Net revenues increased by 46.9%
year-over-year
Gross
billings[1] increased by 18.3%
year-over-year
BEIJING, Sept.10, 2018
/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 second quarter ended June 30,
2018.
Second Quarter 2018 Financial and Operational
Highlights
- Net revenues were RMB281.7
million (US$42.6 million), a
46.9% increase from RMB191.8 million
for the second quarter of 2017.
- Gross billings were RMB420.0
million (US$63.5 million), an
18.3% increase from RMB355.1 million
for the second quarter of 2017.
- Gross margin was 65.7%, compared with 62.9% for the second
quarter of 2017.
- Percentage of gross billings contributed by K-12 students was
83.5%, compared with 71.9% for the second quarter of 2017.
Key Operating Data
|
For the three
months ended
|
|
|
|
June
30,
|
|
June
30,
|
|
Y-o-Y
|
|
2017
|
|
2018
|
|
Change
|
|
|
|
|
|
|
Gross billings (in
RMB millions)
|
355.1
|
|
420.0
|
|
18.3%
|
K-12 mass-market
one-on-one offering
|
186.5
|
|
278.0
|
|
50.6%
|
K-12 small class offering
|
0.4
|
|
43.5
|
|
NM[2]
|
Adult
offering
|
99.8
|
|
69.3
|
|
(30.6%)
|
K-12 American Academy
one-on-one offering
|
68.4
|
|
29.2
|
|
(57.2%)
|
Active
students[3] (in thousands)
|
152.3
|
|
195.5
|
|
28.4%
|
|
|
|
|
|
|
[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] NM for
non-meaningful.
|
[3] An
"active student" for a specified period refers to a student who
booked at least one paid lesson, and excluding those students who
only attended paid live broadcasting lessons or trial
lessons.
|
"Leveraging the success we achieved in the first quarter of
2018, we continued to expand our business and exceeded the top end
of our net revenues and gross billings guidance in the second
quarter. We also increased our gross margin and reduced our
operating expenses, leading to a RMB61.3
million year-over-year reduction in net operating loss,"
said Mr. Jack Jiajia Huang, Founder,
Chairman and Chief Executive Officer of 51Talk. "Our strategic
initiatives to keenly focus on our K-12 mass market one-on-one
program led to 50.6% year-over-year growth in gross billings.
During the second quarter, we continued to broaden our reach with
this offering, which accounted for 66.2% of total gross billings,
compared with 63.2% and 52.0% in the previous quarter and prior
year period, respectively. In particular, we are seeing excellent
results from our efforts to grow our student population in
non-tier-one cities, which contributed 65.4% of our K-12
mass-market one-on-one gross billings in the second quarter of
2018. Traction with our Hawo small class offering is also gaining
momentum. This best-in-class program generated gross billings of
RMB43.5 million in the second
quarter, a 17.6% increase from the prior period. Additionally, our
adult education programs have stabilized with favorable results
from our initiatives to attract more new students during the
quarter.
"Our pathway to growth is clear and we are confident in the
growth potential of our core business centered around our K-12
mass-market one-on-one offering. Along with this focus, we are
becoming more efficient at allocating resources and improving our
margin profile. Our operational and financial accomplishments for
the first half of the year provide the cornerstones for our future
growth. The market opportunity for our high-quality programs is
substantial, especially in non-first-tier cities, where we are
aligning our efforts to meet increasing demand and create
additional value for all of our students, partners and investors,"
Mr. Huang concluded.
Mr. Jimmy Lai, Chief Financial
Officer of 51Talk, added, "For the second quarter of 2018 we
continued to grow our revenues and improve our operating results
both quarter-over-quarter and year-over-year. As a result, our
first half revenues increased 55.0% and we narrowed our net loss by
RMB93.0 million for the first half of
the year, compared to the same period in 2017. These improvements
are primarily due to optimization in sales and marketing
efficiencies. Furthermore, as our Hawo small class offering has
become a more significant portion of our business, we will now be
supplying additional financial information for our one-on-one and
small class offerings in order to provide enhanced clarity and
visibility on these two important components of our
operations."
