strong hold
in these areas, which accounted for 69.7% of our K-12 mass-market
one-on-one gross billings in the fourth quarter. There remains
great demand for high-quality online education English courses in
China, particularly in
non-tier-one cities, and we aim to make our courses more accessible
to this population.
"As we look to attract more students to our leading online
education platform, we are actively raising our brand profile. In
February 2019, we engaged
China's phenomenally popular
'Super Student' Junkai Wang, from
the hit boy band TF Boys, as our new brand spokesperson. With a
massive presence among the K-12 demographic, Junkai will work with
51Talk to promote our high-quality English education for students
in China. In 2019 we will continue
to dedicate resources to increasing the accessibility of our
courses, improving our exposure and strengthening the quality of
our offerings and technology, while further growing our business,"
Mr. Huang concluded.
Mr. Min Xu, Chief Financial
Officer of 51Talk, added, "In the fourth quarter we further grew
our K-12 mass-market one-on-one gross billings by 63.0%
year-over-year, led by our dedicated focus on our core K-12 mass
market one-on-one offering in non-tier-one cities[3]. We
also achieved historical high operating cash inflow of RMB67.3 million in the fourth quarter. Our 2019
strategic growth initiatives are aimed at expanding our business
and reaching new students in underserved markets, while maintaining
a prudent investment strategy."
[1] Gross billings for a specific
period, which is one of the Company's key operating data, is
defined as the total amount of cash received for the sale of course
packages and services in such period, net of the total
amount of refunds in such period.
|
[2] An
"active student" for a specified period refers to a student
who booked at least one paid lesson, excluding those students who
only attended paid live broadcasting lessons or trial lessons. A
student taking both one-on-one and small class lessons is counted
as one active student.
|
[3]
Tier-one cities include Beijing, Shanghai, Shengzhen and
Guangzhou.
|
Fourth Quarter 2018 Financial
Results
Net Revenues
Net revenues for the fourth quarter of 2018 were RMB298.1 million (US$43.4
million), a 14.4% increase from RMB260.6 million for the fourth quarter of 2017.
The increase was primarily attributed to an increase in the number
of active students. The number of active students in the
fourth quarter of 2018 was approximately 213,900, a
22.1% increase from approximately 175,200 in the fourth
quarter of 2017.
Net revenues from one-on-one offerings for the fourth quarter of
2018 were RMB266.5 million
(US$38.8 million), a 6.6% increase
from RMB250.0 million for the fourth
quarter of 2017. Net revenues from small class offerings for the
fourth quarter of 2018 were RMB31.6
million (US$4.6 million),
compared with RMB10.6 million for the
fourth quarter of
2017.
Cost of Revenues
Cost of revenues for the fourth quarter of 2018 was
RMB111.8 million (US$16.3 million), a 14.1% increase from
RMB98.0 million for the fourth
quarter of 2017. The increase was primarily driven by an increase
in total service fees paid to teachers, mainly due to an
increased number of paid lessons.
Cost of revenues of one-on-one offerings for the fourth quarter
of 2018 was RMB89.0 million
(US$12.9 million), a 9.8% increase
from RMB81.1 million for the fourth
quarter of 2017. Cost of revenues of small class offerings for the
fourth quarter of 2018 was RMB22.8
million (US$3.3 million), a
34.5% increase from RMB16.9 million
for the fourth quarter of 2017.
Gross Profit and Gross Margin
Gross profit for the fourth quarter of 2018 was
RMB186.3 million (US$27.1 million), a 14.5% increase from
RMB162.6 million for the fourth
quarter of 2017.
Gross margin for the fourth quarter of 2018 was 62.5%,
compared with 62.4% for the fourth quarter of 2017.
One-on-one offerings gross margin for the
fourth quarter of 2018 was 66.6%, compared with 67.6% for the
fourth quarter of 2017. The decrease was mainly attributable
to a lower revenue percentage from the higher margin adult
offering. 51Talk's small class offering gross margin for the
fourth quarter of 2018 was 27.9%, compared with a negative
gross margin of 59.2% for the fourth quarter of 2017.
Operating Expenses
Total operating expenses for the fourth quarter of 2018
were RMB315.2 million
(US$45.8 million), a 0.1%
decrease from RMB315.5 million
for the fourth quarter of 2017.
Sales and marketing expenses for the fourth quarter of 2018 were
RMB212.1 million (US$30.9 million), an 11.5% increase from
RMB190.2 million for the fourth
quarter of 2017. The increase was mainly due
to higher branding and marketing expenses and higher
sales personnel costs, partially offset by the RMB18.8 million net effect of capitalization and
amortization of certain sales and marketing expenses under the new
accounting standard adopted on January 1,
2018. Please refer to the section in this news release
titled "Impact of Recently Adopted New Accounting Standard" for
details. Excluding share-based compensation expenses, non-GAAP
sales and marketing expenses for the fourth quarter of
2018 were RMB210.6 million
(US$30.6 million), an 11.4% increase
from RMB189.0 million for
the fourth quarter of 2017.
