The chaos of Weibo English is just the tip of the iceberg of online education.

Editor’s note: This article is from WeChat public account “Capital State” (ID: chinaipo ), author Gong Yihang.

The closure of many campuses, the departure of most of the Shanghai headquarters, the high tuition fees of the students, and the education of the staged thunder – recently, the old English training institution Weibo English has become the biggest “explosive” event in online education since 2019.

The chaos of Weibo English is just the tip of the iceberg. Last year, Hujiang English Education also failed to spur Hong Kong stock IPO because of the tight capital chain. In addition, more online education companies are beginning to “money shortage”.

Weibo Crisis

On September 28th, an employee who claimed to be Beijing Weibo issued a report letter saying that all six campuses of Weibo English Beijing had not been paid for a long time, and that the centers would close the store in the future. Conscience English staff with a conscience.”

On October 10, a Hong Kong media reported that “Weibo English lost 160 million yuan and is likely to go bankrupt.” This news completely pushed Weber English into the center of the whirlpool.

On October 12th, Weibo English CEO Gao Weiyu officially released a staff letter:

  • The company’s operations were difficult, and the original financing plan was postponed with the continued deterioration of the Weibo English section’s performance, resulting in a capital chain. Breaking, unable to fulfill the original promise.

Online education, a big loss

In the internal letter of the employee sent in the early morning of the 12th, Gao Weiyu mentioned:

  • At present, Weibo English has reached an agreement with EF. EF can accept Weibo’s adult and young students, and the children of Lange and Lange are also communicating. in.

The incident occurred only ten days, and the well-known English training institutions that operated for 21 years and had nearly 154 stores in 62 cities across the country fell apart. Capital State has learned that as of now, Weibo English has closed or suspended classes in Beijing, Shanghai, Chengdu, Hangzhou and Shenzhen.

New Oriental Online welcomes “first loss”

New Oriental Online Announced 2019Displayed in the earnings report:

  • As of May 31, 2019, total revenue was 919 million yuan, up 41.3% year-on-year; net profit was changed from 82.026 million yuan in the same period last year. The loss was 64.109 million yuan, a decline of 178.2%; the adjusted net loss was 289,000 yuan, and the profit for the same period last year was 73.384 million yuan, a decline of more than 100%.

Online education, a big loss

New Oriental Online, an online education subsidiary of the education giant New Oriental, was listed on the main board of the Hong Kong Stock Exchange on March 28, 2019, and is known as the first stock of Hong Kong stock online education. The company has a net worth of 1.7 billion yuan through IPO.

According to Capital State, New Oriental Online currently has three businesses: university education, K12 education, and preschool education.

  • University education courses include university exam preparation (funds, securities, accounting, etc.), overseas preparation, English study and others. The client group is mainly university students and working professionals;

  • The K12 course covers most of the standard school disciplines from elementary to high school, as well as the regional live interactive platform Oriental Premium;

  • Pre-school education is designed to create an interactive English learning experience and course for children aged 3-10. The platform is Dona.

The decline in New Oriental’s online profit was mainly due to the sharp increase in costs brought about by the accelerated expansion of the primary and secondary education sector in FY2019.

  • Financial data shows that New Oriental Online’s university education segment revenue for the fiscal year 2019 was 651 million yuan, a year-on-year increase of 36.5%, and the number of paid students was approximately 1.3 million. People, an increase of 11.7%.

New Oriental Online:

  • Mainly due to the increase in university pro forma revenue and overseas pro forma revenue, the University’s pro forma revenue and overseas pro forma revenue increased by 32.5% and 39.9% respectively. The revenue from the graduate entrance examinations accounted for more than half of the revenue under the university exam preparations, an increase of 40.4% over the previous year, due to the number of courses in the division and eachThe average expenditure of paid students is growing steadily.

    In addition, the company’s K12 distribution fee and student arrivals increased from 185,000 in FY 2018 to 572,000 in FY 2019, an increase of 209.2% year-on-year;

    Among them, New Oriental Online’s k12 courses have a year-on-year increase of 188.3% for paying students, and 316.1% for paying students in the Oriental Advantage program.

To attract joint venture teachers and expand paying students, New Oriental Online has invested a large amount of upfront investment. But what followed was a higher cost of sales and a rapid increase in R&D spending.

Financial data shows that New Oriental Online’s sales and marketing expenses increased by 98.2% from 224 million in FY 2018 to 444 million in FY 2019. Mainly due to continued investment in the promotion of university curriculum and k12 distribution, resulting in marketing expenses, especially online media promotion, related expenses have increased significantly.

In addition, New Oriental Online’s R&D expenditure increased by RMB 4 billion in FY 2019 from RMB 46.9 to 201.9 billion in fiscal year, mainly due to the need to recruit qualified R&D personnel to support expansion and increase staff costs. .

The dilemma of VIPKID

On October 8th, online youth English brand VIPKID official Xuanteng led the investment in its E round of financing. This is obviously a big profit for the VIPKID that has been passed down for a long time. However, VIPKID is also facing difficulties in valuation and financing difficulties.

Capital states learned that as of August this year, the number of students on the VIPKID platform exceeded 700,000, and the number of foreign teachers in North America exceeded 90,000.

  • After the VIPKID in 2013, I received the financing of the angels of the innovative workshop and Tima Capital, and carried out up to ten rounds of financing.

  • In 2017 and 2018, respectively, they received $200 million and $500 million in Series D and D rounds of financing. Tencent Industry Win-Win Fund, Sequoia Capital, and Yunfeng Fund participated.

Online education, a big loss

Online education, a big loss