Second Quarter 2018 Financial Results
Net Revenues
Net revenues for the second quarter of 2018 were RMB281.7 million (US$42.6
million), a 46.9% increase from RMB191.8 million for the same quarter last year.
The increase was primarily attributed to an increase in the number
of active students and, to a lesser extent, an increase in the
average revenue per active student. The number of active students
in the second quarter of 2018 was 195,500, a 28.4% increase from
152,300 for the same quarter last year.
Net revenues from one-on-one offerings for the second quarter of
2018 were RMB254.2 million
(US$38.4 million), a 32.6% increase
from RMB191.8 million for the same
quarter last year. Net revenues from small class offering for the
second quarter of 2018 were RMB27.5
million (US$4.2 million).
There was no revenues for the
Company's small class offering during the second quarter in
2017.
Cost of Revenues
Cost of revenues for the second quarter of 2018 was RMB96.5 million (US$14.6
million), a 35.7% increase from RMB71.2 million for the same quarter last year.
The increase was primarily driven by an increase in total service
fees paid to teachers, mainly due to the delivery of an increased
number of paid lessons.
Cost of revenues of one-on-one offerings for the second quarter
of 2018 was RMB79.8 million
(US$12.1 million), a 12.3% increase
from RMB71.2 million for the same
quarter last year. Cost of revenues of small class offering for the
second quarter of 2018 was RMB16.7
million (US$2.5 million).
There was no cost of revenue for the Company's small class offering
during the second quarter in 2017.
Gross Profit and Gross Margin
Gross profit for the second quarter of 2018 was RMB185.2 million (US$28.0
million), a 53.6% increase from RMB120.6 million for the same quarter last
year.
Gross margin for the second quarter of 2018 was 65.7%, compared
with 62.9% for the same quarter last year.
One-on-one offerings gross margin for the second quarter of 2018
was 68.6%, compared with 62.9% for the same quarter last year. The
increase was mainly attributable to a lower revenue mix from
American Academy program, which has a lower gross profit margin.
Small class offering gross margin for the second quarter of 2018
was 39.4%.
Operating Expenses
Total operating expenses for the second quarter of 2018 were
RMB261.7 million (US$39.6 million), a 1.3% increase from
RMB258.4 million for the same quarter
last year. The increase was mainly the result of an increase in
sales and marketing expenses, partially offset by decreases of
product development, and general and administrative expenses.
Sales and marketing expenses for the second quarter of 2018 were
RMB163.3 million (US$24.7 million), a 6.3% increase from
RMB153.6 million for the same quarter
last year. The increase was mainly due to higher branding and
marketing expenses, partially offset by the RMB17.6 million net effect of certain sales
personnel expenses and marketing expenses, and capitalization and
amortization under the new accounting standard adopted since
January 1, 2018 (please refer to the
section in this news release titled "Impact of Recently Adopted New
Accounting Standard"). Excluding share-based compensation expenses,
non-GAAP sales and marketing expenses for the second quarter of
2018 were RMB161.9 million
(US$24.5 million), a 6.0% increase
from RMB152.8 million for the same
quarter last year.
Product development expenses for the second quarter of 2018 were
RMB44.6 million (US$6.7 million), a 12.0% decrease from
RMB50.7 million for the same quarter
last year. 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 second quarter of
2018 were RMB42.8 million
(US$6.5 million), a 17.5% decrease
from RMB51.9 million for the same
quarter last year.
General and administrative expenses for the second quarter of
2018 were RMB53.9 million
(US$8.1 million), a 0.4% decrease
from RMB54.1 million for the same
quarter last year. Excluding share-based compensation expenses,
non-GAAP general and administrative expenses for the second quarter
of 2018 were RMB50.4 million
(US$7.6 million), a 5.8% increase
from RMB47.6 million for the same
quarter last year.
Loss from Operations
Loss from operations for the second quarter of 2018 was
RMB76.5 million (US$11.6 million), compared with RMB137.8 million for the same quarter last
year.
Non-GAAP loss from operations for the second quarter of 2018 was
RMB69.9 million (US$10.6 million), compared with RMB131.7 million for the same quarter last
year.
Net Loss
Net loss for the second quarter of 2018 was RMB73.7 million (US$11.1
million), compared with RMB139.3
million for the same quarter last year.