Product development expenses for the fourth quarter of 2018
were RMB42.6 million (US$6.2 million), a 29.5% decrease from
RMB60.4 million for the fourth
quarter of 2017. The decrease was primarily due to a
decrease in the number of personnel. Excluding share-based
compensation expenses, non-GAAP product
development expenses for the fourth quarter of
2018 were RMB40.7 million
(US$5.9 million), a 29.9% decrease
from RMB58.1 million for the
fourth quarter of 2017.
General and administrative expenses for the fourth quarter
of 2018 were RMB60.5 million
(US$8.8 million), a 6.8%
decrease from RMB64.9 million
for the same quarter last year. Excluding share-based compensation
expenses, non-GAAP general and administrative expenses for the
fourth quarter of 2018 were RMB56.4 million (US$8.2 million), a 7.6% decrease from
RMB61.0 million for the same quarter
last year.
Loss from Operations
Loss from operations for the fourth quarter of 2018 was
RMB129.0 million (US$18.8 million), compared with
RMB152.9 million for the fourth
quarter of 2017.
Non-GAAP loss from operations for the fourth quarter of
2018 was RMB121.4 million
(US$17.7 million), compared with
RMB145.5 million for the fourth
quarter of 2017.
Net Loss
Net loss for the fourth quarter of 2018 was RMB140.0 million (US$20.4 million), compared with
RMB159.7 million for the fourth
quarter of 2017.
Non-GAAP net loss for the fourth quarter of 2018 was
RMB132.4 million (US$19.3 million), compared with RMB152.2 million for the fourth quarter of
2017.
Basic and diluted net loss per American depositary share
("ADS") attributable to ordinary shareholders for the fourth
quarter of 2018 was RMB6.90
(US$1.05), compared with RMB7.95 for the fourth quarter of 2017. Each
ADS represents 15 Class A ordinary shares.
Non-GAAP basic and diluted net loss per ADS attributable to
ordinary shareholders for the fourth quarter of 2018 was
RMB6.45 (US$0.90), compared with
RMB7.50 for the fourth quarter
of 2017.
Balance Sheet
As of December 31, 2018, the Company had total cash, cash
equivalents, time deposits and short-term investments of
RMB712.1 million (US$103.6 million), compared with
RMB623.4 million as of
December 31, 2017.
The Company had deferred revenues (current and non-current) of
RMB1,676.1 million (US$243.8 million) as of December 31, 2018, compared with RMB1,201.8 million as of December 31, 2017.
Fiscal Year 2018 Financial
Results
Net Revenues
Net revenues for 2018 were RMB1,145.5
million (US$166.6 million), a
35.1% increase from RMB848.0 million
for 2017. The increase was primarily attributed to an increase in
the number of active students.
Net revenues from one-on-one offerings for 2018 were
RMB1,044.8 million (US$152.0 million), a 25.0% increase from
RMB835.6 million for 2017. Net
revenues from small class offerings for 2018 were RMB100.7 million (US$14.7
million), compared with RMB12.3
million for 2017.
Cost of Revenues
Cost of revenues for 2018 was RMB410.9 million (US$59.8 million), a 30.8% increase from
RMB314.1 million for 2017. The
increase was primarily driven by an increase in total service fees
paid to teachers, mainly due to an increased number of paid
lessons.
Cost of revenues of one-on-one offerings for 2018 was
342.9 million (US$49.9 million),
a 16.7% increase from RMB293.8
million for 2017. Cost of revenues of small class offerings
for 2018 was RMB68.0 million
(US$9.9 million), a 233.9% increase
from RMB20.4 million for 2017.
Gross Profit and Gross Margin
Gross profit for 2018 was RMB734.6 million (US$106.8 million), a 37.6% increase from
RMB533.9 million for 2017.
Gross margin for 2018 was 64.1%, compared with 63.0% for
2017.
One-on-one offerings gross margin for 2018 was 67.2%,
compared with 64.8% for 2017. 51Talk's small class offering
gross margin for 2018 was 32.5%, compared with a negative
gross margin of 64.9% for 2017.
Operating Expenses
Total operating expenses for 2018 were RMB1,139.3 million (US$165.7 million), a 3.1% increase from
RMB1,104.7 million for 2017. The
increase was mainly the result of the increases in sales and
marketing expenses, partially offset by decrease in product
development expenses.
Sales and marketing expenses for 2018 were RMB731.2 million (US$106.4 million), an 11.3% increase from
RMB657.1 million for
2017. The increase was mainly due to higher branding
and marketing expenses and higher payroll due to increasing sales
personnel, partially offset by the RMB61.7
million net effect of capitalization and amortization of
certain sales and marketing expenses under the new accounting
standard adopted on January 1, 2018.
