The K-12 online education market in China is poised to grow by $18.93 bn during 2022-2026, progressing at a CAGR of 15.45{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
This study identifies the outbreak of COVID-19 increased the demand for online education in China as one of the prime reasons driving the K-12 online education market growth in China during the next few years. The market is driven by the increased adoption of online test preparation courses in China and improved accessibility to quality education.
The report on the K-12 online education market in China provides a holistic analysis, market size and forecast, trends, growth drivers, and challenges, as well as vendor analysis covering around 25 vendors. The report offers an up-to-date analysis regarding the current market scenario, latest trends and drivers, and the overall market environment.
The publisher’s robust vendor analysis is designed to help clients improve their market position, and in line with this, this report provides a detailed analysis of several leading K-12 online education market vendors in China that include Ambow Education Holding Ltd., Beijing Huaxia Dadi Distance Learning, China Online Education Group, ChinaEDU Corp., EIC Education, iTutorGroup Ltd., Kaplan Inc., New Oriental Education and Technology, TAL Education Group, and Xueda Education.
Also, the K-12 online education market in China analysis report includes information on upcoming trends and challenges that will influence market growth. This is to help companies strategize and leverage all forthcoming growth opportunities.
The study was conducted using an objective combination of primary and secondary information including inputs from key participants in the industry. The report contains a comprehensive market and vendor landscape in addition to an analysis of the key vendors.
Key Topics Covered:
1. Executive Summary
1.1 Market Overview
2. Market Landscape
2.1 Market ecosystem
2.2 Value Chain Analysis
2.2.1 Inputs
2.2.2 Operations
2.2.3 Marketing and sales
2.2.4 Support activities
2.2.5 Innovations
3. Market Sizing
3.1 Market definition
3.2 Market segment analysis
3.3 Market size 2021
3.4 Market outlook: Forecast for 2021 – 2026
3.4.1 Estimating growth rates for emerging and high-growth markets
3.4.2 Estimating growth rates for mature markets
4. Five Forces Analysis
5. Market Segmentation by Product
5.1 Market segments
5.2 Comparison by Product
5.3 Online schools – Market size and forecast 2021-2026
5.4 Language learning courses – Market size and forecast 2021-2026
5.5 Test preparation services – Market size and forecast 2021-2026
5.6 Market opportunity by Product
6. Market Segmentation by End-user
6.1 Market segments
6.2 Comparison by End-user
6.3 Institutional learners – Market size and forecast 2021-2026
6.4 Individual learners – Market size and forecast 2021-2026
6.5 Market opportunity by End-user
7. Customer landscape
7.1 Overview
8. Drivers, Challenges, and Trends
8.1 Market Driver
8.1.1 Increased adoption of online test preparation courses in China
8.1.2 Improved accessibility to quality education
8.1.3 Outbreak of COVID-19 increased the demand for online education in china
8.2 Market challenges
8.2.1 Skewed interaction and socializing opportunities for students
8.2.2 Availability of low-priced and open educational resources
8.2.3 Rising number of unorganized private tutors
8.3 Market trends
8.3.1 Growing customization of online education services
8.3.2 Increasing use of cloud computing in K-12 online education system
In the news release, China Online Education Group Announces Full Year 2021 Results, issued 24-Mar-2022 by China Online Education Group over PR Newswire, we are advised by the company that there are some figures and words updates based on the original copy. The complete, corrected release follows:
China Online Education Group Announces Full Year 2021 Results
BEIJING, March 24, 2022 /PRNewswire/ — China Online Education Group (“51Talk” or the “Company”) (NYSE: COE), a leading online education platform in China, with core expertise in English education, announced its unaudited financial results for the third quarter ended September 30, 2021, as well as the fourth quarter and full year ended December 31, 2021.
Full Year 2021 Financial and Operating Highlights
Net revenues were RMB2,166.5 million (US$340.0 million), a 5.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB2,054.1 million for the full year 2020.
Gross margin was 74.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with 71.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the full year 2020.
GAAP net income was RMB105.7 million(US$16.6 million), compared with GAAP net income RMB147.0 million for the full year 2020.
Non-GAAP net income1 was RMB132.7 million (US$20.8million), compared with non-GAAP net income RMB 173.7 million for the full year 2020.
Operating cash outflow was RMB676.1 million (US$106.1 million), compared with RMB719.2 million cash inflow for the full year 2020.
Fourth Quarter 2021 Financial and Operating Metrics
Net revenues were RMB412.8 million (US$64.8 million), a 22.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB535.1 million for the fourth quarter of 2020.
Gross margin was 78.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with 72.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the fourth quarter of 2020.
Net income was RMB52.0million (US$8.2 million), compared with net income of RMB31.8 million for the fourth quarter of 2020.
Non-GAAP net income was RMB55.0 million (US$8.6 million), compared with non-GAAP net income of RMB38.6 million for the fourth quarter of 2020.
Operating cash outflow was RMB268.6 million (US$42.1 million), compared with RMB188.5 million of operating cash inflow for the fourth quarter of 2020.
Cash, cash equivalents, restricted cash, time deposits and short-term investments balance stood at RMB992.6 million (US$155.8 million) as of December 31, 2021.
Third Quarter 2021 Financial and Operating Metrics
Net revenues were RMB573.6 million (US$90.0 million), a 6.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB538.5 million for the third quarter of 2020.
Gross margin was 73.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with 72.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the third quarter of 2020.
Net income was RMB 72.7 million (US$11.4 million), compared with net income of RMB31.6 million for the third quarter of 2020.
Non-GAAP net income1 was RMB78.7 million (US$12.3 million), compared with non-GAAP net income of RMB38.5 million for the third quarter of 2020.
Operating cash outflow was RMB376.7 million (US$59.1 million), compared with RMB186.1 million of operating cash inflow for the third quarter of 2020.
Cash, cash equivalents, time deposits and short-term investments balance stood at RMB1,265.7 million (US$198.6 million) as of September 30, 2021.
Active students with attended lesson consumption [2]
(in thousands)
376.5
299.1
455.9
Active students with general lesson consumption[3]
(in thousands)
338.0
406.2
20.2
353.8
363.8
2.8
470.7
483.5
2.7
“In response to the changes in regulations related to After-School Tutoring (“AST”) promulgated by the Chinese government, we have taken measures to restructure our business so that the Company’s 2022 strategy will keenly focus on overseas business. In the fourth quarter, net gross billings of overseas business have reached $2.9 million, representing 222.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} sequential growth,” said Mr. Jack Jiajia Huang, Founder, Chairman and Chief Executive Officer of 51Talk.,
“As the overseas business momentum continue to build, we have extended our product offerings to students in more than 50 countries and regions outside Mainland China. We have been able to leverage our strength in high quality teacher resources, interactive curriculum, and advanced technology platform to quickly establish presence in a new market. We will stick with our business model which balances growth with profitability and was proven in Mainland China market. We are excited in exploring opportunities in oversea markets and allow our Filipino teachers to help more students to be able to talk to the world,” concluded Mr. Huang.