Non-GAAP net loss for the second quarter of 2018 was
RMB67.1 million (US$10.1 million), compared with RMB133.2 million for the same quarter last
year.
Basic and diluted net loss per American depositary share ("ADS")
attributable to ordinary shareholders for the second quarter of
2018 was RMB3.60 (US$0.60), compared with RMB6.90 for the same quarter last year. Each ADS
represents 15 Class A ordinary shares.
Non-GAAP basic and diluted net loss per ADS attributable to
ordinary shareholders for the second quarter of 2018 was
RMB3.30 (US$0.45), compared with RMB6.60 for the same quarter last year.
Balance Sheet
As of June 30, 2018, the Company
had total cash, cash equivalents, time deposits and short-term
investments of RMB601.5 million
(US$90.9 million), compared with
RMB623.4 million as of December 31, 2017.
The Company had deferred revenues (current and non-current) of
RMB1,390.6 million (US$210.2 million) as of June 30, 2018, compared with RMB1,201.8 million as of December 31, 2017.
Outlook
For the third quarter of 2018, the Company currently
expects:
- Net revenues to be between RMB295
million to RMB300 million,
which would represent an increase of approximately 24.9% to 27.1%
from RMB236.1 million for the same
quarter last year;
- Gross billings to be between RMB410
million to RMB420 million,
which would represent an increase of approximately 16.0% to 18.8%
from RMB353.4 million for the same
quarter last year. Gross billings for our one-on-one business is
expected to be between RMB395 million
to RMB405 million, which would
represent an increase of approximately 14.0% to 16.9% from
RMB346.5 million for the same quarter
last year. Gross billings for our small class business is expected
to be approximately RMB15 million,
which would represent an increase of approximately 117.4% from
RMB6.9 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 has completed the
assessment of related adoption impact, including but not limited to
accounting for incentives to customers, contract modification,
contract cost and forfeitures of prepaid credits.
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 in first
two quarters of 2018. The adoption of Topic 606 does not have any
material impact on the Company's revenue recognition for the first
two quarters of 2018 and comparable periods. 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 personnel 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. RMB100.3 million,
RMB 82.7 million and RMB 76.0 million of contract cost asset was
capitalized in prepaid expenses and other current assets account as
of June 30, 2018, March 31, 2018 and January
1, 2018, respectively. The adoption resulted in an
incremental, net capitalization of RMB 17.6
million of sales and marketing expenses for the second
quarter of 2018. 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
September 10, 2018 (8:00 PM Beijing/Hong
Kong time on September 10,
2018).
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
September 17, 2018, by dialing the
following telephone numbers:
United States (toll
free):
|
1-877-344-7529
|
International:
|
1-412-317-0088
|
Replay Access
Code:
|
10123757
|
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.
For more information, please visit http://ir.51talk.com.
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 RMB6.6171 to US$1.00, the rate in effect as of June 30, 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
third 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) 5692-8909
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 INTERIM
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
|
Dec.
31,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
|
|
|
2017
|
|
2018
|
|
2018
|
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
320,039
|
|
329,621
|
|
49,814
|
|
|
Time
deposits
|
|
202,659
|
|
221,261
|
|
33,438
|
|
|
Short term
investment
|
|
100,722
|
|
50,623
|
|
7,650
|
|
|
Prepaid expenses and
other current assets
|
|
84,941
|
|
201,852
|
|
30,505
|
|
Total current
assets
|
|
708,361
|
|
803,357
|
|
121,407
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
Held to
maturity
|
|
6,751
|
|
6,977
|
|
1,054
|
|
|
Property, plant and
equipment, net
|
|
49,009
|
|
39,148
|
|
5,916
|
|
|
Intangible assets,
net
|
|
9,686
|
|
9,027
|
|
1,364
|
|
|
Goodwill
|
|
4,223
|
|
4,223
|
|
638
|
|
|
Other non-current
assets
|
|
5,526
|
|
5,171
|
|
781
|
|
Total non-current
assets
|
|
75,195
|
|
64,546
|
|
9,753
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
783,556
|
|
867,903
|
|
131,160
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
AND STOCKHOLDERS'
DEFICIT
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Short-term
loan
|
|
-
|
|
24,865
|
|
3,758
|
|
|
Deferred
revenues
|
|
1,176,565
|
|
1,371,663
|
|
207,291
|
|
|
Accrued expenses and
other current liabilities
|
|
222,798
|
|
188,140
|
|
28,432
|
|
|
Taxes
payable
|
|
24,985
|
|
23,038
|
|
3,482
|
|
Total current
liabilities
|
|
1,424,348
|
|
1,607,706
|
|
242,963
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
Deferred
revenues
|
|
25,230
|
|
18,958
|
|
2,865
|
|
|
Deferred tax
liabilities
|
|
124
|
|
73
|
|
11
|
|
|
Other non-current
liabilities
|
|
2,245
|
|
2,423
|
|
366
|
|
Total non-current
liabilities
|
|
27,599
|
|
21,454
|
|
3,242
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
1,451,947
|
|
1,629,160
|
|
246,205
|
CHINA ONLINE
EDUCATION GROUP
|
UNAUDITED INTERIM
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
|
Dec.