Please refer to the section in this news release titled "Impact of
Recently Adopted New Accounting Standard" for details. Excluding
share-based compensation expenses, non-GAAP sales and
marketing expenses for 2018 were RMB725.6 million (US$105.5 million), an 11.2% increase from
RMB652.5 million for
2017.
Product development expenses for 2018 were RMB185.0 million (US$26.9
million), a 17.1% decrease from RMB223.2 million for 2017. The decrease was
primarily due to a decrease in the number of personnel.
Excluding share-based compensation
expenses, non-GAAP product
development expenses for 2018 were RMB177.6 million (US$25.8
million), a 17.1% decrease from RMB214.2 million for 2017.
General and administrative expenses for 2018 were RMB223.1 million (US$32.4 million), a 0.6% decrease from
RMB224.4 million for 2017.
Excluding share-based compensation expenses, non-GAAP general and
administrative expenses for 2018 were RMB208.2 million (US$30.3 million), a 2.6% increase from
RMB203.0 million for 2017.
Loss from Operations
Loss from operations for 2018 was RMB404.7 million (US$58.9 million), compared with
RMB570.8 million for 2017.
Non-GAAP loss from operations for 2018 was RMB376.8 million (US$54.8
million), compared with RMB535.7 million for 2017.
Net Loss
Net loss for 2018 was RMB416.7 million (US$60.6 million), compared with
RMB580.8 million for 2017.
Non-GAAP net loss for 2018 was RMB388.8 million (US$56.5 million), compared with
RMB545.7 million for 2017.
Basic and diluted net loss per American depositary share
("ADS") attributable to ordinary shareholders for 2018 was
RMB20.55 (US$3.00), compared with RMB28.95 for 2017. Each ADS represents 15
Class A ordinary shares.
Non-GAAP basic and diluted net loss per ADS attributable to
ordinary shareholders for 2018 was RMB19.20 (US$2.85), compared with
RMB27.15 for 2017.
Outlook
For the first quarter of 2019, the Company currently
expects:
- Net revenues to be between RMB300
million to RMB305 million,
which would represent an increase of approximately 14.3% to 16.2%
from RMB262.6 million for the same
quarter last year;
- Total gross billings to be between RMB425 million to RMB435
million, which would represent an increase of approximately
19.6% to 22.4% from RMB355.3 million
for the same quarter last year.
- Gross billings for the Company's one-on-one business are expected
to be between RMB411 million to
RMB421 million, which would represent
an increase of approximately 29.1% to 32.2% from RMB318.4 million for the same quarter last
year.
- Gross billings for 51Talk's small class business are expected to
be approximately RMB14 million, which
would represent a decrease of approximately 62.1% from RMB36.9 million for the same quarter last
year.
The above outlook is based on the current market conditions and
reflects the Company's current and preliminary estimates of market
and operating conditions and customer demand, which are all subject
to change.
Impact of Recently Adopted New Accounting Standard
In May 2014, the FASB issued ASU
No. 2014-09, "Revenue from Contracts with Customers (Topic 606)."
On January 1, 2018, the Company
adopted the Topic 606 new standard using the modified retrospective
method. Under this method, the Company records adjustments to its
fiscal 2018 opening balance sheet (as of January 1, 2018) to reflect the cumulative effect
of the new accounting standard. The comparative information has not
been restated and continues to be reported under the accounting
standard in effect for those periods.
The Company is required to estimate the breakage, or the
forfeiture of prepaid credits, and recognize the expected breakage
amount as revenue in proportion to the pattern of credits consumed
by the customers. Based on the Company's analysis of historical
customer forfeitures of prepaid credits, the Company has concluded
that no breakage should be recognized, upon adoption or for the
fiscal year of 2018. The adoption of Topic 606 does not have any
material impact on the Company's revenue recognition for the fiscal
year of 2018. The Company will continue to update the estimate of
expected breakage at each reporting date.
The new accounting standard primarily impacts the accounting of
the Company's sales and marketing expenses. Under the new
accounting standard, certain sales commissions to the sales
personnel and the sales agents as well as new customer referral
cost are considered incremental cost of obtaining contracts, and
therefore shall be recognized as an asset given that the Company
expects to recover those costs. RMB137.7
million, RMB118.9 million,
RMB100.3 million, RMB82.7 million and RMB76.0 million of contract cost asset was
capitalized in prepaid expenses and other current assets account as
of December 31, 2018, September 30, 2018, June
30, 2018, March 31, 2018 and
January 1, 2018, respectively. The
adoption resulted in an incremental, net capitalization of
RMB18.8 million and RMB61.7 million of sales and marketing expenses
for the fourth quarter of 2018 and the fiscal year of 2018,
respectively. The asset that was recognized for costs to obtain
contracts will be expensed ratably in future periods, along with
the recognition of revenue of corresponding contracts.