[1] For more information on non-GAAP financial measures, please see the section of “Use of Non-GAAP Financial Measures” and the table captioned “Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures” set forth in this press release.
[2] An “active student with attended lesson consumption” for a specified period refers to a student who attended at least one paid lesson, excluding those students who only attended paid live broadcasting lessons or trial lessons.
[3] An “active student with general lesson consumption” for a specified period refers to a student who consumed at least one paid lesson credit, in attendance or due to minimum consumption or expiration,excluding those students who only attended paid live broadcasting lessons or trial lessons.
Third Quarter 2021 Financial Results
Net Revenues
Net revenues for the third quarter of 2021 were RMB573.6 million (US$90.0 million), a 6.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB538.5 million for the same quarter last year. The increase was primarily attributed to an increase in the number of active students, partially offset by a decrease in average revenue per active student. The number of active students with general lesson consumption in the third quarter of 2021 was 406,200, a 20.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from 338,000 for the same quarter last year. The number of active students with attended lesson consumption in the third quarter of 2021 was 376,500.
Cost of Revenues
Cost of revenues for the third quarter of 2021 was RMB151.9 million (US$23.8 million), a 3.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB146.7 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 an increased number of paid lessons.
Gross Profit and Gross Margin
Gross profit for the third quarter of 2021 was RMB421.8 million (US$66.2 million), a 7.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB391.8 million for the same quarter last year.
Gross margin for the third quarter of 2021 was 73.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with 72.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the same quarter last year. The increase was mainly attributable to the decrease of the cost per lesson, partially offset by the decrease of the revenue per lesson.
Operating Expenses
Total operating expenses for the third quarter of 2021 were RMB369.3 million (US$58.0 million), a 2.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB379.6 million for the same quarter last year. The decrease was mainly due to a decrease in sales and marketing expenses and product development expenses, partially offset by an increase of general and administrative expenses and goodwill and intangibles impairment.
Sales and marketing expenses for the third quarter of 2021 were RMB191.9 million (US$30.1 million), a 32.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB282.8 million for the same quarter last year. The decrease was mainly due to decrease in the number of personnel and lower marketing and branding expenses. Excluding share-based compensation expenses, non-GAAP sales and marketing expenses for the third quarter of 2021 were RMB191.0 million (US$30.0 million), a 31.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB280.6 million for the same quarter last year.
Product development expenses for the third quarter of 2021 were RMB40.7 million (US$6.4 million), a 6.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB43.8 million for the same quarter last year. The decrease was primarily due to lower product development personnel costs related to decrease in the number of personnel. Excluding share-based compensation expenses, non-GAAP product development expenses for the third quarter of 2021 were RMB39.3 million (US$6.2 million), a 6.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB42.1 million for the same quarter last year.
General and administrative expenses for the third quarter of 2021 were RMB104.9 million (US$16.5 million), a 97.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB53.0 million for the same quarter last year. The increase was primarily due to restructuring cost of RMB 51.4 million during the quarter. Excluding share-based compensation expenses, non-GAAP general and administrative expenses for the third quarter were RMB101.1 million (US$15.9 million), a 102.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB50.0 million for the same quarter last year. Excluding restructuring cost and share-based compensation expenses, general and administrative expenses for the third quarter would have been RMB 49.7 million (US$7.8 million), a 0.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB50.0 million for the same quarter last year.
Goodwill and intangibles impairment for the third quarter of 2021 was RMB31.8 million (US$4.9 million), compared with nil for the same quarter last year. The goodwill and intangible impairment was mainly due to the decline of fair value related to the intangible assets and goodwill in connection with the acquisition of 91waijiao.com completed in January 2015, assets acquisition of GKid completed in December 2020, and business combination of Kaola Reading completed in the second quarter of 2021. Considering recent regulatory policies on further alleviating the burden of homework and after-school tutoring for students and the changes in operating environment, the Company recognized impairment losses of the intangible assets and goodwill in the third quarter of 2021.
Other income
The exemption for the value added tax (VAT) of consumer services has been stopped as of March 31, 2021. This exemption, which covers a wide range of consumer services, was part of the Chinese government’s effort to ease the burden of businesses affected by the COVID-19 pandemic. The income obtained by taxpayers from providing essential services shall be exempted from VAT. The favorable impact of such COVID-19 relief policies was nil and RMB7.6 million in the third quarter of 2021 and 2020 respectively.
On September 30, 2019, the Ministry of Finance and the State Taxation Administration announced that from October 1, 2019 to December 31, 2021, taxpayers engaging in the provision of essential services are allowed to deduct an extra 15{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of the deductible input value-added tax for the current period from the payable value-added tax. The impact of the policy of additional value-added tax credit for the income generated by the essential services provided by enterprises was RMB6.0 million and RMB1.7 million in the third quarter of 2021 and 2020 respectively.
Income from Operations
Operating income for the third quarter of 2021 was RMB58.4 million (US$9.2 million), compared with operating income of RMB21.4 million for the same quarter last year. Operating margin for the third quarter was 10.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with operating margin of 4.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the same quarter last year.
Non-GAAP operating income for the third quarter of 2021 was RMB64.4 million (US$10.1million), compared with non-GAAP operating income of RMB28.3 million for the same quarter last year. Non-GAAP operating margin for the third quarter was 11.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with non-GAAP operating margin of 5.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the same quarter last year.
Net income
Net income for the third quarter of 2021 was RMB72.7 million (US$11.4 million), compared with net income of RMB31.6 million for the same quarter last year. Net margin for the third quarter was 12.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with net margin of 5.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the same quarter last year.
Non-GAAP net income for the third quarter of 2021 was RMB78.7 million (US$12.3 million), compared with non-GAAP net income of RMB38.5 million for the same quarter last year. Non-GAAP net margin for the third quarter was 13.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with non-GAAP net margin of 7.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the same quarter last year.
Interest income for the third quarter of 2021 was negative RMB7.0 million, due to RMB15.0 million reversal of interest income accrual from the time-deposits early withdraw, partially offset by interest income of RMB8.0 million.
Income tax benefits for the third quarter of 2021 was RMB20.5 million.
Basic net income per share attributable to ordinary shareholders for the third quarter of 2021 was RMB0.22(US$0.03), compared with basic net income per share of RMB0.10 for the same quarter last year. Diluted net income per share attributable to ordinary shareholders for the third quarter of 2021 was RMB0.21(US$0.03), compared with diluted net income per share of RMB0.09 for the same quarter last year.
Non-GAAP basic net income per share attributable to ordinary shareholders for the third quarter of 2021 was RMB0.24(US$0.04), compared with non-GAAP basic net income per share attributable to ordinary shareholders of RMB0.12 for the same quarter last year. Non-GAAP diluted net income per share attributable to ordinary shareholders for the third quarter of 2021 was RMB0.23(US$0.04), compared with non-GAAP diluted net income per share attributable to ordinary shareholders of RMB0.11 for the same quarter last year.