31,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
|
|
|
2017
|
|
2018
|
|
2018
|
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
Total shareholders'
deficit
|
|
(668,391)
|
|
(761,257)
|
|
(115,045)
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and
|
|
|
|
|
|
|
|
|
shareholders'
deficit
|
|
783,556
|
|
867,903
|
|
131,160
|
CHINA
ONLINE EDUCATION GROUP
|
UNAUDITED INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS
|
(In thousands
except for number of shares and per share data)
|
|
|
|
For the three
months ended
|
|
For the six months
ended
|
|
|
Jun.
30,
|
|
Mar.
31,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
|
2017
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
191,753
|
|
262,577
|
|
281,736
|
|
42,577
|
|
351,272
|
|
544,313
|
Cost of
revenues
|
(71,150)
|
|
(92,929)
|
|
(96,538)
|
|
(14,589)
|
|
(125,902)
|
|
(189,467)
|
Gross
profit
|
120,603
|
|
169,648
|
|
185,198
|
|
27,988
|
|
225,370
|
|
354,846
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses
|
(153,619)
|
|
(171,592)
|
|
(163,274)
|
|
(24,675)
|
|
(299,696)
|
|
(334,866)
|
|
Product development
expenses
|
(50,686)
|
|
(52,240)
|
|
(44,583)
|
|
(6,738)
|
|
(101,287)
|
|
(96,823)
|
|
General and
administrative expenses
|
(54,095)
|
|
(56,364)
|
|
(53,864)
|
|
(8,140)
|
|
(102,459)
|
|
(110,228)
|
Total operating
expenses
|
(258,400)
|
|
(280,196)
|
|
(261,721)
|
|
(39,553)
|
|
(503,442)
|
|
(541,917)
|
Loss from
operations
|
(137,797)
|
|
(110,548)
|
|
(76,523)
|
|
(11,565)
|
|
(278,072)
|
|
(187,071)
|
Interest and
other
(expenses)/income, net
|
(409)
|
|
(1,044)
|
|
3,788
|
|
572
|
|
554
|
|
2,744
|
Loss before income
tax expenses
|
(138,206)
|
|
(111,592)
|
|
(72,735)
|
|
(10,993)
|
|
(277,518)
|
|
(184,327)
|
Income tax
expenses
|
(1,058)
|
|
(1,070)
|
|
(951)
|
|
(144)
|
|
(1,786)
|
|
(2,021)
|
Net loss
|
(139,264)
|
|
(112,662)
|
|
(73,686)
|
|
(11,137)
|
|
(279,304)
|
|
(186,348)
|
Net loss attributable
to ordinary
shareholders
|
(139,264)
|
|
(112,662)
|
|
(73,686)
|
|
(11,137)
|
|
(279,304)
|
|
(186,348)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of
ordinary shares used in
|
|
|
|
|
|
|
|
|
|
|
|
|
computing basic and
diluted
loss per share
|
301,352,242
|
|
302,871,754
|
|
304,214,325
|
|
304,214,325
|
|
301,107,598
|
|
303,546,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to
ordinary shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and
diluted
|
(0.46)
|
|
(0.37)
|
|
(0.24)
|
|
(0.04)
|
|
(0.93)
|
|
(0.61)
|
|
|
CHINA ONLINE
EDUCATION GROUP
|
UNAUDITED INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS
|
(In thousands
except for number of shares and per share data)
|
|
|
|
For the three
months ended
|
|
For the six months
ended
|
|
|
Jun.
