The business covers all-disciplinary tutoring in the field of online education in primary and secondary schools.

Editor’s note: This article comes from the WeChat public account “Unicorn Early Know” (ID: iponews), author: iponews studio.

On May 19th, Head Education submitted an IPO application to the US Securities Regulatory Commission, planning to log on to the New York Stock Exchange under the stock code “ZME”, Morgan Stanley, Credit Suisse, Futu Holdings, Tiger Securities, Snowball, etc. are its underwriters.

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According to the data, Headmaster Education has officially transformed online education since 2014. Relying on the accumulation of investment in teaching and research teachers, science and technology, and the pursuit of teaching quality, its business scale and layout have rapidly expanded, attracting multiple rounds of financing from many internationally renowned investment institutions such as China Investment, CICC, Warburg Pincus, SoftBank Vision Fund, etc. .

Currently, the business of Master Education has covered all-subject tutoring in the field of online education in primary and secondary schools, and has formed the “Master 1 to 1”, “Master Excellent Class”, “Master Children” and “Little Raccoon Enlightenment”. “Comprehensive education matrix composed of subdivided brands.

The prospectus shows that in 2020, the boss’s 1-to-1 retention rate will exceed 80%, and at the same time, more than 50% of new customers will come from old customers. The user’s recognition of the quality of teaching enables Master Education to reduce customer acquisition costs through word-of-mouth communication and achieve a large-scale brand effect.

Zhang Yi, the founder and CEO of Master Education, once publicly stated, “The marketing end of capital investment is called burning money, and the back end of capital investment is called barriers, and the director should spare no effort to promote the latter and invest funds in teaching, research, teaching, Technology and other back-end modules that are highly related to service quality.”

In 2020, its marketing expenses accounted for a decrease of 17.3 percentage points. In 2020, the company has invested a total of 318 million yuan in research and development expenses, which accounted for 7.9% of the total. In addition, there are more than 500 full-time content research experts in the head of education.

In the first quarter of 2021, 69% of the third-grade users of “Master Children” switched to the “Master 1 to 1” course, showing the user stickiness of the Master Education brand. In the third quarter of 2020, the small class business launched by Master Education-“Master Class”, has more than 290,000 students in one quarter, achieving a 220.8% growth rate from the previous quarter.

According to the calculation of cash income, the small group in charge ranks among the top three in the industry, and is the fastest growing one among the top five in the industry. In the future, the small class business is expected to become the second growth curve of the head of education. The company expects that the small class business will continue to grow rapidly in the next few years.

According to the prospectus, the number of paying students enrolled in one-to-one after-school tutoring increased from 380,517 in 2019 to 544,813 in 2020, an increase of 43.2%; as of the first three months of 2021, it was 133,601 People, an increase of 52.2% compared to 87,783 in the first three months of last year. In the first quarter of 2021, the number of paying students for after-school tutoring in small online classes reached 294,397, an increase of 222.6% from 91,260 in the third quarter of 2020.

The net income of Master Education has increased from RMB 2.668.7 billion in 2019 to RMB 4.018.4 billion (US$613.3 million) in 2020, an increase of 50.6%. Revenue for the three months ending March 31, 2021 was 1.345.7 billion yuan, an increase of 19.9% ​​from the 1.122.7 billion yuan in the first three months of 2020.

At the same time, the company’s sales and marketing expenses as a percentage of net income dropped from 81.4% in 2019 to 64.1% in 2020. The net loss decreased by 32.7% from RMB 1.504 billion in 2019 to RMB 1.0123 billion in 2020.

Before the IPO, Zhang Yi, founder and CEO of Head Education Education, held 14.1%, Teng Yu held 6.1%, Genesis Capital Entities held 15.8%; Demantoid Gem Holdings Limited held shares 10.5%; Wenwei Entities holds 7.6%, CMC Entities holds 6.3%, SoftBank’s SVF II ZEAL SUBCO (DE) PTE. LTD. holds 5.8%, Shanghai Huasheng Lingfei Equity Investment (Limited Partnership) holds 5.5%, and Dreamax Education II Limited holds 5.3%.

Some industry insiders said that leading companies have already occupied an absolute leading market share in the 1-to-1 track, but there are still a large number of retail investors in the market, such as those using WeChat for classes or offline small workshops. As the experience becomes more refined, these long-tail retail investors will gradually be digested by online institutions, and the online 1-to-1 market will still have a large space in the future.

After going to the US for IPO, Master Education will further improve the quality of education and teaching, create a better learning experience for users, and attract more users.