Basic net income per American depositary share (“ADS”) attributable to ordinary shareholders for the third quarter of 2021 was RMB3.28(US$0.51), compared with basic net income per ADS of RMB1.46 for the same quarter last year. Diluted net income per ADS attributable to ordinary shareholders for the third quarter of 2021 was RMB3.22(US$0.51), compared with diluted net income per ADS of RMB1.38 for the same quarter last year. Each ADS represents 15 Class A ordinary shares.
Non-GAAP basic net income per ADS attributable to ordinary shareholders for the third quarter of 2021 was RMB3.56(US$0.56), compared with non-GAAP basic net income per ADS attributable to ordinary shareholders of RMB1.78 for the same quarter last year. Non-GAAP diluted net income per ADS attributable to ordinary shareholders for the third quarter of 2021 was RMB3.49(US$0.55), compared with non-GAAP diluted net income per ADS attributable to ordinary shareholders of RMB1.68 for the same quarter last year.
Balance Sheet
As of September 30, 2021, the Company had total cash, cash equivalents, time deposits and short-term investments of RMB1,265.7 million (US$198.6 million), compared with RMB1,727.7 million as of December 31, 2020. As a part of cash, cash equivalents, time deposits and short-term investments, the Company had non-current time deposits of RMB30.0 million (US$4.7 million), compared with RMB414.0 million as of December 31, 2020.
As of September 30, 2021, the Company has a consolidated net current liability of RMB919.9 million, compared with net current liability of RMB1,400.4 million as of December 31, 2020. The Company had advances from students[4] (current and non-current) of RMB2,262.5 million (US$355.0 million) as of September 30, 2021, compared with RMB2,721.0 million as of December 31, 2020.
[4] “Advances from students,” which is defined as the amount of obligation to transfer good or service to students or business partners for which consideration has been received from students in advance. The deposits from students are also presented in the total amount of “advances from students”.
Fourth Quarter 2021 Financial Results
Net Revenues
Net revenues for the fourth quarter of 2021 were RMB412.8 million (US$64.8 million), a 22.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB535.1 million for the same quarter last year. The decrease was primarily attributed to a decrease in the number of lessons booked, partially offset by an increase in the number of active students with general lesson consumption. The number of active students with general lesson consumption in the fourth quarter of 2021 was 363,800, a 2.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from 353,800 for the same quarter last year. The number of active students with attended lesson consumption in the fourth quarter of 2021 was 299,100.
Cost of Revenues
Cost of revenues for the fourth quarter of 2021 was RMB 88.3 million (US$13.9 million), a 39.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB146.1 million for the same quarter last year. The decrease was primarily driven by a decrease in total service fees paid to teachers, mainly due to a decreased number of paid lessons.
Gross Profit and Gross Margin
Gross profit for the fourth quarter of 2021 was RMB324.5 million (US$50.9 million), a 16.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB388.9million for the same quarter last year.
Gross margin for the fourth quarter of 2021 was 78.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with 72.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the same quarter last year. The increase was mainly attributable to the decrease of the cost per lesson and the increase of the revenue per lesson.
Operating Expenses
Total operating expenses for the fourth quarter of 2021 were RMB321.2 million (US$50.4 million), a 16.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB385.7 million for the same quarter last year. The decrease was mainly due to a decrease in sales and marketing expenses and product development expenses, partially offset by an increase in general and administrative expenses.
Sales and marketing expenses for the fourth quarter of 2021 were RMB235.8 million (US$37.0 million), a 17.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB284.5 million for the same quarter last year. The decrease was mainly due to decrease in the number of personnel and lower marketing and branding expenses. Excluding share-based compensation expenses, non-GAAP sales and marketing expenses for the fourth quarter of 2021 were RMB235.4 million (US$36.9 million), a 16.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB282.6 million for the same quarter last year.
Product development expenses for the fourth quarter of 2021 were RMB15.3 million (US$2.4 million), a 65.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB44.6 million for the same quarter last year. The decrease was primarily due to lower product development personnel costs related to decrease in the number of personnel. Excluding share-based compensation expenses, non-GAAP product development expenses for the fourth quarter of 2021 were RMB15.6 million (US$2.4 million), a 64.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB43.3 million for the same quarter last year.
General and administrative expenses for the fourth quarter of 2021 were RMB69.7 million (US$10.9 million), a 23.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB56.6 million for the same quarter last year. The increase was primarily due to restructuring cost of RMB 25.8 million during the quarter. Excluding share-based compensation expenses, non-GAAP general and administrative expenses for the fourth quarter were RMB66.7 million (US$10.5 million), a 26.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB53.0 million for the same quarter last year. Excluding restructuring cost and share-based compensation expenses, general and administrative expenses for the fourth quarter would have been RMB40.9 million (US$6.4 million), a 22.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB53.0 million for the same quarter last year.
Goodwill and intangibles impairment for the fourth quarter of 2021 was RMB0.4 million (US$0.1 million), compared with nil for the same quarter last year. The goodwill and intangibles impairment was mainly due to the decline of fair value related to the system for employee performance evaluation. Considering recent regulatory policies on further alleviating the burden of homework and after-school tutoring for students and the changes in operating environment, the Company recognized impairment losses of the intangible assets in the fourth quarter of 2021.
Other income
The exemption for the VAT of consumer services has been stopped as of March 31, 2021. This exemption, which covers a wide range of consumer services, was part of the Chinese government’s effort to ease the burden of businesses affected by the COVID-19 pandemic. The income obtained by taxpayers from providing essential services shall be exempted from VAT. The favorable impact of such COVID-19 relief policies was nil and RMB7.5 million in the fourth quarter of 2021 and 2020 respectively.
On December 31, 2019, the Ministry of Finance and the State Taxation Administration announced that from October 1, 2019 to December 31, 2021, taxpayers engaging in the provision of essential services are allowed to deduct an extra 15{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of the deductible input value-added tax for the current period from the payable value-added tax. The impact of the policy of additional value-added tax credit for the income generated by the essential services provided by enterprises was RMB0.6 million and RMB0.3 million in the fourth quarter of 2021 and 2020 respectively.
Income from Operations
Operating income for the fourth quarter of 2021 was RMB3.9 million (US$0.6 million), compared with operating income of RMB11.0 million for the same quarter last year. Operating margin for the fourth quarter was 0.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with operating margin of 2.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the same quarter last year.
Non-GAAP operating income for the fourth quarter of 2021 was RMB6.9 million (US$1.1 million), compared with non-GAAP operating income of RMB17.8 million for the same quarter last year. Non-GAAP operating margin for the fourth quarter was 1.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with non-GAAP operating margin of 3.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the same quarter last year.
Net income
Net income for the fourth quarter of 2021 was RMB52.0 million (US$8.2 million), compared with net income of RMB31.8million for the same quarter last year. Net margin for the fourth quarter was 12.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with net margin of 5.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the same quarter last year.
Non-GAAP net income for the fourth quarter of 2021 was RMB55.0 million (US$8.6 million), compared with non-GAAP net income of RMB38.6 million for the same quarter last year. Non-GAAP net margin for the fourth quarter was 13.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with non-GAAP net margin of 7.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for the same quarter last year.