30,
|
|
Mar.
31,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
|
2017
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per ADS
attributable to
ordinary shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and
diluted
|
(6.90)
|
|
(5.55)
|
|
(3.60)
|
|
(0.60)
|
|
(13.95)
|
|
(9.15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
(139,264)
|
|
(112,662)
|
|
(73,686)
|
|
(11,137)
|
|
(279,304)
|
|
(186,348)
|
Other comprehensive
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation
adjustments
|
(6,064)
|
|
(10,628)
|
|
13,895
|
|
2,100
|
|
(12,075)
|
|
3,267
|
Total comprehensive
loss
|
(145,328)
|
|
(123,290)
|
|
(59,791)
|
|
(9,037)
|
|
(291,379)
|
|
(183,081)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses are
included in the operating expenses as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses
|
(863)
|
|
(1,232)
|
|
(1,379)
|
|
(208)
|
|
(2,055)
|
|
(2,611)
|
Product development
expenses
|
1,221
|
|
(1,558)
|
|
(1,759)
|
|
(266)
|
|
(3,925)
|
|
(3,317)
|
General and
administrative expenses
|
(6,465)
|
|
(3,803)
|
|
(3,454)
|
|
(522)
|
|
(13,250)
|
|
(7,257)
|
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 six months
ended
|
|
Jun.
30,
|
|
Mar.
31,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
2017
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
RMB
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses
|
(153,619)
|
|
(171,592)
|
|
(163,274)
|
|
(24,675)
|
|
(299,696)
|
|
(334,866)
|
Less: Share-based
compensation expenses
|
(863)
|
|
(1,232)
|
|
(1,379)
|
|
(208)
|
|
(2,055)
|
|
(2,611)
|
Non-GAAP sales and
marketing expenses
|
(152,756)
|
|
(170,360)
|
|
(161,895)
|
|
(24,467)
|
|
(297,641)
|
|
(332,255)
|
|
|
|
|
|
|
|
|
|
|
|
|
Product development
expenses
|
(50,686)
|
|
(52,240)
|
|
(44,583)
|
|
(6,738)
|
|
(101,287)
|
|
(96,823)
|
Less: Share-based
compensation expenses
|
1,221
|
|
(1,558)
|
|
(1,759)
|
|
(266)
|
|
(3,925)
|
|
(3,317)
|
Non-GAAP product
development
expenses
|
(51,907)
|
|
(50,682)
|
|
(42,824)
|
|
(6,472)
|
|
(97,362)
|
|
(93,506)
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
(54,095)
|
|
(56,364)
|
|
(53,864)
|
|
(8,140)
|
|
(102,459)
|
|
(110,228)
|
Less: Share-based
compensation expenses
|
(6,465)
|
|
(3,803)
|
|
(3,454)
|
|
(522)
|
|
(13,250)
|
|
(7,257)
|
Non-GAAP general and
administrative
expenses
|
(47,630)
|
|
(52,561)
|
|
(50,410)
|
|
(7,618)
|
|
(89,209)
|
|
(102,971)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
(258,400)
|
|
(280,196)
|
|
(261,721)
|
|
(39,553)
|
|
(503,442)
|
|
(541,917)
|
Less: Share-based
compensation expenses
|
(6,107)
|
|
(6,593)
|
|
(6,592)
|
|
(996)
|
|
(19,230)
|
|
(13,185)
|
Non-GAAP operating
expenses
|
(252,293)
|
|
(273,603)
|
|
(255,129)
|
|
(38,557)
|
|
(484,212)
|
|
(528,732)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(137,797)
|
|
(110,548)
|
|
(76,523)
|
|
(11,565)
|
|
(278,072)
|
|
(187,071)
|
Less: Share-based
compensation expenses
|
(6,107)
|
|
(6,593)
|
|
(6,592)
|
|
(996)
|
|
(19,230)
|
|
(13,185)
|
Non-GAAP loss from
operations
|
(131,690)
|
|
(103,955)
|
|
(69,931)
|
|
(10,569)
|
|
(258,842)
|
|
(173,886)
|
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 six months
ended
|
|
|
Jun.