Conference Call
The Company's management will host an earnings conference call
at 8:00 AM U.S. Eastern Time on
March 15, 2019 (8:00 PM Beijing/Hong
Kong time on March 15,
2019).
Dial-in details for the earnings conference call are as
follows:
United States (toll
free):
|
1-866-264-5888
|
International:
|
1-412-317-5226
|
Hong Kong (toll
free):
|
800-905-945
|
Hong Kong:
|
852-3018-4992
|
China:
|
400-120-1203
|
Participants should dial-in at least 5 minutes before the
scheduled start time and ask to be connected to the call for "China
Online Education Group."
Additionally, a live and archived webcast of the conference call
will be available on the Company's investor relations website at
http://ir.51talk.com.
A replay of the conference call will be accessible until
March 22, 2019, by dialing the
following telephone numbers:
United States (toll
free):
|
1-877-344-7529
|
International:
|
1-412-317-0088
|
Replay Access
Code:
|
10129408
|
About China Online Education Group
China Online Education Group (NYSE: COE) is a leading online
education platform in China, with
core expertise in English education. The Company's mission is to
make quality education accessible and affordable. The Company's
online and mobile education platforms enable students across
China to take live interactive
English lessons with overseas foreign teachers, on demand. The
Company connects its students with a large pool of highly qualified
foreign teachers that it assembled using a shared economy approach,
and employs student and teacher feedback and data analytics to
deliver a personalized learning experience to its students.
Use of Non-GAAP Financial Measures
In evaluating its business, 51Talk considers and uses the
following measures defined as non-GAAP financial measures by the
SEC as supplemental metrics to review and assess its operating
performance: non-GAAP sales and marketing expenses, non-GAAP
product development expenses, non-GAAP general and administrative
expenses, non-GAAP operating expenses, non-GAAP loss from
operations, non-GAAP income tax expenses, non-GAAP net loss,
non-GAAP net loss attributable to ordinary shareholders, and
non-GAAP net loss attributable to ordinary shareholders per share
and per ADS. To present each of these non-GAAP measures, the
Company excludes share-based compensation expenses. The
presentation of these non-GAAP financial measures is not intended
to be considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP. For
more information on these non-GAAP financial measures, please see
the table captioned "Reconciliations of non-GAAP measures to the
most comparable GAAP measures" set forth at the end of this press
release.
51Talk believes that these non-GAAP financial measures provide
meaningful supplemental information regarding its performance by
excluding share-based expenses that may not be indicative of its
operating performance from a cash perspective. 51Talk believes that
both management and investors benefit from these non-GAAP financial
measures in assessing its performance and when planning and
forecasting future periods. These non-GAAP financial measures also
facilitate management's internal comparisons to 51Talk's historical
performance. 51Talk computes its non-GAAP financial measures using
the same consistent method from quarter to quarter and from period
to period. 51Talk believes these non-GAAP financial measures are
useful to investors in allowing for greater transparency with
respect to supplemental information used by management in its
financial and operational decision-making. A limitation of using
non-GAAP measures is that these non-GAAP measures exclude
share-based compensation expenses that have been and will continue
to be for the foreseeable future a significant recurring expense in
the 51Talk's business. Management compensates for these limitations
by providing specific information regarding the GAAP amounts
excluded from each non-GAAP measure. The accompanying table at the
end of this press release provides more details on the
reconciliations between GAAP financial measures that are most
directly comparable to non-GAAP financial measures.
Exchange Rate Information
This announcement contains translations of certain RMB amounts
into U.S. dollars at a specified rate solely for the convenience of
the reader. Unless otherwise noted, all translations from RMB
to U.S. dollars are made at a rate of RMB6.8755 to US$1.00, the rate in effect as of December 31, 2018 as certified for customs
purposes by the Federal Reserve Bank of New York.
Safe Harbor Statement
This press release contains statements that may constitute
"forward-looking" statements pursuant to the "safe harbor"
provisions of the U.S. Private Securities Litigation Reform Act of
1995. These forward-looking statements can be identified by
terminology such as "will", "expects", "anticipates", "aims",
"future", "intends", "plans", "believes", "estimates", "likely to"
and similar statements. Among other things, 51Talk's business
outlook and quotations from management in this announcement, as
well as 51Talk's strategic and operational plans, contain
forward-looking statements. 51Talk may also make written or oral
forward-looking statements in its periodic reports to the
Securities and Exchange Commission ("SEC"), in its annual report to
shareholders, in press releases and other written materials and in
oral statements made by its officers, directors or employees to
fourth parties. Statements that are not historical facts, including
statements about 51Talk's beliefs and expectations, are
forward-looking statements. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement, including but not limited to the
following: 51Talk's goals and strategies; 51Talk's expectations
regarding demand for and market acceptance of its brand and
platform; 51Talk's ability to retain and increase its student
enrollment; 51Talk's ability to offer new courses; 51Talk's ability
to engage, train and retain new teachers; 51Talk's future business
development, results of operations and financial condition;
51Talk's ability to maintain and improve infrastructure necessary
to operate its education platform; competition in the online
education industry in China; the
expected growth of, and trends in, the markets for 51Talk's course
offerings in China; relevant
government policies and regulations relating to 51Talk's corporate
structure, business and industry; general economic and business
condition in China, the Philippines and elsewhere and assumptions
underlying or related to any of the foregoing. Further information
regarding these and other risks is included in 51Talk's filings
with the SEC. All information provided in this press release is as
of the date of this press release, and 51Talk does not undertake
any obligation to update any forward-looking statement, except as
required under applicable law.