Income tax benefits for the fourth quarter of 2021 was RMB34.7 million.
Basic net income per share attributable to ordinary shareholders for the fourth quarter of 2021 was RMB0.16(US$0.02), compared with basic net income per share of RMB0.10 for the same quarter last year. Diluted net income per share attributable to ordinary shareholders for the fourth quarter of 2021 was RMB0.15(US$0.02), compared with diluted net income per share of RMB0.09 for the same quarter last year.
Non-GAAP basic net income per share attributable to ordinary shareholders for the fourth quarter of 2021 was RMB0.17(US$0.03), compared with non-GAAP basic net income per share attributable to ordinary shareholders of RMB0.12 for the same quarter last year. Non-GAAP diluted net income per share attributable to ordinary shareholders for the fourth quarter of 2021 was RMB0.16(US$0.03), compared with non-GAAP diluted net income per share attributable to ordinary shareholders of RMB0.11 for the same quarter last year.
Basic net income per ADS attributable to ordinary shareholders for the fourth quarter of 2021 was RMB2.34(US$0.37), compared with basic net income per ADS of RMB1.48 for the same quarter last year. Diluted net income per ADS attributable to ordinary shareholders for the fourth quarter of 2021 was RMB2.31(US$0.36), compared with diluted net income per ADS of RMB1.39 for the same quarter last year. Each ADS represents 15 Class A ordinary shares.
Non-GAAP basic net income per ADS attributable to ordinary shareholders for the fourth quarter of 2021 was RMB2.48(US$0.39), compared with non-GAAP basic net income per ADS attributable to ordinary shareholders of RMB1.79 for the same quarter last year. Non-GAAP diluted net income per ADS attributable to ordinary shareholders for the fourth quarter of 2021 was RMB2.45(US$0.38), compared with non-GAAP diluted net income per ADS attributable to ordinary shareholders of RMB1.68 for the same quarter last year.
Balance Sheet
As of December 31, 2021, the Company had total cash, cash equivalents,restricted cash, time deposits and short-term investments of RMB992.6 million (US$155.8 million)and among which RMB50.6 million of restricted cash, compared with RMB1,727.7 million as of December 31, 2020 with nil of restricted cash. As a part of cash, cash equivalents, time deposits and short-term investments, the Company had non-current time deposits of RMB100.9 million (US$15.8 million), compared with RMB414.0 million as of December 31, 2020.
As of December 31, 2021, the Company has a consolidated net current liability of RMB944.4 million, compared with net current liability of RMB1,400.4 million as of December 31, 2020. The Company had advances from students (current and non-current) of RMB1,767.2 million (US$277.3 million) as of December 31, 2021, compared with RMB2,721.0 million as of December 31, 2020.
Full Year 2021 Financial Results
Net Revenues
Net revenues for 2021 were RMB2,166.5 million (US$340.0 million), a 5.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB2,054.1 million for 2020. The increase was primarily attributed to an increase in the number of active students with general lesson consumption.
Cost of Revenues
Cost of revenues for 2021 was RMB558.0 million (US$87.6 million), a 3.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB580.4 million for 2020. The decrease was primarily driven by a decrease in total service fees paid to teachers, mainly due to the decrease of cost per lesson driven from cost control.
Gross Profit and Gross Margin
Gross profit for 2021 was RMB1,608.6 million (US$252.4 million), a 9.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB1,473.7 million for 2020.
Gross margin for 2021 was 74.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with 71.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for 2020.
Operating Expenses
Total operating expenses for 2021 were RMB1,597.4 million (US$250.7 million), a 13.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB1,412.7 million for 2020. The increase was mainly the result of the increases in sales and marketing expenses, general and administrative expenses, product development expenses and goodwill and intangibles impairment.
Sales and marketing expenses for 2021 were RMB1,062.5 million (US$166.7 million), a 2.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB1,035.6 million for 2020. The increase was mainly due to increase in the sales and marketing personnel costs. Excluding share-based compensation expenses, non-GAAP sales and marketing expenses for 2021 were RMB1,056.3 million (US$165.8 million), a 2.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB1,026.8 million for 2020.
Product development expenses for 2021 were RMB178.8 million (US$28.1 million), a 9.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB162.8 million for 2020. Excluding share-based compensation expenses, non-GAAP product development expenses for 2021 were RMB174.3 million (US$27.4 million), a 10.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB158.4 million for 2020.
General and administrative expenses for 2021 were RMB324.0 million (US$50.8 million), a 51.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB214.2 million for 2020. The increase was primarily due to restructuring cost of RMB 85.9 million during the year. Excluding share-based compensation expenses, non-GAAP general and administrative expenses for 2021 were RMB307.5 million (US$48.3 million), a 53.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from RMB200.8 million for 2020. Excluding restructuring cost and share-based compensation expenses, general and administrative expenses for 2021 would have been RMB221.6 million (US$34.8 million), a 10.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from RMB200.8 million for 2020.
Goodwill and intangibles impairment for 2021 was RMB32.2 million (US$5.0 million), compared with nil for the same quarter last year. The goodwill and intangibles impairment was mainly due to the decline of fair value related to the acquisition of 91waijiao.com completed in January 2015, the assets acquisition of GKid completed in December 2020, the acquisition of Kaola Reading completed in the second quarter of 2021, and the system for employee performance evaluation. Considering recent regulatory policies on further alleviating the burden of homework and after-school tutoring for students and the changes in operating environment, the company recognized impairment losses of the intangible assets in 2021.
Other income
As part of Chinese government’s effort to ease the burden of businesses affected by the coronavirus (COVID-19) outbreak, the State Taxation Administration (STA) exempted a wide range of consumer services from VAT from January 2020. The income obtained by taxpayers from providing essential services shall be exempted from VAT. The favorable impact of coronavirus relief policies was RMB10.7 million and RMB32.3 million in 2021 and 2020, respectively.
On September 30, 2019, Ministry of Finance and the State Taxation Administration announced that from October 1,2019 to December 31, 2021, the taxpayers engaging in the provision of essential services are allowed to deduct an extra 15{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of the deductible input tax for the current period from the payable tax. The impact of the policy of additional value-added tax credit for the income generated by the essential services provided by enterprises was RMB12.5 million and RMB11.1 million in 2021 and 2020, respectively.
Income from Operations
Operating income for 2021 was RMB34.4 million (US$5.4 million), compared with RMB104.4 million for 2020. Operating margin for 2021 was 1.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with operating margin of 5.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for 2020.
Non-GAAP operating income for 2021 was RMB61.4 million (US$9.6 million), compared with RMB131.2 million for 2020. Non-GAAP operating margin for 2021 was 2.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with non-GAAP operating margin of 6.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for 2020.
The favorable impact of coronavirus relief policies was RMB10.7 million in 2021. Excluding the favorable impact, operating income and non-GAAP operating income for 2021 would have been RMB23.7 million (US$3.7 million) and RMB50.7 million (US$8.0 million), representing operating margin of 1.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} and 2.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} respectively.