30,
|
|
Mar.
31,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
|
2017
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expenses
|
(1,058)
|
|
(1,070)
|
|
(951)
|
|
(144)
|
|
(1,786)
|
|
(2,021)
|
Less: Tax impact of
Share-based
compensation expenses
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Non-GAAP income tax
expenses
|
(1,058)
|
|
(1,070)
|
|
(951)
|
|
(144)
|
|
(1,786)
|
|
(2,021)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
(139,264)
|
|
(112,662)
|
|
(73,686)
|
|
(11,137)
|
|
(279,304)
|
|
(186,348)
|
Less: Share-based
compensation
expenses
|
(6,107)
|
|
(6,593)
|
|
(6,592)
|
|
(996)
|
|
(19,230)
|
|
(13,185)
|
Non-GAAP net
loss
|
(133,157)
|
|
(106,069)
|
|
(67,094)
|
|
(10,141)
|
|
(260,074)
|
|
(173,163)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to ordinary
shareholders
|
(139,264)
|
|
(112,662)
|
|
(73,686)
|
|
(11,137)
|
|
(279,304)
|
|
(186,348)
|
Less: Share-based
compensation
expenses, net of tax
|
(6,107)
|
|
(6,593)
|
|
(6,592)
|
|
(996)
|
|
(19,230)
|
|
(13,185)
|
Non-GAAP net loss
attributable to
ordinary shareholders
|
(133,157)
|
|
(106,069)
|
|
(67,094)
|
|
(10,141)
|
|
(260,074)
|
|
(173,163)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of
ordinary shares used in
|
|
|
|
|
|
|
|
|
|
|
|
|
computing basic and
diluted loss
per share
|
301,352,242
|
|
302,871,754
|
|
304,214,325
|
|
304,214,325
|
|
301,107,598
|
|
303,546,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per
share attributable to ordinary
shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and
diluted
|
(0.44)
|
|
(0.35)
|
|
(0.22)
|
|
(0.03)
|
|
(0.86)
|
|
(0.57)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per
ADS attributable to ordinary
shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and
diluted
|
(6.60)
|
|
(5.25)
|
|
(3.30)
|
|
(0.45)
|
|
(12.90)
|
|
(8.55)
|
|
|
CHINA
ONLINE EDUCATION GROUP
|
UNAUDITED INTERIM
ADDITIONAL INFORMATION
|
(In thousands
except for number of shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the six months
ended
|
|
|
Jun.
30,
|
|
Mar.
31,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
|
2017
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
191,753
|
|
245,486
|
|
254,222
|
|
38,419
|
|
351,272
|
|
499,708
|
Small class
offerings
|
-
|
|
17,091
|
|
27,514
|
|
4,158
|
|
-
|
|
44,605
|
Total net
revenues
|
191,753
|
|
262,577
|
|
281,736
|
|
42,577
|
|
351,272
|
|
544,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
(71,150)
|
|
(81,085)
|
|
(79,868)
|
|
(12,070)
|
|
(125,902)
|
|
(160,953)
|
Small class
offerings
|
-
|
|
(11,844)
|
|
(16,670)
|
|
(2,519)
|
|
-
|
|
(28,514)
|
Total cost of
revenues
|
(71,150)
|
|
(92,929)
|
|
(96,538)
|
|
(14,589)
|
|
(125,902)
|
|
(189,467)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
120,603
|
|
164,401
|
|
174,354
|
|
26,349
|
|
225,370
|
|
338,755
|
Small class
offerings
|
-
|
|
5,247
|
|
10,844
|
|
1,639
|
|
-
|
|
16,091
|
Total gross
profit
|
120,603
|
|
169,648
|
|
185,198
|
|
27,988
|
|
225,370
|
|
354,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
62.9%
|
|
67.0%
|
|
68.6%
|
|
68.6%
|
|
64.2%
|
|
67.8%
|
Small class
offerings
|
-
|
|
30.7%
|
|
39.4%
|
|
39.4%
|
|
-
|
|
36.1%
|
Total gross
margin
|
62.9%
|
|
64.6%
|
|
65.7%
|
|
65.7%
|
|
64.2%
|
|
65.2%
|
|
|
CHINA
ONLINE EDUCATION GROUP
|
UNAUDITED INTERIM
ADDITIONAL INFORMATION
|
(In thousands
except for number of shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the six months
ended
|
|
|
Jun.