For investor and media inquiries, please contact:
China Online Education Group
Investor Relations
+86 (10) 8342-6262
ir@51talk.com
The Piacente Group, Inc.
Brandi Piacente
+86 (10) 5730-6200
+1-212-481-2050
51talk@tpg-ir.com
CHINA ONLINE
EDUCATION GROUP
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
|
|
|
2017
|
|
2018
|
|
2018
|
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
320,039
|
|
413,143
|
|
60,089
|
|
|
Time
deposits
|
|
202,659
|
|
162,688
|
|
23,662
|
|
|
Short term
investment
|
|
100,722
|
|
136,304
|
|
19,825
|
|
|
Prepaid expenses and
other current assets
|
|
84,941
|
|
242,499
|
|
35,270
|
|
Total current
assets
|
|
708,361
|
|
954,634
|
|
138,846
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
Held to
maturity
|
|
6,751
|
|
-
|
|
-
|
|
|
Property, plant and
equipment, net
|
|
49,009
|
|
35,341
|
|
5,140
|
|
|
Intangible assets,
net
|
|
9,686
|
|
11,790
|
|
1,715
|
|
|
Goodwill
|
|
4,223
|
|
4,223
|
|
614
|
|
|
Other non-current
assets
|
|
5,526
|
|
4,230
|
|
615
|
|
Total non-current
assets
|
|
75,195
|
|
55,584
|
|
8,084
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
783,556
|
|
1,010,218
|
|
146,930
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
AND SHAREHOLDERS'
DEFICIT
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Deferred
revenues
|
|
1,176,565
|
|
1,658,800
|
|
241,262
|
|
|
Accrued expenses and
other current liabilities
|
|
222,798
|
|
209,910
|
|
30,530
|
|
|
Taxes
payable
|
|
24,985
|
|
16,917
|
|
2,460
|
|
Total current
liabilities
|
|
1,424,348
|
|
1,885,627
|
|
274,252
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
Long-term
loan
|
|
-
|
|
69,045
|
|
10,042
|
|
|
Deferred
revenues
|
|
25,230
|
|
17,321
|
|
2,519
|
|
|
Deferred tax
liabilities
|
|
124
|
|
21
|
|
3
|
|
|
Other non-current
liabilities
|
|
2,245
|
|
853
|
|
124
|
|
Total non-current
liabilities
|
|
27,599
|
|
87,240
|
|
12,688
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
1,451,947
|
|
1,972,867
|
|
286,940
|
|
|
CHINA ONLINE
EDUCATION GROUP
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
|
|
|
2017
|
|
2018
|
|
2018
|
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
Total shareholders'
deficit
|
|
(668,391)
|
|
(962,649)
|
|
(140,010)
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and
|
|
|
|
|
|
|
|
|
shareholders'
deficit
|
|
783,556
|
|
1,010,218
|
|
146,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINA
ONLINE EDUCATION GROUP
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS
|
(In thousands
except for number of shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the year
ended
|
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
|
2017
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2018
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Net
revenues
|
|
260,621
|
|
298,051
|
|
43,350
|
|
847,993
|
|
1,145,517
|
|
166,609
|
Cost of
revenues
|
|
(98,021)
|
|
(111,799)
|
|
(16,260)
|
|
(314,121)
|
|
(410,908)
|
|
(59,764)
|
Gross
profit
|
|
162,600
|
|
186,252
|
|
27,090
|
|
533,872
|
|
734,609
|
|
106,845
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses
|
|
(190,248)
|
|
(212,145)
|
|
(30,855)
|
|
(657,065)
|
|
(731,233)
|
|
(106,353)
|
Product development
expenses
|
|
(60,396)
|
|
(42,574)
|
|
(6,192)
|
|
(223,202)
|
|
(185,000)
|
|
(26,907)
|
General and
administrative
expenses
|
|
(64,904)
|
|
(60,496)
|
|
(8,799)
|
|
(224,395)
|
|
(223,057)
|
|
(32,443)
|
Total operating
expenses
|
|
(315,548)
|
|
(315,215)
|
|
(45,846)
|
|
(1,104,662)
|
|
(1,139,290)
|
|
(165,703)
|
Loss from
operations
|
|
(152,948)
|
|
(128,963)
|
|
(18,756)
|
|
(570,790)
|
|
(404,681)
|
|
(58,858)
|
Impairment
loss
|
|
-
|
|
(7,364)
|
|
(1,071)
|
|
-
|
|
(7,364)
|
|
(1,071)
|
Interest and other
expenses, net
|
|