Net income
Net income for 2021 was RMB105.7 million (US$16.6 million), compared with RMB147.0 million for 2020. Net margin for 2021 was 4.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with net margin of 7.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for 2020.
Non-GAAP net income for 2021 was RMB132.7 million (US$20.8 million), compared with RMB173.7 million for 2020. Non-GAAP net margin for 2021 was 6.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared with non-GAAP net margin of 8.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} for 2020.
The favorable impact of coronavirus relief policies was RMB10.7 million in 2021. Excluding the favorable impact, net income and non-GAAP net income for 2021 would have been RMB95.0 million (US$14.9 million) and RMB122.0 million (US$19.1 million), representing net margin of 4.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} and 5.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} respectively.
Income tax benefits for the fourth quarter of 2021 was RMB46.1 million.
Basic net income per ADS attributable to ordinary shareholders for 2021 was RMB4.82(US$0.76), compared with basic net income per ADS of RMB6.90 for 2020. Diluted net income per ADS attributable to ordinary shareholders for 2021 was RMB4.66(US$0.73), compared with diluted net income per ADS of RMB6.46 for 2020. Each ADS represents 15 Class A ordinary shares.
Non-GAAP basic net income per ADS attributable to ordinary shareholders for 2021 was RMB6.06(US$0.95), compared with non-GAAP basic net income per ADS of RMB8.15 for 2020. Non-GAAP diluted net income per American depositary share (“ADS”) attributable to ordinary shareholders for 2021 was RMB5.86(US$0.92), compared with non-GAAP diluted net income per ADS of RMB7.63 for 2020. Each ADS represents 15 Class A ordinary shares.
The favorable impact of coronavirus relief policies was RMB10.7 million in 2021. Excluding the favorable impact, basic net income per ADS attributable to ordinary shareholders for 2021 was RMB4.33(US$0.68) and non-GAAP basic net income ADS attributable to ordinary shareholders for 2021 was RMB5.57(US$0.87), respectively. Excluding the favorable impact, diluted net income ADS attributable to ordinary shareholders for 2021 was RMB4.19(US$0.66) and non-GAAP diluted net income per American depositary share (“ADS”) attributable to ordinary shareholders for 2020 was RMB5.38(US$0.84), respectively.
Outlook
For the first quarter of 2022, the Company currently expects net gross billings of oversea business to be between $4.4 million and $4.6 million,representing sequential growth of 51.7 {ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to 58.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}
The above outlook is based on 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.
In addition, the Company’s future operational and financial performance depends on the future development of the implementation of the Opinion and the success of the Company’s business adjustment plans, which is subject to inherent uncertainties at this time.
Conference Call
The Company’s management will host an earnings conference call at 8:30 AM U.S. Eastern Time on March 24, 2022 (8:30 PM Beijing/Hong Kong time on March 24, 2022).
Dial-in details for the earnings conference call are as follows:
United States (toll free):
1-800-239-9838
International:
1-323-794-2551
Mainland China:
400-120-9101
Hong Kong (toll free):
800-961-105
Hong Kong:
852-3008-1527
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 December3, 2021, by dialing the following telephone numbers:
United States (toll free):
1-888-203-1112
International:
1-719-457-0820
Replay Access Code:
8412792
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 to take live interactive English lessons, on demand. The Company connects its students with a large pool of highly qualified 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 operating income, non-GAAP net income, non-GAAP net income attributable to ordinary shareholders, and non-GAAP net income 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 compensation 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 RMB6.3726 to US$1.00, the rate in effect as of December 31, 2021 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 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.
CHINA ONLINE EDUCATION GROUP
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
As of
Dec. 31,
Sep.30,
Dec. 31,
Dec. 31,
2020
2021
2021
2021
RMB
RMB
RMB
US$
ASSETS
Current assets
Cash and cash equivalents
326,647
412,462
214,732
33,696
Restricted cash
–
–
50,550
7,932
Time deposits
477,408
212,436
48,437
7,601
Short-term investments
509,636
610,843
577,970
90,696
Inventory
1,935
1,656
1,080
169
Prepaid expenses and other current assets
302,057
295,309
72,450
11,369
Total current assets
1,617,683
1,532,706
965,219
151,463
Non-current assets
Property and equipment, net
21,175
28,973
17,017
2,670
Intangible assets, net
20,302
12,187
11,211
1,759
Goodwill
4,223
–
–
–
Right-of-use assets
98,001
57,312
36,907
5,792
Time deposits
414,000
30,000
100,868
15,828
Deferred tax assets
10,268
23,694
56,868
8,924
Other non-current assets
23,896
17,572
5,496
862
Total non-current assets
591,865
169,738
228,367
35,835
Total assets
2,209,548
1,702,444
1,193,586
187,298
LIABILITIES
AND SHAREHOLDERS’ DEFICIT
Current liabilities
Advances from students
2,718,776
2,261,052
1,766,032
277,129
Accrued expenses and other current liabilities
237,101
139,860
96,205
15,097
Lease liability
42,949
25,680
19,400
3,044
Taxes payable
19,288
26,001
28,027
4,398
Total current liabilities
3,018,114
2,452,593
1,909,664
299,668
Non-current liabilities
Advances from students
2,270
1,438
1,126
177
Lease liability
53,594
33,894
19,340
3,035
Other non-current liabilities
2,508
2,723
1,547
243
Total non-current liabilities
58,372
38,055
22,013
3,455
Total liabilities
3,076,486
2,490,648
1,931,677
303,123
Total shareholders’ deficit
(866,938)
(788,204)
(738,091)
(115,825)
Total liabilities and shareholders’ deficit
2,209,548
1,702,444
1,193,586
187,298
CHINA ONLINE EDUCATION GROUP
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands except for number of shares and per share data)
For the three months ended
For the year ended
Dec. 31,
Sep. 30,
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
2020
2021
2021
2021
2020
2021
2021
RMB
RMB
RMB
US$
RMB
RMB
US$
Net revenues
535,074
573,621
412,773
64,773
2,054,095
2,166,549
339,979
Cost of revenues
(146,134)
(151,852)
(88,276)
(13,852)
(580,417)
(557,974)
(87,558)
Gross profit
388,940
421,769
324,497
50,921
1,473,678
1,608,575
252,421
Operating expenses
Sales and marketing expenses
(284,493)
(191,909)
(235,838)
(37,008)
(1,035,620)
(1,062,523)
(166,733)
Product development expenses
(44,577)
(40,735)
(15,260)
(2,395)
(162,829)
(178,750)
(28,050)
General and administrative expenses
(56,626)
(104,907)
(69,681)
(10,934)
(214,224)
(323,968)
(50,838)
Goodwill and intangibles impairment
–
(31,780)
(396)
(62)
–
(32,176)
(5,049)
Total operating expenses
(385,696)
(369,331)
(321,175)
(50,399)
(1,412,673)
(1,597,417)
(250,670)
Other income
7,766
5,962
552
87
43,414
23,223
3,644
Income from operations
11,010
58,400
3,874
609
104,419
34,381
5,395
Interest income
11,711
(6,972)
5,735
900
38,508
21,120
3,314
Interest expense and other expenses, net
193
785
7,683
1,206
(66)
4,014
630
Income before income tax expenses
22,914
52,213
17,292
2,715
142,861
59,515
9,339
Income tax benefits
8,905
20,452
34,691
5,444
4,101
46,139
7,240
Net income attributable to ordinary shareholders
31,819
72,665
51,983
8,159
146,962
105,654
16,579
Weighted average number of ordinary shares used in computing basic income per share