30,
|
|
Mar.
31,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
Jun.
30,
|
|
|
2017
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
(153,619)
|
|
(153,928)
|
|
(143,711)
|
|
(21,719)
|
|
(299,696)
|
|
(297,639)
|
Small class
offerings
|
-
|
|
(17,664)
|
|
(19,563)
|
|
(2,956)
|
|
-
|
|
(37,227)
|
Total sales and
marketing
expenses[4]
|
(153,619)
|
|
(171,592)
|
|
(163,274)
|
|
(24,675)
|
|
(299,696)
|
|
(334,866)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product development
expenses
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
(50,686)
|
|
(40,881)
|
|
(33,157)
|
|
(5,011)
|
|
(101,287)
|
|
(74,038)
|
Small class
offerings
|
-
|
|
(11,359)
|
|
(11,426)
|
|
(1,727)
|
|
-
|
|
(22,785)
|
Total product
development
expenses[5]
|
(50,686)
|
|
(52,240)
|
|
(44,583)
|
|
(6,738)
|
|
(101,287)
|
|
(96,823)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
expenses
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
(54,095)
|
|
(47,181)
|
|
(44,281)
|
|
(6,692)
|
|
(102,459)
|
|
(91,462)
|
Small class
offerings
|
-
|
|
(9,183)
|
|
(9,583)
|
|
(1,448)
|
|
-
|
|
(18,766)
|
Total general and
administrative
expenses[6]
|
(54,095)
|
|
(56,364)
|
|
(53,864)
|
|
(8,140)
|
|
(102,459)
|
|
(110,228)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
(258,400)
|
|
(241,990)
|
|
(221,149)
|
|
(33,422)
|
|
(503,442)
|
|
(463,139)
|
Small class
offerings
|
-
|
|
(38,206)
|
|
(40,572)
|
|
(6,131)
|
|
-
|
|
(78,778)
|
Total operating
expenses
|
(258,400)
|
|
(280,196)
|
|
(261,721)
|
|
(39,553)
|
|
(503,442)
|
|
(541,917)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
|
|
|
|
|
|
|
|
|
One-on-one
offerings
|
(137,797)
|
|
(77,589)
|
|
(46,795)
|
|
(7,073)
|
|
(278,072)
|
|
(124,384)
|
Small class
offerings
|
-
|
|
(32,959)
|
|
(29,728)
|
|
(4,492)
|
|
-
|
|
(62,687)
|
Total loss from
operations
|
(137,797)
|
|
(110,548)
|
|
(76,523)
|
|
(11,565)
|
|
(278,072)
|
|
(187,071)
|
[4]
Share-based compensation expenses included in the sales and
marketing expenses for one-on-one offerings and small class
offerings were RMB1,307 and RMB72 respectively for the second
quarter of 2018, and RMB1,155 and RMB77 respectively for the first
quarter of 2018.
|
[5]
Share-based compensation expenses, included in the product
development expenses for one-on-one offerings and small class
offerings were RMB1,431 and RMB328 respectively for the second
quarter of 2018, and RMB1,411 and RMB147 respectively for the first
quarter of 2018.
|
[6]
Share-based compensation expenses, included in the general and
administrative expenses for one-on-one offerings and small class
offerings were RMB3,422 and RMB32 respectively for the second
quarter of 2018, and RMB3,758 and RMB45 respectively for the first
quarter of 2018.
|
View original
content:http://www.prnewswire.com/news-releases/china-online-education-group-announces-second-quarter-2018-results-300709474.html
SOURCE China Online Education Group