(5,142)
|
|
(2,706)
|
|
(394)
|
|
(5,679)
|
|
(769)
|
|
(112)
|
Loss before income
tax expenses
|
|
(158,090)
|
|
(139,033)
|
|
(20,221)
|
|
(576,469)
|
|
(412,814)
|
|
(60,041)
|
Income tax
expenses
|
|
(1,583)
|
|
(923)
|
|
(134)
|
|
(4,342)
|
|
(3,880)
|
|
(565)
|
Net loss
|
|
(159,673)
|
|
(139,956)
|
|
(20,355)
|
|
(580,811)
|
|
(416,694)
|
|
(60,606)
|
Net loss attributable
to ordinary
shareholders
|
|
(159,673)
|
|
(139,956)
|
|
(20,355)
|
|
(580,811)
|
|
(416,694)
|
|
(60,606)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of
ordinary shares used in
|
|
|
|
|
|
|
|
|
|
|
|
|
computing basic and diluted
loss
per share
|
|
302,219,381
|
|
305,818,165
|
|
305,818,165
|
|
301,610,060
|
|
304,542,400
|
|
304,542,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to
ordinary shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and
diluted
|
|
(0.53)
|
|
(0.46)
|
|
(0.07)
|
|
(1.93)
|
|
(1.37)
|
|
(0.20)
|
|
CHINA
ONLINE EDUCATION GROUP
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS
|
|
(In thousands
except for number of shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the year
ended
|
|
|
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
|
|
|
2017
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2018
|
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per ADS
attributable to ordinary shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and
diluted
|
|
(7.95)
|
|
(6.90)
|
|
(1.05)
|
|
(28.95)
|
|
(20.55)
|
|
(3.00)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(159,673)
|
|
(139,956)
|
|
(20,355)
|
|
(580,811)
|
|
(416,694)
|
|
(60,606)
|
|
Other comprehensive
(loss)/income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
(5,224)
|
|
4,460
|
|
649
|
|
(24,662)
|
|
16,939
|
|
2,464
|
|
Total comprehensive
loss
|
|
(164,897)
|
|
(135,496)
|
|
(19,706)
|
|
(605,473)
|
|
(399,755)
|
|
(58,142)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses are included in the operating expenses as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses
|
|
(1,274)
|
|
(1,584)
|
|
(230)
|
|
(4,612)
|
|
(5,676)
|
|
(826)
|
|
Product development
expenses
|
|
(2,274)
|
|
(1,855)
|
|
(270)
|
|
(9,039)
|
|
(7,396)
|
|
(1,076)
|
|
General and
administrative expenses
|
|
(3,930)
|
|
(4,137)
|
|
(602)
|
|
(21,418)
|
|
(14,814)
|
|
(2,155)
|
|
CHINA ONLINE
EDUCATION GROUP
|
Reconciliation of
Non-GAAP Measures to the Most Comparable GAAP
Measures
|
(In
thousands except for number of shares and per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the year
ended
|
|
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
|
|
2017
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2018
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses
|
|
(190,248)
|
|
(212,145)
|
|
(30,855)
|
|
(657,065)
|
|
(731,233)
|
|
(106,353)
|
Less: Share-based
compensation expenses
|
|
(1,274)
|
|
(1,584)
|
|
(230)
|
|
(4,612)
|
|
(5,676)
|
|
(826)
|
Non-GAAP sales and
marketing expenses
|
|
(188,974)
|
|
(210,561)
|
|
(30,625)
|
|
(652,453)
|
|
(725,557)
|
|
(105,527)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product development
expenses
|
|
(60,396)
|
|
(42,574)
|
|
(6,192)
|
|
(223,202)
|
|
(185,000)
|
|
(26,907)
|
Less: Share-based
compensation expenses
|
|
(2,274)
|
|
(1,855)
|
|
(270)
|
|
(9,039)
|
|
(7,396)
|
|
(1,076)
|
Non-GAAP product
development expenses
|
|
(58,122)
|
|
(40,719)
|
|
(5,922)
|
|
(214,163)
|
|
(177,604)
|
|
(25,831)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
(64,904)
|
|
(60,496)
|
|
(8,799)
|
|
(224,395)
|
|
(223,057)
|
|
(32,443)
|
Less: Share-based
compensation expenses
|
|
(3,930)
|
|
(4,137)
|
|
(602)
|
|
(21,418)
|
|
(14,814)
|
|
(2,155)
|
Non-GAAP general and
administrative
expenses
|
|
(60,974)
|
|
(56,359)
|
|
(8,197)
|
|