Discussions about wealth and cash you should not usually include kids.But a single Orlando-based nonprofit group is altering that narrative: WESH 2 Group Champion 8 Cents In A Jar. Lashea Reaves is educating younger learners at Alpha Studying Academy about the inventory sector and the advantages of investing.Reaves wishes these college students to make perception of some thing so quite a few older people have a tendency to shy away from.”You should really be in a position to have an open discussion about income. Where by does it appear from? How can I conserve it? What is the ideal area to use it? When we can converse about money. We are much better about running that revenue,” Reaves claimed.Reaves is the government director of 8 Cents In A Jar, an award-winning nonprofit firm concentrated on financial schooling for minority students concerning the ages of 8 and 28 a long time outdated in central Florida.”The lack of money literacy, the deficiency of understanding for cash administration, that definitely drove my occupation,” she reported.It can be a challenge Reaves is aware of all way too well.She grew up down below the poverty line, relying on authorities help for food items and housing.WESH 2 Sheldon Dutes: What is actually the significance guiding the name?Lashea: When I was increasing up, I had to undertake my younger sister. Right after my father handed away, we observed out he was selling our beginning certificates and Social Safety playing cards for income. We experienced about 15 different individuals going for walks all over applying our names and credit. By the time I compensated off the collectors I seemed at my checking account and understood I only had eight cents to my name. So I virtually took that 8 cents and placed it in a jar.Reaves graduated from FAMU and operates in banking. Considering the fact that 2016, she’s employed “8 Cents” as a motor vehicle to push financial improve for family members like hers.”They will have the skills of studying to help you save cash, obtain property and construct wealth,” she explained.And 8 Cents actions university student results on an person foundation.Reaves improved her family’s economical condition by thriving in an business customarily led by gentlemen.”So 1 of the points we appreciate to do at 8 Cents In A Jar is highlighting the females that are CFPS, CFAS but most importantly supplying our college students an possibility to see what they can aspire to that way we can have a lot more gals go into those people fields simply because we have to have them,” she said.This resolve to lead by example distinguished Reaves as a WESH 2 Local community Champion.”It’s definitely a blessing. And so, I can’t wait to now nominate a person else because I am not the only person. Central Florida has a ton of remarkable people today carrying out great factors every one working day,” she reported.
ORLANDO, Fla. —
Discussions about prosperity and revenue will not commonly require young children.
But a person Orlando-centered nonprofit organization is changing that narrative: WESH 2 Neighborhood Winner 8 Cents In A Jar.
Lashea Reaves is instructing younger students at Alpha Studying Academy about the inventory industry and the gains of investing.
Reaves desires these pupils to make sense of a little something so several adults are inclined to shy away from.
“You ought to be equipped to have an open up conversation about cash. The place does it occur from? How can I help save it? What is the greatest spot to use it? The moment we can converse about money. We are greater about managing that funds,” Reaves claimed.
Reaves is the govt director of 8 Cents In A Jar, an award-profitable nonprofit corporation concentrated on economic education for minority learners concerning the ages of 8 and 28 many years old in central Florida.
“The lack of fiscal literacy, the deficiency of knowledge for dollars administration, that actually drove my job,” she said.
It truly is a problem Reaves understands all way too properly.
She grew up under the poverty line, relying on authorities guidance for food stuff and housing.
WESH 2 Sheldon Dutes: What’s the importance driving the name?
Lashea: When I was expanding up, I had to undertake my young sister. Immediately after my father passed absent, we found out he was advertising our delivery certificates and Social Security cards for cash. We experienced about 15 distinctive people today going for walks all-around utilizing our names and credit rating. By the time I paid out off the creditors I looked at my examining account and recognized I only experienced 8 cents to my title. So I actually took that eight cents and positioned it in a jar.
Reaves graduated from FAMU and will work in banking. Due to the fact 2016, she’s employed “8 Cents” as a vehicle to travel economic modify for households like hers.
“They will have the capabilities of discovering to conserve revenue, get assets and make prosperity,” she reported.
And 8 Cents steps university student achievements on an personal foundation.
Reaves improved her family’s economical situation by flourishing in an market customarily led by guys.
“So a single of the matters we adore to do at 8 Cents In A Jar is highlighting the women that are CFPS, CFAS but most importantly offering our pupils an chance to see what they can aspire to that way we can have a lot more gals go into all those fields mainly because we have to have them,” she stated.
This resolve to guide by instance distinguished Reaves as a WESH 2 Group Champion.
“It truly is actually a blessing. And so, I can’t hold out to now nominate an individual else simply because I am not the only individual. Central Florida has a ton of incredible persons carrying out fantastic points just about every single day,” she reported.
NCAA rules and state law now allow student athletes to earn money from sponsorship deals, and a few are cashing in big time. But how will players make sense of the contracts companies are offering them?
Shortly after starting college last fall, Fresno State equestrian Yasmin Roman found out from her school’s athletic department that she could get endorsement deals on a platform called Opendorse, which connects companies to athletes. Roman signed up early in the spring, excited to offset some of the costs associated with being an out-of-state student in an expensive sport. Since then she’s earned $30 on a paid Instagram story for a food delivery service on the app.
On the other side of the spectrum are players like UCLA quarterback Chase Griffin, who has leveraged a fanbase of 30,000 followers on Instagram to sign deals with major brands such as Discord, Duffl, Degree Deodorant, Clearcover Car Insurance and Shell.
Student athletes in California have only been able to profit off their name, image, and likeness — known as NIL — since new NCAA rules and a state law took effect last year, but such agreements are already evolving into an estimated $500 million dollar market nationally. Some California colleges are offering financial education designed to prepare athletes to navigate the new landscape. Advocates for the training say it can facilitate further deals, get more athletes to participate, and help athletes avoid agreements that can cost them money in the long run.
Roman, for example, still has questions that her college’s staff haven’t answered: How can she garner interest from companies while playing a sport that doesn’t attract as big an audience as football or basketball? And how should she know if a deal is worth her time, or how to negotiate a contract?
“It’s definitely still a learning curve, and I’m still working through it to see what kind of opportunities there are for me to make some money throughout my sport,” she said.
Specialized training can help answer those questions for the roughly 500,000 student athletes who participate in the NCAA, said Rashad Campbell, a partner at Team Altemus, a consulting firm that provides education on NIL and financial literacy to Division I programs including San Diego State and Ohio State.
“The sooner we can educate, the sooner we can make this a real thing, the better off everybody will be,” Campbell said.
