Web-based Curriculums Gain Traction as Social Distancing Alters Education Efforts

- FinancialBuzz.com News Commentary

NEW YORK, Dec. 29, 2020 /PRNewswire/ -- The pandemic has helped further accelerate the transition from traditional education avenues towards more online-based curriculums. Even after the pandemic is dealt with and social distancing restrictions removed, projections indicate that some of the new online education habits will remain. Nevertheless, the education system still faces major obstacles in remote learning, a lack of internet access in many households and the need for more personal training necessary for many students. "Teachers know that the world is changing and the education system will need to quickly adapt as well," said Dr. Emily Feistritzer, founder and CEO of TEACH-NOW. "They are way ahead of our elected leaders in recognizing that education five years from now will be delivered very differently than it was before the pandemic struck the nation." Meten EdtechX Education Group Ltd. (NASDAQ: METX), GSX Techedu Inc. (NYSE: GSX), New Oriental Education & Technology Group Inc. (NYSE: EDU), TAL Education Group (NYSE: TAL), China Online Education Group (NYSE: COE)

Around the world, the Asia-Pacific region is leading in terms of market share growth, as the region is expected to provide the highest revenue generating opportunities. This growth is the result of a rapidly expanding internet infrastructure, which has caused many investments in the market. For example, according to a report by Bloomberg from earlier this week, Alibaba Group Holding Ltd. and Tiger Global Management LLC led a USD 1.6 Billion investment in Chinese online education startup Zuoyebang, highlighting how the pandemic has turned web-based learning into an attractive industry.

Meten EdtechX Education Group Ltd. (NASDAQ: METX) announced breaking news last week that, "the latest business development of its exam preparatory product segments, demonstrating that the performance of the "BiGao" exam preparatory product ("BiGao") for middle school students has exhibited strong growth since launch in July 2019. Meanwhile, with the launch of the "YunFan", the exam preparatory product ("YunFan") for college students, in December 2020, the competitiveness of Meten EdtechX in the market of exam preparatory products in China has been further strengthened.

With the core goal of improving students' exam performance, "BiGao" provides a comprehensive VIP learning program for mid-to-high net worth families in China, covering various subjects, including English and mathematics ranging from the junior high school to the college entrance examination. Relying on the improving results from exam scores and good experiences, the cumulative gross billing generated from "BiGao" for the five months ended November 30, 2020 has been approximately RMB20 million, and has increased significantly by more than 360% compared to the same periods last year. It is worth noting that a significant number of the Company's students from both online and offline ELT business segments are customers of "BiGao", which enables "BiGao" to expand its customer base efficiently.

"YunFan" exam preparatory product was officially launched on December 22, 2020. Unlike "BiGao", "Yunfan" is an exam preparatory product mainly designed to assist college students with their exam preparation, including high-level exams such as national English levels 4 and 6 and postgraduate entrance exams. The launch of "YunFan" enables the Company to expand its domestic exam preparatory product segments to different age groups and complete the close-loop of its business from ELT and domestic exam preparatory services in China to overseas exam preparation, which can effectively improve the conversion rate of the students of Meten EdtechX among different product lines and the user stickiness of the Company."

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GSX Techedu Inc. (NYSE: GSX) online K-12 large-class after-school tutoring service provider in China, announced last month its unaudited financial results for the third quarter ended September 30, 2020. Net revenues was RMB1,965.8 million, a 252.9% year-over-year increase. Net revenues of online K-12 courses increased 282.7% year-over-year to RMB1,757.2 million. "The summer vacation of 2020 was significantly shorter than usual as different provinces adopted various holiday schedules in response to the delayed middle school and high school entrance exams. As a result, our course cycles and recruitment pace were also affected. Nevertheless, we were still able to achieve strong growth in topline. In addition, throughout this summer, our student structure has grown sustainable, with the students of non-graduate grade significantly increased, which lays solid foundation for our future retentions." Shannon noted.

New Oriental Education & Technology Group Inc. (NYSE: EDU) provider of private educational services in China based on the number of program offerings, total student enrollments and geographic presence. New Oriental offers a wide range of educational programs, services and products consisting primarily of language training and test preparation, primary and secondary school education, online education, content development and distribution, overseas study consulting services, pre-school education and study tour. The company offers test preparation courses to students taking language and entrance exams used by educational institutions in the United States, the People's Republic of China, and the Commonwealth countries; and after-school tutoring courses for middle and high school students to achieve better scores on entrance exams for admission into high schools or higher education institutions, as well as for children to teach English.

TAL Education Group (NYSE: TAL) is K-12 after-school tutoring services provider in China. Back in October the Company announced unaudited financial results for the second quarter of fiscal year 2021 ended August 31st, 2020. Net revenues increased by 20.8% year-over-year to USD 1,103.3 Million from USD 913.2 Million in the same period of the prior year. "TAL's financial results of the second fiscal quarter reflected a combination of the continued strong growth momentum of our online courses and the lingering pressure on our offline business in this period. Although the second fiscal quarter was marked by the extended impact of the COVID-19 outbreak, we are encouraged to see that the public health situation and general economy began to improve in China, and offline teaching and tutoring gradually resumed during the summer months," said Rong Luo, TAL's Chief Financial Officer.

China Online Education Group (NYSE: COE) reported last month its third quarter financials. Net revenues were RMB538.5 million (US$79.3 million), a 31.8% increase from RMB408.7 million for the third quarter of 2019. "We are pleased to deliver another robust quarter of solid financial and operating results. Our third quarter performance proves the merits of our strategy focused on the K-12 one-on-one mass market offering in non-tier-one cities[4] and showcases our ability to execute our initiatives," said Mr. Jack Jiajia Huang, Founder, Chairman and Chief Executive Officer of 51Talk. "Highlights of the quarter included net revenues reaching RMB538.5 million, up 31.8% year-over-year, surpassing the top end of our guidance, with contribution from our K-12 one-on-one mass market offering growing by 46.0% year-over-year to hit RMB471.8 million. Moreover, the number of active students on our platform in the third quarter grew to 338,000, up 30.9% compared to the third quarter in 2019."

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