(202,977)
|
|
(208,243)
|
|
(30,288)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
(315,548)
|
|
(315,215)
|
|
(45,846)
|
|
(1,104,662)
|
|
(1,139,290)
|
|
(165,703)
|
Less: Share-based
compensation expenses
|
|
(7,478)
|
|
(7,576)
|
|
(1,102)
|
|
(35,069)
|
|
(27,886)
|
|
(4,057)
|
Non-GAAP operating
expenses
|
|
(308,070)
|
|
(307,639)
|
|
(44,744)
|
|
(1,069,593)
|
|
(1,111,404)
|
|
(161,646)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
(152,948)
|
|
(128,963)
|
|
(18,757)
|
|
(570,790)
|
|
(404,681)
|
|
(58,858)
|
Less: Share-based
compensation expenses
|
|
(7,478)
|
|
(7,576)
|
|
(1,102)
|
|
(35,069)
|
|
(27,886)
|
|
(4,057)
|
Non-GAAP loss from
operations
|
|
(145,470)
|
|
(121,387)
|
|
(17,655)
|
|
(535,721)
|
|
(376,795)
|
|
(54,801)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINA ONLINE
EDUCATION GROUP
|
Reconciliation of
Non-GAAP Measures to the Most Comparable GAAP
Measures
|
(In
thousands except for number of shares and per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the year
ended
|
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
|
2017
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2018
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expenses
|
|
(1,583)
|
|
(923)
|
|
(134)
|
|
(4,342)
|
|
(3,880)
|
|
(565)
|
Less: Tax impact of
Share-based compensation
expenses
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Non-GAAP income tax
expenses
|
|
(1,583)
|
|
(923)
|
|
(134)
|
|
(4,342)
|
|
(3,880)
|
|
(565)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(159,673)
|
|
(139,956)
|
|
(20,355)
|
|
(580,811)
|
|
(416,694)
|
|
(60,606)
|
Less: Share-based
compensation expenses
|
|
(7,478)
|
|
(7,576)
|
|
(1,102)
|
|
(35,069)
|
|
(27,886)
|
|
(4,057)
|
Non-GAAP net
loss
|
|
(152,195)
|
|
(132,380)
|
|
(19,253)
|
|
(545,742)
|
|
(388,808)
|
|
(56,549)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to ordinary shareholders
|
|
(159,673)
|
|
(139,956)
|
|
(20,355)
|
|
(580,811)
|
|
(416,694)
|
|
(60,606)
|
Less: Share-based
compensation expenses, net of tax
|
|
(7,478)
|
|
(7,576)
|
|
(1,102)
|
|
(35,069)
|
|
(27,886)
|
|
(4,057)
|
Non-GAAP net loss
attributable to ordinary
shareholders
|
|
(152,195)
|
|
(132,380)
|
|
(19,253)
|
|
(545,742)
|
|
(388,808)
|
|
(56,549)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of ordinary shares used in
computing basic and diluted loss per
share
|
|
302,219,381
|
|
305,818,165
|
|
305,818,165
|
|
301,610,060
|
|
304,542,400
|
|
304,542,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per
share attributable to ordinary shareholders
basic and diluted
|
|
(0.50)
|
|
(0.43)
|
|
(0.06)
|
|
(1.81)
|
|
(1.28)
|
|
(0.19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per
ADS attributable to ordinary shareholders
basic and diluted
|
|
(7.50)
|
|
(6.45)
|
|
(0.90)
|
|
(27.15)
|
|
(19.20)
|
|
(2.85)
|
CHINA
ONLINE EDUCATION GROUP
|
UNAUDITED
ADDITIONAL INFORMATION
|
(In thousands
except for number of shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the year
ended
|
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
|
2017
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2018
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
|
249,987
|
|
266,459
|
|
38,755
|
|
835,649
|
|
1,044,769
|
|
151,956
|
Small class
offerings
|
|
10,634
|
|
31,592
|
|
4,595
|
|
12,344
|
|
100,748
|
|
14,653
|
Total net
revenues
|
|
260,621
|
|
298,051
|
|
43,350
|
|
847,993
|
|
1,145,517
|
|
166,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
|
(81,090)
|
|
(89,028)
|
|
(12,948)
|
|
(293,763)
|
|
(342,927)
|
|
(49,877)
|
Small class
offerings
|
|
(16,931)
|
|
(22,771)
|
|
(3,312)
|
|
(20,358)
|
|
(67,981)
|
|
(9,887)
|
Total cost of
revenues
|
|
(98,021)
|
|
(111,799)
|
|
(16,260)
|
|
(314,121)