Colleges try to fill the gap
While the most lucrativeNIL deals earn headlines, most are more humble, according to Opendorse and INFLCR, another company that connects athletes to brands. From July 1 to the end of 2021, INFLCR said its median transaction value was $51. Football players brought in the most endorsement dollars on Opendorse from July to the end of February, accounting for about half of total NIL earnings, followed by women’s basketball at 19{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} and men’s basketball at 15{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
California colleges vary in the financial education they offer to student athletes. Unlike Florida, which passed a law requiring schools to offer financial literacy training to players, California was the first to legalize NIL deals, but doesn’t require such workshops.
UCLA Bruins quarterback Chase Griffin has made thousands through NIL deals. Photo by Jayne Kamin-Oncea-USA TODAY Sports via REUTERS
San Diego State University moved quickly to develop a curriculum in NIL after 60 players on the university’s football team signed a deal with the College H.U.N.K.S. Hauling Junk moving company.
In November, the school hired a name, image, and likeness coordinator, Michelle Meyer, a former beach volleyball coach and founder of NIL Network, a website where athletes, administrators and coaches can learn more about the topic. Meyer said she plans to meet with each team on the university’s roster. Before athletes look to sign deals, Meyer asks them first what they want to get out of it.
“Do you want to make a quick buck or some cash? Is it about building your network, building your resume, picking up some of those life skills like entrepreneurship?”
Team Altemus will also offer financial education at San Diego State on topics such as decision making, due-diligence, money and contracts. Campbell said he wants athletes to understand both how to handle their money and the risks associated with entering a contract, so they can protect themselves.
Athletes might have experience with choosing a college or a major, but little background in weighing the many factors involved in a business deal, Campbell said.
“We educate them to really assess risk and make informed decisions that they’re comfortable with,” he said.
These kinds of programs would be helpful for Roman, the Fresno State athlete, who also secured a deal for free drinks from Liquid IV in exchange for social media posts. Even small dollar amounts can help defray the costs of competing as an equestrian, she said.
Yasmin Roman said she would benefit from NIL-specific training. Photo by Zaeem Shaikh for CalMatters
“Our busy schedules don’t really leave us with much time to make meals at home,” she said. “So it’s a lot more eating out. And because we are so physically demanding in our sport, we do need to be conscious of what we’re eating. That tends to come with more of a cost.”
Roman said she mostly analyzes offers on her own. Sometimes she will ask her brother, who is pursuing a master’s degree in business administration, for a second opinion. Typically she asks, “What would you do in this situation? What do you think is better? Do you think it’s worth it?”
At many schools, athletics compliance officers have become the de facto staff to field those kinds of questions, even though some don’t have all the answers. At Sacramento State, for example, compliance director Matt Vincent said he advises students on whether they’re getting fair market value based on the standard rates for professional athletes who sign autographs or do promotional appearances.
Santa Clara University compliance director Ryan Merz helps athletes analyze offers and has given team presentations, pulling online examples of deals gone wrong.
Compliance offices are limited in the guidance they can offer. “I’m not a lawyer. I’m not a tax professional. So I can’t give any kind of legal advice, tax advice or anything like that,” Merz said.
Still, Merz believes it’s important that student athletes get education about NIL directly from universities because there’s “not an agenda there,” Merz said. “A company that you’re paying to educate your athletes has an agenda because they want to keep getting paid, but our professors are here already.”
The university’s athletic department, Merz said, is now working with the law and business school to create a minor that focuses on brand management, marketing, financial responsibility and taxes.
Tips for athletes
Experts interviewed by the College Journalism Network offered some tips for student athletes: First, they should avoid giving a company rights to their name, image and likeness forever, said Matthew Mitten, a sports law professor at Marquette University. He said a company may offer you an exorbitant-sounding sum of money, like $20,000, “but whatever you gave up might be worth well in excess of that.”
Athletes should also approach agreements as a trial, Campbell said, avoiding opting into longer term arrangements until they gain more experience. And they need to consider the reputation of a company before signing, he said.
“It’s always been a hustle to make money and pay bills, so it’s like you really have to figure it out on your own. Or if not, it’s pretty much failure.”
Gianni Galaviz, Laney College football player
Although many community college athletes are not receiving NIL deals, John Beam, the athletic director and head football coach at Oakland’s Laney College, sees this as a moment to push for more financial literacy. He brings in speakers to talk to Laney’s football team weekly, including NFL players and AthLife, a company that helps professional athletes meet athletic and career goals, to talk about the basics of NIL.
“So our kids are getting the same training, basically, as NFL or NBA players,” Beam said.
It’s especially important, Beam said, because many of the students he works with do not have easy access to financial planning support.
“If you’re from a marginalized group that has been shut out of the educational system or the finance system, how do you ever learn how to create wealth, generate wealth, and to preserve wealth and to grow?”
Gianni Galaviz, who plays football at Laney, counts himself a member of those marginalized groups. Growing up in Rodeo, Galaviz transferred high schools because his mother wanted him to get a better education, and was surrounded by students wealthier than his family. But he didn’t learn much about how to make and keep money, he said.
“It’s always been a hustle to make money and pay bills, so it’s like you really have to figure it out on your own,” Galaviz said. “Or if not, it’s pretty much failure.”
Athletes themselves are among those pushing for colleges to develop curricula around the new NCAA rules. Tray Maddox Jr., a senior men’s basketball player at Cal State Fullerton, said he contemplated switching his major from sociology to finance and believes that athletes should be able to take classes in NIL.
Because Maddox Jr. had more than 40,000 followers on TikTok and 15,000-plus on Instagram, he knew he had the potential to make money off his likeness. And even before NCAA rules allowed him to, several companies messaged inquiring about deals.
When he was allowed to answer those messages, one of his coaches scanned contracts for any hidden details. “All my coaches have been around pro athletes and have seen the type of deals that people sign with,” Maddox Jr. said. But he’d like to learn those skills himself, he said.
Cal State Fullerton Titans guard Tray Maddox Jr. during a press conference before the first round of the 2022 NCAA Tournament. Photo by Jim Dedmon-USA TODAY Sports via REUTERS
Griffin, the UCLA quarterback, has leveraged his social media following and personality to secure opportunities despite being a third-string player. His previous experience with brands and his father’s advertising expertise helped him vet the deals, he said.
As a young person new to the space, “it’s easy to see a deal…that pays you less than what your time is worth and think that that’s enough money,” Griffin said. ”Or see an opportunity that you like, but not really think about how that brand will impact your reputation.”
Griffin said he now evaluates opportunities in three ways: Does the brand or deal align with his personal values, does it create economic value for himself, and how can he use the deal to help his community?
He has set aside part of his earnings to benefit the Los Angeles Regional Food Bank, and listened when his father advised him to invest his NIL money instead of spending it.
“I know that I have a lot more money than I would have had without NIL,” he said. “And while I’m saving all of that now, in the days that come where I have to spend that, that can be life changing.”
UCLA, the birthplace of the NIL movement, last summer launched an NIL program called “Westwood Ascent,” bringing together UCLA’s graduate business school and the Center for Media, Entertainment and Sports for four workshops on topics relevant to NIL such as personal finance, social media and building a personal brand.