|
|
(410,908)
|
|
(59,764)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
|
168,897
|
|
177,431
|
|
25,807
|
|
541,886
|
|
701,842
|
|
102,079
|
Small class
offerings
|
|
(6,297)
|
|
8,821
|
|
1,283
|
|
(8,014)
|
|
32,767
|
|
4,766
|
Total gross
profit
|
|
162,600
|
|
186,252
|
|
27,090
|
|
533,872
|
|
734,609
|
|
106,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
|
67.6%
|
|
66.6%
|
|
66.6%
|
|
64.8%
|
|
67.2%
|
|
67.2%
|
Small class
offerings
|
|
(59.2%)
|
|
27.9%
|
|
27.9%
|
|
(64.9%)
|
|
32.5%
|
|
32.5%
|
Total gross
margin
|
|
62.4%
|
|
62.5%
|
|
62.5%
|
|
63.0%
|
|
64.1%
|
|
64.1%
|
CHINA
ONLINE EDUCATION GROUP
|
UNAUDITEDADDITIONAL INFORMATION
|
(In thousands
except for number of shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the year
ended
|
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
|
2017
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2018
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
|
(162,956)
|
|
(186,561)
|
|
(27,134)
|
|
(619,966)
|
|
(647,314)
|
|
(94,147)
|
Small class
offerings
|
|
(27,292)
|
|
(25,584)
|
|
(3,721)
|
|
(37,099)
|
|
(83,919)
|
|
(12,206)
|
Total sales and
marketing expenses[4]
|
|
(190,248)
|
|
(212,145)
|
|
(30,855)
|
|
(657,065)
|
|
(731,233)
|
|
(106,353)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product development
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
|
(48,161)
|
|
(31,367)
|
|
(4,562)
|
|
(202,129)
|
|
(139,240)
|
|
(20,251)
|
Small class
offerings
|
|
(12,235)
|
|
(11,207)
|
|
(1,630)
|
|
(21,073)
|
|
(45,760)
|
|
(6,656)
|
Total product
development expenses[5]
|
|
(60,396)
|
|
(42,574)
|
|
(6,192)
|
|
(223,202)
|
|
(185,000)
|
|
(26,907)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
|
(56,388)
|
|
(51,647)
|
|
(7,512)
|
|
(213,880)
|
|
(186,983)
|
|
(27,196)
|
Small class
offerings
|
|
(8,516)
|
|
(8,849)
|
|
(1,287)
|
|
(10,515)
|
|
(36,074)
|
|
(5,247)
|
Total general and
administrative expenses[6]
|
|
(64,904)
|
|
(60,496)
|
|
(8,799)
|
|
(224,395)
|
|
(223,057)
|
|
(32,443)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
|
(267,505)
|
|
(269,575)
|
|
(39,208)
|
|
(1,035,975)
|
|
(973,537)
|
|
(141,594)
|
Small class
offerings
|
|
(48,043)
|
|
(45,640)
|
|
(6,638)
|
|
(68,687)
|
|
(165,753)
|
|
(24,109)
|
Total operating
expenses
|
|
(315,548)
|
|
(315,215)
|
|
(45,846)
|
|
(1,104,662)
|
|
(1,139,290)
|
|
(165,703)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
|
(98,608)
|
|
(92,144)
|
|
(13,401)
|
|
(494,089)
|
|
(271,695)
|
|
(39,515)
|
Small class
offerings
|
|
(54,340)
|
|
(36,819)
|
|
(5,355)
|
|
(76,701)
|
|
(132,986)
|
|
(19,343)
|
Total loss from
operations
|
|
(152,948)
|
|
(128,963)
|
|
(18,756)
|
|
(570,790)
|
|
(404,681)
|
|
(58,858)
|
[4]
Share-based compensation expenses included in the sales and
marketing expenses for one-on-one offerings and small class
offerings were RMB1,479 and RMB105 respectively for the fourth
quarter of 2018, and RMB1,220 and RMB54 respectively for the fourth
quarter of 2017.
|
[5]
Share-based compensation expenses, included in the product
development expenses for one-on-one offerings and small class
offerings were RMB1,460 and RMB395 respectively for the fourth
quarter of 2018, and RMB2,088 and RMB186 respectively for the
fourth quarter of 2017.
|
[6]
Share-based compensation expenses, included in the general and
administrative expenses for one-on-one offerings and small class
offerings were RMB4,074 and RMB63 respectively for the third
quarter of 2018, and RMB3,897 and RMB33 respectively for the third
quarter of 2017.
|
View original
content:http://www.prnewswire.com/news-releases/china-online-education-group-announces-fourth-quarter-and-fiscal-year-2018-results-300813062.html
SOURCE China Online Education Group