The university will also offer an NIL class during the upcoming summer session that will allow athletes to ask specific questions and develop relationships with experts who can offer individual advice, said Jay Tucker, the executive director of UCLA’s Center for Media, Entertainment and Sports. Created by UCLA’s athletic department, business and law schools, it will be open to any student athlete, Tucker said.
A growing interest in financial literacy
Even though many student athletes won’t make much money from NIL, the rise of this new market has increased their interest in financial topics, some experts said.
Kara Jo Wietrzykowski, a financial advisor at Morgan Stanley and former Ohio State tennis player, has visited colleges and spoken to student athletes about the basics of personal finance. She said when she graduated in 2013, finances were not a common topic of conversation, but now when she visits colleges, student athletes pay attention “because they see the opportunity to make money today.”
Wietrzykowski tells athletes to audit their spending and pull their credit card statements for the past two months to tally how much they’re spending. Once they’ve done that, she said it’s important to set short-, mid- and long-term financial goals, which can include getting out of credit card debt, saving for retirement or purchasing a home.
Galaviz, the Laney College football player, said he became more interested in financial literacy when NIL deals became an option. Galaviz is after endorsements for the networking more than the money, hoping he’ll be noticed by scouts who can take him to a Division I program or the NFL.
Now that he has some of the financial training he needs, Galaviz’s big question is: How does he get the deals?
“What does it take … and what as a student athlete do I have to do to make that possible for me?”
Shaikh is a fellow with the CalMatters College Journalism Network, a collaboration between CalMatters and student journalists from across California. This story and other higher education coverage are supported by the College Futures Foundation.
Previous U.S. Secretary of Education and learning John King has a daring proposal for speeding the nation’s financial recovery from the coronavirus pandemic and putting millions of persons on a much better path to attain monetary security: Forgive all $1.7 trillion Us citizens nonetheless owe on their university student financial loans.
King, who served less than President Barack Obama, advised CBS News that the federal government paid about 80{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of the cost of higher education for pupils by means of its Pell grant method in the 1980s. But the government’s move in recent many years to reduce its financial commitment in increased schooling has remaining several students deeply in financial debt, with present-day Pell method masking significantly less than a 3rd of yearly tuition for grant recipients.
“We’ve acquired to make up for that policy error of the previous 40 yrs by addressing the crushing burden of scholar debt that so a lot of younger folks truly feel right now and repairing the issue likely ahead by committing to financial debt-cost-free higher education in the United States,” King said.
More than 43 million Us citizens — just about 13{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of the U.S. inhabitants — have pupil personal debt, in accordance to the St. Louis Federal Reserve. The ordinary borrower owes about $37,000.
That anvil of financial debt generally weighs debtors down for several years, forcing them to postpone plans to purchase a home, start a enterprise or even have small children, King explained. Other popular lawmakers, such as senators Elizabeth Warren and Chuck Schumer, have also urged the federal government to cancel student loans
The White Household, courting back again to 2020 less than President Donald Trump, placed an interest-no cost forbearance on student financial loan payments all through the pandemic. As a result, due to the fact March 2020 just about 37 million borrowers have been excused from building payments on their university student loans — an estimated $195 billion truly worth of waived payments, according to the New York Federal Reserve.
But the forbearance ends Might 1, and a lot of debtors are fearful about getting in a position to resume payments.
Schooling Secretary on pupil financial loans, “Don’t Say Homosexual” invoice and supporting students for the duration of the pandemic
06:13
Present-day Education and learning Secretary Miguel Cardona informed CBS Mornings past week that Biden administration officials are conversing internally about how to give much more pupil debt reduction.
“We are undoubtedly, considering the fact that day a single, putting debtors and students at the centre of conversations,” Cardona reported. “In just a person 12 months, President Biden has forgiven around $17 billion already.”
Independently, the Training Section has stepped up attempts to terminate debt for thousands of previous college students at for-profit colleges right after proof showed that their faculties could have misled them into financial loans.
It is not sufficient to terminate previous school financial loans, explained King, who is now managing for governor in Maryland. The U.S. governing administration must also ensure that future school graduates do not conclusion up weighed down by university student financial debt, he claimed. Two approaches to assist that result in is to make local community higher education absolutely free and to improve the amount every single college student gets in Pell grants, King explained.
Khristopher J. Brooks
Khristopher J. Brooks is a reporter for CBS MoneyWatch covering organization, purchaser and economic stories that vary from financial inequality and housing concerns to bankruptcies and the enterprise of sports.
BBVA is launching this strategy as element of European Money 7 days and Worldwide Revenue 7 days, which are staying held this week. BBVA’s World wide Economical Literacy Program follows the recently printed European Commission and OECD economic literacy framework for grownups in the European Union and provides to the bank’s adherence to the world wide determination promoted by the United Nations to boost fiscal inclusion and economical overall health.
Money education and learning: a key tool for BBVA’s strategic priorities
BBVA thinks in the prospective of monetary education as a vital component for bettering people’s financial wellness and contributing to the changeover in direction of a additional sustainable economic climate, the two of which are strategic priorities for the bank.
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For that reason, it has released this strategy that displays the great importance of financial education for the lender, an schooling that BBVA Chair Carlos Torres Vila considers “essential to boost sustainable and inclusive growth”.
The plan displays the integration of monetary literacy inside BBVA’sLocal community Motivation 2021 -2025 and has three focus of action.
Financial education and learning for modern society
The plan is to generate the enhancement of financial education and learning systems in all international locations the place BBVA is current. The aim is to supply its beneficiaries with money competencies to foster money inclusion and overall health, create resilience and boost sustainable progress and investment decision. It also seeks to provide digital economic expertise with a distinctive concentrate on unique groups, SMEs, entrepreneurs and fiscally empower modern society in standard.
Economic education and learning to aid company
This will involve the advancement of certain instruction routines for consumers to advertise dependable fiscal inclusion, stay clear of economical exclusion, aid increase financial wellbeing, encourage sustainable actions and favor changeover.
Among the the instruction actions aimed at customers to assist them align their money decisions with environmental and social choices include simple applications for calculating their carbon footprint, which in flip teaches them how to reduce this footprint and their individual vitality charges.
Economic instruction to foster collaboration
The cooperation of all stakeholders is important to attain a far more sustainable and inclusive culture. BBVA seeks to boost the importance of fiscal instruction and cooperation in between companies and in the sector through collaboration with exterior stakeholders, the enhancement of cross-cutting initiatives with other parts of BBVA and the dissemination of money education.
BBVA’s dedication to financial instruction is not nearly anything new. In 2008, the financial institution launched its 1st Worldwide Financial Training Approach from then on until finally 2021, it has supplied financial awareness and skills teaching applications in all the countries exactly where it is existing.
To day, 16.5 million persons have participated in BBVA workshops and a lot more than 32 million have accessed economic instruction articles available through digital platforms. For the duration of this period of time, BBVA has invested much more than 94 million euros in economical education systems about the earth and more than 5,000 BBVA workforce have volunteered in fiscal education packages.
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